Henry Boot PLC
Annual Report and Financial Statements
for the year ended 31 December 2022
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WELCOME TO OUR
ANNUAL REPORT 2022
WE ARE A PURPOSE LED BUSINESS
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.
Empowering and developing our people sits at the core of our purpose. This focus shapes our values and behaviours and
is a key aspect of our strategic objectives. Being purpose-led enables us to create long-term value for our stakeholders
and ultimately achieve our vision.
alues
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Our
Purpose
Our Vis i o n
Our approach to Responsible Business and ESG
Our Responsible Business Strategy sets out medium-term objectives which we aim to achieve by the end of 2025.
It aims to incorporate and align our approach to environmental, social and governance (ESG) with our commercial strategy
to ensure our activity and performance is influenced by our Purpose and Values.
Ultimately, It is essential that responsibility is at the core of our business activity, including our Strategy, Vision and Values.
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INSIDE THIS REPORT
Group at a Glance
Find out more about the Group’s
operations.
Business Model
We have a long-standing and proven
business model which is key to how we
create value for our stakeholders.
Read Group at a Glance
on pages 08 to 11
Read the Business Model
on pages 20 to 23
Read about our
137 history at
www.henryboot.co.uk
Watch the Business
Model Video at
www.henryboot.co.uk
Overview
Highlights
Clear Medium-term Strategic Objectives
2025 Responsible Business Strategy
Chair’s Statement
Group at a Glance
Investment Case
Strategic Value in the Business
Strategic
Chief Executive Officer Update
Business Model
Our Markets
Our Strategy
Our strategy – Performance at a Glance
Responsible Business Strategy
Segmental review
– Land Promotion
– Property Investment and Development
– Construction
Financial Review
Principal Risks and Uncertainties
Our Risks
Section 172 Statement
Our People
TCFD
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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
90
99
– Composition, Success and Evaluation
104
– Nomination Committee Report
– Audit and Risk Committee Report
111
– Responsible Business Committee Report 116
120
– Directors’ Remuneration Report
124
– Remuneration Policy
127
– Annual Report on Remuneration
137
Director’s Report
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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
146
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159
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214
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Our focused Key Markets
The Group operates within three key
markets: Industrial and Logistics,
Residential and Urban Development.
Responsible Business
Our approach to ESG and creating
social value within the communities we
operate in.
Read about our Markets
on pages 24 to 27
Read our Responsible
Business Approach
on pages 32 to 36
View our Online Annual Report at
henryboot.annualreport2022.com
Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022
01
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HIGHLIGHTS
Financial Highlights
Operational highlights
Profit Before Tax
£45.6m
•
•
m
6
.
8
4
£
m
1
.
9
4
£
£279m of sales led by our land promotion, property development
and housebuilding businesses making the most of strong markets
in the first half of the year
Selective approach to acquisitions throughout the year, totalling
£28.4m, including £27m of strategic investment to grow Hallam
Land Management and Stonebridge Homes’ land holdings
Group Revenue
£341.4m
m
1
.
7
9
3
£
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7
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1
ROCE
12.0%
Earnings per
Ordinary Share
25.0p
%
8
.
5
1
%
8
.
4
1
%
9
.
4
0
2
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.
9
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Net Asset Value per
Ordinary Share
295p
p
5
9
2
p
7
6
2
p
9
3
2
p
5
3
2
p
7
2
2
Dividend per
Ordinary Share
6.66p
p
0
.
9
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6
6
.
6
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0
.
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.
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2
• Continued investment in our £240m high-quality committed
development programme where costs are 97% fixed
•
Land Promotion
− A record of 3,869 plots sold (2021: 3,008), driven by a major
disposal at Didcot of 2,170 plots
− 9,431 plots with planning permission (2021: 12,865), leaving
Hallam Land Management well positioned against a backdrop
of an increasingly constrained planning system
• Property Investment & Development
− Significant committed development programme of £240m, with
63% pre-sold or pre-let
− Over 1m sq ft of Industrial & Logistics development underway
(HBD Share: £150m GDV)
− £1.5bn development pipeline (Henry Boot share £1.25bn), 65%
of which is focused on supply-constrained Industrial & Logistics
markets, where occupier demand remains robust
− Well timed sales within the investment portfolio of £29.6m,
at an average 17% premium to the last reported book value,
contributed to total return outperformance of -1.5% versus
CBRE Index of -9.1%
− Stonebridge Homes completed 175 homes (124 private/51
social) (2021: 120), at an average selling price for private homes
of £503k (2021: £509k). Total owned and controlled land
bank is now 1,094 plots (2021: 1,157) with detailed or outline
planning permission on 872 plots (2021: 912)
• Construction
− The construction business performed ahead of budget with
turnover of £101.5m (52% from public sector) out of £128.6m
segment total and has secured 68% of 2023 order book
− Banner Plant has seen record levels of trading activity after
experiencing strong demand from its customers and Road
Link (A69) has performed well as a result of increasing traffic
volumes
• Responsible Business
− Continuing to make good progress against our Responsible
Business Strategy targets and objectives, launched in
January 2022
NOTES:
This report contains the following alternative performance measures
(APM): Underlying profit. Return on Capital Employed. Net Asset Value
(NAV) per share. Net (debt)/cash. Total Accounting Return.
More details can be found on page 49.
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Pictured: Island, Manchester, capable
of delivering 91,000 sq ft of Net Zero
Carbon office space
Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022
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CLEAR MEDIUM-TERM
STRATEGIC OBJECTIVES
Our strategy is guided by medium-term strategic objectives
GROWTH AND DELIVERY
PEOPLE AND SAFETY
To grow capital
employed
Medium-term Target
£500m
Work towards a more coordinated
H&S approach to ensure our
Group is a safe place to work
Medium-term Target
<395 Accident Incident Rate
Return on average capital
employed
Reduce directly controlled
greenhouse gas (GHG) emissions
Read more about our
Strategy on page 28
Medium-term Target
20% reduction
Seek high levels of employee
satisfaction and engagement
Medium-term Target
40 eNPS
Create a high performance
culture led by a range of training
opportunities
Medium-term Target
4 days (per employee)
Medium-term Target
10-15%
Grow Hallam
Land’s plot sales
Medium-term Target
c.3,500 pa
Grow HBD development
completions
Medium-term Target
c.£200m pa
Grow investment
portfolio value
Medium-term Target
£150m
Grow Stonebridge
Homes house sales
Medium-term Target
600 units pa
Focus on our three core long-term markets
The Group operates in three key sustainable markets:
INDUSTRIAL & LOGISTICS
Long-term drivers
Occupier demand remains robust and low vacancy rates
continue to drive rental growth.
RESIDENTIAL
Long-term drivers
Rise in mortgage rates post ‘mini-budget’ have slowed
sales rates but supply of new homes remains low, leaving
the Group in a strong position.
URBAN DEVELOPMENT
Long-term drivers
Dominant centres are still attractive to younger people,
whilst there has been a recovery in regional office take-up
with occupier focus on high quality agile/green buildings.
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Growth
Delivery
Read about our Core Markets
on pages 24 to 27
04
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D
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2025 RESPONSIBLE
BUSINESS STRATEGY
We have always understood and been influenced by the
responsibility we have to create sustainable and long-term value
for the communities and environments we operate in.
ESG factors are becoming an increasingly important focus for investors, customers,
our people, and the general public intensified by 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 our people, partners,
places and planet. It is essential that we ensure responsibility is at the core of our business and values.
The foundations we lay – Phase 1 of our
Responsible Business Strategy (135 Henry Boot).
In March 2021, we launched 135 Henry Boot which was the first phase
of our new Responsible Business Strategy, aligning with the Group’s
135th anniversary and focused on the delivery of five key objectives:
1. To launch our path to net zero carbon (NZC) and build awareness of the
importance of sustainable business practices and the circular economy.
2. To take action to ensure our business is equal,
diverse, inclusive, and accessible.
3. To work with key partners across the built environment sector to create
positive direction and thought on diversity within our industry.
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4. To collaborate with our communities to understand
and respond to their challenges and requirements.
5. To engage all our stakeholders to create social
value and contribute to a fair and just society.
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. The objectives that we have set out in our
Responsible Business Strategy are:
1. 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.
2. To empower and engage our people to deliver long-term meaningful
change and impact for the communities and environments we work in.
3. 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.
PILLAR 1 – OUR PEOPLE
PILLAR 2 – OUR PLACES
ACH
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growth
Safety and the
Environment
People
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 to create long-lasting social value.
PILLAR 3 – OUR PLANET
PILLAR 4 – OUR PARTNERS
We will protect and preserve our planet
by reducing our environment impact,
consuming responsibly and safe-guarding
our environments.
We will collaborate with our partners to
deliver exceptional results, create value
and share knowledge, solutions and
creativity to address key issues.
S
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H
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022
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CHAIR’S
STATEMENT
THE GROUP’S BEST
EVER FINANCIAL
RESULTS
RESULTS
RESULTS
PETER MAWSON
PETER MAWSON
CHAIR
H
enry Boot has benefited from strong
sales activity which helped drive a 30%
increase in profit before tax (PBT) to
£45.6m (December 2021: £35.1m).
In 2022, we completed and exchanged
on £279m of sales within our property
development, strategic land and
housebuilding businesses, which
delivered the Group’s best ever financial results of £56.1m
on an underlying profit basis before revaluation movements
on completed investment property. Whilst we are cautious
with respect to the near-term trading climate as the
economy adjusts to a higher interest rate environment,
I am pleased to report that the Group continues to make
progress against its strategic objectives, and we remain
confident about achieving its medium-term growth and
return targets.
£56.1m
UNDERLYING PROFIT
(2021: £29.3M)
295p
NET ASSET VALUE PER SHARE
(2021: 267P)
Read the
Business
Review
on pages
38 to 44
The Group’s financial position remains robust, with TAR5
at 12.8%, reflecting the growth of NAV per share plus
dividends paid. The business has remained purposefully
selective on new projects investing £28.4m into new
opportunities, with net debt increasing only marginally
to £48.6m (2021: £40.5m) and gearing remaining low at
12.3% (2021: 11.4%), providing flexibility from a position of
strength to react to any opportunities we see in the market.
On the basis of the Group’s strong commercial and financial
performance, the Board proposes to pay a final dividend
of 4.00p per share, which together with the 2.66p interim
dividend, gives a total of 6.66p (2021: 6.05p), an increase
of 10.1% for the year. This will be paid on 2 June 2023 to
shareholders on the register at the close of business on
5 May 2023.
In 2022 we launched our Responsible Business Strategy,
and I am pleased to report we are making good progress
against our targets. Our commitment to addressing climate
06
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O
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Pictured above: The Isaacs Building in Sheffield city
centre, which will provide a new head office space for
Henry Boot in line with the modern and progressive
vision of the company
change and reducing our environmental impact remains
a key focus. We are proud of the progress made to lower
our total direct GHG emissions (Scopes 1 and 2), which
were 12% lower than our 2019 baseline, and the efforts our
people have made to support our targets through how they
work and travel.
Each year we conduct an independent Group Employee
Engagement Survey, through the HIVE HR platform, to gain
feedback from our people so we can continue to improve
our employee experience and provide a positive culture
and workplace environment. The 2022 survey continues
to show very high levels of advocacy, pride and loyalty
in Henry Boot, achieving an increased employee Net
Promoter Score (eNPS) of 39 (2021: 26), which is ranked at
the top of the very good range.
Finally, as the Group continues to grow and evolve as
a diverse and progressive business, we have made the
decision to relocate our Head Office from Banner Cross
Hall to the Isaacs Building in Sheffield city centre this
autumn. Isaacs Building is a seven-storey development
in which we have taken 12,800 sq ft across the top three
floors. The building offers greater collaboration space and
excellent transportation links, as well as supporting our
2030 NZC commitments.
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 such a strong set of results
against a challenging backdrop.
PETER MAWSON
CHAIR
This report contains the following alternative performance
measures (APM): Underlying profit. Return on Capital
Employed. Net Asset Value (NAV) per share. Net (debt)/cash.
Total Accounting Return.
More details can be found on page 49.
Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022
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GROUP AT
A GLANCE
Established in 1886, we are one of the UK’s leading land development, property
investment and development and construction companies.
We manage the combined effort and expertise of six primary subsidiaries, 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 Geographical Reach
National coverage and strategic sites
The head office of the Henry Boot Group is located in Sheffield but
we operate throughout the country. We have nine regional offices
and seven plant hire centres to ensure we are close to our strategic
sites and we are able to maximise our development opportunities.
Key
Head Offices
Regional Offices
Hire Centres
Our Core Values
All our operations are carried out in accordance with our six
key values: Respect, Loyalty, Delivery, Adaptability, Integrity and
Collaboration. These values are imperative to our success, and
our people continue to live by them in both their individual and
collaborative roles.
Our Strategic Priorities
Our strategy is shaped by four key strategic pillars – Safety and
the Environment, People, Growth and Delivery. Being purpose-
led allows us to create long-term value for our stakeholders and
ultimately achieve our vision.
Respect
Loyalty
Delivery
Adaptability
Safety and the
Environment
People
Growth
Delivery
Integrity
Collaboration
Read the Strategy
on pages 28 to 31
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Pictured: Setl, delivering 101 premium
apartments within Birmingham’s
Jewellery Quarter.
Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022
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GROUP AT
A GLANCE
Our Group is over 135 years old and
contains six primary subsidiaries that
operate across our three key markets.
3,869
PLOTS SOLD BY HALLAM
LAND MANAGEMENT
95,704
PLOTS IN THE LAND
PORTFOLIO
£117m
DEVELOPMENT
COMPLETIONS (HBD
SHARE £83M)
175
STONEBRIDGE HOMES
COMPLETIONS
£106m
INVESTMENT PORTFOLIO
(INCLUDING OUR SHARE OF
JOINT VENTURES)
£101.5m
CONSTRUCTION
TURNOVER
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.
LAND PROMOTION
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 and have an outstanding record in
achieving planning permission. Hallam Land has a strategic
land bank focused on higher value locations in the South
and Midlands, and in total has the potential to deliver
around 95,704 residential plots.
Key Markets:
Residential
Industrial & Logistics
Revenue Stream
How Land Promotion is
well-positioned for the long-term
•
•
•
A land bank of c.96,000 plots
A total of 9,431 plots with planning permission, of
which 992 have been exchanged for sale in 2023/24
12,297 plots currently awaiting planning determination
Read more on pages 38 to 39
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PROPERTY INVESTMENT AND DEVELOPMENT
CONSTRUCTION
Henry Boot Developments Limited
HBD (Henry Boot Developments) is a UK based property
developer working with a £1.25bn pipeline. Specialising in
industrial and logistics, urban regeneration and residential
projects, HBD creates profitable and impactful places in the
communities that we work.
Key Markets:
Industrial & Logistics
Residential
Urban Development
Revenue Stream
Stonebridge Homes Limited
Stonebridge Homes is a jointly owned company (controlled
by Henry Boot PLC), operating throughout Yorkshire and
with a well-deserved reputation for building quality, high
specification homes in sought after locations and with
a proven track record in delivering successful housing
schemes.
Over the last ten years, Stonebridge Homes has
successfully delivered over 25 developments. They have
sustainable plans for growth that has seen them launch their
first new development in Barnard Castle in the North East
of England in 2022, and increase the number of outlets in
Yorkshire, whilst beginning to substantially increase delivery
to become a multi-regional business.
Key Markets:
Residential
Revenue Stream
How Property Investment and
Development is well-positioned
for the long-term
• HBD has a committed development programme worth
£395m (£240m HBD share), 63% of which has been
pre-let or pre-sold
•
•
•
A long-term pipeline of £1.25bn, comprising 65%
Industrial & Logistics, 20% Urban Commercial and 15%
Urban Residential
The investment portfolio has been valued at £106m,
with expected growth in the medium-term
Stonebridge Homes has a total land bank of 1,094 units
or based on one-year forward sales, 4.4 years supply
(with 872 plots having planning permission)
Read more on pages 40 to 43
Henry Boot Construction Limited
A regional construction services provider to both public
and private sector customers, delivering sustainable,
customer-focused solutions and building strong partnering
relationships to ensure the best outcomes for all projects.
Key Markets:
Industrial & Logistics
Residential
Urban Development
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.
Road Link (A69) Limited
Road Link has a 30-year contract (three 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.
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How Construction is
well-positioned for the long-term
• Henry Boot Construction’s order book is 68%
secured for 2023
•
•
Three urban development schemes with a total
contract value of £129m are progressing well
94% of secured order book has fixed price orders
placed or contractual inflation clauses
• Well positioned as a partner on 10 public sector
frameworks
Read more on page 44
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INVESTMENT
CASE
FIVE REASONS
TO INVEST
Shareholder returns
The Company has a great track record of creating shareholder value through our strategic
focus of delivering sustainable growth. The Group has achieved a total shareholder return
(TSR) of 10.5% per annum over 20 years, which is significantly ahead of the FTSE All-Share
index of 7.9%.
Clear focus on three key markets driven by positive
long-term trends
Our focus remains committed to achieving long-term growth within our three key markets
– Industrial & Logistics, Residential and Urban Development. There were strong levels of
demand across our key markets throughout the majority of 2022, leaving us confident in our
ability to achieve our medium-term growth and return targets. However, despite witnessing a
marked slowdown in Q4 22, in the early stages of 2023 there have been encouraging signs
that demand is recovering with a resumption of activity in our markets.
Significant embedded value in the business
There is significant embedded value across the Group, with all the opportunities sitting
within the Group’s three key markets. This includes c.96,000 strategic land plots (of which
9,431 have planning permission) and a £1.25bn development pipeline (with 65% focused
on Industrial & Logistics). Adding to this, we have a growing housebuilder, with a land bank
of 1,094 units which equates to 4.4 years supply based on a one year rolling forward sales
forecast for land.
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.
Responsible Business approach
We launched the second phase of our Responsible Business Strategy in January 2022. The
Strategy outlines forward-looking targets aimed at further embedding our ESG approach into
the Group’s commercial and strategic decision making, which we continue to work towards.
12
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OUR
STRENGTHS
Our diversified businesses
Henry Boot operates across the whole
property value chain.
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 manage the combined effort and expertise of six primary
subsidiaries, investing in our future to create long-term value and
robust returns for all our stakeholders and partners.
Our planning and development expertise
The Group has been in business for over 135
years and we are valued for our expertise and
forward-thinking approach.
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.
Our capital structure
We reinvest the cash generated from our
investment portfolio and construction business
into profitable areas of the business.
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. HBD’s property investment
portfolio 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 relationships
We have close relationships with landowners’,
key property advisers to alert us to potential
opportunities; and planning consultants and
legal advisers for knowledge and guidance.
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.
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STRATEGIC VALUE
IN THE BUSINESS
LAND PROMOTION
LAND BANK
Regional breakdown
PERMISSION
10% PLOTS WITH
13% PLOTS IN
PLANNING
77% FUTURE
PLOTS
Residential Land Plots
SCOTLAND
9,630
NORTH MIDLANDS
17,716
SOUTH WEST
21,687
TOTAL PLOTS
95,704
NORTH
12,528
SOUTH MIDLANDS
21,982
SOUTH EAST
5,395
|
SOUTH
6,766
100,000
80,000
60,000
40,000
20,000
0
88,070
92,667
95,704
72,469
77,144
44,051
51,766
64,337
68,543
73,976
11,929
16,489
10,665
14,713
8,312
15,421
11,259
12,865
12,297
9,431
Dec 2018
Dec 2019
Dec 2020
Dec 2021
Dec 2022
Plots with Permisson
Plots in Planning
Future Plots
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PROPERTY INVESTMENT & DEVELOPMENT
Future Development Pipeline
The Group has a total development pipeline
of £1.5bn GDV (HBD Share £1.25bn), with
all of these opportunities sitting within the
Company’s three key markets.
Regional breakdown
Consented
Controlled
30% INDUSTRIAL
AND LOGISTICS:
BIG BOX
35%
INDUSTRIAL AND
LOGISTICS:
MID/SMALL
BOX
15% URBAN
RESIDENTIAL
20% URBAN
COMMERCIAL
65%
INDUSTRIAL AND
LOGISTICS
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STRATEGIC
REPORT
Chief Executive Officer Update
Business Model
Our Markets
Our Strategy
Our strategy – Performance at a Glance
Responsible Business Strategy
Segmental review
– Land Promotion
– Property Investment and Development
– Construction
Financial Review
Principal Risks and Uncertainties
Our Risks
Section 172 Statement
Our People
TCFD
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20
24
28
30
32
38
40
44
45
50
52
58
63
68
The Directors present the Group Strategic Report
for the year ended 31 December 2022.
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 02 to 77
has been approved by the Board and signed on its behalf by
TIM ROBERTS
CHIEF EXECUTIVE OFFICER
12 April 2023
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022
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Pictured: Ique qui iduci officii scidebis molore, aut offici aut
diam asperit, con non cone vent, volum volo moluptat.
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CHIEF EXECUTIVE
OFFICER UPDATE
WE HAVE CONFIDENCE IN
ACHIEVING OUR MEDIUM-TERM
GROWTH AND RETURN TARGETS
TIM ROBERTS
TIM ROBERTS
CHIEF EXECUTIVE OFFICER
CHIEF EXECUTIVE OFFICER
H
enry Boot had a good 2022, delivering our best
ever underlying profit of £56.1m. Even after
allowing for downward valuation movements of
£10.5m in our completed investment property
portfolio as UK commercial property values
declined, our statutory profit before tax still
increased by 30% to £45.6m (2021: £35.1m). This
is a highly satisfactory result amidst the macro
economic headwinds faced in the second half.
The year started off buoyantly with encouraging levels of demand
across our three key markets, which offset cost pressures and
supply constraints, but with energy prices fuelling inflation and rising
interest rates, we saw a marked slowdown in Q4 22. However,
as we enter 2023 there are encouraging signs that the economy
is proving slightly more resilient than expected, and demand is
recovering with a resumption of activity in our markets.
The Group’s results for the year were driven primarily by residential
land sales at Hallam Land Management (HLM), a mix of land sales
and development profits at HBD and house sales at Stonebridge
Homes (SBH). We profitably sold £279m of land, buildings and
houses during the year making the most of strong markets in H1 22
and took a very selective approach to acquisitions totalling £28.4m,
which included growing HLM and SBH’s land holdings.
On a statutory basis NAV increased by 11% to £395m, or excluding
the pension surplus was up by 5% to £388m. Capital employed
increased by 6.2% over the year to £399m, consistent with our
medium-term target of £500m. Profitable sales also helped us to
effectively manage our gearing, which at 12.3%, remains at the
bottom of our 10-20% target range. The strength of our balance
sheet, plus recently refreshed banking facilities of £105m, which
are secured to 2025, means we are well positioned for a period
of continued uncertainty ahead. As was the case when we came
out of COVID, we have the capacity to buy land, maintain and
potentially expand the committed development programme,
and continue to grow our JV housebuilder, which puts us in a
competitive position to act opportunistically.
With the disposal of 3,869 plots, HLM had its best ever year in
terms of volume, making the most of a buoyant land market in H1
22, primarily due to a major disposal of 2,170 plots at Didcot. This
project is a great example of HLM’s depth of expertise in dealing with
increasingly complex planning matters, and not only will it deliver
much needed housing supply, but it also includes 80 acres of open
space alongside extensive green infrastructure and cycle networks.
HLM grew its land bank to c.96,000 plots (2021: c.93,000) during
the period, of which 9,431 plots have planning permission. I am
increasingly convinced that the UK planning system is in need of
urgent reform. The delays and complexities can no longer be blamed
on COVID. Whilst we would derive greatest satisfaction from a more
efficient system on account of the benefits this would bring local
communities, the challenges of the current situation mean that the land
we successfully promote and the expertise we bring in navigating the
planning system remain increasingly in demand.
Towards the end of 2022, our major land customers, the national
housebuilders, saw a well reported slowdown in house sales and
consequently became more selective on land acquisitions. Early
signs are that confidence is returning and, together with 992 plots
(2021: 1,880 plots) unconditionally exchanged at year-end, we
anticipate a reasonable year ahead in terms of land sales.
HBD continues to grow completed development activities with a
Gross Development Value (GDV) of £117m (HBD share: £83m) (2021:
£303m GDV, HBD share: £68m) of which 92% has been let or sold.
The committed programme now totals £395m (HBD share: £240m
GDV), 63% of which is currently pre-let or pre-sold. Whilst there
are signs that construction cost inflation is slowing, we continue to
actively manage risk with 97% of the development costs fixed.
Although investment markets have adjusted rapidly, our underlying
occupational markets remain in fundamentally good shape.
Structural demand persists for Industrial & Logistics (I&L) space,
with national take up in 2022 a very healthy 65.8m sq ft (according
to Gerald Eve), which, whilst down on the record high in 2021, was
still the second most active year on record with rents increasing
by 10.3% during the year. The build to rent (BtR) occupational
market remains very buoyant with residential rents growing by
12.1% according to Zoopla in 2022. On offices there is a clear
trend of people returning to our major cities and the workplace,
with particularly strong demand for buildings that offer strong
environmental credentials that assist occupiers in achieving their
own NZC goals.
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The part of the committed programme not pre-let or pre-sold is
primarily in three high-quality schemes where we remain confident
of demand:
•
•
•
In Rainham, we have recently committed along with our JV
partner, Barings, (HBD share: £24m GDV) to a 380,000 sq ft
speculative I&L scheme. Whilst marketing has not yet begun,
this NZC urban logistics development serving Greater London
is already experiencing strong occupier interest.
In the centre of Birmingham, we are part way through
construction of 101 premium apartments (HBD share: £32m
GDV) which we expect to launch successfully for sale in the
summer of this year.
Finally, in Manchester city centre in partnership with the Greater
Manchester Pension Fund, we are building 91,000 sq ft of
prime, NZC offices (HBD share: £33m). With the scheme
responding to several identified office requirements, we expect
good occupier interest.
As we make progress on letting or pre-selling these schemes,
we have a number of high-quality I&L and BtR projects within our
£1.25bn development pipeline that we can bring forward at the
appropriate time.
As we highlighted at the time of the interim results, we tactically
identified several properties for sale and I am pleased to report
we sold three properties for a total of £29.6m, a 17% premium
to the last reported book value. As a result, against a backdrop
of falling values, we have delivered relative out performance on
our investment portfolio (current value including our share of JVs
£106m) with a total return of -1.5 % versus the CBRE UK index of
-9.1%. Over the next few years, through a combination of retaining
completed developments and acquisitions, we will look to build the
portfolio up to our strategic target of £150m.
We made further progress with our JV housebuilder Stonebridge
Homes (SBH), with a 46% increase in the number of homes
delivered to 175 completions (2021: 120). Whilst supply chain
issues at the tail end of the year meant we did not reach our target
of delivering 200 homes, we marginally beat our profit expectations.
This was driven by our ability to achieve sales prices that were over
10% ahead of budget, which meant cost inflation running at 9%
was absorbed. With a target of 250 completions in 2023, and 139
homes already forward sold, we remain firmly on track to continue
scaling up and hit our ambitious medium-term strategic target of
600 completions per annum.
The Construction segment has done remarkably well to trade ahead
of our expectations. Henry Boot Construction (HBC) has made
progress on all its projects despite dealing with very challenging
supply and labour restrictions, although there are some signs that
these restrictions and cost inflation are easing. HBC begins the year
with 68% of the 2023 order book secured and a healthy pipeline of
opportunities. Banner Plant (BP) has seen record levels of trading
activity and is successfully growing its customer base.
Against a challenging near-term backdrop, we expect 2023 profits
to be more subdued than 2022, but we will remain active, pushing
ahead with our strategic and growth ambitions from a position of
strength, further details of which are covered in the strategy and
outlook sections below.
Outlook
Whilst the immediate outlook is uncertain, a number of leading
indicators suggest that the economic slowdown will not be as
severe as forecasts in the final quarter of last year predicted. It looks
increasingly like interest rates are close to the so called ‘pivot’, we
are seeing early signs that supply restrictions are lifting and with that
some prospect of cost pressures easing.
There are early signs that our markets are improving. Occupier
demand for I&L has remained resilient, and whilst yields moved out
quickly during the second half of 2022, there are investors already
looking to buy, tempted by the strong fundamentals of the market.
Likewise, whilst data is available only for the first two months,
housebuilders generally and SBH specifically, have seen a partial
recovery in home buyer interest this year from the lows experienced
in the final quarter of 2022. The march of the BtR sector, both in
terms of customer and investor demand, continues.
So, for Henry Boot, we remain focused on building out our high-
quality development programme. As we increase forward sales
and pre-lettings above the present 63%, we will selectively look to
replenish, and potentially expand, committed development, primarily
by drawing down schemes which are ready to go from our £1.25bn
development pipeline. With an ever restrictive planning environment
demand for our well located consented plots will come back as
the UK remains critically short of housing. In the meantime, we are
partially insulated by the 992 land promotion plots that are already
unconditionally exchanged and we start the year with 56% of SBH’s
250 target completions for 2023 already forward sold.
We will continue to work towards a more progressive, diverse and
responsible business by meeting targets outlined in our Responsible
Business Strategy, and investing in key areas such as marketing,
customer relations and business improvement processes, including
technology. At the same time, we will continue to nurture the great
culture within Henry Boot and engage with people who, despite
the ups and downs of the last few years have remained energetic
and fully committed. Moreover, we have confidence in the long-
term fundamentals of our markets, business model and have the
operational and financial resources to continue to meet our strategic
growth and return objectives.
TIM ROBERTS
CHIEF EXECUTIVE OFFICER
This report contains the following alternative performance measures
(APM): Underlying profit. Return on Capital Employed. Net Asset
Value (NAV) per share. Net (debt)/cash. Total Accounting Return.
More details can be found on page 49.
Key Highlights
95,704
RESIDENTIAL
LAND PLOTS
(2021: 92,667)
£1.25bn
HBD DEVELOPMENT
PIPELINE GDV
(2021: £1.1BN)
£106m
INVESTMENT
PORTFOLIO VALUE
(2021: £126M)
1,094 units
STONEBRIDGE HOMES
TOTAL LAND BANK
(2021: 1,157)
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BUSINESS
MODEL
Our business model is based on transforming land, property and development into sustainable, long-term value.
Key resources and relationships
Responsible business approach (ESG)
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.
Read more on pages 63 to 67
The ‘Henry Boot Way’
In our approach to responsibility, we are committed to doing
everything possible to collaborate with and support our people,
partners, places and planet as we fulfil our corporate purpose. In
2017 we undertook our people-led One Henry Boot Project driven
by the ‘Henry Boot Way’ of working, to define our Purpose, Vision
and Values. The ‘Henry Boot Way’ continues to play a crucial role in
our business and long-term ESG approach.
Portfolio & land bank
HBD have a £1.25bn pipeline, comprising 65% Industrial &
Logistics, 20% Urban Commercial and 15% Urban Development,
whilst Hallam Land Management have increased the land bank to
95,704 plots in the portfolio.
Read more on pages 14 to 15
Group strategy framework
(Focus of 3 Core Markets)
The Group provides reliable earnings with a clear focus on our
three key markets – Industrial & Logistics, Residential and Urban
Development – driven by positive long-term structural trends.
Read more on pages 28 to 29
Supply chain
Our relationships with our supply chain 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.
Read more on page 67
Effective governance
We established our Responsible Business Committee to provide
Board level oversight and scrutiny of the Group’s responsible
business performance. Board and Executive Committee members
were appointed sponsors of our responsible business initiatives
and significant engagement was undertaken with our people-led
working groups.
Read more on pages 116 to 119
2025 Responsible Business Strategy
Our Responsible Business Strategy sets out medium-term
objectives which we aim to achieve by the end of 2025. The
Strategy is built on four key pillars - Our People, Our Places, Our
Planet and Our Partners. It will drive us to deliver our strategic
objectives and targets and our activity and performance will
align with our Purpose, Values, and selected UN Sustainable
Development Goals (SDGs).
Read more on pages 32 to 36
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.
Read more on page 36
Our long-term commitments to 2030
The 2025 Responsible Business Strategy will support us in reaching
our NZC target by 2030. We will continue to collaborate with our
people and partners with passion and ingenuity to create long-
lasting and genuine value and impact for all the people we work
with and the places we work in.
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TRACK RECORD OF GENERATING
ATTRACTIVE RETURNS
Key
Land Promotion
Property Investment
and Development
Land Promotion
Construction
Sale of
land
Sale of
property
Identify
opportunities
and acquire
land
Obtain
planning
permission
Development
of site
Capital structure and financial strength is
result of our operating model
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.
Cyclical Revenue: Sale of land and property development
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.
Group operating model
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.
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.
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.
A. 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.
B. Investment portfolio
A 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 £106m and generates a sizeable amount of
rental income each year.
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.
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TRACK RECORD OF GENERATING
ATTRACTIVE RETURNS
Sale of
property
Construction
Development
of site
Investment
portfolio
Our expertise
Land Promotion
Businesses: Hallam Land Management
•
•
•
•
Identifying land with future potential
The use of agency and option agreements, as opposed
to buying all land outright, means less expenditure on
each asset, allowing us to maximise the number of land
opportunities that we are involved in at any one time.
As investment is spread over many assets, this reduces
the overall risk of involvement in the planning process
and maximises the likelihood of making a return on the
capital invested.
Taking land through the complexities of the
planning system
Property Investment & Development
Businesses: Henry Boot Developments
and Stonebridge Homes
•
Acquiring and developing brownfield land or under
performing property assets
• Operating in diverse sectors to maximise development
opportunities
• Developing partnership arrangements
•
Ability to self fund or source prefunding opens up
opportunities. The businesses can commit to long-term
projects, such as complex multi-site regeneration
schemes.
Construction
Businesses: Henry Boot Construction,
Banner Plant and Road Link (A69)
•
Project delivery in both the public and private sector,
on-time and within budget
• Creating trusted relationships and repeat business
•
Supplying a wide range of plant equipment
Group
•
As a result of our financial structure, we can invest in the
more profitable areas of the business (strategic land and
property development) to maximise the value generated
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O P E N
for m ore infor m atio n
BUSINESS
MODEL
The impact we’re making
Value generation for stakeholders
UN SDGs
When creating our Responsible Business Strategy, we
engaged our stakeholders to understand which of the UN
SDGs they felt our business could most positively impact.
Based on the feedback received, the Responsible Business
Committee selected the below SDGs as those best aligned
with our corporate purpose.
Read more on pages 32 to 36
Society
All of the targets contained within the Responsible
Business Strategy have been influenced and shaped
through consultation with our people, our commercial and
community partners, our senior management and Board,
and our professional advisers to ensure that they are
robust, ambitious (whilst also achievable) and will create the
impact we aspire to achieve.
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.
23
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OUR
MARKETS
Key long-term structural trends affecting our business
URBANISATION
According to the UN, population will
have grown to approximately 71.7m
by 2050 with 90% of the population
living in urban areas.
Given expected population increases over the long-term major
cities will be a key driver of UK growth with a corresponding
increase in demand for more housing and high-quality office
space. 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.
TECHNOLOGY
Advances in technology will
continue to disrupt how we live,
work, shop and communicate,
leading to a greater requirement to
deliver services that adapt to the
emergence of new technology, but
also the environment in which they
do it in.
With continued demand for warehouse space from third-
party logistics operators, online retailers and manufacturers,
the importance of property technology has increased
for data and analytics as well as to help automate and
streamline tasks.
DEMOGRAPHICS
UK’s population continues to grow,
albeit at a slower rate than previously,
with people living longer and low
birth rates.
However, the most significant change in the working age
population over the next 20 years is for 20 to 30-year olds and
40 to 50-year olds who are expected to increase by 4.1% and
4.3% respectively. Demographics therefore provide positive
support for senior living and BtR aimed at young professionals.
ENVIRONMENT
The built environment contributes
an estimated 25% of the UK’s
carbon emissions, which increases
the pressure on businesses in our
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.
24
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INDUSTRIAL
AND LOGISTICS
Market overview
According to Gerald Eve UK industrial and logistics space take-up totalled 65.8 million sq ft in 2022, which whilst down
from the previous record high of 2021, was still the second most active year on record. The CBRE Monthly Index showed
strong industrial rental value growth of 10.3% last year, ahead of the 9.0% increase in 2021. Occupier demand continues
to be from a variety of sectors with ongoing supply chain disruption likely to accelerate the trend of near–shoring and
reshoring as many companies seek to diversify points of production and to localise their supply chain.
Whilst e-commerce remains a structural driver of demand for logistics space it is certainly not immune from a wider economic slowdown.
The decline in online retail sales during 2022, as many consumers switched back to pre-pandemic shopping patterns, has also
corresponded with a reduction in take-up from internet retailers.
What does Henry Boot have to offer:
• HBD has committed to Momentum, Rainham (HBD share:
£24m GDV) a 380,000 sq ft speculative I&L development
located close to Central London. The scheme will target
BREEAM Excellent, an EPC A+ rating and all the units will be
100% electric.
•
•
• We also secured a pre-let with DPD and DHL at Preston
East (HBD share: £15m GDV) in H2 22, the 122,000 sq ft I&L
development was subsequently pre-sold to Titan Investments,
at 10% above book value, with completion expected in Q4 23.
In total, the Group is committed to develop over 1 million sq
ft of industrial and logistic space, with a GDV value of £261m
GDV (HBD Share £150m).
Industrial and logistics represents 65% of Henry Boot’s £1.25bn
development pipeline with the potential to deliver approximately
7 million sq ft of space.
Warehouse take up and availability
Industrial rent
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80
60
40
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10
8
6
4
2
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2014
2015
2016
2017
2018
2019
2020
2021
2022
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Take-up m sq ft (LHS)
Vacancy rate % (RHS)
Gerald Eve Prime Logistics rents
CBRE All industrial rents
Source: Gerald Eve
Source: Gerald Eve & CBRE
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OUR
MARKETS
RESIDENTIAL
Market overview
The residential market slowed during the second half of 2022 as homebuyer demand was impacted by higher mortgage
rates following the sharp increases in interest rates. Whilst new home completions increased in 2022 they remain 3%
below the COVID level and at 205,000 dwellings continue to be way behind Government targets of 300,000 new homes a
year, which is primarily due to delays within the planning system.
According to Savills Research, following growth during the first nine months of 2022 UK greenfield values fell by 2.2% in the final quarter as
land transactions slowed significantly due to many housebuilders pausing buying in response to slowing sales rates. However, despite the
majority of national housebuilders slowing their land buying, there remains selective interest in prime sites with planning, with signs that some
confidence is returning following the significant disruption caused by the ‘mini-budget’ in September 2022.
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 that has the potential to
deliver c.96,000 residential plots, of which 9,431 plots have
planning permission.
•
Stonebridge Homes, the Group’s jointly owned housebuilder,
offers further residential capabilities, with a total land bank of
1,094 plots of which 872 plots have either detailed, or outline
planning consent.
Land values and planning consents
UK housing completions
150
140
130
120
110
100
90
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
350
250
325
300
275
250
225
200
175
150
200
150
100
50
0
5
0
0
2
6
0
0
2
7
0
0
2
8
0
0
2
9
0
0
2
0
1
0
2
1
1
0
2
2
1
0
2
3
1
0
2
4
1
0
2
5
1
0
2
6
1
0
2
7
1
0
2
8
1
0
2
9
1
0
2
0
2
0
2
1
2
0
2
2
2
0
2
Savills UK greenfield development land index (LHS)
Housing completions 000’s
England planning consents – ‘000s (RHS)
Source: Savills
Source: Office for National Statistics
26
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URBAN
DEVELOPMENT
Market overview
The Urban Development market continues to improve since being impacted by COVID, with strong signs that major
UK regional cities are bouncing back, with an increase in mobility. There is a continued belief that by 2050, 90% of the
population will live in urban areas, with people choosing to live in prime urban areas, not only for work reasons but for
better lifestyle options in general.
There has been a strong recovery in total construction activity in 2022 with annual output increasing by 5.6%. The BtR occupational
market remains very buoyant with residential rents growing by 12.1% according to Zoopla in 2022. Office development in major cities has
also shown improvement, with a clear trend of people returning to the workplace, with occupiers showing particularly strong demand for
buildings that offer strong environmental credentials to achieving their own NZC goals.
What does Henry Boot have to offer:
•
The Group has a strong presence in key cites identified as
target areas for BtR schemes.
•
At Neighbourhood, Birmingham, a £117m 414-unit BtR
development, secured planning in March 2023. The scheme is
situated on a 2.6-acre site located within the Jewellery Quarter
area of Birmingham, in a prime location in close proximity to the
city centre.
• HBD and Greater Manchester Pension Fund are working
in a joint venture to deliver a 91,000 sq ft of NZC offices in
Manchester City Centre. The building is targeting the highest
sustainability certifications, including an EPC ‘A’ rating,
BREEAM Excellent and a 5.5 star carbon NABERS rating.
• Henry Boot Construction is currently working on three urban
development schemes in both the city centre of Sheffield and
York, at a combined total contract value of £129m.
Rental growth
Construction output
150
140
130
120
110
100
90
140
130
120
110
100
90
80
5
0
0
2
6
0
0
2
7
0
0
2
8
0
0
2
9
0
0
2
0
1
0
2
1
1
0
2
2
1
0
2
3
1
0
2
4
1
0
2
5
1
0
2
6
1
0
2
7
1
0
2
8
1
0
2
9
1
0
2
0
2
0
2
1
2
0
2
2
2
0
2
England Private Housing
UK Commercial Property
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Source: Office for National Statistics and CBRE
Source: Office for National Statistics
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27
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OUR
STRATEGY
Group Strategy Performance
The Group set a medium-term strategy in 2021 to grow the size of the business by
increasing capital employed by 40% focusing on its three key markets: I&L, Residential
and Urban Development.
KEY STRATEGIC PILLARS
OUR STRATEGY IS
SHAPED BY FOUR
KEY STRATEGIC
PILLARS AND
FOCUSES ON
THREE LONG
TERM MARKETS
SAFETY AND
ENVIRONMENT
GROWTH
DELIVERY
PEOPLE
We aim to be the
safest place to work
in our markets and
be respectful to our
environment
Grow PBT by
increasing 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 65% COMMITTED DEVELOPMENT
PROGRAMME PRE-LET/PRE-SOLD
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Group overall strategy
Strategic
Priorities
Aims
We aim to be the safest place to work in our markets
and be respectful to our environment
Safety and
Environment
Growth
Delivery
Grow PBT by increasing capital employed to £500m
by investing in our three key markets
Adopt emerging working practices, investing and
collaborating to deliver our operational targets
People
Open, progressive, high performing business governed
by clear objectives which engage diverse range
of talent
Performance
•
•
The Group’s Accident Incident Rate decreased to
202 per 100,000 employees, which is a result of
reaffirming our robust management systems and
commitment to on-site training.
Launched our Responsible Business Strategy in
2022, which included our NZC framework and
target to be NZC by 2030.
• Capital employed increased by 6% to £399m.
•
•
•
The Group’s land bank grew to 95,704 plots,
with 6,906 plots added in the year.
Increased committed programme to £240m.
Sold 3,869 plots at an average gross profit of
£6.1k per plot.
• Completed £83m of property developments.
• Completed 175 homes, at an average selling price
for private homes of £503k.
•
2023 construction order book 68% secured.
•
•
•
Significantly increased our eNPS score to 39,
ranked at the top of the very good range.
Learning intervention days increased to 3.7 days
per employee.
Female representation across our workforce
increased to 25%.
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OUR STRATEGY –
PERFORMANCE AT A GLANCE
CLEAR FOCUS
Growth and Delivery Strategic Pillars
Objective
and Medium-
term Target
KPI
To grow capital
employed to £500m
Capital
Employed
Medium-term
Target
£500m
19
20
21
22
£352m
£365m
£376m
£399m
To generate a ROCE
ROCE
of 10–15%
Medium-term
Target
10–15%
19
20
21
22
14.8%
4.9%
9.6%
12%
Grow Hallam Land’s
plot sales
Plot Sales
Medium-term
Target
c.3,500 pa
Grow HBD
development
completions
Medium-term
Target
c.£200m
19
20
21
22
3,427
2,000
3,008
3,869
Development
Completions
19
£404m
20
£55m
21
£69m
22
£83m
Grow investment
portfolio value
Investment
Portfolio
Medium-term
Target
£150m
19
20
21
22
£70m
£92m
£126m
£106m
Grow Stonebridge
Homes house sales
Unit
Completions
Medium-term
Target
c.600 units
Henry Boot
Construction’s order
book secured
Medium-term
Target
>65%
19
20
21
22
115
120
159
175
Order Book Secured
19
20
21
22
95%
80%
100%
68%
Medium-term
performance
Commentary
Aim for 2023
On track to grow
capital employed to
over £500m
To maintain capital
employed growth to
over £400m
Link to Strategic
Pillars and Group Risk
Strategic Pillar
Risks
3
5
We maintain our aim
to be within the target
range
To be within stated
target range
Strategic Pillar
Risks
4
8
9 10 11 12
To exceed current five
year average
Strategic Pillars
Exceeded the strategic
target of 3,500 per
annum, forward sales
of 992 plots
Increased our future
pipeline to £1.25bn,
we are on course to
complete on average
£200m per annum
To grow HBD
share of completed
developments, with
committed programme
of £240m for 2023
Risks
3
4
5
11 12 13
Strategic Pillars
Risks
3
4
5
11 12 13
Value reduced primarily
due to nearly £30m
of accretive sales
with scope to rebuild
portfolio from retained
developments
Completions below our
target of 200 but strong
sales prices mean the
business performed
marginally ahead
of budget
Secured above target
range for 2023 order
book, with public
sector work remaining
a key focus
To maintain progress
towards stated target
Strategic Pillars
Risks
3
4
5
11 12 13
To increase unit
completions to 250
Strategic Pillars
Risks
3
4
5
11 12 13
To secure 65%of 2024
order book by end
of year
Strategic Pillar
Risks
3
4
8 13
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RIGHT APPROACH
People and Safety Strategic Pillars
Objective
and Medium-
term Target
Work towards a more
coordinated H&S
approach to ensure our
Group is a safe place
to work
KPI
Accident
Incident Rate
233
19
20
21
22 202
466
630
Medium-term
performance
Commentary
The Group’s AIR
reduced in 2022 due
to robust management
systems, and an
increased focus on
training
Aim for 2023
To maintain our robust
health & safety approach
and procedures
Link to Strategic
Pillars and Group Risk
Strategic Pillar
Risks
4
8
9 10 11 12
Medium-term
Target
>395
Reduce directly
controlled GHG
emissions
Medium-term
Target
20% reduction
GHG Emission CO2e
19
20
21
22
3,313
2,562
2,706
2,930
Scopes 1 and 2 GHG
emissions reduced by
12% against our 2019
baseline
To empower our
people and partners to
share knowledge and
solutions to reduce GHG
emissions
Strategic Pillar
Risks
4
8
9 10 11 12
Seek high levels of
employee satisfaction
and engagement
Employee Net
Promoter Score (eNPS)
Medium-term
Target
40 (eNPS)
19
20
21
22
40 (eNPS)
46 (eNPS)
26 (eNPS)
39 (eNPS)
Create a high
performance culture
led by a range of
training opportunities
L&D Interventions
Delivered
(per employee)
Medium-term
Target
4 days (per employee)
19
20
21
22
3.3 days
2.8 days
2.5 days
3.7 days
After addressing
feedback from the
2021 survey via the
Group Employee
Forum, we saw a
significant increase in
our eNPS score
As the Group evolved
its training approach
to offer both in-person
and virtual sessions, we
increased the number
of training interventions
To continue engaging
with the Group Employee
Forum and address
feedback which has
arisen from the survey
To implement a wide
range of training
opportunities to support
a high performance
culture
Strategic Pillar
Risks
4
8
9 10 11 12
Strategic Pillar
Risks
4
8
9 10 11 12
Group strategic priorities
Safety and the
Environment
People
Growth
Delivery
Risks
1 Safety
8 Construction contracts
2 Environmental & climate change
9 Property assets
3 Economic
4 People & culture
5 Funding
6 Cyber
7 Pensions
10 Property development
11 Land sourcing
12 Land demand
13 Political
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RESPONSIBLE BUSINESS
STRATEGY
Our Responsible Business Strategy sets out medium-term objectives which we aim to achieve
by the end of 2025. It aims to incorporate and align our approach to ESG with our commercial
strategy, and to ensure our activity and performance is influenced by our Purpose and Values.
Strategy Structure – how it all fits together
Our Purpose
is to empower and develop our people to create
long-term value and sustainable growth for our stakeholders.
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.
Pillar 1 – Our People
Pillar 2 – Our Places
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
We will protect and preserve our planet by reducing our environmental impact,
consuming responsibly and safeguarding our environments.
Pillar 4 – Our Partners
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.
Our Strategy is aligned to the UN SDGs that we and
our stakeholders feel our business can most positively impact
Responsible Business Strategy – 2022 Progress Report
The tables on the following pages detail the progress we have made against the four strategic pillars of the Strategy in 2022.
For more information and case studies please review our Responsible Business Strategy – 2022 Progress Report
32
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Our People
Our people are our greatest asset and are instrumental in the delivery of our Responsible Business Strategy. As we collaborate with them
to create value for our communities and environments, we will invest in them and further develop a workplace culture that encourages
openness, collaboration and fairness. We will proactively support their health and wellbeing and be innovative to ensure that our workplace
is diverse, accessible, and allows all our people to thrive.
Objectives
2025 Target
2022 Performance
Aligned
UN SDGs
Material
Issues
OUR PEOPLE
Promoting
positive health
and wellbeing
for our
people
Develop and deliver a Group-wide
Health and Wellbeing Strategy with
a range of activities and resources
available to all.
Creating
an equal,
inclusive
and diverse
workplace
Encourage greater levels of gender
diversity in our workforce and
increase gender representation in
management positions with 30%
of workforce and line managers
being female.
Our new Health and Wellbeing Strategy has been
developed throughout 2022 in collaboration with
our senior management, Group Employee Forum,
colleagues across the Group, and commercial and
community partners. This Strategy launched in early
2023 with a delivery plan supporting implementation.
We have made strong progress and female
representation of our overall workforce is 25% and of
our management is 24%
(S/R)
Reduce our gender pay gap
to 20%.
Our 2022 gender pay gap (when measured as a
median) was 21.43%.
(S/R)
Begin reporting on our ethnicity
pay gap and set a reduction
target to encourage greater ethnic
diversity in our workforce.
We have engaged commercial partners to review
ethnic pay gap reporting and are undertaking the
required work to begin reporting in 2024.
Deliver equality, diversity and
inclusion (EDI) training to 100% of
our people.
We have delivered EDI training to 79% of our
workforce and continue to engage our people
regularly on this issue.
Introduce best practice recruitment
processes and reverse mentoring
programmes, combined with an
annual benchmarking and auditing
process to ensure progress against
targets.
Our EDI Steering Group and HR team are
collaborating to introduce new recruitment processes
and a reverse mentoring programme in 2023.
We continually review our workforce data and are
introducing measures to ensure it is robust and
accurate to establish further targets and introduce
new diversity initiatives.
Engaging and
empowering
our people
Introduce ESG related targets
for all senior management
remuneration.
All members of our Executive Committee have ESG
related targets incorporated into their performance
review.
Ensure that all Group Pension
Schemes incorporate ESG factors
in investment decisions and that
our people are well informed about
their investment choices.
ISIO, our pension scheme manager, conduct
thorough reviews of ESG capabilities and report
performance against their ESG Manager Review
Framework. ISIO’s financial coaching sessions
provided for our people include advice about
pension investments and the Group regularly shares
information about pensions with employees.
(S/R) This data is inclusive of Stonebridge Homes and Road Link (A69)
• Employee
health and
wellbeing
• EDI
• Education
engagement
• Employee
health and
wellbeing
• EDI
• Employee
health and
wellbeing
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RESPONSIBLE BUSINESS
STRATEGY
Our Places
Investing in, and collaborating with, the communities in which we work is critical to ensure that we create long term meaningful social value.
We are committed to supporting thriving local communities, to working in partnership with community organisations, and to harness the
skills and passion of our people to improving people’s lives. We keenly work with education partners to create excitement about our industry
and inspire learners to consider a career with us. We believe that this approach will support our long term success and ensure that we
remain a partner of choice for all those we work alongside.
Objectives
2025 Target
2022 Performance
Aligned
UN SDGs
Material
Issues
• Community
engagement
• Employee
health and
wellbeing
• Community
engagement
• Employee
health and
wellbeing
• Education
engagement
• Employee
health and
wellbeing
OUR PLACES
Developing
collaborative
charity
partnerships
Contribute £1,000,000 of financial
(and equivalent) value to our
charitable partners* (including
donations of funds, resources,
sponsorship and pro-bono support).
In 2022 we contributed a total of £291,692 to a
range of our charitable and community partners
including financial donations and sponsorship,
employee fundraising, and expertise, time and
resources provided pro bono.
Develop long-term strategic
partnerships both nationally
and regionally, and align all
Group charitable giving with our
Charitable Giving Pillars – for
maximum impact.
In 2022 we developed the relationship with our
Group Charity Partner Place2Be and contributed
approximately £20,000 to support their vital work. We
also continued to develop existing and new strategic
charity partnerships and aligned charitable donations
with our Charitable Giving Pillars.
Collaborating
with our
communities
Contribute 7,500 volunteering
hours across our Group to a
range of community, charity and
education projects.
In 2022, we contributed over 2,250 volunteering
hours (equivalent to 281 working days) to a wide
range of charitable, community, and education
partners.
Engaging
learners
Engage 5,000 learners through
careers initiatives, curriculum-
focused activity, work experience,
and mentoring.
In 2022, we engaged over 2,500 learners through
a wide range of careers education activity and
initiatives including work experience, site visits,
career sessions and mentoring.
Offer 200 entry level employment
opportunities or work experience
placements with a focus on those
who traditionally struggle to access
opportunities.
In 2022, we offered 30 work experience placements
and 21 entry level employment positions. We
engaged a range of education partners to
share information about entry routes (including
apprenticeships) with learners who traditionally
struggle to access careers education.
Develop and deliver an Education
Engagement Strategy to
consolidate and enhance our
support and collaboration with
education partners, to create
significant impact for learners,
and to incorporate social and
environmental responsibility into
our education programmes.
In 2022 we undertook extensive engagement with
education and community partners to develop an
understanding of their needs and aspirations across
the areas in which we work.
Additional engagement was undertaken with our
people to review the education support currently
provided. The feedback and learnings from this
engagement will be incorporated into our Education
Engagement Strategy which will be launched in 2023.
*Charitable partners includes registered charities, CICs, community organisations, and education partners.
(S/R) This data is inclusive of Stonebridge Homes and Road Link (A69)
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Our Planet
We recognise the increasing risk that climate change poses and are steadfast in our commitment to protect our planet for future
generations. We have a clear target of achieving NZC for our direct GHG emissions by 2030. We are taking a holistic approach to tackling
climate change through clear ambitions to protect natural environments, reduce resource use and waste creation, and encouraging
behaviour change. Our targets below (unless stated otherwise) use a baseline year of 2019 for reporting progress.
Objectives
2025 Target
2022 Performance
Aligned
UN SDGs
Material
Issues
OUR PLANET
Reducing
GHG
emissions
Absolute target to reduce Scope 1
and 2 GHG emissions by over 20%
to support reaching NZC by 2030.
Our Scope 1 and 2 GHG emissions in 2022 were 2,930
tonnes (a 12% reduction against our 2019 baseline
which was 3,313 tonnes).
• NZC
Whilst this reduction is positive, our direct GHG emissions
rose moderately in 2022 due to increased productivity.
We remain committed to utilising innovative solutions
and measures to ensure our GHG emissions fall and we
achieve our medium term targets.
(S/R)
In 2022, a fleet project team was established to deliver
an infrastructure programme to service our future electric
fleet. Two electric vans were ordered and will be piloted to
identify any challenges ahead of additional vehicles being
sourced to achieve our target.
Our HGV fleet is close to full EURO 6 compliance and
monitoring of the developments in sustainable HGVs is
regularly undertaken.
Henry Boot Construction trialled a range of sustainable
generator solutions across key sites throughout 2022
in order to identify opportunities to reduce reliance on
traditional generators.
Energy Impact Limited, a specialist third party, were
engaged and have completed audits of our directly
controlled offices and depots. Short term recommendations
are currently being implemented. Employee-led
sustainability audits were also undertaken to identify further
GHG emissions and waste reduction opportunities.
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).
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.
Consuming
resources
responsibly
Reduce non-sustainable business
mileage by 20%.
Business mileage in 2022 reduced by 34% from our
2019 baseline.
Use biodiesel as we electrify
our fleet.
Due to the volatility of the market for HVO fuel and the
complexity around it’s credibility, we are not currently
utilising biodiesel as a GHG emissions reduction measure.
Cut avoidable waste to 99% for our
construction sites (100% by 2030).
In 2022, 99% of avoidable waste reduction was
achieved on Henry Boot Construction’s sites.
Reduce consumption of avoidable
plastic by 50% and undertake Group-
wide waste and water monitoring to
establish reduction targets.
A programme to monitor and reduce avoidable plastic
use across the Group remains in development.
Introduce a Group-wide Sustainable
Supply Chain Standard to support
supply chain collaboration and
innovation.
Procurement specialists from across the Group are
represented on the Group Climate Forum and will
be supporting the development of our forthcoming
Sustainable Supply Chain Standard.
To be a
steward of
nature
Collaborate with commercial
partners to achieve biodiversity
net gain (BNG) on our projects
and, enhance and preserve natural
environments where we work.
Deliver nature stewardship training
to 100% of our people
We continue to collaborate closely with our customers,
supply chain and commercial partners to deliver BNG
effectively on our schemes and to share knowledge and
solutions.
Teams from the business have attended BNG seminars
with specialist industry speakers. A broader range
of training and education will be provided across the
Group in 2023.
• Responsible
consumption
• Nature
stewardship
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RESPONSIBLE BUSINESS
STRATEGY
Our Partners
We have a clear responsibility to our commercial partners and stakeholders. Our success is not possible without the customers we support
and an engaged network of suppliers, advisors, and membership organisations.
It is essential that we collaborate with them to remain a partner of choice in our key markets and foster thriving and inclusive local economies
where we work.
We also recognise that we are just one business and that, through collaborative working, we will be able to deliver much greater impact and
value for our communities and the environments in which we work.
Objectives
2025 Target
2022 Performance
Aligned
UN SDGs
Material
Issues
OUR PARTNERS
Being a
partner
of choice
for our key
markets
Pay all of our suppliers the
real living wage and secure
accreditation with the Living Wage
Foundation.
Maintain best practice to ensure
our sites and supply chain are
modern slavery free.
The Living Wage Foundation have been engaged
and a review is currently being undertaken of the
requirements to secure membership.
Best practice is maintained by the Group’s Modern
Slavery Policy (which is routinely reviewed) and
engagement has been undertaken with charities
focused on this issue including Causeway.
Provide resources and support to
enable our supply chain to support
the objectives of this Strategy.
A range of support has been offered to our supply
chain including toolbox talks, bespoke mental health
awareness sessions with the Lighthouse Charity, and
guidance on regulations and best practice.
Delivering
high impact
collaborations
Engage and collaborate with our
partners to generate the highest
possible social value for our
community and charity partners.
We have routinely engaged our commercial partners
and supply chain to collaborate on delivering
significant social value and employment and skills
opportunities in alignment with commercial schemes
and community partnerships.
Engage key partners to create a
more diverse and inclusive built
environment sector and form
business led partnerships to
improve EDI.
We continue to engage with membership
organisations (including the Confederation of British
Industry (CBI) and Business in the Community
(BITC)) on EDI and engage other businesses to
share knowledge and best practice.
Collaborate with all our partners to
reduce our environmental impact.
This will include collaborating
with business coalitions and
membership organisations, and
providing access to environmental
training and resources for our
suppliers.
We continue to engage with membership organisations
(including Yorkshire Climate Action Coalition) to share
knowledge and best practice. We became members
of the UK Green Building Council (UKGBC) and will
work closely with their team to educate and inform our
people and partners on the latest sector environmental
developments. We routinely collaborate with our
supply chain and professional partners across all areas
of commercial operations to identify opportunities to
protect the environment and support the aspirations of
our NZC Framework.
• Community
engagement
• NZC
• Responsible
consumption
• EDI
• Nature
stewardship
• Community
engagement
• NZC
• Responsible
consumption
• EDI
• Nature
stewardship
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Pictured: Kangaroo Works, Sheffield,
providing 365 high-quality apartments
in the Heart of the City.
Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022
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SEGMENTAL
REVIEW
LAND
PROMOTION
NICK DUCKWORTH
NICK DUCKWORTH
HALLAM LAND
HALLAM LAND
MANAGEMENT LIMITED
MANAGEMENT LIMITED
H
LM has traded strongly in 2022,
achieving an operating profit of £17.3m
(2021: £17.5m) from selling 3,869 plots
(2021: 3,008 plots) at nine locations.
Total plot sales were materially higher
during 2022 due to a major disposal at
Didcot of 2,170 plots to Taylor Wimpey
and Persimmon Homes. However
due to the size of the sale and discount for volume, the
average gross profit per plot reduced to £6,066 (December
2021: £7,820).
UK greenfield land values increased by 2.0% in the 12
months to 31 December 2022 according to Savills Research.
Following growth during the first nine months of the year, UK
greenfield values fell by 2.2% in the final quarter. In the latter
part of the year, transactions slowed significantly as many
housebuilders paused land buying in response to slowing
sales rates and the number of sites being actively marketed
for sale reduced. However, although many of the major
housebuilders have slowed their land buying, there remains
selective interest in prime sites with planning consents, such
as HLM can offer, amid some confidence returning to the
industry following the significant disruption caused by the
effects of the mini-budget in the second half of 2022.
HLM’S land bank grew to 95,704 plots (December 2021:
92,667 plots), of which 9,431 plots (December 2021:
12,865 plots) have planning permission (or Resolution to
Grant subject to S106). The decrease in plots with planning
permission reflects disposals during 2022 and continued
delays in the planning system. In 2022, there were 1,473
plots submitted for planning, taking the total plots awaiting
determination to 12,297 (December 2021: 11,259 plots).
Unfortunately, the planning system continues to experience
delays due to a growing number of complexities such as
the emerging Draft National Planning Guidance, which
looks to be slowing down Local Authority Development
Plan making and Planning Application determination.
This resulted in HLM only gaining planning permission
for 435 plots in 2022 (2021: 52 plots). Already in 2023,
HLM has achieved planning permission on 320 plots and
is expecting determination on its remaining plots to fall
into 2023 and beyond.
HLM’s land bank remains well positioned due to the
high levels of stock with planning permission. Despite
experiencing challenges with the planning system,
the number of plots under control and in planning has
increased, giving us confidence in the medium term that
our stock levels holding planning will return to similar
levels seen in previous years.
There is significant latent value in the Group’s strategic land
portfolio, which is held as inventory 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 9,431 plots with
planning and any increase in value created from securing
planning permission will only be recognised on disposal.
In relation to significant schemes:
•
•
In H2 22, a S106 Agreement was signed at South
West Milton Keynes allowing the outline planning
consent to be drawn down for 618 plots, primary
and secondary schools and open space. The site
has subsequently been disposed of post period-
end to Taylor Wimpey, with the sale completing in
March 2023.
At Pickford Gate, Coventry (formerly Eastern Green),
following the grant of outline planning permission for
2,400 plots, 37 acres of employment land and a new
primary school, local centre uses and open space in
2020, HLM unconditionally exchanged to sell 250 plots
to the Vistry Group in March 2023, which will complete
by the end of 2023.
Residential Land Plots
2022
2021
2020
2019
2018
b/f
12,865
15,421
14,713
16,489
18,529
With permission
granted
435
452
2,708
1,651
1,533
sold
(3,869)
(3,008)
(2,000)
(3,427)
(3,573)
c/f
9,431
12,865
15,421
14,713
16,489
In planning
12,297
11,259
8,312
10,665
11,929
Future
73,976
68,543
64,337
51,766
44,051
Total
95,704
92,667
88,070
77,144
72,469
38
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•
•
In 2022, North West Bicester, a 3,100-plot scheme the
subject of an outline planning application, progressed well with
Oxfordshire County Council delivering a road bridge under the
London/Banbury rail line, and the District Council signalling
an increase in development plan housing numbers, such that
our scheme aligns with emerging policy. The scheme, which
also includes a primary school, funds for a secondary school,
mixed use local centre, commercial land open space and
biodiversity offsetting, has been designed to achieve emerging
environmental requirements and energy use.
At Swindon, the 2,000-plot site with outline consent that is
being promoted through an option agreement jointly held with
Taylor Wimpey, terms for acquisition were near settled with the
landowners, but stalled due to the market disruption in Q4 2022
and HLM is now working to conclude the purchase during 2023.
Residential Land Plots – Regional Split
Region
Scotland
North
North Midlands
South Midlands
South
South East
South West
Totals
Plots
9,630
12,528
17,716
21,982
6,766
5,395
21,687
95,704
Percentage
10%
13%
18%
23%
7%
6%
23%
100%
Community Benefits
The 342 acre site is located to the South West of Milton Keynes,
below the A421 between Bletchley and Newton Longville.
Positioned around seven miles outside of the centre of Milton
Keynes, a series of public transport improvements are set to
further enhance the site’s connections to the surrounding area.
Alongside 1,855 homes, of which 35% will be affordable, the
site will feature a primary school, secondary school and a
neighbourhood centre including retail and community buildings.
Over 130 acres of green infrastructure will be delivered across
the site, providing extensive play spaces, sports facilities and
benefitting air quality and local ecology.
CASE STUDY
Milton Keynes
Sale of 1,855 plots
In 2023, Hallam Land Management completed the sale
of 1,855 plots (HLM share 618 plots) at Milton Keynes to
housebuilder Taylor Wimpey, resulting in an ungeared internal
rate of return of 14% p.a.
Providing value for local authorities
The site forms part of the South West Milton Keynes Consortium
and approval was required from both Buckinghamshire Council
and Milton Keynes Council. The cross-boundary scheme was
granted approval in December 2022.
An extensive Section 106 package will provide funds towards
facilities and services benefitting both authorities, including
6.5 acres of employment land, Milton Keynes hospital,
Buckinghamshire education services, extensive offsite highway
works and new public transport infrastructure together with
substantial pedestrian links.
“The ongoing demand for new homes
presents a significant opportunity for
Hallam Land, and the sale of this site
to a leading national housebuilder
continues to demonstrate the benefit
of working with us to navigate complex
planning arrangements.”
Nick Duckworth
Managing Director, Hallam Land Management Limited
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SEGMENTAL
REVIEW
PROPERTY INVESTMENT
AND DEVELOPMENT
EDWARD HUTCHINSON
EDWARD HUTCHINSON
HENRY BOOT
DEVELOPMENTS
DEVELOPMENTS
LIMITED
DARREN STUBBS
DARREN STUBBS
STONEBRIDGE HOMES
STONEBRIDGE HOMES
LIMITED
P
roperty Investment and Development,
which includes HBD and SBH, delivered
a combined operating profit of £25.7m
(2021: £18.3m).
According to the CBRE Monthly Index,
commercial property values declined by
13.3% in the 12 months to 31 December
2022. Industrial property was the worst performing sector
with values down 21% during the year followed by offices
down 12.1% and retail down 8.1%. Commercial property
values were negatively impacted by rising interest rates
during H2 22 with overall values declining by -19.0%.
Having seen strong investor demand over the last few
years driving substantial yield compression, I&L was the
worst performing sector in 2022 as the sharp increases in
interest rates resulted in significant yield expansion during
H2 22. Whilst investment volumes were down 25% on
2021, it was still the second most active year on record.
At the same time, I&L vacancy rates reached a new low of
3.6% in Q4 22 (for units above 50,000 sq ft). The rate of
yield expansion has slowed in recent months suggesting
that commercial property values are beginning to stabilise.
At the same time, the rental growth outlook for both I&L
and regional BtR remains positive given the level of active
demand and lack of available space. Regional office
demand has continued to recover from the 2020 low with
take-up increasingly focused on grade A space resulting in
prime rental growth of 6.5% in 2022.
HBD has performed well, completing developments with a
GDV of £117m (HBD share £83m GDV; 2021: HBD share
£68m GDV), of which 92% have been let or sold. In the
year, HBD completed on:
•
•
•
Five industrial schemes totalling 497,000 sq ft with a
combined GDV of £86m (HBD share: £60m GDV).
Two residential land sales with a GDV of £23m (HBD
share: £15m GDV), comprising a 184-unit scheme
in Skipton, which was pre-sold to Bellway, as well
as a sale of land to Aberdeen City Council for the
construction of 500 houses.
A 23-unit residential build-to-sell scheme in York,
Clocktower, with a GDV of £8m.
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2022 Completed Schemes
Scheme
Industrial
Wakefield, Kitwave
Luton, Quad 2
Pool, MKM
Southend
Wakefield Hub, Phoenix
Residential
Skipton
Aberdeen, Cloverhill
York, Clocktower
Total for the year
GDV
(£’m)
HBD Share
of GDV
(£m)
Commercial
(‘000 sq ft)
Residential
Size
(Units)
12
16
4
12
42
86
7
16
8
31
117
6
16
4
12
22
60
7
8
8
23
83
65
82
15
75
260
497
–
–
–
–
497
–
–
–
–
–
–
184
500
23
707
707
Status
Pre-let & pre-sold
Pre-sold
Pre-let
Speculative
Pre-sold
Pre-sold
Pre-sold
Pre-sold
The committed development programme now totals a GDV of £395m (HBD share: £240m GDV) of which 63% is currently pre-let or pre-
sold, with 97% of the development costs fixed.
2023 Committed Programme
Scheme
Industrial
Rainham, Momentum
Nottingham, New Horizon
Walsall, SPARK Remediation
Luton, Diploma
Preston, East DPD & DHL
Urban Residential
Birmingham, Setl
York, TDT
Aberdeen, Bridge of Don
Aberdeen, Cloverhill
Urban Commercial
Manchester, Island
Total for year
% sold or pre-let (incl Island)
GDV
(£m)
HBD Share
of GDV (£m)
Commercial
(‘000 sq ft)
Residential
size (units)
Status Completion
120
54
37
20
30
261
32
22
12
2
68
66
395
45%
24
54
37
20
15
150
32
22
1
2
57
–
33
240
63%
368
426
–
85
122
1,001
–
54
–
–
54
91
1,146
Speculative
–
Forward funded
–
Forward funded
–
–
Pre-let
– Pre-let and forward funded
–
Speculative
Pre-sold
Under-offer
Pre-sold and DM fee
Q4 24
Q2 23
Q2 24
Q2 23
Q4 23
Q1 24
Q2 23
Q4 23
Q4 23
Speculative
Q3 24
101
–
TBC
420
521
–
521
Within the committed programme there is currently over 1m sq ft of I&L space (HBD Share: £150m GDV), a total of 521 urban residential
units (HBD Share: £57m GDV) and 91,000 sq ft of commercial space (HBD Share: £33m GDV). In this regard:
•
•
In H1 23, three projects (Diploma, Luton, New Horizon,
Nottingham and TDT, York) are set to complete on site with a
combined GDV of £96m.
•
After securing pre-lets with DPD and DHL at Preston East (HBD
share: £15m GDV) in H2 22, the 122,000 sq ft I&L development
was subsequently pre-sold to Titan Investments, at 10% above
book value, with completion expected in Q4 23.
At Setl, Birmingham, HBD is currently on site delivering a
scheme of 101 premium apartments within the highly sought-
after St Paul’s area of Birmingham’s Jewellery Quarter.
Residential amenities include a roof garden, co-working lounge
and wellness studio. The scheme also incorporates 2,250 sq ft
of ground floor commercial space and is currently on track for
completion in Q4 23.
• HBD has committed to Momentum, Rainham (in an 80:20
JV with Barings) (HBD share: £24m GDV) a 368,000 sq ft
speculative I&L development located close to Central London
and within five miles of J30 of the M25. Whilst formal marketing
has not yet begun, the scheme is already attracting strong
occupier interest.
Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022
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SEGMENTAL
REVIEW
PROPERTY INVESTMENT
AND DEVELOPMENT
HBD’s total development pipeline has grown to a GDV of £1.5bn
(HBD share: £1.25bn GDV). All of these opportunities sit within the
Company’s three key markets of I&L (65%), Urban Commercial
(20%) and Urban Residential (15%). Significant schemes include:
•
•
•
As reported in the interim results, HBD was appointed as
development partner on the first phase (HBD share: £50m
GDV) of Cheltenham Borough Council’s £1bn Golden Valley
development which comprises the delivery of a mixed-use
campus clustered around 150,000 sq ft of innovation space
that will serve as the new National Cyber Innovation Centre.
In H2 22, a planning promotion and option agreement was
secured at Brodsworth (HBD Share: £90m GDV) for 432 acres of
employment land and 1,000 residential plots. The c.730-acre site
is jointly being promoted and developed by both HLM and HBD.
At Neighbourhood, Birmingham (HBD Share: £117m GDV), a
planning application was submitted in Q3 22 for 414-unit BtR
development and was subsequently granted in March 2023. The
scheme is situated on a 2.6-acre site located within the Jewellery
Quarter area of Birmingham, in a prime location in close proximity
to the city centre. Neighbourhood will create an inclusive new
community around public realm with landscaped gardens and will
host a selection of the best local independent leisure operators.
The internal amenities within the scheme include a double height
winter garden, a gym, roof terraces and work zones. The scheme
is targeting to secure pre-funding during 2023.
Within the development pipeline there are several developments
that showcase the Group’s ESG ambitions and credentials by
targeting both an EPC A rating and BREEAM Excellent:
• HBD and Greater Manchester Pension Fund are working in
a joint venture to deliver 91,000 sq ft of NZC offices within
Manchester City Centre. Island will include 12,500 sq ft of
amenity areas including social, meeting and event spaces
and a communal roof terrace. The scheme is on track to be
completed in Q3 24.
•
At Momentum, Rainham, the I&L NZC scheme will target
BREEAM Excellent, an EPC A+ rating and all the units will be
100% electric. The scheme is currently receiving encouraging
occupier interest.
• HBD is designing 200,000 sq ft of NZC offices within
Manchester’s St John’s district, which is establishing itself as
the tech, arts and culture district of the city centre.
During 2022, a number of well-timed sales were made to reduce
the size of the investment portfolio (including share of properties
held in JVs), which as of 31 December 2022 was valued at £106m
(2021: £126m). Whilst the CBRE UK Monthly Index showed
commercial property values decreased by 13.3% over 2022, HBD
completed three sales in H2 22, comprising Kitwave Wakefield,
Acre Mill and Stop24 for a total of £29.6m, at an average 17%
premium to the last reported book value. This was a major driver
of relative outperformance with a portfolio capital return of -5.4%.
The total property return of -1.5% for 2022, was significantly
ahead of the CBRE UK Monthly Index (-9.1%). Rent collection for
FY 22 stands at 98% with occupancy increasing slightly to 88%
(2021: 85%) and the weighted average unexpired lease term is now
10.7 years (2021: 16.1 years).
The Group is also committed to ensuring that all the properties
within the investment portfolio have a minimum EPC rating of ‘C’.
Currently 70% of these properties have a rating of ‘C’ or higher, of
which 39% of the total portfolio are rated ‘A-B’. The majority of the
remaining 30% of the portfolio that are currently below a ‘C’ rating,
have redevelopment potential with a target range of ‘A’ or ‘B’.
The UK housing market slowed during 2022 as homebuyer demand
was impacted by higher mortgage rates following the sharp
increases in interest rates. According to Nationwide, house prices
increased by 2.9% during 2022, with the increase of 5.7% during
the first eight months of the year largely reversing in the final four
months as prices declined by 2.6% from their peak. Whilst mortgage
approvals remain subdued, the reduction in longer-term interest
rates has started to feed through to mortgage rates, which together
with unemployment remaining low and a continued shortage of
supply, should help support transaction volumes during 2023.
SBH has continued to grow and during 2022 delivered 175 house
completions (124 private/51 social) (2021: 120), at an average
selling price for private homes of £503k (2021: £509k). Due to high
levels of forward sales brought into the year, the average sales
rate reduced to 0.51 houses per week per outlet (2021: 0.83). In
common with many in the industry, supply chain challenges have
impacted SBH with completed sales below our target of 200, but
strong sales prices mean the business was marginally ahead of
budget. As a result of sales prices being achieved 10.4% ahead of
budget, 9% build cost inflation has been effectively managed.
SBH total owned and controlled land bank now comprises 1,094
plots (2021: 1,157) of which 872 plots have detailed or outline
planning and has 3.5 years supply based on a one-year rolling forward
sales forecast for land with planning or 4.4 years for its full land bank.
SBH has begun the year well, with mortgage rates beginning to
stabilise, and an easing of cost of living pressures providing some
support to housing market activity levels. The strategic objective of
growing the business to achieve 600 completions per annum remains
on track, entering 2023 with 56% of reservations already secured
against its delivery target of 250 homes (188 private/62 social).
42
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The future
A planning application was submitted in Q3 2022, and the
scheme will be going to planning Committee in Spring 2023,
with the aim to secure forward funding later in the year.
Subject to planning permission being granted, HBD hopes to
start on site in mid-2023.
Neighbourhood is HBD’s second project within the Jewellery
Quarter, with construction work on its Setl development
well underway.
“Following planning being granted, we
are really excited to continue to progress
on Neighbourhood this year. We have
received a very positive reaction to our
plans for the scheme, and have considered
and reacted to a number of suggestions
raised during the consultation period.”
Ed Hutchinson
Managing Director, HBD
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CASE STUDY
Neighbourhood, Birmingham
Delivering over 400 apartments
Neighbourhood is located in the popular Jewellery Quarter area
of Birmingham. It is a £117m GDV build-to-rent scheme, which
will see the transformation of the former Sytner car garage,
delivering 414 apartments alongside a range of amenities.
Creating a vibrant community
HBD acquired the 2.6-acre site in April 2021, working carefully
on its plans for the new development to ensure that the
contemporary scheme is designed in keeping with the historic
Jewellery Quarter.
Neighbourhood has been designed by award-winning
architecture practice, BPN Architects, along with re-form
Landscape Architecture, a team focused on creating
sustainable places.
In addition to 414 new apartments, the site will encompass a
host of amenities for residents, including double height winter
garden, roof terraces and social spaces featuring a selection
of the best local independent leisure operators, plus a gym,
lounge, work-from-home areas and an on-site concierge.
New planting and rain gardens throughout will boost liveability;
one of many features included within the design to ensure that
the scheme is sustainable.
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SEGMENTAL
REVIEW
CONSTRUCTION
TONY SHAW
TONY SHAW
HENRY BOOT
HENRY BOOT
CONSTRUCTION
CONSTRUCTION
LIMITED
LIMITED
JONATHAN FISHER
JONATHAN FISHER
JONATHAN FISHER
JONATHAN FISHER
BANNER PLANT
BANNER PLANT
BANNER PLANT
BANNER PLANT
LIMITED
LIMITED
LIMITED
TREVOR WALKER
TREVOR WALKER
TREVOR WALKER
TREVOR WALKER
ROAD LINK (A69)
ROAD LINK (A69)
ROAD LINK (A69)
LIMITED
rading in the Group’s construction segment
has been ahead of expectations in 2022,
achieving an operating profit of £12.1m
(2021: £9.0m).
HBC operates across ten public sector frameworks
and has seven schemes on site through public sector
frameworks with a total order value of £55m. In 2022 there
were six successful renewals, which include:
T
UK construction activity continued to recover
during 2022, with annual output increasing
by 5.6% following the record increase of
12.8% in 2021. At a sector level private
housing was the largest positive contributor, with record
annual growth in private industrial new work. Monthly output
in December 2022 was 3.8% above the February 2020
pre-COVID level.
HBC, the Group’s construction business, performed in
line with expectations, delivering a turnover of £101.5m
(2021: £81.6m) (52% in public sector) and begins 2023
with 68% of its order book secured. 94% of the forecast
costs relating to work already secured for 2023 has fixed
price orders placed or contractual inflation clauses.
Despite experiencing delays and challenges with the
supply chain and material deliveries, progress continues
to be made on the £42m urban development scheme
in the heart of Sheffield for Sheffield City Council and
Queensberry Development Management to create the
Cambridge Street Collective as a mixed-use facility as well
as Elshaw House which will be a seven-storey NZC office
building. Works will be completed in H1 2023. Works on
our £40m BtR residential scheme Kangaroo Works in
Sheffield are also progressing through to completion in
H1 2023. Good progress has been made on the £47m
residential development called the Cocoa Works in York for
Latimer Developments. The seven storey 279 apartment
scheme remains on schedule for completion early 2024.
•
•
•
A new four-year P23 NHS Framework for projects
up to £20m across Yorkshire, Humber and the East
Midlands.
A place on the new four-year DfE Framework for
projects between £6m to £12m in the North East,
Yorkshire and the East Midlands.
YORbuild3 Medium Value Framework for projects
between £4m and £10m.
Looking ahead, HBC is looking to maintain its public
sector framework presence and is currently bidding on the
Pagabo refit and refurbishment framework for works up to
£30m in Yorkshire, Humberside and the East Midlands.
BP has seen record levels of trading activity with turnover in
2022 up 5%. Strong customer demand has also driven an
improvement in the asset utilisation rate to 75% (2021: 70%)
on its plant hire equipment. Road Link has performed well
as a result of traffic volumes increasing and the added
benefit of high inflation feeding into higher toll revenues.
44
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FINANCIAL
REVIEW
STRONG SALES SIGNIFICANTLY
INCREASING PROFITABILITY
DARREN LITTLEWOOD
DARREN LITTLEWOOD
CHIEF FINANCIAL
CHIEF FINANCIAL
OFFICER
OFFICER
Summary of financial performance
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
What we did in 2022
• 31% increase in operating profit despite downward
revaluation movements on Investment Property.
• Increased capital employed to £399m (2021:
£376m), investing in strategic land and development
schemes.
• Made opportune disposals of investment properties
and a joint venture to recycle cash into assets with
increased development potential.
• Increased dividends by 10% as a continuation of our
progressive dividend policy
2022
£’m
169.0
43.8
128.6
341.4
25.7
17.3
12.1
(8.6)
46.5
(0.9)
45.6
2021
£’m
69.4
58.6
102.6
230.6
18.3
17.5
9.0
(9.3)
35.5
(0.4)
35.1
Change %
+144
-25
+25
+48
+40
-1
+34
-8
+31
+125
+30
The Group has benefited from strong activity within its
property development and strategic land businesses, driving
the Group’s best ever financial results on an underlying
profit basis1 of £56.1m (excluding revaluation movements
on completed investment property) (2021: £29.3m).
Property investment and development was particularly
strong in H1 22, as a number of land sales completed
and development contracts progressed, with the full-
year results subdued only by the market-wide fall in UK
commercial property values. Stonebridge Homes continued
its growth trajectory increasing unit completions by 46% to
round off a strong performance for the property investment
and development segment.
UK housebuilding demand has also driven increased
strategic land activity within our land promotion segment
with an operating profit of £17.3m generated by the
disposal of 3,869 residential plots during the year. The
segment also contractually exchanged sales that will
generate £13.0m of gross profit in 2023.
In anticipation of the UK economy slowing in H2 22, the
Group reduced cash investment in new acquisitions and
focused on the development of existing schemes from our
pipeline of opportunities, with the aim of bringing assets to
market at the most opportune time.
Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022
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FINANCIAL
REVIEW
Consolidated Statement of
Comprehensive Income
Revenue increased 48% to £341.4m (2021: £230.6m) as we
continue to deliver a number of schemes in the property investment
and development segment and having completed on 175 (2021: 120)
house sales in Stonebridge Homes. The land promotion business
disposed of 2,170 plots to Taylor Wimpey and Persimmon Homes at
Didcot and exceeded our target to dispose of 3,500 plots per annum.
The construction segment grew its revenue by 25%, continuing to
deliver urban development works in Sheffield and from a number of
framework agreements that generate profitable work.
Gross profit of the Group increased 47% to £81.6m (2021:
£55.5m), a gross profit margin of 24% (2021: 24%) and reflects
healthy returns across all our operating segments. Administrative
expenses increased by £4.0m (2021: £3.4m) as we continued to
invest in our people and processes to support future growth.
Property revaluation (losses)/gains
Wholly owned investment property:
Completed investment property
Investment property in the course of construction
Joint ventures and associates:
Completed investment property
Investment property in the course of construction
Pension expenses of £4.3m (2021: £6.0m) are £1.7m lower than
the prior year due to the cost of closing the defined benefit pension
scheme to future accrual in 2021. The defined benefit pension
scheme entered a surplus on an IAS 19 basis in the year.
Property revaluation losses amounted to £8.2m (2021: £15.0m
gain), incorporating £4.9m revaluation losses (2021: £8.0m gain)
on wholly owned investment property and £3.2m revaluation
losses (2021: £7.0m gain) on our share of investment property
held in joint ventures.
2022
£’m
(7.3)
2.4
(4.9)
(3.2)
–
(3.2)
(8.2)
2021
£’m
4.6
3.4
8.0
1.2
5.8
7.0
15.0
OPERATING
PROFIT
NAV
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5
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2
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1
9
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2
2
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8
1
9
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2
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2
2
2
Read the Business Review on
pages 38 to 44
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Profit on sale of investment properties of £0.6m (2021: £1.3m),
relates to the opportune disposal of a motorway services asset
to the existing operator in Kent. Loss on disposal of assets held
for sale of £0.1m represents the selling costs on disposal of an
industrial asset in Wakefield.
Share of profit of joint ventures and associates of £9.1m
(2021: £8.9m) includes a significant land disposal in Aberdeen
for local authority housing and development of an industrial unit
in Wakefield offset by property revaluation losses of £3.2m, all by
the property investment and development segment.
Profit on disposal of joint ventures and subsidiaries of £0.7m
(2021: nil) relates to the disposal of a long standing 50% interest
in a joint venture entity in Huddersfield by the property investment
and development segment.
Overall, operating profits increased by 30.6% to £46.5m
(2021: £35.6m) and, after adjusting for net finance costs,
we delivered a PBT of £45.6m (2021: £35.1m).
The segmental result analysis shows that:
•
•
Property investment and development produced an increased
operating profit of £25.7m (2021: £18.3m) arising from
additional profits on development contracts, land sales and
an increase in Stonebridge housing unit disposals to 175
(2021: 120), offset by a valuation loss on wholly owned
investment property of £4.9m (2021: 8.0m gain).
Land promotion operating profit remained consistent at
£17.3m (2021: £17.5m) as we disposed of 3,869 residential
plots during the year (2021: 3,008).
• Construction segment operating profits increased to £12.1m
(2021: £9.0m) as construction and plant hire activity levels
remain positive and due to inflation-related fee increases on
our PFI contract.
We continue to demonstrate the benefits of a broad-based
operating model and how this allows us to manage the impact
of cyclical markets during challenging times and capitalise on
market recoveries that follow. 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 £7.7m (effective rate of tax: 16.9%)
(2021: £4.5m; effective tax rate: 12.8%) and is lower (2021: lower)
than the standard rate of tax due to adjustments for joint ventures and
associates reported net of tax (2021: due to adjustments in respect
of earlier years arising from additional loss relief on asset disposals).
Current taxation on profit for the year was £8.5m (2021: £1.1m),
deferred tax was a credit of £0.8m (2021: £3.4m debit).
Earnings per share and dividends
Basic earnings per share increased 18% to 25.0p (2021: 21.2p) in
line with the increase in profits attributable to owners of the Parent
Company. Total dividend for the year increased 10% to 6.66p
(2021: 6.05p), with the proposed final dividend increasing to 4.00p
(2021: 3.63p), payable on 2 June 2023 to shareholders on the
register as at 5 May 2023. The ex-dividend date is 4 May 2023.
Return on capital employed2 (‘ROCE’)
Higher operating profit in the year saw an increased ROCE to
12.0% in 2022 (2021: 9.6%) and is now within the Group’s target
return of 10%–15% which we believe is appropriate for our current
operating model and the markets we operate in.
Finance and gearing
Net finance costs increased to £0.9m (2021: £0.4m) reflecting the
increase in UK interest rates during the year.
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 22 times (2021: 31 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 with Barclays Bank PLC, HSBC UK Bank
plc and National Westminster Bank Plc runs for three years and
includes two one-year extensions. On 20 January 2022, the banks
agreed to the Group’s second extension taking the facility to 23
January 2025 and on 9 October 2022 to a call on the accordion
increasing the total committed facility to £105.0m. The Group had
drawn £65.0m of the facility at 31 December 2022 (2021: £50.0m).
On 20 December 2021, the Group signed a £25.0m receivables
purchase agreement with HSBC Invoice Finance UK Limited (HSBC)
that allows it to sell 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. The
Group had sold £7.6m of receivables under the agreement at 31
December 2022 (2021: £nil).
2022 year-end net debt4 was £48.6m (2021: £40.5m)6 resulting in
the Group having gearing of 12.3% (2021: 11.4%), at the lower end
of our targeted range of 10%-20%.
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.
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FINANCIAL
REVIEW
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 disposals/(investments)
Net interest and tax
Dividends paid
Dividends received from joint ventures
Other
Change in net debt
Net (debt)/cash brought forward
Net debt carried forward
2022
£’m
46.5
(3.4)
(4.1)
(55.6)
(16.6)
16.6
(3.6)
(12.4)
7.1
0.8
(8.1)
(40.5)
(48.6)
2021
£’m
35.6
(13.9)
(4.8)
(55.5)
(38.6)
(20.9)
(5.0)
(8.4)
2.2
0.2
(70.5)
30.0
(40.5)
During 2022, the cash outflow from operations amounted to
£16.6m (2021: £38.6m) after net investment in equipment held for
hire of £4.1m (2021: £4.8m), and cash outflows from a net increase
in working capital of £55.6m (2021: £55.5m).
Our increase in working capital arises from additional investment in
property developments in progress, our housebuilding and strategic
land portfolios and an increase in contract assets.
Net capital disposals of £16.6m (2021: £20.9m investment) arose
from disposals of investment property of £19.1m (2021: 6.7m)
and joint ventures of £6.9m (2021: £4.3m) and net movement in
JV investments of £0.6m (2021: £(13.7)m), which were offset by
additions to investment property of £9.3m (2021: £17.3m) and net
additions to property, plant and equipment of £0.7m (2021: £0.9m).
Net dividends, totalled £5.3m (2021: £6.2m), with those paid to
equity shareholders of £8.4m (2021: £7.6m) increasing by 10% and,
dividends to non-controlling interests of £4.0m (2021: £0.8m), being
offset by dividends received from joint ventures during the year of
£7.1m (2021: £2.2m).
After net interest and tax of £3.6m (2021: £5.0m), there was an
overall outflow in net cash of £8.1m (2021: £70.5m), resulting in net
debt of £48.6m (2021: £40.5m).
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Statement of financial position summary
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
Retirement benefit asset/(obligations)
Net assets
Add back: Non-current liabilities and
pension asset
Capital employed
2022
£’m
97.1
2.9
20216
£’m
104.2
3.7
29.8
27.9
10.0
139.8
291.8
122.9
(113.6)
(4.2)
436.7
(48.6)
6.2
394.3
4.8
399.1
12.2
148.0
235.3
111.1
(85.1)
(1.2)
408.0
(40.5)
(12.2)
355.3
20.4
375.7
Wholly owned investment properties decreased in value to £97.1m
(2021: £104.2m), following the disposals of an industrial unit in
Wakefield and motorway service station in Kent, together they
sold at a premium to book value of £18.6m. This was offset by
the transfer of newly completed industrial units from inventory
at Southend and Luton, which amount to £16.7m including
subsequent expenditure. Property revaluation losses amounted
to £8.2m (2021: £15.0m gain), incorporating £4.9m revaluation
losses (2021: £8.0m gain) on wholly owned investment property
and £3.2m revaluation losses (2021: £7.0m gain) on our shares of
investment property held in joint ventures.
Intangible assets reflect goodwill of £1.2m (2021: £1.4m), being
Road Link (A69) of £0.3m (2021: £0.5m) and Banner Plant depots
£0.9m (2021: £0.9m) and the Group’s investment in Road Link
(A69) of £1.7m (2021: £2.3m). The treatment of the Road Link
investment as an intangible asset is a requirement of IFRIC 12 and
the impairment 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 £7.0m (2021: £6.6m) and plant, equipment and vehicles
with a net book value of £22.8m (2021: £21.3m), including £1.0m
(2021: £1.6m) of right-of-use assets under IFRS 16. Property, plant
and equipment, along with right-of-use assets, have increased
as new additions of £3.8m (2021: £6.8m) are offset by disposals
and the depreciation charge for the year. Right-of-use assets have
decreased in the year, due to depreciation, as the Group’s lease
liabilities unwind.
Investments in joint ventures and associates decreased £2.2m to
£10.0m (2021: £12.2m) arising from the Group’s share of profits of
£9.1m (2021: £8.9m) (including fair value reductions of £3.2m), less
distributions of £7.2m (2021: £2.2m) and net disposals of £4.1m
(£0.4m). We continue to undertake property development projects
with other parties where we feel there is a mutual benefit.
Inventories were £291.8m (2021: £235.3m) with property inventory
increasing to £91.2m (2021: £75.2m) as the Group progressed a
Build to Sell opportunity in Birmingham, and existing development
schemes, most notably an industrial scheme in Southend. We have
increased our housebuilder land and work in progress to £80.6m
(2021: £52.5m) as we continue to invest in land, expand regionally
into the North East and increase annual plot disposals. We continue
to invest in owned land and land interests held under promotion
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, including contract assets, increased £11.8m to
£122.9m (2021: £111.1m)6 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 increased to £113.6m (2021: £85.1m) with trade and
other payables increasing to £100.0m (2021: £73.9m), provisions
decreasing to £5.4m (2021: £6.3m) as strategic land provisions
unwind, contract liabilities decreasing to £4.0m (2021: £5.0m),
arising from payments received for work not yet undertaken.
Net debt included cash and cash equivalents of £17.4m (2021: £11.1m),
borrowings of £65.0m (2021: £50.0m) and lease liabilities of £1.0m
(2021: £1.7m). In total, net debt was £48.6m (2021: 40.5m).
At 31 December 2022, the IAS 19 pension valuation has decreased
over the year from a deficit of £12.2m to a surplus of £6.2m, driven
by a significant decrease in the value placed on the liabilities. This is
mainly the result of substantial increases in the corporate bond yields
used to discount future benefit payments, which reduces the value
placed on the liabilities. The pension scheme’s assets continue to
be invested globally, with high-quality asset managers, in a broad
range of assets. The pension scheme Trustees regularly consider the
merits of both the managers and asset allocations and, along with the
Company, review the returns achieved by the asset portfolio against
the manager benchmarks. They then make changes, as the Trustee
considers appropriate, in conjunction with investment advice received.
Overall, the net assets of the Group increased by 11.0% to
£394.3m (2021: £355.3m) from retained profits and the decrease in
retirement benefit valuation less distributions to shareholders. NAV
per share3 increased 10.5% to 295p (2021: 267p).
DARREN LITTLEWOOD
CHIEF FINANCIAL OFFICER
NOTES:
1 Underlying profit is an alternative performance measure (APM) and
is defined as profit before tax excluding revaluation movements on
completed investment properties. Revaluation movement on completed
investment properties includes losses of £7.3m (2021: £4.6m gain)
on wholly owned completed investment property and losses of £3.2m
(2021: £1.2m gains) on completed investment property held in joint
ventures. This APM has been introduced as it provides the users with a
measure that excludes specific external factors beyond management’s
controls and reflects the Group’s underlying results. This measure is used
in the business in appraising senior management performance.
2 Return on Capital Employed is an APM and is defined as operating profit/
capital employed where capital employed is the average of total assets
less current liabilities and pension asset/obligation at the opening and
closing balance sheet dates.
3 Net Asset Value (NAV) per share is an APM and is defined using the
statutory measures net assets/closing ordinary shares.
4 Net (debt)/cash is an APM and is reconciled to statutory measures in note 32.
5 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.
6 See ‘prior year restatements’ on page 159.
Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022
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PRINCIPAL RISKS
AND UNCERTAINTIES
MANAGING OUR RISKS
For Henry Boot, effective risk management
is essential in achieving positive outcomes
from our operations and for the delivery of
our strategic targets.
Overview
As a Group, Henry Boot takes a considered approach to risk. We
invest prudently in pursuit of our strategic targets, maintain financial
strength through effective cash management and aim to be the
safest place to work in the markets in which we operate.
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 the 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, have
established procedures and actions that will support the Group’s
day-to-day response to sudden or developing incidents, providing
regular updates to our people, the Executive Committee and
the Board.
Risk appetite
The Group’s risk appetite and tolerance levels are reviewed annually
by the Audit and Risk Committee 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 evolved 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 and
economic 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.
The Group continues to recognise the importance of climate risk
and its impact on our business and the planet, this is recognised
as one of the Group’s principal risks and further information on our
assessment of climate risk is detailed on pages 72 to 74.
The Group have also considered the political and economic impact
of the ongoing crisis in Ukraine. The associated risks continue
to be closely monitored and mitigations strengthened, while not
a separate principal risk their impact is considered across each
principal risk area.
The financial impact of the above are considered in the going
concern and viability section on pages 56 to 57.
50
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Risk
Governance
Establish risk strategy
and appetite
Risk Identification
and Assessment
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
establish the Group’s procedures and plans for
management of continuity events.
Communicates to our people and directs the
immediate business response.
Subsidiary Boards and PLC
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.
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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
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4 People & culture
5 Funding
6 Cyber
7 Pensions
11 Land sourcing
12 Land demand
13 Political
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8
10
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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
Introduction
of Building
Safety Act
Risk
1
Safety
Risk description
Mitigation
Inherent risk within all of our
businesses, but most notably
within construction activity
•
Priority consideration at all Group and
subsidiary Board meetings.
• Robust training, policies, procedures
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 (pages 72-74)
and monitoring.
• Construction operation is ISO
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.
• 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.
• Responsible Business Strategy
including NZC framework in place.
Key
Change during the year
Group strategic priorities
Increased
Decreased
No change
Safety
People
Growth
Delivery
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Risk description
Mitigation
Change
during
the year
Link to Group
strategic
priorities
Risk
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
Rising
interest
rates, price
inflation,
debt
management
and slowing
economy
Impact
of cost
of living,
well-being
and mental
health
issues.
Demand
and
competition
for skilled
personnel
Additional
funding
requirements
to support
business
growth
•
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.
•
•
•
•
•
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 January 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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OUR
RISKS
Risk
6
Cyber
7
Pension
Risk description
Mitigation
Change
during
the year
Link to Group
strategic
priorities
Unauthorised access to
systems, hacking, malware
and distributed denial of
service could all lead to data
loss, business disruption,
reputational damage or
financial loss
The Group has a legacy
defined benefit pension
scheme that closed to future
accrual in 2021. While the
Trustees have a prudent
approach to the mix of both
return-seeking and fixed-
interest assets, times of
economic instability can have
an impact on those asset
values with the result that
the reported pension deficit
increases. Furthermore, the
relationship between implied
inflation and long-term gilt
yields has a major impact on
the pension deficit and the
business has little control over
those variables
•
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.
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.
Liability
decreased
on funding
basis and
is now an
asset on an
IAS19 basis
Supply chain
and viability
challenges
8
Construction
contracts
Changes in terms and
conditions of standard
contracts exposing the
Company to major financial
and design liability risks
Key
Change during the year
Group strategic priorities
Increased
Decreased
No change
Safety
People
Growth
Delivery
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Risk
9
Property
assets
Risk description
Mitigation
Investment property assets
are not marketable and are
without secure tenancies.
Valuations are volatile
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 £1.25bn pipeline of future
opportunities.
•
•
Portfolio strategy actively managed and
covenants regularly reviewed.
Investments in sector with strong
medium term tailwinds.
• 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 £1.25bn 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 96,000 plots with
aspiration to grow further.
• Well respected name within the industry
that demonstrates success.
• Housebuilder land portfolio at 1,094
residential plots.
Change
during
the year
Link to Group
strategic
priorities
Softening
yields
Softening
yields
impact
margins and
viability
Capital
taxes &
margin
erosion
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OUR
RISKS
Risk
12
Land demand
Risk description
Mitigation
Change
during
the year
Link to Group
strategic
priorities
A dramatic change in
housebuilder funding
sentiment and demand for
housing can have a marked
change on the demand and
pricing profile for land
•
•
The Group’s policy is to only progress
land 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.
Housebuilder
activity
reduced
• 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, and
property
taxes
Escalation
of events in
Ukraine
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
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 2024, the Directors considered the Group’s principal risk
areas that they consider material to the assessment of going concern.
As the UK economy moves at a slow pace, the Directors have
assessed the Group’s ability to operate in a more uncertain
environment in modelling a base case scenario. They have also
modelled what they consider to be a severe downside scenario
including further curtailments in activities. This downside scenario
shows a c.50% reduction in sales and c.67% reduction in profits
from the base case. Construction and development activity only
takes place where contracted and likewise for Hallam Land where
no sales are assumed in 2023 unless already contracted.
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.25%. 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 2023 with net debt1
of £48.6m, and with c.£63.2m net debt at 28 February 2023,
against facilities of £105.0m the Directors have concluded that
the Group is able to control the level of uncommitted expenditure,
whilst 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.
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assumes that deferred land sale debtors falling due of £31.8m as
at 28 February 2023 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.
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 63%
of the committed development pipeline and secured 97% of the
development costs on fixed price contracts.
Secondly, a decline in residential property markets where margins
decline due to a lack of government support and planning delays
or rejections, compounded by lower sales prices, higher build costs
and increased legislative costs. Where possible the Group mitigates
this risk by providing quality products from healthy land banks
(including consented land) in prime locations.
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
consider health and safety at all of our Company board meetings.
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 and is reconciled to statutory measures in note 32.
The Group meets its day-to-day working capital requirements
through a secured loan facility. The facility was renewed on 23
January 2020, at a level of £75m, for a period of three years and
extended by one year in January 2021 and a further year in January
2022 taking the facility renewal 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 was called on by the
Group on 9 October 2022 increasing the overall facility to £105m.
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 50% reduction in revenue
and near 67% reduction in profit before tax from our base case
for 2023, demonstrates significant headroom over this covenant
throughout the forecast period to the end of December 2024.
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 28 to 31 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 137-
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 £37.0m per annum, added
over £200.8m to net assets (an increase of some 104%) and paid
64.0p 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
COVID, did the Group 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. Whilst our
strategic land promotion business commenced 2023 with 9,431
plots with planning permission which, at a five-year average disposal
rate of 3,175 plots would imply that we have almost three years of
sales already in hand and a property development pipeline of over
£1.25bn 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 2024, as described in the Going
Concern statement on page 56 and 57 followed by an assumed
return to planned levels of activity for year three. Our modelling
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SECTION 172 STATEMENT AND
STAKEHOLDER ENGAGEMENT STRATEGY
Introduction
It is the aim of our Board and its Committees always to give proper
consideration to stakeholder interests when taking decisions,
and whilst recognising that not all decisions will be equally positive
for all stakeholders, it is nevertheless important for all issues to
be considered.
The Board formally adopted a Stakeholder Policy in 2019, which
has been reviewed and revised in successive years, to ensure that
the Board is proactively considering the most effective methods of
incorporating stakeholder views into decision-making and providing
effective engagement with all groups. More detail on this can be
found below.
The Board is keenly aware that stakeholder views, and the
considerations of ensuring a sustainable and long-term business,
as well as maintaining the highest standards of business conduct,
are all essential aspects of its decision-making processes. Set out
below are some of the ways we ensure this, and decision-making
processes will remain under review at ExCo and Board level to
ensure that they remain dynamic and rounded. Within this report we
also set out a substantial case study on one of the Board’s biggest
decisions in 2022, detailing the consideration of s.172 factors and
how this has shaped the Board’s approach.
Our 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.”
Board Information
• Our Board and senior leaders regularly engage with stakeholders as described on pages 59 to 60
• Board papers on Reserved Matters include consideration of stakeholder interests and views
• Gerald Jennings’ role as designated NED for liaison with the Group Employee Forum ensures that the Board consider
the views of, and impacts on, the workforce of various decisions
•
Leadership and management receive training on Directors’ duties to maintain awareness of the Board’s responsibilities
under s.172
Long-term Strategic Considerations
•
The Board reflects on the Responsible Business Strategy and whether the outcome of its decisions support and
contribute to the agreed targets
•
•
The Board remains mindful of the Company’s corporate objectives and KPIs which are discussed regularly, and have a
wholesale review at annual Strategy Days
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
Decision making
•
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 directly brought about as a result of Board engagement – some examples are set out in the Employee
Engagement section on pages 96 to 97
• Where appropriate, outcomes of decisions are re-assessed, and further engagement and dialogue undertaken
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Board Stakeholder Engagement Strategy
The Board Stakeholder Policy, reviewed annually, is key in setting the existing status of current and future engagement with all of the Group’s
key stakeholders. During the 2022 review, three additional stakeholders were identified as having relevance in relation to Board engagement
– Regulators, Media, and Professional Associations. Engagements with these groups are planned for 2023 and will be reported on next year.
It is important to note that the below sets out Board specific engagements, not the broad and thorough range of engagements undertaken
by the wider Group with each of these stakeholders.
Why is it important for the
Board to engage with this
stakeholder group
Stakeholder
Shareholders Dialogue with our shareholders
to understand issues that are
important to them is vital in
shaping the approach of the
Board, and the wider Group,
in ensuring the delivery of our
strategy, growth plans and
returns
How we the Board engaged in 2022
How we the Board
responded
• Bi-annual Investor Roadshows and structured
feedback sessions with institutional investors
and major family and other shareholders
• Ongoing and structured
communications on
results
•
Focussed investor communication regarding
significant issues as required
• Regular Board updates on investor and proxy
advisor sentiment collated by management /
brokers / PR consultants
•
•
Informal and ad hoc shareholder engagement
with family and other substantial shareholders
Attendance by all Board members at the AGM,
available to answer questions and engage
directly with shareholders
• Consideration of
appropriate guidance to
be issued where required
• Communication of
key initiatives such
as strategy and ESG
objectives
Employees
Customers
Our people are the biggest
asset of the Group, and
ensuring that their priorities are
understood makes sure that
the Board can take their views
into account when delivering
on our strategic aims
See our Employee Engagement report on pages 96
to 97, plus:
•
•
Subsidiary board MDs and department heads
attended Board meetings to discuss issues
relevant to their company/team and the Group
• Board members attended subsidiary board and
other meeting opportunities throughout the year
Making sure that the services
we offer are well received
by customers is vital as a
long-standing business with a
reputation for longevity in its
relationships
• Board site visits arranged to not only view sites
in construction/development but also potentially
interact with customers. This has now been
supplemented by providing Board members with
details of all subsidiary meetings / visits that they
can attend on an individual basis if convenient
•
•
Pensioners
As former employees of
the business, pensioner
engagement ensures we
maintain focus on our
investment outcomes and
returns
• Reports regarding customer engagement
across the Group comes to Board meetings
twice annually
•
•
•
•
Pensioner’s lunch arranged by the company
invitations extended to Board members
Ad hoc attendance by Board members at ad
hoc events for pensioners and family members
Pension Newsletter produced on an annual
basis and a copy issued to relevant members
Pensions report presented bi-annually at
Board meeting to show the performance of the
pension scheme
• CFO attends Pension Trustee meeting as a
representative of the Company
See examples within
employee engagement
report plus case study
on page 61
Introduction of structured
customer feedback
initiatives within each
subsidiary
Inclusion of customer
feedback mechanisms
within wider Marketing and
Communications Strategy
as considered at the
Strategy Days
• Oversight of pension
related matters on a
regular basis
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SECTION 172
STATEMENT
Stakeholder
Suppliers
Why is it important for the
Board to engage with this
stakeholder group
As with customers, our supply
chain is crucial, and our long-
standing relationships ensure
we are able to deliver on our
commitments
How we the Board engaged in 2022
How we the Board
responded
• Board site visits arranged to not only view sites
in construction/development but also potentially
interact with suppliers, supplemented by
providing Board members with details of all
subsidiary meetings / visits that they can attend
on an individual basis if convenient
•
Inclusion of supplier
feedback mechanisms
within wider Marketing and
Communications Strategy
as considered at the
Strategy Days
Communities
Being a responsible corporate
citizen of the areas we operate
in aligns with our values and
is a substantial aspect of our
Responsible Business Strategy
Environment
Similar to communities,
responsibility to the
environment as our wider
stakeholder is integral to
delivery of our ESG objectives,
as well as ensuring we operate
within our environments in a
responsible manner
• Matters Reserved for the Board reports from
Group subsidiary companies contain sections
on stakeholder engagement including suppliers
• Much work has been done on an individual
project basis and also subsidiary and Group
wide on community engagement, particularly
through the Responsible Business Strategy,
overseen by the Responsible Business
Committee, and set out in this report on page 34
• Matters Reserved for the Board reports
from Group subsidiary companies contains
sections on stakeholder engagement including
communities
• Community partnership
targets included within
the Responsible Business
Strategy – see page 34
• Matters Reserved for the Board reports
•
from Group subsidiary companies contain
sections on stakeholder engagement including
environment
Environmental targets
included within the
Responsible Business
Strategy – see pages 35
• Current environmental assessment and
reporting is captured in the Responsible
Business section of the Annual Report, which is
reviewed by the Board
• H&S report brought to each PLC Board
meeting setting out inspections and issues
noted, plus any interactions with authorities
such as the HSE
•
Employees from across the Group who are
involved in delivery of the Climate Change
Framework are invited to relevant Responsible
Business Committee meetings to share updates.
• Responsible Business
Committee approved
adoption of Climate
Change Framework –
more detail on this within
the Responsible Business
Committee Report on
page 117
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CASE STUDY
Relocation of the Group’s Head Office
For some years, the Board and senior managers within the business have been reviewing options for the Group’s Head Office
in Sheffield. The existing office building, Banner Cross Hall, is a Grade II listed former stately home in one of Sheffield suburbs,
occupied by the Group for around 90 years. As such, although an imposing and impressive building, it has a number of
features that are not conducive to modern office working, following a review of our working needs post-pandemic; as well as
being in need of extensive modernisation for environmental and other reasons. For this reason, alternative options including
a move to a purpose-built office within Sheffield city centre were also explored. The options, having been considered by the
Board, triggered a process of engaging with and considering various stakeholders as part of the ultimate decision being
progressed throughout 2022 and into 2023.
The following timeline sets out the progress of the Board’s decision-making and interactions that incorporated stakeholder
views within the process:
November 2021 options in principle considered by
Board at 2021 Strategy Days, including detailed costing
for Banner Cross Hall refurbishment. Board resolved to
continue exploring this option along with alternatives
February 2022 following identification of alternative
office space within Sheffield, Board resolved to carry out
engagement with employees on the options
May 2022 decision to relocate to alternative office
space communicated to employees. Project team
established comprising of a Steering Group and
dedicated workstream leads as well as employee-led
working groups focussing on key areas raised during
the feedback consultation: Culture and Heritage;
Agile Working; Personal Safety, Travel and Parking;
Collaboration; and Location
March 2022 town hall meeting held at Banner Cross
Hall (broadcast as live webinar to the Group) explaining
the options being considered – Banner Cross Hall
refurbishment and relocation to alternative office space, with
benefits and drawbacks of both explained. Consultation
exercise launched within the Group, offering both open and
confidential methods for employees to provide feedback
April 2022 having further considered the options
and feedback received, the Board determined that
it wished to progress with the option to relocate to
alternative office space
June 2022 external workspace design support
appointed and Working Groups commence
gathering initial employee feedback on workspace
considerations
July 2022 following collation of feedback, it is
incorporated into initial workspace design and consultants
engage with key teams throughout the business for
additional views
September 2022 presentation of initial workspace
design to Board for feedback
Work has continued on progressing the development of the relocation plans with regular updates to the Board, and the project
team structure will remain under review during 2023 as the Group looks to move to its new head office as required.
Consideration of s.172 factors
Likely consequences of
decisions in the long term
The Board has considered the fitness for purpose of
Banner Cross Hall post-refurbishment, noting that due to
the listed nature of the building, it would have remained as
a predominantly cellular structure, not allowing for many
open-plan options or to accommodate post-pandemic
working needs. Also, although the environmental impact of
the building would have been mitigated, it would have been
unlikely to achieve a good EPC rating.
Interests of the Company’s workforce
Naturally this has been one of the primary considerations for
the Board to take into account as part of making this decision,
and the methods of incorporating the expressed interests and
concerns of the workforce are as set out in the timeline above.
Need to foster relationships with
suppliers, customers and others
The Board took into account when considering the alternative
office location the ease of transport links to a central
city location, proximity to key customers and suppliers,
and enhanced space to provide interactions with all key
stakeholders, as well as improved ability to attract talent to
the business.
Impact on community and environment
The impact on the local community of vacating the building at
Banner Cross Hall has been discussed by the Board as part of
its decision making, also taking into account the environmental
impact of the building versus an alternative option (also see
above), as well as the contribution that could be made to
creating a vibrant city centre by being located within it.
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OUR
PEOPLE
Our Approach
Our people are our greatest asset and are vital to our long-term
strategic success and sustainability. Engaging and developing our
people is crucial to our continued performance and growth.
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 collaborate with 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 best talent to
work at every level. Our people are committed to working as part of
our team and support and represent our Values.
We believe empowering our people to work in an agile manner will
support their health and wellbeing and allow us to quickly adapt to
any changes in circumstances. It will enable our people to work in
a manner that is most beneficial to their needs whilst continuing to
deliver high quality results.
We convened an Agile Working Group to review the Group’s
approach and this formed one of the Employee Working Groups
established as part of the Isaacs Head Office relocation project
(see page 61). The Group members represent a range of job roles,
seniority, location and function across our business and they have
developed recommendations for how we can further improve and
refine our Agile Working Framework. We will be incorporating these
recommendations into an updated version of the Framework which
will be launched in 2023.
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 and progress
with us. We recruit and promote from within wherever possible
to provide the best possible progression opportunities. As our
business continues to develop and grow, we understand that by
retaining and inspiring effective and committed people, we can
continue to deliver excellence to all.
Agile Working
In July 2021 we launched our Agile Working Framework and we
continue to enshrine the learnings we adopted from the Pandemic
in our future ways of working.
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 our job roles, but we recognise that
not all tasks can be done from alternative locations or from home.
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OUR
PEOPLE
Employee Engagement Survey
Our Objectives
Our Findings
Key Outcomes
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
our people’s feedback so we can
support a culture and an environment
where they can be the best version of
themselves at work.
The survey and our findings focus on the
Group as a whole. Whilst we can look
at our 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 34 questions
that were used to measure progress
when compared with the responses
within our previous survey conducted
during 2021. Some questions were
based on those posed previously to
allow for statistical analysis of change;
however, other questions were more
focused on 2022 and specifically how
we have, and continue to, adapt to
issues such as the cost of living crisis.
71%
RESPONSE RATE
(INCREASE OF 7% FROM 2021)
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 carefully reviewed by our Board,
Executive Committee, and Group
Employee Forum to identify any areas
where there is scope for increased
engagement with, and support for,
our people.
VERY GOOD GROUP eNPS SCORE OF
39
(an increase of 13 points from 2021)
8.8
We received an 8.8 employee
engagement score when our people
were asked whether they have good
relationships with others in their team.
8.4
We received an 8.4 employee
engagement score when people were
asked if they feel proud to work for
Henry Boot.
Did You Know?
Each year, our Group Employee
Forum are tasked with a project
focused on the results of the
survey. In 2022, they focused
on health and wellbeing and,
particularly, on maintaining
boundaries between professional
and personal lives. The findings
from their project were shared with
the Board and incorporated in
to the new Health and Wellbeing
Strategy.
Working collaboratively
Our eNPS of 39 (26 in 2021) was
significantly higher than last year. We
believe this is in response to the positive
actions taken, in collaboration with
our people, to address any issues or
experiences they raised in the 2021
survey. The actions we took focused on
three key themes – involving employees
about decisions in the future, creating
an enjoyable work environment, and
investing in our people.
Wellbeing
Wellbeing was again a key theme in
the 2022 survey and we have been
working hard to support the health and
wellbeing of our people (see page 65
for more information). We recognise that
our people experience pressure and
we remain committed to implementing
our new Health and Wellbeing Strategy
(which has been influenced by the
survey results and feedback from our
Group Employee Forum). This will
support our people to establish and
maintain positive work-life boundaries
and feel empowered to switch off when
not working.
As part of the Employee Engagement
Survey, we continue to roll out our
Open-Door platform where our people
can 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.
In relation to employee engagement
more widely and the role of the
Board in this, please also see our
Employee Engagement section on
pages 96 to 98.
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Reward Strategy
We launched our Reward Strategy in September 2022 which aims
to ensure that all our people are fairly rewarded. We intend to clearly
outline and align the pay and progression structures across the
Group in support of our aspirations to attract and retain a talented
and diverse workforce.
Our Strategy is strongly linked to our Values and behaviours and
introduces a new grading and pay structure and bonus scheme
which provides everyone with an earnings opportunity linked to
performance. It can be summed up in these five principles which
guided the changes we are making:
1 Competitiveness – offering competitive pay so we can both
retain people and attract new talent into the business
2 Fairness – ensuring that our reward structure is fair and
rewards people for the level of performance and contribution
they give
3 Structure, transparency and inclusivity – providing regular
updates on how we are performing, as well as giving clarity on
how the performance of our people will be managed, linking it
more closely with personal development and wellbeing
4 A ‘One Henry Boot’ approach – reward that’s right for us
5 Simplicity and consistency – making sure that the
processes are clear, easy to understand, and consistent for
everyone.
By having a structure in place that is consistent and easy to
understand, we hope our people will be able to see what the next
step looks like for them, not just in terms of reward but also in terms
of skills development, responsibility, and career progression.
Health and Wellbeing
Our people are our greatest asset and investment in their health and
wellbeing is critical to ensure that they are healthy, productive, and
fulfilled in their roles.
Whilst the health and wellbeing of our people has long been
a primary consideration, we recognise that a more strategic,
interventionist, and collaborative approach is needed. This will
ensure that we provide the best possible support to our people and
continue to be successful and enjoy commercial growth driven by
fulfilled and productive people.
The development of a new Health and Wellbeing Strategy is
a primary objective of both the Group’s People Strategy and
Responsible Business Strategy. In the materiality assessment
undertaken in the development of the latter, the health and
wellbeing of our people was ranked the highest material issue that
we should focus on by both internal and external stakeholders.
Our Health and Wellbeing Strategy was developed throughout 2022
by the Group HR team who engaged the Group Employee Forum,
a cross-Group working party, and a range of external partners to
share knowledge and solutions. The Strategy launched in 2023
and consolidates our existing offer making it more accessible whilst
adding additional initiatives, resources, and training that our people
can access to ensure we respond to their individual needs. The
Strategy focuses on the Group’s support for our people across four
key areas of wellbeing – physical, mental, digital, and financial.
Financial Wellbeing
We are committed to ensuring that our people are well rewarded
for their hard work and have access to resources to support their
financial wellbeing.
We operate 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 employee’s 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 made
by the individual based on their risk appetite (with most people
remaining in the pre-selected Default Fund), and the decisions
made by the member 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 the Hub.
Did You Know?
We recognised the impact that the cost of living and energy
crisis could have for our people’s financial security and
wellbeing. In response, we provided a one-off cost of living
payment of £1,000 in September 2022 to the lowest paid two
thirds of our workforce
We partnered with ISIO to provide our people with financial coaching
sessions with one of their expert finance coaches. The individual
sessions gave access to a professional and independent financial
coach, who provided a confidential ‘health check’ of finances and
answered any questions about managing finances. 43 sessions were
delivered and further sessions will be made available to our people in
2023 as part of our Health and Wellbeing Strategy.
In October 2022 we granted share options to all our people who
met the eligibility criteria for the Company Share Option Plan
(CSOP). We also sent invitations to those who were eligible to
participate in the Group’s 2022 Sharesave scheme, which allows
people to contribute a maximum of £500 per month to one or a
combination of current Sharesave schemes. The Remuneration
Committee agreed to apply a 20% discount off the share price, the
maximum discount allowed under the HMRC rules. At the close of
the invitation, 54.9% of those who were eligible had joined one or
more Sharesave schemes.
EDI
We aim to create a fair, accessible, diverse, and inclusive working
environment, while recognising the challenges our sector has
traditionally experienced, particularly in relation to gender and
ethnicity representation and diversity. We want to foster 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 strategic
approach to EDI and 2022 performance on page 33.
Did You Know?
In 2022, we supported Sheffield City Council’s Future Proof work
experience scheme. We partnered up with a Sheffield based
secondary school and worked with their students to develop
a fictional marketing campaign that Henry Boot could run to
improve our diversity. The winning team then met with our EDI
Steering Group to share their ideas and receive feedback.
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OUR
PEOPLE
Although we recognise that the ambitions and objectives in our
Responsible Business Strategy will take time to achieve, we are fully
committed to working with key partners to engage with under-
represented groups through various networks. We will encourage
diversity of thought and approach amongst our people, and open
up opportunities for under-represented groups to experience and
access employment in 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).
We support our people wherever possible, whether they are new to
the Group or have been with us for some time. Our opportunities
for learning, career development, and promotion are inclusive to all
our people. We are proactively engaging with external stakeholders
(including local government and special education providers) to learn
about how we can best support those who are disabled or have
special educational needs (SEND) into meaningful employment and
to offer SEND students rewarding career education experiences.
The Board Diversity Policy is set out in more detail as part of our
Nomination Committee report on pages 104-110. Our gender pay
gap (when measured as a median average) is currently 21.43%.
This continues to reflect the current ratio of men and women
employed rather than an issue relating to how we pay our people.
Our Responsible Business Strategy sets out ambitious targets for
us to increase our workforce diversity and we recognise that further
improving our gender diversity in our workforce and management
teams will support us to further reduce this gap. We are also
currently undertaking the necessary preparations to begin reporting
on our ethnicity pay gap.
The Strategy will guide us to ensure our recruitment processes
attract diverse talent 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.
All employees
Female
121
Senior Managers
Female
3
Male
356
Male
15
Directors
Female
2
Male
5
Professional Development
Delivering a workplace culture and positive career experience that
attracts new and diverse talent and retains experienced people will
give us the ability to compete successfully and ensure long term
sustainability. The Group has a relatively low level of people turnover
as the retention and development of our internal talent remains
critical to our success. Our turnover in 2022 was 16.1%. 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 477 at the end of 2022.
We recruited a further 9 apprentices in 2022, which brings our
total number of current apprentices to 20 with a further 6 trainees.
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 employees 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 2022, 6 of our people completed their
education programmes and a further 2 progressed onto the next
level of their employment programme. We have key pathways in
place for our apprentices and trainees to ensure our talent pipeline
continues to flourish.
Throughout 2022, 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. A further 2 participants
completed this Programme in 2022.
Throughout 2022, we also hosted our Leadership Development
Programme (LDP) which has been attended by 15 of our middle
managers. This unique programme of development and support
aims to encourage further aspiration and development and
progression potential in our future leaders. We also piloted a new
Management Development Programme (MDP) which will be rolled
out in 2023 and aims to provide Line Managers in the business with
enhanced people focused skills and behaviours..
We delivered 1,773.5 learning and development days (an average of
3.7 days per person) and 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. 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 and increase performance amongst our people.
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Our Performance Development Review (PDR) process places
focus on a quality, two-way conversation, aimed at developing our
people, sustaining and improving performance across the business.
Our approach is to encourage this conversation throughout the
year, through a process of interim and midyear reviews, to ensure
our people know what is expected of them and have support in
achieving this.
In 2022, we took the decision to begin to have a more open and
transparent conversation about performance against SMART
objectives and how our people were progressing against those.
We introduced Performance ratings and SMART objectives, with a
focus on not only tasks and operational deliverables, but Values
and behaviours.
This is an evolving process, which will continually develop over
the years ahead through engagement with our people across the
whole business.
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) performance remains strong, and we are delighted to report
that for the eleventh consecutive year, our construction related AIR
and AFR for our directly employed people and operatives is zero.
We are pleased to report a strong overall (including subcontractors)
Accident Incidence Rate (AIR) of 276 (injuries per 100,000 persons)
and Accident Frequency Rate (AFR) of 0.14. This result is a
combination of the effectiveness of our management processes,
the commitment of our project teams, our continuous improvement
approach and Zero Harm initiatives. This strong health and safety
management culture has resulted in securing a prestigious RoSPA
Gold Medal Award for the 13th consecutive year resulting in a
RoSPA Presidents Award.
In 2022, our Construction segment successfully maintained
approval to the ISO 45001 (Occupational Health and Safety
Management System) standard, in addition to ISO 14001
(Environmental Management) and ISO 9001 (Quality Management)
standards which are assessed by Lloyd’s Register Limited.
We continue to be a Considerate Constructors Scheme Partner,
registering two of our projects as ‘Ultra Sites’ which commits the
sites to the highest standards of considerate construction in the
‘Respect the Community’, ‘Care for the Environment‘ and ‘Value
their Workforce’ scoring criteria. We are delighted to report our
average score for 2022 was 42.67 (industry average score is 39.77).
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 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 subcontractors and utilising local suppliers to minimise the miles
and emissions that working with us produces and to generate social
value for the communities in which we work. This continues to be a
strong and responsible approach for our business.
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:
•
•
•
Anti-Bribery and Corruption
Equality, Diversity and Inclusion
Ethics
• 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 (the
‘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 also engaged NGOs and other
supply chain bodies to understand where our practices may be
strengthened.
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 Group employees 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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TASK FORCE ON CLIMATE-RELATED FINANCIAL
DISCLOSURES (TCFD) RECOMMENDATIONS REPORT
Compliance Statement
Over the course of 2022 Henry Boot has continued to implement
the recommendations of the Task Force on Climate-related
Financial Disclosures (TCFD), and the accompanying guidance
notes, to further embed the requirements within our wider
Responsible Business approach. The table below sets out in
more detail where we have assessed ourselves in relation to our
level of consistency with the recommendations of TCFD, and an
explanation of the steps yet to be taken where we are not currently
fully consistent. Where we have indicated ‘Full’ consistency with
the recommendations of the TCFD, this means that we believe
we have achieved the minimum of the recommendations set out,
but nevertheless acknowledge that there will be further work to
do to refine and enhance this approach in coming years. ‘Partial’
consistency indicates that we have carried out some work but are
not yet fully consistent with the recommendations. Where we have
stated we are at the ‘Beginning of the journey’ we have plans in
place to achieve full consistency but recognise that the bulk of the
work has not yet commenced and may take more than the following
Compliance Assessment Table
12 months to complete. The table also provides references to
other sections within this Annual Report where further detail can be
found. We expect that over the course of 2023, 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 current consistency with the recommendations and the
direction of travel as we move forwards.
Given that the industries represented within our Group include
construction and property development, we are aware that we are
classed as a “higher risk business” and acknowledge that we need
to continuously develop our level of disclosure to ensure that it is
more thorough and progressively advanced. This will be an area of
further development for us over the course of 2023 and beyond,
as well as involving appropriate levels of external assurance to the
risks and opportunities we identify, the scenario modelling work we
undertake, and the materiality of the financial impacts those risks
may present to the business.
Provision/
Consistency
Level
GOVERNANCE
Board oversight
of climate-
related risks and
opportunities
F
More
Information
Responsible
Business
Committee
Report, (pages
116 to 119)
Governance
Structure,
(page 87)
Director’s
Remuneration
Report (pages 120
to 136)
Risk Report
(pages 50-56)
Achieved to Date
Future Developments
• Responsible Business Committee established,
•
providing Board-level importance to all ESG related
matters, including oversight of the Group’s Climate
Change Framework, and achievement of all ESG
related targets within the Responsible Business
Strategy
• Climate related risks and opportunities form part of
the annual risk management procedures
• Remuneration Committee has oversight of the
incorporation of ESG related metrics into executive
remuneration
•
Skills and experience in climate issues formed part
of recent Non-executive Director recruitment and
are assessed in the Board skills assessment
• Reporting within the Strategy Days assessed
how the business as a whole and the individual
subsidiaries had performed against ESG metrics
and targets. All strategies include ESG related
objectives
•
•
An extensive governance structure is in place for all
ESG related matters
Training and engagement sessions held with
subject matter experts and Responsible Business
Committee
• Budgeting process accounts for all ESG
related expenditure required for achievement of
Responsible Business Strategy
Increased amount of ESG
updates to ExCo and Board
planned for 2023
• With Serena Lang assuming
the role as the Chair of
the Responsible Business
Committee, we will be working
to ensure that her knowledge
and experience further develops
the role of the Committee in
interrogating areas of delivery
and focus
•
•
Further training and upskilling
sessions to be held with
Responsible Business
Committee, Executive
Committee and other senior
leaders within the business
during 2023
Strategy planning to follow
for November 2023 Strategy
Days including incorporation of
scenario modelling work into
longer term strategies, to be
reviewed by Board and ExCo,
and to further develop the
corporate objectives linking with
ESG risks and opportunities
Key:
F Full compliance
P Partial compliance, progress made
B Beginning of the journey, plans are in place to address
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Provision/
Consistency
Level
GOVERNANCE
Management’s
role in assessing
and managing
climate-related
risks and
opportunities
F
STRATEGY
Climate-related
risks and
opportunities
identified over the
short, medium,
and long term
P
Impact of climate-
related risks and
opportunities on
the organisation’s
business,
strategy, and
financial planning
P
Resilience of the
strategy, taking
into consideration
different climate-
related scenarios
B
More
Information
Responsible
Business
Committee
Report,
governance
arrangements
(page 118)
Responsible
Business
Committee
Report,
management roles
on committee and
groups (page 117)
Achieved to Date
Future Developments
•
•
•
Executive Committee members are responsible for
delivering against specific targets calibrated to ensure
each business contributes to achievement of climate-
related goals, and are periodically updated about
progress against Responsible Business Strategy
•
•
The ESG Steering Group (comprising of the Chief
Executive Officer, Chief Financial Officer, Finance
Director, HR Director, General Counsel and Company
Secretary, and Responsible Business Manager) helps
to assess all ESG related issues including climate
issues, to support the Board, and bringing leaders
from across the Group together for a multi-disciplinary
approach. This considers progress against the
Responsible Business Strategy but also cross cutting
issues such as property environmental performance
and associated objectives
The Chief Executive Officer has ultimate oversight of the
Group’s environmental performance and achievements,
which is 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
Increased amount of ESG
updates to ExCo and Board
planned for 2023
Further training and upskilling
sessions to be held with
Responsible Business
Committee, Executive
Committee and other senior
leaders within the business
during 2023
• Governance structure will
continue to be assessed
during 2023 to ensure it is fit
for purpose and is providing
sufficient focus to all required
areas. In addition, wider climate
issues with the potential to
impact strategic direction will
be considered more holistically
within the groups established, as
appropriate
•
These have been identified and are as set out in the
table within this report on pages 72 to 75
•
Risk Report
(pages 50 to 56)
These will remain under review
on an annual basis in line with
our usual risk review process,
with the additional developments
regarding the risk review process
that are outlined on page 71
• Responsible Business Strategy was considered
by the Board and Executive Committee at the
Strategy Days in 2021 prior to its introduction. The
overarching objective of the Strategy is to embed
ESG into the Group’s commercial decision-making
processes
•
Strategy Days in 2022 reflected on progress
achieved in delivery of the Responsible Business
Strategy
•
•
• Group’s five-year business planning (into which ESG
related expenditure was incorporated)
Scenario modelling work had not
been completed in sufficient time
prior to the 2022 Strategy Days to
enable these to be reflected within
the strategy documents and will
be completed in 2023
Strategy planning to follow
for November 2023 Strategy
Days including incorporation of
scenario modelling work into
longer term strategies, to address
risks and opportunities identified,
to then also be reflected more
fully within the budgeting and
financial planning process
•
Scenario modelling work to date is captured within
the scenario modelling section of this report
• Qualitative scenario modelling
work is ongoing and
consideration will turn in the
next 18 months to quantitative
scenario modelling and how this
could further impact on strategic
considerations and further
financial planning
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OUR RESPONSIBLE BUSINESS
TCFD
Achieved to Date
Future Developments
More
Information
•
As set out in the accompanying notes to the table
within this report
• We will continue to deepen our
exploration of how these risks
are prioritised against the other
principal risks as identified, and
our assessment of their materiality,
over the course of 2023
•
As set out in the table within this report
• Qualitative scenario modelling
Provision/
Consistency
Level
RISK
Processes
for identifying
and assessing
climate-
related risks
F
Processes
for managing
climate-
related risks
B
work relating to the risk identified
is ongoing and consideration will
turn in the next 18 months to
quantitative scenario modelling
and how this could further impact
on strategic considerations and
further financial planning
• We will continue to deepen our
exploration of how these risks
are prioritised against the other
principal risks as identified,
and our assessment of their
materiality, over the course
of 2023
Risk Report
(pages 50 to 56)
•
How processes
for identifying,
assessing,
and managing
climate-related
risks are
integrated into
the organisation’s
overall risk
management
F
The Group undertakes an annual review of its principal
risks as documented in pages 50 to 56 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 indicated
METRICS AND TARGETS
Metrics used by
the organisation
to assess climate-
related risks and
opportunities
in line with its
strategy and risk
management
process
P
• Metrics relating to GHG emissions have been adopted
as part of overall Responsible Business Strategy – see
page 35 of the Responsible Business Report and
page 76
•
• GHG emissions reduction target supported by
sub-targets focused on reduction of business travel,
fleet electrification, sustainable generator usage and
reduction of water usage
• Remuneration related targets on GHG emissions have
been incorporated into the bonus objectives for the
Executive Committee and will also be incorporated into
LTIP objectives from 2023
•
Further work will be required
following the climate-related
scenario planning work which
will commence in 2023, 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
previously determined
Additional metrics to be
established to incorporate the
required cross-industry, climate-
related metrics
Responsible
Business Report
(page 35)
Director’s
Remuneration
Report
(page 135)
NZC
Framework at
henryboot.co.uk
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More
Information
Responsible
Business Report
(page 35)
Provision/
Consistency
Level
Achieved to Date
Future Developments
METRICS AND TARGETS
Scope 1, Scope 2,
and if appropriate,
Scope 3 GHG
emissions, and
the related risks
P
Targets used by
the organisation
to manage
climate-related
risks and
opportunities
and performance
against targets
P
Key:
•
Scope 1 and Scope 2 GHG emissions are set
out below
•
The risks related to these have not
been fully quantified and will be
the subject of further review and
assessment
• Work to identify a partner to
assist in assessing our Scope
3 GHG emissions will be
undertaken during 2023 to
commence this work in 2024 and
beyond
•
Targets relating to a number of environmental factors
have been adopted as part of overall Responsible
Business Strategy – see page 35 of the Responsible
Business Report and page 76
•
Responsible
Business Report
(page 35)
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 targets
previously determined
F Full consistent P Partial consistent, progress made B Beginning of the journey, plans are in place to address
Governance
The Group has set up a comprehensive governance structure
incorporating a Responsible Business Committee of the Board, plus
a number of special interest groups, committees, steering groups
and working groups, which is set out in further detail on page 118
within the Responsible Business Committee Report. Through this
structure we can ensure that necessary activities are delegated to
the appropriate groups to provide the required focus to these areas,
with the Responsible Business Committee, and ultimately the Board,
maintaining overall oversight and direction. In addition, page 117 of
the Responsible Business Committee Report sets out the roles of
various senior managers within the business, and their links to the
various groups, to outline how senior management has the necessary
oversight and involvement with responsible business delivery.
During 2023, we will be carrying out further work with the various
subsidiary businesses to re-review the risks and opportunities
identified, and further develop the strategy for whether these
climate-related risks should be mitigated, transferred, accepted, or
controlled. The review will also determine the potential materiality of
the financial risks that may be posed, assessed by reference to the
two scenarios that are identified within the table below, and how
this may impact on strategic direction, as well as the opportunities
that each part of the business should focus on in developing their
strategies. This can then be fully modelled within the subsidiaries’
and Group’s strategies for the Strategy Days in November 2023.
This will be reported on more fully in next year’s report. This work
needs to be carried out before determining the extent to which those
strategies may be altered by this exercise.
Risks and Opportunities and Risk
Management Process
A risk and opportunity assessment has been carried out in
conjunction with the managing directors of each subsidiary
business, the Executive Committee, Audit and Risk Committee
and Responsible Business Committee, to identify potential risks
and review the likelihood and impact. This focussed 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 in
the tables on pages 72-75. 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).
In relation to the timeframes considered for the risks and
opportunities identified below, these have been reconsidered
following last year’s reporting, and the Group considers short term
to be up to 2030, medium term to be up to 2040 and long term
to be up to 2050. The financial commitments required to address
the short-term 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.
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OUR RESPONSIBLE BUSINESS
TCFD
Risk Table
Low emissions scenario:
2°C warming
Transition
Risk
Potential
financial impact
2030 2040 2050 Response
Technology
Capital cost of
replacing/upgrading
plant and vehicles
Subsidiaries affected:
BP and HBC
In this scenario the business
is exposed to significant
transition risks, including more
stringent reporting regulation
and short-notice legislative
changes with requirements
to adopt new or alternative
materials and technologies
that deliver low-carbon
whole-life infrastructure
assets and buildings. It
includes associated supply
chain impacts and potential
cost increases.
Financial
Increase in supply
chain costs as their
transition costs
(including technological
and legislative) are
passed through to main
contractor/developer
Subsidiaries affected:
HBD and HBC
A balanced transition to carbon friendly
plant and vehicles 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 transition of cabins, generators and
electrification of the fleet. These costs
are included in the Group’s five-year
business plan. We will look at scenario
modelling the costs of transition in the
next 18 months.
It remains difficult to predict the speed
at which our supply chain will transition
and the likely increase in cost to the
Group or indeed our ability to share the
cost with our customers. The Group’s
aim is to maintain healthy margins
on all developments by appropriately
fixing costs and pricing accordingly
while also supporting the transition of
our Group and others to a low carbon
economy.
Unmitigated risk
Significant risk
Elevated risk
Low risk
Subsidiary
HBC = Henry Boot Construction
BP = Banner Plant
HLM = Hallam Land Management
SBH = Stonebridge Homes
HBD = Henry Boot Developments
RL = Roadlink (A69)
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Low emissions scenario:
2°C warming
Transition
Risk
Potential
financial impact
2030 2040 2050 Response
Market
Demand for sustainable
assets rapidly increase
/ reduced appetite for
assets that do not meet
sustainability criteria
Subsidiaries affected:
HBD, BP and HBC
In this scenario the business
is exposed to significant
transition risks, including more
stringent reporting regulation
and short-notice legislative
changes with requirements
to adopt new or alternative
materials and technologies
that deliver low-carbon whole-
life infrastructure assets
and buildings. It includes
associated supply chain
impacts and potential cost
increases (cont.)
Policy
and legal
Government legislation
designed to reduce
emissions (such as
emissions trading
schemes/carbon
tax requirements,
biodiversity net gain
or Future Homes
standards) changes
specifications and
increases costs of
schemes impacting
viability.
Subsidiaries affected:
HLM, HBD and SBH
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.
Subsidiaries affected:
HLM
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The Group continues to invest in
sustainable schemes and assets in
line with Group targets and to position
ourselves favourably in the market.
The increasing cost of switching
to sustainable options will in some
cases be passed to customers or be
embedded within initial 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.
The Group closely monitors existing
and emerging legislation such as
the Future Homes Standard and
biodiversity requirements in advance
of committing to a scheme. Appraisals
then fully embed additional legislative
costs which currently remain within
accepted target return levels.
Strategic Land forecasts recognise
potential decreases in profit per
plot although we will look to begin
modelling the full financial impact in the
next 18 months.
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I
Unmitigated risk
Significant risk
Elevated risk
Low risk
Subsidiary
HBC = Henry Boot Construction
BP = Banner Plant
HLM = Hallam Land Management
SBH = Stonebridge Homes
HBD = Henry Boot Developments
RL = Roadlink (A69)
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OUR RESPONSIBLE BUSINESS
TCFD
High emissions scenario:
4°C warming
Transition
Risk
Potential
financial impact
2030 2040 2050 Response
In this scenario the business
is exposed to significant
physical risks, both acute
and chronic, including
exposure to flooding, strong
winds and heat stress
resulting in damage to assets,
prolonged project delivery
timescales and more onerous
whole-of-life obligations on
buildings and assets to ensure
materials can withstand
temperature extremes.
Extreme
weather
conditions –
Precipitation,
flood, wind
Heat stress
Flooding
Delayed build
programmes due to
extreme weather events,
leading to additional
risk/costs. Ground
or site conditions/
location is affected by
climate events which
means that they are no
longer viable for their
intended use.
Subsidiaries affected:
HBC, SBH and HBD
Design criteria evolved
to combat overheating.
Construction site
conditions and practices
will need to ensure
worker health and safety
and well-being.
Subsidiaries affected:
HBC, SBH and HBD
Already a key
requirement of planning
process. Increased
number of flood plains
in future may reduce
land values
Subsidiaries affected:
HLM, SBH and HBD
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.
The Group remains mindful to develop
sustainable assets and of the health
and well-being impact on our people.
While some costs will inevitably be
passed on to the end user there will
also be some financial impact on the
Group.
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
leading to reduced margins or the
impairment of land values where
flooding becomes more prevalent. This
is mitigated in the medium term by the
suitable strategic land bank we hold in
prime locations. We will look to begin
modelling the financial impact in the
next 18 months.
Identified above are the primary risks to the Group – however, we continue to consider lesser risks which, if they were to increase in either
likelihood or impact, would be elevated to primary risks. These include:
•
•
•
•
the cost of investing in new technology to monitor our environmental impact;
cost of capital;
the valuation impact of environmental factors on investment property; and
increase in insurance costs.
Unmitigated risk
Significant risk
Elevated risk
Low risk
Subsidiary
HBC = Henry Boot Construction
BP = Banner Plant
HLM = Hallam Land Management
SBH = Stonebridge Homes
HBD = Henry Boot Developments
RL = Roadlink (A69)
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Opportunities
Opportunities
Description
Response
Resources
Recruitment of modern thinking and
progressive people
The Group’s delivery on ESG matters, and in particular climate
change, have already impacted the recruitment process with
candidates often reflecting on this as a reason they join Henry Boot.
Financial
Market
Availability and cost of capital to
the Group
Discussed potential targets with our funders and plan to incorporate
climate targets at our next renewal in January 2025 as a means to
reduce interest costs.
Green credentials open tendering
opportunities
Diversified offerings to customers (green
products, retrofitting, redevelopment)
Increased premium on products
Environmental credentials and reporting have supported numerous
bids in the year, in particular our position on public sector framework
contracts in the construction segment.
This opportunity will be progressed in line with our NZC targets
to 2030.
Energy source
and usage
Ability to attract tenants
Lower operating costs
Innovation and
resilience
Digital transformation
The Group is progressing multiple developments which are
operationally net zero and BREEAM excellent. This opportunity will
be progressed as we recycle and develop assets, including the
Group’s investment property.
As a Group we continue to invest heavily in digital transformation and
systems as we believe this will support efficiency and effectiveness
as the Group grows. This is an ongoing opportunity with key system
upgrades currently in process.
Strategy
Currently we are in the process of carrying out qualitative scenario modelling work, the results of which are reflected (to the extent carried
out) in the risks table set out above. Over the course of the next 18 months we intend to develop this further to encompass quantitative
scenario modelling and use this to formulate a transition plan, which will specifically link to each identified risk and opportunity. The transition
plan will be discussed with the subsidiary businesses, incorporating any short-term as well as longer-term milestones, preparing for and
addressing those medium-term or long-term risks identified above.
Scenario modelling will also include the potential financial impact and will link to any relevant disclosures on this within the financial
statements, as well as linking to the relevant risks or opportunities identified. This information will then be crucial for use during the
businesses’ preparation for its November 2023 Strategy Days, enabling the factors identified to be incorporated within the strategies to be
considered by the Board and Executive Committee at that time.
Metrics and Targets
The metrics we currently set relate predominantly to GHG emissions, though we are conscious that additional metrics will be required in relation
to climate related risks and opportunities, capital deployment, internal carbon pricing and remuneration. We have a target to reach NZC for
all direct (Scope 1 and 2) GHG emissions by 2030. In achieving this target, we are aiming to fully electrify our fleet of vans (and make initial
progress in adapting our fleet of heavy goods vehicles), decarbonise operational emissions, and adapt our properties. Our Decarbonisation
Trajectory (see below) plots our projected path to achieve NZC.
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OUR RESPONSIBLE BUSINESS
TCFD
Carbon Trajectory
4.0
3.0
2.0
1.0
0.0
)
e
2
O
C
k
(
s
e
n
n
o
T
Original Trajectory
Actual
1,392 tonnes
to offset
19
20
21
22
23
24
25
26
27
28
29
30
Total direct emissions –
scope 1 and 2 (tonnes of CO2e)
Carbon reduction plan total direct
emissions - scope 1 and 2
(tonnes of CO2e)
Total emissions (tonnes of CO2e)
Total energy consumed –
scopes 1, 2 and 3 (MWh)
2019
2020
2021
2022
2023
2024
2025
2030
3,313
2,562
2,706
2,930
3,313
4,404
3,204
3,357
3,095
3,654
2,985
3,958
2,875
2,765
2,653
1,392
n/a
11,551
12,600
13,647
In 2020, the Group worked with external consultants to establish a carbon reduction trajectory. From a 2019 baseline, reductions were
forecast based on the Group NZC strategy which included fleet electrification, generator replacement and retrofitting of controlled sites
amongst other activities. The trajectory forecast a reduction in direct emissions to 2,653 tonnes by 2025 and to 1,392 tonnes by 2030. The
Group is meeting the reduction targets albeit having been largely impacted by the pandemic in 2020. Although our actions in respect of
decarbonisation may evolve due to changes in legislation, and technology, we still believe that our 2025 and 2030 targets can be achieved.
As seen below, we saw a moderate increase in our direct GHG emissions in 2022. This is partly due to increased productivity associated
with the end of the COVID pandemic restrictions. It has also been exacerbated by a reliance on diesel powered generators for construction
operations where it has not been possible to access electricity via a mains supply.
Despite these factors, we are pleased that we have made strong progress in our efforts to decarbonise our operations. Our energy usage
decreased by 37% less gas and 9% less electricity used when compared with our 2019 baseline and business travel reduced by 34% (also using
a 2019 baseline) as our colleagues adapted to new ways of working (these figures are not inclusive of Stonebridge Homes). We trialled a number of
innovative technological solutions (including sustainable site-based generator solutions) which we hope will support a reduction in site based GHG
emissions. We remain committed to our decarbonisation targets and are optimistic that we will achieve these.
In addition to our direct emissions, we are committed to reducing our indirect GHG emissions (Scope 3). In 2023, we will be undertaking
a project to analyse our indirect emissions ahead of establishing a reduction target and action plan. This target will require significant
collaboration with our people, supply chain and customers to ensure we take a collaborative approach to reaching NZC.
In addition to our decarbonisation targets, we have also established a range of additional targets (see page 35) focused on the reduction of
waste, water and plastic usage. Utilising circular economy principles, we seek to expand on our strong existing performance to implement
commercial processes that utilise resources and avoid creating waste. We are also committed to implementing nature stewardship into our
commercial delivery and to innovate and work with key partners to enhance natural habitats and ecosystems in the environments in which
we work.
This holistic approach to tackling the impacts of climate change will support our business to adapt to the evolving framework of regulation
and stakeholder expectations, and to protect natural capital and reduce environmental damage.
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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 (Location based)
Upstream and downstream indirect emissions (Market based)
Total emissions (Location based)
Total emissions per employee1
2022
Tonnes
2,453
2,453
477
–
2,930
5.5 tonnes CO2e
1,028
906
3,958
7.4 tonnes CO2e
Rise
Trend
Rise
2021
Tonnes
2,303
2,303
403
–
2,706
Rise
5.5 tonnes CO2e No change
948
Rise
834
3,654
Rise
7.4 tonnes CO2e No change
1 Employee numbers are based on the monthly average for the year.
Carbon Emissions by Segment
Henry Boot Group Energy Usage
Total energy consumed (scopes 1, 2 and 3)
2022
MWh
13,647
2021
MWh
12,600
Trend
Rise
Henry Boot Group
CO2e emissions
2022
intensity
ratio
tonnes of
CO2e
2022
tonnes of
CO2
2021
tonnes of
CO2
2021
intensity
ratio tonnes
of CO2e
Property investment and development
Land development
Construction
Group overheads
Total gross controlled emissions
1,089
33
2,740
96
3,958
9.29
0.94
21.12
1.17
757
35
2,739
122
3,654
11.47
1.17
26.68
1.85
Intensity
basis
per 1,000 sq. ft
of investment
property with
communal areas
per employee
per £1m of turnover
per employee
Trend of
intensity
Fall
Fall
Fall
Fall
Our carbon emissions for the year ended 31 December 2022 were calculated using the GHG Protocol Corporate Accounting and Reporting
Standard, which provides requirements and guidance for companies calculating their GHG emissions and in accordance with the March
2019 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 8% when compared with the previous year, although remains comparable on a tonnes per employee
basis. When compared to 2019 pre COVID levels the Group has reduced carbon emissions by 10%; this equates to a decrease of 0.7
tonnes per employee.
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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
– Annual Report on Remuneration
– Directors Report
– Statement of the Directors’
Responsibility in Respect of Financial Statements
80
82
84
86
87
90
99
104
111
116
120
127
137
143
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022
79
Pictured: Ique qui iduci officii scidebis molore, aut offici aut
diam asperit, con non cone vent, volum volo moluptat.
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BOARD OF
DIRECTORS
PETER MAWSON
Chair
TIM ROBERTS
Chief Executive Officer
DARREN LITTLEWOOD
Chief Financial Officer
JOANNE LAKE
Senior Independent Director
N B
R
B
B
A
R B
Date of appointment
October 2015
Date of appointment
January 2020
Date of appointment
January 2016
Date of appointment
October 2015
Independent
Yes
Independent
No
Independent
No
Independent
Yes
Additional roles held
Non-executive Chairman
of Nexus Planning Limited,
Board Representative for
Paradise Circus Project for
the Greater Birmingham
& Solihull Local Enterprise
Partnership.
Brings to the Board
Key strengths:
• Wide-ranging experience
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.
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
Director of the Company’s
six principal operating
subsidiaries and Member
of the CBI Yorkshire and
Humber Regional Council.
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
Non-executive Chair of
Made Tech Group plc, Non-
executive Director of Gateley
(Holdings) Plc, Non-executive
Director of Pollen Street PLC
and Non-executive Director of
Braemar 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
Pricewaterhouse. 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. Joanne became the
Senior Independent Director
on 26 May 2022.
Key
Committee Membership
N Nomination A Audit and Risk R Remuneration B Responsible Business
Committee Chair
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JAMES SYKES
Non-executive Director
GERALD JENNINGS
Non-executive Director and
Designated Non-executive
Director for Workforce
Engagement
SERENA LANG
Non-executive Director
AMY STANBRIDGE
General Counsel and
Company Secretary
N B
N
A R
N
A
BR
Date of appointment
March 2011
Date of appointment
October 2015
Date of appointment
August 2022
Date of appointment
October 2018
Independent
No
Independent
Yes
Independent
Yes
Independent
No
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.
Brings to the Board
Key strengths:
•
•
Significant strategic land
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.
Additional roles held
Non-executive Chairman
of Social Communications
(Leeds) Limited, Chair of the
Morley Town Deal Board 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
Chairman of Eleco plc and
Non-executive Director of
Ainscough Crane Hire Ltd.
Brings to the Board
Key strengths:
•
•
•
Extensive strategic
leadership, growth and
digital transformation
experience
Experience in
industrial, engineering
and construction
environments and
culturally diverse markets
Strong sustainability
credentials, specifically in
the Built Environment
• Diversity of thought to
the Board having worked
across multiple industries
Prior to joining Eleco plc in
2014, she previously held
executive roles as Enterprise
Client Executive at Invensys
(now Schneider Electric),
Global VP of Transformation
at BP plc and as an Executive
Consultant at Capgemini
Ernst & Young.
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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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 and became
Managing Director in 2016.
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,
following which he assumed
the position of Chair in
January 2023.
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, bringing with him
extensive experience in
hospitality and facilities
management. He began his
career as a General Manager
with Whitbread before
transitioning into sales and
management within facilities
management. At the Algeco
Group, Jonathan worked as
an Account Director before
being promoted to Regional
Director, overseeing four
production facilities. He also
served as UK Sales Director
before becoming Managing
Director at Banner Plant. In
addition to his professional
achievements, Jonathan is
a foundation governor at his
local high school.
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Additional Executive
Committee Members
DARREN STUBBS
Stonebridge Homes
Limited
RACHEL WHITE
Henry Boot PLC
Date of appointment
Chief Executive in 2010
Date of appointment
HR Director in 2022
TIM ROBERTS
Chief Executive Officer
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 39-year career. Darren
founded Stonebridge Homes
in 2010, a jointly-owned
company with Henry Boot
PLC. Darren is the Chairman
of The Yorkshire Children’s
Charity and Vice Chair of
Zarach, a charity who
provide beds to children living
in poverty.
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 HR Director in July 2022.
Rachel leads the delivery
of our People Strategy to
meet the requirements of
our internal stakeholders
including employee relations,
succession planning, talent
management, diversity and
inclusion, wellbeing, reward
and recognition, employee
benefits and employee
engagement.
Rachel is also a Trustee
Director for Henry Boot
Pension Trustees Limited
and is a member of the
Governance Committee for
the Henry Boot PLC Group
Stakeholder Pension Plan.
In 2022, Rachel became a
Trustee of The Children’s
Hospital Charity and is also a
volunteer befriender to lonely
older people through b:Friend.
DARREN LITTLEWOOD
Chief Financial Officer
AMY STANBRIDGE
General Counsel and
Company Secretary
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CHAIR’S
INTRODUCTION
PETER MAWSON
CHAIR
Dear Shareholders,
T
his year has seen quite a change for us as a
Board, most significantly with the retirement
of Jamie Boot as our Chairman, my
appointment to the role and the recruitment
of a new Non-executive Director, Serena
Lang. This represents a substantial shift for
the Board, with us reflecting on the loss
of Jamie’s many years of experience and
expertise in navigating the challenges faced by the business
during his tenure, and we wish Jamie all the best in his
well-deserved retirement. It has also presented us with the
scope to progress our succession planning approach, and I
am naturally delighted to have been given the opportunity to
step into the role as the Chair. It is my intention to ensure that
we carry on the great work we have had underway for many
years under Jamie’s direction in our approach to governance,
and also make further progress on our journey towards
greater diversity and inclusion throughout the business,
whilst strengthening our succession and leadership support.
We wholeheartedly welcome Serena to her position on the
Board and also, from the beginning of 2023, as the Chair of
the Responsible Business Committee, an area in which she
brings a wealth of knowledge and expertise.
During 2022 we further developed our methodology for
strategic planning and, during a year in which there has been
a substantial degree of turbulence, this tested our adaptability
to not only weather this challenging time to come but also
used it as an opportunity to reflect on areas of the business
in which we can progress some material programmes of
modernisation. I believe this is a testament to how robust and
aspirational our ambitions are. This is something that we have
debated thoroughly as a Board and I am confident that, with
the enhanced Executive Committee support and input that
we now receive, we are set up well to move forwards.
Succession Planning and Diversity
As a Board, 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 104 to 110. Further work on
our recruitment ambitions will be delivered during 2023
and 2024, which I believe will bolster the resilience and
expertise of the Board and we are mindful that whilst doing
so we want to maintain the excellent working relationships
we have always enjoyed as a team. To facilitate our future
approach to recruitment, we have also rethought the ways
in which we analyse the skills and expertise of our wider
senior leadership team, which you can read more about on
pages 107 to 108.
Strategy
The Company continues to enhance its methods of
reviewing Company strategy, holding our Strategy Days in
November 2022. We were not only joined by the Executive
Committee but a range of other senior leaders from within
the business, who presented on and debated key aspects
of both subsidiary and the wider Group approach on issues
such as people, marketing and IT. By restructuring these
discussions, the Board had the ability to obtain greater
insight of these key areas and fully analyse our resilience,
ambition and focus. Whilst the main strategic direction
of the Group has not changed, by being able to discuss
issues directly with a range of senior leaders, it also gave
a great opportunity to us to interact more widely and gave
visibility to important members of the wider leadership
team. More details on this can be found on page 91.
Leadership Development and Oversight
In a number of areas this year, the Board has overseen
initiatives intended to reshape our approach to reward
and recognition, leadership development and broader
succession issues. The launch by the Group of an
overarching Reward Strategy has been a major move
forwards for us. Ensuring that this compliments the
existing Remuneration Policy, as well as being rolled
out thoughtfully, this has been overseen by the Board
and Remuneration Committee. Thinking about how we
communicate programmes such as this also touches
on how we bring our leaders along with us on important
initiatives and we have overseen a programme of
development activity for our Executive Committee, as
well as some other senior leadership upskilling sessions,
to support this. The next phase of our leadership
development is Aspire, our Management Development
Programme, will launch in early 2023 and alongside this we
are reviewing wider succession plans and talent grids to
ensure that the oversight of this area is robust.
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Code Compliance
During 2022 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 long 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 and responsibilities
Read more on pages 87 to 89
Board leadership and Company
purpose
Read more on pages 90 to 98
Composition, success and evaluation
Read more on pages 99 to 110
Audit, risk and internal control
Read more on pages 111 to 114
Remuneration
Read more on pages 120 to 135
“I am delighted to have stepped into the role
as Chair during 2022 and am confident about
the direction of the Group, its resilience,
ambition and focus, strengthened by our
approach to governance.”
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Responsible Business
Delivering on our Responsible Business
goals remains a key focus for the Board
and, as well as embedding our Responsible
Business Committee activity in 2022, we
welcomed a range of guest speakers to
help us develop our thinking on key topics.
Areas developed this year included our
climate change framework, health and
wellbeing approach as well as volunteering
and charitable giving. You can read more
about this in detail on pages 116 to 119.
In addition, to strengthen our governance
in this area, an ESG Steering Group,
which feeds into the Responsible Business
Committee, was formed. I look forward
to working closely with Serena Lang as
she assumes the role as the Chair of
the Responsible Business Committee to
continue refining its operations and ensuring
that we support the business with its
ambitions in this area.
The following report sets out our
structure, governance processes and key
activities undertaken by the Board and its
Committees during 2022. We welcome
feedback from our stakeholders and I would
encourage you to get in touch with us on
any governance matters. I hope to see
many of you at our AGM on 25 May 2023
(see page 208 for full details).
PETER MAWSON
CHAIR
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GOVERNANCE
AT A GLANCE
HIGHLIGHTS
Promoting long-term success
•
Against an uncertain economic backdrop, the Board has remained purposefully selective on new
projects, with gearing remaining low at 12.3% (2021: 11.4%), allowing the Group to react to any
opportunities available in the market.
• Key themes and actions arising from the Strategy Days in November centred around long-term vision
and maintaining strategic ambition. This included the pursuit of high-quality projects, improving business
processes, investment in technology and nurturing future talent.
Read more on page 91
Responsible Business
• Recognising the rising pressures on the cost of living, the Board approved a £1,000 one-off payment
in September 2022 for those in the lower paid grades 6-9 and we offered financial coaching to all our
people. Alongside this, we also increased our community support through volunteering and donations
to local food banks.
•
ESG targets from the Responsible Business Strategy relating to scope 1 and 2 GHG emission
reductions and improving gender balance across the Group have been introduced into the LTIPs
for the Executive Directors and senior management. ESG-related objectives have already been
incorporated into the Annual Bonus plan.
•
Strong performance made against the Responsible Business Strategy medium-term targets for 2025.
Read more on pages 116 to 119
Board Succession
•
A wholesale review of the skills matrix was undertaken at the end of 2022 as we look ahead to future
Non-executive Director appointments and consider the future skills needed to maintain long-term
success. For the first time, the Executive Committee members were included in the review to provide
a wider coverage of the skills set available across the top layers of the Company.
•
•
Serena Lang joined the Board in August 2022 and underwent a thorough and tailored induction
programme, meeting all the Executive Committee members, the Chair of the Group Employee
Forum and other key senior managers. She also undertook several site visits including Henry Boot
Construction’s Cocoa Works re-development in York and several Stonebridge Homes sites in
Harrogate meeting employees and other stakeholders.
The Nomination Committee updated the Board Diversity Policy to increase our target for female
representation on the Board from 33% to 40%.
Read more on pages 104 to 110
Stakeholder Engagement
•
2022 has seen increased engagement between the Board and the workforce on a number of matters.
Board members attended the town hall meeting to discuss a potential move away from the existing
head office and received all consultation feedback from employees before coming to a decision
to relocate to Sheffield city centre. Regular feedback has been sought to gauge sentiment on the
implementation of the workforce reward strategy and the new personal development review process.
•
The Board met with the Group Employee Forum (GEF) in March and September. Gerald Jennings,
who attends all the GEF meetings, provides updates to the Board on any key issues and ensures that
there is a two-way dialogue between the two groups.
• Customers were identified as a stakeholder group that the Board wanted increased oversight of. New
customer plans have been developed for each business and updates will be provided on a more
regular basis at Board meetings.
Read more on pages 59 to 60
“We have confidence
in the long-term
fundamentals of our
markets, business
model and have
the operational and
financial resources to
continue to meet our
strategic growth and
return objectives.”
Tim Roberts
£1,000 Cost of Living
payment made to
67% of the workforce
in September 2022.
As part of his
transition into the
Chair role, Peter
Mawson has held
14 ‘Meet the Team’
sessions across
10 office locations,
and visited 7 plant
hire depots and
8 project sites.
An improved
customer insight
programme will
be rolled out during
2023 with increased
reporting to the
Board on customer
feedback and
priorities.
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CORPORATE
GOVERNANCE REPORT
DIVISION OF RESPONSIBILITIES
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 118.
The Board
The names, responsibilities and other details of each of the
Directors of the Board are set out on pages 80 and 81. Jamie
Boot resigned as a Director and Chair on 26 May 2022, with Peter
Mawson stepping into the Chair role. Serena Lang joined the Board
as Non-executive Director on 1 August 2022. Biographies for each
Director are shown on page 80 to 81 and roles and responsibilities
can be viewed on the website.
Peter Mawson
Non-executive Director
Tim Roberts
Chief Executive Officer
Darren Littlewood
Chief Financial Officer
Joanne Lake
Senior Independent Director
James Sykes
Non-executive Director
Gerald Jennings
Non-executive Director
Serena Lang
Non-executive Director
Jamie Boot
Non-executive Director
8
8
8
8
8
8
8
8
8
8
8
8
2
2
4
4
Meetings attended
Eligible meetings
Throughout the year there have been six scheduled Board
meetings attended by all Directors, and two separate Board
meetings to approve one-off, urgent matters. 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.
The number of Committee meetings are reported in each
Committee report.
Board composition
Executive
29%
Independent
Non-executive Chair
14%
Board tenure
6+ years
72%
Board gender
Male
72%
Independent
Non-executive
43%
Non-independent
Non-executive
14%
0-2 years
14%
3-5 years
14%
Female
28%
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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. James Sykes is classed
as non-independent, having been appointed to represent the
substantial shareholdings of the Reis family interests (see page 139).
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.
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CORPORATE
GOVERNANCE REPORT
DIVISION OF RESPONSIBILITIES
Governance framework
Board
Audit and
Risk
Committee
Nomination
Committee
Remuneration
Committee
Responsible
Business
Committee
Group
Employee
Forum
You can read
about the
structure for the
Board’s oversight
of climate-
related risks and
opportunities in
the Responsible
Business
Committee report
on page 118.
Executive Committee
Land Promotion
Property
Investment and
Development
Construction
Subsidiary
Employee
Employee
Forums
Forums
Hallam Land
Management
Henry Boot
Developments
Henry Boot
Construction
Stonebridge
Homes
Banner
Plant
Road
Link (A69)
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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 eg 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 page 116 for more information
• Have access to external consultants where necessary
•
See pages 104 to 135 for more information on the work of each Committee
Executive
Committee
• Members are set out on pages 82 to 83
• Re-formed 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
•
Appointments to the Executive Committee are overseen by the Nomination Committee and the Board.
Members of the Executive Committee attend the Board meetings regularly and are part of the Board
Strategy Days.
Subsidiary
Boards
• Day-to-day operational management of the subsidiary companies sits with their respective boards and MDs
•
•
The CEO and CFO sit on all the principal subsidiary company boards
The MDs are invited to attend the Strategy Days and the Board meetings on a rotational basis to discuss
business plans and strategy
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CORPORATE
GOVERNANCE REPORT
BOARD LEADERSHIP AND COMPANY PURPOSE
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 page 58
Developing and
embedding our approach
to ESG matters, through
the launch and embedding
of our Responsible
Business Strategy
Read more
on page 32
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 page 20
History of managing
gearing, and the balance
sheet, effectively through
the cycle
Read more
on page 57
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 page 50
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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 vs 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
Sh E Cu
History of managing
gearing and the
balance sheet
effectively through
the cycle
E Cu S
Sh Co En
Consideration of
the risk facing the
businesses
E Cu Sh
S
Overseeing the
health and safety
arrangements in
place
E
S En
Co Cu
Commitment to
development and
increasing our
knowledge of the
business and culture
E Cu S
Sh En
The Board held a productive session over two days joined by the Executive Committee
and other senior management. Strategies for each of the subsidiary businesses were
debated with a renewed focus on the types of opportunities we want to pursue and
how to build upon existing relationships with customers. Alongside this, time was
dedicated to ensuring that the strategies for some of the central support functions
(IT, Marketing and People) were aligned and able to help the businesses deliver their
long-term ambitions. The key themes, actions and decisions from the sessions were
captured, shared with senior management and will be regularly reviewed.
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.
The Board monitors the level of gearing at every meeting ensuring that it remains within
the agreed target range. More than ever, the Board has considered how best to employ
capital to maximise returns and make progress against the agreed strategic objectives.
Before coming to any investment decision, the Board considers gearing, the Group’s
positioning in each of its key three markets and the level of risk involved.
The Audit and Risk Committee and the Board review the Group’s principal and
emerging risks twice a year (see pages 50 to 56 for more information) but given the
level of uncertainty in the market, the Board has taken a heightened approach to risk
management.
At the start of the year, the Board concentrated specifically on the risks posed to the
business from the war in Ukraine and the measures that had been put in place to mitigate
them, such as having 97% of the committed development programme as fixed cost.
Risks relating to individual investment decisions are considered in detail before approval,
particularly for speculative schemes where the Board actively manages the amount
of speculative vs pre-sold or pre-let projects within the committed development
programme.
As one of Henry Boot’s core strategic objectives, safety remains a key priority at
Board level. Health and Safety KPIs are discussed at every Board meeting alongside
reporting on accidents and near misses.
The Group Health & Safety Manager meets with the Board to present the annual
Health and Safety reports for each of the principal businesses and outlines his
recommendations for improvement.
In October, the Board held an interactive session with the Vice Chair of the TCFD to
discuss his role on the TCFD steering group and good practice around reporting. Other
development opportunities during 2022 included a discussion with a Sustainability Lead
from Natwest Bank who specialised in the real estate and housing sector to explore
key themes and trends and also a refresher course on Directors’ statutory duties. An
extensive programme of training and development has been prepared for 2023 with a
focus on the ESG agenda.
On an operational level during 2022, the Board visited the Setl and Neighbourhood sites
in Birmingham, Phoenix 10 in Walsall and New Horizon in Nottingham. Informal lunches
have been held with various teams and offices following Board meetings and most
Non-executive Directors have also attended a sample of subsidiary board meetings
across the 12 months providing opportunities to engage with talent throughout the
organisation and give an insight into culture and health and safety practices.
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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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BOARD LEADERSHIP AND COMPANY PURPOSE
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 employees 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, but also the need to ensure that the overall culture of the Group
is embedded within its strategy and general approach to business. Over the course of 2023 and 2024, the Board along with the Executive
Committee will be looking again at culture, how it is understood throughout the business and how it is monitored, alongside work on the brand
value proposition and employee value proposition, which will be reported on in subsequent years.
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
THEHENRY BO O T W A Y
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How the Board monitored culture in 2022
Engagement
surveys
Action
The cycle of undertaking and
reflecting on the outcomes of
the main employee survey has
now become well established
by the Board, Executive
Committee and subsidiary
boards. To continue the
process adopted in 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.
During 2022 and in support of
our revised Reward Strategy,
we also engaged with our
people to establish the value
they placed on the various
employment benefits offered
by the Group and to establish
if there were any gaps in
our offer.
Health and
Wellbeing
The Health and Wellbeing
Strategy, and the work that
has been done to produce this
(including substantial input by
the Group Employee Forum)
and launch it, is covered in
more detail on page 65
Link to culture, and
effectiveness of
engagement method
Values upheld
or impacted
Outcomes, development
of culture and addressing
culture issues
Loyalty
Integrity
Collaboration
The Board reviewed the
survey outcome as a whole
and through the direct
engagement with the GEF,
focussed on areas that had
not scored as well within
the survey, such as ability to
balance work with home life,
and switch off from work.
The Board and Responsible
Business Committee
have incorporated these
suggestions within the Health
and Wellbeing Strategy,
launched in early 2023.
We continue to say that our
people are our greatest asset,
and at times of challenge,
we can provide stability and
support in various guises.
This goes to the heart of the
culture of the Group, that we
are nothing without the people
who make our business a
success.
Respect
Adaptability
Integrity
The Health and Wellbeing
Strategy discussed above
aims to develop our culture as
a progressive and proactive,
supportive employer of choice.
The outcomes of an
engagement survey which can
build a picture year on year
regarding the shift of attitude
by employees 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
those employees feel that the
culture of the business is being
upheld, and where it is not,
what employees feel could be
done to address this.
During the cost of living crisis
our people are looking to
the Group for guidance and
support more than ever in
different ways, by engaging
with our people to provide
valued benefits we hope to
have alleviated some of the
pressure being felt.
The formulation of the Health
and Wellbeing Strategy
reflects the outcomes of our
engagement surveys and
issues that have particularly
resonated with our employees,
as set out above. Engagement
methods in developing our
Strategy included:
− GEF reflection and Board
presentations (see more on
page 96)
− Health and Wellbeing
Working Group
− HR Management team
−
A range of other internal
engagements
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BOARD LEADERSHIP AND COMPANY PURPOSE
Employee
forum
Action
As well as the direct Board
interaction outlined above,
and as described on page
96, linkage to the Board is
provided by the designated
Non-executive Director
appointed to liaise with the
GEF, so that the entire Board
can benefit from hearing the
feedback and respond to
issues as necessary.
Whistleblowing
response
In 2022, a whistleblowing
report was received in respect
of cultural issues within
Henry Boot Construction,
in particular in relation to
the position of and working
practices impacting women
within the business.
Values upheld
or impacted
Collaboration
Respect
Integrity
Loyalty
Respect
Link to culture, and
effectiveness of
engagement method
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.
Following receipt of the
whistleblowing report,
immediate action was taken
by the CEO supported by the
HR Director to implement an
investigation into the allegations
made. This was overseen by a
director from one of our other
subsidiaries, and took the
form of interviews and data
gathering to create a robust
assessment. The report was
shared and accepted by the
board of HBC and formed a
basis on which a cultural action
plan has been developed
and is being implemented
during 2023.
Outcomes, development
of culture and addressing
culture issues
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 new reward strategy for
our people. 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 96 to 97.
We have always encouraged
our people to speak up if there
is something that is causing
concern, recognising that this
may not always be possible
through overt routes, so a
whistleblowing line is in place
for those times where a direct
report might not be possible.
Our ongoing engagement
with our people through
various routes means that
the use of our whistleblowing
line is minimal and that any
perceived issues can be dealt
with openly. This matter has
also received Board oversight
and guidance to the subsidiary
affected, ensuring that the
culture issues identified are
addressed.
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Link to culture, and
effectiveness of
engagement method
Values upheld
or impacted
Outcomes, development
of culture and addressing
culture issues
Head office
proposals
Action
As explored in detail within
our section 172 statement
on pages 58 to 61, the
broad and deep consultation
process undertaken as part
of the Board’s decision to
relocate its head office in
Sheffield resulted in a number
of engagements across
the Group.
Strategy Days
The Group’s People Strategy,
alongside the wider strategy
of the operational businesses,
was discussed at the 2022
Strategy Days with the Board
and Executive Committee.
Adaptability
Delivery
A number of methods of
communication and feedback
were employed during the
consultation exercise on the
proposed head office move,
such as:
− Webinars
−
−
−
Town hall meetings
Feedback channels via
both email and confidential
portals
The establishment of
Group-wide Working
Groups on particular areas
of interest
Further outlines of these
methods of engagement are
contained at page 61
Delivery
Integrity
The culture of the business
and how this can be influenced
by the senior leadership
teams, including the Board,
was a key part of the People
Strategy and also an underlying
element of the Marketing and
Communications Strategy,
focusing on the offer to our
people through its employee
value proposition.
Responsible
Business
Committee
The Responsible Business
Committee (see page 116 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.
Respect
Integrity
Delivery
The Committee focusses on a
number of issues that relate to
culture in practice across the
Group, and how the culture of
the business is also perceived
by external stakeholders and
as employees, as well as the
embedding of the Values within
our Responsible Business
Strategy.
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In order to take our people
with us on this change journey,
we adopted a structure of
Working Groups to focus on
specific aspects of the project
which were highlighted by our
people as being important to
them, with a remit to develop
their thinking into broader
Group wide policies. It was
therefore key that there was
cross Group representation
on these working groups,
who feedback their views into
the project Steering Group,
Executive Committee and the
Board to shape the ultimate
proposals. We are immensely
proud of our culture and our
heritage, it was therefore fitting
that these two aspects were
the sole focus of one of the
Working Groups.
The Board and Executive
Committee recognise that
culture is the key to success,
and that without a positive
and engaging culture even
the best formulated strategies
will struggle. We have placed
our people at the heart of
all we do and therefore the
focus that the Board and
Executive Committee are
giving to the People Strategy
as a key lever of change and
also a shared priority will be
more meaningful to our wider
internal stakeholders.
The view of employees
and external stakeholders
influenced the shaping
of a number of policies
and strategies supporting
the delivery of our overall
Responsible Business
Strategy, including elements
such as health and wellbeing
(as discussed above), EDI
Strategy, charitable giving,
community partnerships
and volunteering. These are
intrinsic to delivering the
established culture of Henry
Boot as a business that cares
about its links with the wider
community and its people.
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BOARD LEADERSHIP AND COMPANY PURPOSE
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 employee views are being taken into
account. The Board has established two key methods of direct
Board employee 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 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 page 117, 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 and have continued to meet to discuss a range of key Group
issues during 2022. 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 employees.
Subsidiary Employee Forums have been asked to strengthen their
offering in a number of ways, by recruiting new members, and
refreshing those holding the role as Chair of each SEF. SEF Chairs
have also appointed a Deputy Chair, who has been able to shadow
them at certain meetings, and have been invited to subsidiary board
meetings to represent their views directly to their respective boards.
The GEF has worked with the Marketing and Communications team
to ensure that the outcomes of their work and engagements are
more widely publicised to the Group.
Outcomes
A number of the key issues discussed by the GEF, some of which
have been referred up to the Board or elsewhere throughout the
Group for resolution and/or discussion and feedback, or have
otherwise been overseen by the Board are outlined here:
What employees requested
or were consulted on
Employee engagement
survey results
Method and outline of engagement
How the Board responded
As referred to in Our Culture (page 92), in 2022 the GEF
were tasked by the PLC Board to undertake a research
project focused on the lowest scoring questions in the
2021 Employee Engagement Survey. These were:
“I am able to quickly switch off and reenergise when not
at work” and
“Over the last 12 months my workload has felt
manageable.”
As an increased workload is likely to result in an inability
to switch-off from work, they decided to address both
topics together under a “wellbeing” umbrella. The GEF
undertook extensive engagement with people from
across each of the subsidiary businesses and shared
their proposals with the Board in September 2022.
The outcomes of the GEF’s work
consolidated the responses into a series
of proposals including:
•
The provision of guidance and
training for line managers on how to
manage agile working and working
from home
• Raising awareness of the need for
individuals to create self-imposed
boundaries between work and home,
including rest breaks
•
Providing education around available
technology
• Reviewing resourcing levels in
locations that had an upturn in
turnover.
Following their initial presentation to the
Board, their proposals were incorporated
into the Health and Wellbeing Strategy
considered by the Executive Committee
and Responsible Business Committee,
detailed further in the Responsible
Business Committee Report on pages
116 to 119.
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What employees requested
or were consulted on
Reward strategy
Head office relocation
Induction
Method and outline of engagement
How the Board responded
The Board and management through
the Executive Committee supported
the development of a significantly
different approach to reward in the
Group. Engagement with the GEF will
continue in order to refine and add to the
communication as we continue with our
journey towards reward transparency.
The Board and management, through
regular updates from the Isaacs Steering
Group, have had oversight of the direction
of travel being proposed on a number
of key initiatives. Through extensive
consultation, which has included externally
supported stakeholder interviews with
the design team, it is anticipated that the
move to Isaacs Building will be pivotal to
the next phases of our modernisation and
transformation agenda.
Engagement with the GEF in relation to
induction and onboarding will continue
in order to refine and ensure relevance of
the programme.
As outlined in our 2021 Report, the GEF were
instrumental in bringing forward priorities in relation
to transparency in reward and also promotion and
performance management. Throughout the latter part
of 2021 and into early 2022 the Executive Committee,
with external guidance and internal resource, worked
collaboratively to create a Reward Strategy that
would be relevant to all our subsidiaries despite their
market differences. Our people, through the GEF and
other networks, were consulted and involved in the
development of several key aspects of the Reward
Strategy and the subsequent roll out. This has been
undertaken on a phased basis to ensure adequate
socialisation of what is a significant step for the Group
towards total reward transparency.
Following the decision to relocate our Head Office, the
Group consulted widely with all those individuals directly
affected by the decision to allow the dialogue to be
relevant and also to take into account the views of our
people. The formation of several Working Groups which
included colleagues from other parts of the Group not
directly affected by the decision has been of importance
to ensure that the cultural shift that will ensue from the
relocation (agile working, collaboration, more visibility)
is not just limited to those in the Isaacs Building but
also has influence Group wide and informs Group
protocols. Due to the expansive nature of this remit, the
GEF has been engaged in the process albeit on a more
peripheral basis than other projects. More detail on this
can be found on page 61.
Our Group induction programme was relaunched in
2022 for the first time since the Covid pandemic. An
initial proposal was shared with the GEF for feedback
from our people before a final solution was delivered.
The first in-person session was piloted in November
2022. Feedback from participants and stakeholders
was positive, highlighting the collaboration and
networking benefits, plus opportunities to learn about
other subsidiaries, with minimal enhancements required.
Phase two is underway with an eLearning module
created to give the history of the Group and services
offered by subsidiaries, allowing the in-person event to
focus on the here and now. While the eLearning module
content will remain stable, we expect the in-person
event to continuously be updated to reflect participant
feedback and changing projects.
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CASE STUDY
Peter Mawson – Chair engagement visits
Since his appointment as the Chair in May 2022, Peter has
undertaken a programme of visits and engagements with
employees across the Group, a summary of these are set
out below:
Banner Plant
•
Visits from June 2022 into 2023 to: Leicester Plant depot;
Rotherham Access & Tools depot; Derby Plant & Tool Hire
depot; Leeds Tool Hire depot; Leicester Tool Hire depot;
and Chesterfield Tool Hire depot. Also carried out a ‘Meet
the Team’ event at the Dronfield Headquarters, Plant
Depot & Accommodation Depot in October 2022.
Hallam Land Management
•
Visits to Northampton team and Bristol team in June/July
2022 followed by local site visits. Leeds team engagement
in August 2022, as well as with the management team
in Sheffield and the London and Glasgow teams in
November 2022.
Henry Boot Construction
•
Site visits to Block H, Block G & Kangaroo Works
in Sheffield in July 2022, to Cocoa Works in York in
August 2022, and a ‘Meet the Team’ at the Dronfield
Headquarters in October 2022.
PLC
•
‘Meet the Team’ events from July to September 2022,
including: finance team; legal, company secretarial
and insurance teams; HR team; IT department and
Responsible Business Manager.
Q&A WITH RECENTLY JOINED GEF MEMBERS
Matt Pruce, the Chair of the Hallam Land Management SEF, is
a Senior Development Planner. Lee Pratt is the Depot Manager
of Banner Plant’s Leicester Depot, and Chair of the Banner
Plant SEF. As both of them have joined the Group Employee
Forum within the past 18 months, we asked them for their
views on their roles on the GEF.
Q: How have you found it being part of the GEF this year?
Lee: I have really enjoyed it. I joined the GEF as Chair in
December 2021, and since then it has been a bit of a
whirlwind, as the first meeting with the GEF was to discuss our
proposal on Health and Wellbeing to be raised with the Board
in March 2022. However, I have loved every minute and really
feel as a group the GEF has made a change in the business.
Matt: I have found being part of the GEF a very rewarding
experience, it’s been great to work with my fellow forum
members to understand views from across the business and
have such positive dialogue with Executive Committee and the
Board about our approach and feedback.
Q: Is the GEF supporting the culture of the business
and the work of the Board?
Matt: The GEF continually strives to engage with and listen
to our colleagues to understand the key matters within the
Stonebridge Homes
• Meetings with various leaders within the business from August
to November 2022.
HBD
•
‘Meet the Team’ events in Leeds in August 2022, and in
Manchester, Glasgow and London offices in November 2022,
as well as the management team in Sheffield.
Roadlink
•
Visit to the Road Link team at Stocksfield in August 2022.
This has enabled Peter to hold one-to-one meetings with teams
and individuals across the business, to provide visibility of his role
as Chair and to get to know as many of our people as possible,
facilitating meaningful discussions on issues relevant to each of the
businesses.
“It was really important to me that, having become the Chair,
I was able to commit time to have some quality discussions with
our people across the businesses, to introduce myself and get to
know people on a personal level. I believe this helps to open up vital
conversations and enable me to also get to know what the priorities
are for our Group, and how I can help to facilitate these.”
Peter Mawson, Chair
workplace. Each year we focus on one key topic area which
we have identified through this engagement and make a set
of recommendations to the Board on how we can improve the
business which will ultimately influence its culture and priorities.
Lee: We discuss with all our subsidiaries ways to improve the
business. Using ideas from our employees creates a massive buy
in, and with that and the PLC Board taking on all the ideas we can
all build a better future for the business as one.
Q: In what ways do you feel that having a seat at the GEF
helps people within your subsidiary to be heard?
Lee: I feel that by having a seat, I am the voice of Banner Plant,
speaking for all the employees and making sure all their views are
heard as a collective. The Banner Subsidiary Employee Forum
team are collecting lots of views that we then discuss, and it
is then my responsibility to make sure that their opinions are
understood by a wider audience. It helps in a massive way as we
are making changes as a business as a result of their views.
Matt: Although all of the Henry Boot subsidiaries work within
the property and construction industry, our working practices
differ from company to company, and therefore our lived working
experiences differ. Being Hallam’s representative means I can
relay and make sure the key issues of my colleagues are heard
by ExCo and the Board.
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COMPOSITION, SUCCESSION AND EVALUATION
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 2022. Whilst the value of such a process was
fully appreciated, the Committee concluded that it was not the right
time to conduct such an exercise and would review the decision
again in 2023.
A formal and rigorous internal performance review was undertaken
for the Board, its Committees, the Chair and each individual Director.
Attendees at Board meetings were again 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.
The process and results are set out below.
Areas where the Board
scored strongly:
• Collaborative and welcoming
environment
• Clear oversight of the
work undertaken by the
executive team
• Sufficient time and focus
dedicated to discuss
strategic issues
Board focus areas:
• Overseeing the development
of the marketing, branding and
communication approach
• Allowing time for idea generation
and innovation
•
Improving and maximising the
Board attendee experience
Process
STEP
STEP
In March 2022, the Nomination Committee
considered whether to conduct an externally
facilitated performance review but agreed to
proceed with an internal approach.
Questionnaire deadline, results
collated and reports written.
STEP
STEP
The Board discussed and agreed an
approach in September 2022.
At the year-end, results were reviewed
with the Board and respective Committees,
and actions were agreed for 2023.
Progress against the 2022 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 Peter Mawson to discuss individual
performance and training needs.
Mid-year reviews will be carried out in
summer 2023 to discuss performance
against the agreed actions before a full
review at the year-end.
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CORPORATE
GOVERNANCE REPORT
COMPOSITION, SUCCESSION AND EVALUATION
BOARD
2022 action areas
Progress during 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
Board Visibility
Continue to seek additional opportunities to
increase interaction between the Board and the
wider business, including informal meetings and
presence within offices, particularly to familiarise
Peter with the Group and its people upon him
taking up the role as Chair
Action areas for 2023
• Following an initial conversation in December 2021, an update on the approach to customer engagement
and the wider communications and marketing strategy was discussed at the July 2022 meeting
• Group Marketing and Communications Director presented an update at the November Strategy Days
• An approach for 2023 was agreed at the December 2022 meeting
• Forward Business Schedule brought to the Board in January and July 2022
• More streamlined and harmonised reporting approach agreed with ExCo members
• More papers have been moved out of the main Board pack into an additional reading shelf to prioritise
other items on the agenda and/or provide simpler updates
• Post completion report for all reserved matter projects (and any other exceptional projects) to be
brought back to the Board for review
• Lunch with HBC senior management in February 2022 and Birmingham office in July 2022
• GEF invited to the Board for the March and September meetings and also to the AGM
• Board attendance at the town hall meeting to discuss the future of the Head Office
• Visits around Birmingham to meet site-based staff in July 2022
• Video from Peter sent to all employees in May 2022
• Peter has visited every regional office, seven Banner depots and a number of construction sites, as
well as meeting each of the teams at Banner Cross Hall and Dronfield (see page 98 for more details)
Brand
Oversee the marketing, branding and
communications strategy as it develops
and is rolled out
Innovation
Build time into the Forward Business Schedule to
concentrate on innovation, idea generation and
opportunity identification
Culture
Formulate an approach to understanding and
assessing culture within the business
AUDIT AND RISK
2022 action areas
Progress during 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
• KPMG internal audit of financial controls undertaken to the standards anticipated by the audit reform
requirements, to identify current gaps and requirements
• Further updates to be provided when confirmation is provided on the full detail of the requirements
• Discussion held at July Responsible Business Committee regarding direction of travel on scenario
planning work, to be progressed alongside Scope 3 emissions work
• Benchmarking exercise ongoing to look at disclosures and reporting by other companies on TCFD
to inform discussions on approach and budgeting for 2023
• TCFD report for 2022 ARA has been reviewed in line with all best practice guidance from a number
of regulatory and big 4 sources to improve disclosures. More work on incorporating risk and
opportunities into scenario planning to be undertaken in 2023
Independence Policy
Refine Company policy and protocols for
maintaining independence from the external auditors
• New policy approved and in place
Action areas for 2023
Training
Provide specialist training for
the Committee on the new audit
reform when the guidance is
finalised
New Audit Reform
Processes
Begin internal preparations to
our systems and processes to
be in the best position to adapt
to the new audit reform
Risk Review
Agree new risk review
procedures to be implemented
and rolled out in 2023
(supported by Board and ExCo
training)
Cyber & IT approach
Oversee a wholesale review of the Group’s cyber
and IT security approach, receiving updates
arising from the cyber internal audit of 2022 but
placing these into a broader perspective of the
overall risk management for IT and cyber
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NOMINATION
2022 action areas
Progress during 2022
Executive Succession
Review succession plans for each ExCo
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 Board
appointment is adequately diverse to find
the best possible candidate for the role
EDI
Continue to monitor and support EDI
initiatives across the Group with the
corresponding link that this represents in
providing progress against diversity targets
in the Board Diversity Policy
• Detailed discussions on formailisation of succession plans deferred until March 2023 following the 2022
performance review process when the talent grids were updated
• Further work on the talent grids to be undertaken in 2023
• Skills matrix reviewed and revised approach taken to also include ExCo
• Skills carefully considered for the role description for Board recruitment and will be considered for future
recruitment to address skills gaps so far as possible
• Use of Facet5 for Board members considered
• Women on Boards (WoB) co-appointed to recruit new Non-executive Director with a view to improve
diversity on the Board
• Diverse long and shortlist provided by Norman Broadbent as lead recruiter, including WoB candidate
• Improved diversity of skills and gender balance due to changes on the Board
• Further improvements planned for future recruitment activities
• EDI training rolled out across whole Group during 2022
• Directors supported People targets included in the Responsible Business Strategy through work with
Responsible Business Committee (exceeded 2022 Group gender targets)
• Inclusion of diversity related objectives within executive remuneration in conjunction with the
Remuneration Committee
• EDI Steering Group meeting in September attended by Joanne Lake
• Board Diversity Policy refreshed with updated FCA targets
Action areas for 2023
Diversity & Inclusion
Hold a session with the EDI
Steering Group to gain insight
into barriers to recruitment /
progression and understand
how this could be improved
Diversity Reporting
Oversee the development of
wider diversity reporting in
categories other than gender
(eg ethnicity, disability)
Reverse Mentoring
Oversee a reverse mentoring
programme with ExCo members
and Board members
Talent Grids
Continue to develop succession
planning and talent grids for ExCo
and other senior leaders within the
business
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CORPORATE
GOVERNANCE REPORT
COMPOSITION, SUCCESSION AND EVALUATION
REMUNERATION
2022 action areas
Progress during 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 strategy,
seeking feedback from the Group Employee
Forum at various stages
• ExCo salaries were benchmarked as part of the reward strategy project and information included in
the September 2022 papers. Further benchmarking carried out throughout the year where needed
• ExCo Bonus and LTIP structure discussed in early 2022 and revised in September 2022 to bring
ExCo members in line with the Executive Directors and the wider workforce strategy
• LTIP award increased and 25% of Annual Bonus now deferred into shares
• Meeting held between the Group Employee Forum and Gerald Jennings and Tim Roberts in
February 2022 to discuss alignment of reward between Executive Directors and the new workforce
reward strategy
• Board approval for the new reward strategy was given in July 2022
• Update on reward strategy implementation and employee communications in September 2022 and
December 2022
• Opportunity for all directors to meet the GEF twice a year informally in March and September
Action areas for 2023
Workforce communications
Oversee improved communications between the
Committee, ExCo and employees particularly
with regards to the roll out of the workforce
reward strategy and Performance review process,
seeking feedback from the GEF at various stages
Target setting
Ensure targets for Executive Directors are
sufficiently stretching at the time of setting and
seek advice from advisors on best practice and
market expectations
Workforce reward
Check for consistency across workforce benefits,
particularly with regards to pension contribution
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RESPONSIBLE BUSINESS
2022 action areas
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
Progress during 2022
• Marcos Navarro of Natwest Bank joined the Committee and
Executive Committee in June 2022 to discuss ESG approaches,
particularly in relation to the housing market and key themes and
trends.
• In addition, Graeme Pitkethly of Unilever met with the Committee
and Executive Committee in November 2022 to discuss his role
on the TCFD Steering Group and the expectations of the market
regarding good practice in TCFD reporting.
• The Committee has liaised closely with the Company Secretary
and Responsible Business Manager to identify focus areas
where training and upskilling could provide improved knowledge
and performance.
• A Training Programme is currently under development for
implementation in 2023. This will include training and guidance
on the ESG regulatory framework, climate change, and health
and wellbeing.
• Committee Members have been appointed as Sponsors of
the Group’s responsible business focus areas. Joanne Lake
(EDI Sponsor) attended the EDI Steering Group in September
2022 to engage them in a discussion on performance and
focus. Gerald Jennings continued to liaise closely with the
Group Employee Forum with a particular focus on community
engagement.
• The Committee continued to proactively engage with the
Responsible Business Manager to identify peers (both within
our sector and the broader market) who perform strongly on
ESG. This information has been used to continually benchmark
Henry Boot’s approach and performance against competitors
and peers.
Action areas for 2023
Materiality
Assessment
To support the
development and
delivery of the
materiality assessment
to be undertaken with
key stakeholders
Specialist
speakers
To continue 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
Work 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
Engagement
To engage with Henry Boot
working groups 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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CORPORATE
GOVERNANCE REPORT
COMPOSITION, SUCCESSION AND EVALUATION
PETER MAWSON
CHAIR OF THE
NOMINATION
COMMITTEE
5 5
NOMINATION
COMMITTEE
REPORT
Review of the year
In order to evolve a number of key initiatives this year,
the Nomination Committee (Committee) met five times
during 2022 to review and discuss matters such as
succession planning, leadership development and
talent management, diversity and inclusion, and skills.
You can read an in-depth review of the approach we
have taken to the Board Chair and Non-executive
Director recruitment, how we have taken steps during
this process to support greater diversity and inclusion within
our Board, and thought carefully about the appropriate
ways of undertaking our recruitment activity to constantly
strive to balance on our Board in as many areas as possible
including in relation to the mix of skills and experience.
We have also continued to broaden our understanding
of the talent below the Board level, and have monitored
the Senior Leadership Development Programme and the
Leadership Development Programme, to provide practical
skills to our managers. This has helped to inform the
Committee’s oversight of wider talent grids for the entire
business to ensure that succession planning throughout
the business, not just at Board level, is more developed.
Time has been spent reviewing the skills, knowledge and
overall effectiveness of the Board and its Committees, as
well as rationalising the memberships of our Committees
for Code compliance and time commitment purposes, the
results of which are set out in this report.
Those serving as members of the Committee for 2022 were
myself, Joanne Lake, Gerald Jennings, Jamie Boot and
James Sykes. Within the year Serena Lang was welcomed to
the Committee following her appointment to the Board, with
Joanne Lake stepping down as a Committee member, and
Jamie Boot also stepping down, having retired in May 2022.
On behalf of the Board and the Committee, I am pleased
to present the Directors’ Nomination Report for the year
ended 31 December 2022.
JAMES SYKES
COMMITTEE
MEMBER
4 5
JOANNE LAKE
COMMITTEE
MEMBER
4 4
GERALD JENNINGS
COMMITTEE
MEMBER
5 5
JAMIE BOOT
COMMITTEE
MEMBER
3
3
SERENA LANG
COMMITTEE
MEMBER
1 1
Nomination Committee attendance key
Meetings attended
Eligible meetings
Following a review of Committee memberships, Joanne stepped
down as a member of the Nomination Committee with effect from
September 2022
Jamie retired in May 2022
Serena joined the Committee with effect from her appointment on
the 1 August 2022
“This year we have seen a lot of exciting
developments in our approach to succession
planning, development, diversity and skills.”
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Henry Boot PLC Board
Nomination Committee
Board and Chair succession planning
Read more on page 105
Committee
memberships
Leadership
succession planning
Read more on page 107
Read more on page 107
Board evaluation and skills
Increasing Diversity
Read more on
pages 107 and 108
Read more on
pages 108 to 110
Board Succession Planning
and Chair Appointment
The Committee continued the work commenced in 2021 regarding
succession planning for Board, reviewing its proposed activity for
2023/2024 alongside its ambitions in relation to diversity and inclusion,
as well as the need to plan for the future and also to consider
appropriate methods of addressing outcomes of its skills evaluation.
Recruitment of Non-executive Director
Q&A with Serena Lang
Q: What attracted you to a role as a Non-executive at
Henry Boot PLC?
A: The core themes that attracted me to Henry Boot are:
1. A really robust business that thinks long term and has the
ability to ride the economic waves with its portfolio across
the Built Environment;
2. A strong focus on sustainability;
3. A clear sense of purpose; and
4. A strong leadership team with a great culture from Board
Monitoring overall Board and committee effectiveness
level down
Read more on page 110
Q: What were your thoughts about the recruitment and
induction process?
External recruitment partners were selected by the Committee to assist
with the recruitment process for a new independent Non-executive
Director to the Board. The Committee’s appointed partner was
Norman Broadbent, who was used in conjunction with Women on
Boards, to help the Committee shape its requirements for the role and
to propose strategies to achieve greater diversity on the Board.
January 2022
Recruitment timeline and approach approved by Nomination
Committee
February 2022
External recruitment partners appointed
March 2022
Candidate briefing pack and role profile issued to recruitment
partners
May 2022
A: The recruiters were able to clearly articulate the business
and its strategy, and had been well briefed. There was clarity
around the skillsets required from the appointment that would
be additive to the existing Board. As a result of the above I
was quickly able to determine that this was a business I was
interested in and could add value to. After the initial research
call, there were 3 interviews which allowed for the appropriate
due diligence on both sides.The induction was extensive and
really beneficial and I was able to join a strategy meeting 3
months in with an understanding of each of the businesses.
Q: What do you anticipate will be your areas of focus within your
Board and Committee roles?
A: There is significant expertise on the Board, particularly in
relation to sector and financial knowledge. I anticipate being
able to specifically add value in the areas of sustainability,
digitising the built environment, strategy and marketing.
Chair Appointment
Q & A with Peter Mawson
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Longlist of candidates received, shortlisting for interviews
Q: What are your thoughts about the Chair recruitment process?
June 2022
Initial informal conversations held with five shortlisted
candidates; list reduced to two
July 2022
Final interviews held with shortlisted candidates and Serena
Lang selected and recommended to Board for approval of
appointment
August 2022
New independent Non-executive Director appointed
A: Having taken soundings from across the Board, from key
stakeholders and from the Executive team, there was universal
agreement that an appointment from within the existing group
of Non-executive Directors would be in the best interests of
the Group. The CEO, in consultation with the HR Director,
ensured a rigorous assessment and review process for those
of us who were prospective candidates, ultimately leading to
a formal interview involving both Executive and Non-executive
Directors. I am, of course, delighted to have been invited to take
on the role but, more importantly, I do feel that the Board had
confidence in the robust approach to Chair selection.
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COMPOSITION, SUCCESSION AND EVALUATION
Nomination Committee Report
Q: What steps did you think were important to take in relation to the
handover from Jamie Boot as the previous Chairman?
A: Jamie was always going to be a hard act to follow! I cannot ever
hope to have his intimate knowledge of the business, but I have
felt it important to become visible within the business, meet
with as many of our people as possible and be available to all
of our stakeholders. I am conscious that I and the Board have
responsibility for a business which has a long and successful
history, with a strong legacy of continuity and family ownership.
At the same time, we are a Group which is constantly evolving
and modernising in this ever more complex and uncertain
world, and we continue to attract major institutional and private
investors who recognise our commercial strength built on that
legacy. I feel it is important to strive to maintain that balance as
we drive successfully forwards.
Q: What do you believe will be your key areas of focus as the Chair
of the Board in 2023?
A: I believe we have a clear and well-expressed strategy but
maintaining strategic oversight will continue to be a focus for
me. We need to further develop Board succession planning
and achieve greater diversity as a part of that succession plan.
Meanwhile, despite our commercial strength, our excellent pool
of committed, talented people and a unified, inclusive culture we
have a way to go in projecting our brand and market position
effectively across our markets. This will be a key focus for me.
Primarily, though, my core role will be to support our people
across the Group. It is their committed contribution that makes
Henry Boot a great business and allows us successfully to
deliver on behalf of all of our stakeholders.
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 to 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 a number of years.
Other matters of note and next steps
As a consequence of me having taken up the role as Chair of the
Board, the Senior Independent Director position has been assumed
by Joanne Lake. The Board took 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.
Further independent Non-executive Directors will be appointed during
2023 and 2024, replacing those approaching their 9-year tenure,
to ensure that Board membership is progressively refreshed. These
recruitments will take into account the need to ensure sufficient time
for new Non-executive Directors to be assimilated into their roles,
particularly where it is anticipated that they will be assuming a Chair
role for one of the Board Committees. We are conscious that with the
retirement of Joanne Lake in 2024, one of the recruitment activities
will need to ensure that a successor has recent and relevant financial
experience in order to be able to fulfil the Code requirements for
Audit and Risk Committee Chair. In addition, there is anticipated to
be a further period during which the flexibility permitted by Provision
19 of the Code, will be utilised to allow me to remain in my role as
Chair past the nine-year period of tenure. This is to ensure that all
new Non-executive Directors who have been recruited have had the
opportunity to develop detailed knowledge of the business, before
becoming eligible to be considered for the Chair role.
The anticipated timeline for future Non-executive Director recruitment
is as follows:
First appointment (future ARC Chair)
March 2023
April 2023
May 2023
sign off preferred approach
finalise person specification and role profile as
well as preferred recruitment partner
preferred recruitment partner to commence
seeking candidates for long list
shortlisting
October 2023
August 2023
September 2023 Committee members meet shortlisted
candidates informally
formal interview of preferred shortlisted
candidates to select appointee, for
recommendation to the Committee
appointee commences role as Non-executive
Director, enabling a period to shadow Joanne
as Audit and Risk Committee Chair until
September 2024 at which point they will
assume the role
January 2024
Second appointment
January 2024
March 2024
May 2024
June 2024
July 2024
August 2024
finalise person specification and role profile
as well as preferred recruitment partner,
with refreshed look at any required skills or
experience
preferred recruitment partner to commence
seeking candidates for long list
shortlisting
Committee members meet shortlisted
candidates informally
formal interview of candidates to select
appointee, for recommendation to the
Committee
appointee commences role as Non-executive
Director.
The Committee fully recognises the commitments within its Board
Diversity Policy (see page 108) to achieving greater diversity and
inclusion within its members and will be seeking to meet these
objectives within these recruitment activities, 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 Chair requirements
and Committee membership.
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Committee membership
Given that membership of the Committees increasingly requires greater time commitments than previously (for meeting attendance and pack
reading), the memberships were reviewed by the Committee and refined. In order to enable a complete induction experience for Serena Lang
as our newest Non-executive Director, membership of all Committees for her has currently been allocated, though at a later point this could be
reviewed if required. As a result, Committee membership from September 2022 was revised as follows:
Audit and Risk
Remuneration
Nomination
Responsible Business
C= Chair M= Member
Joanne
James
Gerald
Peter
Serena
Tim
Darren
C
M
M
M
C
M
M
M
M
C
M
C
M
M
M
M
M
Those Non-executive Directors who are not formal members of
any given Committee are very welcome to attend if their time
commitments allow, and all Board members still have access to
all the relevant papers and packs on our Board portal, as well as
the Board reviewing and ratifying any necessary decisions of the
Committees.
Leadership succession planning
Succession planning at all levels within the Group is an area of
significant interest and the Board has continued to support the
development of our people through a variety of mechanisms
including formalised Leadership Development Programmes,
coaching and mentoring.
For Executive Directors and Executive Committee, the Committee
regularly reviews the talent grids which are overseen by our HR
Director with input, where appropriate, from Executive Directors,
Executive Committee and external partners who have gained insight
into our people through the delivery of our suite of development
opportunities. The aim of the regular review is to identify suitable
internal talent who are capable of taking on senior roles within the
Group in the future and to ensure that we nurture and address any
identified development needs to support success.
The Committee has oversight of the Company’s Senior Leadership
Development Programme (SLDP) through which we have given
development opportunities to a significant number of senior
management. In 2020, we developed the Leadership Development
Programme (LDP) which was delivered remotely and in person during
the pandemic and addressed development in our next levels of
management. The SLDP and LDP will continue to be available for our
people as required and identified by the business as being a priority.
In 2022, the Company piloted Aspire, a Management Development
Programme which aims over a period of nine months to develop
junior managers and aspiring managers to develop both themselves
personally and professionally to become more effective in their roles
and drive performance in their teams.
Our investment in learning, development, talent and succession at
all levels in the business is pivotal in achieving our key objectives:
• Delivering our purpose which is: “To empower and develop our
people”; and ensure that this applies at all levels including our
senior teams
•
•
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
The Committee will continue to oversee the leadership development
opportunities in the business and monitor the ongoing impact on
succession planning and talent pipelines throughout the Group.
Board evaluation and skills assessment
Formal performance reviews were carried out at the end of 2022 and
you can read about the process and results on pages 99 to 103.
In addition to the performance reviews outlined on page, the
Committee reviewed the assessment of the Board’s key skills and
experience. We have streamlined the skills evaluation activity to
align more with the core expertise required, to ensure strong links
between the skills evaluated and the core strategic objectives,
and focus on those areas most relevant to an effective overall
governance structure. In addition, given the closer ways of working
and inputs received from the Executive Committee in relation to a
number of key strategic areas, the assessment of skills has been
extended to all Executive Committee members.
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CORPORATE
GOVERNANCE REPORT
COMPOSITION, SUCCESSION AND EVALUATION
Nomination Committee Report
Board & Executive Committee Skills Questionnaire
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The Skills Matrix will be key to determining the role profile for recruiting new Board members as it aims to address any areas in which skills
could be usefully supplemented.
Board Diversity Policy
The Committee reviewed and approved an updated 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 ethnic minority board
representation, as well as reflecting the amended targets introduced
by the updated Listing Rules. The full policy is available to view at
www.henryboot.co.uk/our-responsibility. The Committee ensured
that the objectives set out within the Board Diversity Policy were
fully incorporated within the recruitment activity undertaken
during 2022, and will also ensure that our ambitions in this area
are captured in forthcoming rounds of recruitment. As such, we
anticipate being able to make progress towards achievement of
those objectives through this further 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 Responsible Business Strategy (see page 33 for more
information). We are committed to improving our position on Board
diversity when appropriate opportunities arise. It is recognised
that there will be periods of change on the Board and that these
objectives may be reliant upon the Board being refreshed, however,
it is our longer-term intention to achieve these objectives. The Board
and Nomination Committee will also take into account the prevailing
skills and diversity of the Board and the wider Group as and when
seeking to appoint a new Director to the Board.
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Objective
Progress against objective
Status
1
2
3
4
5
6
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.
Detailed review of effectiveness undertaken confirming that the Board is
adequately resourced and performing well.
The Board has set a target to meet the objective
of the Hampton Alexander Review, in that at
least 40% of our Board members are women.
At least 40% female representation remains our goal but currently stands at
28% (2 out of 7). We will continue to ensure that our recruitment processes
maximise the diversity included in our long and short lists.
In addition, the Board shall have as its
objective that at least one of the four senior
board positions (Chair, Chief Executive Officer
(CEO), Chief Financial Officer (CFO) or Senior
Independent Director (SID)) shall be a woman,
as per the Listing Rules objective.
The Board has set a target to meet the
objectives of the Parker Review for at least one
Board member to be from an ethnic minority
background excluding white ethnic groups
(as set out in categories used by the Office for
National Statistics).
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.
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 candidates from an ethnic minority
background excluding white ethnic groups.
We are fully committed to achieving and exceeding this goal with our Non-
executive Director succession planning and Group-wide diversity initiatives.
The role of Senior Independent Director is held by Joanne Lake, who is female.
We currently have no members on the Board from an ethnic minority
background. It is our ambition to achieve this objective over the next rounds of
recruitment and internal progression.
We have consciously worked with our recruitment partners to ensure that
our briefs for Non-executive Director appointments encouraged diverse
candidates, and a number of those on our long list had no previous FTSE
experience. We will continue to ensure that previous FTSE experience is not a
specified requirement in future recruitment rounds in order to attract a broad
pool of applicants.
In 2022, we appointed external recruitment partners to work with us on our
recruitment exercise, and ensured that the long list for the candidates provided
a wealth of individuals from diverse backgrounds. We will continue this
approach for successive appointments during 2023 and 2024.
As previously discussed on page 106, 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 leadership of the Board after Jamie Boot, a major
shareholder and Boot family member, retired as a Director after 40 years’
service.
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CORPORATE
GOVERNANCE REPORT
COMPOSITION, SUCCESSION AND EVALUATION
Nomination Committee Report
Objective
Progress against objective
Status
7
8
9
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.
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.
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.
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.
During the year, the Committees have approved improved maternity and
paternity policies, as well as the introduction of new policies aimed at improving
the experience for women at work, such as the Menopause Policy.
Phase 2 of the Responsible Business Strategy launched in January 2022
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 (equating to 10% of salary).
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 2023.
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 66. You can read more about
our EDI Strategy and workforce diversity initiatives on page 33.
Terms of reference
In September 2022, 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 is 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, as set
out within this report 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 2022 performance reviews (see pages 99 to 103 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 chair
person role at Made Tech Group plc. Joanne’s time spent at her
other directorships now equates to, on average, 10 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 will seek re-election at the upcoming
AGM, biographies are shown on pages 80 to 81, 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
12 April 2023
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AUDIT, RISK AND INTERNAL CONTROL
JOANNE LAKE
CHAIR OF THE AUDIT
CHAIR OF THE AUDIT
AND RISK COMMITTEE
AND RISK COMMITTEE
4 4
AUDIT AND RISK
COMMITTEE
PETER MAWSON
COMMITTEE
MEMBER
GERALD JENNINGS
COMMITTEE
MEMBER
3
3
4
4
SERENA LANG
COMMITTEE
MEMBER
1
1
Audit and Risk attendance key
Meetings attended
Eligible meetings
Following his appointment as Chair of the Board, Peter stepped
down as a member of the Audit and Risk Committee with effect from
September 2022
Serena joined the Committee with effect from her appointment on the
1 August 2022
“Through embedding our external and
internal auditor resource further this
year, the Committee has set itself
up well to ensure a systematic and
thorough approach to our audit and
risk practices.”
Review of the year
O
n 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 2022.
This year, the Audit and Risk Committee
has commenced its first year of internal
audit work with KPMG as the internal audit partner,
appointed during the latter part of 2021, approving their
annual plan and overseeing the outcomes of their review.
Alongside the Responsible Business Committee, we
also reviewed the approach to assessing climate related
risks and opportunities and the reporting around this as it
relates to the TCFD disclosures, integrating this approach
with our general risk review procedures. We continued to
develop the relationship with EY as the external auditor of
the Group, overseeing all external and internal audit activity
and internal controls regarding risk. The Committee is also
aware of the impending introduction of the audit reforms
relating to internal controls, which is discussed in more
detail on page 113, and which will be the subject of further
work during 2023.
Those serving as members of the Committee were myself
(Committee Chair) and Gerald Jennings, with Peter
Mawson stepping down from the Committee during the
year in compliance with Corporate Governance Code
requirements, and being replaced by Serena Lang.
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.
From early 2022 onwards, our internal audit partner has
been KPMG LLP (KPMG). During 2022, the following
internal audit reviews were carried out by KPMG:
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CORPORATE
GOVERNANCE REPORT
AUDIT, RISK AND INTERNAL CONTROL
Topic
Outline
Cyber Security
The objective of this audit was to provide a risk-based assessment of the Group’s Cyber Security capabilities
and to highlight gaps or areas requiring control improvement. This work has focused predominantly on
the Group’s Cyber Security maturity but also included consideration of Stonebridge Homes. The Internal
Audit was conducted using KPMG’s Cyber Security Framework, consisting of nine different domains, which
comprise: Leadership and Governance; Information Risk Management; Human Factors; Third Parties;
Resilience; Compliance; Technical Security; Security Architecture; and Security Operation.
Financial Controls
Gap Analysis
This audit performed a gap analysis, to understand and document the flow of information within each in-
scope process, identify the various controls in place to mitigate key risks and identify and document the
control gaps that exist within each process, where risks are currently not being adequately remediated.
The scope of the internal audit focused on understanding and covering the following key areas:
Record to Report (R2R) – accounting and financial reporting procedures including journals, balance sheet
reconciliations and month end closing;
Order to Cash (O2C) – end to end cycle from contracting with customers through to receipt of payment for
goods and services; and
Purchase to Pay (P2P) – end to end cycle from selection of supplier through to processing of payment for
goods and services.
The scope of this audit focused on understanding and covering the following key areas:
Pre-construction governance - procedures undertaken prior to contracting, including governance and
approval processes for tender submission and contract award;
Project controls - a high-level assessment of the structure around the management of capital projects; and
Supply chain due diligence and monitoring - processes for compiling the approved supply chain and
ongoing monitoring of subcontractors, as well as the processes in place for maintaining due diligence over,
and monitoring subcontractors who are not part of the approved supply chain.
Construction
Contracts - Supply
Chain Resilience
The results of this internal audit activity were reviewed by the Committee during the year, and will continue to be monitored on an ongoing
basis, including implementation of any recommendations and the overall status of the audit result.
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Audit and Risk Committee Report
Internal audit effectiveness review
The Committee determined that an assessment of the effectiveness of
the internal auditor was not appropriate for 2022 due to the fact that
the internal auditor had only commenced its activities in early 2022,
and had been tested through the tendering exercise and appointment
process. A review of the first full year of internal auditing activities will
be carried out during 2023 and reported on in the following year.
In determining their initial testing plan for 2022, KPMG reviewed
the Group’s risk reporting materials, previous internal audit report
and met with all senior stakeholders in the business. Their plan was
presented and approved by the Committee in February 2022.
Cyber Security
As highlighted above and in previous Committee reports, as well
as in the risk report at pages 50 to 56, cyber security continues
to be an area of focus, to ensure that appropriate procedures
and systems are in place. The Group has not been subject to an
information security breach within the previous three years (the
last incident having occurred in 2018), and is accredited by Cyber
Essentials Plus, an externally audited certification. Cyber risk is an
area where we continue to review the appropriateness of relevant
mitigation factors, such as information security insurance products,
but it is not currently felt that such products offer value for money
in relation to the risk that would be insured. The Group continues
to mitigate the risks in other ways, through the biannual provision
of detailed eLearning, supplemented by phishing email campaigns
– with failures being dealt with by targeted user training, as well as
having a suite of information security policies and protocols being
updated in line with ISO27001 recommendations. Following the
recommendations of KPMG as a result of the internal audit activity
highlighted on the previous page, the Group has put additional
measures in place, including: USB disablement; multi-factor
authentication on all users and cloud systems; procurement of new
backup products; and data migrated from local storage to cloud
storage to help visibility.
Audit Reform
As a Committee, we are keenly aware that the audit-related
corporate governance reforms led by the FRC have been in
progress and that measures will need to be put in place to ensure
full compliance with the requirements when finalised. Policies and
protocols will be reviewed under the supervision of the Committee,
and a gap analysis carried out. The Committee has been advised
on the details of this by both our external and internal auditors, and
will continue to review how to use those resources to shape our
approach over the coming year.
External audit effectiveness review
The Committee oversaw a full review of the effectiveness of the
external auditor in July 2022, which collated feedback from the
Committee, finance teams, Managing Directors and other key
stakeholders within the Group. Within the scope of the review, the
following were considered:
•
•
•
Planning and half year work performed August to September 2021
Interim audit carried out November 2021
Year end audit carried out January to April 2022
Overall, the review concluded that EY conducted a thorough and
comprehensive audit providing robust and independent challenge
where needed. The 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
were reflected upon. Constructive discussions were held with EY
around ways of refining the flow of information between internal teams
and the audit team, to ensure continuous improvements in methods
of engagement. It was also noted that many of these areas would
continue to improve with the embedding of those internal protocols
around information sharing, which did not impact on the quality of
audit work or audit opinion, 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 challenge, particularly
around areas of complexity or judgement, including contract, property
and inventory valuations, as well as going concern and viability. Its
procedures and findings are detailed in its 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 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.
In addition, an External Auditor Independence Policy has been
developed to supplement our approach on external auditor
independence, which was approved in early 2023.
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. Deloitte will provide the Group’s
corporation taxation services for the year ended 31 December 2022.
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 2022 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. 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 reviews 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
which does not compromise the overall quality and rigour of the
work undertaken.
Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022
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CORPORATE
GOVERNANCE REPORT
AUDIT, RISK AND INTERNAL CONTROL
Audit and Risk Committee Report
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 50 to 56. The Committee, and ultimately the Board, oversee these processes and
review the risk reporting and principal and emerging risks on an ongoing basis.
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 page 146 discusses other key audit matters which
were also considered by the Committee.
Focus
Matters considered
Committee outcome
Valuation of investment
properties
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 held 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.
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.
Valuation of housebuilder
inventory
Inventories are stated at the lower of cost or net
realisable value.
Construction accounting
estimates
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.
During the year, the Committee 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 2022, 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
12 April 2023
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CORPORATE
GOVERNANCE STATEMENT
CORPORATE GOVERNANCE STATEMENT
Compliance statement
During 2022, 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 2022
and the vast majority of the provisions. This is demonstrated
throughout this Corporate Governance report, and of particular note
are the issues below 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.
To provide further clarification, we will shortly be uploading details
of our position against every principle and provision to the
Company’s website.
Provisions 9 and 19
As previously disclosed, the former Chair of the Board (Jamie Boot)
was not independent on appointment, having served as Group
Managing Director and a member of the Board for 30 years. In May
2022, Peter Mawson, an independent Non-executive Director of
the Company, was appointed as the new Chair and the Company is
now compliant with provisions 9 and 19.
We foresee that there is likely to be a period of non-compliance with
provision 19 from 1 October 2024 when Peter Mawson will remain
as Chair, despite his nine-year tenure, for a period of time to allow
the Non-executive Directors recently recruited to the Board to have
the opportunity to develop detailed knowledge of the business,
before becoming eligible to be considered for the Chair role.
Provision 11
As previously foreseen, following the retirement of Jamie Boot from
the Board in May 2022, there was a short period of non-compliance
with provision 11 in relation to the number of independent and non-
independent Directors on the Board, with only two independent
Non-executive Directors (excluding the Chair) being in place, versus
three non-independent Directors (Tim Roberts, Darren Littlewood,
and James Sykes). This position was resolved when Serena Lang
joined as an independent Non-executive Director in August 2022
and the Company is now compliant.
Provision 20
During the succession planning for the Chair role, 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 5 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 was
appointed to carry out the search for Serena Lang and will be used
for future Non-executive Director appointments, as reported on
page 106.
Provision 24
Peter Mawson became Chair on 26 May 2022 and remained a
member of the Audit and Risk Committee until 16 September 2022.
The Committee composition is now in line with provision 24.
20% vote against – AGM
At the AGM in 2022, no resolution proposed received more than
20% of the vote against it.
AMY STANBRIDGE
COMPANY SECRETARY
12 April 2023
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CORPORATE
GOVERNANCE REPORT
CORPORATE GOVERNANCE REPORT
PETER MAWSON
CHAIR OF THE
RESPONSIBLE
BUSINESS COMMITTEE
BUSINESS COMMITTEE
3 3
RESPONSIBLE
BUSINESS
COMMITTEE
JAMES SYKES
COMMITTEE
MEMBER
JOANNE LAKE
COMMITTEE
MEMBER
GERALD JENNINGS
COMMITTEE
MEMBER
3 3
3 3
2 2
SERENA LANG
COMMITTEE
MEMBER
DARREN LITTLEWOOD
COMMITTEE
MEMBER
1 1
3 3
TIM ROBERTS
COMMITTEE
MEMBER
3 3
Responsible Business Committee attendance key
Meetings attended
Eligible meetings
Following a review of Committee memberships, Gerald stepped down
as a member of the Responsible Business Committee with effect from
September 2022
Serena joined the Committee with effect from her appointment on the
1 August 2022
Review of the year
T
he Responsible Business Committee (the
Committee) met three times during the
year, as well as attending two additional
engagement sessions with guest speakers
to provide insight on some key areas
of practice. The responsibilities of the
Committee are to provide oversight and
leadership on the Company’s strategic
approach to, and performance on, all 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.
During the year the Committee has been responsible
for overseeing the approval and delivery of the Group’s
Responsible Business Strategy, which was launched in
early 2022. The Committee is also alive to 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 during the
year were myself, Joanne Lake, Gerald Jennings, James
Sykes, Tim Roberts and Darren Littlewood. Within the year
Serena Lang was welcomed to the Committee following her
appointment to the Board, with Gerald stepping down as a
Committee member, and it is my pleasure to hand over the
reins of the Committee to Serena as Chair with effect from 1
January 2023.
On behalf of the Board and the Responsible Business
Committee (the Committee), as Chair of the Committee, I
am pleased to present the Directors’ Responsible Business
Committee Report for the year ended 31 December 2022.
“In the last year, we have launched our progressive Strategy for Responsible Business
and this Committee continues to focus on making sure that the business delivers against
its commitments as well as ensuring it has the right governance in place to manage the
broad spectrum of activities this entails.”
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Henry Boot PLC Board
Responsible Business Committee -
key responsibilities
• Oversight of the setting of, and achievement of the objectives
within, the Responsible Business Strategy;
• Review of all sustainability and ESG reporting, including
implementation of the recommendations of the TCFD and all
associated governance arrangements (see more on pages
68 to 77);
•
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 and supporting the development of employee
diversity and inclusion across the Company and its leadership.
Responsible Business Strategy
Throughout 2022, the Committee approved and then monitored the
delivery of the Responsible Business Strategy, which was launched
in January 2022. This included periodic assessment of the progress
of the Group against the targets and metrics set within the Strategy.
Individual Non-executive Directors were assigned to represent
key areas of the Strategy – with myself being sponsor of the NZC
Framework, Joanne Lake sponsoring our EDI Strategy and Gerald
Jennings sponsoring the Community Partnership Plan.
Given the changes in Committee membership, we will be
undertaking a review of the Committee Sponsorship roles in
early 2023.
Throughout 2022, the Committee regularly monitored delivery of
the Responsible Business Strategy targets and considered how the
development of new initiatives (including the Reward Strategy – see
page 65) took into account ESG factors and aligned with existing
responsible business initiatives.
Other significant issues considered
Focus
Matters considered
Committee outcome
TCFD and Scope
3 GHG Emissions
approach
Climate Change
Framework
(CCF)
Health and
Wellbeing
Throughout the year, TCFD reporting in relation to certain
specific elements of quantitative scenario modelling, and
the development of the Group’s approach to Scope 3 GHG
Emissions evaluation, has been assessed. As noted in the
TCFD report within this Annual Report and Accounts, further
progress in these areas is required, and the Committee has
been reviewing the approaches to addressing this.
Linked to the subject above, in December 2022 the
Committee reviewed a consolidated framework developed
by the ESG Steering Group and TCFD Steering Group, which
brought together the proposed approach on NZC, TCFD,
Biodiversity, Nature Stewardship and Carbon Offsetting.
The purpose of the CCF is to provide an internal reporting
mechanism that aligns the existing and forthcoming strategies,
reporting requirements, and initiatives focused on how the
Group is responding to climate change. This approach intends
to provide a clearer strategic structure and more clarity for
monitoring progress and impact.
Following a round of review by the Executive Committee, and
having been contributed to by the GEF (see pages 65 to 96),
the Health and Wellbeing Strategy was considered by the
Committee in December 2022.
EDI Action Plan Whilst the overall EDI Strategy has been subsumed within the
Group’s overall Responsible Business Strategy, the Group’s
EDI Steering Group continues to operate and had explored
ways in which targets for 2022 could be defined and achieved.
The 2022 Action Plan contained a range of measures including
a revision of parental leave policies to provide greater support
to parents throughout the Group, and also a menopause and
pregnancy loss policy being introduced.
The TCFD Steering Group has been tasked with
compiling an approach to TCFD and Scope 3
reporting, including use of external consultants,
with proposals to be approved by the Committee
during the year.
The Committee noted the interactions with
the Audit and Risk Committee in relation to
assessment of risk, and felt that having an
overarching Framework to bring together all of
the elements relating to climate change was
beneficial. The individual strands within the CCF
will continue to be developed and overseen by
the Committee during the year.
The Committee agreed that the Strategy, which
was an evolution of the current approach, was
an appropriate response to provide a more
collaborative and proactive support for our
people. Alignment with other initiatives, such as
the Agile Working approach and employee value
proposition work, was noted.
Discussing these important initiatives, the
Committee supported the work done to date and
approved the amended policies. The proposed
actions for 2023, and for the remaining years of
the Responsible Business Strategy, will address
encouraging greater levels of diversity throughout
the workforce and management, reducing the
gender pay gap, reporting on the ethnicity pay
gap and other training and initiatives to increase
awareness of EDI matters.
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CORPORATE
GOVERNANCE REPORT
Focus
Matters considered
Committee outcome
Engagement
sessions with
guest speakers
Marcos Navarro of Natwest Bank joined the Committee
and Executive Committee in June 2022 to discuss ESG
approaches, particularly in relation to the housing market and
key themes and trends.
These sessions have provided greater
engagement of the Committee members with
peers and subject matter experts, and upskilling
in key areas relating to current topics of debate.
In addition, Graeme Pitkethly of Unilever met with the
Committee and Executive Committee in November 2022
to discuss his role on the TCFD Steering Group and the
expectations of the market regarding good practice in
TCFD reporting.
The Committee, in conjunction with the Board
and Nomination Committee, will continue to
identify further areas for development through
these engagement sessions.
Oversight of climate related disclosures and governance
Set out below is a summary of the approach that has been developed within the Group to ensure that key stakeholders are involved in, and
providing relevant reporting on, ESG-related activities throughout the business. These governance structures enable specialists and subject
matter experts, as well as our people from throughout the various parts of the Group, to get involved in areas that are closest to them, and
ensure that the input to our Committee comes from as broad a range of employee stakeholders as possible.
Responsibilities of senior leaders and management
Senior Leader
Membership
Summary of Role
Chief Executive Officer
Board
Responsible Business Committee
ESG Steering Group
Executive Committee
Chief Financial Officer
Board
Responsible Business Committee
ESG Steering Group
Executive Committee
Responsible Business
Manager
Responsible Business Committee
(attendee)
ESG Steering Group
Executive Committee (attendee)
Responsible Business Steering Group
EDI Steering Group
Climate Change Forum
Charity Committee
Finance Director
Responsible Business Committee
(attendee)
ESG Steering Group
TCFD Steering Group
General Counsel and
Company Secretary
Board (attendee)
Responsible Business Committee
(attendee)
HR Director
ESG Steering Group
Executive Committee
EDI Steering Group
TCFD Steering Group
Executive Committee
EDI Steering Group
ESG Steering Group
Responsible Business Committee
(attendee)
Managing Directors
Executive Committee
The Chief Executive Officer assumes overall responsibility for the
delivery of the Group’s Responsible Business Strategy and responsible
business performance.
The Chief Financial Officer supports the Chief Executive Officer to monitor
and lead the Group’s responsible business performance and to embed
ESG within commercial decision making.
The Responsible Business Manager:
• is responsible for monitoring the Group’s performance against the
Responsible Business Strategy and routinely updating Executive
Committee and the Responsible Business Committee
• fulfils the secretary role for the Responsible Business Committee
• assumes responsibility for the management and objectives of the
Climate Change Forum and EDI Steering Group
• assists with preparation of the Group’s TCFD disclosures
The Finance Director:
• collaborates with the Responsible Business Manager to monitor and
measure progress against quantative targets within the Responsible
Business Strategy
• provides advice on alignment with the Group’s risk framework and
commercial opportunities
• assists with preparation of the Group’s TCFD disclosures
The Company Secretary is the Group’s executive ESG Lead and assumes
responsibility to inform strategic direction on ESG and alignment with the
expectations of shareholders and the market, as well as assisting with
preparation of the Group’s TCFD disclosures.
The HR Director assumes responsibility for overseeing the alignment of the
Responsible Business Strategy with the People Strategy and leads the EDI
Steering Group.
The Managing Directors all advise on the Group’s strategic approach to
ESG and assume responsibility for the responsible business performance
for their respective businesses.
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ESG Governance Structure
Remuneration
Committee
Oversee alignment of
Remuneration objectives
with ESG targets.
Nomination
Committee
Sets Board diversity policy.
Responsible
Business Steering
Group
Overseeing delivery of
Responsible Business
aims in relation to their
communication and impact
on our people.
ESG Steering Group
Initial development and
review of all ESG related
items for the Responsible
Business Committee
including strategy,
frameworks and policies.
Board
Ultimate responsibility to approve and oversee:
•
•
•
Delivery of ESG targets in Responsible
Business Strategy
Risk management framework
Setting and adjusting of Strategy and
overall budget
Responsible Business
Committee
Reviewing and approving overall Responsible
Business strategy and all linked policies and
frameworks including climate change framework,
EDI strategy, charitable giving and volunteering –
plus achievement
Executive Committee
•
•
Oversight of deliverables
Endorsement of approach on Strategy,
policies etc
Key
Delegating
Reporting
Proposing
Subsidiaries
•
•
Delivery of subsidiary-specific ESG targets
Contribution to Working Groups and
committees
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Audit and Risk
Committee
Audit oversight of ESG
delivery setting and
monitoring risk management.
TCFD Steering
Group
Oversight and delivery of TCFD
implementation reporting.
Charity
Committee
Oversees the application
of the Group’s Charitable
Giving Policy
EDI Steering
Group
Formulates Group EDI Strategy
and annual action plans
Climate Change
Forum
Overseeing delivery of
climate change framework
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Terms of reference
During 2022, the Committee reviewed its terms of reference in line with the scope of its operations and key areas of focus 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.
PETER MAWSON
FORMER CHAIR OF THE RESPONSIBLE BUSINESS COMMITTEE
SERENA LANG
CHAIR OF THE RESPONSIBLE BUSINESS COMMITTEE
12 April 2023
12 April 2023
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CORPORATE
GOVERNANCE REPORT
REMUNERATION
GERALD JENNINGS
GERALD JENNINGS
CHAIR OF THE
REMUNERATION
REMUNERATION
COMMITTEE
4
4
DIRECTORS’
REMUNERATION
REPORT
JOANNE LAKE
COMMITTEE
MEMBER
4
4
PETER MAWSON
COMMITTEE
MEMBER
4
4
SERENA LANG
COMMITTEE
MEMBER
2
2
Remuneration Committee attendance key
Meetings attended
Eligible meetings
Annual Statement from the
Chair of the Remuneration Committee
O
n 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 2022.
This report is divided into three sections:
• This Annual Statement, which summarises the
work of the Committee and our approach to
Directors’ remuneration.
•
•
The Remuneration Policy section, which provides a summary of the
policy approved at the 2021 AGM. The full Remuneration Policy can
be found on pages 111 to 118 of the 2020 Annual Report (and is also
available on the Company website).
The Annual Report on Remuneration, which sets out the remuneration
outcomes for the financial year ended 31 December 2022 and
the proposed implementation of the Remuneration Policy for the
upcoming year.
Company performance
Henry Boot performed well in 2022, achieving the Group’s
best ever underlying profit, whilst continuing to make good
progress against our strategic objectives.
The key highlights are listed below:
• Record underlying profit of £56.1m driven by residential
land and property development sales
•
•
•
Profit before tax increased by 30% to £45.6m
Increased ROCE of 12.0%, up 240 bps, within our
medium-term strategic target of 10–15%
EPS grew to 25.0p, up 17.9%
• Dividend increased by 10% to 6.66p with dividend
cover increased to 3.8x
•
Sold 3,869 plots at an average gross profit of £6.1k
per plot
• Completed on £83m (HBD Share) of developments
with 92% let/sold
• Maintained a strong average selling price for private
homes of £503k
•
2023 construction order book 68% secured – 94% of
costs are fixed
“We have delivered strong operational
performance resulting in our best ever
underlying profit and increased the
dividend by 10%. We believe this is
reflected in the incentive payouts during
the year. We are pleased to introduce
a measure based on our Responsible
Business Strategy into the LTIP grant in
2023 to drive a reduction in GHG and
improve equality”
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Remuneration outcomes
Annual Bonus
The 2022 annual bonus was based on PBT (66.7%) and personal
objectives (33.3%). Operating performance of the business was
excellent, having benefited from strong sales within our property
development and strategic land businesses, driving the Group’s
best ever financial results on an underlying profit basis. Our non-
financial operational performance was also excellent with significant
progress made against our business strategy.
In line with the fall of UK commercial property values in the second
half of 2022, the investment portfolio reduced in value, with the
result that the 2022 underlying profitability from operations was
negatively impacted by £10.5m. As the bonus is designed to reward
strong operational performance within management’s control, this
negative impact is not included in the formulaic outcome of the
bonus (in contrast to the LTIP which includes EPS and ROCE,
which are both impacted by movements in property values). On this
basis, this would have led to a maximum 66.7% pay out against the
stretching PBT target range set at the start of the year. However,
the Committee reviewed this outcome and determined that
downward discretion should be exercised to reduce the pay out to
a target level for this element (so 33.3% rather than 66.7% of the
total bonus opportunity), recognising that the reduction in property
values had led to a reduction of statutory PBT and weakening of the
share price in the final quarter of 2022.
Management performance was strong against the strategic
objectives that were set, with a pay-out of 28.3% and 28.8% of
33.3% for the CEO and CFO, respectively. As a result, the formulaic
outcome of the bonus is 61.6% of maximum for the CEO and
62.1% of maximum for the CFO.
The Committee is comfortable that the bonus outcome reflects
the wider business performance of the Company over the year.
As part of the process for approving Executive Director bonuses,
the Committee also considered the bonus awards payable to less
senior management and employees more widely. The pay-out
is considered proportionate and is broadly consistent with wider
workforce bonuses.
One third of the bonus is deferred in to shares and held for
three years.
LTIP award for performance period FY20–22
The three-year performance period for the 2020 LTIP award ended
on 31 December 2022. Performance was based on EPS (33.3%),
ROCE (33.3%) and TSR (33.4%). The EPS and ROCE targets were
set before the impact of the COVID pandemic and have not been
adjusted to reflect the significant detrimental impact this had on
our financial performance. ROCE was measured on an average
basis across all three years (including a very low ROCE in 2020
caused by significant business disruption) and the 2022 EPS had
not recovered sufficiently compared to the 2019 EPS, which was a
pre COVID high point for measuring the growth targets. This meant
that the minimum performance threshold was not achieved in either
case. The Total Shareholder Return performance element achieved
partial vesting based on our stock market performance relative to
the companies in the FTSE Small Cap Index over the performance
period. Overall, 15.1% of the LTIP will vest. The Committee believes
that this outcome is appropriate and chose not to apply discretion
on the incentive outcome.
The Committee is aware of investor and proxy agency concerns
regarding LTIP “windfall gains” and has considered whether market
movements risk creating a windfall gain for Executive Directors on
the vesting of the 2020 LTIP. The award was granted in June 2020
when the share price was 256p, having recovered from the sharp
market drop in March 2020. As this is higher than the share price at
the time of writing (223p on 31 March 2023), there is currently no
windfall gain.
The Committee is comfortable that actions taken on pay during
the year across the Company were appropriate and balanced
the interests of all stakeholders and that the Remuneration Policy
operated as intended.
Board Changes
Jamie Boot retired from his role as Chairman on 26 May 2022,
following the Company’s AGM. After undertaking a considered
selection process to determine succession, the Group was
delighted to announce that Peter Mawson would succeed Jamie
as Chair. As a consequence of Peter’s changing role, the Senior
Independent Director position was assumed by Joanne Lake.
The Board has taken the decision to retire the role of Deputy
Chair, which was previously held by Joanne. As a part of the work
undertaking in the search for a successor to Jamie Boot, the Chair
fee was reviewed. The market data suggested that the current
fees payable were below market. Taking into account the market
positioning and the time commitment for the role, the Chair fee for
Peter was set at £105,000 effective 26 May 2022.
Later in the year, Serena Lang was appointed as a Non-executive
Director with effect from 1 August 2022. Serena took over as Chair
of the Responsible Business Committee on 1 January 2023.
Application of the Directors’
Remuneration Policy for 2023
The key decisions for 2023 are set out below.
Salary and fees
The Committee reviewed the out of cycle salary increases that had
been made in 2022 and the one-off cost of living payment for the
lowest paid employees. Building on this support for the lower paid
employees, for 2023 the Committee determined that there should
be a tiered approach to salary increases, favouring the lowest paid.
On this basis the lowest paid cohort of employees will receive a
standard salary increase of between 5-7%, the next lowest paid
4-6%, the Executive Committee 3-5% and the Executive Directors
3%. The average overall salary increase, excluding the Executive
Directors and Executive Committee, is 6.24%.
The Non-executive Director and Chair’s fees have been increased
by 4% for 2023.
Annual Bonus
The maximum annual bonus for Executive Directors will remain at
120% of salary. The annual bonus will again be based two-thirds on
financial measures and one-third on strategic objectives, of which
a quarter are related to ESG targets. One third of the bonus is
deferred in to shares and held for three years.
Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022
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CORPORATE
GOVERNANCE REPORT
REMUNERATION
Directors’ Remuneration Report
LTIP
The 2023 LTIP awards will be granted at the normal maximum grant
level, 125% of salary for the CEO and 100% of salary for the CFO.
The 2023 LTIP awards will again be based on EPS, ROCE and
TSR (30% of the award each) and, for the first time, we are pleased
to introduce a measure based on our Responsible Business
Strategy, for the remaining 10%. This year’s award will be based on
achievement against two targets from our Responsible Business
Strategy; a reduction to our scope 1 and Scope 2 emissions by
2025, reflecting our ambition to be net zero for such emissions by
2030 (5%), and a stretching target to improve our gender balance
across the workforce (5%). In future years we may evolve these
measures to reflect other aspects of our broader ESG agenda.
The ranges for the EPS and ROCE targets have been set to be
equivalently challenging to prior years, taking into account internal
business plans and current market conditions.
Wider workforce considerations
Salary levels across the workforce were reviewed during the year,
taking into account the unusually high levels of inflation and cost
of living challenges, including a spike in energy costs. This resulted
in out of cycle salary increases for over 100 employees (22.8% of
the workforce). Also, in September, we made a one-off payment of
£1,000 to the lowest paid two thirds of the workforce.
The Committee also has oversight of the annual bonus and the
long-term incentive schemes across the business and ensures that a
consistent approach is taken between executive schemes and those
applying to the workforce generally.
As a part of the Policy review in the upcoming year, the Committee
will review the cascade of the Remuneration Policy below Board to
ensure our approach is competitive and aligns with the strategy of
the business.
In my dual capacity as Committee Chair and designated Non-
executive Director for workforce engagement, I meet regularly
with the Group Employee Forum. We dedicate one entire session
to discuss how executive remuneration aligns with the workforce
reward strategy. Feedback has been positive with the Group
Employee Forum appreciating the link between the strategy, company
performance and reward with the corporate objectives feeding down
through the business from the Executive Directors to all our people.
Executive remuneration and the implementation of the Remuneration
Policy were not raised as issues during the engagement and so no
amendments were required to the proposed implementation of the
Remuneration Policy in 2023 as a result of the engagement.
Shareholder engagement
The Committee consults with its larger shareholders on executive
pay matters, where considered appropriate. As there are no
significant changes in the implementation of the Remuneration
Policy, we have not carried out a further formal consultation
with shareholders in relation to the policy or its operation in
2023. However, I am always happy to make myself available to
shareholders to discuss any concerns or feedback they may have.
We will consult with larger shareholders during the Remuneration
Policy review process ahead of the 2024 AGM.
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.
GERALD JENNINGS
CHAIR OF THE REMUNERATION COMMITTEE
12 April 2023
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Remuneration at a glance
Performance snapshot
Annual bonus performance
Measure
Underlying PBT (66.7%)
Individual/Strategic
objectives (33.3%)
LTIP performance
Performance
£56.1m
Achievement
(% of max)
50%
See pages 129 to 130
85%
£1,500
Scenario Charts (£’000)
£2,500
£2,000
£1,991
Achievement
(% of max)
45%
0%
0%
£1,000
£500
£0
£545
%
0
0
1
£1,6970
£1,121
%
6
2
%
5
2
%
9
4
%
5
3
%
3
3
%
2
3
£1,199
%
0
3
%
5
3
%
5
3
£1,045
£705
%
2
2
%
6
2
%
2
5
£365
%
0
0
1
Minimum
Target
Maximum Minimum
Target
Maximum
Tim Roberts
Darren Littlewood
Fixed Pay
Annual Bonus
LTIP
50% share price growth on LTIP
Implementation for 2023
Base salary
3% increase for all Executive Directors
• CEO – £470,200
• CFO – £309,000
Benefits
No change
Pension
8% of salary (in line with the wider workforce)
Annual
Bonus
• Maximum opportunity: 120% of salary
•
Subject to underlying profit and strategic
objectives
LTIP
• CEO – 125% of salary
• CFO – 100% of salary
•
•
Subject to EPS, ROCE, TSR and ESG
targets
Two year holding period applies
Shareholding
guidelines
200% of salary (to be held for 2 years
post-employment)
Measure
Relative TSR
vs FTSE Small Cap
EPS
ROCE
Performance
Between median and
upper quartile
-4% pa
8.98%
Executive pay
Total Remuneration (£’000)
1000
800
600
400
200
0
2022
2021
2022
2021
Tim Roberts
Darren Littlewood
Salary
Benefits
Pension
Annual Bonus
LTIP
Other
1 The 2021 figure includes a salary repayment during the year of £43,046
for Tim Roberts and £25,000 for Darren Littlewood relating to FY2020 –
see page 128 for more details.
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CORPORATE
GOVERNANCE REPORT
REMUNERATION
REMUNERATION
Remuneration policy
This part of the Directors’ Remuneration Report sets out a summary
of the Remuneration Policy approved by shareholders at the 2021
AGM on 20 May 2021.
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 employees 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 in the notes to
the Policy table. 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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Summary of the Directors’ Remuneration Policy
and its implementation in 2023
Below is a summarised version of the Policy you can read the full Policy on our website:
http://www.henryboot.co.uk/investors/governance/remuneration-policy/
Element
Salary
Purpose and link to strategy
Key features
2023 implementation
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
• Average workforce increase: 6.24%
• Tim Roberts: £470,200
(3% increase)
• Darren Littlewood: £309,000 (3%
increase)
Benefits
Provided on a market competitive basis
and assists in recruitment and retention
• Level of benefits reviewed to reflect
• No change from last year
market practice
• Include car allowance, private
health insurance, permanent health
insurance, death in service cover
and participation in SAYE scheme
Pension
Contribution towards retirement income
• Choice of participating in defined
• Tim Roberts and Darren Littlewood
Annual bonus
To incentivise the delivery of financial
performance, operational targets
and individual objectives over the
financial year
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
contribution scheme or cash in lieu
• Aligned to the rate applying to the
majority of the workforce (8%)
receive cash in lieu of pension
contribution at a level of 8% of base
salary in line with the majority of
employees
• Targets set annually, majority of
• Stretching PBT target set for two
which will be financial
thirds of the opportunity
• Maximum bonus opportunity of
• Personal objectives set for one third of
the opportunity. 25% of this element will
be based on ESG targets
• Expected grant in FY23 is 125% of
salary for Tim Roberts and 100%
salary for Darren Littlewood
• Mixture of EPS, ROCE, TSR and
ESG targets performance criteria
• Current holdings for Executive
Directors shown on page 132
120% of salary
• 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
• Performance conditions and targets
set annually linked to strategy / TSR
• Normal levels are 125% of salary
for CEO and 100% salary for CFO
(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
• Executive Directors are expected
to retain at least 50% of any
LTIP awards or deferred bonus
awards until holdings reach the
required level.
• Post-cessation requirement to hold
lower of shares held or 200% of
salary for at least two years (market
purchased shares excluded)
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CORPORATE
GOVERNANCE REPORT
REMUNERATION
Element
Purpose and link to strategy
Key features
2023 implementation
Non-executive
Director fees
Fee levels set to assist recruitment and
retention of high calibre Non-executive
Directors
• Non-executive Director fees will be
increased by 4%, lower than the
increase for the wider workforce
of 6.24%
• Chair fee set by the Committee
• Non-executive 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
Service contracts and letters of appointment
The Executive Directors have a service contract requiring twelve months’ notice of termination from either party as shown below:
Executive
Director
Date of
appointment
Date of current
contract
Notice from
the Company
Notice from
the individual
Unexpired period
of service contract
Tim Roberts
1 January 2020
1 August 2019
12 months
12 months
Darren Littlewood
1 January 2016
1 January 2016
12 months
12 months
Rolling
Rolling
The table below details the letters of appointment for each Non-executive Director.
Non-executive
Directors
Date of appointment
Date of current
letter of appointment
Notice from
the Company
Notice from
the individual
Peter Mawson
1 October 2015
30 July 2015
James Sykes
22 March 2011
21 August 2019
Joanne Lake
1 October 2015
30 July 2015
Gerald Jennings
1 October 2015
30 July 2015
Serena Lang
1 August 2022
28 July 2022
3 months
3 months
3 months
3 months
3 months
3 months
3 months
3 months
3 months
3 months
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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 primary role of the Committee is to:
• Review, recommend and monitor the level and structure of the remuneration packages of the Executive Directors and senior management;
•
Set and approve the remuneration package for the Executive Directors; and
• Determine a balance between base pay and performance-related elements of the remuneration package in an effort to align the interests
of stakeholders more widely (including shareholders) with those of the Executive Directors.
The members of the Committee and their attendance at Committee meetings is set out page on 120. The key activities of the Committee
during the year are set out below:
• Oversight of Remuneration Policy and its implementation.
• Reviewed and approved salaries for the Executive Directors and senior management.
• Reviewed formulaic incentive outcomes for the Executive Directors, senior management and the wider workforce. Considered whether
they were aligned to Company performance over the short and long term.
• Reviewed the LTIP awards for the Executive Directors and senior management.
•
Engaged with the wider workforce on the alignment between executive pay and the wider workforce.
External Advisers
Following a formal and robust tender process, the Committee appointed Korn Ferry as its advisers with effect from 11 June 2020.
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. Korn Ferry
provided advice on market practice updates, benchmarking and supported management with undertakings such as producing the
Directors’ remuneration report to the extent this did not impact the independence of its advice. The fees paid to Korn Ferry for providing
advice to the Committee in relation to Directors’ remuneration was £47,100.
Korn Ferry provided other human capital related services during the year, but these services were carried out by a team separate to the
remuneration advisory team. As a result, the Committee is satisfied that the advice received was objective and independent.
Statement of voting at the last Annual General Meeting (AGM)
At the 2022 AGM, shareholders were asked to approve the 2021 Annual Report on Remuneration. The Directors’ Remuneration Policy was
approved by shareholders at the 2021 AGM. The votes received are set out below:
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2022 AGM (26 May 2022)
Approve the 2021 Directors’ Remuneration
report (excluding the Remuneration Policy)
2021 AGM (20 May 2021)
Approve the 2021 Directors’ Remuneration
report (excluding the Remuneration Policy)
Nature of vote
Votes for
Advisory 83,537,884 94.99
% Votes against % Votes total Votes withheld
12,669
4,407,409 5.01 87,945,293
Nature of vote
Votes for
Binding 87,300,759 98.03
% Votes against % Votes total Votes withheld
9,626
1.97 89,055,143
1,754,384
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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 2022
Tim Roberts
Darren Littlewood
Jamie Boot
James Sykes
Joanne Lake
Gerald Jennings
Peter Mawson
Serena Lang
Salary
and
fees1
£’000
457
300
40
51
58
58
89
21
Taxable
benefits
£’000
37
31
1
0
0
0
0
0
Pension-
related
benefits
£’000
37
24
0
0
0
0
0
0
Other2
£’000
4
4
0
0
0
0
0
0
Total
fixed
£’000
535
359
41
51
58
58
89
21
Annual
bonus
£’000
338
224
0
0
0
0
0
0
Long-term
incentives3
£’000
65
38
0
0
0
0
0
0
Total
Variable
£’000
403
262
0
0
0
0
0
0
Total
Remuneration
£’000
938
621
41
51
58
58
89
21
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CORPORATE
GOVERNANCE REPORT
REMUNERATION
Year ended
31 December 2021
Tim Roberts
Darren Littlewood
Jamie Boot
James Sykes
Joanne Lake
Gerald Jennings
Peter Mawson
Salary
and
fees1,4
£’000
478
300
91
48
48
48
48
Taxable
benefits
£’000
35
28
1
–
–
–
–
Pension-
related
benefits
£’000
35
51
–
–
–
–
–
Other2
£’000
0
0
–
–
–
–
–
Total
fixed
£’000
548
379
92
48
48
48
48
Annual
bonus
£’000
435
275
–
–
–
–
–
Long-term
incentives5
£’000
–
29
–
–
–
–
–
Total
Variable
£’000
435
304
–
–
–
–
–
Total
Remuneration
£’000
983
683
92
48
48
48
48
1 Salary includes the value subject to salary sacrifice.
2 Tim Roberts and Darren Littlewood participated in the SAYE all employee plan, further details are set out on page 132.
3 Value of shares based on a three-month average share price of £2.38 to 31 December 2022. This value will be restated next year based on the actual share
price on the date of vesting.
4 As stated in the 2021 annual report, 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 £43,046 for the CEO and £25,000
for the CFO. These salary reductions for Tim Roberts and Darren Littlewood were repaid in 2021, to mirror the experience of the wider workforce. The
Chairman’s fee and the Non-executive Director’s fees were reduced by 20%. The fee reductions were not reinstated.
5 The 2019 LTIP award vested on 30 April 2022, the value included in the table is based on the value of the award on vesting and includes dividend equivalents
of 496 shares. The value is based on the share price on the date of vesting.
Taxable benefits include the provision of a company car or a cash allowance alternative, permanent health insurance and private medical
insurance. The value of benefits is not pensionable.
The information in the single total figure of remuneration in the table on page 127 is derived from the following:
Salary or fees
The amount of salary or fees received in the year
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 128 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 both Tim Roberts and Darren Littlewood.
Other
SAYE awards granted to Executive Directors during the year
Individual elements of remuneration
Pension entitlement
Tim Roberts and Darren Littlewood receive a salary supplement in lieu of pension contribution equivalent to 8% of salary, in line with the
workforce rate.
2022 bonus
The maximum annual bonus opportunity for the Executive Directors was 120% of salary. Two thirds of the bonus was subject to stretching
PBT targets and one third personal strategic objectives. Performance against the targets is set out in the table below.
Measure
Financial
Underlying PBT
Non-financial
Personal objectives
Formulaic outcome
Outcome following Committee discretion
Weighting
(% of
maximum)
Threshold
10% of
maximum
Target
50% of
maximum
Stretch
100% of
maximum
Actual
result
Outcome
(% of maximum)
Tim
Roberts
Darren
Littlewood
66.7%
£45.2m
£50.3m
£52.8m
£56.1m
66.7%
66.7%
33.3%
See below
See below
28.3%
95.0%
61.6%
28.8%
95.5%
62.1%
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Operating performance of the business was excellent, having benefited from strong sales within our property development and strategic
land businesses, driving the Group’s best ever financial results on an underlying profit basis. Our non-financial operational performance was
also excellent with significant progress made against our business strategy.
In line with the fall of UK commercial property values in the second half of 2022, the investment portfolio reduced in value, with the result that
the 2022 underlying profitability from operations was negatively impacted by £10.5m. As the bonus is designed to reward strong operational
performance within management’s control, this negative impact is not included in the formulaic outcome of the bonus (in contrast to the
LTIP which includes EPS and ROCE, which are both impacted by movements in property values). On this basis, this would have led to
a maximum 66.7% pay out against the stretching PBT target range set at the start of the year. However, the Committee reviewed this
outcome and determined that downward discretion should be exercised to reduce the pay out to a target level for this element (so 33.3%
rather than 66.7% of the total bonus opportunity), recognising that the reduction in property values had led to a reduction of statutory PBT
and weakening of the share price in the final quarter of 2022.
The Committee also evaluated the performance of the Executive Directors against their 2022 personal strategic objectives. The proportion of
objectives achieved was assessed as follows:
2022 personal objectives – Tim Roberts
Objective Details
Weighting
(% of salary) Performance against objective
1
2
3
4
5
6
Implement Group strategy, identifying strategic
smart objectives, taking account of risk
15%
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
4%
4%
4%
3%
10%
40%
Total out of max 40%
Outcome
(% of
salary)
12%
3%
3%
Strong: Continued prudent deployment of capital with a more
thorough approach to the cascade of strategic objectives
throughout ExCo and to wider management teams aligned to
Corporate objectives.
Strong: Key appointment of Communications and Marketing
Director and a more strategic focus on the messages shared
with all stakeholders to ensure consistency of narrative.
Strong: Continued development of Executive Committee
with focus on collaboration and customer. Supported the
implementation of a Group wide reward strategy to provide
clarity and transparency.
Excellent: All major KPIs have been achieved and continue to
be monitored closely.
4%
Strong: Continued refinement of our equity narrative.
Attracted 1 major new investor to the register.
Excellent: Successful policy launch and development of ESG
targets for all parts of the business. We achieved our gender
target for the year and a reduction in our gender pay gap
aligned to our longer term goals.
2.5%
9.5%
34%
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CORPORATE
GOVERNANCE REPORT
REMUNERATION
2022 personal objectives – Darren Littlewood
Objective Details
Weighting
(% of salary) Performance against objective
Outcome
(% of
salary)
8.5%
6.5%
1
2
3
4
5
6
7
Implement Group strategy, identifying strategic
smart objectives, taking account of risk
10%
Implement IT strategy with a focus on identifying
business process improvements, efficiencies and
systems
8%
Strong: Continued prudent deployment of capital across
all activities with focus on alignment to the refreshed Group
strategy and implementation of technology solutions.
Continued management of the pension liabilities.
Strong: Appointment of IT Director to deploy the IT strategy
and align to the requirements of the Group and continued
focus on cyber security. Group wide process mapping has
been implemented and has identified a number of areas of
efficiency and where technology solutions can be deployed.
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
3%
3%
Excellent: Continued commitment to ExCo development with
focus on customer and collaboration. Positive feedback from
stakeholders in relation to profile raising and representation on
wider trade bodies and forums.
3%
Excellent: Development of wider skills within the Group to
strengthen delivery to internal stakeholders.
2.5%
Management and development of financial
reporting within each business, to the Board and
to the investor community
3%
Undertake a review of internal and external audit
and tender the Group’s provision of tax services
3%
Support the implementation of the Group’s
ESG Policy
10%
Total out of max 40%
40%
Excellent: Continued to develop compelling equity narrative
supported by relevant and consistent financial reporting.
Good: Reviewed external audit with feedback to ARC; tax
services were successfully tendered with Deloitte being
appointed. Internal audit review will be carried over into 2023.
Excellent: Successful policy launch and implementation of
appropriate ESG targets in all parts of the business. Success
has been achieved in increasing female representation and
reducing the gender pay gap.
2.5%
2%
9.5%
34.5%
Based on performance to 31 December 2022 and downward discretion used by the Committee, the adjusted annual bonus outcome for
Executive Directors during the year are shown below.
Executive
Tim Roberts
Darren Littlewood
Annual Bonus outcome
% of maximum
61.6%
62.1%
% of salary
74%
74.5%
Bonus outcome (£)
£337,812
£223,500
Two thirds of the bonus will be payable in cash. The remaining one third will be invested in shares and deferred for three years. No further
performance conditions or service requirements apply.
Long-Term Incentive Plan (LTIP)
LTIP Awards were granted to Tim Roberts and Darren Littlewood on 22 June 2020. The LTIP shares in this award were subject to the
performance criteria set out in the table below.
Performance condition
EPS growth
ROCE
TSR1
Weighting
33.3%
33.3%
33.4%
Total vesting (out of 100%)
Threshold
(25% vesting)
RPI+3% p.a.
10%
Median
TSR: -11%
Maximum
(100% vesting)
RPI+7% p.a.
13%
Upper quartile
TSR: 24%
Actual
performance
-4% p.a
8.97%
Rank 56 out of 128
TSR: -5.2%
1 The TSR comparator group was comprised of the FTSE Small Companies Index (excluding investment trusts).
Pay-out of
element
(% of max)
0%
0%
15.1%
15.1%
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The Committee is comfortable that the level of vesting is in line with underlying performance and shareholder experience over the
performance period and that no discretion would apply. As a result, the following shares will vest.
Executive Director
Tim Roberts
Darren Littlewood
Number
of shares
granted
168,039
97,592
Number of
shares due
to vest
25,369
14,733
Estimated
Number of
shares for
dividend
equivalents
1,941
1,127
Total
£64,998
£37,747
1 The share price was £2.56 at the time of grant, compared to the three-month average share price of £2.38 to 31 December 2022. Therefore, No part of the
award is currently attributable to share price appreciation. No discretion was applied.
2 After awards vest, subject to selling sufficient shares to pay tax, shares must be held for a further two years.
3 Dividend equivalent shares will be awarded on the shares that vest and will be valued on an average share price for the three business days before the vest
date of 22 June 2023. For the purpose of the table above, the estimated number of dividend equivalents has been based on the three-month average share
price up to 31 December 2022. For the FY23 Annual Report, this figure will be restated.
4 The total value above has been calculated based on the three-month average share price up to 31 December 2022.
LTIP awards granted in the year (audited)
LTIP awards were granted during the year to Tim Roberts and Darren Littlewood on 29 April 2022.
Tim Roberts
Darren Littlewood
Type of award
LTIP – nil cost options
LTIP – nil cost options
% of salary
125%
100%
Number of
shares
175,938
92,497
Face value of
grant at 324.33p
per share1
£570,620
£299,996
% of award
vesting at
threshold
25%
25%
1 The share price is calculated based on the average share price for the three days preceding the grant.
The awards are subject to the following performance conditions which will be measured over the three-year period ending 31 December 2024:
Measure
EPS in 2024
Return on Capital Employed (average over three years)
TSR relative to the FTSE Small Cap Index (excluding investment trusts)
Threshold
(25% of max)
Weighting
28p
33.3%
33.3%
11%
33.4% Median performance
Maximum
(100% of max)
35p
14%
Upper quartile
Sharesave options granted during the year (audited)
During the year Tim Roberts and Darren Littlewood were granted options under the Company’s Sharesave scheme. The details are set
out below:
Name
Tim Roberts
Darren Littlewood
Number
of options
granted1
9,090
9,090
Exercise
price2
198p
198p
Face value
at grant1
£22,437
£22,437
% of award
vesting at
threshold
Date on which
exercisable
N/A 1 December 2025
N/A 1 December 2025
1 Both Directors opted to save £500 a month over the 3-year savings period equating to 9,090 shares based on the exercise price.
2 The exercise price is calculated based on the average share price for the three days preceding the grant (246.83p). The Board then applied a 20% discount
on the price for all participants in line with HMRC rules.
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 2019. As a good leaver, the number of shares available to vest was 5,797 shares, having been prorated for his
time in employment. This equated to a market valuation on exercise of £18,782.
Payments made for loss of office
Jamie Boot stepped down from the Board on 26 May 2022 and received fees to that date (£40k). There were no additional payments.
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CORPORATE
GOVERNANCE REPORT
REMUNERATION
Statement of Directors’ shareholdings and share interests (Audited)
The following table sets out the shareholdings and share interests in ordinary shares of the Directors and connected persons in the
Company as at 31 December 2022. The Executive Directors are subject to a shareholding requirement of 200% of salary under the
Remuneration Policy. Executive Directors are expected to retain at least 50% of any LTIP awards or deferred bonus awards until holdings
reach the required level. There are no holding requirements for Non-executive Directors.
At 31 December 2022
Beneficially
owned at
1 January
2022
279,067
205,404
13,200
20,000
10,710
19,900
N/A
5,665,002
Unvested
Options with
performance
conditions
550,876
294,784
–
–
–
–
–
–
Unvested
Options
without
performance
conditions
9,090
9,090
–
–
–
–
–
–
Beneficially
owned
303,258
225,380
13,200
20,000
10,710
19,900
–
5,665,002
Vested
unexercised
options
–
–
–
–
–
–
–
–
Total interests
863,224
529,254
13,200
20,000
10,710
19,900
–
5,665,002
Share-
holding
as a % of
salary or
fees
152%
171%
28%
89%
41%
77%
0%
13,921%
Director
Tim Roberts
Darren Littlewood
Peter Mawson
James Sykes
Joanne Lake
Gerald Jennings
Serena Lang
Jamie Boot4
1 All outstanding scheme interests are in the form of options.
2 The table above includes the holdings of persons connected with each of the Directors.
3 The shareholding as a percentage shown above is based on the share price at 31 December 2022 (235p). The salary used for this calculation is that which
commences on 1 January 2023.
4 Shareholding for Jamie Boot is shown at 26 May 2022 when he stepped down from the Board in relation to his fee at that time.
Tim Roberts increased his holding by 42,000 shares to 345,258 on 26 January 2023. There have been no other transactions between
31 December 2022 and 31 March 2023.
LTIP
Tim Roberts
Darren Littlewood
Market price
at date of
grant
256.17p
262.67p
324.33p
Date of grant
22/06/2020
23/06/2021
29/04/2022
30/04/2019
22/06/2020
23/06/2021
29/04/2022
272.3p
256.17p
262.67p
324.33p
At 1 January
2022
168,039
206,899
–
374,938
82,619
97,592
104,695
–
284,906
Grant during
the year
–
175,938
175,938
–
–
–
92,497
92,497
Exercised
during the
year
–
–
–
–
9,0941,2
–
–
–
9,094
Lapsed
during the
year
–
–
–
–
74,021
–
–
–
74,021
At 31
December
2022
168,039
206,899
175,938
550,876
–
97,592
104,695
92,497
294,784
Actual
exercise
date/earliest
vesting date
22/06/2023
23/06/2024
29/04/2025
30/04/2022
22/06/2023
23/06/2024
29/04/2025
1 Shares exercised under the LTIP includes 496 dividend equivalent shares.
2 Darren Littlewood exercised 9,094 options during the year under the LTIP. The aggregate gain on exercise was £29,465 based on a share price on the date
of exercise of 324p.
Sharesave plan
Tim Roberts
Date of
grant
15/10/2021
21/10/2022
Darren Littlewood 15/10/2021
21/10/2022
At 1
January
2022
8,000
–
8,000
–
Granted
during the
year
–
9,090
–
9,090
Exercised
during the
year
–
–
–
–
Lapsed
during the
year1
8,000
–
8,000
–
At 31
December
2022
–
9,090
–
9,090
Exercise
price
225p
198p
225p
198p
Date from
which
exercisable
–
01/12/2025
–
01/12/2025
Expiry date
–
01/06/2026
–
01/06/2026
1 Both Tim Roberts and Darren Littlewood pulled out of the 2021 Sharesave plan and opted to join the 2022 Sharesave plan instead.
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Share price
The middle market price for the Company’s shares at 31 December 2022 was 235p and the range of prices during the year was 227p to 345p.
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.
450
400
350
300
250
200
150
100
50
0
)
d
e
s
a
b
e
R
(
)
£
(
l
e
u
a
V
Dec 12
Dec 13
Dec 14
Dec 15
Dec 16
Dec 17
Dec 18
Dec 19
Dec 20
Dec 21
Dec 22
Source: Datastream (Thomson Reuters)
Henry Boot PLC
FTSE SmallCap Index
CEO remuneration for the previous ten years
Year
Name
Total Remuneration
Annual bonus
LTIP
(£’000)
(% of max)
(% of max)
2012
Jamie
Boot
962
58.3
40
2013
Jamie
Boot
1,054
83.3
50
2014
Jamie
Boot
1,000
94.5
25
2015
Jamie
Boot
981
87.8
25
2016
John
Sutcliffe
1,118
91.1
67
2017
John
Sutcliffe
1,277
99.2
100
2018
John
Sutcliffe
1,250
76.8
87
2019
John
Sutcliffe
912
64.8
65
2020
Tim
Roberts
715
50.0
nil
2021
Tim
Roberts
982
83.3
nil
2022
Tim
Roberts
938
61.6
15.1
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.
Average percentage change
2021/22
Taxable
benefits
6%
11%
N/A
N/A
N/A
N/A
N/A
N/A
0%
Salary/
fees
-5%
0%
N/A
6%
21%
21%
85%
N/A
6.24%
Annual
bonus
-22%
-19%
N/A
N/A
N/A
N/A
N/A
N/A
54.89%
Average percentage change
2020/21
Taxable
benefits
0%
0%
N/A
N/A
N/A
N/A
N/A
N/A
0%
Salary/
fees
5%
9%
5%
5%
15.36%
20.55%
27.81%
N/A
9.55%
Annual
bonus
68%
87%
N/A
N/A
N/A
N/A
N/A
N/A
0%
Average percentage change
2019/20
Annual
Taxable
bonus
benefits
0%
N/A
0% -51.10%
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
0% -40.81%
Salary/
fees
0%
11%
3%
3%
3%
3%
3%
N/A
3.99%
Chief Executive Officer1
Chief Financial Officer1
Jamie Boot2
James Sykes3
Joanne Lake3
Gerald Jennings3
Peter Mawson4
Serena Lang5
Workforce
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1 As stated in the 2021 annual report, 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 £43,046 for the CEO and £25,000
for the CFO. These salary reductions for Tim Roberts and Darren Littlewood were repaid in 2021, to mirror the experience of the wider workforce. The
Chairman’s fee and the Non-executive Director’s fees were reduced by 20%.
2 Jamie Boot stepped down from the Board on 26 May 2022. As he did not serve a full year in 2022, the change has not been included as it would not be
representative.
3
In line with general market practice, additional fees were introduced for FY22 onwards for those Directors with additional responsibilities to reflect the
increased time commitment required to effectively undertake these roles.
4 Peter Mawson succeeded Jamie Boot as Chair on 26 May 2022, as a result, his fees increased year on year.
5 Serena Lang was appointed as a Non-executive Director on 1 August 2022. As a result no year-on-year change can be provided.
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CORPORATE
GOVERNANCE REPORT
REMUNERATION
CEO pay ratio
The CEO pay ratio comparing the CEO single total figure of remuneration to the equivalent pay for the lower quartile, median and upper
quartile of UK employees (calculated on a full-time equivalent basis). The ratios have been calculated in accordance with the Companies
(Miscellaneous Reporting) Regulations.
2022
2021
2020
2019
25th
percentile
pay ratio
28:1
31:1
26:1
41:1
Median pay
ratio
20:1
22:1
18:1
27:1
75th
percentile
pay ratio
12:1
14:1
11.1
17:1
Method
Option A
Option A
Option A
Option A
The Committee selected Option A as the method of calculation as it is generally recognised as the most statistically robust and is consistent
with approach used historically. The pay and benefits for UK employees was calculated on 24 March 2023 using the same method as used
for the single total figure. No estimates or adjustments have been made.
Each employee’s pay and benefits were calculated using each element of remuneration on a full-time basis, consistent with the CEO.
No adjustments (other than the approximate up-rating of pay elements to achieve full-time equivalent rates) were made, with the exception
of annual bonuses for Stonebridge and Road Link where the amount paid during 2021 was used as the FY22 bonus figures had not yet
been determined at the time this report was produced. No components of pay have been omitted.
Salary/wages
Total remuneration
25th
percentile
£28,000
£33,227
50th
percentile
£38,600
£45,629
75th
percentile
£48,783
£74,060
In 2022, the CEO pay ratio is broadly in line with previous years but has reduced slightly in comparison to 2021. This is in part due to lower
annual bonus payments than 2021 and higher remuneration for employees due to the increase in base pay and higher bonus pay-outs.
The Committee is satisfied that the median pay ratio reported this year is consistent with our wider pay, reward and progression policies for
employees.
Relative importance of the spend on pay
The following table sets out the percentage change in dividends, and the overall spend on pay across our whole organisation:
Ordinary dividends
Overall expenditure on pay
2022
£’000
8,840
39,444
2021
£’000
8,016
38,144
Change
%
10.0%
3.4%
Implementation of Remuneration Policy in 2023
The section below sets out the implementation of the Remuneration Policy in 2023. Other than the introduction of an ESG performance
condition into the LTIP, there are no significant changes.
Executive Directors
Base salary and fees
The salary increase for 2023 is set out below:
Tim Roberts
Darren Littlewood
Salaries effective from
1 January
2023
£
£470,200
£309,000
1 January
2022
£
456,503
300,000
Change
%
3%
3%
Pension
The Executive Directors will continue to receive cash in lieu of pension contribution at a level of 8% of base salary in line with the
majority of employees.
2023 bonus
The maximum bonus opportunity for Executive Directors is 120% of salary. The 2023 bonus will be based two thirds on financial measures
and one third on strategic personal objectives of which a quarter are related to ESG targets. In line with the Policy, 10% of the bonus will pay
out 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 personal objectives for each Executive Director is set out below.
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2023 strategic personal objectives – Tim Roberts
1
2
3
4
5
6
Objective
Evaluate and oversee implementation of Group strategy
Enhance the Henry Boot profile through effective communication of our strategy, purpose, vision and values
Oversee and drive culture of high performance through enhancing leadership capabilities and developing strategic
capacity
Oversee and direct Group wide Health and Safety practices to avoid any major Health and Safety incidents
Create and share compelling narrative to engage with our shareholders and encourage new investors
Oversee implementation of ESG Policy and influence the modernisation agenda with oversight of nurturing our
culture and embracing new ways of working
2023 strategic personal objectives – Darren Littlewood
Objective
With CEO, support the implementation of the Group Strategy
Oversee the implementation of the IT Strategy to encourage business improvement and efficiencies
Encourage strategic development of talent in group and continue to develop own profile amongst peers
Support modernisation agenda and key internal changes across Group support functions to achieve a more
aligned business partner model
Oversee and develop financial reporting to support compelling equity narrative to encourage development of the
shareholder register
Support implementation of ESG Policy and influence our modernisation agenda
1
2
3
4
5
6
Weighting
(% of
salary)
15%
4%
4%
4%
3%
10%
Weighting
(% of
salary)
10%
10%
2%
4%
4%
10%
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.
2023 LTIP Awards
LTIP awards will be granted at 125% of base salary to the CEO and 100% of salary for the CFO. The 2023 LTIP awards will again be based on
EPS, ROCE and TSR (30% of the award each) and, for the first time, we are pleased to introduce a measure based on our ESG strategy, for the
remaining 10%. This year’s award will be based on achievement against two targets from our Responsible Business Strategy; a reduction to our
Scope 1 and Scope 2 emissions by 2025, reflecting our ambition to be net zero for such emissions by 2030 (5%), and a desire to improve our
gender balance across the workforce (5%). In future years we may evolve these measures to reflect our broader ESG agenda.
The detailed performance metrics, which will be measured over the three-year period to 31 December 2025, is as follows:
EPS (30% weighting)
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 Average Capital Employed
(30% weighting)
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.
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Total Shareholder Return (TSR) relative to
constituent companies of the FTSE Small
Companies Index (30% weighting)
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.
ESG – Scope 1 and 2 GHG reductions
(5% weighting)
Workforce Gender Balance
(5% weighting)
We strive to ensure that our business decisions create sustainable and long-term value for
all our stakeholders. We want to deliver our commercial purpose whilst leaving a lasting
positive legacy.
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REMUNERATION
These four performance criteria provide a good balance between financial and stock market performance and broader stakeholder interests.
The range of the financial targets for the 2023 awards have been set to be equivalently challenging to prior years’ awards, taking into
account internal business plans and current market conditions.
For the new ESG related targets, the Scope 1 and 2 emissions targets represent, approximately a 10% reduction from the 2022 figure of
2,930 tonnes. This is considered a stretching goal and is line with the Responsible Business Strategy target for 2025. The performance
target has been determined based on the current size of the business and will adjust based on growth or contraction of the business, to
ensure that it remains equivalently challenging irrespective of the size of the business in three years’ time. Our current gender balance is
74.5:25.5, male : female and 70:30 represents a clear and simple goal for the business.
We considered whether there should be sliding scales set, but determined that this was unnecessary as each represents just 5% of the
overall LTIP opportunity and the target in each case is sufficiently stretching.
Weighting
Threshold target
(25% of maximum)
Maximum target
(100% of maximum)
EPS in 2025
Return on Average Capital Employed (average over 3 years)
TSR relative to the FTSE Small Cap Index (excluding Investment
Trusts)
Scope 1 and 2 GHG reduction
Workforce Gender Balance by 2025
*Individuals identifying as male or female
Awards will be subject to a two-year holding period post vesting.
30%
30%
30%
5%
5%
20p
9.5%
28p
12%
Median performance
Upper quartile performance
2,650 tonnes
70 male : 30 female*
Non-executive Directors
Non-executive Director and Chair’s fees have been increased by 4% for FY23, lower than the average increase for the workforce of 6.24%.
Chair fee1
Base Non-executive Director fee
Remuneration & Audit and Risk Committee Chair fee
Responsible Business Committee Chair
Non-executive Director designated to workforce engagement
Senior Independent Director
1 Fee includes role as Chair of Nomination Committee.
Fees effective from
1 January
2023
£
109,200
52,654
5,200
2,600
2,600
3,640
1 January
2022
£
105,0002
50,629
5,000
2,500
2,500
3,500
Change
%
4%
4%
4%
4%
4%
4%
2 Peter Mawson was appointed as Chair on 26 May 2022. The fee for the Chair represents his fee on appointment.
Approved by the Board and signed on its behalf by
GERALD JENNINGS
CHAIR OF THE REMUNERATION COMMITTEE
12 April 2023
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DIRECTORS’ REPORT
The Directors’ Report for the financial year ended 31 December
2022 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 for the year ended 31 December 2022 is set out
on pages 02 to 77.
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 84
to 143, and also within this Director’s Report.
Results for the year and dividends
The results are set out in the Consolidated Statement of
Comprehensive Income on page 155. The companies affecting the
profit or net assets of the Group in the year are listed in note 35 to
the Financial Statements.
The Directors recommend that a final dividend of 4.00p per ordinary
share be paid on 2 June 2023, subject to shareholder approval at
the 2023 AGM to be held on 25 May 2023, to ordinary shareholders
on the register at the close of business on 5 May 2023. If approved,
this, together with the interim dividend of 2.66p per ordinary share
paid on 14 October 2022, will make a total dividend of 6.66p per
ordinary share for the year ended 31 December 2022. Further details
are disclosed in note 10 to the Financial Statements on page 174.
Financial instruments
The Group’s policy in respect of financial instruments is set out
within the Accounting Policies on page 166 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 56 to 57.
Accountability and audit
Details of the Directors’ responsibilities and the Statement of
Directors’ Responsibilities are contained on page 143. The
Independent Auditors’ Report is given on pages 146 to 154.
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 143.
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 2022 and as at the date of this Annual Report
and Financial Statements can be found on pages 80 and 81. 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 2022, are
disclosed in the Directors’ Remuneration Report on page 132.
Between 31 December 2022 and 31 March 2023, being a date
not more than one month prior to the date of the Notice of the
AGM, Tim Roberts purchased 42,000 ordinary 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 132.
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 25 May 2023 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 Chair, 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 2022 Directors’ Remuneration
Policy can be viewed on the website, with a summary set out on
pages 125 to 126.
Training and development
Formal and tailored inductions are arranged for all new Directors
and continued development is monitored by the Chair as part of the
evaluation process. The programme of induction includes attendance
at PLC Board and subsidiary meetings, meetings with key internal
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and external stakeholders, training on director duties and other
developments to ensure a seamless integration into the business.
You can read more about the induction for Serena Lang on page 105
and Peter Mawson’s transition to the Chair role on pages 106.
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.
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
2023 on page 91 and engagement with employees and other
stakeholders on pages 96 to 98.
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.
Specific training requirements were considered as part of the Board’s
performance review, details of which can be found on pages 107 to
108. General updates on regulations and best practice are provided
through a mixture of briefings, Board papers and email updates.
Employment policy and involvement
Employees
Employees are at the heart of all that we do; our culture ensures that
employees can grow, thrive and succeed. Details of how we seek to
promote and achieve this are set out in the people section on pages
63 to 67, the employee engagement report on pages 96 to 98 and
Nomination Committee Report on pages 104 to 110.
Employee engagement
Details of our employee engagement activities can be found on
pages 96 to 98.
Employee communications
Employee communications has become a focus during 2022 with
the creation of a new role and the subsequent appointment of a
Group Marketing & Communications Director. We are undertaking
a review of how we communicate with our people and have issued
a survey to understand employee preferences on the regularity,
nature and medium of our interactions. The results will be analysed
and discussed with the Group Employee Forum and will feed into a
revised strategy that will be rolled out in 2023.
During the year, we have had regular communications and
interactions with employees and directors through townhalls,
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.
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, eligible employees have been
invited to participate in Sharesave and either the Company Share
Option Plan or the Long Term Incentive Plan based on their role 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
In addition, subject to the provisions of and to the extent permitted
by relevant statutes, under the Articles of Association of the
Company, the Directors and other officers throughout the year,
and at the date of approval of these Financial Statements, were
indemnified out of the assets of the Company against liabilities
incurred by them in the course of carrying out their duties or the
exercise of their powers.
Health and safety
The Health and Safety of our employees and others is paramount.
Further information on our approach to Health and Safety is
provided in the People section on page 67.
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 58 to 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 GHG emissions disclosures required by the Companies Act
2006 (Strategic Report and Directors’ Report) Regulations 2013
are included within the Strategic Report on pages 76 to 77. This
information is incorporated by reference into (and shall be deemed
to form part of) this report.
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Substantial interests in voting rights
Excluding Directors, as at 31 March 2023, 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.
Rysaffe Nominees and
J J Sykes (joint holding)1
David John Gladman
The London & Amsterdam
Trust Company Limited
The Fulmer Charitable Trust2
Polar Capital
Voting rights over ordinary
shares
Number % of issued
20,532,155
11,319,548
8,487,371
5,739,580
4,176,337
15.40
8.48
6.37
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 at the date of notification to the company.
Details of Directors’ holdings can be found on page 132.
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 2022 were Tim Roberts, Darren Littlewood and Amy
Stanbridge (Jamie Boot resigned as a Director on 1 July 2022),
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 2022, 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 2022 by the Trust who makes
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 18 to
77 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 2022 financial results. Resolutions re-appointing Ernst and
Young LLP as auditors (Resolution 11) and authorising the Audit
and Risk Committee to fix their remuneration (Resolution 12) will be
proposed at the AGM.
Annual General Meeting (AGM)
The Notice of the AGM can be found on pages 208 to 211, 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
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 2023, the ordinary shares
represent 97.10% of the total issued share capital of the Company
by nominal value and the preference shares represent 2.90% 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 maintained by the Financial Conduct Authority.
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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.
The Notice of the AGM on pages 208 to 211 includes the
following resolutions:
•
•
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An ordinary resolution (Resolution 13) to renew the authority of
the Directors to allot shares up to a maximum nominal amount
of £4,457,727 representing approximately one-third (33.33%)
of the Company’s issued ordinary share capital at 31 March
2023. The authority will expire on 24 August 2024 or at the
conclusion of the next AGM, whichever is the earlier, but it is
the present intention of the Directors to seek annual renewal of
this authority. The Directors do not have any present intention of
exercising the authority.
A special resolution (Resolution 14) to enable the Directors to
continue to allot equity securities for cash in connection with
a rights or other issue pro rata to the rights of the existing
shareholders, but subject to certain exceptions, and for any
other purpose provided that the aggregate nominal value of
such allotments does not exceed £668,659 (approximately 5%
of the Company’s issued ordinary share capital at 31 March
2023). The authority will expire on 24 August 2024 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.
A special resolution (Resolution 15) to renew the authority of the
Company to make market purchases of up to 13,373,182 of
its own issued ordinary shares (10% of the Company’s issued
ordinary share capital at 31 March 2023). The minimum price
that may be paid under the authority for an ordinary share is 10p
and the maximum price is limited to not more than 5% above
the average of the middle market quotations for an ordinary
share as derived from the London Stock Exchange Daily Official
List for the five business days before the purchase is made. The
Directors will exercise the authority only if they are satisfied that it
would be likely to result in an increase in expected earnings per
share of the ordinary share capital in issue and that any purchase
will be in the best interests of shareholders generally. If the
Directors do decide to exercise the authority, ordinary shares
so acquired will either be cancelled or held as treasury shares,
depending upon the circumstances prevailing at the time.
Rights and obligations attaching to shares
Subject to the Companies Act 2006 and other shareholders’ rights,
any share may be issued with such rights and restrictions as the
Company may by ordinary resolution decide or, if no such resolution
has been passed or so far as the resolution does not make specific
provision, as the Board of Directors for the time being of the
Company (the Board) may decide. Subject to the Companies Act
2006, the Articles and any resolution of the Company, the Board
may deal with any unissued shares as it may decide.
Rights of preference shares
The preference shares carry the following rights in priority to the ordinary
shares but carry no further right to participate in profits or assets:
•
•
•
the right to receive out of the profits of the Company a fixed
cumulative preferential dividend at the rate of 5.25% per annum
on the capital paid up thereon;
the right on a return of assets on a winding up to payment of
the capital paid up thereon together with a sum calculated at
the rate of 6.00% per annum in respect of any period up to the
commencement of the winding up for which such preferential
dividend as referred to above has not been paid; and
the right on a return of assets in a reduction of capital to
repayment of the capital paid up thereon together with a sum
equal to all arrears (if any) of such preferential dividend as
referred to above. The preference shares shall not confer on the
holders of them any right to receive notice of or to be present or
to vote at any general meeting unless either:
•
•
a resolution is proposed directly affecting the rights or
privileges of the holders of the preference shares as a
separate class; or
at the date of the notice convening the general meeting,
the fixed cumulative preferential dividend provided in the
Articles shall be in arrears for more than six months.
Voting
For 2023, the Company has determined that voting on each
resolution will be conducted by way of a poll. The Company believes
that a poll is more representative of shareholders’ voting intentions
because shareholder votes are counted according to the number of
votes held and all votes tendered are taken into account. The results
of the poll will be announced to the London Stock Exchange and will
be made available on the Company’s website at www.henryboot.
co.uk as soon as practicable following the conclusion of the AGM.
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.
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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 25 May
2023 are set out in the Notice of AGM on pages 208 to 211.
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.
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.
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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
12 April 2023
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
Business Model
Risks and Uncertainties
Audit and Risk Committee Report
Strategy
Key Performance Indicators
20 to 23
50 to 57
111 to 114
28 to 31
Employee Engagement
Board Diversity Policy
Board Stakeholder Policy
Our People
Section 172
Employee Engagement
Human Rights
Modern slavery statement & Policy
Our People
Rights to Work
Whistleblowing
Social matters
Board Stakeholder Policy
Our Responsible Business
Anti-bribery and corruption
Anti-bribery and Corruption Policy
Environmental matters
Board Stakeholder Policy
Section 172
Our People
Our Planet
TCFD
Section 172
Employee Engagement
63 to 67
59 to 60
96 to 98
63 to 67
32 to 36
59 to 60
63 to 67
35
68 to 77
59 to 60
96 to 98
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STATEMENT OF DIRECTORS’ RESPONSIBILITIES
IN RESPECT OF THE FINANCIAL STATEMENTS
The directors are responsible for preparing the annual report and
the financial statements in accordance with applicable United
Kingdom law and regulations.
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 accounting 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 the company and of
the profit or loss of the group and the company for that period.
In preparing these 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 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 inappropriate to presume that the company and/ or
the group will continue in business.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the company’s and
group’s transactions and disclose with reasonable accuracy at
any time the financial position of the company and the group and
enable them to ensure that the company and the group financial
statements comply with the Companies Act 2006. They are also
responsible for safeguarding the assets of the group and parent
company and group 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 company’s website.
The directors confirm, 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;
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 company and undertakings included in
the consolidation taken as a whole, together with a description
of the principal risks and uncertainties that they face; and
that they consider the annual report, taken as a whole, is fair,
balanced and understandable and provides the information
necessary for shareholders to assess the company’s position,
performance, business model and strategy.
Approved by the Board and signed on its behalf by
TIM ROBERTS
DIRECTOR
DARREN LITTLEWOOD
DIRECTOR
12 April 2023
12 April 2023
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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
146
155
156
157
158
159
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Pictured: Ique qui iduci officii scidebis molore, aut offici aut
diam asperit, con non cone vent, volum volo moluptat.
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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 2022 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 2022 which comprise:
Group
Group statement of financial
position as at 31 December 2022
Group 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
Parent Company
Parent Company statement
of financial position as at 31
December 2022
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 36 to the
financial statements including a
summary of significant accounting
policies
Related notes 1 to 36 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.
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 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 2024. The Group
has modelled a base scenario and 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 which
included consideration of 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.
testing the integrity and clerical accuracy of the model.
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 £105m.
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.
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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 for a
period to 31 December 2024.
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.
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
93% of Profit before tax, 99% of Revenue
and 98% of Total assets.
Valuation of contract balances and
associated revenue and profit recognition
Valuation of house building inventories and
profit recognition
Valuation of investment properties
•
• Overall group materiality of £2.4m which
represents 5% of Profit before tax.
Key audit
matters
Materiality
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
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, the potential impact of climate change 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 55
reporting components of the Group, we selected 16 components
covering entities, 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 93% (2021: 95%) of the Group’s Profit before tax,
99% (2021: 99%) of the Group’s Revenue and 98% (2021: 96%)
of the Group’s Total assets. For the current year, the full scope
components contributed 81% (2021: 71%) of the Group’s Profit
before tax, 95% (2021: 94%) of the Group’s Revenue and 83%
(2021: 84%) of the Group’s Total assets. The specific scope
component contributed 12% (2021: 24%) of the Group’s Profit
before tax, 4% (2021: 5%) of the Group’s Revenue and 15%
(2021: 12%) 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.
Of the remaining 39 components that together represent 7% of
the Group’s Profit before tax, none are individually greater than
4% 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 teams.
Profit before tax
Other procedures
7%
Revenue
Other procedures
1%
Total assets
Other procedures
2%
Full scope components
81%
Specific scope
components
12%
Full scope components
95%
Specific scope
components
4%
Full scope components
83%
Specific scope
components
15%
Involvement with component teams
All audit work performed for the purposes of the audit was
undertaken by the Group audit team.
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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
AUDITOR’S REPORT
to the members of Henry Boot PLC
Climate change
Stakeholders are increasingly interested in 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
pages 72 to 75 in the required TCFD on page 52 in the principal
risks and uncertainties. They have also explained their climate
commitments on page 35. All of these disclosures form part of the
“Other information,” rather than the audited financial statements.
Our procedures on these unaudited 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, in line with
our responsibilities on “Other information”.
In planning and performing our audit we assessed the potential
impacts of climate change on the Group’s business and any
consequential material impact on its financial statements.
The Group has explained in the Basis of preparation note how
they have reflected the impact of climate change in their financial
statements. Significant judgements and estimates relating to climate
change are included on page 161.
Our audit effort in considering the impact of climate change on the
financial statements was focused on evaluating management’s
assessment of the impact of climate risk, physical and transition,
their climate commitments, the effects of material climate risks
disclosed on pages 72 to 75 and the significant judgements and
estimates disclosed on page 161 and whether these have been
appropriately reflected in asset values and associated disclosures.
As part of this evaluation, we performed our own risk assessment,
supported by our climate change internal specialists, to determine
the risks of material misstatement in the financial statements from
climate change which needed to be considered in our audit.
We also challenged the Directors’ considerations of climate
change risks in their assessment of going concern and viability and
associated disclosures. Where considerations of climate change
were relevant to our assessment of going concern, these are
described above.
Based on our work we have considered the impact of climate
change on the financial statements to impact certain key audit
matters. Details of our procedures and findings are included in
our explanation of the valuation of investment properties key audit
matter below.
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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 162); and Notes 1, 17 and 21 of
the Consolidated Financial Statements
(pages 169, 187 and 190)
The Group has reported revenues
from construction and development
contracts for the year of £154.7m
(2021 - £78.8m) and cost of sales of
£140.1m (2021 - £84.1m). The Group
has reported contract assets of £19.3m
(2021 - £7.5m) and contract liabilities of
£4.0m (2021 - £5.0m).
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 a walkthrough to understand the key processes
and identify key controls.
We challenged the cost to complete assumptions by:
• Holding discussions with project managers and quantity
surveyors to understand the basis for the assumptions
and for a sample of incomplete contracts, attending the
year end valuation meetings where the costs to complete
are challenged internally;
•
Testing a sample of costs to complete by agreeing through
to purchase order, contract or other evidence;
• Understanding the nature of costs to come and evaluating
the split between fixed and variable costs to assess the
cost volatility risk;
•
For contracts where costs with sub-contractors are fixed,
we assessed management’s consideration of key supplier
resilience; and
• We obtained the post year end Cost Variance Reports
(‘CVR’s’) to ascertain whether there had been any
unfavourable or favourable margin movements that should
have been reflected at year end.
We performed sensitivity analysis to determine what level of
cost increase or project delays would be required to have a
material impact on the amounts recognised as revenue and
cost of sales in the year.
We recalculated the percentage completion and margin
recognised in the year.
We analysed historical accuracy of forecasting by comparing
original forecast margins to their final actual margins on
contracts completed in the year.
We agreed total expected revenue for the contract through to
signed contracts and approved variation orders.
We tested costs incurred in the period to third party invoices
and the allocation of costs to the correct contracts.
We visited the three largest contract sites to gain a deeper
understanding of the projects and to identify any contra-
indicators of the stage of completion through inspection and
discussion with the onsite project managers.
We agreed key contractual terms to customer contracts.
We reviewed board minutes and the legal claims log to
determine whether there are any claims not reflected in the
year end contract assessments.
We assessed the completeness of onerous contracts to
ensure that these are accounted correctly in line with IAS 37.
We performed full and specific scope audit procedures
over this risk area in two components, which covered
100% of the risk amount.
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.
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INDEPENDENT
AUDITOR’S REPORT
to the members of Henry Boot PLC
Risk
Valuation of house building
inventories and profit
recognition
Refer to the Audit Committee Report
(page 112); Accounting policies (page
165); and Note 20 of the Consolidated
Financial Statements (page 189)
The Group holds house building
inventories of £80.6m (2021 - £52.5m).
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.
Key observations
communicated
to the Audit Committee
Based on our audit
procedures we have
concluded that the house
building inventory balance
and profit recognised in
the year are not materially
misstated.
Our response to the risk
We performed a walkthrough to understand the key process
and identified key controls.
For completed sites, we compared the budgeted and
actual costs and margin to assess the historical accuracy of
management’s forecasting and used this to profile where the
greatest risk lies in the cost of sales recognised in the year.
We tested a sample of costs incurred in the year to purchase
invoice and checked they were allocated to the appropriate site.
We challenged the cost to complete assumptions on all
incomplete sites by performing the following procedures;
• We held a meeting with the commercial director to assess
the status and performance to date of the active sites and
the basis for the cost to complete assumptions made,
including understanding the reasons behind any excess
costs or savings recognised on the site since the initial
forecast. This also enabled us to challenge whether the
costs to complete assumptions include future market
indicators of inflation and raw material cost increases;
• We tested a sample of costs to complete by agreeing
through to third party support (e.g. tender, purchase order);
• We compared the original budgeted margin to the current
expected site margin to assess the historical accuracy of
management’s forecasting and the impact on cost of sales;
• We compared the margin recognised to date to the current
expected site margin to identify any significant deviations.
Where there were significant deviations we understood the
drivers and substantiated these;
• We performed a stress test to see by how much costs to
complete would have to change to have material impact on
the margin recognised in the financial statements; and
• Where available, we inspected the post year end site
forecasts to ascertain whether there had been any
significant margin movements that should have been
reflected at year end.
• We challenged the expected selling price assumptions on all
incomplete sites by performing the following procedures;
• We held a meeting with the commercial director to assess
the basis for the expected selling price assumptions made.
This enabled us to challenge whether the expected selling
price assumptions include future market indicators for
house prices;
• We inspected industry publications to assess expectations
regarding house prices to identify any contradictory
evidence for the expected selling price; and
• We tested a sample of expected selling prices to the current
market price on the external website or the most recent
selling price for the same/similar house type.
We performed a stress test to see what expected selling prices
would have to change by to result in a material write down to
inventory.
We performed full and specific scope audit procedures over
this risk area in one component which covered 100% of the
risk amount.
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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 investment
properties
Refer to the Audit Committee Report
(page 112); Accounting policies (page
164); and Note 14 of the Consolidated
Financial Statements (pages 180 to 184)
The Group holds Investment property of
£97.1m (2021 - £104.2m).
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.
In addition, there is a risk that management
inappropriately override the valuation
determined by the external valuer.
We performed walkthroughs to understand the key process
and identify key controls. This is done by selecting relevant
transactions and tracing them through the process.
For a sample of investment properties, we used our internal
EY valuations specialists to assess the appropriateness of
the valuations provided by Management’s specialist valuer.
We assessed these through reading the external valuer
reports and testing the underlying data used by the external
valuer in forming their valuation. This included validating key
assumptions around rent, yields and commerical property
values to supporting third party evidence or market activity,
and by holding discussions directly with the external valuer to
confirm their valuation approach, including their consideration
of climate risk. We also considerd if there was any contrary
evidence to management’s valuations.
Where applicable, we tested a sample of properties in the
course of construction by agreeing the valuation through to
relevant agreements and progress reports.
Tested the appropriateness of any material adjustments from
the valuation determined by the external valuer to the book
value recorded.
We performed full and specific scope audit procedures over
this risk area in six components, which covered 98% of the
risk amount.
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 £2.4 million (2021:
£1.8 million), which is 5% (2021: 5%) of Profit before tax (2021:
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
We determined materiality for the Parent Company to be £2.4
million (2021: £2.0 million), which is 2% (2021: 2%) of Equity (2021:
Equity). The increase in materiality is due to dividends received from
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% (2021: 75%) of our planning
materiality, namely £1.8m (2021: £1.3m). We have set performance
materiality at this percentage due to this being a recurring audit with
a history of few misstatements.
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 £0.4m to £1.8m (2021: £0.3m to
£1.3m).
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 £0.1m (2021: £0.09m),
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.
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INDEPENDENT
AUDITOR’S 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 143, 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.
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.
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
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
the strategic report and the directors’ report have been
prepared in accordance with applicable legal requirements.
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 57;
• 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 57;
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• 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 57;
However, the primary responsibility for the prevention and detection
of fraud rests with both those charged with governance of the
company and management.
• Directors’ statement on fair, balanced and understandable set
• 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; 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
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out on page 137;
• Board’s confirmation that it has carried out a robust assessment
of the emerging and principal risks set out on page 50 to 56;
•
•
The section of the annual report that describes the review of
effectiveness of risk management and internal control systems
set out on page 111 to 114; and;
The section describing the work of the audit committee set out
on page 111 to 114.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement
set out on page 143, 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.
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.
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INDEPENDENT
AUDITOR’S REPORT
to the members of Henry Boot PLC
Other matters we are required to address
•
Following the recommendation from the audit committee, we
were appointed by the company on 26 May 2022 to audit the
financial statements for the year ending 31 December 2022 and
subsequent financial periods.
•
•
The period of total uninterrupted engagement including
previous renewals and reappointments is three years, covering
the years ending 31 December 2020 to 31 December 2022.
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 (SENIOR STATUTORY AUDITOR)
for and on behalf of Ernst & Young LLP, Statutory Auditor
Manchester
12 April 2023
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CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
for the year ended 31 December 2022
Revenue
Cost of sales
Gross profit
Administrative expenses
Pension expenses
(Decrease)/increase in fair value of investment properties
Profit on sale of investment properties
Loss on sale of assets held for sale
Share of profit of joint ventures and associates
Profit on disposal of joint ventures
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 on defined benefit pension scheme
Deferred tax on actuarial gain
Total other comprehensive income 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
Note
1
4
14
16
16
3
5
6
7
12
19
27
19
2022
£’000
341,419
(259,829)
81,590
(36,143)
(4,312)
41,135
(4,921)
646
(149)
9,079
667
46,457
1,641
(2,503)
45,595
(7,725)
37,870
315
(23)
14,994
(3,749)
11,537
49,407
33,319
4,551
37,870
44,856
4,551
49,407
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
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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
9
9
25.0p
21.2p
24.6p
20.9p
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STATEMENTS OF
FINANCIAL POSITION
as at 31 December 2022
Assets
Non-current assets
Intangible assets
Property, plant and equipment
Right-of-use assets
Investment properties
Investments
Investment in joint ventures and associates
Retirement benefit asset
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/(liabilities)
Non-current liabilities
Trade and other payables
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
Parent Company
Note
2022
£’000
2021
(restated1)
£’000
2022
£’000
2021
(restated1)
£’000
11
12
13
14
15
16
27
18
19
20
17
18
22
21
25
13
26
22
13
27
19
26
29
30
30
30
31
2,933
28,766
997
97,116
—
9,990
6,188
37,029
249
183,268
291,778
19,257
66,601
—
17,401
395,037
95,827
4,006
3,793
65,000
426
4,003
173,055
221,982
4,568
607
—
4,401
1,385
10,961
394,289
13,763
2,352
365,692
7,482
(967)
388,322
5,967
394,289
3,716
26,349
1,581
104,177
—
12,165
—
37,107
3,389
188,484
235,296
7,556
64,615
1,828
11,116
320,411
72,155
5,033
—
50,000
639
5,427
133,254
187,157
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
—
380
63
—
37,771
—
6,188
185,206
307
229,915
—
—
40,149
—
10,316
50,465
89,308
—
2,356
65,009
34
—
156,707
(106,242)
—
30
—
1,548
—
1,578
122,095
13,763
—
100,680
8,619
(967)
122,095
—
122,095
—
317
76
—
37,771
—
—
176,689
3,522
218,375
—
—
27,845
1,551
2,691
32,087
86,173
—
—
50,000
41
—
136,214
(104,127)
—
37
12,228
—
—
12,265
101,983
13,732
—
81,414
7,881
(1,044)
101,983
—
101,983
1 See ‘prior year restatements’ on page 159.
The Parent Company made a profit for the year of £15,987,000 (2021: £8,938,000).
The Financial Statements on pages 155 to 206 of Henry Boot PLC, registered number 160996, were approved by the Board of Directors
and authorised for issue on 12 April 2023.
On behalf of the Board
Tim Roberts
Director
Darren Littlewood
Director
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STATEMENTS OF
CHANGES IN EQUITY
for the year ended 31 December 2022
Group
At 1 January 2021
Profit for the year
Other comprehensive income
Total comprehensive income
Equity dividends
Proceeds from shares issued
Share-based payments
Note
30
10
30, 31
At 31 December 2021
Profit for the year
Other comprehensive income
Total comprehensive income
Equity dividends
Proceeds from shares issued
Share-based payments
30
10
30, 31
At 31 December 2022
Share
capital
£’000
13,718
—
—
—
—
14
—
14
13,732
—
—
—
—
31
—
31
13,763
Attributable to owners of the Parent Company
Cost of
shares
held
by ESOP
trust
£’000
(1,176)
—
—
—
—
—
132
Property
revaluation
reserve
£’000
2,342
—
(282)
(282)
—
—
—
Retained
earnings
£’000
288,514
28,160
18,457
46,617
(7,620)
—
837
Other
reserves
£’000
6,404
—
—
—
—
340
—
—
2,060
—
292
292
—
—
—
—
2,352
(6,783)
328,348
33,319
11,245
44,564
(8,383)
—
1,163
(7,220)
365,692
340
6,744
—
—
—
—
738
—
738
7,482
132
(1,044)
—
—
—
—
—
77
77
(967)
Non-
controlling
interests
£’000
3,686
2,500
—
2,500
(740)
—
—
(740)
5,446
4,551
—
4,551
(4,030)
—
—
(4,030)
5,967
Total
£’000
309,802
28,160
18,175
46,335
(7,620)
354
969
(6,297)
349,840
33,319
11,537
44,856
(8,383)
769
1,240
(6,374)
388,322
Parent Company
At 1 January 2021
Profit for the year
Other comprehensive expense
Total comprehensive expense
Equity dividends
Proceeds from shares issued
Share-based payments
At 31 December 2021
Profit for the year
Other comprehensive income
Total comprehensive income
Equity dividends
Proceeds from shares issued
Share-based payments
At 31 December 2022
Note
8
10
31
8
10
30
Share
capital
£’000
13,718
—
—
—
—
14
—
14
13,732
—
—
—
—
31
—
31
13,763
Retained
earnings
£’000
61,357
8,938
18,457
27,395
(7,620)
—
282
(7,338)
81,414
15,987
11,245
27,232
(8,383)
—
417
(7,966)
100,680
Cost of
shares held
by ESOP
trust
£’000
(1,176)
—
—
—
—
—
132
132
(1,044)
—
—
—
—
—
77
77
(967)
Other
reserves
£’000
7,541
—
—
—
—
340
—
340
7,881
—
—
—
—
738
—
738
8,619
Total
equity
£’000
313,488
30,660
18,175
48,835
(8,360)
354
969
(7,037)
355,286
37,870
11,537
49,407
(12,413)
769
1,240
(10,404)
394,289
Total
equity
£’000
81,440
8,938
18,457
27,395
(7,620)
354
414
(6,852)
101,983
15,987
11,245
27,232
(8,383)
769
494
(7,120)
122,095
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STATEMENTS OF
CASH FLOWS
for the year ended 31 December 2022
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 assets held for sale
Proceeds on disposal of investment properties
Advances of loans to joint ventures and associates
Repayment of loans 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
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
– ordinary shares
Dividends paid
– non-controlling interests
– preference shares
Net cash flows from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Group
Parent Company
Note
32
11
12
14
16
16
16, 8
10
10
2022
£’000
(16,549)
(1,829)
(2,918)
(21,296)
—
(971)
(9,301)
(2,112)
270
10,987
8,146
(8,560)
10,904
—
—
6,873
1,153
7,160
24,549
769
355
—
—
(70,000)
85,000
(679)
(8,362)
(4,030)
(21)
3,032
6,285
11,116
17,401
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
2022
£’000
(10,473)
(3,031)
(1,500)
(15,004)
—
(205)
—
—
—
—
—
—
—
(22,676)
10,677
—
85
26,491
14,372
769
—
4,713
(3,803)
(70,000)
85,000
(48)
(8,362)
—
(21)
8,248
7,616
2,691
10,307
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
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NOTES TO THE
FINANCIAL STATEMENTS
for the year ended 31 December 2022
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.
The Group has considered the impact of climate change when preparing the financial statements. In particular, the potential effect on
balance sheet assets arising from either future physical or transition risk. Having undertaken this process we are satisfied no impairments are
required at this time, largely due to the natural churn and development of property assets, continued investment and replacement of plant
hire equipment and the consideration of appraisal processes on land acquisitions.
Prior year restatements
Amounts owed by Group undertakings (parent only) and joint ventures and associates
Amounts owed by Group undertakings (parent only) and joint ventures and associates have been restated for the period ended 31 December
2021. The Group previously recognised amounts owed by Group undertakings (parent only) and joint ventures and associates as been
entirely due within one year on the basis these amounts were repayable on demand. Following a review of the Group’s historic practice and
future plans not to call on all intercompany receivables in the short term, £176,689,000 of current intercompany receivables (parent only)
and £23,803,000 of amounts owed by joint ventures and associates at 31 December 2021 have been reclassified to non-current in line
with IAS 1. There is no impact on the Consolidated Statement of Comprehensive Income, Statement of Changes in Equity or Statement of
Cash Flows. The impact on the 31 December 2020 balance sheet would be to reclassify £102,181,000 of current intercompany receivables
(parent only) and £10,300,000 of amounts owed by joint ventures and associates to non-current receivables.
Government loans
The Group’s borrowings and trade receivables have been restated for the period ended 31 December 2021. The Group previously
recognised a government loan payable to the Homes and Communities Agency (HCA) amounting to £2,941,000 (2020: £2,941,000)
and a corresponding trade receivable from the related housebuilder. Following legal guidance on the nature of the agreement it has been
concluded that the Group has no residual obligation to the HCA in respect of the loan which is payable directly by the related housebuilder
and therefore no rights to receive a corresponding trade receivable from the related housebuilder. This has resulted in previously reported
borrowings reducing by £2,941,000 and trade receivables decreasing by the same. There is no impact on the Consolidated Statement of
Comprehensive Income, Statement of Changes in Equity or Statement of Cash Flows. The impact on the 31 December 2020 balance sheet
would be to decrease borrowings and trade receivables by £2,941,000.
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.
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NOTES TO THE
FINANCIAL STATEMENTS
for the year ended 31 December 2022
Going concern
In undertaking their going concern review, which covers the period to December 2024, the Directors considered the Group’s principal risk
areas that they consider material to the assessment of going concern.
As the UK economy moves at a slow pace, the Directors have assessed the Group’s ability to operate in a more uncertain environment
in modelling a base case scenario. They have also modelled what they consider to be a severe downside scenario, including further
curtailments in activities. This downside scenario shows a c.50% reduction in sales and c.67% reduction in profits from the base case.
Construction and Development activity only takes place where contracted and likewise for Hallam Land where no sales are assumed in 2023
unless already contracted. 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.25%. 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 2023 with net
debt of £48.6m, and with c.£63.2m net debt at 28 February 2023, against facilities of £105.0m the Directors have concluded that the Group
is able to control the level of uncommitted expenditure, whilst 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.
The Group meets its day-to-day working capital requirements through a secured loan facility. The facility was renewed on 23 January 2020,
at a level of £75m, for a period of three years and extended by one year in January 2021 and a further year in January 2022 taking the
facility renewal 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 was called on by the Group on 9 October 2022, increasing the overall facility to £105m. 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 50% reduction in revenue and near 67% reduction in profit before tax from our base case for 2023, demonstrates significant
headroom over this covenant throughout the forecast period to the end of December 2024.
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 56 and 57.
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.
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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.
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
page 163 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.
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NOTES TO THE
FINANCIAL STATEMENTS
for the year ended 31 December 2022
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
Sale of land and
properties
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.
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.
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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.
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.
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NOTES TO THE
FINANCIAL STATEMENTS
for the year ended 31 December 2022
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 three 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 6% and 50%
Vehicles
– between 10% and 25%
• Office equipment
– between 25% and 33%
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’.
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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
promoter for 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 the reimbursed
costs are recognised as revenue. 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.
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.
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NOTES TO THE
FINANCIAL STATEMENTS
for the year ended 31 December 2022
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.
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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.
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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.
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.
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NOTES TO THE
FINANCIAL STATEMENTS
for the year ended 31 December 2022
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 2022:
IFRS 4 (amended 2020)
IFRS 16 (amended 2021)
IFRS 3 (amended 2020)
IAS 16 (amended 2020)
IAS 37 (amended 2020)
Annual Improvements (issued 2020)
‘Extension of the temporary exemption from applying IFRS 9’
‘Covid-related rent concessions beyond June 2021’
‘Reference to the Conceptual Framework’
‘Proceeds before intended use’
‘Costs of fulfilling a contract’
‘Annual improvements to IFRS standards 2018 - 2020’
The adoption of these standards and interpretations has not had a significant impact on the Group.
Effective from
Immediately available
1 April 2021
1 January 2022
1 January 2022
1 January 2022
1 January 2022
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)
IFRS 17 (amended 2020)
IAS 1 (amended 2021)
IAS 8 (amended 2021
IAS 12 (amended 2021)
IFRS 17 (amended 2021)
IAS 1 (amended 2020)
IAS 1 (amended 2022)
IFRS 16 (amended 2022)
‘Insurance Contracts’
‘Implementation challenges’
‘Disclosure of accounting policies’
‘Definition of accounting estimates’
‘Deferred tax related to Assets and Liabilities arising from a single
transaction’
‘Initial application of IFRS 17 and IFRS 9
‘Classification of liabilities as current or non-current’
‘Non-current liabilities with covenants’
‘Lease liability in a sale and leaseback’
Effective from
1 January 2023
1 January 2023
1 January 2023
1 January 2023
1 January 2023
1 January 2023
1 January 2024
1 January 2024
1 January 2024
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 2022, 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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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
2022
£’000
97,571
57,177
34,726
70,631
43,672
13,590
317,367
17,447
6,444
12
149
341,419
Timing of revenue
recognition
Timing of revenue
recognition
At a point
in time
£’000
Over time
£’000
2021
£’000
At a point
in time
£’000
Over time
£’000
74,431
4,405
—
—
—
—
—
—
9,622
49,494
58,410
11,115
—
—
34,726
70,631
43,672
13,590
97,571
74,431
57,177
4,405
—
—
—
—
9,622
49,494
58,410
11,115
207,477
17,129
5,772
67
153
230,598
162,619
154,748
128,641
78,836
Contingent rents recognised as investment property rental income during the year amount to £435,000 (2021: £357,000).
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.
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 159 to 168.
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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NOTES TO THE
FINANCIAL STATEMENTS
for the year ended 31 December 2022
2. Segment information continued
2022
Property
Investment and
Development
£’000
168,990
290
169,280
36,488
(16,142)
5,322
25,668
4,015
(2,226)
27,457
(3,411)
Land
Promotion
£’000
43,820
—
43,820
24,320
(6,971)
—
17,349
744
(213)
17,880
(3,451)
Construction
£’000
128,609
4,453
133,062
20,720
(8,636)
—
12,084
1,507
(374)
13,217
(2,771)
Group
overheads
£’000
—
386
386
99
(8,743)
—
(8,644)
26,576
(3,373)
14,559
1,908
Eliminations
£’000
—
(5,129)
(5,129)
(37)
37
—
—
(31,201)
3,683
(27,518)
—
24,046
14,429
10,446
16,467
(27,518)
9,450
312
(15)
—
4,921
—
—
—
30
—
—
—
775
—
5,884
3,755
203
580
—
683
—
2021
Property
Investment and
Development
£’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)
—
—
Land
Promotion
£’000
58,563
—
58,563
23,257
(5,726)
(56)
17,475
698
(139)
18,034
(2,244)
15,790
Construction
£’000
102,675
7,606
110,281
17,363
(8,401)
—
8,962
765
(467)
9,260
(1,798)
7,462
—
10
—
—
—
1,051
—
6,524
2,864
203
602
—
1,499
—
392
472
—
—
—
—
(3,422)
Group
overheads
£’000
—
526
526
52
(9,177)
—
(9,125)
19,060
(2,303)
7,632
2,487
10,119
380
584
—
—
—
—
(920)
—
—
—
—
—
—
—
Eliminations
£’000
—
(8,422)
(8,422)
(50)
50
—
—
(24,337)
8,756
(15,581)
—
(15,581)
—
—
—
—
—
—
—
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
Decrease 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/(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
Total
£’000
341,419
—
341,419
81,590
(40,455)
5,322
46,457
1,641
(2,503)
45,595
(7,725)
37,870
15,726
4,569
188
580
4,921
1,458
(3,422)
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)
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2. Segment information continued
Segment assets
Property Investment and Development2
Land Promotion
Construction
Group overheads
Unallocated assets
Deferred tax assets
Current tax receivables
Retirement benefit asset
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
Retirement benefit obligations
Total liabilities
Total net assets
1 See ‘prior year restatements’ on page 159.
2
Includes investment in joint ventures and associates of £9,990,000 (2021: £12,165,000).
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)
Reversal of impairment of land and buildings included in administrative expenses (note 12)
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)
Decrease/(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
2022
£’000
355,491
149,598
45,766
3,612
554,467
249
—
6,188
17,401
578,305
59,113
13,114
36,994
568
109,789
3,793
4,401
426
65,000
607
—
184,016
394,289
2022
£’000
3,972
597
203
(75)
60
580
25
432
4,921
85,594
39,088
13
(1,070)
(176)
1
2021
(restated1)
£’000
310,421
142,655
43,205
2,323
498,604
3,389
1,828
—
11,116
514,937
36,169
11,523
40,418
3,071
91,181
—
4,582
639
50,000
1,021
12,228
159,651
355,286
2021
£’000
3,534
598
203
—
285
602
41
779
(7,972)
80,241
38,439
12
(981)
(16)
10
171
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NOTES TO THE
FINANCIAL STATEMENTS
for the year ended 31 December 2022
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
2022
£’000
200
330
530
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
Other employee costs
Group
Parent Company
2022
£’000
29,671
1,240
3,821
989
3,251
72
44
39,088
2021
£’000
27,689
968
3,448
3,407
2,521
111
295
38,439
2022
£’000
5,130
496
649
989
449
22
—
7,735
2021
£’000
3,968
413
593
2,855
316
17
—
8,162
Included within 2021 employee costs is a £820,000 debit for repayment of furlough grant income from the Government’s Job Retention
Scheme introduced in response to the Covid 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
2022
Number
2021
Number
121
35
149
146
82
533
2022
£’000
146
1,007
488
1,641
112
30
151
137
66
496
2021
£’000
2
127
595
724
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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
2022
£’000
2,136
45
322
2,503
2022
£’000
8,690
(152)
8,538
(813)
—
—
(813)
7,725
2021
£’000
747
59
349
1,155
2021
£’000
2,752
(1,683)
1,069
3,457
105
(149)
3,413
4,482
Corporation tax is calculated at 19% (2021: 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% (2021: 25%),
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
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
2022
£’000
45,595
2022
%
19.00
(0.80)
0.27
—
—
(0.33)
(1.20)
16.94
2021
£’000
35,142
2021
%
19.00
0.48
(0.78)
(0.42)
0.30
(4.79)
(1.03)
12.76
The tax charge in the year is lower (2021: lower) than the standard rate of corporation tax predominantly due to joint ventures reported net of
tax (2021: due to adjustments in respect of earlier years arising from additional loss relief on asset disposals).
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NOTES TO THE
FINANCIAL STATEMENTS
for the year ended 31 December 2022
7. Tax continued
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
Total tax recognised in other comprehensive income/(expense)
2022
£’000
(23)
(3,749)
(3,772)
2021
£’000
(282)
(4,840)
(5,122)
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
12 April 2023 is £15,987,000 (2021: £8,938,000) and includes dividends received from subsidiaries of £26,490,500 (2021: £14,530,000).
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
2022
£’000
37,870
(4,551)
(21)
33,298
2021
£’000
30,660
(2,500)
(21)
28,139
2022
No.
133,449,943
(401,672)
133,048,271
2,290,780
135,339,051
2021
No.
133,264,346
(439,261)
132,825,085
2,645,458
135,470,543
2022
25.0p
24.6p
2021
21.2p
20.9p
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 2021 of 3.63p per share (2020: 3.30p)
Interim dividend for the year ended 31 December 2022 of 2.66p per share (2021: 2.42p)
2022
£’000
21
4,822
3,540
8,383
2021
£’000
21
4,383
3,216
7,620
The proposed final dividend for the year ended 31 December 2022 of 4.00p per share (2021: 3.63p) makes a total dividend for the year of
6.66p (2021: 6.05p).
The proposed final dividend is subject to approval by shareholders at the AGM and has not been included as a liability in these Financial
Statements. The total estimated dividend to be paid is £5,300,000.
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 £4,030,000 (2021: £740,000).
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11. Intangible assets
Cost
At 1 January 2021
Additions at cost
At 31 December 2021 and 2022
Accumulated impairment losses and amortisation
At 1 January 2021
Amortisation
Impairment losses for the year
At 31 December 2021
Amortisation
Impairment losses for the year
At 31 December 2022
Carrying amount
At 31 December 2022
At 31 December 2021
Goodwill
£’000
4,973
—
4,973
3,324
—
203
3,527
—
203
3,730
1,243
1,446
PFI
asset
£’000
18,973
203
19,176
16,304
602
—
16,906
580
—
17,486
1,690
2,270
Total
£’000
23,946
203
24,149
19,628
602
203
20,433
580
203
21,216
2,933
3,716
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 (2021: £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% (2021: 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 5.0% (2021: 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 £340,000 (2021: £543,000) 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 National Highways based on the number and
type of vehicles using the road. The concession lasts for a period of 30 years and has a further three years to run, at the end of which the
road reverts to National Highways. Whilst the impairment test demonstrates significant headroom based on forecast levels of return being
consistent with prior years, an impairment charge of £203,000 (2021: £203,000) has been recognised during the year. This reflects the fact
that the PFI concession will revert to National Highways 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 National Highways financial year end and hence interim Financial Statements are prepared for incorporation
into these Consolidated Financial Statements.
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NOTES TO THE
FINANCIAL STATEMENTS
for the year ended 31 December 2022
12. Property, plant and equipment
Group
Cost or fair value
At 1 January 2021
Additions at cost
Disposals
At 31 December 2021
Additions at cost
Disposals
Increase in fair value in year
At 31 December 2022
Being:
Cost
Fair value at 31 December 2022
Accumulated depreciation and impairment
At 1 January 2021
Charge for year
Impairment
Eliminated on disposals
At 31 December 2021
Charge for year
Reversal of impairment
Impairment
Eliminated on disposals
At 31 December 2022
Carrying amount
At 31 December 2022
At 31 December 2021
Land and
buildings
£’000
Equipment
held
for hire
£’000
Vehicles
£’000
Office
equipment
£’000
7,322
—
—
7,322
55
—
315
7,692
—
7,692
7,692
427
—
285
—
712
—
(75)
60
—
697
6,995
6,610
39,885
5,952
(2,449)
43,388
5,454
(3,275)
—
45,567
45,567
—
45,567
26,394
2,474
—
(2,271)
26,597
3,059
—
—
(3,002)
26,654
18,913
16,791
5,835
473
(976)
5,332
612
(597)
—
5,347
5,347
—
5,347
2,842
786
—
(692)
2,936
660
—
—
(504)
3,092
2,255
2,396
3,267
388
(47)
3,608
304
—
—
3,912
3,912
—
3,912
2,828
274
—
(46)
3,056
253
—
—
—
3,309
603
552
Total
£’000
56,309
6,813
(3,472)
59,650
6,425
(3,872)
315
62,518
54,826
7,692
62,518
32,491
3,534
285
(3,009)
33,301
3,972
(75)
60
(3,506)
33,752
28,766
26,349
At 31 December 2022, the Group had entered into contractual commitments for the acquisition of property, plant and equipment amounting
to £1,566,000 (2021: £3,420,000).
Fair value measurements of the Group’s land and buildings
Land and buildings have been revalued at 31 December 2022 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 £6,995,000 (2021:
£6,610,000). 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 £4,339,000 (2021: £4,269,000).
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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
6,935
6,995
2022
£’000
60
6,935
6,995
2021
£’000
60
6,550
6,610
Increase
in year
£’000
—
385
385
The Group’s policy is to recognise transfers into and out of fair value hierarchy levels as of the date of the event or change in circumstances
that causes the transfer. The Directors determine the applicable hierarchy that land and buildings fall into by assessing the level of
comparable evidence in the market which that asset falls into and the inherent level of activity. As at the reporting date and throughout the
year, all land and buildings were determined to fall into Level 3 and so there were no transfers between hierarchies.
Explanation of the fair value hierarchy:
Level 1 – fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets
or liabilities that the entity can access at the measurement date;
Level 2 – fair value measurements are those derived from the use of a model with inputs (other than quoted prices included
in Level 1) that are observable from directly or indirectly observable market data; and
Level 3 – fair value measurements are those derived from use of a model with inputs that are not based on observable
market data.
Information about fair value measurements using significant unobservable inputs (Level 3):
Class
Valuation technique
Rental value per sq ft (£)
Yield %
– weighted average
– low
– high
– weighted average
– low
– high
Buildings
Yield
6.92
3.31
16.25
9.56
7.62
11.83
The sensitivity analysis to significant changes in unobservable inputs relating to fair value measurements (Level 3) are set out below:
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N
A
N
C
E
Yield – improvement by 0.5%
Rental value per sq ft – increase of £1 average
Impact on
valuation
£’000
Buildings
360
1,000
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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NOTES TO THE
FINANCIAL STATEMENTS
for the year ended 31 December 2022
12. Property, plant and equipment continued
Parent Company
Cost
At 1 January 2021
Additions
Disposals
At 31 December 2021
Additions
Disposals
At 31 December 2022
Accumulated depreciation
At 1 January 2021
Charge for year
Disposals
At 31 December 2021
Charge for year
Disposals
At 31 December 2022
Carrying amount
At 31 December 2022
At 31 December 2021
13. Leases
The Group as lessee
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
1,068
279
—
1,347
205
—
1,552
886
144
—
1,030
142
—
1,172
380
317
Group
Parent Company
2022
£’000
775
1
221
997
426
607
1,033
449
282
322
31
1,084
(51)
1,033
2021
£’000
1,249
2
330
1,581
639
1,021
1,660
676
447
564
63
1,750
(90)
1,660
2022
£’000
2021
£’000
—
16
47
63
34
30
64
35
14
16
—
65
(1)
64
—
11
65
76
41
37
78
42
27
11
—
80
(2)
78
Additions to the right-of-use assets during the 2022 financial year were £14,000 (2021: £69,000) for the Group and £32,000 (2021: £65,000)
for the Parent Company.
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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
Vehicles
Office equipment
Interest expense (included in finance cost)
Group
Parent Company
2022
£’000
2021
£’000
2022
£’000
2021
£’000
474
1
122
597
40
470
5
123
598
58
—
14
31
45
2
—
23
30
53
3
The total cash outflow for leases in 2022 was £679,000 (2021: £683,000) for the Group and £48,000 (2021: £131,000) 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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179
NOTES TO THE
FINANCIAL STATEMENTS
for the year ended 31 December 2022
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 and amount to £nil (2021: £nil) in the period. 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. Cash
outflows during the period related to these leases equal the rent expense 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
Between 1-2 years
Between 2-3 years
Between 3-4 years
Between 4-5 years
More than five years
2022
£’000
5,186
4,672
4,477
4,137
3,583
32,989
55,044
2021
£’000
4,048
4,803
3,898
3,105
2,706
47,052
65,612
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
Total carrying amount
Level 1
£’000
Level 2
£’000
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Level 3
£’000
52,927
9,208
—
4,322
6,275
14,466
87,198
9,918
9,918
97,116
2022
£’000
52,927
9,208
—
4,322
6,275
14,466
87,198
9,918
9,918
97,116
Increase/
(decrease)
in year
£’000
6,131
(390)
(7,483)
195
(3,663)
(2,769)
(7,979)
918
918
(7,061)
2021
£’000
46,796
9,598
7,483
4,127
9,938
17,235
95,177
9,000
9,000
104,177
The Group’s policy is to recognise transfers into and out of fair value hierarchy levels as of the date of the event or change in circumstances
that causes the transfer. The Directors determine the applicable hierarchy that a property falls into by assessing the level of comparable
evidence in the market which that asset falls into and the inherent level of activity. As at the reporting date and throughout the year, all
property was determined to fall into Level 3 and so there were no transfers between hierarchies.
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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
2022
£’000
2021
£’000
46,796
—
9,598
—
7,483
—
4,127
—
9,938
—
17,235
—
95,177
—
78,730
11,268
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
8
2
(12)
—
6,827
—
(694)
52,927
948
53,875
Tenant incentives are included in trade receivables.
—
—
(10)
—
—
—
(380)
9,208
202
9,410
—
—
—
(7,493)
—
—
10
—
—
—
—
—
(3)
(7)
—
—
205
4,322
—
4,322
—
—
—
—
—
—
—
—
—
—
8
2
(25)
502
129
(41)
(7,500)
6,827
(5,312)
1,517
—
(3,663)
6,275
—
(2,769)
14,466
—
(7,291)
87,198
3,741
4,643
95,177
625
6,900
459
14,925
2,234
89,432
1,560
96,737
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NOTES TO THE
FINANCIAL STATEMENTS
for the year ended 31 December 2022
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 2022 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 £85,110,000 (2021: £92,609,000). 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 2022 has been determined by the Directors of the Company at £4,322,000
(2021: £4,127,000). 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):
2022
Class
Industrial
Leisure Mixed-use
Residential
Office
Retail
Valuation technique
Rental value per sq ft (£)
Yield %
– weighted average
– low
– high
– weighted average
– low
– high
Yield
6.40
0.67
13.00
6.05
3.38
7.75
Yield
15.55
1.82
45.05
6.68
5.84
9.76
Yield
4.95
2.75
9.00
10.90
8.21
12.69
Sales
comparison
—
—
—
—
—
—
% discount applied to houses held under assured
tenancies
—
—
—
25.00
Yield
27.05
26.60
28.06
12.44
9.61
15.95
—
Yield
14.06
7.33
25.38
5.78
4.49
8.83
—
2021
Class
Industrial
Leisure Mixed-use
Residential
Office
Retail
Valuation technique
Rental value per sq ft (£)
Yield %
– weighted average
– low
– high
– weighted average
– low
– high
% discount applied to houses held under assured
tenancies
Yield
4.44
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
—
—
—
—
—
—
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
—
—
—
25.00
—
—
There is considered to be no inter-relationship between observable and unobservable inputs.
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14. Investment properties continued
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
Tenancy discount – increase by 1%
Yield – improvement by 0.5%
Rental value per sq ft – increase by £1
average
Tenancy discount – increase by 1%
Industrial
Leisure
Mixed-use
Residential
Impact on valuation 2022 £’000
3,834
8,243
—
Industrial
4,519
11,083
—
662
607
—
219
1,013
—
—
—
49
Impact on valuation 2021 £’000
Residential
Mixed-use
Leisure
719
644
—
377
255
—
—
—
50
Office
356
328
—
Office
668
456
—
Retail
1,206
1,002
—
Retail
1,393
1,378
—
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 £5,757,000 (2021: £5,772,000). Direct operating expenses arising on investment property generating rental income in the year
amounted to £1,229,000 (2021: £1,274,000). Direct operating expenses arising on the investment property which did not generate rental
income during the year amounted to £122,000 (2021: £162,000).
At 31 December 2022, the Group had entered into contractual commitments for the acquisition and repair of investment property amounting
to £nil (2021: £nil).
Investment property under construction
Class
Fair value hierarchy
Carrying value
At 1 January
Subsequent expenditure on investment property
Capitalised letting fees
Transfer from inventory
Transfer to completed investment property
Transfers to assets held for sale
Increase in fair value in year
At 31 December
Adjustment in respect of tenant incentives
Market value at 31 December
Industrial
Level 3
£’000
9,000
9,265
26
391
—
(11,134)
2,370
9,918
—
9,918
2022
£’000
9,000
9,265
26
391
—
(11,134)
2,370
9,918
—
9,918
2021
£’000
3,993
5,419
—
—
(3,741)
—
3,329
9,000
—
9,000
One property was transferred to ‘assets held for sale’ during the year and was subsequently disposed of prior to the year end.
Tenant incentives are included in trade receivables.
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NOTES TO THE
FINANCIAL STATEMENTS
for the year ended 31 December 2022
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 %
– weighted average
– low
– high
– weighted average
– low
– high
– weighted average
– low
– high
– weighted average
– low
– high
2022
Industrial
Residual
10.21
10.21
10.21
4.5
4.5
4.5
2021
Industrial
Residual
6.10
6.10
6.10
4.1
4.1
4.1
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
Impact on
valuation 2022
£’000
Industrial
1,025
1,804
Impact on
valuation 2021
£’000
Industrial
1,037
358
Investment properties under construction are developments which have been valued at 31 December 2022 at fair value by the Directors
of the Company using the residual method at £9,918,000 (2021: £9,000,000). 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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15. Investments
Parent Company – shares in Group undertakings
Cost
At 1 January 2021, 31 December 2021 and 31 December 2022
Adjustments
At 1 January 2021, 31 December 2021 and 31 December 2022
Carrying amount
At 31 December 2022
At 31 December 2021
Total
£’000
37,771
—
37,771
37,771
Amounts due from and to subsidiary companies are listed in notes 18 and 22 and details of all subsidiary companies are listed in note 35. All
trading subsidiaries operate in the United Kingdom and are wholly owned, with the exception of:
• Road Link (A69) Holdings Limited 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 35) 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/(loss) for the year
Dividends received
Additions
Disposals
At 31 December
2022
Joint
ventures
£’000
Associates
£’000
12,165
9,524
(7,160)
—
(6,206)
8,323
—
(445)
—
2,112
—
1,667
Joint
ventures
£’000
5,688
9,064
(2,155)
—
(432)
12,165
2021
Associates
£’000
152
(136)
—
2
(18)
—
Total
£’000
12,165
9,079
(7,160)
2,112
(6,206)
9,990
Total
£’000
5,840
8,928
(2,155)
2
(450)
12,165
During the year, the Group increased its equity investment in Rainham Holdco SARL, an associate undertaking, by a further £2.1m which
maintains our interest at 20%.
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
9,311
24,283
—
33,594
(22,848)
(2,423)
8,323
2022
Associates
£’000
—
6,062
—
6,062
(4,395)
—
1,667
Total
£’000
9,311
30,345
—
39,656
(27,243)
(2,423)
9,990
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
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185
NOTES TO THE
FINANCIAL STATEMENTS
for the year ended 31 December 2022
16. Investment in joint ventures and associates continued
Revenue
Administration and other expenses
(Decrease)/increase in fair value of
investment properties
Operating profit/(loss)
Finance costs
Profit/(loss) before tax
Tax
Share of profits/(losses) after tax
Joint
ventures
£’000
38,101
(23,569)
(3,232)
11,300
(403)
10,897
(1,373)
9,524
2022
Associates
£’000
13
(154)
—
(141)
(287)
(428)
(17)
(445)
Total
£’000
38,114
(23,723)
(3,232)
11,159
(690)
10,469
(1,390)
9,079
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
Details of the Group’s investments in joint ventures and associates are listed in note 35.
Material joint ventures and associates
The Directors considers Pennine Property Partnership LLP, Montagu 406 Regeneration LLP, Newmarket Lane Holdings Limited (Group) and
Cognito Oak LLP 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. Cognito Oak LLP is a property development joint venture between the Group and
Wraith Real Estate Limited, 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.
The table below provides summarised financial information for Pennine Property Partnership LLP, Montagu 406 Regeneration LLP,
Newmarket Lane Holdings Limited (Group) and Cognito Oak LLP. The information disclosed reflects the amounts presented in the financial
statements of Pennine Property Partnership LLP, Montagu 406 Regeneration LLP, Newmarket Lane Holdings Limited (Group), and Cognito
Oak LLP 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/(loss) for the period
Other distribution
Closing net assets
Group’s share in %
Group’s share in £
Carrying amount
Pennine Property
Partnership LLP
Montagu 406
Regeneration LLP
Newmarket Lane
Holdings Limited (Group)
Cognito
Oak LLP
2022
£’000
—
—
—
—
—
—
—
10,826
1,215
(12,041)
—
—
—
—
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
2022
£’000
18,611
889
656
420
(15,720)
—
4,856
11,639
(6,783)
—
4,856
50%
2,428
2,428
2021
£’000
25,950
—
143
—
(14,454)
—
11,639
(5)
11,644
—
11,639
50%
5,820
5,820
2022
£’000
—
15,336
9,319
1,665
(13,077)
—
13,243
3,412
9,831
—
13,243
50%
6,622
6,622
2021
£’000
—
19,050
2,303
1,850
(19,791)
—
3,412
(24)
3,455
(19)
3,412
50%
1,706
1,706
2022
£’000
—
—
—
—
(1)
—
(1)
(249)
14,826
(14,578)
(1)
50%
(1)
(1)
2021
£’000
—
1,710
68
348
(2,375)
—
(249)
(41)
(208)
—
(249)
50%
(125)
(125)
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16. Investment in joint ventures and associates continued
Summarised statement of comprehensive income
Revenue
Movement in fair value of
investment property
Profit/(loss) for the year
2022
£’000
1,318
300
1,215
2021
£’000
752
2,356
2,920
2022
£’000
564
2021
£’000
2022
£’000
2021
£’000
2022
£’000
—
36,218
19,435
17,208
(6,764)
(6,783)
11,695
11,644
—
9,831
—
3,455
—
14,826
2021
£’000
1,572
—
(208)
The Group disposed of one joint venture investment in the year:
Pennine Property Partnership LLP
On 1 September 2022 the Group, through its subsidiary Henry Boot Developments Limited, disposed of its interest in Pennine Property
Partnership LLP for a total consideration of £6,873,000.
Sale proceeds
Book value of net assets
Profit on disposal
17. Contract assets
Construction contracts – Construction segment
Construction contracts – Property Investment and Development segment
Due within one year
Due after more than one year
2022
£’000
6,873
(6,206)
667
2021
£’000
2,291
5,265
7,556
7,556
—
7,556
2022
£’000
4,882
14,375
19,257
19,257
—
19,257
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 increased as the Group has provided more construction contract services in the property investment and development
segment.
There were no impairment losses recognised on any contract asset in the reporting period (2021: £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
1 See ‘prior year restatements’ on page 159.
Group
Parent Company
2022
£’000
70,245
(1,682)
9,751
25,316
—
103,630
66,601
37,029
103,630
2021
(restated1)
£’000
66,889
(1,269)
8,442
27,660
—
101,722
64,615
37,107
101,722
2022
£’000
484
—
2,085
—
222,786
225,355
40,149
185,206
225,355
2021
(restated1)
£’000
168
—
949
—
203,417
204,534
27,845
176,689
204,534
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Amounts due after more than one year relate to deferred consideration included in trade receivables on inventory sold that are discounted to
present value and are due for payment between January 2024 and July 2026, and amounts owed by joint ventures and associates that are
not expected to be recovered in the next 12 months.
187
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NOTES TO THE
FINANCIAL STATEMENTS
for the year ended 31 December 2022
18. Trade and other receivables continued
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
2022
£’000
1,269
417
(4)
—
—
1,682
2021
£’000
691
779
(196)
(5)
—
1,269
The loss allowance as at 31 December 2022 and 31 December 2021 for trade receivables was determined as follows:
2022
0-30 days
30–60 days
60–90 days
90–120 days
120+ days
2021
0-30 days
30–60 days
60–90 days
90–120 days
120+ days
Expected
loss rate
%
—
1.3
1.2
5.9
40.7
Expected
loss rate
%
—
0.6
2.9
24.2
41.1
Gross
carrying
amount
£’000
63,962
1,462
520
341
3,960
70,245
Gross
carrying
amount
(restated1)
£’000
60,464
2,895
548
128
2,854
66,889
Loss
allowance
£’000
25
19
6
20
1,612
1,682
Loss
allowance
£’000
31
18
16
31
1,173
1,269
1 See ‘prior year restatements’ on page 159.
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 £213.4m (2021: £203.7m) and are repayable on demand, unsecured and are stated
net of provisions for impairment of £1,498,000 (2021: £1,500,000), of which £nil (2021: £3,000) has been provided in the year, £2,000
(2021: £87,000) has been recovered in the year and £nil (2021: £nil) 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 0% (2021: 2.85%).
The Parent Company has no impaired trade receivables (2021: nil).
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18. Trade and other receivables continued
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:
Group
At 1 January 2021
Recognised in profit or loss
Recognised in other comprehensive income
At 31 December 2021
Recognised in profit or loss
Recognised in other comprehensive income
At 31 December 2022
Deferred tax asset
Deferred tax liability
Parent Company
At 1 January 2021
Recognised in profit or loss
Recognised in other comprehensive income
At 31 December 2021
Recognised in profit or loss
Recognised in other comprehensive income
At 31 December 2022
Deferred tax asset
Deferred tax liability
Accelerated
capital
allowances
£’000
Property
revaluations
£’000
Retirement
benefit
scheme
£’000
Other
timing
differences
£’000
85
(279)
—
(194)
(593)
—
(787)
—
(787)
68
36
—
104
(76)
—
28
28
—
—
(4,106)
(282)
(4,388)
2,345
(23)
(2,066)
—
(2,066)
—
—
—
—
—
—
—
—
—
6,924
973
(4,840)
3,057
(856)
(3,749)
(1,548)
—
(1,548)
6,924
973
(4,840)
3,057
(856)
(3,749)
(1,548)
—
(1,548)
333
(1)
—
332
(83)
—
249
249
—
355
6
—
361
(82)
—
279
279
—
Total
£’000
7,342
(3,413)
(5,122)
(1,193)
813
(3,772)
(4,152)
249
(4,401)
7,347
1,015
(4,840)
3,522
(1,014)
(3,749)
(1,241)
307
(1,548)
Deferred tax assets relating to deductible temporary differences are recognised if it is probable that they can be offset against future taxable
profits or existing temporary differences.
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% (2021: 25%), being the rate at which timing differences are expected to reverse. Management does not expect any significant reversal
of deferred tax assets or liabilities in the next 12 months.
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A
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N
A
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S
I
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
2022
£’000
91,213
80,629
57,475
11,893
50,568
2021
£’000
75,161
52,464
47,682
13,558
46,431
291,778
235,296
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Within property developments in progress, £nil (2021: £1,277,000) 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, £2,019,000 (2021: £1,170,000) has been written down and recognised as an expense in the year.
These costs relate to land, options and planning promotion agreements where planning permission for development has been refused or is
deemed to be doubtful.
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NOTES TO THE
FINANCIAL STATEMENTS
for the year ended 31 December 2022
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
2022
£’000
4,006
—
4,006
4,006
2022
£’000
5,033
—
—
—
2021
£’000
5,033
—
5,033
5,033
2021
£’000
7,280
150
—
—
Contract liabilities have decreased in the year as the Group invoicing remains more closely aligned with the level of construction of work
undertaken on these contracts.
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
2022
£’000
80,069
2,273
3,911
13,777
365
—
100,395
95,827
4,568
100,395
2021
£’000
56,420
4,119
9,441
3,834
10
—
73,824
72,155
1,669
73,824
2022
£’000
1,492
427
1,279
—
—
86,110
89,308
89,308
—
89,308
2021
£’000
1,409
572
1,024
—
—
83,168
86,173
86,173
—
86,173
The Directors consider that the carrying amount of trade payables approximates to their fair value.
Amounts due after more than one year include £1,343,000 (2021: £1,669,000) of deferred income and £3,225,000 (2021: £nil) of trade payables
relating to deferred land payments. Included within deferred income is £1,669,000 relating to an advanced payment from National Highways
(2021: £1,874,000). This is being released as revenue and interest within the income statement under the terms of the A69 Road Link contract.
During the year, £519,000 (2021: £445,000) has been recognised as revenue and £314,000 (2021: 332,000) recognised as interest. The balance
of deferred income represents advanced receipts for construction of a pre-sold asset in the property investment and development segment which
is due to complete in 2023.
Parent Company
Amounts owed to Group undertakings (including loans of £85.8m (2021: £81.1m)) are repayable on demand, unsecured and bear interest
at rates of between 0%-5.20% (2021: 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 £130,000 (2021: £723,000).
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.
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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
2022 this was £48.6m (2021: £43.5m). Equity comprises all components of equity and at 31 December 2022 this was £394.3m (2021:
£355.3m).
During 2022 the Group’s achieved its strategy, to maintain the debt to equity ratio below 30% (2021: 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 and on 9 October 2022 to call on the facility accordion increasing the total
commitments by £30m to £105m. The Group had drawn £65m of the facility at 31 December 2022 (2021: £50m).
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. The
Receivables Purchase Agreement allows the Group to sell eligible deferred receivables generated through its land sale activities to HSBC
Invoice Finance (UK) Limited. Under the terms of the agreement the Group irrevocably assigns all rights to HSBC Invoice Finance (UK)
Limited and all tangible risks and rewards of ownership of the financial asset are transferred. Upon transfer of contractual rights, the deferred
receivable asset is derecognised in the financial statements of the Group. There is a maximum agreement limit of £25m of which receivables
due from eligible housebuilders can be sold. Amounts of £7.6m (2021: nil) were sold under the agreement at the year end.
The Group’s capital risk management disclosures are consistent with the Parent Company.
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25. Borrowings
Bank overdrafts
Bank 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
1 See ‘prior year restatements’ on page 159.
Group
Parent Company
2022
£’000
—
65,000
65,000
65,000
—
65,000
65,000
—
—
65,000
65,000
—
65,000
2021
(restated1)
£’000
—
50,000
50,000
50,000
—
50,000
50,000
—
—
50,000
50,000
—
50,000
2022
£’000
9
65,000
65,009
65,009
—
65,009
65,009
—
—
65,009
65,009
—
65,009
2021
£’000
—
50,000
50,000
50,000
—
50,000
50,000
—
—
50,000
50,000
—
50,000
191
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NOTES TO THE
FINANCIAL STATEMENTS
for the year ended 31 December 2022
25. Borrowings continued
The weighted average interest rates paid were as follows:
Bank overdrafts
Bank loans – floating rate
Bank loans – floating rate (relating to Stonebridge Homes Limited)
2022
%
2.72
4.59
—
2021
%
1.24
1.51
1.98
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.
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.
Other borrowings are arranged at floating rates, thus exposing the Group to cash flow interest rate risk.
Based on approximate average borrowings during 2022, a 1.0% (2021: 0.5%) change in interest rates, which the Directors consider to be a
reasonably possible change, would affect profitability before tax by £618,000 (2021: £82,000).
The fair value of the Group’s borrowings is not considered to be materially different from the carrying amounts.
At 31 December 2022, the Group had available £40,000,000 (2021: £25,000,000) undrawn committed borrowing facilities.
26. Provisions
At 1 January 2021
Additional provisions in year
Utilisation of provisions
At 31 December 2021
Included in current liabilities
Included in non-current liabilities
Additional provisions in year
Utilisation of provisions
At 31 December 2022
Included in current liabilities
Included in non-current liabilities
Land
promotion
£’000
Road
maintenance
£’000
3,936
1,051
(570)
4,417
3,562
855
4,417
775
(1,637)
3,555
2,170
1,385
3,555
1,992
1,499
(1,626)
1,865
1,865
—
1,865
683
(715)
1,833
1,833
—
1,833
Total
£’000
5,928
2,550
(2,196)
6,282
5,427
855
6,282
1,459
(2,352)
5,388
4,003
1,385
5,388
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26. Provisions continued
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 £32,000 and £182,000 respectively (2021: £11,000 and £101,000).
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 £129,000 (2021: £206,000).
Off balance sheet arrangements
The Group is currently undertaking the infrastructure of land promotions at Bridgwater and Cranbrook, spanning 122 and 53 acres
respectively (2021: 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 2023 and 2025 respectively, with costs being incurred throughout these periods.
The Group has cumulatively disposed of 117 and 50 acres respectively (2021: 117 and 48), and has subsequently recognised provisions to
the value of £3,451,000 (2021: 4,351,000), 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 £185,000 (2021: £617,000),
has therefore not been recognised in these Financial Statements.
Contingent liabilities
Contingent liabilities may arise in respect of subcontractor and other third party claims made against the Group, in the normal course of
trading. These claims can include those relating to cladding/legacy fire safety matters, and defects. A provision for such claims is only
recognised to the extent that the Directors believe that the Group has a legal or constructive obligation as a result of a past event and it is
probable that an outflow of economic benefit will be required to settle the obligation. However, such claims are predominantly covered by
the Group’s insurance arrangements.
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% (2021: 5%) of salary is paid by the employee, on a pound-for-pound
basis up to a maximum of 8% (2021: 8%).
The total cost charged to income of £3,251,000 (2021: £2,521,000) 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.
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NOTES TO THE
FINANCIAL STATEMENTS
for the year ended 31 December 2022
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 2021. The results of that valuation have been projected to 31 December 2022 by
a qualified independent actuary and the next formal valuation will be 31 December 2024. 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
2022
%
3.20
2.60
—
2.60
2.60
4.90
2022
Years
21.7
23.8
22.7
25.0
2021
%
3.30
2.70
—
2.70
2.70
2.00
2021
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) 2021 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 2.3%
Decrease by 2.9%
Increase by 3.7%
Decrease in
assumption
Decrease by 2.3%
Increase by 3.1%
Decrease by 3.6%
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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 arising from changes in demographic assumptions
Actuarial gain arising from changes in financial assumptions
Actuarial gain arising from experience assumptions
Actuarial gain recognised in other comprehensive income
Total
2022
£’000
—
644
—
209
136
989
50,365
(1,070)
(63,568)
(721)
(14,994)
(14,005)
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:
Present value of scheme obligations
Fair value of scheme assets
This amount is presented in the Statement of Financial Position as follows:
Non-current (assets)/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
Movements in the fair value of scheme assets in the year were as follows:
At 1 January
Interest income
Actuarial (losses)/gains on scheme assets
Employer contributions
Benefits paid
Ongoing scheme expenses
At 31 December
2022
£’000
152,576
(158,764)
(6,188)
2021
£’000
221,660
(209,432)
12,228
2022
£’000
(6,188)
2021
£’000
12,228
2022
£’000
221,660
—
4,353
(65,359)
—
(8,078)
152,576
2022
£’000
209,432
4,144
(50,365)
4,275
(8,078)
(644)
158,764
2021
£’000
235,143
180
4,201
(10,058)
2,074
(9,880)
221,660
2021
£’000
198,698
3,696
13,239
4,181
(9,880)
(502)
209,432
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NOTES TO THE
FINANCIAL STATEMENTS
for the year ended 31 December 2022
27. Retirement benefit obligations continued
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
Infrastructure
Special situations
At 31 December
2022
£’000
14,381
46,483
2,979
18,969
33,283
21,319
21,350
158,764
2021
£’000
47,796
63,641
3,222
22,536
34,369
20,101
17,767
209,432
The weighted average duration of the defined benefit obligation is 12 years (2021: 16 years).
The current estimated amount of total contributions expected to be paid to the scheme during the 2023 financial year is £1,300,000, being
£1,300,000 payable by the Group and £nil payable by scheme members.
The Company’s level of recovery plan funding to the scheme is £100,000 per month from March 2023 to December 2024 with a provision to
suspend contributions if in surplus over £3m for two quarters or increase contributions to £300,000 if in deficit over £3m for two quarters. In
addition to this, the Company contributes a further £260,000 per annum towards the administration expenses of the scheme.
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
Related companies of key management personnel (amounts paid for Non-executive Director services)
2022
£’000
4,670
—
(1,447)
(159)
(25)
2022
£’000
51
2021
£’000
2,456
4,544
(1,753)
(158)
(39)
2021
£’000
48
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
80 to 83. They are responsible for making all of the strategic decisions of the Group and its subsidiaries, as detailed on pages 28 and 31.
The remuneration of the Board of Directors is set out in the Remuneration Report on pages 120 to 136. The remuneration of the relevant
six (2021: eight) 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
2022
£’000
1,648
81
19
1,748
2021
£’000
1,976
92
23
2,091
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29. Share capital
400,000 5.25% cumulative preference shares of £1 each (2021: 400,000)
133,627,922 ordinary shares of 10p each (2021: 133,323,967)
Authorised, allotted,
issued and fully paid
2022
£’000
400
13,363
13,763
2021
£’000
400
13,332
13,732
The Company has one class of ordinary share which carries no rights to fixed income, but which entitles the holder thereof to receive notice of
and attend and vote at general meetings or appoint a proxy to attend on their behalf. During the year, 303,955 ordinary shares (2021: 142,430)
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%,
on 15 October 2021 at a price of 225.0p at a discount of 20.5% and on 21 October 2022 at a price of 198.0p at a discount of 15.7%.
These become exercisable for a six-month period from 1 December 2021, 1 December 2022, 1 December 2023, 1 December 2024 and
1 December 2025 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.
2021
October 2017 grant
October 2018 grant
October 2019 grant
October 2020 grant
October 2021 grant
Weighted average exercise price
2022
October 2018 grant
October 2019 grant
October 2020 grant
October 2021 grant
October 2022 grant
Weighted average exercise price
Options
outstanding at
1 January
2021
179,553
86,499
734,761
312,039
—
236p
Options
outstanding at
1 January
2022
55,643
624,340
209,214
440,640
—
228p
Options
granted
—
—
—
—
444,640
225p
Options
granted
—
—
—
—
1,007,374
198p
Options
lapsed
(84,366)
(13,050)
(104,709)
(102,825)
(4,000)
243p
Options
exercised
(95,187)
(17,806)
(5,712)
—
—
267p
Options
lapsed
(5,153)
(45,243)
(52,617)
(167,227)
(15,270)
226p
Options
exercised
(50,490)
(168,879)
—
(933)
—
233p
Options
outstanding at
31 December
2021
—
55,643
624,340
209,214
440,640
228p
Options
outstanding at
31 December
2022
—
410,218
156,597
272,480
992,104
211p
The weighted average share price at the date of exercise for share options exercised during the year was 257.07p (2021: 278.10p).
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197
NOTES TO THE
FINANCIAL STATEMENTS
for the year ended 31 December 2022
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
2022
Number
1,365,397
(385,427)
(31,486)
647,331
1,595,815
2021
Number
1,078,207
(177,367)
(53,085)
517,642
1,365,397
The weighted average share price at the date of exercise for share options exercised during the year was 323.00p (2021: 278.00p).
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. The
eighth 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 2022 at an option price of 247.0p. There were no performance conditions imposed on either of these grants.
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
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29. Share capital continued
2022
October 2014 grant
October 2017 grant
September 2018 grant
October 2019 grant
October 2020 grant
September 2021 grant
September 2022 grant
Weighted average exercise price
Options
outstanding at
1 January
2022
10,000
96,209
220,169
340,207
349,903
404,340
—
271p
Options
granted
—
—
—
—
—
—
605,010
247p
Options
lapsed
Options
exercised
Options
outstanding at
31 December
2022
—
(13,386)
(19,500)
(36,306)
(37,213)
(42,132)
(7,450)
270p
—
(25,936)
(54,294)
(5,277)
(2,093)
(792)
—
290p
10,000
56,887
146,375
298,624
310,597
361,416
597,560
262p
The weighted average share price at the date of exercise for share options exercised during the year was 323.36p (2021: 274.80p).
Fair value
Fair value is measured by a Monte Carlo pricing model using the following assumptions:
LTIP
CSOP 2011
CSOP 2014
CSOP 2017
CSOP 2018
CSOP 2019
CSOP 2020
CSOP 2021
CSOP 2022
Sharesave 2017
Sharesave 2018
Sharesave 2019
Sharesave 2020
Sharesave 2021
Sharesave 2022
Weighted
average
exercise price
Nil
121.5p
191.0p
298.9p
291.0p
249.0p
263.0p
281.0p
247.0p
270.0p
262.0p
224.0p
237.0p
225.0p
198.0p
Weighted
average
share price
241.0p to
324.0p
121.5p
191.0p
309.0p
291.0p
249.0p
263.0p
281.0p
250.0p
300.0p
278.0p
248.0p
263.0p
2.83.0p
235.0p
Expected
volatility
29.37% to
38.73%
41.47%
31.17%
30.37%
29.28%
29.25%
38.07%
38.60%
38.25%
30.30%
29.53%
29.25%
38.07%
38.60%
38.25%
Expected life
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
3 years
Risk-free rate
0.00% to
1.65%
1.67%
1.23%
0.51%
0.91%
0.28%
0.00%
0.41%
4.15%
0.51%
0.99%
0.28%
0.00%
0.58%
3.89%
Expected
dividend yield
1.95% to
3.24%
5.02%
3.16%
3.02%
2.90%
3.24%
2.61%
2.49%
1.95%
3.02%
2.90%
3.24%
2.61%
2.49%
1.95%
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 96.78p (2021: 92.71p).
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
2022
£’000
1,241
2021
£’000
969
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The total expense recognised in the Consolidated Statement of Comprehensive Income arose solely from equity-settled share-based
payment transactions.
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NOTES TO THE
FINANCIAL STATEMENTS
for the year ended 31 December 2022
30. Reserves
Group
At 1 January 2021
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
Profit for the year
Dividends paid
Proceeds from shares issued
Arising on employee share schemes
Increase in fair value in year
Deferred tax on revaluation surplus
Actuarial gain on defined benefit pension
scheme
Deferred tax on actuarial gain
At 31 December 2022
Parent Company
At 1 January 2021
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
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 2022
Property
revaluation
£’000
2,342
—
—
—
—
(282)
—
—
2,060
—
—
—
—
315
(23)
—
—
2,352
Retained
earnings
£’000
61,357
8,938
(7,620)
—
282
23,297
(4,840)
81,414
15,987
(8,383)
—
417
14,994
(3,749)
100,680
Retained
earnings
£’000
288,514
28,160
(7,620)
—
837
—
23,297
(4,840)
328,348
33,319
(8,383)
—
1,163
—
—
14,994
(3,749)
365,692
Other
Capital
redemption
£’000
Share
premium
£’000
Capital
£’000
271
—
—
—
—
—
—
—
271
—
—
—
—
—
—
—
—
271
5,924
—
—
340
—
—
—
—
6,264
—
—
738
—
—
—
—
—
7,002
209
—
—
—
—
—
—
—
209
—
—
—
—
—
—
—
—
209
Investment
revaluation
£’000
Capital
redemption
£’000
Other
Share
premium
£’000
Capital
£’000
1,135
—
—
—
—
—
—
1,135
—
—
—
—
—
—
1,135
271
—
—
—
—
—
—
271
—
—
—
—
—
—
271
5,924
—
—
340
—
—
—
6,264
—
—
738
—
—
—
7,002
211
—
—
—
—
—
—
211
—
—
—
—
—
—
211
Total
other
£’000
6,404
—
—
340
—
—
—
—
6,744
—
—
738
—
—
—
—
—
7,482
Total
other
£’000
7,541
—
—
340
—
—
—
7,881
—
—
738
—
—
—
8,619
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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
Disposals
At 31 December
2022
£’000
1,044
(77)
967
2021
£’000
1,176
(132)
1,044
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 2022, the Trustee held 391,003 shares (2021: 422,489 shares) with a cost of £966,483 (2021: £1,044,311) and a market
value of £918,858 (2021: £1,187,195). 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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A
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NOTES TO THE
FINANCIAL STATEMENTS
for the year ended 31 December 2022
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 (decrease)/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
Loss on disposal of right-of-use assets
Profit on disposal of investment properties
Loss on disposal of assets held for sale
Gain on disposal of joint ventures
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
(Increase)/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
2022
£’000
45,595
579
203
3,957
597
4,921
25
1,241
(3,422)
—
(176)
(1,070)
—
(646)
150
(667)
(1,641)
—
2,503
(9,079)
43,070
(5,454)
1,343
38,959
(63,701)
(3,763)
(11,701)
24,684
(1,027)
(16,549)
2021
£’000
35,142
602
203
3,819
598
(7,972)
41
968
(920)
—
(16)
(981)
—
(1,340)
—
—
(724)
—
1,155
(8,928)
21,647
(5,952)
1,159
16,854
(36,025)
(22,643)
5,772
(226)
(2,397)
(38,665)
2022
£’000
14,001
—
—
142
45
—
—
495
(3,422)
(1)
—
—
—
—
—
—
(85)
(26,491)
3,372
—
(11,944)
—
—
(11,944)
—
(1,183)
—
2,654
—
(10,473)
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)
Net debt is an alternative performance measure used by the Group and comprises the following:
Analysis of net debt1:
Cash and cash equivalents
Bank overdrafts
Net cash and cash equivalents
Bank loans
Lease liabilities
Net debt
1 See ‘prior year restatements’ on page 159.
25
25
13
17,401
—
17,401
(65,000)
(1,033)
(48,632)
11,116
—
11,116
(50,000)
(1,660)
(40,544)
10,316
(9)
10,307
(65,000)
(64)
(54,757)
2,691
—
2,691
(50,000)
(78)
(47,387)
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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 £65,000,000 and
£19,036,000 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 2022, further information can be found in note 10.
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. 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 2022, are as follows:
Subsidiary name
Airport Business Park Southend Management Limited2
Airport Business Park (Quad) Management Limited
Banner Plant Limited
Butterfield Quad Management Company Limited2
Butterfield Quad 2 Management Company Limited2
Capitol Park Property Services Limited2
Chocolate Works York Management Company Limited
Clock Tower (York) Management Company Limited
Comstock (Kilmarnock) Ltd.
FB Shelfco 2022 Limited
First National Housing Trust Limited
Glasgowend Limited
Hallam Land Management Limited
HB Island Limited
HBGP Limited
HBD City Court Limited
HBD Summerhill Limited
HBD X Factory 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
Proportion of
ownership
Direct or
indirect
8.9%
83.3%
100%
12.5%
33.3%
4.6%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
85%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Indirect
Indirect
Direct
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Direct
Direct
Direct
Direct
Direct
Indirect
Indirect
Indirect
Direct
Direct
Direct
Direct
Indirect
Direct
Indirect
Direct
Indirect
Direct
Direct
Direct
Direct
Indirect
Activity
Management company
Management company
Plant Hire
Management company
Management company
Management company
Management company
Management company
Land promotion
Inactive
Property investment
Inactive
Land promotion
Holding company
Holding company
Property investment and development
Property investment and development
Property development
Land promotion
Construction
Inactive
Property investment and development
Property development
Property investment
Property development
Inactive
Property investment and development
Holding company
Land promotion
Motor vehicle leasing to Group companies
Property development
Inactive
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N
A
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203
NOTES TO THE
FINANCIAL STATEMENTS
for the year ended 31 December 2022
Subsidiary name
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
Preston East 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
Wyvern Park Skipton Management Company Limited
Proportion of
ownership
Direct or
indirect
100%
100%
100%
100%
100%
100%
100%
100%
100%
66.7%
100%
61.2%
61.2%
100%
100%
100%
100%
100%
50%
50%
50%
100%
100%
Direct
Direct
Indirect
Direct
Indirect
Indirect
Indirect
Indirect
Direct
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Activity
Inactive
Inactive
Inactive
Property development
Management company
Property development
Inactive
Inactive
Employee benefit trust
Management company
Management company
Holding company
PFI road maintenance
Property development
Inactive
Inactive
Holding company
Holding company
Holding company
Property development
Property investment
Inactive
Management company
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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35. 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
Rainham HoldCo S.a.r.l.
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%
50%
20%
37.6%
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
Holding company
Property development
Inactive
Property investment
Property development
Property development
Property development
Management company
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 S.a.r.l. 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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NOTES TO THE
FINANCIAL STATEMENTS
for the year ended 31 December 2022
36. Partly-owned subsidiaries
Financial information of subsidiaries that have a material non-controlling interests is provided below:
Name
Stonebridge Homes Limited
Road Link (A69) Limited
Country of incorporation
England
England
Name
Accumulated balances of material non-controlling interest:
Stonebridge Homes Limited
Road Link (A69) Limited
Profit allocated to material non-controlling interest:
Stonebridge Homes Limited
Road Link (A69) Limited
2022
£’000
50%
61.2%
2022
£’000
3,687
2,280
2,182
2,369
2021
£’000
50%
61.2%
2021
£’000
2,624
2,822
1,033
1,467
The summarised financial information of these subsidiaries is provided below. This information is based on amounts before
inter-company eliminations.
Summarised statement of profit or loss
Revenue
Cost of sales
Administrative and other expenses
Net finance costs
Profit before tax
Tax
Profit for the year
Total comprehensive income
Attributable to non-controlling interests
Dividends paid to non-controlling interests
Summarised balance sheet
Non-current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Current liabilities
Non-current liabilities
Net assets
Equity holders of parent
Non-controlling interest
Summarised cash flow
Operating
Investing
Financing
Net decrease in cash and cash equivalents
Stonebridge Homes Limited
Road Link (A69) Limited
2022
£’000
70,643
(56,613)
(6,572)
(2,039)
5,419
(1,054)
4,365
4,365
2,182
1,121
1,110
80,629
6,703
550
(81,150)
(468)
7,374
3,687
3,687
1,951
(33)
(2,351)
(433)
2021
£’000
49,505
(39,790)
(6,331)
(835)
2,549
(482)
2,067
2,067
1,033
740
1,257
52,464
4,682
879
(53,514)
(520)
5,248
2,624
2,624
(6,468)
(73)
4,800
(1,741)
2022
£’000
13,590
(5,106)
(691)
(254)
7,539
(1,432)
6,107
6,107
2,369
2,910
1,690
–
4,710
4,080
(3,260)
(1,343)
5,877
3,597
2,280
4,742
60
(7,500)
(2,698)
2021
£’000
11,115
(5,458)
(657)
(331)
4,669
(887)
3,782
3,782
1,467
–
2,271
–
3,227
6,778
(3,335)
(1,669)
7,272
4,450
2,822
(601)
(202)
–
(803)
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SHAREHOLDER
INFORMATION
Notice of Annual General Meeting
Financial Calendar
Advisers
Group Contact Information
Glossary
208
212
212
213
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022
Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022
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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 25 May 2023 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 2022.
Resolution 2
To declare a final dividend of 4.00p 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 2022.
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 Serena Lang as a Director of the Company.
Resolution 11
To reappoint Ernst & Young LLP as auditors of the Company.
Resolution 12
To authorise the Audit and Risk Committee to fix the auditors’
remuneration.
Resolution 13
THAT pursuant to Section 551 of the Companies Act 2006, the
Directors be and are generally and unconditionally authorised to allot
shares in the Company or to grant rights to subscribe for or to convert
any security into shares in the Company up to an aggregate nominal
amount of £4,457,727, provided that (unless previously revoked,
varied or renewed) this authority shall expire on 24 August 2024 or at
the conclusion of the next AGM of the Company after the passing of
this resolution, whichever is the earlier, save that the Company may
make an offer or agreement before this authority expires which would
or might require shares to be allotted or rights to subscribe for or
to convert any security into shares to be granted after this authority
expires and the Directors may allot shares or grant such rights
pursuant to any such offer or agreement as if this authority had not
expired. This authority is in substitution for all existing authorities under
Section 551 of the Companies Act 2006 (which, to the extent unused
at the date of this resolution, are revoked with immediate effect).
To consider and if thought fit, pass the following resolutions, which will
be proposed as special resolutions of the Company.
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Resolution 14
THAT subject to the passing of Resolution 13 and pursuant to
Section 570 of the Companies Act 2006, the Directors be and are
generally empowered to allot equity securities (within the meaning
of Section 560 of the Companies Act 2006) for cash pursuant to
the authority granted by Resolution 13 as if Section 561(1) of the
Companies Act 2006 did not apply to any such allotment, provided
that this power shall be limited to the allotment of equity securities:
a.
in connection with an offer of equity securities (whether by way
of a rights issue, open offer or otherwise):
i.
ii.
to holders of ordinary shares in the capital of the Company
in proportion (as nearly as practicable) to the respective
numbers of ordinary shares held by them; and
to holders of other equity securities in the capital of the
Company, as required by the rights of those securities or,
subject to such rights, as the Directors otherwise consider
necessary,
but subject to such exclusions or other arrangements as the
Directors may deem necessary or expedient in relation to treasury
shares, fractional entitlements, record dates or any legal or practical
problems under the laws of any territory or the requirements of any
regulatory body or stock exchange; and
b. otherwise than pursuant to paragraph a. of this resolution, up to
an aggregate nominal amount of £668,659,
and (unless previously revoked, varied or renewed) this power shall
expire on 24 August 2024 or at the conclusion of the next AGM of
the Company after the passing of this resolution, whichever is the
earlier, save that the Company may make an offer or agreement
before this power expires which would or might require equity
securities to be allotted for cash after this power expires and the
Directors may allot equity securities for cash pursuant to any such
offer or agreement as if this power had not expired. This power
is in substitution for all existing powers under Section 570 of the
Companies Act 2006 (which, to the extent unused at the date of
this resolution, are revoked with immediate effect).
Resolution 15
THAT pursuant to Section 701 of the Companies Act 2006, the
Company be and 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 13,373,182;
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.
ii.
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
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 24 August 2024; 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
12 April 2023
HENRY BOOT PLC
Registered Office:
Banner Cross Hall
Ecclesall Road South
Sheffield
United Kingdom
S11 9PD
Registered in England and Wales No. 160996
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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022
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NOTICE OF ANNUAL
GENERAL MEETING
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 23 May 2023 (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. Voting on each resolution will be conducted by way of a poll.
The Company believes that a poll is more representative of
shareholders’ voting intentions because shareholder votes are
counted according to the number of votes held and all votes
tendered are taken into account. The results of the poll will be
announced to the London Stock Exchange and will be made
available on the Company’s website at www.henryboot.co.uk as
soon as practicable following the conclusion of the AGM.
4. 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.
5. 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).
6. A proxy may only be appointed in accordance with the procedures
set out in notes 7 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.
7. 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 23 May 2023 (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).
8. As an alternative to completing the hard copy form of
proxy, an ordinary shareholder may appoint the Chair 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 23 May 2023 (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).
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 23 May 2023 (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 23 May 2023 (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
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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.
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 17 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 13 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.
it may not require the shareholders making the request to
pay any expenses incurred by the Company in complying
with the request;
ii.
iii.
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
the statement may be dealt with as part of the business of
the meeting.
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 03 April 2023 (being the last practicable date before
publication of this notice), the Company’s issued ordinary share
capital was 133,731,826 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 80 to
81 of the annual report for the year ended 31 December 2022.
Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022
211
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FINANCIAL
CALENDAR
London Stock
Exchange announcements
Annual Results 2022:
21 March 2023
Interim Results 2023:
19 September 2023
Pre-close Trading Statement 2023:
end January 2024
Annual Report and
Financial Statements
Annual Report and Financial Statements 2022
(available and online):
by 24 April 2023
ADVISERS
Chartered Accountants
and Statutory Auditors
Ernst & Young LLP
1 Bridgewater Place
Water Lane
Leeds LS11 5QR
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
Financial PR
FTI Consulting
200 Aldersgate
Aldersgate Street
London EC1A 4HD
Annual General Meeting
25 May 2023
Dividends paid on ordinary shares
2022 Final dividend date (subject to approval at AGM):
02 June 2023
2023 Interim dividend date (subject to approval):
13 October 2023
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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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
Head office
1 Featherbank Court, Horsforth, Leeds
LS18 4QF
t: 0113 357 1100
e: sales@stonebridgehomes.co.uk
w: stonebridgehomes.co.uk
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
Registered office and Head office
Stocksfield Hall, Stocksfield,
Northumberland NE43 7TN
t: 01661 842842
e: enquiries@roadlinka69.co.uk
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GLOSSARY
We have used some terms in this report to explain how we run our business that might be unfamiliar to you. The following list gives a definition
for some of the more frequently used terms:
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.
Total accounting return (TAR)
The growth in NAV per share plus dividends
paid, expressed as a percentage of NAV per
share at the beginning of the period.
UK planning system
This system consists of the process of
managing the development of land and
buildings. The purposes of this process are
to save what is best of our heritage and
improve the infrastructure upon which we
depend for a civilised existence.
Commercial property
This refers to buildings or land intended to
generate a profit, either from capital gain
or rental income, such as office building,
industrial property, retail stores, etc.
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.
IFRS
UK-adopted International Financial
Reporting Standard.
SONIA
The effective overnight interest rate paid
by banks for unsecured transactions in the
British sterling 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.
Retail Prices Index (RPI)/
Consumer Prices Index (CPI)
Monthly inflation indicators based on
different ‘baskets’ of products issued by the
Office of National Statistics.
Return on average capital
employed (ROCE)
Operating profit/capital employed where
capital employed is the average of total
assets less current liabilities and pension
asset/obligation at the opening and closing
balance sheet dates.
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.
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The production of this report supports the work of the Woodland Trust,
the UK’s leading woodland conservation charity. Each tree planted will
grow into a vital carbon store, helping to reduce environmental impact as
well as creating natural havens for wildlife and people.
IBC
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Henry Boot PLC
Registered office:
Banner Cross Hall, Ecclesall Road South
Sheffield, S11 9PD United Kingdom
Registered in England and Wales no. 160996
Tel: 0114 2555444
Email: cosec-ir@henryboot.co.uk
Stock Code: BOOT.L
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