OUR FUTURE
OUR LEGACY
Henry Boot PLC
Annual Report and Financial Statements
for the year ended 31 December 2023
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WELCOME TO THE 2023
HENRY BOOT ANNUAL REPORT
Henry Boot has been at the
forefront of Real Estate in
the UK for 138 years and is
established as one of the leading
land management, property
investment and development,
and construction companies in
the country.
Our premium portfolio is focused
on high quality projects in
prime locations with exemplary
sustainability credentials.
View our Online Annual Report at
henryboot.annualreport2023.com
OUR FUTURE
Our focus on today
and our future...
| henryboot.co.uk OUR LEGACY
...builds on our past and
strengthens our legacy.
CONTENTS
Overview
Highlights
Chair’s Statement
Our focus on today
Group at a Glance
Investment Case
Strategic Value in the Business
Strategic
Chief Executive Officer Update
Business Model
Our Marketplace
Our Strategy
Our KPIs
Responsible Business Strategy
Business review
– Land Promotion
– Property Investment and Development
– Construction
Financial Review
Principal Risks and Uncertainties
Our Risks
Section 172 Statement
Our People
TCFD
Governance
Board of Directors
Executive Committee
Chair’s Introduction
Governance at a Glance
Corporate Governance Report
– Division and Responsibilities
– Board Leadership and
Company Purpose
02
04
06
08
10
12
16
20
22
26
28
30
36
38
42
44
48
50
56
60
66
80
82
84
86
87
90
97
– Composition, Success and Evaluation
102
– Nomination Committee Report
– Audit and Risk Committee Report
109
– Responsible Business Committee Report 114
119
– Directors’ Remuneration Report
123
– Remuneration Policy
131
– Annual Report on Remuneration
Director’s Report
142
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
212
216
216
217
218
161
162
163
164
152
160
01
OVERVIEWGOVERNANCESTRATEGIC REPORTFINANCIALSSHAREHOLDERSAnnual Report and Financial Statements for the year ended 31 December 2023 | HIGHLIGHTS
OF 2023
Financial Highlights
Group Revenue
£359.4m
.
m
7
9
7
3
£
.
m
4
9
5
3
£
.
m
4
1
4
3
£
.
m
6
0
3
2
£
.
m
4
2
2
2
£
9
1
0
2
1
2
2
2
3
2
Return on Capital
Employed
9.9%
%
0
.
2
%1
9
.
9
%
6
.
9
%
8
.
4
1
%
9
.
4
Profit Before Tax
£37.3m
.
m
1
9
4
£
.
m
1
5
3
£
.
m
6
5
4
m£
3
7
3
£
.
m
1
.
7
1
£
0
2
9
1
1
2
2
2
3
2
Capital Employed
£416.7m
m
m
7
7
.
.
6
6
1
1
4
4
£
£
m
m
1
1
.
.
9
9
9
9
3
3
£
£
m
m
6
6
.
.
5
5
7
7
3
3
£
£
m
m
5
5
.
.
8
8
5
5
3
3
£
£
m
m
9
9
.
.
0
0
4
4
3
3
£
£
9
1
0
2
1
2
2
2
3
2
9
9
1
1
0
0
2
2
1
1
2
2
2
2
2
2
3
3
2
2
Net Asset Value per
Ordinary Share
306p
p
6
0
3
p
5
9
2
p
7
6
2
p
9
3
2
p
5
3
2
Dividend per
Ordinary Share
7.33p
p
3
3
.
7
p
6
6
.
6
p
5
0
.
6
p
5
.
5
p
0
.
5
9
1
0
2
1
2
2
2
3
2
9
1
0
2
1
2
2
2
3
2
Responsible Business
Highlights
People
People are at
the heart of
our business.
We succeed
by investing in our own people,
improving internal communications,
creating a sense of shared purpose,
and via policies that include
industry-leading approaches on
equality, diversity and inclusion
(EDI), continuing professional
development (CPD), pay and
reward structures, employee
wellbeing, and health and safety.
Highlights
• We launched our Health and
Wellbeing Strategy which is
guided by the vision that our
people are healthy, fulfilled, and
feel supported and empowered.
A broad range of resources,
events and support was
provided throughout the year.
• Nearly 50 of our people
completed Mental Health First
Aid training to provide support
to our people and partners.
• We increased the gender
diversity of our workforce to
28% female and reduced our
gender pay gap to 20.98%
02
| henryboot.co.uk
Partners
We will succeed
by developing long
term, productive
partnerships with those outside
the business, through fair terms
and conditions (T&Cs), best
practice, safety, and through our
unwavering commitment to high
standards, quality and delivery
– in everything we do.
Places
We generate
impact through
placemaking:
via our charitable
and community work, as well
as by a commitment to creating
healthy, high quality communities
and neighbourhoods that people
can live and work in – and enjoy,
for generations.
Planet
Our positive
impacts are
delivered not
only through
the sustainability targets in our
Responsible Business Strategy,
but also by adopting a sustainable
mindset across the whole Group.
We measure success not just
by short-term targets but by the
lasting impact our sustainable
approach generates.
Highlights
Highlights
Highlights
• We engaged with experts at
the Living Wage Foundation to
understand the requirements for
us to secure accreditation.
• We engaged business
membership organisations
including the UK Green
Building Council, Business in
the Community (BITC) and
the Yorkshire Climate Action
Coalition to collaborate on key
industry issues.
• We concluded our charity
partnership with Place2Be
raising over £55,000 for this
amazing charity.
• We contributed over £225,000
of value to our charity and
community partners across our
communities.
• Our people contributed over
3,000 volunteering hours to a
diverse range of community and
charity partners.
• We were a founding member
of the Sheffield Pride of
Place Board.
• We developed our Early Careers
Strategy which is due to be
published in 2024.
• We reduced our direct
greenhouse gas (GHG)
emissions by 14% from our
2019 baseline in alignment with
our decarbonisation trajectory.
• We reduced our electricity
usage by 23% and gas usage
by 39%, from our 2019
baselines.
• We engaged the Carbon Trust
to support the Group to monitor
our Scope 3 GHG emissions.
• Our people-led Group Climate
Forum monitors delivery of
our net zero carbon (NZC)
framework and oversees
knowledge transfer and
innovation across the Group.
03
OVERVIEWGOVERNANCESTRATEGIC REPORTFINANCIALSSHAREHOLDERSAnnual Report and Financial Statements for the year ended 31 December 2023 |
CHAIR’S STATEMENT
I am pleased to report that we remain in a strong financial
position and have continued to make good progress
against our medium term objectives”.
continued investment to support our long
term ambitions, including the relocation of
our head office as well as investment in our
people, marketing and technology. This
resulted in our gearing moving to 19.0%,
which remains within our optimum stated
range of 10-20%.
On other strategic objectives that support
our long term ambitions of the business,
I am pleased to report:
• After launching our Responsible
Business Strategy in 2022, we continue
to make great progress against our
targets. In 2023, we launched our Health
and Wellbeing Strategy which includes
resources and guidance on a range of
key topics, such as neurodiversity and
mental health.
Henry Boot has performed resiliently in
2023, delivering a profit before tax (PBT) of
£37.3m (2022: £45.6m) or on an underlying
profit basis £36.7m (2022: £56.1m), after
excluding revaluation movements on
completed investment property. Throughout
last year, the Group traded in a slowing
economy, facing stubbornly high inflation
and rising interest rates. Despite these
conditions, our focus on high quality land
and development in prime locations has
meant the Group delivered an increase in
overall sales, growing revenue to £359.4m
(2022: £341.4m).
As previously reported, we expect a lag
in performance for 2024 due to the time it
takes for projects and sales to complete,
and we remain cautious of the near-term
trading environment. Whilst believing that
it is crucial that any new government deals
with a reform of the planning system,
the outlook for both inflation and interest
rates are improving, supported by recent
reductions in mortgage rates. With this in
mind, it feels as though the UK economy
has turned a corner, leaving us with
continued conviction in achieving our
medium term growth and return targets.
The Group remains in a strong financial
position, with a robust balance sheet
and NAV per share increasing by 3.7%
to 306p (2022: 295p) or by 3.4% to
300p (2022: 290p), excluding the defined
benefit pension scheme surplus. Net debt
increased to £77.8m (2022: £48.6m) as we
maintained our focus on investing in our
prime land portfolio, building out our high
quality committed development programme
and continuing to grow our premium
housebuilder. Additionally, there was
PETER MAWSON
CHAIR
£359.4m
REVENUE
(2022: £341.4M)
£37.3m
PROFIT BEFORE TAX
(2022: £45.6M)
04
| henryboot.co.uk •
•
In regard to reducing our total direct
greenhouse gas emissions (Scopes 1
and 2), at the end of 2023 there was
a 14% reduction against the 2019
baseline, and we are on track to hit net
zero carbon (NZC) by 2030.
In November 2023, we relocated our
head office to the Isaacs Building in
Sheffield city centre. Our new HQ
supports the aim to reduce our carbon
footprint and the goal of achieving
NZC by 2030, with an expected
emission reduction of 79% compared
with the former head office. On top
of this, it offers a far superior working
environment which not only encourages
greater collaboration and cohesiveness
across our teams but also helps us
retain and attract talent.
• The results of our annual Group
Read more about The relocation of our Head
Employee Engagement Survey were
positive, achieving an employee Net
Promoter Score of 30 (2022:39). This
allows us to gain feedback from our
people so we can continually improve
our employee experience, and despite a
slight decrease in our eNPS, the score
is considered very good and 46 points
higher than construction and heavy
industry averages, while continuing to
show very high levels of advocacy, pride
and loyalty in Henry Boot.
• Finally, during 2023, we began to
assess our brand value proposition
by completing a series of internal and
external workshops. As a result, I am
pleased to say that in early summer we
will be launching our refreshed brand,
which focuses on improving customer
experience and giving greater clarity to
our business model.
The Board proposes to pay a final dividend
of 4.40p per share which, together with
the 2.93p interim dividend, gives a total of
7.33p (2022: 6.66p), an increase of 10.0%
for the year. Subject to approval at the
AGM, this will be paid on 31 May 2024 to
shareholders on the register at the close of
business on 3 May 2024.
On behalf of the Board, I would like to
thank everyone at Henry Boot for their
dedication and hard work. Once again,
their expertise and high levels of
engagement have been instrumental in the
business producing, against a challenging
backdrop, resilient results.
PETER MAWSON
CHAIR
Office on page 19:
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 Property
Return. Total Accounting Return.
More details can be found on page 47.
05
OVERVIEWGOVERNANCESTRATEGIC REPORTFINANCIALSSHAREHOLDERSAnnual Report and Financial Statements for the year ended 31 December 2023 | OUR FOCUS ON TODAY
AND OUR FUTURE ...
Today, our reputation is built
on our ability to promote and
deliver high quality schemes.
Operating across the UK, and
employing over 500 people, our
expertise is focused on three
long term growth markets.
Industrial &
logistics
A market in which we have a strong
track record of delivering prime
industrial and logistics units across
England
•
In 2023 the Group completed
on 661,000 sq ft of I&L
development at a total
combined GDV of £104m
(HBD share: £89m)
• Henry Boot has a wealth of
experience in this market
and currently has 59% of
its £1.3bn development
pipeline sitting within I&L
opportunities
Residential
A market in which we continue to
grow our presence through one of
the largest strategic land portfolios
in the country and a growing
premium housebuilder
• The Group’s land portfolio
increased to over 100,000
plots in 2023
• Our jointly owned
housebuilder, Stonebridge
Homes, increased its annual
sales by 43% to 251 homes,
whilst simultaneously
growing its land bank to over
1,500 plots
Urban
development
A market that continues to recover
from both the social and economic
impact of COVID, with the
continued belief that more people
will be living in urban areas than
rural by 2050
We are currently developing
city centre projects in both
Birmingham and Manchester:
- Setl the 102 premium
apartment scheme in
Birmingham (£32m GDV)
- Island, a 91,000 sq ft NZC
office building in Manchester
(£33m GDV our share)
Market Review
Read more about the key long term structural trends driving our three key
markets and how they have performed throughout 2023 on pages 22 to 25
06
| henryboot.co.uk
... BUILDS ON OUR PAST AND
STRENGTHENS OUR LEGACY
Evolving our brand
As a long-standing business with 138 years of history, Henry Boot has always
recognised the importance of embracing change.
Whether that be due to market conditions,
ever-evolving partner or customer
expectations, innovations in technology or
simply to seize an opportunity, our aim has
always been to remain distinct, yet relevant.
In 2023 we have undertaken an extensive
rebrand exercise to better understand what
our ‘value’ is, what we stand for and how
we activate and articulate our brand as a
modern, progressive and inclusive business.
In a post-COVID, challenging economy,
this need to evolve has never been
more prevalent as brands are continually
scrutinised for what ‘value’ they deliver,
not just for shareholders but for all their
stakeholders including investors, partners,
employees and the communities in which
they work.
Like any progressive business that seeks
buy-in from others in order to succeed,
our impact is now measured in more ways
than financial performance alone. We now
measure the impact of our work on our
people, our partners, our places and our
planet. Our brand needs to connect with
our target audiences and it needs to stand
for something in order to resonate in the
hearts and minds of the people we work
with and for; and especially with the talent
we need to attract in order to progress,
grow and succeed.
We began this journey by facilitating two
significant projects. The first was the
BVP (brand value proposition) project, an
externally facing body of work to discover
what ‘value’ we provide for our external
audiences and, secondly, the EVP (employer
value proposition) project to unearth what
value as an employer we provide for all our
people, aside from salaries.
Brand Value Proposition
The BVP project started with diagnosis
and research canvassing insights from a
broad range of external stakeholders. We
then took the findings of that research to
our people via three internal workshops to
inform how we articulate our positioning,
purpose, values, key messaging and
our tone of voice. The participants in the
workshops were selected from across
the group of businesses, from a range of
positions and roles, seniority, length of
service, ethnicity and gender, to ensure the
broadest representation possible.
Employer Value
Proposition
In quick succession following the BVP, we
quickly launched our second project, the
EVP. Again, we canvassed the opinion of
another large group of people from across
our business to articulate the reasons why
people should join Henry Boot and reasons
why they should stay. We also explored
employee mindsets and personas to help
improve internal communications and
employee engagement. The insight gathered
has informed our talent attraction and talent
retention strategies as well as practical
business-as-usual people needs such as our
on-boarding process, health and wellbeing,
skills development and career progression.
What’s next?
In 2024, we plan to implement a refreshed
corporate brand identity for all our
businesses which will be showcased in our
next Annual Report.
Henry Boot gave us a legacy
we’re proud of – which fuels our
desire to be a business where
great places start. Then, now,
and for future generations.
Annual Report and Financial Statements for the year ended 31 December 2023 |
07
OVERVIEWGOVERNANCESTRATEGIC REPORTFINANCIALSSHAREHOLDERS GROUP AT
A GLANCE
Henry Boot is one of
the UK’s leading land,
property development
and construction
businesses, renowned
for transforming land
and places.
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 real
estate value chain.
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
08
| henryboot.co.uk
| henryboot.co.uk Types of revenue streams
Land Promotion
Property Investment and Development
Hallam Land
HBD
Stonebridge
Hallam Land has facilitated 52,000
new homes since 1990, managing one
of the top four largest land portfolios
in the country, with the potential to
facilitate over 100,000 homes.
Henry Boot Developments (HBD)
manages a development
pipeline of £1.3bn, the equivalent of
7.1m sq ft of developments across
our key markets, whilst maintaining a
£113m investment portfolio, of which
73% of the properties have an EPC
rating of ‘C’ or higher.
Stonebridge, our jointly-owned
home building business, manages a
land portfolio capable of delivering over
1,500 new homes, with an ambition to
deliver up to 600 new homes a year.
Key Markets
Key Markets
Key Markets
Read more on pages 36 to 37
Read more on pages 38 to 41
Construction
Henry Boot
Construction
Henry Boot Construction has
extensive experience in both the
public and private sectors, including
major projects such as the £200m
regeneration of Barnsley town centre,
and The Cocoa Works, a £57m
residential development in York.
Banner Plant
Road Link
For 65 years, Banner Plant has
supplied construction plant and
equipment, operating from seven
regional depots in the North of
England.
Road Link has a 30-year contract
(two years remaining) with National
Highways to operate and maintain the
A69 trunk road between Carlisle and
Newcastle upon Tyne.
Key Markets
Key Markets
Read more on page 42
Types of revenue streams
Recurring Revenue: This revenue stream is regular and stable, which allows the
Group to maintain long term bank funding relationships.
Cyclical Revenue: This revenue stream is dependent on each economic cycle. These
profits, in good years, contribute significantly to the Group’s profits
Key to markets
Industrial & Logistics
Residential
Urban Development
09
OVERVIEWGOVERNANCESTRATEGIC REPORTFINANCIALSSHAREHOLDERSAnnual Report and Financial Statements for the year ended 31 December 2023 |
INVESTMENT
CASE
Five reasons to invest
1 Effective management and shareholder returns
The Group has a strong track record of effectively managing the balance sheet, with a modest gearing of
10 – 20%, whilst continuing to create shareholder value through our strategic focus on delivering sustainable
growth. We have delivered attractive returns through the cycle with a 10-year return on capital employed of
12.7% p.a. and total accounting return of 10.8% p.a.
2 Clear focus on three key markets driven by positive long term trends
Our strategy remains achieving long term growth through our focus on three key markets – Industrial & Logistics,
Residential and Urban Development. Whilst 2023 saw a reduction in activity across all three of our markets, we
continue to have conviction in them over the long term. Industrial property was the best performing commercial
real estate sector in 2023 and, after having a subdued year, the residential market has shown initial signs of
recovery as price falls ease, with leading indicators suggesting that 2024 will see a recovery in demand for
new homes.
3 Significant embedded value in the business
There is significant embedded value across the Group, with our strategic land and property developments held
at cost, rather than revalued on a mark-to-market basis. This includes c.101,000 strategic land plots (of which
8,501 have planning permission) and a £1.3bn development pipeline (with 59% focused on Industrial & Logistics).
Added to this we have a growing premium housebuilder, with a land bank of 1,513 plots which equates to
approximately 5.5 years’ supply based on our one year forward sales forecast.
4 Our culture and people
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.
5 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, with the commitment of achieving NZC by 2030.
10
| henryboot.co.uk 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 capital structure
We reinvest the cash generated from our
investment portfolio and construction
business into more 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 planning and
development expertise
The Group has been in business for 138
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 across our three key markets that executes our
business model successfully and delivers the value created
by the business to our stakeholders.
Our relationships
We work closely with our stakeholders,
including our landowners, key property
advisers (who inform us of potential
opportunities), and planning consultants
and legal advisers.
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.
11
OVERVIEWGOVERNANCESTRATEGIC REPORTFINANCIALSSHAREHOLDERSAnnual Report and Financial Statements for the year ended 31 December 2023 | STRATEGIC VALUE
IN THE BUSINESS
Land promotion
Continuing to grow one of the largest
strategic land banks in the country
Land bank
Regional breakdown
Scotland
9,584
Plots with Permission
8%
Plots in Planning
13%
Future Plots
79%
Residential Land Plots
100,000
80,000
77,144
North Midlands
19,188
South West
23,362
South
6,891
88,070
92,667
95,704
Total Plots
100,972
North
12,382
South Midlands
23,543
South East
6,022
100,972
60,000
40,000
51,766
64,337
68,543
73,976
79,003
20,000
10,665
14,713
0
8,312
15,421
11,259
12,865
12,297
9,431
13,468
8,501
Dec 2019
Dec 2020
Dec 2021
Dec 2022
Dec 2023
Plots with Permission
Plots in Planning
Future Plots
12
| henryboot.co.uk Property investment
& development
Future Development
Pipeline
The Group has a total development
pipeline of £1.5bn GDV (HBD
share £1.3bn), with all of these
opportunities sitting within the
Company’s three key markets.
59%
INDUSTRIAL
& LOGISTICS
28% Industrial
& Logistics:
Big Box
31%
Industrial
& Logistics:
Mid/Small
Box
20% Urban
Residential
21% Urban
commercial
Key regional
breakdown
Consented
Controlled
13
OVERVIEWGOVERNANCESTRATEGIC REPORTFINANCIALSSHAREHOLDERSAnnual Report and Financial Statements for the year ended 31 December 2023 | STRATEGIC
REPORT
The Directors present the
Group Strategic Report for the
year ended 31 December 2023.
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
have been approved by the Board and signed on its behalf by
TIM ROBERTS
CHIEF EXECUTIVE OFFICER
11 April 2024
14
| henryboot.co.uk 15
ContentsChief Executive Officer Update16Business Model20Our Marketplace22Our Strategy26Our KPIs28Responsible Business Strategy30Business Review– Land Promotion36– Property Investment and Development38– Construction42Financial Review44Principal Risks and Uncertainties48Our Risks50Section 172 Statement56Our People60TCFD66GOVERNANCEFINANCIALSSHAREHOLDERSAnnual Report and Financial Statements for the year ended 31 December 2023 |OVERVIEWSTRATEGIC REPORT CHIEF EXECUTIVE OFFICER
UPDATE
I believe we have performed well against a slowing
economy, rising interest rates and high inflation. I am clear
that our focus on high quality land and development in
prime locations has helped us to deliver a resilient set
of results”.
TIM ROBERTS
CHIEF EXECUTIVE OFFICER
WE ARE PLEASED WITH
THE RESULTS, WHICH
WERE IN LINE WITH
OUR EXPECTATIONS
Henry Boot performed relatively well against
a backdrop of a slowing economy, rising
interest rates, high inflation and decreasing
volumes in our key markets. Our focus
on high quality land, commercial property
development and housebuilding in prime
locations has meant demand for our product
remained resilient, allowing us to complete
£248.5m (2022: £241.9m) of sales. Whilst we
have worked hard to mitigate the pressures
facing the business, they have inevitably had
an effect on PBT at £37.3m (2022: £45.6m).
However, in the circumstances, we are
pleased with this result, which was in line with
our expectations.
In line with our strategy, we continue to
grow the business, with NAV, on a statutory
basis, increasing by 4.0% to £410m (2022:
£394m), generating a total accounting return6
of 6.1% (2022: 12.8%). With our 100,972
plot strategic land portfolio and £1.3bn
development pipeline all held at the lower of
cost or net realisable value, rather than being
regularly revalued on a mark-to-market basis,
there is significant latent value across the
Group not reflected in our understated NAV.
306p
NET ASSET VALUE PER
ORDINARY SHARE
(2022: 295P)
£410m
NET ASSET VALUE
(2022: £394M)
16
The rapid and sustained rise in interest rates
has affected our key markets. The resultant
increase in mortgage rates has materially
slowed down house sales, with new build
sales typically down in volume by c.20%.
House prices, at best, have stopped growing
but, in most cases, have fallen, decreasing by
1.8% in 2023 according to Nationwide.
Despite this, Stonebridge Homes (SH), has
managed to increase volume by 43% and
sell at prices slightly ahead of budget. SH is
one of our most ambitious growth targets.
The business has grown total homes sold
since setting our medium-term objectives
in 2021 by 109%. This year, reflecting 50%
forward sales (2022: 56%) and what is
anticipated to be a slowly recovering market,
we have been marginally more cautious and
expect completions to increase by 10% to
275 homes in 2024. We remain committed to
hitting our medium-term objective of scaling
this business up to 600 homes per annum.
According to Savills Research, UK greenfield
land values decreased by 6.5% in 2023.
Against this backdrop, our land promotion
business Hallam Land Management (HLM)
performed well, selling 1,944 plots (2022:
3,869) and maintaining profitability through
a higher percentage of freehold sales.
More crucially, since the start of 2024
HLM has already disposed of 276 plots
and exchanged on a further 793 plots for
completion across 2024-2026, as well
as having an additional 1,556 plots under
offer. In the current constrained planning
environment, it shows our main customers,
the national housebuilders, are still acquiring
prime strategic sites. Not all of these
transactions will contribute to profit in 2024,
as a number of sites have been sold with
| henryboot.co.uk staggered completions as housebuilders
have adjusted their land acquisition strategies
to reflect the reduction in sales volumes.
The Government has consistently failed to
carry out much needed reform of what, I am
afraid to say, is an increasingly dysfunctional
and under resourced planning system. The
delays and uncertainties caused by planning
not only affect housing and commercial
property, but also investment and productivity
in the UK. The recent CMA market study into
housebuilding (which we contributed data
to) concluded that land banking was more
a symptom of the issues identified with the
complex planning system, rather than it being
a primary reason for the shortage of new
homes. The Government’s latest updates
to the National Planning Policy Framework
(NPPF) are at best tactical but may lead to
marginally speeding up development plan
preparation. Labour have made it clear if they
are in government they will prioritise reviewing
planning. Our plots with planning have fallen
in recent years to 8,501 (2022: 9,431),
primarily due to difficulties of the planning
system, accentuated by delays during
COVID. However, at 13,468 (2022: 12,297)
we now have a high number of plots in for
planning and an additional 8,227 have an
allocation or draft allocation. Given our long
term track record we believe we are as skilled
as anyone in the country at navigating the
planning system. So, as we continue to grow
the portfolio, and convert applications, we
expect to build back up our valuable store of
plots with planning consent.
On industrial investment, in line with the
slowdown in the wider UK real estate
market, volumes were down 52% in 2023
to £5.1bn according to JLL. There was
also lower activity in occupational markets,
with Gerald Eve data showing that take
up declined c.30% in 2023 to 44.5m sq ft.
Nevertheless, when factoring in that 2022
demand was boosted by COVID, last year’s
take up is now back in line with the 2015-19
average. However, industrial performance
remained strong with rental value growth at
6.9% during 2023 according to the CBRE
UK Monthly Index, meaning capital values
were up by 1.4% despite further modest
yield expansion. This sustained occupier
demand allowed us to successfully complete
661,000 sq ft of industrial development, all
of which was pre-let or pre-sold. Industrial
will continue to be the largest element of
our development business going forward.
Our aim is to drawdown on our £1.3bn
Gross Development Value (GDV) pipeline
(59% of which is in industrial) over the next
twelve months or so to build back up our
committed programme towards our medium-
term objective of completing £200m of
development per annum. For the time being,
new development will be pre-sold or pre-let
led, and therefore likely to contribute towards
profit in 2025 and beyond.
Cities are continuing to recover from the
social and economic effects caused by
COVID, not least both businesses and
people’s slightly misguided, and now
seemingly reducing, desire to work from
home. The major cities outside of London
where we focus will, therefore, continue to
attract people to live, work and play. This
is demonstrated by the rise in residential
rents this year at a very healthy 8.3%,
although the increase in interest rates has,
for the time being, cooled investor demand
for funding Build-to-Rent (BtR). However,
whilst investment activity has fallen across
all real estate sectors, BtR has proven
more resilient with investment volumes
of £4.3bn during 2023, down a modest
3% on 2022 according to Cushman &
Wakefield. Likewise, the demand for
prime office buildings with strong ESG
credentials, as businesses look to fulfil their
NZC commitments and attract talent back
into the office, is still healthy with regional
prime office rental growth of 5.0% in 2023.
Investor demand for prime offices, like that
for BtR, has waned with the rise in interest
rates but, as rates fall, investors are likely to
return to these growth markets.
With committed development of £240m (HB
share) in 2022, we have tactically reduced our
committed programme to £159m (HB share)
in 2023 as markets have slowed, of which
50% is pre-let or pre-sold (including units
reserved at Setl). A key focus for 2024 will
be converting customer interest in our three
speculative schemes which will all complete
this year: Setl – our premium apartments
to sell in the heart of the Jewellery Quarter
in Birmingham City Centre; Island – our
prime, NZC office building in Manchester
City Centre; and Rainham our high quality
NZC industrial development in Greater
London. Our target is to sell all apartments
in Setl this year and, in this respect, we have
reservations/exchanged in-line with pricing
expectations on 30% already. On Island, we
are now looking to lease the building on a
floor-by-floor basis and our aim is to secure
our first letting prior to completion in Q3 24.
On Rainham, which completes in Q2 24, our
aim is to have the majority of the scheme let
within a year. As we do this the level of pre-let
/ pre-sold will rise above our strategic target
of 65% which will give us greater scope to
replenish our committed developments.
The Group’s investment portfolio (IP) has
outperformed again, with a total return of
6.7%, compared to the CBRE UK Index total
return of 1.7% in 2023. A capital return of
1.5% against commercial markets, which
fell by 1.4%, helped the market value of the
portfolio grow to £112.9m (2022: £108.6m).
Our structural weighting towards industrial
assisted this out performance and, as
we did last year, we helped ourselves by
making selective accretive sales. We sold
four investments plus Banner Cross Hall, the
Group’s former HQ, for a total of £12.7m
at an average 23% premium to December
2022 valuations. We also retained three
completed developments in Luton, Markham
Vale and Pool with a combined value of
£21.2m. We have been patient in growing
the IP to its medium-term target of £150m
and based on market corrections in 2022
and 2023, this has proven to be the correct
approach. Going forward there will be plenty
of opportunity to grow this portfolio.
Our construction segment, like the rest of the
UK construction market, had a challenging
year. Henry Boot Construction’s (HBC)
performance on two of our largest projects
of which both are in the centre of Sheffield,
the BtR Kangaroo Works (£40m contract
value) and the Heart of the City mixed use
scheme (£42m contract value), were hit
by the availability of materials and suffered
delays. HBC starts 2024 with 49% of its
order book secured (against a target of
65%), as we remain determined not to take
on work where either the terms or pricing
are commercially unattractive. With Pre-
Construction Services Agreements (PCSAs)
of £50m there are opportunities for us to
secure further new work in 2024 but, again,
some of this turnover could slip into 2025.
Banner Plant traded slightly below budget
in a market where demand has fallen, and
sales have been volatile. Road Link (A69),
yet again, has traded broadly in line with
expectation. Significantly, given that S&P UK
Construction PMI has been running below
the neutral 50.0 level for much of 2023,
showing a fall in activity, the construction
segment overall still contributed to the
Group’s profit.
17
GOVERNANCEFINANCIALSSHAREHOLDERSAnnual Report and Financial Statements for the year ended 31 December 2023 |OVERVIEWSTRATEGIC REPORT CHIEF EXECUTIVE OFFICER
UPDATE CONTINUED
Cost inflation remained challenging
throughout 2023, and, whilst we have
learned that there can be external shocks,
it feels that its effect will be more subdued
in 2024. We are planning for build cost
inflation in SH and HBC to be running at
between 3-4%.
In line with our ambition to grow the
business, we have invested a combined total
of £60.4m in increasing our strategic land
portfolio to 100,972 plots, completing and
building out our high-quality development
programme, and growing the landbank of our
premium housebuilder, SH. This has helped
us to increase our capital employed by 4% to
£417m. It has, however, meant our gearing
has risen to 19.0% (net debt £77.8m), but
is still within our optimal stated range of 10-
20%. Whilst the Group’s £105m facility runs
until January 2025, we have agreed terms
with existing lenders and expect to have a
new facility in place during Q2 24.
our key markets has been a difficult year.
We are now firmly focused on 2024 and
our medium term growth targets – which
remain very achievable. Whilst there is a path
to lower inflation and reduced interest rates
the expected recovery is very likely to be
weighted towards the second half of the year.
More detail on this is in the outlook, following
a review of our medium term targets and
operations below.
So, all in all we are pleased with the way the
business has performed, during what for
Outlook
Looking ahead it feels the economy has
turned a corner, with inflation falling and the
path of interest rates trending down. This is
very likely to move us on from the shallow
recession we faced at the end of 2023 into
a recovering economy. This is encouraging
news for our rate sensitive markets.
The demand for houses and, therefore,
residential land should pick up. Lower
rates will also stimulate investor interest in
commercial property and BtR. All of this in
turn boosts construction activity. However,
planning uncertainties and delays will
continue to be a problem and we also face
the unpredictability of a General Election
during 2024.
Not surprisingly, we do not have clear
visibility on how all of this will unfold and,
with key transactions to execute and
complete this year in both land promotion
and development, we expect 2024 results
will be heavily second half weighted.
We have confidence in the long term
fundamentals of our key markets, with
growing conviction that our concentration
on prime, high quality buildings and projects
together with our focus on developments
with strong ESG credentials will reward
us with improved liquidity and enhanced
returns. Our balance sheet remains rock
solid and, with agreed terms from our
banks on renewing and enlarging our
facilities expected to be in place during
Q2 24, we have the resources to continue
to grow the business in line with our
medium term targets.
TIM ROBERTS
CHIEF EXECUTIVE OFFICER
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 Property Return.
Total Accounting Return.
More details can be found on page 47.
18
| henryboot.co.uk CASE STUDY
OUR NEW HEAD OFFICE
In November 2023 we relocated our head office to the Isaacs Building,
in Sheffield city centre.
We have taken 12,800 sq ft of space
across the top three floors of the Isaacs
Building, providing our team and partners
with a more contemporary, sustainable
and flexible workspace. Over 90 people
from across our Group are based at
Isaacs, who can now take advantage of
a broad range of spaces to complement
multiple working styles and to better
support their health and wellbeing.
The move also plays a significant role in the Company’s aim to
reduce its carbon footprint and support its goal of being net zero
carbon by 2030, with an expected carbon emission reduction
of 79% compared to the former HQ at Banner Cross Hall. Since
2019, Henry Boot has reduced both its Scope 1 and 2 emissions
by 14%. An ambition to accelerate reductions in energy use and
emissions was a material factor behind the move.
The seven-storey Isaacs Building has been developed with
sustainability at its core, achieving a BREEAM ‘Very Good’
rating. To further enhance the building’s energy efficiency, it has
been connected to Sheffield’s District Energy Network, providing
low-cost, sustainable energy.
The new office supports Henry Boot’s ambitious growth plans by
encouraging greater collaboration and cohesiveness across our
diverse network of teams and businesses, as well as attracting
new talent and supporting retention.
Colleagues based in the Isaacs Building benefit from the
building’s wellbeing-focused approach, with collaboration zones,
breakfast bars, cycle storage, changing facilities, shower rooms
and surrounding complementary retail and leisure facilities in the
city centre.
The new city centre location also takes the firm back to its
roots, bringing it closer to its original headquarters on Moore
Street. The Isaacs Building, situated on Charles Street, around
half a mile from Moore Street, was built between 1904-05 by
paperhanging merchant David Isaacs and has recently been
refurbished and extended to provide over 38,375 sq ft of high-
quality workspace.
19
GOVERNANCEFINANCIALSSHAREHOLDERSAnnual Report and Financial Statements for the year ended 31 December 2023 |OVERVIEWSTRATEGIC REPORT BUSINESS
MODEL
Our Group is made up of six businesses operating across three key markets:
Industrial & Logistics, Residential and Urban Development.
From acquiring land and obtaining planning permission through to development and maintaining an investment portfolio, we work across the
whole property value chain. And, while each business operates as its own profit centre, we encourage collaboration across the Group.
Key resources and
relationships
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 60 to 64
Portfolio and land bank
HBD has a £1.3bn pipeline, across our
three key markets, whilst Hallam Land
Management has increased the land
bank to 100,972 plots in the portfolio.
Read more on pages 12 to 13
Group strategy framework
(focus on three key 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 26 to 27
Supply chain
Our relationships with our supply chain
are 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 64
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 34
20
Our expertise
Land promotion
Hallam Land
•
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
HBD, Stonebridge
• 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 pre
funding opens up opportunities. The
businesses can commit to long term
projects, such as complex multi-site
regeneration schemes.
Construction
Henry Boot Construction,
Banner Plant, Road Link
• Project delivery in both the public
and private sector.
• Creating trusted relationships and
repeat business.
• Supplying a wide range of plant
equipment efficiently.
Our diversified
business
We balance the business in
the following ways:
• Our land promotion business
has an extensive portfolio which
mitigates risk while planning
permissions are obtained.
• Our property development and
investment business self-funds
some projects, while others
are delivered as joint ventures
or forward funded. Its portfolio
generates a significant rental
income, which facilitates
investment in more diverse
operational activities with higher
returns.
• Our construction business also
generates income that can be
reinvested into a portfolio of
land and property development
projects.
• Finally, a significant amount of
equity is retained in the business
to lessen the need for external
borrowing.
Our Capital Structure:
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 developments generates
cyclical revenue. These activities
are riskier and give varying amounts
of profit through each economic
cycle. These profits, in good years,
contribute significantly to the stable
profits from construction and property
investment.
| henryboot.co.uk Investment into
land aquisition
and planning
permission process
£
£
Identify
opportunities
and acquire land
Land
promotion
Cyclical
revenue
Cyclical
revenue
Construction
Recurring
revenue
Sale
of land
Land
promotion
Obtain
planning
permission
Land
promotion
Sale of
developments
Rental
income
Property investment
& development
Property investment
& development
Development
of site
Investment
portfolio
Property investment
& development
Property investment
& development
Property
development
Property
investment
The impact we are making
Our value generation
UN Sustainable Development Goals
When creating our Responsible Business Strategy, we engaged
our stakeholders to understand which of the UN Sustainable
Development Goals (SGDs) 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.
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 that 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 the 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.
21
GOVERNANCEFINANCIALSSHAREHOLDERSAnnual Report and Financial Statements for the year ended 31 December 2023 |OVERVIEWSTRATEGIC REPORT
OUR
MARKETPLACE
In 2023 our three key markets were impacted by a slowing economy, stubbornly high inflation and rising interest rates. Whilst transaction
volumes reduced in all our markets, they showed their resiliency with continued demand for our high-quality buildings and prime projects,
albeit not at the same levels as previous years.
We still believe our markets are driven by long term trends such as retail moving online, population growth and the success of the main cities
in terms of economic growth, education and health provision, leaving us with continued conviction that these markets will drive our growth
and performance.
Key long term structural trends affecting our business
Urbanisation
Technology
According to the UN, the population of the UK 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 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. Research by Centre for Cities
shows that being “close to restaurants/leisure and cultural
facilities” is by far the biggest factor in determining city
centre residents’ location decisions.
The digital landscape is constantly evolving and will 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. In real estate, there has been greater
use of property technology for data and analytics as well
as to help automate and streamline tasks resulting in
increased demand for warehouse space from third party
logistics operators, online retailers and manufacturers. The
emergence of AI also has enormous potential to reshape
real estate including the emergence of new markets.
Demographics
Environment
The UK’s population continues to grow, albeit at a slower
rate than previously, with low birth rates and people living
longer. 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.
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 the need
to reverse environmental degradation has created higher
demand for energy efficient green buildings with a rising
brown discount for buildings that do not offer such
characteristics.
22
| henryboot.co.uk INDUSTRIAL AND LOGISTICS
Market Overview
Warehouse take up has slowed over the last year, with volumes
declining by c.30% to 44.5m sq ft in 2023 according to Gerald Eve.
Whilst this is a reduction in demand from 2022, annual take up is
now back in line with the pre-COVID levels of 2015-2019, after the
pandemic sparked substantial demand for warehouses from online
retailers due to a large spike in internet sales.
Gerald Eve believes that e-commerce remains a long term structural
driver of demand for logistics space, with the emergence of other
businesses that will also make an important contribution, such
as green energy production and EVs as well as companies near
shoring operations to improve supply chain resilience.
High street retailers are also looking to upgrade their logistics
to more sustainable accommodation as well as increase their
e-commerce offering.
Industrial rental growth remained strong in 2023, with the sector
delivering rental growth of 6.9% according to the CBRE UK Monthly
Index, which was the highest within the commercial property sector.
Industrial property capital values also increased by 1.4% against
value declines in both retail and offices, reflecting the limited supply
of high-quality warehouse space.
Warehouse take-up and availability
Annual rental growth
100
90
80
70
60
50
40
30
20
10
0
10
9
8
7
6
5
4
3
2
2
1
1
0
0
14%
12%
10%
8%
6%
4%
2%
0%
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
3
2
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
3
2
0
2
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
23
GOVERNANCEFINANCIALSSHAREHOLDERSAnnual Report and Financial Statements for the year ended 31 December 2023 |OVERVIEWSTRATEGIC REPORT OUR MARKETPLACE
CONTINUED
RESIDENTIAL
Market Overview
The latest housebuilding figures show that the Government has
continued to fall short of its annual target to build 300,000 new
homes in England, which reflects the delays and uncertainties
caused by the planning system. According to Glenigan, in 2023 a
total of 264,994 plots achieved planning permission, a decrease of
18% on the prior year. Whilst the Group has good levels of stock
with planning permission to meet demand from housebuilders as
the delays in achieving planning continue, the Government needs
to carry out much-needed reform of the system. The complexity of
the system not only affects the housing and commercial market, but
also investment and productivity in the UK.
The UK housing market remained subdued during 2023 with house
prices decreasing by 1.8% according to Nationwide. Lower volumes
have been a symptom of the sustained rise in interest rates, which
in turn increased mortgage rates resulting in affordability becoming
more stretched for potential buyers. At the beginning of 2024, there
have been encouraging signs that mortgage rates are edging down,
which in turn should restore the confidence of home buyers.
Residential planning approvals in Great Britain
Housebuilding: Permanent units completed in
Great Britain
400,000
350,000
300,000
250,000
200,000
150,000
100,000
50,000
0
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
3
2
0
2
25,000
250,000
20,000
200,000
15,000
150,000
10,000
100,000
5,000
50,000
0
0
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
3
2
0
2
Number of units (LHS)
Number of projects (RHS)
All dwellings
Source: Glenigan
Source: Office for National Statistics
24
| henryboot.co.uk
URBAN DEVELOPMENT
Market Overview
The Urban Development market suffered the biggest disruption as a
result of COVID. Cities saw a reduction in footfall as people chose to
retreat from them and businesses supported homeworking reducing
the demand for office space. Nonetheless, we are now seeing a
reversal of these practices, with cites becoming more appealing to
people again and an array of businesses either encouraging people
to return to offices or making it mandatory to return full time.
This is demonstrated as residential rents in 2023 saw a very healthy
8.3% rise according to ONS, supporting continued investor demand
for BtR, with volumes remaining resilient at £4.3bn. Demand for
prime offices in regional cities with strong ESG credentials has also
picked up with rental growth of 5.0% in 2023.
Rental value growth (Dec 2013=100)
Office rental growth
140
130
120
110
100
90
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
3
2
0
2
7%
6%
5%
4%
3%
2%
1%
0%
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
3
2
0
2
England Private Housing
UK Commercial Property
Big Nine regional offices
Source: Office for National Statistics and CBRE
Source: Avison Young
25
GOVERNANCEFINANCIALSSHAREHOLDERSAnnual Report and Financial Statements for the year ended 31 December 2023 |OVERVIEWSTRATEGIC REPORT OUR
STRATEGY
Group strategic priorities
The Group set a medium-term strategy in 2021 to grow the size of the business through a 40% increase in capital employed to over £500m
and a targeted focus on three key markets: Industrial & Logistics (I&L), Residential and Urban Development, while maintaining ROCE within a
10-15% range.
Our key metric of capital employed has risen to £417m (2022: £399m), and our ROCE at 9.9%, when rounded, was within our targeted
range of 10-15%. Over the last two years we have delivered a ROCE of 10.8% p.a. which we believe to be a very credible performance
given the decline in commercial property and land values of 22.1% and 8.6% respectively, from their mid-2022 peaks. We maintain our belief
that we can achieve our main medium-term target of £500m capital employed, whilst continuing to generate attractive returns.
Key Strategic Pillars
Our strategy
is shaped
by four key
strategic
pillars and
focuses
on three
long term
markets
Long term
Markets
Value
Delivery
Returns
Responsible
Approach
Risk
26
Safety and
environment
We aim to be the
safest place to work
in our markets and
be respectful to our
environment
Growth
Delivery
People
Grow capital
employed to £500m
by investing in our
three key markets
Adopt emerging
working practices,
investing and
collaborating to
deliver our
operational targets
Open, progressive,
high performing
business governed by
clear objectives which
engages a diverse
range of talent
Industrial & Logistics
Residential
Urban Development
Property Development
& Investment
Land Promotion
Home Building
Construction
Grow Capital Employed to over £500m + Target ROCE 10–15% +
Maintain a progressive dividend policy
People Strategy + ESG
Optimum gearing of 10–20% + minimum 65% committed development
programme pre-let/pre-sold
| henryboot.co.uk
EVOLVING
STRATEGY
Group strategic priorities
As the Group strategy continues to progress, we have evolved our strategic framework to embed our Responsible Business commitments.
Whilst the fundamentals and the commercial medium term objectives of our strategy remain unchanged, we now also measure ourselves on
five pillars: performance, people, partners, places, and planet.
Although the primary measure of success is financial performance, we know that we also need to make a wider impact on a variety of
factors that will help ensure we remain the high performing, responsible long term business we want to be.
Our existing
Strategic
Pillars:
Safety and
environment
People
Growth
Our existing
Responsible
Business Strategy:
People
Partners
Places
Our New
Integrated
Strategy:
Performance
People
Partners
Delivery
Places
Planet
Planet
27
GOVERNANCEFINANCIALSSHAREHOLDERSAnnual Report and Financial Statements for the year ended 31 December 2023 |OVERVIEWSTRATEGIC REPORT OUR KEY PERFORMANCE
INDICATORS
Objective
and Medium-
term Target
To grow capital
employed to £500m
Medium-term
Target
£500m
KPI
Capital Employed
23
22
21
20
19
£417m
£399m
£376m
£365m
£352m
Performance
Commentary
On track to grow
capital employed to
over £500m
Aim for 2024
To maintain
capital employed
growth in line with
strategic target
To generate a ROCE
of 10–15%
ROCE
Medium-term
Target
10–15%
9.9%
12.0%
9.6%
23
22
21
20
4.9%
19
14.8%
Lower operating profit
reduced ROCE to be
marginally out of our
target range
To be around the lower
end of stated target
range, however we
maintain our aim to be
within 10-15% through
the cycle
Link to Strategic
Pillars and Group Risk
Strategic Pillar
Risks
3
5
Strategic Pillar
Risks
4
8
9 10 11 12 14
Grow Hallam Land’s
plot sales
Plot Sales
Medium-term
Target
c.3,500 pa
Grow HBD
development
completions
Medium-term
Target
c.£200m
23
22
21
20
19
1,944
2,000
3,869
3,008
3,427
Development
Completions
23
22
21
£111m
£83m
£69m
20
£55m
19
£404m
1,944 plots in FY 23,
with returns from the
reduction in plots sold
offset by a significant
sale of freehold land
To exceed the current
five year average of
2,850 plots pa
Strategic Pillar
Increased development
completions to £111m
in FY 23 and begin the
year with a committed
programme of £159m
(HB share)
In the current market,
the committed
programme has been
reduced; however,
we have optionality to
build it back up from
our future pipeline
of £1.3bn
Risks
3
4
5 11 12 13 14
Strategic Pillar
Risks
3
4
5 11 12 13 14
Grow investment
portfolio value
Medium-term
Target
£150m
Investment Portfolio
23
22
21
20
19
£113m
£106m
£126m
£92m
£70m
Value increased
primarily due to retained
I&L developments
To maintain progress
towards stated target
Strategic Pillar
Risks
3
4
5 11 12 13
Grow Stonebridge
Homes house sales
Unit Completions
Medium-term
Target
c.600 units
23
22
21
20
19
120
115
175
159
251 homes completed
in FY 23, compared to
delivery target of 250
251
Continue to target
increased annual
output in 2024, albeit
at a slower growth rate
at 275 homes
Strategic Pillar
Risks
3
4
5 11 12 13 14
Henry Boot
Construction order
book secured
Medium-term
Target
>65%
Order Book Secured
23
22
21
20
19
49%
68%
80%
100%
95%
Difficult market
conditions impacting
order book for 2024,
which is 49% secured
In response to securing
below target for 2024,
the opportunity pipeline
has been refocused,
with £50m PCSA’s in
progress
Strategic Pillar
Risks
3
4
8 13 14
28
| henryboot.co.uk Objective
and Medium-
term Target
Work towards a more
coordinated H&S
approach to ensure
our Group is a safe
place to work
Medium-term
Target
<395
Reduce directly
controlled GHG
emissions
Medium-term
Target
20% reduction
KPI
Accident
Incident Rate
785
23
22
21
20
19
233
202
630
466
GHG Emission CO2e
23
22
21
20
19
2,833
2,930
2,706
2,562
3,313
Performance
Commentary
The Group’s AIR
increased due to
Banner Plant not
meeting their individual
Health and Safety
KPIs, which impacted
the Group’s overall
incident rate
Aim for 2024
To reaffirm our
robust health and
safety approach,
whilst launching
new initiatives that
will be implemented
throughout 2024
to mitigate further
incidents
Scopes 1 and 2 GHG
emissions reduced by
14% against our 2019
baseline
To continue
implementing NZC
strategy across
the Group
Link to Strategic
Pillars and Group Risk
Strategic Pillar
Risks
4
8
9 10 11 12 14
Strategic Pillar
Risks
4
8
9 10 11 12 14
Seek high levels of
employee satisfaction
and engagement
Employee Net Promoter
Score (eNPS)
Medium-term
Target
40 (eNPS)
23
22
21
20
19
30 (eNPS)
39 (eNPS)
26 (eNPS)
46 (eNPS)
40 (eNPS)
Whilst our eNPS
reduced, the score is
still considered very
good, and higher than
construction and heavy
industry benchmarks
To address feedback
that has arisen from
the survey
Strategic Pillar
Risks
4
8
9 10 11 12 14
Create a high
performance culture
led by a range of
training opportunities
Medium-term
Target
4 days (per employee)
L&D Interventions
Delivered
(per employee)
23
22
21
20
19
4.0 days
3.7 days
2.5 days
2.8 days
3.3 days
The Group was
within the stated
target number of
L&D interventions
To continue
implementing a wide
range of training
opportunities to
support a high
performance culture
Strategic Pillar
Risks
4
8
9 10 11 12 14
Key to Strategic Pillars
People Partners Places
Planet
Performance
Key to Group Risks
1 Safety
2 Environmental & climate change
6 Cyber
7 Pensions
11 Land sourcing
12 Land demand
3 Economic
4 People & culture
5 Funding
NOTES:
8 Construction contracts
13 Political
9 Property assets
10 Property development
14 Housebuilding
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 Property Return. Total Accounting Return.
More details can be found on page 47.
29
GOVERNANCEFINANCIALSSHAREHOLDERSAnnual Report and Financial Statements for the year ended 31 December 2023 |OVERVIEWSTRATEGIC REPORT
RESPONSIBLE
BUSINESS STRATEGY
Our Responsible Business Strategy sets out medium-term objectives for the
business, which we will aim to achieve by the end of 2025.
It incorporates the findings from our stakeholder engagement and our existing responsible business initiatives to provide clear guidelines
on how we intend to deliver our commitments over the coming years. We will collaborate with our people and partners with passion and
ingenuity to create long-lasting and genuine value and impact. Demonstrating our commitment regularly will be essential, so that we
showcase our successes and the challenges we have overcome.
Our Material Issues
Material Issues
What are the risks?
Where do we see opportunities?
1
Employee
Health and
Wellbeing
We recognise the increasing pressure that our
society faces and the challenges that poor
physical and mental health pose. Without strategic
intervention, we face the risk of increased employee
absence and burnout negatively impacting our
productivity and workplace culture.
2
Equality,
Diversity and
Inclusion (EDI)
The built environment sector has traditionally
struggled to attract, retain, and progress a
diverse pool of talent. Continuing failure to do so
poses a risk of increased skills gaps (particularly
in operational roles) exacerbated by an ageing
workforce, a restricted workplace culture, and
limited opportunities for growth,
3
Achieving our
Net Zero Carbon
(NZC) Target
4
Education
Engagement
As our business aspires to grow and increase
productivity, there is a risk that our direct GHG
emissions could rise.
It is increasingly difficult to attract diverse talent
(particularly in operational roles) and a failure
to do so could lead to skills gaps and reduced
productivity and growth.
5
Community
Investment
We recognise the increasing challenges that our
communities face as a result of the legacy of COVID,
cost of living crisis and rising interest rates. Social
Value continues to be an important consideration for
the public sector when awarding work and a failure
to demonstrate authentic investment and credentials
risks the ability to win bids.
6
Responsible
Consumption
and Nature
Stewardship
Adapting to climate change goes beyond just
reducing GHG emissions and also accounts for how
businesses use resources and protect the natural
world. We rely on the natural world to produce
many of the materials required for our buildings
and a failure to limit our consumption and protect
natural habitats could affect our ability to procure
the materials we require and remain compliant with
evolving legislative and regulatory demands.
30
Our Health and Wellbeing Strategy aims to embed a
collaborative relationship between the Group and our
people to promote a positive and open culture relating
to wellbeing. We aspire to embed a culture of people-led
leadership and review wellbeing at all levels of our business
to ensure that we continue to invest in and protect our
greatest asset – our people. Taking this approach provides
us with the opportunity to evolve our workplace culture and
attract a broader range of diverse talent to our business.
Our EDI Steering Group works closely with our senior
management to collate feedback and review and implement
initiatives aimed at ensuring Henry Boot is a welcoming,
accessible and diverse workplace. Ongoing reviews of our
recruitment processes and employee data are enabling
us to identify areas for improvement and informing
programmes to continue to engage with diverse talent.
Taking this approach presents an opportunity to strengthen
our business resilience, support our growth aspirations, and
better represent the communities we serve’.
Our Group Climate Forum reports to our senior
management team and aims to share knowledge and
collaborate to reduce our direct GHG emissions. We
continue to adapt our approach to reduce our impact and,
in doing so, offer schemes that meet market and investor
demand as well as attract talent to work for our business.
Our Group invests significant amounts of time and resources
into providing leading careers education to a broad range
of learners. We frequently engage and collaborate with
education leaders and specialists to identify where we can
create the greatest impact and aspire to create excitement
about the opportunities in our business and industry.
We are well underway to achieve our medium term target of
generating £1 million of value for our community partners.
We continue to invest significant funds, resources and
time to create long lasting and genuine social value in the
communities where we work. A collaborative approach
enables us to showcase a sincere commitment and
understand the issues our communities face. As a result we
are well regarded for our social value performance.
Our pledge to develop and implement a Nature Stewardship
Strategy in 2024 demonstrates our commitment to
protecting the habitats where we work and source our
materials. We continue to engage partners and our supply
chain to reduce our consumption of materials and utilise
internal subject matter and external experts to shape our
approach to ensure it is ambitious and collaborative.
| henryboot.co.uk
Our strategy is to embed ESG into our
commercial decision making
To read more about our
Responsible Business Report please visit
www.henryboot.co.uk
Our People
Objectives
Promoting positive
health and wellbeing
for our people
Creating an equal,
inclusive and diverse
workplace
2025 Target
2023 Performance
Aligned
UN SDGs
Develop and deliver a
Group-wide Health and
Wellbeing Strategy with
a range of activities and
resources available to all.
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.
The Health and Wellbeing Strategy and Programme
was launched to the Group in February 2023 with a
range of resources, activities and guidance delivered
throughout 2023 including activities and case studies
on mental health, neurodiversity, male health, the
menopause, physical fitness, and pregnancy loss.
We have made strong progress in overall female
representation of our overall workforce, which has
increased to 28% (25% in 2022).
Progress in increasing female representation of our
management has aligned at 28% (24% in 2022).
Reduce our gender pay gap
to 20% (28% in 2020)
Our 2023 gender pay gap was 20.98% (21.43% in
2022).
Begin reporting on our
ethnicity pay gap and set
a 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 analysis of our employee data to begin
reporting and establish a target to increase our ethnic
diversity in 2024.
Deliver EDI training to 100%
of our people.
We delivered expert-led EDI training to the majority of
our workforce in 2022 and all new employees must
complete a mandatory EDI e-learning module as part
of our onboarding process. Our EDI Steering Group
is currently reviewing our EDI training programme to
ensure that we can deliver engaging and practical
training for our people.
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 2024.
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, conducts
thorough reviews of ESG capabilities and reports
performance against their ESG Manager Review
Framework. The Group regularly shares information
about pensions with employees.
31
GOVERNANCEFINANCIALSSHAREHOLDERSAnnual Report and Financial Statements for the year ended 31 December 2023 |OVERVIEWSTRATEGIC REPORT
RESPONSIBLE
BUSINESS STRATEGY
CONTINUED
Our Places
Objectives
Developing
collaborative charity
partnerships
Aligned
UN SDGs
2025 Target
2023 Performance
Contribute £1,000,000 of
financial (and equivalent) value
to our charitable partners
(including donations of funds,
resources, sponsorship and
pro-bono support).
We contributed over £225,000 to a range of our
charitable and community partners including
financial donations and sponsorship, employee
fundraising, and expertise, time and resources and
services 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.
We concluded the relationship with our Group
Charity Partner Place2Be having contributed
over £55,000 to support their vital work. We also
continued to develop existing and new strategic
charity partnerships and to align all 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.
We contributed over 3,000 volunteering hours 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.
We engaged approximately 2,280 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.
We offered 22 work experience placements and
10 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.
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 have been
incorporated into our Early Careers Strategy, which
has been approved by senior management for
implementation in 2024.
32
| henryboot.co.uk
Our Planet
Objectives
Reducing our
greenhouse gas
(GHG) emissions
2025 Target
2023 Performance
Reduce Scope 1 and 2 GHG
emissions by over 20% to
support reaching NZC by 2030.
Our Scope 1 and 2 GHG emissions in 2023 were
2,833 tonnes (a 14% reduction against our 2019
baseline).
Replace 50% of van fleet with
electric vehicles (EVs) or other
sustainable alternatives (100%
by 2030).
Banner Plant has commissioned the installation of
new electric vehicle (EV) charging points and now
have two electric vans undertaking pilots to identify
challenges ahead of further electrification.
Aligned
UN SDGs
The scale of ambition to transition our fleet has been
challenging and we continue to introduce additional
measures whilst the pilots are undertaken including
further driver training and engagement and a review
of alternative lower carbon fuel types.
Banner Plant’s HGV and crane truck fleet are fully
EURO6 compliant.
Henry Boot Construction made significant
reductions in the volume of fuel consumed on their
sites as reliance on traditional generator demand
was increasingly replaced by mains electricity and
they continue to trial sustainable generator solutions.
Energy Impact Limited has completed audits of all
our directly controlled offices and depots. Short term
recommendations are currently being implemented.
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.
Reduce non-sustainable
business mileage by 20%.
Business mileage in 2023 was 20% less than the
2019 baseline.
Use biodiesel as we electrify
our fleet.
Consuming resources
responsibly
Cut avoidable waste by 99%
for all our construction sites
(100% by 2030).
We have continued to monitor the market for
biofuels and the credibility of this fuel type and
are engaging with a range of providers to assess
potential options for investment.
In 2023, 99% of avoidable waste was achieved on
Henry Boot Construction’s sites.
To be a steward
of nature
Reduce consumption of
avoidable plastic by 50%
and undertake Group-wide
waste and water monitoring to
establish reduction targets.
We are engaging with a number of waste
management providers to assist the Group
to baseline our use of plastic and creation of
waste, with a Waste Management Plan due for
implementation in 2024.
Introduce a Group-wide
Sustainable Supply Chain
Standard to support supply
chain collaboration and
innovation.
Collaborate with commercial
partners to achieve biodiversity
net gains (BNG) on our
projects and enhance and
preserve natural environments
where we work.
Deliver nature stewardship
training to 100% of our
people.
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.
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. Our Nature Stewardship
Strategy will be developed and published in 2024.
Teams from the business attended a biodiversity
seminar with specialist industry speakers. A broader
range of training and education will be provided
across the Group in 2024.
33
GOVERNANCEFINANCIALSSHAREHOLDERSAnnual Report and Financial Statements for the year ended 31 December 2023 |OVERVIEWSTRATEGIC REPORT
RESPONSIBLE
BUSINESS STRATEGY
CONTINUED
Our Partners
Objectives
Being a partner of choice
for our key markets
Delivering high impact
collaborations
2025 Target
2023 Performance
Aligned
UN SDGs
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.
Provide resources and
support to enable our
supply chain to support the
objectives of this strategy.
The Living Wage Foundation has been engaged
and an internal review is 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 with our supply chain.
A range of support has been offered to our supply
chain including toolbox talks, bespoke mental health
awareness information from the Lighthouse Charity,
and guidance on regulations and best practice. We
continue to provide bespoke and extensive support
to our sub-contractors to provide them with support
during turbulent market conditions.
Engage and collaborate with
our partners to generate the
highest possible social value
for our community and
charity partners.
We have routinely engaged with 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 members to share
knowledge and best practice. We were proud to be
a founding member of the BITC EDI Yorkshire and
Humber Steering Group.
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 are contributory members of the UK Green
Building Council (UKGBC) and 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.
34
| henryboot.co.uk
COLLOCO – A 200,000 SQ FT OFFICE SCHEME
LOCATED IN THE ST JOHN’S DISTRICT OF
MANCHESTER CITY CENTRE, WHICH WILL
COMPRISE 16 STOREYS OF HIGH-QUALITY
FLEXIBLE OFFICES DESIGNED WITH THE AIM OF
ACHIEVING HIGH SUSTAINABILITY CREDENTIALS.
35
GOVERNANCEFINANCIALSSHAREHOLDERSAnnual Report and Financial Statements for the year ended 31 December 2023 |OVERVIEWSTRATEGIC REPORT BUSINESS REVIEW
LAND PROMOTION
HLM performed well in 2023, selling 1,944 plots at seven
locations and although the number of plots sold in the
year decreased, average gross profit per plot increased
to £15,480 due primarily to a significant freehold sale at
Tonbridge, Kent, offsetting the volume reduction”.
NICK DUCKWORTH
HALLAM LAND MANAGEMENT LIMITED
WE CONTINUE TO GROW
ONE OF THE LARGEST
STRATEGIC LAND BANKS
IN THE COUNTRY
1,944
PLOTS SOLD
(2022: 3,869 PLOTS)
100,972
PLOTS IN STRATEGIC LAND
PORTFOLIO (2022: 95,704 PLOTS)
36
HLM performed well in 2023, achieving an
operating profit of £21.4m (2022: £17.3m)
from selling 1,944 plots (2022: 3,869) at
seven locations. Although the number of
plots sold in the year decreased, average
gross profit per plot increased to £15,480
(December 2022: £6,066) due primarily to a
significant freehold sale at Tonbridge, Kent,
offsetting the volume reduction.
UK greenfield land values decreased
by 6.5% in 2023 according to Savills
Research. Transactions slowed significantly
relative to 2022, with downward
pressures on land values reflecting a fall
in housebuilders’ new build sales rates.
However, with 16% fewer homes granted
planning consent in England during 2023
compared to 2022, there continues to
be competition for available prime sites
resulting in land values in those locations
being more resilient.
HLM’s land bank has grown to 100,972
plots (December 2022: 95,704 plots),
of which 8,501 plots (December 2022:
9,431 plots) have planning permission (or
a Resolution to Grant subject to S106).
Although there continues to be delays and
challenges within the planning system, the
updates to the NPPF appear not to be quite
as restrictive as anticipated. In short the
updated NPPF incentivises local authorities
to drive forward in preparing and publishing
development plans, allowing them to
allocate housing sites in their administrative
areas and giving them a defence against
speculative planning applications. Whilst
HLM is not immune from the revisions of
the NPPF, given that it generally pursues
larger sites of c.500 plots or above, which
normally results in sites being allocated in
development plans more frequently than
smaller sites, the business should benefit
marginally from the quicker publication of
development plans.
Last year, HLM gained planning permission
on 1,014 plots, which is an increase from
the 435 plots granted in 2022. During the
period, there were 2,185 plots submitted
for planning, taking the total plots awaiting
determination to 13,468 (December 2022:
12,297 plots), with a further 8,227 plots
having an allocation or draft allocation for
housing (but with no application as yet).
HLM’s land bank remains well positioned to
benefit from the delays and complexities in
the planning system due to the high levels
of stock in premium locations, both with
planning and awaiting determination, the
team’s specialist skill set and its strategically
placed regional coverage. Despite the
challenges, the number of plots in the
portfolio continues to increase, giving us
confidence in the medium term that our
stock levels with planning will rise.
| henryboot.co.uk 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 in the balance sheet relating to any of the 8,501 plots with planning, and any gain will only be
recognised on disposal.
Residential Land Plots
With permission
b/f
9,431
12,865
15,421
14,713
16,489
granted
1,014
435
452
2,708
1,651
sold
(1,944)
(3,869)
(3,008)
(2,000)
(3,427)
2023
2022
2021
2020
2019
c/f
8,501
9,431
12,865
15,421
14,713
In planning
13,468
12,297
11,259
8,312
10,665
Future
79,003
73,976
68,543
64,337
51,766
Total
100,972
95,704
92,667
88,070
77,144
In relation to significant schemes:
• At Tonbridge, Kent, HLM sold 125 plots
to national housebuilder Cala Homes.
The site was originally contracted
under option in 2004, with the freehold
subsequently purchased in 2021. The
scheme includes additional community
benefits such as new cycle and
pedestrian links to a local railway station
and a contribution to improved public
transport infrastructure. The deal was
completed in two phases over H1 and
H2 of 2023, resulting in an ungeared
internal rate of return (IRR) of 25% p.a.
• At Coventry, the 2,400-plot site known
as Pickford Gate, saw the sale of phase
one, comprising 250 plots to Vistry in
H1 23. Following this, in H2 23 HLM
began to market phase two, which
consists of 1,123 plots, and has
received strong interest from several
major housebuilders.
• Swindon is a site that was jointly held
with Taylor Wimpey, where over 20
years ago HLM secured an option on
the site which in August 2021 received
outline planning consent for a total of
2,380 plots (HLM share 1,063 plots).
In December 2023, a contract was
exchanged to acquire the land whilst
simultaneously exchanging contracts
to sell 760 plots (HLM’s share) to Vistry,
generating an IRR of 10% p.a. The
scheme is contracted for completion
in two phases during H2 24 and H1
26. HLM will retain 304 plots for future
sale. The wider scheme includes local
community benefits such as a new
primary school, community and sport
buildings as well as woodlands and
green infrastructure.
Since the start of 2024 HLM has already
completed the disposal of 276 plots and
exchanged on a further 793 plots for
completion across 2024-2026, as well as
having an additional 1,556 plots under offer.
This shows that despite the slowdown
in the housing and residential market the
demand for strategic sites endures.
37
GOVERNANCEFINANCIALSSHAREHOLDERSAnnual Report and Financial Statements for the year ended 31 December 2023 |OVERVIEWSTRATEGIC REPORT SEGMENTAL REVIEW
PROPERTY INVESTMENT AND DEVELOPMENT
Property Investment
and Development,
which includes HBD
and SH, delivered a
combined operating
profit of £22.2m
(2022: £25.7m)”.
EDWARD HUTCHINSON
HENRY BOOT DEVELOPMENTS LIMITED
DARREN STUBBS
STONEBRIDGE HOMES LIMITED
According to the CBRE UK Monthly Index,
commercial real estate values declined by
3.9% in 2023. Industrial property was the
best performing sector with values up 1.4%
during the year, whilst values for both retail
and offices declined by -4.2% and 11.5%
respectively. The rate of yield expansion
across all three sectors slowed during
2023 following the significant capital value
correction in 2022. Whilst I&L take up has
slowed from record levels during the COVID
pandemic, the industrial sector delivered
the highest rental growth in 2023 at 6.9%,
due to the longer-term structural drivers
and limited supply of high-quality space.
At the same time, whilst BtR yields have
risen from historic lows, the average rent
for new residential lets increased by 8.3%
during 2023 according to Zoopla, driven
by continued strong demand and a lack of
available units.
2023 Completed Schemes
Scheme
Industrial
Nottingham, Power Park
Luton, Diploma
Preston East, DPD & DHL
Urban Residential
York, TDT
Total for the Year
HBD has performed ahead of expectations,
with continued growth of its completed
schemes to a GDV of £126m (HBD share
£111m, 2022: HBD share £83m), of
which 100% was pre-let or pre-sold. In
the year, HBD completed on the following
developments:
• Three industrial schemes in Nottingham,
Luton and Preston totalling 661,000 sq
ft with a combined GDV of £104m (HBD
share: £89m).
• A 40 bed state of the art care facility
for The Disabilities Trust in York (HBD
share: £22m GDV) which has achieved a
BREEAM Excellent rating.
£111m GDV
DEVELOPMENT COMPLETIONS
(2022: £83M)
251
UNIT COMPLETIONS
(2022: 175 UNITS)
GDV
(£m)
54
20
30
104
22
126
HBD Share
of GDV
Commercial
Residential
Size
(£m)
(‘000 sq ft)
(Units)
Status
54
20
15
89
22
111
426
85
150
661
N/A
661
Pre-sold
Pre-let
Pre-sold/
pre-let
Pre-sold
–
–
–
–
–
–
The committed development programme now totals a GDV of £299m (HBD share: £159m GDV) and is currently 50% pre-let, pre-sold or
under offer, with 98% of development costs fixed.
38
| henryboot.co.uk 2024 Committed Programme
Scheme
Industrial
Rainham, Momentum
Southend, Ipeco2 and Cama,
Walsall, SPARK Remediation
Leicester, TMS
Urban Residential
Birmingham, Setl
Aberdeen, Bridge of Don
Aberdeen, Cloverhill
Urban Commercial
Manchester, Island
Total for the Year
% sold or pre-let
GDV
(£m)
120
20
37
10
187
32
12
2
46
66
299
29%
HBD Share
of GDV
Commercial
Residential
Size
(£m)
(‘000 sq ft)
(Units)
Status
Completion
24
20
37
10
91
32
1
2
35
33
159
50%*
380
156
–
29
565
–
–
–
–
91
656
Speculative
Pre-sold
Forward
funded
Pre-sold
Speculative –
30% reserved
Under offer
Pre-sold
and DM fee
Q2 24
Q1 24
Q2 24
Q3 24
Q2 24
Q2 24
Q2 24
Speculative
Q3 24
–
–
–
–
–
102
TBC
500
602
–
602
*This includes space under offer and units reserved at Setl– 01/03/24.
Within the committed programme there is 565,000 sq ft of I&L space (HBD share: £91m GDV), a total of 602 urban residential units (HBD
share: £35m GDV) and 91,000 sq ft of urban office space (HBD share: £33m GDV). This comprises:
• At Momentum, Rainham (in an 80:20 JV with Barings), the four unit I&L development, targeting NZC, serving Greater London, works are
on course for completion in Q2 24, with HBD now marketing the space to potential occupiers with the aim of having the majority of the
scheme let within a year.
•
In H1 23, two freehold design and build transactions totalling 156,000 sq ft, at HBD’s 52 acre I&L scheme in Southend, Essex, were
added at a combined value of £20m. A 129,000 sq ft headquarters facility will be developed for Ipeco, a supplier of aircraft seating.
CAMA Asset Store, specialists in sustainable storage for the creative industries, will take occupation of a 27,600 sq ft warehouse facility
with ancillary office accommodation. Both units are on track for completion in Q1 24.
• Setl, the 102 premium apartment scheme in Birmingham, is on track to be completed in Q2 24. After launching pre-sales in Q4 23, the
full sales campaign was launched in mid-March. HBD has now secured reservations for 30% of the total units, as of March 2024, at the
target price.
• At Island, Manchester a 50:50 JV scheme with Greater Manchester Pension Fund, delivering a 91,000 sq ft NZC office building is
scheduled for completion in Q3 24. Marketing of the scheme has commenced and has attracted several enquiries on a floor-by-floor
basis, with the aim of securing its first pre-let prior to completion.
HBD’s future total development pipeline value is £1.5bn GDV (HBD share: £1.3bn GDV). All of these opportunities sit within the three key
markets of I&L (59%), Urban Commercial (21%) and Urban Residential (20%). Within the development pipeline, we have c.200m near-term,
occupier led schemes which have the potential to be added to the committed programme within the next twelve months comprising:
• Neighbourhood, Birmingham (HBD share: £123m GDV) - after securing planning approval in March 2023 for a 404-unit BtR
development, HBD is continuing preparatory works and is now considering a number of options to progress to development including a
forward funding for the scheme.
• Roman Way, Preston (HBD share: £43m GDV) - a planning consent was granted in Q4 23 to deliver c.700,000 sq ft of I&L space. In
December 2023, HBD exchanged conditionally with Tilemaster to deliver a serviced plot of 10 acres that will accommodate a 150,000 sq
ft manufacturing unit, which is set to commence works in Q2 24. There is also interest on a number of additional units.
• Spark, Walsall (HBD Share: £110m GDV) - HBD is set to complete remediation works in Q2 24 and are in talks to secure the scheme’s
first pre-let on a 250,000 sq ft I&L unit (£42.5m GDV).
• Welwyn Garden City (HBD share £20m GDV) – HBD is close to securing a pre-let on 25% of this 71,200 sq ft industrial scheme and
subject to this being concluded, is targeting a start on site in Q3 2024.
Beyond the near-term pipeline, HBD is progressing on:
• Golden Valley, Cheltenham (HBD share of phase one: £155m GDV) - in December 2023, following the buyout of its JV partner, HBD
became the sole developer of a £1bn GDV mixed-use campus, including the new National Cyber Innovation Centre. A £95m funding
agreement with Cheltenham Borough Council for the delivery of phase one has now been secured as well as a £20m pledge from the
Department for Levelling Up, Housing and Communities. Following planning, construction of phase one is expected to commence in 2025.
39
GOVERNANCEFINANCIALSSHAREHOLDERSAnnual Report and Financial Statements for the year ended 31 December 2023 |OVERVIEWSTRATEGIC REPORT Dec 2023
£112.9m
795
5.8%
6.5%
10.8 years
93%
Dec 2022
£108.6m
856
5.8%
6.5%
10.7 years
88%
SH total owned and controlled land bank
increased materially to 1,513 plots (2022:
1,094) – of which 923 plots (2022: 872)
have detailed or outline planning equating to
3.4 years’ supply based on anticipated one-
year forward sales. During 2023, SH added
a further 670 plots over seven sites to its
owned and controlled landbank, of which
302 plots have some form of planning
and the remaining 368 plots with no form
of planning have been secured under
option agreements.
SH enters 2024 with the benefit of
mortgage rates stabilising and cost
pressures beginning to ease. Whilst not
underestimating the current uncertainty in
the UK housing market, SH has begun the
year relatively well. In January and February
2024, an average sales rate of 0.51 (Jan
and Feb 23: 0.46) houses per week per
outlet was achieved, which has resulted in
SH securing 50% of its sales target against
a delivery target of 275 homes (206 private/
69 social).
SEGMENTAL REVIEW
PROPERTY INVESTMENT AND DEVELOPMENT CONTINUED
Investment Portfolio – key stats
Market values – inc. share of JVs
Total area – '000 sq ft
‘Topped-up’ net initial yield
Reversionary yield
WAULT to expiry¹
Occupancy²
1 Weighted average unexpired lease term (WAULT) on commercial properties
2 As a percentage of completed property portfolio estimated rental value (ERV)
The total market value of the IP (including
share of properties held in JVs) has
increased to £112.9m (December 2022:
£108.6m). Whilst the CBRE UK Monthly
Index showed commercial property values
decreased by 3.9% during 2023, HBD’s
portfolio increased in value by 1.1% on a
like for like basis driven by continued rental
value growth for the industrial and logistics
assets of 2.8% over the year. The portfolio
total return of 6.7% was again ahead of the
CBRE Index (1.7%) and over the past three
years it has outperformed the index with a
total return of 7.9% pa against a benchmark
return of 3.5% pa. Occupancy increased
during the year to 93% (December 2022:
88%) with the weighted average unexpired
lease term now 10.8 years (December
2022: 10.7 years).
During 2023, we made further accretive
sales of four investment properties along
with Banner Cross Hall, the Group’s former
HQ, for a combined value of £12.7m, at
an average 23% premium to December
2022 valuations. In addition to the sales,
we retained three completed high quality
developments at Luton, Markham Vale and
Pool with a total value of £21.2m, which
together with the valuation uplift were the
main drivers of an increase in the value
of the IP.
The Group is also committed to ensuring
that all the properties within the IP have
a minimum EPC rating of ‘C’. Currently
73% of these properties have a rating of
‘C’ or higher, of which 42% of the total
portfolio are rated ‘A-B’. The majority of
the remaining 27% of the portfolio that
are currently below a ‘C’ rating, have
redevelopment potential in the near-term
with a target range of ‘A’ or ‘B’.
The UK housing market remained subdued
during 2023 as homebuyer demand
continued to be impacted by higher
mortgage rates. According to Nationwide
UK, house prices decreased by 1.8%
during 2023 and are now almost 4.5%
below their mid 2022 peak. Whilst monthly
housing transactions are running at c.10%
below pre-COVID levels those involving a
mortgage are down c.20%. There have
been some encouraging signs for potential
buyers recently with average earnings
increasing in real terms and mortgage rates
edging down over the last few months,
whilst unemployment remains low by
historic standards.
SH completed 251 homes during 2023 (171
Private / 80 Social) (2022: 175 - 124 private
/ 51 social), increasing its annual sales by
43% and performing in line with its medium
term growth target of delivering 600 units.
The average selling price (ASP) for private
units remained firm at £461k (2022: £503k)
in-line with budget, however, the ASP
reduced as the business expanded its sales
outlets into its second region in the North
East of England, where selling prices are
slightly lower. In line with the UK new build
housing market, the average sales rate for
the year decreased, with SH securing 0.45
(2022: 0.51) units per week per outlet, for
private houses. Notwithstanding this, sales
rates in Q4 23 improved marginally to 0.46
homes per site per week (Q4 22: 0.36), as
mortgage rates began to fall.
Whilst supply chain availability and cost
pressures remained a key focus, both
issues began to improve and moderate
last year. SH expects build cost inflation to
be around 3% in 2024, with discussions
ongoing with both suppliers and
subcontractors to assist in build
cost savings.
40
| henryboot.co.uk GOLDEN VALLEY, CHELTENHAM (HBD SHARE
OF PHASE ONE: £155M GDV) - A £1BN GDV
MIXED-USE CAMPUS, INCLUDING THE NEW
NATIONAL CYBER INNOVATION CENTRE.
41
GOVERNANCEFINANCIALSSHAREHOLDERSAnnual Report and Financial Statements for the year ended 31 December 2023 |OVERVIEWSTRATEGIC REPORT SEGMENTAL REVIEW
CONSTRUCTION
TONY SHAW
HENRY BOOT CONSTRUCTION LIMITED
JONATHAN FISHER
BANNER PLANT LIMITED
TREVOR WALKER
ROAD LINK (A69) LIMITED
Trading in the Group’s construction segment
was below expectations in 2023, as a result
of deteriorating market conditions, achieving
an operating profit of £6.5m (2022:
£12.1m). UK construction activity slowed
during 2023, with all new work decreasing
by 2.1%, with the most significant reduction
of 13.6% for new private housing.
HBC, the Group’s construction business,
traded below expectations, delivering a
turnover of £70.1m (2022: £97.6m) having
experienced difficult operating conditions
in line with the UK construction market.
However, the business has the lowest
capital employed of any subsidiary of the
Group and, therefore, the risk it poses to
on Henry Boot’s strategic growth plans
remains limited.
Despite both schemes suffering delays,
subcontractor and material availability
issues, the Kangaroo Works, a £40m
BtR scheme, completed in August 2023,
with the Heart of the City, Sheffield Block
H, a £42m urban development scheme,
completing in phases between December
2023 and January 2024. In addition to
the two significant schemes in Sheffield, a
residential project at Clipstone, Mansfield
also impacted HBC’s 2023 performance,
as the project’s developer fell into
administration, resulting in building costs
not being fully recovered.
At HBC’s largest active site, the Cocoa
Works in York, after a significant variation
for the Pavilion and Library buildings,
the contract value of the residential
development increased to £57m and the
project is now expected to complete in
late 2024.
At the beginning of 2024, HBC has
secured 49% of its order book (94% of
its costs have fixed price orders placed or
contractual inflation clauses). The business
remains cautious about difficult trading
conditions, and while HBC is actively
pursuing PCSAs of £50m across urban
development and residential opportunities
for 2024, it is expected that some of these
opportunities could now fall into the 2025
order book as the business becomes more
selective in the work it pursues.
As the business review and explore all the
options to deal with the current commercial
challenges, the difficult decision has been
made to make operational changes which
has resulted in a restructuring within the
business. Whilst this is regrettable, it is
being carried out to protect the long term
future of HBC.
Banner Plant traded slightly below budget in
2023 and in response has adjusted its sales
strategy. Road Link (A69) performed in line
with management expectations as traffic
volumes continue to increase.
Despite the
construction segment
being impacted by
challenging trading
conditions in line with
the slowdown of UK
construction activity
in 2023, it pleasingly
remained profitable.”
£99.5m
CONSTRUCTION SEGMENT REVENUE
(2022: £128.6M)
£6.5m
CONSTRUCTION SEGMENT OPERATING
PROFIT (2022: £12.1M)
42
| henryboot.co.uk CAMBRIDGE STREET COLLECTIVE – THE PROJECT
SAW THE HISTORIC BUILDINGS THAT FRONT THE
SITE SENSITIVELY REFURBISHED AND SEAMLESSLY
INTEGRATED INTO A CONTEMPORARY NEW STRUCTURE
BEHIND- PART OF HEART OF THE CITY, SHEFFIELD
(BLOCK H), A £42M URBAN DEVELOPMENT SCHEME.
43
GOVERNANCEFINANCIALSSHAREHOLDERSAnnual Report and Financial Statements for the year ended 31 December 2023 |OVERVIEWSTRATEGIC REPORT FINANCIAL
REVIEW
Our focus on high quality land and development
opportunities in prime locations across our three key
markets continues to support the Group’s resilience”.
DARREN LITTLEWOOD
CHIEF FINANCIAL OFFICER
STRONG
RESULTS
DESPITE A
CHALLENGING
BACKDROP
£37.3m
PROFIT BEFORE TAX
(2022: £45.6M)
306p
NET ASSET VALUE PER SHARE
(2022: 295P)
44
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 and other
Profit before tax
The Group performed well in 2023, with
only a 14% fall in operating profit despite
the backdrop of an economy in a technical
recession. Group profit before tax of
£37.3m (2022: £45.6m) or £36.7m on an
underlying profit basis1 (2022: £56.1m)
remains very credible and testament to the
Group’s resilience.
Our focus on high quality land and
development opportunities in prime locations
across our three key markets continues to
support this resilience.
Our land promotion business Hallam
Land traded well in the year disposing of
1,944 residential plots (2022: 3,869) at
an increased average gross profit per plot
of £15.5k (2022: £6.1k), generating an
operating profit of £21.4m (2022: £17.3m)
as demand for well located premium sites
continued, despite falling house prices and
volumes across the UK.
2023
£’m
191.9
68.0
99.5
359.4
22.2
21.4
6.5
(9.9)
40.2
(2.9)
37.3
2022
£’m
169.0
43.8
128.6
341.4
25.7
17.3
12.1
(8.6)
46.5
(0.9)
45.6
Change
%
+14
+55
-23
+5
-14
+24
-46
+15
-14
+222
-18
Property investment and development
exceeded expectation with HBD
successfully completing a number
of significant development schemes,
particularly in the industrial sector. It also
made opportune disposals of property
assets at a premium to book value and
progressed three speculative schemes
in Manchester, Birmingham and London.
Meanwhile Stonebridge increased its
output 43%, completing 251 homes (2022:
175) in line with its medium term growth
target of delivering 600 units per annum.
Together resulting in an operating profit of
£22.2m (2022: £25.7m) from the property
investment and development segment.
Consolidated Statement of
Comprehensive Income
Revenue increased 5% to £359.4m
(2022: £341.4m) as the land promotion
business made disposals at a premium
site in Tonbridge increasing the segment’s
| henryboot.co.uk revenue 55% to £68.0m (2022: £43.8m).
The ongoing growth of Stonebridge (43%
increase in output) resulted in a 38% increase
in revenue to £97.2m (2022: £70.6m).
Construction segment revenue declined
£29.1m in a challenging market where
clients are taking longer to make decisions.
We continued to deliver urban development
works in Sheffield and from a number of
framework agreements, while becoming
increasingly selective of future opportunities.
Gross profit of the Group reduced £4.8m
to £76.8m (2022: £81.6m), a gross profit
margin of 21% (2022: 24%) and reflects
healthy returns across all our operating
segments. Other income of £4.8m (2022:
nil) relates to a legal settlement on a property
development contract completed in 2016.
Administrative expenses, including pension
expenses, increased by £3.9m (2022: £2.2m)
as we continued to invest in our people and
processes to support future growth.
Property revaluation gains amounted to
£0.4m (2022: £8.2m losses), incorporating
£0.3m revaluation gains (2022: £4.9m
losses) on wholly owned investment property
and £0.1m revaluation gains (2022: £3.2m
losses) on our share of investment property
held in joint ventures.
Property revaluation gains/(losses)
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
2023
£’m
2022
£’m
0.5
(0.2)
0.3
0.1
–
0.1
0.4
(7.3)
2.4
(4.9)
(3.2)
–
(3.2)
(8.2)
Profit on sale of investment properties of
£0.7m (2022: £0.6m), relates to the disposal
of legacy assets at Bath and Malvern and an
industrial unit at Southend. Profit on disposal
of assets held for sale of £1.6m (2022:
£0.1m loss) relates largely to the disposal of
the Group’s former head office in Sheffield.
Share of profit of joint ventures and
associates of £0.4m (2022: £9.1m) includes
completion and sale of two industrial units in
Preston and completion of a development
in Wakefield, all by the property investment
and development segment. Joint ventures
continue to be a key part of our operating
model however the timing of returns will vary.
Profit on disposal of joint ventures and
subsidiaries were £nil (2022: 0.7m), with the
prior year reflecting the Group’s disposal of a
long standing 50% interest in a joint venture
entity in Huddersfield by the property
investment and development segment.
Overall, operating profits decreased by
13.5% to £40.2m (2022: £46.5m) and, after
adjusting for net finance costs, we delivered a
profit before tax of £37.3m (2022: £45.6m).
The segmental result analysis shows that:
• Property investment and development
operating profit decreased to £22.2m
(2022: £25.7m) following a very strong
result in 2022, 40% up on 2021, offset
by an increase in Stonebridge housing
unit disposals to 251 (2022: 175),
and a valuation gain on wholly owned
investment property of £0.3m (2022:
£4.9m loss).
• Land promotion operating profit
increased to £21.4m (2022: £17.3m)
as we completed on disposals at seven
sites, including a high margin site in
Tonbridge that increased our average
gross profit per plot in the year to
£15.5k (2022: £6.1k).
• Construction segment operating profits
decreased to £6.5m (2022: £12.1m) as
our construction business experienced
difficult operating conditions, with
performance on two significant projects
impacted by the availability of materials
and the resultant delays. Plant hire and
our PFI concession continued to generate
healthy contributions to the segment.
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 £8.8m
(effective rate of tax: 23.5%) (2022: £7.7m;
effective tax rate: 16.9%) and is in line with
(2022: lower) the standard rate of tax (2022:
due to adjustments for joint ventures and
associates reported net of tax). Current
taxation on profit for the year was £6.7m
(2022: £8.5m), deferred tax was a charge
of £2.1m (2022: £0.8m credit).
Earnings per share and
dividends
Basic earnings per share decreased 21%
to 19.7p (2022: 25.0p) in line with the
fall in profits attributable to owners of the
Parent Company. Total dividend for the year
increased 10% to 7.33p (2022: 6.66p), with
the proposed final dividend increasing to
4.40p (2022: 4.00p), payable on 31 May
2024 to shareholders on the register as at
3 May 2024. The ex-dividend date is
2 May 2024.
Return on capital
employed2 (‘ROCE’)
ROCE2 decreased in the year to 9.9%
(2022: 12.0%), given current challenges in
our markets this is expectedly toward the
bottom end of the Group’s target range
of 10%–15% which we believe remains
appropriate for our current operating model
and the markets we operate in.
45
GOVERNANCEFINANCIALSSHAREHOLDERSAnnual Report and Financial Statements for the year ended 31 December 2023 |OVERVIEWSTRATEGIC REPORT FINANCIAL REVIEW
CONTINUED
Finance and gearing
Net finance costs increased to £2.9m
(2022: £0.9m) reflecting the increase in UK
interest rates and higher borrowing levels
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 9 times (2022:
22 times). No interest incurred in either year
has been capitalised into the cost of assets.
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
has agreed terms with lenders to refinance
for a further five year period but while this
facility is being formalised the Group has
put in place an option to extend the existing
facility for a further year to 23 January
2026 which provides security of funding
throughout the going concern period. The
Group had drawn £83.5m of the facility at
31 December 2023 (2022: £65.0m).
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
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
Cash flow summary
fully transfer to HSBC and, therefore, this
agreement is recorded off balance sheet.
The Group had sold £14.7m of receivables
under the agreement at 31 December 2023
(2022: £7.6m).
2023 year-end net debt4 was £77.8m
(2022: £48.6m) resulting in gearing of
19.0% (2022: 12.3%), at the upper
end of our targeted range of 10%-20%
following continued investment in our
prime land portfolio, growing our premium
housebuilder and delivering our high quality
committed development programme.
All bank borrowings continue to be from
facilities linked to floating rates or short-
term fixed commitments. Throughout
the year, we operated within the facility
covenants and continue to do so.
Operating profit
Depreciation and other non-cash items
Net movement on equipment held for hire
Movement in working capital
Cash generated from/(used in) operations
Net capital (investments)/disposals
Net interest and tax
Dividends paid
Dividends received from joint ventures
Other
Change in net debt
Net debt brought forward
Net debt carried forward
During 2023, the cash inflow from
operations amounted to £5.8m (2022:
£16.6m outflow) after net investment in
equipment held for hire of £2.1m (2022:
£4.1m), and cash outflows from a net
increase in working capital of £31.2m
(2022: £55.6m). Our increase in working
capital arises from additional investment
in housebuilder inventories, strategic land
sales on deferred terms and the ongoing
development of schemes in progress.
Net capital investment of £16.4m (2022:
£16.6m disposals) arose primarily from
investment in joint ventures of £13.4m
(2022: £2.3m redemption) the prior year
containing significant disposals of an
industrial unit in Wakefield and a motorway
service station in Kent.
Net dividends, totalled £11.9m (2022:
£5.3m), with those paid to equity
shareholders of £9.3m (2022: £8.4m),
46
2023
£’m
40.2
(1.1)
(2.1)
(31.2)
5.8
(16.4)
(7.4)
(12.8)
0.9
0.7
(29.2)
(48.6)
(77.8)
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)
increasing by 10%, and dividends to
non-controlling interests of £3.5m (2022:
£4.0m), being offset by dividends received
from joint ventures during the year of £0.9m
(2022: £7.1m).
After net interest and tax of £7.4m (2022:
£3.6m), there was an overall outflow in net
cash of £29.2m (2022: £8.1m), resulting in
net debt of £77.8m (2022: £48.6m).
Wholly owned investment properties
increased in value to £100.6m (2022:
£97.1m), following the retention of newly
completed industrial assets in Luton and
Pool with a combined book value of £19.0m.
Offset by disposals of an office in Bath, a
leisure asset in Malvern and an industrial
unit in Southend, together they sold at a
premium to December 2022 book value of
£7.0m. Property revaluation gains amounted
to £0.4m (2022: £8.2m loss), incorporating
£0.3m gains (2022: £4.9m loss) on wholly
owned investment property and a £0.1m
gain (2022: £3.2m loss) on our shares of
investment property held in joint ventures.
Intangible assets reflect goodwill of £1.0m
(2022: £1.2m), being Road Link (A69) of
£0.1m (2022: £0.3m) and Banner Plant
depots £0.9m (2022: £0.9m) and the
Group’s investment in Road Link (A69) of
£1.2m (2022: £1.7m). The treatment of the
Road Link investment as an intangible asset
is a requirement of IFRIC 12 and arises
because the underlying road asset reverts
to National Highways at the end of the
concession period in March 2026.
Property, plant and equipment comprises
Group occupied buildings valued at £4.7m
(2022: £7.0m), leasehold improvements of
£2.4m (2022: nil), and plant, equipment and
vehicles with a net book value of £26.1m
(2022: £22.8m), including £4.0m (2022:
£1.0m) of right-of-use assets under IFRS 16.
| henryboot.co.uk Statement of financial position summary
Investment properties and assets classified as held for sale
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
Net assets
Less: Non-current liabilities and pension asset
Capital employed
2023
£’m
100.6
2.2
33.2
10.5
146.5
297.6
129.3
(88.1)
(5.2)
480.2
(77.8)
7.7
410.1
6.6
416.7
2022
£’m
97.1
2.9
29.8
10.0
139.8
291.8
122.9
(113.6)
(4.2)
436.7
(48.6)
6.2
394.3
4.8
399.1
Property, plant and equipment, along with
right-of-use assets, have increased as
new additions of £11.3m (2022: £3.8m)
are offset by disposals, transfers and the
depreciation charge for the year. Leasehold
improvements and right-of-use assets have
increased largely due to the lease of the
Group’s new head office in Sheffield.
promotion agreements at a lower capital
cost amounting to £42.2m (2022: £28.2m).
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.
Investments in joint ventures and associates
increased £0.5m to £10.5m (2022: £10.0m),
being the Group’s share of profits of £0.4m
(2022: £9.1m) (including fair value increases
of £0.1m), additional investment of £1.0m
(2022: £2.1m), less distributions of £0.9m
(2022: £7.2m) and net disposals of £nil
(2022: £6.2m). We continue to undertake
property development projects with other
parties where mutually beneficial.
Inventories were £297.6m (2022: £291.8m)
as we increased our housebuilder land
and work in progress to £96.2m (2022:
£80.6m). We continue to invest in land,
expand regionally into the North East and
increase annual plot disposals. Property
inventory decreased to £77.4m (2022:
£91.2m) as the Group completed committed
developments in York and Southend, and
retained an industrial scheme which was
transferred to investment property. In our
strategic land business we continue to invest
in owned land and land interests under
Receivables, including contract assets,
increased £6.5m to £129.3m (2022:
£122.9m) due to an increase in loans to joint
ventures and associates and as we progress
development schemes. Deferred payment
receivables remain a function of the number
and size of strategic land development
schemes sold, and levels of construction
contract activity undertaken.
Payables decreased to £88.1m (2022:
£113.6m) with trade and other payables
decreasing to £76.0m (2022: £100.0m),
provisions decreasing to £4.4m (2022:
£5.4m) as strategic land provisions
unwind and we near the end of our PFI
concession arrangement. Contract liabilities
decreased to £1.1m (2022: £4.0m), as large
construction schemes near completion.
Net debt included cash and cash
equivalents of £13.0m (2022: £17.4m),
borrowings of £86.5m (2022: £65.0m),
including £3.0m other loans (2022: £nil)
arising from sale and lease back, and lease
liabilities of £4.3m (2022: £1.0m). In total, net
debt was £77.8m (2022: 48.6m).
At 31 December 2023, the IAS 19 pension
valuation was a surplus of £7.7m (2022:
£6.2m surplus), driven by interest on the
existing surplus and contributions paid by
the Group to the scheme. 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 4.0% to £410.1m (2022:
£394.3m), arising from retained profits
less distributions to shareholders with
NAV per share3 increasing 3.7% to 306p
(2022: 295p).
DARREN LITTLEWOOD
CHIEF FINANCIAL OFFICER
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 gains of £0.5m (2022: £7.3m losses) on wholly owned completed investment
property and a gain of £0.1m (2022: £3.2m losses) on completed investment property held in joint ventures. This APM is used as it provides the users with
a measure that excludes specific external factors beyond management’s control 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/ordinary share capital.
4 Net debt is an APM and is reconciled to statutory measures in note 34.
5 Total property return is a metric that combines capital and income returns for the investment portfolio. It is calculated as the percentage value change plus net
income accrual, relative to the capital employed and is calculated on a monthly basis and then indexed in line with the benchmark.
6 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.
47
GOVERNANCEFINANCIALSSHAREHOLDERSAnnual Report and Financial Statements for the year ended 31 December 2023 |OVERVIEWSTRATEGIC REPORT 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, supported
closely by our advisors, 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.
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 has, therefore, undertaken
horizon scanning exercises that form key
considerations in the Group’s risk and
strategic planning.
The rapid emergence of generative AI
has been of particular note in 2023, with
the Group proactively considering the
transformative effect on our markets and
the competitive advantage to be gained.
Our consideration extends to the data and
security risks that result from the use of
generative AI, and the measures needed to
actively mitigate against these.
Geopolitical and economic risk levels
remain high, their impact is regularly
discussed and have been considered
across each principal risk area.
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 71 to 73.
The financial impact of the above is
considered in the going concern and
viability section on pages 54 to 55.
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 activity 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 of processes. 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.
48
| henryboot.co.uk 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
Established in 2022, the Group
meets monthly to establish the
Group’s procedures and plans
for management of continuity events.
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.
)
y
t
r
a
p
d
r
i
h
t
(
t
i
d
u
A
l
a
n
r
e
t
n
I
Risk heat map
The risk heat map illustrates the 14 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).
The risks associated with housebuilding continue to increase in line with the activity
of our joint venture housebuilder Stonebridge Homes Limited. Existing principal
risks such as safety, land sourcing and political have always included consideration
of housebuilding activities, but the Board recognises that more specific risks
associated with housebuilding such as supply chain, material availability and
quality of product should now be reflected in a new principal risk of the Group.
Movements from the prior year’s ranking are indicated by the arrows.
1 Safety
8 Construction contracts
2 Environmental & climate change
9 Property assets
t
c
a
p
m
I
12
10
3
8
13
1
2
9
4
5
11
3 Economic
10 Property development
14
6
4 People & culture
5 Funding
6 Cyber
7 Pensions
11 Land sourcing
12 Land demand
13 Political
14 Housebuilding
7
Likelihood
49
GOVERNANCEFINANCIALSSHAREHOLDERSAnnual Report and Financial Statements for the year ended 31 December 2023 |OVERVIEWSTRATEGIC REPORT
OUR
RISKS
To enable stakeholders to appreciate what the business considers
are the main operational risks, they are presented in detail below.
Risk
1
Safety
Risk description
Mitigation
Inherent risk within all of our
businesses, but most notably
within construction activity
Change
during
the year
Link to
Group
strategic
priorities
Elevated risk
of incidents
in plant hire
segment
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 71-73)
• Priority consideration at all Group and
subsidiary Board meetings.
• Robust training, policies, procedures and
monitoring.
• Construction operation is ISO 45001
approved for its 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
People
Partners
Places
Planet
Performance
50
| henryboot.co.uk
Risk
3
Economic
Risk description
Mitigation
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
• Strong Statement of Financial Position
with low 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.
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 works
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
6
Cyber
Unauthorised access to
systems, hacking, malware
and distributed denial of
service could all lead to data
loss, business disruption,
reputational damage or
financial loss
• 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.
• New facility terms well progressed with
banking partners, and are backed by
investment property assets.
• £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.
• 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.
Change
during
the year
Link to
Group
strategic
priorities
Lack of
development
funding
51
GOVERNANCEFINANCIALSSHAREHOLDERSAnnual Report and Financial Statements for the year ended 31 December 2023 |OVERVIEWSTRATEGIC REPORT
OUR RISKS
CONTINUED
Change
during
the year
Link to
Group
strategic
priorities
Risk
7
Pension
Risk description
Mitigation
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 position of the
pension scheme worsens.
Furthermore, the relationship
between implied inflation and
long term gilt yields has a
major impact on the pension
scheme position and the
business has little control
over those variables
• Operation of Trustee approved Recovery
Plan and scheme now in surplus.
• 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 has provided a
cushion as interest rates have risen.
• 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.
8
Construction
contracts
Changes in terms and
conditions of standard
contracts exposing the
Company to major financial
and design liability risks
• Preliminary commercial appraisal.
• Directors closely involved.
• Standard position set out in guide for our
people.
Supply chain,
viability and
client risk
Supply chain failure and client
risk
• Experienced legal and commercial
management.
9
Property
assets
Investment property assets
are not marketable and are
without secure tenancies.
Valuations are volatile
• 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.
• 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 £1.3bn pipeline of future
opportunities.
• Portfolio strategy actively managed and
covenants regularly reviewed.
• Investments in sectors with strong
medium term tailwinds.
Key
Change during the year
Group strategic priorities
Increased
Decreased
No change
People
Partners
Places
Planet
Performance
52
| henryboot.co.uk
Risk description
Mitigation
Change
during
the year
Link to
Group
strategic
priorities
Risk
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
12
Land demand
A dramatic change in
housebuilder funding
sentiment and demand for
housing can have a marked
change on the demand and
pricing profile for land
• 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 £1.3bn pipeline of future
opportunities.
• Internal target of no more than 35%
speculative development in the
committed pipeline.
• 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 100,000 plots with
aspiration to grow further.
• Well respected name within the industry
that demonstrates success.
• Housebuilder land portfolio at 1,513
residential plots representing 5.5 years’
land supply at one year forward sales
target.
• The Group’s policy is to only progress
land that is deemed to be of high quality
and in prime locations.
• The business is long term and is not
seriously affected by short-term events, or
economic cycles.
• We recognise cyclicality in our long term
plans and operate with a relatively low
level of debt.
• Greenfield land is probably the most
sought-after land to build upon.
• Long term demographics show a growing
trend; therefore, demand for land will
follow.
• Housebuilders have very good land
portfolios and are selective, targeting
prime locations.
53
GOVERNANCEFINANCIALSSHAREHOLDERSAnnual Report and Financial Statements for the year ended 31 December 2023 |OVERVIEWSTRATEGIC REPORT
OUR RISKS
CONTINUED
Risk
13
Political
14
Housebuilding
Risk description
Mitigation
Change
during
the year
Link to
Group
strategic
priorities
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
Increase in housing
production or a breakdown
within the supply chain
may strain the availability of
materials and trades resulting
in increased costs and
construction delays
The quality of our product
is key. If the Group fails to
deliver consistently against
these high standards, it could
be exposed to reputational
damage, the risk of reduced
sales and increased costs
• 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.
• Partnering arrangements in place for key
New Risk
trades.
• Dual sourcing in place for critical supplies.
• Regional supply chain events held to
promote the business and its growth plans.
• Regular monitoring of the supply chain.
• Regular update meetings with supply
chain partners.
• 5 key stage quality inspection process.
• Stonebridge quality standard manuals
and best practice guides rolled out across
the business.
• Regular supply chain performance reviews.
• Training on the New Homes Quality Code
(NHQC).
• Independent customer satisfaction surveys.
Key
Change during the year
Group strategic priorities
No change
Decreased
Increased
Disclosures
In undertaking their going concern review, which covers the period
to 31 December 2025, the Directors considered the Group’s
principal risk areas that they consider material to the assessment of
going concern.
People
As the UK economy continues to prove challenging, 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 curtailment in activities. This downside scenario
is based on a c.34% reduction in sales and c.87% reduction in
operating profits from the base case in 2024.
The constituents for the reduction in sales and operating profits are:
• Construction and development activity only takes place where
contracted;
54
Partners
Places
Planet
Performance
• No Hallam Land sales are assumed in 2024 unless already
contracted;
• Stonebridge Homes - a 10% decline in house prices is assumed
along with a 25% reduction in the number of plots sold; and
• Banner Plant revenue declines c.20%.
The downside model also 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 2024 with net debt of £77.8m, and with c.£83.7m
net debt at 29 February 2024, against current 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.
| henryboot.co.uk
The Group meets its day-to-day working capital requirements
through a secured loan facility (see note 25 of the Financial
Statements). The existing agreement runs to 23 January 2025 and,
an option, entirely in management’s control, to extend the existing
facilities by a further 12 months to 23 January 2026 has been put in
place. The extension maintains the existing facility terms other than
for a racheted interest rate of between 1.60% and 2.00% above
SONIA. Management has assumed the extension of the current
facility within the going concern assessment.
While the option provides security of funding throughout the going
concern period and has been used as the basis of the going concern
assessment, the Group has also agreed terms with existing lenders
on a new revolving credit facility, which is currently in the legal process
and expected to be signed shortly. The new facility level will increase
to £125m, for a period of three years and include options to extend
by one year to 2028 and a further year to 2029. The facility terms are
similar to the existing agreement and will be at a rate of 1.60% above
SONIA. The agreement includes an accordion to increase the facility
by up to £60m. The new facility is expected to complete in H1 2024.
None of the modelling undertaken by the Directors gives rise to any
breach of bank facility covenants or liquidity breaches in the going
concern period. 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, which is assessed half-
yearly. We have performed a reverse stress test to determine at what
point this covenant could be breached and it would require a further
15% reduction in EBIT, to the downside scenario, in December 2024.
We consider this implausible as our downside modelling includes
a c.34% reduction in revenue and c.87% reduction in operating
profit from our base case for 2024 without a breach, and as such
we consider any further reduction in revenue and operating profit
to be remote. Furthermore, the Directors are satisfied that there are
further mitigations that are in management’s control and can be
implemented quickly should the business require in order to satisfy
a covenant test. We are satisfied that we are able to comply with
covenants throughout the going concern period.
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 26 to 29 in the Strategic Report. These documents outline
the long term business model and are central to the understanding
of how the Group operates. We have operated the current business
model successfully since 2004 and have a 138-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 £38.8m per annum, added over £209m
to net assets (an increase of some 104%) and paid 66.2p 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 2024 with 8,501
plots with planning permission which, at a five-year average disposal
rate of 2,850 plots would imply that we have almost three years of
sales already in hand and a property development pipeline of over
£1.3bn 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 2025, as described in the Going
Concern statement on pages 54 and 55 followed by an assumed
return to planned levels of activity for year three. Our modelling
assumes that deferred land sale debtors falling due of c.£85m as
at 29 February 2024 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 considers
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 that, 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, pre-let or pre-sell 65% of
the committed development pipeline and secure 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.
55
GOVERNANCEFINANCIALSSHAREHOLDERSAnnual Report and Financial Statements for the year ended 31 December 2023 |OVERVIEWSTRATEGIC REPORT SECTION 172 STATEMENT AND STAKEHOLDER
ENGAGEMENT STRATEGY
Introduction
It is the aim of our Board and its Committees 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 key
decisions in 2023, 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.
As part of our ongoing work to refine the Henry Boot brand,
we will review the stakeholders to ensure they remain
appropriate and consider any new potential groups.
Board Information
• Our Board and senior leaders regularly engage with stakeholders as described on pages 57 to 58
• 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 considers
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 each annual set of 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 our culture and our values
• Actions directly brought about as a result of Board engagement – some examples are set out in the Employee
Engagement section on pages 94 to 96
• Where appropriate, outcomes of decisions are re-assessed, and further engagement and dialogue undertaken
56
| henryboot.co.uk 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 and we report our engagement activities in the table below. It is important to note that
the disclosure sets out Board-specific engagements, not the broad and thorough range of engagements undertaken by the wider Group
with each of these stakeholders.
Stakeholder
Shareholders
Employees
Customers
Pensioners
Why is it important
for the Board to
engage with this
stakeholder group
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.
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.
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.
How the Board engaged in 2023
How the Board responded
• The Remuneration Committee undertook
consultation with our major shareholders on the
new Remuneration Policy and implementation for
2024
• Annual Investor Roadshows and structured
feedback sessions with institutional investors and
major family and other shareholders
• 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
See our Employee Engagement report on pages 94
to 96, 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
• Validation of the draft
Remuneration Policy
• Ongoing and structured
communications on results
• Consideration of appropriate
guidance to be issued where
required
• Communication of key
initiatives such as strategy
and ESG objectives
• See examples within
Employee Engagement
report
• 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
• Increased focus on customer insight strategy with
survey results for each subsidiary being shared more
frequently with the Board.
• Introduction of structured
customer feedback initiatives
within each subsidiary
• Inclusion of customer
feedback mechanisms
within wider Marketing and
Communications Strategy
was considered at the
Strategy Days
As former
employees of the
business, pensioner
engagement ensures
we maintain focus
on our investment
outcomes and
returns.
• Adoption of a new CRM system will enhance the
Board’s oversight of customers during 2024
• Pensioners’ lunch is arranged annually by the
Company; with invitations extended to Board
members and attended by the Chair
• Ad hoc attendance by Board members at ad hoc
events for pensioners and family members
• Pensions report presented at every Board meeting
in addition to quarterly performance updates
• Oversight of pension related
matters on a regular basis
57
GOVERNANCEFINANCIALSSHAREHOLDERSAnnual Report and Financial Statements for the year ended 31 December 2023 |OVERVIEWSTRATEGIC REPORT SECTION 172 STATEMENT
Stakeholder
Suppliers
Communities
Environment
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.
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.
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.
How the Board engaged in 2023
How 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
• Matters Reserved for the Board reports from
Group subsidiary companies contains 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 pages 30 to 34
• Matters Reserved for the Board reports from
Group subsidiary companies contains sections on
stakeholder engagement including communities
• Tim Roberts chairs the Sheffield Pride of Place
Board established by BITC with the aim of focusing
efforts on Sheffield’s community priorities
• Matters Reserved for the Board reports from
Group subsidiary companies contains sections on
stakeholder engagement including environment
• 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
and are invited to relevant Responsible Business
Committee meetings to share updates
• Community partnership
targets included within
the Responsible Business
Strategy – see pages 30 to
34
• Environmental targets
included within the
Responsible Business
Strategy – see pages 30 to 34
• Responsible Business
Committee approved
adoption of Climate Change
Framework – more detail on
this within the Responsible
Business Committee Report
on page 116
National /
Local Media
To promote the
Henry Boot brand
and manage its
reputation.
• Tim Roberts has regular meetings with our PR
• Panel speaker slots being
agency and has undertaken interviews with various
media outlets
addressed for 2024 for CEO
and other business leads
• Updates provided to the Board as part of the CEO
• Non-Financial
Report
• Work to be carried out in 2024 to identify which
regulators to engage with
• Engagements with BITC, the CBI and UK Green
Building Council to provide training and understand
latest trends and regulations
Communications Agency
appointed and will co-
ordinate opportunities for
Board members
• Work to be carried out in
2024 to identify relevant
regulators with which
engagement should be
undertaken
• Engagement to be
undertaken with RICS on
careers
• Work to be carried out in
2024 to identify relevant
professional associations with
which engagement should be
undertaken
To build a two
way dialogue and
influence potential
decisions that may
affect the Group.
To liaise with
these groups to
understand best
practice, industry
updates and build
relationships.
Regulators
Professional
Associations
58
| henryboot.co.uk SECTION 172 STATEMENT
Need to foster relationships with suppliers, customers and
others
As part of the BVP project, we held 44 interviews by phone with
many of our external stakeholders. This included investors, our
brokers, suppliers, contractors, commercial property agents,
professional advisory organisations, local government, funding
partners, journalists, private sector developers and construction
partners. Gathering insight from our business contacts was
important to understand external perceptions of Henry Boot to
help shape the future direction of the brand.
Impact on community and environment
In a challenging economy, modern businesses need to consider
their impact on others and what they contribute to society beyond
financial results. We measure the impact of our work on our
people, our partners, our places and our planet. By consulting
with local media, government, higher education providers and
community partners, we have listened to their expectations of
us as a business. We hope our new proposition and branding
clearly resonates with our stakeholders as we continue to work
alongside them in a responsible way.
Stakeholders engaged:
• Shareholders
• Employees:
current and prospective
• Customers
• Suppliers
• Communities
• National Media
• Local Media
• Professional Associations
CASE STUDY
Evolving our brand
As referenced on page 7, the
Company commenced a rebrand
exercise during 2023 to better
understand what ‘value’ we provide
to our stakeholders and use this
feedback to refresh our brand identity.
The BVP (brand value proposition) project focused on what Henry
Boot means to our external stakeholders and the EVP (employer
value proposition) looked internally at what value we provide to
our employees, above and beyond their remuneration.
Under the Matters Reserved for the Board document, the Board
retains responsibility for the Group’s marketing, branding and
communications strategy, and the Board has overseen the
process from its inception to final approval of BVP, EVP and
the new brand architecture. Along this journey, the Board felt
it important to engage with our stakeholders, and incorporate
their views to create an outcome that is authentic, genuine and
resonates with our audiences.
Consideration of s.172 factors
Likely consequences of decisions in the long term
As a business with over 138 years of history, the Board
recognises the need to embrace change and keep evolving to
remain relevant and to achieve our long term ambitions. We want
our brand to appeal to our customers, the communities we work
in, and attract new generations of talent.
Interests of the Company’s workforce
People from all levels of the organisation were involved with the
BVP and EVP projects with their feedback collated and presented
to the Board through regular updates from the Group Marketing
and Communications Director and our external consultants.
BVP
–
Input was sought from ExCo at all stages of the process and
bi-monthly project updates were given
– A BVP Steering Group was established with seven senior
managers from across Henry Boot
– 65 of our people from a variety of roles, locations and tenure
attended one of three workshops held over three days at three
different locations. This represented c.16% of the workforce
at that time
EVP
– Monthly updates and development sessions with ExCo
– Dedicated sessions with senior managers and the HR Director
– An EVP Steering Group was established (with different
individuals to the BVP group)
– Two workshops were held over two days with 24 of our people
59
GOVERNANCEFINANCIALSSHAREHOLDERSAnnual Report and Financial Statements for the year ended 31 December 2023 |OVERVIEWSTRATEGIC REPORT OUR
PEOPLE
Our Approach
Our people are our greatest asset and are vital to our long term
strategic success and sustainability. Engaging and developing them
is crucial to our continued performance and growth.
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.
For roles that must be performed in a particular location, we
continually work to identify opportunities to be agile in different ways,
such as adapting start and finish times to minimise commuting time,
fulfil personal commitments, or make time for hobbies.
We believe empowering our people to work in an agile manner will
support their health and wellbeing 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.
Did You Know?
We have undergone a project within our Construction business
(HBC) to explore how we can bring more flexibility and agile
working to site-based colleagues. This involved working
alongside Timewise, introducing an agile working toolkit and
briefing sessions for managers to build their knowledge and
skills on how to support our people to think and work differently.
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
We continue to develop our Agile Working Framework, originally
launched in 2021 and to enshrine the learnings we adopted from
COVID 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. The framework is designed to be adaptable as
working trends and people’s expectations and needs evolve in the
post-COVID landscape.
60
| henryboot.co.uk 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 on their
experience of working at Henry Boot,
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 39 questions
that were used to measure progress
when compared with the responses
within our previous surveys conducted
over the last two years. Some questions
were based on those posed previously
to allow for statistical analysis of change;
however, other questions were more
focused on 2023 and specifically how
we have, and continue to, adapt to
develop our people’s experience of
working at Henry Boot.
77%
RESPONSE RATE
(INCREASE OF 6% FROM 2022)
The survey results show that our
people have remained resilient during
a challenging economic year, are
optimistic and open to change. Working
together as teams they maintain delivery
of 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, as well as across our
Senior Management teams throughout
the Group to identify any areas where
there is scope for increased engagement
with, and support for, our people.
VERY GOOD GROUP eNPS SCORE OF
30
A decrease of 9 points from 2022,
however, still benchmarked above
industry standard and considered a very
good score.
8.7
We received an 8.7 employee
engagement score when our people
were asked whether they have good
relationships with others in their team.
8.2
We received an 8.2 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 involved in reviewing the
results of the survey. In 2023, they
focused on increasing collaboration
across the Group.
Working collaboratively
Our eNPS of 30 (39 in 2022) was slightly
lower than last year. We believe this
remains a positive indicator of our people’s
experience at Henry Boot. The actions we
took focused on three key themes:
•
feeling valued for my contribution
• ensuring a healthy work-life balance
•
reward and recognition.
Wellbeing
Wellbeing was again a key theme in
the 2023 survey and we have been
working hard to support the health and
wellbeing of our people (see page 62
for more information). We recognise that
our people experience pressure and
we remain committed to developing
our Health and Wellbeing Strategy. 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.
In relation to employee engagement
more widely and the role of the Board
in this, please also see our Employee
Engagement section on pages 94 to 95.
61
GOVERNANCEFINANCIALSSHAREHOLDERSAnnual Report and Financial Statements for the year ended 31 December 2023 |OVERVIEWSTRATEGIC REPORT OUR PEOPLE
CONTINUED
Reward Strategy
We continue to embed our Reward Strategy which launched in
September 2022 and aims to ensure that all our people are fairly
rewarded. The pay and progression structures across the Group
have been aligned and communicated, 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
integral to this is our bonus structure which provides everyone with
an earnings opportunity linked to performance.
Our Reward Strategy can be summed up in these five principles,
which we continue to be guided by:
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 our 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 has continued to be developed
throughout 2023 by a newly formed Health & Wellbeing group led
by our HR team and including people from across the business.
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.
62
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 an employees’ 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 the providers online portal and the Hub.
Did You Know?
We recognised the impact that the cost of living and financial
crisis could have on our people’s financial security and
wellbeing. To further complement previous direct financial
support, we introduced the ability for our people to access their
next pay early, through an app called Early Pay.
We have continued to support financial wellbeing of our people as a
key part of our Health and Wellbeing Strategy with access to external
sessions to develop knowledge and understanding and will continue
with this in 2024.
In October 2023 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 2023 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, 64.2% 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.
Did You Know?
In 2023, we launched 2 new networks for our people in areas
they felt passionate about, SheNetWORKS (our female led
network), and Family Matters (our parents and carers network).
In 2024, we are launching two further employee led networks
focusing on Neurodiversity and the LGBTQ+ community.
| henryboot.co.uk 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).
Our forthcoming Early Careers Strategy (due to be published in
2024) will aim to excite and engage a diverse range of learners about
employment opportunities in our industry and guide us to provide a
top-class experience for all of our people in early career roles.
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 102 to 108. Our gender pay
gap (when measured as a median average) is currently 20.98%. 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
125
Senior managers*
Female
4
Male
331
Male
14
Direct workforce (not including Road Link (A69) or Stonebridge Homes)
*Statutory directors that are not on the PLC Board
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 2023 was 15.7%. 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 456 at the end of 2023.
We recruited a further 4 apprentices in 2023, which brings our
total number of current apprentices to 25 with a further 4 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 2023, 5 of our people completed their
education programmes and a further 3 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 2023, we also hosted a further cohort of our Leadership
Development Programme (LDP) which has been attended by 6
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 rolled out
our previously piloted, Management Development Programme
(MDP) which aims to provide Line Managers in the business with
enhanced people focused skills and behaviours. 23 of our Line
Managers completed the MDP programme in 2023.
We delivered 1,865 learning and development days (an average of
just over 4 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 that 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.
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 2023, we continued our approach to have a more open and
transparent conversation about performance against SMART
objectives. We also implemented our performance ratings
process, focused not only on operational tasks but also values and
behaviours. Our new HR system has supported the development
of this process, which will see a more streamlined PDR approach,
where focus is placed on the conversation rather than process alone.
This is an evolving process, which will continually develop over the
years ahead through engagement with our people across the whole
business.
63
GOVERNANCEFINANCIALSSHAREHOLDERSAnnual Report and Financial Statements for the year ended 31 December 2023 |OVERVIEWSTRATEGIC REPORT OUR PEOPLE
CONTINUED
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
In 2023 the Group’s Accident Incidence Rate (AIR) was 785 (2022:
202). The increase in our AIR score was a result of Banner Plant
not achieving their Health and Safety KPIs, which instigated several
improvement initiatives that will be implemented throughout 2024
to mitigate further incidents within in the business. Despite this, the
rest of the Group maintained robust Health and Safety standards
and made gains towards their individual Group Health and Safety
targets and KPIs.
Throughout the year, the Group has invested in various software
packages to facilitate and improve efficiency. Our performance is
tracked and reported to the Board to ensure Health and Safety
performance is discussed and driven from board level.
KPMG also completed an external Health and Safety audit, focusing
on the risk management aspect relating to Health and Safety across
the Group. In total there were six audit findings, necessitating minor
improvements.
Lastly, we have completed the Group’s annual Health and Safety
reports for all operating subsidiaries reflecting on the year’s
performance. Each report has resulted in recommendations that
have been debated by each subsidiary Executive Leadership Teams
and approved for investing during 2024 to ensure Health and Safety
remains embedded in how the Group operates.
The Building Safety Act 2022 is having a significant impact in
industry, and we have developed various guidance and systems to
ensure we are able to fulfil the requirements of the Act.
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.
64
| henryboot.co.uk 65
GOVERNANCEFINANCIALSSHAREHOLDERSAnnual Report and Financial Statements for the year ended 31 December 2023 |OVERVIEWSTRATEGIC REPORT OUR RESPONSIBLE
BUSINESS
Report on the recommendations of the Taskforce on Climate Related Financial
Disclosures (TCFD)
Compliance Statement
Over the course of 2023 Henry Boot has continued to implement
the recommendations of the Taskforce 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 the TCFD, and an explanation of the
steps yet to be taken where we are not currently fully consistent.
12 months to complete. The table also provides references to
other sections within this section and the wider Annual Report
where further detail can be found. We expect that over the course
of 2024, we will continue to look at areas where we can carry out
further work, more notably on the scenario planning aspect where
our approach is in its infancy. 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.
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
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 2024 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.
Assessment Table
Consistency
Level
Achieved
to Date
Future Developments
More Information
F
F
• As set out under
‘Governance’ below.
• As set out under
‘Governance’ below.
• Development of the Board and
ExCo Sponsorship roles to
provide additional leadership and
visibility.
• Further training and upskilling
sessions to be held with
Responsible Business Committee,
Executive Committee and other
senior leaders within the business
during 2024.
•
Internal subject matter experts
to routinely report to the Board
to ensure their understanding of
operational delivery is consistent
and up to date.
– Page 70 below
– Responsible
Business
Committee Report,
pages 114 to 118
– Governance
Structure, page 88
– Directors’
Remuneration
Report (pages 119
to 141)
– Risk Report (pages
48 to 55)
• Development of the Board and
– Page 70 below
ExCo sponsorship roles to provide
additional leadership and visibility.
•
Increased amount of ESG updates
to subsidiary businesses, ExCo
and Board planned for 2024.
• Further training and upskilling
sessions to be held with
Responsible Business Committee,
ExCo and other senior leaders
within the business during 2024.
– Responsible
Business
Committee Report,
governance
arrangements
page 118
– Responsible
Business
Committee Report,
management roles
on committee and
groups page 117
Provision
Governance
Board
oversight of
climate-related
risks and
opportunities
Management’s
role in
assessing
and managing
climate-related
risks and
opportunities
66
| henryboot.co.uk Key:
F Fully consistent P Partially consistent, progress made B Beginning of the journey, plans are in place to address
Consistency
Level
Achieved
to Date
Future Developments
More Information
F
P
Provision
Strategy
Climate-related
risks and
opportunities
identified over
the short,
medium, and
long term
Impact of
climate-related
risks and
opportunities
on the
organisation’s
business,
strategy,
and financial
planning
B
Resilience of
the strategy,
taking into
consideration
different
climate-related
scenarios
• These have been identified
• These will remain under review
– Risk Report
and are as set out in the table
within this report below.
• The overarching objective of
the Responsible Business
Strategy is to embed ESG
into the Group’s commercial
decision-making processes.
•
In 2023, we aligned the
framework of our commercial
strategy with the structure
of the Responsible
Business Strategy to create
an integrated strategic
framework incorporating our
approach to risk.
• The Strategy Days 2023
incorporated assessment
of climate-related risks and
opportunities into strategies
presented, and 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 to
date is captured within the
scenario modelling section of
this report.
(pages 48 to 55)
– Pages 71 to
74 below
on an annual basis in line with our
usual risk review process, with the
additional developments regarding
the risk review process that are
outlined below.
• Scenario modelling work was
not completed prior to the 2023
Strategy Days to enable these to
be reflected within the strategy
documents. Further work to be
carried out to implement the best
approach to this.
• Scoping of the remaining
scenario modelling work will take
place during 2024 to determine
whether this can be concluded in
time for the 2024 Strategy Days
or whether it will be concluded
in 2025.
• Qualitative scenario modelling
– Risk Report (pages
72 to 74)
work is ongoing, and
consideration will turn in the
next 12 months to quantitative
scenario modelling and how this
could further impact on strategic
considerations and further
financial planning. Scoping of
the remaining scenario modelling
work will take place during 2024
to determine whether this can be
concluded in time for the 2024
Strategy Days or whether it will
be concluded in 2025.
67
GOVERNANCEFINANCIALSSHAREHOLDERSAnnual Report and Financial Statements for the year ended 31 December 2023 |OVERVIEWSTRATEGIC REPORT OUR RESPONSIBLE
BUSINESS
CONTINUED
Consistency
Level
Achieved
to Date
Future Developments
More Information
F
B
P
• As set out in the
• We will continue to deepen our
accompanying notes to the
table within this report.
exploration of how these risks are
prioritised as against the other
principal risks identified, and our
assessment of their materiality,
over the course of 2024.
• As set out in the table within
• Qualitative scenario modelling
this report.
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.
– Pages 71 to
74 below
– Pages 71 to
74 below
• The Group undertakes an
• We will continue to deepen our
– Risk Report
exploration of how these risks are
prioritised as against the other
principal risks identified, and our
assessment of their materiality,
over the course of 2024.
(pages 48 to 55)
annual review of its principal
risks as documented in
pages 48 to 55 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 is 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.
Provision
Risk
Processes
for identifying
and assessing
climate-
related risks
Processes
for managing
climate-
related risks
How processes
for identifying,
assessing,
and managing
climate-
related risks
are integrated
into the
organisation’s
overall risk
management
68
| henryboot.co.uk Key:
F Fully consistent P Partially consistent, progress made B Beginning of the journey, plans are in place to address
Provision
Consistency
Level
Achieved
to Date
Metrics and Targets
Future Developments
More Information
P
P
P
Metrics
used by the
organisation
to assess
climate-related
risks and
opportunities
in line with
its strategy
and risk
management
process
Scope 1,
Scope 2, and
if appropriate,
Scope 3
greenhouse
gas (GHG)
emissions,
and the
related risks
Targets
used by the
organisation
to manage
climate-related
risks and
opportunities
and
performance
against targets
– Responsible
Business Strategy
(pages 30-34)
– Directors’
Remuneration
Report (pages 119
to 141)
– Net Zero Carbon
Framework at
henryboot.co.uk
– Pages 71 to
76 below
– Responsible
Business Strategy
(pages 30-34)
– Responsible
Business Strategy
(pages 30-34)
• Metrics relating to GHG
emissions have been
adopted as part of overall
Responsible Business
Strategy – see pages 30 to
34 and for further information
see our separate Responsible
Business Strategy Report.
• GHG emissions reduction
target supported by sub-
targets focused on reduction
of business travel, fleet
electrification, sustainable
generator usage and
reduction of waste and
water usage.
• Remuneration related targets
on greenhouse gas emissions
have been incorporated into
the bonus objectives for the
Executive Committee and were
also incorporated into LTIP
objectives for 2023 and 2024.
• Scoping of the remaining scenario
modelling work will take place
during 2024 to determine whether
this can be concluded in time
for the 2024 Strategy Days or
whether it will be concluded
in 2025. Further work will be
required in that process 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 and to adopt a
fully holistic approach to climate
change adaptation.
• Scope 1 and Scope 2
• The risks related to these have
greenhouse gas emissions
are set out below.
• Also find below a summary of
the work carried out to date
on assessing our Scope 3
GHG emissions.
• Targets relating to a number
of environmental factors have
been adopted as part of
overall Responsible Business
Strategy – see pages 30 to
34 and for more information
see our separate Responsible
Business Strategy Report.
not been fully quantified and will
be the subject of further review
and assessment.
• Further work to be carried
out to review the setting of a
baseline and target for Scope
3 GHG emissions. This work
is continuing during 2024 to
determine whether this can be
set during 2024 or whether it will
be concluded in 2025.
• 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.
• Further work to be carried out to
review the setting of a baseline and
target for Scope 3 GHG emissions.
This work is continuing during
2024 to determine whether this
can be set during 2024 or whether
it will be concluded in 2025.
69
GOVERNANCEFINANCIALSSHAREHOLDERSAnnual Report and Financial Statements for the year ended 31 December 2023 |OVERVIEWSTRATEGIC REPORT OUR RESPONSIBLE
BUSINESS
CONTINUED
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. The Responsible Business
Committee receives regular reports regarding the progress of
achievement against all ESG-related metrics and targets, and these
are also reviewed annually by the Board. 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. The
Responsible Business Committee ultimately provides 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.
In addition, there are a number of other measures in place to ensure
the best governance of all Responsible Business-related activities,
including:
• Reporting within the Strategy Days assessed how the business as
a whole and the individual subsidiaries assessed its climate related
risks and opportunities, based on a 2 degree and a 4 degree
pathway, with detail about how the strategies would respond in
these scenarios (details of which are set out on page 72 to 74
below). All strategies include wider ESG-related objectives, and
achievement against previous ESG metrics and targets.
• Remuneration Committee has oversight of the incorporation of
ESG-related metrics into Executive remuneration.
• Skills and experience in climate issues forms appropriate part
of Non-executive Director recruitment and are assessed in the
Board skills assessment.
• Training and engagement sessions held with industry climate
experts and Responsible Business Committee.
• Climate related risks and opportunities forms part of the annual
risk management procedures. Twice a year, the Audit and Risk
Committee reviews and discusses the principal risks to the
business, including climate related risks (as captured in the
table on pages 72 to 74 below), to determine whether they
are appropriate and sufficient, as informed by the views of
the subsidiary assessments. In addition to this, at the annual
Strategy Days climate-related risks and opportunities, and their
impact on subsidiary strategies, were reviewed by the Board and
Executive Committee. Where individual schemes and projects
are brought for approval as Matters Reserved for the Board, the
Board reports relating to these also contain an assessment of
climate-related impacts and mitigations, and any environmental
factors that have been taken into account when recommending
a particular course of action.
• Budgeting process accounts for all ESG-related expenditure
required for achievement of Responsible Business Strategy.
70
In relation to the role of senior leaders and managers within the
organisation, other measures include:
• 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 and annual Responsible Business Plans.
• The ESG Steering Group (comprising 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 ESG Steering Group assess climate related risks and
opportunities both directly associated with the delivery of
the CCF and more broadly with regards to our key markets,
stakeholder expectations, and compliance. It regularly engages
the Managing Directors of the subsidiary businesses to
assess their short, medium and long-term climate related risks
(and mitigation measures) and opportunities which are then
incorporated into their commercial strategy. It then provides
recommendations or requests for input from the Responsible
Business Committee, on measures such as property
improvements, energy saving initiatives or fuel usage, and the
impacts these can have on greenhouse gas emissions, together
with any associated financial outlay required.
• The Group Climate Forum – comprised of subsidiary
representatives from around the Group, together with Board and
ExCo sponsors – implements a number of initiatives relating to
climate change, and provides knowledge transfer and impact
on Group strategies. This results in recommendations to the
ESG Steering Group, and ultimately the Responsible Business
Committee, on areas where environmental improvement
activities can be made and innovative measures initiated.
• The appointment of a Climate Change Research Assistant
provides additional climate change focus to the activities
planned by management, and facilitates knowledge transfer with
Sheffield Hallam University.
• Senior leaders within the business have established a
relationship with the UK Green Building Council, to provide
insights specific to the built environment.
• 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
and interactions with subsidiaries and the Executive Committee.
By chairing the ESG Steering Group, the Chief Executive Officer
provides Executive direction and accountability for environmental
undertakings by the Group and provides recommendations
to the Responsible Business Committee, as well as a steer to
subsidiaries on action they should be taking.
| henryboot.co.uk 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 focused on each area
of physical and transitional risk identified as being pertinent to the
industries in which we operate. Once completed, this was compiled
into an overall matrix of risk and opportunity, which can be seen in
the tables below. 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).
During 2023, we have carried 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 also focused on 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 is modelled to impact on strategic direction, as well as
the opportunities that each part of the business should focus on
in developing their strategies. This was then considered within
the subsidiaries’ and Group’s strategies for the Strategy Days in
November 2023. A summary of the results of this strategic review is
set out under ‘Strategy’ below on page 74.
In relation to the timeframes considered for the risks and
opportunities identified below, 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. For this reason, ‘short term’ relates to
our Group for this period of more certain financial planning. Due to
the nature of our business, often property and land schemes can
be in development or the planning stages for over ten years, and so
this translates into a ‘medium-term’ timescale being to 2040, when
some of these schemes may come to fruition. Very few schemes
would be currently in development or planning beyond that period,
and so ‘long term’ for our business means beyond the foreseeable
scope of our current pipeline of opportunities. 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 and approach to take
into account changes in the regulatory and legislative landscape
and the evolving technological response and availability.
71
GOVERNANCEFINANCIALSSHAREHOLDERSAnnual Report and Financial Statements for the year ended 31 December 2023 |OVERVIEWSTRATEGIC REPORT OUR RESPONSIBLE
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Risks
Low emissions scenario:
2°C warming
Transition
Risk
Potential financial impact
2030
2040
2050
Response
Impact on strategy
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.
Technology
Capital cost of replacing/upgrading plant and vehicles.
Subsidiaries affected – BP and HBC
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
Market
Demand for sustainable assets rapidly increase/reduced
appetite for assets that do not meet sustainability criteria.
Subsidiaries affected – HBD, BP and HBC
Policy and
legal
Government legislation designed to reduce emissions
(such as emissions trading schemes/carbon tax
requirements, biodiversity net gains or Future Homes
standards) changes specifications and increases costs of
schemes impacting viability.
Subsidiaries affected – HLM, HBC 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
High emissions scenario:
4°C warming
Physical
Risk
Potential financial impact
2030
2040
2050
Response
Impact on strategy
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
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
Heat stress
Design criteria evolved to combat overheating.
Construction site conditions and practices will need to
ensure worker health and safety and wellbeing.
Subsidiaries affected – HBC, SBH and HBD
Flooding
Already a key requirement of planning process. Increased
number of flood plains in future may reduce land values.
Subsidiaries affected – HLM, SBH and HBD
72
A balanced transition to carbon friendly plant and vehicles considering our
In terms of accommodation units, loss of scrap value due to climate change
customer base, the Group’s NZC targets and availability of technological
and evolving practices means exploration of alternative modern construction
advancements. The Group have assessed the cost of transitioning as part
methods and initiatives such as container villages, which can result in a
of our NZC framework, including the transition of cabins, generators and
better return.
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.
Investment in plant and fleet which addresses other challenges (colder
weather/frozen ground, ventilation, ground preparation equipment) is
factored into the strategy.
It remains difficult to predict the speed at which our supply chain will
Opportunities are to be assessed more thoroughly based on technology and
transition and the likely increase in cost to the Group or indeed our ability to
scheme profile.
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 supply chain
(through sharing knowledge and resources) to a low carbon economy.
Supply chain liaison will be undertaken to understand capability and offering
to support altered requirements as well as any higher risk materials/supplies
to value engineer where possible.
The Group continues to invest in sustainable schemes and assets in line
Adjustments to plant and fleet procurement strategy are underway,
with Group targets and to position ourselves favourably in the market.
replacing diesel-powered vehicles with hybrid or electric options. By 2033,
The increasing cost of switching to sustainable options will, in some cases,
be passed to customers or be embedded within initial appraisals. We also
a significant proportion of our fleet will be eco-friendly. Investments in
hydrogen or electric HGV vehicles will be made when available.
expect the Group will retain costs in some cases as a responsible employer
For development activity, increasing our knowledge of how to achieve
and where this is the case provision is made in the Group’s budget and
class-leading ESG outcomes for refurbishment as well as redevelopment will
business plan.
look to address the retrofit agenda. HBD is already increasing the number
of developments that will achieve the highest environmental standards and
disposing of properties where high standards cannot be achieved.
On construction schemes, evaluations will include bid/no bid criteria
around site location/characteristics and allocation of risk with clients within
contracts, as well as customer capacity to cover increased costs.
The Group closely monitors existing and emerging legislation such as
Residential activity has adopted a follow strategy rather than lead position
the Future Homes Standard and biodiversity requirements in advance of
so the most cost-effective and proven material and technology designs
committing to a scheme. Appraisals then fully embed additional legislative
can be utilised without incurring early adopter risk. Modern methods of
costs, which currently remain within accepted targeted return levels.
construction to be explored further rather than traditional build methodology,
where design adaptability can be more easily achieved and on-site weather-
related delays can be more easily mitigated.
Strategic land forecasts recognise potential decreases in profit per plot
Viability of ongoing projects remains under constant scrutiny to understand
although we will look to begin modelling the full financial impact in the next
the impact on profit per plot of evolving climate change requirements in
18 months.
order that S106 obligations can be appropriately negotiated, infrastructure
provision phased and where necessary viability assessments mounted at
application stage to assist in the maintenance of profit per plot.
Emerging policies to be monitored, so as to ‘future proof’ longer-term
schemes against changing and increasing environmental requirements, and
any impacts on sites not yet within the portfolio.
Current scheme appraisals make allowance for delays and contractual
Ongoing viability pressures will increase and will continue to be appropriately
protections are used where possible. We therefore do not expect any
monitored and mitigated against, through appraisals, supply chain/customer
material short-term financial losses. In the longer term where the Group is
liquidity checks and appropriate contractual mechanisms.
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
On construction schemes, evaluations will continue to include more
and wellbeing impact on our people. Whilst some costs will inevitably be
sophisticated bid/no bid and appraisal criteria around site location,
passed on to the end user, there will clearly also be some financial impact
characteristics and allocation of risk with clients within contracts, as well as
on the Group.
customer capacity to cover increased costs.
Flood assessments are considered on all schemes with a particular focus
Land appraisals will be ever more focused on the optimum size of site which
on strategic land which can be held for longer durations. In the long term
should be promoted, mindful of maximising profit when set against the
we could experience a reduction in the volume of suitable land available
environmental agenda and the emerging need to accommodate biodiversity
leading to reduced margins or the impairment of land values where flooding
and flood measures on site.
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.
| henryboot.co.uk 2°C warming
Risk
Potential financial impact
2030
2040
2050
Response
Impact on strategy
Unmitigated Risk
Subsidiary
Significant risk
HBC = Henry Boot Construction
BP = Banner Plant
Elevated risk
HLM = Hallam Land Management
SBH = Stonebridge Homes
Low risk
HBD = Henry Boot Developments
RL = Roadlink (A69)
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.
In terms of accommodation units, loss of scrap value due to climate change
and evolving practices means exploration of alternative modern construction
methods and initiatives such as container villages, which can result in a
better return.
Investment in plant and fleet which addresses other challenges (colder
weather/frozen ground, ventilation, ground preparation equipment) is
factored into the strategy.
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 supply chain
(through sharing knowledge and resources) to a low carbon economy.
Opportunities are to be assessed more thoroughly based on technology and
scheme profile.
Supply chain liaison will be undertaken to understand capability and offering
to support altered requirements as well as any higher risk materials/supplies
to value engineer where possible.
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 targeted 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.
Adjustments to plant and fleet procurement strategy are underway,
replacing diesel-powered vehicles with hybrid or electric options. By 2033,
a significant proportion of our fleet will be eco-friendly. Investments in
hydrogen or electric HGV vehicles will be made when available.
For development activity, increasing our knowledge of how to achieve
class-leading ESG outcomes for refurbishment as well as redevelopment will
look to address the retrofit agenda. HBD is already increasing the number
of developments that will achieve the highest environmental standards and
disposing of properties where high standards cannot be achieved.
On construction schemes, evaluations will include bid/no bid criteria
around site location/characteristics and allocation of risk with clients within
contracts, as well as customer capacity to cover increased costs.
Residential activity has adopted a follow strategy rather than lead position
so the most cost-effective and proven material and technology designs
can be utilised without incurring early adopter risk. Modern methods of
construction to be explored further rather than traditional build methodology,
where design adaptability can be more easily achieved and on-site weather-
related delays can be more easily mitigated.
Viability of ongoing projects remains under constant scrutiny to understand
the impact on profit per plot of evolving climate change requirements in
order that S106 obligations can be appropriately negotiated, infrastructure
provision phased and where necessary viability assessments mounted at
application stage to assist in the maintenance of profit per plot.
Emerging policies to be monitored, so as to ‘future proof’ longer-term
schemes against changing and increasing environmental requirements, and
any impacts on sites not yet within the portfolio.
Potential financial impact
2030
2040
2050
Response
Impact on strategy
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.
Ongoing viability pressures will increase and will continue to be appropriately
monitored and mitigated against, through appraisals, supply chain/customer
liquidity checks and appropriate contractual mechanisms.
The Group remains mindful to develop sustainable assets and of the health
and wellbeing impact on our people. Whilst some costs will inevitably be
passed on to the end user, there will clearly also be some financial impact
on the Group.
On construction schemes, evaluations will continue to include more
sophisticated bid/no bid and appraisal criteria around site location,
characteristics and allocation of risk with clients within contracts, as well as
customer capacity to cover increased costs.
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.
Land appraisals will be ever more focused on the optimum size of site which
should be promoted, mindful of maximising profit when set against the
environmental agenda and the emerging need to accommodate biodiversity
and flood measures on site.
73
In this scenario the business is exposed
Technology
Capital cost of replacing/upgrading plant and vehicles.
Subsidiaries affected – BP and HBC
Risks
Low emissions scenario:
Transition
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
Market
Demand for sustainable assets rapidly increase/reduced
appetite for assets that do not meet sustainability criteria.
Subsidiaries affected – HBD, BP and HBC
Policy and
Government legislation designed to reduce emissions
legal
(such as emissions trading schemes/carbon tax
requirements, biodiversity net gains or Future Homes
standards) changes specifications and increases costs of
schemes impacting viability.
Subsidiaries affected – HLM, HBC 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
High emissions scenario:
4°C warming
Physical
Risk
In this scenario the business is exposed
to significant physical risks, both acute
Extreme
weather
Delayed build programmes due to extreme weather
events, leading to additional risk/costs. Ground or site
and chronic, including exposure to
conditions –
conditions/location is affected by climate events which
flooding, strong winds and heat stress
precipitation,
means that they are no longer viable for their intended
resulting in damage to assets, prolonged
flood, wind
use.
Subsidiaries affected – HBC, SBH and HBD
project delivery timescales and more
onerous whole-of-life obligations on
buildings and assets to ensure materials
can withstand temperature extremes.
Heat stress
Design criteria evolved to combat overheating.
Construction site conditions and practices will need to
ensure worker health and safety and wellbeing.
Subsidiaries affected – HBC, SBH and HBD
Flooding
Already a key requirement of planning process. Increased
number of flood plains in future may reduce land values.
Subsidiaries affected – HLM, SBH and HBD
GOVERNANCEFINANCIALSSHAREHOLDERSAnnual Report and Financial Statements for the year ended 31 December 2023 |OVERVIEWSTRATEGIC REPORT OUR RESPONSIBLE
BUSINESS
CONTINUED
Identified on the previous spread are the primary risks to the Group assessed in relation to likelihood and impact – 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
the ability to attract and retain a talented workforce who are committed to climate change adaptation and
increase in insurance costs.
Opportunities
In addition to the opportunities presented through the adaptation of our strategies as set out in the table above, a summary of the principal
overarching opportunities we have identified is set out below.
Opportunities
Description
Response
Resources
Recruitment of modern and
progressive people
The Group’s delivery on ESG matters, and in particular climate change,
has 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 that are operationally net
zero and BREEAM excellent. This opportunity will be progressed as we
recycle and develop assets, including the Group’s investment property,
enabling us to appeal to a diverse range of tenants.
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
For the Strategy Days held in November 2023, each of the main subsidiary businesses within the Group assessed its own climate related
risks and opportunities, based on a 2 degree and a 4 degree pathway, with detail about how the strategies have responded in these
scenarios, both in terms of mitigation and also in order to benefit from opportunities presented. A selection of the most relevant items
identified is set out below in the final column of the ‘Risks’ table set out on the previous page. The 2 degree and 4 degree pathways have
been selected as being the most appropriate in the absence of our scenario modelling having being completed; representing as they do a
more probable scenario and then a less probable but more extreme and catastrophic outcome. By carrying out this exercise, each of the
subsidiary businesses has ensured that the resilience of its respective strategies has been improved by modelling the impacts of the identified
risks and opportunities within their plans. It ensures that products and services are fit for purpose, and any anticipated trends have been
catered for when thinking about the longer term future of the various businesses. We also recognise the importance of our approach on
environmental issues to future talent acquisition and monitor any impact this is having on our recruitment activities. When scenario modelling
is concluded and a more detailed set of assumptions and trends can be explained regarding the scenarios considered, this will be included
within the relevant disclosures.
74
| henryboot.co.uk 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
net zero carbon 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 net zero carbon.
4.0
3.0
2.0
1.0
0.0
)
e
2
O
C
k
(
s
e
n
n
o
T
Original Trajectory
Actual
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
2,833
3,313
4,404
3,204
3,357
3,095
3,654
2,985
3,958
2,875
3,897
2,765
2,653
1,392
n/a
11,551
12,600
13,647
13,636
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 forecasts 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 COVID 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.
In alignment with our decarbonisation trajectory, we saw a decrease in our direct GHG emissions in 2023. This is positive evidence that our
internal processes and collaboration with our partners is leading to a reduction in direct GHG emissions.
Our energy usage (not including Stonebridge Homes) decreased, with 39% less gas and 23% less electricity used when compared with our
2019 baseline. Business travel in the year moderately increased but is 20% lower than our 2019 baseline. We trialled a number of innovative
technological solutions (including sustainable site-based generator solutions), which we anticipate 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 have undertaken
a project to analyse our indirect emissions ahead of establishing a reduction target and action plan. The setting of this target will require
significant collaboration with our people, supply chain and customers to ensure we take a collaborative approach to reaching NZC, and
will be an activity that is considered over the course of 2024. Scope 3 emissions reported on by the Group within total energy consumed
include transmission and distribution losses from electricity, well to tank emissions from all fuels and employee transport.
In addition to our decarbonisation targets, we have also established a range of additional targets (see page 33) focused on the reduction of
waste, water and plastic usage and creation. 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.
75
GOVERNANCEFINANCIALSSHAREHOLDERSAnnual Report and Financial Statements for the year ended 31 December 2023 |OVERVIEWSTRATEGIC REPORT
OUR RESPONSIBLE
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CONTINUED
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)2
Upstream and downstream indirect emissions (Market based)
Total emissions (Location based)
Total emissions per employee1,3
2023
Tonnes
2022
Tonnes
2,300
2,300
533
107
2,833
5.1 tonnes CO2e
1,064
970
3,897
7.0 tonnes CO2e
2,453
2,453
477
–
2,930
5.5 tonnes CO2e
1,028
906
3,958
7.4 tonnes CO2e
Trend
Fall
Rise
Fall
Fall
Rise
Fall
Fall
1 Employee numbers are based on the monthly average for the year.
2 Scope 3 includes transmission and distribution losses from electricity, well to tank emissions from all fuels and employee transport.
3 100% of emissions and energy consumed are within the UK and offshore area.
Carbon Emissions by Segment
Henry Boot Group energy usage
Total energy consumed (Scopes 1, 2 and 3)
2023
MWh
13,636
2022
MWh
13,647
Trend
Fall
Henry Boot Group
CO2e emissions
2023
2023
tonnes
of CO2
intensity
ratio tonnes
of CO2e
2022
tonnes
of CO2
2022
intensity
ratio tonnes
of CO2e
Property investment and development
Land development
Construction
Group overheads
Total gross controlled emissions
1,003
54
2,709
131
3,897
3.20
1.39
27.22
1.39
1,089
33
2,740
96
3,958
9.29
0.94
21.12
1.17
Intensity
basis
per 1,000 sqft of
investment property
with communal areas
per employee
per £1m of turnover
per employee
Trend of
intensity
Fall
Rise
Rise
Rise
Our carbon emissions for the year ended 31 December 2023 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 decreased by 11% when compared with 2019. When compared to 2019 pre-COVID levels the Group has reduced
direct GHG emissions by 14%; this equates to a decrease of 0.69 tonnes per employee.
76
| henryboot.co.uk Non-financial and Sustainability Information
The following table sets out where stakeholders can find relevant non-financial and sustainability 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 supports these requirements.
Relevant Henry Boot policies
and procedures
Reporting requirement
Business model
Principal risks and impact of
business activity
Non-financial KPIs
Employee engagement
Board Diversity Policy
Board Stakeholder Policy
Where to read more
in this report
Business Model
Risks and Uncertainties
Audit and Risk Committee Report
Strategy
Key Performance Indicators
Our Responsible Business
Our People
Corporate Governance Report
Human rights
Modern Slavery Statement and Policy
Rights to Work
Whistleblowing
Our People
Social matters
Board Stakeholder Policy
Our Responsible Business
Anti-bribery and corruption
Anti-bribery and Corruption Policy
Environmental matters
Board Stakeholder Policy
Climate Change Framework
Our People
Our Planet
TCFD
Page
20 – 21
48 – 55
109 – 112
26 – 29
30 – 34
60 – 64
78 – 141
60 – 64
60 – 64
64
33
66 – 69
77
GOVERNANCEFINANCIALSSHAREHOLDERSAnnual Report and Financial Statements for the year ended 31 December 2023 |OVERVIEWSTRATEGIC REPORT GOVERNANCE
78
| henryboot.co.uk Contents
Board of Directors
Executive Committee
Chair’s Introduction
Governance at a Glance
Corporate Governance Report
– Division of Responsibilities
– Board Leadership and
Company Purpose
– Composition, Success and Evaluation
– Nomination Committee Report
– Audit and Risk Committee Report
– Corporate Governance Statement
– Responsible Business Committee Report
– Directors’ Remuneration Report
– Remuneration Policy
– Annual Report on Remuneration
Director’s Report
80
82
84
86
87
90
97
102
109
113
114
119
123
131
142
79
FINANCIALSSHAREHOLDERSAnnual Report and Financial Statements for the year ended 31 December 2023 |OVERVIEWGOVERNANCESTRATEGIC REPORT 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
Brings to the Board
Key strengths:
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
Non-executive Chairman
of Nexus Planning Limited,
independent Board
Representative for the
Paradise Circus Project on
behalf of Birmingham City
Council.
Key
Committee Membership
• 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
Chair of Business in the
Community’s Sheffield Pride
of Place Board.
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
Director and Trustee of
South Yorkshire Community
Foundation Limited
and Member of the CBI
Yorkshire and Humber
Regional Council.
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.
Additional roles held
Non-executive Chair of
Made Tech Group plc,
Non-executive Director of
Gateley (Holdings) Plc, Non-
executive Director of Pollen
Street Group Limited and
Non-executive Director of
Braemar PLC.
N Nomination A Audit and Risk R Remuneration B Responsible Business
Committee Chair
80
| henryboot.co.uk James Sykes
Non-executive Director
Talita Ferreira
Non-executive Director
Gerald Jennings
Non-executive Director and
Designated Non-executive Director
for Workforce Engagement
Serena Lang
Non-executive Director
N B
Date of appointment
March 2011
N A R B
Date of appointment
January 2024
N A R
Date of appointment
October 2015
N A R B
Date of appointment
August 2022
Independent
No
Independent
Yes
Independent
Yes
Independent
Yes
Brings to the Board
Key strengths:
Brings to the Board
Key strengths:
Brings to the Board
Key strengths:
Brings to the Board
Key strengths:
• Significant strategic land
• Extensive finance,
• Widespread industry
• Extensive strategic
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
Chairman and Partner in
the London office of Saffery
LLP Chartered Accountants,
which he joined in 1987. He
is a Non-executive Director
of Saffery Trust International
business in Guernsey.
risk and governance
experience
• Extensive experience
in leadership, culture
and transformation
programmes
• Certification from
experience in retail and
property
• Successful track record
of delivering significant
development projects
and working with a wide
range of stakeholders.
Cambridge Institute for
Sustainability Leadership
• 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
Non-executive Chairman
of Social Communications
(Leeds) Limited and
Director of G R Jennings
Properties Ltd.
• Strong strategic and
corporate experience
across multiple industries
Prior to joining Henry Boot
PLC, Talita held a Non-
executive Director and Chair
of Audit role at Tandem
Bank Ltd and executive
roles as CFO and People
Director at BMW UK Ltd,
BMW Automotive Ireland
Ltd, BMW Group Financial
Services Ltd (UK and Ireland)
and Alphabet (GB) Ltd.
Additional roles held
Non-executive Director
and Chair of the Audit
Committee of FCE Bank
plc, CEO and Founder of
Authentic Change Solutions
Limited, Course Leader and
Facilitator for the Institute of
Directors.
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
Chair of Trifast plc and
Non-executive Director of
Ainscough Crane Hire Ltd.
81
FINANCIALSSHAREHOLDERSAnnual Report and Financial Statements for the year ended 31 December 2023 |OVERVIEWGOVERNANCESTRATEGIC REPORT EXECUTIVE
COMMITTEE
Amy Stanbridge
General Counsel and
Company Secretary
Nick Duckworth
Hallam Land
Management Limited
Edward Hutchinson
Henry Boot
Developments Limited
Tony Shaw
Henry Boot
Construction Limited
Date of appointment
October 2018
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
Date of appointment
Chief Executive in 2010
Date of appointment
HR Director in 2022
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. Nick is
an Exco Sponsor for the
Group’s Community and
Educational Investment
working with the relevant
sub-committees that have
oversight of our responsible
business activity.
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 and
Humber Regional Board for
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
Brings to the
Brings to the
Executive Committee
Executive Committee
Darren Stubbs has a
wealth of experience in
Rachel White joined Henry
Boot PLC in 2001 as a
the housebuilding industry
graduate. She has held
and a proven track record
a number of roles in the
in delivering successful
People team, before taking
management. He began his
housing developments,
the role of HR Director
career as a General Manager
spanning a 40-year career.
in July 2022. Rachel
with Whitbread before
Darren founded Stonebridge
leads the delivery of our
transitioning into sales and
Homes in 2010, a jointly
People Strategy to meet
management within facilities
owned company with Henry
the requirements of our
management. At the Algeco
Boot PLC. Darren is the
internal stakeholders,
Group, Jonathan worked as
Chairman of The Yorkshire
including employee relations,
an Account Director before
Children’s Charity and Vice
succession planning, talent
being promoted to Regional
Chair of Zarach, a charity
management, diversity and
Director, overseeing four
who provide beds to children
inclusion, wellbeing, reward
production facilities. He also
living in poverty.
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.
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.
Independent
No
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.
Additional roles held
Trustee of St Luke’s Hospice,
Sheffield and member of
Business in the Community’s
(BITC) Yorkshire and
Humber Board.
82
| henryboot.co.uk Date of appointment
Date of appointment
Date of appointment
Managing Director in 2016
Managing Director in 2018
Managing Director in 2021
Date of appointment
Managing Director in 2021
Date of appointment
Chief Executive in 2010
Date of appointment
HR Director in 2022
Jonathan Fisher
Banner Plant Limited
Darren Stubbs
Stonebridge Homes Limited
Rachel White
Henry Boot PLC
Brings to the
Executive Committee
Nick Duckworth MRTPI
Brings to the
Executive Committee
Edward Hutchinson BSc
Brings to the
Executive Committee
Tony Shaw joined Henry
began his career in a private
(Hons) MRICS started his
Boot Construction Limited as
sector planning consultancy,
career in quantity surveying
a Trainee in 1985 and with
Phillips Planning Services,
before quickly progressing
a background in production
in 1990. He left there
in late 1992 and joined
into project management.
planning and project
He joined Henry Boot
management, he has held
Hallam Land’s then newly
Developments in 2004 as
a number of positions in the
established Northampton
a Project Manager, rapidly
business, including Regional
office. In 1997, Nick set
up the South West office
of Hallam Land in Bristol
rising to the position of
Senior Project Manager,
in 2006. Edward was
Manager and Operations
Director. Tony is North East
Regional Chair and a Director
and became the Regional
appointed a Director in 2012
of the National Federation of
Manager. He was appointed
and became Managing
Builders (NFB) and a Director
a Director in 2002. Nick is
Director in 2018. In January
of the Yorkshire Builders
an Exco Sponsor for the
Group’s Community and
Educational Investment
2021, he became a board
Federation (YBF). Tony took
member of the Yorkshire and
over as Managing Director in
Humber Regional Board for
July 2021.
working with the relevant
LandAid, following which
sub-committees that have
he assumed the position of
oversight of our responsible
Chair in January 2023.
business activity.
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 40-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
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.
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
People 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.
Additional Executive
Committee Members
Tim Roberts
Chief Executive Officer
Darren Littlewood
Chief Financial Officer
83
FINANCIALSSHAREHOLDERSAnnual Report and Financial Statements for the year ended 31 December 2023 |OVERVIEWGOVERNANCESTRATEGIC REPORT CHAIR’S INTRODUCTION
We have weathered 2023 well and look forward to building
on the foundations of success, through several Group-
wide initiatives, that we believe stand us in good stead to
come together and work more collaboratively as a Group
of companies.”
we believe stand us in good stead to come
together and work more collaboratively as a
group of companies.
Performance and Cohesion
A number of important developments in
our ways of working have taken place
with Board oversight during 2023 such as
the move of our head office to the Isaacs
Building in Sheffield City Centre, and the
progression of key Group activities relating
to IT, marketing and communications
(including Brand Value and Employer Value
Propositions), people and reward, to name
but a few. We view these developments as
important building blocks to enable us to
realise our ambition of being a modern and
progressive business, and consideration
of how we achieve these elements formed
an integral part of our Strategy Days in
November 2023. The focus of the Strategy
Days, as it had been throughout the year,
was maintaining focus on achievement of
our medium-term objectives whilst also
ensuring an appropriate focus on cost
consciousness and maximising efficiencies.
We believe that these efficiencies will be
enhanced in their delivery by continuing
the appropriate focus on delivering those
key Group activities which will promote
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, we had a great opportunity to
challenge our thinking and come together
as a senior leadership team.
Leadership Development
and Oversight
The initiatives that were launched in 2022
have been embedded and enhanced in
2023 in relation to our approach to reward
and recognition, leadership development
and broader succession issues. 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 thinking
about how this learning can be cascaded
down including through the rollout of our
Management Development Programme.
Succession Planning
and Diversity
During 2023 we have continued the work
that was outlined in our reports from
previous years to implement our succession
planning approach for the Board. As
highlighted above, we have been very
pleased to welcome Talita Ferreira to the
Board at the start of 2024, following a
recruitment exercise in the latter part of
2023, and you can read about our approach
in more detail in the Nomination Committee
Report on pages 102-108, as well as our
further plans for 2024. We will naturally be
sad to lose the skills and experience that
have been brought to the Board by Gerald
Jennings and Joanne Lake over their tenure
with us, as well as the excellent working
relationships we have always enjoyed as
a team.
PETER MAWSON
CHAIR
During 2023 there have been no changes
within the Board composition, giving us an
opportunity to embed the changes within the
Board that took place during 2022 and reflect
on our next steps in succession planning.
Serena Lang has assumed the role of Chair
of the Responsible Business Committee, to
which she brings her wealth of knowledge
and experience in this arena. We have, in early
2024, welcomed Talita Ferreira to our Board
and anticipate several forthcoming changes
as Joanne Lake and Gerald Jennings prepare
to step down after their nine-year tenure,
towards the end of 2024. This will include
changes to the Chairs of Audit and Risk and
Remuneration Committees, as well as the
designated Group Employee Forum liaison
and Senior Independent Director, which are
outlined in the Nomination Committee Report
on pages 102-108.
2023 has been a year of challenges within
our industries and one which the Board has
keenly managed during this period. The
economic climate in which we operate has
increasingly turned our focus to managing
and mitigating risk and a thorough review
of our strategic approach, in common with
many other businesses of our nature. The
Board has a dynamic approach to setting
its agendas and pivoting to focus on the
issues that require the closest attention,
underpinned by our November Strategy
Days which allow us to examine in greater
detail what our direction of travel is and how
we are responding to the issues we are
seeing in our key markets. In this way, we
have weathered 2023 well and look forward
to building on these foundations of success
during the forthcoming years. This includes
having an ever more cohesive approach
to a number of Group-wide initiatives that
84
| henryboot.co.uk However, within any period of change we
recognise the benefits of welcoming fresh
perspectives to our collective. I am looking
forward to realising these during 2024
and continuing to bolster those excellent
relationships with our refreshed Board.
Responsible Business
Delivering on our Responsible Business
goals remains key and, as we reported
on last year, we continue to refine the
ways in which the Board oversees and
contributes to this important work. One
major development was the adoption by
each member of the Responsible Business
Committee of a ‘Sponsorship’ role for
essential aspects of our Responsible
Business Strategy, enabling Directors to
become more acquainted with the excellent
work that is taking place throughout the
Group and improving its visibility, as well
as contributing their own valuable insights.
We continued to welcome a range of
guest speakers to help us develop our
understanding of key drivers for changes
within our industries, such as the UK
Green Building Council, and you can read
more about this in detail on pages 116. In
addition, we continue to improve our focus
on ensuring that we support the businesses
with their Responsible Business ambitions,
overseeing a number of working groups
focusing on important subjects such as
climate change and health and wellbeing.
Code Compliance
During 2023 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, as well as the report set out at
page 113 for more information.
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, whilst 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 96
Composition, success and
evaluation
Read more on pages 97 to 108
Audit, risk and internal control
Read more on pages 109 to 112
Remuneration
Read more on pages 119 to 141
The following report sets out our
structure, governance processes and key
activities undertaken by the Board and its
Committees during 2023. 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
23 May 2024 (see page 212 to 215 for full
details).
PETER MAWSON
CHAIR
11 April 2024
85
FINANCIALSSHAREHOLDERSAnnual Report and Financial Statements for the year ended 31 December 2023 |OVERVIEWGOVERNANCESTRATEGIC REPORT GOVERNANCE
AT A GLANCE
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. We
have now oriented our successful strategy to the five ‘P’s -People,
Places, Planet, Partners and Performance, an overview of which is
set out below.
Places:
It was a significant decision to
leave our old HQ, Banner Cross
Hall, and the Board engaged with
the workforce before making the
decision to relocate to the Isaacs
Building in Sheffield City Centre.
The Board oversaw this process to
ensure that the new environment
would be a collaborative space, fit
for modern-day working and would
attract and motivate people to work
for Henry Boot. It was ensured
that the space was flexible, could
accommodate future growth and that
local and sustainable materials and
suppliers were used where possible.
Performance:
During the year, the Board
considered several investment
decisions from the businesses. The
Board examines a number of factors
before making a decision, such as:
•
•
•
•
•
the risks involved in the project
and any mitigations
lessons learned from similar
projects
the alignment to the Group
strategy
the impact on cashflow and
return on investment
the social value and net zero
carbon credentials
• views and impacts on
stakeholders
Projects that were approved in
2023 include the acquisition of land
at Barmby Dunn, Doncaster for
Stonebridge Homes and proceeding
with the contract for AMRC3 at
Sheffield Business Park.
People:
The Board meets with the Group
Employee Forum twice annually and
receives updates at every meeting
about their work through Gerald
Jennings, our designated Non-
executive Director. In September,
the GEF presented their proposals
for increasing collaboration
throughout the Group with the Board
discussing their ideas and approving
eight of their recommendations
to be implemented. Alongside
detailed reports on the employee
engagement survey results from our
specialist providers in February, the
Board regularly considers the views
of the workforce and seeks their
input. You can read more about our
people and culture on page 60-64
and 91-96.
Board Activities in 2023
Planet:
Throughout the year, training sessions led by the UK
Green Building Council and Deloitte were held to increase
awareness and understanding of how the wider built
environment is demonstrating best practice in climate change
adaptation and how the ESG regulatory and legislative
framework is evolving.
In addition, the Remuneration Committee included targets to
reduce our Scope 1 and 2 carbon emissions in the LTIP plan
for the Executive Directors and all senior management in line
with our net zero carbon aspirations.
Partners:
At various meetings in the year, the Board has overseen an
ongoing project to redefine the Henry Boot brand. In a bid
to produce an authentic and considered outcome, internal
and external interviews were conducted to understand what
Henry Boot represents to a wide range of stakeholders. This
process included internal workshops with approximately
15% of the workforce. At each step, the Board has listened
to feedback from our external consultants, our in-house
specialists, the Executive Committee and the employee
workshops to inform their decision-making. We look forward
to sharing the results with you during 2024.
86
| henryboot.co.uk 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 UK
Corporate Governance Code 2018 (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.
Executive
25%
Independent
Non-executive Chair
12.5%
Board composition
For this financial year, as a premium listed company, the Company
was subject to compliance with the Code. Further details of how
the Code has been applied are set out throughout this Corporate
Governance section and a statement of Code compliance is
presented on page 113.
The Board
The names, responsibilities and other details of each of the
Directors of the Board are set out on pages 80 and 81. There have
been no Board changes during 2023 but Talita Ferreira joined as a
Non-executive Director on 1 January 2024. Biographies for each
Director are shown on page 80 and 81 and roles and responsibilities
can be viewed on the website.
Throughout the year, there have been six scheduled Board
meetings attended by all Directors, and one separate Board
meeting to approve the appointment of the new Director. 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.
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
Meetings attended
Eligible meetings
7
7
7
7
7
7
7
7
7
7
7
7
7
7
Independent
Non-executive
50%
Non-independent
Non-executive
12.5%
0-2 years
25%
3-5 years
12.5%
Board tenure
6+ years
62.5%
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 144).
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.
87
FINANCIALSSHAREHOLDERSAnnual Report and Financial Statements for the year ended 31 December 2023 |OVERVIEWGOVERNANCESTRATEGIC REPORT CORPORATE
GOVERNANCE REPORT CONTINUED
Board Diversity Disclosures
In accordance with the Listing Rules, the disclosures relating to gender identity and ethnic background are set out below. These were
self-reported by members of the Board and ExCo, having been asked to select which of the categories within each of the tables below the
recipients identified as.
Number
of board
members
Percentage
of the
board
Number of senior
positions on the
board (CEO, CFO,
SID and Chair)
Number in
executive
management
Percentage
of executive
management
Men
Women
Not specified/ prefer not to say
5
3
0
62.5
37.5
0
3
1
0
7
2
0
78
22
0
Number
of board
members
Percentage
of the
board
Number of senior
positions on the
board (CEO, CFO,
SID and Chair)
Number in
executive
management
Percentage
of executive
management
White British or other White
(including minority-white groups)
Mixed/Multiple Ethnic Groups
Asian/Asian British
Black/African/Caribbean/Black
British
Other ethnic group,
including Arab
Not specified / prefer not to say
8
0
0
0
0
0
Governance framework
100
0
0
0
0
0
4
0
0
0
0
0
Board
9
0
0
0
0
0
100
0
0
0
0
0
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.
Subsidiary
Employee
Forums
Land
Promotion
Hallam Land
Management
Executive Committee
Property Investment
and Development
Henry Boot
Developments
Stonebridge
Homes
Construction
Henry Boot
Construction
Banner
Plant
Road Link (A69)
88
| henryboot.co.uk
DIVISION OF RESPONSIBILITIES
Key features
Board
• The Board maintains a formal schedule of matters reserved for its decision that cannot be delegated elsewhere
(available to view on the website)
• This schedule is reviewed at least annually and includes:
– establishing long term strategy and objectives
– overseeing culture and stakeholder engagement
– approval of annual budgets, financial results and the dividend policy
– approval of capital expenditure above an agreed amount
–
the determination and monitoring of the Company’s principal and emerging risks, including the effectiveness
of internal controls
• When matters require Board approval, management is required to present a detailed paper which includes
any input or feedback received from stakeholders, assessment of key risks and how the matter links to Group
strategy
Board
Committees
• Delegated authority from the Board to look after specific areas of responsibility
• Each Committee operates under its own written Terms of Reference which are reviewed at least annually and are
available on the website
• Report to the Board and work alongside the other Committees, e.g. the Responsible Business Committee works
alongside the Audit and Risk Committee to fully consider the TCFD reporting requirements
• Have access to external consultants where necessary
• See pages 102 to 141 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 its updated Terms of Reference and
delegated levels of authority
• Meets at least 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
89
FINANCIALSSHAREHOLDERSAnnual Report and Financial Statements for the year ended 31 December 2023 |OVERVIEWGOVERNANCESTRATEGIC REPORT CORPORATE
GOVERNANCE REPORT
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 strategy, risk, operations and governance, providing updates as well as seeking discussions and approvals on key
Board issues. It includes routine items that are included on every agenda as well as one-off topical items or decisions, and ensures that all
stakeholder groups are discussed as well as scheduling attendance from leaders and colleagues across the Group. Below are set out some
of the key areas of strategic focus for 2023.
Stakeholders
considered
Link to
Strategy
What was reviewed and considered?
Area
Overseeing
and reinforcing
health and safety
practices
E Sh En
Co Cu
Ensuring
understanding
of the business,
culture and ESG
priorities
E S Cu
En Sh
Focusing on brand
and customer
engagement
E S Cu
Co
Evaluating Group
Strategy
Sh E Cu
Reviewing and
managing risk
E Cu Sh
Managing budget,
gearing and
financing
E Cu S
Co En
The safety of our people, particularly given the industries in which we operate, is
paramount. Alongside our routine health and safety reporting and monitoring our KPIs,
the Board has been paying particular attention to emerging trends and linking Group
MDs with other business leaders to promote knowledge transfer and best practice.
In 2023, there were some areas in which we missed our Group KPIs (see page 29),
particularly due to some incidents within Banner Plant. As a result, the Board has
recognised that it is crucial to lead from the top and further strengthen the safety culture
within the businesses, working alongside the Group Safety Manager who compiles the
annual Health and Safety reports for each of the principal businesses and outlines his
recommendations for improvement.
Site visits carried out in 2023 to the Disabilities Trust and Cocoa Works in York, as well
as Stonebridge Homes’ site at Great Ouseburn, provided the Board with an opportunity
to meet our employees, customers and suppliers, as well as demonstrating the breadth
of the schemes in which we are involved. Other engagements this year have included
sessions with the UK Green Building Council and Deloitte to provide opportunities for
the Board to deepen its understanding of the regulatory framework in which we operate,
and ways in which we can seek to contribute to policy in the future.
The Group’s developing approach to its purpose, vision and values, through its Brand
Value Proposition and Employer Value Proposition work, is summarised on page 7. This
strategic rethink of the structure of the Group’s engagement with its internal and external
stakeholders has been discussed with the Board on multiple occasions during the year,
touching as it does on key areas such as customer focus, employee engagement, and
brand values.
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.
Given the evolving picture in relation to the UK Corporate Governance Code and
associated legislation during 2023, the Board (and the Audit and Risk Committee) has
maintained a watching brief on developments in this area. The Committee and the Board
review the Group’s principal and emerging risks twice a year (see pages 48-55 for more
information). However, there have been heightened levels of uncertainty in the market, as
well as the upcoming changes to risk management and internal controls as announced
in early 2024. In response, the Board has kept risk management practices as a priority,
both through overall risk reviews and in-depth reviews on individual projects. This has
included updates to the Board on the risk management capabilities that can be offered
by insurance advisory services, which have been the subject of a tendering exercise in
2023. These benefits are to be maximised through the appointment of a new insurance
broker, Locktons, in early 2024, who will assist the Board and the Audit and Risk
Committee in reviewing all risk management protocols during the course of 2024.
The Board has been maintaining a keen oversight of the Group’s budget and gearing
during 2023, noting the risk environment as referred to in the section above and the
wider macro-economic climate in which we are operating. The Group’s refinancing
activities have been undertaken with a conscious decision to ensure plenty of time has
been allowed to conduct negotiations in a more straitened financial climate, ensuring
that we are best placed to maximise the benefits of existing relationships with financial
institutions. See Note 26 to the Financial Statements for more information.
Stakeholders
Group strategic priorities
E Employees
S Suppliers
Sh Shareholders En Environment
People
Partners
Places
Planet
Performance
Cu Customers
P Pensioners Co Communities
90
| henryboot.co.uk
BOARD LEADERSHIP AND COMPANY PURPOSE
Our Culture
The Henry Boot Way – our articulation of the Group’s vision and values - has been in place since 2017, and has remained a vital part of our
Group’s overall cultural articulation during this time. Towards the end of 2022, the Board approved a wholesale review of this approach,
taking place during 2023, to supplement and develop our refreshed approach to purpose, vision and values – looking at our Brand Value
Proposition and Employer Value Proposition. This work will involve us evolving away from the Henry Boot Way, which focused on being
purpose-led, to being more impact driven and incorporating wider thinking about how we deliver our strategic priorities. Further details of
this are set out on pages 7 and 59.
This work has been overseen by the Board and is due to be launched in 2024, and has given additional opportunities during the measures
set out below to re-examine the views of our employees from across the Group on the culture of our business.
Strategy
Our Purpose
To empower and develop
our people to create
long term value and
sustainable growth for
our stakeholders
Values
The Henry Boot Way
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GOVERNANCE REPORT
How the Board monitored culture in 2023
Link to culture, and
effectiveness of
engagement method
Values upheld
or impacted
Outcomes, development
of culture and addressing
culture issues
Loyalty
Integrity
Collaboration
Collaboration
Adaptability
Respect
Adaptability
Integrity
The Board reviewed the
survey outcome as a whole,
and with direct engagement
with the GEF. A number of
ongoing activities had been
spearheaded by the GEF
in response to prior years’
surveys, such as launch of the
Health and Wellbeing Strategy,
and embedding culture
and performance within the
Group’s reward strategy. In
agreement with the GEF for
2023, there were no stand-
out areas arising from the
engagement survey which
merited addressing within
the year. The engagement
survey provides an important
check-in and capability for the
Board to reflect on important
issues affecting our people on
a regular basis.
Page 7 sets out the BVP and
EVP work, which will also be
launched fully during 2024.
This development of how we
articulate our culture is an
essential step forward as we
look to be more connected
within the Group.
The Health and Wellbeing
Strategy aims to develop
our culture as a progressive
and proactive, supportive
employer of choice. The
Board recognises that our
people are critical to the
delivery of our commercial
priorities and helping our
people flourish by providing
a framework of support will
mean fulfilled and healthier
colleagues which supports
retention, creativity and
innovation.
The outcomes of an
engagement survey build
a picture year on year to
give us an insight into how
our people feel about the
culture of our business.
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.
Obtaining the views of our
people on how we progress
and implement our Employer
Value Proposition, in
particular, is vital. The Henry
Boot Way was developed by
our people and it is crucial
to us that any development
of this approach is done
in the same way. Focus
groups including employees
from across the Group have
helped to shape this work.
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 pages 94-96)
– Health and Wellbeing
Working Group
– HR Management team
– A range of other internal
engagements
Engagement
surveys
Action
In 2023 we continued
refining our cycle of
engagement surveys to
capture our eNPS and
other valuable information
about how our people
feel about working for the
Group.
BVP and EVP
focus sessions
Health and
Wellbeing
As mentioned above, a
number of sessions have
been held with employees
from across the Group
to review perceptions
around purpose, vision
and values, to inform the
Brand Value Proposition
and Employer Value
Proposition approach.
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 pages 116 within the
Responsible Business
Committee Report.
92
| henryboot.co.uk BOARD LEADERSHIP AND COMPANY PURPOSE
Head office
move
Action
As we highlighted in last
year’s Annual Report, the
Group faced a significant
change touching on
culture when it decided
to move from its existing
head office at Banner
Cross Hall to Isaacs
Building in Sheffield City
Centre.
Employee
forum
As well as the direct
Board interaction outlined
above, and as described
on page 94, 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.
Strategy Days
The Group’s People
Strategy, alongside
the wider Group and
subsidiary strategies,
was discussed at the
2023 Strategy Days with
the Board and Executive
Committee.
Link to culture, and
effectiveness of
engagement method
A major consideration in
relation to the move has
been to enhance our key
cultural priorities relating to
the promotion of greater
collaboration across the
Group. By moving to a more
integrated space, with many
facilities and meeting areas
to allow internal and external
stakeholders to use the
building, the move provides
an unparalleled opportunity
to live our values. The Board
has been kept regularly
updated of engagements
that have taken place with
employee working groups
and steering groups that
guided the eventual office
move in late 2023.
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.
The culture of the business
and how this can be
influenced by the Board
and Executive Committee,
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 EVP.
Values upheld
or impacted
Adaptability
Delivery
Collaboration
Outcomes, development
of culture and addressing
culture issues
The successful move into
the new head office and the
impacts on culture have been
felt immediately, and longer-
term benefits will continue to
be monitored by the Board.
Collaboration
Respect
Delivery
Integrity
The Board, represented by
the designated NED, attended
all GEF meetings in the year
and provided insight to the
GEF around several matters,
including Executive Director
remuneration, IT and systems,
and marketing strategy. Other
NEDs and the Executive
Directors have also attended
the GEF by invitation where
relevant to the agenda. Views
of the GEF have been taken
into account when discussing
those issues at the Board,
as reported in more detail on
pages 94-95.
The Board and ExCo 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.
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FINANCIALSSHAREHOLDERSAnnual Report and Financial Statements for the year ended 31 December 2023 |OVERVIEWGOVERNANCESTRATEGIC REPORT CORPORATE
GOVERNANCE REPORT
Employee Engagement
In our refreshed strategic pillars, a focus on one of the five Ps is
‘People’ – Henry Boot’s greatest asset is 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 Strategy on pages 30-34,
and in this section, we outline the ways in which that engagement
has specifically taken place with the Board.
Employee forum
Our Group and subsidiary Employee Forums, launched in 2019,
have continued to meet to discuss a range of key Group issues
during 2023. 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. The
Group and Subsidiary Employee Forums have refreshed their
memberships throughout the year, to renew their commitment
to ensuring representation from across the Group and add new
voices to the teams. The Chair and the Chief Executive Officer
have also worked with the designated NED to structure a series
of attendances at the GEF by them and also by senior leaders
within the businesses to present on key initiatives. 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:
Consultation activities
Method and outline of engagement
How the Board responded
Instead of focusing on the lowest scoring areas from
the Employee Engagement Survey results, this year
the Group Employee Forum decided to look at the
general topic of ‘Collaboration within the Group’. This
was inspired by work presented by Jon Fisher, MD
of Banner Plant, around his work to integrate Banner
Plant into the wider Group with a greater strategic
focus, as well as the opportunities identified for
collaboration by the new Head Office working groups.
The GEF also felt that there were no new areas of focus
that had arisen through the employee engagement
survey, which had been the focus of previous projects.
Following discussions with each of the Subsidiary
Employee Forums, the GEF produced a presentation
which outlined areas of focus for 2023, examples of
successful collaboration, areas of improvement and
what any solution will need to cover.
The initial proposal around collaboration
was shared with the Board in March
2023, who concurred that the areas of
focus felt appropriate and relevant to
our areas of strategic focus. The GEF
members, together with the SEFs, then
developed the proposal into a number
of key actions, such as maximising
cross-Group learning and development
activities, sharing expertise and best
practice, and using process mapping
to increase efficiencies. This action plan
was shared with the Board in September
2023, who were again supportive, with
Executive Directors pledging the support
of the Executive Committee to deliver it.
Elements of the Group-wide reward strategy, launched
in 2022, continued to be implemented in 2023,
with further consultations taking place with the GEF
and points raised by the GEF being fed into the
communications around the rollout.
The designated NED liaison fed back any
areas raised to the Board and these areas
were also addressed directly with the GEF
for cascade throughout the business as
well as tailoring relevant communications.
The consultants appointed by the Remuneration
Committee, Korn Ferry, attended a GEF meeting
to discuss various elements of Executive Director
remuneration and the approach being taken for the
updated Remuneration Policy being proposed for 2024,
to aid understanding and also explain the alignment
with the Group’s wider remuneration policy.
The Remuneration Committee is
conscious of the drive to engage with
employee representatives whenever
a new Remuneration Policy is being
proposed, and to ensure that employee
views are heard. The designated NED
liaison fed back any topics discussed, and
information provided to the GEF, noting
that no concerns had been raised with the
proposed new Remuneration Policy.
GEF Collaboration
Project
Reward strategy
implementation
Directors’
Remuneration Policy
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| henryboot.co.uk Consultation activities
Method and outline of engagement
How the Board responded
Head Office relocation
SheNetWORKS
Board and ExCo
Sponsorship Roles
Cross-Group working groups formed in 2022, as
reported on in our previous Annual Report and
Accounts, continued to meet in 2023 to shape further
aspects of the move to the new Head Office and
provide input to the updates provided to the Board on
areas such as travel and parking, personal safety and
culture and heritage.
A number of networking groups were established
during 2022/2023 as part of the Group’s EDI Strategy;
for parents and carers (Family Matters); mental health
first aiders; menopause and perimenopause (Pause to
Talk) and females within the business (SheNetWORKS).
An event set up towards the end of 2023 welcomed
female attendees from across the Group to start to
create better opportunities for the women within the
businesses to discuss important issues affecting them.
Executive sponsorship roles were proposed at the
Responsible Business Committee in December 2023,
to provide senior leadership support and guidance
for strategic projects, demonstrate leadership, role
model positive behaviour and connect senior leaders to
strategic issues and the workforce.
The Board was keen to ensure that it
understood the employee views and
were kept updated as to the progression
of the plans for the Head Office move
throughout the period up to the transition
date.
Non-executive Director Serena Lang
attended the event alongside the excellent
turnout of women from across the
business, and gave a lunchtime talk about
her experiences within the industries she
had worked in and advice to the attendees.
The Responsible Business Committee
members (as well as the Executive
Committee members) will take on a
variety of sponsorship roles, looking to
achieve the following:
1. To champion their respective initiative
when relevant at any PLC Board and/
or Committee meetings, encouraging
other members to consider their
chosen initiative when decisions are
made to ensure that all commercial
decisions consider ESG factors.
2. To engage with the respective
employee working groups at least
once per annum to share knowledge,
exchange views and display leadership.
3. To attend and be involved (wherever
possible) with any Group events,
webinars or updates about the
chosen subject.
4. To share with fellow Committee
members information about any
related themes, trends or updates
observed in the market.
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FINANCIALSSHAREHOLDERSAnnual Report and Financial Statements for the year ended 31 December 2023 |OVERVIEWGOVERNANCESTRATEGIC REPORT CORPORATE
GOVERNANCE REPORT
CASE STUDY
Peter Mawson and Tim Roberts engagement visits
Throughout 2023, Peter and Tim have undertaken a programme of visits and engagements
with employees across the Group, meeting employees at a number of our Banner Plant
depots, Hallam Land and HBD regional offices, construction sites and other locations.
This has enabled Peter and Tim to hold one-to-one meetings with teams and individuals across
the business, to provide visibility of their respective roles and to get to know as many of our people
as possible, facilitating meaningful discussions on issues relevant to each of the businesses.
In addition, Peter participated in a male health campaign video for Henry Boot employees,
to raise awareness and highlight avenues of support.
“With our people being located in various different areas across the UK, it is important
to me that I can take time to go to them and make sure that they are able to speak
to me directly, which helps me to understand how we as a Board are overseeing and
implementing measures that touch on the whole Group and its operations.”
PETER MAWSON,
PLC BOARD CHAIR
Q&A with recently joined GEF members
Amric Manku has assumed the role as Chair of the Group
Employee Forum at the close of 2023 – here he gives his views on
the roles of the GEF.
Q How has the Board supported and interacted with the
GEF over the past year?
A: The two main forms of support that is given to the GEF by the
Board are time and consideration. The GEF is invited to attend and
present at the Board meetings twice a year, and a Board member
attends all of our meetings. All items discussed at both GEF
meetings and presentations are carefully considered and action is
taken where needed.
Q How do you feel the GEF supports the culture of the
business?
A: The people-first approach of the culture of the business is most
clearly reflected in the GEF and each of the Subsidiary Employee
Forums, which allows for direct communication with the leaders of
the business throughout the year.
Q What areas does the GEF want to focus on in the future?
A: The main area of focus for the GEF will always be the well-
being of the employees, and creating effective changes to reflect
the employee requirements by maintaining direct and meaningful
communications with the Board.
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| henryboot.co.uk 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 2023. 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 due to upcoming Director
changes and would review the decision again in 2024.
A formal and rigorous internal performance review was undertaken
by 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.
Process
STEP
STEP
In March 2023, 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 2023.
At the year-end, results were reviewed
with the Board and respective
Committees, and actions were agreed for
2024. Progress against the 2023 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. Peter
Mawson’s interview was conducted with
Joanne Lake in her capacity as Senior
Independent Director.
Mid-year reviews will be carried out in
summer 2024 to discuss performance
against the agreed actions before a full
review at the year-end.
Areas where the Board
scored strongly:
• Open and collaborative
environment.
• Positive and welcoming experience
for Board attendees.
• Board administration has improved
and Board papers are provided in
sufficient time.
Board focus areas:
• Allowing enough time on the
agenda for idea generation and
opportunity identification.
•
Improving time management
for presenters maximise their
engagement with Directors.
• Providing attendees with timely
feedback and actions.
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BOARD
2023 action areas
Progress during 2023
Marketing and branding
Oversee the marketing, branding, and
communications strategy as it develops and is
rolled out.
Agenda
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.
• The Brand Value Proposition was presented to the Board in July.
• The overall Brand, Marketing & Communications strategy was debated at the November
Strategy Days.
• The Board approved the Brand Value Proposition and the Employer Value Proposition in December,
alongside initial discussions on the corporate identity.
Initial discussions held in during 2023.
•
• Time set aside during 2024 to dedicate to an innovation session.
• Culture was discussed at the July meeting including the various ways in which we assess culture
such as the engagement survey, the whistleblowing internal audit, the brand audit consultation and
engagement with the employee forums.
Action areas for 2024
Marketing and branding
Monitor the roll out of the internal
and external branding project.
Idea generation
Hold a productive session which
focusses on innovation, idea
generation, and opportunity
identification.
Training
Create a dynamic training schedule
that incorporates softer skills and
ensures the successful indication of new
directors and handover of roles.
IT Strategy and
implementation
Oversee the delivery of the
new system implementations
and IT strategy.
AUDIT AND RISK
2023 action areas
Progress during 2023
Specialist training
Provide specialist training for the Committee
on the new audit reform when the guidance is
finalised.
Internal controls preparation
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 and IT
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.
• Training delayed due to the new UK Corporate Governance Code not being published until
January 2024.
• Despite the delays mentioned above, initial discussions commenced on:
– Assessing the new requirements with a view to preparing a gap analysis
– Process mapping the various internal controls within the Group and bringing together
relevant people within the teams to undertake this work.
• Again, deferred to 2024 to ensure that any changes to the risk procedures take into account the
new governance requirements.
• The IT Strategy was debated during the November 2023 Strategy Days.
• A new Cyber Strategy was approved in the February 2024 meeting alongside a review of all the
updated IT policies.
Action areas for 2024
Specialist training
Provide specialist training for
the Committee on the internal
controls requirements arising
from the new UK Corporate
Governance Code and develop
a roadmap for compliance.
98
Internal controls
preparation
Carry out an assessment
of our internal controls in
preparation for the requirement
for the Board to make an
attestation in compliance with
the updated UK Corporate
Governance Code.
Risk review
Review, in conjunction
with external advisers, risk
management procedures
to agree any changes to be
implemented and rolled out in
2024 (supported by Board and
ExCo training).
Internal audit
Review internal audit approach to determine
optimal number and mixture of internal audit
activities to be carried out annually.
Chair succession
Ensure that the new Chair is successfully
transitioned into the role.
| henryboot.co.uk NOMINATION
2023 action areas
Progress during 2023
Equality, diversity, and inclusion
Oversee the development of wider diversity
reporting in categories other than gender (e.g.,
ethnicity, disability).
Executive succession
Hold a session with the EDI Steering Group
to gain insight into barriers to recruitment /
progression and understand how this could be
improved.
Skills development
Oversee a reverse mentoring programme with a
diverse employee and one of the ExCo members
plus one of the Board members.
• The introduction of a new HR system during 2023 now facilitates capturing diversity data on
categories beyond gender. The ability to report on wider data will become possible in 2024.
• The EDI Steering Group was relaunched in early 2024 and Joanne Lake attended the forum’s first
meeting. Once the Steering Group’s priorities have been finalised, a meeting with the Committee will
be arranged for summer 2024.
• As mentioned above, with the relaunch of the EDI Steering Group in early 2024, this action will be
presented to the Committee as a proposal later in 2024.
Action areas for 2024
Skills development
Oversee a reverse mentoring
programme with a diverse
employee and one of the
ExCo members plus one of
the Board members.
Recruitment barriers
Hold a session with the
EDI Steering Group to
gain insight into barriers to
recruitment/progression and
understand how this could
be improved.
Diverse initiatives
Work with management
and the EDI Steering Group
to develop two meaningful
medium-term initiatives to
increase the number of diverse
recruits into the Group.
Non-executive
recruitment
Carry out further successful
recruitment exercise for a Non-
executive Director and ensure a
thorough and effective induction
and embedding process.
Chair succession
Discuss Chair
succession plan with
a view to agreeing
timescales and
procedures.
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REMUNERATION
2023 action areas
Progress during 2023
Employee communications
Oversee improved communications between the
Committee, ExCo and employees particularly
with regards to the roll out of the workforce
reward strategy and PDR process, seeking
feedback from the GEF at various stages.
Exec Directors targets
Ensure targets for Executive Directors are
sufficiently stretching at the time of setting and
seek advice from advisors on best practice and
market expectations.
Benefits alignment
Check for consistency across workforce
benefits, particularly with regards to pension
contribution.
• The workforce reward strategy and PDR launch was discussed in February with the Committee
setting actions for management.
• There were further discussions in March on feedback received from the workforce.
• Reward strategy feedback was discussed by the GEF in various meetings throughout the year with
Gerald Jennings relaying comments back to the Board.
• The Board has also been given regular updates throughout the year on the move to a more
transparent reward structure for the workforce as part of the CEO Report.
• Targets for Executive Directors were set in early 2023 with support from Korn Ferry.
• Annual Bonus targets increased back up to -10/+10% range from -10/+5% the previous year.
• Challenging PBT target set for 2023 amidst difficult market conditions.
• Decisions made to ensure a consistent approach to benefits across the Group, including aligning
employee pensions contribution levels for all.
Action areas for 2024
Chair succession
Ensure that the new Chair is
successfully transitioned into
the role.
PDR processes
Oversee the PDR process
implementation during the
year and the integration
with the PeopleXD software,
gaining insight from the Group
Employee Forum.
Committee visibility
Increase visibility and understanding of
the Committee’s role throughout the
business and raise awareness of how
the executive directors’ remuneration
aligns to the company’s long-term
strategy and workforce remuneration.
Bonus framework
Review the annual bonus framework
across the Group to ensure it
remains appropriate.
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| henryboot.co.uk RESPONSIBLE BUSINESS
2023 action areas
Progress during 2023
Guest speakers
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.
• A session was held with the UK Green Building Council covering best
practice in how the built environment is adapting to climate change
and a session with Deloitte covered the evolving ESG 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.
Employee engagement
Engage with Henry Boot working groups focusing on responsible business
throughout the year to understand their roles, opinions, and aspirations.
Benchmarking
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.
Materiality assessment
To support the development and delivery of the materiality assessment to be
undertaken with key stakeholders.
• See above
• All Committee members were appointed Executive Sponsors of
Responsible Business Strategy pillars and are collaborating with
the Responsible Business Manager to undertake working group
engagement throughout 2024.
• Committee members routinely support the Responsible Business
Manager to benchmark the Group’s responsible business
performance against good practice in the market.
• The materiality assessment has been delayed to 2025 to align with
the development of Phase 3 of the Responsible Business Strategy.
Action areas for 2024
Training
Continue engagement with
specialists to inform the
Committee on the ESG
regulatory and legislative
framework.
Employee Engagement
Fulfil the role profiles of Executive
Sponsorship and engage with Henry Boot
working groups and subject matter experts
focusing on responsible business throughout
the year to share knowledge and provide
executive insight.
Benchmarking
Identify peers that are performing
well on ESG and continually
work to benchmark Henry Boot’s
performance, and support knowledge
transfer, and industry collaboration.
Paper Preparation
Implement a collaborative
process to ensure that
Committee papers are concise,
informative and easy to
understand.
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Nomination Committee Report
Within any period of change we recognise the benefits of
welcoming fresh perspectives, and I am looking forward to
realising these during 2024, and continuing to implement
our succession planning approach for the Board.”
Henry Boot PLC Board
Nomination Committee
Board and Chair succession planning
Read more on page 103-104
Committee
memberships
Read more on page 105
Leadership
succession planning
Read more on page 105
Board performance
review and skills
Read more on page 106
Increasing Diversity
Read more on page 106-107
Monitoring overall Board and Committee effectiveness
Read more on page 108
PETER MAWSON
CHAIR
Review of the year
The Nomination Committee (the Committee) met three times during
2023 to review and discuss matters such as succession planning,
diversity and inclusion, skills and leadership development. You
can read an in-depth review of the approach we have taken to
Non-executive Director recruitment, and how we have taken steps
during this process to support greater diversity and inclusion within
our Board. We have thought carefully about the appropriate ways of
undertaking our recruitment activity to constantly strive for balance
on our Board in as many areas as possible, including in relation to
the mix of skills and experience.
We have continued to broaden our understanding of the talent
below the Board level, with the Executive Committee having taken
a number of steps to develop its own knowledge and expertise
and updating the Committee on how these activities are intending
to flow down to the leaders within the Group. The Committee
continues to monitor an evolving picture of succession planning
activities across the entire business, to ensure greater resilience and
insight into the Group.
Further details of 2023’s activity can be found below. Those serving
as members of the Committee for 2023 were myself, Gerald
Jennings, James Sykes and Serena Lang. Talita Ferreira joined the
Committee on 1 January 2024.
On behalf of the Board and the Committee, I am pleased to
present the Directors’ Nomination Report for the year ended
31 December 2023.
102
| henryboot.co.uk Peter Mawson
Chair of the Nomination
Committee
James Sykes
Committee
member
Gerald Jennings
Committee
member
Serena Lang
Committee
member
4 4
4 4
4 4
4 4
Nomination Committee attendance key
Meetings attended
Eligible meetings
Board Succession Planning
The Committee continued the work commenced in previous years
regarding succession planning for the 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 to
consider appropriate methods of addressing outcomes of its skills
evaluation.
2023 Recruitment Activity
External recruitment partners were selected by the Committee to
assist with the recruitment process for a new independent Non-
executive Director to the Board in the latter part of 2023. Norman
Broadbent, the Committee’s appointed partner, helped to shape
the requirements for the role, acknowledging that the substantive
aim of the role was to provide succession planning for the Audit and
Risk Committee Chair, and to propose strategies to achieve greater
diversity on the Board.
Timeline
March 2023
Recruitment timeline and approach approved by
Nomination Committee
July 2023
External recruitment partners appointed
August 2023
Candidate briefing pack and role profile issued to
recruitment partners
October 2023
Longlist of candidates received, candidates shortlisted for
interviews
November 2023
Initial informal conversations held with five candidates, final
interviews held with three shortlisted candidates
December 2023
Talita Ferreira selected and recommended to Board for
approval of appointment
January 2024
New independent Non-executive Director appointed
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Nomination Committee Report
Recruitment of Non-executive Director
Q&A with Talita Ferreira
Q: What attracted you to a role as a Non-executive at Henry
Boot PLC?
A: Henry Boot is a company with a strong heritage, having
survived and thrived for over 130 years. I have always
worked for brands with strong heritage and cultures, like
BMW and Ford Credit Europe Bank. During my interviews,
I sensed a very people-orientated culture at Henry Boot,
which attracted me to the brand and company. Although my
executive career has included other industries, my current
and former NED positions have been in banking. Henry
Boot allows me to broaden my experience in construction,
property development and property investment.
Q: What are you looking forward to becoming involved with
as part of your Board and Committee roles?
A: I look forward to being involved in the Corporate
Governance Code amendments and Directors’ attestation
from 2026 on the internal control and risk environment
with my former experiences in regulated banking. It will be
my first Responsible Business Committee (sustainability)
membership role. I am eager to apply some of the
knowledge I gained from completing the Cambridge
Business Sustainability Management certificate.
Q: What do you think are the key issues a Board should
be considering when viewing their overall succession
planning approach?
A: Succession planning should allow for a blend of diverse
cognitive thought, skills, industry experience, and an
assessment of the organisation’s strategy and industry
horizon trends to determine gaps, for instance, generative
AI, sustainability and innovation expectations.
The succession plan should ensure enough diverse
thinking around the board table to avoid groupthink and,
combined with strong leadership from the Chair, create the
conditions for constructive challenge in a psychologically
safe environment.
Recruitment for 2024
Further recruitment activity is planned for H1 2024, utilising again
the resources of an external recruitment partner to assist us with
confirming the requirements of this role as well as achievement of
our broader ambitions on diversity and inclusion.
February 2024
March 2024
May 2024
June 2024
July 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 longlist
Shortlisting
Committee members meet shortlisted
candidates informally
Formal interview of candidates to select
appointee, for recommendation to the
Committee
August 2024
Appointee commences role as Non-
executive Director.
The Committee fully recognises the commitments within its Board
Diversity Policy (see below) 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.
Future Chair succession
It is anticipated that 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. Whilst it has not yet been determined how long
this period of flexibility will be utilised for, this will form part of
2024’s further succession planning approach in order to provide
appropriate visibility to the Board and wider stakeholders.
104
| henryboot.co.uk Review of Roles and Responsibilities
The Committee has considered the most appropriate method of ensuring an appropriate period of handover for Non-executive Directors
joining the Board during 2024, and has determined that in order to achieve this, the following changes are to be made to various roles within
the Board:
Role
Current appointee
Proposed appointee
Audit and Risk Committee Chair
Joanne Lake
Talita Ferreira (1st September 2024)
Remuneration Committee Chair
Gerald Jennings
Serena Lang (1st September 2024)
Nomination Committee Chair
Peter Mawson
Responsible Business Committee Chair
Serena Lang
No change
No change
Senior Independent Director
Joanne Lake
Serena Lang (1st October 2024)
Group Employee Forum liaison
Gerald Jennings
Peter Mawson (summer 2024)
This will be reviewed after 12 months to determine if any other alterations to roles would be beneficial.
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 the Executive Committee, the
Committee regularly reviews the talent grids which are overseen by
our HR Director with input, where appropriate, from our leaders 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. Our Leadership Development Programme (LDP),
which was launched in 2020, is a cohort-led development
opportunity to address the needs of the next level of leadership
below Executive Committee and Director level. The SLDP and LDP
will continue to be available for our people as required and identified
by the business as being a priority.
We continue to run cohorts of our Management Development
Programme (MDP) which aims over a period of nine months to
develop junior managers and aspiring managers personally and
professionally to become more effective in their roles and drive
performance in their teams. During 2023, we had 23 colleagues
participate and have a strong demand for delivery in 2024.
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
Following on from team development undertaken by the Executive
Committee in 2023, which focused on collaboration, authentic and
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Nomination Committee Report
compassionate leadership and change management, in 2024 we
will be focusing on a roll-down of this development to our leaders
and managers to support cohesion across the Group.
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 performance review and skills
assessment
Formal performance reviews were carried out at the end of 2023,
and you can read about the process and results on pages 97
to 101.
Board and Executive Committee Skills Questionnaire
In addition to the performance reviews outlined above, 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 as reflected below.
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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, and will be refreshed following the anticipated Board changes later in 2024.
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
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 2023
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.
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 consider 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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| henryboot.co.uk
Objective
Progress against objective
Status
1
The Board will ensure that it is made up of an
appropriate mix of skills, experience and knowledge
required to effectively oversee and support the
management of the Group.
2
The Board has set a target to meet the objective of
the Hampton Alexander Review, in that at least 40% of
our Board members are women.
3
4
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).
5
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.
6
The Board will work with external recruitment
consultants to provide support for Board
appointments and will ensure that Non-executive
Director longlists include both women and candidates
from an ethnic minority background excluding white
ethnic groups.
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 underrepresented 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.
7
8
9
Detailed review of effectiveness undertaken confirming that the Board is
adequately resourced and performing well.
At the commencement of 2024, our proportion of female Board members
is 37.5%, recognising that this will be subject to alteration during the year
with the changes anticipated to the Board composition. At least 40% female
representation remains our goal and we will continue to ensure that our
recruitment processes maximise the gender diversity included in our long and
shortlists.
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.
During 2024, this role will be adopted by Serena Lang when Joanne Lake steps
down from the Board.
We currently have no members on the Board from an ethnic minority
background. We will be looking to address this objective over the next round of
Board recruitment and internal progress.
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 longlist 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 exercises, an appointment that continued throughout 2023. This
ensured that the longlist for the candidates for both recruitment exercises
provided a wealth of individuals from diverse backgrounds. We will continue this
approach for 2024.
As previously disclosed last year, we did not engage an external recruiter for the
appointment of the new Chair. This was a considered decision to prioritise the
continuity of the Board after Jamie Boot, a major shareholder and Boot family
member, retired as a director after almost 37 years’ service.
Through a series of peer sharing forums and information exchanges, led by our
HR team and in conjunction with our Responsible Business Strategy delivery,
we have worked to elevate the built environment and real estate as a positive
career option for women and underrepresented groups. Whilst there is still more
to do in this area, the intent to develop a pipeline of talent for the Group which
meets our diversity aspirations is crucial.
The Responsible Business Strategy, reviewed by the Responsible Business
Committee and approved by the Board, includes people-related targets. ESG-
related targets now also form part of the personal objective element of the
Annual Bonus award for Executive Directors and senior leaders within the whole
Group. These include quantitative targets for improving the gender mix and
reducing the gender pay gap.
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.
We have improved disclosure of progress against our targets for this year.
Activities may include, but not be limited to, the hiring of diverse external senior
managers and internal promotion activity but also a continued emphasis on
a diverse pipeline and graduate and apprentice recruitment to support this
objective long term.
Key:
Objective achieved
Objective achieved in part
Objective remains a work in progress
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GOVERNANCE REPORT
COMPOSITION, SUCCESSION AND EVALUATION
Nomination Committee Report
The gender balance of those in senior management positions is
shown on page 63. You can read more about our EDI Strategy and
workforce diversity initiatives on pages 62 to 63.
Terms of reference
In December 2023, the Committee reviewed its terms of reference
in line with the scope of its operations, and the requirements of
the Code, to ensure that they remained appropriate. Some minor
amendments were proposed and approved, and the full terms of
reference are available to view on the Company’s website.
Board effectiveness and time commitment
The Board believes it has an appropriate balance of Executive and
Non-executive, and independent and non-independent Directors,
having regard to the size and nature of the business. Further to a
review by the Committee it is felt that the overall combination of
experience, skills, knowledge and lengths of service of the current
Board members provides an appropriate level of balance which
contributes to effective decision-making and helps to mitigate risk.
A detailed succession plan for the Non-executive Directors, 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 2023 performance reviews (see pages 97 to 101 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
chairperson role at Made Tech Group plc. Joanne’s time spent at
her other directorships equates to, on average, ten days a month
and therefore the Committee agreed that this leaves sufficient time
to carry out her duties. Among other things, her experience from
other listed businesses provides helpful insight into governance
matters and best practice and we value her input. We do not see
any indication that these other directorships negatively impact her
contribution to the Group and remain wholly satisfied with her time
commitments and performance.
Following the review, I can confirm on behalf of the Committee that
the performance of the Directors, the Board and its Committees
continues to be effective and that all individuals show commitment
to their roles. All Directors 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
11 April 2024
108
| henryboot.co.uk AUDIT, RISK AND INTERNAL CONTROL
This year, the Audit and Risk Committee has approved an
internal audit plan to focus on some key areas connected
with our principal risks. Time has been spent discussing
and planning for the updates to the UK Corporate
Governance Code and how the new requirements will
impact our material controls processes.”
JOANNE LAKE
CHAIR OF THE AUDIT AND
RISK COMMITTEE
Joanne Lake
Chair of the Audit and
Risk Committee
Gerald Jennings
Committee
member
Serena Lang
Committee
member
4 4
3 4
4 4
Audit and Risk attendance key
Meetings attended
Eligible meetings
Review of the year
On behalf of the Board and the Audit and Risk Committee
(the Committee), I am pleased to present the Directors’
Audit and Risk Committee Report for the year ended 31
December 2023. This report will be my last as Chair as I
step down from the Board on 30 September 2024, having
reached my nine-year tenure. Our new Non-executive
Director, Talita Ferreira, will take over as Chair from 1
September 2024.
This year, the Audit and Risk Committee has continued to
work with KPMG as the internal auditor and approved an
internal audit plan to focus on some key areas connected
with our principal risks. Time has been spent discussing
and planning for the updates to the UK Corporate
Governance Code and how the new requirements will
impact our material controls processes.
We continue to strengthen our relationship with EY, our
external auditors, in overseeing our full-year results and
assessing the Group as a going concern. The Committee
has also considered the principal and emerging risks
and, alongside the Responsible Business Committee,
the climate-related risks and opportunities for the TCFD
disclosures. The level of risk appetite and risk tolerances
are also debated and agreed for various risks.
Those serving as members of the Committee were myself
(Committee Chair), Gerald Jennings and Serena Lang.
Talita Ferreira joined the Committee on 1 January 2024.
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GOVERNANCE REPORT
AUDIT, RISK AND INTERNAL CONTROL
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. The Committee consider a range of potential audit areas including those linked to the
Company’s principal risks, routine financial and operational processes and specific requests from the Committee to determine which audits
to prioritise in any given year.
From early 2022 onwards, our internal audit partner has been KPMG LLP (KPMG). During 2023, internal audit reviews carried out by KPMG
included:
Topic
Outline
Whistleblowing
Designed to test the tone and culture of the organisation, the objective of this audit was to provide assurance
that there was an effective whistleblowing process in place that was easily accessible and allowed people
to speak up in a safe environment without fear of reprisal or victimisation. The review consisted of interviews
with key stakeholders, testing of previous incidents reported during the last ten years and a workforce survey
to collate the views from a broader audience. Insight was also gained from KPMG’s subject matter expert to
leverage insight into best practice procedures at similar organisations.
Safety Incident
Management
With safety as one of the Group’s key risks, this audit evaluated the safety incident management procedures
with specific focus on controls for improvement process and reducing the number of incidences and/or near
misses. It also considered the culture and behaviours and how this compared to market leaders.
The scope considered three key areas:
Recording and reporting – Processes for accurately and timely recording, tracking, actioning, analysis,
oversight and reporting of all safety incidents and near misses;
Supplier management – Processes and controls for engagement with business partners to ensure
compliance with safety incident management policies and standards; and
Communication and awareness – Processes to create and raise awareness on how staff identify, report
and minimise the safety incidents and near misses.
Follow-up Action
Tracking
A detailed review was undertaken of the previously agreed internal audit actions to allow the Committee
to understand the level of progress made and provide comfort that recommendations had been followed
through. KPMG independently verified whether actions had been completed sufficiently and, where any
deadlines had been extended, reviewed whether there was a clear rationale for doing so.
The tracker document sits as a regular item on the Committee’s agenda so progress can be monitored.
110
| henryboot.co.uk AUDIT AND RISK COMMITTEE REPORT
Internal audit effectiveness review
The Committee undertook a performance review of the internal
auditor’s effectiveness in the July meeting. The review consisted
of questionnaires with each of the Committee members and the
sponsors and main contacts for each of the audits in that period.
Under review was their scope, expertise and resource, the level of
responsiveness, the clarity of reporting, value for money, quality of
recommendations and relationships with key contributors. KPMG
scored highly in most areas with no major concerns found. The results
were shared with the internal auditors and feedback taken on board.
The Committee was satisfied that the internal auditors are performing
their duties to a high standard and add value to the business.
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 48-55. The Committee, and ultimately the Board, oversee
these processes and review the risk reporting and principal and
emerging risks on an ongoing basis.
Audit Reform
We have been monitoring the updates on the new UK Corporate
Governance Code and the now withdrawn draft bill on audit
reform over the past year. We are working with our advisers to fully
understand the implications of the new Code and prepare to meet
the new requirements. Whilst the Committee already reviews the
internal controls and processes across the Group, we recognise that
this is a good opportunity to strengthen our governance procedures
and we will conduct a thorough gap analysis to highlight any areas
that need to be addressed, ready for 1 January 2025 and 2026.
Cyber Security
Cyber security is one of the Company’s key risks (see page 51) and
continues to be an area of focus for the Committee. In February 2024,
the Committee reviewed and approved an updated Cyber Strategy
which allows the Group to further enhance our security stance.
The Group has not been subject to an information security breach
within the past three years (the last incident having occurred in
2018), and is accredited by Cyber Essentials (IASME), an externally
audited certification recognised within the security industry. We have
cyber insurance in place to mitigate financial losses and liabilities
resulting from potential cyberattacks, data breaches, or other
cybersecurity incidents.
The Group mitigates these risks in other ways too, through the
biannual provision of detailed security e-learning, supplemented
by security awareness training. Where training is not passed
successfully, we carry out additional, targeted training which
sits alongside our suite of information security policies and
protocols which have been recently updated in line with ISO27001
recommendations.
NCSC and CIS frameworks are also now being followed as part
of our Cyber Strategy to ensure that the measures we have are in
line with best practice, and any investment in future technologies is
focused on where we can add the most value.
Following the recommendations of KPMG during the 2022 internal
audit, the Group has put additional measures in place, including:
USB disablement; multi-factor authentication for all our people and
cloud systems; procurement of new backup technologies; and data
migrated from on premise to cloud storage to help visibility and
cleansing exercises.
External audit effectiveness review
The Committee oversaw a full review of the effectiveness of
the external auditor in July 2023, which collated feedback from
the Committee, finance teams, ExCo members and other key
stakeholders within the Group on the 2022 full year audit. A detailed
questionnaire sought views on the external auditor’s understanding
of the business, engagement levels of senior audit staff, how risks
are assessed, working relationships, constructive challenge, audit
planning and hitting deadlines.
Overall, the survey results were very positive with the review
concluding that EY conducted a thorough and comprehensive audit,
providing robust and independent challenge where needed. Strong
scores were received in relation to the senior staff understanding our
business and any audit differences being resolved on a timely basis.
There were some minor areas of improvement identified in relation to
ways of working, as might be expected, but these were discussed
as part of a two way debrief with EY in the summer with suggestions
for how the process could be fine-tuned for the following year. The
Committee is confident that there are no concerns that impact the
quality of audit work or audit opinion.
Independence of the external auditor
In order to ensure the independence of the external auditor, the
Committee monitors the non-audit services provided by EY to the
Group and has adopted a policy on the provision of non-audit services
by the external auditor with the objective that such services do not
compromise the independence or objectivity of the external auditor.
The Committee is required to approve services provided by the
external auditor in excess of £25,000. All other services below
this threshold are also monitored to ensure that the performance
of regulatory requirements is not impaired by the provision of
permissible non-audit services.
EY did not provide any non-audit services to the Group during the
year. Details of amounts paid to the auditors for audit services are
set out in note 3 to the Financial Statements. Deloitte will provide
the Group’s corporation taxation services for the year ended
31 December 2023.
In accordance with best practice, the Company will require its
external audit partner to rotate every five years, this being the fourth
year to which this relates. The statutory auditor signing the Audit
Report for 2023 is Victoria Venning.
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AUDIT AND RISK COMMITTEE REPORT
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.
In addition, an External Auditor Independence Policy has been
developed to supplement our approach on external auditor
independence, which was approved in early 2023.
Extent to which external auditor
challenged management
The external auditor has provided robust challenge, particularly
around areas of complexity or judgement, including contract,
intangibles, property and inventory valuations, as well as going
concern and viability. Its procedures and findings are detailed in its
report to this Committee.
Significant issues
The Committee considered the following key accounting issues and matters of judgement in relation to the Group’s Financial Statements
and disclosures. In addition to these disclosures, the Independent Auditor’s Report on pages 152-159 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.
Valuation of
housebuilder
inventory
Inventories are stated at the lower of cost and net realisable value.
Inventories comprise all the direct costs incurred in bringing the
individual inventories to their present state at the reporting date, less
the value of any impairment losses.
Net realisable value of inventories is determined by reference to
expected future sales value and costs to complete assumptions
which are subject to estimation.
Construction
accounting
estimates
As explained more fully in our accounting policy on construction
contracts on page 167, a significant element of turnover is
attributable to construction contracts.
Contract costs and revenues may be affected by a number of
uncertainties that are dependent on the outcome of future events
and therefore estimates may need to be revised as events unfold
and uncertainties are resolved.
The Committee critically reviewed the
valuations and any key movements during
the year. Having discussed the valuations
during the meeting and considered EY’s
independent valuations, the Committee was
comfortable with the values adopted.
During the year, the Committee critically
reviewed the carrying value of housebuilder
inventories and judgements in relation to
recoverable amounts. Following discussions
with EY on the thoroughness of their testing
processes, the Committee was satisfied that
the carrying values are appropriate.
During the year, the Committee examined the
judgements and methodologies applied to
uncertainties, reviewed the sensitivity analysis
around the future costs on construction
contracts and agreed that the valuation of
contract balances and associated revenue
are not materially misstated.
Terms of Reference
During 2023, 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. There were no amendments proposed during this review but the Committee will consider the matter again in
2024 to incorporate the updated requirements of the Code. The Terms of Reference 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
11 April 2024
112
| henryboot.co.uk CORPORATE GOVERNANCE STATEMENT
Compliance statement
During 2023, the Board and its Committees continued to monitor
their compliance with the requirements of the UK Corporate
Governance Code, as well as the upcoming amendments to the
same as published in early 2024. The Company has complied
with all the principles of the UK Corporate Governance Code 2018
for the year ended 31 December 2023 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. We are conscious of the
updated requirements within the recently published UK Corporate
Governance Code in 2024 and will be providing further updates
on our levels of compliance, and any measures in progress, in next
year’s Annual Report.
DTR 7.2.8A
The Board’s Diversity Policy, including its objectives, how these
have been implemented and the results of the same, is reported on
at pages 106-107.
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 five years, which will once again enable all Non-
executive Directors in post at that time to apply for the role as
Chair. The Board feels strongly that it is important for its Chair to
have had some knowledge and experience of the business prior
to assuming the role as Chair, and, accordingly, has planned for
this approach to maintain that continuity. An external recruitment
agency was appointed to carry out the search for Serena Lang and
Talita Ferreira, and will be used for future Non-executive Director
appointments, as reported on page 103-104.
Given our 138-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.
Provisions 9 and 19
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. However, there will 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. This period of time will 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. As referred to in the Nomination
Committee Report at pages 102-108, this period is currently
undetermined but will be for such duration as will enable the Board
as a whole to be comfortable that Peter’s replacement has garnered
sufficient knowledge and experience of the business to enable Peter
to step down from the Board.
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, and will
remain so notwithstanding the upcoming changes to the Board’s
constitution during the year, with only independent Non-executive
Directors as its members.
20% vote against – AGM
At the AGM in 2023, no resolution proposed received more than
20% of the vote against it.
AMY STANBRIDGE
COMPANY SECRETARY
11 April 2024
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CORPORATE
GOVERNANCE REPORT
GOVERNANCE REPORT
RESPONSIBLE BUSINESS COMMITTEE
In 2023, we continue the work to embed our responsible
business ambitions within our wider commercial
strategies, and think broadly about the ways in which we
can have the greatest amount of positive impact on our
climate, communities and stakeholders.”
SERENA LANG
CHAIR OF THE RESPONSIBLE
BUSINESS COMMITTEE
Review of the year
In 2023, the Responsible Business Committee (the Committee) met
three times, providing oversight and leadership on the Company’s
strategic approach to, and performance on, all responsible business
practices. Committee members also attended two engagement
sessions with guest speakers to provide insight on some key areas
of practice. The Committee provides an independent review and
oversight of the ongoing 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. For
each year, objectives in the Responsible Business Strategy are
broken down into annual targets within a Responsible Business
Plan to provide an attainable roadmap towards achievement of the
2025 ambitions, on a Group and also a subsidiary basis, which the
Committee reviews and tests.
During the year, as well as having this broader oversight of the
Responsible Business Strategy and associated Plan, the Committee
has overseen the setting of an annual Equality, Diversity and
Inclusion plan, the roll-out of the Health and Wellbeing Strategy,
reviewed progress on agile working, early careers and sustainable
transport, to name but a few. Further details of areas of focus
for 2023 are provided below. 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 review 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, Peter Mawson, James Sykes, Tim Roberts
and Darren Littlewood, and I assumed the role as the Chair of the
Responsible Business Committee in January 2023. Talita Ferreira
joined the Committee on 1 January 2024.
On behalf of the Board and the Committee, as Chair of the
Committee, I am pleased to present the Directors’ Responsible
Business Committee Report for the year ended 31 December 2023.
114
Henry Boot PLC Board
Responsible Business Committee –
key responsibilities
• Setting and achieving of the objectives within the Responsible
Business Strategy, and the creation of annual Responsible
Business Plans to contribute towards this;
• Review of all sustainability and ESG reporting, including
implementation of the recommendations of the Taskforce
on Climate-related Financial Disclosures and all associated
governance arrangements (see more on pages 66-76);
• 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
• Monitoring and supporting employee engagement with the
responsible business agenda.
Responsible Business Strategy
The Group’s Responsible Business Strategy outlines a range of
objectives and quantifiable targets to be achieved by the end of
2025. An annual Responsible Business Plan is developed to embed
the Strategy within our commercial approach and culture, and to
provide clarity for our people about how they can contribute to
this in the short term. The Plan details the progress that needs to
be made each year to ensure successful delivery of our medium-
term (2025) targets. In addition, each year, a Responsible Business
Strategy Progress Report details the progress the Group made
against the previous year’s Responsible Business Plan and
the overall Strategy. Each Responsible Business Plan aims for
incremental growth in key areas and seeks to embed a consistent
approach to responsible business practice and to create a shared
responsibility for delivery across the Group.
| henryboot.co.uk Serena Lang
Chair of the
Responsible
Business
Committee
3 3
James Sykes
Committee
member
Joanne Lake
Committee
member
Peter Mawson
Committee
member
Darren Littlewood
Committee
member
Tim Roberts
Committee
member
3 3
3 3
3 3
3 3
3 3
Responsible Business Committee attendance key
Meetings attended
Eligible meetings
To provide further clarity and to enable effective governance, each
subsidiary business works with the Responsible Business Manager
to develop their own Responsible Business Plan which draws from
the Group Plan and details how they are required to contribute to its
success.
Delivery of the Responsible Business Plan and executive
scrutiny and oversight of performance is the responsibility of the
Responsible Business Committee. The Executive Committee, the
ESG Steering Group and the Responsible Business Manager are
responsible for overseeing the implementation and strategic delivery
of the Responsible Business Plan across the Group and reporting
progress back to the Committee. Further details about roles and
responsibilities of individual members can be found on page 117.
However, in addition to this executive oversight and that of the
Committee, the Board and Executive Committee have assumed
sponsorship roles for individual Responsible Business Pillars.
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GOVERNANCE REPORT
Other significant issues considered
Focus
Matters considered
Committee outcome
Health and
wellbeing
Following a round of review by the Executive Committee, and
having been contributed to by the GEF (see pages 92), initial
implementation of the Health and Wellbeing Strategy was
considered by the Committee in December 2023.
Reporting
frameworks
Deloitte provided the Committee with an in-depth overview of
the ESG regulatory frameworks and requirements, including
reporting frameworks such as TCFD and TNFD, that the
leaders within the Group should be aware of.
Early Careers
Strategy
These discussions covered development of an Early Careers
Strategy, focusing on two key areas:
1. Engaging Learners and Building Partnerships (by providing
strategic education engagement, clarity of processes and
engagement with our people) and
2. Early Career Pathways and Experience (by creating entry-
level opportunity and tackling barriers, and developing a
market-leading early-years careers journey).
The Committee agreed that the Strategy, which
was an evolution of the previous 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.
The session provoked a thorough debate with
the Committee and Executive Committee around
the increasing regulatory framework that both
bodies needed to be cognisant of and how this
would feed into considerations around strategy
and risk.
The progress on this Strategy is ongoing but the
Committee provided input on some key areas
requiring a steer and also overall agreement to
the direction of travel.
Climate
Change
Framework
(CCF)
Reporting on a variety of climate-related issues, which has
been drawn into a consolidated framework, continued during
2023, focusing on net zero carbon, TCFD, biodiversity, nature
stewardship and carbon offsetting.
The individual strands within the CCF have
continued to be developed and overseen by the
Committee during the year.
This internal reporting mechanism aligns the existing and
forthcoming strategies, reporting requirements, and initiatives
focused on how the Group is responding to climate change.
This approach provides a clearer strategic structure and more
clarity for monitoring progress and impact.
TCFD and
Scope 3
greenhouse
gas emissions
approach
Engagement
session
In the year, the Group has developed its approach to Scope 3
greenhouse gas emissions evaluation, appointing the Carbon
Trust to carry out baselining work. As noted in the TCFD
report within this Annual Report and Accounts, further
progress on Scope 3 and on scenario modelling is required,
and the Committee has been reviewing the approaches to
addressing this.
An engagement session was held with Simon McWhirter,
Deputy Chief Executive of the UK Green Building Council,
relating to climate change in the built environment, giving an
overview of the ways in which climate change is affecting the
real estate sector and how our industry is responding to these
challenges.
The ESG Steering Group continues to monitor
the preferred approach to TCFD and Scope 3
reporting, including use of external consultants,
with proposals being considered by the
Committee during the year.
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.
The Committee, in conjunction with the Board
and Nomination Committee, will continue to
identify further areas for development through
these engagement sessions.
116
| henryboot.co.uk Oversight of climate-related ESG 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
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.
Responsible Business
Manager
Responsible Business Committee (attendee)
The Responsible Business Manager:
ESG Steering Group
Executive Committee (attendee)
EDI Steering Group
Climate Change Forum
•
is responsible for preparing the Responsible Business Strategy
and annual Responsible Business Plans, monitoring the Group’s
performance against the Strategy/Plans and routinely updating ExCo
and the Responsible Business Committee
• assumes responsibility for the management and delivery of the Climate
Change Forum and EDI Steering Group
• assists with preparation of the Group’s TCFD disclosures
Finance Director
Responsible Business Committee (attendee)
The Group Finance Director:
ESG Steering Group
Climate Change Forum
General Counsel and
Company Secretary
Responsible Business Committee (attendee)
ESG Steering Group
Executive Committee
EDI Steering Group
Climate Change Forum
• collaborates with the Responsible Business Manager to monitor and
measure progress against quantitative 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
the 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.
HR Director
Executive Committee
EDI Steering Group
Responsible Business Committee (attendee)
Managing Directors
Executive Committee
The HR Director assumes responsibility for overseeing the alignment of the
Responsible Business Strategy with the Group People Strategy and leads
on early careers and health and wellbeing.
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.
117
FINANCIALSSHAREHOLDERSAnnual Report and Financial Statements for the year ended 31 December 2023 |OVERVIEWGOVERNANCESTRATEGIC REPORT CORPORATE
GOVERNANCE REPORT
ESG Governance Structure
Remuneration
Committee
Oversees alignment of
Remuneration objectives
with ESG targets.
Nomination
Committee
Sets Board diversity policy.
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
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
Oversees delivery of climate
change framework
Terms of reference
During 2023, 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. There were no amendments proposed as part of that review and the Terms of Reference were re-approved, and
are available on the Company’s website.
SERENA LANG
CHAIR OF THE RESPONSIBLE BUSINESS COMMITTEE
11 April 2024
118
| henryboot.co.uk
CORPORATE
GOVERNANCE REPORT
REMUNERATION
Directors’ Remuneration Report
We engaged with shareholders representing over
two-thirds of the register on the new Remuneration Policy
and plans for implementation in 2024 and received strong
levels of support for both.”
GERALD JENNINGS
CHAIR OF THE REMUNERATION
COMMITTEE
4 4
Joanne Lake
Committee
member
Peter Mawson
Committee
member
Serena Lang
Committee
member
4 4
4 4
4 4
Remuneration Committee attendance key
Meetings attended
Eligible meetings
Annual Statement from the
Chair of the Remuneration Committee
On behalf of the Board and the Remuneration Committee (the
Committee), I am pleased to present the Directors’ Remuneration
Report for the year ended 31 December 2023.
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 (on pages 123 to 130), which will be
put forward for shareholder approval at the 2024 AGM.
• The Annual Report on Remuneration, which sets out
the remuneration outcomes for the financial year ended
31 December 2023 and the proposed implementation of the
Remuneration Policy for the upcoming year.
Remuneration outcomes
Annual Bonus
The 2023 annual bonus was based on financial measures (66.7%)
and individual strategic objectives (33.3%).
At the start of the year, the Committee set stretching financial
targets against a backdrop of a slowing economy and higher
interest rates, acknowledging that it was unlikely to repeat the
record underlying profit recorded in 2022. Despite activity in our
key three markets decreasing during 2023, the business performed
resiliently, exceeding its underlying profit target thanks to the focus
on high quality land and development in prime locations. The
business generated robust sales including growing Stonebridge
Homes’ output by 43% and achieving investment property sales
at a premium to FY22 valuations. As a result, the formulaic payout
under the profit element was 66.67% of maximum.
The personal objectives considered investment in people, IT
infrastructure, marketing and advancements in our internal
strategies which has driven progress towards our long term
ambitions and contributed to a successful year operationally. As
a result, for their personal objectives, the CEO achieved 85% of
maximum under this element and the CFO achieved 82.5% of
maximum. Therefore, the formulaic outcome under the bonus was
72.8% of maximum for the CEO and 71.9% for the CFO.
119
FINANCIALSSHAREHOLDERSAnnual Report and Financial Statements for the year ended 31 December 2023 |OVERVIEWGOVERNANCESTRATEGIC REPORT CORPORATE
GOVERNANCE REPORT
REMUNERATION
Directors’ Remuneration Report
The Committee reviewed the formulaic outcome under the bonus,
taking into account the broader stakeholder experience including
the bonus level more broadly across the workforce and the
level of absolute profitability delivered over the year. After careful
consideration, the Committee felt that despite strong performance
from executives and employees in challenging market conditions,
it would be appropriate to use discretion to reduce the formulaic
bonus outcome by 11.65% for all employees, including Executive
Directors. As a result, the CEO will receive a bonus of 64.3% of
maximum and the CFO will receive 63.6%. One third of the bonus is
deferred into shares and held for three years.
LTIP award for performance period
FY21–23
The three-year performance period for the 2021 LTIP award ended
on 31 December 2023. Performance was based on EPS (33.3%),
ROCE (33.3%) and TSR (33.4%).
The three-year average ROCE was 10.18% which resulted in a
payout of 54.5% of maximum under this element. The relative TSR
and EPS elements did not reach threshold performance and so will
lapse. Overall, 18.15% of the LTIP will vest. After reviewing wider
business performance over the period, the Committee considered
that this result was appropriate and did not apply discretion to
adjust the outcome.
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
There were no changes to the Board during 2023. We welcomed
Talita Ferreira as a Non-executive Director on 1 January 2024.
Talita’s fee is in line with the other Non-executive Director fees and
she will receive an additional annual fee for chairing the Audit and
Risk Committee from 1 September which will be prorated for 2024.
Joanne Lake and I are nearing our nine-year tenure on the Board
and will step down as Directors in September 2024, making this
my last report as Committee Chair. Serena Lang will take over as
Committee Chair in the autumn, with Peter Mawson assuming my
responsibilities as liaison to the Group Employee Forum.
Directors’ Remuneration Policy
Our current Policy was approved at the 2021 AGM and is due
for renewal at the 2024 AGM. The Committee has reviewed the
current Policy, taking into account the Group strategy, corporate
governance developments, institutional investor views and market
practice.
The review concluded that our Policy is working effectively and
is aligned to the Group strategy, provides a good link between
reward and performance and is in line with institutional investors’
best practice expectations. Alternative incentive models, such as
replacing the LTIP with restricted shares, were considered, but there
120
was a consensus that long term share awards should be linked to
performance targets for all of the LTIP population.
The only material change to the Policy is the reduction of the
maximum LTIP grant from 175% of salary to 150% of salary. A
summary of the review process and the factors considered by the
Committee are set out on pages 123 to 124.
Application of the Directors’
Remuneration Policy for 2024
The key decisions for 2024 are set out below.
Salary and fees
The Executive Directors received a salary increase of 3%, lower
than the budgeted increase for the workforce of 4%. In addition,
the Non-executive Directors and Chair also received a fee
increase of 3%.
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 individual strategic objectives,
including a number of ESG targets. One-third of the bonus is
deferred in to shares and held for three years.
LTIP
The 2024 LTIP awards will be granted at 150% of salary for the
CEO and 125% of salary for the CFO in line with the new Policy
maximum. This is a modest increase to the normal LTIP grant level,
as permitted under the new Policy, to increase the emphasis on
long term performance, accompanied by stretching targets, so
that Executive Directors will only receive increased LTIP pay-outs if
excellent performance is delivered.
The FY24 LTIP awards will be subject to relative TSR, EPS, ROCE,
and ESG related targets based on a reduction in Scopes 1 & 2
emissions and workforce gender balance. During the year, the
Committee reviewed the weightings of each of the measures to
ensure they aligned with the strategic priorities of the business
over the longer term. As a result, the Committee increased the
weighting on relative TSR from 30% to 40% to increase the
emphasis on shareholder returns and provide stronger alignment
with shareholders’ interests. The weighting on EPS and ROCE have
been reduced from 30% to 25% each. The weighting on Scopes 1
& 2 emissions and workforce gender balance targets have remained
at 5% each.
The stretching targets that have been set are considered to be at
least as challenging as targets set for prior years’ awards, taking
into account internal business plans and current market conditions.
Wider workforce considerations
The Committee has oversight of the salary increases, 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.
| henryboot.co.uk In my dual capacity as Committee Chair and designated Non-
executive Director for workforce engagement, I meet regularly
with the Group Employee Forum to discuss remuneration and
reward matters. In addition to a discussion with them on the new
Remuneration Policy (see page 123), we also discussed the CEO’s
personal objectives in one session and held another session on
the role of the Remuneration Committee and how the Executive
Directors’ packages link to the company strategy and encourage
long term behaviours. During all our discussions, 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 Remuneration Policy or to the
implementation of the Policy in 2024 as a result of this engagement.
Shareholder engagement
The Committee consults with its larger shareholders on executive
pay matters, where considered appropriate. We engaged with
shareholders representing over two-thirds of the register on the
new Remuneration Policy and plans for implementation in 2024 and
received strong levels of support for both.
Closing remarks
Throughout my time as Committee Chair, I believe that we have
made great strides towards aligning executive remuneration with
the interests of our shareholders and the workforce and I have
welcomed engagement with many of you. Should you have any
queries or comments, please do not hesitate to contact me, or the
Company Secretary, as we do value your input.
I hope that you will be able to support both the Remuneration Policy
and the Directors’ Remuneration Report at this year’s AGM.
GERALD JENNINGS
CHAIR OF THE REMUNERATION COMMITTEE
11 April 2024
121
FINANCIALSSHAREHOLDERSAnnual Report and Financial Statements for the year ended 31 December 2023 |OVERVIEWGOVERNANCESTRATEGIC REPORT CORPORATE
GOVERNANCE REPORT
REMUNERATION
Remuneration at a glance
Performance snapshot
2023 Annual bonus performance
Scenario charts (£’000)
£2,500
Measure
Performance
Achievement
(% of max for
each element)
£2,000
£2,233,897
£1,870,669
Underlying PBT (66.7%)
£36.7m
66.67%
£1,500
Individual Strategic
objectives (33.3%)
See pages
133 to 134
85% (CEO) and
82.5% (CFO)
LTIP performance for 2021 award based on
performance over three years to
31 December 2023
Measure
Relative TSR vs FTSE
Small Cap
Performance
Below median
EPS
ROCE
20.4p
10.18%
Achievement
(% of max for
each element)
0%
0%
54.5%
£1,216,859
%
0
3
%
4
2
%
6
4
£1,000
£563,048
£500
%
0
0
1
£0
%
9
3
%
1
3
%
0
3
£1,354,412
£1,155,493
£765,612
%
6
2
%
5
2
%
9
4
£375,732
%
0
0
1
%
4
3
%
3
3
%
3
3
Fixed
pay only
Target
performance
Maximum
performance
Fixed
pay only
Target
performance
Maximum
performance
Tim Roberts
Darren Littlewood
Fixed pay
Annual bonus
LTIP
50% share price growth on LTIP
Implementation of Policy for 2024
Base salary
3% increase for all Executive Directors
Executive pay in 2023 and compared
to prior year
Total remuneration (£’000)
• CEO – £484,304
• CFO – £318,270
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 – 150% of salary
• CFO – 125% of salary
• Subject to EPS, ROCE, TSR and
ESG targets
• Two year holding period applies
after vesting
Shareholding
guidelines
200% of salary (to be held for two years
post-employment)
1000
800
600
400
200
0
2023
2022
2023
2022
Tim Roberts
Darren Littlewood
Salary
Benefits
Pension
Annual bonus
LTIP
Other
122
| henryboot.co.uk REMUNERATION
Remuneration Policy
This section of the report sets out the Company’s Policy on the
remuneration of Directors which will be put to a binding shareholder
vote at the 2024 AGM. Subject to shareholder approval, the Policy
will take effect from the date of the 2024 AGM and is intended to
apply for three years.
Bonus arrangements across the Group have a similar structure
to the Executive Directors in that there is a measure of Group
profitability, subsidiary profitability and personal performance
through objectives measurement. The level of bonus potential varies
across roles and Group companies.
This report has been prepared in accordance with the provisions of
the Companies Act 2006, The Large and Medium Sized Companies
and Groups (Accounts and Reports) (Amendment) Regulations
2008 and the subsequent amendments, and the UK Listing
Authority Listing Rules. In addition, the report has been prepared
on a ‘comply or explain’ basis with regard to the UK Corporate
Governance Code 2018.
Determining the Remuneration Policy
The Committee is responsible for the development, implementation
and review of the Directors’ Remuneration Policy. In addressing
this responsibility, the Committee works with management and
external advisers to develop proposals and recommendations. The
Committee considers the source of information presented to it,
takes care to understand the detail and ensures that independent
judgement is exercised when making decisions. The Committee
works alongside other Board Committees as needed; for example,
the Audit and Risk Committee confirms incentive plan performance
results.
The Company 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.
When setting the Remuneration Policy, the Committee considered:
market practice, Director remuneration at companies of comparable
size and complexity, Group performance and the wider economic
environment. In addition, the Committee reviewed pay across the
wider workforce and stakeholder views. Set out below is a summary
of the pay across the business and how employee and stakeholder
views are taken into consideration.
Pay across the Group
Henry Boot aims to provide a remuneration package that is market
competitive, complies with statutory requirements and is applied
fairly and equitably across employees of the Group. Where possible,
the Group operates the same core remuneration principles for
employees as it does for Executive Directors.
These are:
• We remunerate fairly for each role with regard to the
marketplace, consistency across comparable roles and
consistency across each company within the Group.
• We remunerate people at a level that the Group has the ability
to meet which is sufficient to retain and motivate our people to
achieve our shared long term goals.
Participation in the LTIP Scheme is extended to the senior
management beyond the Executive Directors based on our grading
structure and at the discretion of the Board. Share ownership
amongst the wider workforce is encouraged but there is no formal
requirement to hold shares. We encourage long term employee
engagement through the offer of a SAYE share scheme and a
CSOP scheme to all employees who don’t participate in the LTIP
Scheme.
How employee views are taken
into account
Employee engagement on remuneration matters by the Committee
is conducted through the Group Employee Forum (GEF). The GEF
consists of employees from across the businesses and provides an
opportunity for employees to voice their views and raise concerns.
The GEF is attended by the designated Non-executive Director and
Remuneration Committee Chair, Gerald Jennings, who acts as a
conduit between the Board and the workforce and ensures a two-
way dialogue.
During the Remuneration Policy consultation, a meeting was held
with the GEF to discuss the overall remuneration approach for
Executive Directors and to highlight how it was closely aligned
to the remuneration approach for the wider workforce. The GEF
members were invited to provide feedback on the Remuneration
Policy and other remuneration structures and practices within the
Group. Other meetings during the year take place with the GEF to
discuss the Company strategy, the Executive Directors’ personal
objectives and the link between strategy, performance and reward.
The executive Remuneration Policy and its implementation were
not raised as material issues in the discussions at any point and
therefore no amendments to the Remuneration Policy were required
as a result of this engagement.
In addition to direct engagement with the workforce, the HR
Director regularly summarises matters relating to the wider
workforce, including relative levels of pay between companies in the
Group, changes to other working conditions and changes within
the composition of the workforce. Updates on GEF opinion on
any remuneration matters are shared with the Committee at most
meetings via the designated NED/Committee Chair.
123
FINANCIALSSHAREHOLDERSAnnual Report and Financial Statements for the year ended 31 December 2023 |OVERVIEWGOVERNANCESTRATEGIC REPORT • 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 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
has been 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.
Conclusion of the review and changes to
the Directors’ Remuneration Policy
The Committee concluded that the Policy worked effectively and is
aligned to the Group strategy, provides a good link between reward
and performance and is in line with institutional investors’ best
practice expectations. On this basis and having explored alternative
incentive models, such as replacing the LTIP with restricted shares,
the Committee concluded that the Policy was fit for purpose. The
only material change to the Policy is the reduction of the maximum
LTIP grant from 175% of salary to 150% of salary. As we do not
intend to grant LTIPs up to 175%, the additional headroom within
the Policy is not needed.
CORPORATE
GOVERNANCE REPORT
REMUNERATION
Remuneration Policy
Consideration of Shareholder Views
Over recent months, the Committee consulted with major family
and institutional shareholders representing over two-thirds of
the shareholder base and proxy advisers to seek their views on
the proposed Remuneration Policy and implementation. During
the consultation, the major shareholders were supportive of our
proposed changes to the Remuneration Policy and the proposed
implementation of the policy in FY24, so we have proceeded with
the planned changes. The Committee is thankful for shareholders’
participation in this consultation process. The Committee will
continue to monitor developments in corporate governance and
market practice to ensure that the Policy and its implementation
continues to be in line with best practice.
Other considerations
The Policy has been tested against the six factors listed in Provision
40 of the UK Corporate Governance Code:
• Clarity – the Committee believes the Remuneration Policy is clear
and includes a simple annual bonus structure. The elements
of the Remuneration Policy were described clearly to investors
during the consultation process, to the workforce during the
engagement with the Group Employee Forum and are set out in
this report.
• Simplicity –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.
124
| henryboot.co.uk Directors’ Remuneration Policy
Element
Salary
Purpose and link to
strategy
Core element of the Executive
Directors’ fixed remuneration
reflecting the role, experience
and set in part by reference
to comparable companies
in the FTSE and appropriate
relativities within the broader
executive team.
Benefits
These are provided on a
market competitive basis to
assist in recruiting and retaining
Executive Directors.
Pension
To provide a contribution
towards retirement income.
Operation
Opportunity
Performance measures
The Committee reviews base
salaries annually, taking into
consideration:
i.
the value of the individual to the
Group, their skills, experience
and performance;
ii. pay increase levels in the Group
and more generally in the
marketplace; and
iii. the Group profitability and
prevailing market conditions.
None.
Salary increases will
normally be in line with
the workforce average.
The Committee will
consider any increase
above this level very
carefully in the following
circumstances, for
example:
i.
relevant commercial
factors;
ii. increasing scope
and responsibility;
iii. promotional
increases; and
iv. falling below market
positioning.
Benefits include (but are not
limited to):
Set by reference to
normal market practice.
None.
i. a car allowance;
ii. private health insurance;
iii. permanent health insurance;
iv. death in service cover; and
v. the offer of participation in the
SAYE Scheme.
The Committee reviews the level
of benefit provision from time
to time and has the flexibility to
add or remove benefits to reflect
changes in market practice or the
operational needs of the Group.
The cost of providing benefits is
borne by the Company and varies
from time to time.
Executive Directors are eligible for
membership of the Henry Boot
PLC Group Stakeholder Pension
Plan (defined contribution pension
scheme) or a cash supplement in
lieu of this.
None.
Executive Directors
will receive a pension
contribution in line
with the rate applying
to the majority of the
workforce, currently 8%
of salary.
125
FINANCIALSSHAREHOLDERSAnnual Report and Financial Statements for the year ended 31 December 2023 |OVERVIEWGOVERNANCESTRATEGIC REPORT CORPORATE
GOVERNANCE REPORT
REMUNERATION
Element
Annual bonus
Purpose and link to
strategy
To incentivise the delivery
of financial performance,
operational targets and
individual objectives over the
financial year.
Long term
incentive plan
The Long term Incentive Plan
provides a clear and strong
link between the remuneration
of Executive Directors and
the creation of value for
shareholders by rewarding
the Executive Directors for
achieving longer-term objectives
aligned closely to the business
strategy and shareholders’
interests.
Operation
Opportunity
Performance measures
The maximum bonus
opportunity is 120% of
salary.
Targets are reviewed annually
and any payment is normally
determined by the Committee after
the year end based on targets set
for the financial year.
At least one-third of the bonus
earned will be invested into shares
and deferred for three years (during
which time the shares cannot be
sold).
Malus and clawback
provisions apply.
Conditional share awards are
normally granted annually to
Executive Directors.
Up to a maximum
of 150% of salary in
any year.
Awards vest after the third
anniversary of grant subject to
performance conditions and
continued service.
To the extent awards vest, the
value of dividends payable over
the vesting period will be added,
usually in the form of an additional
award of shares.
After awards vest, subject to
selling sufficient shares to pay tax,
shares must be held for a further
two years.
Malus and clawback
conditions apply.
The majority of the bonus will
be based on financial metrics.
No more than 10% of the
maximum bonus opportunity
will pay out for threshold
performance and no more than
50% for target performance
where practicable. Payout
between threshold, target and
maximum will be calculated
on a straight-line basis where
practicable.
The Remuneration Committee
has the discretion to adjust the
formulaic outcome of the bonus
if they believe the outcome
does not accurately reflect
business performance.
Performance conditions and
targets will be set each year
linked to business KPIs in line
with the strategy, or a measure
of total shareholder return.
The Remuneration Committee
has the discretion to adjust the
formulaic outcome of the bonus
if they believe the outcome
does not accurately reflect
business performance.
No more than 25% of the
award will vest for threshold
performance where practicable.
126
| henryboot.co.uk Element
Shareholding
guidelines
Purpose and link to
strategy
Direct share ownership by
Executive Directors aligns their
long term interests to those of
shareholders.
Operation
Opportunity
Performance measures
Not applicable.
None.
During employment, Executive
Directors are required to build and
maintain a shareholding equivalent
to 200% of base salary. 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 of employment
Any Executive Director leaving
the Company will be expected to
retain the lower of the shares held
at cessation of employment and
shares to the value of 200% of
salary, for a period of at least two
years. Shares purchased voluntarily
by the individual will be excluded
from this requirement and the
requirement only applies to awards
made after the May 2021 AGM.
Non-executive
Director fees
Fee levels are set in order to
recruit and retain high calibre
Non-executive Directors with
the relevant experience required
to achieve success for the
Company and its shareholders.
The fees of the Chair are
determined by the Committee
and the fees of the Non-executive
Directors are determined by the
Board (minus the Non-executive
Directors).
Non-executive Directors are not
eligible to participate in any of
the Company’s share schemes,
incentive arrangements or pension
schemes.
The Company may pay any
reasonable expenses that a Non-
executive Director incurs in carrying
out their duties as a Director.
Non-executive Directors
are paid a basic fee.
None.
Additional fees may
be paid for chairing
committees or taking
additional roles such as
the Senior Independent
Director or Director
responsible for the
Group Employee Forum
liaison.
Non-executive Directors
are encouraged, but
not required, to build
up a shareholding in
Henry Boot.
127
FINANCIALSSHAREHOLDERSAnnual Report and Financial Statements for the year ended 31 December 2023 |OVERVIEWGOVERNANCESTRATEGIC REPORT CORPORATE
GOVERNANCE REPORT
REMUNERATION
Notes to the Policy table
Explanation of the performance measures chosen
Performance measures are selected to reflect the Group’s strategy. Stretching performance targets are set each year for the annual bonus
and long term incentive awards. In setting these performance targets, the Committee will take into account a number of different reference
points which may include the Group’s business plans and strategy and the market environment.
The Committee has the discretion in exceptional circumstances to change performance measures and targets part way through a
performance year if there is a significant event which causes the Committee to believe the original measures and targets are no longer a fair
and accurate measure of business performance.
Malus and clawback
The Committee has discretion to claw back awards made under the annual bonus plan and LTIP in the event of a material misstatement in
the audited consolidated accounts of the Company, a material error in assessing any performance condition, employee misconduct, serious
reputational damage or corporate failure. In these circumstances, the Committee has discretion to reduce or cancel deferred awards, or
require the participant to repay some or all of the value delivered from a bonus or LTIP awards, at any time up to the third anniversary of
vesting of LTIP awards or payment of annual bonus.
Discretion
The Committee can exercise discretion in a number of areas when operating the Company’s incentive schemes, in line with the relevant
rules of the schemes. These include (but are not limited to):
•
•
•
•
the choice of participants;
the size of awards in any year (subject to the limits set out in the Directors’ Remuneration Policy table);
the extent of payments or vesting in light of the achievement of the relevant performance conditions;
the determination of ‘good’ or ‘bad’ leavers and the treatment of outstanding awards (subject to the provisions of the scheme rules and
the Remuneration Policy provisions); and
•
the treatment of outstanding awards in the event of a change of control.
Illustration of the application of the Remuneration Policy
The graph shows total remuneration under the new Policy, illustrating the minimum pay (fixed pay), on-target pay and maximum pay
(assumptions are set out in the table below).
Minimum
Fixed pay comprised of base pay as of 1 January 2024, benefits paid in FY23, and pension contributions in FY24.
Target
Fixed pay and 50% of the FY24 bonus and LTIP opportunity.
Maximum
Fixed pay and maximum payout under the bonus and LTIP. This scenario also includes an additional element
illustrating the impact of 50% share price growth on the LTIP.
£2,500
£2,000
£1,500
£1,000
£563,048
£500
%
0
0
1
£0
£2,233,897
£1,870,669
£1,216,859
%
0
3
%
4
2
%
6
4
%
9
3
%
1
3
%
0
3
£1,354,412
£1,155,493
£765,612
%
6
2
%
5
2
%
9
4
£375,732
%
0
0
1
%
4
3
%
3
3
%
3
3
Fixed
pay only
Target
performance
Maximum
performance
Fixed
pay only
Target
performance
Maximum
performance
Tim Roberts
Darren Littlewood
128
| henryboot.co.uk Recruitment Remuneration Policy
This table sets out the Company’s policy on recruitment of new Executive Directors for each element of the remuneration package. Non-
executive Directors are recruited on an initial three-year term and receive a fee but no other benefits.
Remuneration
element
Base salary
Benefits
Pension
Bonus
LTIPs
Buyouts
Policy on recruitment
The Committee will typically offer a salary in line with the Policy whilst also considering the experience, ability to
implement Group strategy, and the wider economic climate and pay and conditions throughout the Group, in order
to facilitate the hiring of candidates of the appropriate calibre required to implement the Group’s strategy.
The Committee will offer benefits in line with the Policy for existing Executive Directors; however, the Committee has
the flexibility to consider other benefits from time to time, including relocation expenses.
Contribution levels will be set in line with the Company policy.
The Committee will offer the ability to earn a bonus in line with the Policy (maximum 120% of base salary). Bonus
opportunities will be prorated for new employees that join during the year.
The Committee will offer LTIPs in line with the Policy in the year of joining. As a result, the maximum variable pay
level which may be awarded to a new Executive Director is 270% of salary (i.e. 120% annual bonus and 150% LTIP
award).
The Committee’s policy on ‘buying out’ existing incentives granted by the Executive’s previous employer will
depend on the process of recruitment and be negotiated on a case-by-case basis. The Committee may make
an award in order to ‘buy out’ previous incentives but it will only be made if it is considered necessary to attract
the right candidate and there will not be a presumption in favour of doing so. The award will in any event be no
larger than the award forfeited and will resemble the arrangements forfeited as far as applicable, and performance
conditions will apply on a like-for-like basis.
Internal
appointees
Any remuneration awards previously granted to an internal appointee to the Board will continue on their original
terms. In the same way, if an appointee has deferred benefits in the Henry Boot Staff Pension and Life Assurance
Scheme these will continue as before.
Payment for the loss of office policy
The table below sets out the policy on exit payments. Treatment of different elements under the Policy may vary depending on whether
the Executive Director is classified as a ‘good’ or a ‘bad’ leaver. ‘Good leaver’ status occurs upon the cessation of employment for a
compassionate reason, such as death in service, ill health, injury, disability, retirement, redundancy or for any other reason determined by the
Committee.
The Committee will ensure that a consistent approach to exit payments is adopted and there is no reward for poor performance and
any liability to the Group is minimised/mitigated in all areas. Where a compromise agreement is required, the Committee would consider
contributing to the reasonable costs of legal and other expenses relating to the termination of employment and pay reasonable amounts to
settle potential claims.
Remuneration
element
Policy
Base salary/fees
and benefits
Base salary/fees and benefits will be paid over the notice period subject to mitigation. Compensation will be phased
over the notice period. If the Executive finds a new role prior to the end of the notice period, payments will be offset
against earnings from the new role.
Pension/salary in
lieu of pension
Bonus
LTIP awards
Pension contributions and any payments in lieu of pension will be provided over the notice period.
For a ‘good leaver’, any bonus payment would be at the discretion of the Committee and would be prorated to
the time employed in the year that employment ceases. Any payment would be paid at the same time as other
Directors, subject to the original performance criteria deferral and malus and clawback.
It is normal for awards to lapse on cessation of employment unless the Company and Committee agree that the
Executive is a good leaver. Good leavers will be treated in accordance with the rules of the LTIP scheme which has
been approved by shareholders. Their awards are prorated for the proportion of the performance period that has
elapsed. Any prorated shares vest at the normal vesting date and are subject to the same performance conditions
as other LTIP award holders. The Committee retains discretion to allow vesting at the time of cessation of
employment on a prorated basis. Good leavers will be subject to the clauses in the LTIP Scheme related to holding
periods, malus and clawback.
In the event of a change of control, Directors affected will be treated in accordance with the rules of the LTIP
Scheme. Any early vesting as a consequence of a change of control would be based on the Committee’s
assessment of the performance conditions and would take into account the vesting period that has elapsed at the
time of the change of control.
129
FINANCIALSSHAREHOLDERSAnnual Report and Financial Statements for the year ended 31 December 2023 |OVERVIEWGOVERNANCESTRATEGIC REPORT CORPORATE
GOVERNANCE REPORT
REMUNERATION
Service contracts and letters of appointment
The Executive Directors have a service contract requiring 12 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
Tim Roberts
1 January 2020
1 August 2019
12 months
12 months
Darren Littlewood
1 January 2016
1 January 2016
12 months
12 months
Unexpired
period of service
contract
Rolling
Rolling
Contractual compensation in the event of early termination provides for compensation of basic salary, pension and benefits for the notice
period, which would be payable on a phased monthly basis.
Non-executive Directors have letters of appointment and their appointment and subsequent reappointment is subject to approval by
shareholders. Non-executive Director appointments are typically for three years, subject to a maximum of three terms totalling nine years;
however, they may be terminated without compensation at any time.
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
Gerald Jennings
1 October 2015
Serena Lang
1 August 2022
30 July 2015
30 July 2015
28 July 2022
3 months
3 months
3 months
3 months
3 months
Talita Ferreira
1 January 2024
21 December 2023
3 months
3 months
3 months
3 months
3 months
3 months
3 months
Copies of Executive Directors’ service contracts and Non-executive Directors’ letters of appointment are available on request.
Policy on external appointments
The Company recognises that Executive Directors may be invited to become Non-executive Directors of other companies and that this can
help broaden the skills and experience of a Director. Executive Directors are permitted to accept one external appointment with the approval
of the Board. Any remuneration earned from such appointments is retained by the Executive.
130
| henryboot.co.uk 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 on page 119. The key activities of the Committee
during the year are set out below:
• Oversight of the 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 and reviewing the Remuneration Policy 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 £47,600.
There were no other services provided by Korn Ferry during the year and, 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 2023 AGM, shareholders were asked to approve the 2023 Annual Report on Remuneration. The Directors’ Remuneration Policy was
approved by shareholders at the 2021 AGM. The votes received are set out below:
2023 AGM (25 May 2023)
Approve the 2022
Directors’ Remuneration Report
2021 AGM (20 May 2021)
Approve the
Directors’ Remuneration Policy
Nature of vote
Votes for
% Votes against % Votes total
Votes
withheld
Advisory
91,422,990 98.05
1,816,561 1.95
93,239,551
40,672
Nature of vote
Votes for
% Votes against % Votes total
Votes
withheld
Binding
87,300,759 98.03
1,754,384 1.97
89,055,143
9,626
131
FINANCIALSSHAREHOLDERSAnnual Report and Financial Statements for the year ended 31 December 2023 |OVERVIEWGOVERNANCESTRATEGIC REPORT CORPORATE
GOVERNANCE REPORT
REMUNERATION
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 2023
Tim Roberts
Darren Littlewood
James Sykes
Joanne Lake
Gerald Jennings
Peter Mawson
Serena Lang
Salary
and fees1
£’000
470
309
53
61
60
109
55
Taxable
benefits
£’000
40
32
0
0
0
0
0
Year ended
31 December 2022
Tim Roberts
Darren Littlewood
James Sykes
Joanne Lake
Gerald Jennings
Peter Mawson
Serena Lang
Salary
and
fees1
£’000
457
300
51
58
58
89
21
Taxable
benefits
£’000
37
31
0
0
0
0
0
Pension-
related
benefits
£’000
38
25
0
0
0
0
0
Pension-
related
benefits
£’000
37
24
0
0
0
0
0
Other2
£’000
5
5
0
0
0
0
0
Other2
£’000
0
0
0
0
0
0
0
Total
fixed
£’000
553
371
53
61
60
109
55
Total
fixed
£’000
531
355
51
58
58
89
21
Annual
bonus
£’000
363
236
0
0
0
0
0
Long term
incentives3
£’000
79
40
0
0
0
0
0
Total
variable
£’000
442
276
0
0
0
0
0
Total
remuneration
£’000
995
647
53
61
60
109
55
Annual
bonus
£’000
338
224
0
0
0
0
0
Long term
incentives4
£’000
60
35
0
0
0
0
0
Total
variable
£’000
398
259
0
0
0
0
0
Total
remuneration
£’000
929
614
51
58
58
89
21
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 137. Both Directors withdrew from the
2022 scheme and joined the 2023 scheme. The figures in the table above have been restated to reflect this.
3 Value of shares based on a three-month average share price of 1.90p to 31 December 2023. This value will be restated next year based on the actual share
price on the date of vesting.
4 The 2020 LTIP award vested on 22 June 2023, the value included in the table has been restated and is now based on the value of the award on vesting and
includes dividend equivalents shares. The value is based on the share price on the date of vesting (219p).
5 Taxable benefits include the provision of a company car or a cash allowance alternative and private medical insurance. The value of benefits is not
pensionable.
The information in the single total figure of remuneration in the table above 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 133 and 134.
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.
132
| henryboot.co.uk 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.
2023 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 award)
Threshold
10% of
maximum
Target
50% of
maximum
Stretch
100% of
maximum
Actual
result
Outcome
(% of maximum)
Darren
Tim
Littlewood
Roberts
66.7%
£32.0m
£35.5m
£39.1m £36.7m
66.67%
66.67%
33.3%
See below
See below
85%
72.8%
64.3%
82.5%
71.9%
63.6%
The proportion of personal strategic objectives achieved was assessed by the Committee as follows:
2023 personal objectives – Tim Roberts
Weighting
(% of salary) Performance against objective
15%
Objective Details
Implement Group strategy, grow
capital employed, progress internal
business improvements
Enhance the Henry Boot profile
through effective external and
internal communications
Drive high-performance culture
within senior leaders and review
organisational structures
Lead good Health and Safety
practices around the Group to
avoid any major Health and Safety
incidents
Evolve the Investor Relations policy,
agree the equity narrative and attract
new shareholders to the register
Implement Responsible Business
Strategy, and promote an
open, diverse and progressive
organisation
1
2
3
4
5
6
Total
4%
4%
4%
3%
10%
40%
Strong: Despite cost pressure, ambitions on corporate
and longer-term strategic objective progress at pace.
Capital deployed carefully whilst remaining in the
optimum gearing range.
Excellent: Increased level of communications internally
through various channels, including a live strategy session
with ExCo to the workforce. The Brand Value Proposition
and Employer Value Proposition work streams remain on
track to deliver rebranding in 2024.
Excellent: Successful progress made with ExCo
development enhancing the quality of decision making
and collaboration across the Group. Reporting and
progress structures refreshed in some subsidiaries.
Satisfactory: Reporting structure revised and improved
Group approach to setting targets. High safety standards
expected with most subsidiaries achieving the majority of
their KPIs.
Strong: Positive investor feedback received from the
investor roadshows. Ongoing engagement with new and
potential shareholders.
Excellent: Gender balance target achieved for the year
and positive progress on the gender pay gap. Health and
Wellbeing Strategy launched internally alongside significant
support to charity and community partners. Reduction in
energy usage in line with net zero carbon targets.
Outcome
(% of max)
87%
100%
100%
50%
67%
90%
85%
133
FINANCIALSSHAREHOLDERSAnnual Report and Financial Statements for the year ended 31 December 2023 |OVERVIEWGOVERNANCESTRATEGIC REPORT
Objective Details
Weighting
(% of salary) Performance against objective
10%
CORPORATE
GOVERNANCE REPORT
REMUNERATION
2023 personal objectives – Darren Littlewood
Implement Group strategy, grow
capital employed, progress internal
business improvements
Implement IT strategy with a focus
on identifying business process
improvements, efficiencies and
systems
Encourage strategic development
of senior leadership and increase
influence within the business and
profile within the wider industry
10%
2%
Support the modernisation agenda,
develop direct reports and prepare
for the banking facility renewal
Evolve the internal budgeting
process and Investor Relations
policy and attract new investors
4%
4%
Implement Responsible Business
Strategy, support the TCFD steering
group and progress other initiatives
including the head office move and
Health and Wellbeing Strategy.
10%
40%
1
2
3
4
5
6
Total
Strong: Despite cost pressure, ambitions on corporate
and longer-term strategic objective progress at pace.
Capital deployed carefully whilst remaining in the
optimum gearing range.
Strong: New core HR system implemented and
CRM system identified and beginning first stages of
implementation. IT team upskilled and evolving, and Cyber
Security essentials accreditation successfully renewed.
Excellent: ExCo development has been a core focus
during the year, alongside continued investment in the
Leadership Development Programmes and Management
Development Programmes. Attendance and presenting at
industry events has increased and building networks with
regional stakeholders.
Excellent: Banking facility renewal progressing on time
Brand Value Proposition and Employer Value Proposition
work streams remain on track to deliver rebranding in 2024.
Strong: Improved, revised approach taken to budgeting
processes ensuring alignment across the Group. Investor
Relations Policy evolved with positive investor feedback
received from the roadshows. Ongoing engagement with
new and potential shareholders.
Strong: Oversaw successful head office move including
a change in working practices and establishment of
the sustainable transport policy. Health and Wellbeing
Strategy introduced. TCFD scenario planning continues
to be work in progress.
Outcome
(% of max)
80%
80%
100%
100%
75%
80%
82.5%
As set out in the Chair’s statement on page 119, the Committee reviewed the formulaic outcome under the bonus, taking into account
the broader stakeholder experience. After careful consideration, the Committee felt that despite strong performance from both Executive
Directors, it would be appropriate to use discretion to reduce the formulaic bonus outcome by 11.65%. This reduction is aligned with the
treatment of the bonus outturn for the wider workforce and was felt to be a fair outcome in the broader business context.
Based on performance to 31 December 2023, and downward discretion used by the Committee, the adjusted annual bonus outcomes for
Executive Directors during the year are shown below.
Executive
Tim Roberts
Darren Littlewood
Annual bonus outcome
% of maximum
64.3%
63.6%
% of salary Bonus outcome (£)
£362,786
£235,682
77.2%
76.3%
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.
134
| henryboot.co.uk Long term Incentive Plan (LTIP)
LTIP awards were granted to Tim Roberts and Darren Littlewood on 23 June 2021. The LTIP shares in this award were subject to the
performance criteria set out in the table below.
Performance condition
EPS in 2023
ROCE
TSR vs FTSE Small Cap
(excluding investment trusts)
Total vesting (out of 100%
Weighting
(% of award)
33.3%
33.3%
33.4%
Threshold
(25% vesting)
22p
9%
Median
Maximum
(100% vesting)
28p
12%
Actual
performance
20.4p
10.18%
Upper quartile Rank 75 out of 112
TSR: -19%
Outcome
(% of maximum)
0%
54.5%
0%
18.15%
After reviewing wider business performance over the period, the Committee considered that this result was appropriate and did not apply
discretion to adjust the outcome. As a result, the following shares will vest.
Executive Director
Tim Roberts
Darren Littlewood
Number
of shares
granted
206,899
104,695
Number of
shares due
to vest
37,549
19,000
Estimated
number of
shares for
dividend
equivalents
3.960
2,004
Total
£78,867
£39,908
1 The share price was 263p at the time of grant, compared to the three-month average share price of 190p to 31 December 2023. Therefore, no part of the
award is currently attributable to share price appreciation.
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 23 June 2024. 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 2023. For the FY24 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 2023 of 190p.
LTIP awards granted in the year (audited)
LTIP awards were granted during the year to Tim Roberts and Darren Littlewood on 26 April 2023.
Tim Roberts
Darren Littlewood
Type of award
LTIP – nil cost options
LTIP – nil cost options
% of salary
125%
100%
Number of
shares
249,397
131,117
Face value of
grant at 235.67p
per share1
£587,754
£309,003
% 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 2025:
Measure
EPS in 2025
Return on Capital Employed (average over three years)
TSR relative to the FTSE Small Cap Index (excluding investment trusts)
Greenhouse gas emissions in 2025
Gender balance at 31 December 2025
* Individuals identifying as male or female
Threshold
(25% of max)
Weighting
20p
30%
9.5%
30%
30% Median performance
Maximum
(100% of max)
28p
12%
Upper quartile
5%
5%
2,650 tonnes
70 male : 30 female*
135
FINANCIALSSHAREHOLDERSAnnual Report and Financial Statements for the year ended 31 December 2023 |OVERVIEWGOVERNANCESTRATEGIC REPORT CORPORATE
GOVERNANCE REPORT
REMUNERATION
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
11,967
11,967
Exercise
price2
155p
155p
Face value
at grant1
£23,156
£23,156
% of award
vesting at
threshold
N/A
N/A
Date on which
exercisable
1 December 2026
1 December 2026
1 Both Directors opted to save £500 a month over the three-year savings period which, including the bonus rate amount, equates to 11,967 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 (193.50p). The Board then applied a 20% discount
on the price for all participants in line with HMRC rules.
Payments to past Directors
There were no payments made to past Directors during the year.
Payments made for loss of office
There were no payments made for loss of office.
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 2023. 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.
Beneficially
owned at
1 January
2023
303,258
225,380
13,200
N/A
19,900
10,710
N/A
20,000
Unvested
options with
performance
conditions
632,234
328,309
–
-
–
–
–
–
Beneficially
owned
383,838
265,958
13,200
-
19,900
10,710
–
20,000
At 31 December 2023
Unvested
options
without
performance
conditions
11,967
11,967
–
-
–
–
–
–
Vested
unexercised
options
–
–
–
-
–
–
–
–
Shareholding
as a %
of salary
or fees
165%
174%
24%
0%
66%
35%
0%
77%
Total
interests
1,028,039
606,234
13,200
-
19,900
10,710
–
20,000
Director
Tim Roberts
Darren Littlewood
Peter Mawson
Talita Ferreira
Gerald Jennings
Joanne Lake
Serena Lang
James Sykes
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 2023 (208p). The salary used for this calculation is that which
commences on 1 January 2024.
There have been no other transactions between 31 December 2023 and 31 March 2024.
136
| henryboot.co.uk LTIP
Tim Roberts
Darren Littlewood
Date of
grant
22/06/2020
23/06/2021
29/04/2022
26/04/2023
22/06/2020
23/06/2021
29/04/2022
26/04/2023
Market price
at date of
grant
256.17p
262.67p
324.33p
235.67p
256.17p
262.67p
324.33p
235.67p
At
1 January
2023
168,039
206,899
175,938
–
550,876
97,592
104,695
92,497
–
294,784
Grant during
the year
–
–
–
249,397
249,397
–
–
–
131,117
131,117
Exercised
during the
year1,2
27,428
–
–
–
27,428
15,929
–
–
–
15,929
Lapsed
during the
year
140,611
–
–
–
140,611
81,663
–
–
–
81,663
At 31
December
2023
–
206,899
175,938
249,397
632,234
–
104,695
92,497
131,117
328,309
Actual
exercise
date/earliest
vesting date
22/06/2023
23/06/2024
29/04/2025
26/04/2026
22/06/2023
23/06/2024
29/04/2025
26/04/2026
1 Shares exercised under the LTIP includes 2,059 and 1,196 dividend equivalent shares respectively for Tim Roberts and Darren Littlewood.
2 Tim Roberts and Darren Littlewood exercised options during the year under the LTIP. The aggregate gain on exercise was £60,067 for Tim Roberts and
£34,885 for Darren Littlewood based on a share price on the date of exercise of 219p.
Sharesave plan
Tim Roberts
Date of
grant
21/10/2022
20/10/2023
Darren Littlewood 21/10/2022
20/10/2023
At 1
January
2023
9,090
–
9,090
–
Granted
during the
year
–
11,967
–
11,967
Exercised
during the
year
–
–
–
–
Lapsed
during the
year1
9,090
–
9,090
–
At 31
December
2023
–
11,967
–
11,967
Exercise
price
198p
155p
198p
155p
Date from
which
exercisable
–
01/12/2026
–
01/12/2026
Expiry date
–
01/06/2027
–
01/06/2027
1 Both Tim Roberts and Darren Littlewood withdrew from the 2022 Sharesave plan and opted to join the 2023 Sharesave plan instead.
Share price
The middle market price for the Company’s shares at 31 December 2023 was 208p and the range of prices during the year was
170p to 253p.
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.
250
200
150
100
50
0
)
d
e
s
a
b
e
R
(
)
£
(
l
e
u
a
V
Dec 13
Dec 14
Dec 15
Dec 16
Dec 17
Dec 18
Dec 19
Dec 20
Dec 21
Dec 22
Dec 23
Source: Datastream (Thomson Reuters)
Henry Boot PLC
FTSE SmallCap Index
137
FINANCIALSSHAREHOLDERSAnnual Report and Financial Statements for the year ended 31 December 2023 |OVERVIEWGOVERNANCESTRATEGIC REPORT
CORPORATE
GOVERNANCE REPORT
REMUNERATION
CEO remuneration for the previous ten years
Year
Name
Total Remuneration
Annual bonus
LTIP
2013
Jamie
Boot
(£’000) 1,054
83.3
50
(% of max)
(% of max)
2014
Jamie
Boot
1,000
94.5
25
2015
Jamie
Boot
981
87.8
25
2016
Jamie
Boot
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
John
Sutcliffe
715
50.0
nil
2021
Tim
Roberts
982
83.3
nil
2022
Tim
Roberts
929
61.6
15.1
2023
Tim
Roberts
995
64.3
18.15
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 2022/23
Taxable
benefits
Salary/
fees
Annual
bonus
Average percentage
change 2021/22
Taxable
benefits
Salary/
fees
Annual
bonus
Average percentage
change 2020/21
Taxable
benefits
Salary/
fees
Annual
bonus
Average percentage
change 2019/20
Taxable
benefits
Salary/
fees
Annual
bonus
Chief Executive
Officer1
Chief Financial
Officer1
James Sykes3
Joanne Lake3
Gerald Jennings3
Peter Mawson4
Serena Lang5
Workforce
2.84% 8.11% 7.40%
-5%
6%
-22%
5%
0%
68%
0%
0%
N/A
0%
3.00% 3.23% 5.36%
6%
N/A
3.92%
N/A
21%
N/A
5.17%
N/A
21%
N/A
3.45%
N/A
85%
N/A
22.47%
N/A
N/A
N/A
N/A
N/A
0% -9.39% 6.24%
3.12%
9%
-19%
11%
N/A
5%
N/A
N/A 15.36%
N/A
N/A 20.55%
N/A
N/A 27.81%
N/A
N/A
N/A
N/A
0% 54.89% 9.55%
0%
N/A
N/A
N/A
N/A
N/A
0%
11%
87%
3%
N/A
3%
N/A
3%
N/A
3%
N/A
N/A
N/A
0% 3.99%
0% -51.10%
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
0% -40.81%
1 Explanations for large increases in prior years are provided in the previous Annual Reports
2 Peter Mawson was appointed as Chair on 26 May 2022 resulting in an increase in the fees received.
3 Serena Lang was appointed on 1 August 2022 and received a pro-rated fee. Therefore, the percentage change is not representative and so has not been
included in the table above.
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.
2023
2022
2021
2020
2019
25th
percentile
pay ratio
28:1
28:1
31:1
26:1
41:1
Median
pay ratio
21:1
20:1
22:1
18:1
27:1
75th
percentile
pay ratio
13:1
12:1
14:1
11.1
17:1
Method
Option A
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 the approach used historically. The pay and benefits for UK employees have been determined by reference to the last day of the
financial year (31 December 2023) using the same method as used for the single total figure.
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 2022 was used, as the FY23 bonus figures had not yet been
determined at the time this report was produced. No components of pay have been omitted.
138
| henryboot.co.uk Salary/wages
Total remuneration
25th
percentile
£31,500
£35,128
50th
percentile
£38,000
£49,264
75th
percentile
£57,750
£73,673
The CEO pay ratio for FY 23 is broadly in line with the ratio in FY 22. This reflects similar proportionate salary increases for the CEO and the workforce
in both years and the relatively low long-term incentive payout over this period compared to other years. There have been no changes to the
Company’s employment models or the calculation methods used in both periods. 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
1 Figure reinstated with the 2022 actual dividends over the period
Implementation of Remuneration Policy in 2024
The section below sets out the implementation of the Remuneration Policy in 2024.
2023
£’000
9,785
39,912
2022
£’000
8,8761
39,088
Change
%
10.3%
2.1%
Executive Directors
Base salary
The Executive Directors received an increase of 3%, lower than the budgeted increase for the workforce of 4%. The base salaries for 2024
are set below:
Tim Roberts
Darren Littlewood
Salaries effective from
1 January
2024
£
£484,304
£318,270
1 January
2023
£
£470,200
£309,000
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.
2024 bonus
The maximum bonus opportunity for Executive Directors is 120% of salary. The 2024 bonus will be based two-thirds on financial measures
and one-third on strategic personal objectives of which some are related to ESG targets. In line with the Policy, 10% of the bonus will
pay out for threshold performance and 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 high-level strategic personal objectives for each Executive Director is set
out below. The Committee has reviewed the detail and sub-objectives that sit behind the overarching personal objectives below and is
satisfied that they are stretching, robust and will contribute to the Company’s medium-term strategy.
2024 strategic personal objectives – Tim Roberts
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 a compelling narrative to engage with our shareholders and customers
Oversee implementation of Responsible Business Strategy and embrace new ways of working
1
2
3
4
5
6
Weighting
(% of salary)
15%
5%
3%
6%
3%
8%
139
FINANCIALSSHAREHOLDERSAnnual Report and Financial Statements for the year ended 31 December 2023 |OVERVIEWGOVERNANCESTRATEGIC REPORT CORPORATE
GOVERNANCE REPORT
REMUNERATION
2024 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 Responsible Business Strategy and influence our modernisation agenda
1
2
3
4
5
6
Weighting
(% of salary)
10%
10%
4%
4%
4%
8%
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.
2024 LTIP awards
The 2024 LTIP awards will be granted at 150% of salary for the CEO and 125% of salary for the CFO in line with the new Policy
maximum. This is a modest increase to the normal LTIP grant level, as permitted under the new Policy, to increase the emphasis on long
term performance, accompanied by stretching targets, so that Executive Directors will only receive increased LTIP pay-outs if excellent
performance is delivered.
The Committee will consider the share price at the date of grant in relation to the share price used for the prior year’s grant. If the share price
is materially lower it may scale back the grant level as a percentage of salary. Alternatively, the Committee will review the share price at the
date of vesting and consider whether there has been any windfall gain through a strong recovery in share price that is not linked to business
performance.
The 2024 LTIP awards will be subject to relative TSR, EPS, ROCE, and ESG related targets, based on a reduction in Scopes 1 & 2
emissions and workforce gender balance. During the year, the Committee reviewed the weightings of each of the measures to ensure they
aligned with the strategic priorities of the business over the longer term. As a result, the Committee increased the weighting on relative
TSR from 30% to 40% to increase the emphasis on shareholder returns and provide stronger alignment with shareholders’ interests. The
weighting on EPS and ROCE have been reduced from 30% to 25% each. The weighting on Scopes 1 & 2 emissions and workforce gender
balance targets have remained at 5% each.
The stretching targets that have been set are considered to be at least as challenging as targets set for prior years’ awards, taking into
account internal business plans and current market conditions.
The detailed performance metrics, which will be measured over the three-year period to 31 December 2026, are as follows:
Total Shareholder Return (TSR) relative
to constituent companies of the FTSE
Small Cap Index excluding Investment
Trusts (40% weighting)
EPS (25% 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.
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
(25% weighting)
We aim to deliver strong ROACE performance. This is a further driver to long term
shareholder value growth.
ESG – Scope 1 and 2 Greenhouse
Gas Emissions (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.
140
| henryboot.co.uk These performance criteria provide a good balance between financial and stock market performance and broader stakeholder interests. Set
out below are the target ranges.
Henry Boot TSR relative to the FTSE Small Cap Index (excluding
Investment Trusts)
EPS in 2026
Return on Average Capital Employed (average over 3 years)
Scope 1 and 2 Greenhouse Gas Emissions in 2026
Workforce gender balance by 2026
* Individuals identifying as male or female
Weighting
Threshold target
(25% of maximum)
Maximum target
(100% of maximum)
40% Median performance Upper quartile performance
or above
24p
11.5%
19p
8%
2,612 tonnes
68 male : 32 female*
25%
25%
5%
5%
The target ranges for the EPS and Return on Average Capital Employed elements, have been set to be at least as challenging to prior years’
awards, taking into account internal business plans, consensus analyst estimates and the challenging market conditions.
During the year, the Company undertook a review of the carbon reduction trajectory to take into account when the initiatives set in place
will start to significantly impact emissions. As a result, the Scopes 1 and 2 emissions target was set at 2,612 tonnes and is considered a
stretching goal, even though this represents a relatively modest reduction in comparison to the 2025 target that was set for last year’s award
(2,650 tonnes).
The performance target has been determined based on the current size of the business and will be adjusted 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.
The workforce gender balance split was set taking into account our current gender balance of 72 male: 28 female and the limited
recruitment opportunities within the market Henry Boot operates in. The target set for the FY24 award represents a clear and progressive
goal for the business.
Awards will be subject to a two-year holding period post vesting.
Non-executive Directors
Non-executive Director and Chair’s fees have been increased by 3% for FY24, lower than the budgeted increase for the workforce of 4%.
Chair fee1
Base Non-executive Director fee
Remuneration and Audit & 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.
Approved by the Board and signed on its behalf by
GERALD JENNINGS
CHAIR OF THE REMUNERATION COMMITTEE
11 April 2024
Fees effective from
1 January
2024
£
112,476
54,234
5,356
2,678
2,678
3,729
1 January
2023
£
109,200
52,654
5,200
2,600
2,600
3,640
Change
%
3%
3%
3%
3%
3%
3%
141
FINANCIALSSHAREHOLDERSAnnual Report and Financial Statements for the year ended 31 December 2023 |OVERVIEWGOVERNANCESTRATEGIC REPORT CORPORATE
GOVERNANCE REPORT
DIRECTORS’ REPORT
The Directors’ Report for the financial year ended 31 December
2023 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 2023 is set out
on pages 14 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
78 to 141, 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 160. The companies affecting the
profit or net assets of the Group in the year are listed in note 37
to the Financial Statements.
The Directors recommend that a final dividend of 4.40p per ordinary
share be paid on 31 May 2024, subject to shareholder approval at
the 2024 AGM to be held on 23 May 2024, to ordinary shareholders
on the register at the close of business on 3 May 2024. If approved,
this, together with the interim dividend of 2.93p per ordinary share
paid on 13 October 2023, will make a total dividend of 7.33p per
ordinary share for the year ended 31 December 2023. Further
details are disclosed in note 10 to the Financial Statements on
page 178.
Financial instruments
The Group’s policy in respect of financial instruments is set out
within the Accounting Policies on page 171 and details of credit
risk, capital risk management, liquidity risk and interest rate risk
are given respectively in notes 18, 26 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 54 to 55.
142
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 148.
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 2023 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 2023, are
disclosed in the Directors’ Remuneration Report on page 136.
Between 31 December 2023 and 31 March 2024, being a date
not more than one month prior to the date of the Notice of the
AGM, there were no 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 119
to 141.
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 23 May 2024 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 proposed 2024 Directors’
Remuneration Policy can be viewed on pages 123 to 130.
| henryboot.co.uk 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 and external stakeholders including the Group Employee
Forum Chair, site visits, training on director duties and other
personalised development to encourage a seamless integration into
the business.
Non-executive Directors are encouraged to familiarise themselves
with the Company’s business, and throughout the year they
have regularly attended subsidiary board meetings and other
management meetings. You can read more about engagement with
employees and other stakeholders on pages 57-58 and 94-96.
Specific training requirements were considered as part of the Board’s
performance review, details of which can be found on pages 97 to
101. 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 Responsible
Business section on pages 60 to 64, the employee engagement
report on pages 94 to 96 and Nomination Committee Report on
pages 102 to 108.
Employee engagement
Details of our employee engagement activities can be found on
pages 94 to 96.
Employee communications
Employee engagement and best-practice internal communications
was a key consideration for the Marketing and Communications
team in 2023. Early in the year, detailed strategies and plans were
created to support two major communications workstreams; the
embedding of a refreshed reward strategy linked to employee
objective setting and a major change management project focused
on the head office move from Banner Cross Hall on the outskirts
of Sheffield, to the Isaacs Building in the city centre. In September,
a dedicated Internal Communications Manager was appointed to
strengthen and upskill the existing team.
To ensure communications were as engaging as possible, regular
monthly cross-departmental meetings prioritised the content
workstreams and analysed engagement statistics to inform decisions.
To reduce the number of emails being sent across the business, and
to focus attention, a new monthly e-newsletter titled ‘The Lowdown’
was launched in May, which has proven successful in communicating
important operational and people-focussed news. Also in September,
a dedicated Events and Engagement Manager was appointed to
create and curate a year-round programme of events at the Isaacs
Building, promoting business updates, learning & development,
health & wellbeing initiatives and charitable endeavours.
Employee share schemes
The Group encourages participation in the Company’s employee
share schemes to share in the potential growth and 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 grade on an annual
basis. Details of employee share schemes are set out in note 31 to
the Financial Statements.
Directors’ indemnity provisions
Directors risk personal liability under civil and criminal law for
many aspects of the Company’s main business decisions. As
a consequence, the Directors could face a range of penalties,
including fines and/or imprisonment. In keeping with normal market
practice, the Company believes that it is prudent and in the best
interests of the Company to protect the individuals concerned
from the consequences of innocent error or omission. As a result,
the Company operates a Directors’ and officers’ liability insurance
policy in order to indemnify Directors and other senior officers of the
Company and its subsidiaries, as recommended by the UK Corporate
Governance Code. This insurance policy does not provide cover
where the Director or officer has acted fraudulently or dishonestly.
In addition, subject to the provisions of and to the extent permitted
by relevant statutes, under the Articles of Association of the
Company, the Directors and other officers throughout the year,
and at the date of approval of these Financial Statements, were
indemnified out of the assets of the Company against liabilities
incurred by them in the course of carrying out their duties or the
exercise of their powers.
Health and safety
The health and safety of our employees and others is paramount.
Further information on our approach to health and safety is provided
in the Our People section on page 64.
Relationship with stakeholders
Details of how we engage with stakeholders and uphold our
Directors’ duties more widely under s.172 of the Companies Act
2006 can be found on pages 56 to 59.
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. During the last year, the Company
also consulted with major shareholders on the new Remuneration
Policy which you can read about on pages 123 to 130.
143
FINANCIALSSHAREHOLDERSAnnual Report and Financial Statements for the year ended 31 December 2023 |OVERVIEWGOVERNANCESTRATEGIC REPORT CORPORATE
GOVERNANCE REPORT
DIRECTORS’ REPORT
Greenhouse gas emissions
The greenhouse gas emissions disclosures required by the
Companies Act 2006 (Strategic Report and Directors’ Report)
Regulations 2013 are included within the Strategic Report on page
176. This information is incorporated by reference into (and shall be
deemed to form part of) this report.
Substantial interests in voting rights
Excluding Directors, as at 31 March 2024, 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
Voting rights over
ordinary shares
Number % of issued
20,532,155
12,084,550
8,487,371
5,739,580
15.40
9.02
6.37
4.40
1 Rysaffe Nominees and James Sykes are joint registered holders on behalf
of various Reis family trusts and are therefore not included under the
beneficial interests of James Sykes set out in the Directors’ Remuneration
Report.
2 The shares of the Fulmer Charitable Trust, a recognised charity, are
registered in the names of Mr John Spencer Reis, Mrs Sally Anne Reis and
Mrs Caroline Mary Mytum as Trustees.
These figures represent the number of shares and percentage held
as the date of notification to the Company.
Details of Directors’ holdings can be found on page 136.
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 31 to the Financial Statements. The Trustee
of the Trust, a subsidiary of the Company of which the Directors
throughout 2023 were Tim Roberts, Darren Littlewood and Amy
Stanbridge, exercises the voting rights in relation to shares held
as it, in its absolute discretion, thinks fit, but having regard to the
interests of the beneficiaries. In respect of the financial year of the
Company ended on 31 December 2023, the Trust has waived the
right to receive from the Company all dividends (if any) in respect of
the shares held within the Trust.
During 2023, the Trust purchased 48,916 ordinary shares in the
Company, as it does from time to time in order to satisfy upcoming
grants. Further details are provided in note 33 to the Financial
Statements.
144
Future developments
Important events since the financial year end and likely future
developments are described in the Strategic Report on pages 14 to
77 and in note 36 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 2023 financial results. Resolutions re-appointing Ernst
& Young LLP as auditors (Resolution 13) and authorising the Audit
and Risk Committee to fix their remuneration (Resolution 14) will be
proposed at the AGM.
Accountability and audit
Details of the Directors’ responsibilities and the Statement of
Directors’ Responsibilities are contained on page 148. The
Independent Auditors’ Report is given on pages 152 to 159.
Annual General Meeting (AGM)
The Notice of the AGM can be found on pages 212 to 215, 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 31 to the Financial Statements. As at 31 March 2024,
the ordinary shares represent 97.1% of the total issued share
| henryboot.co.uk capital of the Company by nominal value and the preference shares
represent 2.9% of such total issued share capital. The ordinary
shares and the preference shares are in registered form. Both
classes of share are admitted to the Official List of the Financial
Conduct Authority.
The Company’s ordinary shares are categorised as “Premium
Listed” and its preference shares as “Standard Listed”. A Standard
Listing is based on EU minimum standards for floating a company
on a public market whereas a Premium Listing requires compliance
with additional requirements set out in the Listing Rules of the
Financial Conduct Authority.
The Notice of the AGM on pages 212 to 215 includes the following
resolutions:
• An ordinary resolution (Resolution 15) to renew the authority of
the Directors to allot shares up to a maximum nominal amount
of £4,466,207 representing approximately one-third (33.33%) of
the Company’s issued ordinary share capital at 31 March 2024.
The authority will expire on 23 August 2025 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 16) 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 £669,931 (approximately 5%
of the Company’s issued ordinary share capital at 31 March
2024). The authority will expire on 23 August 2025 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 17) to renew the authority of the
Company to make market purchases of up to 13,398,621 of
its own issued ordinary shares (10% of the Company’s issued
ordinary share capital at 31 March 2024). 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 (subject to Board
approval) 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 2024, the Company has again 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 (add company
link) 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.
145
FINANCIALSSHAREHOLDERSAnnual Report and Financial Statements for the year ended 31 December 2023 |OVERVIEWGOVERNANCESTRATEGIC REPORT CORPORATE
GOVERNANCE REPORT
DIRECTORS’ REPORT
Restrictions on voting
A shareholder shall not be entitled to vote at any general meeting or
class meeting in respect of any shares held by him unless all calls
and other sums presently payable by him in respect of that share
have been paid. In addition, holders of default shares (as defined
in the Articles) shall not be entitled to vote during the continuance
of a default in providing the Company with information concerning
interests in those shares required to be provided (following relevant
notification) under the Companies Act 2006.
Deadlines for voting rights
Full details of the deadlines for exercising voting rights in respect of
the resolutions to be considered at the AGM to be held on 23 May
2024 are set out in the Notice of AGM on pages 212 to 215.
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.
146
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.
they are prohibited by law from being a Director;
ii. they become bankrupt or make any arrangement or composition
with their creditors generally;
iii. 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;
| henryboot.co.uk v. for more than six months they are absent, without special leave
of absence, from the Board, from meetings of the Board held
during that period, and the Board resolves that their office be
vacated; or
vi. they serve on the Company notice of their wish to resign.
Powers of the Directors
The business of the Company shall be managed by the Board
which may exercise all the powers of the Company, subject to
the provisions of the Articles and any resolution of the Company’s
shareholders.
The Articles specify that the Board may exercise all the powers
of the Company to borrow money and to mortgage or charge all
or any part of its undertaking, property and assets and uncalled
capital and to issue debentures and other securities, subject to the
provisions of the Articles.
•
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
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:
AMY STANBRIDGE
COMPANY SECRETARY
11 April 2024
147
FINANCIALSSHAREHOLDERSAnnual Report and Financial Statements for the year ended 31 December 2023 |OVERVIEWGOVERNANCESTRATEGIC REPORT 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
11 April 2024
DARREN LITTLEWOOD
DIRECTOR
11 April 2024
148
| henryboot.co.uk 149
FINANCIALSSHAREHOLDERSAnnual Report and Financial Statements for the year ended 31 December 2023 |OVERVIEWGOVERNANCESTRATEGIC REPORT FINANCIALS
150
| henryboot.co.uk Contents
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
152
160
161
162
163
164
151
SHAREHOLDERSOVERVIEWSTRATEGIC REPORTFINANCIALSGOVERNANCEAnnual Report and Financial Statements for the year ended 31 December 2023 |FINANCIALSGOVERNANCE INDEPENDENT
AUDITOR’S 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 2023 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 2023 which comprise:
Group
Group statement of financial
position as at 31 December 2023
Parent Company
Parent Company statement
of financial position as at
31 December 2023
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 flow forecasts and forecast covenant calculations,
which covers the period to 31 December 2025. The Group
has modelled a base scenario and a severe but plausible
downside scenario. This downside scenario models a significant
curtailment of activity in 2024 followed by a return to 2023
levels in 2025. The 2024 forecast is modelled on a recessionary
environment similar to that experienced during the global
financial crisis in 2008;
Consolidated statement of
comprehensive income for the
year ended 31 December 2023
Parent Company statement of
changes in equity for the year
ended 31 December 2023
•
•
testing the integrity and clerical accuracy of the model;
testing the assumptions included in each modelled scenario
and considering whether climate change could impact the
assessment;.
• considering the mitigating factors included in management’s
downside scenario and assessing whether they are within
control of the Group, for example, reducing uncommitted
development and acquisition expenditure;
• verifying the credit facilities available to the Group, being the
secured loan facility of £105m alongside an option to extend this
facility through to January 2026;
• considering the likelihood of new financing being available for
the period post- January 2026 in light of Heads of Terms being
agreed with full credit committee approval for a new facility as at
the date of this report;
• assessing management’s break case regarding breaching the
EBIT cover covenant in the downside scenario;
• 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; and
•
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.
Parent Company statement of
cash flows for the year ended
31 December 2023
Related notes 1 to 38 to the
financial statements, including
material accounting policy
information
Group statement of cash
flows for the year ended
31 December 2023
Group statement of cash
flows for the year ended
31 December 2023
Related notes 1 to 38 to the
financial statements, including
material accounting policy
information
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.
152
| henryboot.co.uk 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 2025.
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 nine components.
Key audit
matters
• The components where we performed full or specific
audit procedures accounted for 94% of Profit before
tax, 99% of Revenue and 99% 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
Materiality • Overall group materiality of £1.9m which represents
5% of profit before tax.
An overview of the scope of the parent
company and group audits
Tailoring the scope
Our assessment of audit risk, our evaluation of materiality and our
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
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 57 reporting
components of the Group, we selected 15 components covering
entities which represent the principal business units within the Group.
Of the 15 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 nine 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 94% (2022: 93%) of the Group’s Profit before tax,
99% (2022: 99%) of the Group’s Revenue and 99% (2022: 98%)
of the Group’s Total assets. For the current year, the full scope
components contributed 80% (2022: 81%) of the Group’s Profit
before tax, 94% (2022: 95%) of the Group’s Revenue and 81%
(2022: 83%) of the Group’s Total assets. The specific scope
component contributed 14% (2022: 12%) of the Group’s Profit
before tax, , 5% (2022: 4%) of the Group’s Revenue and 18%
(2022: 15%) 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 42 components that together represent 6% of the
Group’s Profit before tax, none are individually greater than 2% 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
6%
Revenue
Other procedures
1%
Total assets
Other procedures
1%
Full scope components
80%
Specific scope
components
14%
Full scope components
94%
Specific scope
components
5%
Full scope components
81%
Specific scope
components
18%
Involvement with component teams
All audit work performed for the purposes of the audit was
undertaken by the Group audit team.
153
SHAREHOLDERSOVERVIEWSTRATEGIC REPORTFINANCIALSGOVERNANCEAnnual Report and Financial Statements for the year ended 31 December 2023 |FINANCIALSGOVERNANCE 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 concluded that the
construction and property development industry is one of the
higher risk sectors and they continuously monitor the risks and
opportunities arising and the materiality of the financial impacts of
those risks may present to the business. This is explained on pages
72 to 74 in the required Task Force on Climate related Financial
Disclosures and on page 50 in the principal risks and uncertainties.
They have also explained their climate commitments on page 33.
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 their
articulation of how climate change has been reflected in the financial
statements. There are no significant judgements or estimates
relating to climate change in the notes to the financial statements.
The Group has concluded that the environmental impact on the
Group’s operations is relatively low and no issues were identified
that would materially impact the carrying values of such assets or
have any other impact on the financial statements.
Our audit effort in considering the impact of climate change on
the financial statements was focused on evaluating whether
management’s assessment of the impact of the physical climate
risk of flooding has been appropriately reflected in inventory asset
values and that the Group’s relevant transition costs have been
appropriately reflected in the investment property valuation. 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.
As part of this evaluation, we performed our own risk assessment,
supported by our climate change internal specialists, include
other relevant steps to our risk assessment to determine the risks
of material misstatement in the financial statements from climate
change which needed to be considered in our audit.
Based on our work, whilst we have not identified the impact of
climate change on the financial statements to be a standalone
key audit matter, we have considered the impact on the valuation
of investment properties. Details of the impact, our procedures
and findings are included in our explanation of the key audit
matter below.
154
| henryboot.co.uk Risk
Our response to the risk
Valuation of contract
balances and associated
revenue and profit
recognition
Refer to the Audit and Risk
Committee Report (page 111);
Accounting policies (page 164);
and Notes 1,17 and 22 of the
Consolidated Financial Statements
(pages 173, 191 and 194)
The Group has reported revenues
from construction and development
contracts for the year of £118.9m
(2022 - £154.7m). The Group has
reported contract assets of £13.6m
(2022 - £19.3m) and contract
liabilities of £1.1m (2022 - £4.0m).
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 agreed key contractual terms to customer contracts.
We agreed total expected revenue for the contracts through to
signed contracts and approved variation orders.
We visited a sample of 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 tested a sample of costs incurred in the year to third party
invoices and ensured the correct allocation of costs to the contracts.
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;
• Assessing management’s consideration of key supplier
resilience for contracts where costs with sub-contractors are
fixed; and
• Obtaining 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 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 performed sensitivity analysis for the incomplete contracts 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 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 and Risk
Committee
Based on our audit
procedures we have
concluded that the
revenue, profit and
contract balances
recognised in the year are
not materially misstated.
155
SHAREHOLDERSOVERVIEWSTRATEGIC REPORTFINANCIALSGOVERNANCEAnnual Report and Financial Statements for the year ended 31 December 2023 |FINANCIALSGOVERNANCE Key observations
communicated
to the Audit and Risk
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.
INDEPENDENT
AUDITOR’S REPORT
to the members of Henry Boot PLC
Risk
Our response to the risk
Valuation of house
building inventories and
profit recognition
Refer to the Audit and Risk
Committee Report (page 111);
Accounting policies (page 164);
and Note 20 of the Consolidated
Financial Statements (page 193)
The Group holds house building
inventories of £96.2m (2022 -
£80.6m).
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 overstated.
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.
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.
We tested a sample of costs incurred in the year by agreeing to third
party invoice and ensuring the cost allocation is to the correct site.
We challenged the cost to complete assumptions on all material
incomplete sites by;
• Holding a meeting with the commercial director to assess the
status and performance to date 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;
• Testing a sample of costs to complete by agreeing through to
third party support (e.g. tender, purchase order) targeting cost
categories containing a higher level of estimation;
• Comparing the original budgeted margin to the current
expected site margin to assess the accuracy of management’s
forecasting and the impact on cost of sales;
• Comparing the margin recognised to date to the current
expected site margin to identify any significant deviations.
Where there are significant deviations we understood and
substantiated the drivers;
• Performing a stress test to see by how much costs to complete
would have to increase by to have a material impact on the
margin recognised in the financial statements; and
• Where available, inspecting the post year end site forecasts and
attending post year end management meetings to ascertain
whether there had been any significant margin movements that
should have been reflected in the year end estimates.
We challenged the expected selling price assumptions on all
material incomplete sites by;
• Holding a meeting with the commercial director to assess the
basis for the expected selling price assumptions made;
• Inspecting industry publications to assess expectations
regarding house prices to identify any contradictory evidence for
the expected selling price;
• Testing a sample of expected selling prices to current market
price on external website or the most recent selling price for the
same/similar house type;; and
• Performing stress tests 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.
156
| henryboot.co.uk Key observations
communicated
to the Audit and Risk
Committee
Based on our audit
procedures we have
concluded that the
investment property
balance is not materially
misstated.
Risk
Our response to the risk
Valuation of investment
properties
Refer to the Audit and Risk
Committee (page 111); Accounting
policies (page 164); and Note
14 of the Consolidated Financial
Statements (pages 184 to 188)
The Group holds Investment
property of £100.6m (2022 -
£97.1m). The change in fair value
of investment properties is a £0.3m
gain (2022: £4.9m loss)
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.
For a sample of completed investment properties, we involved 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 commercial 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 considered
if there was any contrary evidence to management’s valuations
and assessed the objectivity and competence of Managements
specialist valuer.
We reconciled the third party property valuations to the property
book values and tested the appropriateness of any material
reconciling items.
We performed full and specific scope audit procedures over
this risk area in two components, which covered 100% 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 £1.9 million
(2022: £2.4 million), which is 5% (2022: 5%) of 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 £2.5 million
(2022: £2.4 million), which is 2% (2022: 2%) of Equity. However,
we have capped the materiality for our audit testing to the allocated
materiality of the Group.
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% (2022: 75%) of our planning
materiality, namely £1.4m (2022: £1.8m). 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 £0.3m to
£0.7m (2022: £0.4m to £1.8m).
Reporting threshold
An amount below which identified misstatements are considered as
being clearly trivial.
We agreed with the Audit and Risk Committee that we would
report to them all uncorrected audit differences in excess of £0.1m
(2022: £0.1m), which is set at 5% of planning materiality, as well
as differences below that threshold that, in our view, warranted
reporting on qualitative grounds..
We evaluate any uncorrected misstatements against both the
quantitative measures of materiality discussed above and in light of
other relevant qualitative considerations in forming our opinion.
157
SHAREHOLDERSOVERVIEWSTRATEGIC REPORTFINANCIALSGOVERNANCEAnnual Report and Financial Statements for the year ended 31 December 2023 |FINANCIALSGOVERNANCE 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 148, other than the financial
statements and our auditor’s report thereon. The directors are
responsible for the other information contained within the Annual
Report.
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 54 to 55;
• 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 54 to 55;
• 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 54 to 55;
• Directors’ statement on fair, balanced and understandable set
out on page 142;
• Board’s confirmation that it has carried out a robust assessment
of the emerging and principal risks set out on page 48 to 54;
• The section of the Annual Report that describes the review of
effectiveness of risk management and internal control systems
set out on page 109 to 112; and;
• The section describing the work of the Audit and Risk
Committee set out on page 109 to 112,
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set
out on page 148, 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.
Our opinion on the financial statements does not cover the other
information and, except to the extent otherwise explicitly stated in this
report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the
course of the audit, or otherwise appears to be materially misstated.
If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether this gives rise
to a material misstatement in the financial statements themselves.
If, based on the work we have performed, we conclude that there is
a material misstatement of the other information, we are required to
report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the
Companies Act 2006
In our opinion, the part of the directors’ remuneration report to
be audited has been properly prepared in accordance with the
Companies Act 2006.
In our opinion, based on the work undertaken in the course of
the audit:
•
the information given in the strategic report and the directors’
report for the financial year for which the financial statements are
prepared is consistent with the financial statements; and
•
the strategic report and the directors’ report have been prepared
in accordance with applicable legal requirements.
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
158
| henryboot.co.uk • 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 Financial Reporting Council’s
website at https://www.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditor’s report.
Other matters we are required to address
Following the recommendation from the Audit and Risk Committee,
we were appointed by the company on 25 May 2023 to audit the
financial statements for the year ending 31 December 2023 and
subsequent financial periods. The period of total uninterrupted
engagement including previous renewals and reappointments
is four years, covering the years ending 31 December 2020 to
31 December 2023.
• The audit opinion is consistent with the additional report to the
Audit and Risk 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
11 April 2024
Auditor’s responsibilities for the audit of the
financial statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.
Explanation as to what extent the audit was considered
capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect irregularities, including
fraud. The risk of not detecting a material misstatement due to fraud
is higher than the risk of not detecting one resulting from error, as
fraud may involve deliberate concealment by, for example, forgery
or intentional misrepresentations, or through collusion. The extent
to which our procedures are capable of detecting irregularities,
including fraud is detailed below.
However, the primary responsibility for the prevention and detection
of fraud rests with both those charged with governance of the
company and management.
• We obtained an understanding of the legal and regulatory
frameworks that are applicable to the group and determined
that the most significant are those that relate to the reporting
framework (UK adopted international accounting standards
as applied in accordance with section 408 of the Companies
Act 2006), the relevant tax compliance regulations in the UK,
employment law and building safety regulations.
• We understood how Henry Boot PLC is complying with those
frameworks by making enquiries of management, Internal Audit,
those responsible for legal and compliance procedures and the
Company Secretary. We corroborated our enquiries through our
review of board minutes and papers provided to the Audit and
Risk 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.
159
SHAREHOLDERSOVERVIEWSTRATEGIC REPORTFINANCIALSGOVERNANCEAnnual Report and Financial Statements for the year ended 31 December 2023 |FINANCIALSGOVERNANCE CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
for the year ended 31 December 2023
Revenue
Cost of sales
Gross profit
Other income
Administrative expenses
Pension expenses
Increase/(decrease) in fair value of investment properties
Profit on sale of investment properties
Profit/(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 (loss)/gain on defined benefit pension scheme
Deferred tax on actuarial (loss)/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
1
4
14
16
16
3
5
6
7
12
19
29
19
2023
£’000
359,399
(282,634)
2022
£’000
341,419
(259,829)
76,765
4,800
(39,543)
(4,798)
37,223
307
733
1,571
371
—
40,205
3,357
(6,260)
37,302
(8,759)
28,543
(228)
279
(3,066)
767
(2,248)
26,295
26,299
2,244
28,543
24,051
2,244
26,295
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
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
19.7p
25.0p
19.3p
24.6p
160
| henryboot.co.uk STATEMENTS OF
FINANCIAL POSITION
as at 31 December 2023
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
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
Borrowings
Lease liabilities
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
2023
£’000
2022
£’000
2023
£’000
2022
£’000
11
12
13
14
15
16
29
18
19
20
17
18
23
22
27
13
28
23
27
13
19
28
31
32
32
32
33
38
2,179
29,218
3,986
100,602
—
10,484
7,725
39,263
213
193,670
297,618
13,659
76,416
13,034
400,727
73,477
1,060
6,677
84,819
728
3,221
169,982
230,745
2,501
1,699
3,547
5,372
1,178
14,297
410,118
13,799
1,011
383,219
8,248
(875)
405,402
4,716
410,118
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
—
3,021
2,022
—
37,771
—
7,725
190,233
244
241,016
—
—
40,881
5,572
46,453
68,350
—
5,499
84,102
232
—
158,183
(111,730)
—
—
1,982
2,162
—
4,144
125,142
13,799
—
102,833
9,385
(875)
125,142
—
125,142
—
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
The Parent Company made a profit for the year of £13,304,000 (2022: £15,987,000).
The Financial Statements on pages 160 to 211 of Henry Boot PLC, registered number 160996, were approved by the Board of Directors
and authorised for issue on 11 April 2024.
On behalf of the Board
TIM ROBERTS
DIRECTOR
DARREN LITTLEWOOD
DIRECTOR
161
SHAREHOLDERSOVERVIEWSTRATEGIC REPORTFINANCIALSGOVERNANCEAnnual Report and Financial Statements for the year ended 31 December 2023 |FINANCIALSGOVERNANCE
STATEMENTS OF
CHANGES IN EQUITY
for the year ended 31 December 2023
Attributable to owners of the Parent Company
Share
capital
Property
revaluation
reserve
Retained
earnings
Other
reserves
Group
At 1 January 2022
Profit for the year
Other comprehensive income
Total comprehensive income
Equity dividends
Proceeds from shares issued
Share-based payments
Note
32
10
32, 33
At 31 December 2022
Profit for the year
Other comprehensive expense
Total comprehensive income
Transfer between reserves1
Equity dividends
Purchase of treasury shares
Proceeds from shares issued
Share-based payments
32
10
32, 33
At 31 December 2023
£’000
13,732
—
—
—
—
31
—
31
13,763
—
—
—
—
—
—
36
—
36
13,799
1 Transfer of realised profits on disposal of revalued property.
£’000
2,060
—
292
292
—
—
—
—
2,352
—
51
51
(1,392)
—
—
—
—
(1,392)
1,011
£’000
328,348
33,319
11,245
44,564
(8,383)
—
1,163
(7,220)
365,692
26,299
(2,299)
24,000
1,392
(9,274)
—
—
1,409
(6,473)
383,219
£’000
6,744
—
—
—
—
738
—
738
7,482
—
—
—
—
—
—
766
—
766
8,248
Cost of
shares
held by
ESOP
trust
£’000
(1,044)
—
—
—
—
—
77
77
(967)
—
—
—
—
—
(98)
—
190
92
(875)
Non-
controlling
interests
£’000
5,446
4,551
—
4,551
(4,030)
—
—
(4,030)
5,967
2,244
—
2,244
—
(3,495)
—
—
—
(3,495)
4,716
Total
£’000
349,840
33,319
11,537
44,856
(8,383)
769
1,240
(6,374)
388,322
26,299
(2,248)
24,051
—
(9,274)
(98)
802
1,599
(6,971)
405,402
Share
capital
Retained
earnings
Other
reserves
Cost of
shares held
by ESOP trust
Note
8
10
33
8
10
33
£’000
13,732
—
—
—
—
31
—
31
13,763
—
—
—
—
—
36
—
36
13,799
£’000
81,414
15,987
11,245
27,232
(8,383)
—
417
(7,966)
100,680
13,304
(2,299)
11,005
(9,274)
—
—
422
(8,852)
102,833
£’000
7,881
—
—
—
—
738
—
738
8,619
—
—
—
—
—
766
—
766
9,385
£’000
(1,044)
—
—
—
—
—
77
77
(967)
—
—
—
—
(98)
—
190
92
(875)
Parent Company
At 1 January 2022
Profit for the year
Other comprehensive expense
Total comprehensive expense
Equity dividends
Proceeds from shares issued
Share-based payments
At 31 December 2022
Profit for the year
Other comprehensive income
Total comprehensive income
Equity dividends
Purchase of treasury shares
Proceeds from shares issued
Share-based payments
At 31 December 2023
162
Total
equity
£’000
355,286
37,870
11,537
49,407
(12,413)
769
1,240
(10,404)
394,289
28,543
(2,248)
26,295
—
(12,769)
(98)
802
1,599
(10,466)
410,118
Total
equity
£’000
101,983
15,987
11,245
27,232
(8,383)
769
494
(7,120)
122,095
13,304
(2,299)
11,005
(9,274)
(98)
802
612
(7,958)
125,142
| henryboot.co.uk STATEMENTS OF
CASH FLOWS
for the year ended 31 December 2023
Group
Parent Company
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 property, plant and equipment (excluding
equipment for hire)
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
Purchase of treasury shares
Advances 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 (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Note
34
12
14
16
16
8,16
10
10
10
2023
£’000
5,871
(5,475)
(3,797)
(3,401)
(4,074)
(8,017)
—
432
4,713
7,764
(24,321)
10,868
—
—
—
1,830
900
(9,905)
802
(98)
12
—
—
(36,510)
58,028
(526)
(9,253)
(3,495)
(21)
8,939
(4,367)
17,401
13,034
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
2023
£’000
(1,174)
(4,978)
(2,000)
(8,152)
(2,916)
—
—
—
—
—
—
—
(16,769)
9,911
—
269
25,139
15,634
802
(98)
—
2,007
(24,660)
(35,500)
54,000
(96)
(9,253)
—
(21)
(12,819)
(5,337)
10,307
4,970
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
163
SHAREHOLDERSOVERVIEWSTRATEGIC REPORTFINANCIALSGOVERNANCEAnnual Report and Financial Statements for the year ended 31 December 2023 |FINANCIALSGOVERNANCE
NOTES TO THE
FINANCIAL STATEMENTS
for the year ended 31 December 2023
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 Isaacs Building, 4 Charles Street, Sheffield, England, United Kingdom S1 2HS.
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.
Consolidation
The Consolidated Financial Statements are a consolidation of the Financial Statements of the Parent Company and all entities controlled by
the Company (its subsidiaries) made up to 31 December each year. Subsidiaries are all entities over which the Group has control. The Group
controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to
affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the
Group. They are deconsolidated from the date that control ceases.
Where necessary, adjustments are made to the Financial Statements of subsidiaries to bring the Accounting Policies used in line with those
used by the Group. All intra-group transactions, balances, income and expenses are eliminated on consolidation. The results of subsidiaries
acquired or disposed of during the year are included in the Consolidated Statement of Comprehensive Income from the effective date of
acquisition or to the effective date of disposal. Non-controlling interests in the fair value of the net assets of consolidated subsidiaries are
identified separately from the Group’s equity therein. Non-controlling interests consist of the amount of those interests at the date of the
original business combination and the non-controlling interests’ share of changes in equity since the date of the combination.
Investments in subsidiaries are accounted for at cost less impairment. Cost also includes direct attributable costs of investment.
Going concern
In undertaking their going concern review, which covers the period to 31 December 2025, the Directors considered the Group’s principal risk areas
that they consider material to the assessment of going concern.
As the UK economy continues to prove challenging, 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 curtailment in
activities. This downside scenario is based on a c.34% reduction in sales and c.87% reduction in operating profits from the base case in 2024. The
constituents for the reduction in sales and operating profits are:
• Construction and Development activity only takes place where contracted;
• No Hallam Land sales are assumed in 2024 unless already contracted;
• Stonebridge Homes - a 10% decline in house prices is assumed along with a 25% reduction in the number of plots sold;
• and Banner Plant revenue declines c.20%.
The downside model also 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 2024 with net debt of £77.8m, and with c.£83.7m net debt at 29 February 2024, against current facilities of £105.0m the Directors
have concluded that the Group is able to control the level of uncommitted expenditure while delivering contracted schemes, allowing it to retain
and even improve the cash position in the event of a severe downside scenario, although the impact of doing so on the profit and loss account
would be unavoidable.
The Group meets its day-to-day working capital requirements through a secured loan facility (see note 25 of the Financial Statements). The existing
agreement runs to 23 January 2025 and, an option, entirely in management’s control, to extend the existing facilities by a further 12 months to 23
January 2026 has been put in place. The extension maintains the existing facility terms other than for a racheted interest rate of between 1.60%
and 2.00% above SONIA. Management has assumed the extension of the current facility within the going concern assessment.
While the option provides security of funding throughout the going concern period and has been used as the basis of the going concern
assessment, the Group has also agreed terms with existing lenders on a new revolving credit facility which is currently in the legal process and
expected to be signed shortly. The new facility level will increase to £125m, for a period of three years and include options to extend by one
year to 2028 and a further year to 2029. The facility terms are similar to the existing agreement and will be at a rate of 1.60% above SONIA. The
agreement includes an accordion to increase the facility by up to £60m. The new facility is expected to complete in H1 2024.
164
| henryboot.co.uk None of the modelling undertaken by the Directors gives rise to any breach of bank facility covenants or liquidity breaches in the going concern
period. 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, which is assessed half-yearly. We have performed a reverse stress test to determine at what point this covenant could
be breached and it would require a further 15% reduction in EBIT, to the downside scenario, in December 2024. We consider this implausible as
our downside modelling includes a c.34% reduction in revenue and c.87% reduction in operating profit from our base case for 2024 without a
breach, and as such we consider any further reduction in revenue and operating profit to be remote. Furthermore, the Directors are satisfied that
there are further mitigations which are in management’s control and can be implemented quickly should the business require in order to satisfy a
covenant test. We are satisfied that we are able to comply with covenants throughout the going concern period.
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.
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
• Construction, inclusive of its PFI company and plant hire activities
While the following is not a reportable segment, information about it is considered by the Board in conjunction with the reportable segments:
• Group overheads, comprising central services, pensions, head office administration, in-house leasing and financing activities
Joint ventures and associates
Joint ventures are all entities in which the Group has shared control with another entity, established by contractual agreement. Associates
are all entities over which the Group has significant influence, but not control, generally accompanied by a share of between 20% and 50%
of the voting rights. Joint ventures and associates are accounted for using the equity method of accounting and are initially recognised at
cost. The Group’s share of profits or losses is recognised in the Consolidated Statement of Comprehensive Income. If the share of losses
equals its investment, the Group does not recognise further losses, except to the extent that there are amounts receivable that are long
term and may not be settled in the foreseeable future. Unrealised gains on transactions between the Group and its joint ventures and
associates are eliminated to the extent of the Group’s interest in them. Unrealised losses are also eliminated unless the transaction provides
evidence of an impairment of the asset transferred. The accounting policies of the joint ventures and associates are consistent with those of
the Group.
Business combinations and goodwill
Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration for each acquisition is
measured as the aggregate of the fair values (at the date of exchange) of assets given, liabilities incurred or assumed, and equity instruments
issued by the Group in exchange for control of the acquiree.
The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration agreement.
Subsequent changes in fair value of contingent consideration classified as a financial asset or financial liability are accounted for in
accordance with IFRS 9. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are
measured, initially, at their fair values at the acquisition date. Acquisition-related costs are recognised in the Consolidated Statement of
Comprehensive Income as incurred.
165
SHAREHOLDERSOVERVIEWSTRATEGIC REPORTFINANCIALSGOVERNANCEAnnual Report and Financial Statements for the year ended 31 December 2023 |FINANCIALSGOVERNANCE NOTES TO THE
FINANCIAL STATEMENTS
for the year ended 31 December 2023
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 167 and 170, 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, 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 29 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 28 to the Financial Statements gives details of the sensitivity surrounding these estimates.
The reference to estimates above, and in policy notes on IFRS 15 ‘Revenue from Contracts with Customers’ and IAS 2 ‘Inventories’, is not
intended to comply with the requirements of paragraph 125 of IAS 1 ‘Presentation of Financial Statements’, as it is not expected there is a
significant risk of a material adjustment to the carrying amount of assets and liabilities within the next financial year.
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 that 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 for which 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.
166
| henryboot.co.uk The Group’s activities are wide ranging, and, as such, depending on the nature of the product or service delivered and the timing of when
control is passed to the customer, the Group will account for revenue over time or at a point in time. Where revenue is measured over time,
the Group uses the input method to measure progress of delivery.
Product and Service
Nature, timing of satisfaction of performance obligations and significant payment terms.
Construction contracts
Typically, the Group’s construction contracts consist of one performance obligation, being the
delivery of 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.
Sale of land and properties
Revenue from the sale of land and properties is generally a single performance obligation, which is
satisfied at the point in time when control of the land and properties has passed, typically on legal
completion when the legal title has transferred.
Land and properties are treated as disposed when control of the asset is transferred to the buyer.
Typically, this will either occur on unconditional exchange or on completion. Where completion is
expected to occur significantly after exchange, or where the Group continues to have significant
outstanding obligations after exchange, the control will not usually transfer to the buyer until
completion.
Variable consideration such as overages are estimated based on the amount of consideration the
Group expects to be entitled to, taking into account the terms which may give rise to variability and
it is only recognised where it is highly probable there will not be a significant future reversal. This is
estimated at contract inception and reassessed over the life of the contract.
Revenue includes the fair value of consideration received or receivable on the sale of part exchange
properties.
PFI Concession
Revenue from the Group’s PFI concession is recognised at the point in time, by the calculation of
‘shadow tolls’ based on individual vehicle usage of the A69.
The concession is accounted for in accordance with IFRIC 12 ‘Service Concession Arrangements’
using the intangible asset model.
Operating leases (recognised
as income under IFRS 16
‘Leases’)
Revenue from operating leases is recognised on a straight-line basis over the lease term, except for
contingent rental income, which is recognised in the period in which it was earned. When the Group
provides incentives to its tenants, the cost of incentives is recognised over the lease term, on a
straight-line basis, as a reduction to revenue.
Plant and equipment hire
(recognised as income under
IFRS 16 ‘Leases’)
Revenue from plant and equipment hire is measured as the fair value of rental proceeds, which relate
to the period of account.
Critical judgements and other estimates in applying IFRS 15 Revenue from Contracts with Customers
The following are the critical judgements and other 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.
167
SHAREHOLDERSOVERVIEWSTRATEGIC REPORTFINANCIALSGOVERNANCEAnnual Report and Financial Statements for the year ended 31 December 2023 |FINANCIALSGOVERNANCE NOTES TO THE
FINANCIAL STATEMENTS
for the year ended 31 December 2023
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 of 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.
Sale and leaseback
The Group’s sale and leaseback of assets are accounted for such that the transfer of the asset is not deemed a sale under IFRS 15, this is
on the basis that control of the assets remain with the Group as the Group has the right to repurchase the assets.
As the transfers do not qualify as a sale, the Group accounts for the transaction as a financing transaction. This means that the Group
continues to recognise the asset on its balance sheet within property, plant and equipment and that the proceeds from the sale and
leaseback are recognised as a financial liability at amortised cost in accordance with IFRS 9. This arrangement is similar to a loan secured
over the underlying asset. Cashflows are reported in new borrowings and repayment of borrowings on the Group’s cashflow statement.
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 using 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 31. 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 two years to run.
168
| henryboot.co.uk 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.
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:
• Leasehold improvements – between 10% and 20% or based on lease term
• 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’.
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.
169
SHAREHOLDERSOVERVIEWSTRATEGIC REPORTFINANCIALSGOVERNANCEAnnual Report and Financial Statements for the year ended 31 December 2023 |FINANCIALSGOVERNANCE NOTES TO THE
FINANCIAL STATEMENTS
for the year ended 31 December 2023
• 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 that may not form part of the
overall development site or that 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 other estimates in applying IAS 2 Inventories
The following are the estimates in applying accounting policies that the Directors have made in the process of applying IAS 2 Inventories and
that have the most significant effect on the amounts recognised in the Consolidated Financial Statements.
Estimates in determining the carrying value of work in progress inventory – there is often estimation involved in forecasting future costs to
complete and selling prices, which can be affected by market conditions and unexpected events. In determining the carrying value, the
Directors consider previous experience, communications with suppliers and market trends in forming their opinion. Where necessary,
third-party advice is taken.
Assets classified as held for sale
Non-current assets are classified as held for sale when their carrying amount is to be recovered, principally, through a sale transaction and a
sale is considered highly probable. They are stated at the lower of carrying amount and fair value less costs to sell, or fair value in the case
of Investment Property, if their carrying amount is to be recovered, principally, through a sale transaction rather than through continuing use
and a sale is considered highly probable.
Tax
The tax charge on the profit or loss for the year comprises the sum of tax currently payable and any deferred tax movements in the year.
Tax currently payable is based on taxable profit for the year adjusted for any tax payable or repayable in respect of earlier years. Taxable
profit differs from net profit as reported in the Consolidated Statement of Comprehensive Income because it excludes items of income or
expense that are taxable or deductible in other years and items that may never be taxable or deductible.
The Group’s liability for current taxation is calculated using tax rates that have been enacted, or substantively enacted, by the reporting date.
Corporation tax liabilities of wholly owned subsidiary companies are, generally, transferred to and paid by the Parent Company and credit is
given by the Parent Company for loss relief surrendered.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the
Financial Statements and the corresponding tax bases used in computing taxable profits.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that
sufficient taxable profits or gains will be available to allow all or part of the assets to be recovered.
The carrying value of the Group’s investment property is assumed to be realised by sale and the deferred tax is then calculated based on the
respective temporary differences and tax consequences arising from this assumption.
Deferred tax is calculated at tax rates that are expected to apply in the period when the liability is settled or the asset is realised, based
on rates that have been enacted, or substantively enacted, at the reporting date. Deferred tax is charged or credited in the Consolidated
Statement of Comprehensive Income, except when it relates to items charged or credited directly to equity, in which case the deferred tax is
also dealt with in equity.
Deferred tax assets and deferred tax liabilities are offset where the Group has a legally enforceable right to do so and when the deferred tax
assets and liabilities relate to tax levied by the same tax authority where there is an intention to settle the balances on a net basis.
170
| henryboot.co.uk 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.
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 that 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.
171
SHAREHOLDERSOVERVIEWSTRATEGIC REPORTFINANCIALSGOVERNANCEAnnual Report and Financial Statements for the year ended 31 December 2023 |FINANCIALSGOVERNANCE NOTES TO THE
FINANCIAL STATEMENTS
for the year ended 31 December 2023
Other provisions include any liabilities for which 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 28.
Retirement benefit costs
Payments to the defined contribution retirement benefit scheme are charged as an expense as they fall due.
The cost of providing benefits under the defined benefit retirement scheme is determined using the Projected Unit Credit Method, with
actuarial calculations being carried out at each reporting date. Actuarial gains and losses are recognised in full in the period in which they
occur. They are recognised within ‘Other comprehensive income’ within the Consolidated Statement of Comprehensive Income. The
net periodic benefit cost, comprising the employer’s share of the service cost and the net interest cost, is charged to the Consolidated
Statement of Comprehensive Income. The Group’s net obligations in respect of the scheme are calculated by estimating the amount of
future benefit that employees have earned in return for their service in the current and prior periods. This is then discounted to present value
and the fair value of the scheme’s assets is then deducted.
Share capital
Ordinary share capital is classified as equity. Preference share capital is classified as equity as it is non-redeemable or is redeemable only
at the Company’s option and any dividends are discretionary. Dividends on preference share capital classified as equity are recognised as
distributions within equity.
Dividends
The Group recognises a liability to pay a final dividend when the distribution is authorised and the distribution is no longer at the discretion of
the Group. Under UK company law, a distribution is authorised when it is approved by the shareholders. An interim dividend is recognised
when paid. A corresponding amount is then recognised directly in equity.
Impact of accounting standards and interpretations
At the date of authorisation of these Financial Statements, the following standards, amendments and interpretations to existing standards
are effective or mandatory for the first time for the accounting year ended 31 December 2023:
IFRS 17 (issued 2017)
IFRS 17 (amended 2020)
IAS 1 and IFRS Practice Statement 2
(amended 2021)
IAS 8 (amended 2021)
IAS 12 (amended 2021)
IFRS 17 (amended 2021)
IAS 12 (amended 2023)
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
International Tax Reform – Pillar Two Model Rules
Effective from
1 January 2023
1 January 2023
1 January 2023
1 January 2023
1 January 2023
1 January 2023
Immediately effectively
The adoption of these standards and interpretations has not had a significant impact on the Group.
At the date of the authorisation of these Financial Statements, the following standards, amendments and interpretations were in issue, but
not yet effective:
IAS 1 (amended 2020)
IAS 1 (amended 2022)
IFRS 16 (amended 2022)
IAS 7 and IFRS 7 (amended 2023)
IAS 21 (amended 2023) *
Classification of liabilities as current or non-current
Non-current liabilities with covenants
Lease liability in a sale and leaseback
Supplier Finance Arrangements
Lack of Exchangeability
*Not yet endorsed by the UK Endorsement Board
Effective from
1 January 2024
1 January 2024
1 January 2024
1 January 2024
1 January 2025
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 2023, 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.
172
| henryboot.co.uk 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.
2023
£’000
70,081
48,812
39,330
97,182
67,769
13,676
336,850
15,766
5,982
578
223
359,399
Timing of revenue
recognition
At a point
in time
Over time
£’000
£’000
—
—
70,081
48,812
39,330
97,182
67,769
13,676
—
—
—
—
217,957
118,893
Timing of revenue
recognition
At a point
in time
£’000
Over time
£’000
—
—
97,571
57,177
34,726
70,631
43,672
13,590
—
—
—
—
162,619
154,748
2022
£’000
97,571
57,177
34,726
70,631
43,672
13,590
317,367
17,447
5,757
699
149
341,419
Contingent rents recognised as investment property rental income during the year amount to £nil (2022: £435,000).
Other income of £4,800,000 (2022: nil) relates to a legal settlement on a property development contract completed in 2016.
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 164 to 172.
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.
173
SHAREHOLDERSOVERVIEWSTRATEGIC REPORTFINANCIALSGOVERNANCEAnnual Report and Financial Statements for the year ended 31 December 2023 |FINANCIALSGOVERNANCE NOTES TO THE
FINANCIAL STATEMENTS
for the year ended 31 December 2023
2. Segment information continued
Property
Investment and
Development
Land
Promotion
Construction
Group
overheads
Eliminations
2023
£’000
191,884
258
192,142
31,554
4,800
(17,172)
2,989
22,171
3,273
(11,596)
13,848
(5,741)
8,107
8,251
307
105
—
(307)
—
—
£’000
67,992
—
67,992
29,815
—
(8,371)
(7)
21,437
1,197
(615)
22,019
(4,470)
17,549
—
21
—
—
—
1,092
—
£’000
99,523
1,050
100,573
15,177
—
(8,682)
—
6,495
458
(480)
6,473
(1,686)
4,787
£’000
—
271
271
238
—
(10,136)
—
(9,898)
25,813
(5,437)
10,478
3,138
13,616
4,276
3,061
758
—
—
—
—
(4,603)
4,050
203
551
—
1,762
—
2022
£’000
—
(1,579)
(1,579)
(19)
—
19
—
—
(27,384)
11,868
(15,516)
—
(15,516)
—
—
—
—
—
—
—
Property
Investment and
Development
Land
Promotion
Construction
Group
overheads
Eliminations
£’000
168,990
290
169,280
36,488
(16,142)
5,322
25,668
4,015
(2,226)
27,457
(3,411)
24,046
9,450
312
(15)
—
4,921
—
—
£’000
43,820
—
43,820
24,320
(6,971)
—
17,349
744
(213)
17,880
(3,451)
14,429
—
30
—
—
—
775
—
£’000
128,609
4,453
133,062
20,720
(8,636)
—
12,084
1,507
(374)
13,217
(2,771)
10,446
5,884
3,755
203
580
—
683
—
£’000
—
386
386
99
(8,743)
—
(8,644)
26,576
(3,373)
14,559
1,908
16,467
392
472
—
—
—
—
(3,422)
£’000
—
(5,129)
(5,129)
(37)
37
—
—
(31,201)
3,683
(27,518)
—
(27,518)
—
—
—
—
—
—
—
Revenue
External sales
Inter-segment sales
Total revenue
Gross profit
Other income
Administrative expenses and pension
Other operating items
Operating profit/(loss)
Finance income
Finance costs
Profit before tax
Tax
Profit for the year
Other information
Capital additions
Depreciation of plant, property and
equipment and right-of-use assets
Impairment
Amortisation of intangible assets
Increase in fair value of investment
properties
Provisions
Pension scheme credit
Revenue
External sales
Inter-segment sales
Total revenue
Gross profit
Administrative expenses and pension
Other operating items
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
174
Total
£’000
359,399
—
359,399
76,765
4,800
(44,342)
2,982
40,205
3,357
(6,260)
37,302
(8,759)
28,543
15,588
5,136
308
551
(307)
2,854
(4,603)
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)
| henryboot.co.uk
2. Segment information continued
Segment assets
Property Investment and Development1
Land Promotion
Construction
Group overheads
Unallocated assets
Deferred tax assets
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
Non-current borrowings
Total liabilities
Total net assets
1
Includes investment in joint ventures and associates of £10,484,000 (2022: £9,990,000).
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)
(Increase)/decrease 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
Gain on sale of equipment held for hire
Gain on sale of other property, plant and equipment
Loss on disposal of right-of-use assets
2023
£’000
362,737
160,690
41,635
8,363
573,425
213
7,725
13,034
594,397
38,101
15,635
22,797
4,904
81,437
6,677
5,372
728
84,819
3,547
1,699
184,279
410,118
2023
£’000
4,357
779
203
—
105
551
54
4
(307)
153,965
39,912
15
(1,185)
(341)
—
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
175
SHAREHOLDERSOVERVIEWSTRATEGIC REPORTFINANCIALSGOVERNANCEAnnual Report and Financial Statements for the year ended 31 December 2023 |FINANCIALSGOVERNANCE NOTES TO THE
FINANCIAL STATEMENTS
for the year ended 31 December 2023
3. Operating profit continued
The remuneration paid to Ernst & Young LLP, the Company’s external auditor, was as follows:
Fees payable for the audit of the Company’s Annual Financial Statements and
Consolidated Financial Statements
Fees payable to the auditor and its associates for other services:
– audit of the Company’s subsidiaries pursuant to legislation
Total audit fees
4. Employee costs
2023
£’000
220
362
582
2022
£’000
200
330
530
Group
Parent Company
Wages and salaries
Share-based payment expense
Social security costs
Defined benefit pension costs (see note 29)
Defined contribution pension costs (see note 29)
Other pension costs
Other employee costs
2023
£’000
29,422
1,601
3,717
825
3,811
162
374
39,912
2022
£’000
29,671
1,240
3,821
989
3,251
72
44
39,088
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
Interest credit on defined benefit pension scheme
Unwinding of discounting: trade receivables
6. Finance costs
Interest on bank loans and overdrafts
Interest on other loans and payables
Unwinding of discounting: trade payables and borrowings
176
2023
£’000
6,164
612
784
745
567
112
—
8,984
2022
£’000
5,130
496
649
989
449
22
—
7,735
2023
Number
2022
Number
127
37
146
139
89
538
2023
£’000
451
1,378
406
1,122
3,357
2023
£’000
5,572
242
446
6,260
121
35
149
146
82
533
2022
£’000
146
1,007
—
488
1,641
2022
£’000
2,136
45
322
2,503
| henryboot.co.uk 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
Total deferred tax
Total tax
2023
£’000
6,745
(39)
6,706
2,053
2,053
8,759
2022
£’000
8,690
(152)
8,538
(813)
(813)
7,725
From 1 April 2023, corporation tax was amended from 19% to 25% and as such the marginal rate of corporation tax is 23.5% (2022: 19%)
of the estimated assessable profit for the year.
Deferred tax balances at the year end have been measured at 25% (2022: 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
Profits made in advance of corporation tax rate increase
Corporation tax adjustment in respect of earlier years
Joint venture results reported net of tax
Effective tax rate
2023
£’000
37,302
2023
%
23.52
3.09
(0.46)
(2.33)
(0.11)
(0.23)
23.48
2022
£’000
45,595
2022
%
19.00
(0.80)
0.27
—
(0.33)
(1.20)
16.94
The tax charge in the year is lower (2022: lower) than the standard rate of corporation tax, predominantly due to the timing of profits in
advance of corporation tax rate increases (2022: due to joint ventures reported net of tax).
In addition to the amount charged to profit for the year, the following amounts relating to tax have been recognised in other comprehensive income:
Deferred tax:
– property revaluations
– actuarial loss/(gain)
Total tax recognised in other comprehensive income/(expense)
2023
£’000
279
767
1,046
2022
£’000
(23)
(3,749)
(3,772)
8. Results of the 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 11 April 2024, is £13,304,000 (2022: £15,987,000) and includes dividends received from subsidiaries of £25,139,000 (2022:
£26,490,500).
177
SHAREHOLDERSOVERVIEWSTRATEGIC REPORTFINANCIALSGOVERNANCEAnnual Report and Financial Statements for the year ended 31 December 2023 |FINANCIALSGOVERNANCE NOTES TO THE
FINANCIAL STATEMENTS
for the year ended 31 December 2023
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
2023
£’000
28,543
(2,244)
(21)
26,278
2022
£’000
37,870
(4,551)
(21)
33,298
2023
2022
No.
133,880,809
(352,776)
133,528,033
2,797,685
136,325,718
No.
133,449,943
(401,672)
133,048,271
2,290,780
135,339,051
2023
19.7p
19.3p
2022
25.0p
24.6p
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 2022 of 4.00p per share (2021: 3.63p)
Interim dividend for the year ended 31 December 2023 of 2.93p per share (2022: 2.66p)
2023
£’000
21
5,336
3,917
9,274
2022
£’000
21
4,822
3,540
8,383
The proposed final dividend for the year ended 31 December 2023 of 4.40p per share (2022: 4.00p) makes a total dividend for the year of
7.33p (2022: 6.66p).
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 £5,900,000.
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 £3,495,000 (2022: £4,030,000).
178
| henryboot.co.uk 11. Intangible assets
Cost
At 1 January 2022
Additions at cost
At 31 December 2022 and 2023
Accumulated impairment losses and amortisation
At 1 January 2022
Amortisation
Impairment losses for the year
At 31 December 2022
Amortisation
Impairment losses for the year
At 31 December 2023
Carrying amount
At 31 December 2023
At 31 December 2022
Goodwill
PFI asset
£’000
£’000
4,973
—
4,973
3,730
—
203
3,730
—
203
3,933
1,040
1,243
19,176
—
19,176
17,486
580
—
17,486
551
—
18,037
1,139
1,690
Total
£’000
24,149
—
24,149
21,216
580
203
21,216
551
203
21,970
2,179
2,933
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 (2022: £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% (2022: 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% (2022: 5.0%).
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 £137,000 (2022: £340,000), 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 two years to run, at the end of which the
road reverts to National Highways. While the impairment test demonstrates significant headroom based on forecast levels of return being
consistent with prior years, an impairment charge of £203,000 (2022: £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.
179
SHAREHOLDERSOVERVIEWSTRATEGIC REPORTFINANCIALSGOVERNANCEAnnual Report and Financial Statements for the year ended 31 December 2023 |FINANCIALSGOVERNANCE NOTES TO THE
FINANCIAL STATEMENTS
for the year ended 31 December 2023
12. Property, plant and equipment
Group
Cost or fair value
At 1 January 2022
Additions at cost
Disposals
Increase in fair value in year
At 31 December 2022
Additions at cost
Transfer to assets held for sale
Disposals
Decrease in fair value in year
At 31 December 2023
Being:
Cost
Fair value at 31 December 2023
Accumulated depreciation and
impairment
At 1 January 2022
Charge for year
Reversal of impairment
Impairment
Eliminated on disposals
At 31 December 2022
Charge for year
Impairment
Eliminated on disposals
At 31 December 2023
Carrying amount
At 31 December 2023
At 31 December 2022
Land and
buildings
Leasehold
improvements
Equipment
held for hire
£’000
£’000
£’000
Vehicles
£’000
Office
equipment
£’000
7,322
55
—
315
7,692
103
(2,100)
—
(228)
5,467
—
5,467
5,467
712
—
(75)
60
—
697
—
105
—
802
—
—
—
—
—
2,469
—
—
—
2,469
2,469
—
2,469
—
—
—
—
—
—
77
—
—
77
4,665
6,995
2,392
—
43,388
5,454
(3,275)
—
45,567
3,497
—
(3,879)
—
45,185
45,185
—
45,185
26,597
3,059
—
—
(3,002)
26,654
3,317
—
(3,641)
26,330
18,855
18,913
5,332
612
(597)
—
5,347
918
—
(1,035)
—
5,230
5,230
—
5,230
2,936
660
—
—
(504)
3,092
657
—
(950)
2,799
2,431
2,255
3,608
304
—
—
3,912
584
—
(198)
—
4,298
4,298
—
4,298
3,056
253
—
—
—
3,309
306
—
(192)
3,423
875
603
Total
£’000
59,650
6,425
(3,872)
315
62,518
7,571
(2,100)
(5,112)
(228)
62,649
57,182
5,467
62,649
33,301
3,972
(75)
60
(3,506)
33,752
4,357
105
(4,783)
33,431
29,218
28,766
At 31 December 2023, the Group had entered into contractual commitments for the acquisition of property, plant and equipment amounting
to £171,000 (2022: £1,566,000).
One property was transferred to ‘assets held for sale’ during the year and was, subsequently, disposed of prior to the year end.
Included within equipment held for hire are assets with a book value of £3,665,000 (2022: nil) that are held under sale and leaseback
financing arrangements. The original cost of these assets was £4,838,000 (2022: nil). Financial liabilities associated with the assets are
disclosed in note 27.
Fair value measurements of the Group’s land and buildings
Land and buildings have been revalued at 31 December 2023 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 £4,665,000 (2022:
£6,995,000). 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 £3,630,000 (2022: £4,339,000).
180
| henryboot.co.uk 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
Level 2
Level 3
£’000
—
—
—
£’000
—
—
—
£’000
60
4,605
4,665
2023
£’000
60
4,605
4,665
2022
£’000
60
6,935
6,995
Decrease
in year
£’000
—
(2,330)
(2,330)
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
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
2023
Buildings
Yield
6.14
3.31
13.91
10.88
7.62
12.89
2022
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:
Yield – improvement by 0.5%
Rental value per sq ft – increase of £1 average
2023
2022
Impact on
valuation
£’000
Buildings
210
769
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.
181
SHAREHOLDERSOVERVIEWSTRATEGIC REPORTFINANCIALSGOVERNANCEAnnual Report and Financial Statements for the year ended 31 December 2023 |FINANCIALSGOVERNANCE NOTES TO THE
FINANCIAL STATEMENTS
for the year ended 31 December 2023
12. Property, plant and equipment continued
Parent Company
Cost
At 1 January 2022
Additions
At 31 December 2022
Additions
Disposals
At 31 December 2023
Accumulated depreciation
At 1 January 2022
Charge for year
At 31 December 2022
Charge for year
Disposals
At 31 December 2023
Carrying amount
At 31 December 2023
At 31 December 2022
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
Leasehold
improvements
Office
equipment
£’000
£’000
—
—
—
2,469
—
2,469
—
—
—
77
—
77
2,392
—
1,347
205
1,552
447
(172)
1,827
1,030
142
1,172
192
(166)
1,198
629
380
Total
£’000
1,347
205
1,552
2,916
(172)
4,296
1,030
142
1,172
269
(166)
1,275
3,021
380
Group
Parent Company
2023
£’000
3,478
—
508
3,986
728
3,547
4,275
820
934
2,204
663
4,621
(346)
4,275
2022
£’000
775
1
221
997
426
607
1,033
449
282
322
31
1,084
(51)
1,033
2023
£’000
1,590
12
420
2,022
232
1,982
2,214
286
454
1,254
400
2,394
(180)
2,214
2022
£’000
—
16
47
63
34
30
64
35
14
16
—
65
(1)
64
Additions to the right-of-use assets during the 2023 financial year were £3,768,100 (2022: £14,000) for the Group and £2,210,000 (2022:
£32,000) for the Parent Company.
182
| henryboot.co.uk 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
2023
£’000
2022
£’000
2023
£’000
2022
£’000
616
1
162
779
85
474
1
122
597
40
167
9
75
251
36
—
14
31
45
2
The total cash outflow for leases in 2023 was £610,000 (2022: £679,000) for the Group and £96,000 (2022: £48,000) for the Parent Company.
The Group leases various offices, equipment and vehicles. Rental contracts are, typically, made for fixed periods of 4–10 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
• 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.
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 (2022: £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.
183
SHAREHOLDERSOVERVIEWSTRATEGIC REPORTFINANCIALSGOVERNANCEAnnual Report and Financial Statements for the year ended 31 December 2023 |FINANCIALSGOVERNANCE NOTES TO THE
FINANCIAL STATEMENTS
for the year ended 31 December 2023
13. Leases continued
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 1 year
Between 1 and 2 years
Between 2 and 3 years
Between 3 and 4 years
Between 4 and 5 years
More than 5 years
14. Investment properties
2023
£’000
6,029
5,818
5,782
5,160
4,518
40,696
68,003
2022
£’000
5,186
4,672
4,477
4,137
3,583
32,989
55,044
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
73,820
5,096
—
4,359
3,139
14,188
100,602
—
—
100,602
2023
£’000
73,820
5,096
—
4,359
3,139
14,188
100,602
—
—
100,602
Increase/
(decrease)
in year
£’000
20,893
(4,112)
—
37
(3,136)
(278)
13,404
(9,918)
(9,918)
3,488
2022
£’000
52,927
9,208
—
4,322
6,275
14,466
87,198
9,918
9,918
97,116
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.
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
Level 3 – fair value measurements are those derived from use of a model with inputs that are not based on observable
market data
184
| henryboot.co.uk 14. Investment properties continued
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
Includes manufacturing and warehousing, which are usually similar in dimensions and construction method
Leisure
Mixed-use
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
Residential
Includes dwellings under assured tenancies
Retail
Land
Office
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
Subsequent expenditure on investment property
Capitalised letting fees
Amortisation of capitalised letting fees
Disposals
Transfer to assets held for sale
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
Industrial
Level 3
Leisure
Level 3
Residential
Level 3
Office
Level 3
Retail
Level 3
£’000
£’000
£’000
£’000
£’000
2023
£’000
2022
£’000
52,927
119
15
(45)
(913)
(1,041)
3,290
17,580
1,888
73,820
1,575
75,395
9,208
—
—
(7)
(4,452)
—
—
—
347
5,096
144
5,240
4,322
—
—
—
(17)
—
—
—
54
4,359
—
4,359
6,275
—
—
—
(1,650)
—
—
—
(1,486)
3,139
14,466
—
—
(2)
—
—
—
87,198
119
15
(54)
(7,032)
(1,041)
3,290
—
(276)
14,188
17,580
527
100,602
95,177
8
2
(25)
(7,500)
—
6,827
—
(7,291)
87,198
611
3,750
428
14,616
2,758
103,360
2,234
89,432
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.
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.
185
SHAREHOLDERSOVERVIEWSTRATEGIC REPORTFINANCIALSGOVERNANCEAnnual Report and Financial Statements for the year ended 31 December 2023 |FINANCIALSGOVERNANCE NOTES TO THE
FINANCIAL STATEMENTS
for the year ended 31 December 2023
14. Investment properties continued
With the exception of the residential class, completed investment property has been revalued at 31 December 2023 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 £99,000,000 (2022: £85,110,000). 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, which, 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 2023 has been determined by the Directors of the Company at £4,359,000 (2022:
£4,322,000). The fair value takes into account market evidence based on recent comparable sale transactions adjusted to take into account
the tenanted nature of the properties.
Information about fair value measurements using significant unobservable inputs (Level 3):
Class
Industrial
Leisure
Mixed-use Residential
Office
Retail
2023
Valuation technique
Rental value per sq ft (£)
Yield %
– weighted average
– low
– high
– weighted average
– low
– high
Yield
6.27
0.67
14.00
6.23
3.50
13.41
Yield
18.86
1.82
45.05
6.97
6.41
9.76
Sales
comparison
—
—
—
—
—
—
Yield
—
—
—
—
—
—
Yield
25.00
25.00
25.00
19.90
16.77
22.86
Yield
14.06
7.33
25.38
5.90
4.76
8.50
% discount applied to houses held under assured
tenancies
—
—
—
25.00
—
—
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
Sales
comparison
—
—
—
—
—
—
Yield
4.95
2.75
9.00
10.90
8.21
12.69
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
% discount applied to houses held under assured
tenancies
—
—
—
25.00
—
—
There is considered to be no inter-relationship between observable and unobservable inputs.
186
| henryboot.co.uk 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
Office
Impact on valuation 2023 £’000
5,766
12,121
—
Industrial
3,834
8,243
—
350
260
—
—
—
—
—
—
49
Impact on valuation 2022 £’000
Residential
Mixed-use
Leisure
662
607
—
219
1,013
—
—
—
49
89
147
—
Office
356
328
—
Retail
1,154
988
—
Retail
1,206
1,002
—
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 £5,982,000 (2022: £5,757,000). Direct operating expenses arising on investment property generating rental income in the year
amounted to £348,000 (2022: £1,229,000). Direct operating expenses arising on the investment property, which did not generate rental
income during the year, amounted to £74,000 (2022: £122,000).
At 31 December 2024, the Group had entered into contractual commitments for the acquisition and repair of investment property amounting
to £nil (2022: £nil).
Investment property under construction
Class
Fair value hierarchy
Carrying value
At 1 January
Initial acquisition
Subsequent expenditure on investment property
Capitalised letting fees
Transfer from inventory
Transfer to completed investment property
Transfers to assets held for sale
(Decrease)/increase in fair value in year
At 31 December
Adjustment in respect of tenant incentives
Market value at 31 December
Industrial
Level 3
£’000
9,918
627
7,229
26
—
(17,580)
—
(220)
—
—
—
2023
£’000
9,918
627
7,229
26
—
(17,580)
—
(220)
—
—
—
2022
£’000
9,000
—
9,265
26
391
—
(11,134)
2,370
9,918
—
9,918
In 2022, 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.
187
SHAREHOLDERSOVERVIEWSTRATEGIC REPORTFINANCIALSGOVERNANCEAnnual Report and Financial Statements for the year ended 31 December 2023 |FINANCIALSGOVERNANCE NOTES TO THE
FINANCIAL STATEMENTS
for the year ended 31 December 2023
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
2023
Industrial
Residual
—
—
—
—
—
—
2022
Industrial
Residual
10.21
10.21
10.21
4.5
4.5
4.5
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
2023
£’000
Industrial
—
—
Impact on
valuation
2022
£’000
Industrial
1,025
1,804
Investment properties under construction are developments that have been valued at 31 December 2023 at fair value by the Directors of the
Company using the residual method at £nil (2022: £9,918,000). 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.
188
| henryboot.co.uk 15. Investments
Parent Company – shares in Group undertakings
Cost
At 1 January 2022, 31 December 2022 and 31 December 2023
Adjustments
At 1 January 2022, 31 December 2022 and 31 December 2023
Carrying amount
At 31 December 2023
At 31 December 2022
Total
£’000
37,771
—
37,771
37,771
Amounts due from, and to, subsidiary companies are listed in notes 18 and 23 and details of all subsidiary companies are listed in note 36.
All trading subsidiaries operate in the United Kingdom and are wholly owned, with the exception of:
• Road Link (A69) Holdings Limited and its subsidiary Road Link (A69) Limited, which is 61.2% owned by Henry Boot Construction
Limited;
• Plot 7 East Markham Vale Management Company Limited, which is 66.7% owned by, and under board control of, Henry Boot
Developments Limited;
• Capitol Park Property Services Limited, which is 4.6% owned by, and under board control of, Henry Boot Developments Limited; and
• Stonebridge Homes Group Limited and its wholly owned subsidiaries (as indicated in note 37), 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
2023
Joint
ventures
Associates
£’000
£’000
8,323
577
(900)
—
—
8,000
1,667
(206)
—
1,023
—
2,484
2022
Joint
ventures
Associates
£’000
£’000
12,165
9,524
(7,160)
—
(6,206)
8,323
—
(445)
—
2,112
—
1,667
Total
£’000
9,990
371
(900)
1,023
—
10,484
Total
£’000
12,165
9,079
(7,160)
2,112
(6,206)
9,990
During the year, the Group increased its equity investment in Rainham Holdco SARL, an associate undertaking, by a further £1.0m, which
maintains our interest at 20%. This was settled by offsetting a corresponding loan.
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
2023
Joint
ventures
Associates
£’000
9,973
26,329
68
36,370
(17,054)
(11,316)
8,000
£’000
—
16,838
—
16,838
(1,002)
(13,352)
2,484
Total
£’000
9,973
43,167
68
53,208
(18,056)
(24,668)
10,484
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
189
SHAREHOLDERSOVERVIEWSTRATEGIC REPORTFINANCIALSGOVERNANCEAnnual Report and Financial Statements for the year ended 31 December 2023 |FINANCIALSGOVERNANCE NOTES TO THE
FINANCIAL STATEMENTS
for the year ended 31 December 2023
16. Investment in joint ventures and associates continued
Revenue
Administration and other expenses
Increase/(decrease) 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
11,272
(10,060)
110
1,322
(502)
820
(243)
577
2023
Associates
£’000
—
(148)
—
(148)
(53)
(201)
(5)
(206)
Total
£’000
11,272
(10,208)
110
1,174
(555)
619
(248)
371
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
Details of the Group’s investments in joint ventures and associates are listed in note 37.
Material joint ventures and associates
The Directors do not consider there to be any material joint ventures and associates in the year. In the previous year, Directors considered
Pennine Property Partnership LLP, Montagu 406 Regeneration LLP, Newmarket Lane Holdings Limited (Group) and Cognito Oak LLP to be
the 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 had ownership of 50% prior to disposal in 2022. 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 £’000
Carrying amount £’000
190
Pennine Property
Partnership LLP
Montagu 406
Regeneration LLP
Newmarket Lane
Holdings Limited (Group)
Cognito
Oak LLP
2023
£’000
2022
£’000
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
10,826
1,215
(12,041)
—
—
—
—
2023
£’000
19,944
—
1,029
394
(16,821)
—
4,546
4,856
(310)
—
4,546
50%
2,273
2,273
2022
£’000
18,611
889
656
420
(15,720)
—
4,856
11,639
(6,783)
—
4,856
50%
2,428
2,428
2023
£’000
—
16,113
726
594
(3,551)
—
13,882
13,243
639
—
13,882
50%
6,941
6,941
2022
£’000
—
15,336
9,319
1,665
(13,077)
—
13,243
3,412
9,831
—
13,243
50%
6,622
6,622
2023
£’000
2022
£’000
—
—
—
—
(1)
—
(1)
(1)
—
—
(1)
50%
(1)
(1)
—
—
—
—
(1)
—
(1)
(249)
14,826
(14,578)
(1)
50%
(1)
(1)
| henryboot.co.uk 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
2023
£’000
—
—
—
2022
£’000
1,318
300
1,215
2023
£’000
754
2022
£’000
564
220
(310)
(6,764)
(6,783)
2023
£’000
4,557
—
639
2022
£’000
36,218
—
9,831
2023
£’000
—
—
—
2022
£’000
17,208
—
14,826
The Group disposed of one joint venture investment in the prior 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
2022
£’000
4,882
14,375
19,257
19,257
—
19,257
2023
£’000
7,902
5,757
13,659
13,659
—
13,659
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 (2022: £nil).
The Group does not recognise any assets arising from the costs incurred to obtain a contract as the related amortisation period would have
been less than one year.
18. Trade and other receivables
Trade receivables
Loss allowance
Prepayments
Amounts owed by joint ventures and associates
Amounts owed by Group undertakings
Due within one year
Due after more than one year
Group
Parent Company
2023
£’000
72,014
(1,347)
7,264
37,746
—
115,678
76,416
39,262
115,678
2022
£’000
70,245
(1,682)
9,751
25,316
—
103,630
66,601
37,029
103,630
2023
£’000
760
—
2,158
—
228,196
231,114
40,881
190,233
231,114
2022
£’000
484
—
2,085
—
222,786
225,355
40,149
185,206
225,355
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.
191
SHAREHOLDERSOVERVIEWSTRATEGIC REPORTFINANCIALSGOVERNANCEAnnual Report and Financial Statements for the year ended 31 December 2023 |FINANCIALSGOVERNANCE NOTES TO THE
FINANCIAL STATEMENTS
for the year ended 31 December 2023
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
2023
£’000
1,682
4
(20)
(118)
(201)
1,347
2022
£’000
1,269
417
(4)
—
—
1,682
The loss allowance as at 31 December 2023 and 31 December 2022 for trade receivables and contract assets was determined as follows:
2023
0–30 days
30–60 days
60–90 days
90–120 days
120+ days
2022
0–30 days
30–60 days
60–90 days
90–120 days
120+ days
Expected
loss rate
%
0.3
0.3
0.8
6.2
46.1
Expected
loss rate
%
—
1.3
1.2
5.9
40.7
Gross
carrying
amount
£’000
76,623
5,909
558
199
2,384
85,673
Gross
carrying
amount
£’000
63,962
1,462
520
341
3,960
70,245
Loss
allowance
£’000
214
16
4
12
1,101
1,347
Loss
allowance
£’000
25
19
6
20
1,612
1,682
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 £220.3m (2022: £213.4m) and are repayable on demand, unsecured and are
stated net of provisions for impairment of £1,520,000 (2022: £1,498,000), of which £21,000 (2022: £nil) has been provided in the year, £nil
(2022: £2,000) has been recovered in the year and £nil (2022: £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 fewer liquid
assets. Interest is charged annually at 0% (2022: 0%).
The Parent Company has no impaired trade receivables (2022: nil).
Credit risk
The Group’s principal financial assets are bank balances and cash, contract assets 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. Recovery of amounts owed by joint ventures and associates is based on delivery of the intended scheme and realisation of asset
values, forecast appraisal are prepared periodically which support recoverability.
192
| henryboot.co.uk 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 2022
Recognised in profit or loss
Recognised in other comprehensive income
At 31 December 2022
Deferred tax asset
Deferred tax liability
Recognised in profit or loss
Recognised in other comprehensive income
At 31 December 2023
Deferred tax asset
Deferred tax liability
Parent Company
At 1 January 2022
Recognised in profit or loss
Recognised in other comprehensive income
At 31 December 2022
Deferred tax asset
Deferred tax liability
Recognised in profit or loss
Recognised in other comprehensive income
At 31 December 2023
Deferred tax asset
Deferred tax liability
Accelerated
capital
allowances
Property
revaluations
Retirement
benefit
scheme
Other timing
differences
£’000
(194)
(593)
—
(787)
–
(787)
(597)
—
(1,384)
—
(1,384)
104
(76)
—
28
28
—
(258)
—
(230)
—
(230)
£’000
(4,388)
2,345
(23)
(2,066)
–
(2,066)
(269)
279
(2,056)
—
(2,056)
—
—
—
—
—
—
—
—
—
—
—
£’000
3,057
(856)
(3,749)
(1,548)
–
(1,548)
(1,151)
767
(1,932)
—
(1,932)
3,057
(856)
(3,749)
(1,548)
–
(1,548)
(1,151)
767
(1,932)
—
(1,932)
£’000
332
(83)
—
249
249
–
(36)
—
213
213
—
361
(82)
—
279
279
–
(35)
—
244
244
—
Total
£’000
(1,193)
813
(3,772)
(4,152)
249
(4,401)
(2,053)
1,046
(5,159)
213
(5,372)
3,522
(1,014)
(3,749)
(1,241)
307
(1,548)
(1,444)
767
(1,918)
244
(2,162)
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.
Deferred tax balances at the year end have been measured at 25% (2022: 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.
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
2023
£’000
77,386
96,226
49,442
11,090
63,474
297,618
2022
£’000
91,213
80,629
57,475
11,893
50,568
291,778
Within property developments in progress, £1,555,000 (2022: £nil) has been written down and recognised as an expense in the year. These
costs relate to development projects no longer likely to proceed. Within land held for development or sale, options to purchase land and
planning promotion agreements, £1,024,000 (2022: £2,019,000) 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.
193
SHAREHOLDERSOVERVIEWSTRATEGIC REPORTFINANCIALSGOVERNANCEAnnual Report and Financial Statements for the year ended 31 December 2023 |FINANCIALSGOVERNANCE NOTES TO THE
FINANCIAL STATEMENTS
for the year ended 31 December 2023
21. Assets classified as held for sale
Assets classified as held for sale are investment properties and land and buildings within the Property Investment and Development
segment, which are individually being actively marketed for sale with expected completion dates within one year. The gain recognised after
measurement at fair value to sell on the transfer of assets during the year was £1,571,000 (2022: £150,000 loss).
Assets classified as held for sale comprise the following:
Fair value
At 1 January
Transfer from property, plant and equipment (note 12)
Transfer from investment property (note 14)
Disposals
At 31 December
Adjustment in respect of tenant incentives
Market value at 31 December
Investment property and
Land and Buildings
2023
£’000
—
2,100
1,042
(3,142)
—
—
—
2022
£’000
—
—
11,134
(11,134)
—
—
—
Assets classified as held for sale have been valued at 31 December 2023 at fair value by the Directors of the Company at £nil (2022: £nil).
22. 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
2023
£’000
1,060
—
1,060
1,060
2023
£’000
4,006
—
—
—
2022
£’000
4,006
—
4,006
4,006
2022
£’000
5,033
—
—
—
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.
194
| henryboot.co.uk 23. 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
2023
£’000
60,162
6,015
6,463
2,959
377
—
75,978
73,477
2,501
75,978
2022
£’000
80,069
2,273
3,911
13,777
365
—
100,395
95,827
4,568
100,395
2023
£’000
2,566
554
1,750
—
—
63,480
68,350
68,350
—
68,350
2022
£’000
1,492
427
1,279
—
—
86,110
89,308
89,308
—
89,308
The Directors consider that the carrying amount of trade payables approximates to their fair value.
Amounts due after more than one year include £862,000 (2022: £1,343,000) of deferred income and £1,637,000 (2022: £3,225,000) of
trade payables relating to deferred land payments. Included within deferred income is £1,343,000 relating to an advanced payment from
National Highways (2022: £1,669,000). This is being released as revenue and interest within the income statement under the terms of the
A69 Road Link contract. During the year, £606,000 (2022: £519,000) has been recognised as revenue and £280,000 (2022: £314,000)
recognised as interest. The balance of deferred income represents advanced receipts for the construction of a pre-sold asset in the property
investment and development segment, which is due to complete in 2024.
Parent Company
Amounts owed to Group undertakings (including loans of £63.5m (2022: £85.8m)) are repayable on demand, unsecured and bear interest
at rates of 0%–6.95% (2022: 0%–5.20%).
24. Financial liabilities
The table below summerises the maturity profile of the Group’s financial liabilities based on contractual undiscounted payments.
2023
Bank loans
Other loans - sale and
leaseback
Lease liabilities
Trade and other payables
2022
Bank loans
Lease liabilities
Trade and other payables
Note
27
27
13
23
Note
27
13
23
On demand
£'000
–
< 1 year
£'000
83,500
1-2 years
£'000
–
3-5 years
£’000
–
> 5 years
£'000
–
–
–
–
–
On demand
£'000
–
–
–
–
1,461
820
64,503
150,284
< 1 year
£'000
65,000
450
79,777
145,227
1,461
935
1,725
4,121
304
2,204
–
2,508
–
663
–
663
1-2 years
£'000
–
282
1,725
2,007
3-5 years
£’000
–
322
1,725
2,047
> 5 years
£'000
–
31
–
31
Total
£'000
83,500
3,226
4,622
66,228
157,576
Total
£'000
65,000
1,085
83,227
149,312
25. Government grants
Government grants have been received in prior years relating 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 £nil (2022: £130,000).
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.
195
SHAREHOLDERSOVERVIEWSTRATEGIC REPORTFINANCIALSGOVERNANCEAnnual Report and Financial Statements for the year ended 31 December 2023 |FINANCIALSGOVERNANCE NOTES TO THE
FINANCIAL STATEMENTS
for the year ended 31 December 2023
26. 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
2023, this was £77.8m (2022: £48.6m). Equity comprises all components of equity and, at 31 December 2023, this was £410.1m (2022:
£394.3m).
During 2023, the Group achieved its strategy, which was to maintain the debt to equity ratio below 30% (2022: 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 £83.5m of the facility at 31 December 2023 (2022: £65m).
The Group’s secured bank facilities are subject to covenants over the 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 20 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 £14.7m (2022: £7.6m) were sold under the agreement at the year end.
The Group’s capital risk management disclosures are consistent with the Parent Company.
196
| henryboot.co.uk 27. Borrowings
Bank overdrafts
Bank loans
Other loans – sale and leaseback
Due within one year
Due after one year
The weighted average interest rates paid were as follows:
Bank overdrafts
Bank loans – floating rate
Other loans – sale and leaseback
Group
Parent Company
2023
£’000
—
83,500
3,018
86,518
84,819
1,699
86,518
2022
£’000
—
65,000
—
65,000
65,000
—
65,000
2023
£’000
602
83,500
—
84,102
84,102
—
84,102
2023
%
6.17
6.09
5.85
2022
£’000
9
65,000
—
65,009
65,009
—
65,009
2022
%
2.72
4.59
—
Bank overdrafts are repayable on demand and bank loans are drawn for periods of between one and six months.
Other loans relate to sale and leaseback arrangement entered into by the Group. The original loan draw downs in 2023 amounted to
£4,029,000 (2022: nil) and are all repayable over 36 months.
Borrowings are recognised at amortised cost. The fair value of the Group’s borrowings is not considered to be materially different from the
carrying amounts.
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.
At 31 December 2023, the Group had available £21,500,000 (2022: £40,000,000) undrawn committed borrowing facilities.
Interest rate risk
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 bank overdraft is at floating rates, thus exposing the Group to cash flow interest rate risk.
Based on approximate average borrowings during 2023, a 1.0% (2022: 1.0%) change in interest rates, which the Directors consider to be a
reasonably possible change, would affect profitability before tax by £810,000 (2022: £618,000).
Other loans – sales and leaseback – are arranged at fixed rates, thus not exposing the Group to cash flow interest rate risk.
197
SHAREHOLDERSOVERVIEWSTRATEGIC REPORTFINANCIALSGOVERNANCEAnnual Report and Financial Statements for the year ended 31 December 2023 |FINANCIALSGOVERNANCE NOTES TO THE
FINANCIAL STATEMENTS
for the year ended 31 December 2023
28. Provisions
At 1 January 2022
Additional provisions in year
Utilisation of provisions
At 31 December 2022
Included in current liabilities
Included in non-current liabilities
Additional provisions in year
Utilisation of provisions
At 31 December 2023
Included in current liabilities
Included in non-current liabilities
Land
promotion
Road
maintenance
£’000
4,417
775
(1,637)
3,555
2,170
1,385
3,555
1,092
(1,516)
3,131
1,953
1,178
3,131
£’000
1,865
683
(715)
1,833
1,833
—
1,833
1,762
(2,327)
1,268
1,268
—
1,268
Total
£’000
6,282
1,458
(2,352)
5,388
4,003
1,385
5,388
2,854
(3,843)
4,399
3,221
1,178
4,399
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 that 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 £24,000 and £123,000, respectively (2022: £32,000 and £182,000).
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 £204,000 (2022: £129,000).
Off balance sheet arrangements
The Group is currently undertaking the infrastructure of land promotions at Bridgwater and Cranbrook, spanning 122 and 53 acres,
respectively (2022: 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 121 and 50 acres, respectively (2022: 117 and 50), and has, subsequently, recognised provisions
to the value of £2,459,000 (2022: £3,451,000), 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 £99,000
(2022: £185,000), 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.
198
| henryboot.co.uk 29. 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% (2022: 5%) of salary is paid by the employee, on a pound-for-pound
basis up to a maximum of 8% (2022: 8%).
The total cost charged to income of £3,811,000 (2022: £3,251,000) 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.
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 2023 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)
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
2023
%
3.15
2.55
2.55
2.55
4.60
2023
Years
21.2
23.4
22.1
24.5
2022
%
3.20
2.60
2.60
2.60
4.90
2022
Years
21.7
23.8
22.7
25.0
The mortality assumptions adopted are the Self Administered Pension Schemes (SAPS) tables with allowance for future improvements in line
with Continuous Mortality Investigation (CMI) 2022 with an annual improvement of 1% per annum.
199
SHAREHOLDERSOVERVIEWSTRATEGIC REPORTFINANCIALSGOVERNANCEAnnual Report and Financial Statements for the year ended 31 December 2023 |FINANCIALSGOVERNANCE NOTES TO THE
FINANCIAL STATEMENTS
for the year ended 31 December 2023
29. Retirement benefit obligations continued
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 4.1%
Decrease in
assumption
Decrease by 2.4%
Increase by 3.0%
Decrease by 4.1%
Amounts recognised in the Consolidated Statement of Comprehensive Income in respect of the scheme are as follows:
Service cost:
Ongoing scheme expenses
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 loss/(gain) arising from changes in financial assumptions
Actuarial loss/(gain) arising from experience assumptions
Actuarial loss/(gain) recognised in other comprehensive income
Total
2023
£’000
745
(406)
81
420
(1,044)
(1,675)
4,710
1,075
3,066
3,486
2022
£’000
644
209
136
989
50,365
(1,070)
(63,568)
(721)
(14,994)
(14,005)
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
Movements in the present value of scheme obligations in the year were as follows:
At 1 January
Interest on obligation
Actuarial losses
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
200
2023
£’000
(155,264)
162,989
7,725
2023
£’000
7,725
2023
£’000
152,576
7,263
4,110
(8,685)
155,264
2023
£’000
158,764
7,669
1,044
4,942
(8,685)
(745)
162,990
2022
£’000
(152,576)
158,764
6,188
2022
£’000
6,188
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
| henryboot.co.uk 29. 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
2023
£’000
16,511
36,407
5,231
16,277
46,757
22,267
19,540
162,990
2022
£’000
14,381
46,483
2,979
18,969
33,283
21,319
21,350
158,764
The weighted average duration of the defined benefit obligation is 12 years (2022: 12 years).
The current estimated amount of total contributions expected to be paid to the scheme during the 2024 financial year is £1,200,000, being
£1,200,000 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.
On 16 June 2023, the High Court handed down a judgement in the case Virgin Media v NTL Trustees II Limited. The case centred on
changes to the rules of pension schemes that were contracted out of SERPS. The law required that, before amending a scheme’s rules, the
trustees needed to obtain written confirmation from the scheme actuary that the amended benefits would still meet the minimum level. The
actuary’s written confirmation is commonly known as a Section 37 certificate.
The judgement handed down in the Virgin Media case confirmed the position under the law and held that any rule amendments made
without the actuarial confirmation having been obtained would be void. That judgement is currently being appealed and there remains a
possibility that the government will act in this area following the conclusion of the appeal.
The Group’s scheme was contracted out over the relevant period and several rule amendments that affected members’ benefits were
made in that time. The Trustees have conducted a preliminary search of their records and have located most, but not all, of the Section
37 certificates. An exhaustive search has not yet been completed. The Trustee is currently awaiting the outcome of the appeal and any
intervention by the Government, before taking further action.
Until the outcome of the appeal is known, the Government has given its position and a more exhaustive search of records has been
completed, it is not possible to determine whether, or to what extent, this judgement affects the Scheme and the position disclosed.
30. 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 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)
2023
£’000
5,629
(275)
(104)
(17)
2023
£’000
54
2022
£’000
4,670
(1,447)
(159)
(25)
2022
£’000
51
Amounts owing by related parties (note 18) or to related parties (note 23) are unsecured, repayable on demand and will be settled in cash.
The Group is committed to the ongoing funding of some joint ventures and associates where the entity has made commitments to deliver
specific schemes. 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.
201
SHAREHOLDERSOVERVIEWSTRATEGIC REPORTFINANCIALSGOVERNANCEAnnual Report and Financial Statements for the year ended 31 December 2023 |FINANCIALSGOVERNANCE NOTES TO THE
FINANCIAL STATEMENTS
for the year ended 31 December 2023
30. Related party transactions continued
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 26 and 29.
The remuneration of the Board of Directors is set out in the Remuneration Report on pages 119 to 141. The remuneration of the relevant six
(2022: six) 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
31. Share capital
400,000 5.25% cumulative preference shares of £1 each (2022: 400,000)
133,985,763 ordinary shares of 10p each (2022: 133,627,922)
2023
£’000
1,723
100
21
1,844
2022
£’000
1,629
81
19
1,729
Authorised, allotted,
issued and fully paid
2023
£’000
400
13,399
13,799
2022
£’000
400
13,363
13,763
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, 357,841 ordinary shares (2022:
303,955) 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 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%, on
21 October 2022 at a price of 198.0p at a discount of 15.7% and on 20 October 2023 at a price of 155.0p at a discount of 15.3%. These
become exercisable for a six-month period from 1 December 2021, 1 December 2022, 1 December 2023, 1 December 2024, 1 December
2025 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.
2022
October 2018 grant
October 2019 grant
October 2020 grant
October 2021 grant
October 2022 grant
Weighted average exercise price
202
Options
outstanding at
1 January
2022
55,643
624,340
209,214
440,640
—
228p
Options
granted
—
—
—
—
1,007,374
198p
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
2022
—
410,218
156,597
272,480
992,104
211p
| henryboot.co.uk 31. Share capital continued
2023
October 2019 grant
October 2020 grant
October 2021 grant
October 2022 grant
October 2023 grant
Weighted average exercise price
Options
outstanding at
1 January
2023
410,218
156,597
272,480
992,104
—
211p
Options
granted
—
—
—
—
1,600,466
155p
Options
lapsed
(52,426)
(75,773)
(172,900)
(756,176)
(13,163)
206p
Options
exercised
(356,185)
—
(444)
(1,212)
—
224p
Options
outstanding at
31 December
2023
1,607
80,824
99,136
234,716
1,587,303
167p
The weighted average share price at the date of exercise for share options exercised during the year was 238.01p (2022: 257.07p).
(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
2023
Number
1,595,815
(389,804)
(71,870)
1,067,967
2,202,108
2022
Number
1,365,397
(385,427)
(31,486)
647,331
1,595,815
The weighted average share price at the date of exercise for share options exercised during the year was 211.00p (2022: 323.00p).
The weighted average exercise price of all share options issued in the scheme is nil. Additional shares have been awarded in the year based
at a dividend equivalent value over the vesting period.
(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 £60,000. 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 3–10 years after the date of grant. The right to exercise options, generally, terminates if a participant leaves the Group, subject
to certain exceptions. 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. The ninth grant of options under the
plan was made to certain employees (none of whom at the time were Directors of Group companies) on 4 October 2023 at an option price
of 194.0p. There were no performance conditions imposed on either of these grants.
203
SHAREHOLDERSOVERVIEWSTRATEGIC REPORTFINANCIALSGOVERNANCEAnnual Report and Financial Statements for the year ended 31 December 2023 |FINANCIALSGOVERNANCE NOTES TO THE
FINANCIAL STATEMENTS
for the year ended 31 December 2023
31. Share capital continued
2022
October 2014 grant
October 2017 grant
September 2018 grant
October 2019 grant
October 2020 grant
September 2021 grant
October 2022 grant
Weighted average exercise price
2023
October 2014 grant
October 2017 grant
September 2018 grant
October 2019 grant
October 2020 grant
September 2021 grant
September 2022 grant
October 2023 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
outstanding at
1 January
2023
10,000
56,887
146,375
298,624
310,597
361,416
597,560
—
262p
Options
granted
Options
lapsed
Options
exercised
—
—
—
—
—
—
605,010
247p
—
(13,386)
(19,500)
(36,306)
(37,213)
(42,132)
(7,450)
270p
—
(25,936)
(54,294)
(5,277)
(2,093)
(792)
—
290p
Options
granted
Options
lapsed
Options
exercised
—
—
—
—
—
—
—
716,877
194p
—
(5,020)
(10,827)
(30,126)
(32,315)
(31,579)
(55,668)
(5,410)
259p
—
—
—
—
—
—
—
—
—
Options
outstanding at
31 December
2022
10,000
56,887
146,375
298,624
310,597
361,416
597,560
262p
Options
outstanding at
31 December
2023
10,000
51,867
135,548
268,498
278,282
329,837
541,892
711,467
241p
The weighted average share price at the date of exercise for share options exercised during the year was nil (2022: 323.36p).
Fair value
Fair value is measured by a Monte Carlo pricing model using the following assumptions:
Weighted
average
exercise price
Weighted
average
share price
Nil
121.5p
191.0p
298.9p
291.0p
249.0p
263.0p
281.0p
247.0p
194.0p
270.0p
262.0p
224.0p
237.0p
225.0p
198.0p
155.0p
241.0p
to 324.0p
121.5p
191.0p
309.0p
291.0p
249.0p
263.0p
281.0p
250.0p
192.0p
300.0p
278.0p
248.0p
263.0p
2.83.0p
235.0p
183.0p
Expected
volatility
29.37%
to 38.73%
41.47%
31.17%
30.37%
29.28%
29.25%
38.07%
38.60%
38.25%
30.05%
30.30%
29.53%
29.25%
38.07%
38.60%
38.25%
30.05%
Expected life Risk-free rate
Expected
dividend yield
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
3 years
3 years
0.00%
to 3.75%
1.67%
1.23%
0.51%
0.91%
0.28%
0.00%
0.41%
4.15%
4.54%
0.51%
0.99%
0.28%
0.00%
0.58%
3.89%
4.53%
1.95%
to 3.24%
5.02%
3.16%
3.02%
2.90%
3.24%
2.61%
2.49%
1.95%
2.37%
3.02%
2.90%
3.24%
2.61%
2.49%
1.95%
2.37%
LTIP
CSOP 2011
CSOP 2014
CSOP 2017
CSOP 2018
CSOP 2019
CSOP 2020
CSOP 2021
CSOP 2022
CSOP 2023
Sharesave 2017
Sharesave 2018
Sharesave 2019
Sharesave 2020
Sharesave 2021
Sharesave 2022
Sharesave 2023
204
| henryboot.co.uk 31. Share capital continued
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 68.71p (2022: 96.78p).
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
2023
£’000
2022
£’000
1,601
1,241
The total expense recognised in the Consolidated Statement of Comprehensive Income arose solely from equity-settled share-based
payment transactions.
32. Reserves
Group
At 1 January 2022
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
Profit for the year
Dividends paid
Proceeds from shares issued
Arising on employee share schemes
Realised gain on disposal of investment
property
Decrease in fair value in year
Deferred tax on revaluation surplus
Actuarial loss on defined benefit
pension scheme
Deferred tax on actuarial loss
At 31 December 2023
Property
revaluation
Retained
earnings
Capital
redemption
Share
premium
Other
£’000
2,060
—
—
—
—
315
(23)
—
—
2,352
—
—
—
—
(1,392)
(228)
279
—
—
1,011
£’000
328,348
33,319
(8,383)
—
1,163
—
—
14,994
(3,749)
365,692
26,299
(9,274)
—
1,409
1,392
—
—
(3,066)
767
383,219
£’000
271
—
—
—
—
—
—
—
—
271
—
—
—
—
—
—
—
—
—
271
£’000
6,264
—
—
738
—
—
—
—
—
7,002
—
—
766
—
—
—
—
—
—
7,768
Capital
£’000
209
—
—
—
—
—
—
—
—
209
—
—
—
—
—
—
—
—
—
209
Total
other
£’000
6,744
—
—
738
—
—
—
—
—
7,482
—
—
766
—
—
—
—
—
—
8,248
205
SHAREHOLDERSOVERVIEWSTRATEGIC REPORTFINANCIALSGOVERNANCEAnnual Report and Financial Statements for the year ended 31 December 2023 |FINANCIALSGOVERNANCE NOTES TO THE
FINANCIAL STATEMENTS
for the year ended 31 December 2023
32. Reserves continued
Parent Company
At 1 January 2022
Profit for the year
Dividends paid
Premium arising from shares issued
Arising on employee share schemes
Unrecognised actuarial gain
Deferred tax on actuarial gain
At 31 December 2022
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 2023
Retained
earnings
Investment
revaluation
Capital
redemption
Other
Share
premium
£’000
81,414
15,987
(8,383)
—
417
14,994
(3,749)
100,680
13,304
(9,274)
—
422
(3,066)
767
102,833
£’000
1,135
—
—
—
—
—
—
1,135
—
—
—
—
—
—
1,135
£’000
271
—
—
—
—
—
—
271
—
—
—
—
—
—
271
£’000
6,264
—
—
738
—
—
—
7,002
—
—
766
—
—
—
7,768
Capital
£’000
211
—
—
—
—
—
—
211
—
—
—
—
—
—
211
Total
other
£’000
7,881
—
—
738
—
—
—
8,619
—
—
766
—
—
—
9,385
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.
33. Cost of shares held by the ESOP trust
At 1 January
Additions
Disposals
At 31 December
2023
£’000
967
98
(190)
875
2022
£’000
1,044
—
(77)
967
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 2023, the Trustee held 362,860 shares (2022: 391,003 shares) with a cost of £874,849 (2022: £966,483) and a market
value of £754,750 (2022: £918,858). 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.
206
| henryboot.co.uk 34. Cash generated from operations
Group
Parent Company
Profit before tax
Adjustments for:
Amortisation of PFI asset
Goodwill impairment
Depreciation and impairment of property, plant and
equipment
Depreciation of right-of-use assets
Revaluation (increase)/decrease in investment properties
Amortisation of capitalised letting fees
Share-based payment expense
Pension scheme credit
Movements on provision against loans to subsidiaries
Profit on disposal of property, plant and equipment
Profit on disposal of equipment held for hire
Profit on disposal of investment properties
(Profit)/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
Decrease/(increase) in receivables
Decrease/(increase) in contract assets
(Decrease)/increase in payables and provisions
Decrease in contract liabilities
Cash generated from operations
11
11
12
13
14
3
4
3
3
5
6
16
12
2023
£’000
37,302
551
203
4,462
779
(307)
54
1,601
(4,197)
—
(341)
(1,185)
(733)
(1,571)
—
(3,357)
—
6,260
(371)
39,150
(3,497)
1,423
37,076
(9,129)
1,503
5,598
(26,231)
(2,946)
5,871
Net debt is an alternative performance measure used by the Group and comprises the following:
Analysis of net debt:
Cash and cash equivalents
Bank overdrafts
Net cash and cash equivalents
Bank loans
Other loans
Lease liabilities
Net debt
Reconciliation of liabilities from financing activities
Advances from joint ventures and associates
Bank loans
Other loans – sale and leaseback
Lease liabilities
Total liabilities from financing activities
27
27
13
13,034
—
13,034
(83,500)
(3,018)
(4,275)
(77,759)
1 Jan
365
65,000
–
1,033
66,398
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)
17,401
—
17,401
(65,000)
—
(1,033)
(48,632)
2023
£’000
10,199
—
—
269
251
—
—
612
(4,197)
21
6
—
—
—
—
(675)
(25,139)
5,437
—
(13,216)
—
—
(13,216)
—
9,021
—
3,021
—
(1,174)
5,572
(602)
4,970
(83,500)
—
(2,214)
(80,744)
Cashflows
12
18,500
New leases
—
—
3,018
(526)
21,004
—
3,768
3,768
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)
10,316
(9)
10,307
(65,000)
—
(64)
(54,757)
31 Dec
377
83,500
3,018
4,275
91,170
207
SHAREHOLDERSOVERVIEWSTRATEGIC REPORTFINANCIALSGOVERNANCEAnnual Report and Financial Statements for the year ended 31 December 2023 |FINANCIALSGOVERNANCE NOTES TO THE
FINANCIAL STATEMENTS
for the year ended 31 December 2023
35. 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 £83,500,000 and
£20,800,000, respectively.
In the opinion of the Directors, no loss is expected to arise in connection with these matters.
36. Events after the balance sheet date
Since the balance sheet date, the Group has proposed a final dividend for 2023; further information can be found in note 10.
There were no other significant events since the balance sheet date that may have a material effect on the financial position or performance
of the Group.
37. 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 2023, 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.
First National Housing Trust Limited
Glasgowend Limited
Hallam Land Management Limited
HB Island Limited
HBGP Limited
HBD City Court Limited
HBD Summerhill Limited
HBD Dev Co 1 Limited
HBD Golden Valley Limited
Henry Boot Biddenham Limited
Henry Boot Construction Limited
Henry Boot Contracting Limited
Henry Boot Deansgate Limited
Henry Boot Developments Limited
Henry Boot Cornwall House Limited
Henry Boot Estates Limited
Henry Boot Investments 1 Limited
Henry Boot Inner City Limited
Henry Boot ‘K’ Limited
Henry Boot Land Holdings Limited
Henry Boot (Launceston) Limited
Henry Boot Leasing Limited
Henry Boot (Manchester) Limited
Henry Boot Nottingham Limited
Henry Boot Projects Limited
Henry Boot Swindon Limited
Henry Boot Tamworth Limited
Henry Boot Wentworth Limited
208
Registered
Number
Proportion of
ownership
Direct
or
indirect
11441062
14229315
00607575
12091892
13247306
08795137
09889108
13857768
SC166157
00276288
01576203
02456711
11641820
11641976
13351580
13285696
14128256
13966492
05901324
02880202
07399102
15269405
01390361
11176009
00276603
03125802
02145413
06386834
04570294
09276678
03248776
06051156
08682793
01679963
06051131
05901334
01670475
8.9% Indirect
54.2% Indirect
100% Direct
12.5% Indirect
33.3% Indirect
4.6% Indirect
83.3% Indirect
100% Indirect
100% Indirect
100% Direct
100% Direct
100% Direct
100% Direct
100% Direct
100% Indirect
100% Indirect
100% Indirect
85% Indirect
100% Direct
100% Direct
100% Direct
100% Indirect
100% Direct
100% Indirect
100% Direct
100% Indirect
100% Direct
100% Indirect
100% Direct
100% Direct
100% Direct
100% Direct
100% Indirect
100% Direct
100% Direct
100% Indirect
100% Direct
Activity
Management company
Management company
Plant Hire
Management company
Management company
Inactive
Management company
Management company
Land promotion
Property investment
Inactive
Land promotion
Holding company
Holding company
Property investment and development
Property investment and development
Property investment and development
Property development
Land promotion
Construction
Inactive
Property investment and development
Property investment and development
Property development
Property investment
Holding Company
Inactive
Property investment and development
Holding company
Land promotion
Motor vehicle leasing to Group
Property development
Inactive
Inactive
Inactive
Inactive
Property development
| henryboot.co.uk Subsidiary name
IAMP Management Company Limited
Investments (North West) Limited
Marboot Centregate Ltd
Marboot Centregate 2 Limited
Moore Street Securities Limited
Plot 7 East Markham Vale Management Company
Limited
Road Link (A69) Holdings Limited
Road Link (A69) Limited
St John’s Manchester Limited
Saltwoodend Limited
SJ Manchester Limited Partnership
SJM GP Limited
SJM (Nominee) Limited
Stonebridge Homes Group Limited1
Stonebridge Homes Limited1
Stonebridge Offices Limited1
Winter Ground Limited
Wyvern Park Skipton Management Company Limited
Registered
Number
Proportion of
ownership
Direct
or
indirect
11735214
06956932
09662598
10129169
02493145
08281170
03125851
03125840
12276168
05075297
LP022152
13665805
13666505
12065057
07279118
07728107
04572581
13844054
100% Indirect
100% Indirect
100% Indirect
100% Indirect
100% Direct
33.3% Indirect
61.2% Indirect
61.2% Indirect
100% Indirect
100% Indirect
100% Indirect
100% Indirect
100% Indirect
50% Indirect
50% Indirect
50% Indirect
100% Indirect
100% Indirect
Activity
Management company
Property development
Property development
Property development
Employee benefit trust
Inactive
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.
Joint ventures and associates
Aytoun Street Developments Limited
Bigmouth Manchester Limited
Crimea Land Mansfield LLP
HBB Preston East Ltd
HBB Roman Way Limited
Henry Boot Barnfield 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%
20%
37.6%
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Activity
Property development
Property development
Land promotion
Property development
Property development
Property development
Property development
Holding company
Property development
Inactive
Property investment
Property development
Holding company
Management company
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; and Rainham HoldCo S.a.r.l., whose registered
office is 1 Rue Isaac Newton, L-2242, Luxembourg.
209
SHAREHOLDERSOVERVIEWSTRATEGIC REPORTFINANCIALSGOVERNANCEAnnual Report and Financial Statements for the year ended 31 December 2023 |FINANCIALSGOVERNANCE NOTES TO THE
FINANCIAL STATEMENTS
for the year ended 31 December 2023
37. Additional information – subsidiaries, joint ventures and associates continued
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.
38. Partly-owned subsidiaries
Financial information of subsidiaries that have 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
2023
£’000
50%
61.2%
2023
£’000
2,852
1,858
242
2,002
2022
£’000
50%
61.2%
2022
£’000
3,687
2,280
2,182
2,369
210
| henryboot.co.uk
38. Partly-owned subsidiaries continued
The summarised financial information of these subsidiaries is provided below. This information is based on amounts before
inter-company eliminations.
Stonebridge Homes Limited
Road Link (A69) Limited
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 increase/(decrease) in cash and cash equivalents
2023
£’000
97,186
(84,994)
(6,256)
(5,250)
686
(201)
485
485
242
1,070
1,533
96,227
6,063
89
(98,208)
–
5,704
2,852
2,852
2,955
(31)
(3,386)
(462)
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)
2023
£’000
13,676
(6,146)
(718)
(96)
6,715
(1,557)
5,159
5,159
2,002
2,425
1,141
–
3,221
5,106
(3,819)
(862)
4,788
2,930
1,859
7,093
183
(6,250)
1,026
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)
211
SHAREHOLDERSOVERVIEWSTRATEGIC REPORTFINANCIALSGOVERNANCEAnnual Report and Financial Statements for the year ended 31 December 2023 |FINANCIALSGOVERNANCE 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 23 May 2024 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 2023
Resolution 2
To declare a final dividend of 4.40p 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 2023
Resolution 4
To approve the Directors’ Remuneration Policy contained in the
Directors’ Remuneration Report for the year ended
31 December 2023
Resolution 5
To reappoint Timothy Roberts as a Director of the Company
Resolution 6
To reappoint Darren Littlewood as a Director of the Company
Resolution 7
To reappoint Joanne Lake as a Director of the Company
Resolution 8
To reappoint James Sykes as a Director of the Company
Resolution 9
To reappoint Peter Mawson as a Director of the Company
Resolution 10
To reappoint Gerald Jennings as a Director of the Company
Resolution 11
To reappoint Serena Lang as a Director of the Company
Resolution 12
To reappoint Talita Ferreira as a Director of the Company
Resolution 13
To reappoint Ernst & Young LLP as auditors of the Company
Resolution 14
To authorise the Audit and Risk Committee to fix the auditors’
remuneration
Resolution 15
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 £4,466,207, provided that (unless
previously revoked, varied or renewed) this authority shall expire
on 23 August 2025 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.
212
| henryboot.co.uk Resolution 16
THAT subject to the passing of Resolution 15, 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 15 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.
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
ii. 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
d.
to an aggregate nominal amount of £669,931,
and (unless previously revoked, varied or renewed) this power shall
expire on 23 August 2025 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 17
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.
the maximum aggregate number of ordinary shares hereby
authorised to be purchased is 13,398,621;
the minimum price (excluding expenses), which may be paid
for an ordinary share is 10p;
the maximum price (excluding expenses), which may be paid
for an ordinary share is not more than the higher of:
i. an amount equal to 105% of the average of the middle
market quotations for an ordinary share as derived from
the London Stock Exchange Daily Official List for the five
business days immediately preceding the day on which the
purchase is made; and
ii. an amount equal to the higher of the price of the last
independent trade of an ordinary share and the highest
current independent bid for an ordinary share on the trading
venue where the purchase is carried out;
the authority hereby conferred shall expire at the conclusion
of the next AGM of the Company after the passing of this
resolution or, if earlier, on 23 August 2025; and
e.
the Company may make a contract to purchase ordinary
shares under the authority hereby conferred prior to the expiry
of such authority, which will, or may be, completed or executed
wholly or partly after the expiry of such authority.
By order of the Board
AMY STANBRIDGE
COMPANY SECRETARY
11 April 2024
HENRY BOOT PLC
Registered Office:
Isaacs Building
4 Charles Street
Sheffield
United Kingdom
S1 2HS
Registered in England and Wales No. 160996
213
OVERVIEWSTRATEGIC REPORTFINANCIALSGOVERNANCEAnnual Report and Financial Statements for the year ended 31 December 2023 |GOVERNANCESHAREHOLDERSFINANCIALS 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 21 May 2024 (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 21 May 2024 (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).
214
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 21 May 2024 (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 that 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 21 May 2024 (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 21 May
2024 (or, if the meeting is adjourned, 48 hours (excluding any
part of a day that is not a working day) before the time of any
adjourned meeting). For this purpose, the time of receipt will be
taken to be the time (as determined by the timestamp applied
to the message by the CREST Applications Host) from which
Computershare Investor Services PLC is able to retrieve the
message by enquiry to CREST in the manner prescribed by
CREST. After this time, any change of instructions to proxies
appointed through CREST should be communicated to the
appointee through other means.
CREST members and, where applicable, their CREST
sponsors or voting service providers should note that
Euroclear UK & Ireland Limited does not make available special
procedures in CREST for any particular messages. Normal
system timings and limitations will, therefore, apply in relation
to the input of CREST Proxy Instructions. It is the responsibility
of the CREST member concerned to take (or, if the CREST
member is a CREST personal member or sponsored member
or has appointed a voting service provider(s), to procure that
his or her CREST sponsor or voting service provider(s) take(s))
such action as shall be necessary to ensure that a message is
transmitted by means of the CREST system by any particular
time. In this connection, CREST members and, where
| henryboot.co.uk
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 that 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. the Nominated Person may have a right under an
agreement between him/her and the shareholder by
whom he/she was nominated to be appointed, or to have
someone else appointed, as a proxy for the meeting; or
b. if the Nominated Person has no such right or does not wish
to exercise such right, he/she may have a right under such
an agreement to give instructions to the shareholder as to
the exercise of voting rights.
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.
in hard copy, by sending it to the Company Secretary,
Henry Boot PLC, Isaacs Building, 4 Charles Street,
Sheffield, United Kingdom, S1 2HS; or
ii. in electronic form, by sending it by email to investors@
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. to do so would interfere unduly with the preparation for
the meeting or would involve the disclosure of confidential
information;
b. the answer has already been given on a website in the form
of an answer to a question; or
c. it is undesirable in the interests of the Company or the good
order of the meeting that the question be answered.
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.
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
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 auditor’s 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. it must forward the statement to the Company’s auditors no
later than the time when it makes the statement available
on the website; and
iii. the statement may be dealt with as part of the business of
the meeting.
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 investors@henryboot.co.uk
No other methods of communication will be accepted.
17. As at 05 April 2024 (being the last practicable date before
publication of this notice), the Company’s issued ordinary share
capital was 133,986,217 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 2023.
215
OVERVIEWSTRATEGIC REPORTFINANCIALSGOVERNANCEAnnual Report and Financial Statements for the year ended 31 December 2023 |GOVERNANCESHAREHOLDERSFINANCIALS
FINANCIAL
CALENDAR
London Stock
Exchange announcements
Annual Results 2023:
25 March 2024
Interim Results 2024:
17 September 2024
Pre-close Trading Statement 2024:
end January 2025
Annual Report and
Financial Statements
Annual Report and Financial Statements 2023
(available and online):
by 22 April 2024
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
216
Annual General Meeting
23 May 2024
Dividends paid on ordinary shares
2023 Final dividend date (subject to approval at AGM):
31 May 2024
2024 Interim dividend date (subject to approval):
11 October 2024
Financial PR
FTI Consulting
200 Aldersgate
Aldersgate Street
London EC1A 4HD
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
Deutsche 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
| henryboot.co.uk GROUP CONTACT
INFORMATION
Land Promotion
Hallam Land
Management Limited
Registered office and Head office
Isaacs Building, 4 Charles Street, Sheffield
S1 2HS United Kingdom
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
Isaacs Building, 4 Charles Street, Sheffield
S1 2HS United Kingdom
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
Isaacs Building, 4 Charles Street, Sheffield
S1 2HS United Kingdom
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
Isaacs Building, 4 Charles Street, Sheffield
S1 2HS United Kingdom
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
Isaacs Building, 4 Charles Street, Sheffield,
S1 2HS United Kingdom
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
217
OVERVIEWSTRATEGIC REPORTFINANCIALSGOVERNANCEAnnual Report and Financial Statements for the year ended 31 December 2023 |GOVERNANCESHAREHOLDERSFINANCIALS GLOSSARY
We have used some terms in this report to explain how we run our business that might be unfamiliar to you. The following list gives a
definition for some of the more frequently used terms:
Commercial property
This refers to buildings or land intended to
generate a profit, either from capital gain
or rental income, such as office building,
industrial property, retail stores, etc.
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.
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.
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.
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.
218
| henryboot.co.uk 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.
OVERVIEWSTRATEGIC REPORTFINANCIALSGOVERNANCEAnnual Report and Financial Statements for the year ended 31 December 2023 |GOVERNANCESHAREHOLDERSFINANCIALS H
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OUR FUTURE
OUR LEGACY
Henry Boot PLC
Registered office:
Isaacs Building, 4 Charles Street
Sheffield, S1 2HS United Kingdom
Registered in England and Wales no. 160996
Tel: 0114 2555444
Email: cosec-ir@henryboot.co.uk
Stock Code: BOOT.L