1、26323 5 April 2019 3:49 pm Proof 24Sharing expertise,building relationships.Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2018Henry Boot PLCAnnual Report and Financial Statements for the year ended 31 December 2018Stock Code:BOOT.Lwww.henryboot.co.ukHenry Boot
2、AR2018-Overview+Strategic Report.indd 326323 5 April 2019 3:49 pm Proof 24Welcome to the Henry Boot PLC Annual Report 2018Sharing expertise,building relationships.Our Geographical ReachNational coverage The head office of the Henry Boot Group is located in Sheffield but we operate throughout the cou
3、ntry.We have nine regional offices and seven plant hire centres to ensure that we are close to our strategic sites and we are able to maximise our development opportunities.Head OfficeSheffield Offices Birmingham Bristol Dronfield Glasgow Leeds London Manchester Northampton Stocksfield Hire Centres
4、Chesterfield Dronfield Derby Leeds Leicester Rotherham WakefieldOur culture,The Henry Boot Way means that we have an unique and cohesive approach to doing business.We started The One Henry Boot Project so we could capture what The Henry Boot Way is about.We have defined three core elements of The He
5、nry Boot Way:Our Purpose,Our Vision and Our Values.Read about the The Henry Boot Way on pages 14 and 15Established in 1886,we are one of the UKs leading land promotion,property investment and development,and construction companies.Henry Boot AR2018-Overview+Strategic Report.indd 405/04/2019 16:24:12
6、26323 5 April 2019 3:49 pm Proof 24Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 201801OverviewRead about our Business Model on pages 16 to 19OverviewChairmans Statement02Group at a Glance062018 Highlights08Investment Case09Strategic ReportChief Executive Offic
7、er Update12The Henry Boot Way14Business Model Competitive Advantages16Business Model Sustainable Value19Market Review20Segmental Reviews:Land Promotion24 Property Investment and Development26 Construction28Segmental Case Studies30Financial Review34Our Strategy40 Dashboard42 Key Performance Indicator
8、s46Risks and Uncertainties48Corporate Responsibility56GovernanceBoard of Directors68Senior Management72Chairmans Introduction73Corporate Governance Statement74Nomination Committee Report84Audit and Risk Committee Report86Directors Remuneration Report89Directors Report102Statement of Directors Respon
9、sibilities108Financial StatementsIndependent Auditors Report112Consolidated Statement of Comprehensive Income122Statements of Financial Position123Statements of Changes in Equity124Statements of Cash Flows125Principal Accounting Policies126Notes to the Financial Statements136Shareholder InformationN
10、otice of Annual General Meeting174Financial Calendar180Advisers180Group Contact Information181Glossary 182 ContentsInside this ReportGroup at a GlanceThe strength and balance of the Group is achieved through an ordered structure and diverse business segments.Our StrategyThe Group strategic prioritie
11、s ensure our Purpose is fulfilled and our Vision is achieved.Business ModelOur ability to deliver long-term value for stakeholders is underpinned by our business model.The One Henry Boot ProjectInitiated to understand the importance of what The Henry Boot Way,our culture,means to the Group.Read abou
12、t the Group at a Glance on pages 06 and 07Watch our Business Model video at www.henryboot.co.ukRead about Our Strategy on pages 40 to 47Read about The Henry Boot Project on page 12View the Year in Review site at We maintain a Corporate website containing a wide range of information of interest to in
13、vestors and stakeholders www.henryboot.co.uknotes-heading-level-onenotes-heading-level-twonotes-heading-level-threenotes-heading-level-fournotes-straplinenotes-text-body notes-list-bullet notes-list-bespoke notes-list-dashd.notes-list-alpha5.notes-list-numbervi.notes-list-romanHenry Boot AR2018-Over
14、view+Strategic Report.indd 126323 5 April 2019 3:49 pm Proof 2402Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2018OverviewChairmans Statementprocess.Henry Boot Developments,our property investment and development business,performed well but was not able to pro
15、gress certain schemes as quickly as it had originally anticipated.This was due to a combination of planning delays and the higher levels of due diligence that now accompany real estate transactions.Furthermore,the 2017 results of this business benefited from the rapid sales of 164 apartments at the
16、former Terrys Chocolate Factory which brought profit forward from 2018.Stonebridge Homes,our jointly owned Leeds-based housebuilder,achieved 145 completions,up 84%on the 79 units completed in 2017.Once again,planning permission delays have affected the speed at which Stonebridge Homes was able to re
17、plenish its land portfolio.However,its proven ability to deliver much needed housing will result in more opportunities to buy land.We delivered 71m of construction activity in the year,I am pleased to report that Henry Boot PLC achieved a profit before tax of 48.6m,another strong performance,in a ye
18、ar that was typified by higher levels of economic uncertainty and global political tension.Exceeding expectations.This is the second-best result in our 133-year history,and,excluding a one-off unexpected pension scheme provision of 1.5m in relation to Guaranteed Minimum Pensions,this performance exc
19、eeded our expectations.Earnings per share were 28.3p covering our proposed dividend over three times.Net assets rose to over 300m with NAV per share at 227p,an increase of 12%.Gearing,as we move into a potentially challenging year,was very prudent at 6%.The two key profit drivers within the Group ar
20、e:Hallam Land and Henry Boot Developments.In 2018,Hallam Land,our land promotion business,performed exceptionally well,selling over 3,500 units on 24 sites to help replenish the UK housebuilders development land inventory.It retains a site portfolio of 14,325 acres and still holds 16,489 units with
21、planning permission,held at cost with no planning gain value recognition,that are working through the sale Net asset value per ordinary share227pEarnings per ordinary share28.3p2018227p203p177p168p152p2017201620152014201828.3p32.1p21.5p17.5p16.2p2017201620152014Henry Boot AR2018-Overview+Strategic R
22、eport.indd 226323 5 April 2019 3:49 pm Proof 24Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 201803OverviewJamie Boot ChairmanHenry Boot AR2018-Overview+Strategic Report.indd 326323 5 April 2019 3:49 pm Proof 2404Henry Boot PLC Annual Report and Financial State
23、ments for the year ended 31 December 2018OverviewChairmans Statementup from 60m in 2017 and,given levels of already confirmed contract work and the number of opportunities open to us,we anticipate further growth in 2019.Banner Plant and Road Link A69,where we own a 61%share through to 2026,performed
24、 in line with expectations.DividendI am pleased to report to shareholders that the Board is recommending a final dividend of 5.8p which,together with the interim of 3.2p,gives a total of 9.0p for the year,an increase of 13%over the 8.0p paid in 2017.Payment of the final dividend is subject to shareh
25、older approval at the Annual General Meeting and will be paid on 29 May 2019 to shareholders on the register as at 26 April 2019.Our PeopleThe successful results in 2018 were achieved against a more challenging economic and political backdrop with the markets in which we operated being affected by a
26、 higher level of uncertainty.Against this background,our most valuable resource our people performed exceptionally well.We continue to empower our teams,both financially and through training initiatives,to acquire new opportunities and deliver profitable outcomes for our schemes.On behalf of the Boa
27、rd,our shareholders and other stakeholders,I salute our people for their resilience,skill and hard work in 2018.I am sure they will deal with the challenges that 2019 brings by using that same approach.OutlookThe key strategic ethos of Henry Boot is to create long-term value and sustainable growth f
28、or our stakeholders by financially empowering and commercially developing our people.2018 continued this journey as we delivered yet another strong financial performance,while replenishing the longer-term property investment and development opportunities within the business.We anticipate that 2019 w
29、ill be a challenging year,as the UK real estate sector adapts to the marketplace in anticipation of the UKs departure from the EU.In advance of this,we have taken the opportunity to reduce gearing through 2018 to take advantage of any opportunities which may arise through 2019.Henry Boot Constructio
30、n has started the year with a strong committed order book,certain commercial developments anticipated to start during 2018 have now commenced and one sale expected to complete in 2018 completed in January 2019.We remain committed to our chosen sectors of strategic land,commercial and residential pro
31、perty investment and development and construction.I remain confident that the skilled,experienced and dedicated teams in each of our businesses will achieve sector-leading results,despite the challenges we face.As reported before,we retain and continue to build an extensive pipeline of opportunities
32、 in each of our businesses.The Groups annual results are driven by the profitable delivery of schemes for that year but,rest assured that our teams are committed to the long-term financial success of each site we hold,irrespective of which financial period the profit ultimately arises in.It is throu
33、gh this attention to detail,on a site-by-site basis,that we ultimately achieve long-term value creation for all our stakeholders which is what we are resolutely committed to.Despite the macro uncertainty in the UK real estate market,the new year has started well and the Boards expectations for the c
34、urrent financial year remain unchanged.Jamie Boot Chairman 11 April 2019I remain confident that the skilled,experienced and dedicated teams in each of our businesses will achieve sector-leading results,despite the challenges we face.Jamie Boot,Chairman20189.00p8.00p7.00p6.10p5.60p2017201620152014Div
35、idends per Ordinary Share9.00pHenry Boot AR2018-Overview+Strategic Report.indd 426323 5 April 2019 3:49 pm Proof 24Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 201805OverviewHenry Boot AR2018-Overview+Strategic Report.indd 505/04/2019 16:24:2126323 5 April 201
36、9 3:49 pm Proof 2406Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2018OverviewGroup at a GlanceProfit before tax48.6m201848.6m55.4m39.5m32.4m28.3m2017201620152014The Group is split into three different business segments consisting of six primary businesses.The
37、Parent Company,Henry Boot PLC,exists to provide leadership,direction and support in a number of areas to the businesses.Land Promotion Property Investment and Development Construction Group Overheads/EliminationsGroup revenue397.1m2018397.1m408.5m306.8m176.2m147.2m2017201620152014 Hallam Land Manage
38、mentLimitedHenry BootDevelopment LimitedStonebridge HomesLimitedProperty Investment and DevelopmentHenry BootConstruction LimitedBanner Plant LimitedRoad Link(A69)LimitedConstructionLand PromotionExpertise,experience and agility Land Promotion Property Investment and Development Construction Group O
39、verheads/Eliminations74.8m221.9m 102.9m(2.5m)28.5m15.9m 9.2m(5.0m)Henry Boot AR2018-Overview+Strategic Report.indd 605/04/2019 16:24:2226323 5 April 2019 3:49 pm Proof 24Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 201807OverviewProperty Investment and Develop
40、mentHenry Boot DevelopmentsOne of the most progressive property companies in the UK with its considerable experience and impressive reputation in all sectors of property development.Currently the company has a commercial development pipeline of over 1bn.Key sectors:Retail,industrial,leisure,office s
41、pace and commercial development Development partnerships Residential developmentStonebridge HomesA jointly owned company(controlled by Henry Boot PLC)in the north of England which develops family homes that combine care,consideration and attention to detail.The company also provides high specificati
42、on fully serviced office space to small business occupiers.Key sectors:Residential development Serviced office space ConstructionLand PromotionHenry Boot ConstructionSpecialising in serving both public and private clients in all construction and civil engineering sectors,in which we have strong part
43、nering relationships.Key sectors:Housing,civil engineering,health,sports and leisure,commercial/retail,industrial,custodial and educationBanner PlantOffering a wide range of construction equipment and services for sale and hire in plant,temporary accommodation,power tools,powered access,big air comp
44、ressors and serviced toilets.The range of products continues to evolve to meet customer requirements in modern health and safety legislation.Primarily,supply areas stretch from Yorkshire in the north to the East Midlands and Birmingham in the south.Road Link(A69)Road Link has a 30-year contract(seve
45、n years remaining)with Highways England to operate and maintain the A69 trunk road between Carlisle and Newcastle upon Tyne.Works include road resurfacing,bridge repairs,winter preparation and routine maintenance.Highways England pays Road Link(A69)a shadow toll,which is a fee based upon the number
46、of vehicles using the road and mileage travelled by those vehicles.Hallam Land ManagementThe strategic land and planning promotion arm of the Henry Boot Group.Since 1990 we have been acquiring,promoting and developing land with an outstanding record in achieving planning permission.Key sectors:Housi
47、ng Sustainable communities Business parksHenry Boot AR2018-Overview+Strategic Report.indd 705/04/2019 16:24:2626323 8 April 2019 11:41 am Proof 2408Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2018OverviewProfit before tax48.6mNet asset value per ordinary shar
48、e227pNet debt18.6mEarnings per ordinary share28.3pOperating profit49.2mDividends per ordinary share9.00p2018 HighlightsOperational Highlights Strong set of results delivered,in line with market expectation.Over 3,500 units,across 24 sites,sold during the year.Stonebridge Homes delivered sales of 145
49、 units,nearly doubling the amount from 2017.The 333m joint venture development,TECA,remains within cost budget and is set to open mid 2019.Henry Boot Construction delivered over 70m of construction activity across all sectors of their operations.Net debt reduced to 18.6m.The One Henry Boot Project h
50、as completed having achieved its purpose of understanding our culture.GDV of current development schemes in delivery is over 700m,of which 400m has been delivered at the end of 2018.Read the Financial Review on pages 34 to 39Read the Segmental Reviews on pages 24 to 29201848.6m55.4m39.5m32.4m28.3m20
51、17201620152014201818.6m29.0m32.9m38.9m36.4m2017201620152014201849.2m56.2m39.5m31.7m28.0m20172016201520142018227p203p177p168p152p2017201620152014201828.3p32.1p21.5p17.5p16.2p201720162015201420189.00p8.00p7.00p6.10p5.60p2017201620152014Financial HighlightsHenry Boot AR2018-Overview+Strategic Report.in
52、dd 808/04/2019 15:39:2926323 5 April 2019 3:49 pm Proof 2409Overview Reinvestment of cash generated in the construction segment into strategic land and commercial development assets to enhance returns to shareholders.We aim to provide dividend growth while maintaining at least three times dividend c
53、over to allow for investment in future opportunities,without diluting existing shareholders by raising new equity capital.Providing reliable earnings through cyclical markets with good visibility from the opportunities under control.Prudent debt levels and a disciplined approach to risk management.T
54、rading profit produced within our three business segments:Land Promotion,Property Investment and Development and Construction.1 Good financial track record over the long term2 A long-established and efficient capital structure3 Delivering residential communities4 Delivering commercial opportunity5 S
55、hareholder returns Over 14,000 acres of strategic land on 178 sites throughout the UK.Our strategic land business has the scope to deliver 60,000 to 70,000 housing units over the next 10 to 20 years,with 16,489 secured planning permission plots.Given the well-documented housing shortages and the gov
56、ernments desire for more housing delivery,our land portfolio is well positioned to help deliver these much needed houses.A commercial development pipeline of 1bn plus of Gross Development Value in addition to over 300m to be delivered over the next three years.A small but quickly growing jointly own
57、ed housebuilder with a land portfolio of over 800 units and a medium-term planned output of 250 unit sales.Our long-term strategic aim is to create shareholder value through land promotion,property development and construction.Strong organic growth drivers and capital allocation across our three bus
58、iness segments.Dividend has increased by 180%over the last ten years.Key drivers of growth.Investment Case0FTSE Small Cap IndexHenry Boot PLCDec-08Dec-09Dec-10Dec-11Dec-12Dec-13Dec-14Dec-15Dec-16Dec-17Dec-18700600500400300200100(100)Ten-year TSR performanceHenry Boot AR2018-Overview+Strategic Report
59、.indd 905/04/2019 16:24:2626323 5 April 2019 3:49 pm Proof 2410Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2018Strategic ReportHenry Boot AR2018-Overview+Strategic Report.indd 1026323 5 April 2019 3:49 pm Proof 24Henry Boot PLC Annual Report and Financial Sta
60、tements for the year ended 31 December 201811Strategic Report11Strategic ReportA review of our business and strategyWorking in partnership to make things happen.The Directors present the Group Strategic Report for the year ended 31 December 2018.This report sets out how Henry Boot continues to creat
61、e consistent value through the promotion of new land opportunities,the development of and investment in high quality property assets and construction activities.The Strategic Report on pages 12 to 65 has been approved by the Board and signed on its behalf byJohn Sutcliffe Chief Executive Officer11 A
62、pril 2019Darren Littlewood Group Finance Director11 April 2019Henry Boot AR2018-Overview+Strategic Report.indd 1126323 5 April 2019 3:49 pm Proof 2412Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2018Strategic ReportChief Executive Officer UpdateOne Henry BootT
63、he now complete One Henry Boot Project has been an important story referred to in the past two reports.The purpose of the project was to define our culture,vision and values,which we refer to as The Henry Boot Way,by setting up a Working Group of volunteers from across our Group of companies.This pr
64、oject was launched internally in 2017 to ensure the results resonated with our businesses in practice.During 2018,we began the second phase of the project,with an additional eight Working Groups being set up and the external launch of The Henry Boot Way.We split the launch internally and externally
65、to allow the business time to process and embed The Henry Boot Way.The external launch to our stakeholders took place in March 2018 and was met with very positive feedback.Our customers,partners and clients told us that they recognised The Henry Boot Way to be authentic to our identity and the way w
66、e operate.We will continue to share The Henry Boot Way externally as we grow our business and form new relationships.The eight Working Groups were given specific topics to debate and to make improvements on.These ranged from how we induct and recruit to how we support career development.In total,the
67、re were 60 recommendations with 45 already implemented and contributing to the business.This represented a fantastic achievement by the employees involved and a real testament to the One Henry Boot Project.In June 2018 the One Henry Boot Project closed after achieving its purpose.However,this is by
68、no means the end,as the work undertaken will now embed naturally in the business.The Henry Boot Way will continue to be one of the key elements of our strategy to achieve long term future success.TimelineIdentify opportunities and acquire land2018Identify opportunities and acquire land2017Identify o
69、pportunities and acquire land2019FebruaryAugustSeptemberDecemberJanuaryJuneJulyOngoingLaunch of One Henry Boot ProjectDefined The Henry Boot WayLaunch of The Henry Boot WayAdoption of The Henry Boot WayEmbedding of The Henry Boot WayInvestors in PeopleLast year Henry Boot PLC and Henry Boot Developm
70、ents gained Investors In People accreditation.The plan had been to achieve Group accreditation,however after an internal review,it was agreed that subsidiaries should apply separately.This allowed each business the time to focus on meeting the standards at their own pace.With Henry Boot Construction
71、 and Road Link already having accreditation,our focus now shifts to the remaining subsidiaries,who we have no doubt will follow in due course.Read about our People in the Corporate Responsibility section on pages 58 to 60John Sutcliffe Chief Executive OfficerLaunch,Adoption&Embedding.Henry Boot AR20
72、18-Overview+Strategic Report.indd 1226323 5 April 2019 3:49 pm Proof 24Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 201813Strategic ReportJohn Sutcliffe Chief Executive OfficerHenry Boot AR2018-Overview+Strategic Report.indd 1326323 5 April 2019 3:49 pm Proof
73、2414Overview The Henry Boot WayBuilt from the ground up.Our culture,The Henry Boot Way means that we have a unique and cohesive approach to doing business.We started The One Henry Boot Project so we could capture what The Henry Boot Way is about.We have defined three core elements of The Henry Boot
74、Way:Our Purpose,Our Vision and Our Values.Our PurposeTo empower and develop our people to create long-term value and sustainable growth for our stakeholders*.Our VisionOur people,partners and communities continue to trust our reputation,respect our expertise and value us for our forward-thinking app
75、roach.*Our stakeholders are our shareholders,employees,pensioners,customers and suppliers.More broadly,we recognise our duties to the environment and the communities in which we operate.Our ValuesRespect We treat everyone in the way they wish to be treated.We think about what we do,how we do it and
76、how it will impact others.We recognise and value difference.We recognise and value everyones individual contribution.We foster two-way,clear and constructive communication.We strive to always meet our commitments and obligations.We put sustainability and safety at the heart of what we do.Loyalty We
77、celebrate our heritage,our history and our achievements.We are committed to giving back to our communities.We build our reputation on strong relationships.We build our reputation on repeat business.We value the longevity of our relationships with our business and our partners.We are totally committe
78、d to our peoples learning and development.We place great value on“growing our own”.Integrity We do what we say we are going to do.We keep our promises,stay true to our word.We do what is right,not what is easy.We tackle problems head on.We operate with the utmost professionalism.We champion ethical
79、working.We operate fairly and equitably in everything we do.Henry Boot AR2018-Overview+Strategic Report.indd 1426323 5 April 2019 3:49 pm Proof 24Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 201815OverviewDelivery We are relentless in delivering for our custom
80、er.We thrive on our customers success.We deliver our best quality work for everyone,no matter what.We get things done properly.We are skilled and resourceful problem-solvers.We are all self-motivated to deliver.We set ambitious goals and meet them.Collaboration We set clear mutual expectations and s
81、trive to achieve them.We work in partnership to make things happen.We promote cross-team working always.We are a friendly and open bunch.We look out for each other and want to get to know people.We have time and patience for people.We share our financial rewards with our people.Adaptability We welco
82、me change.We are open to opportunities to do things differently.We share our knowledge and experience for the greater good.We seek to positively challenge what we do and how we do it.We always think about how we could do things better.We stay ahead of the game.We are resilient,have staying power.We
83、are straightforward to do business with.Henry Boot AR2018-Overview+Strategic Report.indd 1526323 5 April 2019 3:49 pm Proof 24Strategic Report16Business ModelCompetitive advantages.The business model describes how our three business segments successfully operate for the combined benefit of the Group
84、.The key competitive advantages the business model has to offer are:Expertise We have been in business for over 130 years and we are valued for our expertise and forward-thinking approach.This expertise varies throughout the diversified business segments:Land promotion Identifying land with future p
85、otential Various investment methods(being owned,optioned or agency agreements)allow us to meet the needs of landowners whilst maximising the number of opportunities available Taking land through the complexities of the planning systemProperty Investment&Development Acquiring and developing brownfiel
86、d land or under performing property assets Operating in diverse sectors to maximise development opportunities Developing partnership arrangementsConstruction Project delivery in both the public and private sector,on-time and within budget Creating trusted relationships and repeat business Supplying
87、a wide range of plant equipment efficientlyRelationshipsCreating lasting relationships with clients,partners and customers is fundamental to the way we do business.We ensure landowners are guided through the planning system,work with key property advisers to become aware of potential opportunities a
88、nd deliver on time to create repeat business in each of the Groups segments.Our reputation and success are built on the relationships we create,and we take great care to ensure we build on these for the future.Capital StructureThe property investment portfolio of Henry Boot Developments generates a
89、sizeable amount of rental income each year which allows us to borrow against the investment portfolio at attractive rates.The Construction segment is self-funded and cash generative.We reinvest the cash generated from these activities into strategic land and property development.The revenues generat
90、ed from the sale of land and property development is not regular,recurring income and it would not be possible to directly fund these activities through borrowings.Our financial structure allows us to invest in the more profitable areas of the business(strategic land and property development)to maxi
91、mise the value generated while maintaining prudent gearing levels.Diversified businessesThe Groups three business segments operate across the whole property value chain.Each segment is involved in multiple sectors residential,leisure,retail,industrial,office and civil engineering which means that we
92、 are not overly exposed to one area of the market.This enables us to weather economic fluctuations and deliver on our key objective of maximising Stakeholder value.Read about Our Diversified Business on pages 06 and 07Henry Boot AR2018-Overview+Strategic Report.indd 1605/04/2019 16:24:3526323 5 Apri
93、l 2019 3:49 pm Proof 24Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 201817Strategic ReportBusiness ModelIdentify opportunities&acquire landIdentify opportunities&acquire landObtain planning permissionObtain planning permissionDevelopment of siteHBD and Stonebr
94、idge Homes develop the sites themselves.HBD have the ability to self-fund or source prefunding.This means the company can commit to long-term projects,such as complex multi-site regeneration schemes.HBD will gain planning permission for commercial development.Stonebridge Homes promotes land for resi
95、dential development.Henry Boot Developments(HBD)acquires mainly brownfield land for commercial development.HLM promotes land for residential,commercial and retail consent.Gaining planning permission on the land adds immense value to its worth and is crucial part of their operation.Hallam Land Manage
96、ment(HLM)acquires mainly agricultural land and then promotes it for its highest value use.The use of agency and option agreements is used to secure the land,which can reduce the expenditure on each asset allowing us to maximise the number of land opportunities.However,HLM will buy the land outright
97、if an opportunity presents itself.The six primary businesses within Henry Boot all operate relatively autonomously within their respective business segments.The businesses will work on the same projects if the circumstances are right.For example,Henry Boot Construction may act as a construction cont
98、ractor for the Property Investment and Development business,if it tenders the best bid.The businesses share ideas and best practice with each other.Identify opportunities and acquire landIdentify opportunities and acquire landIdentify opportunities and acquire landIdentify opportunities and acquire
99、landInvestment into land and planning permission processDevelopment of siteInvestment portfolioConstructionObtain planning permissionCyclical RevenueRecurring RevenueIdentify opportunities and acquire landSale of landHenry Boot AR2018-Overview+Strategic Report.indd 1705/04/2019 16:24:3626323 5 April
100、 2019 3:49 pm Proof 24Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 201818Strategic ReportSale of propertySale of landInvestment PortfolioConstructionHLM sells land to a developer,occasionally after infrastructure has been installed.The amount of capital requir
101、ed to achieve planning permission on land is very small in comparison to the whole building process.HLM is focused on maximising the most profitable section of the house building process for the lowest amount of working capital.Once a property is developed,it may be immediately sold,generating signi
102、ficant revenue.Properties may also be retained by the business to form part of the investment portfolio which may be sold at a later time.A number of the finished property developments are retained and managed by the Property Investment.The Development segment and the Property Investment portfolio i
103、s worth over 120m.Henry Boot Construction is a contractor specialising in servicing both public and private clients in all construction and civil engineering sectors.Banner Plant offers a wide range of services,and a high quality inventory of equipment for hire and sale,such as temporary accommodati
104、on,powered access equipment,tools and non-man operated plant.Road Link(A69)has a contract with Highways England to operate and maintain the A69 truck road between Carlisle and Newcastle upon Tyne.Highways England pays Road Link a fee based on the number of vehicles using the road and the mileage tra
105、velled.KeyLand Promotion Hallam Land ManagementProperty Investment&Development Henry Boot Developments Stonebridge HomesConstruction Henry Boot Construction Banner Plant Road Link(A69)Revenue Cyclical Recurring View the video explaining our Business Model on our corporate websiteDevelopment of siteS
106、ale of propertySale of landHenry Boot AR2018-Overview+Strategic Report.indd 1805/04/2019 16:24:3626323 5 April 2019 3:49 pm Proof 24Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 201819Strategic ReportBusiness ModelFinancial StrengthAs a result of our financial
107、structure,we can invest in the more profitable areas of the business(strategic land and property development)to maximise the value generated while maintaining prudent gearing levels.Stakeholder valueSustainable valueRecurring RevenueThe revenue from construction and the property investment portfolio
108、 is regular and stable.This income allows Henry Boot PLC to maintain long term bank funding relationships.Cyclical RevenueSale of land and property developments generates cyclical revenue.These activities are riskier and give varying amounts of profit through each economic cycle.These profits,in goo
109、d years,contribute significantly to the stable profits from construction and property investment.ShareholdersOperating transparently and responsibly,we regularly engage with our investors to give an understanding of our business model and provide updates on the Groups progress.EmployeesOur employees
110、 are integral in bringing the business model into operation.We attract,retain and motivate employees by creating an environment that allows growth and development.This increases the potential for all our people to have long term career opportunities in the Group.CommunitiesWe aim to develop and main
111、tain strong relationships with the communities we operate in.An important aspect of our approach is to work in partnership with organisations to share benefits equally.We believe the business model plays a fundamental role in creating sustainable value for the Group and our Stakeholders.The competit
112、ive advantages it offers allows us to operate efficiently and meet Our Purpose of creating long-term value.Read more in our Corporate Responsibility Section on pages 56 to 65GroupInvestment into land acquisition and planning permission processBank FundingCyclical RevenueRecurring RevenueHenry Boot A
113、R2018-Overview+Strategic Report.indd 1926323 5 April 2019 3:49 pm Proof 24Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 201820Strategic ReportMarket ReviewAnnual land value growthSource:Savills Research,HBF,Glenigan0UK greenfieldUK urbanUK planning consentsDec
114、18160100401401208060Index(100=2007/08 peak)Dec 14Dec 15Dec 16Dec 17Land PromotionDuring 2018 residential land value remained stable,helped by Government initiatives on affordable housing and Help to Buy,which was relaunched in the Autumn.The housing market continues to be buoyed by low interest rate
115、s and good availability of borrowing.Our major customers continue to be the large UK housebuilders,but additionally during the year we sold two sites to Housing Associations,broadening our future customer base.The Government continues with welcome planning reforms,such as National Planning Policy Fr
116、amework(NPPF),re-issued in the summer of 2018,with the objective of increasing the amount of planning consented land so that the national target of building 300,000 new homes per annum by the mid 2020s can be achieved.We do not expect significant structural change to the planning process that would
117、impact significantly on our strategic land business,but,as we have seen over the last decade,we do anticipate continued pressure on land value through Section 106 negotiations requiring more affordable housing and higher payments towards infrastructure.The housing market in 2018 remained resilient,a
118、nd sales in the new homes sector,as opposed to second hand homes,were maintained.The underlying market for our land remains strong with Halifax anticipating“continued stability in house prices during 2019 with between 2%and 4%price inflation”.However,the planning process remains very protracted and
119、expensive and accordingly sites in valuable market areas continue to be the most sought after.We continually review the markets our business segments operate in to identify market trends and conditions which can affect the Group.The analysis helps form the strategy that will deliver the Groups key p
120、riorities and the identification of risk.Henry Boot AR2018-Overview+Strategic Report.indd 2005/04/2019 16:24:3926323 5 April 2019 3:49 pm Proof 24Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2018In common with other industries,the Brexit uncertainty has fed th
121、rough into the UK property investment and development market.This has resulted in net investment disposals which has led,in turn,to lower rents and valuations,particularly for retail assets.However,the fundamentals of the UK property market remain strong with relatively low loan to value ratios and
122、a diverse and experienced range of investors.Therefore,whilst we may see some market uncertainty whilst investors and occupiers fully assess the Brexit outcome,the medium-term prospects for the UK commercial property sector remain positive.Indeed,for international investors,the UK continues to be a
123、favoured property option due to its legal and tax transparency,and any sterling depreciation will,we believe,only increase the appetite for overseas investment into the UK commercial property market.Net yields%Source:JLL&IPD7.06.05.00All Property Types4.0RetailOfficeIndustrial8.0Dec 14Dec 15Dec 16De
124、c 17Dec 18Property Investment and DevelopmentThe strongest sub sectors of the market through 2018 were industrial and logistics assets and residential accommodation,including build to rent,student and affordable housing.Indications are that,along with regional offices,these will continue to be the f
125、avoured sectors during 2019.Length of lease,inflation linked or growing rental indicators and quality of the tenant covenant remain the key drivers of yield strength,although few asset categories are now seeing any further yield compression.21Strategic ReportHenry Boot AR2018-Overview+Strategic Repo
126、rt.indd 2105/04/2019 16:24:4226323 5 April 2019 3:49 pm Proof 2Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2018Henry Boot Construction mainly operates throughout the Midlands and the North of England,servicing a wide range of public and private sector clients
127、.Banner Plant supplies a broad variety of non-man operated plant to the construction subcontract supply base across a wide range of construction markets,once again in the North and the Midlands.Across the country,spending by schools,universities,hospitals,prisons and other local infrastructure provi
128、ders has been maintained,coupled with increased spending on housing.We expect spending on these sectors to continue regardless of changes to Government policy,due to anticipated growth in the UK population.This workload is further complemented by a wide private sector client base.Uncertainty has res
129、ulted in private sector developers delaying certain construction projects.However centrally funded projects across a wide range of sectors remains resilient and we remain Construction output&employment seasonally adjusted,GBSource:Construction Output and Employment Office for National Statistics1201
130、10100900Rolling three-month80Index 2016=100Dec 18Dec 14Dec 15Dec 16Dec 17ConstructionMarket ReviewStrategic Report22confident that quality contractors with demonstrable financial strength will continue to win work.The well publicised financial difficulties within some parts of the construction indus
131、try brought more scrutiny on construction delivery partners,particularly given the very low margins and risks associated with construction projects.However,our strong customer base,healthy level of negotiated schemes,repeat business opportunities and ability to deliver work across a wide range of se
132、ctors,combined with our financial strength,means that we continue to successfully secure a growing workload.Henry Boot AR2018-Overview+Strategic Report.indd 2205/04/2019 16:24:4426323 5 April 2019 3:49 pm Proof 2423Strategic Report Stonebridge Homes has a growing land portfolio in strong market loca
133、tions where we expect the market to be resilient and is looking forward to 2019 confident it can deal with the challenging marketplace.Hallam Land also continues to grow its land portfolio with a focus towards increasing its owned land and opportunities in the Midlands and Southern regions.The gover
134、nment is actively addressing the housing shortage with initiatives such as Help to Buy,placing our strategic land business in a strong position to continue to deliver land with planning permission to UK housebuilders.This also supports the growth of our own house building activities and presents res
135、idential development opportunities in property development.We retain a diverse range of development projects throughout the UK to help protect the Group from any short-term market volatility.Our forecast workload for the next three years shows us delivering schemes across different types of property
136、,with a strong bias towards the industrial and logistics sector.We have a good mix of projects which we are either progressing independently,or via joint venture arrangements.Many of these joint venture opportunities are being delivered in partnership with the public sector(particularly local author
137、ities).This is a core part of our business which has enjoyed success over many years and one which we aim to grow in the future.A strong reputation and ability to deliver work across a variety of construction sectors leading to a healthy order book of repeat business.Strategic strengths.1 Actively a
138、ddress the housing shortage2 A growing land portfolio3 Diverse range of development projects4 Variety of JV opportunities5 Reputation to deliver workAfter completing the market review we identified five strategic strengths that we feel support our operations.These strengths also become a part of the
139、 thought process for the subsidiaries strategic priorities.Henry Boot AR2018-Overview+Strategic Report.indd 2305/04/2019 16:24:4526323 5 April 2019 3:49 pm Proof 2424Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2018Strategic ReportSegmental Review Land Promoti
140、onWe have been encouraged to see initial indications from the major UK housebuilders that they have traded,thus far,well.Nick Duckworth,Hallam Land Management LimitedHallam Land had a very successful year in 2018.Our UK housebuilder customers achieved strong house sales during the year and replenish
141、ed their land portfolios in good market areas.Profit before tax for the year was 28.5m(2017:23.1m)from selling 3,573 plots across 24 residential and three commercial schemes.Because of these sales,our consented site portfolio reduced to 16,489 plots(Dec 2017:18,529);however,at the year end we had 11
142、,929 plots which were the subject of planning applications(Dec 2017:7,982),and we entered 2019 with 1,480 plot sales exchanged and awaiting completion in 2019.As our strategic land portfolio is held as inventory,accounting policy requires these assets to be held at the lower of cost or net realisabl
143、e value.In accordance with this policy no uplift in value can be recognised within our accounts relating to any of the 16,489 plots over which planning permission has been secured.Any increase in value created from securing planning permission over these assets will therefore only be recognised on d
144、isposal.Over a six year period,we have gained planning permission for 21,591 new plots,successfully sold 11,396 plots and built a land portfolio of plots moving into the sale process amounting to 16,489,in addition to the land we are now progressing through the planning system or waiting to come for
145、ward into the process.We secured a total of 1,533 new consented plots during the year(or consents subject to Section 106 agreement)including sites at:Bilston(95 plots),Crowmarsh Gifford(75 plots),Evesham(220 plots),Sileby(195 plots),Warwick(90 plots),Wellingborough(600 plots)and Wetherby(210 plots).
146、At the year end the Company held land interests in 14,325 acres(2017:13,273 acres)as either freehold or under option/promotion agreements,including 2,599 acres with planning consent(2017:2,884 acres).During the year we made initial disposals at Market Harborough(226 plots)and Haverhill(450 plots),le
147、aving 236 plots and 800 plots respectively for future years.At Market Harborough the balance of the holding is contracted for disposal between 2019 to 2021,whereas at Haverhill(south east of Cambridge)the balance will be marketed in 2021/22.As mentioned last year,we benefit from a significant asset
148、at Didcot,comprising 2,150 plots and a share in a local centre,to the west of the town.During 2018,we selected preferred housebuilders and contract negotiations have commenced as we work to secure disposal of these plots.Another significant project that progressed very well during 2018 was at Easter
149、n Green,Coventry.During the year planners removed this site from the green belt and allocated it for a mix of residential and commercial development in the Coventry city local plan.At the turn of the year we submitted a planning application for 2,625 plots,15 hectares of commercial development,a pri
150、mary school and other community facilities.Coventry is largely surrounded by green belt and this is the most significant site coming forward for development within the City boundary.Our aim is to secure planning consent late in 2019 with development commencing in 2020/21.At our other long-standing p
151、rojects,Cranbrook,the 3,500-unit new community at Exeter,and Kingsdown in Bridgwater,steady progress continued during the year.At Cranbrook we sold 180 plots to a regional housebuilder,and successfully progressed our expansion plans for the new town,while in Bridgwater,72 plots were sold to a nation
152、al housebuilder.Both projects continue to perform well.We commence 2019 in very good shape with 1,480 plots exchanged for sale and a further 237 exchanged subject to reserved matters planning approval.Additionally,our consented portfolio was bolstered in the first few days of 2019 when a long-standi
153、ng scheme to the west of Worcester secured outline consent,subject to signing the Section 106 agreement,for 900 plots.We have been encouraged to see initial indications from the major UK housebuilders that they have traded,thus far,well through the period of uncertainty arising from the decision to
154、leave the EU with no adverse impact on our contracted transactions and,therefore,we look forward to another solid year in 2019.Total revenue74.8m201874.8m76.2m51.2m46.7m39.0m2017201620152014Profit before tax28.5m201828.5m23.1m17.7m19.1m13.1m2017201620152014Henry Boot AR2018-Overview+Strategic Report
155、.indd 2426323 5 April 2019 3:49 pm Proof 24Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 201825Strategic ReportLand portfolio(acres)14,32520181,7491,8041,81920172016201520141,5621,60810,1399,2578,16612,76311,66511,88811,0619,98514,32513,273Plots with planning p
156、ermission16,489201816,48918,52916,41712,04311,5472017201620152014No.of plots sold3,57320183,5732,1691,6091,7631,1072017201620152014Plots in planning process11,929201811,9297,98210,45217,76810,6462017201620152014Pictured:Coventry,planning application for 2,625 plots submitted during the year.Agency a
157、nd Optioned Purchased Henry Boot AR2018-Overview+Strategic Report.indd 2505/04/2019 16:24:4826323 5 April 2019 3:49 pm Proof 2426Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2018Strategic ReportSegmental Review Property Investment and DevelopmentWe have seen p
158、lanning,development agreements and letting successes across several of our strategic employment sites.Edward Hutchinson,Henry Boot Developments LimitedStonebridge Homes performed well in 2018,achieving 145 sales,nearly doubling since the previous year.Darren Stubbs,Stonebridge Homes LimitedHenry Boo
159、t Developments achieved good progress on a diverse range of projects in both the pre-and post-construction phases during 2018.New development opportunities were progressed on a 56-acre employment site at Cloverhill in Aberdeen,a 300-unit Private Rented Sector(PRS)scheme at Deansgate Station in Manch
160、ester and a prominent city centre site in Manchester for circa 100,000 sq ft of Grade A office space.We have seen planning,development agreements and letting successes across several of our strategic employment sites.We obtained detailed planning and exchanged a development agreement for the Interna
161、tional Advanced Manufacturing Park(IAMP)in Sunderland,with the first phase of infrastructure planned for 2019 and are already in detailed discussions with several potential occupiers.We have commenced construction of 83,000 sq ft of speculative industrial space at Butterfields Business Park in Luton
162、.Following planning permission and confirmation of further infrastructure grant funding at Airport Business Park in Southend,we expect the first design and build unit,of 123,000 sq ft for Ipeco,to commence in 2019.We have also completed the acquisition of 18 acres at Preston and entered into develop
163、ment agreements at Wakefield,Taunton and Enfield to deliver further industrial/logistics schemes.The strategic employment sites in Nottingham(car dealership use included)and Walsall are also making good progress and we should be developing units by late 2020/2021.Our residential opportunities are pr
164、ogressing well.“Kampus”in Manchester,a 220m forward funded 533 build-to-rent apartment scheme,is on track to complete in 2020.We submitted a planning application late in 2018 for a 123-apartment scheme with Stonebridge Homes at our site in York and we hope to commence development in late 2019/2020.W
165、e also expect to start construction work on 27 apartments on the upper floors of Equitable House in central Manchester following the sale of the ground floor retail units in 2018.At Wyvern Park,Skipton,we obtained planning consent to commence infrastructure work in 2019 which should result in us sec
166、uring residential and employment land receipts in 2020.Elsewhere,we completed bespoke industrial units,for the 11th consecutive year,totalling 108,000 sq ft at Markham Vale and are already contracted to deliver a further 110,000 sq ft in 2019.Finally,The Event Complex Aberdeen remains within cost bu
167、dget and on time to open in summer 2019.The exciting 333m development,in partnership with Aberdeen City Council,will create 48,000 square metres of multi-purpose event space,conference and exhibition halls,a stunning 12,500 seat arena,spacious hospitality boxes,a premium restaurant and 350 hotel bed
168、s.HousebuildingOur jointly owned housebuilder,Stonebridge Homes,performed well in 2018,achieving 145 sales(2017:79 sales)and carried over 15 reservations into 2019.We expect to be selling from six to eight sites with planning permission to deliver our 2019 targets largely in the buoyant market areas
169、 north and east of Leeds.We have also invested further in our management teams to support the anticipated growth in the business.Our land portfolio with secured permission now stands at 379 units(2017:320 units)and longer term secured sites,subject to obtaining planning permission,equate to 489 unit
170、s(2017:560 units).We are actively looking to grow this opportunity portfolio,with the longer term aim of building Stonebridge Homes into a multi-region mid-tier housebuilder.Henry Boot AR2018-Overview+Strategic Report.indd 2626323 5 April 2019 3:49 pm Proof 24Henry Boot PLC Annual Report and Financi
171、al Statements for the year ended 31 December 201827Strategic ReportTotal revenue221.9m2018221.9m250.7m176.5m50.3m26.1m2017201620152014Profit before tax15.9m201815.9m26.2m11.2m3.5m4.6m2017201620152014Rental income7.0m20187.0m8.1m6.7m7.2m6.2m2017201620152014No.of plots sold(Stonebridge Homes Limited)1
172、452018201720162015201470413214579Pictured:Progress shot of TECA,the 333m project for Aberdeen City Council,set to complete mid 2019.Henry Boot AR2018-Overview+Strategic Report.indd 2705/04/2019 16:24:5026323 5 April 2019 3:49 pm Proof 2428Henry Boot PLC Annual Report and Financial Statements for the
173、 year ended 31 December 2018Strategic ReportSegmental Review ConstructionHenry Boot Construction delivered 71m of construction activity in 2018 and started 2019 with a very strong order book.In recent years we have exceeded targeted profit levels by maintaining a good blend of both private and publi
174、c-sector clients across a wide range of building and civil engineering sectors.This provides a solid base to manage the risk of any short-term uncertainty associated with the UKs departure from the EU.Repeat business continues to underpin our success and is an indication of our excellent performance
175、 and delivery of value for our clients.In the commercial sector,Phase 1 of the Barnsley town centre redevelopment scheme,The Glass Works,is now nearing completion and we have commenced design and remediation works on the first part of Phase 2,an 88m commercial and retail offering.The civil engineeri
176、ng sector continues to provide good opportunities.We completed the infrastructure and roads project at the Advanced Manufacturing Park for the University of Sheffield and work for Extra MSA at Skelton Lake in Leeds is also progressing well.There has been an increase in housing opportunities and we a
177、re now part of a preferred consortium aiming to build out a major PRS residential scheme in Sheffield.We completed several projects within the educational sector in 2018;the Aerothermal Technology Building for Loughborough University,concourse Public Realm works for the University of Sheffield,the S
178、chool of Earth and Environment expansion at the University of Leeds and the Spine Public Realm scheme for Lancaster University.We also continue to deliver the Sports Development Centre for the University of Hull,the Royce Discovery Centre for the University of Sheffield and Brookfield Campus for the
179、 University of Leicester.We also successfully secured a place on the Leeds Local Education Partnership.Further places have been secured on the Pagabo public and private sector framework and the Procure North West framework.Several schemes have also been secured through the Ministry of Justice refurb
180、ishment framework.Through the YORbuild 2 framework,we have completed structural works to six tower blocks for Leeds City Council.In the healthcare sector,we continue to be a framework delivery partner for the Sheffield Teaching Hospitals NHS Foundation Trust.In recent years we have exceeded targeted
181、 profit levels by maintaining a good blend of both private and public-sector clients.Simon Carr,Henry Boot Construction LimitedDepots in the North traded well and we benefited from strong sale values for fully depreciated asset disposals.Giles Boot,Banner Plant LimitedDespite testing weather conditi
182、ons in early 2018,the contract completed another successful year in line with expectations.Trevor Walker,Road Link(A69)LimitedHenry Boot AR2018-Overview+Strategic Report.indd 2826323 5 April 2019 3:49 pm Proof 24Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 201
183、829Strategic ReportTotal revenue102.9m2018102.9m81.9m79.4m79.5m82.4m2017201620152014Profit before tax9.2m20189.2m10.0m11.0m9.9m10.1m2017201620152014Plant HireBanner Plant traded broadly in line with expectations.Depots in the North traded well and we benefited from strong sale values for fully depre
184、ciated asset disposals.These benefits were offset by weaker activity in the Midlands-based depots and management changes have been implemented to bring new focus here.We continue to invest in the fleet with capital investment at 12%of asset cost,while cash inflows,helped by the strong sales values,w
185、ere ahead of expectations.Road Link Road Link(A69)which runs the A69 between Newcastle and Carlisle under a Design,Build,Finance and Operate(DBFO)agreement,completed another successful year in line with expectations.Traffic volumes were slightly up on 2017 and,despite some days of heavy snow in the
186、early part of 2018,the road remained open throughout the year.The contract has seven years to run and remains on course to operate to plan until the hand-back to Highways England is effected at that time.Pictured:University of Hull,the project consists of a 12-court sports hall built on campus and r
187、efurbishment of the existing Grade II listed sports centre.Henry Boot AR2018-Overview+Strategic Report.indd 2905/04/2019 16:24:5426323 5 April 2019 3:49 pm Proof 24Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2018Cyclical Revenue30Strategic Report30Strategic R
188、eportSegmental Case Study Land Promotion30Strategic ReportAirfield Farm,Market Harborough,LeicestershireIn 1999,Hallam Land Management(HLM)purchased 56 ha at Airfield Farm Market Harborough,which once formed part of a World War Two Wellington bomber RAF airbase and training centre.In the early 2000s
189、 work on the master plan began.This demonstrated the need for two points of access,one to the north of Leicester Road and one to the south via a new bridge to be built across the existing Grand Union Canal.In January 2009,Harborough District Council(HDC)produced a Local Development Framework timetab
190、le and in March of that year they published a Strategic Housing Land Availability Assessment which identified Airfield Farm and neighbouring land as a site with potential to accommodate 1,100 dwellings.After HDC advisors reviewed our proposal the following application was submitted in 2011:Residenti
191、al development,up to 924 dwellings Construction of access roads Local centre,retail&leisure Marina with hotel Community uses Primary schoolAirfield Farm secured planning consent in May 2016,followed by approval of its Reserved Matters first phase in February 2017.A detailed strategy was put in place
192、 for our on-site infrastructure works,ground remediation,archaeological excavation and service provision.Infrastructure contracts were agreed with Breheny Civil Engineering and novated to our purchasing housebuilder.HLM completed the sale of 226 plots to housebuilder,Taylor Wimpey(East Midlands)in M
193、ay 2018.The installation of both on and off site infrastructure commenced in January 2018,facilitating the housing construction.The first house sales are due to commence in May 2019.Identify opportunities and acquire landIdentify opportunities and acquire landObtain planning permissionSale of landIn
194、vestment into land and planning permission processRead the Land Promotion Review on pages 24 and 25Land Promotion Value ChainRead more about our Business Model on pages 16 to 19Henry Boot AR2018-Overview+Strategic Report.indd 3005/04/2019 16:24:5626323 5 April 2019 3:49 pm Proof 24Henry Boot PLC Ann
195、ual Report and Financial Statements for the year ended 31 December 201831Strategic Report31Strategic Report31Strategic Report31Strategic ReportSegmental Case Study ConstructionGlass Works,Phase 131Strategic ReportIn partnership with Barnsley Metropolitan Borough Council,The Glass Works Phase 1 is a
196、42m regeneration scheme that will leave a lasting legacy in Barnsley.The town centre has been transformed with new retail,leisure and market space,including new Barnsley Markets,library,public open space and market square.From the very beginning,the site team have worked seamlessly with the client a
197、nd other key stakeholders to deliver an outstanding and award-winning project,along with an employment and skills legacy that will benefit the community for years to come.The scheme has already won three awards,including Collaborative Working at the Celebrating Construction in South Yorkshire Awards
198、.Throughout the project,the site team exceeded the Key Performance Indicators,with over 200,000 donated to local good causes and charities.There was also over 250 school and site visits,alongside work experience placements,charitable work and new employment provided for 26 people in the area.Contrac
199、ts worth over 8m have been awarded to Barnsley-based contractors and over 100,000 has been invested in the Skills Village,a collaboration with Northern Regeneration,Barnsley College and Barnsley Council.The Skills Village helps to address the skills shortage in construction and gives people the oppo
200、rtunity to develop their skills and find a career in the industry.Henry Boot Construction have also contributed 60,000 of funding to the Better Barnsley Bond,which provides grants to local businesses to support training,employment and community initiatives in Barnsley.ConstructionInvestment into lan
201、d and planning permission processRecurring RevenueRead the Construction Review on pages 28 and 29Construction Value ChainRead more about our Business Model on pages 16 to 19Henry Boot AR2018-Overview+Strategic Report.indd 3105/04/2019 16:24:5726323 5 April 2019 3:49 pm Proof 2432Henry Boot PLC Annua
202、l Report and Financial Statements for the year ended 31 December 2018Strategic Report32Strategic Report32Strategic ReportInternational Manufacturing Park(IAMP),Tyne&WearSegmental Case Study Property Investment and Development32Strategic Report32Strategic Report32Strategic ReportLocated next to the U
203、Ks largest and most productive car manufacturing plant at Nissan,IAMP is a nationally significant project which will provide over 4 million sq ft of advanced manufacturing space by 2031.IAMP is a joint venture with Sunderland City Council and South Tyneside Council and was secured by way of a compet
204、itive OJEU process.We secured detailed planning permission for Phase One in May 2018 which allowed us to commence on site with the first phase of infrastructure works,a 15m contract including the delivery of a new primary substation.We are supporting the Councils in finalising the Development Consen
205、t Order to allow Phase Two to be brought forward,the first time a DCO has been utilised in the UK to deliver a planning consent for development.We have embarked on an extensive marketing strategy,producing early interest for over 700,000 sq ft of space.Henry Boot Developments have currently 900 Acre
206、s of strategic employment land under contract at various stages of development,capable of delivering over 20 million square feet of space.We have been particularly successful in securing partnerships with Local Authorities.Identify opportunities and acquire landIdentify opportunities and acquire lan
207、dRecurring RevenueCyclical RevenueObtain planning permissionInvestment portfolioDevelopment of siteInvestment into land and planning permission processSale of propertyRead the Property Investment and Development Review on pages 26 and 27Property Investment and Development Value ChainRead more about
208、our Business Model on pages 16 to 19Henry Boot AR2018-Overview+Strategic Report.indd 3205/04/2019 16:24:5926323 5 April 2019 3:49 pm Proof 24Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 201833Strategic Report33Strategic ReportButterfield Business Park,LutonAir
209、port Business Park(ABPS),SouthendButterfield is located on the A505,less than five miles from both Junction 10 of the M1 and Luton Airport.The site currently comprises of an Innovation Centre,The Office Business Village,a 157-bedroom Hilton Garden Inn hotel and a 100,000 sq.ft.research and developme
210、nt facility occupied by Eaton.We were successful in securing a joint venture partnership with a consortium of landowners to deliver the next phase of development at Butterfield,comprising 45 acres of employment land,which upon completion will deliver a further 650,000 sq.ft.of design and build busin
211、ess space.In late 2018 we managed to get the site reallocated in the Local Plan after an extensive lobbying campaign.This resulted in a revised allocation permitting high quality light manufacturing,warehousing and distribution uses adding to the parks long-standing allocation for offices which will
212、 ensure a more rapid take up of accommodation.The next phase of development is forecast to complete in autumn 2019 and will comprise the speculative development of 10 high-quality industrial units bringing 83,000 sq.ft.of much needed supply to the Luton market.Located adjacent to London Southend Air
213、port,ABPS extends to some 50 acres and will deliver over 1 million sq ft of commercial business space.We were selected as joint venture partner by Southend Borough Council following a competitive OJEU process.Working with the council,22m of LEP funding has been secured to fund the site infrastructur
214、e,the relocation of Westcliffe Rugby Club,and the provision of an Innovation Centre for start-up businesses.Planning consent for the scheme has been obtained,and the first phase of infrastructure together with the relocation of the rugby club will be completed by the end of 2019.We have secured Ipec
215、o as the first occupier for the site.Ipeco are a world leader in the manufacture of crew seats for the aviation industry who are investing in a new 125,000 sq ft headquarters facility on the scheme,with construction expected to commence in early summer 2019.Henry Boot AR2018-Overview+Strategic Repor
216、t.indd 3305/04/2019 16:25:0126323 5 April 2019 3:49 pm Proof 2434Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2018Strategic ReportFinancial ReviewThe Group has once again delivered strong results with good cash generation and a notable reduction in net debt.Th
217、e continued delivery of The Event Complex Aberdeen,our Markham Vale scheme in Derbyshire and a growing contribution from residential house sales by Stonebridge Homes underpinned our performance for the year.The continued strength of the UK residential housing market meant that UK housebuilder appeti
218、te for good quality residential development land remained high as they replenish their stocks,delivering a 20%profit increase within our land promotion segment.Property investment and development has,however,been impacted by the current market uncertainty along with protracted planning negotiations
219、during the year,albeit the prior year did benefit from strong residential sales at the former Terrys Chocolate Factory which made a significant contribution to that years results.We continue to take a long-term strategic approach to land promotion and property development while at the same time focu
220、sing on the delivery of the existing pipeline which should deliver good results for the years ahead.While negotiations between the UK and the EU continue to drive uncertainty within our markets,which lead to commencement delays in projects and developments,we enter 2019 with a significant amount of
221、property development work in progress,several land sales already exchanged awaiting completion and a strong order book within our construction business.Summary financial performance2018 m2017 mChange%Total revenueProperty investment and development221.6250.412Land promotion74.876.22Construction100.7
222、81.9+23397.1408.5-3Operating profit/(loss)Property investment and development20.130.4-34Land promotion27.923.2+20Construction8.99.67Group overheads(7.7)(7.0)1049.256.212Net finance cost(1.4)(1.5)+7Share profit of joint ventures and associates0.80.7+14Profit for the year 48.655.412Delivering results
223、for the years ahead.The Group has once again delivered strong results with good cash flow generation and a notable reduction in net debt”.Darren Littlewood,Group Finance DirectorHenry Boot AR2018-Overview+Strategic Report.indd 3426323 5 April 2019 3:49 pm Proof 24Henry Boot PLC Annual Report and Fin
224、ancial Statements for the year ended 31 December 201835Strategic ReportDarren Littlewood Group Finance DirectorHenry Boot AR2018-Overview+Strategic Report.indd 3526323 5 April 2019 3:49 pm Proof 2436Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2018Strategic Re
225、portFinancial ReviewConsolidated Statement of Comprehensive IncomeRevenue decreased 3%to 397.1m(2017:408.5m)resulting from lower activity within the property investment and development segment arising from work which will now commence in 2019,offset by an increased level of activity within Construct
226、ion as we continued the delivery of The Glass Works,a 35m town centre redevelopment scheme for Barnsley Metropolitan Borough Council.Gross profit decreased 10%to 78.0m(2017:86.7m)and reflects a gross profit margin of 20%(2017:21%).Administrative expenses increased by 1.4m(2017:4.7m),resulting from t
227、he continued expansion of Stonebridge Homes and a modest level of wage inflation linked to employee retention.During the year,the High Court issued its judgement relating to the Guaranteed Minimum Pension equalisation case with Lloyds Bank plc.This resulted in increased obligations for defined benef
228、it pension schemes which are to be recognised as a past service cost.Accordingly,pension expenses increased by 1.6m(2017:0.6m)to include a one-off provision of 1.5m relating to Guaranteed Minimum Pensions,along with a general increase due to rising employee numbers.Without this one-off provision,Gro
229、up overheads would have fallen during the year helped by reduced employee bonus provisioning.Property revaluation losses of 0.1m(2017:3.6m)were the net effect of uplifts of 2.9m(2017:5.2m)in the fair value of certain existing completed investment properties,largely in the industrial and mixed-use ca
230、tegories,offset by the recognition of valuation deficits of 3.0m(2017:8.8m)on a number of other properties,most notably retail assets.Overall,operating profits decreased by 12%to 49.2m(2017:56.2m)and,after adjusting for net finance costs and our share of profits from joint ventures and associates,we
231、 delivered a profit before tax of 48.6m(2017:55.4m).The segmental result analysis shows that property investment and development produced a reduced operating profit of 20.1m(2017:30.4m)arising from continued activity on The Event Complex Aberdeen and contributions from our Markham Vale industrial de
232、velopment.Land promotion operating profit increased 20%to 27.9m(2017:23.2m)as we disposed of 3,573 residential plots during the year(2017:2,169).Construction segment operating profits decreased slightly to 8.9m(2017:9.6m)after Plant Hire and Road Link performed in line with expectation but Construct
233、ion returns were impacted by pre-commencement works,on several potential future schemes,on which the company only recovers costs.The nature of deal-driven property and land promotion businesses,dependent upon demand from the major UK housebuilders and reliant on the UK planning regime,is demonstrate
234、d in the movements within our mix of business streams.We continue to show how the benefits of a broad-based operating model brings stability in what are highly fluid business environments.While we maintain a significant pipeline of property development and consented residential plots,the variable ti
235、ming of the completion of deals in these areas does give rise to financial results which can vary significantly depending upon when contracts are ultimately concluded.We mitigate this through the blend of businesses within the Group and our business model which,over the longer term,will ultimately s
236、ee the blended growth of the Group delivered.TaxThe tax charge for the year was 8.2m(effective rate of tax:17%)(2017:9.8m and effective rate:18%)and is lower than the standard rate due to a prior year adjustment relating to non-taxable capital gains.We currently have a 3.5m unrecognised deferred tax
237、 asset(2017:3.2m)which can be utilised to offset future capital gains if they arise.Current taxation on profit for the year was 8.1m(2017:9.7m),with the 2018 charge What we did in 2018 Produced a strong set of results,despite uncertainty in the market Reduced Net Debt to 18.6m,gearing at 6%Increased
238、 final year dividend by 12%,bringing the total to 5.8p per ordinary share.Grew Net Asset Value per Share by 12%to 227pHenry Boot AR2018-Overview+Strategic Report.indd 3626323 5 April 2019 3:49 pm Proof 24Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 201837Strat
239、egic ReportFinance and gearingNet finance costs reduced slightly to 1.4m(2017:1.5m).We saw a reduction in our net debt levels throughout 2018 as we collected several deferred land sale receipts and concluded the disposal of our retail investment at St Annes Square in Manchester.Average borrowing rat
240、es were slightly higher than the previous year due to the increase in the base rate from 0.50%to 0.75%in the year.We anticipate that interest costs will rise through 2019 from increased borrowings to support higher levels of development activity.We also expect to see slight rises in interest rates d
241、uring 2019,although this will not result in a material change to our borrowing costs.We continue to invest in both our land and property development assets,as we recycle capital into future opportunities and development activity.Interest cover,expressed as the ratio of operating profit(excluding the
242、 valuation movement on investment properties and disposal profits)to net interest(excluding interest received on other loans and receivables),was 33 times(2017:38 times).No interest incurred in either year has been capitalised into the cost of assets.being lower than the standard rate of corporation
243、 tax due to the previously mentioned prior year adjustment.Deferred tax was 0.1m(2017:0.1m).Earnings per share and dividendsBasic earnings per share decreased in line with profits to 28.3p(2017:32.1p),however,total dividend for the year increased by 13%to 9.00p(2017:8.00p),with the proposed final di
244、vidend increasing by 12%to 5.80p(2017:5.20p),payable on 29 May 2019 to shareholders on the register as at 26 April 2019.The ex-dividend date is 25 April 2019.Return on capital employed(ROCE)Slightly lower operating profit in the year saw a reduced ROCE(1)of 14.9%in 2018(2017:18.6%),the prior year be
245、nefited from the impressive result within property development that year.While we continue to review our strategic target rate of return,we continue to believe that a target return of 12%15%is appropriate for our current operating model.We will continue to monitor this important performance measure
246、over the business cycle,given the potential for market conditions to change quickly.(1)ROCE is calculated as operating profit divided by total assets less current liabilities.Henry Boot AR2018-Overview+Strategic Report.indd 3726323 5 April 2019 3:49 pm Proof 2438Henry Boot PLC Annual Report and Fina
247、ncial Statements for the year ended 31 December 2018Strategic ReportFinancial ReviewSummary of net debt2018m2017mOperating profit49.256.2Depreciation and other non-cash items4.88.5Net movement on equipment held for hire(3.3)(2.6)Movement in working capital(28.4)(15.8)Cash generated from operations22
248、.346.3Acquisition of subsidiary(2.7)Net capital disposals/(expenditure)13.4(17.6)Net interest and tax(11.3)(9.5)Dividends(13.6)(12.0)Other(0.2)(0.6)Reduction in net debt10.63.9Net debt brought forward(29.0)(32.9)Net debt carried forward(18.4)(29.0)Our completed investment property portfolio has decr
249、eased to 118m(2017:127m)against which we secure bank funding to allow us to undertake property development and land promotion,neither of which is readily funded using traditional low-cost bank debt.Our investment property assets continue to provide the key covenant support for our banking facilities
250、.Our agreed facilities remained at 72m throughout the year and have a renewal date in February 2020.Initial conversations have been undertaken with several banks regarding the renewal in 2020 and feedback suggests that there is a good level of interest in tendering for the facilities during 2019 eit
251、her as a sole provider or under a syndicated arrangement.The 2018 year-end net debt fell to 18.4m(2017:29.0m)resulting in gearing,on net assets of 302.3m,falling to a very conservative 6%(2017:net assets 270.1m;gearing 11%).Total year-end net debt includes 3.6m(2017:6.1m)of Homes and Communities Age
252、ncy(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.20186%11%14%18%18%2
253、017201620152014Gearing levels6%20183.9m6.1m(2.5m)(0.3m)201720162015201410.6mCash Generation10.6mDuring 2018,cash generated from operations amounted to 22.3m(2017:46.3m)after net investment in equipment held for hire of 3.3m(2017:2.6m)and,after a net investment in working capital of 28.4m(2017:15.8m)
254、.Our investment in working capital arises from the continued growth in our land portfolio and higher levels of contracting activity.Net capital disposals of 13.4m(2017:expenditure 17.6m)arose from sales of investment property and property,plant and equipment of 20.1m(2017:11.1m),which were offset by
255、 new investment in property development and plant hire assets of 6.7m(2017:28.7m).Dividends paid,including those to non-controlling interests,totalled 13.6m(2017:12.0m),with those paid to equity shareholders of 11.1m(2017:9.6m)increasing by 16%.After net interest and tax of 11.2m(2017:9.5m),the over
256、all reduction in net debt was 10.6m(2017:3.9m),resulting in net debt of 18.4m(2017:29.0m).Henry Boot AR2018-Overview+Strategic Report.indd 3826323 5 April 2019 3:49 pm Proof 24Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 201839Strategic ReportNet debt included
257、 cash and cash equivalents of 10.9m(2017:10.3m),once again a result of cash received in December not able to be offset against short-term borrowings of 29.3m(2017:39.3m).In total,net debt reduced to 18.4m(2017:29.0m).At 31 December 2018,the IAS 19 pension deficit relating to retirement benefit oblig
258、ations was 16.7m,compared with 22.8m at 31 December 2017,helped by an increase in the discount rate applied to future liabilities to 2.8%(2017:2.5%).The pension schemes assets continue to be invested globally,with high quality asset managers,in a broad range of assets.The pension scheme Trustees reg
259、ularly consider the merits of both the managers and asset allocations and,along with the Company,review the returns achieved by the asset portfolio against the manager benchmarks;they then make changes,as the Trustee considers appropriate,in conjunction with investment advice from KPMG.Overall,the n
260、et assets of the Group increased by 12%to 302.3m(2017:270.1m)from retained profits and the reduction in retirement benefit obligations less distributions to shareholders.Net asset value per share increased 12%to 227p(2017:203p)as we continue to increase the scale of our operations and portfolio of o
261、pportunities through retained earnings.Darren Littlewood Group Finance Director 11 April 2019Statement of financial position summary2018m2017mInvestment properties and assets classified as held for sale121.0134.8Intangible assets5.15.4Property,plant and equipment26.226.5Investment in joint ventures6
262、.75.9159.0172.6Inventories155.0144.6Receivables114.996.1Payables(95.0)(96.0)Other3.54.6Net operating assets337.4321.9Net debt(18.4)(29.0)Retirement benefit obligations(16.7)(22.8)Net assets 302.3270.1Investment properties and assets classified as held for sale reduced in value to 121.0m(2017:134.8m)
263、,largely following the disposal of our retail investment at St Annes Square in Manchester,whilst retaining the upper floors for future residential development.Intangible assets reflect the Groups investment in Road Link(A69)of 4.2m(2017:4.5m)and goodwill of 0.9m(2017:0.9).The treatment of the Road L
264、ink 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.Property,plant and equipment comprises Group occupied buildings valued at 7.9m(2017:8.1m)and plant,equipment and veh
265、icles with a net book value of 18.3m(2017:18.4m),broadly unchanged as new additions of 5.8m(2017:10.3m)were offset by the depreciation charge for the year.Investments in joint ventures and associates increased to 6.7m(2017:5.9m)as we continue to invest in property development projects with other par
266、ties where we feel there is a mutual benefit.We anticipate that these opportunities will continue to increase as we finalise a number of schemes with interested parties partnering with us to utilise our development expertise.Inventories were 155.0m(2017:144.6m)and saw an increase in the land portfol
267、io to 107.9m(2017:101.7m)as we continue to invest in owned land,option or agency agreements.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 acc
268、ounts until disposal.Property development work in progress increased to 47.1m(2017:42.9m)as we invest in our housebuilder operation,and commercial development work in progress.Receivables increased to 114.9m(2017:96.1m)due to increased deferred land sales and construction contract receivables.We ant
269、icipate that these deferred payment receivables will now stabilise,but it remains a function of the number and size of strategic land development schemes sold.Payables reduced to 95.0m(2017:96.0m)with trade and other payables,contract liabilities and provisions broadly in line with the prior year an
270、d current tax liabilities reducing to 3.9m(2017:5.8m).Henry Boot AR2018-Overview+Strategic Report.indd 3905/04/2019 16:25:0726323 5 April 2019 3:49 pm Proof 2440Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2018Strategic ReportBCDAPeopleDeliveryGrowthSafetyLand
271、 PromotionProperty Investment and DevelopmentConstructionRecruit and retain employees who are empowered to deliver the growing business we aspire to be.Invest appropriately in all our business segments to achieve short-term delivery.To grow net assets,increasing opportunity for the long-term.To be t
272、he safest place to work inthe construction industry.Our Strategy Group Strategic PrioritiesDuring 2018 we have further developed our strategy,defining the key Group strategic priorities which have been formulated to focus on delivering our Purpose and Vision.These key priorities,detailed in the fram
273、ework below,are used to guide our business segment strategies and formulate the Groups overarching strategy.This ensures a clear alignment and consistency between strategy,implementation and monitoring.Formulate,implement and monitorHenry Boot AR2018-Overview+Strategic Report.indd 4026323 5 April 20
274、19 3:49 pm Proof 24Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 201841Strategic ReportStrategy StatementEach business segment defines its own strategy within the framework set by Henry Boot PLC.As the business model explains,while our six primary subsidiaries
275、will work together and share best practice on projects,they also operate autonomously.This requires them to have formulated their own individual strategies within the boundaries set.However,Strategic Priorities A&B will be Group led to ensure consistency across all of our businesses.Land PromotionTo
276、 source and promote land through the complexities of the UK Planning system for the highest use value.Through land ownership,or via agency and option agreements,the business conveys land,which has gained planning permission,primarily to the UKs major housebuilders.A focus on growing and replenishing
277、 the portfolio will also be maintained.The two key factors impacting this business segment are the demand for houses in the UK and the Planning system.To achieve its purpose the business must appreciate and consider how these factors affect its sites.Read about the Land Promotion Case Study on page
278、30ConstructionTo compete for and win construction contract work in both the public and private sectors,with a specific focus on securing larger value contracts.With very tight construction margins it is important to continue to grow our client base and to secure repeat business opportunities.Our Pla
279、nt Hire business aims to continue providing a high quality service and seek out new depot locations to increase network coverage.Read about the Construction Case Study on page 31Property Investment and DevelopmentTo obtain,develop and invest in a diverse range of property sector opportunities,while
280、flexibly adapting to customers needs within the market.With regional offices throughout the UK,the business is very close to the local markets when seeking out future development pipeline opportunities.Our joint venture housebuilding company aims to continue to increase housing delivery and to grow
281、its land portfolio to fuel longer term activity.Read about the Property Investment and Development Case Study on pages 32 and 33Strategic PrioritiesLink to Group Strategic PrioritiesGain planning permission and convey land to UK housebuilders increasing Hallam Lands business performance in the next
282、12 months.CTo replenish and grow the strategic land portfolio.DSeek out new investment opportunities which would also increase returns.DStrategic PrioritiesLink to Group Strategic PrioritiesQuickly adapt to arising market changes whilst ensuring delivery of our existing committed development pipelin
283、e.CGrow our future pipeline of development opportunities.DIncrease housebuilder output to 250 units per annum by 2021.DStrategic PrioritiesLink to Group Strategic PrioritiesContinue to bid and win construction work in the North and Midlands.CGrow revenues within the Construction subsidiary by concen
284、trating on larger scale contracts DHenry Boot AR2018-Overview+Strategic Report.indd 4105/04/2019 16:25:0826323 5 April 2019 3:49 pm Proof 2442Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2018Strategic ReportDashboardA year of solid progressGroup Strategic Prio
285、ritiesStrategic ObjectivesPerformance in 2018 A SafetyContinual review of our systems,ongoing training and development,adoption of best practice and keeping abreast of change.In 2018 we again demonstrated the high safety standards set across our Group.In particular,the Groups construction activities
286、 achieved a very low Accident Frequency Rate score,consistent with 2017,which is due to our management systems,a drive for continuous improvement and an increased investment in learning and development.6 71 2 4 B PeopleOffer a wide range of long-term career and development opportunities which attrac
287、t new and retain employees.The Groups number of new recruits was lower than the previous year in which we acquired Premier Plant and Tool Hire Limited which added two new plant hire depots in Leicester to Group operations.Overall,our total employee numbers continued to increase and now stands at 538
288、.There was 1,187 personal development days during 2018,a slight increase from the previous year,but a number we expect to grow to ensure employees learning and development needs are met.6 8 9 10 3 4 6 C DeliveryMaintaining a maximum gearing level of 30%,utilising available capital efficiently.A redu
289、ction in gearing was strategically targeted throughout the year with gearing successfully reducing from 11%to 6%(net debt/net assets).We believe this to be an important strategic decision given the current levels of economic uncertainty in the Markets in which we operate.To dispose of an annually in
290、creasing number of residential plots while market conditions are supportive.The number of plots sold increased by 63%in 2018,which led to a 23%increase in Land Promotion Profit Before Tax.Sites at Market Harborough and Haverhill performed well,with over 600 plots being disposed of between them.To pr
291、e-fund and pre-sell our development opportunities to mitigate risk and secure delivery.The percentage of pre-sold and pre-funded property development increased by 15%in 2018 to 99.57%of GDV delivered in the year.With a percentage so high we believe that the market risk currently relating to the sche
292、mes we have in delivery is minimal.Constantly monitor the customers and markets in which we operate,to compete effectively and appropriately balance our workflows within these markets.During 2018 Construction turnover increased by maintaining a balance of workflows between both the private and publi
293、c sector.However,uncertainty and turmoil in the industry did factor into our construction segment this year which saw profit reduce slightly by 8%.Read about our Strategic Priorities on pages 40 and 41Henry Boot AR2018-Overview+Strategic Report.indd 4205/04/2019 16:25:0826323 5 April 2019 3:49 pm Pr
294、oof 24Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 201843Strategic ReportAims for 2019Key Performance IndicatorsKey RisksContinue to invest in training and development and to implement best practice across the Group to maintain a level of zero reportable healt
295、h and safety incidents.6 71 2 4 To ensure the Group provides necessary training and development at an appropriate level,which gives employees the knowledge to excel in their field of work and adequate opportunity to develop their careers.Ensure that we attract and retain employees of an appropriate
296、calibre to support the sustainable growth of the Group.6 8 9 10 3 4 6 C DeliveryMaintaining a maximum gearing level of 30%,utilising available capital efficiently.A reduction in gearing was strategically targeted throughout the year with gearing successfully reducing from 11%to 6%(net debt/net asset
297、s).We believe this to be an important strategic decision given the current levels of economic uncertainty in the Markets in which we operate.Whilst investment in both land and property assets will continue we actively review cash requirements on a continual basis.Our low levels of gearing allow us t
298、o be opportunistic should appropriate land and property development opportunities present themselves.We expect to continue to trade comfortably within the maximum level of gearing which we have set ourselves as a Board and will continue to recycle capital into investment and development activities.4
299、 5 3 5 6 We started 2019 with 1,480 plots exchanged for sale and a further 237 plots conditionally exchanged.Given this,the strategic objective of increasing annual disposals is well on track for 2019.L1 L5 L6 3 5 6 12 13 14 To pre-sell or pre-fund as much development work as is achievable in order
300、to mitigate risk and secure delivery.D1 D2 D53 5 6 10 11Constantly monitor the customers and markets in which we operate,to compete effectively and appropriately balance our workflows within these markets.During 2018 Construction turnover increased by maintaining a balance of workflows between both
301、the private and public sector.However,uncertainty and turmoil in the industry did factor into our construction segment this year which saw profit reduce slightly by 8%.The order book for 2019 looks healthy across all sectors and we hope too be able to further grow turnover as we go forward through a
302、ctively targeting larger contracts whilst maintaining appropriate levels of return.C1 C2 3 5 6 9Read about our Key Performance Indicators on pages 46 and 47Read about our Risks and Uncertainties on pages 48 to 55Henry Boot AR2018-Overview+Strategic Report.indd 4305/04/2019 16:25:0826323 5 April 2019
303、 3:49 pm Proof 2444Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2018Strategic ReportDashboardGroup Strategic PrioritiesStrategic ObjectivesPerformance in 2018 D GrowthTarget a dividend cover of over 3 times to grow net assets and profitability through reinvest
304、ment in strategic land and development opportunitiesWe successfully achieved a dividend cover level of 3.14 times,ahead of our 3 times target.Net assets increased by 32m which allowed us to invest further in strategic land and reduced debt levels.To increase the scale and investment in land acres an
305、d plots over time,with a focus on raising profile in geographical areas which provide the highest returns and increasing the proportion of directly owned land to balance the style of ownership.The total number of plots with planning permission and in the planning process increased by 7%from 26,511 t
306、o 28,418.The overall land portfolio acreage grew by nearly 8%,with each region in which we operate increasing total acreage under control during 2018.Explore new investment opportunities,such as logistics and distribution,with the primary focus remaining on residential and mixed use opportunities.An
307、 effort to expand into new markets was made last year,but as expected the residential market continued to provide the core trade in Land Promotion.Our interests in employment,industrial and retail remained stable at circa 190 acres after disposing of 27 acres in the year.To actively seek out new opp
308、ortunities with a focus on innovative joint venture projects.The future pipeline of work has decreased by 6%as we continue to deliver the opportunities we have secured.Our pipeline of just over 1bn worth of potential future activity provides the comfort that we are able to carry on delivering in to
309、the future.During the year we successfully entered into five new joint venture projects as we actively target this area of growth.Invest in our housebuilding residential land portfolio to ensure we have sites available to deliver quality in design and build while providing a first class customer exp
310、erience.Our jointly-owned housebuilders land portfolio slightly reduced last year as a consequence of the increased number of plots sold,which almost doubled since 2017.This is not of concern and we believe that the portfolio is of a size which continues to allow growth as we move through 2019.To ac
311、tively pursue contract values of between 5m and 15m to benefit from improving economies of scale.Whilst we have successfully increased the average contract size in 2018 the results do not reflect the substantial contract to deliver the Glassworks scheme in Barnsley.This scheme commenced in 2017 at a
312、 value of 42m to be delivered across the years 2017 to 2019,we delivered over 20m of value on this contract during 2018.Read about our Strategic Priorities on pages 40 and 41Henry Boot AR2018-Overview+Strategic Report.indd 4405/04/2019 16:25:0826323 5 April 2019 3:49 pm Proof 24Henry Boot PLC Annual
313、 Report and Financial Statements for the year ended 31 December 201845Strategic ReportAims for 2019Key Performance IndicatorsKey RisksThe strategic objectives will deliver profits that support 3 times dividend cover.This allows us to grow our NAV asset base alongside prudent debt levels to further g
314、row our activities for all stakeholders.1 2 33To increase the scale and investment in land acres and plots over time,with a focus on raising profile in geographical areas which provide the highest returns and increasing the proportion of directly owned land to balance the style of ownership.The tota
315、l number of plots with planning permission and in the planning process increased by 7%from 26,511 to 28,418.The overall land portfolio acreage grew by nearly 8%,with each region in which we operate increasing total acreage under control during 2018.Continue to grow the number of acres in the land po
316、rtfolio we have across the UK,in particular seeking out a greater number of opportunities to directly own an interest in land.L2 L3 L4 3 5 6 12 13 14Explore new investment opportunities,such as logistics and distribution,with the primary focus remaining on residential and mixed use opportunities.An
317、effort to expand into new markets was made last year,but as expected the residential market continued to provide the core trade in Land Promotion.Our interests in employment,industrial and retail remained stable at circa 190 acres after disposing of 27 acres in the year.Review and seek out new inves
318、tment opportunities that will support the continued growth of our land segment.L23 5 6 12 13 14To actively seek out new opportunities with a focus on innovative joint venture projects.The future pipeline of work has decreased by 6%as we continue to deliver the opportunities we have secured.Our pipel
319、ine of just over 1bn worth of potential future activity provides the comfort that we are able to carry on delivering in to the future.During the year we successfully entered into five new joint venture projects as we actively target this area of growth.Review and seek out new development opportuniti
320、es that continue to grow the future pipeline of work targeting innovative joint venture relationships to help bring forward development collaboratively.D3 D43 5 6 10 11Invest in our housebuilding residential land portfolio to ensure we have sites available to deliver quality in design and build whil
321、e providing a first class customer experience.Our jointly-owned housebuilders land portfolio slightly reduced last year as a consequence of the increased number of plots sold,which almost doubled since 2017.This is not of concern and we believe that the portfolio is of a size which continues to allo
322、w growth as we move through 2019.Continue to provide a first class customer experience and the on-going growth of plots sold during the year with a focus on replenishing and expanding the unit and site portfolio being a continuing priority.D6 D73 4 5 6 12 14To actively pursue contract values of betw
323、een 5m and 15m to benefit from improving economies of scale.Whilst we have successfully increased the average contract size in 2018 the results do not reflect the substantial contract to deliver the Glassworks scheme in Barnsley.This scheme commenced in 2017 at a value of 42m to be delivered across
324、the years 2017 to 2019,we delivered over 20m of value on this contract during 2018.We have a number of contracts currently being tendered or negotiated which are in excess of 10m which,if successful,should positively increase our average contract size.C1 C3 3 5 6 9Read about our Key Performance Indi
325、cators on pages 46 and 47Read about our Risks and Uncertainties on pages 48 to 55Henry Boot AR2018-Overview+Strategic Report.indd 4505/04/2019 16:25:0826323 5 April 2019 3:49 pm Proof 2446Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2018Strategic ReportKey Per
326、formance IndicatorsIn line with the Groups strategy,further review and development of our KPIs took place to ensure that there is transparency and a clear understanding of how the Groups performance is measured.This year we have refined our financial and non-financial KPIs and present new segmental
327、KPIs which specifically track the performance of their strategic objectives.FinancialNon-FinancialKPIKPI 1 Profit Before Tax201848.6m55.4m39.5m32.4m28.3m2017201620152014 6 Personal Development Days20181,0571,2031,16420172016201520141,1871,130 2Earnings per Ordinary Share201828.3p32.1p21.5p17.5p16.2p
328、2017201620152014 7 Accident Frequency Rate20180.170.080.1220172016201520140.050.05 3Net Assets 2018302.3m270.1m233.6m221.5m200.5m2017201620152014 8 Employee Profile Male Female 20181111061112017201620152014133119342328348405395453434459538514 4Return on Capital Employed201814.9%18.6%14.4%12.2%11.4%2
329、017201620152014 9 Employee Intake20185020172016201520141001418075 5Gearing levels20186%11%14%18%18%2017201620152014 10 Employee Turnover201878201720162015201480736566Henry Boot AR2018-Overview+Strategic Report.indd 4605/04/2019 16:25:0926323 5 April 2019 3:49 pm Proof 24Henry Boot PLC Annual Report
330、and Financial Statements for the year ended 31 December 201847Strategic ReportOperationalSegmental KPIs24%Profit Before Tax 28.5m8%Land portfolio 14,325 acres11%Plots with Planning permission 16,489 49%28%65%Plots submitted for Planning permission 11,929 Profit per plot 9,400 Plots sold 3,573 Land P
331、romotion11%Total revenue 221.9m39%Profit Before Tax 15.9m18%Current pipeline 711.0m2%Future pipeline 1.0bnProperty Investment and Development15%Total revenue 102.9m7%Profit Before Tax 9.2m30%Average contract size won 5.2mConstructionRead the Land Promotion Review on page 24Read the Property Investme
332、nt and Development Review on page 26Read the Construction Review on page 2815%84%1%Proportion of Pre-sold/forward fundedNumber of Plots Sold(SH)145Number of Plots in portfolio(SH)868 L1 L2 L3 L4 L5 L6 D1 D2 D3 D4 D5 D6 D7 C1 C2 C3Henry Boot AR2018-Overview+Strategic Report.indd 4705/04/2019 16:25:09
333、26323 5 April 2019 3:49 pm Proof 2448Strategic ReportRisks and UncertaintiesManaging our Risk.Effective risk management is essential to the achievement of our key priorities and strategic initiatives.Risk Management controls are integrated across all levels of our business and operations.OverviewEffective risk management is essential to the achievement of the key priorties and strategic aims.Risk
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