HENRY B OOT PLC HENRY BOOT PLC aNNual REPoRt aND a NN fiNaNcial StatEmENtS 2008 ual ual REP o R t a ND fi N a N 120 YEARS IN PROPERTY AND CONSTRUCTION cial S tat E m EN t S 2008 Further copies of the 2008 Annual Report and Financial Statements may be obtained from the Company Secretary. HENRY BOOT PLC Registered office: Banner Cross Hall Sheffield S11 9PD Registered in England No. 160996 t: 0114 255 5444 f: 0114 258 5548 e: [email protected] www.henryboot.co.uk _1_BHY_ar08_cover.indd 1 08/04/2009 12:25:18 THE HENRY BOOT GROUP OPERATES IN THE UK PROPERTY AND CONSTRUCTION SECTORS. Our key objective is to maximise long‑term shareholder value through construction and plant hire activities, the development of and investment in high quality property assets and the promotion of new land development opportunities. REVIEW OF THE YEAR CORPORATE RESPONSIBILITY FINANCIAL STATEMENTS 01 2008 HIGHLIGHTS 24 CORPORATE SOCIAL RESPONSIBILITY 49 Independent auditors’ report 02 HENRY BOOT AT A GLANCE HEALTH AND SAFETY 50 GROUP INCOME STATEMENT 04 CHairman’s stATEMENT oUR EMPLOYEES 51 BALANCE SHEETS CoRPORATE GOVERNANCE 52 STATEMENTS OF RECOGNISED INCOME CoMMUNITIES AND CHARITIES AND EXPENSE ENVIRONMENTAL RESPONSIBILITIES 52 STATEMENTS OF CHANGES IN EQUITY 53 CASH FLOW STATEMENTS 54 PRINCIPAL ACCOUNTING POLICIES 58 NOTES TO THE FINANCIAL STATEMENTS BUSINESS REVIEW CORPORATE GOVERNANCE OTHER 06 FEATURE ON MARKHAM VALE 30 BOARD OF DIRECTORS 74 PROPERTY VALuers’ report 08 BUSINESS REVIEW 30 S UBSIDIARY COMPANY 75 NOTICE OF ANNUAL GENERAL MEETING oPERATIONS REVIEW MANAGING DIRECTORS FINANCIAL REVIEW 31 COMPANY ADVISERS 31 FINANCIAL CALENDAR 32 Directors’ report 41 directors’ responsiBILITIES 42 CORPORATE GOVERNANCE REPORT 45 Directors’ remunerATION REPORT cover image: Part of Gleadless Valley, Sheffield, where Henry Boot The commitment of the Henry Boot Group to environmental issues is Construction (UK) Limited reflected in this annual report which has been printed on Revive 75 Silk, is carrying out the largest ‘Decent Homes’ programme a recycled paper stock. It contains 50% de-inked post consumer in the country. waste, 25% pre-consumer waste and 25% virgin wood fibre. _1_BHY_ar08_cover.indd 2 08/04/2009 12:25:18 01 HENRY BOOT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2008 REVIEW OF T H E YEAR 2008 HIGHLIGHTS Trading profits increased by 53% to £44.0m (2007: £28.8m) Property impairments and revaluation deficit of £22.4m (2007: surplus £18.1m) Profit before tax reduced by 59% to £19.3m (2007: £46.5m) Earnings per share 10.8p (2007: 24.5p) Maintained final dividend proposed of 3.75p, giving a total for the year of 5.0p (2007: 5.0p) Net asset value per share increased by 5% to 146p (2007: 139p) Debt reduced to £49.3m (2007: £70.9m) Gearing reduced to 26% (2007: 39%) GROUP PROFIT BEFORE NET ASSET VALUE PER EARNINGS PER ORDINARY DIVIDENDS PER ORDINARY TAX (£M) ORDINARY SHARE (P) SHARE (P) SHARE (P) 5.0 5.0 46.5 24.5 146.0 139.0 4.4 40.8 19.8 3.8 116.0 3.3 30.2 94.0 15.6 84.0 12.9 23.2 10.8 19.3 04 05 06 07 08 04 05 06 07 08 04 05 06 07 08 04 05 06 07 08 _BHY_ar08_front.indd 1 08/04/2009 12:24:03 HENRY BOOT AT A GLANCE 02 The Sheffield-based Henry Boot Group is one of the UK’s leading property and construction HENRY BOOT PLC organisations, with its four principal trading subsidiary companies operating in the property ANNUAL REPORT AND FINANCIAL development and investment, land management, construction and plant hire sectors. STATEMENTS 2008 The Group’s main objective is to maximise shareholder value in the longer-term through active commercial development and land management, allied to recurring income from investment property, PFI, construction and plant hire activities. Each Group company is managed autonomously and has set objectives to maximise short-term profits and create valuable long-term asset backed opportunities in the property sector. PROPERTY LAND CONSTRUCTION HENRY BOOT HALLAM LAND HENRY BOOT CONSTRUCTION DEVELOPMENTS LIMITED MANAGEMENT LIMITED (UK) LIMITED Henry Boot Developments is Hallam Land Management is Henry Boot Construction a major force in the UK property the strategic land and planning specialises in serving the needs development market, operating promotion arm of the Henry of commerce and industry in nationally from its head office Boot Group of Companies. the North of England from its in Sheffield and regional offices The Company’s key role is operational centres in Dronfield, in Bristol, Glasgow, London to promote and deliver land Sheffield and Manchester, and and Manchester. opportunities through the enjoys an enviable reputation complexities of the UK Town for the delivery of high quality With its considerable experience and Country Planning System. construction work, on-time and and impressive reputation in all within agreed cost parameters. sectors of property development, Experienced land and planning the Company has built up a promotion teams cover the UK, These performance targets substantial investment portfolio operating from regional offices are embodied in the added in recent years. At the same in Bristol, Glasgow, London value approach applied time, many schemes have been and Northampton, as well as to all forms of contracts, sold-on to financial institutions from the Sheffield head office. which include negotiated, looking to add to their own design-build, partnered quality portfolio. and traditional tender work. Head Office: Head Office: Head Office: Banner Cross Hall, Sheffield S11 9PD Banner Cross Hall, Sheffield S11 9PD Dronfield, Derbyshire S18 6XS t: 0114 255 5444 t: 0114 255 5444 t: 01246 410111 e: [email protected] e: [email protected] e: [email protected] www.henrybootdevelopments.co.uk www.hallamland.co.uk www.henrybootconstruction.co.uk Managing Director: Managing Director: Managing Director: David Anderson Bob Brown Mick Mosley Regional Offices: Regional Offices: Regional Offices: South East – London t: 020 7495 6419 South East – London t: 020 7495 6419 North East – Dronfield t: 01246 410111 South West – Bristol t: 01454 275261 South West – Bristol t: 01454 625532 North West – Manchester t: 0161 273 5302 North West – Manchester t: 0161 830 8000 South Midlands – Northampton t: 01604 646588 North East – Sheffield t: 0114 255 5444 North East – Sheffield t: 0114 255 5444 Road Link (A69) Limited, a 61% owned Scotland – Glasgow t: 0141 223 9090 North West – Sheffield t: 0114 255 5444 subsidiary, with two other shareholders Scotland – Glasgow t: 01698 464320 holding the remaining 39%, operates and maintains the A69 Newcastle-Carlisle trunk road for the Highways Agency under a PFI contract. The contract was initially for 30 years and has 17 years still to run. Head Office: Stocksfield, Northumberland NE43 7TN t: 01661 842842 e: [email protected] Chairman: Douglas Greaves _BHY_ar08_front.indd 2 08/04/2009 12:24:03 03 HENRY BOOT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2008 REVIEW OF T H E YEAR PLANT OUR LOCATIONS GROUP HEAD OFFICE Sheffield 11 Regional locations Bristol BANNER PLANT LIMITED Chesterfield Derby Banner Plant is a long established Glasgow plant hire company offering Leeds London a wide range of products Manchester and services for sale and hire. Newcastle-upon-Tyne Northampton The Company’s head office Rotherham is in Dronfield, Derbyshire, Wakefield with hire centres located in Dronfield, Chesterfield, Derby, Leeds, Rotherham and Wakefield. Continuing investment is made in providing new equipment, transport and service facilities to meet the increasing needs of its many varied customers in commerce, industry and the general public. Head Office: Dronfield, Derbyshire S18 2XS t: 01246 299400 e: [email protected] www.bannerplant.co.uk Managing Director: Giles Boot Regional Hire Centres: Chesterfield t: 01246 268593 Derby t: 01332 752035/751762 Leeds t: 0113 240 6350 Rotherham t: 01709 515655/511500 Dronfield t: 01246 299400 Wakefield t: 01924 283487 _BHY_ar08_front.indd 3 08/04/2009 12:24:04 CHAiRMAn’S stateMenT Given the very difficult market conditions that have arisen in the UK property 04 market during 2008, I am pleased to report a further set of solid results, with HENRY BOOT PLC ANNUAL REPORT the exception of our investment property portfolio where we have seen falling AND FINANCIAL STATEMENTS values throughout the year. The year under review saw the economic backdrop 2008 in which we operate become very difficult indeed; successive rises in interest rates through 2007 and into 2008, followed by a dramatic tightening of liquidity, have severely affected both the housing and property investment markets. Against this backdrop we are pleased to report: completion of several large land sales; a very strong year in our construction division; completion of most developments in progress at the start of 2008; and gearing reduced by a third, with the prospect of making further reductions in 2009. We continued to operate through our national network of offices, creating valuable long-term opportunities in land promotion and property investment and development. We recognise that it will be some time before house builders are able to replenish their land banks or that property yields make development the John Reis, Chairman profitable business it had historically become. Our construction division and the investment property rentals generate a growing level of recurring income, though Given the very difficult this will not replace the scale of the ‘deal-driven’ profits previously achieved by market conditions that our property development and land promotion activities. We expect to face a very difficult market for some considerable time, however, have arisen in the UK the key strategic focus of the business is: property market during ‘‘ to protect the retained asset value we have created; 2008, i am pleased to to continue to manage debt levels down from the prudent levels currently carried; report a further set to continue to improve the planning position of the land and development of solid results, with portfolios and realise profits where possible; and the exception of our to continue the profitable operation of our construction division.