TIDMBOOT
RNS Number : 9390O
Boot(Henry) PLC
25 August 2017
25 August 2017
HENRY BOOT PLC
('Henry Boot', 'the Company' or 'the Group')
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHSED 30 JUNE 2017
Henry Boot PLC, a company engaged in land promotion, property
investment and development, and construction, announces its interim
results for the period ended 30 June 2017. Ticker: BOOT.L: Main
market premium listing: FTSE: construction & materials.
HIGHLIGHTS
30 June 30 June %
2017 2016 change
-- Profit before tax GBP22.6m GBP20.8m +8.7%
-- Operating profit GBP22.8m GBP21.1m +8.1%
-- Earnings per share 13.1p 11.9p +10.1%
-- Interim dividend 2.80p 2.50p +12.0%
-- Net debt GBP62.2m GBP56.2m +10.7%
Net asset value
-- per share 184p 171p +7.6%
Commenting on the results, Chief Executive John Sutcliffe
said:
"We are pleased to report another good performance in the first
half against a strong comparative result in 2016, with further
operational progress delivered across the Group.
This momentum has continued into the second half of the year and
we are seeing high levels of activity across our operations. Whilst
we remain mindful of a continued degree of economic and political
uncertainty, sentiment amongst our customers and clients remains
positive and we have a strong pipeline of profitable opportunities.
The Group continues to trade well and in line with the Board's
expectations for the full year."
For further information, please contact:
Henry Boot PLC
John Sutcliffe, Chief Executive Officer
Darren Littlewood, Group Finance Director
Tel: 0114 255 5444
www.henryboot.co.uk
Investec Bank plc
Garry Levin/Carlton Nelson/David Anderson
Tel: 020 7597 5970
Hudson Sandler LLP
Nick Lyon/Wendy Baker
Tel: 020 7796 4133
CHAIRMAN'S STATEMENT
I am very pleased to report that Henry Boot has once again
performed well in the first half of 2017. Progress throughout our
commercial development programme has been good and we concluded
eight land sales in the period and have a further five sites
exchanged for completion in the second half of this year.
Despite operating in a more uncertain economic and political
climate, we continue to see a high level of demand for land and
housing in the UK, and are delivering our commercial development
portfolio ahead of our expectations, in particular, at York and
Aberdeen. We maintain a positive dialogue with our customers and
have yet to see any direct impact from these external events.
We continue to backfill the opportunity pipeline and invested
some GBP21.8m in property investment assets with commercial
development potential in Manchester and Nottingham, in addition to
several strategic land sites, during the half year. We obtained
planning consent on 2,675 plots in the period and have an 18,000
unit permissioned portfolio progressing towards sale in due
course.
Trading review
Revenue for the period increased by 82% to GBP195.4m (2016:
GBP107.3m) driven by higher levels of activity across all business
segments. Property development activity continued to benefit from
several active schemes, in particular at Aberdeen, York and Markham
Vale. The sale of land at Southam completed in the period and
increased both turnover and cost of sales proportionately.
Construction turnover was in line with our expectation for this
stage in the year, and well ahead of the previous year where
activity was slower than anticipated in the first half of that
year. In response to the significant increases in activity,
administrative expenses grew due to higher headcount and the
Premier Plant Tool Hire & Sales Limited ('Premier Plant')
acquisition. The decrease in fair value of investment properties
arose from two development property sites which are proving
difficult to bring to market profitably.
Operating profits increased 8.1% to GBP22.8m (2016: GBP21.1m)
with the contribution from property development now arising from
larger, pre-funded and pre-let schemes where we take lower risk and
commensurately lower margins. Also, the land development result did
not benefit from the disposal of owned land at Marston Moretaine
seen in the 2016 half year, although the final phased disposal of
this site is contracted to complete in September 2017.
Net finance costs were GBP0.6m (2016: GBP0.7m) helped by the
reduction in the base rates which arose in the second half of the
prior year. This, together with joint venture property development
activity gains of GBP0.4m (2016: GBP0.4m), resulted in an 8.7%
increase in profit before tax to GBP22.6m (2016: GBP20.8m).
Retained profit increased 9.1% to GBP18.0m (2016: GBP16.5m),
helping earnings per share to rise 10.1% to 13.1p (2016:
11.9p).
Statement of financial position
Total non-current assets were GBP176.2m (31 December 2016:
GBP166.5m). The net investment in the plant hire fleet of GBP2.0m
(2016: GBP1.8m) arose from the acquisition of Premier Plant which
gave us a presence in Leicester and is performing well. We also
acquired two investment properties with future development
potential in the period. The Equitable Building in St Ann's Square,
Manchester, acquired for GBP10.1m and the Imperial Brands Horizon
factory in Nottingham acquired for GBP5.8m. Including these
acquisitions, our total Investment property valuation increased to
GBP131.9m (31 December 2016: GBP123.7m). This increase was
partially offset by the transfer of the completed Livingston
development to assets classified as held for sale. The reduction in
trade and other receivables related to collected deferred land sale
debtors.
The uplift in current asset inventories to GBP153.6m (31
December 2016: GBP137.9m) resulted from higher house building and
property development work in progress. The investment in strategic
land inventories reduced slightly to GBP106.5m (31 December 2016:
GBP107.9m). The increase in trade receivables resulted from higher
deferred receipts on land disposals and property development
activity. Cash and cash equivalents were GBP5.2m lower at GBP2.2m
(31 December 2016: GBP7.4m) as cash received from land sales in
December 2016 was utilised. The Livingston development, transferred
from investment properties, resulted in assets classified as held
for sale increasing to GBP6.3m (31 December 2016: GBP1.0m). In
summary, current assets were GBP48.6m higher at GBP261.9m (31
December 2016: GBP213.3m).
Current liabilities rose to GBP156.3m (31 December 2016:
GBP105.9m) as current borrowings increased to GBP57.0m (31 December
2016: GBP33.3m) and trade and other payables increased to GBP87.1m
(31 December 2016: GBP61.1m). This increase is expected to reverse
in the second half as we collect significant deferred land sale
debts and conclude land disposals at Biddenham and Marston
Moretaine. The current high level of commercial development
activity is likely to result in a modest increase in debt levels as
they work through to completion and, therefore, we have increased
our bank facilities from GBP60.0m to GBP72.0m, to provide the
necessary additional flexibility to undertake these larger schemes.
Working with our banking partners we concluded the formalities for
this increase on 21 August 2017 with no changes to the terms or
conditions from the existing facilities. Overall, net current
assets were GBP105.5m (31 December 2016: GBP107.4m).
Non-current liabilities decreased to GBP39.0m (31 December 2016:
GBP40.4m). We again suffered an increase in the defined benefit
pension scheme liability under IAS 19 to GBP27.6m (31 December
2016: GBP26.4m) caused primarily by a further decrease in the
discount rate to 2.6% as long-term interest rates reduced. This,
along with a slight increase to longer term borrowings from asset
finance arrangements acquired with Premier Plant, was offset by
reductions to trade payables to GBP2.7m (31 December 2016: GBP4.6m)
where deferred land acquisition payments became current and from
utilisation of provisions to GBP1.5m (31 December: GBP2.5m) as we
fulfil our infrastructure obligations attached to previous land
disposals.
Retained earnings, offset by the increased pension deficit, saw
net assets rise to GBP242.7m (31 December 2016: GBP233.6m) with net
asset value per share increasing by 4% to 184p (31 December 2016:
177p).
Cash flows
Operating cash inflows before movements in working capital were
GBP25.3m (2016: GBP20.2m). Working capital investment across all
the Group's activities increased inventories, receivables and
payables, resulting in working capital outflows of GBP24.0m (2016:
GBP29.3m) which, in turn, meant that operations generated funds of
GBP1.4m (2016: utilised funds GBP9.0m). Interest paid of GBP0.5m
(2016: GBP0.6m) and tax paid of GBP3.7m (2016: GBP4.4m) resulted in
net cash flows from operating activities of GBP2.8m (2016:
GBP14.0m).
Acquisition of our new plant subsidiary of GBP2.7m (2016: nil)
and net property investment of GBP15.4m (2016: GBP5.8m net property
receipts), resulted in net cash outflows from investing activities
of GBP19.1m (2016: cash inflows of GBP3.5m).
Dividends paid in the period increased 14.0% to GBP7.2m (2016:
GBP6.4m). Therefore, at 30 June 2017, net debt increased to
GBP62.2m resulting in gearing of 26% (2016: net debt of GBP56.2m,
gearing 25%). As noted above, it is anticipated that land and
property receipts in the second half of 2017 will reduce borrowings
and gearing by the year end.
Dividend
The Board remains confident in the Group's prospects and, as
such, has declared a 12.0% increase in the interim dividend to 2.8p
(2016: 2.5p). This will be paid on 20 October 2017 to shareholders
on the register at the close of business on 22 September 2017.
BUSINESS REVIEW
Land Promotion Review
Hallam Land had a very good start to the year concluding the
sale of eight sites for 960 houses in the period. Furthermore, at
the end of June 2017 we exchanged two contracts for the disposal of
416 housing plots for completion in the second half of the year,
and three further sites that were at an advanced stage of
negotiation, totalling 592 housing plots, have since completed.
At 30 June 2017, Hallam Land held interests in 169 sites,
equating to 12,131 acres, of which 1,766 acres are owned, 2,679
acres are under option and 7,686 acres are under planning promotion
agreements, up from 11,416 at this stage in 2016. It was pleasing
to win planning permission for 2,675 plots during the period and at
30 June 2017 we had 17,987 plots for sale across 53 sites, with a
further 9,706 plots the subject of planning applications in
progress, across 27 sites. Our accounting policy is to hold these
strategic land purchases as inventory, at the lower of cost or net
realisable value, and therefore the assets do not benefit from
unrealised valuation gains. The inventory value at 30 June 2017 was
GBP106.5m (December 2016: GBP107.9m).
Housebuilders continue to report very positively regarding their
UK activities, despite a slowing down of house sales in the wider
market, with the government's 'Help to Buy' scheme supporting the
new homes market. We continue to see good levels of demand for our
consented portfolio as we bring these sites to the market and the
recent general election outcome does not seem to have affected
house builders' interest. Nevertheless, it seems likely that one
outcome of the election result will be a period of stability in the
planning system with all parties seeing housebuilding as important
to the wider economy, with little appetite to make significant
legislative changes.
We look forward to the second half of 2017 with confidence and
given that the substantial majority of our business for this year
is now at an advanced stage of completion, we are able to look to
the future where we have already exchanged four sale contracts that
will complete in 2018, and are in advanced discussions with
housebuilders on a further six.
Property Investment and Development Review
Our commercial development arm has traded really well in the
first half. In particular, the strong demand for the residential
units at the former Terry's chocolate factory in York gave rise to
the positive trading update made at our AGM and announced on 25 May
2017. We are currently delivering schemes with a gross development
value of over GBP700m and have over GBP500m in the opportunity
pipeline.
The largest development project currently being undertaken by
the Company, the GBP333m Aberdeen Exhibition and Conference Centre,
is progressing well and remains on budget. This first phase of a
larger, longer term development, which is fully funded by Aberdeen
City Council, is on schedule to be completed by mid-2019. Elsewhere
in Scotland, the 43,000 sq ft retail warehouse development in
Livingston, pre-let to Dunelm and B&M Retail, completed in the
period and this investment is now under offer to be sold in the
second half of 2017.
As we entered 2017, a number of forward funded projects were
unconditionally contracted and these have progressed on track and
to budget. They include two distribution warehouse schemes at
Markham Vale; firstly a 480,000 sq ft unit for Great Bear
Distribution Limited and secondly, a 90,000 sq ft unit for
distributor Gist Limited. Located at Junction 29a of the M1
motorway, both projects will complete by the end of 2017. On the
same business park, we have also exchanged contracts for two new
schemes which are forward funded and expected to commence before
the end of the year. Nearby in Chesterfield, the sale of a 4.9-acre
site to a Ford Dealership has completed and, having concluded the
sale of an industrial unit earlier in the year at our site in
Thorne, Doncaster, the sale of the remaining speculatively
developed industrial unit is proceeding as planned.
In the south of England; the extension and refurbishment of
30,000 sq ft of grade A offices in Uxbridge has almost completed
and will be marketed to occupiers in the last quarter of 2017. The
development of the pre-let, forward funded 110,000 sq ft HQ office
scheme for WS Atkins in Epsom is expected to complete in the second
half of 2018. Having concluded letting agreements and received
planning consent in the period, the conversion and extension of
existing office space within The Mall, Bromley, to provide a new
Travelodge, is expected to complete in the first half of 2018.
The residential conversion of the former Terry's chocolate
factory in York is progressing well ahead of our original
development programme, with 155 of the 163 apartment sales in the
main factory block now completed and the remaining eight are
contracted to complete in the second half of the year. Following
protracted planning negotiations, permission for the conversion of
the adjoining listed clock tower to provide a further 22 apartments
is expected to be granted shortly, with work expected to commence
immediately thereafter. It is anticipated that the sales of these
22 smaller apartments will conclude in 2018.
Reflecting the continued expansion of activities by the Company,
a number of new development projects have been secured in the first
half of the year. These include the former 47-acre Imperial Brands
Horizon factory in Nottingham, acquired just ahead of the period
end for commercial redevelopment, and in Manchester city centre, we
bought an existing prime retail investment on St Ann's Square where
we plan to undertake a residential conversion of the upper
floors.
Stonebridge Projects Limited
Stonebridge Projects completed 24 sales in the period with
reservations on a further 32 units. Most sales in 2017 will come
from the former Leeds Girls High School and Stocksbridge sites.
Stonebridge is now operating from a land bank approaching 600 units
as we continue to invest in the future growth of our jointly owned
house builder. In line with recent reports made by other UK house
builders, demand, pricing and margins remain in line with the
previous year and our expectations.
Construction Review
Despite the more challenging political and economic conditions,
Henry Boot Construction Limited have continued to win work in line
with our expectations. We are on track to secure our budgeted
activity and profit for this year and have secured in the region of
60% of 2018 activity, which compares favourably to the 50% of
2017's activity achieved at this stage last year.
We continue to see a good level of construction opportunities
within our chosen workflow areas of housing, commercial
development, retail, health, education, leisure, industrial, civil
engineering and custodial. As always, we remain selective in the
opportunities we pursue focusing, where possible, on higher margin
business, developing repeat business and proactively sourcing work.
We have also increased the size of contract opportunities we bid
for in order to increase the efficiency of our business model.
After completing the enabling works for the GBP35.0m Glass Works
Barnsley town centre redevelopment (previously known as Better
Barnsley) for Barnsley Metropolitan Borough Council, we have now
commenced the first phase works on the Library and Metropolitan
Centre. In addition, Snowhill Retail Park, Wakefield, for Kier was
successfully handed over earlier this year. Following our success
last year in securing a place on the new YORbuild2 framework, we
continue to deliver structural repairs to six tower blocks in Leeds
and have recently commenced works at a primary school for Leeds
City Council. The higher education sector also provides further
good opportunities, and we are currently delivering schemes for the
University of Sheffield, University of Loughborough, University of
Hull and University of Lancaster. Work on the new spa facility at
the prestigious Rudding Park Hotel in Harrogate was handed over
earlier this year.
The 45-bed extra care unit at Yeadon for Leeds City Council was
successfully handed over earlier this year and we are progressing a
60-bed apartment extra care facility in Newark, which is due for
completion later this year. We have also started design work on the
second phase of Home Farm on the Ampleforth Estate for Autism Plus.
In addition, we have recently commenced the refurbishment of the
Grade II listed St George's Concert Hall for Bradford City
Council.
We have continued to carry out civil engineering work as a major
supply chain partner on the 25-year Amey PFI Sheffield Streets
Ahead Scheme where we have now delivered 140 schemes. Works are
also nearing completion at the Olympic Legacy Park at Don Valley
for Sheffield City Council and a car park for B Braun in Sheffield
and we have completed the AMP2 Infrastructure Scheme in Sheffield.
Furthermore, we continue to deliver works in Leeds and Sheffield
for Stonebridge Homes. We have also been recently appointed to the
YORcivils2 framework where we delivered several schemes under the
previous framework.
Banner Plant Limited
Banner Plant has continued to trade well throughout the first
half of 2017 and integrated the GBP2.8m acquisition of Premier
Plant, based in Leicester, during the period. The integration has
gone well and the two new depots are now trading successfully under
the Banner Plant brand. In a full year, the new depots add
approximately 20% to the capacity of Banner Plant, and we will
report further on progress at the end of 2017.
Road Link (A69) Limited
The Group continues to have a 61% stake in Road Link (A69) and
has now completed year 21 of the 30-year contract with Highways
England. The project continues to trade in line with management's
expectations and we are currently undertaking design works for the
upgrade of two roundabouts on the dual carriageway section of the
A69 to improve traffic flow on behalf of Highways England.
OUTLOOK
The last 12 months have seen a continued degree of economic and
political uncertainty. Historically, the wider UK real estate
sector thrives on certainty and stutters on uncertainty, as
investment decisions can be deferred. Henry Boot operates in this
environment and, therefore, we must be continually mindful of that
background economic environment.
Notwithstanding this, we are currently trading more actively
than ever across the Group. Our customers and clients continue to
interact positively, committing extensively to property
development, construction and land acquisition into the future.
Provided this positivity continues, we have a strong pipeline of
profitable opportunities to provide our customers with the
development assets they need. The Group continues to trade well and
in line with the Board's expectations for the full year, as
detailed in the Company's AGM statement published on 25 May 2017
and our expectations for 2018 remain unchanged.
GROUP RISKS AND UNCERTAINTIES
The Directors set out, in the 2016 Financial Statements (and
reproduced in note 14), the key risks that could have a material
effect on our results. The Board does not consider that these
risks, which were identified at the time, have changed materially
since then. Despite concerns following the EU referendum in 2016
and the recent rather unexpected general election result, the
economic conditions across all our trading segments remain good and
our trading performance in the first half year gives us confidence
that we can meet our upgraded expectations for the year. We
continue to have a strong portfolio of strategic land and
development opportunities which are delivering profitability in
line with appraisal forecasts. Our housing development land bank
has grown to over 600 units, to be delivered over the next three to
four years, and both reservations and sales currently remain
strong. These development opportunities, combined with the
strategic land sites with planning permission on almost 18,000
units, and a further 9,700 units in the planning pipeline, are held
as inventory and valued accordingly. Profit is taken as
developments progress and land sales complete. Subject to
maintained confidence levels in the UK property investment market,
we continue to have opportunities secured to allow us to continue
to grow shareholder value, over both the short and long-term, which
remains our prime objective.
Jamie Boot
Chairman
25 August 2017
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
for the half year ended 30 June 2017
Half Half
year year Year
ended ended ended
30 June 30 June 31 December
2017 2016 2016
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
------------------------------------------ --------- --------- -----------
Revenue 195,395 107,333 306,806
Cost of sales (157,941) (75,032) (244,496)
------------------------------------------ --------- --------- -----------
Gross profit 37,454 32,301 62,310
Other income - 19 40
Administrative expenses (10,789) (8,752) (17,958)
Pension expenses (2,047) (1,921) (3,774)
------------------------------------------ --------- --------- -----------
24,618 21,647 40,618
Decrease in fair value of investment
properties (1,986) (1,119) (1,783)
Profit on sale of investment properties 159 557 647
Loss on sale of assets held for sale (39) - -
------------------------------------------ --------- --------- -----------
Operating profit 22,752 21,085 39,482
Finance income 82 182 156
Finance costs (684) (839) (1,670)
Share of profit of joint ventures and
associates 407 350 1,523
------------------------------------------ --------- --------- -----------
Profit before tax 22,557 20,778 39,491
Tax (4,555) (4,292) (8,945)
------------------------------------------ --------- --------- -----------
Profit for the period from continuing
operations 18,002 16,486 30,546
------------------------------------------ --------- --------- -----------
Other comprehensive (expense)/income not being
reclassified to profit or loss in subsequent periods:
Revaluation of Group occupied property (7) - 30
Deferred tax on property revaluations 24 - 3
Actuarial loss on defined benefit pension
scheme (1,814) (7,224) (8,959)
Current tax on actuarial loss - - 428
Deferred tax on actuarial loss 200 1,301 964
Total other comprehensive expense not
being reclassified to profit or loss
in subsequent periods (1,597) (5,923) (7,534)
------------------------------------------ --------- --------- -----------
Total comprehensive income for the
period 16,405 10,563 23,012
------------------------------------------ --------- --------- -----------
Profit for the period attributable
to:
Owners of the Parent Company 17,332 15,761 28,259
Non-controlling interests 670 725 2,287
------------------------------------------ --------- --------- -----------
18,002 16,486 30,546
------------------------------------------ --------- --------- -----------
Total comprehensive income attributable
to:
Owners of the Parent Company 15,735 9,838 20,725
Non-controlling interests 670 725 2,287
------------------------------------------ --------- --------- -----------
16,405 10,563 23,012
------------------------------------------ --------- --------- -----------
Basic earnings per ordinary share for
the profit attributable
to owners of the Parent Company during
the period 13.1p 11.9p 21.5p
------------------------------------------ --------- --------- -----------
Diluted earnings per ordinary share
for the profit attributable
to owners of the Parent Company during
the period 13.0p 11.8p 21.3p
------------------------------------------ --------- --------- -----------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (UNAUDITED)
as at 30 June 2017
30 June 30 June 31 December
2017 2016 2016
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
-------------------------------------------- --------- --------- -----------
Assets
Non-current assets
Intangible assets 5,414 5,551 4,909
Property, plant and equipment 25,277 23,322 21,967
Investment properties 131,908 118,542 123,663
Investment in joint ventures and associates 5,555 4,940 5,148
Trade and other receivables 2,621 15,437 5,592
Deferred tax assets 5,473 5,354 5,249
-------------------------------------------- --------- --------- -----------
176,248 173,146 166,528
-------------------------------------------- --------- --------- -----------
Current assets
Inventories 153,587 163,747 137,915
Trade and other receivables 99,723 57,568 66,921
Cash and cash equivalents 2,210 4,534 7,389
255,520 225,849 212,225
-------------------------------------------- --------- --------- -----------
Assets classified as held for sale 6,343 - 1,050
-------------------------------------------- --------- --------- -----------
261,863 225,849 213,275
-------------------------------------------- --------- --------- -----------
Liabilities
Current liabilities
Trade and other payables 87,114 64,288 61,149
Current tax liabilities 5,542 3,301 4,707
Borrowings 57,028 54,628 33,342
Provisions 6,662 7,304 6,669
-------------------------------------------- --------- --------- -----------
156,346 129,521 105,867
-------------------------------------------- --------- --------- -----------
Net Current Assets 105,517 96,328 107,408
-------------------------------------------- --------- --------- -----------
Non-current liabilities
Trade and other payables 2,667 9,721 4,615
Borrowings 7,351 6,115 6,922
Retirement benefit obligations 27,570 25,564 26,396
Provisions 1,450 2,393 2,451
-------------------------------------------- --------- --------- -----------
39,038 43,793 40,384
-------------------------------------------- --------- --------- -----------
Net Assets 242,727 225,681 233,552
-------------------------------------------- --------- --------- -----------
Equity
Share capital 13,611 13,605 13,608
Property revaluation reserve 3,896 3,964 3,879
Retained earnings 220,048 202,741 210,664
Other reserves 4,648 4,561 4,611
Cost of shares held by ESOP trust (690) (458) (1,071)
-------------------------------------------- --------- --------- -----------
Equity attributable to owners of the
Parent Company 241,513 224,413 231,691
Non-controlling interests 1,214 1,268 1,861
-------------------------------------------- --------- --------- -----------
Total Equity 242,727 225,681 233,552
-------------------------------------------- --------- --------- -----------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)
for the half year ended 30 June 2017
Attributable to owners of
the Parent Company
-----------------------------------------------------------
Cost
of
shares
Property held Non-
Share revaluation Retained Other by ESOP controlling Total
capital reserve earnings reserves trust Total interests Equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- -------- ----------- -------- -------- ------- ------- ----------- --------
At 1 January 2016 13,604 3,964 197,895 4,548 (345) 219,666 1,883 221,549
---------------------------- -------- ----------- -------- -------- ------- ------- ----------- --------
Profit for the period - - 15,761 - - 15,761 725 16,486
Other comprehensive
expense - - (5,923) - - (5,923) - (5,923)
---------------------------- -------- ----------- -------- -------- ------- ------- ----------- --------
Total comprehensive
income - - 9,838 - - 9,838 725 10,563
---------------------------- -------- ----------- -------- -------- ------- ------- ----------- --------
Equity dividends - - (5,016) - - (5,016) (1,340) (6,356)
Proceeds from shares
issued 1 - - 13 - 14 - 14
Purchase of treasury
shares - - - - (346) (346) - (346)
Share-based payments - - 24 - 233 257 - 257
---------------------------- -------- ----------- -------- -------- ------- ------- ----------- --------
1 - (4,992) 13 (113) (5,091) (1,340) (6,431)
---------------------------- -------- ----------- -------- -------- ------- ------- ----------- --------
At 30 June 2016 (unaudited) 13,605 3,964 202,741 4,561 (458) 224,413 1,268 225,681
---------------------------- -------- ----------- -------- -------- ------- ------- ----------- --------
At 1 January 2016 13,604 3,964 197,895 4,548 (345) 219,666 1,883 221,549
---------------------------- -------- ----------- -------- -------- ------- ------- ----------- --------
Profit for the year - - 28,259 - - 28,259 2,287 30,546
Other comprehensive
income/(expense) - 33 (7,567) - - (7,534) - (7,534)
---------------------------- -------- ----------- -------- -------- ------- ------- ----------- --------
Total comprehensive
income - 33 20,692 - - 20,725 2,287 23,012
---------------------------- -------- ----------- -------- -------- ------- ------- ----------- --------
Equity dividends - - (8,318) - - (8,318) (2,309) (10,627)
Realised revaluation
surplus - (118) 118 - - - - -
Proceeds from shares
issued 4 - - 63 - 67 - 67
Purchase of treasury
shares - - - - (959) (959) - (959)
Share-based payments - - 277 - 233 510 - 510
---------------------------- -------- ----------- -------- -------- ------- ------- ----------- --------
4 (118) (7,923) 63 (726) (8,700) (2,309) (11,009)
---------------------------- -------- ----------- -------- -------- ------- ------- ----------- --------
At 31 December 2016
(audited) 13,608 3,879 210,664 4,611 (1,071) 231,691 1,861 233,552
---------------------------- -------- ----------- -------- -------- ------- ------- ----------- --------
Profit for the period - - 17,332 - - 17,332 670 18,002
Other comprehensive
income/(expense) - 17 (1,614) - - (1,597) - (1,597)
---------------------------- -------- ----------- -------- -------- ------- ------- ----------- --------
Total comprehensive
income - 17 15,718 - - 15,735 670 16,405
---------------------------- -------- ----------- -------- -------- ------- ------- ----------- --------
Equity dividends - - (5,927) - - (5,927) (1,317) (7,244)
Proceeds from shares
issued 3 - - 37 - 40 - 40
Purchase of treasury
shares - - - - (196) (196) - (196)
Share-based payments - - (407) - 577 170 - 170
---------------------------- -------- ----------- -------- -------- ------- ------- ----------- --------
3 - (6,334) 37 381 (5,913) (1,317) (7,230)
---------------------------- -------- ----------- -------- -------- ------- ------- ----------- --------
At 30 June 2017 (unaudited) 13,611 3,896 220,048 4,648 (690) 241,513 1,214 242,727
---------------------------- -------- ----------- -------- -------- ------- ------- ----------- --------
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
for the half year ended 30 June 2017
Half Half
year year Year
ended ended ended
30 June 30 June 31 December
2017 2016 2016
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
---------------------------------------------- --------- --------- -----------
Cash flows from operating activities
Cash generated from/(used by) operations 1,382 (9,039) 28,545
Interest paid (501) (612) (1,141)
Tax paid (3,720) (4,358) (7,405)
---------------------------------------------- --------- --------- -----------
Net cash flows from operating activities (2,839) (14,009) 19,999
---------------------------------------------- --------- --------- -----------
Cash flows from investing activities
Purchase of intangible assets (350) (521) (606)
Purchase of property, plant and equipment (755) (1,326) (1,836)
Purchase of investment property (18,799) (1,484) (10,181)
Purchase of investment in joint ventures
and associates - (800) (800)
Proceeds on disposal of property, plant
and equipment 52 191 492
Proceeds on disposal of investment
properties 2,437 7,324 9,430
Proceeds on disposal of assets held
for sale 1,011 - -
Interest received 60 66 113
Acquisition of subsidiary, net of cash
acquired (2,711) - -
Dividends received from joint ventures - - 965
---------------------------------------------- --------- --------- -----------
Net cash flows from investing activities (19,055) 3,450 (2,423)
---------------------------------------------- --------- --------- -----------
Cash flows from financing activities
Proceeds from shares issued 40 14 67
Purchase of treasury shares (196) (346) (959)
Decrease in borrowings (5,909) (10,322) (39,128)
Increase in borrowings 30,024 20,064 28,421
Dividends
paid - ordinary shares (5,917) (5,006) (8,297)
- non-controlling interests (1,317) (1,340) (2,309)
- preference shares (10) (10) (21)
--------------------------------------------- --------- --------- -----------
Net cash flows from financing activities 16,715 3,054 (22,226)
---------------------------------------------- --------- --------- -----------
Net decrease in cash and cash equivalents (5,179) (7,505) (4,650)
Net cash and cash equivalents at beginning
of period 7,389 12,039 12,039
---------------------------------------------- --------- --------- -----------
Net cash and cash equivalents at end
of period 2,210 4,534 7,389
---------------------------------------------- --------- --------- -----------
Analysis of net debt:
Cash and cash equivalents 2,210 4,534 7,389
Bank overdrafts - - -
---------------------------------------------- --------- --------- -----------
Net cash and cash equivalents 2,210 4,534 7,389
Bank loans (56,385) (52,390) (32,684)
Government loans (6,733) (8,353) (7,580)
Asset finance (1,261) - -
---------------------------------------------- --------- --------- -----------
Net debt (62,169) (56,209) (32,875)
---------------------------------------------- --------- --------- -----------
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
for the half year ended 30 June 2017
1. GENERAL INFORMATION
The Company is a public limited company, listed on the London
Stock Exchange and incorporated and domiciled in the United
Kingdom. The address of its registered office is Banner Cross Hall,
Ecclesall Road South, Sheffield, United Kingdom, S11 9PD.
The financial information set out above does not comprise
statutory accounts within the meaning of Section 434 of the
Companies Act 2006 and is neither audited nor reviewed. The
Financial Statements for the year ended 31 December 2016, which
were prepared under IFRS as adopted by the European Union, have
been reported on by the Group's auditors and delivered to the
Registrar of Companies. The Independent Auditors' Report was
unqualified and did not contain any statement under Section 498 of
the Companies Act 2006.
2. Basis of preparation and accounting policies
The half-yearly financial information has been prepared in
accordance with the Disclosure and Transparency Rules of the
Financial Conduct Authority and with IAS 34 'Interim Financial
Reporting' as adopted by the European Union.
The Company meets its day-to-day working capital requirements
through a secured loan facility, which includes an overdraft
facility. The facility was renewed with effect from 17 February
2015, with a renewal date of 17 February 2018 and an option to
extend the facility by one year, each year, for the following two
years occurring on the anniversary of the facility. On 17 February
2017, we exercised our option to extend the facilities by one year
to 17 February 2020.
The current economic conditions create uncertainty for all
businesses over a number of risk areas. As part of their regular
going concern review, the Directors specifically address all the
risk areas that they consider material to the assessment of going
concern. The Directors have a reasonable expectation that the
Company has adequate resources to continue in operational existence
for the foreseeable future and thus they continue to adopt the
going concern basis of accounting in preparing the half-yearly
financial information.
The preparation of half-yearly financial information requires
management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported
amounts of assets, liabilities, income and expense. Actual results
may differ from these estimates.
In preparing these half-yearly financial statements, the
significant judgements made by management in applying the Group's
accounting policies and the key sources of estimation uncertainty
were the same as those that applied to the consolidated Financial
Statements for the year ended 31 December 2016.
The half-yearly financial information has been prepared using
the same accounting policies and methods of computation as compared
with the annual Financial Statements for the year ended 31 December
2016, except for as described below:
There are no standards and interpretations becoming mandatory
for the first time for the financial year ending 31 December 2017.
At the date of the half year financial statements, a number of
standards were in issue, but not yet effective, including IFRS 9
and IFRS 15. Management are underway with an impact assessment and
will disclose the impact in the year end annual report.
3. Segment information
For the purpose of the Board making strategic decisions, the
Group is currently organised into three operating segments:
Property Investment and Development; Land Promotion; and
Construction. Group overheads are not a reportable segment;
however, information about them is considered by the Board in
conjunction with the reportable segments.
Operations are carried out entirely within the United
Kingdom.
Inter-segment sales are charged at prevailing market prices.
The accounting policies of the reportable segments are the same
as the Group's accounting policies as detailed above.
Segment profit represents the profit earned by each segment
before tax and is consistent with the measure reported to the
Group's Board for the purpose of resource allocation and assessment
of segment performance.
Half year ended 30 June 2017 Unaudited
------------------------------------------------------------------------
Property
investment
and Land Group
development development Construction overheads Eliminations Total
Revenue GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------ ----------- ----------- ------------ --------- ------------ -------
External sales 112,560 40,202 42,633 - - 195,395
Inter-segment sales 170 - 4,878 312 (5,360) -
------------------------ ----------- ----------- ------------ --------- ------------ -------
Total revenue 112,730 40,202 47,511 312 (5,360) 195,395
------------------------ ----------- ----------- ------------ --------- ------------ -------
Operating profit/(loss) 12,743 8,269 4,687 (2,947) - 22,752
Finance income 497 726 452 3,068 (4,661) 82
Finance costs (2,742) (773) (256) (1,324) 4,411 (684)
Share of profit
of joint ventures
and associates 407 - - - - 407
------------------------ ----------- ----------- ------------ --------- ------------ -------
Profit/(loss) before
tax 10,905 8,222 4,883 (1,203) (250) 22,557
Tax (2,396) (1,582) (932) 355 - (4,555)
------------------------ ----------- ----------- ------------ --------- ------------ -------
Profit/(loss) for
the period 8,509 6,640 3,951 (848) (250) 18,002
------------------------ ----------- ----------- ------------ --------- ------------ -------
Half year ended 30 June 2016 Unaudited
------------------------------------------------------------------------
Property
investment
and Land Group
development development Construction overheads Eliminations Total
Revenue GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------ ----------- ----------- ------------ --------- ------------ -------
External sales 39,390 30,036 37,907 - - 107,333
Inter-segment sales 161 - 2,291 327 (2,779) -
------------------------ ----------- ----------- ------------ --------- ------------ -------
Total revenue 39,551 30,036 40,198 327 (2,779) 107,333
------------------------ ----------- ----------- ------------ --------- ------------ -------
Operating profit/(loss) 5,371 13,358 4,545 (2,189) - 21,085
Finance income 668 599 612 3,949 (5,646) 182
Finance costs (3,413) (1,035) (236) (1,626) 5,471 (839)
Share of profit
of joint ventures
and associates 350 - - - - 350
------------------------ ----------- ----------- ------------ --------- ------------ -------
Profit before tax 2,976 12,922 4,921 134 (175) 20,778
Tax (773) (2,550) (944) (2) (23) (4,292)
------------------------ ----------- ----------- ------------ --------- ------------ -------
Profit for the
period 2,203 10,372 3,977 132 (198) 16,486
------------------------ ----------- ----------- ------------ --------- ------------ -------
Year ended 31 December 2016 Audited
------------------------------------------------------------------------
Property
investment
and Land Group
development development Construction overheads Eliminations Total
Revenue GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------ ----------- ----------- ------------ --------- ------------ -------
External sales 176,232 51,190 79,384 - - 306,806
Inter-segment sales 314 - 5,044 639 (5,997) -
------------------------ ----------- ----------- ------------ --------- ------------ -------
Total revenue 176,546 51,190 84,428 639 (5,997) 306,806
------------------------ ----------- ----------- ------------ --------- ------------ -------
Operating profit/(loss) 15,105 18,608 10,288 (4,519) - 39,482
Finance income 936 1,079 1,172 22,649 (25,680) 156
Finance costs (6,390) (1,955) (484) (3,145) 10,304 (1,670)
Share of profit
of joint ventures
and associates 1,523 - - - - 1,523
------------------------ ----------- ----------- ------------ --------- ------------ -------
Profit before tax 11,174 17,732 10,976 14,985 (15,376) 39,491
Tax (1,969) (3,532) (2,244) (1,177) (23) (8,945)
------------------------ ----------- ----------- ------------ --------- ------------ -------
Profit for the
year 9,205 14,200 8,732 13,808 (15,399) 30,546
------------------------ ----------- ----------- ------------ --------- ------------ -------
30 June 30 June 31 December
2017 2016 2016
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
------------------------------------ --------- --------- -----------
Segment assets
Property investment and development 243,588 202,241 195,830
Land promotion 146,336 151,803 136,378
Construction 37,540 32,081 32,104
Group overheads and other 2,964 2,982 2,853
------------------------------------ --------- --------- -----------
430,428 389,107 367,165
Unallocated assets
Deferred tax assets 5,473 5,354 5,249
Cash and cash equivalents 2,210 4,534 7,389
------------------------------------ --------- --------- -----------
Total assets 438,111 398,995 379,803
------------------------------------ --------- --------- -----------
Segment liabilities
Property investment and development 27,992 16,535 17,646
Land promotion 33,091 29,345 20,893
Construction 34,284 35,125 33,888
Group overheads and other 2,526 2,701 2,457
------------------------------------ --------- --------- -----------
97,893 83,706 74,884
Unallocated liabilities
Current tax liabilities 5,542 3,301 4,707
Current borrowings 57,028 54,628 33,342
Non-current borrowings 7,351 6,115 6,922
Retirement benefit obligations 27,570 25,564 26,396
------------------------------------ --------- --------- -----------
Total liabilities 195,384 173,314 146,251
------------------------------------ --------- --------- -----------
Total net assets 242,727 225,681 233,552
------------------------------------ --------- --------- -----------
4. Earnings per ordinary share
Earnings per ordinary share is calculated on the weighted
average number of shares in issue. Diluted earnings per ordinary
share is calculated on the weighted average number of shares in
issue adjusted for the effects of any dilutive potential ordinary
shares.
5. Dividends
Half Half
year year Year
ended ended ended
30 June 30 June 31 December
2017 2016 2016
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
--------------------------------------------- --------- --------- -----------
Amounts recognised as distributions
to equity holders in period:
Preference dividend on cumulative preference
shares 10 10 21
Interim dividend for the year ended
31 December 2016 of 2.50p per share
(2015: 2.30p) - - 3,291
Final dividend for the year ended 31
December 2016 of 4.50p per share (2015:
3.80p) 5,917 5,006 5,006
--------------------------------------------- --------- --------- -----------
5,927 5,016 8,318
--------------------------------------------- --------- --------- -----------
An interim dividend amounting to GBP3,684,000 (2016:
GBP3,291,000) will be paid on 20 October 2017 to shareholders whose
names are on the register at the close of business on 22 September
2017. The proposed interim dividend has not been approved at the
date of the Consolidated Statement of Financial Position and so has
not been included as a liability in these Financial Statements.
6. Tax
Half Half
year year Year
ended ended ended
30 June 30 June 31 December
2017 2016 2016
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
----------------------------------------- --------- --------- -----------
Current tax:
UK corporation tax on profits for the
period 4,546 4,105 8,927
Adjustment in respect of earlier periods 10 (82) (23)
----------------------------------------- --------- --------- -----------
Total current tax 4,556 4,023 8,904
----------------------------------------- --------- --------- -----------
Deferred tax:
Origination and reversal of temporary
differences (1) 269 41
Total deferred tax (1) 269 41
----------------------------------------- --------- --------- -----------
Total tax 4,555 4,292 8,945
----------------------------------------- --------- --------- -----------
Corporation tax is calculated at 19.25% (2016: 20.00%) of the
estimated assessable profit for the period being management's
estimate of the weighted average corporation tax rate for the
period.
Deferred tax balances at the period end have been measured at
17% (June 2016: 18%), being the rate expected to be applicable at
the date the actual tax will arise.
7. Investment properties
Investment
Completed property
investment under
property construction Total
GBP'000 GBP'000 GBP'000
-------------------------------------- ----------- ------------- --------
Fair value
At 1 January 2016 103,694 21,617 125,311
Subsequent expenditure on investment
property 1,167 234 1,401
Capitalised letting fees 21 62 83
Amortisation of capitalised letting
fees (18) - (18)
Disposals (6,767) - (6,767)
Transfer to inventories (349) - (349)
Increase/(decrease) in fair value
in period 382 (1,501) (1,119)
At 30 June 2016 (unaudited) 98,130 20,412 118,542
-------------------------------------- ----------- ------------- --------
Adjustment in respect of tenant
incentives 2,234 - 2,234
Market value at 30 June 2016 100,364 20,412 120,776
-------------------------------------- ----------- ------------- --------
Fair value
At 1 January 2016 103,694 21,617 125,311
Subsequent expenditure on investment
property 4,197 5,854 10,051
Capitalised letting fees 46 84 130
Amortisation of capitalised letting
fees (35) (1) (36)
Disposals (8,170) (613) (8,783)
Transfers to assets held for sale (775) - (775)
Transfer to inventories (452) - (452)
Transfers within investment property 1,322 (1,322) -
Increase/(decrease) in fair value
in period 1,081 (2,864) (1,783)
-------------------------------------- ----------- ------------- --------
At 31 December 2016 (audited) 100,908 22,755 123,663
Direct acquisitions of investment
property 15,931 - 15,931
Subsequent expenditure on investment
property 913 1,955 2,868
Disposals (1,586) (639) (2,225)
Transfers to assets held for sale - (6,343) (6,343)
Transfers within investment property 9,300 (9,300) -
Decrease in fair value in period (585) (1,401) (1,986)
At 30 June 2017 (unaudited) 124,881 7,027 131,908
-------------------------------------- ----------- ------------- --------
Adjustment in respect of tenant
incentives 1,758 - 1,758
Market value at 30 June 2017 126,639 7,027 133,666
-------------------------------------- ----------- ------------- --------
At 30 June 2017, the Group had entered into contractual
commitments for the acquisition and repair of investment property
amounting to GBP5,782,000 (31 December 2016: GBP2,047,000).
8. Borrowings
Half Half
year year Year
ended ended ended
30 June 30 June 31 December
2017 2016 2016
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
----------------- --------- --------- -----------
Bank loans 56,385 52,390 32,684
Asset finance 1,261 - -
Government loans 6,733 8,353 7,580
64,379 60,743 40,264
----------------- --------- --------- -----------
Movements in borrowings are analysed as follows:
GBP'000
-------------------------------- -------
At 1 January 2017 40,264
Secured bank loans 28,763
Repayment of secured bank loans (5,062)
Asset finance 1,261
Repayment of government loans (847)
At 30 June 2017 64,379
-------------------------------- -------
9. Provisions for liabilities and charges
Since 31 December 2016 the following movements on provisions for
liabilities and charges have occurred:
-- the road maintenance provision represents management's
best estimate of the Group's liability under a
five-year rolling programme for the maintenance
of the Group's PFI asset. During the period GBP351,000
has been utilised and additional provisions of
GBP356,000 have been made, all of which were due
to normal operating procedures; and
-- the Land development provision represents management's
best estimate of the Group's liability to provide
infrastructure and service obligations, which remain
with the Group following the disposal of land.
During the period GBP1,385,000 has been utilised
and additional provisions of GBP372,000 have been
made.
10. Defined benefit pension scheme
The main financial assumptions used in the valuation of the
liabilities of the scheme under IAS19 are:
30 June 30 June 31 December
2017 2016 2016
% % %
---------------------------------------- ------- ------- -----------
Retail Prices Index 'Jevons' (RPIJ) n/a 2.05 n/a
Retail Prices Index (RPI) 3.00 2.75 3.00
Consumer Prices Index (CPI) 2.00 1.75 2.00
Pensionable salary increases 1.00 1.00 1.00
Rate in increase to pensions in payment
liable for Limited Price Indexation
(LPI) 2.00 2.05 2.00
Revaluation of deferred pensions 2.00 1.75 2.00
Liabilities discount rate 2.60 3.00 2.80
---------------------------------------- ------- ------- -----------
Amounts recognised in the Consolidated Statement of
Comprehensive Income in respect of the scheme are as follows:
Half Half
year year Year
ended ended Ended
30 June 30 June 31 December
2017 2016 2016
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
----------------------------------------- --------- --------- -----------
Service cost:
Current service cost 551 573 1,112
Ongoing scheme expenses 242 284 493
Net interest expense 360 353 691
Pension Protection Fund 91 63 167
----------------------------------------- --------- --------- -----------
Pension expenses recognised in profit
or loss 1,244 1,273 2,463
----------------------------------------- --------- --------- -----------
Remeasurement on the net defined benefit
liability:
Return on plan assets (excluding amounts
included in net interest expense) (5,295) (5,535) (12,528)
Actuarial losses arising from changes
in demographic assumptions - - 1,592
Actuarial losses arising from changes
in financial assumptions 7,109 15,836 22,972
Actuarial gains arising from experience
adjustments - (3,077) (3,077)
----------------------------------------- --------- --------- -----------
Actuarial losses recognised in other
comprehensive income 1,814 7,224 8,959
----------------------------------------- --------- --------- -----------
Total 3,058 8,497 11,422
----------------------------------------- --------- --------- -----------
The amount included in the Statement of Financial Position
arising from the Group's obligations in respect of the scheme is as
follows:
Half Half
year year Year
ended ended ended
30 June 30 June 31 December
2017 2016 2016
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
------------------------------------ --------- --------- -----------
Present value of scheme obligations 197,135 182,547 190,974
Fair value of scheme assets (169,565) (156,983) (164,578)
------------------------------------ --------- --------- -----------
27,570 25,564 26,396
------------------------------------ --------- --------- -----------
11. Related party transactions
There have been no material transactions with related parties
during the period.
There have been no material changes to the related party
arrangements as reported in note 28 to the Annual Report and
Financial Statements for the year ended 31 December 2016.
Transactions between the Company and its subsidiaries, which are
related parties, have been eliminated on consolidation and are not
disclosed in this note.
12. SHARE CAPITAL
Half Half
year year Year
ended ended ended
30 June 30 June 31 December
2017 2016 2016
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
---------------------------------------- --------- --------- -----------
400,000 5.25% cumulative preference
shares of GBP1 each (31 December 2016:
400,000) 400 400 400
132,111,137 ordinary shares of 10p
each (31 December 2016: 132,080,138) 13,211 13,205 13,208
---------------------------------------- --------- --------- -----------
13,611 13,605 13,608
---------------------------------------- --------- --------- -----------
13. Cash generated from operations
Half Half
year year Year
ended ended ended
30 June 30 June 31 December
2017 2016 2016
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
---------------------------------------------- --------- --------- -----------
Profit before tax 22,557 20,778 39,491
Adjustments for:
Amortisation of PFI asset 647 625 1,251
Goodwill impairment 101 102 203
Depreciation of property, plant and equipment 2,250 1,950 4,022
Revaluation decrease in investment properties 1,986 1,119 1,783
Amortisation of capitalised letting fees - 18 36
Share-based payment expense 170 257 510
Pension scheme credit (640) (1,234) (2,140)
Loss on disposal of assets held for sale 39 - -
Gain on disposal of property, plant and
equipment (194) (276) (506)
Gain on disposal of investment properties (159) (557) (647)
Finance income (82) (182) (156)
Finance costs 684 839 1,670
Share of profit of joint ventures and
associates (407) (350) (1,523)
---------------------------------------------- --------- --------- -----------
Operating cash flows before movements
in equipment held for hire 26,952 23,089 43,994
Purchase of equipment held for hire (2,010) (3,418) (4,048)
Proceeds on disposal of equipment held
for hire 406 542 648
---------------------------------------------- --------- --------- -----------
Operating cash flows before movements
in working capital 25,348 20,213 40,594
(Increase)/decrease in inventories (15,669) (24,458) 1,478
Increase in receivables (28,861) (7,934) (7,515)
Increase/(decrease) in payables 20,564 3,140 (6,012)
Cash generated from/(used by) operations 1,382 (9,039) 28,545
---------------------------------------------- --------- --------- -----------
14. Key risks
In common with all organisations, the Group faces risks which
may affect its performance. These are general in nature and
include: obtaining business on competitive terms, retaining key
personnel, successful integration of new business streams and
market competition.
The Group operates a system of internal control and risk
management in order to provide assurance that it is managing risk
whilst achieving our business objectives. No system can fully
eliminate risk and therefore the understanding of operational risk
is central to the management process within Henry Boot. The
long-term success of the Group depends on the continual review,
assessment and control of the key business risks it faces.
The Directors have, and continue to, review the potential impact
of the EU referendum. We believe that the Group worked hard in the
first half year to mitigate any potential downside risks that might
have arisen following the referendum and we believe we are well
placed to manage any further downside risk that may arise.
The Directors do not consider that the principal risks and
uncertainties have changed since the publication of the Annual
Report for the year ended 31 December 2016 and we expect these
principal risks and uncertainties to remain applicable for the
remaining six months of the year. To enable shareholders to
appreciate what the business considers are the main operational
risks, they are briefly outlined below:
Health & Safety
-- Inherent risk within construction activity.
Construction
-- Increased cost and lower availability of skilled
labour, subcontractors and building materials.
Environmental
-- The Group is inextricably linked to the property
sector and environmental considerations are paramount
to our success.
-- Stricter environmental legislation will increase
development and house building costs and therefore
could impact on profitability if capital and land
values do not increase to reflect more efficient
energy performance.
Development
-- Not developing marketable assets for both tenants
and the investment market on time and cost-effectively.
-- Rising market yields on completion making development
uneconomic.
-- Construction and tenant risk which is not matched
by commensurate returns on development projects.
Land
-- The inability to source, acquire and promote land
would have a detrimental effect on the Group's
strategic land bank and income stream.
-- A dramatic change in house builder funding sentiment
and demand for housing can have a marked change
on the demand and pricing profile for land.
Planning
-- Changes in government or government policy towards
planning policies could impact on the speed of
the planning consent process or the value of sites.
-- Increased complexity, cost and delay in the planning
process may slow down the project pipeline.
Economic
-- The Group operates solely in the UK and is closely
allied to the real estate, house building and construction
sectors. A strong economy with strong tenant demand
is vital to create long-term growth in rental and
asset values, whilst at the same time creating
a healthy market for the construction and plant
hire divisions.
Personnel
-- Attraction and retention of the highest calibre
people with the appropriate experience is crucial
to our long-term growth in the highly competitive
labour markets in which the Group works.
Treasury
-- The lack of readily available funding to either
the Group or third parties to undertake property
transactions can have a significant impact on the
marketplace in which the Group operates.
Investments
-- Identifying and retaining assets which have the
best opportunity for long-term rental and capital
growth, or conversely selling those assets where
capital values have been maximised.
Interest rates
-- Significant upward changes in interest rates affect
interest costs, yields and asset prices and reduce
demand for commercial and residential property.
Counterparty
-- Depends on the stability of customers, suppliers,
funders and development partners to achieve success.
Pension
-- The Group operates a defined benefit pension scheme
which has been closed to new members for 12 years.
Whilst the Trustees have a prudent approach to
the mix of both return-seeking and fixed- interest
assets, times of economic instability can have
an impact on those asset values with the result
that the reported pension deficit increases. Furthermore,
the relationship between implied inflation and
long-term gilt yields has a major impact on the
pension deficit and the business has little control
over those variables.
UK exit from European Union
-- The announcement of the UK exit from the European
Union resulted in exchange rate fluctuations and
material price inflation. As we move through the
process we could see further price inflation, reduced
market confidence, restrictions to the supply of
labour and increased economic uncertainty.
Cyber Security
-- Unauthorised access to systems, hacking, malware
and distributed denial of service could all lead
to data loss, business disruption, reputational
damage or financial loss.
15. Approval
At the Board meeting on 24 August 2017 the Directors formally
approved the issue of these statements.
RESPONSIBILITY STATEMENTS OF THE DIRECTORS
The Directors confirm that these condensed interim financial
statements have been prepared in accordance with International
Accounting Standard 34, 'Interim Financial Reporting', as adopted
by the European Union and that the interim management report
includes a fair review of the information required by DTR 4.2.7 and
DTR 4.2.8, namely:
-- an indication of important events that have occurred
during the first six months and their impact on
the condensed set of financial statements, and
a description of the principal risks and uncertainties
for the remaining six months of the financial year;
and
-- material related-party transactions in the first
six months and any material changes in the related-party
transactions described in the last annual report.
The Directors of Henry Boot PLC are listed in the Henry Boot PLC
Annual Report for the year ended 31 December 2016. A list of
current Directors is maintained on the Henry Boot PLC Group
website: www.henryboot.co.uk.
On behalf of the Board
J T SUTCLIFFE D L LITTLEWOOD
Director Director
24 August 2017 24 August
2017
This information is provided by RNS
The company news service from the London Stock Exchange
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