TIDMBOOT
RNS Number : 6689I
Boot(Henry) PLC
23 March 2018
23 March 2018
HENRY BOOT PLC
('Henry Boot', 'the Company' or 'the Group')
UNAUDITED RESULTS FOR THE YEARED 31 DECEMBER 2017
Henry Boot PLC, a company engaged in land promotion, property
investment and development, and construction, announces its results
for the year ended 31 December 2017. Ticker: BOOT.L: Main market
premium listing: FTSE: construction & materials.
2017 KEY HIGHLIGHTS
-- Revenue increased 33% to GBP408.5m (2016: GBP306.8m)
-- Profit before tax increased 40% to GBP55.4m (2016: GBP39.5m)
-- Earnings per share increased 49% to 32.1p (2016: 21.5p)
-- Proposed final dividend of 5.20p (2016: 4.50p), giving a
total for the year of 8.00p (2016: 7.00p), a 14% increase
-- Net asset value per share increased 15% to 203p (2016: 177p)
-- Conservative gearing at 11% (2016: 14%), net debt GBP29.0m (2016: GBP32.9m)
-- Strategic land acreage now 13,273 acres (2016: 11,888 acres)
Commenting on the results, Chairman, Jamie Boot said:
"I am very pleased to report revenue growth of 33% resulting in
a 40% increase in profit before tax and a 49% increase in earnings.
In addition, net assets per share exceeded 200p for the first time.
Dividends increased by 14% and gearing reduced slightly compared
with the previous year.
"We have made a good start to the 2018 financial year, having
already concluded a number of land sales. In addition, we have a
strong pipeline of construction work, commercial development
projects and strategic land sites working through the marketing
process, on which to capitalise through the year. Our focus
consequently continues to be on the profitable delivery of these
schemes and the value they will create for all our stakeholders. I
look forward to reporting on our success in doing this through 2018
and beyond."
Commenting on the results, Chief Executive Officer, John
Sutcliffe said:
"2017 delivered a record financial performance, primarily due to
development schemes being delivered more quickly than we initially
anticipated. As a result, profit before tax and earnings per share
increased by 40% and 49% respectively, and we were able to more
than replenish our portfolio of future opportunities during the
year. Notwithstanding any potential impact from the decision to
leave the EU, our business model and strategic aims remain
unchanged, and 2018 has started well across all our business
streams."
For further information, please contact:
Henry Boot PLC
John Sutcliffe, Chief Executive Officer
Darren Littlewood, Group Finance Director
Tel: 0114 255 5444
Investec Bank plc
Garry Levin/Carlton Nelson/David Anderson
Tel: 020 7597 5970
Hudson Sandler LLP
Nick Lyon/Wendy Baker
Tel: 020 7796 4133
About Henry Boot PLC
Henry Boot PLC (BOOT.L) was established over 130 years ago and
is one of the UK's leading and long-standing property investment
and development, land promotion and construction companies. Based
in Sheffield, the Group is comprised of the following three
divisions:
Land Promotion:
Hallam Land Management Limited
Property Investment & Development:
Henry Boot Developments Limited, Stonebridge Homes Limited
Construction:
Henry Boot Construction Limited, Banner Plant Limited, Road Link
(A69) Limited
The Group possess a high-quality strategic land portfolio, a
substantial investment portfolio and an enviable reputation in the
property development market. It has a construction specialism in
both the public and private sectors, a growing plant hire business,
and generates strong cash flows from its PFI contract through Road
Link (A69) Limited.
www.henryboot.co.uk
CHAIRMAN'S STATEMENT
I am very pleased to report a 40% increase in profit before tax
to GBP55m for the year ended 31 December 2017. These record results
produced an earnings per share increase of 49% to 32.1p and
retained earnings, which benefited from a slightly lower pension
deficit, resulted in our net asset value per share exceeding 200p
for the first time. Total capital employed rose to GBP270m. As an
indication of the volume of activity undertaken in 2017, revenue
exceeded GBP400m in the year, which is more than double that
achieved two years ago in 2015, as we deliver projects such as the
new Aberdeen Exhibition and Conference Centre, the residential
conversion of the former Terry's Chocolate Factory and the
extension of our Markham Vale industrial scheme. We also sold 15
strategic land sites, delivered over GBP60m of construction work,
GBP17m of plant hire sales and almost GBP25m of new house sales
through our joint venture house builder, Stonebridge Homes.
We were also successful in adding future opportunities into the
Group's divisions, with the estimated value of the longer term,
commercial development scheme pipeline now exceeding GBP1.0bn for
the first time. Our strategic land acreage increased by over 10% to
more than 13,000 acres, after taking account of the acreage sold
during the year. We also added some 2,200 plots to our inventory of
plots to sell, having obtained planning permission on some 4,500
plots during the year. The scale and number of these sites and
schemes, held as inventory, are once again at record levels, giving
us confidence that we can continue to deliver sustainable returns
to our stakeholders well into the future.
Dividend
In view of the strong performance in the year, I am pleased to
report that the Board is recommending a final dividend of 5.20p,
giving a total for the year of 8.00p, an increase of 14% over the
total paid for the 2016 year. Payment of the final dividend is
subject to shareholder approval at the Annual General Meeting and
will be paid on 30 May 2018 to shareholders on the register as at
27 April 2018.
Our People
The very successful operational and financial results achieved
in 2017 are a direct reflection of all the people within Henry Boot
whose skill, talent and hard work have once again delivered
positive results for all our stakeholders. In last year's Annual
Report, we highlighted that we had commenced a project called 'One
Henry Boot'. Its purpose was to understand 'The Henry Boot Way' and
our culture; and to focus on our purpose, vision and values. We
recognise that our people play, and will continue to play, a
crucial role in our business success. Initiating this project
demonstrates our commitment to the ongoing empowerment and
development of them, our most valuable resource. On behalf of the
Board, shareholders and other stakeholders, we thank all our people
for their contribution and look forward to reporting on their
success in the future.
Outlook
Our key strategic aim is to empower and develop our people to
create long-term value and sustainable growth for our stakeholders.
In 2017, we achieved a great financial result, whilst strengthening
our ability to replicate this in future years. Our Group is focused
on UK real estate and we are therefore very mindful of the cyclical
nature of our marketplace and also the current background level of
uncertainty regarding negotiations to leave the EU.
However, we take our lead from our customers which, in 2017,
were very supportive and, whilst it is still early days, the new
year indications are equally positive. In the wider marketplace,
current expectations are that economic growth will be similar to
2017 for the next two years, supported by a generally strong global
economy.
We have made a good start to the 2018 financial year, having
already concluded a number of land sales. In addition, we have a
strong pipeline of construction work, commercial development
projects and strategic land sites working through the marketing
process, on which to capitalise through the year. Our focus
consequently continues to be on the profitable delivery of these
schemes and the value they will create for all our stakeholders. I
look forward to reporting on our success in doing this through 2018
and beyond.
Jamie Boot
Chairman
BUSINESS REVIEW
I am very pleased to report that Henry Boot PLC has delivered
yet another strong operational and financial performance with
earnings per share growth of 49%. These results were helped by the
speed at which the residential units at The Chocolate Works, York
scheme were sold and the faster than anticipated progress of the
Aberdeen Exhibition and Conference Centre contract, both of which
resulted in future anticipated profits arising in 2017. Our
strategy and business model remain unchanged, as do the key metrics
by which we manage and monitor our business segments. 2018 has
started well for all our businesses, and we look forward to
profitably delivering the schemes that we are progressing to
market, throughout the course of 2018.
Land Promotion
Progress in 2017
Hallam Land Management, our strategic land promotion business,
had a strong 2017 as, in general, the UK house builders put the EU
referendum and the General Election behind them. Whilst these
events slowed transactions for eight weeks or so in 2016, they did
not dent builders' appetite for land in the right locations.
During the year, Hallam Land secured a GBP23.1m profit (2016:
GBP17.7m) from selling 15 residential sites comprising 2,169 plots
and, at the same time, successfully secured 14 new planning
consents (or consent subject to Section 106 agreement) and
increased its consented portfolio by 13% to 18,529 plots (December
2016: 16,417). We also entered 2018 with 780 plots exchanged for
sale later this year. Hallam Land also sold a three-acre commercial
site at Bridgwater to its sister company, Henry Boot
Developments.
New consents obtained during 2017 included sites at Swindon
(1,000 plots), Bridport (760 plots), Moulton (125 plots), Warton
(115 plots), Sapcote (125 plots), Buckingham (400 plots), Haverhill
(1,250 plots) and Milton Keynes (524 plots). With regard to land
interests, at the year end Hallam Land benefited from 2,884 acres
with planning consent (or consent subject to signing a Section 106
agreement) (2016: 2,405 acres) and a further 937 acres (2016: 1,078
acres) being allocated in local plans for residential development.
In total, at the year end, the Company held 13,273 acres (2016:
11,888 acres) as freehold or under Option/Promotion Agreement.
In terms of particularly significant projects, during the year,
Hallam Land sold the final tranches of our residential land
holdings at Bedford and Marston Moretaine, and pleasingly these
have been replaced with other substantial projects coming forward,
including Didcot (2,170 plots), Market Harborough (462 plots) and
Haverhill (1,250 plots).
Contracted only in 2013, our 51% stake in Valley Park, Didcot,
has been allocated, planning consent has been obtained and we are
now negotiating a sale with a preferred bidder. Similarly, at
Haverhill, south east of Cambridge, our 50% stake in the 2,500-plot
urban extension to the north of the town is being marketed for
sale, and has generated significant interest. At Market Harborough,
where we own the freehold of 462 plots with outline consent, the
site will be marketed for sale once we have concluded a commercial
negotiation with a previous owner. These are just three of a range
of larger projects that we control and whilst securing outline
planning consent is task enough, it is invariably insufficient to
ensure a market sale. To secure a disposal, utility and service
provision needs to be guaranteed, infrastructure contracts
procured, Reserved Matters planning consent secured and planning
conditions discharged. Satisfying these and other buyer
requirements takes time and contributes to the Government's
concerns about "land banking". There are a variety of stakeholders
involved in the disposal of strategic urban extension sites to
build new communities and satisfying all their requirements takes
significant time, effort and diligence.
As to our two long-standing projects; at Cranbrook (the
3,500-unit new community at Exeter) we have negotiated a disposal
of 180 plots which exchanged early in 2018; and at Kingsdown,
Bridgwater, we completed on a 130-plot sale, exchanged on a further
72 plots and sold three acres of industrial land to Henry Boot
Developments. Both projects continue to deliver well, in line with
our expectations.
2018 has started positively with 780 plots exchanged for sale.
The major UK house builders have reported that they are trading
well and we are in advanced discussions with them in relation to a
range of our projects. At this stage, we anticipate that 2018 will
be another year of steady progress.
Property Investment and Development
Progress in 2017
Henry Boot Developments, our commercial development business,
had one of its busiest years in 2017, continuing to progress a
broad range of commercial and an increasing number of residential
projects. Activity levels and turnover exceeded the previous year,
which itself was a record for the Company. Our major, long-term
projects continued to make satisfactory progress as expected. The
largest of these is the 800,000 sq ft, forward-funded, development,
of the new GBP333m Aberdeen Exhibition and Conference Centre, which
remains on track to be completed in mid-2019. In Manchester city
centre, the development of the initial phase of the GBP220m,
forward-funded, build-to-rent residential project, providing 533
apartments, commenced mid-year 2017. Completion of the final phase
is scheduled for 2020.
Developments within the industrial and business park sector
significantly increased during the year with the completion of
575,000 sq ft of logistics space at Markham Vale, off Junction 29A
of the M1. A further 100,000 sq ft of industrial space on the park
is now the subject of exchanged contracts. Elsewhere, the first
phase of infrastructure was completed at the Airport Business Park
in Southend, with the first development expected to commence in
late 2018. We also expect to see the first phase of development on
Butterfields Business Park in Luton in 2018 after securing a full
employment use planning allocation in 2017. Completion of the
mixed-use, retail and industrial scheme off Junction 6 of the M18
motorway (near Doncaster) was achieved late in 2017, with disposal
of the last two, speculatively-built industrial units totalling
48,000 sq ft, together with a small development plot, all at values
ahead of original forecasts. Further business park locations have
now been placed under contract on the M5 junction in Taunton and at
the former Horizons tobacco factory in Nottingham. Notably, during
the latter part of the year, we were also selected as preferred
development partner on four other business parks at locations
across the UK, which we will be progressing through 2018 and
beyond.
The Company maintains a broad sector spread of development
projects and was active on retail, leisure and residential projects
in 2017. In York, the award-winning conversion and redevelopment of
the former Terry's Chocolate Factory continued apace. All the
remaining apartments were sold in the year, completing the 163-unit
factory conversion well ahead of the original programme. Planning
permission is expected shortly for the 22-apartment conversion of
the adjoining iconic clock tower which is planned to be completed
in 2018. Furthermore, on the balance of the site, pre-application
planning negotiations have commenced for an apartment scheme. In
Manchester, detailed planning permission was secured for a 140-bed
hotel in the city centre on a site held under option. This site was
subsequently sold, well ahead of schedule. We also completed the
purchase of Equitable House, located on one of the city's prime
retail areas, St Anne's Square, and agreements have been reached to
re-gear the existing ground floor retail leases. In parallel, we
are progressing the conversion of the upper floors tor luxury
apartments and this development is expected to commence in 2018 for
completion in 2020.
The retail warehouse market remained relatively stable over the
year, and the 43,000 sq ft project in Livingston town centre,
pre-let to Dunelm and B&M Retail, was successfully completed
and sold in the year. Elsewhere, the development of a small pre-let
neighbourhood centre in Monmouth, Wales, was completed and sold. In
Daventry, detailed planning permission was granted for an 83,000 sq
ft edge-of-centre retail scheme undertaken in partnership with the
District Council. This is now the subject of pre-let negotiations
with a range of retailers and is targeted to commence in the second
half of 2018. Further investment within Henry Boot Developments'
existing investment portfolio included the extension and
comprehensive refitting of office space in Uxbridge and the
development of a pre-let Travelodge hotel in our mixed-use
investment in Bromley, Kent.
House Building
Our joint venture house builder, Stonebridge Homes, had another
year of growing momentum, achieving 79 house sales in total with
almost half that number arising in the last two months of the year
as, in particular, residential units in the former Leeds Girls'
High School became available to sell.
We also carried over 20 reservations into 2018 and have added to
this in the current year, which is very pleasing. Although early in
the year, we anticipate house sales will be in the range of 110-130
units for 2018, at an average selling price of circa GBP250,000,
based on current levels of activity.
Our land bank of secured planning permissions is now over 250
units and the longer term secured sites that are subject to
planning decisions encompass some 750 additional units.
Successfully achieving planning permission on these sites will
allow annual activity levels to grow towards 200 units per annum
over the next three years.
Construction
Progress in 2017
2017 was a busy and successful year for Henry Boot Construction,
which specialises in serving both public and private clients in all
construction sectors, including civil engineering, with the
business exceeding our targeted profit levels. Repeat business
continued to underpin our success, and is an excellent indicator of
how we are performing, particularly by achieving and integrating
sustainable value into projects. This, along with the high-quality
people within our business, has resulted in existing clients
returning to us with prestigious follow-on projects and remains
crucial to achieving success.
Henry Boot Construction has continued to deliver the first phase
of the GBP35m Better Barnsley town centre regeneration scheme, now
known as The Glassworks. Aligned with this project is the Barnsley
skills village, with the Government taking interest in the
excellent track record of this initiative, providing skills to new
trainees from all backgrounds entering employment which, in turn,
helps reduce the skills shortage within the construction
sector.
After a lengthy period of bidding, Henry Boot Construction was
selected for the Education and Skills Funding Agency ('ESFA')
regional framework. This GBP8bn Government-funded programme will
provide improved education provision through refurbishment and
replacement of schools. We expect this to be a prominent part of
our business moving forward. Other notable projects in 2017 were
the prestigious spa facility at Rudding Park Hotel, Harrogate, and
the refurbishment of the Grade II listed St George's Hall in
Bradford.
In the civil engineering sector, Henry Boot Construction has
recently completed the regeneration and infrastructure work on the
Olympic Legacy Park in Don Valley, Sheffield, and we are working on
the Advanced Manufacturing Park for the University of Sheffield. We
continue as a major supply chain partner on the 25-year, Amey PFI
Sheffield Streets Ahead scheme and also continue to deliver work
through the YORcivils framework, having been successful in securing
a place on the new YORcivils2 framework, under which we are
carrying out structural works to six tower blocks for Leeds City
Council, together with the remodelling of Iverson Primary School in
Horsforth.
In the health and social care sectors, we completed a 60-bed
extra care unit for Newark and Sherwood Homes, enhancing our
offering in that market. We are also a delivery partner on the
Sheffield Teaching Hospitals NHS Trust framework.
Within the higher education sector, we were awarded the
Aerothermal Research Building at Loughborough University, the
Sports Sciences Building for the University of Hull, Concourse
Public Realm works for the University of Sheffield and the SEE
(School of Earth and Environment) expansion at the University of
Leeds. We also continue to progress works to deliver a Public Realm
scheme for Lancaster University.
We have several schemes being delivered through the Ministry of
Justice refurbishment framework, where we have three projects
currently on site and another two that begin in the first quarter
of 2018.
Henry Boot Construction started 2018 with the healthiest order
book seen in recent years; although we remain cautious,
particularly in the medium to long term, regarding the possible
reduction in construction activity due to market uncertainty
associated with exiting the EU, price pressures on imported
materials associated with exchange rate volatility and other labour
and supply chain price pressures.
Health and Safety
Health, Safety and Environmental management remains of paramount
importance, and we continue to be committed to providing a safe and
healthy working environment and actively finding ways to eliminate
risk. We have continued to maintain approval of our Company
Management System to meet the requirements of OHSAS 18001, ISO
14001 and ISO 9001.
We are delighted, that for the sixth consecutive year, our
construction-related Accident Frequency Rate (AFR) for our directly
employed staff and operatives is zero.
This strong health and safety management culture has resulted in
us securing the CIOB Health and Safety Award and Contractor of the
Year Award, in addition to receiving a further RoSPA Gold Medal
Award to recognise eight continuous years of Gold Award
achievements, coupled with a project-specific RoSPA Gold Award for
the University of Derby St Helena project.
Plant Hire
In 2017, Banner Plant had a year dominated by the purchase and
integration of Premier Plant Tool Hire & Sales Limited. The
acquisition in the early part of the year added a plant and a tool
hire depot, both in the Leicester area. Both locations made a
positive contribution during the remainder of 2017, in line with
our expectations. The financial results and capital investment
within our existing profit centres were in line with our forecasts,
whilst cash generated was ahead of target. Particularly positive
performances came from our powered access and accommodation depots,
closely followed by plant depots at Dronfield and Ossett. Overall,
this resulted in a record trading performance for this
customer-focused operation.
Road Link
Our PFI contract Road Link (A69), which maintains the A69 trunk
road between Carlisle and Newcastle, has completed another strong
year. 2017 saw an increase in traffic volume and with no major
disruptions or impact from adverse weather conditions, the contract
continued to perform to our financial expectations. The contract
remains on course to operate to plan throughout the remaining eight
years of the concession.
John Sutcliffe
Chief Executive Officer
FINANCIAL REVIEW
Key highlights of our financial performance in 2017
-- Profit before tax increased by 40% to GBP55.4m
-- Basic earnings per share increased by 49% to 32.1p
-- Dividends per ordinary share for the year increased by 14% to a record 8.00p
-- Return on capital employed increased by 29% to 18.6%
The delivery of our residential conversion scheme at the former
Terry's Chocolate Factory and the progress made on the new Aberdeen
Exhibition and Conference Centre delivered results in advance of
management's original expectations. These, coupled with a generally
strong underlying performance in our operations, resulted in these
impressive Group results. A commendable achievement by our talented
people and a credit to all those businesses with whom we engage to
achieve our goals.
Our continued long-term strategic approach to land promotion and
property development has generated increasing pipelines to deliver
results for the years ahead. We remain cautious of where
negotiations between the UK and the EU may end and believe
continuing uncertainty within our markets could lead to
commencement delays in projects and developments. However, as we
enter 2018 we have a significant amount of property development
work currently in delivery, a number of land sales already
exchanged awaiting completion, residential properties in stock,
carried over the year end, for which demand remains high and we
have a strong order book within our construction business.
Consolidated Statement of Comprehensive Income
Revenue increased 33% to GBP408.5m (2016: GBP306.8m) resulting
from increased activity within all segments of the Group. This was
driven most notably from the continued delivery of the new
conference and exhibition centre for Aberdeen City Council, sales
of residential apartments at the former Terry's Chocolate Factory
in York and increased residential land sales within the land
promotion segment. Gross profit increased 39% to GBP86.7m (2016:
GBP62.3m) and reflects a gross profit margin of 21% (2016: 20%),
broadly in line with that achieved in the previous year.
Administrative expenses increased by GBP4.7m, resulting from the
continued expansion of Stonebridge Homes, the acquisition of two
plant depots in Leicester, the opening of a new regional office in
Birmingham, and employee costs which rose as we recruited
additional staff across the Group to support the increased activity
achieved in recent years, and we made provision for higher levels
of profit share and bonuses, given the Group's performance over the
year, and saw a modest level of wage price inflation linked to
employee retention.
Pension expenses increased by GBP0.6m (2016: GBP0.1m) as
employee numbers increased and auto-enrolment contributions
increased in accordance with statutory requirements.
Property revaluation losses of GBP3.6m (2016: GBP1.8m) were the
net effect of uplifts of GBP5.2m in the fair value of certain
existing completed investment properties, largely in the industrial
and mixed-use categories, offset by the recognition of valuation
deficits of GBP8.8m on a number of other properties, most notably
retail assets in secondary locations.
Overall, operating profits increased by 42% to GBP56.2m (2016:
GBP39.5m) and, after adjusting for net finance costs and our share
of profits from joint ventures and associates, we delivered a
profit before tax of GBP55.4m (2016: GBP39.5m), an increase of
40%.
The segmental result analysis shows that property investment and
development produced a significantly improved operating profit of
GBP30.4m (2016: GBP15.1m) arising from a full year's activity on
the Aberdeen Exhibition and Conference Centre, final residential
sales from the York Chocolate Factory conversion and continuing
contributions from our Markham Vale industrial development. Land
promotion operating profit also showed a strong performance,
increasing to GBP23.2m (2016: GBP18.6m) as we disposed of 2,169
residential plots during the year (2016: 1,609). Construction
segment operating profits decreased slightly to GBP9.6m (2016:
GBP10.3m) after improved results from Plant Hire, following the
acquisition of the Leicester depots, and Road Link were offset by
lower Construction returns which were marginally impacted by the
reduced turnover on secured schemes which did not come forward as
quickly as expected. The movements within our mix of business
streams demonstrates the nature of deal-driven property and land
promotion businesses, dependent upon demand from the major UK house
builders but combined with the relatively stable returns from our
Construction segment. This continues to demonstrate the benefits of
our broadly based operating model, working together to the benefit
of our Group. Whilst we have a greater pipeline of property
development and a larger number of consented residential plots than
ever before, 2017 saw returns achieved which we had expected to
deliver through 2018 and into 2019, and further evidences the
deal-driven nature of our land promotion and property development
businesses giving rise to financial results which can vary
significantly from year to year.
Tax
The tax charge for the year was GBP9.8m (effective rate of tax:
18%) (2016: GBP8.9m and effective rate: 23%), and arises from the
net investment property revaluation deficit, which is not tax
deductible until realised, offset by other permanent differences.
We currently have a GBP3.2m unrecognised deferred tax asset (2016:
GBP2.7m) which can be utilised to offset future capital gains if
they arise. Current taxation on profit for the year was GBP9.7m
(2016: GBP8.9m), with the 2017 charge being lower than the standard
rate of corporation tax due to permanent tax differences. Deferred
tax was GBP0.1m (2016: GBP0.04m), due to the elimination of any
property revaluation deferred tax asset and no deferred tax asset
arising on the increased pension scheme deficit as contributions
have exceeded cumulative charges to the income statement.
Earnings per share and dividends
Basic earnings per share increased by 49% to 32.1p (2016:
21.5p). Total dividends payable for the year increased by 14% to
8.00p (2016: 7.00p), with the proposed final dividend increasing by
16% to 5.20p (2016: 4.50p), payable on 30 May 2018 to shareholders
on the register as at 27 April 2018. The ex-dividend date is 26
April 2018.
Return on capital employed ('ROCE')
Increased pre-tax profits in the year helped ROCE(1) improve to
18.6% in 2017 (2016: 14.4%). This improvement was aided
considerably by the impressive performance within property
development mentioned above. Whilst we continue to review our
strategic target rate of return, given that we are currently able
to forward fund and sell property development, we believe that a
target return of 12% -15% is appropriate to our current operating
model. We will continue to monitor this important performance
measure over the business cycle, given the potential for market
conditions to change quickly.
(1) ROCE is calculated as operating profit divided by total
assets less current liabilities.
Finance and gearing
Net finance costs were unchanged at GBP1.5m (2016: GBP1.5m). We
saw a reduction in our net debt levels towards the end of 2017 as
we collected a number of deferred land sale receipts and concluded
a number of property disposals. Average borrowing rates were lower
than the previous year although we expect interest costs to rise
through 2018, as we increase borrowings to support higher levels of
development activity. It is also possible that we will see rises in
interest rates during 2018, although this will not result in a
material change to our borrowing costs. We expect to continue to
invest in both our land and property development assets, as we
recycle capital into future opportunities and anticipated
development activity.
Interest cover, expressed as the ratio of operating profit
(excluding the valuation movement on investment properties and
disposal profits) to net interest (excluding interest received on
other loans and receivables), was 38 times (2016: 28 times). No
interest incurred in either year has been capitalised into the cost
of assets.
Our completed investment property portfolio has increased to
GBP127m (2016: GBP101m) against which we secure bank funding to
allow us to undertake property development and land promotion,
neither of which are readily funded using bank debt. Our investment
property assets continue to provide the key covenant support for
our banking facilities. Our facilities were increased to GBP72m in
August 2017 to support the increased property development work,
taking the renewal date to February 2020. In addition, we have a
GBP5m revolving loan facility within Stonebridge Homes, our joint
venture house builder. This loan is secured against work in
progress.
2017 year-end net debt fell by GBP3.9m to GBP29.0m (2016:
GBP32.9m) resulting in gearing on net assets of GBP270.1m falling
to a conservative 11% (2016: net assets GBP233.6m; gearing 14%).
Total year-end net debt includes GBP6.1m (2016: GBP7.6m) of Homes
and Communities Agency ('HCA') funding which is repayable from the
future sale of residential units. All bank borrowings continue to
be from facilities linked to floating rates or short-term fixed
commitments. Throughout the year we operated comfortably within the
facility covenants and continue to do so.
Statement of cash flows
During 2017, we increased operating cash flows before movements
in working capital by GBP21.5m to GBP62.1m (2016: GBP40.6m) and,
after a net investment in working capital of GBP15.8m (2016:
GBP12.0m), cash generated from operations was GBP46.3m (2016:
GBP28.5m). Our investment in working capital arises from the
increase in levels of property development activity and continued
investment in our land portfolio. Cash outflows from investing
activities of GBP19.7m (2016: outflow of GBP2.4m) arising from
disposals of GBP11.1m (2016: GBP9.9m) of investment property and
property, plant and equipment sales, offset by new investment of
GBP31.4m (2016: GBP13.4m) in new property development, plant
purchases and the acquisition of Premier Plant Tool Hire &
Sales Limited, adding two new depots to our plant hire business.
Dividends paid, including those to non-controlling interests,
totalled GBP12.0m (2016: GBP10.6m), with dividends paid to equity
shareholders increasing by 16%.
Statement of financial position
Investment properties and assets classified as held for sale
were valued at GBP134.8m (2016: GBP124.7m), increasing after the
acquisition of a retail investment at St Anne's Square in
Manchester and a distribution unit investment let to Imperial
Tobacco in Nottingham, both acquired with longer term development
opportunities. The value of investment property under construction
within investment properties was GBP6.2m (2016: GBP22.7m) as we
develop these assets into investment properties and either keep or
sell the completed product.
Intangible assets reflect the Group's investment in Road Link
(A69) of GBP4.5m (2016: GBP4.9m) and goodwill of GBP0.9m (2016:
GBPnil), on the acquisition in the year of two plant depots in
Leicester. 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 Highways England at the end of
the concession period.
Property, plant and equipment comprises Group occupied buildings
valued at GBP8.1m (2016: GBP6.5m), increasing on the acquisition of
office space in Leeds, from which our house building operation is
being managed, and plant, equipment and vehicles with a net book
value of GBP18.4m (2016: GBP15.4m). This increase arose largely
from the acquisition of the Leicester plant depots but also from
continued investment in new plant and plant delivery vehicles.
Non-current trade and other receivables have reduced to GBP2.9m
(2016: GBP5.6m) due to a net decrease in long-term house builder
land sale payment plans. We anticipate that the level of deferred
payment receivables will start to increase as we market and dispose
of some of our larger strategic land development schemes over the
coming years.
Investments in joint ventures and associates increased to
GBP5.9m (2016: GBP5.1m) as we continued to invest in property
development projects with other parties where we feel there is a
mutual benefit. We anticipate that these opportunities will
increase as we see a number of interested parties looking to
harness our expertise in bringing schemes forward.
The non-current deferred tax asset reduced because of the lower
IAS 19 pension deficit. In total, non-current assets increased to
GBP178.0m (2016: GBP166.5m).
Within current assets, inventories were GBP144.6m (2016:
GBP137.9m) and saw a reduction in the land portfolio to GBP101.7m
(2016: GBP107.9m) as we sold, in part, our more capital-intensive
owned land whilst investing further in land under option or agency
agreements. Property development work in progress increased to
GBP42.9m (2016: GBP30.0m) as we grow our house builder operation,
and increased work in progress on active property development
schemes. Trade and other receivables increased to GBP93.2m (2016:
GBP66.9m) resulting from land sales made on short-term payment
deferrals and an increase in construction contract receivables.
Cash and cash equivalents increased to GBP10.3m (2016: GBP7.4m) and
was a result of cash received in December not offset against
short-term borrowing at that time. In total, current assets
increased to GBP250.1m (2016: GBP213.3m).
Current liabilities increased to GBP125.2m (2016: GBP105.9m) as
trade and other payables increased to GBP79.4m (2016: GBP61.1m),
resulting from increased property development activity, accounted
for as construction contracts. The portion of debt classed as
current increased to GBP34.3m (2016: GBP33.3m) and provisions
decreased to GBP5.6m (2016: GBP6.7m) as we continue to meet our
infrastructure planning obligations on two land development
schemes.
Net current assets increased to GBP124.9m (2016: GBP107.4m).
This increase is predominantly due to the increase in debtors,
offset in part by the increase in creditors, resulting from higher
levels of property development activity and house builder deferred
income on land disposals.
Non-current liabilities decreased to GBP32.8m (2016: GBP40.4m)
after trade and other payables decreased to GBP2.7m (2016: GBP4.6m)
and borrowings decreased to GBP4.9m (2016: GBP6.9m), both
reductions being a transition to current liabilities and IAS 19
pension liabilities decreased to GBP22.8m (2016: GBP26.4m).
Overall, net assets increased by 16% to GBP270.0m (2016:
GBP233.6m) largely from the increase in retained profits. Net asset
value per share increased 15% to 203p (2016: 177p) as we increase
the scale of our operations via retained earnings.
Pension scheme
The IAS 19 deficit at 31 December 2017 was GBP22.8m compared
with GBP26.4m at 31 December 2016 and was again adversely impacted
by a further fall in the discount rate applied to future
liabilities to 2.5% (2016: 2.8%). Despite this, the Company's
contributions and an excellent performance from the pension
scheme's assets saw the net deficit reduced by GBP3.6m (2016:
increase GBP6.8m). As we have noted in previous years, the
application of a 3.8% discount rate would result in a negligible
deficit and the 2017 scheme asset return was comfortably ahead.
The pension scheme's assets continue to be invested globally,
with high quality asset managers, in a broad range of assets. The
pension scheme Trustee 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 from KPMG.
Darren Littlewood
Group Finance Director
Unaudited Consolidated Statement of Comprehensive Income
for the year ended 31 December 2017
2017 2016
GBP'000 GBP'000
------------------------------------------- --------- ---------
Revenue 408,486 306,806
Cost of sales (321,758) (244,496)
-------------------------------------------- --------- ---------
Gross profit 86,728 62,310
Other income - 40
Administrative expenses (22,636) (17,958)
Pension expenses (4,336) (3,774)
-------------------------------------------- --------- ---------
59,756 40,618
Decrease in fair value of investment
properties (3,597) (1,783)
Profit on sale of investment properties 137 647
Loss on sale of assets held for sale (98) -
-------------------------------------------- --------- ---------
Operating profit 56,198 39,482
Finance income 189 156
Finance costs (1,703) (1,670)
Share of profit of joint ventures and
associates 708 1,523
-------------------------------------------- --------- ---------
Profit before tax 55,392 39,491
Tax (9,817) (8,945)
-------------------------------------------- --------- ---------
Profit for the year from continuing
operations 45,575 30,546
-------------------------------------------- --------- ---------
Other comprehensive (income)/expense
not being reclassified to profit or
loss in subsequent years:
Revaluation of Group occupied property (379) 30
Deferred tax on property revaluations 50 3
Actuarial gain/(loss) on defined benefit
pension scheme 2,306 (8,959)
Current tax on actuarial loss - 428
Deferred tax on actuarial (gain)/loss (391) 964
Total other comprehensive income/(expense)
not being reclassified to profit or
loss in subsequent years 1,586 (7,534)
-------------------------------------------- --------- ---------
Total comprehensive income for the year 47,161 23,012
-------------------------------------------- --------- ---------
Profit for the year attributable to:
Owners of the Parent Company 42,368 28,259
Non-controlling interests 3,207 2,287
-------------------------------------------- --------- ---------
45,575 30,546
------------------------------------------- --------- ---------
Total comprehensive income attributable
to:
Owners of the Parent Company 43,954 20,725
Non-controlling interests 3,207 2,287
-------------------------------------------- --------- ---------
47,161 23,012
------------------------------------------- --------- ---------
Basic earnings per ordinary share for
the profit attributable to owners of
the Parent Company during the year 32.1p 21.5p
-------------------------------------------- --------- ---------
Diluted earnings per ordinary share
for the profit attributable to owners
of the Parent Company during the year 31.8p 21.3p
-------------------------------------------- --------- ---------
Unaudited Statement of Financial Position
as at 31 December 2017
2017 2016
GBP'000 GBP'000
---------------------------------- -------- --------
Assets
Non-current assets
Intangible assets 5,361 4,909
Property, plant and equipment 26,485 21,967
Investment properties 132,777 123,663
Investment in joint ventures 5,856 5,148
Trade and other receivables 2,906 5,592
Deferred tax assets 4,613 5,249
------------------------------------ -------- --------
177,998 166,528
---------------------------------- -------- --------
Current assets
Inventories 144,603 137,915
Trade and other receivables 93,176 66,921
Cash and cash equivalents 10,282 7,389
------------------------------------ -------- --------
248,061 212,225
---------------------------------- -------- --------
Assets classified as held for
sale 2,000 1,050
------------------------------------ -------- --------
250,061 213,275
---------------------------------- -------- --------
Liabilities
Current liabilities
Trade and other payables 79,429 61,149
Current tax liabilities 5,794 4,707
Borrowings 34,340 33,342
Provisions 5,602 6,669
------------------------------------ -------- --------
125,165 105,867
---------------------------------- -------- --------
Net Current Assets 124,896 107,408
------------------------------------ -------- --------
Non-current liabilities
Trade and other payables 2,684 4,615
Borrowings 4,922 6,922
Retirement benefit obligations 22,825 26,396
Provisions 2,387 2,451
------------------------------------ -------- --------
32,818 40,384
---------------------------------- -------- --------
Net Assets 270,076 233,552
------------------------------------ -------- --------
Equity
Share capital 13,701 13,608
Property revaluation reserve 3,550 3,879
Retained earnings 245,260 210,664
Other reserves 6,121 4,611
Cost of shares held by ESOP trust (1,240) (1,071)
------------------------------------ -------- --------
Equity attributable to owners
of the Parent Company 267,392 231,691
Non-controlling interests 2,684 1,861
------------------------------------ -------- --------
Total Equity 270,076 233,552
------------------------------------ -------- --------
Unaudited Statement of Changes in Equity
for the year ended 31 December 2017
Attributable to owners of
the Parent Company
----------------------------------------------------------------
Cost
of
shares
Property held Non-
Share revaluation Retained Other by ESOP controlling Total
capital reserve earnings reserves trust Total interests equity
Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- -------- ------------ --------- --------- -------- -------- ------------ --------
At 1 January 2016 13,604 3,964 197,895 4,548 (345) 219,666 1,883 221,549
---------------------- -------- ------------ --------- --------- -------- -------- ------------ --------
Profit for the year - - 28,259 - - 28,259 2,287 30,546
Other comprehensive
income - 33 (7,567) - - (7,534) - (7,534)
---------------------- -------- ------------ --------- --------- -------- -------- ------------ --------
Total comprehensive
income - 33 20,692 - - 20,725 2,287 23,012
---------------------- -------- ------------ --------- --------- -------- -------- ------------ --------
Equity dividends - - (8,318) - - (8,318) (2,309) (10,627)
Realised revaluation
surplus - (118) 118 - - - - -
Proceeds from shares
issued 4 - - 63 - 67 - 67
Purchase of treasury
shares - - - - (959) (959) - (959)
Share-based payments - - 277 - 233 510 - 510
---------------------- -------- ------------ --------- --------- -------- -------- ------------ --------
4 (118) (7,923) 63 (726) (8,700) (2,309) (11,009)
--------------------- -------- ------------ --------- --------- -------- -------- ------------ --------
At 31 December 2016 13,608 3,879 210,664 4,611 (1,071) 231,691 1,861 233,552
---------------------- -------- ------------ --------- --------- -------- -------- ------------ --------
Profit for the year - - 42,368 - - 42,368 3,207 45,575
Other comprehensive
income - (329) 1,915 - - 1,586 - 1,586
---------------------- -------- ------------ --------- --------- -------- -------- ------------ --------
Total comprehensive
income - (329) 44,283 - - 43,954 3,207 47,161
---------------------- -------- ------------ --------- --------- -------- -------- ------------ --------
Equity dividends - - (9,628) - - (9,628) (2,384) (12,012)
Proceeds from shares
issued 93 - - 1,510 - 1,603 - 1,603
Purchase of treasury
shares - - - - (782) (782) - (782)
Share-based payments - - (59) - 613 554 - 554
---------------------- -------- ------------ --------- --------- -------- -------- ------------ --------
93 - (9,687) 1,510 (169) (8,253) (2,384) (10,637)
--------------------- -------- ------------ --------- --------- -------- -------- ------------ --------
At 31 December 2017 13,701 3,550 245,260 6,121 (1,240) 267,392 2,684 270,076
---------------------- -------- ------------ --------- --------- -------- -------- ------------ --------
Unaudited Statement of Cash Flows
for the year ended 31 December 2017
2017 2016
GBP'000 GBP'000
---------------------------------------- -------- --------
Cash flows from operating activities
Cash generated from operations 46,338 28,545
Interest paid (1,463) (1,141)
Tax paid (8,620) (7,405)
---------------------------------------- -------- --------
Net cash flows from operating
activities 36,255 19,999
---------------------------------------- -------- --------
Cash flows from investing activities
Acquisition of subsidiary, net
of cash acquired (2,711) -
Purchase of intangible assets (622) (606)
Purchase of property, plant and
equipment (3,906) (1,836)
Purchase of investment property (24,081) (10,181)
Purchase of investments in joint
ventures and associates - (800)
Proceeds on disposal of property,
plant and equipment 137 492
Proceeds on disposal of investment
properties 2,778 9,430
Proceeds on disposal of assets
held for sale 8,141 -
Interest received 544 113
Dividends received from joint
ventures - 965
Net cash flows from investing
activities (19,720) (2,423)
---------------------------------------- -------- --------
Cash flows from financing activities
Proceeds from shares issued 1,603 67
Purchase of treasury shares (782) (959)
Decrease in borrowings (49,965) (39,128)
Increase in borrowings 47,514 28,421
Dividends
paid - ordinary shares (9,607) (6,865)
- non-controlling interests (2,384) (1,674)
- preference shares (21) (21)
------------------------------ -------- -------- --------
Net cash flows from financing
activities (13,642) (22,226)
---------------------------------------- -------- --------
Net increase/(decrease) in cash
and cash equivalents 2,893 (4,650)
Net cash and cash equivalents
at beginning of year 7,389 12,039
---------------------------------------- -------- --------
Net cash and cash equivalents
at end of year 10,282 7,389
---------------------------------------- -------- --------
Analysis of net debt:
Cash and cash equivalents 10,282 7,389
Bank overdrafts - -
---------------------------------------- -------- --------
Net cash and cash equivalents 10,282 7,389
Bank loans (30,599) (32,684)
Finance leases (2,544) -
Government loans (6,119) (7,580)
---------------------------------------- -------- --------
Net debt (28,980) (32,875)
---------------------------------------- -------- --------
Notes to the Financial Statements
for the year ended 31 December 2017
1. Basis of preparation
This financial information has been prepared in accordance with
IFRS adopted by the EU, IFRIC interpretations and the Companies Act
2006 applicable to companies reporting under IFRS and therefore
complies with Article 4 of the EU IAS regulations. It has 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 same accounting policies and methods of computation are
followed as in the latest published audited accounts for the year
ended 31 December 2016, which are available on the Group's website
at www.henryboot.co.uk, except for as described below.
The following standards, amendments and interpretations to
existing standards are effective or mandatory for the first time
for the accounting year ended 31 December 2017:
Effective
from
--------------------- --------------------------------
Annual improvements 'Annual Improvements to IFRSs 1 January
(issued 2016) 2014-2016 Cycle' 2017
IAS 7 (amended 1 January
2016) 'Disclosure Initiative' 2017
IAS 12 (amended 'Recognition of Deferred Tax 1 January
2016) Assets for Unrealised Losses' 2017
------------------- ---------------------------------- -----------
The adoption of these standards and interpretations has not had
a significant impact on the Group.
The Group did not early adopt any standard or interpretation not
yet mandatory.
These results for the year ended 31 December 2017 are unaudited.
The financial information set out in this announcement does not
constitute the Group's IFRS statutory accounts for the years ended
31 December 2017 or 31 December 2016 as defined by Section 434 of
the Companies Act 2006.
The financial information for the year ended 31 December 2016 is
derived from the statutory accounts for that year which have been
delivered to the Registrar of Companies. The auditors,
PricewaterhouseCoopers LLP, reported on those accounts and their
report was unqualified, did not contain an emphasis of matter
paragraph and did not contain any statement under Section 498 (2)
or (3) of the Companies Act 2006.
The statutory accounts for the year ended 31 December 2017 will
be finalised on the basis of the financial information presented by
the Directors in these results and will be delivered to the
Registrar of Companies following the Annual General Meeting of
Henry Boot PLC.
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 Development; 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.
During the year, the Property Investment and Development segment
made disposals to a single external customer amounting to 29.7%
(2016: 14.7%) of the Group's total revenue. This related to a
single high value contract which commenced in the prior year and
will continue through to 2019. The segment has a number of other
contracts in progress and is not reliant on any major customer
individually.
The accounting policies of the reportable segments are the same
as the Group's Accounting Policies.
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.
2017
--------------------------------------------------------------------------
Property
Investment
and Land Group
Development Promotion Construction overheads Eliminations Total
Revenue GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------ ------------ ---------- ------------ ---------- ------------ --------
External sales 250,418 76,192 81,876 - - 408,486
Inter-segment sales 324 - 7,417 646 (8,387) -
------------------------ ------------ ---------- ------------ ---------- ------------ --------
Total revenue 250,742 76,192 89,293 646 (8,387) 408,486
------------------------ ------------ ---------- ------------ ---------- ------------ --------
Operating profit/(loss) 30,419 23,169 9,613 (7,003) - 56,198
Finance income 1,041 1,472 900 17,953 (21,177) 189
Finance costs (5,950) (1,567) (549) (2,757) 9,120 (1,703)
Share of profit of
joint ventures and
associates 708 - - - - 708
------------------------ ------------ ---------- ------------ ---------- ------------ --------
Profit/(loss) before
tax 26,218 23,074 9,964 8,193 (12,057) 55,392
Tax (5,512) (4,409) (1,853) 1,957 - (9,817)
------------------------ ------------ ---------- ------------ ---------- ------------ --------
Profit/(loss) for the
year 20,706 18,665 8,111 10,150 (12,057) 45,575
------------------------ ------------ ---------- ------------ ---------- ------------ --------
2016
--------------------------------------------------------------------------
Property
Investment
and Land Group
Development Promotion Construction overheads Eliminations Total
Revenue GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------ ------------ ---------- ------------ ---------- ------------ --------
External sales 176,232 51,190 79,384 - - 306,806
Inter-segment sales 314 - 5,044 639 (5,997) -
------------------------ ------------ ---------- ------------ ---------- ------------ --------
Total revenue 176,546 51,190 84,428 639 (5,997) 306,806
------------------------ ------------ ---------- ------------ ---------- ------------ --------
Operating profit/(loss) 15,105 18,608 10,288 (4,519) - 39,482
Finance income 936 1,079 1,172 22,649 (25,680) 156
Finance costs (6,390) (1,955) (484) (3,145) 10,304 (1,670)
Share of profit of
joint ventures 1,523 - - - - 1,523
------------------------ ------------ ---------- ------------ ---------- ------------ --------
Profit/(loss) before
tax 11,174 17,732 10,976 14,985 (15,376) 39,491
Tax (1,969) (3,532) (2,244) (1,177) (23) (8,945)
------------------------ ------------ ---------- ------------ ---------- ------------ --------
Profit/(loss) for the
year 9,205 14,200 8,732 13,808 (15,399) 30,546
------------------------ ------------ ---------- ------------ ---------- ------------ --------
2017
GBP'000 2016 GBP'000
------------------------------------ --------- ------------
Segment assets
Property Investment and Development 233,253 195,830
Land Promotion 140,379 136,378
Construction 36,385 32,104
Group overheads 3,147 2,853
------------------------------------ --------- ------------
413,164 367,165
Unallocated assets
Deferred tax assets 4,613 5,249
Cash and cash equivalents 10,282 7,389
------------------------------------ --------- ------------
Total assets 428,059 379,803
------------------------------------ --------- ------------
Segment liabilities
Property Investment and Development 28,847 17,646
Land Promotion 28,146 20,893
Construction 29,750 33,888
Group overheads 3,359 2,457
------------------------------------ --------- ------------
90,102 74,884
Unallocated liabilities
Current tax liabilities 5,794 4,707
Current borrowings 34,340 33,342
Non-current borrowings 4,922 6,922
Retirement benefit obligations 22,825 26,396
------------------------------------ --------- ------------
Total liabilities (157,983) 146,251
------------------------------------ --------- ------------
Total net assets 270,076 233,552
------------------------------------ --------- ------------
3. Dividends
2017 2016
GBP'000 GBP'000
------------------------------------------------ -------- --------
Amounts recognised as distributions to equity
holders in the year:
Preference dividend on cumulative preference
shares 21 21
Final dividend for the year ended 31 December
2016 of 4.50p per share (2015: 3.80p) 5,917 5,006
Interim dividend for the year ended 31 December
2017 of 2.80p per share (2016: 2.50p) 3,690 3,291
------------------------------------------------ -------- --------
9,628 8,318
------------------------------------------------ -------- --------
The proposed final dividend for the year ended 31 December 2017
of 5.20p per share (2016: 4.50p) makes a total dividend for the
year of 8.00p (2016: 7.00p).
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 GBP6,900,000.
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.
4. Investment properties
Fair value measurements recognised in the Statement of Financial
Position
The following table provides an analysis of the fair values of
investment properties recognised in the Statement of Financial
Position by the degree to which the fair value is observable:
Increase/
(decrease)
Level 1 Level 2 Level 3 2017 2016 in fair value
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 in year
--------------------- -------- -------- -------- -------- -------- --------------
Completed investment
property
Industrial - - 23,075 23,075 14,700 8,375
Leisure - - 11,460 11,460 12,475 (1,015)
Mixed-use - - 52,355 52,355 53,564 (1,209)
Residential - - 3,600 3,600 3,720 (120)
Office - - 12,900 12,900 2,830 10,070
Retail - - 23,214 23,214 13,619 9,595
--------------------- -------- -------- -------- -------- -------- --------------
- - 126,604 126,604 100,908 25,696
--------------------- -------- -------- -------- -------- -------- --------------
Investment property
under construction
Industrial - - 299 299 525 (226)
Land - - 1,214 1,214 1,214 -
Office - - - - 7,556 (7,556)
Retail - - 4,660 4,660 13,460 (8,800)
--------------------- -------- -------- -------- -------- -------- --------------
- - 6,173 6,173 22,755 (16,582)
--------------------- -------- -------- -------- -------- -------- --------------
Total fair value - - 132,777 132,777 123,663 9,114
--------------------- -------- -------- -------- -------- -------- --------------
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; and
-- Level 3 - fair value measurements are those derived from use
of a model with inputs that are not based on observable market
data.
Investment properties have been split into different classes to
show the composition of the investment property portfolio of the
Group as at the reporting date. Management has determined that
aggregation of the results would be most appropriate based on the
type of use that each property falls into, which is described
below:
Class
Industrial Includes manufacturing and warehousing, which
are usually similar in dimensions and construction
method.
Leisure Includes restaurants and gymnasiums or properties
in which the main activity is the provision
of entertainment and leisure facilities to
the public.
Mixed-use Includes schemes where there are different
types of uses contained within one physical
asset, the most usual combination being office
and leisure.
Residential Includes dwellings under assured tenancies.
Retail Includes any property involved in the sale
of goods.
Land Includes land held for future capital appreciation
as an investment.
Office 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.
5. Share capital
2017 2016
GBP'000 GBP'000
----------------------------------------------- -------- --------
400,000 5.25% cumulative preference shares
of GBP1 each (2016: 400,000) 400 400
133,010,911 ordinary shares of 10p each (2016:
132,080,138) 13,301 13,208
13,701 13,608
----------------------------------------------- -------- --------
6. Cash generated from operations
2017 2016
GBP'000 GBP'000
-------------------------------------- -------- --------
Profit before tax 55,392 39,491
Adjustments for:
Amortisation of PFI asset 870 1,251
Goodwill impairment 204 203
Depreciation of property, plant
and equipment 4,899 4,022
Impairment gain on land and buildings 48 -
Revaluation decrease in investment
properties 3,597 1,783
Amortisation of capitalised letting
fees 48 36
Share-based payment expense 554 510
Pension scheme credit (1,265) (2,140)
Gain on disposal of property,
plant and equipment (380) (506)
Gain on disposal of investment
properties (127) (647)
Gain on disposal of assets held
for sale 98 -
Finance income (189) (156)
Finance costs 1,703 1,670
Share of profit of joint ventures
and associates (708) (1,523)
---------------------------------------- -------- --------
Operating cash flows before movements
in equipment held for hire 64,744 43,994
Purchase of equipment held for
hire (3,283) (4,048)
Proceeds on disposal of equipment
held for hire 654 648
---------------------------------------- -------- --------
Operating cash flows before movements
in working capital 62,115 40,594
(increase)/decrease in inventories (6,500) 1,478
Increase in receivables (22,975) (7,515)
Increase/(decrease) in payables 13,698 (6,012)
---------------------------------------- -------- --------
Cash generated from operations 46,338 28,545
---------------------------------------- -------- --------
7. These results were approved by the Board of Directors and
authorised for issue on 22 March 2018.
8. The 2017 Annual Report and Financial Statements is to be
published on the Company's website at www.henryboot.co.uk and sent
out to those shareholders who have elected to continue to receive
paper communications by no later than 20 April 2018. Copies will be
available from The Company Secretary, Henry Boot PLC, Banner Cross
Hall, Ecclesall Road South, Sheffield S11 9PD.
9. The Annual General Meeting of the Company is to be held at
Baldwins Omega, Brincliffe Hill, Off Psalter Lane, Sheffield S11
9DF on Thursday 24 May 2018, commencing at 12.30pm.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR PGUPPWUPRGQP
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