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View Annual Report Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2018 Stock Code: BOOT.L Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2018 Sharing expertise, building relationships. www.henryboot.co.uk Henry Boot AR2018 - Overview + Strategic Report.indd 3 05/04/2019 16:24:12 26323 5 April 2019 3:49 pm Proof 24 Welcome to the Henry Boot PLC Annual Report 2018 Sharing expertise, building relationships. Established in 1886, we are one of the UK’s leading land promotion, property investment and development, and construction companies. Our culture, ‘The Henry Boot Way’ means that we have an unique and cohesive approach to doing business. We started ‘The One Henry Boot Project’ so we could capture what ‘The Henry Boot Way’ is about. We have defined three core elements of ‘The Henry Boot Way’: Our Purpose, Our Vision and Our Values. Read about the ‘The Henry Boot Way’ on pages 14 and 15 Our Geographical Reach National coverage 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 that we are close to our strategic sites and we are able to maximise our development opportunities. Head Office Offices Hire Centres Sheffield Birmingham Chesterfield Bristol Dronfield Dronfield Derby Glasgow Leeds Leeds Leicester London Rotherham Manchester Wakefield Northampton Stocksfield Henry Boot AR2018 - Overview + Strategic Report.indd 4 05/04/2019 16:24:12 26323 5 April 2019 3:49 pm Proof 24 01 notes-heading-level-one Overview notes-heading-level-two notes-heading-level-three notes-heading-level-four Contents notes-strapline notes-text-body Inside this Report Overview − notes-list-bullet Chairman’s Statement 02 Group at a Glance Business Model Group at a Glance 06 − notes-list-bespoke The strength and balance of the Group Our ability to deliver long-term value 2018 Highlights 08 Investment Case 09 − notes-list-dash is achieved through an ordered structure for stakeholders is underpinned by our and diverse business segments. business model. d. notes-list-alpha Strategic Report Chief Executive Officer Update 12 5. notes-list-number ‘The Henry Boot Way’ 14 vi. notes-list-roman Business Model — Competitive 16 Advantages Business Model — Sustainable Value 19 Market Review 20 Segmental Reviews: Land Promotion 24 Property Investment 26 and Development Read about the Group at a Glance Read about our Business Model Construction 28 on pages 06 and 07 on pages 16 to 19 Segmental Case Studies 30 Financial Review 34 Watch our Business Model video Our Strategy 40 at www.henryboot.co.uk Dashboard 42 Key Performance Indicators 46 Risks and Uncertainties 48 Our Strategy ‘The One Henry Boot Project’ Corporate Responsibility 56 The Group strategic priorities ensure Initiated to understand the importance of Governance our Purpose is fulfilled and our Vision is what ‘The Henry Boot Way’, our culture, Board of Directors 68 achieved. means to the Group. Senior Management 72 Chairman’s Introduction 73 Corporate Governance Statement 74 Nomination Committee Report 84 Audit and Risk Committee Report 86 Directors’ Remuneration Report 89 Directors’ Report 102 Statement of Directors’ Responsibilities 108 Financial Statements Independent Auditors’ Report 112 Read about Our Strategy Read about The Henry Boot Consolidated Statement of 122 on pages 40 to 47 Project on page 12 Comprehensive Income Statements of Financial Position 123 Statements of Changes in Equity 124 Statements of Cash Flows 125 Principal Accounting Policies 126 Notes to the Financial Statements 136 We maintain a Corporate website containing a wide range of information Shareholder Information of interest to investors and stakeholders Notice of Annual General Meeting 174 www.henryboot.co.uk Financial Calendar 180 Advisers 180 View the Year in Review site at Group Contact Information 181 henryboot.annualreport2018.com Glossary 182 Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2018 Henry Boot AR2018 - Overview + Strategic Report.indd 1 05/04/2019 16:24:17 26323 5 April 2019 3:49 pm Proof 24 02 Overview Chairman’s Statement Exceeding expectations. Net asset value per ordinary share I am pleased to report that Henry Boot PLC achieved a profit 227p before tax of £48.6m, another 2018 227p strong performance, in a year that 2017 203p was typified by higher levels of 2016 177p economic uncertainty and global 2015 168p political tension. 2014 152p This is the second-best result in our process. Henry Boot Developments, our Earnings per 133-year history, and, excluding a property investment and development ordinary share one-off unexpected pension scheme business, performed well but was not provision of £1.5m in relation to able to progress certain schemes as Guaranteed Minimum Pensions, this quickly as it had originally anticipated. 28.3p performance exceeded our expectations. This was due to a combination of planning delays and the higher levels of Earnings per share were 28.3p covering 2018 28.3p due diligence that now accompany real our proposed dividend over three times. estate transactions. Furthermore, the Net assets rose to over £300m with NAV 2017 32.1p 2017 results of this business benefited per share at 227p, an increase of 12%. from the rapid sales of 164 apartments 2016 21.5p Gearing, as we move into a potentially at the former Terry’s Chocolate Factory challenging year, was very prudent at 6%. 2015 17.5p which brought profit forward from 2018. The two key profit drivers within the Stonebridge Homes, our jointly owned Group are: Hallam Land and Henry Boot 2014 16.2p Leeds-based housebuilder, achieved Developments. In 2018, Hallam Land, 145 completions, up 84% on the 79 our land promotion business, performed units completed in 2017. Once again, exceptionally well, selling over 3,500 planning permission delays have affected units on 24 sites to help replenish the the speed at which Stonebridge Homes UK housebuilder’s development land was able to replenish its land portfolio. inventory. It retains a site portfolio of However, its proven ability to deliver 14,325 acres and still holds 16,489 units much needed housing will result in more with planning permission, held at cost opportunities to buy land. We delivered with no planning gain value recognition, £71m of construction activity in the year, that are working through the sale Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2018 Henry Boot AR2018 - Overview + Strategic Report.indd 2 05/04/2019 16:24:18 26323 5 April 2019 3:49 pm Proof 24 03 Overview Jamie Boot Chairman Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2018 Henry Boot AR2018 - Overview + Strategic Report.indd 3 05/04/2019 16:24:19 26323 5 April 2019 3:49 pm Proof 24 04 Overview Chairman’s Statement Dividends per up from £60m in 2017 and, given levels We anticipate that 2019 will be a Ordinary Share of already confirmed contract work and challenging year, as the UK real estate the number of opportunities open to us, sector adapts to the marketplace in we anticipate further growth in 2019. anticipation of the UK’s departure from 9.00p Banner Plant and Road Link A69, where the EU. In advance of this, we have we own a 61% share through to 2026, taken the opportunity to reduce gearing 2018 9.00p performed in line with expectations. through 2018 to take advantage of any opportunities which may arise through 2017 8.00p Dividend 2019. Henry Boot Construction has I am pleased to report to shareholders 2016 7.00p started the year with a strong committed that the Board is recommending a final order book, certain commercial dividend of 5.8p which, together with 2015 6.10p developments anticipated to start during the interim of 3.2p, gives a total of 9.0p 2018 have now commenced and one for the year, an increase of 13% over 2014 5.60p sale expected to complete in 2018 the 8.0p paid in 2017. Payment of the completed in January 2019. final dividend is subject to shareholder approval at the Annual General Meeting We remain committed to our chosen and will be paid on 29 May 2019 to sectors of strategic land, commercial and residential property investment and I remain confident that the shareholders on the register as at 26 April 2019. development and construction. I remain skilled, experienced and confident that the skilled, experienced dedicated teams in each of Our People and dedicated teams in each of our our businesses will achieve The successful results in 2018 were businesses will achieve sector-leading sector-leading results, despite achieved against a more challenging results, despite the challenges we the challenges we face. economic and political backdrop with face. As reported before, we retain the markets in which we operated Jamie Boot, Chairman and continue to build an extensive being affected by a higher level of pipeline of opportunities in each of our uncertainty. Against this background, businesses. The Group’s annual results our most valuable resource – our people are driven by the profitable delivery of – performed exceptionally well. We schemes for that year but, rest assured continue to empower our teams, both that our teams are committed to the financially and through training initiatives, long-term financial success of each site to acquire new opportunities and deliver we hold, irrespective of which financial profitable outcomes for our schemes. period the profit ultimately arises in. It On behalf of the Board, our shareholders is through this attention to detail, on and other stakeholders, I salute our a site-by-site basis, that we ultimately people for their resilience, skill and hard achieve long-term value creation for all work in 2018.
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