Henry Boot PLC
Annual Report and Financial Statements
for the year ended 31 December 2021
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FOCUSED ON KEY MARKETS
AND SUSTAINABLE GROWTH
CONTENTS
OVERVIEW
Welcome
Highlights
Chairman’s Statement
Investment Case
Our Purpose and Culture
Living our Values the
Henry Boot Way
Group at a Glance
Strategic Value in the Business
Responsible Business
STRATEGIC
Chief Executive Officer Review
Business Model
Our Markets
Our Strategy
Business Review
– Land Promotion
– Property Investment
and Development
– Construction
Financial Review
Principal Risks and Uncertainties
Our Risks
Section 172 Statement
Building a Responsible Future
GOVERNANCE
Board of Directors
Executive Committee
Chairman’s Introduction
Governance at a Glance
Corporate Governance Report
– Division and Responsibilities
– Board Leadership and
Company Purpose
– Composition, Success and
Evaluation
– Nomination Committee Report
– Audit and Risk Committee Report
– Responsible Business
Committee Report
– Directors’ Remuneration Report
– Remuneration Policy
– Annual Report on Remuneration
Director’s Report
FINANCIALS
Independent Auditor’s Report
Consolidated Statement of
Comprehensive Income
Statements of Financial Position
Statements of Changes in Equity
Statements of Cash Flows
Notes to the Financial
Statements
SHAREHOLDER INFORMATION
Notice of Annual General Meeting
Financial Calendar
Advisers
Group Contact Information
Glossary
IFC
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WELCOME TO OUR
ANNUAL REPORT 2021
OUR PURPOSE
To empower and develop our people to create long-term value
and sustainable growth for our stakeholders*.
ABOUT US
We manage the combined effort and expertise of six primary
businesses across three key markets, investing in our future to
create long-term value and robust returns for all our stakeholders
and partners.
With our uniquely sustainable business model we have built a
market-leading Group of Companies that source, develop and
deliver across the whole property value-chain.
We have been in business for over 135 years and we are valued
for our expertise and forward-thinking approach.
* Our stakeholders are our shareholders, employees, pensioners, customers and suppliers. More
broadly, we recognise our duties to the environment and the communities in which we operate.
View our online Annual Report at:
henryboot.annualreport2021.com
We maintain a corporate website containing a wide
range of information of interest to investors and
stakeholders. Go to: henryboot.co.uk
HIGHLIGHTS
FINANCIAL HIGHLIGHTS
GROUP REVENUE
£230.6m
m
5
.
8
0
4
£
m
1
.
7
9
3
£
m
7
.
9
7
3
£
m
4
.
2
2
2
£
m
6
.
0
3
2
£
PROFIT BEFORE TAX
£35.1m
m
4
.
5
5
£
m
6
.
8
4
£
m
1
.
9
4
£
m
1
.
5
3
£
m
1
.
7
1
£
ROCE
9.6%
%
7
.
9
1
%
8
.
5
1
%
8
.
4
1
%
6
.
9
%
9
.
4
Read the
Financial
Review on
pages 38 to 41
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21
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21
17
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19
20
21
EARNINGS PER
ORDINARY SHARE
21.2p
p
1
.
2
p3
3
.
8
2
p
3
.
8
2
p
2
.
1
2
p
0
.
9
NET ASSET VALUE PER
ORDINARY SHARE
267p
p
9
3
2
p
5
3
2
p
7
2
2
p
3
0
2
DIVIDEND PER
ORDINARY SHARE
6.05p
p
7
6
2
p
0
9
.
p
0
.
8
p
5
0
6
.
p
5
.
5
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0
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5
17
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21
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OPERATIONAL HIGHLIGHTS
• Hallam Land Management sold 3,008 plots
•
(2020: 2,000) at an average gross profit per plot of
£7,820 (2020: £6,456) and increased the land bank
to 92,667 plots (2020: 88,070).
• Committed development programme materially
stepped up in response to demand from £85m to
£277m, with 72% pre-sold or pre-let.
• Approximately 1m sq ft of industrial & logistics
development underway (de-risked with 92%
pre-sold or pre-let).
• £1.4bn development pipeline (Henry Boot share
£1.1bn), 75% of which is focused on industrial &
logistics.
Investment portfolio value increased including JVs
to £126m (2020: £92m), delivering a strong total
property return of 19.5%.
Read the
Business
Review on
pages 30 to 37
• Stonebridge Homes has already secured 77% of
its annual sales target of 200 units for 2022. Total
owned and controlled land bank is now 1,157
plots (2020: 1,119) with detailed or outline planning
permission on 912 plots (2020: 657).
• The construction business is performing ahead
of expectations with turnover of £81.6m (68% in
public sector) out of £110.3m segment total and
has secured over 100% of its 2022 order book.
• Launched Phase 2 of our Responsible Business
Strategy setting ambitious objectives and clear
medium-term targets.
This report contains the following alternative performance measures (APM):
Return on Capital Employed. Net Asset Value (NAV) per share. Net (debt)/cash. Total Accounting Return
More details can be found on page 40.
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OVERVIEWHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 CHAIRMAN’S STATEMENT
THE GROUP
IS IN A
STRONG
POSITION
JAMIE BOOT
CHAI RMAN
HENRY BOOT HAS PERFORMED STRONGLY
THROUGHOUT 2021, ACHIEVING A PROFIT
BEFORE TAX (PBT) OF £35.1M.
Henry Boot has performed strongly throughout 2021,
achieving a profit before tax (PBT) of £35.1m. Two key profit
drivers have been, firstly, the significant growth in industrial
and logistics capital values resulting from continued
occupier demand, increasing rents and the weight of
investment capital targeting the sector and, secondly, an
increase in plot sales from our strategic land business.
We have made good progress towards our refocused
strategy, with activity levels continuing to recover ahead of
our expectations, alongside all three of our key markets –
Industrial & Logistics, Residential and Urban Development.
Current market trends reinforce the confidence we have
in our strategy, leaving the Group well placed to meet its
medium-term targets.
£35.1m
PROFIT BEFORE TAX
(2020: £17.1M)
267p
NET ASSET VALUE PER SHARE
(2020: 235P)
02
The Group’s financial position remains
strong with NAV per share increasing
by 13.6% to 267p and our low net
gearing of 12.2% and a debt position
of £43.5m, meaning we are well
positioned to continue scaling up
activity across all operations. We also
have 12,865 strategic land plots,
which already benefit from planning
permission and are held at cost with no
increase in value created from securing
planning permission over these assets
recognised until disposal. Plus, with a
committed development programme
of £277m GDV to be delivered largely
over the next 18 months, both of these
provide a significant store for future
value creation.
On the basis of the Group’s strong commercial and financial
performance, the Board proposes to pay a final dividend
of 3.63p, which together with the 2.42p interim dividend,
gives a total of 6.05p (2020: 5.50p), an increase of 10% for
the year.
After over 40 years of service to Henry Boot, I have taken
the decision to retire as Chairman and from the Board on
26 May 2022. I am delighted that current Non-executive
Director, Peter Mawson, will be taking over the reins as
Chair and I am confident that he will continue to provide
commercial experience, strategic expertise and governance
to support the executive team in growing the business,
while maintaining the highest standards. As a consequence
of Peter’s changing role, the Senior Independent Director
position will be assumed by Joanne Lake.
On behalf of the Board, I would like to thank everyone at
Henry Boot for their dedication and hard work. Their high
levels of engagement have once again been instrumental
to the business in producing a strong set of results. I look
forward to following Henry Boot’s next chapter closely. With
the Group in such a strong position, I leave confident that
the business will continue to be successful for many years
to come and I look forward to remaining a committed long-
term shareholder.
JAMIE BOOT
CHAIRMAN
This report contains the following alternative performance
measures (APM): Return on Capital Employed. Net Asset Value
(NAV) per share. Net (debt)/cash. Total Accounting Return.
More details can be found on page 40.
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OVERVIEWHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 Pictured: Kampus,
Manchester, a 533-unit BtR
scheme completed in 2021
Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021
03
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OVERVIEW INVESTMENT CASE
A LONG TRACK RECORD
OF GENERATING
ATTRACTIVE RETURNS
The Group provides reliable earnings with a clear focus on our three key markets,
driven by positive long-term structural trends
We are a responsible business with a long track record of generating attractive returns. There is significant embedded value
across the Group, including 92,500 strategic land plots and a £1.1bn development pipeline, with all the opportunities sitting
within the Group’s three key markets. The Company has a great track record of creating shareholder value, boasting a total
shareholder return (TSR) of 12.0% per annum over 20 years, which is significantly ahead of the FTSE All-Share index (5.7%).
DIVIDEND PER SHARE
12p
10p
8p
6p
4p
2p
0p
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
SHARE PRICE OVER 10 YEARS
Jan 13
Jan 14
Jan 15
Jan 16
Jan 17
Jan 18
Jan 19
Jan 20
Jan 21
Jan 22
400p
350p
300p
250p
200p
150p
100p
50p
0
Jan 12
04
Half year
Full year
Henry Boot
FTSE Small Cap
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OVERVIEWHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 INVESTING FOR
LONG-TERM
SUSTAINABLE GROWTH
Our culture: the Henry Boot
Way of doing things
Our people are vital to Henry Boot’s long-term success. A positive and inclusive
embedded culture enables us to create and maintain long standing relationships with
our customers, clients and communities. This is crucial to our sustainability, creating
an environment which empowers our people to deliver the Group’s strategy, whilst
continuing to attract and retain people who support our culture.
Read more on
pages 06 to 07
Clear focus on three key markets
driven by positive long-term trends
Our three key markets – Industrial & Logistics, Residential and Urban Development –
continue to perform well, driving good progress against our strategic objectives.
The Group moves into 2022 in good shape with a robust balance sheet, strong
momentum within our operations and a healthy store of opportunities secured in our
three key markets.
Read more on
pages 08 to 09
Significant embedded value
in the business
There is embedded value across the Group. Hallam Land Management added over
1,000 acres to its land bank with potential to deliver c.7,600 plots, resulting in a total
portfolio of over 92,500 plots. Henry Boot Developments has a development pipeline
of £1.1bn, adding a further £194m GDV through acquisitions at Welwyn, Rainham,
Markham Vale and Birmingham.
Read more on
pages 10 to 11
Responsible Business approach
We launched the second phase of our Responsible Business Strategy in January this
year. The Strategy outlines forward-looking targets aimed at further embedding our
environmental, social and governance (ESG) approach into the Group’s commercial
and strategic decision making.
Read more on
pages 12 to 13
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OVERVIEWHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 OUR PURPOSE AND CULTURE
EMPOWERING AND DEVELOPING OUR
PEOPLE SITS AT THE CORE OF OUR BEING
This focus shapes our values and behaviours and is also a key aspect of our strategic priorities.
Being purpose-led enables us to create long-term value for our stakeholders and ultimately achieve our vision.
Read more about
Our Strategy on
pages 26 to 29
SAFETY
PEOPLE
GROWTH
DELIVERY
OUR VISION
Our people, partners
and communities continue
to trust our reputation,
respect our expertise and
value us for our forward-
thinking approach.
U R S T R ATEGIC PRIORITIES
O
S T R ATEGY
OUR PURPOSE
To empower and develop
our people to create long-term
value and sustainable
growth for our stakeholders*
VALUE S
OUR VALU E S
RESPECT
LOYALTY
DELIVERY
ADAPTABILITY
INTEGRITY
COLLABORATION
Read more at henryboot.co.uk
More broadly, we recognise our duties to the environment and the communities in which we operate.
* Our stakeholders are our shareholders, employees, pensioners, customers and suppliers.
06
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OVERVIEWHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 LIVING OUR VALUES THE HENRY BOOT WAY
LIVING OUR VALUES
THE HENRY
BOOT WAY
LOYALTY
GEORGINA RONKSLEY
Management Surveyor,
HBD
The Group has supported
me through my degree
apprenticeship, which has
provided the platform for me
to take the next step in my
career and be promoted to
Management Surveyor.
DELIVERY
SARAH COOKSON
Planner, Henry Boot
Construction Limited
Working on Phase 2 of the
Glassworks project has given
Henry Boot the opportunity
to provide social values in
and around Barnsley town
centre, including support of
Barnsley Hospice during the
pandemic.
ADAPTABILITY
STUART MCKERROW
Assistant Manager,
Banner Plant Limited
Banner Plant has recently
made transport acquisitions
and adopted a new transport
manager system. With many
environmentally friendly units
already on fleet and more
arriving this year, we are also
increasing our offering of
renewable solutions.
RESPECT
DENA MACE
Executive Assistant,
Hallam Land
Management Limited
As a Company, we are
committed to respecting
the environment, and have
recently been involved in
canal cleaning as well as
tree planting at our New
Lubbesthorpe site.
INTEGRITY
ANTHONY CLITHEROE
Director, HBD
We pride ourselves on
doing the right thing for
our partners. We continue
to honour our pledge to
deliver a vibrant logistics
and manufacturing hub at
Markham Vale, a partnership
spanning over a decade.
COLLABORATION
CHRIS STALKER
Director, HBD
We’ve worked collaboratively
in joint venture with Capital
& Centric to conceive and
deliver Kampus, one of
the UK’s most complex
build-to-rent (BtR) schemes,
delivering design-led
apartments, canal side
gardens, and independent-
led commercial space in the
centre of Manchester.
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OVERVIEWHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 GROUP AT A GLANCE
BUSINESS SEGMENTS
Land
Promotion
Property Investment
and Development
Construction
HENRY BOOT
CONSTRUCTION LIMITED
A regional construction services provider
to both public and private clients,
delivering creative, customer-focused
solutions and building strong partnering
relationships to ensure the best outcomes
for all projects.
REVENUE STREAM
BANNER PLANT LIMITED
Offering a wide range of construction
equipment and services for sale and hire
in plant, temporary accommodation,
power tools, powered access and big
air compressors. Primarily, supply areas
stretch from Yorkshire in the North to
the East Midlands and Birmingham in
the South.
REVENUE STREAM
ROAD LINK (A69) LIMITED
Road Link has a 30-year contract (four
years remaining) with National Highways
to operate and maintain the A69 trunk
road between Carlisle and Newcastle
upon Tyne. National Highways pays Road
Link (A69) a shadow toll, which is a fee
based upon the number of vehicles using
the road and mileage travelled by those
vehicles.
REVENUE STREAM
287EMPLOYEES
HALLAM LAND MANAGEMENT LIMITED
The strategic land and planning promotion
arm of the Henry Boot Group. Since
1990 we have been acquiring, promoting
and developing land with an outstanding
record in achieving planning permission.
Hallam Land has a strategic land bank of
18,012 acres, focused on higher value
locations in the South and Midlands, and
in total has the potential to deliver around
92,667 residential plots.
REVENUE STREAM
HENRY BOOT
DEVELOPMENTS LIMITED
Henry Boot Developments, trading as HBD,
is one of the UK’s most active and well-
respected property developers, working
with a £1.1bn pipeline and continuing to
grow its investment portfolio. Focusing on
industrial and logistics, urban regeneration
and residential projects, it develops
profitable, impactful schemes that exceed
occupier and investor expectations and
creates places with purpose.
REVENUE STREAM
32 EMPLOYEES
STONEBRIDGE HOMES LIMITED
Stonebridge Homes is a jointly owned
company (controlled by Henry Boot PLC).
It has built homes and communities for
over a decade and specialises in delivering
quality, high specification properties in the
Yorkshire region. It has exciting plans for
sustainable growth that will soon see the
launch of new developments in the North
East of England and increase the number
of outlets in Yorkshire.
REVENUE STREAM
112 EMPLOYEES
Types of revenue streams:
Recurring Revenue: This revenue
stream is regular and stable which allows
the Group to maintain long-term bank
funding relationships.
Cyclical Revenue: This revenue
stream is dependent on each
economic cycle. These profits,
in good years, contribute
significantly to the Group’s
profits overall.
08
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OVERVIEWHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 OUR FOCUS MARKETS
INDUST RIAL
AN D LOGISTICS
RESIDENTIAL
URBAN
DEVELOPMENT
In 2021, the industrial and logistics market
continued to experience strong demand.
The market has been a major beneficiary
of pandemic-related lockdowns, which
resulted in a structural shift of retail sales
moving online and a record amount of
warehouse space take-up.
Throughout last year, the Group completed
on just under 500,000 sq ft of industrial
and logistics development and, in
response to high demand, have committed
to a further c.1,000,000 sq ft of industrial
space, with a Gross Development Value
of £165m.
The residential market performed well
last year, with UK house prices increasing
as many households re-evaluated their
housing needs. The strong demand for UK
housing underpinned housebuilders needs
to replenish their land portfolios, with
greenfield land values also increasing.
With over 92,500 plots of land within our
strategic land portfolio and an aspiring
multi-regional housebuilder, the Group is
well placed to meet the market’s future
growth requirements.
With the UK beginning to return to some
level of normality after the initial outbreak
of the pandemic, there have been signs
that big regional cities are recovering in
footfall, with the continued belief that more
people will be living in urban areas than
rural by 2050.
The Group secured two urban
development contracts in 2021, with a
total value of £89m, whilst also making an
acquisition of a site in Birmingham, which
will be redeveloped into a 404-unit BtR
scheme.
ASSOCIATED BUSINESS SEGMENTS
• Henry Boot Developments Limited
ASSOCIATED BUSINESS SEGMENTS
• Hallam Land Management Limited
ASSOCIATED BUSINESS SEGMENTS
• Henry Boot Developments Limited
• Henry Boot Construction Limited
• Stonebridge Homes Limited
• Henry Boot Construction Limited
KEY PROJECTS
• Markham Vale – The scheme has
KEY PROJECTS
• Didcot – A c.400-acre site under PPA
KEY PROJECTS
• Summerhill – A £110m GDV BtR
delivered 2,000,000 sq ft of industrial
and logistic space since 2004 and
in 2021, a further 297,000 sq ft was
delivered over two units.
with planning for 2,170 plots. Expect
grant of consent in Spring 2022, with
the first plot sales expected shortly
after in H1 2022.
development scheme in the city centre
of Birmingham, which will redevelop
a former Sytner BMW dealership site
into 404 apartments.
• New Horizon, Nottingham – The
• Eastern Green, Coventry – The
• Cocoa Works – A £47m
45-acre scheme secured funding from
Oxenwood Real Estate to commence
development of seven logistics units
totalling 426,000 sq ft.
357-acre site held under option has
planning permission for 2,400 plots,
with land sales expected in H2 2022.
• Armthorpe – Our jointly owned
refurbishment of the historic Rowntree
Factory in York, which will deliver
279 apartments. Works are set to
complete in 2023.
• Wakefield Hub – The 200-acre
site continued to make good
progress last year, by pre-letting a
260,000 sq ft unit to a German
pharmaceutical company.
housebuilder unconditionally secured
planning to build 232 units in South
Yorkshire last year, with construction
set to begin in 2022.
• Heart of the City – A £42m mixed-
use space, including a seven-storey
NZC office building, in the centre of
Sheffield.
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OVERVIEWHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 STRATEGIC VALUE IN THE BUSINESS
LAND BANK
LAND PROMOTION
Regional breakdown
SCOTLAND
10,170
NORTH MIDLANDS
19,999
SOUTH WEST
6,766
TOTAL PLOTS
92,667
NORTH
7,396
SOUTH MIDLANDS
20,392
SOUTH EAST
4,968
|
SOUTH
22,976
Residential land plots
100,000
80,000
60,000
67,355
72,469
40,000
40,844
44,051
20,000
0
7,982
18,529
11,929
16,489
77,144
51,766
10,665
14,713
88,070
92,667
64,337
68,543
8,312
15,421
11,259
12,865
Dec 2017
Dec 2018
Dec 2019
Dec 2020
Dec 2021
Plots with permission
Plots in planning
Future plots
10
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OVERVIEWHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 Future Development Pipeline
The Group has a total development pipeline of
£1.4bn GDV (HBD Share £1.1bn), with all of
these opportunities sitting within the Company’s
three key markets.
REGIONAL BREAKDOWN
Consented
Controlled
45%
INDUSTRIALS
AND
LOGISTICS:
BIG BOX
30%
INDUSTRIALS
AND
LOGISTICS:
MID/
SMALL BOX
17%
URBAN
RESIDENTIAL
8%
URBAN
COMMERCIAL
75%
INDUSTRIALS
AND LOGISTICS
|
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OVERVIEWHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 RESPONSIBLE BUSINESS
PHASE ONE – LAUNCH OF 135 HENRY BOOT
COMMUNITY PARTNERSHIP
PLAN – MARCH 2021
The Group’s Community Partnership
Plan was shaped from a community
engagement consultation we undertook
with our people in 2020.
The plan has found us collaborating with,
and supporting, our charity, educational
and community partners to create
meaningful and lasting impact on their
work. In doing so, we have engaged our
people to get involved and utilise their
skills, knowledge and experience to make
a difference for our communities.
NEW EQUALITY, DIVERSITY,
AND INCLUSION STRATEGY –
APRIL 2021
The Group’s Equality, Diversity and
Inclusion Strategy aims to work with all
our partners to ensure our business and
sector is truly representative, and that we
offer all our current and prospective people
an inclusive, accessible and forward-
thinking workplace.
We aim to create a fair, accessible, diverse
and inclusive working environment, while
acknowledging the challenges our sector
has traditionally faced in achieving this.
KEY OBJECTIVES
• To provide a strategic approach
to charitable support, educational
engagement and volunteering.
• To provide guidance as we support
our charity, educational and
community partners.
• To engage our people to get involved
and utilise their skills, knowledge and
experience.
KEY OBJECTIVES
• Success for all – All our people will
have the best possible opportunities
for success, free of the barriers of
prejudice and discrimination.
•
Inclusivity for all – To promote
inclusion and accessibility for all.
• Knowledge for all – Enabling
and ensuring impactful change
through knowledge, awareness and
cultural shift.
Read more about Phase one see pages 53 to 57
LAUNCH OF OUR NET ZERO
CARBON (NZC) FRAMEWORK
– JUNE 2021
The Group’s Net Zero Carbon Framework
aims to guide the business to achieve
NZC for all direct emissions by 2030.
Since 2020, a team comprising of
colleagues from across the Group,
with support from consultancy firm
Anthesis, have analysed the Group’s
directly controlled Greenhouse Gas
(GHG) emissions. Following this, the
team produced a Framework which will
help guide the business in two phases
to reduce directly controlled carbon
emissions by 2030.
KEY OBJECTIVES
• To achieve NZC for our directly
controlled GHG emissions (Scopes 1
and 2) by 2030.
• To enhance our understanding of our
indirectly controlled GHG emissions
and deliver reduction solutions.
• To empower our people and
partners to take positive action to
collaboratively decarbonise.
12
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OVERVIEWHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 LAUNCH OF PHASE 2 OF OUR RESPONSIBLE BUSINESS STRATEGY
PROCESS FOR DEVELOPING RESPONSIBLE BUSINESS STRATEGY
135 Henry Boot and the wider work undertaken in 2021 put us in a strong position to develop Phase 2 of our Responsible Business Strategy,
which launched in January 2022. Phase 2 sets ambitious objectives and targets for the medium term, ensuring we maintain our bold and
determined approach to achieving significant environmental and social value through our work.
In developing Phase 2 of our Responsible Business Strategy, it was vital that we captured the opinions and views of our people and partners.
We wanted to understand the issues they thought were the most material when considering how our business generates positive impact and
social value.
STAKEHOLDER
ENGAGEMENT
Our Responsible Business
Committee undertook
a stakeholder mapping
exercise to understand
how best to engage our
stakeholders. Desk-based
research and employee
engagement was
undertaken to create a
shortlist of material issues,
which was also influenced
by the ambitions of the
United Nations Sustainable
Development Goals.
IDENTIFY ISSUES
Based on the stakeholder
mapping exercise, we
conducted a Responsible
Business Survey amongst
a representative sample
of our people, customers,
suppliers, advisers,
professional membership
bodies, charity partners,
education partners and
community partners.
They were asked to rank
a series of responsible
business issues to assist
us in determining which
issues should be the most
material to our Group.
PRIORITISATION
AND SELECTION
Our materiality assessment
identified that the top three
issues our business should
focus on are:
• Promoting positive
health and wellbeing
for our people.
• Ensuring our
business is equal,
inclusive, diverse and
accessible.
• Achieving net zero
carbon (NZC).
DEVELOPMENT
OF RESPONSIBLE
BUSINESS
STRATEGY
Following the materiality
assessment and the
prioritisation and selection
of our key areas of focus,
we began to develop our
Responsible Business
Strategy. The Strategy will
guide us to have a positive
impact on these issues,
and ongoing stakeholder
engagement will be
undertaken to ensure that
the aims and objectives
remain relevant and
impactful.
Read more about Phase two see on pages 66 to 67
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OVERVIEWHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021
Pictured: Phoenix 10, Walsall,
a 44-acre site capable of
delivering 620,000 sq ft of
industrial and logistics space
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STRATEGIC
REPORT
Chief Executive Officer Review
Business Model
Our Markets
Our Strategy
Business Review
– Land Promotion
– Property Investment and Development
– Construction
Financial Review
Principal Risks and Uncertainties
Our Risks
Section 172 Statement
Building a Responsible Future
TCFD
16
18
22
26
30
32
36
38
42
44
50
52
68
The Directors present the Group Strategic Report
for the year ended 31 December 2021.
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 Business Overview and Strategic Report on pages
01 to 71 has been approved by the Board and signed
on its behalf by
TIM ROBERTS
CHIEF EXECUTIVE OFFICER
13 April 2022
DARREN LITTLEWOOD
GROUP FINANCE DIRECTOR
13 April 2022
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CHIEF EXECUTIVE OFFICER REVIEW
MATERIAL
PROGRESS MADE
TOWARDS OUR
MEDIUM-TERM
STRATEGIC
TARGETS
TIM ROBERTS
CHI EF EXECUTIVE OFFI CER
We have had a good year with profits ahead of our
expectations, NAV per share up by 13.6%, and material
progress made towards our medium-term strategic targets.
Against a backdrop that was heavily impacted by
COVID-19 (CV-19) throughout 2021, we have made good
progress with our refreshed strategy to focus, grow and
gain appropriate scale in our three key markets, all of which
have performed well. CBRE research shows that the UK
industrial & logistics market has performed particularly
strongly with values up over 35% in 2021. This has been
fuelled by another year that has seen near UK record take
up of warehouse space, relatively low levels of vacancy
and strong investor demand. The UK Price Index states
that the residential market has also been buoyant with UK
house price inflation of nearly 11% in 2021, which led to
residential land prices increasing by c.9% according to
Savills research. There are also signs of our big regional
cities bouncing back, with more footfall, while Build-to-Rent
92,667
RESIDENTIAL LAND PLOTS
(2020: 88,070)
£1.1bn
HBD DEVELOPMENT PIPELINE GDV
(2020: £1.1BN)
(BtR) rents increased by an average
of 8% according to Zoopla research.
Furthermore, key office markets,
like Manchester, are seeing take up
recover to pre-CV-19 levels, with a
clear flight to quality.
In anticipation of a recovery in our
markets, and in line with our refreshed
strategy, we started to increase both
our employed and committed capital
as early as the summer of 2020. We
continued this in 2021 investing over
£60m primarily into the acquisitions
of land, development sites and
16
investment properties. This increase in activity delivered
PBT ahead of management expectations in 2021 with
£35.1m of PBT and will also help to restore our profit,
ahead of schedule, to near pre-CV-19 levels in 2022.
Moreover, we are also progressing well in realising our
medium-term strategic targets. Achieving these targets
will result in a larger, more sustainable business, with
appropriate scale in our chosen markets, backed by a
modern, progressive team all set within a strong ESG
framework.
A more detailed review of our refreshed strategy is set
out below, including highlights of this year’s operational
progress towards our medium-term strategic targets:
• As a result of strong demand from housebuilding
clients, Hallam Land Management (Hallam Land) has
sold 3,008 plots (2020: 2,000 plots).
• Henry Boot Developments (HBD) has completed
developments of £303m GDV (HBD share £69m)
(2020: £58m) but more importantly, the committed
programme has materially increased to £277m
(2020: £85m) – including nearly 1m sq ft of industrial,
of which 92% is pre-let or pre-sold.
• Significantly, along with our joint venture partner
Greater Manchester Pension Fund (GMPF), we have
committed to the £66m (HBD share £33m) speculative
office redevelopment of the Island, in the centre of
Manchester. It will be one of the UK’s first Net Zero
Carbon (NZC) office buildings.
• Our investment portfolio has grown to £126m, including
JVs (2020: £92m), delivering a strong total return of
19.5% during the year.
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021STRATEGIC REPORT £126m
INVESTMENT PORTFOLIO VALUE
(2020: £92m)
1,157 UNITS
STONEBRIDGE HOMES TOTAL
LAND BANK
(2020: 1,119)
• Our jointly owned housebuilder, Stonebridge
Homes, grew sales to 120 units in 2021
(2020: 115) and has plans to build on this
momentum with a sales target of 200 units
in 2022. The land bank has also grown,
specifically land with planning has increased
to 912 plots (2020: 657) mitigating against
the impact of ongoing planning delays on our
growth.
• With gearing at 12.2%, against a
conservative balance sheet where our
strategic land bank is held at cost, we are
comfortably positioned within our stated
optimum range of 10–20%.
• ROCE at 9.6% is close to our stated
medium-term target range of 10–15% and,
this year, we believe it will be firmly within this
range. NAV per share increased by 13.6%,
ahead of expectations, and is now 11.7%
above the 31 December 2019 level, driving
a TAR of 8.0% per annum over the last
two years.
• We have also started 2022 well with secured
revenue through Hallam Land pre-selling
1,880 plots. The committed development
programme is 72% pre-let or presold and
Stonebridge Homes has 77% reservations
against 200 units. Henry Boot Construction
continues to successfully win work, with
100% of its order book secured for 2022,
and Banner Plant’s monthly trading is above
2019 levels.
In relation to this, I am proud of the level of
dedication and commitment that our team has
shown in these uncertain, yet busy times, and
also very pleased to be leading a business
that is responding to the environmental and
social challenges we are all facing. We have a
Responsible Business Strategy, which not only
sets out clear actions and targets that will be
more respectful to our people, planet, places
and partners, but will also further embed ESG
into our commercial decision making. Whilst this
approach will involve some evolution of mind
set and investment, I strongly believe it will help
us anticipate demand from our customers, and
better support the communities that we work
in. So, ultimately, it will be the right thing in the
long term for the business and, therefore, in the
interests of our various stakeholders.
Finally, after a remarkable 40 years of service,
Jamie Boot, our Chairman, will be retiring from
the Board following the Company’s Annual
General Meeting (AGM) in May of this year.
Everyone at Henry Boot would like to express
their thanks to Jamie for his outstanding
contribution and wish him well in his retirement.
On a personal note, it has been a real pleasure
working with Jamie and I greatly appreciate
his leadership and support. After undertaking
a considered selection process, the Group is
pleased that current Non-executive Director
(NED), Peter Mawson, will be appointed as
Chair. Peter has been on the Board since 2015
and brings a wealth of property and commercial
experience. As a consequence of Peter’s
changing role, the Senior Independent Director
position will be assumed by Joanne Lake, an
existing NED. Also, the Nomination Committee,
supported by a consultant, has started the
recruitment of an additional NED.
I look forward to working with the Board, under
Peter’s Chairship, and the rest of our team on the
next exciting phase of Henry Boot’s journey.
OUTLOOK
The immediate outlook for our markets remains
positive with high levels of occupier and
investor demand for industrial and logistics
space, a strong forward sales position for
Stonebridge Homes and continued demand
from housebuilders for residential land. Not
surprisingly, therefore, we have had a very good
start to 2022 with high levels of secured sales.
However, as an industry we face several
headwinds. Build cost inflation is stubbornly
high, supply restrictions are being seen and it’s
a competitive employment market. All of these
challenges have been overshadowed recently
by the conflict in Ukraine. At the moment, we
are managing these challenges, maintaining our
margin through sales inflation and doing a good
job of motivating and retaining our team.
We remain a long-term business and one of
our main advantages is our attractive pipeline.
With potential for over 92,500 plots Hallam
Land has one of the largest strategic land
banks in the country, HBD has maintained its
pipeline at £1.1 bn (75% in industrial) despite
committing to £277m of development over the
year and Stonebridge Homes with a land bank
of 1,157 plots is readying itself to become a truly
multiregional premium housebuilder.
With a strong balance sheet, low levels of
gearing, an engaged team and a portfolio rich
with opportunity, we are ready to meet demand
and to continue making excellent progress
against our medium-term strategic targets.
TIM ROBERTS
CHIEF EXECUTIVE OFFICER
This report contains the following alternative performance
measures (APM): Return on Capital Employed. Net Asset Value
(NAV) per share. Net (debt)/cash. Total Accounting Return.
More details can be found on page 40.
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021STRATEGIC REPORT BUSINESS MODEL
HOW WE CREATE VALUE
Our Purpose: to empower and develop our people to create
long-term value and sustainable growth for our shareholders
We are focused on three key markets
Our focus on these markets and our people drives
our investment in the business.
INDUST RIAL
AND LOGISTICS
RESIDENTIAL
URBAN
DEVELOPMENT
CURRENT CAPABILITIES
The Group completed on £43m GDV of industrial
and logistics, and c.500,000 sq ft due to
strong demand. At the beginning of 2022, we
are committed to a further c.950,000 sq ft of
industrial and logistics development with a GDV
of £165m, including schemes in Nottingham,
Wakefield and Luton.
CURRENT CAPABILITIES
The residential market performed strongly,
with the Group’s land promotion business
selling 3,008 plots in the year and our regional
housebuilder completed on 120 units, at 0.83
sales per week per outlet with an average selling
price of £509,000.
CURRENT CAPABILITIES
Urban development is showing signs of recovery,
with big regional cities bouncing back, with
footfall increasing. In the year, Kampus, a
533-unit BtR scheme in Manchester achieved
practical completion and in addition, we
completed the £89m Glass Works project in
Barnsley city centre in June 2021.
INVESTMENT
The Group invested in c.1m sq ft of industrial and
logistics development at Markham Vale, Rainham
and Welwyn Garden, with a GDV of £84m. We also
Read more on
page 23
acquired two industrial estates in Skelmersdale
and Manchester, which have been retained within
the investment portfolio, for a combined £11m, at
a blended net initial yield of almost 5%.
INVESTMENT
Hallam Land Management secured over 1,000
acres of land, which has the potential for around
7,600 plots, leaving the total land bank capable of
delivering over 92,500 plots. Stonebridge Homes
increased their land bank to 1,157 plots, of which
912 plots has either detailed, or outline planning
Read more on
page 24
permission.
INVESTMENT
The Group’s construction business won £89m
worth of urban development schemes in Sheffield
and York. We also acquired a site at Summerhill,
Birmingham with a GDV of £110m, which has the
potential to deliver up to 404 BtR units.
Read more on
page 25
Key resources
and relationships
CAPITAL STRUCTURE
Our financial structure allows us to invest in the more
profitable areas of the business to ensure we can
maximise value, whilst maintaining prudent gearing
levels. The property investment portfolio of Henry Boot
Developments generates rental income each year,
allowing us to borrow against the investment portfolio
at attractive rates. The Construction segment is
self-funded and cash generative, resulting in the cash
produced from these activities being invested into
strategic land and property development.
OUR PEOPLE
Henry Boot recognises that our people are
fundamental to the success and sustainability of the
Group. It is their expertise that executes our business
model successfully and delivers the value created by
the business to our stakeholders.
PARTNERSHIPS
At Henry Boot we pride ourselves on collaboration.
We set clear mutual expectations and strive to
achieve them. We promote cross-team working,
and work in partnership to make things happen.
REPUTATION
We deliver on time to create repeat business in
each of the Group’s segments. Our reputation and
success are built on the relationships we create, and
we take great care to ensure we build on these for
the future.
OUR CULTURE – THE ‘HENRY BOOT WAY’
Our culture and behaviour are guided by The ‘Henry
Boot Way’. This allows us to create and sustain an
open culture, where our people can grow and thrive,
upholding the standards that are so important to
all of us. It inspires excellence in everything we do
for our customers, and our colleagues and aims to
provide satisfaction for all our stakeholders.
18
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021STRATEGIC REPORT INDUS TRIAL
AND L OGI STICS
RESID ENTI AL
URBAN
DEVELOPMENT
CURRENT CAPABILITIES
The Group completed on £43m GDV of industrial
and logistics, and c.500,000 sq ft due to
strong demand. At the beginning of 2022, we
are committed to a further c.950,000 sq ft of
industrial and logistics development with a GDV
of £165m, including schemes in Nottingham,
Wakefield and Luton.
CURRENT CAPABILITIES
The residential market performed strongly,
with the Group’s land promotion business
selling 3,008 plots in the year and our regional
housebuilder completed on 120 units, at 0.83
sales per week per outlet with an average selling
price of £509,000.
CURRENT CAPABILITIES
Urban development is showing signs of recovery,
with big regional cities bouncing back, with
footfall increasing. In the year, Kampus, a
533-unit BtR scheme in Manchester achieved
practical completion and in addition, we
completed the £89m Glass Works project in
Barnsley city centre in June 2021.
INVESTMENT
The Group invested in c.1m sq ft of industrial and
logistics development at Markham Vale, Rainham
and Welwyn Garden, with a GDV of £84m. We also
acquired two industrial estates in Skelmersdale
and Manchester, which have been retained within
the investment portfolio, for a combined £11m, at
a blended net initial yield of almost 5%.
Read more on
page 23
INVESTMENT
Hallam Land Management secured over 1,000
acres of land, which has the potential for around
7,600 plots, leaving the total land bank capable of
delivering over 92,500 plots. Stonebridge Homes
increased their land bank to 1,157 plots, of which
912 plots has either detailed, or outline planning
permission.
Read more on
page 24
INVESTMENT
The Group’s construction business won £89m
worth of urban development schemes in Sheffield
and York. We also acquired a site at Summerhill,
Birmingham with a GDV of £110m, which has the
potential to deliver up to 404 BtR units.
Read more on
page 25
Value for
stakeholders
OUR PEOPLE
Our people deliver the core activities of our business
model. We invest a significant amount of time
and resource in their training and development to
ensure they are empowered in their roles. We apply
the same methods and dedication when we are
recruiting to ensure we attract the highest calibre of
people within the Group.
COMMUNITIES
We have offices in ten locations across the UK,
but we have projects which extend our community
impact across the country. Wherever we operate
it is fundamental to us that we develop strong
relationships and partnerships with our communities.
This could be by using the local supply chain on
projects or volunteering our skill set to a local charity.
CUSTOMERS
We are committed to maintaining our long standing
track record of customer satisfaction. We continue
to listen, understand and adapt how we can improve
upon what we deliver, so we are able to further
enhance the competitive advantage our Group
brings to its customers.
SHAREHOLDERS
Our priority is to protect the sustainability of
our Group for our shareholders. By operating
transparently and responsibly, we are able to create
added value for our shareholders, providing updates
on performance and changes to the strategic
direction of the Group.
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021STRATEGIC REPORT BUSINESS MODEL
BUSINESS MODEL
OUR OPERATING MODEL
LAND
PROMOTION
PROPERTY INVESTMENT
AND DEVELOPMENT
CONSTRUCTION
1
2
Identify opportunities and acquire land
Obtain planning permission
3a
Sale of land
3b
Development of site
4a
Sale of property
4b
Investment portfolio
Cyclical revenue
Recurring revenue
GROUP
Bank
funding
Cyclical Revenue: Sale of land and property
developments generates cyclical revenue. These activities
are riskier and give varying amounts of profit through each
economic cycle. These profits, in good years, contribute
significantly to the stable profits from construction and
property investment.
Recurring Revenue: The revenue from construction and
the property investment portfolio is regular and stable. This
income allows Henry Boot PLC to maintain long-term bank
funding relationships.
20
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021STRATEGIC REPORT STRATEGIC REPORT
1
2
Identify
opportunities and
acquire land
Hallam Land Management
acquires mainly agricultural land
and then promotes it for its
highest value use. Henry Boot
Developments acquires mainly
brownfield land.
Obtain planning
permission
Gaining planning permission
on land adds immense value to
its worth.
Hallam Land Management
promotes land for residential and
commercial consent.
Henry Boot Developments
promotes land for commercial
development. Stonebridge
Homes promotes land for
residential development.
3b
Development
of site
Unlike Hallam Land
Management, when Henry
Boot Developments and
Stonebridge Homes gain
planning permission for a site,
they will develop it themselves.
4a
Sale of
property
Once a property is developed,
it may be immediately sold,
generating significant revenue.
Properties may be retained by
the business to form part of the
investment portfolio and may be
sold at a later time.
Pictured: Mabgate, Leeds –
400 unit BtR scheme.
Construction
Henry Boot Construction
is a contractor specialising
in servicing both public
and private clients in all
construction and civil
engineering sectors.
Banner Plant offers a wide
range of services, and a high-
quality inventory of equipment
for hire and sale, such as
temporary accommodation,
powered access equipment,
tools and non-man
operated plant.
Road Link (A69) has a
contract with National
Highways to operate and
maintain the A69 trunk
road between Carlisle and
Newcastle upon Tyne. National
Highways pays Road Link a
fee based on the number of
vehicles using the road and the
mileage travelled.
Read the Business Review
on pages 30 to 37
3a
Sale of land
Once Hallam Land
Management obtains planning
permission on a site, it is sold
to a developer, sometimes
after infrastructure has been
installed. The amount of capital
required to achieve planning
permission on a section of
land is a very small proportion
of the total capital required for
the whole building process,
from acquisition of land without
planning permission through
to completion of construction.
This means that Hallam Land
Management is focused on
maximising the most profitable
section of the housebuilding
process for the lowest amount
of working capital.
4b
Investment
portfolio
A select number of the finished
property developments are
retained and managed by the
Property Investment and
Development segment. The
property investment portfolio of
Henry Boot Developments is
worth £126m (including JVs) and
generates a sizeable amount of
rental income each year.
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 OUR MARKETS
The Group operates within three key sustainable markets: Industrial and Logistics, Residential and Urban
Development. These markets are driven by long-term structural trends, such as population growth, rising
numbers of households and shopping moving online. With these structural tailwinds supporting the markets,
Henry Boot expect them to give momentum to future performance.
KEY LONG-TERM STRUCTURAL TRENDS AFFECTING OUR BUSINESS
URBANISATION
TECHNOLOGY
Despite the CV-19 disruption and the expected population
increases over the longer term, major cities will be a significant
driver of UK growth. According to the UN, central case scenario
population will have grown to approximately 75.4m by 2050
with 90% of the population living in urban areas. People do not
choose to live in cities merely to be close to work, but rather
because of the lifestyle benefits provided by accessibility to
amenities. A Centre for Cities survey shows that being “close to
restaurants/leisure and cultural facilities” was by far the biggest
factor in determining city centre residents’ location decisions.
Advances in technology over the past decade have caused
disruption to how we live, work, shop and communicate,
resulting in many businesses needing to rethink their digital
strategies and offering. The emergence of new technology
impacts on a series of issues relating to not only how businesses
deliver their services, but also the environment in which they do it
in. This increases the requirement for property businesses to be
flexible and deliver services to their customers as well as simply
delivering a product to rent or own.
DEMOGRAPHICS
ENVIRONMENT
UK’s population continues to grow, but at a slower rate than
previously, with people living longer and the average size of
households reducing. According to ONS data, the UK population
reached an estimated 66.8m in mid-2019. The growth rate from
mid-2018 to mid-2019, at 0.5%, was slower than any year since
2004. However, the most significant change in the working age
population over the next 20 years is for 20–30-year-olds and
40–50-year-olds who are expected to increase by 4.2% and
6.5% respectively. Demographics therefore provide positive
support for senior living and BtR aimed at young professionals.
The built environment contributes an estimated 40% of the UK’s
carbon emissions, which increases the pressure on businesses
in that industry to adapt their operations to become more
sustainable. This, alongside climate change and the need to
reverse environmental degradation, has created higher demand
for energy efficient green buildings with rising brown discount.
22
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021STRATEGIC REPORT STRATEGIC REPORT
I NDUSTRIAL AND LOGISTICS
MARKET OVERVIEW
In 2021, there was a UK record industrial space take-up of 55.1m
sq ft, with the market continuing to outperform both the office and
retail property sectors. In particular, take-up of warehouse space was
supported by online retailers, who continued to perform well in last
year’s lockdowns. This resulted in internet sales take home percentage
of total retail sales increasing to just under 30% and according to
DTRE, retailers accounted for 47.4% of UK take-up.
The pandemic clearly has played a significant role in accelerating
e-commerce and the digital economy, which has resulted in the
industrial and logistics sector performing with remarkable strength
in recent times. This looks set to continue, and with vacancy
rates at 2.9%, a record low, the market’s outlook remains positive
for the future.
What does Henry Boot have to offer:
INTERNET SALES AS A PERCENTAGE OF TOTAL RETAIL SALES (%)1
• A long-standing reputation and expertise in the
sector, in particular the Group’s 2,000,000 sq ft
flagship scheme, Markham Vale has been offering
industrial and logistics solutions since 2004, and in
2021 the scheme has been expanded by a further
750,000 sq ft.
• Last year, planning was secured at Phoenix 10,
Walsall, a site capable of delivering
c.620,000 sq ft and funding was secured at
New Horizon Nottingham to commence and
develop a 426,000 sq ft scheme of industrial and
logistic space.
In total, the Group is committed to develop
c.1,000,000 sq ft of industrial and logistic space,
with a GDV value of £187m GDV (HBD Share
£165m).
Industrial and logistics represents 75% of Henry
Boot’s £1.1bn development pipeline with the
potential to deliver approximately 8,000,000 sq ft
of space.
•
•
30
25
20
15
10
5
0
2010
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
2021
Internet sales as a percentage of total retail sales (%)
1. Source: Office for National Statistics
BIG BOX TAKEUP – MILLION SQ FT 2
60
50
40
30
20
10
0
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
Total
Two-year rolling average
2. Source: Savills
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 OUR MARKETS
RESIDENTIAL
MARKET OVERVIEW
The residential market performed strongly in 2021, which resulted in
a total house price growth of 10.8% last year according to HM Land
Registry, as people continued to re-evaluate their housing needs.
Housing affordability was also supported by low mortgage rates and
the average mortgage payment remained stable at around 30% of
people’s take-home pay.
As a result of a buoyant housing market, there was robust demand
from UK housebuilders for greenfield land, who were looking to quickly
replenish their land portfolios to match the ongoing demand for new
homes. According to Savills research, last year saw UK greenfield land
values increase by 8.8%, the strongest annual growth since 2014.
What does Henry Boot have to offer:
• Hallam Land Management has six offices
located across the country and is well established
and experienced in the complexities of the UK
planning system.
• The Group has a strategic land bank of 18,012
acres, which has the potential to deliver over
92,500 residential plots.
• Stonebridge Homes, the Group’s jointly owned
housebuilder, offers further residential capabilities,
with a total land bank of 1,157 plots and in 2021
increased the number of plots that have either
detailed, or outline planning permission to 912 plots.
LAND VALUES AND PLANNING CONSENTS1
170%
160%
150%
140%
130%
120%
110%
100%
90%
10
11
12
13
14
15
16
17
18
19
20
21
350
325
300
275
250
225
200
175
150
Savills UK greenfield development land index (LHS)
1. Source: Savills
England planning consents – ‘000s (RHS)
FIRST TIME BUYER AFFORDABILITY2
50%
45%
40%
35%
30%
25%
20%
15%
10%
83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15 17 19 21
Mortgage payments as % of take home pay
Long-term average
2. Source: Nationwide
24
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021STRATEGIC REPORT U RBAN DEVELOPMENT
MARKET OVERVIEW
Whilst the Urban Development market has been impacted by CV-19,
there have been signs that our big regional cities are bouncing back,
with an increase in footfall. There is a continued belief that by 2050,
90% of the population will live in urban areas, with people choosing
to live in rental accommodation within prime urban areas, not only for
work reasons but for better lifestyle options in general.
Over the past decade, private renters have significantly increased, and
whilst during the pandemic rates have slightly dropped, they remained
relatively stable. In particular, BtR rents increased by an average of 8%
according to Zoopla research and JLL expect BtR rental growth of
2.7% pa between 2021 and 2025, with regional growth strongest in
Birmingham and Manchester.
RESIDENTIAL RENTS
What does Henry Boot have to offer:
RENTAL GROWTH1
• The Group has a strong presence in key cites
identified as target areas for BtR schemes.
•
In 2021, the Group completed on Kampus, the
533-unit BtR development in Manchester and
further expanded its BtR pipeline by acquiring a
site at Summerhill, Birmingham (£110m GDV),
which has the potential to deliver up to 404 units.
• Last year, Henry Boot Construction secured two
urban development schemes in the city centre of
Sheffield and York. Both schemes commenced
work in 2021 and we will continue to seek and
secure further opportunities within this market.
140%
135%
130%
120%
120%
115%
110%
105%
100%
95%
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
England Private Housing
UK Commercial Property
1. Source: Office for National Statistics
HOUSING TENURE2
45%
40%
35%
30%
25%
20%
15%
10%
5%
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19
20
21
Own
outright
Own with
mortgage
Social
renters
Private
renters
2. Source: GOV.UK
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021STRATEGIC REPORT OUR STRATEGY
OUR STRATEGY IS SHAPED BY FOUR KEY STRATEGIC PILLARS
AND FOCUSES ON THREE LONG TERM MARKETS
KEY STRATEGIC PILLARS
SAFETY AND
ENVIRONMENT
GROWTH
DELIVERY
PEOPLE
We aim to be the
safest place to work
in our markets and
be respectful to our
environment
Restore profit and
grow capital
employed to £500m
by investing in our
three key markets
Adopt emerging
working practices,
investing and
collaborating to
deliver our
operational targets
Open, progressive,
high performing
business governed
by clear objectives
which engage
diverse range of talent
Long-term Markets
Industrial and logistics
Residential
Urban Development
Value Delivery
LAND PROMOTION
PROPERTY INVESTMENT
AND DEVELOPMENT
HOUSEBUILDING
CONSTRUCTION
Returns
Grow Capital Employed to over £500m + Target ROCE 10–15% +
Maintain a progressive dividend policy
Responsible Approach
People Strategy + ESG
Risk
Optimum gearing of 10–20% + minimum 70% committed development
programme pre-let/pre-sold
26
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021STRATEGIC REPORT 2021 STRATEGY REVIEW
At the start of 2021, we set out a medium-term strategy focused
around three key markets: Industrial & Logistics, Residential and
Urban Development. Our markets, which are driven by long-term
structural trends, have all performed well. In particular, we have seen
demand for industrial & logistics space continue to be driven by the
structural shift of retail sales moving online, whilst rising residential land
prices reflect the continued demand from housebuilders benefiting
from a strong sales market. Urban development in the form of BtR is
experiencing healthy levels of rental growth of around 8% according
to Zoopla research and occupier take up of offices is recovering,
especially in the big regional cities we target.
Our main focus is to grow the business, by increasing capital
employed by over 40% to £500m, whilst at the same time continuing
to generate a ROCE of 10–15% and maintaining a progressive
dividend policy.
During 2021, we made excellent progress with our strategy of growth,
investing £60m in acquisitions, which, amongst other things, enabled
us to grow Hallam Land’s land bank by a further 1,000 acres (c.7,600
plots). £36.2m of the investment was put towards new development
opportunities, including the £110m GDV BtR project in Summerhill,
Birmingham, and a large industrial site in Rainham (GDV: £120m), which
was purchased in a joint venture with Barings Fund (HBD share £24m).
We delivered an improved ROCE of 9.6% in 2021, whilst increasing
our capital employed to £376m. We believe it will exceed £400m by
the end of 2022, putting us on track to achieve our medium-term
target of over £500m, and we anticipate being firmly in the target
ROCE range of 10–15%.
There remains strong demand for our strategic land, with Hallam Land
completing 3,008 plot sales in 2021 (2020: 2,000). With a further
1,880 plots already exchanged for completion over 2022–2023, we
are very much on track to grow sales to an average of 3,500 plots per
annum, as targeted.
HBD has trebled its committed development programme to £277m
(2020: £85m), whilst also adding a further £194m of schemes to our
£1.1bn future development pipeline, which means we are well ahead
of our plan for HBD to complete on average £200m of developments
per annum. The property investment portfolio has grown to £126m,
including our share of JVs, with a strong valuation performance of
14.4% for the year.
Whilst demand for Stonebridge Homes’ premium houses has
been very strong, our ambition to grow units sold to 600 has been
hampered by the slow planning process, due to CV-19 and a
very competitive market for buying land. However, we increased
completions to 120 units in 2021 (2020: 115) and are confident in the
prospect of growing our completions to 200 units for 2022. We have
also marginally increased the land bank to 1,157 units (December
2020: 1,119 units) and currently have several further land opportunities
with agreed heads of terms.
During 2021, the construction business secured major urban
development schemes in Sheffield and York, totalling £89m, with
our order book 100% secure for 2022, well ahead of our target to
secure a minimum of 65% at the start of each year. Public sector work
remains our focus, accounting for 52% of Henry Boot Construction’s
2022 order book. Banner Plant is trading above pre-pandemic
levels with particularly strong demand from customers serving the
housebuilding and construction markets.
The Group’s Accident Incident Rate increased to 630 per 100,000
employees (2020: 466) in 2021, which is a result of incurring one
extra RIDDOR than the previous reporting year. Despite this increase,
the rate is still in line with our competitors, and we remain firmly
committed to maintaining our robust health and safety procedures
to ensure we continue providing a safe working environment for our
people and subcontractors.
At the beginning of 2022 we launched our Responsible Business
Strategy, which includes our Net Zero Carbon Framework, which has
a medium-term target to reduce Scope 1 & 2 GHG emissions by over
20% and NZC by 2030. You can read more information on how we
are going to achieve this on page 56.
In regard to our people targets, the Group’s employee engagement
survey achieved a response rate of 64% and an employee Net
Promoter Score (eNPS) of 26 (2020: 46), which despite a score
decrease, is still benchmarked as good. The Group Employee Forum
(GEF) have reviewed the feedback from the survey to address the
key outcomes and, after presenting their findings and suggestions
of improvement to the Board, are now engaging with our people on
their suggested solutions. Finally, to support our strategic growth, it is
important that we create a high-performing culture by providing a wide
range of training opportunities that continue to develop our people’s
skill sets.
This report contains the following alternative performance measures (APM): Return on Capital Employed. Net Asset Value (NAV) per share. Net (debt)/cash.
Total Accounting Return. More details can be found on page 40.
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021STRATEGIC REPORT OUR STRATEGY
OUR MEDIUM-TERM STRATEGIC OBJECTIVES & PERFORMANCE AT A GLANCE
Objective
KPI
Aim for 2022
Medium-Term Target
TO GROW CAPITAL
EMPLOYED TO £500M
Capital Employed
m
2
5
3
£
m
5
6
3
£
m
6
7
3
£
To grow capital
employed to
over £400m
£500m
Link to Strategic Pillars
and Group Risk
Strategic Pillar
Risks
3
5
TO GENERATE A
ROCE OF 10–15%
GROW HALLAM
LAND’S PLOT SALES
GROW HBD
DEVELOPMENT
COMPLETIONS
19
20
21
ROCE
%
8
.
4
1
%
6
.
9
21
%
9
4
.
20
19
Plot Sales
7
2
4
,
3
8
0
0
,
3
0
0
0
,
2
19
20
21
Development
Completions
m
4
0
4
£
19
m
5
5
£
20
m
9
6
£
21
GROW INVESTMENT
PORTFOLIO VALUE
Investment Portfolio
m
6
2
1
£
m
2
9
£
m
0
7
£
19
20
21
To be firmly within
stated range
10-15% pa Strategic Pillar
Risks
4
8
9 10 11 12
c.3,500 pa
Strategic Pillars
Risks
3
4
5
11 12 13
c.£200m pa Strategic Pillars
Risks
3
4
5
9 10
To be closely
approaching
the medium-
term target
To grow HBD
share of
completed
developments,
with committed
programme
grown to £277m
for 2022
To maintain
progress towards
our stated target
c.£150m
Strategic Pillars
GROW STONEBRIDGE
HOMES HOUSE
SALES
Unit Completions
9
5
1
5
1
1
0
2
1
To increase unit
completions
to 200
c.600
units
19
20
21
28
Risks
3
4
9
13
Strategic Pillars
Risks
3
4
5
12 13
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021STRATEGIC REPORT
Objective
KPI
Aim for 2022
Medium-Term Target
HENRY BOOT
CONSTRUCTION’S
ORDER BOOK
SECURED
Order Book Secured
%
5
9
%
0
0
% 1
0
8
100% order book
at start 2022
>65%
WORK TOWARDS A
MORE COORDINATED
H&S APPROACH TO
ENSURE OUR GROUP
IS A SAFE PLACE
TO WORK
19
20
21
Accident
Incident Rate
0
3
6
6
6
4
3
3
2
19
20
21
<395
To reaffirm our
robust health &
safety procedures
through training
and raising
awareness
Link to Strategic Pillars
and Group Risk
Strategic Pillars
Risks
3
4
8
13
Strategic Pillar
Risks
1
2
4
REDUCE DIRECTLY
CONTROLLED
GREENHOUSE GAS
EMISSION
Greenhouse Gas
Emission
N/A*
*Target begins in 2022
To implement NZC
plan across the
Group
20% reduction
Strategic Pillar
Risks
1
2
4
8
9 10 13
SEEK HIGH LEVELS
OF EMPLOYEE
SATISFACTION AND
ENGAGEMENT
CREATE A HIGH
PERFORMANCE
CULTURE LED BY A
RANGE OF TRAINING
OPPORTUNITIES
Employee Net
Promoter Score (eNPS)
)
S
P
N
e
(
6
4
)
S
P
N
e
(
0
4
)
S
P
N
e
(
6
2
19
20
21
L&D Interventions
Delivered
(per employee)
s
y
a
d
3
.
3
s
y
a
d
8
.
2
s
y
a
d
5
.
2
19
20
21
To engage with
the GEF and
address the
feedback from the
employee survey
40
(eNPS)
4 days
(per employee)
To offer training
which drives
a high level of
knowledge and
improves the skill
sets of our people
Strategic Pillar
Risks
3
4
13
Strategic Pillar
Risks
3
4
13
Group strategic priorities
Risks
1 Safety
5 Funding
8 Construction contracts
11 Land sourcing
Safety
People
Growth
Delivery
2 Environmental & climate change
6 Cyber
9 Property assets
12 Land demand
3 Economic
4 People & culture
7 Pensions
10 Property development
13 Political
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021STRATEGIC REPORT
BUSINESS REVIEW
LAND PROMOTION
NICK DUCKWORTH
HALLAM LAND
MANAGEMENT LI MIT ED
Read the
Financial
Review on
pages 38 to 41
Hallam Land performed materially ahead of expectations in
2021, delivering an operating profit of £17.5m
(2020: £14.2m) from selling 3,008 plots (2020: 2,000) at 14
locations. Encouragingly, average gross profit per plot grew
by 21% to £7,820 (2020: £6,456), leaving the business
firmly on track to reach its ambition of achieving the
pre-CV-19 average gross profit per plot of £10,000.
At the end of 2021, 12,865 plots had planning consent (or
Resolution to Grant subject to S106). As our strategic land
portfolio is held as inventory, these assets are held at the
lower of cost or net realisable value. As such, no uplift in
value is recognised within our accounts relating to any of the
12,865 plots and any increase in value created from securing
planning permission will only be recognised on disposal.
UK greenfield land values increased by 8.8% in 2021
according to Savills Research, the strongest annual growth
since 2014. A strong housing market has underpinned
robust demand for sites as most major housebuilders
have increased levels of land buying to match the ongoing
demand for new homes.
The reduction in plots with planning consent in the strategic
land bank during last year reflects both disposals in the
period and continued delays in the planning system. With
11,259 plots (2020: 8,312) in planning, Hallam Land’s scale
and portfolio approach reduces the reliance on individual
sites, allowing for any delays to be managed more effectively.
In relation to significant schemes, at the end of 2021, a
revised Resolution to Permit at Didcot was secured for
2,170 plots and during Q1 we signed the S106, securing
the grant of planning consent and expect to sell this major
site in Spring 2022. Eastern Green, Coventry, the 2,400 plot
and 37 acres of commercial development site, cleared a
Judicial Review, with infrastructure works beginning in Q1
22. Marketing has now begun on the first phase of the site,
with 250 plots expected to be disposed of later in 2022.
Furthermore, at Swindon, 1,000 plots were granted
Outline Consent, with negotiations beginning between
Hallam Land and the vendor for acquisition of the land
under an option agreement.
At the beginning of 2022, Hallam Land already had 1,880
plots exchanged for completion in 2022/23, leaving the
business well placed to meet its annual target and strategic
growth plans for the year.
RESIDENTIAL LAND PLOTS – REGIONAL SPLIT
Region
Plots
Percentage
Scotland
North
North Midlands
South Midlands
South
South East
South West
Totals
10,170
7,396
19,999
20,392
6,766
4,968
22,976
92,667
11%
8%
22%
22%
7%
5%
25%
100%
Hallam Land’s land bank also grew steadily to 92,667 plots
across the UK (2020: 88,070) at the year-end after securing
over a further 1,000 acres of land, which has the potential
for around 7,600 plots, subject to planning. Of the total
portfolio, 8,013 plots are owned freehold with the balance
of 84,654 secured through Planning Promotion Agreements
(PPA) and Option Agreements. Whilst freeholds typically
deliver a higher profit per plot, the use of PPAs and options
means lower capital employed on each scheme, allowing
us to maximise the number of land opportunities that we
are promoting at any one time.
RESIDENTIAL LAND PLOTS
b/f
15,421
14,713
16,489
18,529
16,417
With permission
granted
452
2,708
1,651
1,533
4,281
sold
(3,008)
(2,000)
(3,427)
(3,573)
(2,169)
c/f
12,865
15,421
14,713
16,489
18,529
In planning
11,259
8,312
10,665
11,929
7,982
Future
68,543
64,337
51,766
44,051
40,844
Total
92,667
88,070
77,144
72,469
67,355
2021
2020
2019
2018
2017
30
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021STRATEGIC REPORT STRATEGIC REPORT
BURDIEHOUSE,
EDINBURGH
IN 2021, HALLAM LAND MANAGEMENT
COMPLETED THE SALE OF 92 PLOTS
AT BURDIEHOUSE ON THE EDGE OF
EDINBURGH TO NATIONAL HOUSEBUILDER
BARRATT DEVELOPMENTS AT A TOTAL
PRICE OF £2.3M. THE SALE REPRESENTS
THE THIRD IN A SERIES OF COMPLETIONS
ON THE SITE, WHICH IN TOTAL HAS NOW
SOLD 425 PLOTS IN THREE SEPARATE
PHASES FOR A TOTAL PRICE OF £12.1M.
PLANNING GRANTED
The 75-acre site was first contracted under option in 2006
and after a period of sustained promotion through the
City of Edinburgh Local Plan review process, the land was
partially granted Planning in Principle for approximately
100 houses in February 2012. The site was subsequently
purchased in Autumn 2012 whilst negotiations on a
planning gain package were still ongoing. Additional
community benefits included within the planning gain
package are contributions towards new cycle path
networks and a healthcare facility.
A PHASED APPROACH
After purchasing the freehold, the first phase was marketed
and sold to Barratt Developments in 2013, with subsequent
phases sold through to this year. The first phase was
granted outline consent for 122 houses in June 2012 and
was sold in 2013. After which, a further Phase 2 sale for
211 houses and flats was completed in August 2015, the
construction of which was completed in May 2021. Finally,
after a long examination process, the City of Edinburgh
Local Development Plan was adopted in November 2016
with a further 20 acres identified for housing, which resulted
in HLM selling an additional 92 plots as part of the third and
latest phase.
“ WE ARE DELIGHTED TO HAVE COMPLETED
THE THIRD SALE TO BARRATT
DEVELOPMENTS ON OUR THRIVING SITE IN
BURDIEHOUSE. THERE CONTINUES TO BE A
STRONG DEMAND FROM HOUSEBUILDERS
ACROSS THE UK FOR STRATEGIC LAND
AND WE REMAIN ACTIVELY FOCUSED ON
REPLENISHING OUR LAND BANK TO ENSURE
WE CAN CONTINUE TO MEET THIS DEMAND.”
NICK DUCKWORTH
MANAGING DIRECTOR, HALLAM LAND MANAGEMENT LIMITED
Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021
31
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BUSINESS REVIEW
PROPERTY INVESTMENT
AND DEVELOPMENT
EDWARD HUTCHINSON
HENRY BOO T DEVEL OPMENTS LIMITED
DARREN STUBBS
STONEBRIDGE HOMES LIMI TE D
Read the
Financial
Review on
pages 38 to 41
Property Investment and Development, which includes HBD and Stonebridge Homes, delivered a combined operating
profit of £18.3m (2020: £4.9m). According to the CBRE UK Monthly Index, commercial property values increased by
13.8% in 2021. Industrial & logistics, which forms 75% of Henry Boot’s development pipeline, continued to outperform
the office and retail sectors as a result of both strong rental growth and yield compression. Last year, there was record
industrial take-up of 55.1m sq ft according to Savills, up 86% since the onset of the CV-19 pandemic (units above
100,000 sq ft). Given the strong levels of occupier demand, supply has fallen significantly with the UK vacancy rate now
standing at just 2.9%, the lowest ever recorded.
In total, HBD completed on seven developments with a total GDV of £303m (HBD share £69m), with 92% of these
schemes currently pre-let or pre-sold.
2021 COMPLETED SCHEMES
Scheme
Industrial
Markham Vale, Aver
Wakefield Hub, Kitwave
Preston East Spec
Enfield, Montagu 406
Urban Residential
Manchester, Kampus
Land & other
Wakefield Hub, Mountpark
Skipton, Bellway
Total for the year
GDV
(£’m)
Share of GDV
(£m)
Commercial
(‘000 sq ft)
Residential
(units)
22
7
11
25
65
216
15
7
22
303
22
3
5
13
43
11
8
7
15
69
297
65
70
55
487
44
2,000
–
2,000
2,531
–
–
–
–
–
533
–
184
184
717
Included within the completed schemes was 487,000 sq ft of industrial and logistics development, with a total value of
£65m GDV (HBD share £43m). This includes Enfield and Preston East, where lettings have already been agreed on over
90% of the combined schemes, and 297,000 sq ft at Markham Vale sold on a forward funding basis for Aver. There has
also been good progress made at Wakefield Hub, where a land disposal was completed with Mountpark for a 2m sq ft
unit and construction of a 65,000 sq ft unit pre-let for Kitwave completed shortly after the year-end. In Urban Residential,
Kampus, the 533-unit BtR scheme in Manchester, achieved practical completion in Q4 2021 and has since attracted
strong letting interest, with the occupancy level ahead of the business plan.
The committed programme grew materially to 14 schemes with a GDV of £352m (HBD share £277m), 72% of which is
pre-let or pre-sold.
32
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021STRATEGIC REPORT 2022 COMMITTED PROGRAMME
Scheme
Industrial
Pool, MKM
Southend
Nottingham, New Horizon
Wakefield Hub, Plot 6
Walsall, Phoenix 10
Luton, Diploma
Luton
Urban Residential
Birmingham, Setl
Clocktower, York
TDT, York
Aberdeen, Bridge of Don
Aberdeen, Cloverhill
Skipton (2), Bellway
Urban Commercial
Island, Manchester
Total for year
% sold or pre-let (incl Island)
GDV
(£m)
Share of GDV
(£m)
Commercial
(‘000 sq ft)
Residential
(units)
Status
Completion
4
12
54
44
37
20
16
4
12
54
22
37
20
16
187
165
32
8
22
12
18
7
99
66
352
65%
32
8
22
1
9
7
79
33
277
72%
15
75
426
260
–
85
82
943
–
–
–
–
–
–
–
91
1,034
Pre-let
Speculative
Forward funded
Forward funded
Forward funded
Pre-let
Speculative, now 100%
pre-sold or pre-let
Speculative
Forward funded
Pre-sold
To be pre-sold
Pre-sold and DM Fee
Pre-sold
Q2 22
Q3 22
Q2 23
Q1 23
Q2 24
Q2 23
Q1 22
Q3 23
Q2 22
Q1 23
Q4 22
Q4 23
Q3 22
Speculative
Q3 24
–
–
–
–
–
–
–
–
101
21
n/a
TBC
536
184
842
–
844
Pictured: Setl, Birmingham,
a 101-unit BtS scheme
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021STRATEGIC REPORT BUSINESS REVIEW
PROPERTY INVESTMENT
AND DEVELOPMENT
Within the committed programme, there is currently £187m GDV
(HBD Share £165m) and nearly 1m sq ft of industrial & logistics
development. In this regard:
• Planning was secured at Phoenix 10, Walsall, in H2 21, a site
capable of delivering c.620,000 sq ft of industrial and logistic
space. Infrastructure works, which have been forward funded,
are set to commence in Q2 2022, ahead of commencing
development.
• At Wakefield Hub, a new 260,000 sq ft unit has been pre-let to
a German pharmaceutical company and forward funded to an
institution. Demand for industrial investments is extremely strong.
Work is due to start on site in Q2 2022.
• Exchanged contracts with Oxenwood Real Estate, an investment
management business, on a forward funding basis to commence
development of 426,000 sq ft scheme with a £54m GDV at New
Horizon, Nottingham.
• A further 157,000 sq ft of speculative development, representing
a GDV of £28m is also under construction at Butterfields, Luton
and Southend with completions anticipated in Q1 and Q3
of 2022 respectively. 57% has been pre-let at terms ahead of
our expectations.
The committed programme also includes the premium Build-to-
Sell (BtS) scheme known as Setl, located in Birmingham, where
construction has commenced and is set to deliver 101 units.
Completion is timetabled for Q3 2023. Additionally, in urban
commercial, the Group is developing a £66m GDV scheme
(HBD share £33m) called Island in a JV with Greater Manchester
Pension Fund (GMPF), for a ten-storey building totalling 91,000 sq ft.
The building is targeting EPC ‘A’ Rating and BREEAM Excellent,
effectively a NZC office proposition in the centre of Manchester, one of
the first in the city.
Throughout 2021, HBD acquired new development opportunities with
a total GDV of £194m. This included expanding its BtR development
pipeline by acquiring a site at Summerhill, Birmingham (£110m GDV),
which has the potential to deliver up to 404 units. A further two
industrial sites were acquired in the South East, the first is in Rainham,
East London (£24m GDV HBD share), which was purchased in
partnership with Barings and has the potential to deliver 368,000 sq ft
of employment use. The second is located in Welwyn Garden City
(£20m GDV), and has the potential to deliver 71,112 sq ft. Finally,
the Group extended its flagship industrial and logistics development
scheme, Markham Vale, by a further 750,000 sq ft (£40m GDV), with
a planning application on the site set to be determined in H1 2022.
After making a number of key acquisitions, HBD’s total development
pipeline has been maintained at a GDV of £1.4bn (HBD share
£1.1bn). All of these opportunities sit within the Company’s three key
markets of Industrial & Logistics (75%), Urban Residential (17%) and
Urban Commercial (8%).
34
This includes a potential near-term development pipeline of £367m,
where the main focus is:
•
•
to secure sufficient pre-lets/sales in order to commit to a further
1m sq ft of industrial space on top of the c.950,000 sq ft already
under construction; and
to secure partners for the delivery of two BtR schemes with a
combined total of 614 units (Mabgate 210 units & Summerhill 404
units) at Leeds and Birmingham.
In 2021, HBD was selected as preferred bidder to deliver Cheltenham
Borough Council’s Golden Valley regeneration scheme, immediately
adjacent to GCHQ. The total development is expected to create
12,000 new jobs, 3,700 new homes and 2m sq ft of commercial
space, with Cyber Central UK at the heart of a visionary integrated
campus focused on cyber and digital innovation. A development
agreement is expected to be signed shortly. At the moment, this has
not been included in HBD’s pipeline.
The total value of the Group’s investment portfolio (including share
of properties held in JVs) has increased to £126m (2020: £92m).
The underlying valuation growth of 14.4% was principally as a result
of the uplift in industrial & logistics assets, with the portfolio also
increasing through acquisitions at Skelmersdale (£4.8m) and City
Court, Manchester (£5.7m), plus retained completed developments
at Wakefield and Enfield (£21.7m HBD share). The total property
return of 19.5% for 2021, was in line with the CBRE UK Monthly Index
(19.9%). Rent collection for FY 2021 stands at 98% with occupancy
slightly increasing to 85% (2020: 84%) and the weighted average
unexpired lease term is now 16.1 years (14.9 years to first break).
Stonebridge Homes continues to perform well with 120 house
completions (75 private/45 social) (2020: 115) at an average selling
price for private units of £509k (2020: £368k), and a materially
improved average sales rate of 0.83 units per week per outlet
(2020: 0.61). The housing market once again saw strong demand,
with a total house price growth of 10.8% last year according to HM
Land Registry. House prices in nearly every region of the UK increased
more in 2021 than in 2019 and 2020 combined, with especially strong
growth in Yorkshire and Humberside and the North West.
The total Stonebridge Homes owned and controlled land bank has
grown marginally to 1,157 units (2020: 1,119). In total, five sites
(491 plots) were added to our land bank with detailed or outline
planning, whilst a further seven sites (245 plots) are currently
progressing through planning. Despite continued related delays in
the planning system, the number of plots that have either detailed,
or outline planning permission increased to 912 plots (2020: 657).
Stonebridge Homes has 4.6 years supply based on a one-year rolling
forward sales forecast for land with planning or 5.8 years for its full
land bank.
Stonebridge Homes begins 2022 in good shape, increasing its active
sales outlets to six, with 77% of reservations already secured against
its delivery target of 200 units (140 private/60 social). The increase of
plots with planning permission in the land bank has also secured a
pipeline that will help us achieve our growth targets for 2022/2023.
This, plus the several sites under offer, means the business is
confident of achieving its growth aspirations.
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021STRATEGIC REPORT STRATEGIC REPORT
ISLAND,
MANCHESTER
ISLAND IS LOCATED IN A CENTRAL
MANCHESTER CONSERVATION AREA.
IT IS A £66M GDV (HBD SHARE £33M)
JOINT-VENTURE PARTNERSHIP BETWEEN
HBD AND THE GREATER MANCHESTER
PENSION FUND (GMPF), DELIVERING
91,000 SQ FT OF NEXT GENERATION
WORKSPACE REDEVELOPMENT.
With seven architects’ practices originally competing to get
involved, we were able to ensure the very best talent was
involved in devising a design-led approach to the project.
ONE OF THE FIRST OF ITS KIND
The site is surrounded by King Street, Manchester Town
Hall and Spinningfields, and will comprise ten storeys,
complete with a basement and roof terrace. The space will
be accompanied by a selection of independent vendors,
creating a hospitality-driven experience throughout the
ground floor, and will be in keeping with the authentic
Manchester heritage feel with detailed brickwork and
industrial theme.
Island will be HBD’s first net zero carbon smart enabled
building, and one of the first workspace developments of
this type in the whole of Manchester. It will be NZC in both
embodied and operational carbon, with the project utilising
low carbon technologies to support tenants’ health and
wellbeing.
THE FUTURE
Island will be designed to embrace a new hybrid model of
working, with seamless technology being combined with
a scheme design to enable people to work fluidly. Work
started on site in Q1 2022, with completion due for Q3
2024 and, based on its ESG credentials, good levels of
occupier interest are anticipated.
Island is an important part of the wider regeneration of this
part of Manchester city centre, and is set to be a robust,
well-crafted building that will stand the test of time.
“ ISLAND IS A REAL STATEMENT OF INTENT,
AND DEMONSTRATES OUR CONFIDENCE
NOT ONLY IN MANCHESTER BUT IN THE
FUTURE OF WORKSPACE MORE BROADLY.
TARGETING THE HIGHEST SUSTAINABILITY
STANDARDS, THE PROJECT’S INNOVATIVE
DESIGN, COMBINED WITH ITS PEOPLE-
FOCUSED AND ‘SMART’ OFFICE SPACE,
ALIGN PERFECTLY WITH THE ENHANCED
STANDARDS THE MODERN OCCUPIER
DEMANDS.”
ED HUTCHINSON
MANAGING DIRECTOR, HBD
Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021
35
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BUSINESS REVIEW
CONSTRUCTION
TONY S HAW
HENRY BOO T CONS TR UCT ION LIMITED
JONATHAN FISHER
BANNER PLANT LI MITED
TREVOR WALKER
ROAD L INK (A69) LIMITED
Read the
Financial
Review on
pages 38 to 41
Trading in the Group’s construction segment has been
strong, achieving an operating profit of £9.0m (2020:
£6.5m). UK construction activity continued to recover in
2021, with annual output increasing by 12.7%, largely
driven by infrastructure. Monthly output in December 2021
was 0.3% above the February 2020 pre-CV-19 level.
Henry Boot Construction, the Group’s construction
business, performed ahead of expectations, delivering a
turnover of £81.6m (2020: £86.2m) (68% in public sector)
and begins 2022 with a full order book. The majority of
this year’s order book now has fixed price orders placed
with the supply chain or, where this has not been possible,
includes contractual inflation clauses with customers.
The Glass Works in Barnsley, an £89m urban development,
was successfully completed in June 2021 with the
centre opening on 9 September 2021, meeting the
anchor tenants’ opening dates. Unfortunately, the £13m
remodelling and refurbishment scheme, Opera North in
Leeds, did experience delays due to the initial pause of
installing the necessary safety procedures as a result of
the outbreak of CV-19. However, despite experiencing
further disruptions caused by the pandemic, the scheme
completed in October 2021.
In H1 2021, Henry Boot Construction secured and
commenced a £42m urban development scheme, Heart
of the City, for Sheffield City Council and Queensberry
Development Management. The scheme is making
good progress and will provide major mixed-use space
including a seven-storey NZC office building in the centre
of Sheffield. Works on Henry Boot Construction’s first
£38.9m BtR scheme known as Kangaroo Works in Sheffield
also commenced on site in April 2021 and is progressing
on schedule, with completion targeted for Spring 2023.
Additionally, a £47m urban residential development,
the Cocoa Works in York, was won. The seven-storey
279 apartment scheme is being delivered for Latimer
Developments and commenced on site Q3 2021, with
completion due at the end of 2023.
At the end of 2021, Henry Boot Construction continued
to sit on ten public sector frameworks, including the
newly launched four-year DfE Framework, and are
currently working on seven schemes through public sector
frameworks with a total contract value of £15m. Post
year-end, Henry Boot Construction have successfully
secured a further two public frameworks, a P23 NHS
Framework for projects up to £20m across Yorkshire,
Humberside and East Midlands and the new regional
YORbuild3 medium value framework for projects between
£4m and £10m.
Banner Plant is trading ahead of pre-pandemic levels
and is experiencing strong demand due to the positive
performance of the UK housing and construction markets,
resulting in live contract count increasing by 17% to 3,261
(2020: 2,786). Road Link (A69) has been impacted by low
traffic levels in H1 2021, resulting in a slight decrease in
performance levels; however, trading levels have stabilised
and are now close to pre-CV-19 levels. The concession
has a further four years remaining before reverting back to
National Highways.
36
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021STRATEGIC REPORT The Cocoa Works, Latimer by
Clarion Housing Group©
STRATEGIC REPORT
COCOA WORKS,
YORK
HENRY BOOT CONSTRUCTION BEGAN
WORK ON THE COCOA WORKS IN Q4 2021.
WE WERE APPOINTED TO UNDERTAKE THE
£80M (£47M CONTRACT VALUE TO HENRY
BOOT CONSTRUCTION) REFURBISHMENT
OF THE HISTORIC SITE, WHICH WAS HOME
TO THE ROWNTREE FACTORY FROM 1890
AND HAD OVER 6,000 EMPLOYEES BY
THE 1920s, PRODUCING WORLD-FAMOUS
CONFECTIONERY BRANDS.
The building has laid derelict for a decade, and will be
converted into a vibrant hub of distinctive one, two and
three-bedroom and studio apartments with landscaped
gardens. In addition, the old Joseph Rowntree Memorial
Library will also be refurbished, providing a character-filled
community space that will be home to a concierge service
for residents and a private working space.
PRESERVING AND CELEBRATING HERITAGE
We are looking forward to delivering a new, exciting future
for this striking building, which is integral to York’s social
history. Once complete, the Cocoa Works will comprise a
total of 279 apartments, featuring seven studios, 111
one-bedroom, 146 two-bedroom and 15 three-bedroom
homes. The plans for the eight-hectare site will ensure
original features of the building are celebrated and
incorporated into designs.
LEAVING A LASTING LEGACY
As part of our commitment to York, and as a major
employer across the region, the Cocoa Works is being
delivered with the aim of providing valuable social value
outputs through our local supply chain and site-specific
employment and training initiatives that leave a lasting
legacy. We are excited to see the return of a vibrant
community around a building so symbolic to York, and
one with such an iconic history and heritage.
“ THE ROWNTREE FACTORY IS SYNONYMOUS
WITH YORK AND IT’S A REAL PRIVILEGE TO
RE-ESTABLISH A COMMUNITY AND BRING
LIFE BACK TO SUCH AN ICONIC HERITAGE
BUILDING. HENRY BOOT IS COMMITTED
TO SENSITIVE RESTORATION AND WE ARE
LOOKING FORWARD TO DELIVERING A NEW,
EXCITING FUTURE FOR THIS STRIKING
BUILDING, WHICH IS INTEGRAL TO YORK’S
SOCIAL HISTORY.”
TONY SHAW
MANAGING DIRECTOR, HENRY BOOT CONSTRUCTION LIMITED
Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021
37
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FINANCIAL REVIEW
WHAT WE DID IN 2021
The Group performed strongly in
2021, increasing activity levels across
the Group
• 23% increase in operating profit,
generated by land disposals and
property valuation gains
•
Invested £60m across the
Group to grow our pipeline of
opportunities
The Group has delivered a strong set
of financial results as markets have
adapted and recovered from CV-19
and, we have made further significant
investments in our key markets,
redeploying cash and debt facilities into
operational assets.
Occupier and investor demand in the
industrial and logistics market has
driven both development and valuation
gains within our property investment
and development segment, which,
along with an increase in the average
selling prices of Stonebridge Homes,
has resulted in a 274% increase in the segment’s operating
profit. UK housebuilding demand has also driven increased
strategic land activity within our land promotion segment,
resulting in a 23% increase in operating profit, generated by
the disposal of 3,008 residential plots during the year.
A STRONG
SET OF
FINANCIAL
RESULTS
DARREN LITTLE WOOD
GROUP FI NANCE DIRECTOR
“ WE HAVE MADE
FURTHER SIGNIFICANT
INVESTMENTS IN
OUR KEY MARKETS,
REDEPLOYING CASH AND
DEBT FACILITIES INTO
OPERATIONAL ASSETS.”
The Group itself has made significant capital investments,
increasing investment property by £21.5m to £104.2m
(£125.9m including our share of JVs) and inventories
by £34.5m to £235.3m, through acquisition of new
development opportunities, ongoing development of
existing assets and strategic land purchases. Along with
further investments in our joint venture businesses, we
continue to grow our pipeline of opportunities in each
segment, which will help us meet our future strategic
growth and return targets.
38
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021STRATEGIC REPORT RETURN ON CAPITAL
INVESTMENT
9.6%
%
7
.
9
%1
8
.
5
1
%
8
.
4
1
%
9
.
4
20
17
18
19
NAV PER SHARE
267p
p
9
3
2
p
5
3
2
p
7
2
2
p
3
0
2
%
6
.
9
21
p
7
6
2
17
18
19
20
21
SUMMARY OF FINANCIAL PERFORMANCE
Scheme
Total revenue
Property investment and development
Land promotion
Construction
Operating profit/(loss)
Property investment and development
Land promotion
Construction
Group overheads
Net finance cost
Profit before tax
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
Revenue increased 4% to £230.6m (2020:
£222.4m) as transactional activity in the land
promotion segment improved disposing of 3,008
plots (2020: 2,000) and the average selling price
by Stonebridge Homes increased 38% to over
£500k per unit (2020: £368k). Revenue within the
property investment and development segment
reduced overall as we are increasingly transacting
through joint venture entities reported on a net
basis in share of profits of joint ventures and
associates. The construction segment completed
the £89m Glass Works urban development
scheme in Barnsley and commenced new urban
development works on the Heart of the City and
Kangaroo Works schemes in Sheffield, effectively
securing revenue for 2022.
Gross profit of the Group increased 37% to
£55.5m (2020: £40.5m), a gross profit margin
of 24% (2020: 18%) reflecting the higher
margin returns from land promotion activities.
Administrative expenses increased by £3.4m
(2020: £0.9m decrease) including £0.8m full
repayment of the Coronavirus Job Retention
Scheme monies as well as an increase in staff
costs and general expenditure, which were
curtailed during the prior year due to CV-19.
Pension expenses of £6.0m (2020: £4.6m) are
£1.4m higher than the prior year. Following a
consultation with active members of the defined
benefit pension scheme early in 2021, the Group
closed the scheme to future accrual with an
associated cost of £2.2m.
Property revaluation gains of £8.0m (2020: £1.3m)
were the net effect of uplifts of £10.3m (2020:
£5.7m) generated largely from increases in the
fair value of industrial assets, from the re-gearing
of existing leases and from completion of assets
under construction, offset by the recognition of
2021
£’m
69.4
58.6
102.6
230.6
18.3
17.5
9.0
(9.3)
35.5
(0.4)
35.1
2020
£’m
85.5
21.0
115.9
222.4
4.9
14.2
6.5
(8.1)
17.5
(0.4)
17.1
Change %
-19
+179
-11
+4
+273
+23
+38
-14
+103
–
+105
valuation deficits of £2.3m (2020: £4.4m) on a
number of other properties, which, for the most
part are those subject to future development.
Profit on the sale of investment property of £1.3m
(2020: loss of £0.1m), includes the opportune
disposal of a newly developed retail site in Huyton
to a national supermarket retailer.
Share of profit of joint venture and associates
of £8.9m (2020: £1.8m) includes industrial
development disposals and valuation uplifts on a
number of schemes in the property investment and
development segment.
Profit on disposal of joint ventures and subsidiaries
in the prior year of £7.4m principally included the
disposal of a 50% interest in a joint venture entity
in our land promotion segment.
Overall, operating profits increased by 103% to
£35.6m (2020: £17.5m) and, after adjusting for
net finance costs, we delivered a PBT of £35.1m
(2020: £17.1m).
The segmental result analysis shows that
property investment and development produced
an increased operating profit of £18.3m (2020:
£4.9m), arising from growing commercial rent rolls,
increases in the fair value of industrial properties,
profits from joint ventures in Huddersfield, Enfield
and Wakefield, the profit on disposal of a retail unit
at Huyton and an increase in the average selling
price of housing units. Land promotion operating
profit increased 23% to £17.5m (2020: £14.2m)
as we disposed of 3,008 residential plots during
the year (2020: 2,000). Construction segment
operating profits increased to £9.0m (2020: £6.5m)
as productivity levels increase and due to a prior
year impairment charge of £2.0m. We continue to
show how the benefits of a broad-based operating
model allow us to manage the impact in these
cyclical markets during challenging times and
capitalise on market recoveries in the aftermath.
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021STRATEGIC REPORT FINANCIAL REVIEW
We maintain a significant pipeline of property development and
consented residential plots, the variable timing of the completion of
deals in these areas does give rise to financial results, which can vary
depending upon when contracts are ultimately concluded. We mitigate
this through the mix of businesses within the Group and our business
model which, over the longer term, will ultimately see the blended
growth of the Group delivered.
TAX
The tax charge for the year was £4.5m (effective rate of tax: 12.8%)
(2020: £3.4m; effective tax rate: 20%) and is lower (2020: higher) than
the standard rate of tax due to adjustments in respect of earlier years
arising from additional loss relief on asset disposals (2020: due to
impairment of ineligible goodwill and a dry tax charge on transfer of an
asset from inventory to investment property offset by joint venture profits
presented net of tax). Current taxation on profit for the year was £1.1m
(2020: £3.1m), deferred tax was £3.4m (2020: £0.3m).
EARNINGS PER SHARE AND DIVIDENDS
Basic earnings per share increased 135% to 21.2p (2020: 9.0p) as
performance continues to recover post CV-19 and in line with the
increase in profits attributable to owners of the Parent Company. Total
dividend for the year increased 10% to 6.05p (2020: 5.50p), with the
proposed final dividend increasing to 3.63p (2020: 3.30p), payable on
1 June 2022 to shareholders on the register as at 6 May 2022. The
ex-dividend date is 5 May 2022.
RETURN ON CAPITAL EMPLOYED (ROCE)
Higher operating profit in the year saw an increased ROCE1 to 9.6%
in 2021 (2020: 4.9%). While this shows a significant recovery from
the initial impact of CV-19, we continue to believe that a target return
of 10%–15% is appropriate for our current operating model and the
markets in which we operate. We will continue to monitor this important
performance measure over the business cycle.
FINANCE AND GEARING
Net finance costs remain at £0.4m (2020: £0.4m). Having maintained
a cash surplus during the uncertainties of Brexit and CV-19, the Group
made a number of strategic investments in 2021, bringing us back
within our optimal gearing range of 10%–20%. While interest rates are
beginning to rise, they remain at low levels and are an effective source
of funding for the Group.
Interest cover, expressed as the ratio of operating profit (excluding
the valuation movement on investment properties, disposal and joint
venture profits) to net interest (excluding interest received on other
loans and receivables), was 31 times (2020: 13 times). No interest
incurred in either year has been capitalised into the cost of assets.
The Group’s banking facilities were agreed on 23 January 2020
at £75.0m. The facility includes an additional accordion facility of
£30.0m, which can be called upon at the Group’s request. The
facility with Barclays Bank PLC, HSBC UK Bank plc and National
Westminster Bank Plc runs for three years and includes two one-year
extensions. On 19 January 2022, the banks agreed to the Group’s
second extension taking the facility to 23 January 2025. The Group
had drawn £50.0m of the facility at 31 December 2021 (2020: £nil).
On 20 December 2021, the Group signed an additional £25.0m
receivables purchase agreement with HSBC that allows it to draw
funds on transfer of deferred income receivables to the bank. The risk
and rewards of ownership are deemed to fully transfer to HSBC and,
therefore, this agreement is recorded off balance sheet. No amounts
were utilised under the terms of the agreement at 31 December
2021; however, the Group did make its first drawdown of £6.2m in
January 2022.
40
2021 year-end net debt3 was £43.5m (2020: net cash £27.0m)
resulting in the Group net debt having gearing of 12.2% (2020: no
gearing). Total year-end net cash includes £2.9m (2020: £2.9m) of
Homes and Communities Agency (HCA) funding, which is repayable
from the future sale of residential units. All bank borrowings continue
to be from facilities linked to floating rates or short-term fixed
commitments. Throughout the year, we operated comfortably within
the facility covenants and continue to do so.
CASH FLOW SUMMARY
Operating profit
Depreciation and other non-cash items
Net movement on equipment held
for hire
Movement in working capital
Cash generated from operations
Net capital investment
Net interest and tax
Net dividends
Other
Change in net cash
Net cash brought forward
Net (debt)/cash3 carried forward
2021
£’m
35.6
(13.9)
(4.8)
(55.5)
(38.6)
(20.9)
(5.0)
(6.2)
0.2
(70.5)
27.0
(43.5)
2020
£’m
17.5
(5.1)
(1.0)
9.7
21.1
(9.5)
(6.8)
(3.6)
(1.2)
—
27.0
27.0
During 2021, the cash outflow from operations amounted to £38.6m
(2020: £21.1m inflow) after net investment in equipment held for
hire of £4.8m (2020: £1.0m), and cash outflows from a net increase
in working capital of £55.5m (2020: £9.7m decrease). Our increase
in working capital arises from additional investment in property
developments in progress, our housebuilding land portfolio and from
growing trade receivables as commercial activity levels rise.
Net capital investment of £20.9m (2020: £9.5m) arose from additions
to investment property and property, plant and equipment of £18.4m
(2020: £12.9m) and investment in joint ventures of £13.7m (2020: nil),
which were offset by disposals of investment property and property,
plant and equipment and joint ventures of £10.7m (2020: £3.4m).
Net dividends, totalled £6.2m (2020: £3.6m), with those paid to
equity shareholders of £7.6m (2020: £4.6m) increasing by 65%
and, dividends to non-controlling interests of £0.7m, being offset by
dividends received from joint ventures during the year of £2.2m
(2020: £2.2m).
After net interest and tax of £5.0m (2020: £6.8m), there was an overall
outflow in net cash of £70.5m (2020: no movement), resulting in net
debt of £43.5m (2020: £27.0m net cash).
NOTES:
1 Return on Capital Employed is an alternative performance measure (APM)
and is defined as operating profit/average of total assets less current liabilities
at the opening and closing balance sheet dates.
2 Net Asset Value (NAV) per share is an APM and is defined using the statutory
measures net assets/ordinary share capital.
3 Net (debt)/cash is an APM and is reconciled to statutory measures in note 32.
4 Total Accounting Return is an APM and is defined as the growth in NAV per
share plus dividends paid, expressed as a percentage of NAV per share at the
beginning of the period.
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021STRATEGIC REPORT STATEMENT OF FINANCIAL POSITION SUMMARY
2021
£’m
Investment properties
Intangible assets
Property, plant and equipment,
including right-of-use assets
Investment in joint ventures and
associates
Inventories
Receivables
Payables
Other
Net operating assets
Net (debt)/cash3
Retirement benefit obligations
Net assets
Less: Non-current liabilities
Capital employed
104.2
3.7
27.9
12.2
148.0
235.3
114.0
(85.1)
(1.2)
411.0
(43.5)
(12.2)
355.3
20.4
375.7
2020
£’m
82.7
4.3
25.9
5.8
118.7
200.8
85.6
(89.6)
7.4
322.9
27.0
(36.4)
313.5
51.4
364.9
Investment properties increased in value to £104.2m (2020: £82.7m),
following the acquisition of two industrial sites at Skelmersdale
and City Court, Manchester, both of which present medium-term
redevelopment prospects and the construction and retention of an
industrial asset at Wakefield, partially offset by the opportune disposal
of a newly developed retail site in Huyton.
Intangible assets reflect the Group’s investment in Road Link (A69)
of £2.3m (2020: £2.7m) and goodwill of £1.4m (2020: £1.6m). The
treatment of the Road Link investment as an intangible asset is a
requirement of IFRIC 12 and arises because the underlying road asset
reverts to National Highways at the end of the concession period
in 2026.
Property, plant and equipment comprises Group occupied buildings
valued at £6.6m (2020: £6.9m) and plant, equipment and vehicles
with a net book value of £21.3m (2020: £19.0m), including £1.6m
(2020: £2.1m) of right-of-use assets under IFRS 16. Property, plant
and equipment, along with right-of-use assets, have increased as
new additions of £6.8m (2020: £3.6m) are offset by disposals and the
depreciation charge for the year. Right-of-use assets have decreased
in the year as the Group’s lease liabilities unwind.
Investments in joint ventures and associates increased £6.4m to
£12.2m (2020: £5.8m) arising from the Group’s share of profits of
£8.9m, including fair value uplifts of £7.0m. We continue to undertake
property development projects with other parties where we feel there
is a mutual benefit. We anticipate that these opportunities will continue
to increase as we finalise several schemes with interested parties
partnering with us to utilise our development expertise.
Inventories were £235.3m (2020: £200.8m) with property inventory
increasing to £75.2m (2020: £44.4m) as the Group invested in a
BtR opportunity in Birmingham, a speculative multi-let industrial/
warehouse scheme in Welwyn Garden City and further progressing
existing development schemes. Increasing our housebuilder land and
work in progress to £52.5m (2020: £39.2m) as we continue to invest
in land, expand regionally into the North East and having reservations
against 77% of its 2022 sales target. We continue to invest in owned
land and land interests held under agency agreements at a lower
capital cost. Inventories are held at the lower of cost or net realisable
value, in accordance with our accounting policy and, as such, no uplift
in value created from securing planning permission is recognised within
our accounts until disposal.
Receivables increased £28.4m to £114.0m (2020: decreased £85.6m)
due to an increase in commercial activity. Deferred payment receivables
remain a function of the number and size of strategic land development
schemes sold, and levels of construction contract activity undertaken.
Payables decreased to £85.1m (2020: £89.6m) with trade and other
payables decreasing to £73.9m (2020: £75.1m), provisions increasing
to £6.3m (2020: £5.9m) as strategic land provisions grow, contract
liabilities decreasing to £5.0m (2020: £7.4m), arising from payments
received for work not yet undertaken.
Net debt3 included cash and cash equivalents of £11.1m (2020:
£42.1m), borrowings of £52.9m (2020: £12.9m) and lease liabilities
of £1.7m (2020: £2.2m). In total, net debt was £43.5m (2020: 27.0m
net cash).
At 31 December 2021, the IAS 19 pension deficit relating to retirement
benefit obligations was £12.2m, compared with £36.4m at 31
December 2020, the favourable movement is due to an increase in
the discount rate applied to future liabilities to 2.0% (2020: 1.4%).
The pension scheme’s assets continue to be invested globally, with
high-quality asset managers, in a broad range of assets. The pension
scheme Trustee regularly considers the merits of both the managers
and asset allocations and, along with the Company, reviews the returns
achieved by the asset portfolio against the manager benchmarks.
They then make changes, as the Trustee considers appropriate, in
conjunction with investment advice from ISIO.
Overall, the net assets of the Group increased by 13.3% to £355.3m
(2020: £313.5m) from retained profits and the decrease in retirement
benefit obligations less distributions to shareholders. NAV per share2
increased 13.6% to 267p (2020: 235p).
DARREN LITTLEWOOD
GROUP FINANCE DIRECTOR
13 April 2022
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021STRATEGIC REPORT PRINCIPAL RISKS AND UNCERTAINTIES
MANAGING OUR RISKS
EFFECTIVE RISK MANAGEMENT IS ESSENTIAL TO
THE ACHIEVEMENT OF OUR STRATEGIC TARGETS
AND CONTROLS ARE INTEGRATED ACROSS ALL
LEVELS OF OUR BUSINESS OPERATIONS.
OVERVIEW
As a Group, Henry Boot takes a cautious approach to risk. We aim
to be the safest place to work in the markets in which we operate, to
maintain financial strength through effective cash management and to
invest prudently in pursuit of our strategic targets.
The Group operates a system of internal control for risk management
within a structured framework. The long-term success of the Group
depends on the continual review, assessment and control of the key
business risks and emerging risks it faces.
While there is a formal process in place for reporting risks on an annual
basis, the process of risk identification, assessment and response is
continuous and, therefore, if required, risks are reported to the Group’s
Board outside of the annual process, should events dictate that this is
necessary and appropriate.
In the event of rapidly changing risks, our business continuity group,
which incorporates key members of senior management, will meet
on a regular basis to coordinate and control the Group’s day-to-day
response, providing regular updates to our people, the Executive
Committee and Board.
RISK APPETITE
The Group’s risk appetite and tolerance levels are reviewed annually
by the Audit and Risk Committee and provide and guide the risk
process. The Group has no appetite for safety-related risk or undue
financial exposure and will not pursue additional income generating or
cost-saving initiatives unless returns are at targeted levels.
RISK MANAGEMENT FRAMEWORK
The principal components of the Group’s risk management framework
comprise the risk strategy, risk appetite and tolerance statement,
risk registers and the risk heat map. Although the process of risk
identification, assessment and response is continuous and embedded
within the day-to-day operations of each business segment, it is
consolidated, reported and reviewed at varying levels throughout the
Group on an annual basis as a continuation of the strategy review
process. The Board reviews all principal risks including consideration
of how risk exposures have changed during the period and any new
risks arising from the risk registers.
The methodology used is to initially assess the gross (or inherent) risk.
This is essentially the worst case scenario, being the product of the
impact, together with the likelihood of the risk materialising if there are
no controls in place to manage, mitigate or monitor the risk. The key
benefit of assessing the gross risk is that it highlights the potential risk
exposure if controls were to fail completely or not be in place at all.
Both impact and likelihood are scored on a rating of one to five, using
a scoring matrix.
The Board has ultimate responsibility for risk management, internal
controls and review. Part of the Audit and Risk Committee’s role is to
ensure that the Group’s risk management framework and processes,
on which the Board relies, are working effectively.
EMERGING RISKS
The Group believes that its emerging risks are inextricably linked to
emerging trends in our marketplace and more widely to global events.
Such trends include urbanisation, demographics, technology, political
and environment. Failure to keep pace with these changes could result
in additional risk exposure to the Group. Management have, therefore,
undertaken horizon scanning exercises which form key considerations
in the Group’s risk and strategic planning.
In particular we recognise the increasing importance of climate risk
and its impact on our business and the planet. Further information on
our response to this is detailed on pages 68 to 71.
Despite the lower level of risk posed by CV-19, we continue to
manage the risk through our business continuity group and consider
the impact of CV-19 on each of the principal risks documented in
this report.
The Group have also considered the political and economic impact of
the ongoing crisis in Ukraine. These risks are being closely monitored
with mitigations being strengthened, however do not at this time give
rise to a new principal risk.
The financial impact of the above are considered in the going concern
and viability section on pages 48 to 49.
42
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021STRATEGIC REPORT Risk
Governance
Risk Identification
and Assessment
Establish risk strategy
and appetite
Identify and
evaluate risk
Risk Response
and Reporting
Review, report
and revise
THE BOARD/THE AUDIT AND RISK COMMITTEE
Oversight of all risk management within the Group is undertaken at the highest level by the Board of Henry Boot PLC,
which is delegated in general terms to the Audit and Risk Committee.
Reviews the adequacy and effectiveness of the Group’s internal controls and risk management systems.
Monitors and reviews internal and external audit.
THE EXECUTIVE COMMITTEE
Reviews risks and internal controls at a consolidated Group level and coordinates the Group’s response.
BUSINESS CONTINUITY GROUP
Comprises senior individuals from within the Group who
meet on a flexible basis to manage ongoing events.
Communicates to our people and directs the immediate
business response.
SUBSIDIARY BOARDS AND PLC DEPARTMENTS
Each subsidiary and PLC department has a nominated
individual responsible for reviewing the risks within that
subsidiary/department on an annual basis. In general, this
will be the Managing Directors (for subsidiaries) and the
heads of department (for the PLC), with input from other
relevant designated team members as applicable.
)
Y
T
R
A
P
D
R
H
T
(
I
I
T
D
U
A
L
A
N
R
E
T
N
I
RISK HEAT MAP
The risk heat map illustrates the 13 principal risks identified by the
Board as having a potential material impact on the Group. The risks
have been plotted by the Group Board/Audit and Risk Committee
based on a common understanding of the risk appetite of the
Group. The risks are presented gross (before taking account of
mitigating actions).
Movements from the prior year’s ranking are indicated by the arrows.
1 Safety
8 Construction contracts
2 Environmental & climate change
9 Property assets
3 Economic
10 Property development
t
c
a
p
m
I
4 People & culture
5 Funding
6 Cyber
7 Pensions
11 Land sourcing
12 Land demand
13 Political
1
5
12
3
4
8
10
2
9
11
13
6
7
Likelihood
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021STRATEGIC REPORT
OUR RISKS
To enable stakeholders to appreciate what the business considers
are the main operational risks, they are presented in detail below.
Change
during
the year
Link to
Group
strategic
priorities Mitigation
Risk and
description
1
SAFETY
Inherent risk within all of our
businesses, but most notably
within construction activity
Impact of
CV-19
Ensure sites,
depots and
offices remain
safe and secure
environments
• Priority consideration at all Group and subsidiary
Board meetings.
• Robust training, policies, procedures and
monitoring.
• Construction operation is OHSAS 45001 approved
Health and Safety management system.
•
Internal independent Health and Safety department
conducts regular random inspections.
• Routine Director, senior manager or independent
health and safety inspections.
• CLC guidelines being followed for enhanced safety
procedures.
• Coronavirus Committee established to steer,
manage and communicate the Group response.
• Construction environmental risk is managed
through the operation of an ISO 14001 approved
environmental management system.
• Continuous improvement of our performance
is achieved by setting annual environmental
improvement targets.
•
Internal design helps mitigate environmental
planning issues.
• Record of awards given in respect of good safety
and environmental performance.
• Environmental Impact Assessments are carried
out for all construction activities. These detail
the action required to eliminate or reduce
environmental impacts.
• Board level Responsible Business Committee
established.
• 135 Henry Boot Responsible Business Strategy
including net zero carbon framework in place.
Remote working
has resulted
reduced business
travel and
commuting
Growing
relevance
and impact
of climate
change and
net zero
carbon
targets
2
ENVIRONMENTAL
AND CLIMATE
CHANGE
The Group is inextricably
linked to the real estate and
construction sectors, and
environmental considerations
are paramount to our
success
Further detail on the
compliance, legal,
technological, reputational,
financial, market and physical
risk associated with climate
change are documented
in the TCFD section of this
Annual Report (page 70)
KEY
Change during the year
Group strategic priorities
Increased
Decreased
No change
Safety
People
Growth
Delivery
44
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021STRATEGIC REPORT Risk and
description
3
ECONOMIC
The Group operates solely in
the UK and is closely allied to
the real estate, housebuilding
and construction sectors. A
strong economy with strong
tenant demand is vital to
create long-term growth in
rental and asset values, while
at the same time creating
a healthy market for the
construction and plant hire
divisions
4
PEOPLE AND CULTURE
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 work
5
FUNDING
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 we
operate
Change
during
the year
Link to
Group
strategic
priorities Mitigation
Impact of
CV-19
Supply chain
challenges and
delays in delivery
Increase in
interest rates
and price
inflation
Negative effects
of working
remotely on
wellbeing and
mental health
Demand and
competition
for skilled
personnel has
significantly
risen
• Strong Statement of Financial Position with
no gearing and a 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.
• Banking partners continue to be supportive.
• CV-19 largely results in delays rather than loss.
• This risk is increased when unemployment falls and
labour markets contract.
• Long-term employment records indicate that good
people stay within the Group.
• The Group encourages equity ownership.
• Proven record of sharing profits with our people.
• Succession planning is an inherent part of
management process.
• Reward and remuneration benchmarked against the
market to ensure competitive.
• The Group has agreed three-year facilities with its
banking partners, which run to January 2025 and
are backed by investment property assets.
• A good level of interest from the banks in tendering
for the renewed facilities in 2019, facility renewed
January 2020.
• New £25m HSBC receivable purchase agreement
in place to December 2025.
• Detailed cash requirements are forecast up to
15 months in advance, and reviewed and revised
monthly.
• Five-year business plan prepared as part of
strategic review.
• As a PLC, access to equity funding is available,
should this be required.
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021STRATEGIC REPORT OUR RISKS
Risk and
description
Impact of
CV-19
Change
during
the year
Link to
Group
strategic
priorities Mitigation
6
CYBER
Unauthorised access to
systems, hacking, malware
and distributed denial of
service could all lead to data
loss, business disruption,
reputational damage or
financial loss
7
PENSION
The Group has a legacy
defined benefit pension
scheme that closed to future
accrual in the period. While
the Trustees has 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
8
CONSTRUCTION
CONTRACTS
Changes in terms and
conditions of standard
contracts exposing the
Company to major financial
and design liability risks
Increase in cyber
threat as people
work remotely
Level of
remote
working and
threat of
attack
Scheme
closed to
future accrual
• Awareness updates routinely distributed to
our people.
• Use of software and security products and regular
updates thereof.
• Detailed disaster recovery plans.
• External vulnerability and threat management
reviews.
•
Internal mock attacks carried out.
• Operation of Trustee-approved Recovery Plan.
• While pension schemes are a long-term
commitment, regulations require the Group
to respond to deficits in the short term.
• The move out of gilts provides a cushion should
interest rates rise.
• Risk mitigated by move to quoted investments
including pooled diversified growth funds.
• Treat pension scheme as any other business
segment to be managed.
• Strong working relationship maintained between
Company sponsor and pension Trustee.
• Use good quality external firms for actuarial and
investment advice.
• Scheme now closed to future accrual.
Potential for
increased costs
and delays to
programme
Supply chain
delivery
and viability
in current
environment.
Tight margins
in the industry
give rise to
additional
contract risk
• Preliminary commercial appraisal.
• Directors closely involved.
• Standard position set out in guide for our people.
• Experienced legal and commercial management.
• Project-specific tender risk register.
• Use of pre-construction services agreements help to
mitigate cost and risk.
•
Inflation clauses negotiated where security of pricing
cannot be achieved.
KEY
Change during the year
Group strategic priorities
Increased
Decreased
No change
Safety
People
Growth
Delivery
46
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021STRATEGIC REPORT Change
during
the year
Link to
Group
strategic
priorities Mitigation
Impact of
CV-19
Rent delays and
impact on tenants
Risk and
description
9
PROPERTY ASSETS
Investment property assets
are not marketable and are
without secure tenancies.
Valuations are volatile
Increased
exposure
to market
movements
Delivery delays
Increased
exposure
to market
movements
10
PROPERTY
DEVELOPMENT
Construction and client risk,
which is not matched by
commensurate returns on
development projects. Clients
not taking up new lettings on
speculative schemes
11
LAND SOURCING
The inability to source,
acquire and promote land
would have a detrimental
effect on the Group’s
strategic land portfolio and
income stream
• 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 and over
£1.1bn pipeline of future opportunities.
• Portfolio strategy actively managed and covenants
regularly reviewed.
• Strong market, high demand.
• 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.
• Highly experienced development team.
• Flexible to market trends in development
requirements.
•
Diverse range of sites within the portfolio and over
£1.1bn pipeline of future opportunities.
• Monthly operational meetings detail land owned
or under control, new opportunities and status of
planning.
• Acquisitions are subject to a formal appraisal
process, which must exceed the Group-defined
rate of return, and is subject to approval by the
subsidiary board or Executive Directors of the main
Board, subject to level of investment.
• Land portfolio of over 92,000 plots with aspiration
to grow further.
• Well-respected name within the industry that
demonstrates success.
• Housebuilder land portfolio at 1,157
residential plots.
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021STRATEGIC REPORT OUR RISKS
Risk and
description
12
LAND DEMAND
A dramatic change in
housebuilder funding
sentiment and demand for
housing can have a marked
change on the demand and
pricing profile for land
13
POLITICAL
Political decisions, events
or conditions can have
a significant impact on
the Group. Changes in
government or government
policy towards planning
policies could impact on
the speed of the planning
consent process or the
value of sites and legislative
changes can have a
significant impact on the
viability of transactions and
schemes
Impact of
CV-19
Change
during
the year
Link to
Group
strategic
priorities Mitigation
• The Group’s policy is to only progress land that 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 a growing trend;
therefore, demand for land will follow.
• Housebuilders have very good land portfolios and
are selective, targeting prime locations.
• 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 a
cost-effective and timely manner.
• Large land portfolio can help smooth short-term
fluctuations.
• A high profit margin can be achieved when
successful.
• No uplifts are taken on land through the
planning process, which reduces valuation risk
in a downturn. Therefore, though profits may be
reduced if site values fall, the Group should still
achieve a profit on sale.
Housing
planning
policy
KEY
Change during the year
Group strategic priorities
Increased
Decreased
No change
Safety
People
Growth
Delivery
GOING CONCERN
In undertaking their going concern review, which covers the period to
December 2023, the Directors considered the Group’s principal risk
areas that they consider material to the assessment of going concern.
In recent years, this has focused on the impact of CV-19, a risk that
continues to be managed by the Group’s Business Continuity Group
despite the reduced threat level.
In the current year, the Directors have assessed the Group’s speed
of recovery against the back drop of significant cost inflation and
interest rate rises in modelling a base case scenario, and in compiling
forecasts consideration has been given to climate risk and the costs of
transitioning to a low carbon economy. They have also modelled what
they consider to be a severe downside scenario including a significant
curtailment in activities. Construction and Development activity only
takes place where contracted and likewise for Hallam Land where no
sales are assumed in 2022, unless already contracted, with a c.45%
reduction in sales from the base case for 2022. For Stonebridge
Homes, a 10% decline in house prices is assumed along with a 25%
reduction in the number of plots sold and Banner Plant revenue
declines c.20%. Each segment assumes a slow recovery in 2023.
This downside model assumes that acquisition and development
spend is restricted other than that already committed and is all
consistent with previous experience in recessionary environments.
Having started 2022 with net debt1 of £43.5m and with c.£38m net
debt held by the Group, at 28 February 2022, against facilities of
£75.0m the Directors have concluded that the Group is able to control
the level of uncommitted expenditure, while delivering contracted
schemes, allowing it to retain and even improve the cash position in
the event of a severe downside scenario, although the impact of doing
so on the profit and loss account would be unavoidable.
48
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021STRATEGIC REPORT The Group meets its day-to-day working capital requirements through
a secured loan facility. The facility was renewed on the 23 January
2020, at a level of £75m, for a period of three years and extended in
January 2021 and January 2022 by a further two years to 23 January
2025 on the same terms as the existing agreement. The facility
includes an accordion to increase the facility by up to £30m, which
can be requested by the Company at a time of its choosing. None of
the modelling undertaken by the Directors gives rise to any breach of
bank facility covenants. The most sensitive covenant in our facilities
relates to the ratio of EBIT (Earnings Before Interest and Tax) on a
12-month rolling basis to senior facility finance costs. Our downside
modelling, which reflects a near 16% reduction in revenue and near
70% reduction in PBT from our base case for 2022, demonstrates
significant headroom over this covenant throughout the forecast
period to the end of December 2023.
The Directors have considered the likely impacts on the business
arising from the conflict in Ukraine, which has occurred subsequent
to the balance sheet date and is ongoing at the date of approval of
the Financial Statements. The Directors are satisfied that the potential
economic impacts of this event, is adequately taken into account in
the severe but plausible downside scenario.
At the time of approving the Financial Statements, the Directors
expect that the Company and the Group will have adequate
resources, liquidity and available bank facilities to continue in
operational existence for the foreseeable future. Accordingly, 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 20 to 21 and pages 26 and 29 in the Strategic Report. These
documents outline the long-term business model and are central to
the understanding of how the Group operates. We have operated the
current business model successfully since 2004 and have a 136-year
unbroken trading history. By their nature, the Group’s activities tend
to be very long term, especially in the land promotion business and
increasingly within property development. The Group’s strategy and
experience in the markets in which we operate has been built up
over many years. Over the last ten years, the Group has reported an
average profit before tax of £33.7m per annum, added over £170m
to net assets (an increase of some 95%) and paid 62.05p per share
in dividends, all from the trading segments it now operates, and at no
stage in the last economic downturn, between 2008 and 2010, nor
during 2020 and 2021 with the outbreak of CV-19, did the Company
make a trading loss.
The assessment processes
The Group’s prospects are assessed through a three-year forecasting
process led by the PLC Board Executive Directors and the Boards
of the individual subsidiaries. A detailed three-year bottom up base
case is agreed prior to the commencement of the current financial
year, reforecast each month throughout the financial year within each
business and consolidated at a Group level. As a largely deal-driven
business, it is considered inappropriate to attempt to prepare detailed
bottom-up forecasts over a longer-term period, although our strategic
land promotion business commenced 2022 with 12,865 plots with
planning permission which, at a five-year average disposal rate of
2,556 plots would imply that we have almost six years of sales already
in hand and a property development pipeline of over £1.1bn Gross
Development Value (GDV) to be delivered over a period extending
beyond five years, it becomes difficult to accurately forecast the timing
of transactions beyond year three.
We have stress tested our financial results based on the downside
scenario modelled to December 2023, as described in the Going
Concern Statement on page 48 followed by an assumed return to
planned levels of activity for year three. Our modelling assumes that
deferred land sale debtors falling due in 2022 of £14.7m as at
28 February 2022 will continue to be received during the period either
directly from the debtors themselves or via the use of our debt purchase
facilities or promissory notes, which management consider to be viable
alternatives facilitated by UK banks. These models highlight that as
economic conditions worsen and construction activity, developments
and land sales do not happen as envisaged, deferred land sale receipts,
reduced investment and tight cost control sees the Group retain cash
in the short to medium term, although long-term profitability would be
significantly lower if the aforementioned mitigating actions were required
to preserve cash.
Assessment of viability
The long-term strategy: the three-year monthly forecasts reflect the
Directors’ best estimates of the prospects for the business and the
Directors consider a three-year period to be appropriate over which
to assess the viability of the Group. In addition to the downside
modelled, we have also reviewed several 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, in
addition to the CV-19 pandemic and Ukraine risk discussed in the
Going Concern statement on page 48.
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 must 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 look to maintain prudent debt levels (even at maximum facility
utilisation of £105m) and we have pre-sold or pre-let 72% of the
committed development pipeline.
Secondly, further cost inflation and interest rate increases that
could reach levels where the availability and cost of capital become
prohibitive, mortgages availability reduces, schemes are no longer
viable and asset values fall. Where possible the Group mitigates
this risk by contracting rates, allowing for contingencies in expected
returns and controlling the level of speculative investments.
Finally, 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
treating 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 over the three-year viability
period.
1 Net debt is an APM (alternative performance measure) and is reconciled to
statutory measures in note 33 to the financial statements.
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021STRATEGIC REPORT SECTION 172 STATEMENT
OUR APPROACH
Henry Boot has always understood and been influenced by the
responsibility we have to create sustainable and long-term value for
our shareholders but also for the communities and environments
we operate in. In addition to generating profit, ESG factors are
becoming an increasingly important focus for investors, as well as our
customers, our people and the general public, against a backdrop of
uncertain global events and climate change. We are working hard to
ensure that our long-term business decisions incorporate the way we
protect and collaborate with all our stakeholders and ensure that our
business will be around for another 135 years.
OUR STAKEHOLDERS
We identified our key stakeholders during our work on the “Henry Boot
Way” project in 2017, being those groups whose interests and views
are vital to the operation and culture of the Group, and are included in
our Purpose:
“ TO EMPOWER AND DEVELOP OUR PEOPLE TO CREATE LONG-TERM
VALUE AND SUSTAINABLE GROWTH FOR OUR STAKEHOLDERS.
OUR STAKEHOLDERS ARE OUR SHAREHOLDERS, EMPLOYEES,
PENSIONERS, CUSTOMERS AND SUPPLIERS. MORE BROADLY, WE
RECOGNISE OUR DUTIES TO THE ENVIRONMENT AND THE COMMUNITIES
IN WHICH WE OPERATE.”
Pages 92 to 97 outline the Board’s stakeholder policy and how the
Board interacts with the Company’s key stakeholders. We think
carefully about the methods of engagement both directly with
stakeholders and indirectly in the form of information flow to and from
the subsidiaries, the Executive Committee and others.
OUR DECISION-MAKING
The need to consider the long-term nature of our decisions and the
impact on our key stakeholders is now an embedded process for the
Board. The table below highlights how we ensure that these issues are
appropriately addressed.
BOARD
INFORMATION
• Our Board and
senior leaders
regularly engage
with stakeholders as
described on pages
92 to 93.
• Board papers on
Reserved Matters
include consideration
of stakeholder
interests and views.
• Gerald Jennings uses
his role as designated
NED to ensure that
the Board consider
the views of, and
impacts on, the
workforce.
• Leadership and
management
receive training on
Directors’ duties to
maintain awareness
of the Board’s
responsibilities
under s.172.
50
LONG-TERM
STRATEGIC
CONSIDERATIONS
• Papers seeking
Board approval are
required to explain
how the matter aligns
with the Company’s
long-term strategy.
Any items that
deviate from the
strategy are given
additional scrutiny.
• The Board reflects
on the Responsible
Business Strategy
and whether the
outcome of the
decision supports
and contributes to
the agreed targets.
• The Board remains
mindful of the
Company’s corporate
objectives and KPIs,
which are discussed
regularly.
DECISION MAKING
• Directors are regularly
reminded of their
duties under s.172.
• The Company’s
culture is a core
consideration when
making decisions.
The Board reflects on
whether the action
aligns with The Henry
Boot Way and our
values: Integrity,
Respect, Delivery,
Collaboration, Loyalty
and Adaptability.
• Actions have been
taken as a direct
result of Board
engagement – see
the examples detailed
in the Employee
Engagement section
on pages 94 to 95.
• Where appropriate,
outcomes of
decisions are
re-assessed and
further engagement
and dialogue
undertaken.
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021STRATEGIC REPORT LIKELY CONSEQUENCES OF DECISIONS IN THE LONG TERM
The Company is proud of its long history and the Board is mindful
of its responsibility as a custodian of the business. The corporate
objectives, derived from the Board’s agreed strategy, are reviewed
every Board meeting. Every proposal that comes to the Board for
approval, whether to proceed with a new development, or approve a
dividend, is required to explain how the matter aligns with the Group’s
long-term strategy.
THE INTEREST OF THE COMPANY’S WORKFORCE
Pages 92 to 96 outline the ongoing dialogue that takes place between
the Board and the workforce. This relationship has strengthened
over the past couple of years thanks to Gerald Jennings’ direct
involvement with the Group Employee Forum. Board decisions on
evolving workforce remuneration and the promotion processes have
been directly influenced by the opinions and recommendations of the
workforce during 2021.
THE NEED TO FOSTER RELATIONSHIPS WITH
SUPPLIERS, CUSTOMERS AND OTHERS
As a service-based business, we are reliant on our supply chain
and have done a lot of work to ensure that we build long-term,
sustainable relationships. A focus for the Board in 2022 is to improve
the understanding of our customer needs and foster a culture that
encourages repeat business. We are continuing to develop our
approach to these stakeholders as detailed on pages 92 to 93.
IMPACT OF OPERATIONS ON THE
COMMUNITY AND ENVIRONMENT
The Group’s operations have a direct impact on the surroundings and
in the communities where we work. Our new Responsible Business
Strategy (see below and pages 66 to 67) strives to create long-lasting
social value for our communities and to reduce our environmental
impact and consumption.
HIGH STANDARDS OF BUSINESS CONDUCT
The Board and its Committees routinely consider the Company’s
culture and values during its decision making. The Directors
are acutely aware of being a responsible business and acting in
accordance with the Henry Boot Way. Whether it’s the Remuneration
Committee’s decision to use discretion to reduce the formulaic
outcome of the FY21 annual bonus for Executive Directors, or the
Board’s decision to repay the money received from the government’s
furlough scheme, we are constantly striving to do the right thing.
THE NEED TO ACT FAIRLY BETWEEN MEMBERS
It is the aim of our Board and its Committees to always give proper
consideration to all member and stakeholder interests when taking
decisions, and whilst recognising that not all decisions will be equally
positive for everyone, it is nevertheless important for all issues to be
considered and an informed decision to be made.
CREATION OF A
RESPONSIBLE
BUSINESS
COMMITTEE
The Board had been conscious for some time of growing
interest from shareholders and proxy agencies around how
companies manage ESG issues and how their approach aligns
to the business’ overarching long-term strategy.
Customers were starting to ask more probing questions
about the Company’s ESG credentials before committing to
work with us and were approaching us for more sustainable
solutions and products. We also recognised that our
current workforce was taking a more active interest in
how the Company behaved as a corporate citizen and that
prospective talent placed more value in employers who had
a genuine and proactive ESG offering.
The Directors recognised this shift and wanted to ensure that
specific time and focus was given to these matters from the
top down. The Board took the decision to create a Board-level
Responsible Business Committee in March 2021 to determine
and scrutinise the Group’s approach to responsible business
performance. Whilst the Company was already involved
in various initiatives, there was a lack of a co-ordinated,
considered approach across the Group and the Committee
oversaw the development of a new Group-wide Responsible
Business Strategy.
In order to develop a meaningful strategy, we undertook a
materiality assessment of the issues that were most important
to our stakeholders. This exercise involved interviewing a
sample of our people, customers, suppliers, advisors,
professional membership bodies, charity partners,
education partners and our community partners. Based
on the feedback received, a strategy was established with clear
and transparent objectives across four key pillars; our people,
our places, our planet and our partners. Results against
these targets will be measured and shared publicly, ensuring
that we are held accountable for our performance against our
ambitions. This exercise illustrated the value that we place on
engagement and considering all stakeholders views before
coming to a decision which we hope we leave a positive and
long-lasting legacy on those around us.
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021STRATEGIC REPORT BUILDING A RESPONSIBLE FUTURE
FOUNDATIONS FOR SUSTAINABLE GROWTH
Our business is more than 135 years old, and we understand the importance of adapting to the needs of our stakeholders to create
sustainable value for the long term. We recognise, and are adapting to, the changing needs of the communities and environments in
which we work to ensure that we create the greatest possible social value and impact as we fulfil our corporate purpose.
Our responsible business approach focuses on collaborating with our people and partners to create value for all those we work with,
and we are guided and governed by our workplace culture (the Henry Boot Way) and our Purpose, Vision and Values.
OUR PURPOSE
To empower and develop our people to create long-term
value and sustainable growth for our stakeholders.
RESPECT
WE THINK ABOUT WHAT
WE DO, HOW WE DO
IT AND HOW IT WILL
IMPACT OTHERS.
INTEGRITY
WE OPERATE
FAIRLY AND
EQUITABLY IN
EVERYTHING
WE DO.
LOYALTY
WE ARE COMMITTED TO
GIVING BACK TO OUR
COMMUNITIES.
OUR
VALUES
OUR VISION
Our people, partners and communities continue to trust our reputation,
respect our expertise and value us for our forward-thinking approach.
ADAPTABILITY
WE SEEK TO
POSITIVELY
CHALLENGE WHAT WE
DO AND HOW WE DO IT.
DELIVERY
WE DELIVER OUR
BEST QUALITY
WORK FOR
EVERYONE, NO
MATTER WHAT.
COLLABORATION
WE WORK IN
PARTNERSHIP TO MAKE
THINGS HAPPEN.
52
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021STRATEGIC REPORT THE FIRST PHASE OF OUR RESPONSIBLE BUSINESS STRATEGY
In March 2021, we launched 135 Henry Boot which was the first phase of our new Responsible Business Strategy. 135 Henry Boot aligned
with the Group’s 135th anniversary and focused on the delivery of five key objectives:
To launch our path to net zero carbon (NZC) and build awareness of the
importance of sustainable business practices and the circular economy.
To take action to ensure our business is equal, diverse, inclusive,
and accessible.
To work with key partners across the built environment sector to create positive
direction and thought on diversity within our industry.
To collaborate with our communities to understand and respond to their
challenges and requirements.
To engage all our stakeholders to create social value and contribute
to a fair and just society.
The Strategy aligned the launch of three important initiatives for the Group which were:
• A Community Partnership Plan (CPP).
• Equality, Diversity and Inclusion Strategy (EDI).
• Net Zero Carbon (NZC) Framework.
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021STRATEGIC REPORT BUILDING A RESPONSIBLE FUTURE
THE FIRST PHASE OF OUR RESPONSIBLE BUSINESS STRATEGY
COMMUNITY PARTNERSHIP PLAN (CPP) (LAUNCHED MARCH 2021) –
ENGAGING AND EMPOWERING OUR PEOPLE TO SUPPORT OUR COMMUNITIES.
The purpose of our CPP is to guide our collaboration with our charity, educational, and community partners to create meaningful and lasting
impact on their amazing work. Our approach focuses on engaging our people and partners to get involved and utilise their skills, knowledge,
and experience to make a significant difference for our communities.
In November 2020, we undertook a responsible business survey with a sample of our people (selected to represent the workforce across our
Group) and the CPP was developed in response to the feedback received from this engagement.
Delivery of the CPP to date has been led by our people through working groups including our Charity Committee, Social Value Working Group
(focused on the delivery of our social value commitments) and Responsible Business Steering Group (a working group tasked with oversight and
scrutiny of how the CPP is delivered).
The CPP established five targets (with some outputs overlapping across numerous targets) for the Group to achieve in 2021. These were:
1. 135 INDIVIDUAL COMMUNITY ENGAGEMENTS
Individual community engagements included single instances of support for charities or community groups and incorporated both support
from the Group (e.g. corporate charitable donations) and the support of our people, which included volunteering, fundraising, pro bono or any
additional support provided.
Throughout 2021, we achieved 317 community engagements which equated to 235% progress against our target.
2. 135 INDIVIDUAL ENGAGEMENTS WITH EDUCATION PARTNERS
Individual engagements with education partners included single instances of support for education organisations including primary and
secondary schools, colleges, universities, further and higher level education providers, and charities and community organisations focused
on education.
Throughout 2021, the Group achieved 77 education engagements. This equated to 57% progress against our target. Whilst we adapted our
approach to education engagement in response to the impact of the CV-19 pandemic, we were significantly restricted in our ability to engage
our education partners. The Group is developing an Education Engagement Strategy as part of Phase 2 of our Responsible Business Strategy
(see page 66), which will guide and support us to strategically increase engagement with our education partners whilst focusing our efforts on
broadening access to our industry and offering opportunities to learners who have traditionally struggled to access these.
3. 135 INDIVIDUAL VOLUNTEERING OPPORTUNITIES
Individual volunteering opportunities included individual instances of our people volunteering their time and services to our charity, community
and education partners and incorporated both group and individual activity.
Throughout 2021, the Group achieved 191 individual volunteering sessions which equated to 141% progress against our target.
4. £135,000 RAISED FOR CHARITABLE CAUSES
Throughout 2021, the Group donated and fundraised approximately £288,000 of financial or equivalent value to charitable and community
causes. This included corporate donations, sponsorship, pro bono services, and fundraising. This equates to 213% progress against our target.
5. TO DELIVER THE 135 HENRY BOOT CHALLENGE
The 135 Henry Boot Challenge was a proposed ‘steps’ challenge for all people across the Group to collectively walk 13,500,000 steps
across the month of September 2021. In response to the impact of the CV-19 pandemic and feedback, a programme of events, activities and
resources focusing on health and wellbeing and colleague socialising was delivered in place of the 135 Henry Boot Challenge. This programme
was entitled Re:Fresh and offered our people a range of opportunities to enhance their health and wellbeing and socialise with colleagues
across the Group.
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021STRATEGIC REPORT THE FIRST PHASE OF OUR RESPONSIBLE BUSINESS STRATEGY
EQUALITY, DIVERSITY AND INCLUSION (EDI) STRATEGY (LAUNCHED APRIL 2021) –
TACKLING THE BARRIERS WITHIN OUR INDUSTRY.
Our Equality, Diversity, and Inclusion (EDI) Strategy is focused on engaging our people and partners to ensure that our business (and the wider
built environment sector) is truly representative and that we offer all our current and prospective people an authentically inclusive, accessible, and
forward-thinking workplace. It will guide us to engage with those who are under-represented and collaborate with partners to identify and tackle
the barriers to achieving a rewarding career in our industry.
The development of the Strategy was shaped by a review in 2020 of our Group, which was undertaken by Brook Graham and involved extensive
engagement with our people to assess their feedback and aspirations. We established a cross-Group EDI Steering Group to develop and deliver
the EDI Strategy and ensure it continues to reflect and represent the outcomes desired by our current people and prospective talent.
The Strategy finds the Group making three key commitments:
To ensure fair and equitable access to all our opportunities.
To recognise and embrace difference, within our workforce and in the
organisations we work alongside.
To welcome and celebrate diversity and create an environment where everyone
can develop their talents, prosper and succeed.
As we deliver on these commitments, we are guided by the five key priority areas of the Strategy:
Inclusive Culture and Leadership.
Increasing our Diversity.
Access and Engagement.
Success, Progression and Development.
Our Communities and Stakeholders.
To create focused activity and accountability, members of the EDI Steering Group all agreed to take on the role of ‘EDI Champions’ (a formal but
voluntary role that will see them champion progressive EDI practice and performance) and have been allocated into sub-groups, each tasked
with leading on delivery of one of the five key priority areas.
Across the Group, EDI training was delivered by Brook Graham to our Board, Executive Committee, and leaders across the Group and a formal
review of the Group’s relevant policies and processes was commenced.
Additionally, we engaged with a number of external stakeholders including commercial partners, professional advisers, business membership
organisations, charities and education partners to share knowledge and identify (and overcome) barriers to achieving more equal, inclusive and
diverse workplaces.
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021STRATEGIC REPORT BUILDING A RESPONSIBLE FUTURE
THE FIRST PHASE OF OUR RESPONSIBLE BUSINESS STRATEGY
NZC FRAMEWORK (LAUNCHED JUNE 2021) –
TACKLING CLIMATE CHANGE
WHILST WE GROW OUR BUSINESS.
Our NZC Framework found us building on our impressive track
record of incorporating environmental protection into our commercial
operations and establishing a target to achieve NZC for our direct
(Scope 1 and 2) greenhouse gas (GHG) emissions by 2030.
The NZC Framework was developed by our Group NZC Taskforce,
which was led by the Managing Directors of Henry Boot Construction
and HBD and comprised of representatives from across our
subsidiaries. The team worked in collaboration with specialist
environmental consultancy Anthesis and their support ensured our
Framework is ambitious, strategic, and measurable.
Our approach to tackling climate change is ambitious and will guide
us to achieve NZC for our directly controlled operations, whilst
undertaking the necessary work to understand and reduce our
indirect emissions. It will also support us to enhance our longstanding
efforts to reduce waste, protect biodiversity, and continually improve
our performance on working to circular economy principles.
We have developed ambitious targets to achieve by 2030 in support
of the objectives below including:
• 100% of our fleet cars and vans to be electric (with delivery of
our Sustainable HGV Renewal Programme underway).
• 20% reduction in non-sustainable business travel.
• 100% of generators to be replaced by sustainable alternatives.
• Undertaking a full review of energy and resource use at all
controlled sites to deliver carbon-reduction solutions.
Medium-term targets have been established in Phase 2 of our
Responsible Business Strategy (see page 67) and we will report on
our progress annually. We will empower all our people and partners to
share knowledge and collaborate to reach solutions to the issues and
problems posed by climate change and environmental degradation.
We are also proud to work to circular economy principles wherever
possible and ensure that we limit waste, reuse materials, and recycle
as much as we can. We are signatories of BITC’s ‘Waste to Wealth’
pledge and support the Government’s Construction 2025 Strategy.
We also recognise that the risk of climate change is one that faces
all businesses and that solutions to the many challenges it poses
requires collaboration and teamwork. We routinely contribute to
the Yorkshire Climate Action Coalition (a coalition of likeminded
businesses, all of whom are ambitiously focused on addressing their
environmental impact) and regularly collaborate with membership
organisations including the CBI and Business in the Community
(BITC) on this issue.
Our Framework is guided by three key objectives:
To achieve NZC for our directly controlled GHG emissions (Scopes 1 and 2) by 2030.
To enhance our understanding of our indirectly controlled GHG emissions and
deliver reduction solutions.
To empower our people and partners to take positive action to collaboratively decarbonise.
In developing our NZC Framework, the NZC Taskforce developed an estimated costs schedule for successful delivery of the Framework which
was presented to the Responsible Business Committee. This schedule will continually be monitored and updated as we strive to achieve our
objectives and has also informed our response to the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) (see
page 68 for more information).
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021STRATEGIC REPORT THE FIRST PHASE OF OUR RESPONSIBLE BUSINESS STRATEGY
LEADERSHIP AND ENGAGEMENT
Throughout 2021, we undertook a number of additional actions
to consolidate our approach to responsible business.
We established our Responsible Business Committee to provide
Board level oversight and scrutiny of the Group’s responsible
business performance (please see page 51 for more information).
The Committee ensure that our Group’s approach to Environment,
Social and Governance (ESG) activity and ambition is increasingly
incorporated within our wider Group strategy and that key financial
and non-financial risks and opportunities linked with ESG receive
careful consideration and review. This will include interaction, where
necessary, with the Audit and Risk Committee for the review and
monitoring of any risks relating to ESG issues that require input from
our auditors or particular consideration in relation to risk identification
and management.
Members of our Board and Executive Committee were also
appointed sponsors of our responsible business initiatives to
demonstrate leadership from the management of our business on
these critical issues.
Our leadership commitment to responsible business is further
demonstrated by our CEO and Group Finance Director’s personal
objectives being linked to the delivery of our Responsible Business
Strategy. In 2022 and beyond, we will also be looking to set further
Group-wide KPIs and link these, where appropriate, to remuneration
outcomes in other ways.
As importantly, significant engagement was consistently undertaken
with our people through our people-led working groups. Each of the
three initiatives of 135 Henry Boot were shaped and formulated (and
are now being delivered by) these working groups. This approach
has enabled us to engage and empower our people to inform and
influence our responsible business approach.
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021STRATEGIC REPORT BUILDING A RESPONSIBLE FUTURE
SUPPORTING OUR PEOPLE AND PARTNERS IN 2021
EMPLOYEE ENGAGEMENT SURVEY
AGILE WORKING FRAMEWORK
In July 2021, we launched our Agile Working Framework. The disruption
to normal working practices caused by the CV-19 pandemic gave us
the opportunity to reflect on how we organise work for our people in the
future. We want to work together in ways that suit more people, while
continuing to deliver high standards in everything we do. This will be a
journey for us, building on the positive changes that have come from the
pandemic and enshrining them in our future ways of working.
The Agile Working Framework was developed by a cross-Group working
group and development incorporated the results of the Agile Working
Survey shared with our people in October 2020.
The Framework’s vision is to change the way we work to improve work-
life balance for our people, while maintaining high levels of engagement
and service for our stakeholders. We believe an element of agility can be
achieved in all of our job roles, but we recognise that not all tasks can
be done from alternative locations or from home. For roles that must
be performed in a particular location, we continually work to identify
opportunities to be agile in different ways, such as adapting start and
finish times to minimise commuting time, fulfil personal commitments, or
make time for hobbies.
We believe empowering our people to work in an agile manner will
support their health and wellbeing, allow us to quickly adapt to any
changes in circumstances and enable our people to work in a manner
that is most beneficial to their needs whilst continuing to deliver high-
quality results.
Delivery and incorporation of the Framework will be reviewed every
six months to ensure it works as effectively as possible for all across
the Group.
HEALTH AND WELLBEING
There continues to be significant societal awareness of the challenges
around physical and mental health (which are likely to be further
exacerbated by the CV-19 pandemic) and we have an important role to
play in promoting positive physical, mental, digital and financial wellbeing
for our people.
We continue to utilise our Group intranet platform (the Hub) to bring
together all our benefits and wellbeing provisions into one accessible
location so that our people can access information and support at
any time.
One of the principal ambitions of our Responsible Business Strategy
is the development and delivery of a new Group Health and Wellbeing
Strategy (see page 66). This will consolidate our existing offer and detail
further initiatives, resources and training that our people can access to
ensure we continually support their health and wellbeing and respond
to their individual needs. This Strategy is currently being developed by a
cross-Group team and will be launched later in 2022.
FINANCIAL WELLBEING
One of the targets outlined in Phase 2 of our Responsible Business Strategy
is to pay all of our suppliers the real living wage and secure accreditation
with the Living Wage Foundation. Work on achieving these goals is
already underway.
OUR PEOPLE AND PARTNERS
OUR APPROACH
Our people are our greatest asset and are vital to our long-term
strategic success and sustainability. Engaging with and developing
our people is crucial to our continued performance and growth.
We collaborate with all our people to enable them to achieve their
best. We work to continually develop and maintain a culture of
inclusivity that enables us to attract and retain the right colleagues
to work at every level, who are committed to working as part of our
team, and who support and represent our Values.
We remain committed to investing the time and resources to support,
engage and motivate our people to feel valued, to be able to
develop rewarding careers, and want to stay with us. We recruit and
promote from within wherever possible to provide the best possible
progression opportunities. As our businesses continue to develop
and grow, we understand that by retaining and inspiring effective and
committed people, we can continue to deliver excellence to all.
ONGOING SUPPORT THROUGHOUT THE CV-19 PANDEMIC
The CV-19 pandemic has posed many challenges for us all, and we
have worked hard to ensure our people have consistently been kept
up to date with our response to the changing circumstances. This has
included regular communications and interactive webinars to provide
updates on health and safety protocols, the protection measures in
place at all our sites, depots and offices, business performance and
financial position, and positive news stories. We have also included
regular resources and guidance on maintaining good physical and
mental health and wellbeing to provide support through each stage of
the pandemic.
GENDER DIVERSITY
All employees
Senior managers
Directors
Female
106
Male
363
Female
5
Male
18
Female
1
Male
6
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021STRATEGIC REPORT SUPPORTING OUR PEOPLE AND PARTNERS IN 2021
EMPLOYEE ENGAGEMENT SURVEY
OUR OBJECTIVES
OUR FINDINGS
KEY OUTCOMES
The survey results show that our people
have remained resilient, optimistic
and focused on working as a team to
maintain delivering an exceptionally high
standard for our clients and partners.
The survey results and feedback are
being carefully reviewed by our Board,
Executive Committee and Employee
Forum to identify any areas where there
is scope for increased engagement with,
and support for, our people.
STRONG GROUP eNPS SCORE OF
26
8.5
We received an 8.5 employee
engagement score when our people
were asked whether the Group had
worked hard to keep them safe during
the Pandemic.
8.4
We received an 8.4 employee
engagement score when people were
asked if their personal values are well
suited to the Henry Boot Way.
The overall objective of conducting
the survey is to gain an in-depth
understanding of our people’s experience
whilst working at Henry Boot. The survey
is focused on gaining feedback from our
people so we can create a culture and
an environment where they can be the
best version of themselves at work.
The survey and our findings focuses
on the Group as a whole and whilst we
can look at the subsidiaries as separate
entities, which will be beneficial for
business specific feedback, we have
opted to look at the scoring holistically as
a Group to push for more collaboration,
a collective responsibility and a joined-up
approach to culture and engagement.
Our process
Our process facilitated by HIVE (our
employee engagement partner), saw our
annual Employee Engagement Survey
housing a framework of 40 questions
that were used to measure progress
when compared with the responses
within our previous survey conducted
during 2020. Some questions were
based on those posed previously to
allow for statistical analysis of change;
however, other questions were more
focused on 2021 and specifically how
we have, and continue to, adapt to the
impact of the CV-19 pandemic.
64%
RESPONSE RATE
(DECREASE OF 2% FROM 2020)
1 Adapting to challenges
Our employee Net Promoter Score
(eNPS) of 26 (46 in 2020) was lower
than last year. Whilst we remain proud of
this score which demonstrates positive
engagement with our people, we note
that it has reduced from 2020 and
are engaging with our people (via our
Employee Forums) to make continuous
improvements and address any issues
experienced.
2 Wellbeing
Whilst we are pleased that our average
employee engagement score for
positive mental wellbeing was 7.5, we
do recognise the significant ongoing
challenges that the pandemic has
created for our people. We will continue
to address these and key to doing so
will be the introduction of our Health
and Wellbeing Strategy in 2022 and the
project undertaken by our Employee
Forum in to how we can best support
the wellbeing of our people and their
ability to switch off and re-energise when
not working.
As part of the Employee Engagement
Survey, we introduced a new platform
– Open Door – whereby our people
could provide us with confidential honest
feedback. This platform has been well
adopted and has demonstrated the
real sense of honesty and integrity that
underpins our workplace culture, the
Henry Boot Way.
Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021
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STRATEGIC REPORT BUILDING A RESPONSIBLE FUTURE
SUPPORTING OUR PEOPLE AND PARTNERS IN 2021
We have continued the employment, wherever possible, of any
person who becomes disabled during their employment with us, and
opportunities for learning, career development and promotion do not
operate to the detriment of disabled employees.
The Board Diversity Policy is set out in more detail as part of our
Nomination Committee Report on page 102. Our gender pay gap is
currently 29%, which continues to reflect the current ratio of men and
women employed. We have a disproportionate number of women in
all roles and, therefore, our data is skewed; we recognise that without
a representative increase in the number of women we employ, the gap
will be difficult to reduce. The EDI Strategy will guide us to ensure our
recruitment and attraction processes attract a diverse talent pool and
ensure our workforce reflects the diversity of the communities in which
we live and work, by increasing opportunities and reducing barriers
to under-represented groups. We are not obligated by statute to
report our gender pay gap as we do not meet the required reporting
thresholds; however, we will continue to report voluntarily and will
report on our ethnicity pay gap in the future.
PROFESSIONAL DEVELOPMENT
Delivering a workplace culture and positive career experience that
attracts new and diverse talent and retains experienced talent will
give us the ability to compete successfully and ensure long-term
sustainability. The retention and development of our people remains
critical to our success. The Group’s employee turnover in 2021 was
20% which is close to the UK average. Our high retention rates
ensure that we have a solid base on which our people can grow,
develop and achieve their potential. Our directly employed headcount
was 499 at the end of 2021.
We recruited a further two apprentices in 2021, which brings our total
number of current apprentices to 19 with a further six trainees. All
our trainees and apprentices are enrolled on formal courses of
education and supplement their learning through in-house training
and experiential development.
Our preferred succession planning method is one of in-house
development and growth; consequently, we also have a number of
experienced people enrolled on formalised education programmes
to enhance their skills and knowledge, in anticipation of career
development and promotion within the business in which they
operate. Throughout 2021, 11 of our people completed their
education programmes and a further six progressed onto the next
level of their education programme. We have key pathways in
place for our apprentices and trainees to ensure our talent pipeline
continues to flourish. Throughout 2021, our senior leaders who
participated on our Senior Leadership Development Programme
(SLDP) have continued to develop their own skills and knowledge and
have continued with coaching and mentoring activities.
Throughout 2021, we also hosted our Leadership Development
Programme (LDP) Centres which have been attended by 32 of our
middle managers and aspiring leaders. This unique programme of
development and support aims to encourage further aspiration and
development and progression potential in our future leaders.
FINANCIAL WELLBEING
We take the financial wellbeing of our people seriously and offer a
range of services and guidance to support this.
We operated two pension schemes in 2021, until the closure of
The Henry Boot Staff Pension and Life Assurance Scheme on 19
March 2021 to active members. Following this our sole pension
provision is now the Henry Boot PLC Group Stakeholder Pension Plan
(defined contribution pension), where the Group pays contributions
to an independently administered fund (AVIVA) based upon a fixed
percentage of salary. Member benefits from the plan are determined
by the amount of contributions paid by the Group and the member,
the investment returns on the investments are made by the individual
based on their risk appetite with most remaining in the pre-selected
Default Fund, and the decisions made on retirement age and how
they choose to receive their retirement benefits. We have implemented
the UK’s auto-enrolment pension requirements, including re-enrolment
on a triennial basis, and our people are informed of auto-enrolment
and other pension choices through our online portal and Group
Intranet platform.
Company-funded Independent Financial Advice is available for defined
benefit member reaching 55 years of age; the age at which they can
legally take their pension. We want to ensure that our people are in a
fully informed position when making decisions about pensions and are
exploring an expansion of financial wellbeing advice.
In September 2021, we granted share options to all eligible colleagues
to participate in the Company Share Option Plan (CSOP). We also
invited all eligible colleagues to participate in the Group’s 2021
Sharesave scheme, which allows our people to contribute a maximum
of £500 per month to one or a combination of current Sharesave
schemes. In 2021, the Remuneration Committee agreed to increase
the usual 10% discount off the share price to the maximum discount
allowed under the HMRC rules of 20%. At the close of the invitation,
57% of eligible people had joined one or more Sharesave schemes.
EQUALITY, DIVERSITY AND INCLUSION
We aim to create a fair, accessible, diverse, and inclusive working
environment, while recognising the challenges that our sector has
traditionally suffered, particularly in relation to gender and ethnicity
representation and diversity. We want to provide a sustainable
culture in which all our people can be themselves at work so that
they can thrive, add value, and feel valued. We believe that this will
bring out the best in our people and lead to long-term success and
sustainability. You can read more about our EDI Strategy and 2021
performance on page 55.
Although we recognise that the ambitions and objectives in our EDI
Strategy will take time to achieve, we are fully committed to working
with key partners to engage with under-represented groups through
various networks, to encourage diversity of thought and approach
amongst our people, and to open opportunities for underrepresented
groups to experience our industry. We continue to forge links with
local groups and educational establishments to encourage diversity
and to change perceptions and influence others to view our industry
as a positive career choice. Examples of the networks we are
members of and actively support are Building Equality, Women in
Property, the Considerate Constructor’s Scheme and Business in the
Community BITC.
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021STRATEGIC REPORT SUPPORTING OUR PEOPLE AND PARTNERS IN 2021
In 2021 we delivered 1,560 learning and development days. In
addition to this, and in recognition of the diverse range of skills
within our workforce, there was also an unquantifiable amount of ad
hoc learning and development, which takes place on a daily basis
at our sites, offices, depots and via remote engagement during
the pandemic. The coming year will see a renewed learning and
development provision being rolled out across all subsidiaries, which
includes a focus on developmental outputs from building capacity and
capability at all levels, provision of mentoring and other interventions,
which will seek to build resilience amongst our people.
HEALTH AND SAFETY
One of our most important responsibilities as a business is making
sure that the health, safety and wellbeing of our people, partners
and the wider public is safeguarded, together with protecting the
environment in all our areas of operations.
Our team are enthusiastic experts in this area and work hard in
collaboration with our project teams and supply chain to drive
innovation and achieve best practice.
OUR PERFORMANCE
Our Accident Incidence Rate (AIR) and Accident Frequency Rate
(AFR) and performance in our Construction segment remains strong,
and our construction-related AFR and AIR for our directly employed
people and operatives is nil.
Our Construction segment delighted to report a strong overall
(including subcontractors) Accident Incidence Rate (AIR) of 297 and
Accident Frequency Rate (AFR) of 0.15. This result is a combination
of the effectiveness of our management processes, continuous
improvement and our Zero Harm initiatives. This strong health and
safety management culture has resulted in securing a prestigious
RoSPA Gold Medal Award for the 12th consecutive year resulting in a
RoSPA Presidents Award.
In 2021, our Construction segment successfully migrated from
OHSAS 18001 to the ISO 45001 (Occupational Health and Safety
Management System) standard in June 2021. In addition to this, a
full ‘Certificate renewal’ assessment was successfully completed in
October 2021 against all three standards (ISO 45001 (Occupational
Health and Safety) ISO 14001 (Environmental Management) and ISO
9001 (Quality Management).
We continue to be a Considerate Constructors Scheme Partner,
registering three of our projects as ‘Ultra Sites’, which commits the
sites to the highest standards of considerate construction in terms
of potential to impact local communities, the environment, workforce
and supply chain.
We have also enjoyed success in further industry awards including
the Constructing Excellence, LABC Awards, Chartered Institute of
Building (CIOB), Insider Yorkshire Property Awards and Generation for
Change (G4C).
OUR SUPPLY CHAIN
Our partnership with our supply chain partners is critical to our
success and we work hard to engage and collaborate with all of our
suppliers and partners to create and maintain long-term successful
relationships. We have a commitment to securing the services of
predominantly local sub-contractors and utilising local suppliers to
minimise the miles and emissions that working with us produces,
which continues to be a strong and responsible approach for our
business. This has only been strengthened due to the impact of
CV-19 on supply chains, and the increasing value placed on creating
opportunities for local communities.
HUMAN RIGHTS
Our business is totally committed to supporting and working to the
UN’s Guiding Principles on Business and Human Rights. Protecting,
preserving and respecting human rights is fully embedded in our
culture and is fundamental to our Values. This commitment is reflected
in and demonstrated by our routinely updated policies including:
• Ethics.
• Anti-corruption.
• Modern Slavery.
• Rights to Work.
• Whistleblowing.
In addition to our policies, we aim to demonstrate this commitment
through all our behaviour and actions towards our people, suppliers,
partners and the communities in which we operate.
MODERN SLAVERY
We recognise that our industry is vulnerable to the impacts of modern
slavery and, therefore, we have implemented and embedded a
number of measures, which seek to bring about greater transparency
and scrutiny into our various supply chains in order to combat slavery
and trafficking activities.
We keep our Human Trafficking and Slavery Statement under regular
review and set out the activities we undertake to reduce the risk of
slavery and trafficking activities being present within our business
operations. These measures include enforcing our Modern Slavery
Policy, due diligence requirements, and mandatory contract clauses
seeking compliance by our supply chain with appropriate anti-slavery
measures. Following completion of a Modern Slavery Assessment
Tool (MSAT), we have signed up to the Gangmasters & Labour
Abuse Authority (GLAA) Construction Protocol. In addition, we have
recently engaged NGOs to understand where our practices may be
strengthened and are looking forward to implementing some new
measures throughout 2022.
We commit to collaborating closely with our people, partners,
contractors and suppliers to monitor our performance, share
knowledge and maintain vigilance throughout our business and
supply chains.
ANTI-BRIBERY AND ANTI-CORRUPTION
Delivering our services with a zero-tolerance approach to corruption
in any form is essential for us to demonstrate our Values, long-
standing commitment to ethical behaviour and integrity, and to uphold
our reputation and image. Our Anti-Bribery and Corruption Policy
sets out the standards expected of all our people and supply chain
members 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 and
supply chain complies.
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021STRATEGIC REPORT CHARITY PARTNERS
Throughout 2021, we continued to support a range of charity partners
across our areas of operation and offered our support through
financial donations, donations of time, and donations of materials
and our professional expertise. These donations were managed by
our Group Charity Committee who meet on a fortnightly basis. The
Committee identify charities to allocate financial support to as well as
respond to requests received from charities. Support is allocated to
charities that align with our Charitable Giving Pillars and on the basis
of securing the greatest possible impact.
In October 2021, our Responsible Business Survey (see page
66 for more information) requested feedback from our people on
our Charitable Giving Pillars. 92% of participants agreed that they
continue to represent the issues the Group can best impact. Our
Charitable Giving Pillars are:
• Charities and organisations that support health, medical, and
educational improvements for children and adults;
• Charities and organisations that support those who are homeless
or rootless; and
• Charities and organisations that support improvements for the
environment and are tackling the effects of climate change.
BUILDING A RESPONSIBLE FUTURE
SUPPORTING OUR COMMUNITIES
OUR PLACES
OUR APPROACH
The Group’s success depends on the communities in which we
operate, live, and work continuing to thrive and develop. We recognise
the important role our business has to play in generating social value for
the communities we work alongside as we deliver our services.
We are excited to engage our people and partners to respond to
societal needs with strategic focus and renewed commitment.
The CV-19 pandemic has negatively impacted many communities
and exacerbated pre-existing inequalities. Our approach focuses
on supporting those who will receive the most benefit from
our engagement as we seek to create long-term value for our
communities and tackle the barriers to accessing the employment
and skills opportunities we offer.
Our CPP, a core element of our Responsible Business Strategy (see
page 54 for more information), finds us engaging our people to get
involved and utilise their skills, knowledge, and experience to make a
huge difference for our communities.
CHARITY OF THE
YEAR PARTNERSHIP
We extended our 2020 Charity of the Year partnership with Sheffield
Children’s Hospital to the end of 2021 to mitigate the impacts of the
CV-19 pandemic on our ability to fundraise and volunteer. This fantastic
charity aims to ensure that the services and support offered by the
hospital to young people and their families is of the best possible quality.
They fund research, cutting edge medical equipment, improvements
to the hospital facilities, and bespoke provision for their patients and
loved ones. Given their coverage of many of the regions in which we
operate, and their ambitions to support young people to give them
the best possible quality healthcare and compassionate support, we
were delighted to partner with an organisation with shared values and
ambition.
Throughout 2021, we delivered several fundraising events including
our annual Golf Day, charity skydive and quiz night to raise funds. We
sponsored the charity’s Snowflake campaign and were proud to be
a principal partner of their Bears of Sheffield campaign. Our support
for this public art trail included providing the logistics and project
management support to transport, install and de-install all of the 60
bear sculptures across Sheffield. This involved extensive support from
our specialist teams within Henry Boot Construction and Banner Plant
who provided a significant level of service to the charity. We were hugely
proud to see the campaign raise over £750,000 for the charity.
Our partnership with The Children’s Hospital Charity raised
approximately £33,000 for this fantastic cause.
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021STRATEGIC REPORT SUPPORTING OUR COMMUNITIES
In addition, we have supported a range of national and local charity
partnerships and our support included:
• Becoming a Strategic Partner of LandAid (a national property
industry charity focusing on supporting young people affected
by homelessness) and taking part in their Virtual Sleep Out event
with our team raising over £16,000.
• Supporting Roundabout, a Sheffield-based Youth Homelessness
Charity, through the sponsorship of their Homelessness
Prevention Service, participating in their Snowdon Sunset Trek
and their Sleep Out raising over £30,000 in total.
• Donating to the Laptops for Kids campaign, which aimed to
address digital poverty through providing young people with
laptops to enable remote learning and engagement.
• Delivering the ‘Henry Boot 13 Gifts of Christmas’ campaign,
which saw us supporting charities promoting positive mental
health across the 13 communities in which we have offices and
depots as chosen by our colleagues.
• Headline sponsoring the annual St Luke’s Hospice Festival of
Light campaign and event for the fourth time.
We also gave our people the opportunity to nominate a grassroots
sports team for a donation via our Discretionary Sports Fund. We
recognise the importance of grassroots sports for communities
and for mental and physical wellbeing but are also aware of the
lack of funding that organisations often endure. Many of our people
are directly or indirectly involved in grassroots sport and we were
delighted to distribute a total of £8,000 to nominated local sports
teams throughout 2021.
The Group also maintains several investment funds with South
Yorkshire Community Foundation (SYCF). We collaborate closely
with the SYCF (and are a member of their SY100 Supporter Scheme)
to ensure our funds are used to support grassroots charities and
community organisations whose purpose aligns with our Charitable
Giving Pillars. We can also use our funds in order to collaborate with
other SYCF supporters to provide grants to applicants assessed for
eligibility by SYCF.
We are a founding member of Sheffield Business Together (SBT) and
continue to offer our financial and people resources to support the
work of this responsible business coalition. SBT’s total leverage value
of completed projects in support of charity, community, and voluntary
organisations in 2021 was a fantastic £262,000.
This year, we contributed approximately £288,000 (£98,000 in
2020) to charitable causes. This figure is significantly higher than
that achieved in 2020 due to the greater potential for fundraising
as the CV-19 restrictions eased, a number of significant fundraising
events and campaigns occurring in 2021, and an improved and
more comprehensive reporting structure which includes additional
sources of charitable and community giving and support. Our
commitment to donate to charitable causes continues to strengthen
and we look forward to supporting our charity partners in the future
and collaborating with them to ensure our donations have the best
possible impact on their work.
EDUCATION PARTNERS
We recognise that young people are the future of our business.
Collaborating with our partners in the education sector to showcase
our business and sector and give young people valuable and
authentic workplace engagement is paramount for their and our
long-term success; if they can see it, they can be it.
We also recognise the disproportionate impact that the CV-19
pandemic has had on young people and the challenges that they have
faced from school closures and inconsistency in careers education.
We have been proud to maintain our support for the career education
programmes of our education partners and commit to ensuring these
partners have our long-term support to providing young people with
valuable and interactive workplace experience, engagement, and
education as we build back from the impacts of the pandemic.
Examples include:
• Chairing the D2N2 Enterprise Partnership Cornerstone Employers
Steering Group – working alongside likeminded businesses to
provide learners across North Derbyshire with rich and rewarding
careers engagement.
• Empowering our people to become Enterprise Advisors across
North Derbyshire and the Sheffield City Region and working
with local schools to provide them with valuable guidance and
support.
• Delivering a series of careers education support for a range of
partners including site visits, careers talks and mock interviews.
• Providing significant pro bono support to refurbish and improve
the playground and outdoor provision at Shirecliffe Meadows – a
new early years education centre – in collaboration with Sheffield
Hallam University and SBT.
• Providing further specialist pro bono support to education
partners including Astrea Academy and the installation of a Green
Wall at Intake School alongside supply chain partners.
A NEW APPROACH TO CHARITABLE SUPPORT
In late 2021, our Charity Committee opted to introduce a
cause-based partnership model which will strategically focus
charitable support on a shared cause chosen by our people
over a two-year (2022-23) period.
All of our people were engaged via a survey in November
2021 which asked them to nominate a preferred cause to
support (from a shortlist produced by the Charity Committee)
and to nominate an aligned charity for consideration to be the
Group’s Charity Partner. The cause that received the highest
number of votes was promoting positive mental health.
Our efforts to promote positive mental health will focus
on support for a strategic Group Charity Partner. We are
delighted to announce that Place2Be is our new Group
charity partner. Place2Be work in schools to improve the
social, emotional and mental wellbeing of children and young
people in the crucial formative years of their lives.
£21,022 of the total funds donated in 2021 were through our
people utilising our Give as You Earn payroll giving mechanism.
The Company matched this pound for pound; both sums are reflected
in the total figure.
Whilst Henry Boot will partner with Place2Be, we will also
be encouraging our teams to support and collaborate with
various local charities and organisations that link to our
chosen cause of promoting positive mental health.
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021STRATEGIC REPORT BUILDING A RESPONSIBLE FUTURE
PROTECTING OUR PLANET
OUR APPROACH
We recognise the increasing risk and damage that climate change
and environmental damage poses and are steadfast in our
commitment to protect our planet for future generations and tackle
the impacts of climate change.
Our efforts are guided by our NZC Framework (see page 56).
This ambitious plan establishes our NZC target and achieving this will
find us progressively reducing our greenhouse gas (GHG) emissions.
We understand, however, that tackling climate change requires efforts
beyond decarbonisation. Protection of natural environments and
their ecosystems and biodiversity, the reduction of resource use and
waste, and behaviour change will all be critical factors in the efforts
needed to reduce global warming.
In recognition of this, we have developed (and are now delivering)
Environmental Sustainability Action Plans for each of our businesses.
These plans (which will support the delivery of our NZC Framework)
provide clarity for our people on what needs to be achieved in the
medium term and establish ambitious targets around GHG emissions
reduction, waste reduction, and working to circular economy
principles.
The Group NZC Taskforce (established to develop our NZC
Framework) has evolved into a new governance structure (which
mirrors our Group Employee Forum model – whom they will work
closely alongside) whereby each of our businesses has a Climate
Change Team who are tasked with overseeing the delivery of targets
and sharing knowledge and solutions. A representative from each
team will also sit on the Group Climate Forum which reports directly
to the Responsible Business Committee. This approach aims to
encourage a cohesive and collaborative approach to achieving targets
and addressing challenges.
We will also work with our charity and education partners to educate,
engage, support and learn from them as we assist with their efforts to
addressing the impacts of climate change.
As we deliver our climate commitments in the Responsible Business
Strategy, we will also be publishing our target to achieve NZC for our
indirect emissions (Scope 3) and the emissions subsets by which we
will measure reduction.
To support the successful delivery of our NZC Framework and
aspirations to tackle climate change, we have committed to the
following medium term targets in our Responsible Business Strategy.
OUR TARGETS – BY THE END OF 2025 WE WILL
Objective 1
Reducing our greenhouse gas (GHG) emissions.
• Reduce Scope 1 and 2 GHG emissions by over 20% to
support reaching NZC by 2030.
• Replace 50% of van fleet with electric vehicles (EVs) or
other sustainable alternatives (100% by 2030).
• Ensure that all our HGVs are EURO 6 compliant
(30% to be replaced with EVs or other sustainable
alternatives by 2030).
• Reduce non-sustainable business mileage by 20%.
• Supply 50% of electricity demand for construction sites
from renewable generators.
• Complete energy, resource and sustainability audits in all
of our directly controlled offices, sites and depots – and
implement all medium-term recommendations.
• Use biodiesel as we electrify our fleet.
Objective 2
Consuming resources responsibly
• Cut avoidable waste by 99% for all our construction sites
(100% by 2030).
• Reduce consumption of avoidable plastic by 50%.
• Undertake Group-wide waste monitoring and establish a
waste-reduction target.
• Undertake Group-wide water monitoring and establish a
water-reduction target.
•
Introduce a Group-wide Sustainable Supply Chain
Standard to support supply chain collaboration and
innovation.
Objective 3
To be a steward of nature
• Collaborate with commercial partners to achieve
biodiversity net gains on our projects.
• Enhance and preserve natural environments where
we work.
• Deliver nature stewardship training to 100% of our people.
64
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021STRATEGIC REPORT Pictured: Hallam Land Management
helping with tree planting at
Lubbesthorpe
Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021
65
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STRATEGIC REPORT BUILDING A RESPONSIBLE FUTURE
PHASE 2 OF OUR RESPONSIBLE BUSINESS STRATEGY
The delivery of 135 Henry Boot and the wider work undertaken in 2021
put us in a strong position to develop Phase 2 of our Responsible
Business Strategy which launched in January 2022. Phase 2 sets
ambitious medium-term objectives and targets to be achieved by the
end of 2025, ensuring we maintain our bold and determined approach
to achieving significant environmental and social value through
our work.
In developing Phase 2 of our Responsible Business Strategy, it was
vital to capture the opinions and views of our people and partners. We
wanted to understand the issues they thought were the most material
when considering how our business generates positive impact and
social value.
Our Responsible Business Committee undertook a stakeholder
mapping exercise to understand how best to engage our stakeholders.
Desk-based research and engagement was undertaken to create a
shortlist of material issues which was also influenced by the ambitions
of the United Nations Sustainable Development Goals.
Based on this exercise we conducted a Responsible Business Survey
among a representative sample of our people, customers, suppliers,
advisors, professional membership bodies, charity partners, education
partners and community partners. We asked them to rank a series of
responsible business issues to assist us in determining which issues
should be the most material to our Group. We also undertook focused
engagement with investors, professional advisers and our people to
best understand their expectations and opinions on Henry Boot’s
approach to responsible business.
Our materiality assessment identified that the top three issues our
business should focus on are:
• Promoting positive health and wellbeing for our people.
• Ensuring our business is equal, inclusive, diverse and accessible.
• Achieving NZC.
The Strategy incorporates the findings from our stakeholder engagement
and all our existing responsible business initiatives providing clear
guidelines on how we intend to deliver our commitments over the
coming years. It is guided by three headline objectives:
To further embed ESG factors into our commercial decision making, so that we adapt our
business, ensuring long-term sustainability and value creation for our stakeholders.
To empower and engage our people to deliver long-term meaningful change and impact for the
communities and environments we work in.
To authentically address those issues deemed to be most significant and material to our
business and hold ourselves accountable by reporting regularly on our progress.
66
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021STRATEGIC REPORT PHASE 2 OF OUR RESPONSIBLE BUSINESS STRATEGY
RESPONSIBLE BUSINESS STRATEGY STRUCTURE
Our Responsible Business Strategy focuses on four key strategic pillars ‘Our People, Our Places, Our Planet, and Our Partners.’
Our Purpose is to empower and develop our people to create long-term
value and sustainable growth for our stakeholders.
Pillar 1 – Our People
Pillar 2 – Our Places
We will support, develop, engage, and empower
our people to have an exceptional working
experience, to be the best versions of themselves,
and to deliver long-term value for our stakeholders.
In fulfilling our purpose, we will support and
engage the communities we work with, and
alongside, to create long-lasting social value.
Pillar 3 – Our Planet
Pillar 4 – Our Partners
We will protect and preserve our planet by
reducing our environmental impact, consuming
responsibly and safeguarding our environments.
We will collaborate with our partners
to deliver exceptional results, create value
and share knowledge, solutions
and creativity to address key issues.
Our Ambitions will be delivered by our people working closely with our partners –
delivering collaborative solutions with real impact.
Our Values will underpin and align everything we do.
We also engaged our stakeholders to understand which of the United Nations Sustainable Development Goals (UN SDGs) they
felt our business could most positively impact. Based on the feedback received, the Responsible Business Committee selected
the five UN SDGs above as those best aligned with our corporate purpose and which we can most positively impact.
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021STRATEGIC REPORT BUILDING A RESPONSIBLE FUTURE
TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES.
Compliance Statement
Over the course of 2021, Henry Boot has continued to analyse the requirements of the TCFD, and the accompanying guidance notes, to
understand how the requirements could be properly implemented. Whilst there are a number of areas in which we anticipate being fully
compliant due to the advanced work we have done on our Net Zero Carbon initiatives within the framework of our overall Responsible Business
Strategy (please see table below for analysis), there will naturally be some areas that continue to develop as we deepen our understanding
of the risks and opportunities presented by climate change. We expect that over the course of 2022 we will continue to delve into this, and
understand the wider impacts it may have on our strategic focus, to ensure that our strategy development is properly debated and embedded
within our operations. For this reason, as we set out below, in some areas we have chosen to explain the extent of our current compliance and
the direction of travel as we move forwards.
Area of focus
Progress to date
Future focus
Through the establishment of a Responsible Business Committee
(see page 51), the Board is ensuring that it has assigned Board-level
importance to all ESG-related matters, including climate-related
issues, and is regularly updated on the Group’s Responsible Business
Framework development, implementation and outcomes. In particular,
the Committee has oversight of the Group’s Net Zero Carbon (NZC)
Framework (read more on page 56) and in connection with this, has
set climate-related goals and targets through the Responsible Business
Strategy and will monitor and oversee their implementation and
performance.
In addition, climate-related risks and opportunities will form part of
the annual risk management procedures undertaken through the
Audit and Risk Committee’s assessments (see sections below). The
Remuneration Committee also has oversight of the incorporation of
ESG-related metrics into executive remuneration.
See also below in relation to the consideration of these issues at the
Group’s Strategy Days.
Following the development of some of the actions
outlined below, the Responsible Business Committee
(and/or other Committees as appropriate, reporting up
to the Board) will monitor the following:
•
•
•
assessment of climate-related risks and
opportunities in relation to material capital
expenditure or divestitures.
assignment of management oversight of
climate-related issues.
integration of the risks and opportunities and
climate-related scenario planning into strategic
development at the Strategy Days (see also
below);
− major plans of action;
−
−
−
risk management policies;
annual budgets,
business plans
The Managing Directors of Henry Boot Construction Limited and HBD
assumed the main responsibility for steering the Group’s NZC strategy,
reporting into the Responsible Business Committee as appropriate.
Further consideration will be given to whether the
specific allocation of any additional roles or positions
relating to climate-related issues is required.
The Chief Executive Officer has ultimate oversight of the Group’s
NZC achievements, which will also be reported on to the Executive
Committee along with the Board, and disseminated down to other
senior management and more widely within the business through
planned information releases.
As a result of the risk and opportunity assessment (see under ‘Risk
Management’), the key risks and opportunities identified are contained
within the separate table on page 70.
The Group’s Responsible Business Strategy was also considered by
the Board and Executive Committee at the Strategy Days alongside
other areas of business strategy, including the Group’s five-year
business plan (into which ESG-related expenditure was incorporated).
Although the Group’s Responsible Business Strategy
was considered alongside the Group and subsidiary
Strategy at the Strategy Days, further work will be
carried out to integrate the impacts of those risks and
opportunities further within the Strategy, working in
conjunction with the Executive Committee.
The aim in the 2022 Strategy Days will be to reflect
fully on the risks and opportunities identified and
ensure that these are integrated within the Strategy for
each business and for the Group. During 2022, and
informed by climate-related scenario modelling work,
each subsidiary and the Group will be reflecting on
further development of those strategies, as necessary,
to embed the impacts identified through the risks and
opportunities presented.
Concurrently with the 2022 Strategy Days we will
update our five-year financial business plan. The plan
will incorporate operational costs, capital allocation and
funding in light of the risk and scenario planning work
performed. This will then also form part of the Group’s
financial budgeting process for 2023 which follows the
Strategy Days.
GOVERNANCE
Board oversight of
climate-related risks
and opportunities
Management’s role
in assessing and
managing climate-
related risks and
opportunities
STRATEGY
Climate-related risks
and opportunities
identified over the short,
medium, and long term
Impact of climate-
related risks and
opportunities on the
organisation’s business,
strategy, and financial
planning
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021STRATEGIC REPORT Area of focus
Progress to date
Future focus
STRATEGY
Resilience of the
strategy, taking into
consideration different
climate-related
scenarios
RISK MANAGEMENT
Processes for
identifying and
assessing climate-
related risks
Processes for managing
climate-related risks
How processes for
identifying, assessing,
and managing
climate-related risks
are integrated into the
organisation’s overall
risk management
TARGETS AND METRICS
Metrics used by the
organisation to assess
climate-related risks
and opportunities in line
with its strategy and risk
management process
Scope 1, Scope 2, and
if appropriate, Scope 3
greenhouse gas (GHG)
emissions, and the
related risks
The Audit and Risk Committee will be considering during 2022 the
method of carrying out climate-related scenario modelling to assist in
assessing the various climate-related scenarios that may impact on
the Group.
A review of each area of operation within the business
would assess the risks and opportunities already
identified for further analysis and development within the
subsidiary and overall Group Strategy.
A risk and opportunity assessment has been carried out in conjunction
with the Managing Directors of each subsidiary business, to review the
likelihood and impact of the identified potential risks and opportunities.
This focused on each area of physical and transitional risk identified as
being pertinent to the industries in which we operate. Once completed,
this was compiled into an overall matrix of risk and opportunity, which
can be seen on pages 70 and 71.
As this exercise has been performed in respect of each part of the
business, it has included assessment of risk by sector (and geography
to the extent it is relevant).
The Group undertakes an annual review of its principal risks as
documented in pages 42 to 49 of this report. This review, which is
undertaken at a subsidiary level, includes consideration of the risks and
opportunities relating to climate change. The financial impact of the
risks is in part quantified in our NZC transition workings, although are
not material to the business. As part of the assessment of the climate-
related risks and opportunities, the management and/or mitigation of
each item identified sets out the response, and a decision to Treat,
Tolerate, Terminate or Transfer each relevant item following such
management or mitigation was assigned.
The climate-related risks and opportunities assessment was brought
to the Audit and Risk Committee for review in February 2022, and will
form part of the Group’s annual overall risk review matrix with oversight
of the Committee in each instance.
Further assessment of the impacts of the risks and
opportunities identified in relation to scenario modelling
is to be undertaken in order to refine the risk and
opportunity assessment process, as overseen by the
Audit and Risk Committee.
Mitigation of these risks, including the medium/
longer-term financial impact of key climate risks, and
promotion of the opportunities identified, will be further
developed, and included within strategy development,
as highlighted previously.
As referred to within this table.
Metrics and targets relating to a number of environment factors have
been adopted as part of overall Responsible Business Strategy (see
page 64 for more information.)
In relation to this, remuneration-related targets on greenhouse gas
emissions have been incorporated into the bonus objectives for the
Executive Committee.
Further work will be required following the climate-
related scenario planning work to understand the
impact that these outcomes have on the Group’s
Responsible Business Strategy and Group Strategy,
and whether this should alter any metrics or targets
previously determined.
Scope 1 and Scope 2 greenhouse gas emissions are set out on
page 71.
The risks related to these have not been fully
quantified and will be the subject of further review and
assessment.
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021STRATEGIC REPORT BUILDING A RESPONSIBLE FUTURE
TCFD
CLIMATE-RELATED RISKS AND OPPORTUNITIES
Following a series of discussions with senior managers within the business, the Executive Committee, Audit and Risk Committee and
Responsible Business Committee, the following risks and opportunities have been identified as requiring further focus. In relation to the time
frames considered, the Group considers short term to be within 12 months, medium term to be between one-five years and long term beyond
five years. These timeframes align with the Group strategic objectives, targets and NZC commitments. The financial commitments required to
address these risks are embedded in the Group’s short-term budget and five-year business plan. We have taken this approach as we recognise
that the response to climate change is evolving rapidly and, whilst it is essential to deliver cost projections for the investment needed to tackle
climate change, we must maintain flexibility to adapt our projections to take into account changes in the regulatory and legislative landscape and
the evolving technological response and availability.
Risk
Description
Our response
Timeframe
TRANSITIONAL RISK
COMPLIANCE
WITH REGULATORY
REQUIREMENTS
Government legislation designed to reduce
emissions (such as emissions trading
schemes/carbon tax requirements or Future
Homes standards) changes specifications
and increases costs of schemes impacting
viability.
Strategic Land values reduce as
housebuilders and developers look to pass
on additional building standards costs
as well as additional site planning and
infrastructure cost requirements.
TECHNOLOGICAL
RISK
Cost of transition to more carbon friendly
plant is not absorbed by customers.
Impairment and obsolescence of property
and plant assets.
The Group closely monitors existing and emerging legislation such
as the Future Homes Standard in advance of scheme appraisals.
Short/medium
term
Appraisals then fully embed additional legislative costs, which
currently remain within accepted targeted return levels.
Strategic Land forecasts recognise potential decreases in profit
per plot although currently mitigated by levels of demand and
increasing land values.
A balanced transition to carbon friendly plant considering our
customer base, the Group’s NZC targets and availability of
technological advancements. The Group have assessed the cost
of transitioning as part of our NZC framework including the cost
of carbon offsetting from 2030 and these costs are included in the
Group’s five-year business plan.
Healthy level of asset replacement and redevelopment, and
targeted EPC ratings for investment properties.
Short/medium
term action
required although
will also be longer
term actions
where technology
is not yet available
MARKET RISK
Demand for sustainable assets rapidly
increases.
The Group continues to invest in sustainable schemes and assets
in line with Group targets and to position ourselves favourably in the
market.
Medium/long term
The increasing cost of switching to sustainable options will in
some cases be passed to customers or be embedded within
initial land appraisals, we also expect the Group will retain costs in
some cases as a responsible employer and where this is the case
provision is made in the Group’s budget and business plan.
FINANCIAL RISK
Capital costs increase and availability
reduces if the Group does not meet ESG
requirements.
Responsible Business Committee and Responsible Business
Strategy in place.
Medium/long
term
NZC trajectory and climate change actions agreed across
the Group.
PHYSICAL RISK
PHYSICAL RISK
Delayed build programmes due to extreme
weather events
Ground conditions are no longer suitable
70
Long term
Current scheme appraisals make allowance for delays and
contractual protections are used where possible. We, therefore, do
not expect any material short-term financial losses. In the longer
term, where the Group is unable to contractually mitigate the risk
it could result in margin erosion on schemes although we do not
foresee this resulting in scheme losses due to the healthy margins
currently achieved.
Biodiversity and flood assessments are considered on all schemes
with a particular focus on Strategic Land which can be held for
longer durations. In the long term, we could experience a reduction
in the volume of suitable land available and at a higher cost to the
Group reducing profit margins. This is mitigated in the medium term
by the suitable strategic land bank we currently have interest in.
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021STRATEGIC REPORT Opportunities
Description
Response
PHYSICAL RISK
RESOURCES
FINANCIAL
MARKET
Recruitment of modern and progressive people
Availability and cost of capital to the Group
Green credentials open tendering opportunities
Diversified offerings to customers (green products,
retrofitting, redevelopment)
Increased premium on sustainable products
The Group recognises and manages the risks
associated with climate change, however,
also has a strategy that actively pursues
opportunities arising from positive action that
benefits not only the Group but our wider
stakeholders.
ENERGY SOURCE AND USAGE
Ability to attract tenants
Lower operating costs
INNOVATION AND RESILIENCE
Digital transformation
HENRY BOOT GROUP CO2 FOOTPRINT BY SOURCE
Henry Boot Group CO2e emissions
Scope 1: Combustion of fuel and operation of facilities (Location based)
Combustion of fuel and operation of facilities (Market based)
Scope 2: Electricity, heat, steam and cooling purchased for own use (Location based)
Electricity, heat, steam and cooling purchased for own use (Market based)
Total direct emissions
Total direct emissions per employee1
Scope 3: Upstream and downstream indirect emissions
Upstream and downstream indirect emissions (Market based)
Total emissions (Location based)
Total emissions per employee1
1 Employee numbers are based on the monthly average for the year.
Henry Boot Group Energy Usage
Total energy consumed (scopes 1, 2 and 3)
CARBON EMISSIONS BY SEGMENT
2021
Tonnes
2020
Tonnes
2,303
2,303
403
–
2,706
5.5 tonnes
CO2e
948
834
3,654
7.4 tonnes
CO2e
1,918
n/a
644
n/a
2,562
4.7 tonnes
CO2e
796
n/a
3,357
6.2 tonnes
CO2e
2021
MWh
12,600
2020
MWh
11,551
Trend
Rise
Fall
Rise
Rise
Rise
Rise
Rise
Trend
Rise
Henry Boot Group CO2e emissions
2021
tonnes of
CO2
2021
intensity
ratio tonnes
of CO2e
2020
tonnes of CO2
2020
intensity
ratio tonnes of
CO2e
Intensity
basis
Trend
Property investment and development
Land development
Construction
Group overheads
Total gross controlled emissions
757
35
2,739
122
3,654
11.47
1.17
26.68
1.85
552
45
2,649
111
3,357
per 1,000 sq ft
of investment property
with communal areas
per employee
per £1m of turnover
per employee
14.22
1.44
22.84
1.64
Rise/Fall
Fall
Rise
Rise
Our carbon emissions for the year ended 31 December 2021 were calculated in accordance with the March 2020 BEIS ‘Environmental
Reporting Guidelines: Including streamlined energy and carbon reporting guidance’ and the EMA methodology for SECR Reporting.
Our direct and indirect operational carbon emissions are shown in the tables above. 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 carbon
emissions have increased by 9% when compared with the historical lows of the previous year; this equates to an increase of 1.2 tonnes per
employee. However, when compared to 2019 pre CV-19 levels the Group has reduced carbon emissions by 17%; this equates to a decrease of
0.3 tonnes per employee.
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021STRATEGIC REPORT Pictured: Island, Manchester,
capable of delivering 91,000
sq ft of Net Zero Carbon
office space
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GOVERNANCE
Board of Directors
Executive Committee
Chairman’s Introduction
Governance at a Glance
Corporate Governance Report
– Division and Responsibilities
– Board Leadership and Company Purpose
– Composition, Success and Evaluation
– Nomination Committee Report
– Audit and Risk Committee Report
– Responsible Business Committee Report
– Directors’ Remuneration Report
– Remuneration Policy
– Annual Report on Remuneration
Directors Report
74
78
80
82
83
86
98
102
108
114
116
121
127
136
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BOARD OF DIRECTORS
1 TIM ROBERTS
CHIEF EXECUTIVE OFFICER
2 AMY STANBRIDGE
GENERAL COUNSEL AND
COMPANY SECRETARY
3 DARREN LITTLEWOOD
GROUP FINANCE DIRECTOR
4 JOANNE LAKE
DEPUTY CHAIR
1
3
2
4
74
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE 5
6
5 GERALD JENNINGS
NON-EXECUTIVE DIRECTOR
6 PETER MAWSON
NON-EXECUTIVE DIRECTOR
7 JAMIE BOOT
CHAIRMAN
8 JAMES SYKES
NON-EXECUTIVE DIRECTOR
8
7
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75
Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE BOARD OF DIRECTORS
JAMIE BOOT
Chairman
TIM ROBERTS
Chief Executive Officer
DARREN LITTLEWOOD
Group Finance Officer
JOANNE LAKE
Deputy Chair and
Non-executive Director
N
B
B
N
A
R B
Date of appointment
June 1985.
Date of appointment
January 2020.
Date of appointment
January 2016.
Date of appointment
October 2015.
Independent
No.
Independent
No.
Independent
No.
Independent
Yes.
Additional roles held
Director of the Company’s six
principal operating subsidiaries.
Brings to the Board
Key strengths:
•
In depth Group and
financial experience.
• Establishing and delivering
strategy, whilst protecting
assets in the Group.
Darren joined the Group in
1999 prior to his appointment
as Group Finance Director in
2016. He became qualified as
a member of the Chartered
Institute of Management
Accountants in 2007 and is
responsible for all financial
and risk matters relating to the
Group. He is heavily involved in
investor communications and,
along with Tim Roberts, is also
responsible for communicating
strategy and results to both
private and institutional
investors.
Additional roles held
Previously Director of British
Land PLC, and Non-executive
Director of Songbird PLC.
Brings to the Board
Key strengths:
• Strong strategic and
corporate experience
accumulated as past
longstanding Director.
• Strong property and
leadership experience.
• Extensive experience
in delivering significant
property development
projects.
Tim joined Henry Boot as Chief
Executive Officer in January
2020. He is responsible for
developing and implementing
Group Strategy and has
ultimate responsibility for
Group profitability. Tim leads
the engagement with all the
Company’s stakeholders,
including interaction with
investors and our people. He
is also the Director responsible
for all health, safety and
environmental matters.
Additional roles held
Non-executive Chair of Made
Tech Group plc, Non-executive
Director of Gateley (Holdings)
Plc, Non-executive Director
of Honeycomb Investment
Trust PLC, Non-executive
Director of Braemar Shipping
Services PLC.
Brings to the Board
Key strengths:
• Extensive financial and
investment banking
experience.
•
In depth knowledge of
strategy and governance.
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. The Deputy
Chair role will be retired and
Joanne will become the Senior
Independent Director from
26 May 2022.
Brings to the Board
Key strengths:
• Extensive Group and
leadership experience.
• Long-term track record
in delivering sustainable
growth to the Group.
Jamie, who is a member of
the founding family, has over
36 years’ experience as a
Director of Henry Boot PLC.
He has been a Director of the
Company’s principal operating
subsidiaries and his role now
sees him responsible for the
leadership of the Board. He will
step down from the Board on
26 May 2022.
KEY
Committee Membership
N Nomination
A Audit and Risk
R Remuneration
B Responsible Business
Committee Chair
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE JAMES SYKES
Non-executive Director
PETER MAWSON
Senior Independent Director and
Non-executive Director
GERALD JENNINGS
Non-executive Director and
Designated Non-executive
Director for Workforce
Engagement
AMY STANBRIDGE
General Counsel and
Company Secretary
N B
N B
A R
N
A
BR
Date of appointment
March 2011.
Date of appointment
October 2015.
Date of appointment
October 2015.
Date of appointment
October 2018.
Independent
No.
Independent
Yes.
Independent
Yes.
Additional roles held
Chairman and Partner in
the London office of Saffery
Champness Chartered
Accountants, which he joined
in 1987. He is a Non-executive
Director of Saffery Champness
business in Guernsey.
Additional roles held
Non-executive Chairman
of Nexus Planning Limited
and Board Representative
for Paradise Circus Project
for the Greater Birmingham
and Solihull Local Enterprise
Partnership.
Brings to the Board
Key strengths:
Brings to the Board
Key strengths:
• Significant strategic land
• Wide-ranging experience
knowledge.
• Sound financial background
and experience.
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
particularly to Hallam Land
Management Limited.
in senior leadership and
practitioner roles across the
built environment.
• Property development and
planning knowledge in
both the public and private
sector.
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. Peter will
be appointed Chair on
26 May 2022.
Additional roles held
Non-executive Chairman of
Social Communications (Leeds)
Limited, Non-executive Director
of the Ahead Partnership
and Director of G R Jennings
Properties Ltd.
Brings to the Board
Key strengths:
• Widespread industry
experience in retail and
property.
• Successful track record
of delivering significant
development projects and
working with a wide range
of stakeholders.
• Extensive experience in
asset management.
• A variety of executive and
non-executive roles over
the years within the private,
public and third sectors.
Gerald has over 30 years’
experience in the retail and
property industry and the
delivery of major development
projects and adding value
through proactive asset
management.
Additional Roles Held
Trustee of St Luke’s Hospice,
Sheffield and member of
Business in the Community’s
(BITC) Yorkshire and
Humber Board.
Brings to the Board
Key strengths:
• Significant legal,
compliance, regulatory
and corporate governance
experience.
• Robust knowledge of all
aspects of commercial law
and practice
Having obtained her
qualifications at the Universities
of Nottingham (LLB Hons) and
Sheffield (PG Dip LP), Amy
qualified as a solicitor in 2006
and as a Chartered Secretary
in 2019. She is an experienced
lawyer with a demonstrated
history of working in-house
in the public sector and
construction industry. With a
broad range of expertise across
contract and commercial law
and practice, construction
matters, corporate governance
and compliance matters, Amy
has worked at Henry Boot
PLC since 2014, becoming
Company Secretary in 2018
and General Counsel in 2021.
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE EXECUTIVE COMMITTEE
NICK DUCKWORTH
Hallam Land
Management Limited
EDWARD HUTCHINSON
Henry Boot
Developments Limited
TONY SHAW
Henry Boot
Construction Limited
JONATHAN FISHER
Banner Plant Limited
Date of appointment
Managing Director in 2016.
Date of appointment
Managing Director in 2018.
Date of appointment
Managing Director in 2021.
Date of appointment
Managing Director in 2021.
Brings to the Executive
Committee
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 Land’s then
newly established Northampton
office. In 1997, Nick set up the
South West office of Hallam
Land in Bristol and became
the Regional Manager. He was
appointed a Director in 2002.
Brings to the Executive
Committee
Edward Hutchinson BSc
(Hons), MRICS started his
career in quantity surveying
before quickly progressing into
project management. He joined
Henry Boot Developments in
2004 as a Project Manager
rapidly rising to the position
of Senior Project Manager in
2006. Edward was appointed
a Director in 2012 and became
Managing Director in 2018. In
January 2021, he became a
board member of the Yorkshire
Board of LandAid.
Brings to the Executive
Committee
Tony Shaw joined Henry Boot
Construction Limited as a
Trainee in 1985 and with a
background in production
planning and project
management, he has held
a number of positions in the
business including Regional
Manager and Operations
Director. Tony is North East
Regional Chair and a Director
of the National Federation of
Builders (NFB) and a Director
of the Yorkshire Builders
Federation (YBF). Tony took
over as Managing Director in
July 2021.
Brings to the Executive
Committee
Jonathan Fisher joined the
Henry Boot Group in 2021.
He started his career in
hospitality, working as
a General Manager in a
variety of roles for Whitbread
before moving into facilities
management in sales and
management. In 2016,
Jonathan joined Elliott Group
working as an Account
Director for the first two years
managing a large portfolio of
Tier one contractors. Jonathan
was promoted to Regional
Director managing the North
of the Elliott business, which
included four production
facilities. Jonathan moved back
into a commercial role as UK
Sales Director before moving
to be Managing Director at
Banner Plant.
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE ADDITIONAL EXECUTIVE
COMMITTEE MEMBERS
TIM ROBERTS
Chief Executive Officer
DARREN LITTLEWOOD
Group Finance Director
AMY STANBRIDGE
General Counsel and
Company Secretary
DARREN STUBBS
Stonebridge Homes
Limited
RACHEL WHITE
Henry Boot PLC
Date of appointment
Chief Executive in 2010.
Date of appointment
Head of HR in 2015.
Brings to the Executive
Committee
Darren Stubbs has a wealth of
experience in the housebuilding
industry and a proven track
record in delivering successful
housing developments,
spanning a 38-year career. He
started work at Tay Homes
plc at the age of 16 and
just nine years later he was
Managing Director of his own
Leeds-based housebuilding
company. Darren formed a
new housebuilding company,
Stonebridge Homes Limited, in
2010, which is a jointly-owned
company with Henry Boot PLC.
Brings to the Executive
Committee
Rachel White joined Henry Boot
PLC in 2001 as a graduate.
She has held a number of roles
in the HR team, before taking
the role of Head of HR in July
2015. Rachel has responsibility
for HR, Employee Benefits,
Reward and Remuneration,
Learning and Development and
Payroll. Rachel is also a Trustee
Director for Henry Boot Pension
Trustees Limited, which
oversees the Henry Boot Staff
Pension and Life Assurance
Scheme, and is a member of
the Governance Committee
for the Henry Boot PLC Group
Stakeholder Pension Plan.
Rachel leads the development
of our People Strategy to
meet the requirements of our
subsidiary businesses including
succession planning, talent
management, diversity and
inclusion, wellbeing, reward
and recognition and employee
engagement.
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79
Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE CHAIRMAN’S INTRODUCTION
DEAR SHAREHOLDERS
JAMIE BOOT
CHAI RMAN
DEAR SHAREHOLDERS,
Naturally the business has continued to respond to the
ongoing challenges posed by the COVID-19 (CV-19)
pandemic, which continues to require us to adapt our
operational practices, governance and strategy planning.
In the meantime, as a Board we have also been continuing
to develop our approach in relation to newer governance
challenges, such as ESG and TCFD reporting, which
stretches out further our engagement with stakeholders and
requires us to think differently about risks and opportunities
facing the business. Change continues apace in many
areas, such as our approach to diversity and inclusion,
and more widely, though linked to this, how we approach
remuneration and reward for our people.
Within that context, we have been working with the
Executive Committee, which reformed towards the end of
2020, to ensure the senior management of the business
is considering and inputting into major decisions affecting
the Group. We welcomed two new Managing Directors
this year, with Tony Shaw taking over at Henry Boot
Construction Limited, and Jon Fisher at Banner Plant
Limited. Many thanks are given to Giles Boot and Simon
Carr for their leadership of those businesses over many
years, and we wish them all the best in their retirement.
SUCCESSION PLANNING
As many of you will be aware, following my announcement
in February, I will be stepping down at the 2022 Annual
General Meeting (AGM), and it is my privilege and honour
to have served the business through my years within the
business and on its Board. I am confident that I leave the
Group in great shape, having weathered the storm of the
pandemic and also having adapted in numerous ways to
face the new needs of our business, stakeholders, our
people and the wider environment. I know I leave the Chair
role in the very capable hands of Peter Mawson, who has
been serving on the Board for the past six years, and who
brings a wealth of leadership, development and planning
experience. We have been carefully thinking about our
wider succession planning approach and how we ensure
a diverse representation of views on our Board, which you
can read about in more detail in the Nomination Committee
Report on pages 102 to 107.
ESG AND TCFD
I am proud to say that our focus on being a responsible
business, and ensuring that we capture all of the good work
we do across the Group, has escalated rapidly during 2021,
with the implementation of Phase 1 of our Responsible
Business Strategy, 135 Henry Boot. The Board has taken
its own role in delivering this strategy seriously, having
formed a Responsible Business Committee (which you can
read more about on pages 114 to 115 in the Responsible
Business Committee Report). During the year, we have also
been overseeing the development of the longer-term Phase
2 Responsible Business Strategy, more details of which
are on pages 66 to 67, and I believe I will be leaving the
business in an incredibly strong position of having found its
own authentic way of incorporating responsible business
practices within its wider business strategy.
STRATEGY
This year, we have further strengthened our focus on
Company strategy, holding two Strategy Days as a Board,
together with the Executive Committee towards the end
of the year. Whilst the main strategic direction of the Group
has not changed, as a Board together with the Executive
Committee, we have been able to delve into the ways in
which the various parts of the business are contributing
to the overall strategy, overlaid with our approach to our
people and to ESG, which gives us greater clarity and focus
as we move forwards. More details on this can be found
on pages 26 to 29.
80
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE ENGAGEMENT WITH STAKEHOLDERS
We have continued to consider effective
stakeholder engagement during 2021, looking to
areas where more effective or direct engagement
could be facilitated, and we welcomed the Group
Employee Forum to our Board meeting in October
2021 to hear their views on a key issue arising
from the employee engagement survey. Through
our report on stakeholder engagement activities
on page 92, and our Section 172 Statement on
page 50, you will be able to see in more detail the
ways in which we have ensured that engagement
has been tailored to adapt to the needs of our
stakeholders, and that their views have been
factored into important decision making.
The following report sets out our structure,
governance processes and key activities
undertaken by the Board and its Committees
during 2021. We welcome feedback from our
stakeholders and I would encourage you to get
in touch with us on any governance matters. I’m
very pleased that this year we will be meeting
in person for our AGM after two years of being
unable to see our shareholders at the event in
person, and so I hope to see many of you at our
AGM venue on 26 May 2022 (see page 204 for
full details).
JAMIE BOOT
CHAIRMAN
Code Compliance
During 2021, the Board and its Committees have continued to keep their focus on ensuring
wherever possible that compliance with the Code can be achieved, improving its operations and
governance. This is demonstrated throughout this Corporate Governance Report and of particular note
are the Code principles below with references to further detail as applicable.
Given our 135-year history as a family business, and as a FTSE Small Cap Company, we have
adopted alternative solutions to the provisions where we believe this is appropriate. The Code
recognises that good governance can be achieved by other means, and the Board believes the
approach we have taken is the most appropriate for the Company and its shareholders, while
remaining consistent with the spirit of the Code.
DIVISION OF RESPONSIBILITIES
Read more on pages 83 to 85
BOARD LEADERSHIP AND COMPANY PURPOSE
Read more on pages 86 to 97
COMPOSITION, SUCCESSION AND EVALUATION
Read more on pages 98 to 107
AUDIT, RISK AND INTERNAL CONTROL
Read more on pages 108 to 113
REMUNERATION
Read more on pages 116 to 135
“ IT IS MY PRIVILEGE AND HONOUR TO HAVE
SERVED THE BUSINESS THROUGH MY YEARS
WITHIN THE BUSINESS AND ON ITS BOARD,
AND I KNOW I AM LEAVING IT IN FANTASTIC
SHAPE FOR THE YEARS TO COME.”
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE DIV ISION O F RESPONSIBILITIES
GOVERNANCE AT A GLANCE
HIGHLIGHTS
PROMOTING LONG-TERM SUCCESS
• The Board has increasingly monitored risks arising from CV-19 and the
current economic uncertainty such as cost inflation, rising interest rates and
workforce retention. The Group has remained agile and mitigated these risks
swiftly where possible to ensure sustainable long-term stability and success.
• The two-day strategy sessions held in November 2021 consolidated the
Group’s strategic approach and focus on its key markets. The Board debated
the people, IT and ESG strategies to ensure that the business has the right
approach and necessary resources to achieve its medium-term targets.
Read more on pages 86 to 97
RESPONSIBLE BUSINESS
• The Board approved the creation of a Board-level Responsible Business
Committee in March 2021.
• Following consultation with stakeholder groups, the Board oversaw the
development and launch of Phase 2 of the Responsible Business Strategy,
which sets out ambitious targets aimed at embedding the Group’s ESG
approach into commercial and strategic decision making.
• ESG metrics linked to the Responsible Business Strategy are now included
in the Annual Bonus personal objectives for the Executive Directors and the
Executive Committee.
Read more on pages 51 & 114 to 115
SUCCESSION PLANNING
• A key area of focus throughout the year was developing the succession
plan for the Chair and Non-executive Directors to facilitate progressive
refreshment of the Board’s membership.
• The Nomination Committee and the Board led the recruitment process for
two new appointments at Executive Committee level; one internal promotion
and one external recruitment hire for the Managing Directors (MDs) of Henry
Boot Construction and Banner Plant.
• Clear EDI targets introduced to encourage greater levels of gender diversity
throughout the workforce, including a target of 30% female representation
for line manager positions.
Read more on pages 102 to 107
STAKEHOLDER ENGAGEMENT
• 2021 has seen increased interaction between the Board and the workforce.
The Group Employee Forum has collaborated in the design of the new
workforce remuneration strategy and performance management processes.
• Following a stakeholder mapping exercise, a comprehensive consultation
process was undertaken with the results helping to shape the Responsible
Business Strategy.
• There has been a commitment to enhance the level of customer feedback to
the Board, this will continue to be a focus for 2022.
Read more on pages 92 to 97
82
100% increase in Board and
Committee meetings during the year
from 2019, attributed to the focus on
the 2021 Remuneration Policy,
Non-executive and Executive
Committee succession and the
creation of the Responsible Business
Committee.
Agreed and published 35 targets
to achieve by 2025 to strive for
meaningful change across our four
key pillars; our people, places, planet
and partners.
Women on Boards co-appointed
alongside Norman Broadbent to
ensure that the recruitment process
during 2022 for a Non-executive
Director is as diverse as possible.
“ We will only achieve our ambitions
if all of our people and stakeholders
come on this journey with us.”
Peter Mawson
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE BOARD COMPOSITION CHART
Non-independent
Non-executive
14%
Independent
Non-executive
43%
Non-executive Chairman
14%
Executive
29%
BOARD COMPOSITION AND INDEPENDENCE
The governance structures in place are designed to reflect the
individuality of the Company and the composition of both its
institutional shareholders and individual shareholders, many of whom
have family ties to the Company.
As discussed in more detail in the Compliance Statement on page
113, Jamie Boot is regarded as non-independent having previously
served as Managing Director. James Sykes is also classed as non-
independent, having been appointed to represent the substantial
shareholdings of the Reis family interests (see page 137).
The Company values the importance of its independent
Non-executive Directors who provide objective advice and challenge
the Executive Directors. Their diverse backgrounds in various sectors
and knowledge of the wider business environment are critical when it
comes to strategy development. The Non-executive Directors meet
without the Executive Directors present, usually the evening before the
Board meetings and on other occasions throughout the year.
CORPORATE GOVERNANCE REPORT
DIVISI ON OF RESPONSIBI LITIES
UK CORPORATE GOVERNANCE CODE 2018
The Board is committed to achieving high governance standards
and following best practice. Where we do not strictly follow the
Code, considerable thought is given to ensuring that our approach
aligns with the spirit of good governance, helps to promote high
ethical standards and sustains the success of the Company over the
long term.
For this financial year, as a premium listed company, the Company
was subject to compliance with the UK Corporate Governance Code
2018 (Code). Further details of how the Code has been applied are set
out throughout this Corporate Governance section and a statement of
Code compliance is presented on page 113.
THE BOARD
The names, responsibilities and other details of each of the Directors
of the Board are set out on pages 76 and 77. There have been no
changes in membership during 2021, but you can read about the
changes planned from 2022 onwards on page 103.
Throughout the year, there have been seven scheduled Board
meetings attended by all Directors, and three separate Board calls to
approve one-off, urgent matters. Darren Littlewood was on holiday
for the Board meeting approving the appointment of the new MD for
Banner Plant, and Joanne Lake and James Sykes were on holiday
for the urgent approval of a development site. Both of these meetings
were arranged at late notice and the views of the Directors were
shared in advance with the Chairman. In addition to the formal Board
meetings, two Strategy Days were held in November with a selection
of sessions attended by the Executive Committee and
senior management.
Jamie Boot
Chairman
Tim Roberts
Chief Executive Officer
Darren Littlewood
Group Finance Director
Joanne Lake
Deputy Chair
James Sykes
Non-executive Director
Peter Mawson
Non-executive Director
Gerald Jennings
Non-executive Director
10
10
9
9
9
10
10
The number of Committee meetings are reported in each Committee
Report and all received 100% attendance during 2021.
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83
Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE
CORPORATE GOVERNANCE REPORT
DIVISION OF RESPONSIBILITIES
GOVERNANCE FRAMEWORK
BOARD
Audit and
Risk
Committee
Nomination
Committee
Remuneration
Committee
Responsible
Business
Committee
Group
Employee
Forum
TCFD
Steering
Group
EDI
Steering
Group
Net
Zero Carbon
Taskforce
Charity
Committee
EXECUTIVE COMMITTEE
Land Promotion
Property
Investment and
Development
Construction
Subsidiary
Employee
Forums
Hallam Land
Management
Henry Boot
Developments
Henry Boot
Construction
Stonebridge
Homes
Banner
Plant
Road
Link (A69)
84
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE KEY FEATURES
BOARD
• The Board maintains a formal schedule of matters reserved for its decision that cannot be delegated elsewhere
(available to view on the website)
• This schedule is reviewed at least annually and includes:
− establishing long-term strategy and objectives
− overseeing culture and stakeholder engagement
− approval of annual budgets, financial results and the dividend policy
− approval of capital expenditure above an agreed amount
− the determination and monitoring of the Company’s principal and emerging risks including the effectiveness of
internal controls
• When matters require Board approval, management is required to present a detailed paper, which includes any input
or feedback received from stakeholders, assessment of key risks and how the matter links to Group strategy
BOARD
COMMITTEES
• Delegated authority from the Board to look after specific areas of responsibility.
• Each Committee operates under its own written Terms of Reference, which are reviewed at least annually and are
available on the website.
• Report to the Board and work alongside the other Committees e.g. the Responsible Business Committee works
alongside the Audit and Risk Committee to fully consider the TCFD reporting requirements.
• Responsible Business Committee formed in 2021 – see pages 51 and 114–115 for more information.
• Have access to external consultants where necessary.
• See pages 102 to 135 for more information on the work of each Committee.
EXECUTIVE
COMMITTEE
• Members are set out on pages 78 to 79.
• Reformed in December 2020, the Board has reviewed and approved their updated Terms of Reference and
delegated levels of authority.
• Meets ten times a year to debate strategic issues that affect the Group, to collaborate and share best practice and
make recommendations to the Board and also all Executive Committee members attend the Strategy Days with
the Board.
• Appointments to the Executive Committee are overseen by the Nomination Committee and the Board. Two new
members, Jonathan Fisher (an external recruit) and Tony Shaw (an internal promotion) were appointed during 2021.
Both presented their 90-day plans to the Board and returned to provide feedback and give their initial impressions.
SUBSIDIARY
BOARDS
• Day-to-day operational management of the subsidiary companies sits with their respective boards and MDs.
• The CEO and Group Finance Director sit on all the principal subsidiary company boards.
• The MDs are invited to attend the Board meetings on a rotational basis to discuss business plans and strategy.
• Board Directors attend the meetings as a guest from time to time to offer support and guidance, and improve their
own knowledge of the different businesses.
MANAGEMENT
COMMITTEES
• EDI Steering Group – a committee comprising of people from across the Group who have been responsible for
developing our EDI Strategy and are now responsible for delivering strategic objectives.
• TCFD Steering Group – a committee of individuals specialising in risk, strategy and ESG across the Group who are
responsible for developing the Group’s response to the recommendations of the TCFD
• Net Zero Carbon Taskforce – a committee comprising of people from across the Group who have been responsible
for developing our NZC Framework (now replaced by the Group Climate Forum – see page 64 for more details).
• Charity Committee – a committee comprising of people from across the Group who meet fortnightly to allocate
charitable funding in alignment with the Group’s Charitable Giving Pillars.
EMPLOYEE
FORUMS
Please see pages 94 to 96 for more information.
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85
Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE CORPORATE GOVERNANCE REPORT
BOARD LEADERSHIP AND COMPANY PURPO SE
ENABLING LONG-TERM SUSTAINABLE SUCCESS
Henry Boot’s long-term success is founded upon a clear purpose and supporting strategy, which
considers the views and needs of its many stakeholders.
Details of the Board’s contribution to the long-term success of the Company, whilst ensuring
responsible governance, strategy implementation and oversight of operations is set out below.
Committed to engaging
with wider stakeholders
and hearing their voices in
decision making
Read more on pages
50 to 51 & 92 to 93
Developing and
embedding our approach
to Environmental, Social
and Governance matters,
through the launch of the next
phase of our Responsible
Business Strategy
Read more on pages
51 & 66 to 67
Contributing to
the Group’s strategy in its
dedicated Strategy Days
Read more
on page 91
SUPPORTING
HENRY BOOT’S
LONG-TERM
SUCCESS
Oversight of the
Group’s sustainable
business model
Read more on pages
18 to 21
History of managing
gearing, and the balance
sheet, effectively through
the cycle
Read more
on page 18
Consideration of
the risks and opportunities
facing the business
(with an additional focus on
climate-related risks and
opportunities) and aligning
with strategy
Read more on pages
42 to 49 & 68 to 71
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE BOARD LEADERSHIP AND COMPANY PURPOSE
The Board has a rolling 12-month Forward Business Schedule, which is regularly reviewed to check that there is appropriate balance across the
year between forward-looking versus backward-looking discussion and between strategy, risk, operations and governance. It includes routine items
that are included on every agenda such as health and safety and financial updates as well as one-off topical items or decisions for approval.
The schedule ensures that all stakeholder groups are discussed and, where appropriate, attendance from management and colleagues across
the different businesses is encouraged.
Stakeholders
considered
Link to
Strategy
What was reviewed and considered?
Area
Contributing
to the Group’s
Strategy Days
History of
managing
gearing and
the balance
sheet effectively
through the cycle
Sh E Cu
E Cu S
Sh Co En
P
E Cu Sh
Consideration
of the risk and
opportunities
facing the
businesses
Overseeing the
health and safety
arrangements
in place
E S En
Co Cu
E Cu S
Sh En
Commitment to
development and
increasing our
knowledge of
the business and
culture
Whilst strategy remains a focus all year, the Board held two full days dedicated
to strategy in November 2021 with the Executive Committee invited to join
for some of the sessions. The Board explored long-term trends and forecasts
affecting the Group, the refreshed five-year strategic priorities, as well as the
People, IT and ESG Strategies.
Throughout our 135-year history, Henry Boot has successfully navigated its way
through many economic crises and cyclical downturns thanks to its sustainable
business model.
Against an uncertain backdrop in 2021, the Board considered a number of key
investment decisions and debated how best to employ capital to maximise
returns and progress the agreed strategic objectives.
Before coming to a decision, the Board considered gearing, the Group’s positioning
in each of its key three markets and the level of risk involved, particularly when
approving speculative developments such as Setl, a residential scheme in
Birmingham, that received Board approval in July 2021.
Whilst a consideration in every meeting, the Board and the Audit and Risk
Committee discuss the Group’s principal and emerging risks in detail twice a
year – see pages 108 to 112 for more information. The Responsible Business
Committee also oversees any risks relating to climate change and have been
involved in developing our approach to reporting against the TCFD requirements
– see pages 68 to 71.
Time is set aside at the Strategy Days to reflect on the Group’s competencies,
external trends and to explore where strategic opportunities may exist in the market.
Risk and opportunities relating to individual investment decisions are outlined
and debated in detail by the Board before approval is given.
As one of Henry Boot’s core strategic objectives, safety remains a key priority at
Board level. The importance of fostering a strong health and safety culture has
been heightened even further during the CV-19 pandemic to ensure that sites
and depots remain operational and our people stay safe.
Health and Safety reports are received at every Board meeting with updates
performance against KPIs and scrutiny over incidents and near misses.
The Board has participated in various sessions over the year including Equality,
Diversity and Inclusion leadership training as well as various briefings from
external advisers on upcoming legislative changes and best practice. The Board
also invited an external expert to lead on a tailored economic outlook debate
covering issues such as inflation, interest rates and the levelling up agenda.
On an operational level, in July, the Board visited the Wakefield Hub and
Markham Vale development sites and Henry Boot Construction’s The Glass
Works in Barnsley. In October, there were tours around the Preston East site
and the Kampus development in Manchester. All the visits enabled the Board
to meet with wider members of the team, suppliers and contractors giving an
insight into culture and the focus on health and safety.
Group strategic priorities
Stakeholders
Safety
People
Growth
Delivery
E Employees
S Suppliers
Sh Shareholders
En Environment
Cu Customers
P Pensioners
Co Communities
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE
CORPORATE GOVERNANCE REPORT
BOARD LEADERSHIP AND COMPANY PURPO SE
OUR CULTURE
The Henry Boot Group adopted its Purpose, Vision and Values in 2017 after extensive work had been carried out through numerous Group
employee engagements – this is referred to as the ‘Henry Boot Way’. By approaching the definition of our culture in this way, we ensured that we
could capture the thoughts of our people through a ‘bottom-up’ approach and articulated a culture that reflected all. Since then, we have been
on a journey to reflect the Henry Boot Way throughout our business, and it remains a key element in our Group strategy. The Board recognises
that not only does it have a key role to play in living the Values itself, ensuring that the overall culture of the Group is embedded within its strategy
and general approach to business as well as the way the Board conducts itself.
T H E H E N RY BOOT WAY
S T R ATEGY
OUR PURPOSE
To empower and develop
our people to create long-term
value and sustainable
growth for our stakeholders
VALUE S
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE HOW THE BOARD MONITORED CULTURE IN 2021
ENGAGEMENT
SURVEYS
Action
The cycle of undertaking
and reflecting on the
outcomes of the main
employee engagement
survey has now become
well established by
the Board, Executive
Committee and subsidiary
boards. To further develop
this approach during 2021,
the Group Employee
Forum (GEF) was asked
to reflect on some of the
areas identified as requiring
further focus within
the survey results, and
attended a Board meeting
to discuss their views and
proposals for addressing
the issues raised.
In addition to the main
employee engagement
survey, a Responsible
Business Survey was also
sent to a sample group
of our people in October
2021 who were chosen.
EMPLOYEE
FORUM
As well as the direct Board
interaction outlined above,
and as described on pages
to 92 to 96, linkage to the
Board is provided by the
designated Non-executive
Director (NED), Gerald
Jennings, appointed to
liaise with the GEF, so
that the entire Board can
benefit from hearing the
feedback and respond to
issues as necessary.
Link to culture, and
effectiveness of
engagement method
The outcomes of the
engagement survey are
essential and can build
a picture year on year
regarding the shift of
attitude by our people
relating to culture, are
essential. It gives a good
baseline for the Board to
measure against, and as
a method of engagement
it ensures that it reaches
all areas of the Group. In
addition, being able to
hear directly from GEF
members on issues that
impact them and their
areas of the business
enables the Board to
understand directly
whether our people feel
that the culture of the
business is being upheld,
and where it is not,
what could be done to
address this.
The Responsible Business
survey took a more
focused approach asking
stakeholders their views
on how the Responsible
Business Strategy linked
in the most appropriate
way to our business and
its values.
The Group and Subsidiary
Employee Forums provide
a key method of employee
engagement on several
issues including cultural
matters and perceptions
throughout the Group.
The designated NED
feeds back on issues
discussed by the GEF at
every Board meeting, to
ensure that relevant issues
are taken into account in
decision making as well
as the general view across
the Group on matters
impacting on culture.
Bringing together interested
members of the Group,
who can speak directly
to the designated NED,
means that a cross section
of views from around the
Group can be heard.
Values upheld
or impacted
Loyalty
Integrity
Collaboration
Outcomes, development
of culture and addressing
culture issues
The Board reviewed the survey
outcome as a whole and through
the direct engagement with the
GEF, focused on areas that had
not scored as well within the
survey, such as whether people
feel that they are being rewarded
fairly. The Board has incorporated
these suggestions within the wider
reward and recognition strategy
for our people to be progressed
in 2022, which looks at further
embedding culture within measures
such as the annual performance
development review, with links to
financial incentives.
The Board received a summary of
the Responsible Business Survey
results, which influenced the
development of our Responsible
Business Strategy.
Collaboration
Respect
The Board, represented by the
designated NED, attended all GEF
meetings in the year and provided
insight to the GEF around several
matters, including the socialisation
of our revised Remuneration Policy
for the Executive Directors. Other
NEDs and the Executive Directors
have also attended the GEF by
invitation, where relevant to the
agenda. Views of the GEF have
been taken into account when
discussing those issues at the
Board, as reported in more detail
on pages 94 to 95.
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE CORPORATE GOVERNANCE REPORT
BOARD LEADERSHIP AND COMPANY PURPO SE
Action
Link to culture, and
effectiveness of
engagement method
Values upheld
or impacted
Outcomes, development
of culture and addressing
culture issues
Adaptability
Collaboration
Issues such as the Agile
Working Framework, developed
partially as a result of the CV-19
pandemic, was carried out by
this Committee, with the broad
range of representatives across
the Group able to input on ways
this would feed into the culture of
their respective parts of the Group.
This was considered when it was
agreed by the Board.
Adaptability
Collaboration
As a result, our people
were provided with a clear
demonstration of the Group’s
leadership from the top on
responsible business issues.
The Board’s focus and
commitment to responsible
business was clearly
demonstrated.
CORONAVIRUS
COMMITTEE
Established in February
2020, and comprising
both Board and non-Board
members from across
the Group, this team has
continued to meet during
2021 to ensure that the
Group remains flexible in
adapting to the challenges
posed by the CV-19
pandemic.
WEBINARS
The Responsible Business
Committee launched a
series of ESG-related
webinars during 2021
including Board members,
focusing on the three
strands of the 135
Henry Boot Responsible
Business Strategy.
135 Henry Boot was
launched in March 2021
with a webinar featuring
our CEO. Our Equality,
Diversity and Inclusion
Strategy was also
launched with a webinar
in April 2021 and this was
supported by members of
the Board.
This forum has enabled
feedback from the
Group to be filtered up
to the Board on various
measures taken and
views across the Group
on matters relating to the
pandemic response. By
including the CEO and
Group Finance Director
on the Committee, to
hear input from across the
Group from our people,
this has enabled a more
informal interaction,
which has been flexible
to accommodate the
Committee’s requirements.
This enabled the
Committee members
to interact directly with
webinar attendees to
respond to matters such
as diversity and inclusion
within the Group, and
the Group’s community
engagement and
charitable giving initiatives.
Webinars were chosen
as an effective method
of engagement because
they gave the ability for
real-time interaction, but
also were recorded for
later access by those who
could not attend at the
time of broadcast.
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE STRATEGY
DAYS
Action
The Group’s People
Strategy, alongside the
wider strategy of the
operational businesses,
was discussed at the
2021 Strategy Days with
the Board and Executive
Committee.
Values upheld
or impacted
Delivery
Integrity
Collaboration
Link to culture, and
effectiveness of
engagement method
Issues such as attraction
and retention of talent, and
their link to key strategic
objectives, enabled the
Board and Executive
Committee to consider
how this could enable the
delivery of the key strategic
objectives.
RESPONSIBLE
BUSINESS
COMMITTEE
Respect
Integrity
Delivery
The Board’s establishment
of a Responsible Business
Committee (see pages 51
& 114 to 115 for the work
of the Committee during
the year) is a further strand
of connection to the wider
workforce as well as to
the Group’s customers,
suppliers, professional
service providers,
professional associations
and community, charity
and education partners.
The Committee focuses
on a number of issues that
relate to culture in practice
across the Group, and
how this is also perceived
by external stakeholders
and our people, as well
as the embedding of
our Henry Boot Way
culture-related activities
and the Values within our
Responsible Business
Strategy.
Outcomes, development
of culture and addressing
culture issues
The Board and the wider Executive
Committee debated the key
strategic objectives relating to
our people for 2022 and beyond
reflecting on the pressures that
the business has felt in 2021,
particularly in relation to recruitment
and retention. The Board
acknowledges that the Group has
a positive culture and that we need
to maintain this in order to ensure
our ongoing and future success.
The Board has agreed a number
of key, people-related initiatives
for 2022 and beyond, which will
enhance our employer (EVP) value
proposition and positively position
us for future growth.
The view of our people and
external stakeholders influenced
the shaping of the Phase 2
Responsible Business Strategy,
such as the UN SDGs that most
align to our business, and the
material issues that the Strategy
should address.
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE CORPORATE GOVERNANCE REPORT
BOARD LEADERSHIP AND COMPANY PURPO SE
HOW THE BOARD ENGAGES WITH STAKEHOLDERS
The Board identified our key stakeholders during our work on the Henry Boot Way in 2017, being those groups whose interests
and views are vital to the operation and culture of the Group, as embodied within our Purpose:
“To empower and develop our people to create long-term value and sustainable growth for our stakeholders.
Our stakeholders are our shareholders, employees, pensioners, customers and suppliers. More broadly, we recognise our duties to the
environment and the communities in which we operate.”
In 2019, the Board formally adopted a Board Stakeholder Policy, which was key in setting the of current and future engagement with all of the
Group’s key stakeholders.
During 2021, methods of engagement were kept under review and further developed wherever possible, to ensure that they were done in a
way that was significant and relevant. Disruptions to normal working practices continued during 2021 due to the CV-19 pandemic and so every
effort has been made to tailor engagement to stakeholders reflecting these challenges, with some methods of engagements being adopted
permanently, such as colleague webinars.
Method
Information flow to Board
Direct Engagement
EMPLOYEES
Group Employee Forum
(GEF) and Nominated
Non-executive Director
(discover more information on
this on pages 92 to 96)
Attendance by Board at
subsidiary meetings
Different forms of
engagement
Interactive communications
including webinars with Q&A
sessions have continued to
be used to engage with our
people on a range of matters
this year.
Employee engagement
surveys
Employee engagement
surveys were carried out in
January and November 2021.
COMMUNITIES
Environmental, social
and governance
(see more about this in our
Responsible Business section
on pages 51 & 114 to 115)
Nominated Non-executive Director fed back any issues arising and
decisions required by the Board on issues presented by the GEF.
GEF meetings attended by Nominated Non-executive
Director and CEO.
Subsidiary board MDs and department heads attended Board
meetings to discuss issues relevant to their company and key issues
throughout the Group.
The wider Board were kept aware of the webinars,
were able to attend them and received feedback on issues arising
afterwards.
Attendance by GEF at October 2021 Board meeting.
Board members attended subsidiary board and other
meeting opportunities throughout the year.
The CEO and Group Finance Director both participated
in the webinars to our people, as well as other Board
members on matters such as the launch of the
Responsible Business Strategy initiatives.
Whilst restrictions allowed, the CEO also hosted
numerous in person breakfast sessions throughout the
year. Groups were chosen at random to spend time
with CEO on an informal basis discussing any areas
of interest and raise suggestions or issues directly
with him.
Results of the employee engagement surveys including actions
arising are brought to the Board following completion for review and
agreement of next steps.
Attendance by the GEF at October 2021 Board
meeting to discuss significant issues arising from
surveys.
The Board has now formed a Responsible Business Committee,
with Board Directors as members, which oversees the development
and implementation of the Group’s Responsible Business Strategy. A
key pillar of this relates to community engagement and partnerships,
overseen by the Committee with ultimate responsibility to the Board.
Members of the Responsible Business Committee have
been proactively involved in the development and initial
delivery of the Group’s Responsible Business Strategy.
The Responsible Business Manager has met routinely
with the Board and presented at Board meetings and
the Strategy Days.
Reserved matters
Approvals now require specific consideration of
stakeholder engagement.
Community engagement
The Responsible Business Committee has formulated a Phase 2
Responsible Business Strategy and framework for reporting on ESG
matters. This included stakeholder engagement across the Group
and externally, in relation to all ESG matters, to determine the current
state of play and opinions, for presentation alongside the Phase 2
Strategy.
Much work has been done on an individual project basis and also
subsidiary and Group wide on community engagement, particularly
through the 135 Henry Boot project. This is detailed further at pages
53 to 56.
92
Gerald Jennings is the Board Sponsor of the
Community Partnership Plan (CPP) and will, in addition
to attendance at the GEF meetings, meet with the
Charity Committee and Responsible Business Working
Group on an annual basis.
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE Method
Information flow to Board
Direct Engagement
PENSIONERS
Pensioners’ lunch
Ad hoc events for
pensioners and family
members
Usually arranged by the Company and attended by
Board members (impacted by CV-19 in 2021).
Wherever possible these are attended by Board
members.
Colleagues who were active contributory members to
the defined benefit pension scheme were consulted
on the closure of the scheme to future accrual with
effect from 19 March 2021. The consultation was
led by the Group Finance Director and the Head of
HR and was conducted on a collective basis using
video conferencing to provide information to affected
members on the Company’s proposal.
Pensions Report
The Group Finance Director provides pensions update at every
Board meeting including details on any events notifiable to the
Pensions Regulator. The Board were kept fully informed on the
closure of the defined benefit pension scheme to future accrual and
the process of consulting with individuals who were affected.
CUSTOMERS (including local authorities)
Subsidiary engagement
Awards
ENVIRONMENT
Formal and informal feedback methods are carried out throughout the
Group. More rigorous methods of engagement are being introduced by
each subsidiary business during 2022 and will be fed back to the Board
on an annual basis, to enable the Board to consider any required direct
engagement in due course.
In conjunction with our clients and customers, we represent our
joint success in schemes across the Group through achievement of
numerous awards.
Environmental, social and
governance
The Responsible Business Committee oversees the development
and implementation of the Group’s Responsible Business Strategy.
(see more about this in our
Responsible Business section
on page 66)
Members of the Responsible Business Committee have
been proactively involved in the development and initial
delivery of the Group’s Responsible Business Strategy.
The Responsible Business Manager has met routinely
with the Board and presented at Board meetings and
the Strategy Days.
Current environmental
assessment and reporting
Reporting requirements and methodologies form part of reports
to the Board in relation to formulation of the Group’s Responsible
Business Strategy.
Matters Reserved for
the Board
Reports from Group subsidiary companies now contain
consideration of environmental issues.
SHAREHOLDERS
Investor roadshows
Structured feedback sessions are reported to the Board.
Focused investor
communication
Outcomes of any investor consultations are reported to the Board.
Regular Board updates
Provided in relation to investor and proxy advisor sentiment collated
by management/brokers/PR.
Shareholder engagement
with family members
AGM
SUPPLIERS
Take place annually with the CEO and Group Finance
Director.
Undertaken via letters/telephone calls regarding
significant ‘votes against’ and other issues of interest to
investors prior to AGM.
Done informally through family/other relationships with
Board members, on ad hoc basis.
Usual formal and informal engagement by all Board
members directly with shareholders sadly compromised
again in 2021 due to CV-19. Read more about the
AGM on page 204.
Health and Safety
This is continuously monitored and reported to the Board.
Interactions on site
Operations on site are part of the observation and feedback process.
OUR ENGAGEMENT THROUGH THE ANNUAL GENERAL MEETING
The Board carefully considered the best method of engagement with its shareholders due to the difficulties of holding an in-person AGM in
2021. The AGM in May 2021 welcomed questions to be submitted by shareholders in advance, and proxy voting in advance of the meeting
was strongly encouraged, with an online presentation containing business updates presented by the CEO available. Though the Board was
saddened to be unable to welcome shareholders in its usual manner, it felt that the format provided appropriate avenues for engagement, and
will be looking forward to welcoming shareholders in person again in 2022.
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE CORPORATE GOVERNANCE REPORT
BOARD LEADERSHIP AND COMPANY PURPO SE
EMPLOYEE ENGAGEMENT
As we often state, Henry Boot’s greatest assets are its people and as
such are a key focus across the organisation, including at Board level,
to ensure that our peoples views are being taken into account. The
Board has established two key methods of direct Board engagement,
also demonstrating compliance with provision 5 of the Code:
•
•
the founding of a network of Employee Forums across the
Group; and
the appointment of a designated Non-executive Director (NED) of
the Board to liaise with the Group Employee Forum.
In addition, there are a number of ways that employee engagement
is addressed in our Responsible Business Report on pages 52 to 66,
and in this section, we outline the ways in which that engagement has
specifically taken place with the Board.
EMPLOYEE FORUM
Our Group and subsidiary Employee Forums, launched in 2019, have
continued to meet to discuss a range of key Group issues during
2021. Each main wholly-owned subsidiary (and Henry Boot PLC)
have their own Subsidiary Employee Forum (SEF), the Chair of each of
which meets to form the Group Employee Forum (GEF).
The Group is constantly looking to develop and strengthen its
approach to employee engagement, and recognises the Employee
Forums as a pivotal route to hearing the voice of our people. As a
result, in 2021, the Board has undertaken a number of initiatives to
strengthen the arrangements for the GEF, such as coaching and
training for its members, as well as raising their profile, to ensure that
all Group colleagues have visibility over the work of the GEF. This work
will continue in 2022, focusing on the role of the SEFs, and ensuring
that subsidiary-specific matters equally receive the consideration
required to ensure meaningful engagement with leaders of the
respective businesses. This in turn will impact on issues being flowed
up to the GEF and thereafter, the Board.
OUTCOMES
A number of the key issues discussed, some of which have been
referred up to the Board or elsewhere throughout the Group for
resolution and/or discussion and feedback, are outlined here:
What employees requested
or were consulted on
Employee survey results
including approach to
reward and recognition
ESG
Agile Working Framework
Method and outline of engagement
How the Board responded
The Group results were shared with the Board who tasked
the GEF with identifying priorities that they would like to
investigate and develop a response to as a colleague
led solution. The GEF considered that promotion and
performance management were associated areas which
could be considered in parallel. The GEF, in consultation
with the wider workforce, developed an approach which
could be incorporated into the reward strategy during 2022
particularly in relation to career pathways, performance
management and performance-related pay mechanisms.
Preliminary drafts of both phases of the Responsible
Business Strategy were shared with the GEF to ensure that
the strategic direction and aspirations would be engaging
for our people. The GEF provided insightful feedback and,
in particular, provided guidance on how best to engage our
people when launching the strategies and guidance on the
level of aspiration for specific targets.
GEF members were canvassed for their views on the
Group’s proposed approach and were asked to contribute
to the consultation activities (through surveys and webinars)
being carried out widely across the Group. GEF members
remain involved in reviewing the roll-out of this initiative,
to ensure that the diverse needs of our people were
considered.
The Board and management through the
NED liaison provided guidance to the GEF
and provided scope for the integration
of the outputs to the existing reward
strategy project.
The GEF was invited to a Board meeting
to present its preferred solution, where
the Board sought to understand the
rationale of the solutions offered and
how this could be incorporated into
Henry Boot.
The Board and management, through
the NED liaison and CEO, supported
the Responsible Business Manager to
incorporate the feedback and guidance
from the GEF.
The Responsible Business Committee
has overseen the implementation of the
Agile Working Framework, and will be
monitoring its ongoing development
throughout 2022, alongside the GEF, who
will be focusing on this issue more widely
alongside wellbeing to propose additional
initiatives for our people.
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE What employees requested
or were consulted on
Method of engagement
Closure of the defined
benefit (DB) pension scheme
Removal of company cars
to be replaced by car
allowance
Method and outline of engagement
How the Board responded
GEF members were asked for feedback on initiatives such
as Breakfast with the CEO and the strategy and Group
update broadcasts by CEO and GFD, to understand how
effective these methods of engagement had been.
Engagement with the GEF in relation to
these methods will continue in order to
refine and add to effective channels of
communication.
Colleagues who were active contributory members of the
DB scheme were consulted on the closure of the scheme to
future accrual with effect from March 2021. The consultation
was led by the Group Finance Director and the Head of
HR and was conducted on a collective basis using video
conferencing to provide information to affected members on
the Company’s proposal. Individual consultation meetings
took place with each members by request, before the final
decision to close was made with support of the Board. The
final decision was communicated to all affected colleagues
by letter, with the wider pension scheme membership being
informed through the Spotlight pensions magazine.
In line with our NZC ambitions, the Company reviewed
our car fleet arrangements in light of the pandemic and
the increased move by colleagues to car allowance.
A consultation was held with all colleagues who had a
company car, guidance and insight was sought from the
GEF as to how best to approach this matter, as it was
perceived to be very emotive. Consultation was led by
the Head of HR with support from the Group Finance
Director and was conducted on a collective basis, followed
by individual meetings for those who wished to discuss
specific circumstances. The GEF was consulted on the
communication of the outcome of the consultation.
The Board supported the decision
to close the DB pension scheme to
active members and future accrual,
and delegated the management of the
closure to the Group Finance Director and
the Head of HR. The Board were kept
informed at all stages of the consultation
and the final decision to close was taken
at the Board meeting in March 2021.
The Board supported the decision to
move to a more progressive policy for
fleet arrangements. The Board were kept
informed at all stages of the consultation
and were notified of the final changes in
August 2021.
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE CORPORATE GOVERNANCE REPORT
BOARD LEADERSHIP AND COMPANY PURPO SE
Q&AWITH JEN MCNAMEE
(G EF CHA IR)
Q
HOW HAS THE BOARD SUPPORTED
AND INTERACTED WITH THE GEF
OVER THE PAST YEAR?
Q
HOW DO YOU FEEL THE GEF
SUPPORTS THE CULTURE OF
THE BUSINESS?
Q
WHAT AREAS DOES THE
GEF WANT TO FOCUS ON
IN THE FUTURE?
A
A
A
The Group Employee Forum comprises
the chairs of each of the PLC, Hallam,
HBD, Construction and Banner Employee
Forums, in addition to Gerald Jennings,
a Non-executive Director on the PLC
Board. Having Gerald on the GEF enables
us to have two-way communication
between the GEF and the PLC Board. The
agenda for every GEF meeting includes
suggestions for Gerald to take to the
Board, and questions received from the
Board. Further, Tim Roberts, our CEO,
whilst not a member of the GEF, is a very
frequent attendee at the GEF meetings
– we welcome Tim’s commitment to the
GEF and his involvement reflects the
value the business places on the GEF
and on seeking input from its employees
on decision making. In November 2021,
the GEF presented our proposed solution
for improving both the Promotions and
Review Processes within the business to
the Board. This was really well received
and will be used to shape future Henry
Boot promotion and review policies.
Henry Boot is a great employer and a large
part of that is down to its friendly, open
and supportive culture. The GEF gives a
voice to all employees across the Group.
It encompasses the Values of Henry Boot:
Respect – it facilitates two-way, clear and
constructive communication; Adaptability
– we challenge how we do things and
consider how they can be improved; and
Collaboration – the GEF and subsidiary
employee forums bring together
employees across all teams, locations and
subsidiaries and strives to bring about
positive change that meets the needs of
the business as a whole.
As we did last year, the GEF are in the
process of reviewing the low scoring
areas from the most recent Employee
Engagement Survey with a view to
identifying areas for improvement for the
GEF to focus on, and propose solutions
to, over the coming year. In addition,
the GEF is always open to hearing
suggestions for how we might improve
the business and tackling any issues
which are raised. Before new policies,
such as the Agile Working Framework
and the Responsible Business Strategy,
are rolled out across the Group, they are
referred to the GEF first, who in turn ask
the employees for their views. Given the
value Henry Boot places on openness and
transparency, the GEF periodically seeks
feedback on Group-wide communications
to check how these are perceived and
whether the method of communication
and level of detail is being pitched at the
correct level.
96
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE BREAKFAST CLUB WITH TIM
Tim Roberts commenced his role as Chief Executive
Officer in January 2020. Less than three months
later, the UK went into lockdown in response to the
CV-19 pandemic. Whilst the Group continued to
function effectively throughout this time, the pandemic
and associated restrictions significantly curtailed
the ability for Tim to engage with teams across the
business in person. As a new CEO, Tim recognised
the importance of getting to know colleagues from
across the Group and for them to get to know him,
whilst also being given the opportunity to find out
about his vision for the business and ask of him any
questions they may have or share feedback about
their experiences of working for the Group.
To enable this, a new event series ‘Breakfast
Club with Tim’ was launched in September 2021.
Taking place approximately every six weeks, these
events are hosted by Tim and find him inviting a
group of colleagues to join him for an informal and
complimentary breakfast and discussion. Each event
is attended by approximately ten colleagues with
events held alternately at Head Office (attended by a
selection of colleagues representing each subsidiary)
and regional locations (offices, sites or depots and
attended by the teams in these locations).
The events have given a number of our colleagues the
opportunity to get to know Tim and share with him
their experiences of working for the Group, feedback
on specific initiatives (e.g. agile working) and to offer
ideas as well as to hear Tim’s plans for the business.
To date, three events have been hosted in September
(Dronfield); October (Manchester); and November
(Sheffield) with plans for further events in place
throughout 2022.
“ HOSTING THE BREAKFAST CLUB HAS PROVIDED
AN EXCELLENT OPPORTUNITY FOR ME TO GET TO
KNOW MY BRILLIANT COLLEAGUES ACROSS THE
GROUP AS WELL AS TO HEAR THEIR FEEDBACK
AND IDEAS DIRECTLY ABOUT HOW WE DEVELOP
OUR BUSINESS. THIS HAS BEEN INVALUABLE AND
WE WILL CONTINUE TO EVOLVE THE EVENTS AND
ENGAGE WITH OUR PEOPLE TO ENSURE THAT WE
WORK CLOSELY TOGETHER AS A TEAM.”
TIM ROBERTS
CHIEF EXECUTIVE OFFICER
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE CORPORATE GOVERNANCE REPORT
COMPOSITION, SUCCESSION AND EVALUATIO N
BOARD PERFORMANCE REVIEW
Although Henry Boot is not required to conduct an externally
facilitated performance review, as it sits outside the FTSE 350, the
Nomination Committee did seriously consider whether to engage
an external provider for 2021. Whilst the value of such a process
was fully appreciated, the Committee concluded that it would
be preferable to delay to a year when face-to-face meetings had
completely resumed in order to maximise the benefits. This decision
will be reviewed again in 2022.
A formal and rigorous internal performance review was, undertaken
for the Board, its Committees, the Chair and each individual Director.
Given the increased attendance at meetings from management
throughout the year, and in the spirit of eliciting feedback from
stakeholders, all attendees at Board meetings were asked to
complete an anonymous questionnaire seeking their thoughts on
preparing for, attending and receiving feedback after the meetings.
This step offered an additional layer of rigour to the evaluation process
and introduced a new stakeholder perspective to the review.
The process and results are set out below.
AREAS WHERE THE BOARD
SCORED STRONGLY:
• Welcoming and respective
environment
•
Increased focus on ESG
matters
• Open and collaborative
approach
• Management oversight
and challenge
BOARD FOCUS AREAS:
• Understanding the customer
• Refine reporting approach
• Further increase the Board’s
visibility following CV-19 and
remote working culture
PROCESS
STEP
STEP
In March 2021, the Nomination Committee
considered whether to conduct an externally
facilitated performance review but agreed
to proceed with an internal approach for the
reasons set out above.
Questionnaire deadline, results were
collated and reports written.
STEP
STEP
The Board discussed and agreed
an approach in October 2021.
At the year-end, results were reviewed with
the Board and respective Committees,
and actions were agreed for 2022.
Progress against the 2021 actions was
also discussed.
STEP
STEP
Question content was agreed with the
respective Chairs and the questionnaires
issued. 1:1 interviews were also arranged with
Jamie Boot to discuss individual performance
and training needs.
Mid-year reviews will be carried out in summer
2022 to discuss performance against the
agreed actions before a full review at the
year-end.
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE COMPOSITION, SUCCESS AND EVALUATION
BOARD
2021 action areas
Strategy
Ensure there is a regular update to the Board on progress against
the 2020 Strategy Day actions.
Reporting
Ensure that stakeholder engagement and views are built into Board
reporting more robustly.
Work with the Executive Committee to develop consistency and
brevity of subsidiary reporting and ensure that they contain clear and
concise summaries.
Progress during 2021
Progress against the Strategy Day actions were reviewed in the July
Board meeting and again at the 2021 Strategy Day.
Stakeholder views are more consistently considered in meetings.
KPIs are now reported in a consistent approach across all the
different businesses and all Board papers across the Group are
distributed on the same electronic platform.
There is still some further work to be undertaken to streamline the
reports and oversee the governance framework.
Action areas for 2022
Customer
Regular updates to the Board on the development of the customer feedback processes for each business and review where direct Board
involvement would be beneficial.
Agenda
Review the Forward Business Schedule in H2 with the aim of reassessing agenda structure and priorities.
Key Project Oversight
Introduce a more structured process for monitoring projects that have received Board approval and increased focus to be given to capturing
lessons learned.
AUDIT AND RISK
2021 action areas
2021 action areas
Risk review
Continue ongoing review of risk appetite, principal and emerging
risks and the mitigation measures in place.
Risk mapping
Undertake a risk assurance mapping exercise in conjunction with
internal/external auditors
External audit
Evaluate first full financial year audit carried out by EY to identify any
pinch points or lessons learned.
Progress during 2021
Progress during 2021
Biannual updates on all risk aspects received by the Committee
following a detailed review by the Executive Committee.
Initial risk mapping exercise undertaken in conjunction with KPMG.
This will be an ongoing exercise which will be kept under review.
The results of the evaluation, including a debrief with EY and
feedback from senior internal stakeholders, was discussed in
July 2021.
Internal audit
Tendering the position of internal auditor, and considering the
approach and content for internal audit for 2022 onwards.
A tender was undertaken with three firms presenting to a panel.
The decision to appoint KPMG was approved in September 2021.
Action areas for 2022
Internal controls
Monitor and implement (as required) the new requirements arising from the BEIS consultation.
Climate-related risks
Evolve our approach to the assessment of climate-related risks and climate scenario planning in line with TCFD recommendations.
Independence Policy
Refine Company policy and protocols for maintaining independence from the external auditors.
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99
Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE COMPOSITION, SUCCESSION AND EVALUATION
CORPORATE GOVERNANCE REPORT
COMPOSITION, SUCCESSION AND EVALUATIO N
NOM INATION
2021 action areas
2021 action areas
Equality, Diversity and Inclusion
Continue to monitor and support Equality, Diversity and Inclusion
(EDI) initiatives across the Group with the corresponding link that
this represents in providing progress against diversity targets in the
Board Diversity Policy.
Skills development
Continue to consider the future Group strategy and the skills
needed at Board level to bridge any skills gaps.
Succession planning
Continue to review at least annually the succession plan for
Executive Directors and senior management and, in light of the
Senior Leadership Development Programme, invite the Executive
Committee to prepare a succession plan for the senior leadership
within their teams.
Action areas for 2022
Progress during 2021
Progress during 2021
EDI initiatives monitored and supported and EDI training undertaken
for all Board members. Women on Board have been co-appointed
to recruit the new NED with a view to improve diversity on the Board.
Diversity-related people targets included in the Responsible Business
Strategy and Executive Director remuneration.
The Skills Matrix was reviewed in 2021 and will be carefully
considered again in 2022 ahead of future Board appointments.
Talent grids for each subsidiary business were reviewed in March
2021 with a request to broaden further for 2022.
Executive Succession
Review succession plans for each Executive Committee member and those prepared by the MDs of each business.
Skills Matrix
Re-evaluate the approach to the skills mix on the Board, ensuring that skills required to deliver the Group’s future strategy are fully considered.
Diversity
Work with recruitment partners to ensure that the long list and short list for the new NED appointment is adequately diverse to find the best
possible candidate for the role.
EDI
Continue to monitor and support Equality, Diversity and Inclusion initiatives across the Group with the corresponding link that this represents
in providing progress against diversity targets in the Board Diversity Policy.
100
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE REMUN ERATION
2021 action areas
2021 action areas
Disclosure
Considering appropriate levels of disclosure in relation to the new
Remuneration Policy and its application, as well as reporting against
Code compliance achieved this year.
Stakeholder engagement
Ensure that stakeholder engagement and views are built into
Committee reporting more robustly, in particular our peoples views of
(linking into the Group Employee Forum as applicable).
Workforce remuneration
Continue to gain further oversight into the reward strategy of the
wider workforce and review appropriateness, seeking to align where
appropriate with the approach across the Group and with Senior
Management.
Progress during 2021
Progress during 2021
Increased level of disclosure made in the 2020 Annual Report and
good progress towards best practice and code compliance with
the introduction of the 2021 Remuneration Policy.
Strong support received at the 2021 AGM for the Remuneration
Report and the Policy.
The Group Employee Forum held a session with the Committee to
present their view on reward and performance management.
Gerald Jennings holds a session every year with the GEF to discuss
remuneration matters including the Executive Directors’ personal
objectives.
The Committee has overseen a review undertaken by Korn Ferry
to initiate a new approach to workforce reward with a clearer link
to performance.
Annual Bonus decisions have been aligned to the approach for the
wider workforce.
Action areas for 2022
Executive Committee pay
Review the salaries and structure of the Executive Committee members’ variable pay to ensure a consistent approach and alignment with the
Executive Directors and the wider workforce.
Workforce remuneration
Monitor the roll out of the new workforce Rewards and Recognition Strategy, seeking feedback from the Group Employee Forum at various
stages.
RES PONSIBLE BUSINESS COMM ITTE E
Action areas for 2022
Specialist speakers
To engage with a series of specialist guest speakers who will inform the Committee on a variety of ESG topics including the regulatory and
legislative framework.
Training
Working with the Responsible Business Manager and Company Secretary, to identify and commission specialist third parties to provide
training and/or updates on the ESG regulatory and legislative framework to the Committee and the workforce.
Engagement
To engage with all Henry Boot working groups, including the Group Employee Forum, focusing on responsible business throughout the year
to understand their roles, opinions, and aspirations.
Best practice
To identify peers (in our sector and beyond) that are performing well on ESG and continually work with the Responsible Business Manager to
benchmark Henry Boot’s performance.
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101
Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE CORPORATE GOVERNANCE REPORT
COMPOSITION, SUCCESSION AND EVALUATIO N
JAMIE BOOT
COMM ITTEE
MEMB ER
JOANNE LAKE
COMMITTEE
MEMBER
JAMES SYKES
COMMITTEE
MEMBER
GERALD JENNINGS
COMMITTEE
MEMBER
6
6
6
6
6
6
6
6
Nomination
Committee
attendance key
Meetings attended
Eligible meetings
REVIEW OF THE YEAR
2021 has been a busy year for the Nomination Committee
(the Committee), we met six times to consider a wide variety
of significant issues and initiatives. A key focus area for the
year was succession planning, for the Board Chair, Non-
executive Directors and the Executive Committee. We have
also continued to broaden our understanding of the talent
below these levels and have received updates on the Senior
Leadership Development Programme and the Leadership
Development Programme.
Time has been spent reviewing the skills, knowledge and
overall effectiveness of the Board and its Committees and,
as a result, the Committee approved the membership of
the new Responsible Business Committee in March 2021,
which works alongside the Committee and will lead the
focus on ESG matters.
Diversity and inclusion remained a priority as we seek to
improve diversity across all fronts. This has been at the
forefront of our decision to appoint Women on Boards as a
joint partner for the recruitment process to appoint a new
Non-executive Director during 2022.
Further details of 2021’s activity can be found over the next
few pages.
102
NOMINATION
COMMITTEE
REPORT
PETER MAWSON
CHAI R OF THE NOMINATION CO MMITTEE
6
6
Those serving as members of the Committee for the whole
of 2021 were myself, Joanne Lake, Gerald Jennings, Jamie
Boot and James Sykes. Within the year there have been no
changes to the composition of the Committee.
On behalf of the Board and the Committee, I am pleased
to present the Directors’ Nomination Committee Report for
the year ended 31 December 2021.
HENRY BOOT PLC BOARD
NOMINATION COMMITTEE
Proactive Board succession planning
and appointments
Read more on page 103
Leading process for
senior management
appointments
Read more on page 103
Assessing core skills
and commitment
Read more on page 104
Identifying skills and
experience gaps
Increasing
Diversity
Read more on page 104
Read more on page 105
Monitoring overall Board and
Committee effectiveness
Read more on page 107
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE
NOMINATION
COMMITTEE
REPORT
BOARD SUCCESSION PLANNING AND CHAIR APPOINTMENT
The Committee has been aware for some time that it needed to
reconsider its succession planning approach, taking into account its
aspirations for diversity and inclusion, the need to plan for the future
and also to consider appropriate methods of addressing outcomes of
its skills evaluation. Towards the end of 2021, the Committee reviewed
the duration of service for all current Directors, and discussed with each
Director their preferences for the remainder of their service.
During these conversations, it became clear that Jamie Boot would like
the Committee to consider planning for his retirement during the course
of 2022. As a result, an indicative timeline of potential recruitment and
selection procedures was considered and agreed.
AUTUMN 2021
Informal conversations held with all Directors
DECEMBER 2021
Considered approach for Jamie’s retirement and Non-executive
Director succession. Agreed that an existing Non-executive
Director should be appointed for continuity reasons
JANUARY 2022
Expressions of interest submitted
FEBRUARY 2022
Formal interview process
Chaired by Joanne, the Committee approved Peter’s
appointment
MAY 2022
26 MAY 2022
Jamie to retire. Peter to commence Chair role
SUMMER 2022
New independent Non-Executive Director to be appointed
After undertaking a considered selection process to determine the
Chair succession, inviting expressions of interest from all independent
Non-executive Directors currently serving on the Board, I will be
appointed as Chair with effect from Jamie’s retirement in May 2022.
I have been a member of the Board since 2015 and am determined
to continue to drive Henry Boot’s commitment to achieving high
governance standards and following best practice, whilst ensuring
that stakeholder engagement remains a key priority. I will be retaining
my role as the Chair of the Nomination and Responsible Business
Committees, the latter being in the short term prior to appointment of
a new independent Non-executive Director later in 2022.
As a consequence of my changing role, the Senior Independent
Director position will be assumed by Joanne Lake. The Board has
taken the decision to retire the role of Deputy Chair, which was
previously held by Joanne, as it is not considered to be usual for a
Company of this nature.
Following Jamie’s retirement, there will be a temporary imbalance in
the number of independent and non-independent Directors on the
Board for a short period of time. This will be addressed and actively
managed through a thorough recruitment and succession
programme, with the aim being to appoint an independent
Non-executive Director in summer 2022, when we will return to
being Code compliant. Further independent Non-executive Directors
will be appointed during the following years, replacing those
“ WE INTEND TO SEE REAL PROGRESS
ON OUR DIVERSITY TARGETS OVER THE
COMING YEARS. AS A SIGN OF OUR
COMMITMENT, WE HAVE ENGAGED
WOMEN ON BOARDS AS A JOINT
RECRUITMENT PARTNER ALONGSIDE
NORMAN BROADBENT TO MAXIMISE
THE DIVERSITY INCLUDED IN THE LONG
AND SHORT LISTS FOR OUR NEW NON-
EXECUTIVE DIRECTOR APPOINTMENT.”
approaching their nine-year tenure, to ensure that Board membership
is progressively refreshed. In addition, there is anticipated to be a
further period during which the flexibility permitted by provision 19 of
the Code, to allow me to remain in my role as Chair past the nine-
year period of tenure, is contemplated. This is to ensure that all new
Non-executive Directors who have been recruited will have developed
detailed knowledge of the business, before becoming eligible to be
considered for the Chair role anticipated in 2026.
The Committee took the informed decision not to appoint an external
recruitment partner to select a new Chair, considering instead that
maintaining continuity of experience was vital to ensure a smooth
transition to a new Chair. However, the Committee considers it be a
major step to have an independent Non-executive Director taking the
Chair role, and that the approach taken ensures a good balance of
independence alongside maintenance of the knowledge acquired from
a Director who has been on the Board for over 36 years.
However, external recruitment partners have been selected by the
Committee to assist with the recruitment process for new independent
Non-executives to the Board. The Committee’s appointed partner is
Norman Broadbent, who will be used in conjunction with Women on
Boards, to help the Committee to shape its requirements for the role
and to propose strategies to achieve greater diversity on the Board.
The Committee fully recognises the commitments within its Board
Diversity Policy (see page 105) to achieving greater diversity and
inclusion within its members, whilst acknowledging that it will take
time to be able to put these objectives fully into action through this
succession approach. In addition, the Committee will be considering
the extent to which it can address any outcomes from its skills
assessment in the recruitment activities, whilst acknowledging that it
will also need to fulfil any other regulatory requirements in relation to
Committee Chairs and membership.
EXECUTIVE APPOINTMENTS
The Committee oversaw the process for appointing two new Executive
Committee members during 2021, due to the retirement of the MDs
of Banner Plant and Henry Boot Construction. External recruitment
consultants, Page Executive, who were our recruitment partner for the
recruitment of Tim Roberts, but who were subject to the usual tender
process for contacts of this nature, have no other connection to the
Company or individual Directors, were engaged to support the process.
Following a rigorous and formal procedure, the Committee appointed
Jonathan Fisher (an external hire) as MD of Banner Plant and Tony
Shaw (an internal promotee) as MD of Henry Boot Construction. It was
encouraging to see a balance of internal and external routes into the
roles; Tony’s development is something we have been following for a
while under the executive succession plans and Jon brings a fresh,
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE CORPORATE GOVERNANCE REPORT
COMPOSITION, SUCCESSION AND EVALUATIO N
Nomination Committee Report
external perspective that has already added value. Both appointees
have made a strong start at their respective businesses and have
contributed positively to the Executive Committee dynamics.
In 2020, the Committee initiated a programme aimed at our next layer
of leaders. The Leadership Development Programme (LDP) has one
additional objective:
Committee approval was also given during the year for two internal
promotions to Directors of key subsidiary boards.
SUCCESSION PLANNING
The Committee reviews talent grids for its senior management on an
annual basis, noting progress of individuals over the past 12 months. The
Committee also oversees the Company’s Senior Leadership Development
Programme (SLDP) through successive cohorts of its senior management.
Our investment in learning, development, talent and succession at all levels
in the business is pivotal in achieving our key objectives:
• To facilitate and foster cross-Group working and learning.
Though implementation of the LDP has been hampered to some
extent by the CV-19 pandemic, cohorts have still been undertaking the
programme, leading to further development activities and succession
planning outcomes as a result. This important work continues to establish
a process for the Group to identify its future talent and ensure that they are
given the environment in which to thrive. The Committee will be overseeing
the continued delivery of the LDP during 2022 and monitoring its ongoing
impact on succession planning throughout the business.
• Delivering our purpose which is: “To empower and develop our
people”; and ensure that this applies at all levels including our
senior teams.
BOARD EVALUATION AND SKILLS ASSESSMENT
Formal performance reviews were carried out at the end of 2021 and
you can read about the process and results on pages 98 to 101.
• To strengthen our short and medium-term succession planning
across the whole business; whilst providing the foundations for
longer-term talent planning.
• To provide the right level of development support to ensure
that we all continue to make the maximum contribution to the
wider business.
In addition to the performance reviews outlined above, the Committee
reviewed the assessment of the Board’s knowledge and experience,
technical skills and understanding of the Henry Boot culture and
behaviours. Following an in-depth review of the skills in 2020 as
detailed in last year’s report, the results were re-examined and
assessed for 2021 in light of the Group’s current and future strategic
direction. The Committee also considered the necessary skills and
experience for the new Responsible Business Committee.
KNOWLEDGE AND EXPERIENCE
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE
For the scores that were at or below the mid-point of the ‘Good’
ranking, the Committee considered four potential courses of action:
• Do nothing.
• Buy in expertise (short term, targeted).
• Build expertise from within.
• Recruit expertise.
Actions were agreed and, overall, the Committee felt that there were
no significant areas of concern. The Committee’s view was that the
low scores in these areas represented less of an issue as to their
ability to challenge practices throughout the Group and it felt confident
that it could assess and identify areas of challenge. The Skills Matrix
will be reassessed during 2022 and will be key to determining the role
profile for recruiting new Board members as it aims to address any
key gaps.
BOARD DIVERSITY POLICY
The Committee reviewed and approved its Board Diversity Policy during
the year, which is aligned to the recommendations of the Hampton
Alexander Review regarding gender diversity on Boards, and the Parker
Review on B.A.M.E. Board representation. The full policy is available to
view athenryboot.co.uk/our-responsibility. The Committee is ensuring that
the objectives set out within the Board Diversity Policy are fully incorporated
within the recruitment activity being undertaken during 2022 and beyond,
and anticipates being able to make progress towards achievement of
those objectives through this period of Board refresh.
Our key strategic priorities, which are centred around safety, people,
growth and delivery can only be enhanced by seeking diversity of opinion
which is achieved through having a varied Board membership. One of
the four pillars of our Responsible Business Strategy, launched in January
2022, is dedicated to Our People. This pillar aligns with our goal to
champion diversity and incorporates the strategic objectives of our Group-
wide People Strategy and EDI Strategy (see page 55 for more information).
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105
Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE CORPORATE GOVERNANCE REPORT
COMPOSITION, SUCCESSION AND EVALUATIO N
Nomination Committee Report
Objective
Progress against objective
Status
1 The Board will ensure that it is made up of an appropriate
mix of skills, experience and knowledge required to
effectively oversee and support the management of the
Group.
2 The Board has set a target to meet the objective of
the Hampton Alexander Review, in that at least 33%
of our Board members are women, provided that this
is consistent with the prevailing skills and diversity
requirements of the Group as and when seeking to
appoint a new Director to the Board. It is recognised that
there will be periods of change on the Board and that
this number may be smaller for periods of time while the
Board is refreshed; however, it is our longer-term intention
to achieve this target.
3 The Board has set a target to meet the objectives of the
Parker Review for at least one Black, Asian and Minority
Ethnic (B.A.M.E) Board member, provided that this is
consistent with the prevailing skills and diversity of the
Group as and when seeking to appoint a new Director to
the Board. It is recognised that there will be periods of
change on the Board and that this target is reliant upon
the Board being refreshed; however, it is our longer-term
intention to achieve this target.
4 The Board will consider candidates for appointment as
Non-executive Directors from a wider pool including
those with little or no previous FTSE Board experience.
5 The Board will work with external recruitment consultants
to provide support for Board appointments and will
ensure that Non-executive Director ‘long lists’ include
both women and B.A.M.E candidates.
Detailed review of effectiveness undertaken confirming that the
Board is adequately resourced and performing well.
At least 33% female representation remains our goal but
currently stands at 14% (1 out of 7). As a signal of our
commitment, we have engaged Women on Boards as a joint
recruitment partner alongside Norman Broadbent to maximise
the diversity included in our long and short lists.
We are fully committed to achieving and exceeding this goal
with our Non-executive Director succession planning and
Group-wide diversity initiatives.
We currently have no B.A.M.E members on the Board. As
above, it is our intention to achieve this objective over the next
rounds of recruitment and as we progress our EDI Strategy.
We are consciously working with our recruitment partners to
ensure that briefs for Non-executive Director appointments
encourage diverse candidates. Previous FTSE experience is not
a specified requirement as we would like to attract a broad pool
of applicants.
This year we have improved our approach to diverse recruitment
and will work with external partners for upcoming Board
appointments.
As previously discussed on page 103, we did not engage an
external recruiter for the appointment of the new Chair. This was
a considered decision to prioritise the continuity of the Board as
Jamie Boot, a major shareholder and Boot family member, is due
to retire after over 36 years as a Director.
106
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE Objective
Progress against objective
Status
6 The Board (in conjunction with the Committee and the
Responsible Business Committee) will support and
monitor Group activities to increase the percentage of
senior management roles held by women and other
under-represented groups across the Group. Activities
may include, but not be limited to, the hiring of diverse
external senior managers and internal promotion activity
but also continued emphasis on diverse pipeline,
graduate and apprentice recruitment to support this
objective long term.
Through a series of peer sharing forums and information
exchanges, led by our HR team, we have worked to elevate
the built environment and real estate as a positive career option
for women and under-represented groups. Whilst there is still
more to do in this area, the intent to develop a pipeline of talent
for the Group, which meets our diversity aspirations, is crucial.
The Directors have recently approved vastly improved family
leave policies, as well as the introduction of new policies aimed
at improving the experience for women at work, such as our
Menopause Policy.
7 The Committee (together with the Responsible Business
Committee), on behalf of the Board, will monitor,
challenge and support internally set targets for diversity
and inclusion at all levels across the organisation.
Phase 2 of the Responsible Business Strategy launched in
January 2022 and includes People-related targets. The Strategy
was reviewed by the Responsible Business Committee and
approved by the Board.
ESG-related targets now also form 25% of the personal objective
element of the Annual Bonus award for Executive Directors.
These include quantitative targets for improving the gender mix
and reducing the gender pay gap.
We have improved disclosure of progress against our targets
for this year. Whilst we have not achieved all our targets yet, we
remain determined to drive improvements and hope to have
made further progress during 2022.
8 The Committee (together with the Responsible Business
Committee), on behalf of the Board, will report annually
against these objectives and other initiatives taking place
within the Company which promote gender and other
forms of diversity.
Key:
Objective achieved
Objective achieved in part
Objective remains a work in progress
The gender balance of those in senior management positions and
their direct reports is shown on page 59. You can read more about
our EDI Strategy and workforce diversity initiatives on page 62.
TERMS OF REFERENCE
In October 2021, the Committee reviewed its terms of reference in line
with the scope of its operations, and the requirements of the Code,
to ensure that they remained appropriate. Some minor amendments
were proposed and approved, and the full terms of reference are
available to view on the Company’s website.
BOARD EFFECTIVENESS AND TIME COMMITMENT
The Board believes it has an appropriate balance of Executive and
Non-executive, and independent and non-independent Directors
having regard to the size and nature of the business. Further to a
review by the Committee, it is felt that the overall combination of
experience, skills, knowledge and lengths of service of the current
Board members provides an appropriate level of balance which
contributes to effective decision making and helps to mitigate risk.
A detailed succession plan for the Non-executive Directors has been
developed by the Committee and will address any gaps needed to
achieve our strategic objectives.
The Committee discussed the skills, independence, length of tenure
and time commitments of all the Directors and reviewed the results of
the 2021 performance reviews (see page 107 for more information) as
well as the Board skills evaluation completed during the year.
During this process, we noted that Joanne Lake held directorships
in other publicly-listed companies including a chairship at Made
Tech Group plc. Joanne’s time spent at her other directorships
now equates to, on average, ten days a month and, therefore,
the Committee agreed that this leaves sufficient time to carry out
her duties. Among other things, her experience from other listed
businesses provides helpful insight into governance matters and best
practice and we value her input. We do not see any indication that
these other directorships negatively impact her contribution to the
Group and remain wholly satisfied with her time commitments and
performance.
Following the review, I can confirm on behalf of the Committee that
the performance of the Directors, the Board and its Committees,
continues to be effective and that all individuals show commitment to
their roles. All Directors, apart from the retiring Jamie Boot, will seek
re-election at the upcoming AGM, biographies are shown on pages
76 to 77, and a further summary of Board roles and responsibilities
can be found on our website at henryboot.co.uk.
PETER MAWSON
CHAIR OF THE NOMINATION COMMITTEE
13 April 2022
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE AUDIT AND RISK
COMMITTEE
REPORT
JOANNE LAKE
CHAI R O F THE A UDI T AND RI SK CO MMITTEE
4
4
INTERNAL AUDIT
Given the size of the Group and extent of the internal
audit activities required, the Committee considers that an
externally appointed internal auditor is appropriate.
This provides independence to the internal audit activities
as well as ensuring that any required areas of specialism
and knowledge of audit processes can be provided by
the auditor.
Until early 2021, the role of internal auditor was held by
BDO LLP (BDO). As we signalled during our 2020 report,
we have carried out a tendering exercise during 2021 for
the position of internal auditor, and from 2022 onwards
our internal audit partner will be KPMG LLP (KPMG).
Please pages 109 to 110 for further details of the tendering
process and internal audit plan for 2022.
CORPORATE GOVERNANCE REPORT
AUDIT, RI SK AND INTERNAL CONTR OL
REVIEW OF THE YEAR
On behalf of the Board and the Audit and Risk Committee
(the Committee), as Chair of the Committee, I am pleased
to present the Directors’ Audit and Risk Committee Report
for the year ended 31 December 2021.
This year, the Committee has continued to develop its
relationship with EY as the external auditor of the Group,
overseeing all external and internal audit activity and internal
controls regarding risk. Whilst the audit environment was
by no means as challenging as that experienced during
2020, there were naturally some ongoing impacts relating
to the CV-19 pandemic that related to both auditing and
risk-related issues, which the Committee has monitored
throughout the course of the year. In addition, due to
the re-tendering exercise carried out during 2021 for the
Group’s internal audit partner, the Committee has been
involved in ensuring that the existing internal audit work
has been appropriately resolved, managing the tendering
process and on-boarding the new internal audit partner, as
is outlined below.
Those serving as members of the Committee were myself
(Committee Chair), Peter Mawson and Gerald Jennings.
GERALD JENNINGS
COMM ITTEE
MEMB ER
4
4
PETER MAWSON
COMM ITTEE
MEMB ER
4
4
Audit and Risk
Committee
attendance key
Meetings attended
Eligible meetings
108
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE
AUDIT AND RISK
COMMITTEE
REPORT
During 2021 the following internal audit reviews were carried out by BDO:
Topic
Outline
CYBER SECURITY
AND PENETRATION
TESTING CONTROLS
To provide assurance over the controls in place around cyber security, including:
• Cyber security risk assessment in the Group.
• Cyber security training arrangements.
• The management of mobile and hardware assets.
• Threat detection controls and the use of technical reviews such as penetration testing and appropriate
remediation activity.
STONEBRIDGE
ACCOUNTS PAYABLE
To provide independent assurance as to whether appropriate controls are in place to mitigate the key risks
over the accounts payable processes in Stonebridge Homes (our jointly-owned housebuilder).
STONEBRIDGE
CONTRACTORS
CORE FINANCIAL
CONTROLS
To assess whether appropriate controls are in place to mitigate the key risks over development contractors in
Stonebridge Homes, in relation to how contractors have been appointed and subsequently managed.
This was an advisory review over the introduction of Evision, a new finance system that has been
implemented within Henry Boot PLC over the last 12 months, to provide advice over the operation of general
ledger processes and controls within the new system.
The results of this internal audit activity will be considered
by the Committee on an ongoing basis including any
recommendations and the overall status of the audit result.
In 2021, BDO carried out a follow up exercise in relation
to the results of the internal audit activities from 2020 and
presented a review to the Committee in February 2021, to
ensure that outstanding activities had been carried out.
“ WITH THE DEVELOPMENT OF
POSITIVE WORKING RELATIONSHIPS
WITH OUR EXTERNAL AUDITOR,
AND THE INTRODUCTION OF A
NEW INTERNAL AUDIT PARTNER,
OVERSIGHT BY THE COMMITTEE
THIS YEAR HAS BEEN ROBUST AND
PRODUCTIVE.”
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109
Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE CORPORATE GOVERNANCE REPORT
AUDIT, RI SK AND INTERNAL CONTR OL
Audit and Risk Committee Report
TENDERING PROCESS WAS AS FOLLOWS:
STEP
STEP
STEP
The Committee approached a
number of firms to assess interest and
capability before embarking on its
tendering process.
The invitation to tender (ITT) was
issued in June 2021, with three firms
indicating a willingness to participate,
one big and two mid-tier firms including
the incumbent. The ITT considered
experience, resourcing, overall approach
to internal audit, transition, quality
assurance and fees.
Tenderers were given access to
management and relevant information
during the process and written
proposals were received in August 2021.
STEP
STEP
Presentations were made by
tenderers to a panel comprising the
Committee Chair, Group Finance Director,
a Non-executive Director and
the Group Financial Controller in late
August 2021.
A recommendation was put to the
September Audit and Risk Committee
to appoint KPMG as the new internal
auditor, which was approved. The
decision was reached on the basis that
KPMG could bring a fresh perspective,
specialist insight and a deeper, more
challenging review of key risks.
110
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE INTERNAL AUDIT EFFECTIVENESS
REVIEW AND RE-TENDERING
The Committee determined that an assessment of the effectiveness of
the internal auditor was not appropriate for 2021 due to the fact that
the Committee was carrying out a tendering exercise for its internal
auditor during the year, which by its nature, would assess the services
provided by BDO, who were considered as part of this exercise.
An onboarding process commenced towards the end of 2021,
with the key internal audit Director meeting stakeholders from the
Committee and throughout the Group to understand areas of potential
focus and substantive processes, in order to develop the approach to
internal audit for 2022.
EXTERNAL AUDIT EFFECTIVENESS REVIEW
The full review of the effectiveness of the external auditor was carried
out in July 2021, including feedback from the Committee, finance
teams and Managing Directors within the Group. Within the scope of
the review, the following were considered:
• Transition, planning and half year-work performed August to
September 2020.
•
Interim audit carried out November 2020.
• Year-end audit carried out January to April 2021.
The review highlighted a number of positive areas of feedback, including
the development of strong working relationships with the external
audit team, the collaborative nature of the work carried out on the
going concern evaluation, and the level of challenge being fair and
balanced. Particularly of note was the way in which the first full year
of audit activity had been managed, such that any potentially difficult
aspects of the transition to a new external audit partner were minimised.
Constructive feedback had been provided to EY around some areas
for improvement, which have resulted in some improved methods of
engagement being put in place. It was also noted that many of these
areas would naturally improve with the embedding of the external audit
team and their increasing knowledge of the business, and so were not
considered to be matters of any significant concern.
EXTENT TO WHICH EXTERNAL AUDITOR
CHALLENGED MANAGEMENT
The external auditor has provided robust challenges around areas of
complexity or judgement, including contract, property and inventory
valuations, as well as going concern and viability. Their procedures
and findings are detailed in their report to this Committee.
INDEPENDENCE OF THE EXTERNAL AUDITOR
In order to ensure the independence of the external auditor, the
Committee monitors the non-audit services provided by it to the
Group and has adopted a policy on the provision of non-audit services
by the external auditor with the objective that such services do not
compromise the independence or objectivity of the external auditor.
The Committee is required to approve services provided by the
external auditor in excess of £25,000. All other services below this
threshold are also monitored to ensure that the performance of
regulatory requirements is not impaired by the provision of permissible
non-audit services.
EY did not provide any non-audit services to the Group during the
year. Details of amounts paid to the auditors for audit services are
set out in note 3 to the Financial Statements. KPMG continued to
provide the Group’s corporation taxation services for the year ended
31 December 2021.
In accordance with best practice, the Company will require its external
audit partner to rotate every five years, this being the second year to
which this relates. The statutory auditor signing the Audit Report
for 2021 is Victoria Venning.
The Committee members meet with the audit partner and other
members of the audit team without management present to discuss
any potential areas of concern. In addition, I have met separately
with the statutory auditor on one occasion to discuss matters arising.
There are no issues to report in relation to this. The Committee also
reviews a letter from the external auditor on an annual basis outlining
the measures taken by it to ensure that its independence is not
compromised. The Committee review the safeguards and policies in
place to maintain a high level of objectivity.
Following a review of all these elements, the Committee is satisfied
that the independence and objectivity of the external auditor is not
impaired and that the amount of non-audit fees is at a level that does
not compromise the overall quality and rigour of the work undertaken.
EFFECTIVENESS OF RISK MANAGEMENT
AND INTERNAL CONTROLS
Risk assessment and risk management reporting across the Group
has continued to be monitored during the year. Details of the key
risks which the Group faces, the key controls in place to manage and
mitigate those risks and the enhanced system of risk management
adopted by the Company are set out in more detail on pages 42
to 49. The Committee, and ultimately the Board, oversee these
processes and review the risk reporting and principal and emerging
risks on an ongoing basis.
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111
Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE CORPORATE GOVERNANCE REPORT
AUDIT, RI SK AND INTERNAL CONTR OL
Audit and Risk Committee Report
SIGNIFICANT ISSUES
The Committee considered the following key accounting issues and matters of judgement in relation to the Group’s Financial Statements and
disclosures. In addition to these disclosures, the Independent Auditor’s Report on pages 144 to 151 discusses other key audit matters which
were also considered by the Committee.
Focus
Matters considered
Committee outcome
VALUATION OF
INVESTMENT
PROPERTIES
VALUATION OF
HOUSEBUILDER
INVENTORY
CONSTRUCTION
ACCOUNTING
ESTIMATES
The investment property portfolio accounts for a large
proportion of the Group assets and the assessment
is subject to a degree of judgment and assumptions.
In line with our accounting policy, completed
investment properties are valued at fair value. Other
than houses, the portfolio is valued twice a year
by external, independent valuers. Assets under
construction are valued by management at fair value
using the residual method.
Inventories are stated at the lower of cost and net
realisable value.
Inventories comprise all the direct costs incurred in
bringing the individual inventories to their present
state at the reporting date, less the value of any
impairment losses.
Net realisable value of inventories is determined by
reference to expected future sales value and costs
to complete assumptions which are subject to
estimation.
As explained more fully in our accounting policy
on construction contracts, a significant element of
turnover is attributable to construction contracts.
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.
The Committee critically reviewed the
valuations and any key movements during
the year. Having discussed the valuations
during the meeting and considered
EY’s assessment, the Committee was
comfortable with the values adopted.
During the year, the Committee critically
reviewed the carrying value of housebuilder
inventories and judgements in relation to
recoverable amounts. Following discussions
with EY, the Committee was satisfied that
the carrying values are appropriate.
During the year, the Committee examined
the judgements and methodologies applied
to uncertainties and were in agreement with
the position adopted.
TERMS OF REFERENCE
During 2021, the Committee reviewed its terms of reference in line with the scope of its operations, and the requirements of the Code, to ensure
that they remained appropriate. Some minor amendments were proposed and adopted as part of that review and the Terms of Reference were
reapproved, and are available on the Company’s website.
Approved by the Board and signed on its behalf by
JOANNE LAKE
CHAIR OF THE AUDIT AND RISK COMMITTEE
13 April 2022
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE PROVISION 20
During the succession planning discussion referred to on page 103,
the Board determined that its strong preference was not to appoint an
external recruitment agency to source a new Chair for the Board, but
to ensure continuity of experience within the Chair role by appointing
one of its existing independent Non-executive Directors as the Chair.
Within the longer-term succession plan, provision is made for a further
Chair appointment process to commence within the next five years,
which will once again enable all Non-executive Directors in post at that
time to apply for the role as Chair. The Board feels strongly that it is
important for its Chair to have had some knowledge and experience
of the business prior to assuming the role as Chair, and accordingly
has planned for this approach to maintain that continuity. An external
recruitment agency has, however been appointed to carry out the
search for new Non-executive Director appointments, as reported on
page 103.
PROVISIONS 17, 24 AND 32
It should be noted that throughout the planned changes to the Board
as detailed within the succession plan, the balance and membership
of each of the Committees will remain Code compliant.
PROVISION 34
The remuneration of Non-executive Directors has been carefully
considered during 2021 and, as a result, a tiered approach to
remuneration for Non-executive Directors has been introduced, taking
into account their differing roles and responsibilities. See page 135 for
more details.
20% VOTE AGAINST – AGM
At the AGM in 2021, no resolution proposed received more than 20%
of the vote against it.
AMY STANBRIDGE
COMPANY SECRETARY
13 April 2022
COMPLIANCE STATEMENT
During 2021, the Board and its Committees have been continuing its
work to embed the requirements of the Code and improve wherever
possible its operations and governance. The Company has complied
with all the principles of the UK Corporate Governance Code 2018
for the year ended 31 December 2021 and the vast majority of
the provisions. This is demonstrated throughout this Corporate
Governance Report, and of particular note are the following issues
with references to further detail as applicable. However, as in previous
years, there are some instances where the Company has chosen to
take advantage of the flexibility offered with the ‘comply or explain’ rule
when applying certain provisions.
Given our 135-year history as a family business, and as a FTSE Small
Cap Company, we have adopted alternative solutions to the provisions
where we believe this is appropriate. The Code recognises that good
governance can be achieved by other means and the Board believes
the approach we have taken is the most appropriate for the Company
and its shareholders, whilst remaining consistent with the spirit of
the Code.
During 2022, the Company will endeavour to collate and detail
complete explanations of its position against every principle and
provisions, in order to provide greater clarity to shareholders, and
provide this on its website.
PROVISIONS 9 AND 19
As previously disclosed, the Chairman of the Board was not
independent on appointment, having served as Group Managing
Director and a member of the Board for 30 years. The Board has
always supported this appointment based on the extensive knowledge
of the Group and industry that Jamie Boot brings to the role and
to Board discussions. As is discussed on pages 102 to 103 of the
Nomination Committee Report, the role of Chair will be passing in May
2022 to Peter Mawson, an independent Non-executive Director of the
Company, and at this point the Company will be in compliance with
provisions 9 and 19.
PROVISION 11
For 2021, we complied with this provision. However, following the
retirement of Jamie Boot from the Board on 26 May 2022, there will
be a temporary imbalance in the number of independent and
non-independent Directors on the Board, with only two (excluding the
Chair) independent Non-executive Directors being in place, versus
three non-independent Directors (Tim Robert, Darren Littlewood, and
James Sykes).
As explained on page 103, this is part of a wider programme of
recruitment and succession planning work that commenced during
2021, which will see the Board appoint a further independent Non-
executive Director in summer 2022, and then further independent
Non-executive Directors over the following years, to ensure the
progressive programme of supplementing the Board with additional
external Directors. As a result, there will be a short period of
non-compliance with provision 11 during 2022, with activities being
underway to correct this as soon as possible.
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE CORPORATE GOVERNANCE REPORT
RESPON SI BLE BUSINESS
RESPONSIBLE
BUSINESS
COMMITTEE
REPORT
PETER MAWSON
CHAI R O F THE
RESPONSI BLE BUSINESS COMMITTEE
3
3
REVIEW OF THE YEAR
As we reported on in 2020, one of the key
actions for 2021 was for the Board to establish
a Responsible Business Committee, which held
its first meeting in June 2021 and met three
times during the year. The responsibilities of the
Committee are to provide oversight and leadership
on the Company’s strategic approach to, and
performance on, responsible business practices.
It provides an independent review and oversight
of the development and delivery of the Group’s
Responsible Business Strategy, which guides the
Company’s approach to delivery of long-term ESG
activity and objectives.
As such, during the year, the Responsible
Business Committee (the Committee) has been
accountable for overseeing the delivery of the
first phase of the Group’s Responsible Business
Strategy, 135 Henry Boot, and the development
of its Phase 2 Strategy. The Committee is also
aware of the interactions required in relation
to incorporation of ESG-related targets into
executive remuneration (in conjunction with
the Remuneration Committee) and oversight of
climate-related risks (along with the Audit and
Risk Committee).
Those serving as members of the Committee
established in 2021 were myself, Joanne Lake,
Gerald Jennings, James Sykes, Tim Roberts
and Darren Littlewood. Within the year, there
have been no changes to the composition of the
Committee.
On behalf of the Board and the Committee, as
Chair of the Committee, I am pleased to present
the Directors’ Responsible Business Committee
Report for the year ended 31 December 2021.
HENRY BOOT PLC BOARD
Responsible Business Committee
• Oversight of the Responsible Business
Strategy’s ESG objectives;
• Review of all sustainability and ESG
reporting, including implementation of the
recommendations of the Task Force on
Climate-Related Financial Disclosures (see
more on pages 68 to 71);
• Ensuring that the Board maintains up-to-date
awareness of the Company’s impact on the
communities it serves, the environment it
operates within and the charitable support it
is able to give;
• Monitoring culture and alignment with the
Company’s Purpose, Vision and Values; and
• Monitoring the development of diversity
across the Company and its leadership.
RESPONSIBLE BUSINESS STRATEGY
Throughout 2021, the Committee monitored
the delivery of 135 Henry Boot – Phase 1 of our
Responsible Business Strategy. Individual Non-
executive Directors were assigned to represent
key areas of the 135 Henry Boot strategy – with
myself being sponsor of the NZC Framework,
Joanne Lake sponsoring our EDI Strategy and
Gerald Jennings sponsoring the Community
Partnership Plan.
In September 2021, the Committee supported
the process of stakeholder mapping ahead
of the materiality assessment undertaken
during the development of the Responsible
Business Strategy. The materiality assessment
found us engaging with selected stakeholders
to understand the issues they thought were
JAMES SYKES
COMM ITTEE
MEMB ER
JOANNE LAKE
COMMITTEE
MEMBER
3
3
3
3
GERALD JENNINGS
COMMITTEE
MEMBER
3
3
Responsible
Business
Committee
attendance key
Meetings attended
Eligible meetings
DARREN
LITTLEWOOD
COMM ITTEE
MEMB ER
3
3
TIM ROBERTS
COMM ITTEE
MEMB ER
3
3
114
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE
RESPONSIBLE
BUSINESS
COMMITTEE
REPORT
the most material when considering how our business generates
positive impact and social value and which of the United Nations
Sustainable Development Goals (UN SDGs) our business could most
positively impact. We conducted a Responsible Business Survey
among a representative sample of our people, customers, suppliers,
advisers, professional membership bodies, charity partners, education
partners and community partners which asked them to rank a series
of responsible business issues (identified by desk-based research,
employee engagement and the ambitions of the UN SDGs). The
Committee also participated in the Responsible Business Survey to
identify the issues of highest important to the business.
The feedback from our stakeholder engagement has informed the
objectives of the Strategy and our decision to focus on addressing our
material issues, whilst also incorporating a progressive and ambitious
approach on key areas of responsibility to ensure our approach is
holistic and focused. This has then influenced the development of our
Phase 2 Responsible Business Strategy, the details of which can be
found on pages 66 to 67.
TERMS OF REFERENCE
During the process of establishing the Committee, it approved its
terms of reference which outlined the scope of its responsibility as
well as its operational procedures. The Terms of Reference are
available on the Company’s website.
“ TO OVERSEE THE INCEPTION
OF A NEW COMMITTEE AT
THE HIGHEST LEVEL OF
THE COMPANY, WHICH HAS
RESPONSIBLE BUSINESS AS ITS
SOLE FOCUS IS A PROUD AND
SIGNIFICANT STEP, BOTH FOR
MYSELF AND FOR THE GROUP.”
SIGNIFICANT ISSUES CONSIDERED
Focus
Matters considered
Committee outcome
NET ZERO CARBON
FRAMEWORK
DIVERSITY AND INCLUSION
TCFD
COMMUNITY ENGAGEMENT
Interaction with the Group’s NZC Taskforce
ensured that the NZC Framework
developed and launched to the business
during 2021 was overseen by the
Committee.
Issues such as the outcomes of the
Group’s EDI Steering Group and the
resulting EDI Strategy, linking to the launch
of the Agile Working Framework, were
reviewed and overseen by the Committee.
The Committee considered the
requirements introduced by the Taskforce
on Climate-Related Financial Disclosures,
and noted the progress made in relation
to governance, risk and opportunity
review and the introduction of metrics and
targets within Phase 2 of the Responsible
Business Strategy.
The Committee carefully considered the
development of community engagement
targets contained in Phase 2 of the
Responsible Business Strategy. It
also provided further guidance on the
engagement of education partners.
Following the release of the NZC Framework, supported by
the Committee, work continued to incorporate its aims and
targets into the wider Responsible Business Strategy.
Both the EDI Strategy and the Agile Working Framework
were launched to the business during 2021 and remain
under consideration by the Committee for further activities
and support.
All outcomes were noted and approved, with a recognition
that further work in relation to Greenhouse Gas emissions
Scope 3 and climate scenario modelling would be required
during 2022, to further strengthen the link between the
Responsible Business Strategy and the Group’s overall
business strategy. It is anticipated that over the course of
2022, the Committee will oversee the achievement of all
climate-related targets and metrics (alongside those set out
within the wider Responsible Business Strategy) and also
implementation of any further TCFD-related activities.
Appropriate targets have been included within the
Responsible Business Strategy, linking closely to the
objectives and presence of the business within its
environment and industry.
PETER MAWSON
CHAIR OF THE RESPONSIBLE BUSINESS COMMITTEE
13 April 2022
115
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE CORPORATE GOVERNANCE REPORT
REMUN ERATION
DIRECTORS’
REMUNERATION
REPORT
GERALD JENNINGS
CHAI R O F THE
REMUNERATION C OMMITTEE
9
9
On behalf of the Board and the Remuneration Committee (the Committee), I am pleased to present the Directors’
Remuneration Report for the year ended 31 December 2021.
REVIEW OF THE YEAR
We were delighted to see the Remuneration Policy and Remuneration Report receive strong backing at the 2021 AGM
with 98.03% and 98.97% votes for respectively. We consulted widely on the new policy and I would like to thank our major
shareholders for your engagement and all shareholders for your support.
During 2021, the Committee met nine times to consider a variety of important issues and initiatives. A summary of the key
activities undertaken is shown below:
Executive Directors
Senior Management
Workforce
Governance
Approve FY22 salaries.
Approve FY20 Annual Bonus
(using downward discretion)
and set appropriately
stretching targets for FY21
Annual Bonus.
Approve 2021 LTIP Grant
and 2018 LTIP Vesting.
Approval of alignment of
pension contribution to 8%
in line with the workforce as
part of new policy.
Approve FY22 salaries
including for the two new
Executive Committee
members.
Review average salary
increase for FY22 and
review interim pay increases
during FY21.
Formation, stakeholder
consultation and approval
of the 2021 Remuneration
Policy.
Approval of FY20
Annual Bonus and
set targets for FY21
Annual Bonus.
Approval of 2021 LTIP Grant
and 2018 LTIP Vesting.
Benchmark of packages
for Executive Committee
members.
Review workforce annual
bonus/profit share budget.
Approval of the Directors’
Remuneration Report.
Review of Committee Terms
of Reference.
Committee Performance
Review.
Oversee the review of wider
workforce remuneration
strategy review.
Met with the Group
Employee Forum to
understand their views on
reward across the Group
and its link to performance
and to explain how
Executive pay is aligned to
broader work force pay.
JOANNE LAKE
COMM ITTEE
MEMB ER
9
9
PETER MAWSON
COMM ITTEE
MEMB ER
9
9
Remuneration
Committee
attendance key
Meetings attended
Eligible meetings
116
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE
DIRECTORS’
REMUNERATION
REPORT
OUR APPROACH TO CV-19
The Group has made a strong recovery during 2021, with performance exceeding the expectations set at the start of the
year. The Committee remains mindful of the environment that the business operates in and the uncertainty that persists
due to the CV-19 pandemic. Targets for variable pay were set at the start of the year and have not been adjusted. The
Company has not taken direct support from the government. We have continued to support our people and there have
been no redundancies related to the pandemic during 2021.
PERFORMANCE IN 2021 AND EXECUTIVE REMUNERATION OUTCOMES
Annual Bonus
The Group delivered an excellent financial performance in challenging circumstances caused by the continuing impact of
the CV-19 pandemic. The FY21 profit of £35.1m exceeded the top end of the PBT target range and so the two-thirds of
the bonus based on PBT performance was due to pay out in full. Of the remaining one-third, based on individual objectives,
performance was, again, strong, leading to a potential pay-out of 80%. Based on the achievement of the performance
conditions the overall bonus achievement was, therefore, 93.3% of maximum.
The Committee then assessed this outturn against broader performance factors, to consider whether any discretionary
adjustment would be appropriate. Noting the following factors, the Committee decided to use discretion to reduce the
formulaic outcome of the FY21 Annual Bonus award. You can read more about the reasons for this decision below.
Discretion Factor
Committee consideration
PBT
SHAREHOLDER
EXPERIENCE
EMPLOYEE
EXPERIENCE
The PBT outturn was significantly ahead of the business plan numbers and a high
bonus would have been payable even if a materially higher bonus range had been set.
Countering this, the Committee reviewed the historical PBT levels and relative levels of
payout and noted that 2021 PBT remained below pre-CV-19 levels.
Considered the dividend, which has increased by 10% since FY20 but still remains
below pre-CV-19 levels, and the share price, which has remained relatively stable over
the past 12 months.
Considered alignment with the annual bonuses and profit share award for our people
and the proportionate pay-out is broadly consistent with their bonuses. More generally,
the Committee noted that there had been no significant redundancies during the year.
MARKET SENTIMENT
Discussed the expectations and views of other stakeholders.
EXTERNAL FACTORS
Considered whether there were any external factors that had a significant impact on the
results and were outside of management control, e.g. a change in accounting standards,
revised government policy, increase in property valuations. These were not considered to
be a factor.
WIDER COMPANY
PERFORMANCE
Discussed the overall annual performance as a responsible business e.g. whether there
had been any significant health and safety incidents or reputational damage etc, and
noted that there had been strong performance in this regard.
TOTAL REWARD PICTURE
Reviewed the overall remuneration position, noting that the LTIP payout for performance
over the three years to FY21 would be low and noting that the Committee had used
discretion to reduce the bonus outcome in FY20.
GOVERNMENT SUPPORT
Noted that no government support had been received during the year.
Taking into account the above factors, the Committee recognised that there had been strong underlying performance,
but chose to override the formulaic award outturn of 93.3% of maximum and reduce this by 10% to 83.3% of maximum,
equating to a bonus of 100% salary for both Executive Directors. One-third of the bonus is deferred in shares and held for
three years.
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE CORPORATE GOVERNANCE REPORT
REMUN ERATION
Directors’ Remuneration Report
CONSIDERATION OF STAKEHOLDER VIEWS
The 2020 Group-wide Employee Engagement Survey revealed
that people felt reward and performance management to be two
areas that required improvement. The Group Employee Forum took
this feedback, engaged with the business and developed some
recommendations. The outcome of this work was presented to the
Committee in October 2021 and, as a result, their views are directly
shaping the workforce reward and remuneration strategy discussed
further on page 124.
In my dual capacity as Committee Chair and designated
Non-executive Director for workforce engagement, I also met with
the Group Employee Forum at a separate session to discuss the
topics below.
• The CEO and GFD’s Annual Bonus FY22 personal objectives and
how they flowed down to the Executive Committee and then into
the businesses.
• The inclusion of ESG metrics for FY22 and their sufficiently
proportionate weighting relative to the overall opportunity.
• The link between executive performance and reward and how that
approach would be mirrored with the revised workforce reward
and recognition strategy.
• The structure of financial versus individual performance within
the Annual Bonus scheme and how a similar structure was being
developed for the workforce.
• The CEO and GFD’s FY21 Annual Bonus outcome and in
particular why the Committee chose to use discretion.
LTIP AWARD FOR PERFORMANCE PERIOD FY19-21
The targets for the 2019 LTIP awards were set before the pandemic
and given the circumstances, have proved difficult to achieve. The
award will not pay out under the EPS or TSR performance conditions
but will pay out a small amount under the ROCE performance
condition, giving rise to an overall vesting level of 10.41% of
the award.
APPLICATION OF THE DIRECTORS’ REMUNERATION
POLICY FOR FY22
The base salary for the CEO was increased by 5% in line with the
standard increase for the workforce, recognising that this would
deliver a package that would be slightly below a mid-market level. The
base salary for the GFD was increased from £275,000 to £300,000 in
line with the policy described in prior years’ Remuneration Reports, for
the salary to be brought closer to a mid-market level over time. This
increase was determined after considering the Group and individual
performance and represents the final step in this series of increases.
The pension contribution for the GFD reduced from 20% to 8% of
salary on 1 January 2022 and both Executive Directors’ pensions are
now aligned to the rate applying to the majority of the workforce.
The annual bonus will remain two-thirds based on stretching PBT
targets, with the entire target range requiring a significant build on
the FY21 outturn. The remaining one-third will be based on a range
of individual operational KPIs that are key contributors to the future
growth of the business. The Company’s commitment to being a
responsible business has strengthened throughout the year with the
creation of our Responsible Business Committee. The Committee felt
strongly that ESG-related objectives should be incorporated into the
Executive Directors’ remuneration in a meaningful way. Accordingly,
the Committee agreed that 25% of the individual’s Annual Bonus
personal objectives would relate to ESG matters, many taken directly
from our Responsible Business Strategy launched in January 2022.
Where possible, the targets are quantifiable and relate to a variety of
issues such as improving our gender balance within the workforce,
reducing Scope 1 and 2 Greenhouse Gas emissions and reducing the
gender pay gap. You can read more about the Responsible Business
Strategy on pages 66 to 67 and the high-level objectives for FY22 on
pages 134.
The FY22 LTIP awards will be based on the same mix of EPS, ROCE
and TSR in an equal one-third split. The EPS and ROCE target ranges
have been increased compared to last year and are considered
to be appropriately stretching in light of the business outlook. The
Committee did debate the inclusion of ESG-related metrics for
the Long-Term Incentive Plan but chose to retain a mix of financial
measures for the grant in 2022 and review again for 2023.
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE The session was very worthwhile and it was important to highlight
the key aims of our reward approach, which is consistent across the
Group, irrespective of seniority. We aim to have a clear, transparent
framework that links performance to reward and has an appropriate
balance of short-term reward with long-term incentives.
In the lead up to the 2021 AGM, the Committee undertook extensive
consultation with major family and institutional shareholders, and
proxy advisers to seek their views on the proposed Remuneration
Policy and its implementation as detailed in last year’s report. Given
the strong support received at the AGM, and with implementation
continuing to be in line with the Policy, there has been more limited
additional engagement with shareholders during the year on
remuneration matters.
The Committee will continue to monitor developments in corporate
governance and market practice to ensure that the Policy and its
implementation continues to be in line with best practice.
CLOSING REMARKS
Should you have any queries or comments, please do not hesitate to
contact me or the Company Secretary as we value engaging with our
shareholders.
I hope that you will be able to support the Directors’ Remuneration
Report at this year’s AGM.
“ BUSINESS PERFORMANCE RECOVERED
VERY WELL DURING 2021 AND IS
REFLECTED IN THE PAY OUTCOME FOR
THE YEAR. WE HAVE SET STRETCHING
GOALS FOR THE FY22 INCENTIVE PLANS
INCLUDING ESG-BASED METRICS, TO
STRENGTHEN THE ALIGNMENT WITH OUR
WIDER STAKEHOLDERS’ INTERESTS.
THIS CHANGE WAS ENCOURAGED BY OUR
GROUP EMPLOYEE FORUM AND WE WILL
LOOK TO BUILD ON THE LINK BETWEEN
OUR RESPONSIBLE BUSINESS STRATEGY
AND EXECUTIVE REMUNERATION
FURTHER IN FUTURE YEARS.”
GERALD JENNINGS
CHAIR OF THE REMUNERATION COMMITTEE
13 April 2022
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE CORPORATE GOVERNANCE REPORT
REMUN ERATION
Remuneration at a glance
EXECUTIVE DIRECTORS’ REMUNERATION POLICY
Elements of Executive Directors’ pay
TIM ROBERTS CHIEF EXECUTIVE OFFICER
2021
2020
DARREN LITTLEWOOD GROUP FINANCE DIRECTOR
2021
2020
Single total figure of remuneration for
Executive Directors for year ended 31 December 2021
983
435
584
678
......
24
275
379
Fixed pay
Annual bonus
1200
Long-term incentive
£’000
Tim Roberts
Darren Littlewood
120
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1000
800
600
400
200
0
Fixed:
Base salary
Taxable benefits
Pension-related benefits
Performance-linked:
Annual bonus
Long-term incentive plan
Fixed:
Base salary
Taxable benefits
Pension-related benefits
Performance-linked:
Annual bonus
Long-term incentive plan
2021
%
56
88
6
6
44
100
–
2021
%
56
79
7
14
44
92
8
2020
%
64
85
8
7
36
100
–
2020
%
61
73
9
18
39
76
24
Key performance indicators (KPIs) performance
for year ended 31 December 2021
KEY
At or above stretch target
Between threshold and
stretch target
Below threshold target
Annual bonus
Profit before tax
£35.1m
LTIP 3-year performance
Earnings per share
(22)%
Total shareholder returns
13%
Return on capital employed
10%
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE REMUNERATION POLICY
The current Remuneration Policy was approved by shareholders at the
2021 AGM. The Committee feel the Policy remains fit for purpose for
FY22 and would expect to seek approval again in 2024.
The Company’s Policy on remuneration is designed to ensure that
Executive Directors earn sufficient remuneration to be motivated
to achieve our strategy with the addition of appropriate incentives,
aligned to our vision and strategic objectives, that encourage
enhanced performance without excessive risk.
The Committee annually reviews market practices and levels of
remuneration for directors in similar roles within companies of
comparable size and complexity. This review considers remuneration
within our wider workforce, pay increases awarded and bonus levels
generally in the Group, with the aim that we reward all our people fairly
according to their role, performance, the economic environment and
the Group’s financial performance.
The Policy has been tested against the six factors listed in Provision
40 of the UK Corporate Governance Code:
• Clarity – the Committee made alterations to the Remuneration
Policy to make it clearer, including a simplified annual bonus
structure. The elements of the Remuneration Policy were
described clearly to investors during the consultation process and
to the workforce during the engagement with the Group Employee
Forum.
• Simplicity – remuneration structures have been simplified. All
structures are as simple as possible, whilst providing a strong link
between reward and performance and avoiding reward for failure.
• Risk – the Remuneration Policy has been designed to discourage
inappropriate risk taking including a balance between short-term
and long-term elements, as well as bonus deferral, recovery and
withholding provisions, in addition to in-employment and post-
cessation shareholding requirements. To avoid conflicts of interest,
Committee members are required to disclose any conflicts or
potential conflicts ahead of Committee meetings. No Executive
Director or other member of management is present when their
own remuneration is under discussion.
• Predictability – elements of the Policy are subject to caps and
dilution limits. An illustration of pay levels for different levels of
performance are shown in the scenario charts on page 124. The
Committee has the discretion to adjust the formulaic outcomes
of the incentive arrangements if the outcome is considered
inappropriate.
• Proportionality – There is a broadly equal balance between
fixed pay and incentives at target performance and there is also
a broadly equal balance between short-term and long-term
incentives, reflecting the importance of both short-term and long-
term performance.
• Alignment to culture – Henry Boot’s distinctive company
culture was taken into consideration with the incentivisation of
the Executive Directors to continue to develop the Group with our
people at the forefront of our strategies, whilst formulating a Policy
to drive sustainable long-term growth.
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE CORPORATE GOVERNANCE REPORT
REMUN ERATION
THE APPLICATION OF DIRECTORS’ REMUNERATION POLICY FOR 2022
Below is a summarised version of the Policy, but you can read the full Policy, as approved by shareholders last year, on our website:
henryboot.co.uk/investors/governance/remuneration-policy/
Element
Purpose and link to strategy
Key features
2022 implications
SALARY
Core element of fixed remuneration
reflecting role, experience and
market rates. Assists in recruitment
and retention
• Reviewed annually.
•
Increases generally awarded in
line with the workforce average
unless compelling reasons for a
higher rise.
• Tim Roberts 5% increase in line
with standard applied to the
workforce.
• Darren Littlewood £25k
increase as previously
communicated (see page 118).
BENEFITS
Provided on a market competitive
basis and assists in recruitment and
retention
PENSION
Contribution towards
retirement income
• No change from last year.
• Level of benefits reviewed to
reflect market practice.
•
Include car allowance, private
health insurance, permanent
health insurance, death in
service cover and participation
in SAYE scheme.
• Choice of participating in
• Tim Roberts and Darren
defined contribution scheme or
cash in lieu.
• Aligned to the rate applying
to the majority of the
workforce (8%).
Littlewood receive cash in lieu
of pension contribution at a
level of 8% of base salary in line
with the majority of employees.
ANNUAL BONUS
To incentivise the delivery of
financial performance, operational
targets and individual objectives
over the financial year
• Targets set annually, majority of
which will be financial.
• Maximum bonus opportunity of
120% of salary.
• Personal objectives set for
one-third of the opportunity.
ESG targets introduced for 25%
of this element.
• Stretching PBT target set for
two-thirds of the opportunity.
• No more than 10% pay-out
for threshold performance
and 50% pay-out for target
performance.
• Two-thirds paid in cash and
one-third invested in shares and
deferred for three years.
• Committee discretion and
malus clawback provision apply.
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE Element
Purpose and link to strategy
Key features
2022 implications
LTIP
Provides a clear and strong
link between Executive Director
remuneration and value creation for
shareholders for achieving longer-
term strategic objectives
SHAREHOLDING
GUIDELINES
Aligns their long-term interests to
those of shareholders
NON-EXECUTIVE
DIRECTOR FEES
Fee levels set to assist recruitment
and retention of high calibre
Non-executive Directors
• Expected grant in FY22 is
125% of salary for Tim Roberts
and 100% salary for Darren
Littlewood.
• Mixture of EPS, ROCE and TSR
performance criteria.
• Current holdings for Executive
Directors shown on page 131.
• Performance conditions and
targets set annually linked to
strategy/TSR.
• Normal levels are 125% of
salary for CEO and 100% salary
for GFD (Maximum level is
175% of salary- above normal
levels require major shareholder
consultation).
• No more than 25% vests for
threshold performance.
• Three-year award with two-year
holding period.
• Committee discretion and
malus clawback provision apply.
• Requirement to build and
maintain equivalent to 200%
of base salary for Executive
Directors.
• Post-cessation requirement to
hold lower of shares held or
200% of salary for at least two
years (market purchased shares
excluded).
• Chair salary set by the
• Chair increase of 5% salary in
Committee.
• Non-executive Director fees set
by the Board (excluding the
Non-executive Directors).
•
Increases aligned generally to
the workforce rate.
• Non-executive Directors not
involved in share schemes or
pension arrangements.
line with the standard applied to
the workforce.
• Non-executive Directors
increase of 5% salary in line
with the standard applied to the
workforce.
• Fees introduced for additional
responsibilities in line with
market practice.
NOTES TO THE POLICY TABLE
Explanation of the performance measures chosen
The Committee has the discretion in exceptional circumstances to change performance measures and targets part-way through a performance
year if there is a significant event which causes the Committee to believe the original measures and targets are no longer a fair and accurate
measure of business performance.
Malus and clawback
The Committee has discretion to claw back awards made under the annual bonus plan and LTIP in the event of a material misstatement in
the audited consolidated accounts of the Company, a material error in assessing any performance condition, employee misconduct, serious
reputational damage or corporate failure. In these circumstances, the Committee has discretion to reduce or cancel deferred awards, or require
the participant to repay some or all of the value delivered from a bonus or LTIP awards, at any time up to the third anniversary of vesting of LTIP
awards or payment of annual bonus.
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE CORPORATE GOVERNANCE REPORT
REMUN ERATION
WORKFORCE REWARD AND RECOGNITION STRATEGY
Following the work undertaken with the 2021 Remuneration Policy to
simplify executive pay and ensure it was aligned with best practice,
the Committee has subsequently been overseeing a reform of the
workforce reward and recognition strategy, which aims to follow
similar principles.
As previously mentioned on page 94, the 2020 Group-wide Employee
Engagement Survey revealed that people felt reward and performance
management were areas that could be improved. The Committee took
this as an opportunity for the Forum to collaborate with the Committee
and influence the process. The Group Employee Forum engaged
with the business to understand the reasons behind the results and
formulate recommendations. The outcome of this work was presented
to the Committee during 2021 and, as a result, their views are directly
shaping the workforce reward and recognition strategy.
The review, led by the Executive Committee and external consultants
Korn Ferry, aims to create a clearer link between performance and
reward and standardise the Group’s approach to the reward and
remuneration of its people. The Committee approved the reward
principles, the general approach and the timeline and will monitor
its implementation, whilst continuing to seek feedback from the
workforce at various stages.
ILLUSTRATION OF THE APPLICATION OF THE REMUNERATION POLICY
The graph shows total remuneration under the new Policy, illustrating the minimum pay (fixed pay), on-target pay and maximum pay
(assumptions are set out in the table below).
Fixed pay
Annual bonus
LTIP
50% share price growth on LTIP
£2,500,000
£2,000,000
£1,500,000
£1,000,000
£528,022
£500,000
%
0
0
1
£0
£1,931,766
£1,087,237
%
6
2
%
5
2
%
9
4
%
5
3
%
3
3
%
2
3
£1,162,000
£682,000
29%
£352,000
%
0
0
1
22%
26%
%
2
5
%
6
3
%
5
3
Fixed pay
only
Target
performance
Maximum
performance
Fixed pay
only
Target
performance
Maximum
performance
Tim Roberts
Darren Littlewood
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE FIXED PAY ONLY
Fixed pay comprised of base pay as of 1 January 2022, benefits paid in FY21, and pension
contributions in FY22.
TARGET
MAXIMUM
Fixed pay and 50% of maximum bonus and LTIP opportunity.
Fixed pay and maximum pay-out under the bonus and LTIP. This scenario also includes an
additional element illustrating the impact of 50% share price growth on the LTIP.
RECRUITMENT REMUNERATION POLICY
This table sets out the Company’s policy on recruitment of new Executive Directors for each element of the remuneration package.
Non-executive Directors are recruited on an initial three-year term and receive a base fee, plus additional responsibility fees but no other benefits.
Remuneration element
Policy on recruitment
BASE SALARY
BENEFITS
The Committee will typically offer a salary in line with the Policy, whilst also considering the
experience, ability to implement Group strategy, and the wider economic climate and pay and
conditions throughout the Group, in order to facilitate the hiring of candidates of the appropriate
calibre required to implement the Group’s strategy.
The Committee will offer benefits in line with the Policy for existing Executive Directors; however,
the Committee has the flexibility to consider other benefits from time to time, including relocation
expenses.
PENSION/SALARY IN LIEU
ON PENSION
Contribution levels will be set in line with the Company Policy. Cash alternative available if joining the
pension scheme is not appropriate for the Executive Director.
BONUS
LTIPs
BUYOUTS
The Committee will offer the ability to earn a bonus in line with the Policy (maximum 120% of base
salary). Bonus opportunities will be pro-rated for new Executive Directors that join during the year.
The Committee will offer LTIPs in line with the Policy in the year of joining.
The Committee’s policy on ‘buying out’ existing incentives granted by the Executive’s previous
employer will depend on the process of recruitment and be negotiated on a case-by-case basis.
The Committee may make an award in order to ‘buy out’ previous incentives, but it will only be
made if it is considered necessary to attract the right candidate and there will not be a presumption
in favour of doing so. The award will in any event be no larger than the award forfeited and will
resemble the arrangements forfeited as far as applicable and performance conditions will apply on a
like-for-like basis.
INTERNAL APPOINTEES
Any remuneration awards previously granted to an internal appointee to the Board will continue on
their original terms.
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE CORPORATE GOVERNANCE REPORT
REMUN ERATION
PAYMENT FOR THE LOSS OF OFFICE POLICY
The table below sets out the policy on exit payments. Treatment of different elements under the Policy may vary depending on whether the
Executive Director is classified as a ‘good’ or a ‘bad’ leaver. ‘Good leaver’ status occurs upon the cessation of employment for a compassionate
reason, such as death in service; ill health; injury; disability; retirement; redundancy; or for any other reason determined by the Committee.
The Committee will ensure that a consistent approach to exit payments is adopted and there is no reward for poor performance and any liability
to the Group is minimised/mitigated in all areas. Where a compromise agreement is required, the Committee would consider contributing to the
reasonable costs of legal and other expenses relating to the termination of employment and pay reasonable amounts to settle potential claims.
Remuneration element
BASE SALARY/FEES AND
BENEFITS
PENSION/SALARY IN
LIEU OF PENSION
BONUS
LTIP AWARDS
Base salary/fees and benefits will be paid over the notice period subject to mitigation.
Compensation will be phased over the notice period. If the Executive Director finds a new role prior
to the end of the notice period, payments will be offset against earnings from the new role.
Pension contributions and any payments in lieu of pension will be provided over the notice period.
For a good leaver, any bonus payment would be at the discretion of the Committee and would be
pro-rated to the time employed in the year that employment ceases. Any payment would be paid at
the same time as other Directors, subject to the original performance criteria deferral and malus and
clawback.
It is normal for awards to lapse on cessation of employment, unless the Company and Committee
agree that the Executive Director is a good leaver. Good leavers will be treated in accordance
with the rules of the LTIP scheme, which has been approved by shareholders. Their awards are
prorated for the proportion of the performance period that has elapsed. Any prorated shares vest at
the normal vesting date and are subject to the same performance conditions as other LTIP award
holders. The Committee retains discretion to allow vesting at the time of cessation of employment
on a prorated basis. Good leavers will be subject to the clauses in the LTIP Scheme related to
holding periods, malus and clawback.
In the event of a change of control, Directors affected will be treated in accordance with the rules
of the LTIP Scheme. Any early vesting as a consequence of a change of control would be based
on the Committee’s assessment of the performance conditions and would take into account the
vesting period that has elapsed at the time of the change of control.
SERVICE CONTRACTS
Tim Roberts and Darren Littlewood each have a one-year rolling service agreement in accordance with our policy on Directors’ contracts.
Termination of these arrangements would, therefore, be subject to their contractual terms and conditions that require a notice period of one year
from either party. Contractual compensation in the event of early termination provides for compensation of basic salary, pension and benefits for
the notice period, which would be payable on a phased monthly basis.
Non-executive Directors have letters of appointment and their appointment and subsequent reappointment is subject to approval by
shareholders. Non-executive Director appointments are typically for three years, subject to a maximum of three terms totalling nine years;
however, they may be terminated without compensation at any time.
POLICY ON EXTERNAL APPOINTMENTS
The Company recognises that Executive Directors may be invited to become Non-executive Directors of other companies and that this can help
broaden the skills and experience of a Director. Executive Directors are permitted to accept one external appointment with the approval of the
Board. Any remuneration earned from such appointments is retained by the Executive Director..
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE ANNUAL REPORT ON REMUNERATION
The following section provides details of
how Henry Boot’s Remuneration Policy was
implemented during the financial year. The
labelled parts of the Directors’ Remuneration
Report are subject to audit.
THE REMUNERATION COMMITTEE
The role of the Remuneration Committee as well as members,
meetings and key activities during the year are set out on page 116.
EXTERNAL ADVISERS
Following a formal and robust tender process, the Committee
appointed Korn Ferry as its advisers with effect from 11 June 2020.
This relationship was reviewed in October 2021 and the Committee
agreed to continue using their services.
During the year, the Committee received independent advice on
Directors’ remuneration from Korn Ferry who are a member of the
Remuneration Consultants Group and adhere to its Code of Conduct,
which requires its advice to be objective and impartial.
The fees paid to Korn Ferry for providing advice to the Committee in
relation to Directors’ remuneration was £9,907.50. A separate team
within Korn Ferry have also been engaged to support the work on the
wider workforce reward and remuneration strategy. The Committee is
satisfied that the advice it received is objective and independent.
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 20 May 2021,
the resolution put to shareholders on an advisory basis to receive and
approve the 2020 Directors’ Remuneration Report was passed. The
number of votes in favour of that resolution was 85,701,476 (98.97%
of votes cast), against 887,718 (1.03% of votes cast), and withheld
2,478,575. The total number of votes cast in respect of this resolution
represented 64.97% of the issued share capital.
A resolution put to shareholders on a binding basis to approve the
Directors’ Remuneration Policy was passed. The number of votes
in favour of that resolution was 87,300,759 (98.03% of votes cast),
against 1,754,384 (1.97% of votes cast), and withheld 9,626. The total
number of votes cast in respect of this resolution represented 66.82%
of the issued share capital.
SINGLE TOTAL FIGURE OF REMUNERATION (AUDITED)
The table below reports the total remuneration receivable by Directors in respect of qualifying services during the year.
Year ended
31 December 2021
Tim Roberts
Darren Littlewood
Jamie Boot
James Sykes
Joanne Lake
Gerald Jennings
Peter Mawson
Salary and
fees
£’000
Taxable
benefits
£’000
Pension-
related
benefits
£’000
Total fixed
£’000
Annual
bonus5
£’000
Long-term
incentives3
£’000
Total
Variable
£’000
Total
Remuneration
£’000
478
300
91
48
48
48
48
1,061
35
28
1
—
—
—
—
64
35
51
—
—
—
—
—
86
548
379
92
48
48
48
48
1,211
435
275
—
—
—
—
—
710
—
24
—
—
—
—
—
24
435
299
—
—
—
—
—
734
983
678
92
48
48
48
48
1,945
Year ended
31 December 2020
Salary and
fees £’0001,2
Tim Roberts
John Sutcliffe4
Darren Littlewood
Jamie Boot
James Sykes
Joanne Lake
Gerald Jennings
Peter Mawson
387
151
221
81
43
43
43
43
1,012
Taxable
benefits
£’000
Pension-
related
benefits
£’000
Total fixed
£’000
Annual
bonus
£’000
Long-term
incentives
£’000
Total Variable
£’000
Total
Remuneration
£’000
35
15
28
1
—
—
—
—
79
34
33
54
—
—
—
—
—
121
456
199
303
82
43
43
43
43
1,212
259
—
147
—
—
—
—
—
406
—
65
53
—
—
—
—
—
112
259
65
194
—
—
—
—
—
518
715
264
497
82
43
43
43
43
1,730
1 The Board voluntarily reduced salaries by 20% from 1 April 2020, for the duration of the most severe impact of the pandemic. Salaries and fees were reinstated in
full on 1 October 2020. For Executive Directors, the total salary waived was £43,045.98 for the CEO and £25,000.00 for the GFD. These salary reductions for Tim
Roberts and Darren Littlewood were repaid, to mirror the experience of the wider workforce In having received 100% of salary whilst furloughed, after the year-end.
2 The Chairman’s fee and the Non-executive Director’s fees were reduced by 20%. The fee reductions were not reinstated.
3 The value of long-term incentives has been calculated based on the average share price for the period 1 October to 31 December 2021 of £2.7799. No part of the
award is currently attributable to share price appreciation. No discretion was applied.
4 John Sutcliffe stepped down from the CEO role on 31 December 2019. He remained on the Board in an advisory role until 31 May 2020 when he stepped down from
the Board.
5 A third of this after payment is then invested in shares given it is a term of the bonus.
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 are not pensionable.
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE CORPORATE GOVERNANCE REPORT
REMUN ERATION
The information in the single total figure of remuneration in the table on page 120 is derived from the following:
SALARY OR FEES
The amount of salary or fees received in the year (including the amount waived during 2020 in relation
to the CV-19 pandemic repaid in 2021).
TAXABLE BENEFITS
The taxable benefits received in the year by Executive Directors.
ANNUAL BONUS
The value of bonus payable and the calculations underlying this are disclosed on pages 117 and 129.
LONG-TERM INCENTIVES
The value of LTIP awards are those related to shares that vested as a result of the performance over the
three-year period ended 31 December of the reporting year.
PENSION-RELATED
BENEFITS
Pension-related benefits represent the cash value of pension contributions or salary in lieu of contributions
received by Executive Directors at a rate of 8% salary for Tim Roberts and 20% of salary for Darren Littlewood.
(Both will receive 8% of salary for FY22.)
INDIVIDUAL ELEMENTS OF REMUNERATION
2021 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, market expectations and previous years’ profits.
Profit (£m)
% of salary payable under bonus (out of 80% of salary)
Profit Before Tax
Threshold
Target
Maximum
£24.5m
10%
£27.3m
40%
£30.0m
80%
Actual
achieved
£35.1m
80%
The Remuneration Committee also evaluated the performance of the Executive Directors against their 2021 personal objective. The proportion
of objectives achieved was assessed as follows:
2021 personal objectives – Tim Roberts
Objective Details
Performance on objective
1
2
3
4
5
6
7
Reviewing and develop Group strategy, identifying and
implementing strategic smart objectives taking account
of risk.
Strong: Prudent deployment of capital into growth areas, closure
of the DB pension scheme for active members. Targets embedded to
encourage synergies and collaboration.
Communicating the Group’s strategy, vision and values
both internally and externally.
Strong: Greatly improved employee communications, good feedback on
external communication of strategy.
Develop senior leadership team and review Group
remuneration.
Strong: Enhanced ExCo with good succession process, new appointees
and enhanced training and development.
Successful employee-wide remuneration review.
Lead good health and safety practices around the
Group to avoid any major health and safety incidents.
Good: We missed the main Group target relative to the AIR (Accident
Incident Rate), we continue to set high standards for health and safety.
Attract new shareholders to the register, achieving
positive feedback from meetings with existing
shareholders and analysts by clear key messaging and
Investor Relations (IR) Policy
Develop Environmental, Social and Governance (ESG)
Policy, and support legal and regulatory compliance
and initiatives around the Group meeting related
deadlines.
New Group and subsidiary KPIs introduced.
Good: New IR policy successfully introduced with good broker feedback. No
significant new shareholders added.
2/3
Excellent: ESG strategy completed ready for full launch on time
for January 2022.
135 Henry Boot plan launched, including community plan, EDI Strategy and net
zero 2030 policy introduced and good feedback received.
Promote an open, diverse and progressive organisation
and reduce the gender pay gap
Strong: EDI Strategy launched April 2021 Further steps have been taken to
promote female senior talent and to reduce the gender pay gap.
Score
13/15
3/4
3/4
2/4
6/6
3/4
32%
Total (out of max 40%)
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE 2021 personal objectives – Darren Littlewood
Objective Details
Performance on objective
Reviewing and develop Group strategy, identifying
and implementing key strategic smart objectives for
the Group.
Excellent: Renewed strategy rolled out internally and externally
to all stakeholders.
five-year plan for capex and focus on key markets.
Closure of DB pension plan for active members.
Operational efficiencies delivered through the revised marketing
and technology strategy.
Inform and develop IT strategy for each subsidiary
business and the overarching Group with specific focus
on innovation and technology.
Good: Good progress on cyber security testing.
4.5/7
Review of core technology and applications with a roadmap
to next steps.
Developing strategic influence within the business and
profile within the wider industry.
Developing the Finance/IT/Communication team’s
profile and skillsets, developing their integration across
the Group.
Management and development of financial reporting
within each business, to the Board and to the investor
community.
Undertake a review of internal audit following the three-
year BDO programme and successful transitioning of
the external audit from PWC to EY.
Improved financial reporting systems.
Excellent: Strong interaction and induction for new members of ExCo.
2.5/3
Successful marketing campaign for potential investors.
Strong representation through trade bodies (CBI, SBT, BITC).
Strong: Strengthened further internal and external audit process.
Strong interaction with Divisions on financial strategy and reporting.
Strong: Have developed the equity narrative further to make the business
as attractive as possible to potential investors, albeit recognising liquidity
constraints due to a large group of long-standing and supportive
shareholders.
Excellent: Reviewed internal audit and after a tender process appointed
KPMG to replace BDO.
More refined internal audit programme.
Review of EY as external auditor following first year of audit.
Support the development of an Environmental, Social
and Governance (ESG) Policy.
Excellent: ESG strategy completed ready for full launch on time
for 1 January 2022.
135 Henry Boot plan launched, including community plan, EDI Strategy and
net zero 2030 policy introduced and good feedback received.
1
2
3
4
5
6
7
Score
12/14
3/4
3/4
3/3
4/5
32%
Total (out of max 40%)
As detailed in the Chair’s review on page 117, the Committee exercised discretion to scale back the formulaic bonus payable.
The table below sets out the calculation for the bonus payable based on the formula and then the bonus payable after the Committee used
discretion to reduce this amount.
Formulaic payout
under profit
element
(max 80% of salary)
Payout under
personal element
(max 40% of salary)
Total formulaic
payout of bonus
(max 120% of
salary)
80%
80%
32%
32%
112%
112%
Total payout
before
Committee
discretion
£483,676
£308,000
Total payout
following
Committee
discretion
£434,765
£275,000
Executive Director
Tim Roberts
Darren Littlewood
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129
Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE CORPORATE GOVERNANCE REPORT
REMUN ERATION
LONG-TERM INCENTIVE PLAN (LTIP)
The Committee has reviewed the performance criteria for the LTIP shares awarded in 2019, based on performance for the years 2019, 2020 and
2021. The LTIP shares in this award were subject to the performance criteria set out in the table below. Based on performance, the award will
only pay out under the ROCE element.
Performance condition
EPS growth
ROCE
TSR1
Total vesting (out of 100%)
Weighting
Threshold (25%
vesting)
Maximum (100%
vesting)
33.3%
33.3%
33.4%
RPI+3% p.a.
10%
Median
TSR: 27%
RPI+7% p.a.
13%
Upper quartile
TSR: 61%
Actual
performance
(22%)
10.25%
Below median
TSR: 13%
Payout of
element
(max out of
33.3%/33.4%)
—
10.41%
—
10.41%
1 The TSR comparator group was comprised of the FTSE Small Companies Index.
LTIP AWARDS GRANTED IN THE YEAR (AUDITED)
LTIP awards were granted during the year to Tim Roberts and Darren Littlewood on 23 June 2021. The Committee considered the level of the
share price at the date of grant and determined that the award level should proceed at the usual level of 125% of salary for the CEO and 100%
of salary for the GFD:
Type of award % of salary
Face value
of grant at
£2.6267 per
share
Number of
shares
Tim Roberts
Darren Littlewood
LTIP – nil cost options
LTIP – nil cost options
125%
100%
206,899
104,695
£543,461.03
£275,002.36
% of award
vesting at
threshold
25%
25%
The awards are subject to the following performance conditions, which will be measured over the three-year period ending 31 December 2023:
EPS growth
Return on Capital Employed
TSR
% linked to
award
33.3
33.3
33.4
Threshold
(25% of max)
Maximum
(100% of max)
22p
Average three-year ROCE of 9%
TSR at median compared to the
constituent companies of the
FTSE Small Companies Index
28p
Average three-year ROCE of
12% or more
TSR at or above the upper quartile
PENSION ENTITLEMENT
Tim Roberts receives a salary supplement in lieu of pension contribution equivalent to 8% of salary, in line with the workforce rate.
Darren Littlewood is a deferred member of The Henry Boot Staff Pension and Life Assurance Scheme (Defined Benefit) from 31 March 2019. His
normal retirement date within the Scheme would be in 2042, aged 67.
The annual allowance for tax relief on pension savings applicable to Darren Littlewood in 2021 was £4,000. He elected to receive a salary
supplement in lieu of the employer contributions, which amounted to £51,000, following which he chose to contribute £4,000 into the Henry
Boot PLC Group Stakeholder Pension Plan through a salary sacrifice arrangement. Darren Littlewood’s pension contribution has now reduced to
8% of salary with effect from 1 January 2022, in line with the majority of the workforce rate.
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 national leaving work age is
currently 65.
130
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE PAYMENTS TO PAST DIRECTORS
The only payment to a past Director during the year, in respect of services provided to the Company as a Director, was in relation to LTIPs
granted to John Sutcliffe in 2018. As a good leaver, the number of shares available to vest was 25,845 shares, having been prorated for his time
in employment. This equated to a market valuation on exercise of £71,856.21.
PAYMENTS MADE FOR LOSS OF OFFICE
There were no payments made during the year in respect of loss of office to a Director.
STATEMENT OF DIRECTORS’ SHAREHOLDINGS AND SHARE INTERESTS (AUDITED)
The following table sets out the shareholdings and share interests of the Directors and connected persons in the Company as at 31 December
2021. The Executive Directors are subject to a shareholding requirement of 200% of salary under the Remuneration Policy.
Jamie Boot1
Tim Roberts
Darren Littlewood
James Sykes
Joanne Lake
Gerald Jennings
Peter Mawson
Number of
ordinary shares
held
LTIPs subject
to performance
measures
5,665,002
279,067
205,404
20,000
10,710
19,900
13,200
—
374,938
284,906
—
—
—
—
Number of
ordinary shares
as a % of salary
or fees
Total share
interests as a %
of salary or fees
16,823.42%
173.61%
194.45%
112.19%
54.68%
95.58%
60.83%
16,823.42%
406.87%
464.16%
112.19%
54.68%
95.58%
60.83%
Total
5,665,002
654,005
490,310
20,000
10,710
19,900
13,200
1 Jamie Boot also holds 14,753 preference shares.
The share price at 31 December 2021 was 284p. The salary used for this calculation is that which commences on 1 January 2022.
Between 31 December 2021 and 31 March 2022, being a date not more than one month prior to the date of the Notice of the AGM, Tim
Roberts purchased 24,191 ordinary shares and Darren Littlewood purchased 15,301 ordinary shares in relation to the FY21 Annual Bonus
award where one third of the bonus amount after tax was used to purchase shares. There were no other changes in the beneficial interests of
any of the current Directors during this period.
Market
price at
date of
grant
Plan Date of grant
Tim Roberts
LTIP
LTIP
22/06/2020
23/06/2021
256.17p
262.67p
Darren Littlewood
LTIP
LTIP
LTIP
LTIP
25/04/2018
30/04/2019
22/06/2020
23/06/2021
294.33p
272.33p
256.17p
262.67p
At 1
January
2021
168,039
—
168,039
67,950
82,619
97,592
–
248,161
Grant
during
the year
Exercised
during
the year
Lapsed
during
the year
At 31
December
2021
—
206,899
206,899
—
—
—
— 18,897
—
—
—
—
—
104,695
18,897
104,695
—
—
—
49,053
—
—
—
49,053
Actual
exercise
date/earliest
vesting date
22/06/2023
23/06/2024
168,039
206,899
374,938
— 25/04/2021
30/04/2022
22/06/2023
23/06/2024
82,619
97,592
104,695
284,906
Market
Valuation
on
exercise
£
—
—
—
52,539
—
—
52,539
SHARESAVE PLAN
Tim Roberts
Plan
2010
2020
At 1 January
2021
Granted
during the
year
Exercised
during the
year
Lapsed
during the
year1
At 31
December
2021
Exercise
price
Date from
which
exercisable
7,594
—
—
8,000
—
—
7,594
—
—
8,000
237p
225p
01/12/2023
01/12/2024
At 1 January
2021
Plan
Granted
during the
year
Exercised
during the
year
Lapsed
during the
year1
At 31
December
2021
Exercise
price
Date from
which
exercisable
Expiry date
01/06/2024
01/06/2025
Expiry date
Darren Littlewood
2020
—
8,000
—
—
8,000
225p
01/12/2024
01/06/2025
Options cancelled during the year and savings withdrawn.
SHARE PRICE
The middle market price for the Company’s shares at 31 December 2021 was 284p and the range of prices during the year was 252p to 292p.
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE CORPORATE GOVERNANCE REPORT
REMUN ERATION
TEN-YEAR TSR PERFORMANCE GRAPH
The chart below shows the TSR for the Company compared to the FTSE Small Cap Index over ten years. The FTSE Small Cap index has been
chosen as Henry Boot is a constituent of the FTSE Small Cap index.
)
d
e
s
a
b
e
R
(
)
£
(
l
e
u
a
V
400
300
200
100
0
Dec 11
Dec 12
Dec 13
Dec 14
Dec 15
Dec 16
Dec 17
Dec 18
Dec 19
Dec 20
Dec 21
Source: Datastream (Thomson Reuters)
Henry Boot PLC
FTSE
SmallCap Index
CEO REMUNERATION FOR THE PREVIOUS TEN YEARS
Year
Total Remuneration
Annual bonus
LTIP
(£’000)
(% of max)
(% of max)
2011
2012
842
66.7
50
962
58.3
40
2013
1,054
83.3
50
2014
1,000
94.5
25
2015
981
87.8
25
2016
1,118
91.1
67
2017
1,277
99.2
100
2018
1,250
76.8
87
2019
2020
2021
912
64.8
65
715
50.0
nil
983
83.3
nil
PERCENTAGE CHANGE IN DIRECTORS REMUNERATION
The table below sets out in relation to salary, taxable benefits and annual bonus the percentage increase in remuneration for Directors compared
to the wider workforce from 2020 to 2021. For these purposes:
Chief Executive Officer
Group Finance Director
Jamie Boot
James Sykes
Joanne Lake
Gerald Jennings
Peter Mawson
Workforce
Salary/fees
Taxable
benefits
5%
9%
5%
5%
15.36%
20.55%
27.81%
9.55%
0%
0%
n/a
n/a
n/a
n/a
n/a
0%
Annual
bonus
68%
87%
n/a
n/a
n/a
n/a
n/a
48.92%
CEO PAY RATIO
The table below illustrates the ratio of the CEO’s latest single total figure of remuneration versus UK full-time equivalent (FTE)
employees’ remuneration.
25th
percentile
pay ratio
31:1
26:1
Median pay
ratio
22:1
18:1
75th
percentile
pay ratio
14:1
11.1
Method
Option A
Option A
2021
2020
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE
In line with legislation, the analysis has been calculated using Option A, based on the single total figure for the CEO on page 127 and pay
and benefits for UK FTE employees. The Committee selected Option A as the method of calculation as it is generally recognised as the most
statistically robust and is consistent with the 2020 reporting.
The pay and benefits for UK employees was calculated on 17 March 2022, using the same method as used for the single total figure.
No estimates or adjustments have been made.
Salary/wages
Total remuneration
25th
percentile
£26,000.00
£29,900.00
50th
percentile
£35,000.04
£41,880.04
75th
percentile
£51,319.92
£67,397.39
RELATIVE IMPORTANCE OF THE 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:
Ordinary dividends
Profit attributable to owners of the business
Overall expenditure on pay
2021
£’000
8,016
28,160
38,144
2020
£’000
7,319
11,921
31,125
%
change
10%
136%
23%
IMPLEMENTATION OF REMUNERATION POLICY IN 2022
Executive Directors
Base salary and fees
The CEO will receive a base salary increase of 5% effective 1 January 2022, in line with the standard applied to the wider workforce. The GFD
will receive a salary increase of £25k (9.09%) effective 1 January 2022, this is the second part of a two-stage increase to reflect his experience,
the market rate for this role and his outstanding contribution to the business since his appointment.
Tim Roberts
Darren Littlewood
Salaries effective from
1 January
2022
£
456,503
300,000
1 January
2021
£
434,764
275,000
Change
%
5%
9.09%
Pension
Darren Littlewood’s pension contribution paid as salary supplement reduced to 8% of salary on 1 January 2022, this representing the pension
contribution that most employees are able to contribute to the pension. Tim Roberts will receive a salary supplement in lieu of pension of
8% of salary.
2022 bonus
The maximum bonus opportunity for Executive Directors is 120% of salary. The 2022 bonus will be based two-thirds on financial measures and
one-third on strategic objectives, of which a quarter are related to ESG targets. In line with the Policy, 10% of the bonus will payout for threshold
performance, 50% at target. The profit targets are considered to be commercially sensitive and will, therefore, be disclosed retrospectively in
next year’s report. An overview of the strategic objectives for each director is set out on page 134.
Two thirds of any bonus earned will be payable in cash and for the remaining one third of the bonus, Executive Directors will be required to invest
this into shares which must be held for three years.
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE CORPORATE GOVERNANCE REPORT
REMUN ERATION
2022 personal objectives – Tim Roberts
Objective
Implement Group strategy, identifying strategic smart objectives, taking account of risk
Communicating the Group’s strategy, vision and values both internally and externally
Develop senior leadership team and review Group remuneration
Lead good Health and Safety practices around the Group to avoid any major Health and Safety incidents
Attract new shareholders to the register, achieving positive feedback from meetings with existing shareholders
and analysts by clear key messaging and Investor Relations (IR) Policy
Implement Environment Social and Governance (ESG) Policy, and promote an open, diverse and progressive
organisation
1
2
3
4
5
6
Total
2022 personal objectives – Darren Littlewood
Objective
Implement Group strategy, identifying strategic smart objectives, taking account of risk
Implement IT strategy with a focus on identifying business process improvements, efficiencies and systems
Developing strategic influence within the business and profile within the wider industry
Developing the Finance/IT/Comms team’s profile and skillsets, developing their integration across the Group
and encouraging the departments to become more pro-active business partners
Management and development of financial reporting within each business, to the Board and to the investor
community
Undertake a review of internal and external audit and tender the Group’s provision of tax services
Support the implementation of the Group’s Environmental, Social and Governance (ESG) Policy
1
2
3
4
5
6
7
Total
Weighting
(% of
salary)
15%
4%
4%
4%
3%
10%
40%
Weighting
(% of
salary)
10%
8%
3%
3%
3%
3%
10%
40%
LTIP AWARDS EXPECTED TO BE GRANTED FOR THE FINANCIAL YEARS 2022–2024 IN 2022
The normal grant level is 125% of base salary for the CEO and 100% of salary for the GFD. The LTIP opportunities are designed to drive and
reward management for achieving the stretching performance conditions, linked to the long-term strategy. We are comfortable with the slightly
higher award level for the CEO, recognising his position as leader of the business and key driver of the success of the long-term strategy.
Type of award % of salary
% of award
at threshold
LTIP – nil cost option
LTIP – nil cost option
125%
100%
25%
25%
Tim Roberts
Darren Littlewood
134
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE The performance criteria for these awards is as follows:
EPS
We strive to grow earnings per share sustainably over the long term. This should give rise to an
ability to grow dividends faster than inflation; a key driver to long-term growth in shareholder value.
RETURN ON CAPITAL EMPLOYED
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 CONSTITUENT
COMPANIES OF THE FTSE SMALL
COMPANIES INDEX
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 Executive Directors.
These three performance criteria provide a good balance between financial and stock market performance.
The EPS target range, which is entirely ahead of the range set for last year’s awards and represents CAGR growth from a 2021 EPS of between
8% and 16.4%, is considered by the Committee to be stretching in light of the business plan and the market outlook.
The ROCE range has been increased slightly from the prior year, recognising the improved outlook for performance.
The detailed performance metrics, which will be measured over the three-year period to 31 December 2024, for these awards is as follows:
EPS in 2024
Return on Capital Employed (average over three years)
TSR relative to the FTSE Small Cap Index
Weighting
33.3%
33.3%
33.4%
Threshold target
(25% of maximum)
Maximum target
(100% of maximum)
28p
11%
Median
performance
35p
14%
Upper quartile
performance
Awards will be subject to a two-year holding period post vesting.
NON-EXECUTIVE DIRECTORS
In line with general market practice, fees have been introduced for FY22 onwards for those Directors with additional responsibilities to reflect the
increased time commitment required to effectively undertake these roles.
Fees effective from
1 January
2022
£
1 January
2021
£
95,632
50,629
5,000
2,500
2,500
3,500
91,078
48,218
–
–
–
–
Change
%
5%
5%
100%
100%
100%
100%
Chairman fee
Base Non-executive Director fee
Remuneration, Audit and Risk and Nomination Committee Chair fee1
Responsible Business Committee Chair
Non-executive Director designated to workforce engagement
Senior Independent Director
1.
Fee payable to Chair of Nomination Committee whilst the Committee Chair is not also Chair of the Board.
Approved by the Board and signed on its behalf by
GERALD JENNINGS
CHAIR OF THE REMUNERATION COMMITTEE
13 April 2022
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135
Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE CORPORATE GOVERNANCE REPORT
DIRECTORS’ REPORT
The Directors’ Report for the financial year ended 31 December 2021
is detailed below.
ACTIVITIES OF THE GROUP
The principal activities of the Group are land promotion, 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’s business along with a description
of the principal risks and uncertainties it faces. The Strategic Report
including the business overview for the year ended 31 December
2021 is set out on pages 01 to 71.
CORPORATE GOVERNANCE STATEMENT
The Disclosure Guidance and Transparency Rules of the Financial
Conduct Authority 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 80 to 141, and also within this
Directors’ Report.
RESULTS FOR THE YEAR AND DIVIDENDS
The results are set out in the Consolidated Statement of Comprehensive
Income on page 152. The companies affecting the profit or net assets of
the Group in the year are listed in note 36 to the Financial Statements.
The Directors recommend that a final dividend of 3.63p per ordinary
share be paid on 1 June 2022, subject to shareholder approval at the
2022 AGM to be held on 26 May 2022, to ordinary shareholders on
the register at the close of business on 6 May 2022. If approved, this,
together with the interim dividend of 2.42p per ordinary share paid
on 15 October 2021, will make a total dividend of 6.05p per ordinary
share for the year ended 31 December 2021. Further details are
disclosed in note 10 to the Financial Statements on page 170.
FINANCIAL INSTRUMENTS
The Group’s policy in respect of financial instruments is set out
within the Accounting Policies on page 162 and details of credit risk,
capital risk management, liquidity risk and interest rate risk are given
respectively in notes 18, 24, 25 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 pages 48 to 49.
ACCOUNTABILITY AND AUDIT
Details of the Directors’ responsibilities and the Statement of Directors’
Responsibilities are contained on page 141. The Independent
Auditor’s Report is given on pages 144 to 151.
FAIR, BALANCED AND UNDERSTANDABLE
The Audit and Risk Committee and the Board have assessed the tone,
balance and language of the Annual Report and Financial Statements,
being mindful of the requirements of the UK Corporate Governance
Code and the need for consistency between the narrative section
of the document and the Financial Statements. The Board’s formal
statement on the Annual Report and Financial Statements being fair,
balanced and understandable is contained within the Statement of
Directors’ Responsibilities which can be found on page 141.
136
POLITICAL DONATIONS
The Company made no political donations in the year or in the
previous year.
DIRECTORS AND THEIR INTERESTS
Details of the Directors who held office during the financial year ending
31 December 2021, and as at the date of this Annual Report and
Financial Statements, can be found on pages 76 and 77. At no time
during the year has any Director had any interest in any significant
contract with the Company.
The interests of Directors and persons closely associated with them
in the share capital of the Company as at 31 December 2021, are
disclosed in the Directors’ Remuneration Report on page 131.
Between 31 December 2021 and 31 March 2022, being a date not
more than one month prior to the date of the Notice of the AGM, Tim
Roberts purchased 24,191 ordinary shares and Darren Littlewood
purchased 15,301 ordinary shares in relation to the FY21 Annual
Bonus award where one third of the bonus amount after tax was used
to purchase shares. There were no other changes in the beneficial
interests of any of the current Directors during this period.
Details of Directors’ long-term incentive awards and share options are
provided in the Directors’ Remuneration Report on pages 130 to 131.
DIRECTORS’ SERVICE CONTRACTS AND
LETTERS OF APPOINTMENT
Details of unexpired terms of Directors’ service contracts and/
or letters of appointment of the Executive Directors proposed for
reappointment at the AGM on 26 May 2022 are set out in the
Directors’ Remuneration Policy.
Tim Roberts and Darren Littlewood each have a one-year rolling
service agreement in accordance with our policy on Directors’
contracts. Termination of these arrangements would, therefore, be
subject to their contractual terms and conditions, which require a
notice period of one year to the Director. Contractual compensation
in the event of early termination provides for compensation at basic
salary, pension and benefits for the notice period.
Non-executive Directors, including the Chairman, do not have service
contracts. All Non-executive Directors have letters of appointment
and their appointment and subsequent reappointment is subject to
approval by shareholders. Non-executive Director appointments are
typically for three years; however, they may be terminated without
compensation at any time. The full 2021 Directors’ Remuneration
Policy can be viewed on the website, with a summary set out on
pages 122 to 123.
TRAINING AND DEVELOPMENT
Formal and tailored inductions are arranged for all new Directors and
continued development is monitored by the Chairman as part of the
evaluation process. The programme of induction includes attendance
at PLC Board and subsidiary meetings, meetings with key internal
and external stakeholders, training on director duties and other
development to ensure a seamless integration into the business.
Non-executive Directors are encouraged to familiarise themselves
with the Company’s business, and throughout the year they have
regularly attended subsidiary board meetings and other management
meetings. You can read more about training during 2021 on page 87
and engagement with our people and other stakeholders on pages 92
to 97.
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE Specific training requirements were considered as part of the Board’s
skills evaluation, details of which can be found on pages 60 to 63.
General updates on regulations and best practice are provided
through a mixture of briefings, Board papers and emails.
RELATIONSHIP WITH STAKEHOLDERS
Details of how we engage with stakeholders and uphold our Director’s
duties more widely under s.172 of the Companies Act 2006 can be
found on pages 50 to 51 and 92 to 96.
EMPLOYMENT POLICY AND INVOLVEMENT
Our People
Our people are at the heart of all that we do; our culture ensures that
they can grow, thrive and succeed. Details of how we seek to promote
and achieve this are set out in the Responsible Business section on
pages 58 to 61, the Employee Engagement report on pages 92 to 96
and Nomination Committee Report on pages 102 to 107.
Employee engagement
Details of our employee engagement activities can be found on
pages 92 to 96.
Employee communications
As a result of the CV-19 pandemic, our employee communications
have become more frequent and diverse. During 2021, we have
had regular communications and interactions with our people and
Directors through email, live webinars and recorded video messages
from the CEO. Collaboration and inclusion is encouraged; live
webinars are recorded so that they can be watched on demand and
Q&A sessions are included where possible. During 2021, the Group’s
intranet function was refreshed following feedback from the Group
Employee Forum and working groups and will continue to evolve.
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. From 2018, all eligible colleagues were invited to
participate in Sharesave and the Company Share Option Plan on an
annual basis. Details of employee share schemes are set out in note
29 to the Financial Statements.
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 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 UK 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 people and others is paramount.
Further information on our approach to Health and Safety is provided
in the Responsible Business Section on page 61.
SHAREHOLDER RELATIONS
The Company actively communicates with its institutional and private
shareholders and values a two-way conversation on key Company
issues. It is this close relationship with shareholders that is viewed as
one of the Company’s particular strengths.
During the year, a number of formal presentations were made by
members of the Board to institutional shareholders and feedback from
these meetings was provided to the Board by our brokers or through
written reports. In addition, informal feedback sessions regarding the
Annual Report were carried out with institutional investors. At every
Board meeting an update is given to the Non-executive Directors
on any feedback from investors, particularly after investor roadshow
programmes. The Board receive a report at every meeting on share
movements during the period and any market trends. The Company
uses the Investor Relations section of its website, henryboot.co.uk, to
publish statutory documents and communications to shareholders,
such as the Annual Report and Financial Statements. The website is
designed to communicate with both present and potential investors
and includes all London Stock Exchange announcements, investor
presentations and press releases.
GREENHOUSE GAS EMISSIONS
The greenhouse gas emissions disclosure required by the Companies
Act 2006 (Strategic Report and Directors’ Report) Regulations 2013
are included within the Strategic Report on page 71. This information
is incorporated by reference into (and shall be deemed to form part of)
this report.
SUBSTANTIAL INTERESTS IN VOTING RIGHTS
Excluding Directors, as at 31 March 2022, being 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 Guidance
and Transparency Rules of the Financial Conduct Authority.
Voting rights over ordinary
shares
Number % of issued
Rysaffe Nominees and
J J Sykes (joint holding)1
The London & Amsterdam Trust
Company Limited
Unicorn Asset Management Limited
The Fulmer Charitable Trust2
Polar Capital
20,532,155
15.40
8,487,371
6,429,320
5,739,580
4,176,337
6.37
4.82
4.40
3.14
1 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.
2 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.
These figures represent the number of shares and percentage held as
the date of notification to the Company.
Details of Directors’ holdings can be found on page 131.
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE CORPORATE GOVERNANCE REPORT
DIRECTORS’ REPORT
SHARES HELD BY THE HENRY BOOT PLC EMPLOYEE TRUST
The Company has an established Employee Trust (the Trust) for the
benefit of the Group’s 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
29 to the Financial Statements. The Trustee of the Trust, a subsidiary of
the Company of which the Directors throughout 2021 were Jamie Boot,
Tim Roberts, Darren Littlewood and Amy Stanbridge, 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 2021, the Trust
has waived the right to receive from the Company all dividends (if any) in
respect of the shares held within the Trust.
There were no purchases during 2021 by the Trust who does make
purchases of ordinary shares in the Company from time to time in
order to satisfy upcoming grants. Further details are provided in note
31 to the Financial Statements.
FUTURE DEVELOPMENTS
Important events since the financial year-end and likely future
developments are described in the Strategic Report on pages 16
to 71 and in note 34 to the Financial Statements.
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 external auditors, Ernst & Young LLP, have carried out the audit
of the 2021 financial results. Resolutions re-appointing Ernst & Young
LLP as auditors (Resolution 10) and authorising the Audit and Risk
Committee to fix their remuneration (Resolution 11) will be proposed at
the AGM.
ACCOUNTABILITY AND AUDIT
Details of the Directors’ responsibilities and the Statement of Directors’
Responsibilities are contained on page 141. The Independent
Auditors’ Report is given on pages 144 to 151.
ANNUAL GENERAL MEETING (AGM)
The Notice of the AGM can be found on pages 204 to 207, which
also details methods of shareholder engagement to take place in
conjunction with the AGM. It is also available at 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
138
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 29 to
the Financial Statements. As at 31 March 2022, the ordinary shares
represent 97.09% of the total issued share capital of the Company
by nominal value and the preference shares represent 2.91% 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 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 Financial Conduct
Authority.
If the Directors wish to allot shares they must, subject to certain
exceptions such as an allotment in accordance with an employees’
share scheme, offer such shares to shareholders in proportion to their
existing holdings in accordance with statutory pre-emption rights.
A special resolution was passed at the Company’s last AGM to disapply
the statutory pre-emption rights provided that the aggregate nominal
value of such shares does not exceed 5% of the Company’s ordinary
share capital. The Directors have not made use of this authority since its
last AGM, but intend to renew this authority as set out below.
Further details of the shares allotted during the year can be found in
note 29 to the Financial Statements.
The Notice of the AGM on pages 204 to 207 includes the following
resolutions:
• An ordinary resolution (Resolution 12) to renew the authority of
the Directors to allot shares up to a maximum nominal amount of
£4,446,152 representing approximately one-third (33.33%) of the
Company’s issued ordinary share capital at 31 March 2022. The
authority will expire on 25 August 2023 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 13) 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 £666,922 (approximately 5% of the Company’s
issued ordinary share capital at 31 March 2022). The authority will
expire on 25 August 2023 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 also confirm
their intention that, in line with the Pre-Emption Group’s Statement
of Principles, no more than 7.5% of the issued ordinary share
capital of the Company (excluding treasury shares) will be issued
for cash on a non pre-emptive basis during any rolling three-year
period without prior consultation with shareholders.
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE • A special resolution (Resolution 14) to renew the authority of the
Company to make market purchases of up to 13,338,457 of
its own issued ordinary shares (10% of the Company’s issued
ordinary share capital at 31 March 2022). 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, is at the discretion of the Board,
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 they are 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 2022
are set out in the Notice of AGM on pages 204 to 207.
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-
quarters 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:
•
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
• 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.
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 Act 2006 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.
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139
Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE CORPORATE GOVERNANCE REPORT
DIRECTORS’ REPORT
STATE MENT O F DIRE CTORS’ RESPON SIBILITIE S
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 Act 2006) 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 they were not appointed or reappointed at
either such AGM and they have 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 Act 2006, remove any
Director before their period of office has expired notwithstanding anything
in the Articles or in any agreement between them and the Company. A
Director may also be removed from office by the service on them 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:
i.
ii.
iii.
they are prohibited by law from being a Director;
they become bankrupt or make any arrangement or composition
with their creditors generally;
they are physically or mentally incapable of acting as a Director,
in the opinion of a registered medical practitioner who is
treating them;
iv. a court makes an order that they are prevented from exercising
their powers or rights by reasons of their mental health;
v.
for more than six months they are absent, without special leave of
absence, from the Board, from meetings of the Board held during
that period, and the Board resolves that their office be vacated; or
vi. they serve on the Company notice of their 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 resolution of the Company’s shareholders.
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 the Company 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 by its order by
AMY STANBRIDGE
COMPANY SECRETARY
13 April 2022
The following table sets out where stakeholders can find relevant Non-Financial information within this Annual Report, further to the Financial
Reporting Directive requirements contained in sections 414CA and 414CB of the Companies Act 2006. Where possible, it also states where
additional information can be found that support these requirements.
Reporting requirement
Relevant Henry Boot policies and procedures
Where to read more in this report
Page
BUSINESS MODEL
PRINCIPAL RISKS AND IMPACT
OF BUSINESS ACTIVITY
NON-FINANCIAL KPIS
EMPLOYEE ENGAGEMENT
Board Diversity Policy
Board Stakeholder Policy
HUMAN RIGHTS
Modern slavery statement and Policy
Rights to Work
Whistleblowing
Business Model
Risks and Uncertainties
Audit and Risk Committee Report
Strategy
Our Responsible Business
Our People
Corporate Governance Report
Our People
18 to 21
42 to 49
108 to 112
28 to 29
53 to 65
58 to 61
92 to 93
61
SOCIAL MATTERS
Board Stakeholder Policy
Our Responsible Business
53 to 65
ANTI-BRIBERY AND CORRUPTION
Anti-bribery and Corruption Policy
ENVIRONMENTAL MATTERS
Board Stakeholder Policy
Our People
Our Planet
61
64
140
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE STATEMENT OF D IRECTORS’ RESPONSI BILIT IES
ANNUAL REPORT AND FINANCIAL STATEMENTS
The Directors are responsible for preparing the Annual Report and the
Financial Statements in accordance with applicable law and regulation.
Company law requires the Directors to prepare Financial Statements
for each financial year. Under that law the Directors have elected
to prepare the Group and Parent Company Financial Statements
in accordance with UK adopted International Financial Reporting
Standards (IFRSs).
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 Parent Company and of the
profit or loss of the Group and Parent Company for that period.
In preparing the Financial Statements, the Directors are required to:
•
select suitable accounting policies in accordance with IAS 8
Accounting Policies, Changes in Accounting Estimates and
Errors and then apply them consistently;
• make judgements and accounting estimates that are reasonable
and prudent;
• present information, including accounting policies, in a manner
that provides relevant, reliable, comparable and understandable
information;
• provide additional disclosures when compliance with the specific
requirements in IFRSs is insufficient to enable users to understand
the impact of particular transactions, other events and conditions
on the Group and Parent Company financial position and financial
performance;
•
•
in respect of the Group Financial Statements, state whether UK
adopted international accounting standards have been followed,
subject to any material departures disclosed and explained in the
financial statements;
in respect of the Parent Company Financial Statements, state
whether UK adopted international accounting standards, 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 appropriate to presume that the Parent Company
and/or the Group will not continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group and Parent
Company’s transactions and disclose with reasonable accuracy at
any time the financial position of the Group and Parent Company and
enable them to ensure that the Financial Statements comply with the
Companies Act 2006.
The Directors are also responsible for safeguarding the assets of the
Group and Parent Company and hence for taking reasonable steps
for the prevention and detection of fraud and other irregularities.
Under applicable law and regulations, the directors are also responsible
for preparing a Strategic Report, Directors’ Report, Directors’
Remuneration Report and Corporate Governance Statement that
comply with that law and those regulations.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Parent Company’s
website.
FAIR, BALANCED AND UNDERSTANDABLE
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 Group and Parent Company’s performance, business model
and strategy.
DIRECTORS’ RESPONSIBILITY STATEMENT
Each of the Directors, whose names and functions are listed in Board
of Directors, confirm that, to the best of their knowledge:
•
•
that the Consolidated Financial Statements, prepared in
accordance with UK adopted international accounting standards
give a true and fair view of the assets, liabilities, financial position
and profit of the Parent Company and undertakings included in
the consolidation taken as a whole; and
that the Annual Report, including the Strategic Report, includes a
fair review of the development and performance of the business
and the position of the Parent Company and undertakings
included in the consolidation taken as a whole, together with a
description of the principal risks and uncertainties that they face.
Approved by the Board and signed on its behalf by
TIM ROBERTS
DIRECTOR
DARREN LITTLEWOOD
DIRECTOR
13 April 2022
13 April 2022
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141
Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021GOVERNANCE Pictured: Kampus, Manchester,
a 533-unit BtR scheme
completed in 2021
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FINANCIAL
STATEMENTS
Independent Auditors’ Report
Consolidated Statement of
Comprehensive Income
Statements of Financial Position
Statements of Changes in Equity
Statements of Cash Flows
Notes to the Financial Statements
144
152
153
154
155
156
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INDEPENDENT AUDITORS’ REPORT
TO THE MEMBERS OF HENRY BOOT PLC
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 2021 and of the group’s profit for the year
then ended;
•
•
the group financial statements have been properly prepared in
accordance with UK adopted international accounting standards;
the parent company financial statements have been properly
prepared in accordance with UK adopted international accounting
standards as applied in accordance with section 408 of the
Companies Act 2006; and
•
the financial statements have been prepared in accordance with the
requirements of the Companies Act 2006.
We have audited the financial statements of Henry Boot PLC (the
‘parent company’) and its subsidiaries (the ‘group’) for the year ended
31 December 2021 which comprise:
Parent Company
Parent Company statement
of financial position as at
31 December 2021
Parent Company statement of
changes in equity for the year then
ended
Parent Company statement of cash
flows for the year then ended
Related notes 1 to 37 to the financial
statements including a summary of
significant accounting policies
Group
Group statement of financial
position as at 31 December 2021
Consolidated statement of
comprehensive income for the year
then ended
Group statement of changes in
equity for the year then ended
Group statement of cash flows for
the year then ended
Related notes 1 to 37 to the
financial statements, including a
summary of significant accounting
policies
The financial reporting framework that has been applied in their
preparation is applicable law and UK adopted international accounting
standards and as regards the parent company financial statements, as
applied in accordance with section 408 of the Companies Act 2006.
BASIS FOR OPINION
We conducted our audit in accordance with International Standards on
Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for
the audit of the financial statements section of our report. We believe
that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
INDEPENDENCE
We are independent of the group and parent in accordance with
the ethical requirements that are relevant to our audit of the financial
statements in the UK, including the FRC’s Ethical Standard as applied
to listed public interest entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
The non-audit services prohibited by the FRC’s Ethical Standard were
not provided to the group or the parent company and we remain
independent of the group and the parent company in conducting
the audit.
144
CONCLUSIONS RELATING TO GOING CONCERN
In auditing the financial statements, we have concluded that the
directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our evaluation
of the directors’ assessment of the group and parent company’s ability
to continue to adopt the going concern basis of accounting included:
• confirming our understanding of management’s going concern
assessment process, through our walkthrough of the Group’s
financial close process and also engaging with management early
to ensure all key factors we identified were considered in their
assessment.
• obtaining management’s going concern assessment, including
the cash forecast and forecast covenant calculation which covers
the period to 31 December 2023. The Group has modelled a
base scenario and then a severe but plausible downside scenario
in their cash forecasts and covenant calculations in order to
incorporate unexpected changes to the forecasted liquidity of the
Group. This downside scenario models a significant curtailment of
activity and is modelled on a recessionary environment similar to
that experienced during the global financial crisis in 2008.
•
testing the factors and assumptions included in each modelled
scenario for the cash forecast and covenant calculation. We also
considered whether climate change could impact the assessment.
We also considered the appropriateness of the models used
to calculate the cash forecasts and covenant calculations to
determine if they were appropriately sophisticated to be able to
make an assessment on going concern.
• considering the mitigating factors included in the cash forecasts
and covenant calculations that are within control of the Group,
for example, reducing uncommitted development and acquisition
expenditure. This included an assessment of the Group’s non-
operating cash outflows.
•
verifying the credit facilities available to the Group, being the
secured loan facility of £75m.
• performing reverse stress testing in order to identify what factors
would lead to the Group utilising all liquidity or breaching the
financial covenant during the going concern period.
•
reviewing the Group’s going concern disclosures included in
the annual report in order to assess that the disclosures were
appropriate and in conformity with the reporting standards.
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that, individually
or collectively, may cast significant doubt on the group and parent
company’s ability to continue as a going concern to 31 December 2023.
In relation to the group and parent company’s reporting on how they have
applied the UK Corporate Governance Code, we have nothing material
to add or draw attention to in relation to the directors’ statement in the
financial statements about whether the directors considered it appropriate
to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect
to going concern are described in the relevant sections of this report.
However, because not all future events or conditions can be predicted,
this statement is not a guarantee as to the group’s ability to continue as a
going concern.
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FINANCIAL STATEMENTSHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 Of the remaining 45 components that together represent 5% of the
Group’s Profit before tax, none are individually greater than 3% of the
Group’s Profit before tax. For these components, we performed other
procedures, including analytical review and testing of consolidation
journals and intercompany eliminations to respond to any potential
risks of material misstatement to the Group financial statements.
The charts below illustrate the coverage obtained from the work
performed by our audit team.
PROFIT BEFORE TAX
Other procedures
5%
REVENUE
Other procedures
1%
TOTAL ASSETS
Other procedures
4%
Full scope components
71%
Specific scope
components
24%
Full scope components
94%
Specific scope
components
5%
Full scope components
84%
Specific scope
components
12%
OVERVIEW OF OUR AUDIT APPROACH
Audit scope
• We performed an audit of the complete
financial information of six components and
audit procedures on specific balances for a
further ten components.
• The components where we performed full or
specific audit procedures accounted for 95%
of Profit before tax, 99% of Revenue and 96%
of Total assets.
• Valuation of contract balances and associated
revenue and profit recognition.
• Valuation of house building inventories and
profit recognition.
Key audit
matters
Materiality
• Valuation of investment properties.
• Group materiality of £1.8m which represents
5% of Profit before tax.
AN OVERVIEW OF THE SCOPE OF THE PARENT
COMPANY AND GROUP AUDITS
Tailoring the scope
Our assessment of audit risk, our evaluation of materiality and our
Our assessment of audit risk, our evaluation of materiality and our
allocation of performance materiality determine our audit scope for
each company within the Group. Taken together, this enables us
to form an opinion on the consolidated financial statements. We
take into account size, risk profile, the organisation of the group
and effectiveness of group-wide controls, changes in the business
environment and other factors such as recent Internal audit results
when assessing the level of work to be performed at each company.
In assessing the risk of material misstatement to the Group financial
statements, and to ensure we had adequate quantitative coverage
of significant accounts in the financial statements, of the 61 reporting
components of the Group, we selected 16 components, which
represent the principal business units within the Group.
Of the 16 components selected, we performed an audit of the
complete financial information of six components (“full scope
components”) which were selected based on their size or risk
characteristics. For the remaining ten components (“specific scope
components”), we performed audit procedures on specific accounts
within that component that we considered had the potential for the
greatest impact on the significant accounts in the financial statements
either because of the size of these accounts or their risk profile.
The reporting components where we performed audit procedures
accounted for 95% (2020: 94%) of the Group’s Profit before tax, 99%
(2020: 97%) of the Group’s Revenue and 96% (2020: 93%) of the
Group’s Total assets. For the current year, the full scope components
contributed 71% (2020: 71%) of the Group’s Profit before tax, 94%
(2020:92%) of the Group’s Revenue and 84% (2020: 85%) of the
Group’s Total assets. The specific scope components contributed
24% (2020: 23%) of the Group’s Profit before tax, 5% (2020: 5%) of
the Group’s Revenue and 12% (2020: 8%) of the Group’s Total assets.
The audit scope of these components may not have included testing
of all significant accounts of the component but will have contributed
to the coverage of significant accounts tested for the Group.
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145
FINANCIAL STATEMENTSHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgment,
were of most significance in our audit of the financial statements of
the current period and include the most significant assessed risks of
material misstatement (whether or not due to fraud) that we identified.
These matters included those which had the greatest effect on: the
overall audit strategy, the allocation of resources in the audit; and
directing the efforts of the engagement team. These matters were
addressed in the context of our audit of the financial statements as a
whole, and in our opinion thereon, and we do not provide a separate
opinion on these matters.
INDEPENDENT AUDITORS’ REPORT
TO THE MEMBERS OF HENRY BOOT PLC
CHANGES FROM THE PRIOR YEAR
The number of specific scope components increased from five in the
prior year to eleven in the current year due to increased activity in
subsidiaries and joint ventures.
All audit work performed for the purposes of the audit was undertaken
by the Group audit team.
CLIMATE CHANGE
There has been increasing interest from stakeholders as to how
climate change will impact Henry Boot PLC. The Group has
determined that the most significant future impacts from climate
change on their operations will be from various factors, that are
explained on page 70 in the required Task Force on Climate-
related Financial Disclosures on page 44 in the principal risks and
uncertainties, which form part of the “Other information,” rather than
the audited financial statements. Our procedures on these disclosures
therefore consisted solely of considering whether they are materially
inconsistent with the financial statements or our knowledge obtained
in the course of the audit or otherwise appear to be materially
misstated.
As explained in the Basis of Preparation note governmental and
societal responses to climate change risks are still developing, and
are interdependent upon each other, and consequently financial
statements cannot capture all possible future outcomes as these are
not yet known.
Our audit effort in considering climate change was focused on
ensuring that the effects of material climate risks disclosed on page 70
have been appropriately considered in asset values, and associated
disclosures. We also challenged the Directors’ considerations of
climate change in their assessment of going concern and viability and
associated disclosures.
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FINANCIAL STATEMENTSHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 Key observations
communicated
to the Audit Committee
Based on our audit procedures we
have concluded that the contract
balances, revenue and profit
recognised in the year are not
materially misstated.
Risk
Our response to the risk
VALUATION OF CONTRACT BALANCES
AND ASSOCIATED REVENUE AND PROFIT
RECOGNITION
Refer to the Audit & Risk Committee Report
(page 112); Accounting policies (page 158);
and Note 1, 17 and 22 of the Consolidated
Financial Statements (page 165, 183 and
186)
The Group has reported revenues from
construction and development contracts
for the year of £78.8m (2020: £123.9m).
The Group has reported contract assets of
£7.6m (2020: £13.3m) and contract liabilities
of £5.0m (2020: £7.4m).
For construction and development contract
activity the performance obligation is
satisfied over time. This means that revenue
is recognised by measuring the progress
towards completing the performance
obligation satisfactorily. This assessment
requires management to estimate the
stage of completion of construction and
development contract activity and assess
costs to complete. Forecasting is highly
subjective and is an area that could lead
to misstatement of revenue, profit and
related construction and development
contract balances either through error or
management bias.
For construction and development contract activity
the performance obligation is satisfied over time.
This means that revenue is recognised by measuring
the progress towards completing the performance
obligation satisfactorily. This assessment requires
management to estimate the stage of completion
of construction and development contract activity
and assess costs to complete. Forecasting is
highly subjective and is an area that could lead
to misstatement of revenue, profit and related
construction and development contract balances
either through error or management bias.
• We performed walkthroughs to understand the
key processes and identify key controls;
• We agreed key contractual terms to customer
contracts;
• We agreed total revenue for the contract to the
signed contract and approved variation orders;
• We held meetings with in-house surveyors to
understand the status and performance to date
of the contracts and the basis for the cost to
complete assumptions made;
• We challenged management’s forecast of costs
to complete by analysing historical forecasting
accuracy through reviewing the movement in
forecast margins to their final actual margins on
completed contracts;
• We performed sensitivity analysis on costs to
come to identify any contracts that were sensitive
to both price increases and delays.
• We obtained post year end contract valuation
schedules to identify any favourable or
unfavourable margin movements and where
necessary ensured that this post year end
information was reflected in the year end
assessments;
• We tested a sample of costs incurred in the
year to third party supporting evidence and
validated that the cost had been allocated to the
appropriate contract;
• We recalculated the percentage completion of the
project using the costs incurred to date, and the
corresponding revenue and margin recognised in
the year;
• We tested the amounts invoiced on contracts to
underlying payment applications/certificates and
to cash receipt where paid and assessed any
contract assets for recoverability; and
• We discussed projects with in-house surveyors
and the Group legal department to identify any
claims that may impact on cost to complete.
For a sample of the larger projects that were
incomplete at the balance sheet date, we also visited
the site to gain a deeper understanding of the projects
and to identify contra-indicators of the stage of
completion
We performed full and specific scope audit
procedures over this risk area in two locations, which
covered 100% of the risk amount.
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147
FINANCIAL STATEMENTSHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 Key observations
communicated
to the Audit Committee
Based on our audit procedures
we have concluded that the
investment property balance and
fair value movement recognised
in the year are not materially
misstated.
INDEPENDENT AUDITORS’ REPORT
TO THE MEMBERS OF HENRY BOOT PLC
Risk
Our response to the risk
VALUATION OF HOUSE BUILDING
INVENTORIES
Refer to the Audit & Risk Committee Report
(page 112); Accounting policies (page 161);
and Note 20 of the Consolidated Financial
Statements (page 185)
The Group holds house building inventories of
£58.5m (2020 - £39.2m).
There is a risk that the margin used to
recognise profit on each development is
incorrect and that the carrying value of
Inventory could be subject to impairment
write downs.
The carrying value of Inventory is determined
by reference to a number of assumptions
inherent in the site forecasts, such as costs to
complete and expected selling price. These
are used to calculate the expected margin
on each development and the cost of sale
recorded when a plot is sold. There is a risk
that these assumptions may be subject to
management override or error and that costs
incurred are not allocated to the appropriate
developments.
For a sample of sites, we performed the following
procedures:
• We performed walkthroughs to understand the key
processes and identify key controls;
• We held meetings with the commercial director
to assess the status and performance to date of
the active sites and the basis for the sales and
cost to complete assumptions made, including
understanding the reasons behind any excess
costs or savings recognised on the site since the
initial forecast;
• We verified selling price assumptions against recent
market activity and considered whether recent
market activity provided any contra-evidence;
• For completed sites, we compared the estimated
and actual costs and margin to assess the
historical accuracy of management’s forecasting
and to evaluate the appropriateness of the
forecast margin for incomplete sites at the balance
sheet date;
• For a sample of sites where revenue was
recognised in the year, we compared the gross
margin to industry averages to identify sites with
inconsistent margins and understood the drivers of
this to assess reasonableness;
• We selected a sample of costs incurred during the
year (included as additions to work in progress) and
agreed them to third party invoices, checking the
costs had been allocated to the appropriate site
and were recognised in the correct period;
• For a sample of sales in the year, we checked that
the proportion of expenditure recognised as a cost
of sale in the year was in line with the most recent
forecast margin for the site
• We assessed the completeness of inventory
provisions by performing sensitivity analysis on
active sites and post year end sales activity; and
• For a sample of land assets, we considered their
location within the UK and assessed whether there
was any impairment risk due to potential flooding.
We performed full and specific scope audit
procedures over this risk area in one location, which
covered 100% of the risk amount.
148
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FINANCIAL STATEMENTSHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 Key observations
communicated
to the Audit Committee
Based on our audit procedures
we have concluded that the
investment property balance and
fair value movement recognised
in the year are not materially
misstated.
Risk
Our response to the risk
VALUATION OF INVESTMENT
PROPERTIES
Refer to the Audit & Risk Committee Report
(page 112); Accounting policies (page 160);
and Note 14 of the Consolidated Financial
Statements (page 176 to 180)
The Group holds Investment property of
£104.2m (2020 - £82.7m).
There is a risk that the carrying value of
investment properties is misstated, given
that the carrying value of these assets
is based on a number of assumptions
which contain inherent uncertainties and
which require management judgement.
Uncertainties in the valuations include
yields,market rent, actual rent achieved and
commercial property values amongst other
building specific assumptions.
For a sample of investment properties, we performed
the following procedures:
• We performed walkthroughs to understand the
key processes and identify key controls; and
• For a sample of investment properties valued
by an external valuer, we assessed the
appropriateness of the valuations, with the
assistance of our EY Valuations specialists. We
assessed these through reading the external
valuer reports and testing the underlying data
used by the external valuer in forming their
valuation including; validating key assumptions
around rent, yields and commercial property
values to supporting third party evidence or
market activity, holding discussions directly with
the external valuer to confirm their valuation
approach, including their consideration of climate
risk and considering contrary evidence.
We performed full and specific scope audit
procedures over this risk area in seven locations,
which covered 100% of the risk amount.
Audit work at component locations for the purpose of obtaining
audit coverage over significant financial statement accounts is
undertaken based on a percentage of total performance materiality.
The performance materiality set for each component is based on
the relative scale and risk of the component to the Group as a whole
and our assessment of the risk of misstatement at that component.
In the current year, the range of performance materiality allocated to
components was £0.26m to £1.3m (2020: £0.19m to £0.95m).
Reporting threshold
An amount below which identified misstatements are considered as
being clearly trivial.
We agreed with the Audit Committee that we would report to them
all uncorrected audit differences in excess of £0.09m (2020: £0.1m),
which is set at 5% of planning materiality, as well as differences below
that threshold that, in our view, warranted reporting on qualitative
grounds.
We evaluate any uncorrected misstatements against both the
quantitative measures of materiality discussed above and in light of
other relevant qualitative considerations in forming our opinion.
OUR APPLICATION OF MATERIALITY
We apply the concept of materiality in planning and performing the
audit, in evaluating the effect of identified misstatements on the audit
and in forming our audit opinion.
Materiality
The magnitude of an omission or misstatement that, individually or in
the aggregate, could reasonably be expected to influence the economic
decisions of the users of the financial statements. Materiality provides a
basis for determining the nature and extent of our audit procedures.
We determined materiality for the Group to be £1.8 million (2020: £1.9
million), which is 5% (2020: 5%) of Profit before tax (2020: normalised
Profit before tax). We believe that Profit before tax provides us with an
appropriate basis of materiality and is the most relevant measure for
stakeholders as it is a focus of both management and investors. In the
prior year, our materiality was based on the average Profit before tax
over the previous three years due to the impact of COVID-19. In the
current year, the impact of COVID-19 was reduced to such a level that
we determined Profit before tax to be representative of the earnings of
the Group.
We determined materiality for the Parent Company to be £2.0 million
(2020: £1.6 million), which is 2% (2020: 2%) of equity. The increase in
materiality is due to dividends received by subsidiaries in the year.
Performance materiality
The application of materiality at the individual account or balance
level. It is set at an amount to reduce to an appropriately low level
the probability that the aggregate of uncorrected and undetected
misstatements exceeds materiality.
On the basis of our risk assessments, together with our assessment
of the Group’s overall control environment, our judgement was
that performance materiality was 75% (2020: 50%) of our planning
materiality, namely £1.3m (2020: £0.95m). We have set performance
materiality at this percentage due to this being a recurring audit
with a history of few misstatements. We previously set performance
materiality at 50% as it was the first year of our audit.
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149
FINANCIAL STATEMENTSHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 INDEPENDENT AUDITORS’ REPORT
TO THE MEMBERS OF HENRY BOOT PLC
OTHER INFORMATION
The other information comprises the information included in the annual
report set out on pages 1 to 142 other than the financial statements
and our auditor’s report thereon. The directors are responsible for the
other information contained within the annual report.
Our opinion on the financial statements does not cover the other
information and, except to the extent otherwise explicitly stated in this
report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with
the financial statements or our knowledge obtained in the course of
the audit or otherwise appears to be materially misstated. If we identify
such material inconsistencies or apparent material misstatements,
we are required to determine whether this gives rise to a material
misstatement in the financial statements themselves. If, based on
the work we have performed, we conclude that there is a material
misstatement of the other information, we are required to report
that fact.
We have nothing to report in this regard.
OPINIONS ON OTHER MATTERS PRESCRIBED
BY THE COMPANIES ACT 2006
In our opinion, the part of the directors’ remuneration report to be
audited has been properly prepared in accordance with the Companies
Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
•
•
•
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 and those
reports have been prepared in accordance with applicable legal
requirements;
the information about internal control and risk management
systems in relation to financial reporting processes and about
share capital structures, given in compliance with rules 7.2.5 and
7.2.6 in the Disclosure Rules and Transparency Rules sourcebook
made by the Financial Conduct Authority (the FCA Rules), is
consistent with the financial statements and has been prepared in
accordance with applicable legal requirements; and
information about the company’s corporate governance statement
and practices and about its administrative, management and
supervisory bodies and their committees complies with rules
7.2.2, 7.2.3 and 7.2.7 of the FCA Rules.
MATTERS ON WHICH WE ARE REQUIRED
TO REPORT BY EXCEPTION
In the light of the knowledge and understanding of the group and the
parent company and its environment obtained in the course of the
audit, we have not identified material misstatements in:
•
•
the strategic report or the directors’ report; or
the information about internal control and risk management
systems in relation to financial reporting processes and about
share capital structures, given in compliance with rules 7.2.5 and
7.2.6 of the FCA Rules
150
We have nothing to report in respect of the following matters in
relation to which the Companies Act 2006 requires us to report to you
if, in our opinion:
• 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; or
• certain disclosures of directors’ remuneration specified by law are
not made; or
• we have not received all the information and explanations we
require for our audit
• a Corporate Governance Statement has not been prepared by the
company
CORPORATE GOVERNANCE STATEMENT
We have reviewed the directors’ statement in relation to going
concern, longer-term viability and that part of the Corporate
Governance Statement relating to the group and company’s
compliance with the provisions of the UK Corporate Governance
Code specified for our review by the Listing Rules.
Based on the work undertaken as part of our audit, we have
concluded that each of the following elements of the Corporate
Governance Statement is materially consistent with the financial
statements or our knowledge obtained during the audit:
• Directors’ statement with regards to the appropriateness of
adopting the going concern basis of accounting and any material
uncertainties identified set out on page 48;
• Directors’ explanation as to its assessment of the company’s
prospects, the period this assessment covers and why the period
is appropriate set out on page 49;
• Director’s statement on whether it has a reasonable expectation
that the group will be able to continue in operation and meets its
liabilities set out on page 49;
• Directors’ statement on fair, balanced and understandable set out
on page 141;
• Board’s confirmation that it has carried out a robust assessment
of the emerging and principal risks set out on pages 42 to 48;
• The section of the annual report that describes the review of
effectiveness of risk management and internal control systems set
out on pages 109 to 112; and;
• The section describing the work of the audit committee set out on
pages 108 to 112.
RESPONSIBILITIES OF DIRECTORS
As explained more fully in the directors’ responsibilities statement set
out on page 141, the directors are responsible for the preparation of
the financial statements and for being satisfied that they give a true
and fair view, and for such internal control as the directors determine
is necessary to enable the preparation of financial statements that are
free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible
for assessing the group and parent company’s ability to continue as
a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the group or the parent company or
to cease operations, or have no realistic alternative but to do so.
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FINANCIAL STATEMENTSHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 enquiries of Group management and Internal Audit; and focused
testing, as referred to in the key audit matters section above.
In addition, we completed procedures to conclude on the
compliance of the disclosures in the Annual Report and Accounts
with the requirements of the relevant accounting standards, UK
legislation and the UK Corporate Governance Code 2018.
A further description of our responsibilities for the audit of the financial
statements is located on the Financial Reporting Council’s website at
https://www.frc.org.uk/auditorsresponsibilities. This description forms
part of our auditor’s report.
OTHER MATTERS WE ARE REQUIRED TO ADDRESS
• Following the recommendation from the audit committee, we
were appointed by the company on 20 May 2021 to audit the
financial statements for the year ending 31 December 2021 and
subsequent financial periods.
• The period of total uninterrupted engagement including previous
renewals and reappointments is two years, covering the years
ending 31 December 2020 to 31 December 2021.
• The audit opinion is consistent with the additional report to the
audit committee.
USE OF OUR REPORT
This report is made solely to the company’s members, as a body, in
accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
company’s members those matters we are required to state to them
in an auditor’s report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the company and the company’s members as a
body, for our audit work, for this report, or for the opinions we have
formed.
VICTORIA VENNING
for and on behalf of Ernst & Young LLP, Statutory Auditor
Manchester
13 April 2022
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT
OF THE FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the
financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report
that includes our opinion. Reasonable assurance is a high level
of assurance, but is not a guarantee that an audit conducted in
accordance with ISAs (UK) will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users
taken on the basis of these financial statements.
Explanation as to what extent the audit was considered
capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect irregularities, including fraud.
The risk of not detecting a material misstatement due to fraud is higher
than the risk of not detecting one resulting from error, as fraud may
involve deliberate concealment by, for example, forgery or intentional
misrepresentations, or through collusion. The extent to which our
procedures are capable of detecting irregularities, including fraud is
detailed below.
However, the primary responsibility for the prevention and detection of
fraud rests with both those charged with governance of the company
and management.
• We obtained an understanding of the legal and regulatory
frameworks that are applicable to the group and determined
that the most significant are those that relate to the reporting
framework (UK adopted international accounting standards
as applied in accordance with section 408 of the Companies
Act 2006) , the relevant tax compliance regulations in the UK,
employment law and building safety regulations.
• We understood how Henry Boot PLC is complying with those
frameworks by making enquiries of management, Internal Audit,
those responsible for legal and compliance procedures and the
Company Secretary. We corroborated our enquiries through
our review of board minutes and papers provided to the Audit
Committee.
• We assessed the susceptibility of the group’s financial statements
to material misstatement, including how fraud might occur by
meeting with management from various parts of the business to
understand where it considered there was a susceptibility to fraud.
We also considered performance targets and their propensity
to influence efforts made by management to manage earnings.
We considered the programmes and controls that the Group has
established to address risks identified, or that otherwise prevent,
deter and detect fraud; and how senior management monitors
those programmes and controls. Where the risk was considered
to be higher, we performed audit procedures to address each
identified fraud risk, as set out in the Key Audit Matters section
above. These procedures included testing manual journals and
were designed to provide reasonable assurance that the financial
statements were free from material fraud and error.
• Based on this understanding we designed our audit procedures
to identify non-compliance with such laws and regulations. Our
procedures involved journal entry testing, with a focus on manual
consolidation journals, and journals indicating large or unusual
transactions based on our understanding of the business;
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151
FINANCIAL STATEMENTSHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2021
Revenue
Cost of sales
Gross profit
Administrative expenses
Pension expenses
Increase in fair value of investment properties
Profit/(loss) on sale of investment properties
Share of profit of joint ventures and associates
Profit on disposal of joint ventures and subsidiaries
Operating profit
Finance income
Finance costs
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
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
4
14
16
35
3
5
6
7
12
27
19
9
9
2021
£’000
230,598
(175,052)
55,546
(32,174)
(6,039)
17,333
7,972
1,340
8,928
—
35,573
724
(1,155)
35,142
(4,482)
30,660
—
(282)
23,297
(4,840)
18,175
48,835
28,160
2,500
30,660
46,335
2,500
48,835
21.2p
20.9p
2020
£’000
222,411
(181,944)
40,467
(28,791)
(4,552)
7,124
1,266
(97)
1,756
7,426
17,475
721
(1,117)
17,079
(3,354)
13,725
(651)
—
(15,713)
3,089
(13,275)
450
11,921
1,804
13,725
(1,354)
1,804
450
9.0p
8.9p
152
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FINANCIAL STATEMENTSHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 STATEMENTS OF FINANCIAL POSITION
AS AT 31 DECEMBER 2021
Assets
Non-current assets
Intangible assets
Property, plant and equipment
Right-of-use assets
Investment properties
Investments
Investment in joint ventures and associates
Trade and other receivables
Deferred tax assets
Current assets
Inventories
Contract assets
Trade and other receivables
Current tax receivable
Cash
Liabilities
Current liabilities
Trade and other payables
Contract liabilities
Current tax liabilities
Borrowings
Lease liabilities
Provisions
Net current assets
Non-current liabilities
Trade and other payables
Borrowings
Lease liabilities
Retirement benefit obligations
Deferred tax liability
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
2021
£’000
2020
£’000
Parent Company
2021
£’000
2020
£’000
Note
11
12
13
14
15
16
18
19
20
17
18
22
21
25
13
26
22
25
13
27
19
26
29
30
30
30
31
3,716
26,349
1,581
104,177
—
12,165
13,304
3,389
164,681
235,296
7,556
91,359
1,828
11,116
347,155
72,155
5,033
—
52,941
639
5,427
136,195
210,960
1,669
—
1,021
12,228
4,582
855
20,355
355,286
13,732
2,060
328,348
6,744
(1,044)
349,840
5,446
355,286
4,318
23,818
2,110
82,723
—
5,840
7,194
7,342
133,345
200,789
13,328
65,032
—
42,125
321,274
72,727
7,430
1,129
2,941
603
4,852
89,682
231,592
2,346
9,969
1,613
36,445
—
1,076
51,449
313,488
13,718
2,342
288,514
6,404
(1,176)
309,802
3,686
313,488
—
317
76
—
37,771
—
—
3,522
41,686
—
—
204,534
1,551
2,691
208,776
86,173
—
—
50,000
41
—
136,214
72,562
—
—
37
12,228
—
—
12,265
101,983
13,732
—
81,414
7,881
(1,044)
101,983
—
101,983
—
182
137
—
38,021
—
—
7,347
45,687
—
—
135,640
—
31,615
167,255
93,110
—
386
1,421
54
—
94,971
72,284
—
—
86
36,445
—
—
36,531
81,440
13,718
—
61,357
7,541
(1,176)
81,440
—
81,440
The Parent Company made a profit for the year of £8,938,000 (2020: £552,000).
The Financial Statements on pages 152 to 201 of Henry Boot PLC, registered number 160996, were approved by the Board of Directors and
authorised for issue on 13 April 2022.
On behalf of the Board
Tim Roberts
Director
Darren Littlewood
Director
153
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FINANCIAL STATEMENTSHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 STATEMENTS OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2021
Attributable to owners of the Parent Company
Property
revaluation
reserve
£’000
2,993
—
(651)
Retained
earnings
£’000
293,593
11,921
(12,624)
Other
reserves
£’000
6,390
—
—
Cost of
shares held
by ESOP
trust
£’000
(1,248)
—
—
Non-
controlling
interests
£’000
3,041
1,804
Total
equity
£’000
318,486
13,725
— (13,275)
Total
£’000
315,445
11,921
(13,275)
(1,354)
(4,664)
15
(615)
975
(4,289)
309,802
28,160
18,175
46,335
(7,620)
354
969
(6,297)
349,840
—
—
—
(615)
687
72
(1,176)
—
—
—
—
—
132
132
(1,044)
1,804
(1,159)
—
—
—
(1,159)
3,686
2,500
—
2,500
(740)
—
—
(740)
5,446
Cost of
shares held
by ESOP
trust
£’000
(1,248)
—
—
—
—
—
(615)
687
72
(1,176)
—
—
—
—
—
132
132
(1,044)
Other
reserves
£’000
7,527
—
—
—
—
14
—
—
14
7,541
—
—
—
—
340
—
340
7,881
450
(5,823)
15
(615)
975
(5,448)
313,488
30,660
18,175
48,835
(8,360)
354
969
(7,037)
355,286
Total
equity
£’000
98,386
552
(12,624)
(12,072)
(4,664)
15
(615)
390
(4,874)
81,440
8,938
18,457
27,395
(7,620)
354
414
(6,852)
101,983
(651)
—
—
—
—
—
2,342
—
(282)
(282)
—
—
—
—
2,060
(703)
(4,664)
—
—
288
(4,376)
288,514
28,160
18,457
46,617
(7,620)
—
837
(6,783)
328,348
Note
8
10
31
31
8
10
30
Share
capital
£’000
13,717
—
—
—
—
1
—
—
1
13,718
—
—
—
—
14
—
14
13,732
—
—
14
—
—
14
6,404
—
—
—
—
340
—
340
6,744
Retained
earnings
£’000
78,390
552
(12,624)
(12,072)
(4,664)
—
—
(297)
(4,961)
61,357
8,938
18,457
27,395
(7,620)
—
282
(7,338)
81,414
Group
At 1 January 2020
Profit for the year
Other comprehensive expense
Total comprehensive income/
(expense)
Equity dividends
Proceeds from shares issued
Purchase of treasury shares
Share-based payments
At 31 December 2020
Profit for the year
Other comprehensive income
Total comprehensive income/
(expense)
Equity dividends
Proceeds from shares issued
Share-based payments
At 31 December 2021
Note
30
10
31
30, 31
30
10
30, 31
Share
capital
£’000
13,717
—
—
—
—
1
—
—
1
13,718
—
—
—
—
14
—
14
13,732
Parent Company
At 1 January 2020
Profit for the year
Other comprehensive expense
Total comprehensive expense
Equity dividends
Proceeds from shares issued
Purchase of treasury shares
Share-based payments
At 31 December 2020
Profit for the year
Other comprehensive income
Total comprehensive income
Equity dividends
Proceeds from shares issued
Share-based payments
At 31 December 2021
154
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FINANCIAL STATEMENTSHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2021
Cash flows from operating activities
Cash generated from 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
Capital expenditure on investment property
Purchase of investment in associate
Proceeds on disposal of property, plant and equipment (excluding
equipment held for hire)
Proceeds on disposal of investment properties
Movement in receivables from joint ventures and associates
Advances made to subsidiary undertakings
Repayments received from subsidiary undertakings
Proceeds on disposal of investment in joint ventures
Interest received
Dividends received from joint ventures and subsidiaries
Net cash flows from investing activities
Cash flows from financing activities
Proceeds from shares issued
Purchase of treasury shares
Movement in payables from joint ventures and associates
Advances received from subsidiary undertakings
Repayments made to subsidiary undertakings
Repayment of borrowings
Proceeds from new borrowings
Principal elements of lease payments
Dividends paid
– ordinary shares
– non-controlling interests
– preference shares
Net cash flows from financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
1 See ‘Prior year restatement - parent’ on page 156.
Note
32
11
12
31
10
10
Group
Parent Company
2021
£’000
(38,665)
(792)
(4,299)
(43,756)
(203)
(861)
(17,317)
(2)
301
6,651
(12,999)
—
—
4,252
129
2,155
(17,894)
354
—
(701)
—
—
(14,969)
55,000
(683)
(7,599)
(740)
(21)
30,641
(31,009)
42,125
11,116
2020
£’000
21,136
(728)
(6,597)
13,811
(283)
(924)
(11,962)
—
279
627
—
—
—
2,798
512
2,200
(6,753)
15
(615)
—
—
—
(1,942)
4,153
(3,024)
(4,643)
(1,159)
(21)
(7,236)
(178)
42,303
42,125
2021
£’000
(9,037)
(2,272)
(2,750)
(14,059)
—
(280)
—
—
—
—
—
(87,409)
15,185
—
4,544
14,530
(53,430)
354
—
—
5,007
(7,625)
(5,000)
55,000
(130)
(7,599)
—
(21)
39,986
(27,503)
30,194
2,691
Restated1
2020
£’000
(2,362)
(2,232)
(4,477)
(9,071)
—
(54)
—
—
—
—
—
(22,324)
11,695
—
3,665
7,897
879
15
(615)
—
7,912
(499)
—
—
(67)
(4,643)
—
(21)
2,082
(6,110)
36,304
30,194
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155
FINANCIAL STATEMENTSHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021
The principal Accounting Policies adopted in the preparation of the Group’s 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, England, United Kingdom S11 9PD.
BASIS OF PREPARATION AND STATEMENT OF COMPLIANCE
The Consolidated Financial Statements of the Group and the Financial Statements of the Parent Company have been prepared in accordance
with UK-adopted International Accounting Standards. 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.
PRIOR YEAR RESTATEMENT – PARENT
For the Parent Company only the cash flows from operating activities, investing activities and financing activities have been restated for the
period ended 31 December 2020. This is due to cash flows relating to loans and advances made to subsidiary undertakings of £22.3m and
associated repayments of these balances of £11.7m were incorrectly classified and presented as a net cash flow movement within operating
activities, instead of as investing activities and presented on a gross basis. This has resulted in previously reported net cash flows from investing
activities decreasing by £10.6m from £11.5m to £0.9m and for the increase in receivables included within operating activities to reduce by
£10.6m.
In addition, loans and advances received from subsidiary undertakings of £7.9m and associated repayments of these balances of £0.5m were
incorrectly classified and presented as a net cash flow movement within operating activities, instead of as financing activities and presented on
a gross basis. This has resulted in previously reported net cash flows used in financing activities adjusted by £7.4m from £5.3m cash outflow to
£2.1m cash inflow and increase in payables and provisions included within operating activities to decrease by £7.4m from £13.6m to £6.2m.
As a result of the above adjustments, the amounts reported in the comparative year relating to cash generated from operations (£5.5m outflows)
and net cash flows from operating activities (£12.3m outflows) are adjusted by a net amount of £3.2m to £2.3m and £9.1m, respectively.
Neither of these reclassifications changes any other numbers in the remaining primary statements or notes to the financial accounts.
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 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 to the effective date of 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 also includes direct attributable costs of investment.
GOING CONCERN
In undertaking their going concern review, which covers the period to 31 December 2023, the Directors considered the Group’s principal risk
areas that they consider material to the assessment of going concern. In recent years, this has focused on the impact of CV-19, a risk that
continues to be managed by the Group’s Business Continuity Committee despite the reduced threat level.
In the current year, the Directors have assessed the Groups speed of recovery against the back drop of significant cost inflation and interest rate
rises in modelling a base case scenario, and in compiling forecasts consideration has been given to climate risk and the costs of transitioning
to a low carbon economy. They have also modelled what they consider to be a severe downside scenario including a significant curtailment in
activities. Construction and Development activity only takes place where contracted and likewise for Hallam Land where no sales are assumed
in 2022 unless already contracted, with a c.45% reduction in sales from the base case for 2022. For Stonebridge Homes a 10% decline in
house prices is assumed along with a 25% reduction in the number of plots sold and Banner Plant revenue declines c.20%. Each segment
assumes a slow recovery in 2023. This downside model assumes that acquisition and development spend is restricted other than that already
committed and is all consistent with previous experience in recessionary environments. Having started 2022 with net debt of £43.5m and with
c.£38m net debt held by the Group, at 28 February 2022, against facilities of £75.0m the Directors have concluded that the Group is able to
control the level of uncommitted expenditure while delivering contracted schemes, allowing it to retain and even improve the cash position in the
event of a severe downside scenario, although the impact of doing so on the profit and loss account would be unavoidable.
156
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NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2021FINANCIAL STATEMENTSHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 The Group meets its day-to-day working capital requirements through a secured loan facility. The facility was renewed on the 23 January 2020,
at a level of £75m, for a period of three years and extended in January 2021 and January 2022 by a further two years to 23 January 2025 on the
same terms as the existing agreement. The facility includes an accordion to increase the facility by up to £30m, which can be requested by the
Company at a time of its choosing. None of the modelling undertaken by the Directors gives rise to any breach of bank facility covenants. The
most sensitive covenant in our facilities relates to the ratio of EBIT (Earnings Before Interest and Tax) on a 12-month rolling basis to senior facility
finance costs. Our downside modelling, which reflects a near 16% reduction in revenue and near 70% reduction in PBT from our base case for
2022, demonstrates significant headroom over this covenant throughout the forecast period to the end of December 2023.
The Directors have considered the likely impacts on the business arising from the conflict in Ukraine, which has occurred subsequent to the
balance sheet date and is ongoing at the date of approval of the financial statements. The Directors are satisfied that the potential economic
impacts of this event, is adequately taken into account in the severe but plausible downside scenario.
At the time of approving the Financial Statements the Directors expect that the Company and the Group will have adequate resources, liquidity
and available bank facilities to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern
basis of accounting in preparing the Financial Statements. Further detail is contained in the Strategic Report on pages 48 to 49.
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.
The Board considers the business based on the following operating segments:
• Property Investment and Development, inclusive of property investment, property development, housebuilding and associated trading activities;
• Land Promotion, inclusive of land management, development and trading activities; and
• Construction, inclusive of its PFI company and plant hire 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 financing activities.
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. Joint ventures 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 are long-term and may not be settled
in the foreseeable future. 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 a financial asset or financial liability are accounted for in accordance with IFRS 9.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values
at the acquisition date. 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 Consolidated 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.
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157
FINANCIAL STATEMENTSHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 CRITICAL JUDGEMENTS AND ESTIMATES
The critical judgements and estimates in applying the Group’s Accounting Policies that have the most significant effect on the amounts
recognised in the Financial Statements, apart from those noted below, relate to revenue recognition and inventories. These are referred to
on pages 159 and 161 and each is interpreted by management in the light of IFRS 15 ‘Revenue from Contracts with Customers’ 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 14 to the Financial Statements give details of the valuation methods
used and the sensitivity surrounding these estimates. In determining fair value measurement, the impact of climate-related matters, including
legislation, which may affect the fair value measurement of investment property has been considered; 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.
REVENUE RECOGNITION
Revenue is measured based on the consideration specified in a contract with a customer at an amount that reflects the consideration to which
the Group expects to be entitled in exchange for transferring promised goods or services to a customer and excluding amounts collected on
behalf of third parties. The Group recognises revenue when it transfers control over a product or service to a customer. Where consideration
is not specified within the contract and therefore subject to variability, the Group estimates the amount of consideration to be received from its
customer. The consideration recognised is the amount which is highly probable not to result in a significant reversal in future periods. Where a
modification to an existing contract occurs, the Group assesses the nature of the modification and whether it represents a separate performance
obligation required to be satisfied by the Group or whether it is a modification to the existing performance obligation.
The Group has some contracts where the period between the transfer of the promised goods or services to the customer and payment by the
customer exceeds one year. The Group adjusts its transaction price for the time value of money.
The Group’s activities are wide-ranging, and as such, depending on the nature of the product or service delivered and the timing of when control
is passed to the customer, the Group will account for revenue over time or at a point in time. Where revenue is measured over time, the Group
uses the input method to measure progress of delivery.
Product and Service
Nature, timing of satisfaction of performance obligations and significant payment terms.
Construction contracts
Typically, the Group’s construction contracts consist of one performance obligation, being delivery of the
construction works. However, for certain contracts (for example where contracts involve separate phases
or products that are not highly interrelated), multiple performance obligations exist. Where multiple
performance obligations exist, total transaction price is allocated to performance obligations based on
the relative standalone selling prices of each performance obligation.
Revenue attributed to each performance obligation is recognised over time based on the percentage
of completion, as the benefit is transferred to the customer, reflecting the enhancement in value of
the customer’s asset. The percentage of completion is calculated as the costs incurred to date as a
percentage of the total costs expected to satisfy the performance obligation. Estimates of revenues,
costs or extent of progress toward completion are revised if circumstances change. Any resulting
increases or decreases in estimated revenues or costs are reflected in the percentage of completion
calculation in the period in which the circumstances that give rise to the revision become known.
Losses are recorded in full when the unavoidable costs of fulfilling a contract exceed the economic benefits.
Any revenues recognised in excess of amounts invoiced are recognised as contract assets within current
assets. Any payments received in excess of revenue recognised are recognised as contract liabilities
within current liabilities.
158
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NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2021FINANCIAL STATEMENTSHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 Sale of land and properties
Revenue from the sale of land and properties is generally a single performance obligation which is
satisfied at the point in time when control of the land and properties has passed, typically on legal
completion when legal title has transferred.
Land and properties are treated as disposed when control of the asset is transferred to the buyer.
Typically, this will either occur on unconditional exchange or on completion. Where completion is
expected to occur significantly after exchange, or where the Group continues to have significant
outstanding obligations after exchange, the control will not usually transfer to the buyer until completion.
Variable consideration such as overages are estimated based on the amount of consideration the Group
expects to be entitled to, taking into account the terms which may give rise to variability and it is only
recognised where it is highly probable there will not be a significant future reversal. This is estimated at
contract inception and reassessed over the life of the contract.
Revenue includes the fair value of consideration received or receivable on the sale of part exchange
properties.
PFI Concession
Revenue from the Group’s PFI concession is recognised at the point in time, by the calculation of
‘shadow tolls’ based on individual vehicle usage of the A69.
The concession is accounted for in accordance with IFRIC 12 ‘Service Concession Arrangements’ using
the intangible asset model.
Operating leases (recognised
as income under IFRS 16
‘Leases’)
Revenue from operating leases is recognised on a straight-line basis over the lease term, except for
contingent rental income which is recognised in the period in which it was earned. 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.
Plant and equipment hire
(recognised as income under
IFRS 16 ‘Leases’)
Revenue from plant and equipment hire is measured as the fair value of rental proceeds which relate to
the period of account.
Critical judgements and estimates in applying IFRS 15 Revenue from Contracts with Customers
The following are the critical judgements and estimates in applying accounting policies that the Directors have made in the process of applying
IFRS 15 Revenue from Contracts with Customers and that have the most significant effect on the amounts recognised in the Consolidated
Financial Statements.
Estimates in determining the recognition of revenue on construction contracts over time – construction 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 is the input method using cost incurred to date as a percentage of estimated total costs to complete. The
assessment of the final outcome of each contract is determined by regular review of the revenues and costs to complete that contract by an
in-house or external survey of the work.
Judgement in determining the recognition of revenue at a point in time on land sale contracts – there is often judgement involved in evaluating
when a customer obtains control of land during a sale, particularly where the contract includes licensing (or the granting early access to
housebuilders before completion), risk or deferred payment term clauses. In determining the revenue recognition the Directors consider the
present right for payment, legal title, physical possession, risks and rewards of ownership and acceptance of the asset in forming their opinion.
Where necessary third party advice is taken.
INTEREST INCOME AND EXPENSE
Interest income and expense are recognised within ‘Finance income’ and ‘Finance costs’ in the Consolidated 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.
LEASING
Where the Group acts as a lessor in the case of operating leases, rentals receivable are recognised on a straight-line basis over the term of the
relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset
and recognised over the lease term on the same basis as rental income.
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FINANCIAL STATEMENTSHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 LEASES
The Group assesses whether a contract is or contains a lease, at inception of the contract. The Group recognises a right-of-use asset and a
corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for short-term leases (defined as leases with
a lease term of 12 months or less) and leases of low value assets. For these leases, the Group recognises the lease payments as an operating
expense on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which
economic benefits from the leased assets are consumed.
Lease liability: The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date,
discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the Group uses an incremental borrowing rate which
is the rate of interest that the lessee would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain
an asset of a similar value to the right-of-use asset in a similar economic environment.
Right-of-use assets: The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at
or before the commencement day and any initial direct costs. They are subsequently measured at cost less accumulated depreciation and
impairment losses. Right-of-use assets are depreciated over the shorter period of lease term and useful life of the underlying asset.
The Group applies IAS 36 to determine whether a right-of-use asset is impaired and accounts for any identified impairment loss in line with the
Group’s existing impairment accounting policy.
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 29. 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.
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.
INTANGIBLE ASSETS EXCLUDING GOODWILL
Intangible assets are stated at cost less accumulated amortisation and impairment. The PFI asset which is accounted for under IFRIC 12
‘Service Concession Arrangements’ 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 four years to run.
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 recorded in OCI and credited to the revaluation reserve. However, to the extent that it
reverses a revaluation deficit of the same asset previously recognised in profit or loss, the increase is recognised in profit or loss. 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 profit or loss in the Consolidated 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 – between 10% and 50%
• Vehicles
– between 10% and 25%
• Office equipment
– between 25% and 33%
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NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2021FINANCIAL STATEMENTSHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 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 14 to the Financial Statements. Movements in fair value are included in the Consolidated 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 Consolidated Statement of Comprehensive Income in the period
in which it arises.
Investment property is derecognised when it is disposed of at its carrying value.
Where specific investment properties have been identified as being for sale within the next 12 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’.
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.
• Property developments in progress includes properties being developed for onward sale.
• Housebuilder land and work in progress includes construction of residential housing 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 entered into with the landowners whereby the Group has the option to purchase
the land within a limited time frame. The landowners 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 landowners 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 capitalises 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, at which point inventory is reduced by the
value of the reimbursed cost. These costs are held in inventory at the lower of cost and estimated net realisable value.
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 Consolidated 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.
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161
FINANCIAL STATEMENTSHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 Critical judgements and estimates in applying IAS 2 Inventories
The following are the critical estimates in applying accounting policies that the Directors have made in the process of applying IAS 2 Inventories
and that have the most significant effect on the amounts recognised in the Consolidated Financial Statements.
Estimates in determining the carrying value of work in progress inventory – there is often estimation involved in forecasting future costs to
complete and selling prices which can be affected by market conditions and unexpected events. In determining the carrying value the Directors
consider previous experience, communications with suppliers and market trends in forming their opinion. Where necessary third party advice
is taken.
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, or fair value in the case of
Investment Property, 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.
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 Consolidated 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 generally 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, based on rates
that have been enacted or substantively enacted at the reporting date. Deferred tax is charged or credited in the Consolidated 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.
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 are measured initially at fair value and then amortised cost — where the time value of money is material,
receivables are amortised using the effective interest rate method (see Interest income and expense in notes 5 and 6). IFRS 9’s simplified
approach to provisioning is used to calculate the Group’s lifetime expected credit loss;
• 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
in notes 5 and 6); and
• Borrowings — see below.
For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above, net of
outstanding bank overdrafts as they are considered an integral part of the Group’s cash management.
162
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NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2021FINANCIAL STATEMENTSHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 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 Consolidated 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 and amortised until the drawdown occurs. To the extent that 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.
GOVERNMENT GRANTS
Government grants are recognised at their fair value in the Consolidated 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.
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. Onerous contracts are provided for at the lower of
costs or termination.
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 promotion 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.
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 the lower of the cost of fulfilling the contract or terminating the contract.
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 promotion and road maintenance can be found in note 26.
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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FINANCIAL STATEMENTSHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 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.
DIVIDENDS
The Group recognises a liability to pay a final dividend when the distribution is authorised and the distribution is no longer at the discretion of
the Group. Under UK company law a distribution is authorised when it is approved by the shareholders. An interim dividend is recognised when
paid. A corresponding amount is then recognised directly in equity.
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 2021:
IFRS 16 (amended 2020)
IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16
(amended 2020)
IFRS 4 (amended 2020)
‘Covid-19-related rent concessions’
Effective from
1 June 2020
‘Interest rate benchmark reform’
‘Extension of the temporary exemption from applying IFRS 9’
1 January 2021
Immediately available
The adoption of these standards and interpretations has not had a significant impact on the Group.
At the date of the authorisation of these Financial Statements, the following standards, amendments and interpretations were in issue but not yet
effective:
IFRS 17 (issued 2017)
IAS 1 (amended 2020)
IFRS 3 (amended 2020)
IAS 16 (amended 2020)
IAS 37 (amended 2020)
Annual Improvements (issued 2020)
IFRS 17 (amended 2020)
IAS 1 (amended 2021)
IAS 8 (amended 2021
IFRS 16 (amended 2021)
IAS 12 (amended 2021)
IFRS 17 (amended 2021)
‘Insurance Contracts’
‘Classification of liabilities as current or non-current’
‘’Reference to the Conceptual Framework’
‘Proceeds before intended use’
‘Costs of fulfilling a contract’
‘Annual improvements to IFRS standards 2018 - 2020’
‘Implementation challenges’
‘Disclosure of accounting policies’
‘Definition of accounting estimates’
‘Covid-19-related rent concessions beyond June 2021’
‘Deferred tax related to Assets and Liabilities arising from a single
transaction’
‘Initial application of IFRS 17 and IFRS 9 - comparative information’
Effective from
1 January 2023
1 January 2023
1 January 2022
1 January 2022
1 January 2022
1 January 2022
1 January 2023
1 January 2023
1 January 2023
1 April 2021
1 January 2023
1 January 2023
A review of the impact of these standards, amendments and interpretations has been conducted and the Directors do not believe that they will
give rise to any significant financial impact.
In 2021, 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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NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2021FINANCIAL STATEMENTSHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 1. REVENUE
Analysis of the Group’s revenue is as follows:
Activity in the United Kingdom
Construction contracts:
– Construction1
– Property Investment and Development2
Sale of land and properties:
– Property Investment and Development2
– Housebuilder unit sales2
– Land Promotion3
PFI concession1
Revenue from contracts
with customers
Plant and equipment hire1
Investment property rental income2
Other rental income – Property Investment
and Development2
Other rental income – Land Promotion3
1 Construction segment
2 Property Investment and Development segment
3 Land Promotion segment
2021
£’000
74,431
4,405
9,622
49,494
58,410
11,115
207,477
17,129
5,772
67
153
230,598
Timing of revenue
recognition
At a point
in time
£’000
Over time
£’000
—
—
74,431
4,405
9,622
49,494
58,410
11,115
—
—
—
—
128,641
78,836
Timing of revenue
recognition
At a point
in time
£’000
Over time
£’000
—
—
90,596
33,301
9,964
38,222
20,890
10,868
—
—
—
—
79,944
123,897
2020
£’000
90,596
33,301
9,964
38,222
20,890
10,868
203,841
14,448
3,280
720
122
222,411
Contingent rents recognised as investment property rental income during the year amount to £357,000 (2020: £258,000).
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 Promotion; 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.
In the prior year, the Construction segment made sales to a single external customer amounting to 22.0% of the Group’s total revenue.
This related to two high-value contracts which commenced in 2018 and continue through to early 2021. The segment has a number of other
contracts in progress and is not reliant on any major customer individually.
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 156 to 164.
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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165
FINANCIAL STATEMENTSHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 2. SEGMENT INFORMATION CONTINUED
2021
Property
Investment and
Development
£’000
Land
Promotion
£’000
Construction
£’000
Group
overheads
£’000
Eliminations
£’000
69,360
290
69,650
14,924
(14,959)
18,296
18,261
4,538
(7,002)
15,797
(2,927)
12,870
17,430
76
285
—
(7,972)
—
—
58,563
—
58,563
23,257
(5,726)
(56)
17,475
698
(139)
18,034
(2,244)
15,790
—
10
—
—
—
1,051
—
102,675
7,606
110,281
17,363
(8,401)
—
8,962
765
(467)
9,260
(1,798)
7,462
6,524
2,864
203
602
—
1,499
—
2020
—
526
526
52
(9,177)
—
(9,125)
19,060
(2,303)
7,632
2,487
10,119
380
584
—
—
—
—
(920)
—
(8,422)
(8,422)
(50)
50
—
—
(24,337)
8,756
(15,581)
—
(15,581)
—
—
—
—
—
—
—
Property
Investment and
Development
£’000
Land
Promotion
£’000
Construction
£’000
Group
overheads
£’000
Eliminations
£’000
85,487
296
85,783
12,977
(11,024)
2,929
4,882
4,377
(3,638)
5,621
1,864
7,485
11,960
420
—
—
(1,266)
—
—
21,012
—
21,012
12,319
(4,402)
6,247
14,164
212
(390)
13,986
(2,898)
11,088
—
30
—
—
—
129
—
115,912
500
116,412
15,200
(9,872)
1,175
6,503
812
(638)
6,677
(1,898)
4,779
2,779
3,368
2,218
570
—
1,209
—
—
647
647
32
(8,106)
—
(8,074)
11,532
(2,171)
1,287
(422)
865
631
754
—
—
—
—
(2,233)
—
(1,443)
(1,443)
(61)
61
—
—
(16,212)
5,720
(10,492)
—
(10,492)
—
—
—
—
—
—
—
Total
£’000
230,598
—
230,598
55,546
(38,213)
18,240
35,573
724
(1,155)
35,142
(4,482)
30,660
24,334
3,534
488
602
(7,972)
2,550
(920)
Total
£’000
222,411
—
222,411
40,467
(33,343)
10,351
17,475
721
(1,117)
17,079
(3,354)
13,725
15,370
4,572
2,218
570
(1,266)
1,338
(2,233)
Revenue
External sales
Inter-segment sales
Total revenue
Gross profit
Administrative expenses and pension
Other operating income/(expense)
Operating profit/(loss)
Finance income
Finance costs
Profit before tax
Tax
Profit for the year
Other information
Capital additions
Depreciation of plant, property and
equipment and right-of-use assets
Impairment
Amortisation of intangible assets
Increase in fair value of investment
properties
Provisions
Pension scheme credit
Revenue
External sales
Inter-segment sales
Total revenue
Gross profit
Administrative expenses and pension
Other operating income
Operating profit/(loss)
Finance income
Finance costs
Profit before tax
Tax
Profit for the year
Other information
Capital additions
Depreciation of plant, property and
equipment and right-of-use assets
Impairment
Amortisation of intangible assets
Increase in fair value of investment
properties
Provisions
Pension scheme credit
166
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NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2021FINANCIAL STATEMENTSHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021
2. SEGMENT INFORMATION CONTINUED
Segment assets
Property Investment and Development1
Land Promotion
Construction
Group overheads
Unallocated assets
Deferred tax assets
Current tax receivables
Cash and cash equivalents
Total assets
Segment liabilities
Property Investment and Development
Land Promotion
Construction
Group overheads
Unallocated liabilities
Current tax liabilities
Deferred tax liabilities
Current lease liabilities
Current borrowings
Non-current lease liabilities
Non-current borrowings
Retirement benefit obligations
Total liabilities
Total net assets
1
Includes investment in joint ventures and associates of £12,165,000 (2020: £5,840,000).
3. OPERATING PROFIT
Operating profit has been arrived at after charging/(crediting):
Depreciation of property, plant and equipment (note 12)
Depreciation of right-of-use assets (note 13)
Impairment of goodwill included in administrative expenses (note 11)
Impairment of land and buildings included in administrative expenses (note 12)
Amortisation of PFI asset included in cost of sales (note 11)
Amortisation of capitalised letting fees (note 14)
Impairment losses recognised on trade receivables (note 18)
Low-value and short-term operating leases
Increase in fair value of investment property (note 14)
Cost of inventories recognised as expense
Employee costs
Amounts payable to Mazars LLP by Road Link (A69) Limited in respect of audit services
Gross profit on sale of equipment held for hire
Gain on sale of other property plant and equipment
Loss on disposal of right-of-use assets
2021
£’000
310,421
145,596
43,205
2,323
501,545
3,389
1,828
11,116
517,878
36,169
11,523
40,418
3,071
91,181
—
4,582
639
52,941
1,021
—
12,228
162,592
355,286
2021
£’000
3,534
598
203
285
602
41
779
—
(7,972)
80,241
38,439
12
(981)
(16)
10
2020
£’000
217,863
151,988
32,447
2,854
405,152
7,342
—
42,125
454,619
35,292
11,934
37,554
3,651
88,431
1,129
—
603
2,941
1,613
9,969
36,445
141,131
313,488
2020
£’000
3,585
987
2,218
—
570
30
481
68
(1,266)
45,815
32,289
11
(854)
(85)
89
167
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FINANCIAL STATEMENTSHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 3. OPERATING PROFIT CONTINUED
The remuneration paid to Ernst & Young 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
4. EMPLOYEE COSTS
2021
£’000
167
298
465
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
Group
Parent Company
2021
£’000
27,689
968
3,448
3,407
2,521
111
38,144
2020
£’000
22,837
975
2,761
2,160
2,293
99
31,125
2021
£’000
3,968
413
593
2,855
316
17
8,162
2020
£’000
147
273
420
2020
£’000
3,351
391
396
(105)
286
15
4,334
Included within employee costs a £820,000 debit for repayment of furlough grant income from the Government’s Job Retention Scheme introduced
in response to the CV-19 pandemic.
The average monthly number of employees during the year, including Executive Directors, was:
Property Investment and Development
Land Promotion
Construction
Plant Hire
Parent Company
5. FINANCE INCOME
Interest on bank deposits
Interest on other loans and receivables
Unwinding of discounting: trade receivables
2021
Number
2020
Number
112
30
151
137
66
496
2021
£’000
2
127
595
724
115
31
184
145
68
543
2020
£’000
292
220
209
721
168
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NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2021FINANCIAL STATEMENTSHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 6. FINANCE COSTS
Interest on bank loans and overdrafts
Interest on other loans and payables
Unwinding of discounting: trade payables and borrowings
7. TAX
Current tax:
UK corporation tax on profits for the year
Adjustment in respect of earlier years
Total current tax
Deferred tax (note 19):
Origination and reversal of temporary differences
Adjustment in respect of prior years
Impact of rate change
Total deferred tax
Total tax
2021
£’000
747
59
349
1,155
2021
£’000
2,752
(1,683)
1,069
3,457
105
(149)
3,413
4,482
2020
£’000
632
119
366
1,117
2020
£’000
2,824
245
3,069
285
—
—
285
3,354
Corporation tax is calculated at 19% (2020: 19%) of the estimated assessable profit for the year.
In the Spring Budget 2021, the Government announced that from 1 April 2023 the main rate of UK corporation tax would increase to 25%. This
new law was substantively enacted on 24 May 2021; deferred tax balances at the year end have been measured at 25% (2020: 19%), being the
rate at which timing differences are expected to reverse.
The charge for the year can be reconciled to the profit per the Consolidated Statement of Comprehensive Income as follows:
Profit before tax
Tax at the UK corporation tax rate
Effects of:
Permanent differences
Capital gains
Tax losses for which no deferred tax asset is recognised being £nil (2020: £297,000)
Impact of rate differences
Deferred tax adjustment in respect of prior years
Corporation tax adjustment in respect of earlier years
Joint venture results reported net of tax
Effective tax rate
2021
£’000
35,142
2021
%
19.00
0.57
(0.78)
(0.09)
(0.42)
0.30
(4.79)
(1.03)
12.76
2020
£’000
17,079
2020
%
19.00
2.60
1.40
(1.74)
—
—
0.33
(1.95)
19.64
The tax charge in the year is lower (2020: higher) than the standard rate of corporation tax predominantly due to adjustments in respect of earlier
years arising from additional loss relief on asset disposals (2020: impairment of goodwill which is ineligible for tax relief and dry tax charges on
the transfer of assets from inventories to investment property offset by joint venture profits presented net of tax).
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
Total tax recognised in other comprehensive expense
2021
£’000
(282)
(4,840)
(5,122)
2020
£’000
—
3,089
3,089
169
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FINANCIAL STATEMENTSHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 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
13 April 2022 is £8,938,000 (2020: £552,000) and includes dividends received from subsidiaries of £14,530,000 (2020: £7,897,000).
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
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
Basic earnings per share
Diluted earnings per share
2021
£’000
30,660
(2,500)
(21)
28,139
2020
£’000
13,725
(1,804)
(21)
11,900
2021
No.
133,264,346
(439,261)
132,825,085
2,645,458
135,470,543
2020
No.
133,176,230
(486,654)
132,689,576
690,392
133,379,968
2021
21.2p
20.9p
2020
9.0p
8.9p
The Group has two types of dilutive potential ordinary shares being: those share options granted to employees where the exercise price is less
than the average market price of the Company’s ordinary shares during the year; and expected future vesting of shares under the 2015 Long-
Term Incentive Plan.
10. DIVIDENDS
Amounts recognised as distributions to equity holders in the year:
Preference dividend on cumulative preference shares
Final dividend for the year ended 31 December 2020 of 3.30p per share (2019: 1.30p)
Interim dividend for the year ended 31 December 2021 of 2.42p per share (2020: 2.20p)
2021
£’000
21
4,383
3,216
7,620
2020
£’000
21
1,724
2,919
4,664
The proposed final dividend for the year ended 31 December 2021 of 3.63p per share (2020: 3.30p) makes a total dividend for the year of 6.05p
(2020: 5.50p).
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 £4,800,000.
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 £740,000 (2020: £1,159,000).
170
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NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2021FINANCIAL STATEMENTSHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 11. INTANGIBLE ASSETS
Cost
At 1 January 2020
Additions at cost
Disposals at cost
At 31 December 2020
Additions at cost
At 31 December 2021
Accumulated impairment losses and amortisation
At 1 January 2020
Amortisation
Impairment losses for the year
Eliminated on disposal
At 31 December 2020
Amortisation
Impairment losses for the year
At 31 December 2021
Carrying amount
At 31 December 2021
At 31 December 2020
Goodwill
£’000
6,988
—
(2,015)
4,973
—
4,973
3,121
—
2,218
(2,015)
3,324
—
203
3,527
1,446
1,649
PFI
asset
£’000
18,690
283
—
18,973
203
19,176
15,734
570
—
—
16,304
602
—
16,906
2,270
2,669
Total
£’000
25,678
283
(2,015)
23,946
203
24,149
18,855
570
2,218
(2,015)
19,628
602
203
20,433
3,716
4,318
The Group acquired the trade and assets of Premier Plant Tool Hire & Sales Limited on 30 March 2017. They were immediately hived up into
the immediate parent company Banner Plant Limited, which sits in the Construction segment. The goodwill arising on the acquisition, which
has a current net book value of £903,000 (2020: £903,000), represents the excess of consideration over net assets acquired and is subject
to an impairment test at the reporting date. The cash generating units assessed for impairment are the Leicester depots of Banner Plant
Limited, which were formerly Premier Plant Tool Hire & Sales Limited’s only operational sites. Impairment calculations use pre-tax cash flow
projections including revenue growth of 3.0% per annum into perpetuity which reflects past experience and management’s future expectations.
Management estimates discount rates that reflect current market assessments of the time value of money and risk specific to the cash
generating unit of 3.5%.
The Group’s investment in Road Link (A69) Holdings Limited is 61.2%. The goodwill arising on the acquisition which has a current net book
value of £543,000 (2020: £746,000) 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 Highways England based on the number and type of vehicles using
the road. The concession lasts for a period of 30 years and has a further four years to run, at the end of which the road reverts to Highways
England. Whilst the impairment test demonstrates significant headroom based on forecast levels of return being consistent with prior years, an
impairment charge of £203,000 (2020: £203,000) has been recognised during the year. This reflects the fact that the PFI concession will revert
to Highways England 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 Consolidated 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 Highways England’s financial year end and hence interim Financial Statements are prepared for incorporation
into these Consolidated Financial Statements.
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171
FINANCIAL STATEMENTSHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 12. PROPERTY, PLANT AND EQUIPMENT
Group
Cost or fair value
At 1 January 2020
Additions at cost
Disposals
Transfers from right-of-use asset1
Decrease in fair value in year
At 31 December 2020
Additions at cost
Disposals
At 31 December 2021
Being:
Cost
Fair value at 31 December 2021
Accumulated depreciation and impairment
At 1 January 2020
Charge for year
Transfer from right-of-use asset1
Eliminated on disposals
At 31 December 2020
Charge for year
Impairment
Eliminated on disposals
At 31 December 2021
Carrying amount
At 31 December 2021
At 31 December 2020
Land and
buildings
£’000
Equipment
held
for hire
£’000
Vehicles
£’000
Office
equipment
£’000
7,842
131
—
—
(651)
7,322
—
—
7,322
—
7,322
7,322
342
85
—
—
427
—
285
—
712
6,610
6,895
35,675
2,201
(2,780)
4,789
—
39,885
5,952
(2,449)
43,388
43,388
—
43,388
24,853
2,235
1,781
(2,475)
26,394
2,474
—
(2,271)
26,597
16,791
13,491
5,444
707
(932)
616
—
5,835
473
(976)
5,332
5,332
—
5,332
2,548
822
195
(723)
2,842
786
—
(692)
2,936
2,396
2,993
3,310
86
(129)
—
—
3,267
388
(47)
3,608
3,608
—
3,608
2,513
443
—
(128)
2,828
274
—
(46)
3,056
552
439
Total
£’000
52,271
3,125
(3,841)
5,405
(651)
56,309
6,813
(3,472)
59,650
52,328
7,322
59,650
30,256
3,585
1,976
(3,326)
32,491
3,534
285
(3,009)
33,301
26,349
23,818
1 Right-of-use assets are transferred to property, plant and equipment where the lease obligation has been settled and the Group retains ownership of the asset.
At 31 December 2021, the Group had entered into contractual commitments for the acquisition of property, plant and equipment amounting to
£3,420,000 (2020: £1,437,000).
Fair value measurements of the Group’s land and buildings
Land and buildings have been revalued at 31 December 2021 by Jones Lang LaSalle Limited and Dove Haigh Phillips LLP in accordance
with the Practice Statements contained in the RICS Appraisal and Valuation Standards on the basis of market value at £6,610,000 (2020:
£6,895,000). Jones Lang LaSalle Limited and Dove Haigh Phillips LLP are professional valuers who hold recognised and professional
qualifications and have 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 £4,269,000 (2020: £4,554,000).
172
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NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2021FINANCIAL STATEMENTSHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 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
6,550
6,610
2021
£’000
60
6,550
6,610
2020
£’000
60
6,835
6,895
Decrease
in year
£’000
—
(285)
(285)
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
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 of £1 average
Buildings
Yield
6.17
2.34
16.25
9.36
7.17
11.83
Impact on
valuation
£’000
Buildings
355
1,100
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 12 months.
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173
FINANCIAL STATEMENTSHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 12. PROPERTY, PLANT AND EQUIPMENT CONTINUED
Parent Company
Cost
At 1 January 2020
Additions
Disposals
At 31 December 2020
Additions
Disposals
At 31 December 2021
Accumulated depreciation
At 1 January 2020
Charge for year
Disposals
At 31 December 2020
Charge for year
Disposals
At 31 December 2021
Carrying amount
At 31 December 2021
At 31 December 2020
13. LEASES
Right-of-use assets
Land and buildings
Vehicles
Office equipment
Lease liabilities
Due within one year
Due after more than one year
Contractual maturities of lease liabilities including future interest:
On demand or within one year
In the second year
In the third to fifth years inclusive
In more than five years
Total contractual cash flows
Future finance charges on lease liabilities
Present value of contractual cash flows
Office
equipment
£’000
1,014
54
—
1,068
280
—
1,347
683
203
—
886
144
—
1,030
317
182
Group
Parent Company
2021
£’000
1,249
2
330
1,581
639
1,021
1,660
676
447
564
63
1,750
(90)
1,660
2020
£’000
1,655
8
447
2,110
603
1,613
2,216
654
655
901
151
2,361
(145)
2,216
2021
£’000
2020
£’000
—
11
65
76
41
37
78
42
27
11
—
80
(2)
78
—
48
89
137
54
86
140
57
49
39
—
145
(5)
140
Additions to the right-of-use assets during the 2021 financial year were £69,000 (2020: £512,000) for the Group and £65,000 (2020: £37,000)
for the Parent Company.
174
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NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2021FINANCIAL STATEMENTSHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 13. LEASES CONTINUED
The statement of profit or loss shows the following amounts relating to leases:
Depreciation charge of right-of-use assets
Land and buildings
Equipment held for hire
Vehicles
Office equipment
Interest expense (included in finance cost)
Group
2021
£’000
2020
£’000
Parent Company
2021
£’000
2020
£’000
470
—
5
123
598
58
434
436
10
107
987
91
—
—
23
30
53
3
—
—
32
24
56
5
The total cash outflow for leases in 2021 was £683,000 (2020: £3,024,000) for the Group and £131,000 (2020: £67,000) for the Parent
Company.
The Group leases various offices, equipment and vehicles. Rental contracts are typically made for fixed periods of 4 to 10 years and may have
extension options.
Contracts may contain both lease and non-lease components. The Group allocates the consideration in the contract to the lease and non-lease
components based on their relative stand-alone prices. However, for leases of real estate for which the Group is a lessee, it has elected not to
separate lease and non-lease components and instead accounts for these as a single lease component.
Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not
impose any covenants other than the security interests in the leased assets that are held by the lessor. Leased assets may not be used as
security for borrowing purposes.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the
following lease payments:
• Fixed payments (including in-substance fixed payments), less any lease incentives receivable;
• Variable lease payments that are based on an index or a rate, initially measured using the index or rate as at the commencement date;
• Amounts expected to be payable by the Group under residual value guarantees;
• The exercise price of a purchase option if the Group is reasonably certain to exercise that option; and
• Payments of penalties for terminating the lease, if the lease term reflects the Group exercising that option.
Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the
case for leases in the Group, the lessee’s incremental borrowing rate is used.
The Group is exposed to potential future increases in variable lease payments based on an index or rate, which are not included in the lease
liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is reassessed and
adjusted against the right-of-use asset.
Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease period so as to
produce a constant periodic rate of interest on the remaining balance of the liability for each period.
Right-of-use assets are measured at cost comprising the following:
• The amount of the initial measurement of lease liability
• Any lease payments made at or before the commencement date less any lease incentives received
• Any initial direct costs, and restoration costs
Right-of-use assets are generally depreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis. If the Group
is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying asset’s useful life. While the Group
revalues its land and buildings that are presented within property, plant and equipment, it has chosen not to do so for the right-of-use buildings
held by the Group.
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FINANCIAL STATEMENTSHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 13. LEASES CONTINUED
Payments associated with short-term leases of equipment and vehicles and all leases of low-value assets are recognised on a straight-line basis
as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. Low-value assets comprise IT equipment
and small items of office furniture (note 3). Cash outflows during the period related to these leases equal the rent expense in note 3 and are
included within operating activities in the Statement of Cash Flows.
The Group as lessor
The Group has entered into operating 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
After one year but not more than five years
More than five years
2021
£’000
4,048
14,512
47,052
65,612
2020
£’000
3,357
11,807
54,286
69,450
14. 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
Office
Retail
Investment property under construction
Industrial
Retail
Total carrying amount
Level 1
£’000
Level 2
£’000
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Level 3
£’000
46,796
9,598
7,483
4,127
9,938
17,235
95,177
9,000
—
9,000
104,177
2021
£’000
46,796
9,598
7,483
4,127
9,938
17,235
95,177
9,000
—
9,000
104,177
Increase/
(decrease)
in year
£’000
15,246
171
223
21
(1,512)
2,298
16,447
7,371
(2,364)
5,007
21,454
2020
£’000
31,550
9,427
7,260
4,106
11,450
14,937
78,730
1,629
2,364
3,993
82,723
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.
176
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NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2021FINANCIAL STATEMENTSHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 14. 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 retail, 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
Carrying value
At 1 January
Initial acquisition
Industrial
Level 3
£’000
Leisure
Level 3
£’000
Mixed-use
Level 3
£’000
Residential
Level 3
£’000
Office
Level 3
£’000
Retail
Level 3
£’000
2021
£’000
2020
£’000
31,550
11,268
9,427
—
7,260
—
4,106
—
11,450
—
14,937
—
78,730
11,268
61,764
—
Subsequent expenditure on investment
property
Capitalised letting fees
Amortisation of capitalised letting fees
Disposals
Transfer from inventory
Transfers from investment property under
construction
Increase/(decrease) in fair value in year
At 31 December
Adjustment in respect of tenant incentives
Market value at 31 December
220
112
(17)
—
—
—
3,663
46,796
654
47,450
Tenant incentives are included in trade receivables.
—
—
(15)
—
—
—
186
9,598
212
9,810
250
17
(7)
—
—
—
(37)
7,483
17
7,500
—
—
—
(232)
—
—
253
4,127
—
4,127
32
—
—
—
—
—
—
(2)
502
129
(41)
(5,080)
1,517
(5,312)
1,517
193
90
(30)
(8)
245
—
(1,544)
9,938
312
10,250
3,741
2,122
17,235
365
17,600
3,741
4,643
95,177
1,560
96,737
17,040
(564)
78,730
561
79,291
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FINANCIAL STATEMENTSHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 14. 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 purchaser’s 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 accounting 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 2021 by Jones Lang LaSalle
Limited in accordance with the Practice Statements contained in the RICS Valuation - Global Standards (the ‘Red Book’) on the basis of
market value at £92,609,000 (2020: £75,185,000). Jones Lang LaSalle Limited are professional valuers who hold recognised and professional
qualifications and have recent experience in the location and category of the investment property being valued. The valuation conforms to
International Valuation Standards, as incorporated within the Red Book 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 completed 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 2021 has been determined by the Directors of the Company at £4,128,000
(2020: £4,106,000). 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
Office
Retail
2021
Valuation technique
Rental value per sq ft (£) – weighted average
Yield %
– low
– high
– weighted average
– low
– high
% discount applied to houses held under
assured tenancies
Yield
4.44
0.56
11.00
4.98
2.73
9.05
—
Yield
15.88
1.75
45.05
6.54
4.79
9.76
Yield
15.26
7.50
24.65
5.08
3.09
24.26
Sales
comparison
—
—
—
—
—
—
—
—
25.00
2020
Yield
26.82
26.50
27.50
8.96
6.91
11.70
—
Yield
14.57
8.21
21.40
5.08
3.97
9.00
—
Class
Industrial
Leisure
Mixed-use
Residential
Office
Retail
Valuation technique
Rental value per sq ft (£) – weighted average
Yield %
– low
– high
– weighted average
– low
– high
% discount applied to houses held under
assured tenancies
Yield
4.14
0.56
8.70
5.20
2.48
6.27
—
Yield
14.96
1.67
45.05
6.25
5.20
8.93
—
Yield
26.61
7.50
63.39
8.75
9.65
12.00
Sales
comparison
—
—
—
—
—
—
—
25.00
Yield
24.33
19.46
26.50
8.38
5.92
10.81
—
Yield
15.10
10.00
21.40
5.42
4.83
9.00
—
There is considered to be no inter-relationship between observable and unobservable inputs.
178
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NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2021FINANCIAL STATEMENTSHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 14. INVESTMENT PROPERTIES CONTINUED
The sensitivity analysis to significant changes in unobservable inputs relating to fair value measurements (Level 3) is set out below:
Industrial
Leisure Mixed-use
Residential
Office
Impact on valuation 2021 £’000
Yield – improvement by 0.5%
Rental value per sq ft – increase by £1 average
Tenancy discount – increase by 1%
4,519
11,083
—
719
644
—
377
255
—
—
—
50
Yield – improvement by 0.5%
Rental value per sq ft – increase by £1 average
Tenancy discount – increase by 1%
Industrial
Leisure
Impact on valuation 2020 £’000
Residential
Mixed-use
2,930
8,409
—
731
663
—
398
277
—
—
—
50
668
456
—
Office
708
510
—
Retail
1,393
1,378
—
Retail
1,464
1,097
—
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 12 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 £5,772,000 (2020: £3,280,000). Direct operating expenses arising on investment property generating rental income in the year
amounted to £1,274,000 (2020: £608,000). Direct operating expenses arising on the investment property which did not generate rental income
during the year amounted to £162,000 (2020: £179,000).
At 31 December 2021, the Group had entered into contractual commitments for the acquisition and repair of investment property amounting to
£nil (2020: £310,000).
Investment property under construction
Class
Fair value hierarchy
Carrying value
At 1 January
Subsequent expenditure on investment property
Capitalised letting fees
Disposals
Transfers to completed investment property
Increase in fair value in year
At 31 December
Adjustment in respect of tenant incentives
Market value at 31 December
Tenant incentives are included in trade receivables.
Industrial
Level 3
£’000
Land
Level 3
£’000
1,629
4,724
—
—
—
2,647
9,000
—
9,000
—
—
—
—
—
—
—
—
—
Retail
Level 3
£’000
2,364
695
—
—
(3,741)
682
—
—
—
2021
£’000
3,993
5,419
—
—
(3,741)
3,329
9,000
—
9,000
2020
£’000
8,238
11,633
46
(714)
(17,040)
1,830
3,993
—
3,993
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179
FINANCIAL STATEMENTSHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 14. INVESTMENT PROPERTIES CONTINUED
Investment property under construction
Information about fair value measurements using significant unobservable inputs (Level 3):
Class
Valuation technique
Rental value per sq ft (£)
Yield %
Class
Valuation technique
Rental value per sq ft (£)
Yield %
Cost to complete per sq ft (£)
– weighted average
– low
– high
– weighted average
– low
– high
– weighted average
– low
– high
– weighted average
– low
– high
– weighted average
– low
– high
2021
Industrial
Retail
Residual
6.10
6.10
6.10
4.1
4.1
4.1
Residual
—
—
—
—
—
—
2020
Industrial
Retail
Residual
2.28
2.28
2.28
5.20
5.20
5.20
29.95
29.95
29.95
Residual
1.46
1.46
1.46
5.00
5.00
5.00
6.08
6.08
6.08
The sensitivity analysis to significant changes in unobservable inputs relating to fair value measurements (Level 3) is set out below:
Yield – improvement by 0.5%
Rental value per sq ft – increase by £1 average
Yield – improvement by 0.5%
Rental value per sq ft – increase by £1 average
Cost to complete – increased by 1%
Impact on valuation 2021
£’000
Industrial
Retail
1,037
358
—
—
Impact on valuation 2020
£’000
Industrial
669
1,588
200
Retail
300
1,104
130
Investment properties under construction are developments which have been valued at 31 December 2021 at fair value by the Directors of
the Company using the residual method at £9,000,000 (2020: £3,993,000). 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.
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NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2021FINANCIAL STATEMENTSHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 15. INVESTMENTS
Parent Company – shares in Group undertakings
Cost
At 1 January 2020 and 31 December 2020
Disposals
At 31 December 2021
Adjustments
At 1 January 2020 and 31 December 2020
Reversal of provisions for losses
At 31 December 2021
Carrying amount
At 31 December 2021
At 31 December 2020
Total
£’000
38,021
(250)
37,771
—
—
—
37,771
38,021
Amounts due from and to subsidiary companies are listed in notes 18 and 22 and details of all subsidiary companies are listed in note 36. All
trading subsidiaries operate in the United Kingdom and are wholly owned, with the exception of:
• Road Link (A69) Holdings Limited and its subsidiary Road Link (A69) Limited which is 61.2% owned by Henry Boot Construction Limited;
• Plot 7 East Markham Vale Management Company Limited which is 66.7% owned by, and under board control of, Henry Boot Developments
Limited;
• Capitol Park Property Services Limited which is 4.6% owned by, and under board control of, Henry Boot Developments Limited; and
• Stonebridge Homes Group Limited and its wholly owned subsidiaries (as indicated in note 36) which is 50% owned by, and under board
control of (by virtue of majority voting rights), 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.
16. INVESTMENT IN JOINT VENTURES AND ASSOCIATES
Group
Cost
At 1 January
Share of profit for the year
Dividends received
Additions
Disposals
At 31 December
2021
Joint
ventures
£’000
Associates
£’000
5,688
9,064
(2,155)
—
(432)
12,165
152
(136)
—
2
(18)
—
Total
£’000
5,840
8,928
(2,155)
2
(450)
12,165
Joint
ventures
£’000
6,567
1,671
(2,200)
—
(350)
5,688
The Group’s share of its joint ventures’ and associates’ aggregated assets, liabilities and results are as follows:
Investment property
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Net investment
Joint
ventures
£’000
21,676
25,711
1
47,388
(32,122)
(3,101)
12,165
2021
Associates
£’000
—
5,692
7
5,699
(2,130)
(3,569)
—
Total
£’000
21,676
31,403
8
53,087
(34,252)
(6,670)
12,165
Joint
ventures
£’000
12,656
16,611
1
29,268
(20,321)
(3,259)
5,688
2020
Associates
£’000
67
85
—
—
—
152
2020
Associates
£’000
—
154
2
156
(4)
—
152
Total
£’000
6,634
1,756
(2,200)
—
(350)
5,840
Total
£’000
12,656
16,765
3
29,424
(20,325)
(3,259)
5,840
181
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FINANCIAL STATEMENTSHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 16. INVESTMENT IN JOINT VENTURES AND ASSOCIATES CONTINUED
Revenue
Administration and other expenses
Increase in fair value of investment properties
Operating profit
Finance costs
Profit before tax
Tax
Share of profits after tax
Joint
ventures
£’000
18,944
(15,388)
6,970
10,526
(375)
10,151
(1,087)
9,064
2021
Associates
£’000
53
(67)
—
(14)
(121)
(135)
(1)
(136)
Total
£’000
18,997
(15,455)
6,970
10,512
(496)
10,016
(1,088)
8,928
Joint
ventures
£’000
17,927
(16,198)
103
1,832
(185)
1,647
24
1,671
2020
Associates
£’000
85
—
—
85
—
85
—
85
Total
£’000
18,012
(16,198)
103
1,917
(185)
1,732
24
1,756
Details of the Group’s investments in joint ventures and associates are listed in note 36.
Material joint ventures and associates
The Directors considers Pennine Property Partnership LLP, Montagu 406 Regeneration LLP and Newmarket Lane Holdings Limited (Group) to
be the only material joint venture or associate they hold an interest in.
Pennine Property Partnership LLP is a property development joint venture between the Group and Calderdale and Huddersfield NHS Foundation
Trust, the LLP is incorporated in England and the Group has ownership of 50%. The joint venture is accounted for using the equity method of
accounting. Montagu 406 Regeneration LLP is a property development joint venture between the Group and The Mayor and Burgesses of the
London Borough of Enfield. The LLP is incorporated in England and the Group has ownership of 50% of the LLP. The joint venture is accounted
for using the equity method of accounting. Newmarket Lane Holdings Limited (Group) (henceforth the “NML Group”) is a property development
joint venture between the Group, two individual shareholders, and Hazeltime Limited. The NML Group includes three legal entities, Newmarket
Lane Holdings Limited, Newmarket Lane Limited, and Newmarket Lane Management Company Limited. The NML Group is incorporated in
England, and the Group has ownership of 50% of the NML Group. The joint venture is accounted for using the equity method of accounting.
The table below provides summarised financial information for Pennine Property Partnership LLP, Montagu 406 Regeneration LLP, and
Newmarket Lane Holdings Limited (Group). The information disclosed reflects the amounts presented in the financial statements of Pennine
Property Partnership LLP, Montagu 406 Regeneration LLP, and Newmarket Lane Holdings Limited (Group), and not the Group’s share of those
amounts.
Summarised balance sheet
Investment properties (non-current)
Inventories
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Borrowings (non-current)
Net assets/(liabilities)
Reconciliation to carrying amount:
Opening net assets 1 January
Profit for the period
Other distribution
Closing net assets
Group’s share in %
Group’s share in £
Carrying amount
Summarised statement of comprehensive income
2021
£’000
752
2,920
Revenue
Profit for the year
182
Pennine Property
Partnership LLP
Montagu 406
Regeneration LLP
Newmarket Lane Holdings
Limited (Group)
2021
£’000
17,401
141
138
252
(4,516)
(2,590)
10,826
8,956
2,920
(1,050)
10,826
50%
5,413
5,413
2020
£’000
15,045
146
235
475
(4,377)
(2,568)
8,956
10,424
710
(2,178)
8,956
50%
4,478
4,478
2020
£’000
745
710
2021
£’000
25,950
—
143
—
(14,454)
—
11,639
(5)
11,644
—
11,639
50%
5,820
5,820
2021
£’000
—
11,644
2020
£’000
7,072
—
—
—
(7,077)
—
(5)
(5)
—
—
(5)
50%
(3)
(3)
2020
£’000
—
—
2021
£’000
—
19,050
2,303
1,850
(19,791)
—
3,412
(24)
3,455
(19)
3,412
50%
1,706
1,706
2021
£’000
19,435
3,455
2020
£’000
—
15,857
120
1,810
(17,831)
—
(44)
404
(448)
—
(44)
50%
(22)
(22)
2020
£’000
1,524
(448)
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NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2021FINANCIAL STATEMENTSHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021
17. CONTRACT ASSETS
Construction contracts – Construction segment
Construction contracts – Property Investment and Development segment
Due within one year
Due after more than one year
2021
£’000
2,291
5,265
7,556
7,556
—
7,556
2020
£’000
2,051
11,277
13,328
13,328
—
13,328
Amounts relating to construction contracts are balances due from customers under construction contracts that arise when the Group receives
payments from customers in line with a series of performance related milestones. The Group will previously have recognised a contract asset for
any work performed but not yet invoiced as conditional to reaching certain agreed milestone. Any amount previously recognised as a contract
asset is reclassified to trade receivables at the point at which it is invoiced to the customer.
Contract assets have decreased as the Group has provided fewer construction contract services in the property investment and development
segment.
There were no significant impairment losses recognised on any contract asset in the reporting period (2020: £nil).
The Group does not recognise any assets arising from the costs incurred to obtain a contract as the related amortisation period would have
been less than one year.
18. TRADE AND OTHER RECEIVABLES
Trade receivables
Loss allowance
Prepayments
Amounts owed by joint ventures and associates
Amounts owed by Group undertakings
Due within one year
Due after more than one year
Group
Parent Company
2021
£’000
69,830
(1,269)
8,442
27,660
—
104,663
91,359
13,304
104,663
2020
£’000
53,269
(691)
4,987
14,661
—
72,226
65,032
7,194
72,226
2021
£’000
168
—
949
—
203,417
204,534
204,534
—
204,534
2020
£’000
265
—
891
—
134,484
135,640
135,640
—
135,640
Amounts due after more than one year relate to deferred consideration included in trade receivables on inventory sold. Amounts are discounted
to present value and are due for payment between January 2023 and by June 2023.
Group
Movement in the trade receivables loss allowance
At 1 January
Impairment losses recognised
Amounts written off as uncollectable (utilisation)
Amounts recovered during the year
Impairment losses reversed
At 31 December
The loss allowance as at 31 December 2021 and 31 December 2020 for trade receivables was determined as follows:
2021
0-30 days
30–60 days
60–90 days
90–120 days
120+ days
Expected
loss rate
%
—
0.6
2.9
24.2
41.1
2021
£’000
691
779
(196)
(5)
—
1,269
Gross
carrying
amount
£’000
63,405
2,895
548
128
2,854
69,830
2020
£’000
724
481
(214)
—
(300)
691
Loss
allowance
£’000
31
18
16
31
1,173
1,269
183
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FINANCIAL STATEMENTSHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 18. TRADE AND OTHER RECEIVABLES CONTINUED
2020
0-30 days
30–60 days
60–90 days
90–120 days
120+ days
Expected
loss rate
%
0.8
0.9
4.2
14.0
8.0
Gross
carrying
amount
£’000
46,800
2,810
359
114
3,186
53,269
Loss
allowance
£’000
381
25
15
16
254
691
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 include loans of £203.7m (2020: £131.3m) and are repayable on demand, unsecured and are stated net
of provisions for impairment of £1,500,000 (2020: £1,584,000), of which £3,000 (2020: £3,000) has been provided in the year, £87,000 (2020:
£166,000) has been recovered in the year and £nil (2020: £3,655,000) was written off. Expected credit losses are based on the assumption that
repayment of the loan is demanded at the reporting date. Where there are insufficient liquid assets the Parent Company considers the expected
manner of recovery to measure expected credit losses. This might be a ‘repay over time’ strategy, or a fire sale of less liquid assets. Interest is
charged annually at 2.85% (2020: 2.85%).
The Parent Company has no significantly 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
loss allowances for doubtful receivables, estimated by the Group’s management based on prior experience and forward-looking assessments of
the economic environment in accordance with IFRS 9 ‘Financial Instruments’.
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.
19. DEFERRED TAX
Deferred tax assets and deferred tax liabilities are offset where the Group has a legally enforceable right to set off current tax assets against
current tax liabilities 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:
Accelerated
capital
allowances
£’000
Retirement
benefit
obligations
£’000
Other
timing
differences
£’000
Property
revaluations
£’000
Group
Total
£’000
At 1 January 2020
Recognised in profit or loss
Recognised in other comprehensive income
At 31 December 2020
Recognised in profit or loss
Recognised in other comprehensive income
At 31 December 2021
Deferred tax asset
Deferred tax liability
Parent Company
At 1 January 2020
Recognised in profit or loss
Recognised in other comprehensive income
At 31 December 2020
Recognised in profit or loss
Recognised in other comprehensive income
At 31 December 2021
Deferred tax asset
184
252
(167)
—
85
(279)
—
(194)
—
(194)
51
17
—
68
36
—
104
104
—
—
—
—
(4,106)
(282)
(4,388)
—
(4,388)
—
—
—
—
—
—
—
—
3,904
(69)
3,089
6,924
973
(4,840)
3,057
3,057
—
3,904
(69)
3,089
6,924
973
(4,840)
3,057
3,057
382
(49)
—
333
(1)
—
332
332
—
300
55
—
355
6
—
361
361
4,538
(285)
3,089
7,342
(3,413)
(5,122)
(1,193)
3,389
(4,582)
4,255
3
3,089
7,347
1,015
(4,840)
3,522
3,522
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NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2021FINANCIAL STATEMENTSHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 19. DEFERRED TAX CONTINUED
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 £nil (2020: £1,596,000). 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.
In the Spring Budget 2021, the Government announced that from 1 April 2023 the main rate of UK corporation tax rate would increase to 25%.
This new law was substantively enacted on 24 May 2021. As a result deferred tax balances at the year end have been measured at 25% (2020:
19%), being the rate at which timing differences are expected to reverse. Management do not expect any significant reversal of deferred tax assets or
liabilities in the next 12 months.
20. INVENTORIES
Property developments in progress
Housebuilder land and work in progress
Land held for development or sale
Options to purchase land
Planning promotion agreements
2021
£’000
75,161
52,464
47,682
13,558
46,431
2020
£’000
44,368
39,192
57,898
14,757
44,574
235,296
200,789
Within property developments in progress £1,277,000 (2020: £909,000) 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 or sale, options to purchase land and
planning promotion agreements £1,170,000 (2020: £1,434,000) 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.
21. CONTRACT LIABILITIES
Construction contracts – Construction segment
Construction contracts – Property Investment and Development segment
Due within one year
Revenue recognised that was included in the contract liability balance at the beginning of the period
Construction contracts – Construction segment
Construction contracts – Property Investment and Development segment
Revenue recognised from performance obligations satisfied in previous periods
Construction contracts – Construction segment
Construction contracts – Property Investment and Development segment
2021
£’000
5,033
—
5,033
5,033
2021
£’000
7,280
150
—
—
2020
£’000
7,280
150
7,430
7,430
2020
£’000
9,433
—
—
—
Contract liabilities have decreased in the year as the Group invoicing remains more closely aligned with the level of construction of works
undertaken.
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185
FINANCIAL STATEMENTSHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 22. TRADE AND OTHER PAYABLES
Trade payables
Social security and other taxes
Accrued expenses
Deferred income
Amounts owed to joint venture and associates
Amounts owed to Group undertakings
Due within one year
Due after more than one year
Group
Parent Company
2021
£’000
56,420
4,119
9,441
3,834
10
—
73,824
72,155
1,669
73,824
2020
£’000
62,076
4,665
3,549
4,072
711
—
75,073
72,727
2,346
75,073
2021
£’000
1,409
572
1,024
—
—
83,168
86,173
86,173
—
86,173
2020
£’000
1,255
371
1,616
—
—
89,868
93,110
93,110
—
93,110
The Directors consider that the carrying amount of trade payables approximates to their fair value.
Amounts due after more than one year include £1,669,000 (2020: £1,873,000) of deferred income and £nil (2020: £473,000) of trade payables.
Included within deferred income is £1,874,000 relating to an advanced payment from Highways England (2020: £1,987,000). This is being released as
revenue and interest within the income statement under the terms of the A69 Road Link contract. During the year £445,000 has been recognised as
revenue and £(332,000) recognised as interest.
Parent Company
Amounts owed to Group undertakings (including loans of £81.1m (2020: £87.5m)) are repayable on demand, unsecured and bear interest at
2.85% (2020: 2.85%).
23. GOVERNMENT GRANTS
Government grants have been received in relation to the infrastructure of one of the Group’s land promotions and one of the Group’s property
developments.
Grant income received relating to revenue grants are included within deferred income and released to the Consolidated 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 Consolidated Statement of Comprehensive Income during the year were £723,000 (2020: £820,000).
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.
24. CAPITAL RISK MANAGEMENT
The Group’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 2021
this was £43.5m (2020: net cash £27.0m). Equity comprises all components of equity and at 31 December 2021 this was £355.3m (2020:
£313.5m).
During 2021 the Group’s strategy, was to maintain the debt to equity ratio below 30% (2020: 30%). This level was chosen to ensure that we can
access debt relatively easily and inexpensively if required.
In January 2020, the Group concluded negotiations with three banking partners to put in place a £75m facility to replace the £72m facility we
had in place at 31 December 2019. The renewed facilities commenced on 23 January 2020, with a renewal date of 23 January 2023 and an
option to extend the facilities by one year, each year, for the next two years occurring on the anniversary of the facility. The renewed facilities, on
improved terms, maintain covenants on the same basis as the previous facilities. On 19 January 2022 the banks agreed to the Group’s second
request to extend the facility to 23 January 2025. The Group had drawn £50m of the facility at 31 December 2021 (2020: £nil).
The Group’s secured bank facilities are subject to covenants over loan-to-market value of investment properties, interest cover, EBIT cover,
gearings and minimum consolidated tangible assets value. The Group operated comfortably within all of its requirements throughout the year
and continues to do so over forecast periods.
On the 17 December 2021, the Group entered into a Receivables Purchase Agreement with HSBC Invoice Finance (UK) Limited, from which the
Group can draw up to £25m on the transfer of certain deferred receivables to the bank. No amounts were drawn on the facility at the year end.
The Group’s capital risk management disclosures are consistent with the parent company.
186
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NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2021FINANCIAL STATEMENTSHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 25. BORROWINGS
Bank overdrafts
Bank loans
Government loans
Due within one year
Due after one year
Contractual maturities of borrowings, including future interest, as follows:
On demand or within one year
In the second year
In the third to fifth years inclusive
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 Stonebridge Homes Limited)
Government loans
Group
Parent Company
2021
£’000
—
50,000
2,941
52,941
52,941
—
52,941
52,941
—
—
52,941
52,941
—
52,941
2020
£’000
—
9,969
2,941
12,910
2,941
9,969
12,910
3,195
9,969
—
13,164
3,195
9,969
13,164
2021
£’000
—
50,000
—
50,000
50,000
—
50,000
50,000
—
—
50,000
50,000
—
50,000
2021
%
1.24
1.51
1.98
—
2020
£’000
1,421
—
—
1,421
1,421
—
1,421
1,421
—
—
1,421
1,421
—
1,421
2020
%
1.56
—
2.24
—
Bank overdrafts are repayable on demand and bank loans are drawn for periods of between one and six months.
Borrowings are recognised at amortised cost.
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, Stonebridge Offices Limited and Stonebridge Homes Limited.
The Stonebridge Homes Limited revolving loan facility is secured by a specific charge over the freehold property of that company and is
guaranteed by Henry Boot PLC. On 25 January 2019 the Stonebridge Homes facility was increased to £10,000,000 with full and final settlement
becoming due on 24 January 2022. On 17 December 2021, the facility was settled in full with Stonebridge Homes now being funded through
the Henry Boot PLC group facility.
The Group has a government loan from the Homes and Communities Agency (HCA) held at a fair value of £2,941,000 (2020: £2,941,000)
(Education Campus) which was issued with a fixed level of interest of £254,000 (2020: £254,000). As a result, the Company has no exposure
to interest rate changes in relation to this loan. The Company’s exposure to indexation risk may result in an increase in the value of repayments,
causing the loan to be settled at an earlier date.
The Government loan was received to fund specific residential construction expenditure.
Repayment of the Education Campus HCA loan commenced upon the occupation of the first dwelling and follows for each occupation
thereafter until the total contribution sum is repaid in full. Repayments of £nil (2020: £nil) were made during the year. 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.
Other borrowings are arranged at floating rates, thus exposing the Group to cash flow interest rate risk.
Based on approximate average borrowings during 2021, a 0.5% (2020: 0.5%) change in interest rates, which the Directors consider to be a
reasonably possible change, would affect profitability before tax by £82,000 (2020: £4,000).
The fair value of the Group’s borrowings is not considered to be materially different from the carrying amounts.
At 31 December 2021, the Group had available £25,000,000 (2020: £75,000,000) undrawn committed borrowing facilities.
187
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FINANCIAL STATEMENTSHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 26. PROVISIONS
At 1 January 2020
Additional provisions in year
Utilisation of provisions
At 31 December 2020
Included in current liabilities
Included in non-current liabilities
Additional provisions in year
Utilisation of provisions
At 31 December 2021
Included in current liabilities
Included in non-current liabilities
Land
promotion
£’000
Road
maintenance
£’000
5,315
129
(1,508)
3,936
2,860
1,076
3,936
1,051
(570)
4,417
3,562
855
4,417
1,681
1,209
(898)
1,992
1,992
—
1,992
1,499
(1,626)
1,865
1,865
—
1,865
Total
£’000
6,996
1,338
(2,406)
5,928
4,852
1,076
5,928
2,550
(2,196)
6,282
5,427
855
6,282
The land promotion 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 of. 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 reasonably possible change, land promotion provisions would change
and affect profitability before tax by £11,000 and £101,000 respectively (2020: £51,000 and £193,000).
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 reasonably
possible change, the road maintenance provision would change and affect profitability before tax by £206,000 (2020: £171,000).
Off balance sheet arrangements
The Group is currently undertaking the infrastructure of land promotions at Bridgwater and Cranbrook, spanning 122 and 53 acres respectively
(2020: 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 2022 and 2025
respectively, with costs being incurred throughout these periods.
The Group has historically disposed of 117 and 48 acres respectively (2020: 117 and 35), and has subsequently recognised provisions to the
value of £4,351,000 (2020: £3,845,000), 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 of. The present value of the estimated cash flows relating to future disposals, amounting to £617,000 (2020: £1,369,000), has
therefore not been recognised in these Financial Statements.
27. RETIREMENT BENEFIT OBLIGATIONS
Defined contribution pension plan
The Group operates a defined contribution pension plan for all qualifying employees. The plan is administered and managed by Aviva and the
Group matches member contributions, providing a minimum of 5% (2020: 5%) 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 £2,521,000 (2020: £2,293,000) represents contributions payable to the plan 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 accrued benefits up until 19 March 2021 at which point the scheme closed to future accrual. To 19 March 2021
members accrued an annual pension of either 1/45th or 1/60th of final pensionable salary for each year of pensionable service. Increases in
pensionable salary were 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.
188
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NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2021FINANCIAL STATEMENTSHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 27. RETIREMENT BENEFIT OBLIGATIONS CONTINUED
Up to the date of closure active members of the scheme paid contributions at the rate of either 5% or 7% of pensionable salary and the Group
employers paid 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.
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 2018. The results of that valuation have been projected to 31 December 2021
by a qualified independent actuary and the next formal valuation as at 31 December 2021 is currently in progress. 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 (RPI)
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
2021
%
3.30
2.70
—
2.70
2.70
2.00
2021
Years
21.8
24.1
22.8
25.3
2020
%
2.80
2.20
1.00
2.20
2.20
1.40
2020
Years
21.8
24.1
22.8
25.3
The mortality assumptions adopted are the Self Administered Pension Schemes (SAPS) tables with allowance for future improvements in line
with Continuous Mortality Investigation (CMI) 2020 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
Liabilities discount rate
Rate of mortality
Impact on scheme liabilities
Change in
assumption
0.25%
0.25%
1 year
Increase in
assumption
Increase by 3.0%
Decrease by 4.0%
Increase by 4.5%
Decrease in
assumption
Decrease by 3.0%
Increase by 4.3%
Decrease by 4.2%
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FINANCIAL STATEMENTSHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 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
Past service cost
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 (gain)/loss arising from changes in demographic assumptions
Actuarial (gain)/loss arising from changes in financial assumptions
Actuarial (gain)/loss recognised in other comprehensive income
Total
2021
£’000
180
502
2,074
505
146
3,407
(13,239)
(277)
(9,781)
(23,297)
(19,890)
The amount included in the Statement of Financial Position arising from the Group’s obligations in respect of the scheme is as follows:
2020
£’000
795
576
150
433
206
2,160
(13,898)
2,265
27,346
15,713
17,873
2020
£’000
235,143
(198,698)
36,445
2021
£’000
221,660
(209,432)
12,228
2021
£’000
12,228
2020
£’000
36,445
2021
£’000
235,143
180
4,201
(10,058)
2,074
(9,880)
221,660
2020
£’000
208,318
795
4,098
29,610
150
(7,828)
235,143
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
Actuarial losses
Past service cost
Benefits paid
At 31 December
190
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NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2021FINANCIAL STATEMENTSHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 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 gains on scheme assets
Employer contributions
Benefits paid
Ongoing scheme expenses
At 31 December
The categories of plan assets are as follows:
Quoted investments, including pooled diversified growth funds:
Equity
Diversified credit funds
Cash and net current assets
Unquoted investments:
Direct lending
Liability driven investment
Collateralised loan obligations
Infrastructure
Special situations
At 31 December
2021
£’000
198,698
3,696
13,239
4,181
(9,880)
(502)
209,432
2021
£’000
47,796
63,641
3,222
22,536
34,369
—
20,101
17,767
209,432
2020
£’000
185,353
3,665
13,898
4,186
(7,828)
(576)
198,698
2020
£’000
39,934
62,892
2,826
28,521
31,626
21,608
—
11,291
198,698
The weighted average duration of the defined benefit obligation is 16 years (2020: 17 years).
The current estimated amount of total contributions expected to be paid to the scheme during the 2022 financial year is £4,300,000, being
£4,300,000 payable by the Group and £nil payable by scheme members.
The Company’s level of recovery plan funding to the scheme is £3,550,000 per annum and will increase by £100,000 per annum until the next
triennial valuation. In addition to this, the Company contributes a further £260,000 per annum towards the administration expenses of the
scheme.
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191
FINANCIAL STATEMENTSHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 28. 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)
2021
£’000
2,456
4,544
(1,753)
(158)
39
2021
£’000
—
48
2020
£’000
1,963
3,377
(1,802)
(156)
51
2020
£’000
49
43
Amounts owing by related parties (note 18) or to related parties (note 22) are unsecured, repayable on demand and will be settled in cash. No
guarantees have been given or received. No significant provisions have been made for impaired receivables in respect of the amounts owed by
related parties. Other than as disclosed above and in note 16, there are no further related party transactions with joint ventures and associates.
Remuneration of key management personnel
The key management personnel of the Group are the Board of Directors and members of the Executive Committee, as presented on pages
76 to 79. They are responsible for making all of the strategic decisions of the Group and its subsidiaries, as detailed on pages 26 and 29. The
remuneration of the Board of Directors is set out in the Remuneration Report on pages 116 to 135. The remuneration of the relevant eight (2020:
four) members of the Senior Management team is set out below, in aggregate, for each of the categories specified in IAS 24 ‘Related Party
Disclosures’.
Short-term employee benefits
Post-employment benefits
Share-based payments
2021
£’000
1,976
92
23
2,091
2020
£’000
1,271
19
203
1,493
192
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NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2021FINANCIAL STATEMENTSHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 29. SHARE CAPITAL
400,000 5.25% cumulative preference shares of £1 each (2020: 400,000)
133,323,967 ordinary shares of 10p each (2020: 133,181,537)
Authorised, allotted,
issued and fully paid
2021
£’000
400
13,332
13,732
2020
£’000
400
13,318
13,718
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. During the year 142,430 ordinary shares (2020: 8,935) were
issued in satisfaction of share option exercises.
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:
(i) The Henry Boot 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 24 October 2017 at a price of 270.0p at a discount of 10%, on 4 October 2018 at a price of 262.0p at a discount
of 5.8%, on 3 October 2019 at a price of 224.0p at a discount of 9.7%, on 5 October 2020 at a price of 237.0p at a discount of 6.0% and
on 15 October 2021 at a price of 225.0p at a discount of 20.5%. These become exercisable for a six-month period from 1 December 2021,
1 December 2022, 1 December 2023 and 1 December 2024 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.
2020
October 2017 grant
October 2018 grant
October 2019 grant
October 2020 grant
Weighted average exercise price
2021
October 2017 grant
October 2018 grant
October 2019 grant
October 2020 grant
October 2021 grant
Weighted average exercise price
Options
outstanding at
1 January
2020
246,009
113,841
863,490
—
237p
Options
outstanding at
1 January
2021
179,553
86,499
734,761
312,039
—
236p
Options
granted
—
—
—
312,039
237p
Options
granted
—
—
—
—
444,640
225p
Options
outstanding at
31 December
2020
179,553
86,499
734,761
312,039
236p
Options
outstanding at
31 December
2021
—
55,643
624,340
209,214
440,640
228p
Options
exercised
—
—
(3,935)
—
224p
Options
exercised
(95,187)
(17,806)
(5,712)
—
—
267p
Options
lapsed
(66,456)
(27,342)
(124,794)
—
243p
Options
lapsed
(84,366)
(13,050)
(104,709)
(102,825)
(4,000)
243p
The weighted average share price at the date of exercise for share options exercised during the year was 278.10p (2020: 260.50p).
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193
FINANCIAL STATEMENTSHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 29. SHARE CAPITAL CONTINUED
(ii) 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 (ii) 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
2021
Number
1,078,207
(177,367)
(53,085)
517,642
1,365,397
2020
Number
1,115,063
(176,301)
(311,640)
451,085
1,078,207
The weighted average share price at the date of exercise for share options exercised during the year was 278.00p (2020: 235.00p). The weighted
average exercise price of all share options issued in the scheme is nil.
(iii) 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. The third grant of options under the
plan was made to certain senior employees (none of whom at the time were Directors of Group companies) on 6 October 2017 at an option
price of 298.9p. The fourth grant of options under the plan was made to certain employees (two of whom at the time were Directors of Group
companies) on 14 September 2018 at an option price of 291.0p. The fifth grant of options under the plan was made to certain employees (two
of whom at the time were Directors of Group companies) on 3 October 2019 at an option price of 249.0p. The sixth grant of options under the
plan was made to certain employees (none of whom at the time were Directors of Group companies) on 5 October 2020 at an option price
of 263.0p. The seventh grant of options under the plan was made to certain employees (none of whom at the time were Directors of Group
companies) on 29 September 2021 at an option price of 281.0p. There were no performance conditions imposed on either of these grants.
2020
May 2011 grant
October 2014 grant
October 2017 grant
September 2018 grant
October 2019 grant
October 2020 grant
Weighted average exercise price
Options
outstanding at
1 January
2020
10,000
15,000
134,690
269,425
444,838
—
267p
Options
granted
—
—
—
—
—
416,316
263p
Options
lapsed
Options
exercised
Options
outstanding at
31 December
2020
—
—
—
—
—
—
275p
(5,000)
—
(4,183)
(5,860)
(7,432)
—
112p
5,000
15,000
130,507
263,565
437,406
416,316
266p
194
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NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2021FINANCIAL STATEMENTSHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 29. SHARE CAPITAL CONTINUED
2021
May 2011 grant
October 2014 grant
October 2017 grant
September 2018 grant
October 2019 grant
October 2020 grant
September 2021 grant
Weighted average exercise price
Options
outstanding at
1 January
2021
5,000
15,000
130,507
263,565
437,406
416,316
—
266p
Options
granted
—
—
—
—
—
—
413,230
281p
Options
lapsed
Options
exercised
Options
outstanding at
31 December
2021
—
—
(34,298)
(43,396)
(88,779)
(65,847)
(8,890)
269p
(5,000)
(5,000)
—
—
(8,420)
(566)
—
198p
—
10,000
96,209
220,169
340,207
349,903
404,340
271p
The weighted average share price at the date of exercise for share options exercised during the year was 274.80p (2020: 253.00p).
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
dividend yield
Expected
LTIP
CSOP 2011
CSOP 2014
CSOP 2017
CSOP 2018
CSOP 2019
CSOP 2020
CSOP 2021
Sharesave 2014
Sharesave 2017
Sharesave 2018
Sharesave 2019
Sharesave 2020
Sharesave 2021
Nil
121.5p
191.0p
298.9p
291.0p
249.0p
263.0p
281.0p
172.0p
270.0p
262.0p
224.0p
237.0p
225.0p
241.0p to 294.0p
121.5p
191.0p
309.0p
291.0p
249.0p
263.0p
281.0p
181.0p
300.0p
278.0p
248.0p
263.0p
2.83.0p
29.37% to 36.57%
41.47%
31.17%
30.37%
29.28%
29.25%
38.07%
38.60%
31.45%
30.30%
29.53%
29.25%
38.07%
38.60%
3 years
3 years
3 years
3 years
3 years
3 years
3 years
3 years
3 years
3 years
3 years
3 years
3 years
3 years
0.00% to 0.94% 2.14% to 3.24%
5.02%
3.16%
3.02%
2.90%
3.24%
2.61%
2.49%
3.16%
3.02%
2.90%
3.24%
2.61%
2.49%
1.67%
1.23%
0.51%
0.91%
0.28%
0.00%
0.41%
0.82%
0.51%
0.99%
0.28%
0.00%
0.58%
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 92.71p (2020: 76.64p).
Expense recognised in the Consolidated Statement of Comprehensive Income
The total expense recognised in the Consolidated Statement of Comprehensive Income
arising from share-based payment transactions
2021
£’000
2020
£’000
969
975
The total expense recognised in the Consolidated Statement of Comprehensive Income arose solely from equity-settled share-based payment
transactions.
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195
FINANCIAL STATEMENTSHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 30. RESERVES
Group
At 1 January 2020
Profit for the year
Dividends paid
Proceeds from shares issued
Decrease in fair value of group occupied
property
Arising on employee share schemes
Actuarial loss on defined benefit pension
scheme
Deferred tax on actuarial loss
At 31 December 2020
Profit for the year
Dividends paid
Proceeds from shares issued
Arising on employee share schemes
Deferred tax on revaluation surplus
Actuarial gain on defined benefit pension
scheme
Deferred tax on actuarial gain
At 31 December 2021
Parent Company
At 1 January 2020
Profit for the year
Dividends paid
Premium arising from shares issued
Arising on employee share schemes
Unrecognised actuarial loss
Deferred tax on actuarial loss
At 31 December 2020
Profit for the year
Dividends paid
Premium arising from shares issued
Arising on employee share schemes
Unrecognised actuarial loss
Deferred tax on actuarial loss
At 31 December 2021
Property
revaluation
£’000
2,993
—
—
—
(651)
—
—
—
2,342
—
—
—
—
(282)
—
—
2,060
Retained
earnings
£’000
293,593
11,921
(4,664)
—
—
288
(15,713)
3,089
288,514
28,160
(7,620)
—
837
—
23,297
(4,840)
328348
Other
Capital
redemption
£’000
Share
premium
£’000
Capital
£’000
271
—
—
—
—
—
—
—
271
—
—
—
—
—
—
—
271
5,910
—
—
14
—
—
—
—
5,924
—
—
340
—
—
—
—
6,264
209
—
—
—
—
—
—
—
209
—
—
—
—
—
—
—
209
Retained
earnings
£’000
Capital
redemption
£’000
Share
premium
£’000
Capital
£’000
Investment
revaluation
£’000
Other
78,390
552
(4,664)
—
(297)
(15,713)
3,089
61,357
8,938
(7,620)
—
282
23,297
(4,840)
81,414
271
—
—
—
—
—
—
271
—
—
—
—
—
—
271
5,910
—
—
14
—
—
—
5,924
—
—
340
—
—
—
6,264
211
—
—
—
—
—
—
211
—
—
—
—
—
—
211
1,135
—
—
—
—
—
—
1,135
—
—
—
—
—
—
1,135
Total
other
£’000
6,390
—
—
14
—
—
—
—
6,404
—
—
340
—
—
—
—
6,744
Total
other
£’000
7,527
—
—
14
—
—
—
7,541
—
—
340
—
—
—
7,881
196
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NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2021FINANCIAL STATEMENTSHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 30. 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. This reserve is distributable to the extent it does not arise from
revaluation gains.
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. This reserve in not distributable.
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.
Investment revaluation reserve
This reserve was carried forward from previous accounting framework, and represents accumulated unrealised revaluation gains. This is
distributable only when the related investment in subsidiaries are sold or impaired.
31. COST OF SHARES HELD BY THE ESOP TRUST
At 1 January
Additions
Disposals
At 31 December
2021
£’000
1,176
—
(132)
1,044
2020
£’000
1,248
615
(687)
1,176
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 2021, the Trustee held 422,489 shares (2020: 475,574 shares) with a cost of £1,044,311 (2020: £1,175,526) and a market value
of £1,187,195 (2020: £1,213,715). All of these shares were committed to satisfy existing grants by the Company under the Henry Boot PLC 2015
Long-Term Incentive 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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197
FINANCIAL STATEMENTSHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 32. CASH GENERATED FROM OPERATIONS
Group
Parent Company
Profit before tax
Adjustments for:
Amortisation of PFI asset
Goodwill impairment
Depreciation and impairment of property, plant and
equipment
Depreciation of right-of-use assets
Revaluation increase in investment properties
Amortisation of capitalised letting fees
Share-based payment expense
Pension scheme credit
Movements on provision against loans to subsidiaries
Profit on disposal of property, plant and equipment
Profit on disposal of equipment held for hire
(Profit)/Loss on disposal of right-of-use assets
Profit/(loss) on disposal of investment properties
Gain on disposal of joint ventures and subsidiaries
Finance income
Dividends received from subsidiaries
Finance costs
Share of profit of joint ventures and associates
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 in contract assets
Increase/(decrease) in payables and provisions
Decrease in contract liabilities
Cash generated from operations
11
11
12
13
14
3
4
3
3
3
5
6
16
12
2021
£’000
35,142
602
203
3,819
598
(7,972)
41
968
(920)
—
(16)
(981)
—
(1,340)
—
(724)
—
1,155
(8,928)
21,646
(5,952)
1,159
16,854
(36,025)
(22,643)
5,772
(226)
(2,397)
(38,665)
2020
£’000
17,079
570
2,218
3,585
987
(1,266)
30
975
(2,233)
—
(85)
(854)
89
95
(7,426)
(721)
—
1,117
(1,756)
12,404
(2,201)
1,159
11,362
(31,285)
39,800
5,757
(2,052)
(2,446)
21,136
Net (debt)/cash is an alternative performance measure used by the Group and comprises the following:
Analysis of net (debt)/cash:
Cash and cash equivalents
Bank overdrafts
Net cash and cash equivalents
Bank loans
Lease liabilities
Government loans
Net (debt)/cash
1 See ‘Prior year restatement - parent’ on page 156.
25
25
13
25
11,116
—
11,116
(50,000)
(1,660)
(2,941)
(43,485)
42,125
—
42,125
(9,969)
(2,216)
(2,941)
26,999
2021
£’000
7,211
—
—
144
53
—
—
413
(920)
(84)
—
—
74
—
—
(4,544)
(14,530)
2,275
—
(9,908)
—
—
(9,908)
—
4,677
—
(3,806)
—
(9,037)
2,691
—
2,691
(50,000)
(78)
—
(47,387)
Restated1
2020
£’000
(162)
—
—
203
56
—
—
391
(2,233)
3,818
—
—
3
—
—
(3,666)
(7,897)
2,172
—
(7,315)
—
—
(7,315)
—
(1,221)
—
6,174
—
(2,362)
31,615
(1,421)
30,194
—
(140)
—
30,054
198
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NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2021FINANCIAL STATEMENTSHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 33. GUARANTEES AND CONTINGENCIES
The Parent Company has guaranteed the performance of certain contracts entered into by Group undertakings in the ordinary course of
business. These guarantees are impracticable to quantify.
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. At the year end amounts guaranteed against these facilities were £50,000,000 and £20,528,000
respectively.
In the opinion of the Directors, no loss is expected to arise in connection with these matters.
34. EVENTS AFTER THE BALANCE SHEET DATE
Since the balance sheet date the Group has proposed a final dividend for 2021, further information can be found in note 10, and made an initial
drawdown of £15.2m on the new £25.0m HSBC receivables purchase facility.
There were no other significant events since the balance sheet date which may have a material effect on the financial position or performance of
the Group.
35. DISPOSALS OF JOINT VENTURES AND SUBSIDIARIES
The Group completed on two disposals in the prior year:
a) Starfish Commercial Ltd
On 14 September 2020 the Group, through its subsidiary Henry Boot Construction Limited, placed its wholly owned subsidiary Starfish
Commercial Ltd into creditors voluntary liquidation.
Sales proceeds
Book value of net liabilities
Sales costs
Profit on disposal
2020
£’000
—
1,262
—
1,262
b) Ansty Developments LLP
On 12 November 2020 the Group, through its subsidiary Hallam Land Management Limited, disposed of its interest in Ansty Developments LLP
for a total consideration of £6,250,000.
Sales proceeds
Book value of net assets
Sales costs
Profit on disposal
2020
£’000
6,250
—
(86)
6,164
199
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FINANCIAL STATEMENTSHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 36. ADDITIONAL INFORMATION – SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES
Details of the Company’s subsidiaries, joint ventures and associates, all of which are incorporated in England (unless otherwise stated) and are
either consolidated or equity accounted in the Group Financial Statements at 31 December 2021, are as follows:
Subsidiary name
Airport Business Park Southend Management Limited2
Banner Plant Limited
Butterfield Quad Management Company Limited2
Butterfield Quad 2 Management Company Limited
Capitol Park Property Services Limited2
Chocolate Works York Management Company Limited
Comstock (Kilmarnock) Ltd.
First National Housing Trust Limited
Glasgowend Limited
Hallam Land Management Limited
HB Island Limited
HBGP Limited
HBD City Court Limited
HBD Summerhill Limited
Henry Boot Biddenham Limited
Henry Boot Construction Limited
Henry Boot Contracting Limited
Henry Boot Developments Limited
Henry Boot Cornwall House Limited
Henry Boot Estates Limited
Henry Boot Investments 1 Limited
Henry Boot Inner City Limited
Henry Boot ‘K’ Limited
Henry Boot Land Holdings Limited
Henry Boot (Launceston) Limited
Henry Boot Leasing Limited
Henry Boot (Manchester) Limited
Henry Boot Nottingham Limited
Henry Boot Projects Limited
Henry Boot Swindon Limited
Henry Boot Tamworth Limited
Henry Boot Wentworth Limited
IAMP Management Company Limited
Investments (North West) Limited
Marboot Centregate Ltd
Marboot Centregate 2 Limited
Moore Street Securities Limited
Plot 7 East Markham Vale Management Company Limited
Road Link (A69) Holdings Limited
Road Link (A69) Limited
St John’s Manchester Limited
Saltwoodend Limited
SJ Manchester Limited Partnership
SJM GP Limited
SJM (Nominee) Limited
Stonebridge Homes Group Limited1
Stonebridge Homes Limited1
Stonebridge Offices Limited1
Winter Ground Limited
Proportion of
ownership
Direct or
indirect
1.8%
100%
12.5%
100%
4.6%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
66.7%
61.2%
61.2%
100%
100%
100%
100%
100%
50%
50%
50%
100%
Indirect
Direct
Indirect
Indirect
Indirect
Indirect
Indirect
Direct
Direct
Direct
Direct
Direct
Indirect
Indirect
Direct
Direct
Direct
Direct
Indirect
Direct
Indirect
Direct
Indirect
Direct
Direct
Direct
Direct
Indirect
Direct
Direct
Indirect
Direct
Indirect
Indirect
Indirect
Indirect
Direct
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Activity
Management company
Plant Hire
Management company
Management company
Management company
Management company
Land promotion
Property investment
Inactive
Land promotion
Property development
Property development
Property investment and development
Property investment and development
Land promotion
Construction
Inactive
Property investment and development
Inactive
Property investment
Property development
Inactive
Property investment and development
Holding company
Land promotion
Motor vehicle leasing to Group companies
Property development
Inactive
Inactive
Inactive
Property investment and development
Property development
Management company
Property development
Property investment
Property investment
Employee benefit trust
Management company
Holding company
PFI road maintenance
Property development
Inactive
Property development
Property development
Property development
Holding company
Property development
Property investment
Property development
1 Stonebridge related entities are included as subsidiaries due to the Group’s additional voting rights, having two of the three director appointments.
2 Subsidiary by virtue of management control
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NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2021FINANCIAL STATEMENTSHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 3 6. ADDITIONAL INFORMATION – SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES CONTINUED
Joint ventures and associates
Aytoun Street Developments Limited
Bigmouth Manchester Limited
Cognito Oak LLP
Crimea Land Mansfield LLP
HBB Preston East Ltd
HBB Roman Way Limited
Henry Boot Barnfield Limited
I-Prop Developments Limited
Island Site Limited Partnership
Island Site (General Partner) Limited
Island Site (Nominee) Limited
Kirklees Henry Boot Partnership Limited
Montagu 406 Regeneration LLP
MVNE LLP
Newmarket Lane Holding Limited
Newmarket Lane Limited
Newmarket Lane Management Company Limited
Pennine Property Partnership LLP
Rainham Holdco SARL
Road Link Limited
Proportion of
ownership
Direct or
indirect
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
33%
50%
20%
37.6%
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Activity
Property development
Property development
Property development
Land promotion
Property development
Property development
Property development
Inactive
Property development
Property development
Property development
Inactive
Property investment
Property development
Property development
Property development
Management company
Property investment and development
Property investment and development
Inactive
The address of the registered office of all subsidiaries, joint venture and associates is the same as the Parent Company, with the exception of:
Road Link Limited, Road Link (A69) Limited and Road Link (A69) Holdings Limited whose registered office is Stocksfield Hall, Stocksfield,
Northumberland, NE43 7TN.
Comstock (Kilmarnock) Ltd. whose registered office is 48 St. Vincent Street, Glasgow, G2 5HS.
Henry Boot Barnfield Limited, HBB Roman Way Limited and HBB Preston East Limited whose registered office is 8 Kenyon Road, Lomeshaye
Industrial Estate, Nelson, Lancashire, England, BB9 5SP.
Kirklees Henry Boot Partnership Limited whose registered office is Legal Services, 2nd Floor Civic Centre 3, Huddersfield, West Yorkshire,
HD1 2WZ.
Cognito Oak LLP whose registered office is Union Plaza (6th Floor), 1 Union Wynd, Aberdeen, Scotland, AB10 1DQ.
Island Site Limited Partnership whose registered office is Guardsman Tony Downes House, 5 Manchester Road, Droylsden, Tameside, M43 6SF.
Crimea Land Mansfield LLP whose registered office is C/O Harworth Group, Advantage House Poplar Way, Catcliffe, Rotherham, S60 5TR,
United Kingdom.
Rainham Holdco SARL whose registered office is 1 Rue Isaac, Newton, L-2242, Luxembourg.
Residents Management Companies
The companies listed below are Residents Management Companies (RMCs). All RMCs are companies limited by guarantee without share capital
(unless otherwise stated) and incorporated in the UK. The capital, reserves and profit or loss for the year has not been stated for these RMCs
as beneficial interest in any assets or liabilities of these companies is held by the residents. These companies have not been included in the
consolidated accounts, are temporary members of the Group and will be handed over to residents in due course. The registered office of each
RMC is 1 Featherbank Court, Horsforth, Leeds, LS18 4QF.
RMCs controlled by the Group:
Woodside Park Newlay Estate Management Company Limited, Fox Valley Management Company Limited1, Moorlands Cleckheaton
Management Company Limited, Brookfield Garth Hampsthwaite Management Company Limited, Kingsley Road Harrogate Management
Company Limited, Weyland Road Management Company Limited, Willow Crest Cawood Management Company Limited, The Willows Whinney
Lane Management Company Limited, Victoria Gardens (Headingley) Management Company Ltd1, Derry Hill Menston Management Company
Limited and Hawbank Field Skipton Management Company Limited.
1. Company limited by share capital
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201
FINANCIAL STATEMENTSHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 Pictured: Longford Park,
Banbury, 1,070 plot site
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SHAREHOLDER
INFORMATION
Notice of Annual General Meeting
Financial Calendar
Advisers
Group Contact Information
Glossary
204
208
208
209
210
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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 DoubleTree by Hilton
Hotel Sheffield Park, Chesterfield Road South, Sheffield, S8 8BW
on Thursday 26 May 2022 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 2021.
RESOLUTION 2
To declare a final dividend of 3.63p per ordinary share.
RESOLUTION 3
To approve the Directors’ Remuneration Report (other than the part
containing the Directors’ Remuneration Policy) for the year ended
31 December 2021.
RESOLUTION 4
To reappoint Timothy Roberts as a Director of the Company.
RESOLUTION 5
To reappoint Darren Littlewood as a Director of the Company.
RESOLUTION 6
To reappoint Joanne Lake as a Director of the Company.
RESOLUTION 7
To reappoint James Sykes as a Director of the Company.
RESOLUTION 8
To reappoint Peter Mawson as a Director of the Company.
RESOLUTION 9
To reappoint Gerald Jennings as a Director of the Company.
RESOLUTION 10
To reappoint Ernst & Young LLP as auditors of the Company.
RESOLUTION 11
To authorise the Audit and Risk Committee to fix the auditors’
remuneration.
RESOLUTION 12
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 £4,446,152, provided that (unless previously revoked,
varied or renewed) this authority shall expire on 25 August 2023 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.
RESOLUTION 13
THAT subject to the passing of Resolution 12 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 12 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):
ii.
iii.
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 £666,922,
and (unless previously revoked, varied or renewed) this power shall
expire on 25 August 2023 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).
204
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SHAREHOLDER INFORMATIONHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 RESOLUTION 14
THAT pursuant to Section 701 of the Companies Act 2006, the
Company be and 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.
b.
c.
d.
e.
the maximum aggregate number of ordinary shares hereby
authorised to be purchased is 13,338,457;
the minimum price (excluding expenses) which may be paid for an
ordinary share is 10p;
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;
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 2023; and
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
AMY STANBRIDGE
COMPANY SECRETARY
13 April 2022
HENRY BOOT PLC
Registered Office:
Banner Cross Hall
Ecclesall Road South
Sheffield
United Kingdom
S11 9PD
Registered in England and Wales No. 160996
Notes
1. The holders of preference shares in the Company are not entitled
to attend and vote at the AGM.
2. The right to vote at the meeting is determined by reference to the
register of members. Only those ordinary shareholders registered
in the register of members of the Company as at the close of
business on 24 May 2022 (or, if the meeting is adjourned, at the
close of business 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 ordinary
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.
3. An ordinary shareholder is entitled to appoint any other 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. An ordinary 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 ordinary share or ordinary shares held by that ordinary
shareholder. Failure to specify the number of ordinary shares each
proxy appointment relates to or specifying a number which when
taken together with the numbers of ordinary shares set out in the
other proxy appointments is in excess of the number of ordinary
shares held by the ordinary shareholder may result in the proxy
appointment being invalid.
4. APPOINTMENT OF PROXY BY JOINT HOLDERS: In the case of
joint holders, where more than one of the joint holders purports
to appoint a proxy, only the appointment submitted by the
most senior holder will be accepted. Seniority is determined by
the order in which the names of the joint holders appear in the
Company’s register of members in respect of the joint holders (the
first-named being the most senior).
5. A proxy may only be appointed in accordance with the procedures
set out in notes 6 to 9 below and the notes to the form of
proxy. The appointment of a proxy will not preclude an ordinary
shareholder from attending and voting in person at the meeting.
6. A form of proxy is enclosed with the notice issued to holders of
ordinary shares. When appointing more than one proxy, complete
a separate proxy form in relation to each appointment. Additional
proxy forms may be obtained by contacting the Company’s
registrar or the proxy form may be photocopied. State clearly on
each proxy form the number of shares in relation to which the
proxy is appointed. To be valid, a form of proxy must be received
by post (during normal business hours only) 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 2022 (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).
7. As an alternative to completing the hard copy form of proxy,
an ordinary shareholder may appoint any person as his or
her proxy 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 2022 (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).
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SHAREHOLDER INFORMATIONHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 NOTICE OF ANNUAL GENERAL MEETING
8. Proxymity Voting – if you are an institutional investor you may
also be able to appoint a proxy electronically via the Proxymity
platform, a process which has been agreed by the Company
and approved by the Company’s registrar. For further information
regarding Proxymity, please go to proxymity.io. Your proxy must
be lodged by 12.30pm on 24 May 2022 (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)
in order to be considered valid. Before you can appoint a proxy
via this process you will need to have agreed to Proxymity’s
associated terms and conditions. It is important that you read
these carefully as you will be bound by them and they will govern
the electronic appointment of your proxy.
9. 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 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 2022 (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.
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.
206
10. An ordinary 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.
11. 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.
b.
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
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 ordinary shareholders in relation to
the appointment of proxies in notes 5 to 9 above does not apply
to a Nominated Person. The rights described in such notes can
only be exercised by ordinary shareholders of the Company.
12. 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 16 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 12 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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SHAREHOLDER INFORMATIONHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 13. Any request by a shareholder or shareholders to require the
Company to publish audit concerns as set out in note 12:
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).
14. 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.
b.
c.
to do so would interfere unduly with the preparation for
the meeting or would involve the disclosure of confidential
information;
the answer has already been given on a website in the form of
an answer to a question; or
it is undesirable in the interests of the Company or the good
order of the meeting that the question be answered.
15. 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: henryboot.co.uk
16. 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 cosec-ir@henryboot.co.uk
No other methods of communication will be accepted.
17. As at 08 April 2022 (being the last practicable date before
publication of this notice), the Company’s issued ordinary share
capital was 133,392,949 ordinary shares, carrying one vote each
and representing the total number of voting rights in the Company.
18. The following documents will be available for inspection during
normal business hours at the registered office of the Company
from the date of this notice until the time of the meeting. They will
also be available for inspection at the place of the meeting from at
least 15 minutes before the meeting until it ends.
a. Copies of the service contracts of the executive directors.
b. Copies of the letters of appointment of the non-executive
directors.
19. Biographies for each of the directors are shown on pages 76 to
77 of the annual report for the year ended 31 December 2021.
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207
SHAREHOLDER INFORMATIONHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 FINANCIAL CALENDAR
LONDON STOCK EXCHANGE ANNOUNCEMENTS
Annual Results 2021:
23 March 2022
Interim Results 2022:
20 September 2022
Pre-close Trading Statement 2022:
end January 2023
ANNUAL REPORT AND FINANCIAL STATEMENTS
Annual Report and Financial Statements 2021
(Available and online):
by 22 April 2022
ANNUAL GENERAL MEETING
26 May 2022
DIVIDENDS PAID ON ORDINARY SHARES
2021Final dividend date (Subject to approval at AGM):
01 June 2022
2022 Interim dividend date (Subject to approval):
14 October 2022
ADVISERS
CHARTERED ACCOUNTANTS AND STATUTORY AUDITORS
Ernst & Young LLP
1 Bridgewater Place
Water Lane
Leeds LS11 5QR
FINANCIAL PR
FTI Consulting
200 Aldersgate
Aldersgate Street
London EC1A 4HD
BANKERS
Barclays Bank PLC
1 St Paul’s Place
121 Norfolk Street
Sheffield S1 2JW
HSBC UK Bank Plc
City Point
29 Kings Street
Leeds LS1 2HL
National Westminster Bank PLC
2 Whitehall Quay
Leeds LS1 4HR
CORPORATE FINANCE
KPMG Corporate Finance
1 Sovereign Square
Sovereign Street
Leeds LS1 4DA
208
REGISTRARS
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol BS13 8AE
SOLICITORS – CORPORATE
DLA Piper UK LLP
1 St Paul’s Place
Sheffield S1 2JX
SOLICITORS – OPERATIONAL
Irwin Mitchell LLP
Riverside East House
2 Millsands
Sheffield S3 8DT
STOCKBROKERS
Numis Securities Limited
Joint Corporate Broker
The London Stock Exchange Building
10 Paternoster Square
London EC4M 7LT
Peel Hunt LLP
Joint Corporate Broker
Moor House
120 London Wall
EC2Y 5ET
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SHAREHOLDER INFORMATIONHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 GROUP CONTACT INFORMATION
LAND PROMOTION
Hallam Land Management Limited
Registered office and Head office
Banner Cross Hall, Ecclesall Road South, Sheffield S11 9PD
t: 0114 255 5444
e: info@hallamland.co.uk
w: hallamland.co.uk
Regional offices
Bristol, Glasgow, Leeds, London and Northampton
PROPERTY INVESTMENT AND DEVELOPMENT
Henry Boot Developments Limited
Registered office and Head office
Banner Cross Hall, Ecclesall Road South, Sheffield S11 9PD
t: 0114 350 4477
e: hello@hbd.co.uk
w: hbd.co.uk
Regional offices
Birmingham, Bristol, Glasgow, Leeds, London and Manchester
Stonebridge Homes Limited
Registered office
Banner Cross Hall, Ecclesall Road South, Sheffield S11 9PD
CONSTRUCTION
Henry Boot Construction Limited
Registered office
Banner Cross Hall, Ecclesall Road South, Sheffield S11 9PD
Head office
Callywhite Lane, Dronfield, Derbyshire S18 2XN
t: 01246 410111
e: hbc@henryboot.co.uk
w: henrybootconstruction.co.uk
Banner Plant Limited
Registered office
Banner Cross Hall, Ecclesall Road South, Sheffield S11 9PD
Head office
Callywhite Lane, Dronfield, Derbyshire, S18 2XS
t: 01246 299400
e: dronfield@bannerplant.co.uk
w: bannerplant.co.uk
Hire centres
Chesterfield, Derby, Dronfield, Leicester, Leeds, Rotherham
and Wakefield
Road Link (A69) Limited
Head office
1 Featherbank Court, Horsforth, Leeds LS18 4QF
Registered office and Head office
Stocksfield Hall, Stocksfield, Northumberland NE43 7TN
t: 0113 357 1100
e: sales@stonebridgehomes.co.uk
w: stonebridgehomes.co.uk
t: 01661 842842
e: enquiries@roadlinka69.co.uk
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SHAREHOLDER INFORMATIONHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 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:
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.
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.
EARNINGS PER SHARE (EPS)
Profit for the period attributable to equity
shareholders divided by the average number
of shares in issue during the period.
ESG
Environmental, Social and Governance
GEARING
Net debt expressed as a percentage of equity
shareholders’ funds.
IAS
International Accounting Standard.
IASB
International Accounting Standards Board.
IFRS
International Financial Reporting Standard as
adopted by the European Union.
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).
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.
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.
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.
RENEWABLE ENERGY
Energy which comes from natural resources,
such as sunlight, wind, rain, tides, waves
and geothermal heat, which are naturally
replenished.
RETAIL PRICE INDEX (RPI)/CONSUMER
PRICE INDEX (CPI)
Monthly inflation indicators based on different
‘baskets’ of products issued by the Office of
National Statistics.
RETURN ON AVERAGE CAPITAL
EMPLOYED (ROCE)
A financial ratio that measures a company’s
profitability and the efficiency with which its
capital is employed.
S106
Section 106 agreements (S106) are private
agreements made between local authorities
and developers. They can be attached to
a planning permission to make acceptable
development which would otherwise be
unacceptable in planning terms.
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.
TCFD
Task Force on Climate-related Financial
Disclosures’ (https://www.fsb-tcfd.org/)
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.
210
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SHAREHOLDER INFORMATIONHenry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2021 IBC
Henry Boot PLC
Registered office:
Banner Cross Hall, Ecclesall Road South
Sheffield, S11 9PD United Kingdom
Registered in England and Wales no. 160996
Tel: 0114 2555444
Email: cosec-ir@henryboot.co.uk
STOCK CODE: BOOT.L
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