TIDMBOOT
RNS Number : 8302M
Boot(Henry) PLC
19 September 2023
19 September 2023
HENRY BOOT PLC
('Henry Boot', the 'Company' or the 'Group')
Ticker: BOOT.L: Main market premium listing: FTSE: Real Estate
Investment and Services.
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHSED 30 JUNE 2023
A resilient operational performance driven by land promotion
disposals and property development completions, despite economic
headwinds
Henry Boot PLC, a Company engaged in land promotion, property
investment and development, and construction, announces its
unaudited interim results for the six months ended 30 June
2023.
Tim Roberts, Chief Executive Officer, commented:
"The first half of the year has seen our markets slow as
interest rates have continued to rise, but, as these results show,
our focus on prime strategic sites, high quality development and
premium homes has provided us with a degree of resilience. This has
helped us to report a very respectable underlying profit before tax
of GBP23.3m, an increase in NAV of 3%, plus the confidence to grow
our interim dividend by 10%.
Whilst uncertainty in our markets has increased, we believe we
have enough momentum to carry us through the year, although the
outlook for 2024 for the time being is not so clear. However, we
have conviction in our three markets which are driven by structural
trends and I am pleased to report that we remain on track to hit
our strategic growth and return targets over the medium term."
Financial highlights
-- 24.5% increase in revenue to GBP179.8m (June 2022: GBP144.4m)
driven by land disposals and housing completions
-- Underlying profit before tax(1) of GBP23.3m (June 2022:
GBP37.8m) or GBP25.0m (June 2022: GBP38.8m) on a statutory basis,
supported by the resilient performance of residential land sales
and industrial development activity
-- ROCE(2) of 6.3% (June 2022: 10.1%), expected to be around the
lower end of our medium-term target of 10%-15% by the year-end
-- NAV(3) per share is up by 2.6% to 303p (December 2022: 295p),
due to robust operational performance. Excluding the defined
benefit pension scheme surplus, the NAV per share showed an
underlying increase of 2.9% to 298p (December 2022: 291p)
-- Strong balance sheet, with net debt(4) of GBP70.8m (December
2022: GBP48.6m) reflecting continued investment in committed
developments and a decision to limit further acquisitions. Gearing
remains within our optimal stated range of 10%-20% at 17.5%
(December 2022: 12.3%)
-- EPS of 14.0p (June 2022: 24.1p); Interim dividend of 2.93p
declared (June 2022: 2.66p), an increase of 10%, reflecting the
Group's resilient operational performance and progressive dividend
policy
Operational highlights
-- GBP129.3m of property sales led by our land promotion,
development and housebuilding businesses, despite weakening
markets. Only GBP3.9m of acquisitions. GBP22.1m of investment in
our high quality committed development programme where costs are
98% fixed
-- Land promotion
o 1,900 plots sold (June 2022: 3,447), increased profit per plot
to GBP11,400 (December 2022: GBP6,066) due to significant sale at
Tonbridge, offsetting the volume reduction
o The total land bank has grown to 97,095 plots (December 2022:
95,704 plots)
o 8,335 plots with planning permission (December 2022: 9,431),
all held at cost
-- Property investment & development
o High quality committed development programme of GBP186m, with
52% pre-sold or pre-let
o c.700,000 sq ft of Industrial & Logistics development
underway (HB share: GBP96m GDV)
o GBP1.5bn development pipeline (HB share GBP1.26bn GDV), 62% of
which is focused on Industrial & Logistics markets, where
occupier demand remains robust
o The investment portfolio value increased to GBP112m (December
2022: GBP106m). Total return of 3.3% continues to be ahead of the
CBRE index for the six months to June 2023
o GBP11.1m post H1 23 investment sales, including Banner Cross
Hall our Head Office, at a combined 19% above book value
o Stonebridge Homes during H1 sold 99 units (30 June 2022: 39
units) and at the end of August has secured 97% of its annual sales
target of 250 units for 2023, with a total owned and controlled
land bank at 997 plots (December 2022: 1,094 plots) keeping us on
track to scale up this business
-- Construction
o The construction segment achieved turnover of GBP56.2m (June
2022: GBP66.5m) in a challenging market
o Henry Boot Construction remains focused on delivering its
current projects with 72% of its 2023 target order book secured
following delays in bringing activity to site as customers proceed
cautiously
-- Responsible Business
o Making good progress against our Responsible Business Strategy
targets set in January 2022, with the launch of our Health and
Wellbeing programme and continued progress in achieving our GHG
emissions target to support reaching NZC by 2030
NOTES:
(1) Underlying profit before tax is an alternative performance
measure (APM) and is defined as profit before tax excluding
revaluation movements on completed investment properties.
Revaluation movement on completed investment properties includes
gains of GBP1.4m (2022: GBP1.0m gain) on wholly owned completed
investment property and gains of GBP0.3m (2022: GBP0.6m gains) on
completed investment property held in joint ventures. This APM
provides the users with a measure that excludes specific external
factors beyond management's controls and reflects the Group's
underlying results. This measure is used in the business in
appraising senior management performance
(2) Return on Capital Employed (ROCE) is an APM and is defined
as operating profit/ average of total assets less current
liabilities (excluding DB pension surplus) at the opening and
closing balance sheet dates
(3) Net Asset Value (NAV) per share is an APM and is defined
using the statutory measures net assets/ordinary share capital
(4) Net (debt)/cash is an APM and is reconciled to statutory
measures in note 14
For further information, please contact:
Enquiries:
Henry Boot PLC
Tim Roberts, Chief Executive Officer
Darren Littlewood, Chief Financial Officer
Daniel Boot, Group Communications Manager
Tel: 0114 255 5444
www.henryboot.co.uk
Numis Securities Limited
Joint Corporate Broker
Ben Stoop/Will Rance
Tel: 0207 260 1000
Peel Hunt LLP
Joint Corporate Broker
Ed Allsopp/Charles Batten
Tel: 0207 418 8900
FTI Consulting
Financial PR
Giles Barrie/Richard Sunderland
Tel: 020 3727 1000
henryboot@fticonsulting.com
A webcast for analysts and investors will be held at 9.30am
today and presentation slides will be available to download via
www.henryboot.co.uk . Details for the live dial-in facility and
webcast are as follows:
Participants (UK): Tel: +44 (0) 33 0551 0200
Password: Henry Boot
Webcast link: https://stream.brrmedia.co.uk/broadcast/64b59edbedb1b705b3cdcddd
About Henry Boot PLC
Henry Boot PLC (BOOT.L) was established over 135 years ago and
is one of the UK's leading and long-standing property investment
and development, land promotion and construction companies. Based
in Sheffield, the Group is comprised of the following three
segments:
Land Promotion:
Hallam Land Management Limited
Property Investment and Development:
HBD (Henry Boot Developments Limited), Stonebridge Homes
Limited
Construction:
Henry Boot Construction Limited , Banner Plant Limited , Road
Link (A69) Limited
The Group possess a high-quality strategic land portfolio, 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 long-standing plant hire
business, and generates strong cash flows from its PFI contract
through Road Link (A69) Limited.
www.henryboot.co.uk
CEO Review
Henry Boot traded in line with the Board's expectations over the
half year, achieving an underlying profit before tax of GBP23.3m
(June 2022: GBP37.8m), or GBP25.0m (June 2022: GBP38.8m) on a
statutory basis. Our expectations for the full year remain in line
with market consensus*. The Group's balance sheet remains strong,
with NAV per share increasing by 2.6% to 303p (Dec 2022: 295p), or
by 2.9% to 298p (Dec 2022: 291p) excluding the defined benefit
pension scheme surplus. Whilst the first half of the year has been
impacted by continued economic uncertainty, principally as a result
of persistent inflation and rising interest rates, we have
delivered a resilient performance, completing GBP129.3m of sales
within our land promotion, development and housebuilding
businesses. Acquisitions have only been GBP3.9m.
According to JLL, in H1 23 the volume of UK commercial property
transactions has slowed markedly to GBP14.2bn, down 53% on the same
period in 2022. Much of the reduction has been driven by fewer
large deals with demand remaining more resilient in those sectors
benefiting from rental growth such as Industrial & Logistics
(I&L) and build to rent (BtR), both are sectors that we focus
on. House prices have been more resilient than many commentators
predicted having reduced by 1.2% during the six months to June
according to Nationwide and are now 5.3% below the peak in August
2022. Reductions in the price of new homes have generally been
smaller than this. Whilst strategic land sale volumes have reduced
housebuilders continue to selectively acquire land, with an
emphasis on sites in prime locations which remains a focal point
for our land promotion business. In support of this, we currently
have nine sites under offer to housebuilders.
With this backdrop in mind, we have had a good six months,
supported by the resilience of our three long-term markets,
I&L, Residential and Urban Development. In the half-year:
-- Hallam Land Management (HLM) disposed of 1,900 plots (June
2022: 3,447 plots). Although plots sold in the period has
decreased, we have increased profit per plot to GBP11,400 (December
2022: GBP6,066), offsetting the volume reduction. This was due to a
significant and very profitable freehold sale at Tonbridge, which
has shown an ungeared internal rate of return of 27% p.a. HLM
continue to receive selective bids for its land, especially on
smaller prime sites from national and regional housebuilders. The
total land bank has grown to 97,095 plots (December 2022: 95,704
plots), of which 8,335 plots have planning permission.
-- HBD completed on a total Gross Development Value (GDV) of
GBP70m (HBD share) - of which 100% has been pre-let/ pre-sold with
a committed development programme of GBP186m GDV (HBD share) - 52%
of which is pre-let or pre-sold. The part which is not pre-let/
pre-sold comprises three high quality schemes; Island our NZC
office scheme in the heart of Manchester; Setl which offers premium
apartments in the Jewellery Quarter in the centre of Birmingham
and; Momentum an NZC I&L scheme in Rainham serving Greater
London. All three complete at various times in 2024 and we continue
to expect good customer interest. To replenish the committed
development programme, we have a number of I&L schemes which we
are looking to commit to providing we can appropriately manage risk
through pre-letting or forward sales.
-- Stonebridge Homes (SH) secured 88% of its 250-unit sales
target for this year during H1 23, achieving a slightly reduced
sales rate of 0.48 houses per week per outlet, alongside a firm
average selling price of GBP499,000. Post half-year, we have
secured a further 21 units, achieving a sales rate of 0.52 houses
per week per outlet in the months from July to August. This takes
us to 97% secured for the year. Despite a slower market, price
against budget has up to the end of August been running at plus
0.8%. We believe this is due to the high quality of our homes and
the prime locations of our sites.
-- Henry Boot Construction (HBC) has experienced challenging
trading conditions with industry wide supply constraints and
subcontractor and material availability issues giving rise to
delays and budget challenges on two of its largest projects - the
GBP47m BtR residential scheme Kangaroo Works in Sheffield and Block
H, the GBP42m urban development scheme also in Sheffield. The
GBP47m Cocoa Works, York, remains on time and budget.
Despite low economic growth and slowing markets, we have
maintained our strategic ambition to grow and are still looking to
invest into prime opportunities. Rightly, we have been cautious
during H1 23 towards acquisitions, with our main focus on
investment in building out HBD's committed development programme.
Investment in this area totals GBP22.1m, with a further GBP3.9m
made on land purchases for both HLM and SH's land bank.
We have also continued to invest in other strategic objectives
that support our long-term ambitions. For our people, we have
launched a refreshed reward strategy which offers more clarity on
career progression and remuneration, and we continue to invest in
modernising both digital and technology capabilities and our
marketing and customer relationship functions.
An example of this, is our imminent head office relocation to
the Isaac's Building in Sheffield city centre. The building offers
strong ESG credentials and will provide our people with a more open
and collaborative workspace. In regard to Banner Cross Hall, our
current head office, after receiving strong interest, we have
completed the sale of the building, retaining a short-term lease on
the premises until we relocate. The buyer intends to refurbish the
Hall primarily into serviced office space.
Overall, these investments have resulted in our gearing
increasing to 17.5%, which is still within our stated optimal range
of 10%-20%. Whilst the Group's GBP105m banking facility runs until
January 2025 we have already had positive conversations with our
existing lenders about its renewal and expect to agree terms during
Q4 23, with an aim to have renewed facilities in place in Q2
24.
*Market expectations being the average of current analyst
consensus of GBP37.8m profit before tax, comprising three forecasts
from Numis, Peel Hunt and Panmure Gordon.
Dividend
The Board has declared an interim dividend of 2.93p (June 2022:
2.66p), an increase of 10%, which reflects our progressive dividend
policy. This will be paid on 13 October 2023 to shareholders on the
register at the close of business on 29 September 2023.
Strategy
The Group set a medium-term strategy in 2021 to grow the size of
the business by increasing capital employed by 40% focusing on its
three key markets: I&L, Residential and Urban Development,
whilst maintaining ROCE within a 10-15% range. Since setting this
strategy, we have successfully grown our capital employed by 13% to
GBP413m. Good progress has been made against our stated medium-term
targets as set out below:
Measure Medium term H1 23 Performance Progress
target
Capital employed To over GBP500m GBP413m as at On track to grow
30 June 2023 capital employed
to over GBP500m
-------------------- --------------------- ---------------------------
Return on average 10-15% pa 6.3% in H1 23 We maintain our
capital employed aim to be within
the target range
for FY23
-------------------- --------------------- ---------------------------
Land promotion c.3,500 pa 1,900 plots in The running five
plot sales H1 23 year average has
increased to 3,175
plots pa. So, we
remain on track
to achieve our medium-term
target.
-------------------- --------------------- ---------------------------
Development Our share c.GBP200m Our share: GBP70m We are on course
completions pa in H1 23, with to carry on growing
committed programme our completed developments
of GBP186m for to GBP200m pa as
2023 we look to draw
down on our future
pipeline of GBP1.26bn.
-------------------- --------------------- ---------------------------
Grow investment To around GBP150m GBP112m as at Value increased
portfolio 30 June 2023 primarily due to
retained I&L developments.
We have made accretive
tactical sales and
will be patient
building the portfolio
back up to its target.
-------------------- --------------------- ---------------------------
Stonebridge Up to 600 units 99 homes completed Already looking
Homes sales pa in H1 23, out to expand our annual
of a delivery target in 2024,
target of 250 in line with overall
homes strategic objective
of 600 units.
-------------------- --------------------- ---------------------------
Construction Minimum of 65% 18% at H1 23 Difficult market
order book secured for the following for 2024 conditions impacting
year order book for 2024.
In response, the
opportunity pipeline
has been refocused,
with GBP85m PCSA's
in progress.
-------------------- --------------------- ---------------------------
Responsible Business
We launched our Responsible Business Strategy in January 2022,
with our primary aim to be NZC by 2030 with respect to Scopes 1
& 2. I am pleased with the progress we have made so far against
our 2025 objectives and targets. Our strategy is guided by three
principal objectives:
-- To further embed ESG factors into commercial decision making
so that the business adapts, ensuring long-term sustainability and
value creation for the Group's stakeholders.
-- To empower and engage our people to deliver long term
meaningful change and impact for the communities and environments
Henry Boot works in.
-- To focus on issues deemed to be most significant and material
to the business and hold ourselves accountable by reporting
regularly on progress.
18-month performance against our 2025 target
Our People Performance Our Places Performance
Develop and deliver The Health and Contribute GBP1,000,000 We contributed
a Group-wide Wellbeing Strategy of financial (financial and
Health and Wellbeing and Programme (and equivalent) equivalent value
Strategy was launched to value to our of) over GBP400,000
the Group in February charitable partners to our charitable
2023 with a range and community
of resources, partners.
activities and
guidance delivered
throughout 2023.
---------------------------- -------------------------- ------------------------
Increase gender We have made progress, Contribute 7,500 More than 3,500
representation with female representation volunteering volunteering
in the business, across our workforce hours to a range hours have been
aiming for 30% increasing to of community, delivered.
of our team and 27% (2022: 26%). charity, and
line managers education projects
being female
---------------------------- -------------------------- ------------------------
Our Planet Performance Our Partners Performance
---------------------------- -------------------------- ------------------------
Reduce Scope Total direct GHG Pay all of our The Living Wage
1 and 2 GHG emissions emissions (Scopes suppliers the Foundation has
by over 20% to 1 and 2) in 2022 real living wage been engaged
support reaching were 2,930 tonnes and secure accreditation and a review
NZC by 2030 which equates with the Living is currently
to a 12% reduction Wage Foundation being undertaken
from the 2019 of the requirements
baseline. Remain to secure membership.
on course to achieve
the decarbonisation
trajectory.
---------------------------- -------------------------- ------------------------
Reduce consumption Sustainability Collaborate with We continue to
of avoidable audits completed all our partners engage with membership
plastic by 50% and a reduction to reduce our organisations
action plan is environmental (including Yorkshire
in development. impact Climate Action
Coalition and
the UK Green
Building Council)
and our supply
chain to share
knowledge and
best practice.
---------------------------- -------------------------- ------------------------
The Group is also committed to ensuring that all the properties
within the investment portfolio have a minimum EPC rating of 'C'.
Currently 73% (December 2022: 70%) of these properties have a
rating of 'C' or higher, of which 45% (December 2022: 39%) of the
total portfolio are rated 'A-B'. The majority of the remaining 27%
of the portfolio that are currently below a 'C' rating, have
redevelopment potential with a target range of 'A' or 'B'.
Outlook
There is no doubt that the rapid increase in short term rates is
slowing the economy, reducing customer demand across our markets,
and putting pressure, not least due to the funding costs, on the
viability of residential and commercial schemes. As its designed to
do, tighter monetary policy is curbing cost pressures, and we have
seen the rate of inflation come down throughout the Group with the
prospect of more to come by the year end giving us a degree of
confidence in being able to achieve our current year ambitions.
Henry Boot is not immune to these pressures, but its focus on high
quality real estate and customer care affords us some
resilience:
-- HLM promotes high quality, significant sites, with the
majority in the South of England, and c.24,000 plots around the
golden growth triangle demarked by London, Cambridge and Oxford.
Whilst uncertainty around the timing of disposals has increased
over the short-term we have no doubt that the structural demand for
homes in the UK will continue to outstrip supply and that these
sites will be in demand from housebuilders.
-- HBD delivers institutional quality development in and around
the major regional cities and the main road networks, offering high
ESG credentials. 64% of its speculative committed development is
NZC. The majority of our pipeline is industrial where structural
occupier demand endures.
-- SH builds premium homes, in affluent locations, and over the
year whilst it's been harder work to sell, as mortgage rates and
uncertainty have increased, sales rates have remained resilient. By
the end of August, in effect, 97% of this year's target has been
sold and we have increased overall volume by 43%, in line with our
ambition to scale up this business.
Our balance sheet offers the same quality and resilience, with
development and land promotion opportunities held at the lower of
cost or value whilst gearing is managed over the cycle at between
10-20%. Our NAV has shown consistent growth through cycles. This
allows us to invest in opportunities, such as land, both to promote
in the medium term and to build houses as we scale up SH. It also
allows us to build out our high quality committed development
programme.
We have confidence in the long-term fundamentals of our market,
supported by our people and their skillsets, plus the financial
resources to meet the business's strategic growth and return
ambitions.
Business Review
Land Promotion
HLM had a good first half, achieving an operating profit of
GBP17.0m (June 2022: GBP17.2m) from selling 1,900 plots (June 2022:
3,447 plots). Although the number of plots sold in the year has
decreased, average gross profit per plot increased to GBP11,400
(December 2022: GBP6,066) due primarily to a significant freehold
sale of land at Tonbridge, Kent, offsetting the volume
reduction.
UK greenfield land values decreased by 2.8% in the six months to
June 2023 according to Savills Research. Transactions slowed
significantly relative to the same period in 2022, with downward
pressures on land values reflecting many housebuilders more modest
new build sales rates. However, with 17% fewer homes granted
planning consent in H1 23 compared to the same period in 2022, the
reduction in land supply coming forward has resulted in selective
demand for prime deliverable sites.
HLM's land bank has grown to 97,095 plots (December 2022: 95,704
plots), of which 8,335 plots (December 2022: 9,431 plots) have
planning permission (or Resolution to Grant subject to S106). The
decrease in plots with planning permission reflects the continued
delays in the planning system due to a growing number of
complexities. One such complexity is the emerging Draft National
Planning Guidance, which looks to be slowing down local authority
development plan making and planning application determination with
58 development plans having been withdrawn or paused since the
December 2022 announcements. Notwithstanding this, HLM has gained
planning permission on 804 plots over H1 23, which is a significant
increase from the 435 plots granted in 2022. During the period,
there were 689 plots submitted for planning, taking the total plots
awaiting determination to 12,182 (December 2022: 12,297 plots).
HLM's land bank remains well positioned to benefit from the
delays and complexities in the planning system due to the high
levels of stock both with planning and awaiting determination, and
the team's specialist skill set and its strategically placed
regional coverage. Despite the challenges, the number of plots in
the portfolio continues to increase, giving us confidence in the
medium term that our stock levels with planning will return to
similar levels seen in previous years.
There is significant latent value in the Group's strategic land
portfolio, which is held as inventory at the lower of cost or net
realisable value. As such, no uplift in value is recognised within
our accounts relating to any of the 8,335 plots with planning, and
any increase in value created from securing planning permission
will only be recognised on disposal.
Residential Land Plots
With permission In planning Future Total
b/f granted sold c/f
------- -------- -------- -------
2023 9,431 804 (1,900) 8,335 12,182 76,578 97,095
------- -------- -------- ------- ------------ ------- -------
2022 12,865 435 (3,869) 9,431 12,297 73,976 95,704
2021 15,421 452 (3,008) 12,865 11,259 68,543 92,667
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
------- -------- -------- ------- ------------ ------- -------
-- In relation to significant schemes:
o At Tonbridge, Kent, we concluded an agreement for the sale of
125 plots to national housebuilder Cala Homes. The site was
originally contracted under option in 2004, with the freehold
subsequently purchased by HLM in 2021. The scheme includes
additional community benefits such as new cycle and pedestrian
links to a local railway station and a contribution to improved
public transport infrastructure. The sale will complete in two
phases across 2023 (81 plots) and 2024 (44 plots). The final
completion will result in an ungeared internal rate of return of
27% p.a in 2024.
o At Pickford Gate, Coventry (formerly known as Eastern Green),
a 2,400 plot site, a 250 plot sale concluded to the Vistry Group in
April. Marketing will commence for the next tranche in September,
which will comprise up to 1,000 plots.
o At Swindon, the 2,000-plot site with outline consent that is
being promoted through an option agreement jointly held with Taylor
Wimpey (TW), as previously reported, terms for acquisition were
nearly settled with the landowners, but stalled due to the market
disruption in Q4 2022. Alongside TW, HLM is now working to exchange
on the purchase later this year, with completion expected to fall
into 2024.
Property Investment and Development
Property Investment and Development, which includes HBD and
Stonebridge Homes, delivered a combined operating profit of GBP8.5m
(June 2022: GBP19.6m).
According to the CBRE Monthly Index, commercial property values
declined by 0.4% in the six months to June 2023. Industrial
property was the best performing sector with values up 1.4% during
the first half of the year ahead of retail up 1.0%, whilst offices
declined by 3.5%. The rate of yield expansion has slowed during
2023 following the significant capital value correction in the
second half of 2022. Industrial continues to deliver the highest
rental growth at 3.2% in six months to June 2023. Whilst take up
has slowed from record levels during the pandemic, occupier demand
is proving resilient due to the longer-term structural drivers and
limited supply of high-quality space. At the same time the outlook
for BtR remains positive with rental growth for multifamily assets
of 8.2% in the year to March 2023 according to CBRE driven by
continued strong demand and a lack of available units.
HBD completed on two developments with a total GDV of GBP70m
(HBD share), with 100% of these either sold or let:
-- Completed on a GBP54m (GDV) I&L scheme, Power Park,
located on the former Imperial Tobacco plant in Nottingham. The
426,000 sq ft scheme, comprising seven units, was pre-sold to
Oxenwood Logistics Fund, on a forward funding basis in 2021. Each
of the seven units meet BREEAM "Very Good" standards.
-- Completed an 85,000 sq. ft. building at the 83-acre
Butterfield Business Park in Luton, Bedfordshire. The GBP16m (GDV)
unit was pre-let to Shoal Group, an electrical component supplier,
and has been retained within the investment portfolio.
The committed development programme now totals a GDV of GBP341m
(HBD share: GBP186m GDV) of which 52% is currently pre-let or
pre-sold, with 98% of the development costs fixed.
2023 Committed Programme
GDV HBD Share of GDV Commercial Residential Size
Scheme (GBPm) (GBPm) ('000 sq ft) (Units) Status Completion
------------------- -------- ------------------- -------------- ----------------- ------------------ -----------
Industrial
Rainham, Momentum 120 24 380 - Speculative Q1 24
Southend, Ipeco2
and Cama, 20 20 156 - Pre-Sold Q1 24
Walsall, SPARK
Remediation 37 37 - - Forward funded Q2 24
Preston, East DPD Pre-let and
& DHL 30 15 150 - forward funded Q4 23
207 96 686 -
-------- ------------------- -------------- -----------------
Urban Residential
Birmingham, Setl 32 32 - 102 Speculative Q1 24
York, TDT 22 22 54 - Pre-sold Q3 23
Aberdeen, Bridge
of Don 12 1 - TBC Under-offer Q2 24
Aberdeen, Pre-sold and DM
Cloverhill 2 2 - 500 fee Q4 23
-------- ------------------- -------------- -----------------
68 57 54 602
-------- ------------------- -------------- -----------------
Urban Commercial
Manchester, Island 66 33 91 - Speculative Q3 24
Total for the Year 341 186 831 602
------------------- -------- ------------------- -------------- -----------------
% sold or pre-let
(incl Island) 36% 52%
Within the committed programme there is currently nearly 700,000
sq ft of I&L space (HBD share: GBP96m GDV), a total of 602
urban residential units (HBD share: GBP57m GDV) and 91,000 sq ft of
commercial space (HBD share: GBP33m GDV). In this regard:
-- Two freehold Design and Build transactions, at HBDs 52 acre
I&L scheme in Southend, Essex, have been added and agreed at a
total price of GBP20m and a combined c.156,000 sq ft of warehouse
space. A 129,000 sq ft headquarters facility will be developed for
Ipeco Holdings, the world leader in aircraft seating. CAMA Asset
Store, specialists in sustainable storage for the creative
industries, will take occupation of a 27,600 sq ft warehouse
facility with ancillary office accommodation.
-- SETL, the 102 premium apartment scheme in Birmingham, is on
track to complete in Q1 24 and marketing of selective apartments
will start shortly with the remainder to be sold post PC during
2024. Although the market has slowed, the aim is to achieve sales
in line with our stated GBP32m GDV.
-- At Momentum, Rainham (in an 80:20 JV with Barings) a 380,000
sq ft speculative I&L development targeting NZC serving Greater
London, is ahead of building schedule and is now targeting
completion in Q1 24. Marketing of the scheme is underway and is
attracting encouraging occupier interest.
-- HBD and Greater Manchester Pension Fund are working in a
50:50 JV to deliver 91,000 sq ft of NZC offices within Manchester
City Centre. Island will include 12,500 sq ft of amenity areas
including social, meeting and event spaces and a communal roof
terrace. The scheme is on track to be completed in Q3 24 and is
again generating occupier interest.
-- Post half-year, HBD has completed The Disabilities Trust,
York (HBD share: GBP22m GDV), a 54,000 sq ft scheme with state of
the art care facilities. The building is low carbon and has
achieved BREEAM 'Excellent' rating. This is the fourth phase of our
highly successful Chocolate Works development, in York.
-- HBD are looking to replenish the programme by committing to
further schemes such as the development of I&L schemes at
Walsall Spark, Roman Way, Preston and Welwyn, subject to demand and
viability.
HBD's total development pipeline has been maintained at a GDV of
GBP1.5bn (HBD share: GBP1.26bn GDV). All of these opportunities sit
within the Company's three key markets of I&L (62%), Urban
Commercial (21%) and Urban Residential (17%). Significant schemes
include:
-- At Golden Valley, Cheltenham, HBD continues preparations to
submit a planning application for the first phase of the scheme
(HBD share: GBP50m GDV), with the council signing off the Funding
Agreement in Q3 2023. The scheme comprises a mixed-use campus
clustered around 150,000 sq ft of innovation space.
-- At Neighbourhood, Birmingham (HBD share: GBP140m GDV), after
securing planning approval for a 414-unit BtR development, HBD are
continuing preparatory works but have delayed seeking funding until
the new year.
The total value of the investment portfolio (including share of
properties held in JVs) has increased to GBP112m (December 2022:
GBP106m). Following the significant repricing of UK commercial real
estate in Q4 2022, capital values have stabilised in the first six
months of 2023 with an underlying valuation increase of 0.8% for
the investment portfolio, principally as a result of the growth in
rental values for I&L assets with the equivalent yield
unchanged at 6.2%. The total property return of 3.3% for the six
months to June 2023, was ahead of the return from the CBRE UK
Monthly Index (2.5%). During the period occupancy increased to 89%
(December 2022: 88%) with the weighted average unexpired lease term
now 10.6 years (8.9 years to first break).
Post half year, the Group has also completed four sales of
smaller assets for a total of GBP11.1m including Banner Cross Hall,
at an average 19% premium to December 2022 valuation.
The UK housing market remained subdued during H1 23 as homebuyer
demand continued to be impacted by higher mortgage rates. According
to Nationwide UK house prices decreased by 1.2% during the six
months to June and are now 5.3% below the August 2022 peak. Whilst
higher mortgage rates are suppressing activity with monthly housing
transactions around 15% below pre-pandemic levels unemployment is
expected to remain low by historic standards which should provide
some support to house prices.
Against this backdrop demand for housing has remained resilient,
with pricing remaining firm, leaving SH still on track to meet its
annual sales target having secured 88% (144 private/77 social) of
its 2023 delivery target of 250 units at 30 June. The average
selling price for private units to 30 June is GBP499k (June 2022:
GBP512k) alongside an average sales rate of 0.48 (June 2022: 0.6)
units per week per outlet, for private houses (PH), in line with
target. Sales prices achieved were 1.2% above budget whilst build
cost inflation has started to moderate, reducing from c.10% in 2022
to 8% currently. Negotiations with suppliers and subcontractors are
ongoing and are likely to lead to further falls in cost
inflation.
Post H1 23, SH have secured an additional 21 units (PH) taking
them to 97% (164 private/78 social) secured for the year, meaning
only a further eight units (PH) need to be secured between 1
September and the end of October to achieve its annual sales
target. The year to date sales rate achieved to the end of August
was 0.49 houses per week per outlet.
SH total owned and controlled land bank comprises 997 plots
(June 2022: 1,164) of which 775 plots have detailed or outline
planning and has 2.21 years supply based on a one-year rolling
forward sales forecast for land with planning or 2.38 years for its
full land bank. SH have a number of sites where terms are agreed in
order to grow its land bank in line with stated scale up plans.
However, the business is being patient in negotiations, in light of
the slowing house sales market and the more subdued land
market.
The strategic objective of growing the business to achieve 600
completions per annum over the medium term remains on track.
Construction
Trading in the Group's construction segment has been below
expectations in H1 23, achieving an operating profit of GBP4.4m
(2022: GBP6.3m).
UK construction activity slowed during the first half of 2023,
with monthly output increasing by 1.0% following the strong
increase of 6.2% in 2022. All new work decreased by 2.1% with the
most significant reduction of 6.7% for private housing.
Construction output in June 2023 was 7.3% above the February 2020
pre-CV-19 level.
HBC is trading below management's expectations, having
experienced difficult operating conditions in line with the UK
construction market. The slowdown in UK construction has resulted
in HBC securing only 72% of its turnover for 2023 (94% of its costs
have fixed price orders placed or contractual inflation clauses)
and has experienced several delays on Pre-Construction Services
Agreements (PCSAs). However, there is a healthy pipeline of
opportunities that HBC is actively pursuing, with a target of
GBP85m PCSA's across urban development and residential
opportunities.
Despite both schemes suffering delays, subcontractor and
material availability issues, the Kangaroo Works, a GBP47m BtR
scheme, completed in August 2023, with the Heart of the City,
Sheffield Block H, a GBP42m urban development scheme, due to
complete in phases between August and October 2023. The Cocoa
Works, a GBP47m residential development in York, remains on time
and to budget.
Banner Plant is trading slightly below expectations, seeing a
slight reduction in demand in line with the wider slowdown in
construction activity. The business has refocused on core hire
products and cost management. Road Link is performing in line with
management expectations.
FINANCIAL REVIEW
Consolidated statement of comprehensive income
Group revenue for the period increased by 24.5% to GBP179.8m (30
June 2022: GBP144.4m) as the Land Promotion business completed
additional freehold sales and Stonebridge continued to grow
completions, achieving 99 unit sales in H1 (30 June 2022: 39 unit
sales). The Group continued to generate strong revenues from
property development activity and construction work during the
period.
Gross profit was slightly below that of the prior period at
GBP40.8m (30 June 2022: GBP43.9m) and shows the ongoing resilience
of the Group despite challenging market conditions. Other income of
GBP4.8m relates to a legal settlement on a property development
contract completed in 2016. Administrative expenses (excluding
pension costs) increased by GBP2.2m (30 June 2022: increased
GBP2.5m) reflecting the current and future growth ambitions of the
business, and includes investment in our people, systems, marketing
and ESG.
Fair value of investment properties increased by GBP0.6m (30
June 2022: increase GBP3.4m) with Group assets continuing to
outperform the CBRE index. Profits on sale of investment properties
were GBP0.1m (30 June 2022: GBPnil). The Group's share of profit
from joint ventures and associates was GBP0.2m (30 June 2022:
GBP10.4m), including investment property valuation gains of GBP0.3m
(30 June 2022: GBP0.6m), the prior year included an individually
significant disposal of a residential site in Aberdeen.
Property revaluation gains/(loss) H1 23 H1 22 2022
GBP'm GBP'm GBP'm
----------------------------------------------------- ------- ------- -------
Wholly owned investment property:
- Completed investment property 1.4 1.0 (7.3)
- Investment property in the course of construction (0.8) 2.4 2.4
----------------------------------------------------- ------- ------- -------
0.6 3.4 (4.9)
Joint ventures and associates:
- Completed investment property 0.3 0.6 (3.2)
- Investment property in the course of construction - - -
----------------------------------------------------- ------- ------- -------
0.3 0.6 (3.2)
----------------------------------------------------- ------- ------- -------
0.9 4.0 (8.2)
----------------------------------------------------- ------- ------- -------
This results in a 34% reduction in operating profit to GBP25.7m
(30 June 2022: GBP39.1m) which generated an underlying profit
before tax(1) of GBP23.3m or GBP25.0m on a statutory basis (30 June
2022: GBP37.8m underlying or GBP38.8m statutory), which remains a
robust result given current market conditions. Earnings per share
followed, reducing to 14.0p (30 June 2022: 24.1p).
Return on capital employed
Lower operating profits in the period resulted in a decreased
return on capital employed (ROCE) of 6.3% over a six-month period
(30 June 2022: 10.1%). Over a 12-month period we continue to
believe a target return of 10-15% is appropriate for our current
operating model, although in current market conditions we would
expect to be at the lower end of this range.
Finance and gearing
Financing costs were GBP2.5m (30 June 2022: GBP0.9m) reflecting
the impact of rising interest rates on borrowings. This is
partially offset by finance income of GBP1.8m (30 June 2022:
GBP0.5m) as an element of financing costs are recovered through our
joint venture arrangements.
At 30 June 2023, net debt was GBP70.8m (31 December 2022:
GBP48.6m). This reflects an increase in deferred land sale receipts
as well as continued investment in strategic land, property
development and our growing housebuilder.
Gearing levels have increased to 17.5% (31 December 2022: 12.3%)
and remain within our preferred operating range of 10%-20%. We
remain selective on new investments in an uncertain market but
ready to react to any compelling opportunities that might
arise.
Cash flows
Operating cash inflows before movements in working capital were
GBP22.0m (30 June 2022: GBP23.4m).
Working capital requirements have increased as a result of land
transactions on deferred payment terms and from investment in
inventory, resulting in working capital outflows of GBP15.8m (30
June 2022: GBP22.9m outflow) which, in turn, meant that operations
generated funds of GBP6.1m (30 June 2022: GBP0.5m). After interest
paid of GBP1.9m (30 June 2022: GBP0.5m) and tax paid of GBP0.9m (30
June 2022: GBP1.0m) net cash inflows from operating activities were
GBP3.3m (30 June 2022: GBP1.1m outflows).
Including expenditure on investment properties of GBP7.0m (30
June 2022: GBP0.3m) and advances to joint ventures and associates
of GBP6.8m (30 June 2022: GBP2.1m), net cash outflows from
investing activities were GBP12.3m (30 June 2022: GBP7.8m
inflow).
The final dividend on ordinary shares for 2022 increased by 10%
to GBP5.3m (30 June 2022: GBP4.8m).
Statement of financial position
Total non-current assets were GBP206.1m (31 December 2022:
GBP183.3m). Significant movements arose as follows:
- a GBP5.5m increase in right of use assets (30 June 2022:
GBP0.3m decrease) due to investment in plant acquired on hire
purchase and a lease on the Group's new head office;
- a GBP5.6m increase (30 June 2022: decrease GBP3.4m) in the
value of investment properties, being subsequent capital
expenditure of GBP7.0m (30 June 2022: GBPnil), transfers from
inventory GBPnil (30 June 2022: GBP4.5m) a revaluation gain of
GBP0.6m (30 June 2022: gain of GBP3.4m), disposals of GBP1.0m (30
June 2022: GBPnil), and transfers to assets held for sale of
GBP1.0m (30 June 2022: GBP11.1m);
- Investments in joint ventures and associates increased by
GBP0.2m to GBP10.2m (31 December 2022: GBP10.0m), being profits
generated of GBP0.2m;
- an increase in non-current trade receivables of GBP14.6m (30
June 2022: GBP1.3m decrease) following a number of strategic land
sales made on deferred terms;
- The pension scheme asset has increased GBP1.9m to GBP8.1m (31
December 2022: GBP6.2m) largely due to the effect of the increasing
liabilities discount rate offset by asset returns during the
period; and a deferred tax asset which remains consistent at
GBP0.2m (30 June 2022: GBP3.1m decrease).
Current assets were GBP8.9m higher at GBP404.0m (31 December
2022: GBP395.0m) resulting from:
- an uplift in inventories to GBP297.7m (31 December 2022:
GBP291.8m) due to growth in housebuilding inventory;
- lower trade and other receivables of GBP65.2m (31 December 2022: GBP66.6m);
- cash and cash equivalents which were GBP3.1m higher at
GBP20.5m (31 December 2022: GBP17.4m) due to current cash
requirements and timing on loan repayments; and
- assets held for sale of GBP3.1m (31 December 2022: GBPnil)
which relates to two property assets, one in Southend and a second
being the Group's Head Office building in Sheffield (as the Group
prepares to relocate to Sheffield City Centre in Q4).
Total liabilities rose to GBP204.7m (31 December 2022:
GBP156.6m) with the most significant changes arising from:
- trade and other payables, including contract liabilities,
decreased GBP8.5m to GBP95.9m (31 December 2022: GBP104.4m);
and,
- borrowings, including lease liabilities, increased to GBP91.3m
(31 December 2022: GBP66.0m) as the Group continues to invest in
operational assets and transact on deferred payment terms.
Retained earnings increased net assets to GBP405.4m (31 December
2022: GBP394.3m) with the net asset value per share increasing by
2.6% to 303p (31 December 2022: 295p), an underlying increase of
2.9% to 298p (Dec 2022: 291p) when excluding the defined benefit
pension scheme surplus net of tax liability.
NOTES:
(1) Underlying profit before tax is an alternative performance
measure (APM) and is defined as profit before tax excluding
revaluation movements on completed investment properties.
Revaluation movement on completed investment properties includes
gains of GBP1.4m (2022: GBP1.0m gain) on wholly owned completed
investment property and gains of GBP0.3m (2022: GBP0.6m gains) on
completed investment property held in joint ventures. This APM
provides the users with a measure that excludes specific external
factors beyond management's controls and reflects the Group's
underlying results. This measure is used in the business in
appraising senior management performance.
(2) Return on Capital Employed (ROCE) is an APM and is defined
as operating profit/ average of total assets less current
liabilities (excluding DB pension surplus) at the opening and
closing balance sheet dates
(3) Net Asset Value (NAV) per share is an APM and is defined
using the statutory measures net assets/ordinary share capital
(4) Net (debt)/cash is an APM and is reconciled to statutory
measures in note 14
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
for the half year ended 30 June 2023
Half year Half year Year
ended ended ended
30 June 30 June 31 December
2023 2022 2022
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
---------------------------------------------------- --------- --------- -----------
Revenue 179,756 144,414 341,419
Cost of sales (138,909) (100,528) (259,829)
---------------------------------------------------- --------- --------- -----------
Gross profit 40,847 43,886 81,590
Other income 4,800 - -
Administrative expenses (20,831) (18,596) (40,455)
24,816 25,290 41,135
Increase/(decrease) in fair value of investment
properties 595 3,443 (4,921)
Profit on sale of investment properties 86 16 646
Loss on sale of assets held for sale - - (149)
Profit on disposal of joint ventures - - 667
Share of profit of joint ventures and associates 188 10,376 9,079
Operating profit 25,685 39,125 46,457
Finance income 1,769 535 1,641
Finance costs (2,495) (883) (2,503)
Profit before tax 24,959 38,777 45,595
Tax (5,805) (6,071) (7,725)
---------------------------------------------------- --------- --------- -----------
Profit for the period from continuing operations 19,154 32,706 37,870
---------------------------------------------------- --------- --------- -----------
Other comprehensive (expense)/income not being reclassified
to profit or loss in subsequent periods:
Revaluation of Group occupied property (86) - 315
Deferred tax on property revaluations 15 - (23)
Actuarial (loss)/gain on defined benefit pension
scheme (2,049) 18,842 14,994
Deferred tax on actuarial loss/(gain) 512 (4,710) (3,749)
Total other comprehensive (expense)/income not
being reclassified to profit or loss in subsequent
periods (1,608) 14,132 11,537
---------------------------------------------------- --------- --------- -----------
Total comprehensive income/(expense) for the period 17,546 46,838 49,407
---------------------------------------------------- --------- --------- -----------
Profit for the period attributable to:
Owners of the Parent Company 18,661 32,065 33,319
Non-controlling interests 493 641 4,551
---------------------------------------------------- --------- --------- -----------
19,154 32,706 37,870
---------------------------------------------------- --------- --------- -----------
Total comprehensive income attributable to:
Owners of the Parent Company 17,053 46,197 44,856
Non-controlling interests 493 641 4,551
---------------------------------------------------- --------- --------- -----------
17,546 46,838 49,407
---------------------------------------------------- --------- --------- -----------
Basic earnings per ordinary share for the profit
attributable
to owners of the Parent Company during the period 14.0p 24.1p 25.0p
---------------------------------------------------- --------- --------- -----------
Diluted earnings per ordinary share for the profit
attributable
to owners of the Parent Company during the period 13.7p 23.7p 24.6p
---------------------------------------------------- --------- --------- -----------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (UNAUDITED)
as at 30 June 2023
30 June 30 June 31 December
2022
2023 Restated(1) 2022
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
---------------------------------------------------- --------- ------------ -----------
Assets
Non-current assets
Intangible assets 2,552 3,321 2,933
Property, plant and equipment 24,210 27,975 28,766
Right of use assets 6,476 1,290 997
Investment properties 102,716 100,740 97,116
Investment in joint ventures and associates 10,178 15,581 9,990
Retirement benefit asset 8,108 8,361 6,188
Trade and other receivables 51,648 34,827 37,029
Deferred tax assets 249 332 249
---------------------------------------------------- --------- ------------ -----------
206,137 192,427 183,268
---------------------------------------------------- --------- ------------ -----------
Current assets
Inventories 297,664 252,894 291,778
Contract assets 17,421 12,761 19,257
Trade and other receivables 65,207 74,296 66,601
Cash and cash equivalents 20,538 21,526 17,401
Assets classified as held for sale 3,142 11,137 -
403,972 372,614 395,037
---------------------------------------------------- --------- ------------ -----------
Liabilities
Current liabilities
Trade and other payables 90,243 82,250 95,827
Contract liabilities 1,468 7,730 4,006
Current tax liabilities 7,664 2,876 3,793
Borrowings 85,000 60,000 65,000
Lease liabilities 1,539 559 426
Provisions 2,836 4,511 4,003
---------------------------------------------------- --------- ------------ -----------
188,750 157,926 173,055
---------------------------------------------------- --------- ------------ -----------
Net current assets 215,222 214,688 221,982
---------------------------------------------------- --------- ------------ -----------
Non-current liabilities
Trade and other payables 4,235 2,571 4,568
Lease liabilities 4,770 791 607
Deferred tax liability 4,878 6,573 4,401
Provisions 2,057 855 1,385
---------------------------------------------------- --------- ------------ -----------
15,940 10,790 10,961
---------------------------------------------------- --------- ------------ -----------
Net assets 405,419 396,325 394,289
---------------------------------------------------- --------- ------------ -----------
Equity
Share capital 13,798 13,747 13,763
Property revaluation reserve 2,281 2,060 2,352
Retained earnings 378,213 370,229 365,692
Other reserves 8,246 7,139 7,482
Cost of shares held by ESOP trust (966) (966) (967)
---------------------------------------------------- --------- ------------ -----------
Equity attributable to owners of the Parent Company 401,572 392,209 388,322
Non-controlling interests 3,847 4,116 5,967
---------------------------------------------------- --------- ------------ -----------
Total equity 405,419 396,325 394,289
---------------------------------------------------- --------- ------------ -----------
(1) See 'Prior year restatements' for further details in the
'Basis of preparation and accounting policies'
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)
for the half year ended 30 June 2023
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
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- -------- ----------- -------- -------- ------- ------- ----------- -------
At 1 January 2022 13,732 2,060 328,348 6,744 (1,044) 349,840 5,446 355,286
---------------------------- -------- ----------- -------- -------- ------- ------- ----------- -------
Profit for the period - - 32,065 - - 32,065 641 32,706
Other comprehensive income - - 14,132 - - 14,132 - 14,132
---------------------------- -------- ----------- -------- -------- ------- ------- ----------- -------
Total comprehensive income - - 46,197 - - 46,197 641 46,838
---------------------------- -------- ----------- -------- -------- ------- ------- ----------- -------
Equity dividends - - (4,833) - - (4,833) (1,971) (6,804)
Proceeds from shares issued 15 - - 395 - 410 - 410
Share-based payments - - 517 - 78 595 - 595
---------------------------- -------- ----------- -------- -------- ------- ------- ----------- -------
15 - (4,316) 395 78 (3,828) (1,971) (5,799)
---------------------------- -------- ----------- -------- -------- ------- ------- ----------- -------
At 30 June 2022 (unaudited) 13,747 2,060 370,229 7,139 (966) 392,209 4,116 396,325
---------------------------- -------- ----------- -------- -------- ------- ------- ----------- -------
At 1 January 2022 13,732 2,060 328,348 6,744 (1,044) 349,840 5,446 355,286
------------------------------------- ------ ----- ------- ----- ------- ------- ------- --------
Profit for the year - - 33,319 - - 33,319 4,551 37,870
Other comprehensive income - 292 11,245 - - 11,537 - 11,537
------------------------------------- ------ ----- ------- ----- ------- ------- ------- --------
Total comprehensive income - 292 44,564 - - 44,856 4,551 49,407
------------------------------------- ------ ----- ------- ----- ------- ------- ------- --------
Equity dividends - - (8,383) - - (8,383) (4,030) (12,413)
Proceeds from shares issued 31 - - 738 - 769 - 769
Share-based payments - - 1,163 - 77 1,240 - 1,240
------------------------------------- ------ ----- ------- ----- ------- ------- ------- --------
31 - (7,220) 738 77 (6,374) (4,030) (10,404)
------------------------------------- ------ ----- ------- ----- ------- ------- ------- --------
At 31 December 2022 (audited) 13,763 2,352 365,692 7,482 (967) 388,322 5,967 394,289
------------------------------------- ------ ----- ------- ----- ------- ------- ------- --------
Profit for the period - - 18,661 - - 18,661 493 19,154
Other comprehensive expense - (71) (1,537) - - (1,608) - (1,608)
------------------------------------- ------ ----- ------- ----- ------- ------- ------- --------
Total comprehensive income/(expense) - (71) 17,124 - - 17,053 493 17,546
------------------------------------- ------ ----- ------- ----- ------- ------- ------- --------
Equity dividends - - (5,347) - - (5,347) (2,613) (7,960)
Proceeds from shares issued 35 - - 764 - 799 - 799
Share-based payments - - 744 - 1 745 - 745
------------------------------------- ------ ----- ------- ----- ------- ------- ------- --------
35 - (4,603) 764 1 (3,803) (2,613) (6,416)
------------------------------------- ------ ----- ------- ----- ------- ------- ------- --------
At 30 June 2023 (unaudited) 13,798 2,281 378,213 8,246 (966) 401,572 3,847 405,419
------------------------------------- ------ ----- ------- ----- ------- ------- ------- --------
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
for the half year ended 30 June 2023
Half year Half year Year
ended ended ended
30 June 30 June 31 December
2023 2022 2022
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
----------------------------------------------------------- --------- --------- -----------
Cash flows from operating activities
Cash generated from operations 6,140 518 (16,549)
Interest paid (1,949) (549) (1,829)
Tax paid (930) (1,030) (2,918)
----------------------------------------------------------- --------- --------- -----------
Net cash flows from operating activities 3,261 (1,061) (21,296)
----------------------------------------------------------- --------- --------- -----------
Cash flows from investing activities
Purchase of property, plant and equipment (926) (335) (971)
Purchase of investment property (6,975) 283 (9,301)
Purchase of investment in associate - - (2,112)
Proceeds on disposal of property, plant and equipment
(excluding assets held for hire) 21 184 10,987
Proceeds on disposal of assets held for hire - - 270
Proceeds on disposal of investment properties 1,013 - 8,146
Repayment of loans from joint ventures and associates - 2,483 10,904
Advances to joint ventures and associates (6,752) (2,101) (8,560)
Proceeds on disposal of investment in joint ventures - - 6,873
Distributions received from joint ventures and
associates - 6,960 7,160
Interest received 1,299 372 1,153
Net cash flows from investing activities (12,320) 7,846 24,549
----------------------------------------------------------- --------- --------- -----------
Cash flows from financing activities
Proceeds from shares issued 801 410 769
Movement in payables from joint ventures and associates 4 358 355
Decrease in borrowings (15,000) (30,000) (70,000)
Increase in borrowings 35,000 40,000 85,000
Principal element of lease payments (648) (339) (679)
Dividends
paid - ordinary shares (5,336) (4,822) (8,362)
- non-controlling interests (2,614) (1,971) (4,030)
- preference shares (11) (11) (21)
---------------------------------------------------------- --------- --------- -----------
Net cash flows from financing activities 12,196 3,625 3,032
----------------------------------------------------------- --------- --------- -----------
Net increase in cash and cash equivalents 3,137 10,410 6,285
Net cash and cash equivalents at beginning of period 17,401 11,116 11,116
----------------------------------------------------------- --------- --------- -----------
Net cash and cash equivalents at end of period 20,538 21,526 17,401
----------------------------------------------------------- --------- --------- -----------
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
for the half year ended 30 June 2023
1. GENERAL INFORMATION
The Company is a public limited company, listed on the London
Stock Exchange and incorporated and domiciled in the United
Kingdom. The address of its registered office is Banner Cross Hall,
Ecclesall Road South, Sheffield, United Kingdom, S11 9PD.
The financial information set out above does not comprise
statutory accounts within the meaning of Section 434 of the
Companies Act 2006 and is neither audited nor reviewed. The
Financial Statements for the year ended 31 December 2022, which
were prepared in accordance with UK-adopted International
Accounting Standards, have been reported on by the Group's auditors
and delivered to the Registrar of Companies. The Independent
Auditors' Report was unqualified and did not contain any statement
under Section 498 of the Companies Act 2006.
2. Basis of preparation and accounting policies
The half-yearly financial information has been prepared in
accordance with the Disclosure and Transparency Rules of the
Financial Conduct Authority and with UK adopted International
Accounting Standard IAS 34 'Interim Financial Reporting'.
The half-yearly financial information has been prepared using
the same accounting policies and methods of computation as compared
with the annual Financial Statements for the year ended 31 December
2022.
A number of other standards, amendments and interpretations
became effective from 1 January 2023, which do not have a material
impact on the Group's financial statements or accounting
policies.
Prior year restatements
Amounts owed by joint ventures and associates
Amounts owed by joint ventures and associates have been restated
for the period ended 30 June 2022. The Group previously recognised
amounts owed by joint ventures and associates as being entirely due
within one year on the basis these amounts were repayable on
demand. Following a review of the Group's historic practice and
future plans not to call on all intercompany receivables in the
short term, GBP22,824,000 of amounts owed by joint ventures and
associates at 30 June 2022 have been reclassified to non-current in
line with IAS 1. There is no impact on the Consolidated Statement
of Comprehensive Income, Statement of Changes in Equity or
Statement of Cash Flows.
Government loans
The Group's borrowings and trade receivables have been restated
for the period ended 30 June 2022. The Group previously recognised
a government loan payable to the Homes and Communities Agency (HCA)
amounting to GBP2,941,000 and a corresponding trade receivable from
the related housebuilder. Following legal guidance on the nature of
the agreement it has been concluded that the Group has no residual
obligation to the HCA in respect of the loan which is payable
directly by the related housebuilder and therefore no rights to
receive a corresponding trade receivable from the related
housebuilder. This has resulted in previously reported borrowings
reducing by GBP2,941,000 and trade receivables decreasing by the
same. There is no impact on the Consolidated Statement of
Comprehensive Income, Statement of Changes in Equity or Statement
of Cash Flows.
Going Concern
The Group meets its day-to-day working capital requirements
through a secured loan facility. The facility was renewed on 23
January 2020, at a level of GBP75m, for a period of three years and
extended by one year in January 2021 and a further year in January
2022 taking the facility renewal to 23 January 2025 on the same
terms as the existing agreement. The facility includes an accordion
to increase the facility by up to GBP30m, which was called on by
the Group on 9 October 2022, increasing the overall facility to
GBP105m.
The Directors have considered the Group's principal risk areas,
including the risk of continued economic slowdown, that they
consider material to the assessment of going concern.
The Directors have prepared forecasts to 31 December 2024
covering a base case and severe downside scenario.
Having conducted significant stress testing at the year-end they
have further considered the outcome of our half year position and
their latest forecasts, whilst taking into account the current
trading conditions, the markets in which the Group's businesses
operate and associated credit risks together with the available
committed banking facilities and the potential mitigations that can
be taken, to protect operating profits and cash flows.
The severe downside scenario considered includes short-term
curtailment in transactional activity and percentage reductions in
other activities mirroring recent downturn experiences. This is
followed by a short to medium-term recovery, coupled with the
ability to manage future expenditure as described in the 2022
Annual Report.
As reported in the 2022 Annual Report, the most sensitive
covenant in our facilities relates to the ratio of EBIT (Earnings
Before Interest and Tax) on a 12-month rolling basis to senior
facility finance costs. Our downside modelling, which reflects a
near 50% reduction in revenue and near 67% reduction in profit
before tax from our base case for 2023, demonstrates significant
headroom over this covenant throughout the forecast period to the
end of December 2024.
Their review supports the view that 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 half-yearly financial information.
Estimates and Judgements
The preparation of half-yearly financial information requires
management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported
amounts of assets, liabilities, income and expense. Actual results
may differ from these estimates.
In preparing these half-yearly financial statements, the
significant judgements made by management in applying the Group's
accounting policies and the key sources of estimation uncertainty
were the same as those that applied to the Consolidated Financial
Statements for the year ended 31 December 2022.
Goodwill
Goodwill is subjected to an impairment test at the reporting
date or when there has been an indication that the goodwill should
be impaired, any loss is recognised immediately through the
Consolidated Statement of Comprehensive Income and is not
subsequently reversed.
3. 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.
The accounting policies of the reportable segments are the same
as the Group's accounting policies as detailed above.
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.
Half year ended 30 June 2023 Unaudited
-----------------------------------------------------------------------
Property
investment
and Land Group
development promotion Construction overheads Eliminations Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------- ----------- --------- ------------ --------- ------------ --------
Revenue
External sales 71,517 52,645 55,594 - - 179,756
Inter-segment sales 144 - 585 156 (885) -
--------------------------------- ----------- --------- ------------ --------- ------------ --------
Total revenue 71,661 52,645 56,179 156 (885) 179,756
--------------------------------- ----------- --------- ------------ --------- ------------ --------
Gross profit/(loss) 11,117 21,143 8,467 134 (14) 40,847
Other income 4,800 - - - - 4,800
Administrative expenses (8,297) (4,168) (4,087) (4,293) 14 (20,831)
Other operating income/(expense) 872 (3) - - - 869
--------------------------------- ----------- --------- ------------ --------- ------------ --------
Operating profit/(loss) 8,492 16,972 4,380 (4,159) - 25,685
Finance income 4,219 529 229 140 (3,348) 1,769
Finance costs (2,455) (263) (217) (2,163) 2,603 (2,495)
Profit/(loss) before
tax 10,256 17,238 4,392 (6,182) (745) 24,959
Tax (2,338) (4,076) (1,098) 1,707 - (5,805)
--------------------------------- ----------- --------- ------------ --------- ------------ --------
Profit/(loss) for the
period 7,918 13,162 3,294 (4,475) (745) 19,154
--------------------------------- ----------- --------- ------------ --------- ------------ --------
Half year ended 30 June 2022 Unaudited
-----------------------------------------------------------------------
Property
investment
and Land Group
development promotion Construction overheads Eliminations Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------ ----------- --------- ------------ --------- ------------ --------
Revenue
External sales 56,837 24,741 62,836 - - 144,414
Inter-segment sales 145 - 3,685 214 (4,044) -
------------------------ ----------- --------- ------------ --------- ------------ --------
Total revenue 56,982 24,741 66,521 214 (4,044) 144,414
------------------------ ----------- --------- ------------ --------- ------------ --------
Gross profit/(loss) 13,042 20,409 10,368 85 (18) 43,886
Administrative expenses (7,233) (3,250) (4,040) (4,091) 18 (18,596)
Other operating income 13,835 - - - - 13,835
------------------------ ----------- --------- ------------ --------- ------------ --------
Operating profit/(loss) 19,644 17,159 6,328 (4,006) - 39,125
Finance income 724 310 482 5 (986) 535
Finance costs (740) (77) (190) (1,074) 1,198 (883)
Profit/(loss) before
tax 19,628 17,392 6,620 (5,075) 212 38,777
Tax (1,904) (3,304) (1,717) 854 - (6,071)
------------------------ ----------- --------- ------------ --------- ------------ --------
Profit/(loss) for the
period 17,724 14,088 4,903 (4,221) 212 32,706
------------------------ ----------- --------- ------------ --------- ------------ --------
Year ended 31 December 2022 Audited
-----------------------------------------------------------------------
Property
investment
and Land Group
development promotion Construction overheads Eliminations Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------ ----------- --------- ------------ --------- ------------ --------
Revenue
External sales 168,990 43,820 128,609 - - 341,419
Inter-segment sales 290 - 4,453 386 (5,129) -
------------------------ ----------- --------- ------------ --------- ------------ --------
Total revenue 169,280 43,820 133,062 386 (5,129) 341,419
------------------------ ----------- --------- ------------ --------- ------------ --------
Gross profit/(loss) 36,488 24,320 20,720 99 (37) 81,590
Administrative expenses (16,142) (6,971) (8,636) (8,743) 37 (40,455)
Other operating income 5,322 - - - - 5,322
------------------------ ----------- --------- ------------ --------- ------------ --------
Operating profit/(loss) 25,668 17,349 12,084 (8,644) - 46,457
Finance income 4,015 744 1,507 26,576 (31,201) 1,641
Finance costs (2,226) (213) (374) (3,373) 3,683 (2,503)
Profit/(loss) before
tax 27,457 17,880 13,217 14,559 (27,518) 45,595
Tax (3,411) (3,451) (2,771) 1,908 - (7,725)
------------------------ ----------- --------- ------------ --------- ------------ --------
Profit/(loss) for the
year 24,046 14,429 10,446 16,467 (27,518) 37,870
------------------------ ----------- --------- ------------ --------- ------------ --------
30 June 30 June 31 December
2022
2023 Restated(1) 2022
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
------------------------------------ --------- ------------ -----------
Segment assets
Property investment and development 375,023 336,185 355,491
Land promotion 152,251 139,678 149,598
Construction 48,116 55,395 45,766
Group overheads 5,826 3,564 3,612
------------------------------------ --------- ------------ -----------
581,216 534,822 554,467
Unallocated assets
Retirement benefit assets 8,108 8,361 6,188
Deferred tax assets 249 332 249
Cash and cash equivalents 20,536 21,526 17,401
------------------------------------ --------- ------------ -----------
Total assets 610,109 565,041 578,305
------------------------------------ --------- ------------ -----------
Segment liabilities
Property investment and development 52,955 35,104 59,113
Land promotion 14,183 10,753 13,114
Construction 28,427 48,035 36,994
Group overheads 5,274 4,025 568
------------------------------------ --------- ------------ -----------
100,839 97,917 109,789
Unallocated liabilities
Current tax liabilities 7,664 2,876 3,793
Deferred tax liabilities 4,878 6,573 4,401
Current lease liabilities 1,539 559 426
Current borrowings 85,000 60,000 65,000
Non-current lease liabilities 4,770 791 607
Total liabilities 204,690 168,716 184,016
------------------------------------ --------- ------------ -----------
Total net assets 405,419 396,325 394,289
------------------------------------ --------- ------------ -----------
(1) See 'Prior year restatements' for further details in the
'Basis of preparation and accounting policies'
4. REVENUE
The Group's revenue is derived from contracts with customers. In
the following table, revenue is disaggregated by primary activity,
being the Group's operating segments and timing of revenue
recognition:
Timing of revenue Timing of revenue
recognition recognition
------------------- -------------------
30 June 30 June
2023 At a 2022
Unaudited point Over Unaudited At a point Over
Activity in the United Kingdom GBP'000 in time time GBP'000 in time time
---------- ------- ---------- ----------- ------
Construction contracts:
- Construction 41,096 - 41,096 48,004 - 48,004
- Property investment and
development 24,663 - 24,663 12,356 - 12,356
Sale of land and properties:
- Property investment and
development 12,836 12,836 - 26,509 26,509 -
- House builder unit sales 31,012 31,012 - 15,007 15,007 -
- Land promotion 52,502 52,502 - 24,645 24,645 -
PFI concession 6,502 6,502 - 6,162 6,162 -
Revenue from contracts with
customers 168,611 102,852 65,759 132,683 72,323 60,360
------------------------------- ---------- ---------- ------- ---------- ----------- ------
Plant and equipment hire 7,996 8,670
Investment property rental
income 3,002 2,914
Other rental income - property
development 4 51
Other rental income - land
promotion 143 96
------------------------------- ---------- ---------- ------- ---------- ----------- ------
179,756 144,414
------------------------------- ---------- ---------- ------- ---------- ----------- ------
5. Earnings per ordinary share
Earnings per ordinary share is calculated on the weighted
average number of shares in issue being 133,386,168 (30 June 2022:
132,978,061). Diluted earnings per ordinary share is calculated on
the weighted average number of shares in issue adjusted for the
effects of any dilutive potential ordinary shares.
6. Dividends
Half year Half year Year
ended ended ended
30 June 30 June 31 December
2023 2022 2022
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
------------------------------------------------------ --------- --------- -----------
Amounts recognised as distributions to equity holders
in period:
Preference dividend on cumulative preference shares 11 11 21
Interim dividend for the year ended 31 December
2022 of 2.66p per share (2021: 2.42p) - - 3,540
Final dividend for the year ended 31 December 2022
of 4.00p per share (2021: 3.63p) 5,336 4,822 4,822
------------------------------------------------------ --------- --------- -----------
5,347 4,833 8,383
------------------------------------------------------ --------- --------- -----------
An interim dividend amounting to GBP3,910,000 (2022:
GBP3,540,000) will be paid on 13 October 2023 to shareholders whose
names are on the register at the close of business on 29 September
2023. The proposed interim dividend has not been approved at the
date of the Consolidated Statement of Financial Position and so has
not been included as a liability in these Financial Statements.
7. Tax
Half year Half year Year
ended ended ended
30 June 30 June 31 December
2023 2022 2022
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
-------------------------------------------------- --------- --------- -----------
Current tax:
UK corporation tax on profits for the period 4,886 5,733 8,690
Adjustment in respect of earlier periods (85) - (152)
-------------------------------------------------- --------- --------- -----------
Total current tax 4,801 5,733 8,538
-------------------------------------------------- --------- --------- -----------
Deferred tax:
Origination and reversal of temporary differences 1,004 338 (813)
Total deferred tax 1,004 338 (813)
-------------------------------------------------- --------- --------- -----------
Total tax 5,805 6,071 7,725
-------------------------------------------------- --------- --------- -----------
Corporation tax is calculated at 23.5% (31 December 2022: 19%)
of the estimated assessable profit for the period being
management's estimate of the weighted average corporation tax rate
for the period. The Group's effective rate of tax of
23.3% is lower than the standard rate of corporation tax due to
non-taxable property valuation increases.
In the Spring Budget 2021, the Government announced that from 1
April 2023 the main rate of UK corporation tax would increase to
25%. This new law was substantively enacted on 24 May 2021;
deferred tax balances at the period end have been measured at 25%
(2022: 25%), being the rate at which timing differences are
expected to reverse.
8. Investment properties
Investment
Completed property
investment under
property construction Total
GBP'000 GBP'000 GBP'000
----------------------------------------------- ----------- ------------- ---------
Fair value
At 1 January 2023 (audited) 87,198 9,918 97,116
Subsequent expenditure on investment property 83 6,892 6,975
Disposals (928) - (928)
Transfer to assets held for sale (1,042) - (1,042)
Increase/(decrease) in fair value in period 1,405 (810) 595
----------------------------------------------- ----------- ------------- ---------
At 30 June 2023 (unaudited) 86,716 16,000 102,716
----------------------------------------------- ----------- ------------- ---------
Adjustment in respect of tenant incentives (2,213) - (2,213)
----------------------------------------------- ----------- ------------- ---------
Market value at 30 June 2023 84,503 16,000 100,503
----------------------------------------------- ----------- ------------- ---------
Fair value
At 1 January 2022 95,177 9,000 104,177
Subsequent expenditure on investment property (48) - (48)
Disposals (3) - (3)
Transfer from inventory 4,542 - 4,542
Transfer to assets held for sale - (11,371) (11,371)
Increase in fair value in period 1,072 2,371 3,443
At 30 June 2022 (unaudited) 100,740 - 100,740
----------------------------------------------- ----------- ------------- ---------
Adjustment in respect of tenant incentives (2,132) - (2,132)
Market value at 30 June 2022 98,608 - 98,608
----------------------------------------------- ----------- ------------- ---------
Fair value
At 1 January 2022 95,177 9,000 104,177
Subsequent expenditure on investment property 8 9,265 9,273
Capitalised letting fees 2 26 28
Amortisation of capitalised letting fees (25) - (25)
Disposals (7,500) - (7,500)
Transfer from inventory 6,827 391 7,218
Transfer to assets held for sale - (11,134) (11,134)
Increase/(decrease) in fair value in period (7,291) 2,370 (4,921)
----------------------------------------------- ----------- ------------- ---------
At 31 December 2022 (audited) 87,198 9,918 97,116
Adjustment in respect of tenant incentives 2,234 - 2,234
Market value at 30 June 2023 89,432 9,918 99,350
----------------------------------------------- ----------- ------------- ---------
At 30 June 2023, the Group had entered into contractual
commitments for the acquisition and repair of investment property
amounting to GBP711,000 (31 December 2022: GBPnil).
9. Borrowings
Half year Half year Year
ended ended ended
30 June 30 June 31 December
2022
2023 Restated(1) 2022
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
------------------ --------- ------------ -----------
Bank loans 85,000 60,000 65,000
Lease liabilities 6,309 1,350 1,033
------------------ --------- ------------ -----------
91,309 61,350 66,033
------------------ --------- ------------ -----------
(1) See 'Prior year restatements' for further details in the
'Basis of preparation and accounting policies'
Movements in borrowings are analysed as follows:
GBP'000
-------------------------------- --------
At 1 January 2023 66,033
Secured bank loans 35,000
Repayment of secured bank loans (15,000)
New leases 5,851
Repayment of lease liabilities (575)
At 30 June 2023 91,309
-------------------------------- --------
Bank loans include the Group's revolving loan facility which
runs to January 2025 and is drawn for durations of up to six
months.
10. Provisions for liabilities and charges
Since 31 December 2023, the following movements on provisions
for liabilities and charges have occurred:
-- The road maintenance provision represents management's best estimate
of the Group's liability under a five-year rolling programme for
the maintenance of the Group's PFI asset. During the period GBP867,000
has been utilised and additional provisions of GBP583,000 have
been made, all of which were due to normal operating procedures.
-- The Land promotion provision represents management's best estimate
of the Group's liability to provide infrastructure and service
obligations, which remain with the Group following the disposal
of land. During the period, GBP887,000 has been utilised and additional
provisions of GBP23,000 have been made.
11. Defined benefit pension scheme
The main financial assumptions used in the valuation of the
liabilities of the scheme under IAS 19 are:
30 June 30 June 31 December
2023 2022 2022
% % %
----------------------------------------------- ------- ------- -----------
Retail Prices Index (RPI) 3.30 3.90 3.20
Consumer Prices Index (CPI) 2.70 2.75 2.60
Rate in increase to pensions in payment liable
for Limited Price Indexation (LPI) 2.70 2.75 2.60
Revaluation of deferred pensions 2.70 2.75 2.60
Liabilities discount rate 5.40 3.90 4.90
----------------------------------------------- ------- ------- -----------
Amounts recognised in the Consolidated Statement of
Comprehensive Income in respect of the scheme are as follows:
Half year Half year Year
ended ended ended
30 June 30 June 31 December
2023 2022 2022
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
----------------------------------------------------------- --------- --------- -----------
Service cost:
Ongoing scheme expenses 439 266 644
Net interest (income)/expense (196) 112 209
Pension Protection Fund 45 98 136
----------------------------------------------------------- --------- --------- -----------
Pension expenses recognised in profit or loss 288 476 989
----------------------------------------------------------- --------- --------- -----------
Remeasurement on the net defined benefit liability:
Return on plan assets (excluding amounts included
in net interest expense) 6,451 32,573 50,365
Actuarial losses/(gains) arising from changes
in demographic assumptions 986 - (1,070)
Actuarial losses/(gains) arising from experience
adjustments 2,138 (721) (721)
Actuarial gains arising from changes in financial
assumptions (7,526) (50,694) (63,568)
Actuarial losses/(gains) recognised in other comprehensive
income 2,049 (18,842) (14,994)
----------------------------------------------------------- --------- --------- -----------
Total 2,337 (18,366) (14,005)
----------------------------------------------------------- --------- --------- -----------
The amount included in the Statement of Financial Position
arising from the Group's obligations in respect of the scheme is as
follows:
Half year Half year Year
Ended ended ended
30 June 30 June 31 December
2023 2022 2022
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
------------------------------------ --------- --------- -----------
Present value of scheme obligations 147,410 168,369 152,576
Fair value of scheme assets (155,518) (176,730) (158,764)
------------------------------------ --------- --------- -----------
(8,108) (8,361) (6,188)
------------------------------------ --------- --------- -----------
12. Related party transactions
There have been no material transactions with related parties
during the period.
There have been no material changes to the related party
arrangements as reported in note 28 to the Annual Report and
Financial Statements for the year ended 31 December 2022.
Transactions between the Company and its subsidiaries, which are
related parties, have been eliminated on consolidation and are not
disclosed in this note.
13. SHARE CAPITAL
Half year Half year Year
ended ended ended
30 June 30 June 31 December
2023 2022 2022
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
----------------------------------------------------- --------- --------- -----------
400,000 5.25% cumulative preference shares of
GBP1 each (31 December 2022: 400,000) 400 400 400
133,984,551 ordinary shares of 10p each (31 December
2022: 133,627,922) 13,398 13,347 13,363
----------------------------------------------------- --------- --------- -----------
13,798 13,747 13,763
----------------------------------------------------- --------- --------- -----------
14. Cash generated from operations
Half year Half year Year
ended ended ended
30 June 30 June 31 December
2023 2022 2022
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
--------------------------------------------------- --------- --------- -----------
Profit before tax 24,959 38,777 45,595
Adjustments for:
Amortisation of PFI asset 279 293 579
Goodwill impairment 102 102 203
Depreciation of property, plant and equipment 2,125 1,926 3,957
Depreciation of right-of-use assets 287 298 597
Revaluation (increase)/decrease in investment
properties (595) (3,443) 4,921
Amortisation of capitalised letting fees - - 25
Share-based payment expense 744 595 1,241
Pension scheme credit (3,969) (1,747) (3,422)
(Profit)/loss on disposal of property, plant and
equipment (excluding equipment held for hire) 14 (113) (176)
Profit on disposal of equipment held for hire (596) (389) (1,070)
Loss on disposal of right-of-use assets - 1 -
Profit on disposal of investment properties (85) - (646)
Loss on disposal of assets held for sale - - 150
Gain on disposal of joint ventures - - (667)
Finance income (1,769) (535) (1,641)
Finance costs 2,495 883 2,503
Share of profit of joint ventures and associates (188) (10,376) (9,079)
--------------------------------------------------- --------- --------- -----------
Operating cash flows before movements in equipment
held for hire 23,803 26,272 43,070
Purchase of equipment held for hire (2,538) (3,450) (5,454)
Proceeds on disposal of equipment held for hire 722 550 1,343
--------------------------------------------------- --------- --------- -----------
Operating cash flows before movements in working
capital 21,987 23,372 38,959
Increase in inventories (5,886) (22,140) (63,701)
Increase in receivables (6,005) (7,619) (3,763)
Increase/(decrease) in contract assets 1,836 (5,205) (11,701)
(Increase)/decrease in payables (3,252) 9,413 24,684
(Increase)/decrease in contract liabilities (2,540) 2,697 (1,027)
Cash generated from operations 6,140 518 (16,549)
--------------------------------------------------- --------- --------- -----------
Net debt is an alternative performance measure used by the Group
and comprises the following(1) :
Analysis of net debt(1) :
Cash and cash equivalents 20,538 21,526 17,401
Bank overdrafts - - -
------------------------------ -------- -------- --------
Net cash and cash equivalents 20,538 21,526 17,401
Bank loans (85,000) (60,000) (65,000)
Lease liabilities (6,309) (1,350) (1,033)
Net debt (70,771) (39,824) (48,632)
------------------------------ -------- -------- --------
(1) See 'Prior year restatements' for further details in the
'Basis of preparation and accounting policies'
15. GROUP RISKS AND UNCERTAINTIES
The Directors consider that the principal risks and
uncertainties which could have a material impact on the Group's
performance over the remaining six months of the 2023 financial
year remain consistent with those set out in the Strategic Report
on pages 52 to 56 of the Group's Annual Report and Financial
Statements. These risks and uncertainties include:
Safety; Environmental and climate change; Economic; People and
culture; Funding; Cyber; Pensions; Construction contracts; Property
assets; Property development; Land sourcing; Land demand;
Political.
The Group is mindful of sustained inflation, increasing interest
rates and the low levels of growth in the UK economy, and
particularly the impact this has on the residential housing market.
This continues to be mitigated by maintaining a robust balance
sheet, prudent levels of gearing and being selective of the
opportunities we progress.
The Group operates a system of internal control and risk
management in order to provide assurance that it is managing risk
while achieving our business objectives. No system can fully
eliminate risk and therefore the understanding of operational risk
is central to the management process within Henry Boot. The
long-term success of the Group depends on the continual review,
assessment and control of the key business risks it faces.
16. Approval
The issue of these statements was formally approved by a duly
appointed committee of the Board on 19 September 2023.
RESPONSIBILITY STATEMENTS OF THE DIRECTORS
The Directors confirm that these condensed interim Financial
Statements have been prepared in accordance with International
Accounting Standard 34, 'Interim Financial Reporting', as adopted
by the European Union and that the interim management report
includes a fair review of the information required by DTR 4.2.7 and
DTR 4.2.8, namely:
-- an indication of important events that have occurred during the
first six months and their impact on the condensed set of financial
statements, and a description of the principal risks and uncertainties
for the remaining six months of the financial year; and
-- material related-party transactions in the first six months and
any material changes in the related-party transactions described
in the last Annual Report.
The Directors of Henry Boot PLC are listed in the Henry Boot PLC
Annual Report for the year ended 31 December 2022. A list of
current Directors is maintained on the Henry Boot PLC Group
website: www.henryboot.co.uk .
On behalf of the Board
T A ROBERTS D L LITTLEWOOD
Director Director
19 September 2023 19 September 2023
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