HENRY BOOT PLC ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2014 www.henryboot.co.uk CREATING VALUE... Stock code: BHY 23804.04 13 April 2015 8:14 AM Proof 8 Overview chairman’s stATEMENT I am delighted to report another year of strong returns for our Group with profit before tax of £28.3m, a 54% increase on £18.4m achieved in 2013. Strategic progress of approximately 10% over 2013 and a I am delighted to report another year of record for the Company. strong returns for our Group with profit Payment of the final dividend is subject to before tax of £28.3m, a 54% increase approval by shareholders at the Annual on £18.4m achieved in 2013. It is also General Meeting and will be paid on 29 pleasing to report that all of the businesses May 2015 to shareholders on the register within the Group performed well in their as at 1 May 2015. market segment, supported by a generally improving UK economy. Talented people A key element of our strategy is to In our view, 2014 was the second full year commercially empower our incredibly of our recovery from the bottom of the talented people to identify and obtain property cycle. The UK house building land, development and construction industry performed well, in what have been opportunities, achieve success in planning, described as balanced market conditions, and deliver a profitable finished product. and this allowed us to sell sites with On behalf of my fellow Directors and our planning permission at competitive prices. shareholders, thank you all for your efforts Further investment in the planning process in 2014 and achieving such a great result. added over 2,100 plots to our portfolio I look forward to seeing our teams achieve of permissioned sites, an impressive further success in 2015 and beyond. replenishment rate, given that we sold John Brown Chairman approximately 1,100 plots in the year. Outlook Henry Boot enters 2015 in great shape, 2014 saw the UK commercial property with a portfolio of high quality opportunities development market improve significantly, Company Facts to deliver growing shareholder returns. The with Henry Boot activity high throughout • Profit before tax of 2015 financial year has started positively. the year and we were able to complete £28.3m We have already concluded two land several schemes. In addition, we have a sales and agreed terms on several others • Proposed final number of projects in progress for 2015 for completion later in the year and we dividend of 3.50p per and opportunities beyond that are even recently announced encouraging news share more encouraging. It is pleasing to report with regard to a major development in that the cyclical upswing is once again • 2,100 plots added to Aberdeen. We have a comparatively larger helping the development business steadily land portfolio number of developments compared to improve both activity and profitability levels prior years which are progressing well compared to the last few years’ subdued Read our Financial to deliver anticipated financial returns trading performance. In addition, our Statements in detail on on completion. Our strategic direction jointly owned house builder, Stonebridge page 82 remains the delivery of long-term growth in Projects Limited, had a good year and is View more content online at: shareholder value through investing capital now becoming a contributor to profits with www.henryboot.co.uk in the early stages of a land or commercial good, long-term growth prospects. Finally, development’s lifespan. In the shorter our Construction division traded well in term, we remain confident that prevailing 2014 and our Plant business had one of economic and market conditions will allow its best ever years which, combined with us to deliver growing returns through the stable income from the Road Link PFI, 2015. In the longer term we continue to resulted in this segment of the business identify and acquire numerous valuable achieving a 12% increase in profit before opportunities to enable us to deliver this tax over 2013. strategic goal, well into the future. Dividend I am pleased to report that, following on from the very good result for the year, the J E Brown Board will recommend an increased final Chairman dividend of 3.50p giving a total for the 17 April 2015 year of 5.60p (2013: 5.10p), an increase 23804.04 13 April 2015 8:14 AM Proof 8 CONTENTS Overview OUR GROUP OPERATIONS 00 OVERVIEW IFC Our Group Operations Henry Boot PLC, established over 125 years ago, is one of the IFC Our Group Locations UK’s leading and long-standing land development, property IFC Chairman’s Statement 01 Our Performance in 2014 investment and development, and construction companies. 01 STRATEGIC REPORT Land Development 04 Our Business Model Revenue 06 Our Strategy 08 Creating Value... through Land £39.0m Development 2013: £37.7m 12 Creating Value... through Property Investment and Development Hallam Land Management Limited The strategic land and planning promotion arm of the Henry Boot Group. Our experienced land and 16 Creating Value... through planning teams promote and deliver land opportunities through the complexities of the UK planning Construction system. The company has been acquiring, promoting, developing and trading in land since 1990. We Corporate Responsibility 20 have established an outstanding record in resolving planning and associated technical problems in 28 Financial Review order to secure planning permission for a whole range of different land uses. 34 Key Performance Indicators- Financial Find out more about Land Development on pages 8–11 36 Key Performance Indicators- Non-Financial 38 Managing Risk Property Investment and Development 02 GOVERNANCE Revenue 46 Board of Directors £25.8m 2013: £37.6m 48 Senior Management 50 Chairman’s Introduction Henry Boot Developments Limited 51 Corporate Governance Statement A major force in the UK property development market. With its considerable experience and impressive reputation in all sectors of property development, the company has built up a substantial investment 56 Nomination Committee Report portfolio in recent years. 57 Audit Committee Report 60 Directors’ Remuneration Report Stonebridge Projects Limited 78 Directors’ Report A jointly owned company in the north of England which develops family homes that combine care, consideration and attention to detail to create a place where luxury living comes to life. The company Statement of Directors’ 81 also provides high specification fully serviced office space to the market. Responsibilities Find out more about Property Investment and Development on pages 12–15 03 FINANCIAL STATEMENTS 84 Independent Auditors’ Report Construction 92 Consolidated Statement of Comprehensive Income Revenue 93 Statements of Financial Position 94 Statements of Changes in Equity £82.4m 95 Statements of Cash Flows 2013: £78.5m 96 Principal Accounting Policies Henry Boot Construction Limited 104 Notes to the Financial Statements We specialise in serving both public and private clients in all construction sectors, including civil engineering. Our jobs are delivered to the highest quality, safely, on time, within agreed costs and to the 04 SHAREHOLDER INFORMATION maximum benefit to all parties. Banner Plant Limited 140 Property Valuers’ Report We offer a wide range of products and services for sale and hire. Continuing investment is made to 141 Additional Shareholder Information develop and meet the increasing needs of its many varied customers in commerce, industry and the 144 Notice of Annual General Meeting general public. 155 Financial Calendar Road Link (A69) Limited Advisers 155 Road Link has a 30 year contract with the Highways Agency to operate and maintain the A69 trunk IBC Group Contact Information road between Carlisle and Newcastle upon Tyne. This long-term contract was one of the first awarded IBC Glossary via the Government’s Private Finance Initiative. Find out more about Construction on pages 16–19 23804.04 13 April 2015 8:14 AM Proof 8 Overview OUR GROUP LOCATIONS The head office of the Henry Boot Group is located in Sheffield but we operate throughout the country and have eight regional offices and six plant hire centres. 04 National coverage with over 200 projects 09 Ongoing high quality opportunities 13 05 15 14 07 HEAD OFFICE 01 01 Sheffield 03 11 OFFICES 10 12 02 Bristol 03 Dronfield 04 Glasgow 05 Leeds 08 06 London 07 Manchester 08 Northampton 09 Stocksfield 02 06 HIRE CENTRES 10 Chesterfield 11 Dronfield 12 Derby 13 Leeds 14 Rotherham 15 Wakefield Find out more about our Group Contact Information on the inner back cover 23804.04 13 April 2015 8:14 AM Proof 8 Henry Boot PLC www.henryboot.co.uk 01 Annual Report and Financial Statements for the year ended 31 December 2014 Stock Code: BHY Overview OUR PERFORMANCE IN 2014 O V PROFIT BEFORE TAX (£m) NET DEBT (£m) E RV £28.3m £36.1m £36.4m IE 54% 1% W (2013: 37%) (2013: 65%) £18.9m £18.4m £21.9m £16.1m £13.4m £11.4m £2.3m 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 NET ASSET VALUE PER DIVIDENDS PER ORDINARY SHARE (p) ORDINARY SHARE (p) 145p 148p 152p 5.60p 142p 139p 5.10p 4.70p 3% 10% 4.25p (2013: 6%) (2013: 9%) 3.50p 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 EARNINGS PER ORDINARY SHARE (p) OPERATING PROFIT (£m) 16.2p £28.0m 88% 47% £20.9m (2013: 23%) (2013: 35%) £19.0m £16.9m 9.1p 8.6p £14.2m 6.9p 7.0p 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 Financial and Operational Highlights • Trading environment across all business streams improved further during 2014. • Best financial result since 2007. • Value creation achieved by improving the planning position or development use of speculatively acquired assets.