TIDMBOOT
RNS Number : 1231T
Boot(Henry) PLC
23 March 2021
23 March 2021
HENRY BOOT PLC
('Henry Boot', 'the Company' or 'the Group')
UNAUDITED RESULTS FOR THE YEARED 31 DECEMBER 2020
Henry Boot PLC, a company engaged in land promotion, property
investment and development, and construction, announces its
unaudited results for the period ended 31 December 2020. Ticker:
BOOT.L: Main market premium listing: FTSE: Real Estate Investment
and Services.
HIGHLIGHTS
-- Revenue of GBP222.4m (2019: GBP379.7m) reduced as operations
saw lower demand affected by CV-19
-- Profit before tax of GBP17.1m (2019: GBP49.1m) ahead of
expectations primarily due to land disposals and a resilient
performance from our operations in H2. EPS lower at 9.0p (2019:
28.3p)
-- Robust NAV per share(1) at 235p (2019: 239p) and strong net
cash(2) position at GBP27.0m (2019: GBP27.0m) resulting in nil
gearing. Current cash (at the end of February 2021) is GBP38.5m
-- Proposed final dividend of 3.3p (2019: 1.3p), increasing the
full year dividend to 5.5p (2019: 5.0p) reflecting our current
financial position and confidence in our long-term markets. 135
Henry Boot launches our ESG strategy and celebrates our 135(th)
anniversary
-- An evolved strategy focusing on our three long-term markets:
industrial & logistics, residential and urban development all
of which are driven by positive long-term trends
-- Land promotion business sold 2,000 plots and interest in
major JV in the Midlands. Capital successfully recycled into
growing the landbank to 16,607 acres (2019:14,898 acres)
-- Committed development of GBP312m (HB share GBP85m) - 88%
pre-sold or pre-let. Strong GBP1.4bn development pipeline (HB share
- GBP1.1bn) with 78% in industrial and logistics
-- Stonebridge Homes performed ahead of target after completing
on 115 sales in 2020 and secured 57% of their sales target for
2021. Land bank increased to 1,119 plots including a site in
Wakefield secured for 149 plots
-- Construction business recovered well in H2, performing ahead
of expectations with a turnover of GBP86.2m. Encouraging demand,
led by public sector customers, leading to full order book for
2021
-- Good start to year, ahead of expectations on activity, order
book and forward sales in land, development and housebuilding
(1) Net Asset Value (NAV) per share is an alternative
performance measure (APM) and is defined using the statutory
measures net assets / ordinary share capital
(2) Net cash is an APM and is reconciled to statutory measures
in note 7.
Commenting on the results, Chief Executive Officer Tim Roberts
said:
"Our people have responded well to a challenging year, our
balance sheet remains rock solid and, in the circumstances, we are
pleased with our results.
There have been encouraging signs of recovery in our key
markets, with momentum carrying over, so we have made a good start
to the year. In the long term our strategy will be to tighten our
focus on our three key markets which benefit from structural tail
winds".
For further information, please contact:
Henry Boot PLC
Tim Roberts, Chief Executive Officer
Darren Littlewood, Group Finance Director
Daniel Boot, Group Communications Manager
Tel: 0114 255 5444
www.henryboot.co.uk
Numis Securities Limited
Joint Corporate Broker
Garry Levin/George Fry
Tel: 020 7260 1000
Peel Hunt LLP
Joint Corporate Broker
Charles Batten/Harry Nicholas
Tel: 020 7418 8900
Hudson Sandler LLP
Financial PR
Nick Lyon/Wendy Baker
Tel: 020 7796 4133
About Henry Boot PLC
Henry Boot PLC (BOOT.L) was established 135 years ago and is one
of the UK's leading and longest standing land promotion, property
investment and development, and construction groups of companies.
Based in Sheffield, the Group comprises the following three
segments:
Land Promotion:
Hallam Land Management Limited
Property Investment & Development:
Henry Boot Developments Limited (HBD) , Stonebridge Homes
Limited
Construction:
Henry Boot Construction Limited , Banner Plant Limited , Road
Link (A69) Limited
The Group possesses a high-quality strategic land portfolio, an
enviable reputation in the property development market backed by a
substantial investment property portfolio and an expanding, jointly
owned, housebuilding business. It has a construction specialism in
both the public and private sectors, a plant hire business, and
generates strong cash flows from its PFI contract, Road Link (A69)
Limited.
www.henryboot.co.uk
CHAIRMAN'S STATEMENT
Highlights
I am pleased to announce that Henry Boot delivered a robust set
of results, achieving a profit before tax of GBP17.1m (2019:
GBP49.1m) against the challenging backdrop of a global pandemic,
and we maintained our strong financial position throughout 2020,
with Net Asset Value per share remaining resilient at 235p (2019:
239p). After making selective investments in the Group's focused
three long-term key markets: industrial & logistics,
residential and urban development, net cash was preserved at
GBP27.0m (2019: GBP27.0m), which improved post year-end to GBP38.5m
at 28 February 2021 as a result of land completions and deferred
receipts in the land segment. Unsurprisingly, the Group's activity
was impacted by COVID-19 (CV-19), which had a material effect on
the Group's commercial and financial performance for 2020. However,
after an initial pause at the beginning of the pandemic, we began
to rebuild momentum and our businesses made good progress towards
recovery in the second half of the year. We have had an encouraging
start to 2021, showing strong forward sales and a high order
book.
As reported in January's trading update, our land promotion
business, Hallam Land Management (HLM), continued to trade well,
selling 2,000 plots (2019: 3,427) and in H2 disposed of a
significant interest in a joint venture site in the Midlands, which
contributed towards the Group's 2020 profit. Henry Boot
Developments (HBD) delivered schemes with a Gross Development Value
(GDV) of GBP58m (HBD share GBP55m) during the year but, in response
to the market, reduced its committed programme. Accordingly, having
commenced 2020 with a pipeline having a GDV of GBP315m (HBD share
GBP107m), this fell to GBP312m (HBD share GBP85m) by the end of the
year. However, we have seen healthy demand for industrial
accommodation and expect to grow our committed pipeline over the
course of the current year. Stonebridge Homes also saw good demand
for its premium houses; however, its growth was affected by slow
planning decisions, partly as a result of CV-19. Despite this, the
business completed the year ahead of target, having achieved 115
completions (2019: 159). Henry Boot Construction finished the year
on 95% of planned site activity, and Banner Plant increased its
activity to 95% of year-on-year sales. Road Link (A69) still
generated encouraging returns despite seeing a decrease in traffic
volumes due to CV-19 travel restrictions.
Our relatively new CEO has undertaken a strategic review, which
pleasingly reported that our business model is in good shape, so it
is now about evolving our strategy. However, we want to be more
explicit about our ambitions to grow, and to have more focus on our
three key markets, which benefit from structural tailwinds. We have
also identified synergies and efficiencies, plus ways to
collaborate across the Group. An important part of the strategy is
to formalise and coordinate our approach to Environment Social
Governance (ESG). 135 Henry Boot, whilst celebrating our 135(th)
anniversary, is phase one of our new ESG strategy.
The Group only utilised the Government's Coronavirus Job
Retention scheme (CJRS) up to August of last year, and only ever
had a minority of people on furlough, with the business topping up
pay to 100%. After the Board reviewed full year performance and the
net cash position, we made the decision to repay all furlough
grants claimed under the CJRS, making a full repayment in February
2021. In addition, the Remuneration Committee has taken the
decision, in line with the results achieved for 2020, to reimburse
the 20% deduction from the CEO and the Group Finance Director, to
reflect the position that everyone at Henry Boot experienced in
receiving 100% of their salaries whilst either at work or on
furlough. This is also aligned to the treatment of Executive
Directors along with employees in receiving 50% of their 2019
bonuses, a parallel that will be continued in relation to 2020 with
Executive Director bonus increases being tied to those of the wider
workforce.
Our People
Our people's skills, determination, and expertise in our three
key markets has proved fundamental to the Group's 2020 performance
and to maintaining our strong financial position in these
challenging circumstances. Our teams have shown themselves to be
agile and adaptable, adopting new ways of working and creating new
efficiencies, which will continue to shape the Group's future
working practices. I believe an effective business can be measured
by its agility to respond effectively to challenging environments,
market uncertainty, and structural change. On behalf of the Board,
I would like to thank everyone at Henry Boot for their dedication
and hard work during this unprecedented period, which has allowed
us to produce a robust set of results.
Dividend
The Board regularly reviewed the Group's financial position and
considered the impact of CV-19 on trading conditions when deciding
whether to continue paying a dividend during the pandemic. Given
the Group's confidence in our strong balance sheet and that we
operate in markets that will continue to deliver returns over the
longer term, the Board has proposed to continue to pay a dividend
and concluded to pay a final dividend of 3.3p, which together with
the 2.2p interim dividend, gives a total of 5.5p (2019: 5.0p) for
the year. Payment of the final dividend is subject to shareholder
approval at the Annual General Meeting and will be paid on 28 May
2021 to shareholders on the register as at 30 April 2021.
Outlook
Whilst CV-19 had an impact on the Group's 2020 performance,
there was still resilient demand within the markets we operate in,
leaving us optimistic for the year ahead. These remain
unprecedented times, however, we begin the year in a strong
financial position, with a resilient balance sheet, a portfolio
with ample opportunities, and encouraging forward sales as our key
markets recover. This leaves the Group feeling confident that we
will be able to build on the momentum we saw in H2 2020 and
continue delivering a high-quality service to our customers.
Jamie Boot
Chairman
CEO Review
Just over a year into my new role and I find myself very proud
of the way our people have responded to the pandemic, along with
many other institutions, businesses and communities across the
country. It gives me added confidence that we are not only well
placed in the three key markets we serve, together with our strong
financial position, but that we also have a team that shows it can
cope with significant change and uncertainty.
The safety and welfare of our people, customers, supply chain,
and the communities in which we operate have been the key
priorities in Henry Boot's response to the CV-19 outbreak and I'm
relieved to say that the safety procedures we have installed have
allowed us to continue operating safely. We have monitored
infection rates closely using lateral flow testing, including in
our largest construction site at Barnsley, and there is no data to
suggest that the people who have been working on site and in our
depots have been at greater risk. Whilst I want to thank everyone
at Henry Boot, I would like to give special thanks goes to those
who have worked on site or in our depots so effectively, away from
the relative safety of home working.
The Group utilised the Government's CJRS due to the initial
reduction in construction, housebuilding and plant hire activity
but only ever had a minority of people on furlough, with the
business topping their pay up to 100%. We stopped using the CJRS by
August 2020 and paid back all furlough grants claimed under the
scheme in February 2021, as we are confident activity levels have
now stabilised.
The Group also made various adjustments in response to further
support the business during the pandemic. This included: reducing
the Board's executive and non-executive pay by 20% for six months;
paying a reduced final dividend to shareholders for 2019 and only
paying 50% of bonuses to employees and directors for the full year
of 2019 in 2020.We also made the difficult decision to restructure
our construction division, which included making some
redundancies.
In terms of operations, HLM performed well after the housing
market recovered and was unexpectedly buoyant in H2. We sold 2,000
plots (2019: 3,427) on nine sites, achieving a profit per plot of
GBP6,456, and exchanged on 1,744 plots that will provide profit for
the Group in 2021. We invested GBP10.0m in our land bank growing it
to 16,607 acres (2019:14,898 acres) and ended the year with over
15,000 plots where we have planning secured.
HBD adjusted to the uncertain environment by slowing down
development but still successfully completed on a total GDV of
GBP58m (our share GBP55m), with 100% of these schemes either sold
or let (GBP41m) or retained (GBP17m) in our investment portfolio.
Towards the end of 2020, we started to increase our developments,
particularly in response to growing industrial demand with
commitments on 206,100 sq ft of industrial and logistic space. In
H2 2021 we will complete on our 533-unit BTR Kampus scheme in
Manchester, which has been forward-funded with us retaining a 5%
equity stake. We also purchased two opportunities at a combined
price of GBP12.6m during the year, Mabgate in Leeds, and St John's
College in Manchester with existing buildings of 60,000 sq ft and
27,000 sq ft respectively. We also entered into a development
agreement on Phoenix 10 in Walsall, which adds a further 620,000 sq
ft to our industrial and logistic offering. Committed development
currently stands at GBP312m (HBD share GBP85m) and our development
pipeline has been maintained at GBP1.4bn (HBD share GBP1.1bn), 78%
of which is in industrial and logistics.
Our jointly owned housebuilder, Stonebridge Homes, achieved
115-unit sales (2019: 159 sales), which was ahead of our target
and, with a buoyant housing market, maintained a strong sales rate
of 0.61 units per site per week during the year. 2021 has started
well with sales already agreed on 69 units to date, well ahead of
the business plan. However, growth in Stonebridge has been hampered
by a slow process for getting planning on our land bank, partly
caused by CV-19. We are addressing this by taking a more portfolio
approach in planning terms to our 1,119 plot landbank (2019: 1,023
plots), helped by securing a site just before Christmas in
Wakefield with planning for 149 plots. We are determined to grow
this business so that it benefits from more operational scale and
becomes a multi-regional premium housebuilder.
Henry Boot Construction delivered revenue of GBP86.2m (2019:
GBP89.7m), which was significantly ahead of our expectation despite
earlier disruptions from CV-19. During the year, we successfully
secured a GBP40m contract to deliver a BTR scheme, and post
year-end we started work on a GBP42.5m mixed use scheme both in the
'Heart of Sheffield'. As a result, we now have a full construction
order book for 2021, and with our public sector bias, expect to
play our part in the Government's plans to Build Back Better.
Our balance sheet has remained rock solid, with no stranded
assets needing to be written down. With GBP38.5m of cash in the
bank (as at 28 February 2021), as well as committed and undrawn
facilities of GBP75m, we are in a very strong position to fund our
growth plans. However, like all businesses, we need to be clear
about our strategic objectives, and there are also areas where we
can develop our approach and skills. In this respect, I set out a
summary of our evolving strategy together with a new approach to
ESG in the next two sections, followed by the normal business
review. I am confident that with a greater strategic focus on our
three key markets, the growth prospects driven by existing
opportunities within our portfolio, our strong financial resources,
plus our highly engaged people, the outlook is very
encouraging.
Strategy
Our strategy is focused around three key markets: industrial
& logistics, residential and urban development. These markets
are driven by positive long-term structural trends which we expect
to give momentum to our future operational and financial
performance.
In this regard, the population of the UK continues to grow with
the number of households rising accentuated by the average size of
households dropping. Supply of housing generally fails to meet the
Government target of 300,000 new homes a year. At the same time,
and whilst CV-19 might temper the trend short-term, people are
moving to large urban centres not just for work but also the
lifestyle on offer. 90% of the UK population is predicted to be
living in urban areas exceeding 300,000 population by 2050. This
will create demand for good quality schemes for people to work and
live in. BTR will be an important element of supply. Pre-CV-19
there has been a growth in demand for industrial and logistics, but
with online sales up by c.40% over the last 12 months or so, take
up, especially in big boxes has been at record highs. This is
likely to be accelerated by more onshoring.
With focus on our three key markets, and within the framework of
our existing four strategic pillars of Growth, Delivery, People and
Safety; we have reworked our strategic priorities. Our values,
which were developed as part of The Henry Boot Way, endure, and
shape our culture.
We have extremely skilled, experienced, and highly engaged teams
focused on our three key markets. The vast majority of our GBP365m
of capital is already employed in these markets and our aim is to
gain greater scale by growing our capital employed to over GBP500m
through achieving the following key medium-term objectives:
-- Land Promotion - Grow our market-leading land promotion
business to sales of 3,500 plots per annum (currently 2,039 plots)
with increasing emphasis on the Midlands and the South. Through a
blend of freehold purchases, planning promotion agreements and
options to purchase, we will leverage the significant expertise
within HLM to unlock value through the planning process.
-- Development - Grow our development activities to GBP200m per
annum with a broad split of two-thirds industrial and one-third
urban residential (including BTR). We continue to manage market
risk through prefunding/sales/lettings and JVs. In the short term,
we will be selective in committing to urban development, as markets
adjust to a post CV-19 world. We remain positive that over the
longer term, population growth will continue, and cities will
outperform in terms of GVA output.
-- Investment - Double the size of our property investment
portfolio to around GBP150m (currently c.GBP80m), again with a
focus on our key markets. This will be achieved through a mix of
buying income-producing buildings, with redevelopment or
refurbishment potential and retaining certain of our own
high-quality developments. The aim will be to create a recurring,
resilient income stream with the added potential for capital growth
which will show a total return of 6.0% p.a.
-- Housebuilding - Grow our premium housebuilding operations to
an output of 600 units per annum, extending our regional presence
from Yorkshire into the North East and the Midlands. To support
this growth, we will build up a three to four-year landbank of
sites, primarily via options to purchase, but also through
selective freehold acquisitions.
-- Construction - Grow a profitable, cash generative business
focused primarily on public sector projects in our existing
regional markets. We believe we can play a valued role in the
Government's Levelling Up agenda and its Build Back Better plan for
growth. Our emphasis will remain on repeat work generating above
industry margins. We aim to start each financial year with a
minimum of 65% of our order book secured.
There are significant opportunities to grow in each of our three
key markets and we have embedded value within our conservatively
valued balance sheet. With over 16,000 acres of strategic land, a
development pipeline of GBP1.4bn (HBD share GBP1.1bn), and GBP18m
of developments we have identified for our investment portfolio,
plus 1,119 plots in Stonebridge's landbank, we have all the
building blocks to deliver our ambitious plans for growth.
We have a long track record of managing our gearing levels well.
With a strong balance sheet, net cash of GBP38.5m (as at 28
February 2021), committed debt facilities of GBP75m and material
retained earnings we are in a strong position to fund our growth
strategy and, if required, will look to take a conservative
approach to gearing, in a range of 10% to 20% of net assets.
We are confident our strategy can generate attractive market
returns (average ROCE between 10-15% p.a.), without high levels of
financial gearing, and will lead to growth in our profits to beyond
pre pandemic levels, enabling us to continue with a progressive
dividend policy.
Each of our divisions has a clear focus and is driven by
specific financial and strategic targets. We have also established
an Executive Committee (Ex Co) to facilitate greater collaboration
and the development of existing cross-functional expertise serving
our key markets. In addition, we have identified and intend to take
advantage of opportunities to create further synergies and
efficiencies in how we operate as a Group.
As a modern, open, and progressive business, our aim is to
attract, retain and develop a diverse range of talent. Our people
strategy is at the heart of our business and together with the
formation of Ex Co as a high-performing senior leadership team,
will allow us to continue to build on our positive culture and our
strong operational record.
Henry Boot celebrates its 135(th) anniversary this year and we
are proud of our heritage. We have grown over the years with a
clear culture of looking after our people and stakeholders, and in
return, levels of team engagement within the business are very
high. We understand the need for further commitment to deal with
issues at the heart of ESG. Today, we announce the launch of our
135 Henry Boot project, phase one of our ESG approach, as outlined
below, which will be an integral part of the Group's strategy going
forward.
Responsible Business
As a 135-year-old business, we understand sustainability and
long-term value creation. This year, we will formalise and
coordinate our approach to ESG as we launch our new ESG Strategy.
This will guide our business to deliver an ambitious and strategic
approach to ESG and align all our current and prospective
responsible business activities with a clear focus. Henry Boot
would not be here today without sustainability being at our core.
The new ESG Strategy will see us formalise ESG factors in our
discussions of business risks and opportunities and will allow us
to measure our progress against clear ESG objectives. We understand
that now is a time for action and for driving and communicating
clear progress on these important factors.
The implementation of our ESG Strategy will take a two-phase
approach and will clearly align our responsible business ambitions
with key societal issues, with particular focus in the first phase
on how we will achieve Net Zero Carbon (NZC) and develop increasing
equality, diversity and inclusion in our business and the sector we
represent.
135 Henry Boot is phase one of our ESG Strategy. This strategic
framework will guide us as we launch three long-term
initiatives:
1. Our Pathway to NZC and enhancing our environmental stewardship
2. Our new Equality, Diversity, and Inclusion strategy
3. Our Community Partnership Plan to provide funds, time,
resources, and expertise to support our community partners
135 Henry Boot will see our business build on our strong
foundations of responsibility and create engagement with all of our
stakeholders as we address and respond to crucial issues faced by
our communities and environments.
Phase two of our ESG Strategy will launch in January 2022 and
will be influenced by further consultation and engagement with our
people and partners. This will ensure we focus on the most material
issues and will have regard to the United Nations Sustainable
Development Goals that we believe we can impact most positively. It
will incorporate all of our existing responsible business
initiatives and guide us to achieve long-term ambitious targets and
create long-lasting and meaningful social value and impact.
To provide oversight and support to the Group's ESG ambitions
and commitment, we have established a new sub-committee of the
Board. The Responsible Business Committee will support the business
to embed ESG factors into our Commercial Strategy. The Committee
will be chaired by Non-Executive Director Peter Mawson. Our
timeline for key initiatives is:
Responsible Business Strategy Timeline
Initiative Launch Date
----------------------------------------------------------- ------------
Phase One Launch of 135 Henry Boot and Community March 2021
Partnership Plan
New Equality, Diversity, and Inclusion Strategy April 2021
Pathway to Net Zero Carbon and enhancing our environmental June 2021
stewardship
Phase Two Responsible Business Strategy January
2022
----------------------------------------------------------- ------------
Whilst formulating our long-term ESG Strategy, I am pleased to
report that we have maintained our focus on supporting our people
and communities in the unprecedented circumstances of CV-19. Amid
the challenging working environment of a pandemic, we have:
- supported and maintained regular communications with our
people; our Employee Net Promoter Score (eNPS) has increased to an
outstanding score of 46;
- continued to provide support to, and work closely with the communities in which we operate;
- collaborated with regulatory bodies including the Construction
Leadership Council, National Federation of Builders, Confederation
of British Industry and UK Government Ministers, to ensure our
services continue to adhere to best practice and guidance;
- directly supported the NHS Nightingale Hospital programme, as
a unit at our joint venture development scheme in Sunderland, the
International Advanced Manufacturing Park, was selected for
conversion into a temporary hospital, and
- our charitable giving programme donated a total of nearly
GBP68,000 to 28 organisations who needed support during the
pandemic.
We recognise this approach is a unique way to deliver our ESG
ambitions. However, we believe it will enable us to successfully
embed ESG factors within our business decision-making and
activities and to engage with our people and partners, in order to
create a meaningful strategic approach to responsible business and
the social value created through our operations. It is the Henry
Boot Way!
Business Review
Land Promotion
HLM performed well, achieving a GBP14.2m operating profit (2019:
GBP31.0m) from selling 2,000 plots (2019: 3,427 plots), at an
average of GBP6,456 per plot (2019: GBP10,000 per plot). During
2020, UK greenfield land values remained relatively stable with a
decline of 0.6% in the year according to Savills Research. After
suspending land buying in H1, the majority of the major national
and regional housebuilders re-entered the market in H2 with land
values increasing by 0.3% in Q4. This followed a strong recovery in
new housing sales, leading to continued demand for our land, where
encouragingly we received bids at pre-CV-19 prices.
In 2020, disposals were made at various locations including,
Wellingborough (600 plots), Lubbesthorpe (258 plots), Hatfield (189
plots), Ripley (200 plots) and Warton (109 plots). In addition, we
also sold land in Buckingham for a Care Home and Doctors Surgery,
and in Faversham for a Care Home and food store. Later in the year,
we also disposed of an interest in a joint venture site in the
Midlands, which made a major contribution to HLM's performance.
Significant strides forward were achieved at Didcot with
Oxfordshire County Council securing an important infrastructure
funding package which enabled it to re affirm its support for our
2,170-plot scheme. We are hopeful that the final planning consent
will be secured in 2021. Furthermore, we continued to make good
progress at Eastern Green, Coventry where in November a resolution
to permit planning permission was secured for 2,400 plots, 37 acres
of commercial development, plus a primary school and community
centre. This scheme requires a grade separated junction on the A45
to effect access, and a loan from the Homes and Infrastructure Fund
(HIF) has been secured, with delivery expected during 2021/22.
HLM secured further opportunities in its land bank during the
year, increasing it to 16,607 acres (2019: 14,898) with just under
60% located in prime market areas in the Midlands and the South of
England. Exciting new projects were secured including at Bicester
with potential for c.2,300 plots, community centre and ancillary
uses, Milton Keynes, Thirsk, Selby, Worksop, New Ash Green and
Whitstable. In total, we invested GBP10m on acquiring positions in
new sites and at the year-end held interests in land capable of
delivering just over 88,000 potential residential plots.
Region Plots
---------------- -------
Scotland 8,855
North 7,260
North Midlands 20,929
South Midlands 17,646
South East 11,782
South West 21,598
---------------- -------
Total 88,070
---------------- -------
The pandemic did slow the preparation of local plans, which, in
turn, slightly delayed some projects, as local authorities were
unable to process plans through to publication and public
consultation. Nonetheless, planning authorities transitioned to
Virtual Committee meetings during the year, allowing HLM to
continue to make progress on planning applications.
We secured new planning consents (or consents subject to s106
Agreements) for a total of 2,708 plots during the year, which
resulted in our consented portfolio increasing to 15,421 plots at
the year-end (2019: 14,713 plots) and we also had 8,312 plots the
subject of planning applications (2019: 10,665 plots). By the
year-end, our housebuilder customers had returned to the
acquisition trail, so that we entered 2021 with 1,744 plots
unconditionally exchanged for 2021/22 completion (2019: 1,268
plots).
Residential Land Plots
With Permission In planning Future Total
------------ ------- -------
b/f Granted Sold c/f
------- -------- -------- ------- ------------ ------- -------
2020 14,713 2,708 (2,000) 15,421 8,312 64,337 88,070
2019 16,489 1,651 (3,427) 14,713 10,665 51,766 77,144
2018 18,529 1,533 (3,573) 16,489 11,929 44,051 72,469
2017 16,417 4,281 (2,169) 18,529 7,982 40,844 67,355
2016 12,043 5,983 (1,609) 16,417 10,452 32,630 59,499
------- -------- -------- ------- ------------ ------- -------
At Chatteris (1,000 plots), which previously had received a
minded to grant permission, we signed the s106 and secured outline
planning consent. Bridport, which also had previously achieved
Outline Planning Consent, cleared a Judicial Review in relation to
our 760 plot and 10-acre commercial scheme, this site now being the
subject of sale negotiations. Planning applications covering a
further 1,171 plots were also submitted during the year.
2021 has started well, in addition to the 1,744 plots exchanged,
we have also unconditionally exchanged 450 plots at Worcester to
Taylor Wimpey and Redrow, and completed the disposal of 115 plots
at Warton, Fylde. During January 2021, the Government published its
next steps on the enhancement of Building Regulations, the Future
Homes Standard, and this will doubtless feature in future land
negotiations. Nevertheless, as evidenced by our Worcester
transaction where returns were in line with expectations, plus the
high element of forward sales we are confident about our prospects
for 2021.
Property Investment and Development
Property Investment and Development delivered a combined
operating profit of GBP4.9m (2019: GBP17.8m). In 2020, there was an
acceleration in the recent divergence in property market
performance with non-food retail and leisure assets severely
impacted by trading restrictions for much of the year. According to
the CBRE UK Monthly Index, commercial property values declined by
7.6% in 2020. Industrial was the only sector to deliver positive
capital returns with investors attracted by secure income and
continued rental value growth.
In 2020, HBD completed on developments with a GDV of GBP58m (HBD
share GBP55m), with GBP41m of these schemes having been sold and
GBP17m having been let and retained in the Group's investment
portfolio. Industrial and logistics development formed 90% of our
completed schemes and despite the pandemic, the UK market
experienced high demand throughout 2020 with record annual take up.
We have responded to this demand by committing to speculatively
develop a total of 206,100 sq ft at Luton, Preston and Enfield.
Additionally, we exchanged contracts on two new projects Phoenix
10; Walsall, which has the potential to deliver industrial and
logistic units ranging from 21,000 to 415,000 sq. ft, and Wakefield
Hub, to jointly develop a 2,000,000m sq ft occupier led
distribution depot, which is subject to planning.
In total, the committed development pipeline includes nine
schemes with a GDV of GBP312m (HBD share GBP85m) and 2,611,000 sq
ft, of which 88% is either pre-sold or pre-let. This includes our
533-unit build-to-rent (BTR) scheme in Manchester known as Kampus,
which is due for completion in Q3 2021 as well as approximately
GBP67m (HBD share GBP52m) of new industrial and logistics space.
All of the schemes are either already on site or are expected to
commence in Q1 2021 and are all due for completion before the end
of 2021.
Committed Schemes
Share of
GDV GDV Commercial Residential
Scheme (GBPm) (GBPm) (000 sq ft) (units) Status
-------------------------- -------- --------- ------------- ------------ ------------
Industrial
Enfield 16 8 56 - Speculative
Markham Vale, Orion 22 22 297 - Pre-sold
Wakefield Hub, Kitwave 8 4 65 - Pre-let
Preston 7 4 67 - Speculative
Luton 14 14 82 - Speculative
67 52 567 -
-------- --------- ------------- ------------
Residential
Manchester, Kampus 216 11 44 536 Pre-sold
216 11 44 536
-------- --------- ------------- ------------
Land and other
Wakefield Hub, Mountpark 15 8 2,000 - Pre-sold
Skipton 14 14 - 184 Pre-sold
29 22 2,000 184
-------- --------- ------------- ------------
Total for year 312 85 2,611 720
-------------------------- -------- --------- ------------- ------------
% pre-sold or pre-let 88% 69%
Despite the challenges of CV-19, we have been successful in
securing a number of new development opportunities. We have
acquired sites at Mabgate in Leeds and St John's College in
Manchester for a combined price of GBP12.6m with existing buildings
of 60,000 sq ft and 27,000 sq ft respectively. Both sites are fully
occupied and offer good short-term income returns whilst providing
excellent medium-term redevelopment opportunities in strong urban
regeneration settings. Adding to our industrial and logistics
pipeline we have secured a position on 83 acres of land at Todwick
just off J31 of the M1. The site has been secured under a Promotion
Agreement with a view to creating over 1,000,000m sq ft of space,
with a GDV of approximately GBP90m.
In addition to our committed schemes, we have a short to medium
term development pipeline with a total GDV of GBP1.4bn (HBD share -
GBP1.1bn). All of these opportunities sit within our three core
sectors of industrial & logistics (78%), urban residential
(11%) and urban commercial (11%). The immediate focus on our
development pipeline will be to commence remediation works at
Phoenix 10, Walsall, capable of delivering 620,000 sq ft of
industrial space and starting construction of our 95-unit build for
sale residential scheme in Birmingham known as Cornwall House. At
Wakefield Hub, we have submitted a joint application with our
development partner to develop a 2,000,000m sq ft unit that will be
pre-let prior to start on site, which we anticipate commencing on
site in Q3 this year. Also, on this scheme post year-end, we will
deliver a 260,000 sq. ft. pre-let industrial unit on behalf of a
German pharmaceutical company. Subject to securing planning in
mid-2021, work is expected to start on site in the second half of
2021 with the total GDV in excess of GBP30m.
Having successfully sold the majority of the retail assets from
our investment portfolio in 2019, we have made further progress
against our revised strategy. The year-end value of the portfolio
was GBP82.7m (2019: GBP70.0m), which reflected a modest 2.3%
valuation decline on a like-for-like basis, outperforming the CBRE
monthly index (-7.6%). The increase was principally as a result of
retaining two completed assets amounting to GBP17.0m pre-let at
Eden Farm, Luton (73,500 sq ft industrial unit) and Huyton (19,000
sq ft foodstore). Rent collection finished the year at 88% with the
portfolio weighted average unexpired lease term now 12.9 years.
Occupancy was at 84% as at 31 December 2020, although this has
subsequently increased to 94% following post period end lettings at
Blake House, Uxbridge and MV55, Markham Vale. We are confident of
being able to continue to grow the investment portfolio from both
retained developments and selective acquisitions with the objective
of increasing the overall value to around GBP100m in 2021 and to
approximately GBP150m over the medium term with a continued focus
on the industrial and logistics sector.
Our jointly owned housebuilder, Stonebridge Homes, had a
successful year, performing ahead of targets after achieving 115
house completions (90 private/25 affordable) (2019: 159), at an
average selling price for private units of GBP368k (2019: GBP268k).
As many households re-evaluated their housing needs, there was high
demand from house buyers in H2 and we maintained a strong sales
rate of 0.61 units per week per site over the year. Excluding April
and May, when we temporarily closed all our construction sites and
sales centres, the sales rate rises to 0.71. A price uplift of 2.7%
was achieved over anticipated, budget prices on the 90 private
units sold in the year. We also secured a further 211 plots in the
land bank including a key site in Wakefield in December, which has
outline planning permission for 149 plots. The total owned and
controlled land bank is now 1,119 plots, which at the current sale
rates is a 10-year supply or four to five years supply, at our two
year forward forecast sales rate.
We begin 2021 in good shape and, to date, have secured 69
reservations (40 private/29 affordable) out of a delivery target of
120 plots (75 private/44 affordable). With home reservations
currently running ahead of the comparable period last year, we
continue to see positive signs that the market remains stable,
leaving Stonebridge positioned to perform well and achieve its
growth aspirations.
Construction
Despite the challenging operating environment, the Group's
construction segment, which also includes Banner Plant and Road
Link (A69), achieved a combined operating profit of GBP6.5m (2019:
GBP9.0m). Henry Boot Construction performed ahead of expectations,
with turnover of GBP86.2m (86% in public sector), against a total
UK construction output decrease of 12.5% in 2020. The Office for
National Statistics showed a record 40.7% monthly decline in April
2020, UK construction activity recovered during the remainder of
the year with December 2020 output only 3.5% below the pre-CV-19
February 2020 level. These national trends were broadly reflected
in both Henry Boot Construction and Banner Plant where after a
brief pause due to the first national lockdown, year-end activity
levels had both recovered to 95%.
Our major GBP88.0m urban development scheme at The Glass Works,
Barnsley, continued to progress at pace and is on schedule for
handover this summer and works also continued on the GBP12.3m
contract to transform the existing Opera North facilities in Leeds
city centre, which is set for completion in 2021. Additionally, we
signed a GBP40.0m contract to deliver the Kangaroo Works, a
364-unit residential BTR scheme and began works on a GBP42.5m mixed
use urban development project, Heart of Sheffield, Block H. Both
projects are located in the centre of Sheffield and start on site
in Q2 2021. Unfortunately, our affordable housing business,
Starfish Commercial, was materially impacted by CV-19 and we made
the decision to place it into creditors' voluntary liquidation in
H2.
Across several public sector frameworks, we completed three
schemes with a total contract value of GBP8.2m, and throughout 2020
were active on a further six schemes at a total contract value of
GBP35.5m. We secured our first project through the PAGABO framework
and are taking another scheme through the pre-construction stage.
We also secured a place on the new Crown Commercial Services
framework in the North of England for projects up to GBP30.0m and a
place on the NHS shared business services framework for projects up
to GBP15.0m across our operational area.
We have had a good start to the year securing new opportunities
and are now ahead of our expectations having already secured a full
orderbook for 2021. We are still receiving good tender
opportunities and are well placed as the economy recovers through
our presence on nine public sector national and regional
frameworks, where we expect spend on construction projects will be
maintained by the Government's Build Back Better policy.
Banner Plant's performance was impacted by the pandemic, but
after the initial pause to readjust our operations to CV-19, all
the depots continued to trade and remained profitable. With
activity levels stabilising towards the end of the year, we are
optimistic trading will be in line with our expectations for 2021.
Due to CV-19 travel restrictions, Road Link (A69) traffic levels
have been impacted resulting in a decrease in returns in 2020 and
whilst we expect traffic levels to recover through 2021, we
anticipate they will not fully return to pre-pandemic levels. With
five-years remaining on the contract, the hand back process will
commence shortly to return the management of the A69 to Highways
England.
Looking Forward
As I write, there are reasons to be cautiously optimistic; the
successful ongoing national roll out of the vaccine; infection
rates falling and the Government's road map setting out some form
of social and economic recovery. Importantly over the last year, we
have shown that our business has adjusted and, whilst not immune,
still offers a resilient, viable and relevant business model.
As for the immediate outlook I am encouraged. We start the year
with strong forward sales and very healthy order books. Land plots
pre-sold last year, and sold at the start of this year, total
2,039, our committed developments of GBP312m (HB share GBP85m) are
already 88% presold or let (HB share 69%), sales have now been
agreed on 57% of our housebuilding target for 2021, plus the year's
orderbook for construction is fully secured. Just as importantly
with cash on the balance sheet, together with a portfolio rich with
opportunity we are ready to respond to signs of increasing demand
in our key markets.
Moreover, our strategy focuses on growth in three long term
markets - industrial & logistics, residential and urban
development that are driven by long-term trends, which in a post
pandemic world, we are confident will endure. We also have a good
record of serving public sector clients in key regional
construction areas, at a time when the Government is looking to
invest money in the regions.
We remain committed to working with our clients and various
stakeholders in building on the good start to the year and in
realising our long-term strategy.
Tim Roberts
CEO
FINANCIAL REVIEW
Summary financial performance
2020 2019 Change
GBP'm GBP'm %
------------------------------------- ------- ------- -------
Total revenue
Property investment and development 85.5 192.2 -56
Land promotion 21.0 73.2 -71
Construction 115.9 114.3 +1
------------------------------------- ------- ------- -------
222.4 379.7 -41
------------------------------------- ------- ------- -------
Operating profit/(loss)
Property investment and development 4.9 17.8 -72
Land promotion 14.2 31.0 -54
Construction 6.5 9.0 -28
Group overheads (8.1) (7.5) +8
------------------------------------- ------- ------- -------
17.5 50.3 -65
------------------------------------- ------- ------- -------
Net finance cost (0.4) (1.2) -67
------------------------------------- ------- ------- -------
Profit for the year 17.1 49.1 -65
------------------------------------- ------- ------- -------
The Group has delivered a commendable result against the
challenging backdrop of 2020 and, having secured several
investments in our key strategic markets, maintained its net cash
position at the same level at which it commenced the year. UK
housebuilders recovered from the initial UK lockdown well and
whilst several transactions were secured in H2, they were all
contracted to conclude in 2021, resulting in a 54% decrease in
operating profit within our land promotion segment, although
providing a strong start for the new year. The completion of The
Event Complex Aberdeen (TECA) during 2019 gave our property
investment and development segment a tough comparative, even
without the pause on new work in the year, resulting in a 72%
decrease in operating profit for the year.
Having disposed of GBP64.1m of completed Investment Property in
2019, mainly comprised of mixed-use retail-focused properties,
reinvestment in property has started well with the portfolio now
standing at GBP82.7m. This has been achieved through retention of
self-constructed properties and, with a GBP1.4bn (HBD share
GBP1.1bn) pipeline of opportunities, we can continue to retain
choice assets and rebuild the portfolio, especially those in the
industrial & logistics market.
Land promotion remains a long-term investment with disposals in
the year being derived from sites with an average length of
ownership of 11 years. With over 15,000 residential plots with
planning permission, we estimate that we have around five years of
sales in stock working towards disposal and with a total portfolio
covering 16,607 acres we estimate that this could deliver around
88,000 units, assuming they were all successful.
Whilst the impact of CV-19 has continued into 2021, we started
the year with land sales for 1,744 plots which have either already
completed or are exchanged, awaiting completion. We also have
committed property development work of GBP85m, 69% of which is
pre-let, and our construction business has a full order book, now
focusing on opportunities for 2022 and beyond.
Consolidated Statement of Comprehensive Income
Revenue decreased 41% to GBP222.4m (2019: GBP379.7m) as both the
property investment and development and land promotion segments saw
delays in transactional activity caused by the pandemic. In
addition to this there was lower activity in the property
investment and development segment resulting from the completion in
August 2019 of the GBP333m TECA project. The land promotion segment
disposed of 2,000 plots (2019: 3,427), although this excludes land
disposed of via the sale of our interest in a joint venture, which
made a significant contribution to profit in H2. Construction
segment revenue remained consistent as productivity on sites
quickly recovered from the initial national lockdown and the
business continued delivery of The Glass Works Phase 2, an GBP88m
urban regeneration scheme for Barnsley Metropolitan Borough
Council. Gross profit decreased 50% to GBP40.5m (2019: GBP81.0m)
and reflects a gross profit margin of 18% (2019: 21%).
Administrative expenses decreased by GBP0.9m (2019: GBP5.6m
increase) despite including a GBP2.0m impairment of goodwill, as
the business took measures to control expenditure levels in the
year which included a 50% reduction in staff bonus payments, a 20%
cut in salary and fees for main board Directors and participating
in the Government CJRS. Following the year end, and having reviewed
the Group's result, the Board took the decision to repay the CJRS
monies received and to reimburse the 20% deduction from the CEO and
the Group Finance Director salaries to reflect the position that
everyone at Henry Boot experienced in receiving 100% of their
salaries whilst at work and on furlough.
Pension expenses of GBP4.6m (2019: GBP4.5m) are in line with the
prior year charge. Since the year-end, the Group has commenced
consultation with active members of the defined benefit pension
scheme with a view to closing the scheme to future accrual.
Property revaluation gains of GBP1.3m (2019: gains of GBP2.4m)
were the net effect of uplifts of GBP5.7m (2019: GBP5.6m) generated
largely from increases in the fair value of industrial assets,
arising from the re-gearing of existing leases and completion of
assets under construction, offset by the recognition of valuation
deficits of GBP4.4m (2019: GBP3.2m) on a number of other
properties, most notably retail-focused mixed-use assets.
Profit on disposal of joint ventures and subsidiaries of GBP7.4m
(2019: GBPnil) includes the disposal of our 50% interest in a joint
venture entity in our land promotion segment, which gave rise to a
profit of GBP6.2m. In addition to this, Starfish Commercial
Limited, a subsidiary in the construction segment, was placed into
creditor voluntary liquidation giving rise to a book profit on
disposal of GBP1.2m.
Overall, operating profits decreased by 65% to GBP17.5m (2019:
GBP50.4m) and, after adjusting for net finance costs, we delivered
a profit before tax of GBP17.1m (2019: GBP49.1m).
The segmental result analysis shows that property investment and
development produced a reduced operating profit of GBP4.9m (2019:
GBP17.8m) arising from industrial developments at Markham Vale,
Luton, Southend and Sunderland, offset by rent concessions (rent
collection standing at 88% for the year) and a GBP2.4m loss of rent
on investment property sales made in the prior year. Land promotion
operating profit decreased 54% to GBP14.2m (2019: GBP31.0m) as we
disposed of 2,000 residential plots during the year (2019: 3,427).
Construction segment operating profits decreased to GBP6.5m (2019:
GBP9.0m) as productivity levels were affected by the pandemic and
reduced road traffic volumes impacted the Road Link (A69) PFI
concession. The nature of deal-driven property and land promotion
businesses, dependent upon demand from the major UK housebuilders,
reliant on the UK planning regime and dependent upon market
confidence are demonstrated in the movements within our mix of
business streams. However, we continue to show how the benefits of
a broad-based operating model allows us to dampen the impact in
these cyclical markets during challenging times. While we maintain
a significant pipeline of property development and consented
residential plots, the variable timing of the completion of deals
in these areas does give rise to financial results, which can vary
depending upon when contracts are ultimately concluded. We mitigate
this through the mix of businesses within the Group and our
business model which, over the longer term, will ultimately see the
blended growth of the Group delivered.
Tax
The tax charge for the year was GBP3.4m (effective rate of tax:
20%) (2019: GBP9.6m and effective tax rate: 20%) and is higher than
the standard rate due to impairment of ineligible goodwill and a
dry tax charge on transfer of an asset from inventory to investment
property offset by joint venture profits presented net of tax
(2019: capital gains on the disposal of investment property). We
currently have a GBP1.6m unrecognised deferred tax asset (2019:
GBP2.1m), which can be utilised to offset future capital gains if
they arise. Current taxation on profit for the year was GBP3.1m
(2019: GBP9.3m), broadly in line with the standard rate of
corporation tax. Deferred tax was GBP0.3m (2019: GBP0.3m).
Earnings per share and dividends
Basic earnings per share reduced 68% to 9.0p (2019: 28.3p) in
line with the reduction in profit for the year. Following a
rebasing in 2019, total dividend for the year increased 10% to
5.50p (2019: 5.00p), with the proposed final dividend increasing to
3.30p (2019: 1.30p), payable on 28 May 2021 to shareholders on the
register as at 30 April 2021. The ex-dividend date is 29 April
2021.
Return on capital employed
Lower operating profit in the year saw a reduced return on
capital employed ROCE(1) of 4.9% in 2020 (2019: 14.8%). While the
current return is impacted by the global pandemic, we continue to
believe that a target return of 10-15% is appropriate for our
current operating model and the markets in which we operate. 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 average
total assets less average current liabilities.
Finance and gearing
Net finance costs reduced to GBP0.4m (2019: GBP1.2m), helped by
the Group's net cash surplus. We saw a significant shift from
having net debt of GBP18.4m to net cash of GBP27.0m in 2019 and
have maintained this cash reserve throughout 2020 ending the year
as we started with GBP27.0m. We anticipate that interest costs will
remain low through 2021 as we look to redeploy our current net
funds during the year in line with our revised strategy.
Interest cover, expressed as the ratio of operating profit
(excluding the valuation movement on investment properties,
disposal and joint venture profits) to net interest (excluding
interest received on other loans and receivables), was 13 times
(2019: 33 times). No interest incurred in either year has been
capitalised into the cost of assets.
Our agreed banking facilities were renewed on 23 January 2020
increasing to GBP75m from GBP72m. The facility includes an
additional accordion facility of GBP30m, which can be called upon
at the Group's request. The new facility with Barclays Bank PLC,
HSBC UK Bank plc and National Westminster Bank Plc runs for three
years and includes two one-year extensions, allowing the Group to
extend the facility to 23 January 2025, on the same terms, subject
to agreement by the banks. On 19 January 2021 the banks agreed to
the Group request to exercise the first of these extensions
extending the facility to 23 January 2024. These facilities remain
undrawn at 31 December 2020 and 31 December 2019.
2020 year-end net cash was GBP27.0m (2019: net cash GBP27.0m)
resulting in the Group having no gearing (2019: no gearing). Total
year-end net cash includes GBP2.9m (2019: GBP2.9m) 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.
Cash flow summary
As restated
2020 2019
GBP'm GBP'm
----------------------------------------- ------- ------------
Operating profit 17.5 50.4
Depreciation and other non-cash items (5.1) 1.1
Net movement on equipment held for hire (1.0) (2.3)
Movement in working capital 9.7 (27.7)
----------------------------------------- ------- ------------
Cash generated from operations 21.1 21.5
Acquisition of subsidiary _ (0.2)
Net capital (investment)/disposals (9.5) 52.9
Net interest and tax (6.8) (9.3)
Net dividends (3.6) (15.1)
Other (1.2) (4.4)
----------------------------------------- ------- ------------
Change in net cash _ 45.4
Net cash/(debt) brought forward 27.0 (18.4)
----------------------------------------- ------- ------------
Net cash carried forward 27.0 27.0
----------------------------------------- ------- ------------
During 2020, cash generated from operations amounted to GBP21.1m
(2019: GBP21.5m) after net investment in equipment held for hire of
GBP1.0m (2019: GBP2.3m), and cash generated by a net reduction in
working capital of GBP9.7m (2019: GBP27.7m increase). Our decrease
in working capital arises from collection of deferred land receipts
relating to strategic land sales offset by continued investment in
our house building land portfolio, property developments in
progress and strategic land interests.
Net capital investment of GBP9.5m (2019: net disposals of
GBP52.9m) arose from additions to investment property and property,
plant and equipment of GBP12.9m (2019: GBP16.1m), which were offset
by disposals of investment in property development, property, plant
and equipment and joint ventures of GBP3.4m (2019: GBP69.0m).
Net dividends paid, totalled GBP3.6m (2019: GBP15.1m), with
those paid to equity shareholders of GBP4.6m (2019: GBP12.6m)
decreasing by 63% and, dividends to non-controlling interests of
GBP1.2m, being off set by dividends received from joint ventures
during the year of GBP2.2m (2019: GBPnil).
After net interest and tax of GBP6.8m (2019: GBP9.3m), there was
no overall movement in net cash (2019: reduction GBP45.4m),
resulting in net cash of GBP27.0m (2019: GBP27.0m).
Statement of financial position summary
2020 2019
GBP'm GBP'm
-------------------------------------------------------------- ------- -------
Investment properties and assets classified as held for sale 82.7 70.0
Intangible assets 4.3 6.8
Property, plant and equipment, including right-of-use assets 25.9 28.1
Investment in joint ventures and associates 5.8 6.6
-------------------------------------------------------------- ------- -------
118.7 111.5
Inventories 200.8 169.7
Receivables 85.6 127.1
Payables (89.6) (98.5)
Other 7.4 4.7
-------------------------------------------------------------- ------- -------
Net operating assets 322.9 314.5
Net cash 27.0 27.0
Retirement benefit obligations (36.4) (23.0)
-------------------------------------------------------------- ------- -------
Net assets 313.5 318.5
-------------------------------------------------------------- ------- -------
Less: Non-current liabilities 51.4 34.1
-------------------------------------------------------------- ------- -------
Capital employed 364.9 352.4
-------------------------------------------------------------- ------- -------
Investment properties increased in value to GBP82.7m (2019:
GBP70.0m), following the construction of industrial assets at Luton
and Wakefield and a retail asset at Huyton.
Intangible assets reflect the Group's investment in Road Link
(A69) of GBP2.7m (2019: GBP3.0m) and goodwill of GBP1.6m (2019:
GBP3.9m). 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 in 2026. Goodwill decreased in the year,
following the Board's decision to place Starfish Commercial
Limited, a company in the construction segment, into creditors
voluntary liquidation resulting in an impairment of GBP2.0m.
Property, plant and equipment comprises Group occupied buildings
valued at GBP6.9m (2019: GBP7.5m) and plant equipment and vehicles
with a net book value of GBP19.0m (2019: GBP20.6m), including
GBP2.1m (2019: GBP6.1m) of right-of-use assets under IFRS 16.
Property, plant and equipment, along with right-of-use assets, have
decreased slightly as new additions of GBP3.6m (2019: GBP6.7m) are
offset by disposals and the depreciation charge for the year.
Right-of-use assets have decreased in the year as the Group used
excess cash to settle outstanding finance lease obligations.
Investments in joint ventures and associates reduced to GBP5.8m
(2019: GBP6.6m) following a dividend distribution of GBP2.2m. We
continue to undertake property development projects with other
parties where we feel there is a mutual benefit. We anticipate that
these opportunities will continue to increase as we finalise
several schemes with interested parties partnering with us to
utilise our development expertise.
Inventories were GBP200.8m (2019: GBP169.7m) and saw an increase
in our house-builder land and work in progress to GBP39.2m (2019:
GBP36.3m) as we continue to invest in land, and having carried 49
reservations (24 private/25 Social) into 2021. Property inventory
increased to GBP44.4m (2019: GBP31.7m) having invested in
short-term income generating assets in Leeds and Manchester with
medium-term development opportunities and strategic land inventory
increased to GBP117.2m (2019: GBP101.7m) as we continue to invest
in owned land and land interests held under agency agreements at a
lower capital cost. Inventories are held at the lower of cost or
net realisable value, in accordance with our accounting policy and,
as such, no uplift in value created from securing planning
permission is recognised within our accounts until disposal.
Receivables decreased to GBP85.6m (2019: GBP127.1m) due to a
decrease in transactional activity. Deferred payment receivables
remain a function of the number and size of strategic land
development schemes sold, and levels of construction contract
activity undertaken.
Payables decreased to GBP89.6m (2019: GBP98.5m) with trade and
other payables broadly in line with the prior year, provisions
decreasing to GBP5.9m (2019: GBP7.0m) as strategic land provisions
are utilised, contract liabilities decreasing to GBP7.4m (2019:
GBP9.9m), arising from payments received for work not yet
undertaken, and current tax liabilities decreasing to GBP1.1m
(2019: GBP4.7m) due to changes in the HMRC payment regime.
Net cash included cash and cash equivalents of GBP42.1m (2019:
GBP42.3m), borrowings of GBP12.9m (2019: GBP10.7m) and lease
liabilities of GBP2.2m (2019: GBP4.6m). In total, net cash remained
at GBP27.0m (2019: 27.0m).
At 31 December 2020, the IAS 19 pension deficit relating to
retirement benefit obligations was GBP36.4m, compared with GBP23.0m
at 31 December 2019, adversely affected by a reduction in the
discount rate applied to future liabilities to 1.4% (2019: 2.0%).
The pension scheme's assets continue to be invested globally, with
high-quality asset managers, in a broad range of assets. The
pension scheme Trustees regularly consider the merits of both the
managers and asset allocations and, along with the Company, review
the returns achieved by the asset portfolio against the manager
benchmarks. They then make changes, as the Trustee considers
appropriate, in conjunction with investment advice from ISIO.
Overall, the net assets of the Group decreased by 2% to
GBP313.5m (2019: GBP318.5m) from retained profits offset by the
increase in retirement benefit obligations and distributions to
shareholders. Net asset value per share decreased 2% to 235p (2019:
239p).
Darren Littlewood
Group Finance Director
UNaudited Consolidated Statement of Comprehensive Income
for the year ended 31 December 2020
As restated
2020 2019
GBP'000 GBP'000
--------------------------------------------------------- ---------- -----------
Revenue 222,411 379,693
Cost of sales (181,944) (298,711)
---------------------------------------------------------- ---------- -----------
Gross profit 40,467 80,982
Administrative expenses (28,791) (29,681)
Pension expenses (4,552) (4,475)
---------------------------------------------------------- ---------- -----------
7,124 46,826
Increase in fair value of investment properties 1,266 2,370
Loss on sale of investment properties (97) (238)
Loss on sale of assets held for sale - (56)
Share of profit of joint ventures and associates 1,756 1,448
Profit on disposal of joint ventures and subsidiaries 7,426 -
---------------------------------------------------------- ---------- -----------
Operating profit 17,475 50,350
Finance income 721 494
Finance costs (1,117) (1,740)
Profit before tax 17,079 49,104
Tax (3,354) (9,649)
---------------------------------------------------------- ---------- -----------
Profit for the year from continuing operations 13,725 39,455
---------------------------------------------------------- ---------- -----------
Other comprehensive expense not being reclassified
to profit or loss in subsequent years:
Revaluation of Group occupied property (651) (404)
Actuarial loss on defined benefit pension scheme (15,713) (7,937)
Deferred tax on actuarial loss 3,089 1,350
Total other comprehensive expense not being reclassified
to profit or loss in subsequent years (13,275) (6,991)
---------------------------------------------------------- ---------- -----------
Total comprehensive income for the year 450 32,464
---------------------------------------------------------- ---------- -----------
Profit for the year attributable to:
Owners of the Parent Company 11,921 37,596
Non-controlling interests 1,804 1,859
---------------------------------------------------------- ---------- -----------
13,725 39,455
--------------------------------------------------------- ---------- -----------
Total comprehensive income attributable to:
Owners of the Parent Company (1,354) 30,605
Non-controlling interests 1,804 1,859
---------------------------------------------------------- ---------- -----------
450 32,464
--------------------------------------------------------- ---------- -----------
Basic earnings per ordinary share for the profit
attributable to owners of the Parent Company during
the year 9.0p 28.3p
---------------------------------------------------------- ---------- -----------
Diluted earnings per ordinary share for the profit
attributable to owners of the Parent Company during
the year 8.9p 28.1p
---------------------------------------------------------- ---------- -----------
UNaudited Statement of Financial Position
as at 31 December 2020
2020 2019
GBP'000 GBP'000
-------------------------------------------- -------- --------
Assets
Non-current assets
Intangible assets 4,318 6,823
Property, plant and equipment 23,818 22,015
Right-of-use assets 2,110 6,085
Investment properties 82,723 70,002
Investment in joint ventures and associates 5,840 6,634
Trade and other receivables 7,194 17,238
Deferred tax assets 7,342 4,538
---------------------------------------------- -------- --------
133,345 133,335
-------------------------------------------- -------- --------
Current assets
Inventories 200,789 169,749
Contract assets 13,328 19,085
Trade and other receivables 65,032 90,777
Cash and cash equivalents 42,125 42,303
---------------------------------------------- -------- --------
321,274 321,914
-------------------------------------------- -------- --------
Liabilities
Current liabilities
Trade and other payables 72,727 70,763
Contract liabilities 7,430 9,876
Current tax liabilities 1,129 4,680
Borrowings 2,941 9,981
Lease liabilities 603 2,052
Provisions 4,852 5,315
---------------------------------------------- -------- --------
89,682 102,667
-------------------------------------------- -------- --------
Net Current Assets 231,592 219,247
---------------------------------------------- -------- --------
Non-current liabilities
Trade and other payables 2,346 6,148
Borrowings 9,969 717
Lease liabilities 1,613 2,585
Retirement benefit obligations 36,445 22,965
Provisions 1,076 1,681
---------------------------------------------- -------- --------
51,449 34,096
-------------------------------------------- -------- --------
Net Assets 313,488 318,486
---------------------------------------------- -------- --------
Equity
Share capital 13,718 13,717
Property revaluation reserve 2,342 2,993
Retained earnings 288,514 293,593
Other reserves 6,404 6,390
Cost of shares held by ESOP trust (1,176) (1,248)
---------------------------------------------- -------- --------
Equity attributable to owners of the Parent
Company 309,802 315,445
Non-controlling interests 3,686 3,041
---------------------------------------------- -------- --------
Total Equity 313,488 318,486
---------------------------------------------- -------- --------
UNaudited Statement of Changes in Equity
for the year ended 31 December 2020
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 31 December 2018 13,715 3,397 276,999 6,347 (1,260) 299,198 3,114 302,312
-------------------------- -------- ------------ --------- --------- -------- -------- ------------ --------
Change in accounting
policy(1) - - (154) - - (154) - (154)
-------------------------- -------- ------------ --------- --------- -------- -------- ------------ --------
Restated at 1 January 2019 13,715 3,397 276,845 6,347 (1,260) 299,044 3,114 302,158
-------------------------- -------- ------------ --------- --------- -------- -------- ------------ --------
Profit for the year - - 37,596 - - 37,596 1,859 39,455
Other comprehensive
expense - (404) (6,587) - - (6,991) - (6,991)
-------------------------- -------- ------------ --------- --------- -------- -------- ------------ --------
Total comprehensive
(expense)/income - (404) 31,009 - - 30,605 1,859 32,464
-------------------------- -------- ------------ --------- --------- -------- -------- ------------ --------
Equity dividends - - (12,621) - - (12,621) (2,445) (15,066)
Proceeds from shares
issued 2 - - 43 - 45 - 45
Purchase of treasury
shares - - - - (598) (598) - (598)
Acquisition of subsidiary - - - - - - (1,343) (1,343)
Purchase of
non-controlling
interest - - (1,856) - - (1,856) 1,856 -
Share-based payments - - 216 - 610 826 - 826
-------------------------- -------- ------------ --------- --------- -------- -------- ------------ --------
2 - (14,261) 43 12 (14,204) (1,932) (16,136)
------------------------- -------- ------------ --------- --------- -------- -------- ------------ --------
At 31 December 2019 13,717 2,993 293,593 6,390 (1,248) 315,445 3,041 318,486
Profit for the year - - 11,921 - - 11,921 1,804 13,725
Other comprehensive
expense - (651) (12,624) - - (13,275) - (13,275)
-------------------------- -------- ------------ --------- --------- -------- -------- ------------ --------
Total comprehensive
(expense)/income - (651) (703) - - (1,354) 1,804 450
-------------------------- -------- ------------ --------- --------- -------- -------- ------------ --------
Equity dividends - - (4,664) - - (4,664) (1,159) (5,823)
Proceeds from shares
issued 1 - - 14 - 15 - 15
Purchase of treasury
shares - - - - (615) (615) - (615)
Share-based payments - - 288 - 687 975 - 975
-------------------------- -------- ------------ --------- --------- -------- -------- ------------ --------
1 - (4,376) 14 72 (4,289) (1,159) (5,448)
------------------------- -------- ------------ --------- --------- -------- -------- ------------ --------
At 31 December 2020 13,718 2,342 288,514 6,404 (1,176) 309,802 3,686 313,488
-------------------------- -------- ------------ --------- --------- -------- -------- ------------ --------
(1) The Group adopted IFRS 16 retrospectively from 1 January
2019 but did not restated comparatives for the 2018 reporting
period, as permitted under the specific transitional provisions in
the standard.
UNaudited Statement of Cash Flows
for the year ended 31 December 2020
2020 2019
GBP'000 GBP'000
-------------------------------------------------- -------- --------
Cash flows from operating activities
Cash generated from operations 21,136 21,525
Interest paid (728) (1,341)
Tax paid (6,597) (8,459)
-------------------------------------------------- -------- --------
Net cash flows from operating activities 13,811 11,725
-------------------------------------------------- -------- --------
Cash flows from investing activities
Acquisition of subsidiary, net of cash
acquired - (152)
Purchase of intangible assets (283) (491)
Purchase of property, plant and equipment (924) (1,471)
Purchase of investment property (11,962) (14,060)
Capital expenditure of investment in associate 350 1,500
Proceeds on disposal of property, plant
and equipment 279 365
Proceeds on disposal of investment properties 627 22,542
Proceeds on disposal of assets held for
sale - 44,550
Proceeds on disposal of joint ventures 2,448 -
Interest received 512 494
Dividends received from joint ventures 2,200 -
Net cash flows from investing activities (6,753) 53,277
-------------------------------------------------- -------- --------
Cash flows from financing activities
Proceeds from shares issued 15 46
Purchase of treasury shares (615) (598)
Repayment of borrowings (1,942) (59,368)
Proceeds from borrowings 4,153 43,777
Principal elements of lease payments (3,024) (2,346)
Dividends
paid - ordinary shares (4,643) (12,600)
- non-controlling interests (1,159) (2,445)
- preference shares (21) (21)
------------------------------------- ----------- -------- --------
Net cash flows from financing activities (7,236) (33,555)
-------------------------------------------------- -------- --------
Net (decrease)/increase in cash and cash
equivalents (178) 31,447
Net cash and cash equivalents at beginning
of year 42,303 10,856
-------------------------------------------------- -------- --------
Net cash and cash equivalents at end of
year 42,125 42,303
-------------------------------------------------- -------- --------
Notes to the Financial Statements
for the year ended 31 December 2020
1. Basis of preparation
These results for the year ended 31 December 2020 are unaudited.
The financial information set out in this announcement does not
constitute the Group's statutory accounts for the years ended 31
December 2020 or 31 December 2019 as defined by Section 434 of the
Companies Act 2006.
The financial information for the year ended 31 December 2019 is
derived from the statutory accounts for that year which have been
delivered to the Registrar of Companies. The previous 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 2020 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 AGM of Henry Boot PLC.
Change in accounting policies
The same accounting policies and methods of computation are
followed as in the latest published audited accounts for the year
ended 31 December 2019, which are available on the Group's website
at www.henryboot.co.uk with the exception of the following. In the
current year, we have reclassified share of profit of joint
ventures and associates into operating profit. This is to reflect
that our use of joint ventures and associates has gradually moved
such that they are now integral to our business model and underpin
our core operational business activities. The Directors therefore
believe that classifying these lines into operating profit provides
more reliable and relevant information to the users of the
financial statements. For comparability purposes, the prior year
amounts have been restated, leading to an operating profit
increasing from GBP48.9m to GBP50.4m. There is no overall impact on
profit before tax or the balance sheet.
The following standards, amendments and interpretations to
existing standards are effective or mandatory for the first time
for the accounting year ended 31 December 2020:
Effective
from
-------------------------- --------------------------------------- ---------
Amendments to IFRS (issued 'Reference to the Conceptual Framework' 1 January
2018) 2020
IFRS 3 (amended 2018) 'Business Combinations' 1 January
2020
IAS 1 and IAS 8 (amended 'Definition of material' 1 January
2018) 2020
IFRS 9, IAS 39 and IFRS 'Interest rate benchmark reform' 1 January
7 (amended 2019) 2020
-------------------------- --------------------------------------- ---------
These standards did not have a material impact on the Group's
results.
The Group did not early adopt any standard or interpretation not
yet mandatory.
Going concern
In January 2020, the Group concluded negotiations with three
banking partners to put in place a GBP75m facility to replace the
GBP72m facility we had in place at 31 December 2019. The renewed
facilities commenced on 23 January 2020, with a renewal date of 23
January 2023 and an option to extend the facilities by one year,
each year, for the next two years occurring on the anniversary of
the facility. The renewed facilities, on improved terms, maintain
covenants on the same basis as the previous facilities. On 19
January 2021 the banks agreed to the Group's request to extend the
facility to 23 January 2024. The facility was undrawn at 31
December 2020 and 31 December 2019.
Following the third national lockdown and ongoing impact of
CV-19, the Directors have further considered its potential impact
on the Group in modelling a base case scenario. They have also
modelled what they consider to be a severe downside scenario to
include a curtailment of activity where no sales from the
Construction or Developments businesses, are made unless already
committed. For Hallam Land, no sales are assumed in 2021 unless
already contracted, with a c20% reduction in sales from the base
case for 2022. For Stonebridge Homes a 5% decline in house prices
is assumed throughout the assessment period and Banner Plant is
assumed to mirror depressed activity levels in 2020. This downside
model assumes that acquisition and development spend is restricted
other than that already committed. Having started 2021 in a GBP27m
net cash position, a position which has been improved upon over the
first part of 2021 with cGBP38.5m net cash held by the Group and
facilities of GBP75m, at 28 February 2021, the Directors have
concluded that the Group is able to control the level of
uncommitted expenditure, allowing it to retain cash and position
itself well in the event of a severe downside scenario, although
the impact of doing so on the profit and loss account would be
unavoidable.
At the time of approving the Financial Statements the Directors
expect that the Company and the Group will have adequate resources,
liquidity and available bank facilities to continue in operational
existence for the foreseeable future. Accordingly, they continue to
adopt the going concern basis of accounting in preparing the
Financial Statements.
2. Segment information
For the purpose of the Board making strategic decisions, the
Group is currently organised into three operating segments:
Property Investment and Development; Land Promotion; and
Construction. Group overheads are not a reportable segment;
however, information about them is considered by the Board in
conjunction with the reportable segments.
Operations are carried out entirely within the United
Kingdom.
Inter-segment sales are charged at prevailing market prices.
During the year, the Construction segment made sales to a single
external customer amounting to 22.0% (2019: 10.8%) of the Group's
total revenue. This related to two high-value contracts which
commenced in 2018 and continue through to 2021. The segment has a
number of other contracts in progress and is not reliant on any
major customer individually. In the prior year, the Property
Investment and Development segment made sales to a single external
customer amounting to 15.3% of the Group's total revenue. This
related to a single high value contract which commenced in 2016 and
continued through to 2019.
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.
2020
--------------------------------------------------------------------------
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 85,487 21,012 115,912 - - 222,411
Inter-segment sales 296 - 500 647 (1,443) -
--------------------------- ------------ ---------- ------------ ---------- ------------ --------
Total revenue 85,783 21,012 116,412 647 (1,443) 222,411
--------------------------- ------------ ---------- ------------ ---------- ------------ --------
Operating profit/(loss) 4,882 14,164 6,503 (8,074) - 17,475
Finance income 4,377 212 812 11,532 (16,212) 721
Finance costs (3,638) (390) (638) (2,171) 5,720 (1,117)
Profit/(loss) before tax 5,621 13,986 6,677 1,287 (10,492) 17,079
Tax 1,864 (2,898) (1,898) (422) - (3,354)
--------------------------- ------------ ---------- ------------ ---------- ------------ --------
Profit/(loss) for the year 7,485 11,088 4,779 865 (10,492) 13,725
--------------------------- ------------ ---------- ------------ ---------- ------------ --------
2019 (as restated)
--------------------------------------------------------------------------
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 192,225 73,213 114,255 - - 379,693
Inter-segment sales 297 - 10,886 612 (11,795) -
--------------------------- ------------ ---------- ------------ ---------- ------------ --------
Total revenue 192,522 73,213 125,141 612 (11,795) 379,693
--------------------------- ------------ ---------- ------------ ---------- ------------ --------
Operating profit/(loss) 17,803 31,037 9,045 (7,535) - 50,350
Finance income 1,326 2,074 965 22,700 (26,571) 494
Finance costs (5,701) (1,304) (631) (2,884) 8,780 (1,740)
Profit/(loss) before tax 13,428 31,807 9,379 12,281 (17,791) 49,104
Tax (1,205) (5,947) (2,145) (352) - (9,649)
--------------------------- ------------ ---------- ------------ ---------- ------------ --------
Profit/(loss) for the year 12,223 25,860 7,234 11,929 (17,791) 39,455
--------------------------- ------------ ---------- ------------ ---------- ------------ --------
2020 2019
GBP'000 GBP'000
------------------------------------ -------- --------
Segment assets
Property Investment and Development 217,863 198,024
Land Promotion 151,988 164,300
Construction 32,447 42,667
Group overheads 2,854 3,417
------------------------------------ -------- --------
405,152 408,408
Unallocated assets
Deferred tax assets 7,342 4,538
Cash and cash equivalents 42,125 42,303
------------------------------------ -------- --------
Total assets 454,619 455,249
------------------------------------ -------- --------
Segment liabilities
Property Investment and Development 35,292 32,321
Land Promotion 11,934 19,663
Construction 37,554 39,583
Group overheads 3,651 2,216
------------------------------------ -------- --------
88,431 93,783
Unallocated liabilities
Current tax liabilities 1,129 4,680
Current lease liabilities 603 2,052
Current borrowings 2,941 9,981
Non-current lease liabilities 1,613 2,585
Non-current borrowings 9,969 717
Retirement benefit obligations 36,445 22,965
------------------------------------ -------- --------
Total liabilities 141,131 136,763
------------------------------------ -------- --------
Total net assets 313,488 318,486
------------------------------------ -------- --------
3. Tax
2020 2019
GBP'000 GBP'000
-------------------------------------------------- -------- --------
Current tax:
UK corporation tax on profits for the year 2,824 9,057
Adjustments in respect of earlier years 245 184
-------------------------------------------------- -------- --------
Total current tax 3,069 9,241
-------------------------------------------------- -------- --------
Deferred tax:
Origination and reversal of temporary differences 285 408
-------------------------------------------------- -------- --------
Total deferred tax 285 408
-------------------------------------------------- -------- --------
Total tax 3,354 9,649
-------------------------------------------------- -------- --------
4. Dividends
2020 2019
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 2019 of 1.30p
per share (2018: 5.80p) 1,724 7,691
Interim dividend for the year ended 31 December 2020 of
2.20p per share (2019: 3.70p) 2,919 4,909
------------------------------------------------------------ -------- --------
4,664 12,621
------------------------------------------------------------ -------- --------
The proposed final dividend for the year ended 31 December 2020
of 3.30p per share (2019: 1.30p) makes a total dividend for the
year of 5.50p (2019: 5.00p).
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 GBP4,400,000.
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.
5. 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/
Level 1 Level 2 Level 3 2020 2019 (decrease)
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 in year
------------------------------ -------- -------- -------- -------- -------- -----------
Completed investment property
Industrial - - 31,550 31,550 15,900 15,650
Leisure - - 9,427 9,427 11,044 (1,617)
Mixed-use - - 7,260 7,260 8,823 (1,563)
Residential - - 4,106 4,106 3,704 402
Office - - 11,450 11,450 12,000 (550)
Retail - - 14,937 14,937 10,293 4,644
------------------------------ -------- -------- -------- -------- -------- -----------
- - 78,730 78,730 61,764 16,966
------------------------------ -------- -------- -------- -------- -------- -----------
Investment property under
construction
Industrial - - 1,629 1,629 3,634 (2,005)
Land - - - - 714 (714)
Retail - - 2,364 2,364 3,890 (1,526)
------------------------------ -------- -------- -------- -------- -------- -----------
- - 3,993 3,993 8,238 (4,245)
------------------------------ -------- -------- -------- -------- -------- -----------
Total carrying value - - 82,723 82,723 70,002 12,721
------------------------------ -------- -------- -------- -------- -------- -----------
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.
6. Share capital
Authorised, allotted,
issued and fully
paid
2020 2019
GBP'000 GBP'000
------------------------------------------------------------ ----------- ----------
400,000 5.25% cumulative preference shares of GBP1 each
(2019: 400,000) 400 400
133,181,537 ordinary shares of 10p each (2019: 133,172,602) 13,318 13,317
13,718 13,717
------------------------------------------------------------ ----------- ----------
7. Cash generated from operations
2020 2019
GBP'000 GBP'000
------------------------------------------------- -------- --------
Profit before tax 17,079 49,104
Adjustments for:
Amortisation of PFI asset 570 555
Goodwill impairment 2,218 205
Depreciation of property, plant and equipment 3,585 4,661
Depreciation of right-of-use assets 987 1,250
Revaluation decrease in investment properties (1,266) (2,370)
Amortisation of capitalised letting fees 30 18
Share-based payment expense 975 826
Pension scheme credit (2,233) (1,684)
Loss on disposal of assets held for sale - 56
Gain on disposal of property, plant and
equipment (939) (1,140)
Loss on disposal of right-of-use assets 89 34
Loss on disposal of investment properties 95 238
Gains on disposal of joint ventures and
subsidiaries (7,426) -
Finance income (721) (494)
Finance costs 1,117 1,740
Share of profit of joint ventures and associates (1,756) (1,448)
--------------------------------------------------- -------- --------
Operating cash flows before movements in
equipment held for hire 12,404 51,551
Purchase of equipment held for hire (2,201) (3,700)
Proceeds on disposal of equipment held
for hire 1,159 1,363
--------------------------------------------------- -------- --------
Operating cash flows before movements in
working capital 11,362 49,214
Increase in inventories (31,285) (14,769)
Decrease/(increase) in receivables 39,800 (33,649)
Decrease in contract assets 5,757 23,687
Decrease in payables (2,052) (10,040)
(Decrease)/increase in contract liabilities (2,446) 7,082
--------------------------------------------------- -------- --------
Cash generated from operations 21,136 21,525
--------------------------------------------------- -------- --------
Analysis of net cash:
Cash and cash equivalents 42,125 42,303
Bank overdrafts - -
------------------------------ ------- -------
Net cash and cash equivalents 42,125 42,303
Bank loans (9,969) (7,757)
Lease liabilities (2,216) (4,637)
Government loans (2,941) (2,941)
-------------------------------- ------- -------
Net cash 26,999 26,968
-------------------------------- ------- -------
8. Post balance sheet events
In January 2021 the nation entered a third lock down as a result
of the CV-19 pandemic, while clearly this has impacted the Group's
operations there has been no materially negative impact on the
Group's results to date.
On 26 February 2021 the Group repaid all furlough grants claimed
under the Government's Coronavirus Job Retention Scheme. The total
amount claimed and repaid was GBP0.8m, all of which related to the
2020 financial year. As the decision to repay was taken after the
year end this event has been classified as a non-adjusting post
balance sheet event.
The Group has commenced in 2021, a consultation with active
members of the defined benefit pension scheme, with a view to
closing the scheme to future accrual.
9. These results were approved by the Board of Directors and
authorised for issue on 22 March 2021.
10. The 2020 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 16 April 2021. Copies will be
available from The Company Secretary, Henry Boot PLC, Banner Cross
Hall, Ecclesall Road South, Sheffield S11 9PD.
11. The AGM of the Company is to be held at Banner Cross Hall,
Ecclesall Road South, Sheffield, S11 9PD on Thursday 20 May 2021,
commencing at 12.30pm. In view of the UK Government placing
restrictions on gatherings due to the CV-19 pandemic, a very
limited number of shareholders will be permitted to attend the AGM
in person via pre-arrangement, and so shareholders are kindly
requested not to attend in person. Details will be given in the
Notice of AGM regarding shareholder participation in and
notifications regarding the AGM.
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