Untitled

Henry Boot PLC

Annual Report and Financial Statements

for the year ended 31 December 2022

WELCOME

OUR

ANNUAL

REPORT

2022

ARE

PURPOSE

LED

BUSINESS

Our Purpose

To empower and develop our people to create long-term value and sustainable

growth for our stakeholders. 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.

Empowering and developing our people sits at the core of our purpose. This focus shapes our values and behaviours and

is a key aspect of our strategic objectives. Being purpose-led enables us to create long-term value for our stakeholders

and ultimately achieve our vision.

Our

Purpose

Our approach to Responsible Business and ESG

Our Responsible Business Strategy sets out medium-term objectives which we aim to achieve by the end of 2025.

It aims to incorporate and align our approach to environmental, social and governance (ESG) with our commercial strategy

to ensure our activity and performance is influenced by our Purpose and Values.

Ultimately, It is essential that responsibility is at the core of our business activity, including our Strategy, Vision and Values.

INSIDE THIS REPORT

Group at a Glance

Find out more about the Group’s

operations.

Read Group at a Glance

on pages 08 to 11

Business Model

We have a long-standing and proven

business model which is key to how we

create value for our stakeholders.

Read the Business Model

on pages 20 to 23

Read about our

137 history at

www.henryboot.co.uk

Watch the Business

Model Video at

www.henryboot.co.uk

Our focused Key Markets

The Group operates within three key

markets: Industrial and Logistics,

Residential and Urban Development.

Responsible Business

Our approach to ESG and creating

social value within the communities we

operate in.

Read about our Markets

on pages 24 to 27

Read our Responsible

Business Approach

on pages 32 to 36

View our Online Annual Report at

henryboot.annualreport2022.com

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Overview

Highlights

Clear Medium-term Strategic Objectives

2025 Responsible Business Strategy

Chair’s Statement

Group at a Glance

Investment Case

Strategic Value in the Business

Strategic

Chief Executive Officer Update

Business Model

Our Markets

Our Strategy

Our strategy – Performance at a Glance

Responsible Business Strategy

Segmental review

–

Land Promotion

–

Property Investment and Development

–

Construction

Financial Review

Principal Risks and Uncertainties

Our Risks

Section 172 Statement

Our People

TCFD

Governance

Board of Directors

Executive Committee

Chairman’s Introduction

Governance at a Glance

Corporate Governance Report

–

Division and Responsibilities

–

Board Leadership and

Company Purpose

–

Composition, Success and Evaluation

–

Nomination Committee Report

–

Audit and Risk Committee Report

104

111

– Responsible Business Committee Report 116

–

Directors’ Remuneration Report

–

Remuneration Policy

–

Annual Report on Remuneration

Director’s Report

Financials

Independent Auditor’s Report

Consolidated Statement of

Comprehensive Income

Statements of Financial Position

Statements of Changes in Equity

Statements of Cash Flows

Notes to the Financial Statements

Shareholder Information

Notice of Annual General Meeting

Financial Calendar

Advisers

Group Contact Information

Glossary

120

124

127

137

146

155

156

157

158

159

208

212

213

214

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

HIGHLIGHTS

Financial Highlights

Operational highlights

Group Revenue

£341.4m

ROCE

12.0%

Net Asset Value per

Ordinary Share

295p

Profit Before Tax

£45.6m

Earnings per

Ordinary Share

25.0p

Dividend per

Ordinary Share

6.66p

•

£279m of sales led by our land promotion, property development

and housebuilding businesses making the most of strong markets

in the first half of the year

•

Selective approach to acquisitions throughout the year, totalling

£28.4m, including £27m of strategic investment to grow Hallam

Land Management and Stonebridge Homes’ land holdings

•

Continued investment in our £240m high-quality committed

development programme where costs are 97% fixed

•

Land Promotion

− A record of 3,869 plots sold (2021: 3,008), driven by a major

disposal at Didcot of 2,170 plots

− 9,431 plots with planning permission (2021: 12,865), leaving

Hallam Land Management well positioned against a backdrop

of an increasingly constrained planning system

•

Property Investment & Development

− Significant committed development programme of £240m, with

63% pre-sold or pre-let

− Over 1m sq ft of Industrial & Logistics development underway

(HBD Share: £150m GDV)

− £1.5bn development pipeline (Henry Boot share £1.25bn), 65%

of which is focused on supply-constrained Industrial & Logistics

markets, where occupier demand remains robust

− Well timed sales within the investment portfolio of £29.6m,

at an average 17% premium to the last reported book value,

contributed to total return outperformance of -1.5% versus

CBRE Index of -9.1%

− Stonebridge Homes completed 175 homes (124 private/51

social) (2021: 120), at an average selling price for private homes

of £503k (2021: £509k). Total owned and controlled land

bank is now 1,094 plots (2021: 1,157) with detailed or outline

planning permission on 872 plots (2021: 912)

•

Construction

− The construction business performed ahead of budget with

turnover of £101.5m (52% from public sector) out of £128.6m

segment total and has secured 68% of 2023 order book

− Banner Plant has seen record levels of trading activity after

experiencing strong demand from its customers and Road

Link (A69) has performed well as a result of increasing traffic

volumes

•

Responsible Business

− Continuing to make good progress against our Responsible

Business Strategy targets and objectives, launched in

January 2022

NOTES:

This report contains the following alternative performance measures

(APM): Underlying profit. Return on Capital Employed. Net Asset Value

(NAV) per share. Net (debt)/cash. Total Accounting Return.

More details can be found on page 49.

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

227p

15.8%

£397.1m

239p

14.8%

£379.7m

235p

20 4.9%

£222.4m

267p

9.6%

£230.6m

295p

12.0%

£341.4m

9.0p

£48.6m

28.3p

5.0p

28.3p

£49.1m

5.5p

9.0p

20 £17.1m

6.05p

21.2p

£35.1m

6.66p

25.0p

£45.6m

Pictured: Island, Manchester, capable

of delivering 91,000 sq ft of Net Zero

Carbon office space

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

INDUSTRIAL

LOGISTICS

Long-term drivers

CLEAR MEDIUM-TERM

STRATEGIC OBJECTIVES

Our strategy is guided by medium-term strategic objectives

To grow capital

employed

Medium-term Target

£500m

Return on average capital

employed

Medium-term Target

10-

15%

Grow Hallam

Land’s plot sales

Medium-term Target

c.3,500

Grow HBD development

completions

Medium-term Target

c.£200m

Grow investment

portfolio value

Medium-term Target

£150m

Grow Stonebridge

Homes house sales

Medium-term Target

600 units pa

Work towards a more coordinated

H&S approach to ensure our

Group is a safe place to work

Medium-term Target

<395

Accident

Incident

Rate

Reduce directly controlled

greenhouse gas (GHG) emissions

Medium-term Target

20%

reduction

Seek high levels of employee

satisfaction and engagement

Medium-term Target

eNPS

Create a high performance

culture led by a range of training

opportunities

Medium-term Target

days

(per

employee)

Read more about our

Focus on our three core long-term markets

The Group operates in three key sustainable markets:

Occupier demand remains robust and low vacancy rates

continue to drive rental growth.

Rise in mortgage rates post ‘mini-budget’ have slowed

sales rates but supply of new homes remains low, leaving

the Group in a strong position.

Dominant centres are still attractive to younger people,

whilst there has been a recovery in regional office take-up

with occupier focus on high quality agile/green buildings.

Read about our Core Markets

on pages 24 to 27

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

RESIDENTIAL

Long-term drivers

PEOPLE

AND

SAFETY

Strategy on page 28

Growth

Delivery

Long-term drivers

URBAN

DEVELOPMENT

GROWTH

AND

DELIVERY

2025 RESPONSIBLE

BUSINESS

STRATEGY

Safety and the

Environment

People

We have always understood and been influenced by the

responsibility we have to create sustainable and long-term value

for the communities and environments we operate in.

ESG factors are becoming an increasingly important focus for investors, customers,

our people, and the general public intensified by global events and climate change. We are working hard to ensure

that our long-term business decisions incorporate the way we protect and collaborate with our people, partners,

places and planet. It is essential that we ensure responsibility is at the core of our business and values.

The foundations we lay – Phase 1 of our

Responsible Business Strategy (135 Henry Boot).

In March 2021, we launched 135 Henry Boot which was the first phase

of our new Responsible Business Strategy, aligning with the Group’s

135th anniversary and focused on the delivery of five key objectives:

1. To launch our path to net zero carbon (NZC) and build awareness of the

importance of sustainable business practices and the circular economy.

2. To take action to ensure our business is equal,

diverse, inclusive, and accessible.

3. To work with key partners across the built environment sector to create

positive direction and thought on diversity within our industry.

4. To collaborate with our communities to understand

and respond to their challenges and requirements.

5. To engage all our stakeholders to create social

value and contribute to a fair and just society.

Phase 2 sets ambitious objectives

and targets for the medium-term:

Ensuring we maintain our bold and determined approach to

achieving significant environmental and social value through

our work. The objectives that we have set out in our

Responsible Business Strategy are:

1. To further embed ESG factors into our commercial

decision making, so that we adapt our business ensuring

long-term sustainability and value creation for our stakeholders.

2. To empower and engage our people to deliver long-term meaningful

change and impact for the communities and environments we work in.

3. To authentically address those issues deemed to be

most significant and material to our business and hold ourselves

accountable by reporting regularly on our progress.

PILLAR

–

OUR

PEOPLE

PILLAR

–

OUR

PLACES

We will support, develop, engage

and empower our people to have an

exceptional working experience, to be the

best versions of themselves and to deliver

long-term value for our stakeholders.

In fulfilling our Purpose, we will support

and engage the communities we work

with to create long-lasting social value.

PILLAR

–

OUR

PLANET

PILLAR

–

OUR

PARTNERS

We will protect and preserve our planet

by reducing our environment impact,

consuming responsibly and safe-guarding

our environments.

We will collaborate with our partners to

deliver exceptional results, create value

and share knowledge, solutions and

creativity to address key issues.

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

CHAIR’S

STATEMENT

THE

GROUP’S

BEST

EVER

FINANCIAL

RESULTS

PETER

CHAIR

SON

enry Boot has benefited from strong

sales activity which helped drive a 30%

increase in profit before tax (PBT) to

£45.6m (December 2021: £35.1m).

In 2022, we completed and exchanged

on £279m of sales within our property

development, strategic land and

housebuilding businesses, which

Read the

Business

Review

on pages

38 to 44

delivered the Group’s best ever financial results of £56.1m

on an underlying profit basis before revaluation movements

on completed investment property. Whilst we are cautious

with respect to the near-term trading climate as the

economy adjusts to a higher interest rate environment,

I am pleased to report that the Group continues to make

progress against its strategic objectives, and we remain

confident about achieving its medium-term growth and

return targets.

£56.1m

UNDERLYING

PROFIT

(2021: £29.3M)

295p

NET ASSET VALUE

PER

(2021: 267P)

The Group’s financial position remains robust, with TAR

at 12.8%, reflecting the growth of NAV per share plus

dividends paid. The business has remained purposefully

selective on new projects investing £28.4m into new

opportunities, with net debt increasing only marginally

to £48.6m (2021: £40.5m) and gearing remaining low at

12.3% (2021: 11.4%), providing flexibility from a position of

strength to react to any opportunities we see in the market.

On the basis of the Group’s strong commercial and financial

performance, the Board proposes to pay a final dividend

of 4.00p per share, which together with the 2.66p interim

dividend, gives a total of 6.66p (2021: 6.05p), an increase

of 10.1% for the year. This will be paid on 2 June 2023 to

shareholders on the register at the close of business on

5 May 2023.

In 2022 we launched our Responsible Business Strategy,

and I am pleased to report we are making good progress

against our targets. Our commitment to addressing climate

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Pictured above: The Isaacs Building in Sheffield city

centre, which will provide a new head office space for

Henry Boot in line with the modern and progressive

vision of the company

change and reducing our environmental impact remains

a key focus. We are proud of the progress made to lower

our total direct GHG emissions (Scopes 1 and 2), which

were 12% lower than our 2019 baseline, and the efforts our

people have made to support our targets through how they

work and travel.

Each year we conduct an independent Group Employee

Engagement Survey, through the HIVE HR platform, to gain

feedback from our people so we can continue to improve

our employee experience and provide a positive culture

and workplace environment. The 2022 survey continues

to show very high levels of advocacy, pride and loyalty

in Henry Boot, achieving an increased employee Net

Promoter Score (eNPS) of 39 (2021: 26), which is ranked at

the top of the very good range.

Finally, as the Group continues to grow and evolve as

a diverse and progressive business, we have made the

decision to relocate our Head Office from Banner Cross

Hall to the Isaacs Building in Sheffield city centre this

autumn. Isaacs Building is a seven-storey development

in which we have taken 12,800 sq ft across the top three

floors. The building offers greater collaboration space and

excellent transportation links, as well as supporting our

2030 NZC commitments.

On behalf of the Board, I would like to thank everyone at

Henry Boot for their dedication and hard work. Their high

levels of engagement have once again been instrumental

to the business in producing such a strong set of results

against a challenging backdrop.

PETER

MAWSON

CHAIR

This report contains the following alternative performance

measures (APM): Underlying profit. Return on Capital

Employed. Net Asset Value (NAV) per share. Net (debt)/cash.

Total Accounting Return.

More details can be found on page 49.

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

GROUP

GLANCE

Established in 1886, we are one of the UK’s leading land development, property

investment and development and construction companies.

We manage the combined effort and expertise of six primary subsidiaries, investing in our future to create long-term value and

robust returns for all our stakeholders and partners. With our uniquely sustainable business model we have built a market-leading

Group of Companies that source, develop and deliver across the whole property value-chain. We have been in business for over

135 years and we are valued for our expertise and forward thinking approach.

Our Core Values

All our operations are carried out in accordance with our six

key values: Respect, Loyalty, Delivery, Adaptability, Integrity and

Collaboration. These values are imperative to our success, and

our people continue to live by them in both their individual and

collaborative roles.

Our Strategic Priorities

Our strategy is shaped by four key strategic pillars – Safety and

the Environment, People, Growth and Delivery. Being purpose-

led allows us to create long-term value for our stakeholders and

ultimately achieve our vision.

Respect Loyalty Delivery Adaptability

Integrity Collaboration

Safety and the

Environment

People Growth Delivery

Read the Strategy

on pages 28 to 31

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Our Geographical Reach

National coverage and strategic sites

The head office of the Henry Boot Group is located in Sheffield but

we operate throughout the country. We have nine regional offices

and seven plant hire centres to ensure we are close to our strategic

sites and we are able to maximise our development opportunities.

Key

Head Offices

Regional Offices

Hire Centres

Pictured: Setl, delivering 101 premium

apartments within Birmingham’s

Jewellery Quarter.

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

GROUP

GLANCE

Our Group is over 135 years old and

contains six primary subsidiaries that

operate across our three key markets.

3,869

PLOTS SOLD BY

HALLAM

LAND MANAGEMENT

£117m

DEVELOPMENT

COMPLETIONS (HBD

SHARE £83M)

175

STONEBRIDGE HOMES

COMPLETIONS

95,704

PLOTS

IN THE

LAND

PORTFOLIO

£106m

INVESTMENT PORTFOLIO

(INCLUDING OUR SHARE

JOINT VENTURES)

£101.5m

CONSTRUCTION

TURNOVER

Recurring Revenue: This revenue stream is regular and stable which

allows the Group to maintain long-term bank funding relationships.

Cyclical Revenue: This revenue stream is dependent on each

economic cycle. These profits, in good years, contribute significantly

to the Group’s profits overall.

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

How Land Promotion is

well-positioned for the long-term

•

A land bank of c.96,000 plots

•

A total of 9,431 plots with planning permission, of

which 992 have been exchanged for sale in 2023/24

•

12,297 plots currently awaiting planning determination

Read more on pages 38 to 39

Hallam Land Management Limited

The strategic land and planning promotion arm of the Henry

Boot Group.

Since 1990 we have been acquiring, promoting and

developing land and have an outstanding record in

achieving planning permission. Hallam Land has a strategic

land bank focused on higher value locations in the South

and Midlands, and in total has the potential to deliver

around 95,704 residential plots.

Key Markets:

Residential

Industrial & Logistics

Revenue Stream

LAND

PROMOTION

PROPERTY

INVESTMENT

AND

DEVELOPMENT

Henry Boot Developments Limited

HBD (Henry Boot Developments) is a UK based property

developer working with a £1.25bn pipeline. Specialising in

industrial and logistics, urban regeneration and residential

projects, HBD creates profitable and impactful places in the

communities that we work.

Key Markets:

Industrial & Logistics

Residential

Urban Development

Revenue Stream

Stonebridge Homes Limited

Stonebridge Homes is a jointly owned company (controlled

by Henry Boot PLC), operating throughout Yorkshire and

with a well-deserved reputation for building quality, high

specification homes in sought after locations and with

a proven track record in delivering successful housing

schemes.

Over the last ten years, Stonebridge Homes has

successfully delivered over 25 developments. They have

sustainable plans for growth that has seen them launch their

first new development in Barnard Castle in the North East

of England in 2022, and increase the number of outlets in

Yorkshire, whilst beginning to substantially increase delivery

to become a multi-regional business.

Key Markets:

Residential

Revenue Stream

CONSTRUCTION

Henry Boot Construction Limited

A regional construction services provider to both public

and private sector customers, delivering sustainable,

customer-focused solutions and building strong partnering

relationships to ensure the best outcomes for all projects.

Key Markets:

Industrial & Logistics

Residential

Urban Development

Revenue Stream

Banner Plant Limited

Offering a wide range of construction equipment

and services for sale and hire in plant, temporary

accommodation, power tools, powered access and big air

compressors. Primarily, supply areas stretch from Yorkshire

in the North to the East Midlands and Birmingham in

the South.

Road Link (A69) Limited

Road Link has a 30-year contract (three years remaining)

with National Highways to operate and maintain the A69

trunk road between Carlisle and Newcastle upon Tyne.

National Highways pays Road Link (A69) a shadow toll,

which is a fee based upon the number of vehicles using the

road and mileage travelled by those vehicles.

How Property Investment and

Development is well-positioned

for the long-term

•

HBD has a committed development programme worth

£395m (£240m HBD share), 63% of which has been

pre-let or pre-sold

•

A long-term pipeline of £1.25bn, comprising 65%

Industrial & Logistics, 20% Urban Commercial and 15%

Urban Residential

•

The investment portfolio has been valued at £106m,

with expected growth in the medium-term

•

Stonebridge Homes has a total land bank of 1,094 units

or based on one-year forward sales, 4.4 years supply

(with 872 plots having planning permission)

How Construction is

well-positioned for the long-term

•

Henry Boot Construction’s order book is 68%

secured for 2023

•

Three urban development schemes with a total

contract value of £129m are progressing well

•

94% of secured order book has fixed price orders

placed or contractual inflation clauses

•

Well positioned as a partner on 10 public sector

frameworks

Read more on pages 40 to 43

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

Henry Boot PLC

Annual Report and Financial Statements for the year ended 31 December 2022

INVESTMENT

CASE

FIVE

REASONS

INVEST

Shareholder returns

The Company has a great track record of creating shareholder value through our strategic

focus of delivering sustainable growth. The Group has achieved a total shareholder return

(TSR) of 10.5% per annum over 20 years, which is significantly ahead of the FTSE All-Share

index of 7.9%.

Clear focus on three key markets driven by positive

long-term trends

Our focus remains committed to achieving long-term growth within our three key markets

– Industrial & Logistics, Residential and Urban Development. There were strong levels of

demand across our key markets throughout the majority of 2022, leaving us confident in our

ability to achieve our medium-term growth and return targets. However, despite witnessing a

marked slowdown in Q4 22, in the early stages of 2023 there have been encouraging signs

that demand is recovering with a resumption of activity in our markets.

Significant embedded value in the business

There is significant embedded value across the Group, with all the opportunities sitting

within the Group’s three key markets. This includes c.96,000 strategic land plots (of which

9,431 have planning permission) and a £1.25bn development pipeline (with 65% focused

on Industrial & Logistics). Adding to this, we have a growing housebuilder, with a land bank

of 1,094 units which equates to 4.4 years supply based on a one year rolling forward sales

forecast for land.

Our culture: the Henry Boot way of doing things

Our people are vital to Henry Boot’s long-term success. A positive and inclusive embedded

culture enables us to create and maintain long standing relationships with our customers,

clients and communities. This is crucial to our sustainability, creating an environment which

empowers our people to deliver the Group’s strategy, whilst continuing to attract and retain

people who support our culture.

Responsible Business approach

We launched the second phase of our Responsible Business Strategy in January 2022. The

Strategy outlines forward-looking targets aimed at further embedding our ESG approach into

the Group’s commercial and strategic decision making, which we continue to work towards.

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

OUR

STRENGTHS

Our diversified businesses

Henry Boot operates across the whole

property value chain.

With our uniquely sustainable business model we have built a

market-leading Group of Companies that source, develop and

deliver across the whole property value-chain.

We manage the combined effort and expertise of six primary

subsidiaries, investing in our future to create long-term value and

robust returns for all our stakeholders and partners.

Our planning and development expertise

The Group has been in business for over 135

years and we are valued for our expertise and

forward-thinking approach.

Henry Boot recognises that our people are fundamental to the

success and sustainability of the Group. It is their expertise that

executes our business model successfully and delivers the value

created by the business to our stakeholders.

Our capital structure

We reinvest the cash generated from our

investment portfolio and construction business

into profitable areas of the business.

Our financial structure allows us to invest in the more profitable

areas of the business to ensure we can maximise value, whilst

maintaining prudent gearing levels. HBD’s property investment

portfolio generates rental income each year, allowing us to borrow

against the investment portfolio at attractive rates. The construction

segment is self-funded and cash generative, resulting in the cash

produced from these activities being invested into strategic land and

property development.

Our relationships

We have close relationships with landowners’,

key property advisers to alert us to potential

opportunities; and planning consultants and

legal advisers for knowledge and guidance.

At Henry Boot we pride ourselves on collaboration. We set clear

mutual expectations and strive to achieve them. We promote cross-

team working, and work in partnership to make things happen.

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

TOTAL

PLOTS

95,704

PLOTS

WITH

10%

PERMISSION

PLOTS

13%

PLANNING

FUTURE

77%

PLOTS

73,976

STRATEGIC VALUE

IN THE BUSINESS

LAND

PROMOTION

LAND

BANK

Regional breakdown

SCOTLAND

9,630

NORTH

MIDLANDS

17,716

SOUTH

WEST

21,687

NORTH

12,528

SOUTH

MIDLANDS

21,982

SOUTH

EAST

5,395

SOUTH

6,766

Residential Land Plots

100,000

88,070

92,667

95,704

80,000

72,469

77,144

60,000

40,000

20,000

Dec 2018

Dec 2019

Dec 2020

Dec 2021

Dec 2022

Plots with Permisson Plots in Planning Future Plots

16,489

11,929

44,051

14,713

10,665

51,766

15,421

8,312

64,337

12,865

11,259

68,543

9,431

12,297

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

PROPERTY

INVESTMENT

DEVELOPMENT

Future Development Pipeline

The Group has a total development pipeline

of £1.5bn GDV (HBD Share £1.25bn), with

all of these opportunities sitting within the

Company’s three key markets.

65%

INDUSTRIAL AND

LOGISTICS

Regional breakdown

Consented

Controlled

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

INDUSTRIAL

30%

AND

LOGISTICS:

BIG

BOX

INDUSTRIAL

AND

35%

LOGISTICS:

MID/SMALL

BOX

15%

URBAN

RESIDENTIAL

20%

URBAN

COMMERCIAL

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

REPORT

Chief Executive Officer Update

Business Model

Our Markets

Our Strategy

Our strategy – Performance at a Glance

Responsible Business Strategy

Segmental review

Land Promotion

Property Investment and Development

Construction

Financial

Review

Principal Risks and Uncertainties

Our Risks

Section 172 Statement

Our People

TCFD

The Directors present the Group Strategic Report

for the year ended 31 December 2022.

This report sets out how Henry Boot continues to create

consistent value through the promotion of new land opportunities,

the development of and investment in high-quality property

assets, and construction activities.

The Business Overview and Strategic Report on pages 02 to 77

has been approved by the Board and signed on its behalf by

TIM

ROBERTS

CHIEF

EXECUTIVE

OFFICER

12 April 2023

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

CHIEF EXECUTIVE

OFFICER UPDATE

HAVE

CONFIDENCE

ACHIEVING

OUR

MEDIUM-TERM

GROWTH

AND

RETURN

TARGETS

TIM

OBERTS

CHIEF

EXECUTIVE

OFFICER

enry Boot had a good 2022, delivering our best

ever underlying profit of £56.1m. Even after

allowing for downward valuation movements of

£10.5m in our completed investment property

portfolio as UK commercial property values

declined, our statutory profit before tax still

increased by 30% to £45.6m (2021: £35.1m). This

is a highly satisfactory result amidst the macro

economic headwinds faced in the second half.

The year started off buoyantly with encouraging levels of demand

across our three key markets, which offset cost pressures and

supply constraints, but with energy prices fuelling inflation and rising

interest rates, we saw a marked slowdown in Q4 22. However,

as we enter 2023 there are encouraging signs that the economy

is proving slightly more resilient than expected, and demand is

recovering with a resumption of activity in our markets.

The Group’s results for the year were driven primarily by residential

land sales at Hallam Land Management (HLM), a mix of land sales

and development profits at HBD and house sales at Stonebridge

Homes (SBH). We profitably sold £279m of land, buildings and

houses during the year making the most of strong markets in H1 22

and took a very selective approach to acquisitions totalling £28.4m,

which included growing HLM and SBH’s land holdings.

On a statutory basis NAV increased by 11% to £395m, or excluding

the pension surplus was up by 5% to £388m. Capital employed

increased by 6.2% over the year to £399m, consistent with our

medium-term target of £500m. Profitable sales also helped us to

effectively manage our gearing, which at 12.3%, remains at the

bottom of our 10-20% target range. The strength of our balance

sheet, plus recently refreshed banking facilities of £105m, which

are secured to 2025, means we are well positioned for a period

of continued uncertainty ahead. As was the case when we came

out of COVID, we have the capacity to buy land, maintain and

potentially expand the committed development programme,

and continue to grow our JV housebuilder, which puts us in a

competitive position to act opportunistically.

With the disposal of 3,869 plots, HLM had its best ever year in

terms of volume, making the most of a buoyant land market in H1

22, primarily due to a major disposal of 2,170 plots at Didcot. This

project is a great example of HLM’s depth of expertise in dealing with

increasingly complex planning matters, and not only will it deliver

much needed housing supply, but it also includes 80 acres of open

space alongside extensive green infrastructure and cycle networks.

HLM grew its land bank to c.96,000 plots (2021: c.93,000) during

the period, of which 9,431 plots have planning permission. I am

increasingly convinced that the UK planning system is in need of

urgent reform. The delays and complexities can no longer be blamed

on COVID. Whilst we would derive greatest satisfaction from a more

efficient system on account of the benefits this would bring local

communities, the challenges of the current situation mean that the land

we successfully promote and the expertise we bring in navigating the

planning system remain increasingly in demand.

Towards the end of 2022, our major land customers, the national

housebuilders, saw a well reported slowdown in house sales and

consequently became more selective on land acquisitions. Early

signs are that confidence is returning and, together with 992 plots

(2021: 1,880 plots) unconditionally exchanged at year-end, we

anticipate a reasonable year ahead in terms of land sales.

HBD continues to grow completed development activities with a

Gross Development Value (GDV) of £117m (HBD share: £83m) (2021:

£303m GDV, HBD share: £68m) of which 92% has been let or sold.

The committed programme now totals £395m (HBD share: £240m

GDV), 63% of which is currently pre-let or pre-sold. Whilst there

are signs that construction cost inflation is slowing, we continue to

actively manage risk with 97% of the development costs fixed.

Although investment markets have adjusted rapidly, our underlying

occupational markets remain in fundamentally good shape.

Structural demand persists for Industrial & Logistics (I&L) space,

with national take up in 2022 a very healthy 65.8m sq ft (according

to Gerald Eve), which, whilst down on the record high in 2021, was

still the second most active year on record with rents increasing

by 10.3% during the year. The build to rent (BtR) occupational

market remains very buoyant with residential rents growing by

12.1% according to Zoopla in 2022. On offices there is a clear

trend of people returning to our major cities and the workplace,

with particularly strong demand for buildings that offer strong

environmental credentials that assist occupiers in achieving their

own NZC goals.

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

The part of the committed programme not pre-let or pre-sold is

primarily in three high-quality schemes where we remain confident

of demand:

•

In Rainham, we have recently committed along with our JV

partner, Barings, (HBD share: £24m GDV) to a 380,000 sq ft

speculative I&L scheme. Whilst marketing has not yet begun,

this NZC urban logistics development serving Greater London

is already experiencing strong occupier interest.

•

In the centre of Birmingham, we are part way through

construction of 101 premium apartments (HBD share: £32m

GDV) which we expect to launch successfully for sale in the

summer of this year.

•

Finally, in Manchester city centre in partnership with the Greater

Manchester Pension Fund, we are building 91,000 sq ft of

prime, NZC offices (HBD share: £33m). With the scheme

responding to several identified office requirements, we expect

good occupier interest.

As we make progress on letting or pre-selling these schemes,

we have a number of high-quality I&L and BtR projects within our

£1.25bn development pipeline that we can bring forward at the

appropriate time.

As we highlighted at the time of the interim results, we tactically

identified several properties for sale and I am pleased to report

we sold three properties for a total of £29.6m, a 17% premium

to the last reported book value. As a result, against a backdrop

of falling values, we have delivered relative out performance on

our investment portfolio (current value including our share of JVs

£106m) with a total return of -1.5 % versus the CBRE UK index of

-9.1%. Over the next few years, through a combination of retaining

completed developments and acquisitions, we will look to build the

portfolio up to our strategic target of £150m.

We made further progress with our JV housebuilder Stonebridge

Homes (SBH), with a 46% increase in the number of homes

delivered to 175 completions (2021: 120). Whilst supply chain

issues at the tail end of the year meant we did not reach our target

of delivering 200 homes, we marginally beat our profit expectations.

This was driven by our ability to achieve sales prices that were over

10% ahead of budget, which meant cost inflation running at 9%

was absorbed. With a target of 250 completions in 2023, and 139

homes already forward sold, we remain firmly on track to continue

scaling up and hit our ambitious medium-term strategic target of

600 completions per annum.

The Construction segment has done remarkably well to trade ahead

of our expectations. Henry Boot Construction (HBC) has made

progress on all its projects despite dealing with very challenging

supply and labour restrictions, although there are some signs that

these restrictions and cost inflation are easing. HBC begins the year

with 68% of the 2023 order book secured and a healthy pipeline of

opportunities. Banner Plant (BP) has seen record levels of trading

activity and is successfully growing its customer base.

Against a challenging near-term backdrop, we expect 2023 profits

to be more subdued than 2022, but we will remain active, pushing

ahead with our strategic and growth ambitions from a position of

strength, further details of which are covered in the strategy and

outlook sections below.

Outlook

Whilst the immediate outlook is uncertain, a number of leading

indicators suggest that the economic slowdown will not be as

severe as forecasts in the final quarter of last year predicted. It looks

increasingly like interest rates are close to the so called ‘pivot’, we

are seeing early signs that supply restrictions are lifting and with that

some prospect of cost pressures easing.

There are early signs that our markets are improving. Occupier

demand for I&L has remained resilient, and whilst yields moved out

quickly during the second half of 2022, there are investors already

looking to buy, tempted by the strong fundamentals of the market.

Likewise, whilst data is available only for the first two months,

housebuilders generally and SBH specifically, have seen a partial

recovery in home buyer interest this year from the lows experienced

in the final quarter of 2022. The march of the BtR sector, both in

terms of customer and investor demand, continues.

So, for Henry Boot, we remain focused on building out our high-

quality development programme. As we increase forward sales

and pre-lettings above the present 63%, we will selectively look to

replenish, and potentially expand, committed development, primarily

by drawing down schemes which are ready to go from our £1.25bn

development pipeline. With an ever restrictive planning environment

demand for our well located consented plots will come back as

the UK remains critically short of housing. In the meantime, we are

partially insulated by the 992 land promotion plots that are already

unconditionally exchanged and we start the year with 56% of SBH’s

250 target completions for 2023 already forward sold.

We will continue to work towards a more progressive, diverse and

responsible business by meeting targets outlined in our Responsible

Business Strategy, and investing in key areas such as marketing,

customer relations and business improvement processes, including

technology. At the same time, we will continue to nurture the great

culture within Henry Boot and engage with people who, despite

the ups and downs of the last few years have remained energetic

and fully committed. Moreover, we have confidence in the long-

term fundamentals of our markets, business model and have the

operational and financial resources to continue to meet our strategic

growth and return objectives.

TIM

ROBERTS

CHIEF

EXECUTIVE

OFFICER

This report contains the following alternative performance measures

(APM): Underlying profit. Return on Capital Employed. Net Asset

Value (NAV) per share. Net (debt)/cash. Total Accounting Return.

More details can be found on page 49.

Key Highlights

95,704

RESIDENTIAL

LAND PLOTS

(2021: 92,667)

£1.25bn

HBD DEVELOPMENT

PIPELINE GDV

(2021: £1.1BN)

£106m

INVESTMENT

PORTFOLIO

VALUE

(2021: £126M)

1,094

units

STONEBRIDGE HOMES

TOTAL LAND BANK

(2021: 1,157)

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

BUSINESS

MODEL

Our business model is based on transforming land, property and development into sustainable, long-term value.

Key resources and relationships

Our people

Henry Boot recognises that our people are fundamental to the

success and sustainability of the Group. It is their expertise that

executes our business model successfully and delivers the value

created by the business to our stakeholders.

Read more on pages 32 to 36

Our long-term commitments to 2030

The 2025 Responsible Business Strategy will support us in reaching

our NZC target by 2030. We will continue to collaborate with our

people and partners with passion and ingenuity to create long-

lasting and genuine value and impact for all the people we work

with and the places we work in.

Group operating model

Identify opportunities and acquire land

Hallam Land Management acquires mainly agricultural land

and then promotes it for its highest value use. Henry Boot

Developments acquires mainly brownfield land.

Obtain planning permission

Gaining planning permission on land adds immense value to

its worth.

Hallam Land Management promotes land for residential and

commercial consent.

Henry Boot Developments promotes land for commercial

development. Stonebridge Homes promotes land for residential

development.

Sale of land

Once Hallam Land Management obtains planning permission on

a site, it is sold to a developer, sometimes after infrastructure has

been installed. The amount of capital required to achieve planning

permission on a section of land is a very small proportion of the total

capital required for the whole building process, from acquisition

of land without planning permission through to completion of

construction. This means that Hallam Land Management

is focused on maximising the most profitable section of the

housebuilding process for the lowest amount of working capital.

Development of site

Unlike Hallam Land Management, when Henry Boot

Developments and Stonebridge Homes gain planning permission

for a site, they will develop it themselves.

A. Sale of property

Once a property is developed, it may be immediately sold,

generating significant revenue. Properties may be retained by the

business to form part of the investment portfolio and may be sold at

a later time.

B. Investment portfolio

A number of the finished property developments are retained

and managed by the Property Investment and Development

segment. The property investment portfolio of Henry Boot

Developments is worth £106m and generates a sizeable amount of

rental income each year.

Construction

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

accommodation, powered access equipment, tools and non-man

operated plant.

Road Link (A69) has a contract with National Highways to operate

and maintain the A69 trunk road between Carlisle and Newcastle

upon Tyne. National Highways pays Road Link a fee based on the

number of vehicles using the road and the mileage travelled.

Capital structure and financial strength is

result of our operating model

Recurring Revenue: The revenue from construction and the

property investment portfolio is regular and stable. This income

allows Henry Boot PLC to maintain long term bank funding

relationships.

Cyclical Revenue: Sale of land and property development

generates cyclical revenue. These activities are riskier and give

varying amounts of profit through each economic cycle. These

profits, in good years, contribute significantly to the stable profits

from construction and property investment.

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

TRACK

RECORD

ATTRACTIVE

RETURN

Key

Land Promotion

Property Investment

and Development

Land Promotion

Construction

Sale of

land

Identify

opportunities

and acquire

land

Obtain

planning

permission

Our expertise

Land Promotion

Businesses: Hallam Land Management

•

Identifying land with future potential

•

The use of agency and option agreements, as opposed

to buying all land outright, means less expenditure on

each asset, allowing us to maximise the number of land

opportunities that we are involved in at any one time.

•

As investment is spread over many assets, this reduces

the overall risk of involvement in the planning process

and maximises the likelihood of making a return on the

capital invested.

•

Taking land through the complexities of the

planning system

Property Investment & Development

Businesses: Henry Boot Developments

and Stonebridge Homes

•

Acquiring and developing brownfield land or under

performing property assets

•

Operating in diverse sectors to maximise development

opportunities

•

Developing partnership arrangements

•

Ability to self fund or source prefunding opens up

opportunities. The businesses can commit to long-term

projects, such as complex multi-site regeneration

schemes.

Construction

Businesses: Henry Boot Construction,

Banner Plant and Road Link (A69)

•

Project delivery in both the public and private sector,

on-time and within budget

•

Creating trusted relationships and repeat business

•

Supplying a wide range of plant equipment

Group

•

As a result of our financial structure, we can invest in the

more profitable areas of the business (strategic land and

property development) to maximise the value generated

Watch the Business Model Video

at www.henryboot.co.uk

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

ENERATING

Sale of

property

Construction

Development

of site

Investment

portfolio

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

BUSINESS

MODEL

The impact we’re making

UN SDGs

When creating our Responsible Business Strategy, we

engaged our stakeholders to understand which of the UN

SDGs they felt our business could most positively impact.

Based on the feedback received, the Responsible Business

Committee selected the below SDGs as those best aligned

with our corporate purpose.

Read more on pages 32 to 36

Society

All of the targets contained within the Responsible

Business Strategy have been influenced and shaped

through consultation with our people, our commercial and

community partners, our senior management and Board,

and our professional advisers to ensure that they are

robust, ambitious (whilst also achievable) and will create the

impact we aspire to achieve.

Value generation for stakeholders

Our People

Our people deliver the core activities of our business model.

We invest a significant amount of time and resource in their

training and development to ensure they are empowered

in their roles. We apply the same methods and dedication

when we are recruiting to ensure we attract the highest

calibre of people within the Group.

Communities

We have offices in ten locations across the UK, but we have

projects which extend our community impact across the

country. Wherever we operate it is fundamental to us that

we develop strong relationships and partnerships with our

communities. This could be by using the local supply chain

on projects or volunteering our skill set to a local charity.

Customers

We are committed to maintaining our long standing track

record of customer satisfaction. We continue to listen,

understand and adapt how we can improve upon what we

deliver, so we are able to further enhance the competitive

advantage our Group brings to its customers.

Shareholders

Our priority is to protect the sustainability of our Group

for our shareholders. By operating transparently and

responsibly, we are able to create added value for our

shareholders, providing updates on performance and

changes to the strategic direction of the Group.

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

OUR

MARKETS

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

URBANISATION

According to the UN, population will

have grown to approximately 71.7m

by 2050 with 90% of the population

living in urban areas.

Given expected population increases over the long-term major

cities will be a key driver of UK growth with a corresponding

increase in demand for more housing and high-quality office

space. People do not choose to live in cities merely to be close

to work, but rather because of the lifestyle benefits provided by

accessibility to amenities. A Centre for Cities survey shows that

being “close to restaurants/leisure and cultural facilities” was

by far the biggest factor in determining city centre residents’

location decisions.

TECHNOLOGY

Advances in technology will

continue to disrupt how we live,

work, shop and communicate,

leading to a greater requirement to

deliver services that adapt to the

emergence of new technology, but

also the environment in which they

do it in.

With continued demand for warehouse space from third-

party logistics operators, online retailers and manufacturers,

the importance of property technology has increased

for data and analytics as well as to help automate and

streamline tasks.

DEMOGRAPHICS

UK’s population continues to grow,

albeit at a slower rate than previously,

with people living longer and low

birth rates.

However, the most significant change in the working age

population over the next 20 years is for 20 to 30-year olds and

40 to 50-year olds who are expected to increase by 4.1% and

4.3% respectively. Demographics therefore provide positive

support for senior living and BtR aimed at young professionals.

ENVIRONMENT

The built environment contributes

an estimated 25% of the UK’s

carbon emissions, which increases

the pressure on businesses in our

industry to adapt their operations to

become more sustainable.

This, alongside climate change and the need to reverse

environmental degradation, has created higher demand for

energy efficient green buildings with rising brown discount.

Key long-term structural trends affecting our business

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

INDUSTRIAL

AND

LOGISTICS

Market overview

According to Gerald Eve UK industrial and logistics space take-up totalled 65.8 million sq ft in 2022, which whilst down

from the previous record high of 2021, was still the second most active year on record. The CBRE Monthly Index showed

strong industrial rental value growth of 10.3% last year, ahead of the 9.0% increase in 2021. Occupier demand continues

to be from a variety of sectors with ongoing supply chain disruption likely to accelerate the trend of near–shoring and

reshoring as many companies seek to diversify points of production and to localise their supply chain.

Whilst e-commerce remains a structural driver of demand for logistics space it is certainly not immune from a wider economic slowdown.

The decline in online retail sales during 2022, as many consumers switched back to pre-pandemic shopping patterns, has also

corresponded with a reduction in take-up from internet retailers.

What does Henry Boot have to offer:

•

HBD has committed to Momentum, Rainham (HBD share:

£24m GDV) a 380,000 sq ft speculative I&L development

located close to Central London. The scheme will target

BREEAM Excellent, an EPC A+ rating and all the units will be

100% electric.

•

We also secured a pre-let with DPD and DHL at Preston

East (HBD share: £15m GDV) in H2 22, the 122,000 sq ft I&L

development was subsequently pre-sold to Titan Investments,

at 10% above book value, with completion expected in Q4 23.

•

In total, the Group is committed to develop over 1 million sq

ft of industrial and logistic space, with a GDV value of £261m

GDV (HBD Share £150m).

•

Industrial and logistics represents 65% of Henry Boot’s £1.25bn

development pipeline with the potential to deliver approximately

7 million sq ft of space.

Warehouse take up and availability

Industrial rent

100

10 16

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2013 2014

2015

2016

2017

2018

2019

2020

2021

2022

Take-up m sq ft (LHS) Vacancy rate % (RHS) Gerald Eve Prime Logistics rents CBRE All industrial rents

Source: Gerald Eve Source: Gerald Eve & CBRE

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

OUR

MARKETS

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

RESIDENTIAL

Market overview

The residential market slowed during the second half of 2022 as homebuyer demand was impacted by higher mortgage

rates following the sharp increases in interest rates. Whilst new home completions increased in 2022 they remain 3%

below the COVID level and at 205,000 dwellings continue to be way behind Government targets of 300,000 new homes a

year, which is primarily due to delays within the planning system.

According to Savills Research, following growth during the first nine months of 2022 UK greenfield values fell by 2.2% in the final quarter as

land transactions slowed significantly due to many housebuilders pausing buying in response to slowing sales rates. However, despite the

majority of national housebuilders slowing their land buying, there remains selective interest in prime sites with planning, with signs that some

confidence is returning following the significant disruption caused by the ‘mini-budget’ in September 2022.

What does Henry Boot have to offer:

•

Hallam Land Management has six offices located across

the country and is well established and experienced in the

complexities of the UK planning system.

•

The Group has a strategic land bank that has the potential to

deliver c.96,000 residential plots, of which 9,431 plots have

planning permission.

•

Stonebridge Homes, the Group’s jointly owned housebuilder,

offers further residential capabilities, with a total land bank of

1,094 plots of which 872 plots have either detailed, or outline

planning consent.

Land values and planning consents

UK housing completions

150

140

130

120

110

100

350

325

300

275

250

225

200

175

250

200

150

100

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

150 0

Savills UK greenfield development land index (LHS)

England planning consents – ‘000s (RHS)

Housing completions 000’s

Source: Savills Source: Office for National Statistics

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

URBAN

DEVELOPMENT

Market overview

The Urban Development market continues to improve since being impacted by COVID, with strong signs that major

UK regional cities are bouncing back, with an increase in mobility. There is a continued belief that by 2050, 90% of the

population will live in urban areas, with people choosing to live in prime urban areas, not only for work reasons but for

better lifestyle options in general.

There has been a strong recovery in total construction activity in 2022 with annual output increasing by 5.6%. The BtR occupational

market remains very buoyant with residential rents growing by 12.1% according to Zoopla in 2022. Office development in major cities has

also shown improvement, with a clear trend of people returning to the workplace, with occupiers showing particularly strong demand for

buildings that offer strong environmental credentials to achieving their own NZC goals.

What does Henry Boot have to offer:

•

The Group has a strong presence in key cites identified as

target areas for BtR schemes.

•

At Neighbourhood, Birmingham, a £117m 414-unit BtR

development, secured planning in March 2023. The scheme is

situated on a 2.6-acre site located within the Jewellery Quarter

area of Birmingham, in a prime location in close proximity to the

city centre.

•

HBD and Greater Manchester Pension Fund are working

in a joint venture to deliver a 91,000 sq ft of NZC offices in

Manchester City Centre. The building is targeting the highest

sustainability certifications, including an EPC ‘A’ rating,

BREEAM Excellent and a 5.5 star carbon NABERS rating.

•

Henry Boot Construction is currently working on three urban

development schemes in both the city centre of Sheffield and

York, at a combined total contract value of £129m.

Rental growth Construction output

150

140

130

120

110

100

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

England Private Housing

UK Commercial Property

Source: Office for National Statistics and CBRE Source: Office for National Statistics

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

OUR

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

STRATEGY

Group Strategy Performance

The Group set a medium-term strategy in 2021 to grow the size of the business by

increasing capital employed by 40% focusing on its three key markets: I&L, Residential

and Urban Development.

OUR

STRATEGY

SHAPED BY FOUR

KEY STRATEGIC

PILLARS AND

FOCUSES ON

THREE LONG

TERM MARKETS

SAFETY AND

ENVIRONMENT

We aim to be the

safest place to work

in our markets and

be respectful to our

environment

GROWTH

Grow PBT by

increasing capital

employed to £500m

by investing in our

three key markets

DELIVERY

Adopt emerging

working practices,

investing and

collaborating to

deliver our

operational targets

PEOPLE

Open, progressive,

high performing

business governed

by clear objectives

which engage

diverse range of talent

LONG-TERM

MARKETS

VALUE

DELIVERY

RETURNS

RESPONSIBLE

APPROACH

RISK

LAND

PROMOTION

PROPERTY

INVESTMENT AND

DEVELOPMENT

HOUSEBUILDING

CONSTRUCTION

KEY

STRATEGIC

PILLARS

URBAN

DEVELOPMENT

RESIDENTIAL

INDUSTRIAL

AND

LOGISTICS

OPTIMUM

GEARING

10–20%

MINIMUM

65%

COMMITTED

DEVELOPMENT

PROGRAMME PRE-LET/PRE-SOLD

PEOPLE

STRATEGY

ESG

GROW

CAPITAL

EMPLOYED TO

OVER

£500M

+ TARGET

ROCE

10–15%

MAINTAIN A PROGRESSIVE DIVIDEND POLICY

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Group overall strategy

Strategic

Priorities Aims Performance

Safety and

Environment

We aim to be the safest place to work in our markets

and be respectful to our environment

•

The Group’s Accident Incident Rate decreased to

202 per 100,000 employees, which is a result of

reaffirming our robust management systems and

commitment to on-site training.

•

Launched our Responsible Business Strategy in

2022, which included our NZC framework and

target to be NZC by 2030.

Growth

Grow PBT by increasing capital employed to £500m

by investing in our three key markets

•

Capital employed increased by 6% to £399m.

•

The Group’s land bank grew to 95,704 plots,

with 6,906 plots added in the year.

•

Increased committed programme to £240m.

Delivery

Adopt emerging working practices, investing and

collaborating to deliver our operational targets

•

Sold 3,869 plots at an average gross profit of

£6.1k per plot.

•

Completed £83m of property developments.

•

Completed 175 homes, at an average selling price

for private homes of £503k.

•

2023 construction order book 68% secured.

People

Open, progressive, high performing business governed

by clear objectives which engage diverse range

of talent

•

Significantly increased our eNPS score to 39,

ranked at the top of the very good range.

•

Learning intervention days increased to 3.7 days

per employee.

•

Female representation across our workforce

increased to 25%.

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

OUR STRATEGY –

PERFORMANCE

A GLANCE

CLEAR

FOCUS

Growth and Delivery Strategic Pillars

Objective

and Medium-

term Target KPI

Medium-term

performance

Commentary Aim for 2023

Link to Strategic

Pillars and Group Risk

To grow capital

employed to £500m

Capital

Employed

On track to grow

capital employed to

over £500m

To maintain capital

employed growth to

over £400m

Strategic Pillar

Medium-term

Target

19 £352m

20 £365m

21 £376m

Risks

3 5

£500m

To generate a ROCE

of 10–15%

22 £399m

ROCE

We maintain our aim

to be within the target

To be within stated

target range

Strategic Pillar

Medium-term

20 4.9%

21 9.6%

14.8%

range

Risks

Target

10–15%

Grow Hallam Land’s

plot sales

Medium-term

Target

c.3,500

Grow HBD

development

completions

22 12%

Plot Sales

3,427

2,000

3,008

3,869

Development

Completions

Exceeded the strategic

target of 3,500 per

annum, forward sales

of 992 plots

Increased our future

pipeline to £1.25bn,

we are on course to

To exceed current five

year average

To grow HBD

share of completed

developments, with

4 8 9 10

11 12

Strategic Pillars

Risks

3 4 5 11 12

Strategic Pillars

Medium-term

Target

c.£200m

Grow investment

portfolio value

20 £55m

21 £69m

22 £83m

Investment

Portfolio

£404m

complete on average

£200m per annum

Value reduced primarily

due to nearly £30m

of accretive sales

committed programme

of £240m for 2023

To maintain progress

towards stated target

Risks

3 4 5 11 12

Strategic Pillars

Medium-term

Target

19 £70m

20 £92m

£126m

with scope to rebuild

portfolio from retained

Risks

3 4 5 11 12

£150m

Grow Stonebridge

Homes house sales

22 £106m

Unit

Completions

developments

Completions below our

target of 200 but strong

sales prices mean the

To increase unit

completions to 250

Strategic Pillars

Medium-term

Target

20 115

21 120

159

business performed

marginally ahead

Risks

3 4 5 11 12

c.600

units

Henry Boot

Construction’s order

22 175

Order Book Secured

of budget

Secured above target

range for 2023 order

To secure 65%of 2024

order book by end

Strategic Pillar

book secured

20 80%

95%

100%

book, with public

sector work remaining

of year

Risks

Medium-term

Target

>65%

22 68%

a key focus

3 4 8

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

RIGHT

APPROACH

People and Safety Strategic Pillars

Objective

and Medium-

term Target KPI

Medium-term

performance

Commentary Aim for 2023

Link to Strategic

Pillars and Group Risk

Work towards a more

Accident

Incident Rate

19 233

20 466

21 630

22 202

The Group’s AIR

To maintain our robust

Strategic Pillar

Risks

4 8 9 10

coordinated H&S

reduced in 2022 due

health & safety approach

approach to ensure our

Group is a safe place

to work

to robust management

systems, and an

increased focus on

and procedures

Medium-term

training

Target

>395

Reduce directly

GHG Emission CO2e

Scopes 1 and 2 GHG

To empower our

Strategic Pillar

Risks

4 8 9 10

controlled GHG

emissions reduced by

people and partners to

emissions

3,313

2,562

2,706

12% against our 2019

baseline

share knowledge and

solutions to reduce GHG

Medium-term

2,930

emissions

Target

20%

reduction

Seek high levels of

Employee Net

After addressing

To continue engaging

Strategic Pillar

Risks

4 8 9 10

employee satisfaction

and engagement

Promoter Score (eNPS)

feedback from the

2021 survey via the

with the Group Employee

Forum and address

Medium-term

Target

(eNPS)

(

eNPS

)

(

eNPS

)

(

eNPS

)

(

eNPS

)

Group Employee

Forum, we saw a

significant increase in

our eNPS score

feedback which has

arisen from the survey

Create a high

L&D Interventions

Delivered

(per employee)

3.3 days

2.8 days

2.5 days

3.7 days

As the Group evolved

To implement a wide

Strategic Pillar

Risks

4 8 9 10

performance culture

its training approach

range of training

led by a range of

training opportunities

to offer both in-person

and virtual sessions, we

opportunities to support

a high performance

Medium-term

Target

increased the number

of training interventions

culture

4 days

(per employee)

Group strategic priorities

Risks

Safety

Environmental & climate change

Construction contracts

Property assets

Safety and the

Environment

People Growth Delivery

Economic

People & culture

Funding

Cyber

Pensions

Property development

Land sourcing

Land demand

Political

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

RESPONSIBLE BUSINESS

STRATEGY

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Our Purpose

is to empower and develop our people to create

long-term value and sustainable growth for our stakeholders.

Pillar 1 – Our People

We will support, develop, engage, and empower our people to have an exceptional working experience,

to be the best versions of themselves, and to deliver long-term value for our stakeholders.

Pillar 2 – Our Places

In fulfilling our Purpose, we will support and engage the communities we work with,

and alongside, to create long-lasting social value.

Pillar 3 – Our Planet

We will protect and preserve our planet by reducing our environmental impact,

consuming responsibly and safeguarding our environments.

Pillar 4 – Our Partners

We will collaborate with our partners to deliver exceptional results,

create value and share knowledge, solutions and creativity to address key issues.

Our Ambitions

will be delivered by our people working closely with our partners

– delivering collaborative solutions with real impact.

Our Values

will underpin and align everything we do.

Our Strategy is aligned to the UN SDGs that we and

our stakeholders feel our business can most positively impact

Responsible Business Strategy – 2022 Progress Report

The tables on the following pages detail the progress we have made against the four strategic pillars of the Strategy in 2022.

For more information and case studies please review our Responsible Business Strategy – 2022 Progress Report

Our Responsible Business Strategy sets out medium-term objectives which we aim to achieve

by the end of 2025. It aims to incorporate and align our approach to ESG with our commercial

strategy, and to ensure our activity and performance is influenced by our Purpose and Values.

Strategy Structure – how it all fits together

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Our People

Our people are our greatest asset and are instrumental in the delivery of our Responsible Business Strategy. As we collaborate with them

to create value for our communities and environments, we will invest in them and further develop a workplace culture that encourages

openness, collaboration and fairness. We will proactively support their health and wellbeing and be innovative to ensure that our workplace

is diverse, accessible, and allows all our people to thrive.

Objectives 2025 Target 2022 Performance

Aligned

UN SDGs

Material

Issues

OUR

PEOPLE

Promoting

positive health

and wellbeing

for our

people

Develop and deliver a Group-wide

Health and Wellbeing Strategy with

a range of activities and resources

available to all.

Our new Health and Wellbeing Strategy has been

developed throughout 2022 in collaboration with

our senior management, Group Employee Forum,

colleagues across the Group, and commercial and

community partners. This Strategy launched in early

2023 with a delivery plan supporting implementation.

•

Employee

health and

wellbeing

Creating

an equal,

inclusive

and diverse

workplace

Encourage greater levels of gender

diversity in our workforce and

increase gender representation in

management positions with 30%

of workforce and line managers

being female.

We have made strong progress and female

representation of our overall workforce is 25% and of

our management is 24%

(S/R)

•

EDI

•

Education

engagement

•

Employee

health and

wellbeing

Reduce our gender pay gap

to 20%.

Our 2022 gender pay gap (when measured as a

median) was 21.43%.

(S/R)

Begin reporting on our ethnicity

pay gap and set a reduction

target to encourage greater ethnic

diversity in our workforce.

We have engaged commercial partners to review

ethnic pay gap reporting and are undertaking the

required work to begin reporting in 2024.

Deliver equality, diversity and

inclusion (EDI) training to 100% of

our people.

We have delivered EDI training to 79% of our

workforce and continue to engage our people

regularly on this issue.

Introduce best practice recruitment

processes and reverse mentoring

programmes, combined with an

annual benchmarking and auditing

process to ensure progress against

targets.

Our EDI Steering Group and HR team are

collaborating to introduce new recruitment processes

and a reverse mentoring programme in 2023.

We continually review our workforce data and are

introducing measures to ensure it is robust and

accurate to establish further targets and introduce

new diversity initiatives.

Engaging and

empowering

our people

Introduce ESG related targets

for all senior management

remuneration.

Ensure that all Group Pension

Schemes incorporate ESG factors

in investment decisions and that

our people are well informed about

their investment choices.

All members of our Executive Committee have ESG

related targets incorporated into their performance

review.

ISIO, our pension scheme manager, conduct

thorough reviews of ESG capabilities and report

performance against their ESG Manager Review

Framework. ISIO’s financial coaching sessions

provided for our people include advice about

pension investments and the Group regularly shares

information about pensions with employees.

•

EDI

•

Employee

health and

wellbeing

This data is inclusive of Stonebridge Homes and Road Link (A69)

(S/R)

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

RESPONSIBLE BUSINESS

STRATEGY

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Our Places

Investing in, and collaborating with, the communities in which we work is critical to ensure that we create long term meaningful social value.

We are committed to supporting thriving local communities, to working in partnership with community organisations, and to harness the

skills and passion of our people to improving people’s lives. We keenly work with education partners to create excitement about our industry

and inspire learners to consider a career with us. We believe that this approach will support our long term success and ensure that we

remain a partner of choice for all those we work alongside.

Objectives 2025 Target 2022 Performance

Aligned

UN SDGs

Material

Issues

OUR

PLACES

Developing

collaborative

charity

partnerships

Contribute £1,000,000 of financial

(and equivalent) value to our

charitable partners* (including

donations of funds, resources,

sponsorship and pro-bono support).

In 2022 we contributed a total of £291,692 to a

range of our charitable and community partners

including financial donations and sponsorship,

employee fundraising, and expertise, time and

resources provided pro bono.

•

Community

engagement

•

Employee

health and

wellbeing

Develop long-term strategic

partnerships both nationally

and regionally, and align all

Group charitable giving with our

Charitable Giving Pillars – for

maximum impact.

In 2022 we developed the relationship with our

Group Charity Partner Place2Be and contributed

approximately £20,000 to support their vital work. We

also continued to develop existing and new strategic

charity partnerships and aligned charitable donations

with our Charitable Giving Pillars.

Collaborating

with our

communities

Contribute 7,500 volunteering

hours across our Group to a

range of community, charity and

education projects.

In 2022, we contributed over 2,250 volunteering

hours (equivalent to 281 working days) to a wide

range of charitable, community, and education

partners.

•

Community

engagement

•

Employee

health and

wellbeing

Engaging

learners

Engage 5,000 learners through

careers initiatives, curriculum-

focused activity, work experience,

and mentoring.

In 2022, we engaged over 2,500 learners through

a wide range of careers education activity and

initiatives including work experience, site visits,

career sessions and mentoring.

•

Education

engagement

•

Employee

health and

Offer 200 entry level employment

opportunities or work experience

placements with a focus on those

who traditionally struggle to access

opportunities.

In 2022, we offered 30 work experience placements

and 21 entry level employment positions. We

engaged a range of education partners to

share information about entry routes (including

apprenticeships) with learners who traditionally

struggle to access careers education.

wellbeing

Develop and deliver an Education

Engagement Strategy to

consolidate and enhance our

support and collaboration with

In 2022 we undertook extensive engagement with

education and community partners to develop an

understanding of their needs and aspirations across

the areas in which we work.

education partners, to create

significant impact for learners,

and to incorporate social and

environmental responsibility into

our education programmes.

Additional engagement was undertaken with our

people to review the education support currently

provided. The feedback and learnings from this

engagement will be incorporated into our Education

Engagement Strategy which will be launched in 2023.

*Charitable partners includes registered charities, CICs, community organisations, and education partners.

This data is inclusive of Stonebridge Homes and Road Link (A69)

(S/R)

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Our Planet

We recognise the increasing risk that climate change poses and are steadfast in our commitment to protect our planet for future

generations. We have a clear target of achieving NZC for our direct GHG emissions by 2030. We are taking a holistic approach to tackling

climate change through clear ambitions to protect natural environments, reduce resource use and waste creation, and encouraging

behaviour change. Our targets below (unless stated otherwise) use a baseline year of 2019 for reporting progress.

Objectives 2025 Target 2022 Performance

Aligned

UN SDGs

Material

Issues

OUR

PLANET

Reducing

GHG

emissions

Absolute target to reduce Scope 1

and 2 GHG emissions by over 20%

to support reaching NZC by 2030.

Our Scope 1 and 2 GHG emissions in 2022 were 2,930

tonnes (a 12% reduction against our 2019 baseline

which was 3,313 tonnes).

Whilst this reduction is positive, our direct GHG emissions

rose moderately in 2022 due to increased productivity.

We remain committed to utilising innovative solutions

and measures to ensure our GHG emissions fall and we

achieve our medium term targets.

•

NZC

(S/R)

Replace 50% of van fleet with electric

vehicles (EVs) or other sustainable

alternatives (100% by 2030)

In 2022, a fleet project team was established to deliver

an infrastructure programme to service our future electric

fleet. Two electric vans were ordered and will be piloted to

identify any challenges ahead of additional vehicles being

sourced to achieve our target.

Ensure that all our HGVs are EURO 6

compliant (30% to be replaced with

EVs or other sustainable alternatives

by 2030).

Our HGV fleet is close to full EURO 6 compliance and

monitoring of the developments in sustainable HGVs is

regularly undertaken.

Supply 50% of electricity demand for

construction sites from renewable

generators.

Henry Boot Construction trialled a range of sustainable

generator solutions across key sites throughout 2022

in order to identify opportunities to reduce reliance on

traditional generators.

Complete energy, resource and

sustainability audits in all of our

directly controlled offices, sites

and depots – and implement all

medium-term recommendations.

Energy Impact Limited, a specialist third party, were

engaged and have completed audits of our directly

controlled offices and depots. Short term recommendations

are currently being implemented. Employee-led

sustainability audits were also undertaken to identify further

GHG emissions and waste reduction opportunities.

Reduce non-sustainable business

mileage by 20%.

Business mileage in 2022 reduced by 34% from our

2019 baseline.

Use biodiesel as we electrify

our fleet.

Due to the volatility of the market for HVO fuel and the

complexity around it’s credibility, we are not currently

utilising biodiesel as a GHG emissions reduction measure.

Consuming

resources

responsibly

Cut avoidable waste to 99% for our

construction sites (100% by 2030).

In 2022, 99% of avoidable waste reduction was

achieved on Henry Boot Construction’s sites.

•

Responsible

consumption

Reduce consumption of avoidable

plastic by 50% and undertake Group-

wide waste and water monitoring to

establish reduction targets.

A programme to monitor and reduce avoidable plastic

use across the Group remains in development.

Introduce a Group-wide Sustainable

Supply Chain Standard to support

supply chain collaboration and

innovation.

Procurement specialists from across the Group are

represented on the Group Climate Forum and will

be supporting the development of our forthcoming

Sustainable Supply Chain Standard.

To be a

steward of

nature

Collaborate with commercial

partners to achieve biodiversity

net gain (BNG) on our projects

and, enhance and preserve natural

environments where we work.

We continue to collaborate closely with our customers,

supply chain and commercial partners to deliver BNG

effectively on our schemes and to share knowledge and

solutions.

•

Nature

stewardship

Deliver nature stewardship training

to 100% of our people

Teams from the business have attended BNG seminars

with specialist industry speakers. A broader range

of training and education will be provided across the

Group in 2023.

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

RESPONSIBLE BUSINESS

STRATEGY

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Our Partners

We have a clear responsibility to our commercial partners and stakeholders. Our success is not possible without the customers we support

and an engaged network of suppliers, advisors, and membership organisations.

It is essential that we collaborate with them to remain a partner of choice in our key markets and foster thriving and inclusive local economies

where we work.

We also recognise that we are just one business and that, through collaborative working, we will be able to deliver much greater impact and

value for our communities and the environments in which we work.

Objectives 2025 Target 2022 Performance

Aligned

UN SDGs

Material

Issues

OUR

PARTNERS

Being a

partner

of choice

for our key

markets

Pay all of our suppliers the

real living wage and secure

accreditation with the Living Wage

Foundation.

The Living Wage Foundation have been engaged

and a review is currently being undertaken of the

requirements to secure membership.

•

Community

engagement

•

NZC

•

Responsible

consumption

•

EDI

•

Nature

stewardship

Maintain best practice to ensure

our sites and supply chain are

modern slavery free.

Best practice is maintained by the Group’s Modern

Slavery Policy (which is routinely reviewed) and

engagement has been undertaken with charities

focused on this issue including Causeway.

Provide resources and support to

enable our supply chain to support

the objectives of this Strategy.

A range of support has been offered to our supply

chain including toolbox talks, bespoke mental health

awareness sessions with the Lighthouse Charity, and

guidance on regulations and best practice.

Delivering

high impact

collaborations

Engage and collaborate with our

partners to generate the highest

possible social value for our

community and charity partners.

We have routinely engaged our commercial partners

and supply chain to collaborate on delivering

significant social value and employment and skills

opportunities in alignment with commercial schemes

and community partnerships.

•

Community

engagement

•

NZC

•

Responsible

consumption

•

EDI

•

Nature

stewardship

Engage key partners to create a

more diverse and inclusive built

environment sector and form

business led partnerships to

improve EDI.

We continue to engage with membership

organisations (including the Confederation of British

Industry (CBI) and Business in the Community

(BITC)) on EDI and engage other businesses to

share knowledge and best practice.

Collaborate with all our partners to We continue to engage with membership organisations

reduce our environmental impact. (including Yorkshire Climate Action Coalition) to share

This will include collaborating knowledge and best practice. We became members

with business coalitions and of the UK Green Building Council (UKGBC) and will

membership organisations, and work closely with their team to educate and inform our

providing access to environmental people and partners on the latest sector environmental

training and resources for our developments. We routinely collaborate with our

suppliers. supply chain and professional partners across all areas

of commercial operations to identify opportunities to

protect the environment and support the aspirations of

our NZC Framework.

Pictured: Kangaroo Works, Sheffield,

providing 365 high-quality apartments

in the Heart of the City.

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

SEGMENTAL

REVIEW

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

WOR

LAND

PROMOTION

LM has traded strongly in 2022,

achieving an operating profit of £17.3m

(2021: £17.5m) from selling 3,869 plots

(2021: 3,008 plots) at nine locations.

Total plot sales were materially higher

during 2022 due to a major disposal at

Didcot of 2,170 plots to Taylor Wimpey

and Persimmon Homes. However

due to the size of the sale and discount for volume, the

average gross profit per plot reduced to £6,066 (December

2021: £7,820).

UK greenfield land values increased by 2.0% in the 12

months to 31 December 2022 according to Savills Research.

Following growth during the first nine months of the year, UK

greenfield values fell by 2.2% in the final quarter. In the latter

part of the year, transactions slowed significantly as many

housebuilders paused land buying in response to slowing

sales rates and the number of sites being actively marketed

for sale reduced. However, although many of the major

housebuilders have slowed their land buying, there remains

selective interest in prime sites with planning consents, such

as HLM can offer, amid some confidence returning to the

industry following the significant disruption caused by the

effects of the mini-budget in the second half of 2022.

HLM’S land bank grew to 95,704 plots (December 2021:

92,667 plots), of which 9,431 plots (December 2021:

12,865 plots) have planning permission (or Resolution to

Grant subject to S106). The decrease in plots with planning

permission reflects disposals during 2022 and continued

delays in the planning system. In 2022, there were 1,473

plots submitted for planning, taking the total plots awaiting

determination to 12,297 (December 2021: 11,259 plots).

Unfortunately, the planning system continues to experience

delays due to a growing number of complexities such as

the emerging Draft National Planning Guidance, which

looks to be slowing down Local Authority Development

Plan making and Planning Application determination.

This resulted in HLM only gaining planning permission

for 435 plots in 2022 (2021: 52 plots). Already in 2023,

HLM has achieved planning permission on 320 plots and

is expecting determination on its remaining plots to fall

into 2023 and beyond.

HLM’s land bank remains well positioned due to the

high levels of stock with planning permission. Despite

experiencing challenges with the planning system,

the number of plots under control and in planning has

increased, giving us confidence in the medium term that

our stock levels holding planning will return to similar

levels seen in previous years.

There is significant latent value in the Group’s strategic land

portfolio, which is held as inventory at the lower of cost or

net realisable value. As such, no uplift in value is recognised

within our accounts relating to any of the 9,431 plots with

planning and any increase in value created from securing

planning permission will only be recognised on disposal.

In relation to significant schemes:

•

In H2 22, a S106 Agreement was signed at South

West Milton Keynes allowing the outline planning

consent to be drawn down for 618 plots, primary

and secondary schools and open space. The site

has subsequently been disposed of post period-

end to Taylor Wimpey, with the sale completing in

March 2023.

•

At Pickford Gate, Coventry (formerly Eastern Green),

following the grant of outline planning permission for

2,400 plots, 37 acres of employment land and a new

primary school, local centre uses and open space in

2020, HLM unconditionally exchanged to sell 250 plots

to the Vistry Group in March 2023, which will complete

by the end of 2023.

Residential Land Plots

With permission

b/f

granted

sold

c/f

In planning

Future

Total

2022

12,865

435

(3,869)

9,431

12,297

73,976

95,704

2021

15,421

452

(3,008)

12,865

11,259

68,543

92,667

2020

14,713

2,708

(2,000)

15,421

8,312

64,337

88,070

2019

16,489

1,651

(3,427)

14,713

10,665

51,766

77,144

2018

18,529

1,533

(3,573)

16,489

11,929

44,051

72,469

NICK

DUCK

ORTH

HALLAM LA

MANAGEME

LIMITED

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

•

In 2022, North West Bicester, a 3,100-plot scheme the

subject of an outline planning application, progressed well with

Oxfordshire County Council delivering a road bridge under the

Residential Land Plots – Regional Split

Region Plots Percentage

CASE

STUDY

Milton Keynes

Sale of 1,855 plots

In 2023, Hallam Land Management completed the sale

of 1,855 plots (HLM share 618 plots) at Milton Keynes to

housebuilder Taylor Wimpey, resulting in an ungeared internal

rate of return of 14% p.a.

Providing value for local authorities

The site forms part of the South West Milton Keynes Consortium

and approval was required from both Buckinghamshire Council

and Milton Keynes Council. The cross-boundary scheme was

granted approval in December 2022.

An extensive Section 106 package will provide funds towards

facilities and services benefitting both authorities, including

6.5 acres of employment land, Milton Keynes hospital,

Buckinghamshire education services, extensive offsite highway

works and new public transport infrastructure together with

substantial pedestrian links.

Community Benefits

The 342 acre site is located to the South West of Milton Keynes,

below the A421 between Bletchley and Newton Longville.

Positioned around seven miles outside of the centre of Milton

Keynes, a series of public transport improvements are set to

further enhance the site’s connections to the surrounding area.

Alongside 1,855 homes, of which 35% will be affordable, the

site will feature a primary school, secondary school and a

neighbourhood centre including retail and community buildings.

Over 130 acres of green infrastructure will be delivered across

the site, providing extensive play spaces, sports facilities and

benefitting air quality and local ecology.

“The ongoing demand for new homes

presents a significant opportunity for

Hallam Land, and the sale of this site

to a leading national housebuilder

continues to demonstrate the benefit

of working with us to navigate complex

planning arrangements.”

Nick Duckworth

Managing Director, Hallam Land Management Limited

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

London/Banbury rail line, and the District Council signalling

Scotland

9,630

10%

an increase in development plan housing numbers, such that

North

12,528

13%

our scheme aligns with emerging policy. The scheme, which

North Midlands

17,716

18%

also includes a primary school, funds for a secondary school,

South Midlands

21,982

23%

mixed use local centre, commercial land open space and

South

6,766

biodiversity offsetting, has been designed to achieve emerging

South East

5,395

environmental requirements and energy use.

South West

21,687

23%

•

At Swindon, the 2,000-plot site with outline consent that is

Totals

95,704

100%

being promoted through an option agreement jointly held with

Taylor Wimpey, terms for acquisition were near settled with the

landowners, but stalled due to the market disruption in Q4 2022

and HLM is now working to conclude the purchase during 2023.

SEGMENTAL

REVIEW

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

HINSON

EDWARD

HUTC

INSON

HENRY

BOOT

DEVELOPMENTS

LIMITED

DARREN

STU

STONEBRID

HOMES

LIMITED

PROPERTY

INVESTMENT

AND

DEVELOPMENT

roperty Investment and Development,

which includes HBD and SBH, delivered

a combined operating profit of £25.7m

(2021: £18.3m).

According to the CBRE Monthly Index,

commercial property values declined by

13.3% in the 12 months to 31 December

2022. Industrial property was the worst performing sector

with values down 21% during the year followed by offices

down 12.1% and retail down 8.1%. Commercial property

values were negatively impacted by rising interest rates

during H2 22 with overall values declining by -19.0%.

Having seen strong investor demand over the last few

years driving substantial yield compression, I&L was the

worst performing sector in 2022 as the sharp increases in

interest rates resulted in significant yield expansion during

H2 22. Whilst investment volumes were down 25% on

2021, it was still the second most active year on record.

At the same time, I&L vacancy rates reached a new low of

3.6% in Q4 22 (for units above 50,000 sq ft). The rate of

yield expansion has slowed in recent months suggesting

that commercial property values are beginning to stabilise.

At the same time, the rental growth outlook for both I&L

and regional BtR remains positive given the level of active

demand and lack of available space. Regional office

demand has continued to recover from the 2020 low with

take-up increasingly focused on grade A space resulting in

prime rental growth of 6.5% in 2022.

HBD has performed well, completing developments with a

GDV of £117m (HBD share £83m GDV; 2021: HBD share

£68m GDV), of which 92% have been let or sold. In the

year, HBD completed on:

•

Five industrial schemes totalling 497,000 sq ft with a

combined GDV of £86m (HBD share: £60m GDV).

•

Two residential land sales with a GDV of £23m (HBD

share: £15m GDV), comprising a 184-unit scheme

in Skipton, which was pre-sold to Bellway, as well

as a sale of land to Aberdeen City Council for the

construction of 500 houses.

•

A 23-unit residential build-to-sell scheme in York,

Clocktower, with a GDV of £8m.

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

2022 Completed Schemes

The committed development programme now totals a GDV of £395m (HBD share: £240m GDV) of which 63% is currently pre-let or pre-

sold, with 97% of the development costs fixed.

2023 Committed Programme

Within the committed programme there is currently over 1m sq ft of I&L space (HBD Share: £150m GDV), a total of 521 urban residential

units (HBD Share: £57m GDV) and 91,000 sq ft of commercial space (HBD Share: £33m GDV). In this regard:

•

In H1 23, three projects (Diploma, Luton, New Horizon,

Nottingham and TDT, York) are set to complete on site with a

combined GDV of £96m.

•

After securing pre-lets with DPD and DHL at Preston East (HBD

share: £15m GDV) in H2 22, the 122,000 sq ft I&L development

was subsequently pre-sold to Titan Investments, at 10% above

book value, with completion expected in Q4 23.

•

HBD has committed to Momentum, Rainham (in an 80:20

JV with Barings) (HBD share: £24m GDV) a 368,000 sq ft

speculative I&L development located close to Central London

and within five miles of J30 of the M25. Whilst formal marketing

has not yet begun, the scheme is already attracting strong

occupier interest.

•

At Setl, Birmingham, HBD is currently on site delivering a

scheme of 101 premium apartments within the highly sought-

after St Paul’s area of Birmingham’s Jewellery Quarter.

Residential amenities include a roof garden, co-working lounge

and wellness studio. The scheme also incorporates 2,250 sq ft

of ground floor commercial space and is currently on track for

completion in Q4 23.

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

GDV

HBD Share

of GDV

Commercial

Residential

Size

Scheme

(£’m)

(£m)

(‘000 sq ft)

(Units)

Status

Industrial

Wakefield, Kitwave

–

Pre-let & pre-sold

Luton, Quad 2

–

Pre-sold

Pool, MKM

–

Pre-let

Southend

–

Speculative

Wakefield Hub, Phoenix

260

–

Pre-sold

497

–

Residential

Skipton

–

184

Pre-sold

Aberdeen, Cloverhill

–

500

Pre-sold

York, Clocktower

–

Pre-sold

–

707

Total for the year

117

497

707

Scheme

GDV

(£m)

HBD Share

of GDV (£m)

Commercial

(‘000 sq ft)

Residential

size (units)

Status

Completion

Industrial

Rainham, Momentum

120

368

–

Speculative

Q4 24

Nottingham, New Horizon

426

–

Forward funded

Q2 23

Walsall,

SPARK

Remediation

–

Forward funded

Q2 24

Luton, Diploma

–

Pre-let

Q2 23

Preston, East DPD & DHL

122

–

Pre-let and forward funded

Q4 23

261

150

1,001

–

Urban Residential

Birmingham, Setl

–

101

Speculative

Q1 24

York, TDT

–

Pre-sold

Q2 23

Aberdeen, Bridge of Don

–

TBC

Under-offer

Q4 23

Aberdeen, Cloverhill

–

420

Pre-sold and DM fee

Q4 23

521

Urban Commercial

–

Manchester, Island

–

Speculative

Q3 24

Total for year

395

240

1,146

521

% sold or pre-let (incl Island)

45%

63%

SEGMENTAL

REVIEW

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

PROPERTY

INVESTMENT

AND

DEVELOPMENT

HBD’s total development pipeline has grown to a GDV of £1.5bn

(HBD share: £1.25bn GDV). All of these opportunities sit within the

Company’s three key markets of I&L (65%), Urban Commercial

(20%) and Urban Residential (15%). Significant schemes include:

•

As reported in the interim results, HBD was appointed as

development partner on the first phase (HBD share: £50m

GDV) of Cheltenham Borough Council’s £1bn Golden Valley

development which comprises the delivery of a mixed-use

campus clustered around 150,000 sq ft of innovation space

that will serve as the new National Cyber Innovation Centre.

•

In H2 22, a planning promotion and option agreement was

secured at Brodsworth (HBD Share: £90m GDV) for 432 acres of

employment land and 1,000 residential plots. The c.730-acre site

is jointly being promoted and developed by both HLM and HBD.

•

At Neighbourhood, Birmingham (HBD Share: £117m GDV), a

planning application was submitted in Q3 22 for 414-unit BtR

development and was subsequently granted in March 2023. The

scheme is situated on a 2.6-acre site located within the Jewellery

Quarter area of Birmingham, in a prime location in close proximity

to the city centre. Neighbourhood will create an inclusive new

community around public realm with landscaped gardens and will

host a selection of the best local independent leisure operators.

The internal amenities within the scheme include a double height

winter garden, a gym, roof terraces and work zones. The scheme

is targeting to secure pre-funding during 2023.

Within the development pipeline there are several developments

that showcase the Group’s ESG ambitions and credentials by

targeting both an EPC A rating and BREEAM Excellent:

•

HBD and Greater Manchester Pension Fund are working in

a joint venture to deliver 91,000 sq ft of NZC offices within

Manchester City Centre. Island will include 12,500 sq ft of

amenity areas including social, meeting and event spaces

and a communal roof terrace. The scheme is on track to be

completed in Q3 24.

•

At Momentum, Rainham, the I&L NZC scheme will target

BREEAM Excellent, an EPC A+ rating and all the units will be

100% electric. The scheme is currently receiving encouraging

occupier interest.

•

HBD is designing 200,000 sq ft of NZC offices within

Manchester’s St John’s district, which is establishing itself as

the tech, arts and culture district of the city centre.

During 2022, a number of well-timed sales were made to reduce

the size of the investment portfolio (including share of properties

held in JVs), which as of 31 December 2022 was valued at £106m

(2021: £126m). Whilst the CBRE UK Monthly Index showed

commercial property values decreased by 13.3% over 2022, HBD

completed three sales in H2 22, comprising Kitwave Wakefield,

Acre Mill and Stop24 for a total of £29.6m, at an average 17%

premium to the last reported book value. This was a major driver

of relative outperformance with a portfolio capital return of -5.4%.

The total property return of -1.5% for 2022, was significantly

ahead of the CBRE UK Monthly Index (-9.1%). Rent collection for

FY 22 stands at 98% with occupancy increasing slightly to 88%

(2021: 85%) and the weighted average unexpired lease term is now

10.7 years (2021: 16.1 years).

The Group is also committed to ensuring that all the properties

within the investment portfolio have a minimum EPC rating of ‘C’.

Currently 70% of these properties have a rating of ‘C’ or higher, of

which 39% of the total portfolio are rated ‘A-B’. The majority of the

remaining 30% of the portfolio that are currently below a ‘C’ rating,

have redevelopment potential with a target range of ‘A’ or ‘B’.

The UK housing market slowed during 2022 as homebuyer demand

was impacted by higher mortgage rates following the sharp

increases in interest rates. According to Nationwide, house prices

increased by 2.9% during 2022, with the increase of 5.7% during

the first eight months of the year largely reversing in the final four

months as prices declined by 2.6% from their peak. Whilst mortgage

approvals remain subdued, the reduction in longer-term interest

rates has started to feed through to mortgage rates, which together

with unemployment remaining low and a continued shortage of

supply, should help support transaction volumes during 2023.

SBH has continued to grow and during 2022 delivered 175 house

completions (124 private/51 social) (2021: 120), at an average

selling price for private homes of £503k (2021: £509k). Due to high

levels of forward sales brought into the year, the average sales

rate reduced to 0.51 houses per week per outlet (2021: 0.83). In

common with many in the industry, supply chain challenges have

impacted SBH with completed sales below our target of 200, but

strong sales prices mean the business was marginally ahead of

budget. As a result of sales prices being achieved 10.4% ahead of

budget, 9% build cost inflation has been effectively managed.

SBH total owned and controlled land bank now comprises 1,094

plots (2021: 1,157) of which 872 plots have detailed or outline

planning and has 3.5 years supply based on a one-year rolling forward

sales forecast for land with planning or 4.4 years for its full land bank.

SBH has begun the year well, with mortgage rates beginning to

stabilise, and an easing of cost of living pressures providing some

support to housing market activity levels. The strategic objective of

growing the business to achieve 600 completions per annum remains

on track, entering 2023 with 56% of reservations already secured

against its delivery target of 250 homes (188 private/62 social).

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

CASE

STUDY

Neighbourhood,

Birmingham

Delivering over 400 apartments

Neighbourhood is located in the popular Jewellery Quarter area

of Birmingham. It is a £117m GDV build-to-rent scheme, which

will see the transformation of the former Sytner car garage,

delivering 414 apartments alongside a range of amenities.

Creating a vibrant community

HBD acquired the 2.6-acre site in April 2021, working carefully

on its plans for the new development to ensure that the

contemporary scheme is designed in keeping with the historic

Jewellery Quarter.

Neighbourhood has been designed by award-winning

architecture practice, BPN Architects, along with re-form

Landscape Architecture, a team focused on creating

sustainable places.

In addition to 414 new apartments, the site will encompass a

host of amenities for residents, including double height winter

garden, roof terraces and social spaces featuring a selection

of the best local independent leisure operators, plus a gym,

lounge, work-from-home areas and an on-site concierge.

New planting and rain gardens throughout will boost liveability;

one of many features included within the design to ensure that

the scheme is sustainable.

The future

A planning application was submitted in Q3 2022, and the

scheme will be going to planning Committee in Spring 2023,

with the aim to secure forward funding later in the year.

Subject to planning permission being granted, HBD hopes to

start on site in mid-2023.

Neighbourhood is HBD’s second project within the Jewellery

Quarter, with construction work on its Setl development

well underway.

“Following planning being granted, we

are really excited to continue to progress

on Neighbourhood this year. We have

received a very positive reaction to our

plans for the scheme, and have considered

and reacted to a number of suggestions

raised during the consultation period.”

Ed Hutchinson

Managing Director, HBD

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

SEGMENTAL

REVIEW

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

CONSTRUCTION

TONY

SHAW

NATHAN

FISHER

TREVOR

KER

HENRY

BOOT

CONSTRUCTION

LIMITED

BANNER PL

LIMITED

ROAD LI

LIMITED

K (A69)

rading in the Group’s construction segment

has been ahead of expectations in 2022,

achieving an operating profit of £12.1m

(2021: £9.0m).

UK construction activity continued to recover

during 2022, with annual output increasing

by 5.6% following the record increase of

12.8% in 2021. At a sector level private

housing was the largest positive contributor, with record

annual growth in private industrial new work. Monthly output

in December 2022 was 3.8% above the February 2020

pre-COVID level.

HBC, the Group’s construction business, performed in

line with expectations, delivering a turnover of £101.5m

(2021: £81.6m) (52% in public sector) and begins 2023

with 68% of its order book secured. 94% of the forecast

costs relating to work already secured for 2023 has fixed

price orders placed or contractual inflation clauses.

Despite experiencing delays and challenges with the

supply chain and material deliveries, progress continues

to be made on the £42m urban development scheme

in the heart of Sheffield for Sheffield City Council and

Queensberry Development Management to create the

Cambridge Street Collective as a mixed-use facility as well

as Elshaw House which will be a seven-storey NZC office

building. Works will be completed in H1 2023. Works on

our £40m BtR residential scheme Kangaroo Works in

Sheffield are also progressing through to completion in

H1 2023. Good progress has been made on the £47m

residential development called the Cocoa Works in York for

Latimer Developments. The seven storey 279 apartment

scheme remains on schedule for completion early 2024.

HBC operates across ten public sector frameworks

and has seven schemes on site through public sector

frameworks with a total order value of £55m. In 2022 there

were six successful renewals, which include:

•

A new four-year P23 NHS Framework for projects

up to £20m across Yorkshire, Humber and the East

Midlands.

•

A place on the new four-year DfE Framework for

projects between £6m to £12m in the North East,

Yorkshire and the East Midlands.

•

YORbuild3 Medium Value Framework for projects

between £4m and £10m.

Looking ahead, HBC is looking to maintain its public

sector framework presence and is currently bidding on the

Pagabo refit and refurbishment framework for works up to

£30m in Yorkshire, Humberside and the East Midlands.

BP has seen record levels of trading activity with turnover in

2022 up 5%. Strong customer demand has also driven an

improvement in the asset utilisation rate to 75% (2021: 70%)

on its plant hire equipment. Road Link has performed well

as a result of traffic volumes increasing and the added

benefit of high inflation feeding into higher toll revenues.

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

DARRE

LITTLEWOOD

What we did in 2022

CHIEF

INANCIAL

OFFICE

Summary of financial performance

2022

£’m

2021

£’m Change %

Total revenue

Property Investment and Development

Land Promotion

Construction

169.0

43.8

128.6

69.4

58.6

102.6

+144

-25

+25

341.4

230.6

+48

Operating profit/(loss)

Property Investment and Development

Land Promotion

Construction

Group overheads

25.7

17.3

12.1

(8.6)

18.3

17.5

9.0

(9.3)

+40

-1

+34

-8

46.5

35.5

+31

Net finance cost

(0.9)

(0.4)

+125

Profit before tax

45.6

35.1

+30

The Group has benefited from strong activity within its

property development and strategic land businesses, driving

the Group’s best ever financial results on an underlying

profit basis

of £56.1m (excluding revaluation movements

on completed investment property) (2021: £29.3m).

Property investment and development was particularly

strong in H1 22, as a number of land sales completed

and development contracts progressed, with the full-

year results subdued only by the market-wide fall in UK

commercial property values. Stonebridge Homes continued

its growth trajectory increasing unit completions by 46% to

round off a strong performance for the property investment

and development segment.

UK housebuilding demand has also driven increased

strategic land activity within our land promotion segment

with an operating profit of £17.3m generated by the

disposal of 3,869 residential plots during the year. The

segment also contractually exchanged sales that will

generate £13.0m of gross profit in 2023.

In anticipation of the UK economy slowing in H2 22, the

Group reduced cash investment in new acquisitions and

focused on the development of existing schemes from our

pipeline of opportunities, with the aim of bringing assets to

market at the most opportune time.

FINANCIAL

REVIEW

STRONG

SALES

SIGNIFICANTLY

INCREASING

PROFITABILITY

•

31% increase in operating profit despite downward

revaluation movements on Investment Property.

•

Increased capital employed to £399m (2021:

£376m), investing in strategic land and development

schemes.

•

Made opportune disposals of investment properties

and a joint venture to recycle cash into assets with

increased development potential.

•

Increased dividends by 10% as a continuation of our

progressive dividend policy

FINANCIAL

REVIEW

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Consolidated Statement of

Comprehensive Income

Revenue increased 48% to £341.4m (2021: £230.6m) as we

continue to deliver a number of schemes in the property investment

and development segment and having completed on 175 (2021: 120)

house sales in Stonebridge Homes. The land promotion business

disposed of 2,170 plots to Taylor Wimpey and Persimmon Homes at

Didcot and exceeded our target to dispose of 3,500 plots per annum.

The construction segment grew its revenue by 25%, continuing to

deliver urban development works in Sheffield and from a number of

framework agreements that generate profitable work.

Gross profit of the Group increased 47% to £81.6m (2021:

£55.5m), a gross profit margin of 24% (2021: 24%) and reflects

healthy returns across all our operating segments. Administrative

expenses increased by £4.0m (2021: £3.4m) as we continued to

invest in our people and processes to support future growth.

Pension expenses of £4.3m (2021: £6.0m) are £1.7m lower than

the prior year due to the cost of closing the defined benefit pension

scheme to future accrual in 2021. The defined benefit pension

scheme entered a surplus on an IAS 19 basis in the year.

Property revaluation losses amounted to £8.2m (2021: £15.0m

gain), incorporating £4.9m revaluation losses (2021: £8.0m gain)

on wholly owned investment property and £3.2m revaluation

losses (2021: £7.0m gain) on our share of investment property

held in joint ventures.

Property revaluation (losses)/gains

2022

£’m

2021

£’m

Wholly owned investment property:

Completed investment property

Investment property in the course of construction

(7.3)

2.4

4.6

3.4

(4.9)

8.0

Joint ventures and associates:

Completed investment property

(3.2)

1.2

Investment property in the course of construction

–

5.8

(3.2)

7.0

(8.2)

15.0

OPERATING

PROFIT

NAV

Read the Business Review on

pages 38 to 44

£50.0m

£50.4m

£17.5m

£35.6m

£46.5m

£302.3m

£318.5m

£313.5m

£355.3m

£394.3m

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Profit on sale of investment properties of £0.6m (2021: £1.3m),

relates to the opportune disposal of a motorway services asset

to the existing operator in Kent. Loss on disposal of assets held

for sale of £0.1m represents the selling costs on disposal of an

industrial asset in Wakefield.

Share of profit of joint ventures and associates of £9.1m

(2021: £8.9m) includes a significant land disposal in Aberdeen

for local authority housing and development of an industrial unit

in Wakefield offset by property revaluation losses of £3.2m, all by

the property investment and development segment.

Profit on disposal of joint ventures and subsidiaries of £0.7m

(2021: nil) relates to the disposal of a long standing 50% interest

in a joint venture entity in Huddersfield by the property investment

and development segment.

Overall, operating profits increased by 30.6% to £46.5m

(2021: £35.6m) and, after adjusting for net finance costs,

we delivered a PBT of £45.6m (2021: £35.1m).

The segmental result analysis shows that:

•

Property investment and development produced an increased

operating profit of £25.7m (2021: £18.3m) arising from

additional profits on development contracts, land sales and

an increase in Stonebridge housing unit disposals to 175

(2021: 120), offset by a valuation loss on wholly owned

investment property of £4.9m (2021: 8.0m gain).

•

Land promotion operating profit remained consistent at

£17.3m (2021: £17.5m) as we disposed of 3,869 residential

plots during the year (2021: 3,008).

•

Construction segment operating profits increased to £12.1m

(2021: £9.0m) as construction and plant hire activity levels

remain positive and due to inflation-related fee increases on

our PFI contract.

We continue to demonstrate the benefits of a broad-based

operating model and how this allows us to manage the impact

of cyclical markets during challenging times and capitalise on

market recoveries that follow. We maintain a significant pipeline of

property development and consented residential plots; the variable

timing of the completion of deals in these areas does give rise to

financial results which can vary depending upon when contracts are

ultimately concluded. We mitigate this through the mix of businesses

within the Group and our business model which, over the longer

term, will ultimately see the blended growth of the Group delivered.

Tax

The tax charge for the year was £7.7m (effective rate of tax: 16.9%)

(2021: £4.5m; effective tax rate: 12.8%) and is lower (2021: lower)

than the standard rate of tax due to adjustments for joint ventures and

associates reported net of tax (2021: due to adjustments in respect

of earlier years arising from additional loss relief on asset disposals).

Current taxation on profit for the year was £8.5m (2021: £1.1m),

deferred tax was a credit of £0.8m (2021: £3.4m debit).

Earnings per share and dividends

Basic earnings per share increased 18% to 25.0p (2021: 21.2p) in

line with the increase in profits attributable to owners of the Parent

Company. Total dividend for the year increased 10% to 6.66p

(2021: 6.05p), with the proposed final dividend increasing to 4.00p

(2021: 3.63p), payable on 2 June 2023 to shareholders on the

Return on capital employed

(‘ROCE’)

Higher operating profit in the year saw an increased ROCE to

12.0% in 2022 (2021: 9.6%) and is now within the Group’s target

return of 10%–15% which we believe is appropriate for our current

operating model and the markets we operate in.

Finance and gearing

Net finance costs increased to £0.9m (2021: £0.4m) reflecting the

increase in UK interest rates during the year.

Interest cover, expressed as the ratio of operating profit (excluding

the valuation movement on investment properties, disposal and joint

venture profits) to net interest (excluding interest received on other

loans and receivables), was 22 times (2021: 31 times). No interest

incurred in either year has been capitalised into the cost of assets.

The Group’s banking facilities were agreed on 23 January 2020

at £75.0m. The facility with Barclays Bank PLC, HSBC UK Bank

plc and National Westminster Bank Plc runs for three years and

includes two one-year extensions. On 20 January 2022, the banks

agreed to the Group’s second extension taking the facility to 23

January 2025 and on 9 October 2022 to a call on the accordion

increasing the total committed facility to £105.0m. The Group had

drawn £65.0m of the facility at 31 December 2022 (2021: £50.0m).

On 20 December 2021, the Group signed a £25.0m receivables

purchase agreement with HSBC Invoice Finance UK Limited (HSBC)

that allows it to sell deferred income receivables to the bank. The

risk and rewards of ownership are deemed to fully transfer to HSBC

and, therefore, this agreement is recorded off balance sheet. The

Group had sold £7.6m of receivables under the agreement at 31

December 2022 (2021: £nil).

2022 year-end net debt

was £48.6m (2021: £40.5m)

resulting in

the Group having gearing of 12.3% (2021: 11.4%), at the lower end

of our targeted range of 10%-20%.

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.

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

FINANCIAL

REVIEW

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Cash flow summary

2022

£’m

2021

£’m

During 2022, the cash outflow from operations amounted to

£16.6m (2021: £38.6m) after net investment in equipment held for

hire of £4.1m (2021: £4.8m), and cash outflows from a net increase

in working capital of £55.6m (2021: £55.5m).

Our increase in working capital arises from additional investment in

property developments in progress, our housebuilding and strategic

land portfolios and an increase in contract assets.

Net capital disposals of £16.6m (2021: £20.9m investment) arose

from disposals of investment property of £19.1m (2021: 6.7m)

and joint ventures of £6.9m (2021: £4.3m) and net movement in

JV investments of £0.6m (2021: £(13.7)m), which were offset by

additions to investment property of £9.3m (2021: £17.3m) and net

additions to property, plant and equipment of £0.7m (2021: £0.9m).

Net dividends, totalled £5.3m (2021: £6.2m), with those paid to

equity shareholders of £8.4m (2021: £7.6m) increasing by 10% and,

dividends to non-controlling interests of £4.0m (2021: £0.8m), being

offset by dividends received from joint ventures during the year of

£7.1m (2021: £2.2m).

After net interest and tax of £3.6m (2021: £5.0m), there was an

overall outflow in net cash of £8.1m (2021: £70.5m), resulting in net

debt of £48.6m (2021: £40.5m).

Operating profit

46.5

35.6

Depreciation and other non-cash items

(3.4)

(13.9)

Net movement on equipment held

for hire

(4.1)

(4.8)

Movement in working capital

(55.6)

(55.5)

Cash generated from operations

(16.6)

(38.6)

Net capital disposals/(investments)

16.6

(20.9)

Net interest and tax

(3.6)

(5.0)

Dividends paid

(12.4)

(8.4)

Dividends received from joint ventures

7.1

2.2

Other

0.8

0.2

Change in net debt

(8.1)

(70.5)

Net (debt)/cash brought forward

(40.5)

30.0

Net debt carried forward

(48.6)

(40.5)

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Statement of financial position summary

increased our housebuilder land and work in progress to £80.6m

2022

£’m

2021

£’m

(2021: £52.5m) as we continue to invest in land, expand regionally

into the North East and increase annual plot disposals. We continue

to invest in owned land and land interests held under promotion

agreements at a lower capital cost. Inventories are held at the lower

of cost or net realisable value, in accordance with our accounting

policy and, as such, no uplift in value created from securing planning

permission is recognised within our accounts until disposal.

Receivables, including contract assets, increased £11.8m to

£122.9m (2021: £111.1m)

due to an increase in commercial

activity. Deferred payment receivables remain a function of the

number and size of strategic land development schemes sold, and

levels of construction contract activity undertaken.

Payables increased to £113.6m (2021: £85.1m) with trade and

other payables increasing to £100.0m (2021: £73.9m), provisions

decreasing to £5.4m (2021: £6.3m) as strategic land provisions

unwind, contract liabilities decreasing to £4.0m (2021: £5.0m),

arising from payments received for work not yet undertaken.

Net debt included cash and cash equivalents of £17.4m (2021: £11.1m),

borrowings of £65.0m (2021: £50.0m) and lease liabilities of £1.0m

(2021: £1.7m). In total, net debt was £48.6m (2021: 40.5m).

Wholly owned investment properties decreased in value to £97.1m

(2021: £104.2m), following the disposals of an industrial unit in

Wakefield and motorway service station in Kent, together they

sold at a premium to book value of £18.6m. This was offset by

the transfer of newly completed industrial units from inventory

at Southend and Luton, which amount to £16.7m including

subsequent expenditure. Property revaluation losses amounted

to £8.2m (2021: £15.0m gain), incorporating £4.9m revaluation

losses (2021: £8.0m gain) on wholly owned investment property

and £3.2m revaluation losses (2021: £7.0m gain) on our shares of

investment property held in joint ventures.

Intangible assets reflect goodwill of £1.2m (2021: £1.4m), being

Road Link (A69) of £0.3m (2021: £0.5m) and Banner Plant depots

£0.9m (2021: £0.9m) and the Group’s investment in Road Link

(A69) of £1.7m (2021: £2.3m). The treatment of the Road Link

investment as an intangible asset is a requirement of IFRIC 12 and

the impairment arises because the underlying road asset reverts to

National Highways at the end of the concession period in 2026.

Property, plant and equipment comprises Group occupied buildings

valued at £7.0m (2021: £6.6m) and plant, equipment and vehicles

with a net book value of £22.8m (2021: £21.3m), including £1.0m

(2021: £1.6m) of right-of-use assets under IFRS 16. Property, plant

and equipment, along with right-of-use assets, have increased

as new additions of £3.8m (2021: £6.8m) are offset by disposals

and the depreciation charge for the year. Right-of-use assets have

decreased in the year, due to depreciation, as the Group’s lease

liabilities unwind.

Investments in joint ventures and associates decreased £2.2m to

£10.0m (2021: £12.2m) arising from the Group’s share of profits of

£9.1m (2021: £8.9m) (including fair value reductions of £3.2m), less

distributions of £7.2m (2021: £2.2m) and net disposals of £4.1m

(£0.4m). We continue to undertake property development projects

with other parties where we feel there is a mutual benefit.

Inventories were £291.8m (2021: £235.3m) with property inventory

increasing to £91.2m (2021: £75.2m) as the Group progressed a

Build to Sell opportunity in Birmingham, and existing development

schemes, most notably an industrial scheme in Southend. We have

At 31 December 2022, the IAS 19 pension valuation has decreased

over the year from a deficit of £12.2m to a surplus of £6.2m, driven

by a significant decrease in the value placed on the liabilities. This is

mainly the result of substantial increases in the corporate bond yields

used to discount future benefit payments, which reduces the value

placed on the liabilities. The pension scheme’s assets continue to

be invested globally, with high-quality asset managers, in a broad

range of assets. The pension scheme Trustees regularly consider the

merits of both the managers and asset allocations and, along with the

Company, review the returns achieved by the asset portfolio against

the manager benchmarks. They then make changes, as the Trustee

considers appropriate, in conjunction with investment advice received.

Overall, the net assets of the Group increased by 11.0% to

£394.3m (2021: £355.3m) from retained profits and the decrease in

retirement benefit valuation less distributions to shareholders. NAV

per share

increased 10.5% to 295p (2021: 267p).

DARREN

LITTLEWOOD

CHIEF

FINANCIAL

OFFICER

NOTES:

Underlying profit is an alternative performance measure (APM) and

is defined as profit before tax excluding revaluation movements on

completed investment properties. Revaluation movement on completed

investment properties includes losses of £7.3m (2021: £4.6m gain)

on wholly owned completed investment property and losses of £3.2m

(2021: £1.2m gains) on completed investment property held in joint

ventures. This APM has been introduced as it provides the users with a

measure that excludes specific external factors beyond management’s

controls and reflects the Group’s underlying results. This measure is used

in the business in appraising senior management performance.

Return on Capital Employed is an APM and is defined as operating profit/

capital employed where capital employed is the average of total assets

less current liabilities and pension asset/obligation at the opening and

closing balance sheet dates.

Net Asset Value (NAV) per share is an APM and is defined using the

statutory measures net assets/closing ordinary shares.

Net (debt)/cash is an APM and is reconciled to statutory measures in note 32.

Total accounting return is an APM and is defined as the growth in NAV per

share plus dividends paid, expressed as a percentage of NAV per share at

the beginning of the period.

See ‘prior year restatements’ on page 159.

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

Investment properties

97.1

104.2

Intangible assets

2.9

3.7

Property, plant and equipment,

including right-of-use assets

29.8

27.9

Investment in joint ventures and

associates

10.0

12.2

139.8

148.0

Inventories

291.8

235.3

Receivables

122.9

111.1

Payables

(113.6)

(85.1)

Other

(4.2)

(1.2)

Net operating assets

436.7

408.0

Net debt

(48.6)

(40.5)

Retirement benefit asset/(obligations)

6.2

(12.2)

Net assets

394.3

355.3

Add back: Non-current liabilities and

pension asset

4.8

20.4

Capital employed

399.1

375.7

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

PRINCIPAL RISKS

AND

UNCERTAINTIES

MANAGING

OUR

RISKS

For Henry Boot, effective risk management

is essential in achieving positive outcomes

from our operations and for the delivery of

our strategic targets.

Overview

As a Group, Henry Boot takes a considered approach to risk. We

invest prudently in pursuit of our strategic targets, maintain financial

strength through effective cash management and aim to be the

safest place to work in the markets in which we operate.

The Group operates a system of internal control for risk

management within a structured framework. The long-term success

of the Group depends on the continual review, assessment and

control of the key business risks and the emerging risks it faces.

While there is a formal process in place for reporting risks on an

annual basis, the process of risk identification, assessment and

response is continuous and, therefore, if required, risks are reported

to the Group’s Board outside of the annual process, should events

dictate that this is necessary and appropriate.

In the event of rapidly changing risks, our business continuity group,

which incorporates key members of senior management, have

established procedures and actions that will support the Group’s

day-to-day response to sudden or developing incidents, providing

regular updates to our people, the Executive Committee and

the Board.

Risk appetite

The Group’s risk appetite and tolerance levels are reviewed annually

by the Audit and Risk Committee and guide the risk process. The

Group has no appetite for safety-related risk or undue financial

exposure and will not pursue additional income generating or cost-

saving initiatives unless returns are at targeted levels.

Risk management framework

The principal components of the Group’s risk management

framework comprise the risk strategy, risk appetite and tolerance

statement, risk registers and the risk heat map. Although the process

of risk identification, assessment and response is continuous and

embedded within the day-to-day operations of each business

segment, it is consolidated, reported and reviewed at varying levels

throughout the Group on an annual basis as a continuation of

the strategy review process. The Board reviews all principal risks

including consideration of how risk exposures have evolved during

the period and any new risks arising from the risk registers.

The methodology used is to initially assess the gross (or inherent)

risk. This is essentially the worst case scenario, being the product

of the impact, together with the likelihood of the risk materialising

if there are no controls in place to manage, mitigate or monitor the

risk. The key benefit of assessing the gross risk is that it highlights

the potential risk exposure if controls were to fail completely or not

be in place at all. Both impact and likelihood are scored on a rating

of one to five, using a scoring matrix.

The Board has ultimate responsibility for risk management, internal

controls and review. Part of the Audit and Risk Committee’s role

is to ensure that the Group’s risk management framework and

processes, on which the Board relies, are working effectively.

Emerging risks

The Group believes that its emerging risks are inextricably linked to

emerging trends in our marketplace and more widely to global and

economic events. Such trends include urbanisation, demographics,

technology, political and environment. Failure to keep pace with

these changes could result in additional risk exposure to the

Group. Management have, therefore, undertaken horizon scanning

exercises which form key considerations in the Group’s risk and

strategic planning.

The Group continues to recognise the importance of climate risk

and its impact on our business and the planet, this is recognised

as one of the Group’s principal risks and further information on our

assessment of climate risk is detailed on pages 72 to 74.

The Group have also considered the political and economic impact

of the ongoing crisis in Ukraine. The associated risks continue

to be closely monitored and mitigations strengthened, while not

a separate principal risk their impact is considered across each

principal risk area.

The financial impact of the above are considered in the going

concern and viability section on pages 56 to 57.

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Risk heat map

The risk heat map illustrates the 13 principal risks identified by

the Board as having a potential material impact on the Group.

The risks have been plotted by the Group Board/Audit and

Risk Committee based on a common understanding of the risk

appetite of the Group. The risks are presented gross (before

taking account of mitigating actions).

Movements from the prior year’s ranking are indicated by the

arrows.

4 8

Safety

Environmental & climate change

Economic

People & culture

Funding

Cyber

Pensions

Construction contracts

Property assets

Property development

Land sourcing

Land demand

Political

Likelihood

Risk Response

and Reporting

Review, report

and revise

Risk Identification

and Assessment

Identify and

evaluate risk

Risk

Governance

Establish risk strategy

and appetite

Subsidiary Boards and PLC

Each subsidiary and PLC department has a

nominated individual responsible for

reviewing the risks within that subsidiary/department

on an annual basis. In general, this will be the

Managing Directors (for subsidiaries) and the heads

of department (for the PLC), with input from other

relevant designated team members as applicable.

Business Continuity Group

Comprises senior individuals from

within the Group who meet on a flexible basis to

establish the Group’s procedures and plans for

management of continuity events.

Communicates to our people and directs the

immediate business response.

The Executive Committee

Reviews risks and internal controls at a consolidated Group level and coordinates the Group’s response.

The Board/The Audit and Risk Committee

Oversight of all risk management within the Group is undertaken at the highest level by the Board of Henry Boot PLC,

which is delegated in general terms to the Audit and Risk Committee.

Reviews the adequacy and effectiveness of the Group’s internal controls and risk management systems.

Monitors and reviews internal and external audit.

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

Impact

Internal

Audit

(third

party)

OUR

RISKS

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

To enable stakeholders to appreciate what the business considers

are the main operational risks, they are presented in detail below.

Risk Risk description Mitigation

Change

during

the year

Link to Group

strategic

priorities

Safety

Inherent risk within all of our

businesses, but most notably

within construction activity

•

Priority consideration at all Group and

subsidiary Board meetings.

•

Robust training, policies, procedures

and monitoring.

•

Construction operation is ISO

45001 approved Health and Safety

management system.

•

Internal independent Health and Safety

department conducts regular random

inspections.

•

Routine Director, senior manager

or independent health and safety

inspections.

Introduction

of Building

Safety Act

Environmental

and climate

change

The Group is inextricably

linked to the real estate and

construction sectors, and

environmental considerations

are paramount to our success

Further detail on the

compliance, legal,

technological, reputational,

financial, market and physical

risk associated with climate

change are documented

in the TCFD section of this

Annual Report (pages 72-74)

•

Construction environmental risk is

managed through the operation of an

ISO 14001 approved environmental

management system.

•

Continuous improvement of our

performance is achieved by setting

annual environmental improvement

targets.

•

Internal design helps mitigate

environmental planning issues.

•

Record of awards given in respect

of good safety and environmental

performance.

•

Environmental Impact Assessments are

carried out for all construction activities.

These detail the action required to

eliminate or reduce environmental

impacts.

•

Board level Responsible Business

Committee established.

•

Responsible Business Strategy

including NZC framework in place.

Key

Change during the year

Increased Decreased No change

Group strategic priorities

Safety People Growth Delivery

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Risk Risk description Mitigation

Change

during

the year

Link to Group

strategic

priorities

Economic

The Group operates solely in

the UK and is closely allied to

the real estate, housebuilding

and construction sectors. A

strong economy with strong

tenant demand is vital to

create long-term growth in

rental and asset values, while

at the same time creating

a healthy market for the

construction and plant hire

divisions

•

Strong Statement of Financial Position

with no gearing and a long-term

shareholder base means that we

can ride out short-term economic

fluctuations.

•

Different business streams increase the

probability that not all of them are in

recession at the same time.

•

The City recognises the Group is a

cyclical business and understands

performance will be affected by

economic cycles.

Rising

interest

rates, price

inflation,

debt

management

and slowing

economy

•

Directors and shareholders share

a common goal of less aggressive

leveraging than some competitors.

•

Banking partners continue to be

supportive.

Attraction and retention of the

highest calibre people with

•

This risk is increased when

unemployment falls and labour markets

Impact

of cost

of living,

well-being

and mental

health

issues.

Demand

and

competition

for skilled

personnel

People and

culture

the appropriate experience

is crucial to our long-

term growth in the highly

competitive labour markets in

which the Group work

contract.

•

Long-term employment records indicate

that good people stay within the Group.

•

The Group encourages equity

ownership.

•

Proven record of sharing profits with our

people.

•

Succession planning is an inherent part

of management process.

•

Reward and remuneration benchmarked

against the market to ensure competitive.

Funding

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

we operate

•

The Group has agreed three-year

facilities with its banking partners, which

run to January 2025 and are backed by

investment property assets.

•

A good level of interest from the banks

in tendering for the renewed facilities in

2019, facility renewed January 2020.

•

New £25m HSBC receivable purchase

agreement in place to January 2025.

Additional

funding

requirements

to support

business

growth

•

Detailed cash requirements are forecast

up to 15 months in advance, and

reviewed and revised monthly.

•

Five-year business plan prepared as

part of strategic review.

•

As a PLC, access to equity funding is

available, should this be required.

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

OUR

RISKS

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Risk Risk description Mitigation

Change

during

the year

Link to Group

strategic

priorities

Cyber

Unauthorised access to

systems, hacking, malware

and distributed denial of

service could all lead to data

loss, business disruption,

reputational damage or

financial loss

•

Awareness updates routinely

distributed to our people.

•

Use of software and security products

and regular updates thereof.

•

Detailed disaster recovery plans.

•

External vulnerability and threat

management reviews.

•

Internal mock attacks carried out.

Pension

The Group has a legacy

defined benefit pension

scheme that closed to future

accrual in 2021. While 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

•

Operation of Trustee approved

Recovery Plan.

•

While pension schemes are a long-

term commitment, regulations require

the Group to respond to deficits in the

short term.

•

The move out of gilts provides a

cushion should interest rates rise.

•

Risk mitigated by move to quoted

investments including pooled diversified

growth funds.

•

Treat pension scheme as any other

business segment to be managed.

•

Strong working relationship maintained

between Company sponsor and

pension Trustee.

•

Use good quality external firms for

actuarial and investment advice.

Liability

decreased

on funding

basis and

is now an

asset on an

IAS19 basis

•

Scheme now closed to future accrual.

Construction

contracts

Changes in terms and

conditions of standard

contracts exposing the

Company to major financial

and design liability risks

•

Preliminary commercial appraisal.

•

Directors closely involved.

•

Standard position set out in guide for

our people.

•

Experienced legal and commercial

management.

•

Project specific tender risk register.

•

Use of pre-construction services

agreements help to mitigate cost

and risk.

•

Inflation clauses negotiated where

security of pricing cannot be achieved.

Supply chain

and viability

challenges

Key

Change during the year

Increased Decreased No change

Group strategic priorities

Safety People Growth Delivery

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Risk Risk description Mitigation

Change

during

the year

Link to Group

strategic

priorities

Property

assets

Investment property assets

are not marketable and are

without secure tenancies.

Valuations are volatile

•

Monthly performance meetings.

•

Defined appraisal process.

•

Monitoring of property market trends.

•

Highly experienced development team.

•

Flexible to market trends in development

requirements.

•

Diverse range of sites within the portfolio

and over £1.25bn pipeline of future

opportunities.

•

Portfolio strategy actively managed and

covenants regularly reviewed.

•

Investments in sector with strong

medium term tailwinds.

Softening

yields

Property

development

Construction and client risk,

which is not matched by

commensurate returns on

development projects. Clients

not taking up new lettings on

speculative schemes

•

Construction projects, including returns

and cash flows, are monitored monthly by

subsidiary company management teams.

•

Seek high level of pre-lets prior to

authorising development.

•

Development subject to a ‘hurdle’

profit rate.

•

Shared risk with landowners where

applicable.

•

Highly experienced development team.

•

Flexible to market trends in development

requirements.

•

Diverse range of sites within the

portfolio and £1.25bn pipeline of future

opportunities.

Softening

yields

impact

margins and

viability

Land sourcing

The inability to source, acquire

and promote land would

have a detrimental effect on

the Group’s strategic land

portfolio and income stream

•

Monthly operational meetings detail

land owned or under control, new

opportunities and status of planning.

•

Acquisitions are subject to a formal

appraisal process, which must exceed

the Group defined rate of return, and

is subject to approval by the subsidiary

board or Executive Directors of the main

Board, subject to level of investment.

•

Land portfolio of over 96,000 plots with

aspiration to grow further.

•

Well respected name within the industry

that demonstrates success.

•

Housebuilder land portfolio at 1,094

residential plots.

Capital

taxes &

margin

erosion

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

OUR

RISKS

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Risk Risk description Mitigation

Change

during

the year

Link to Group

strategic

priorities

Land demand

A dramatic change in

housebuilder funding

sentiment and demand for

housing can have a marked

change on the demand and

pricing profile for land

•

The Group’s policy is to only progress

land that is deemed to be of high quality

and in prime locations.

•

The business is long term and is not

seriously affected by short-term events,

or economic cycles.

Housebuilder

activity

reduced

•

We recognise cyclicality in our long-term

plans and operate with a relatively low

level of debt.

•

Greenfield land is probably the most

sought-after land to build upon.

•

Long-term demographics show a

growing trend; therefore, demand for

land will follow.

•

Housebuilders have very good land

portfolios and are selective, targeting

prime locations.

Political

Political decisions, events

or conditions can have

a significant impact on

the Group. Changes in

government or government

policy towards planning

policies could impact on

the speed of the planning

consent process or the

value of sites and legislative

changes can have a

significant impact on the

viability of transactions and

schemes

•

The Group’s highly skilled in-house

technical and planning teams monitor

changes in the market and in the

planning process, and react accordingly

to ensure that planning consents are

achieved in a cost-effective and timely

manner.

•

Large land portfolio can help smooth

short-term fluctuations.

•

A high profit margin can be achieved

when successful.

•

No uplifts are taken on land through

the planning process, which reduces

valuation risk in a downturn. Therefore,

though profits may be reduced if site

values fall, the Group should still achieve

a profit on sale.

Housing

planning

policy, and

property

taxes

Escalation

of events in

Ukraine

Key

Change during the year

Increased Decreased No change

Going concern

In undertaking their going concern review, which covers the period to

December 2024, the Directors considered the Group’s principal risk

areas that they consider material to the assessment of going concern.

As the UK economy moves at a slow pace, the Directors have

assessed the Group’s ability to operate in a more uncertain

environment in modelling a base case scenario. They have also

modelled what they consider to be a severe downside scenario

including further curtailments in activities. This downside scenario

shows a c.50% reduction in sales and c.67% reduction in profits

from the base case. Construction and development activity only

takes place where contracted and likewise for Hallam Land where

no sales are assumed in 2023 unless already contracted.

Group strategic priorities

Safety

People

Growth

Delivery

For Stonebridge Homes a 10% decline in house prices is assumed

along with a 25% reduction in the number of plots sold and Banner

Plant revenue declines c.25%. This downside model assumes that

acquisition and development spend is restricted other than that

already committed and is all consistent with previous experience

in recessionary environments. Having started 2023 with net debt

of £48.6m, and with c.£63.2m net debt at 28 February 2023,

against facilities of £105.0m the Directors have concluded that

the Group is able to control the level of uncommitted expenditure,

whilst delivering contracted schemes, allowing it to retain and

even improve the cash position in the event of a severe downside

scenario, although the impact of doing so on the profit and loss

account would be unavoidable.

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

The Group meets its day-to-day working capital requirements

through a secured loan facility. The facility was renewed on 23

January 2020, at a level of £75m, for a period of three years and

extended by one year in January 2021 and a further year in January

2022 taking the facility renewal to 23 January 2025 on the same

terms as the existing agreement. The facility includes an accordion

to increase the facility by up to £30m, which was called on by the

Group on 9 October 2022 increasing the overall facility to £105m.

None of the modelling undertaken by the Directors gives rise to any

breach of bank facility covenants. The most sensitive covenant in

our facilities relates to the ratio of EBIT (Earnings Before Interest and

Tax) on a 12-month rolling basis to senior facility finance costs. Our

downside modelling, which reflects a near 50% reduction in revenue

and near 67% reduction in profit before tax from our base case

for 2023, demonstrates significant headroom over this covenant

throughout the forecast period to the end of December 2024.

At the time of approving the Financial Statements, the Directors

expect that the Company and the Group will have adequate

resources, liquidity and available bank facilities to continue in

operational existence for the foreseeable future. Accordingly,

they continue to adopt the going concern basis of accounting in

preparing the Financial Statements.

Viability statement

Introduction

The business model and strategy of Henry Boot PLC can be found

on pages 28 to 31 in the Strategic Report. These documents

outline the long-term business model and are central to the

understanding of how the Group operates. We have operated the

current business model successfully since 2004 and have a 137-

year unbroken trading history. By their nature the Group’s activities

tend to be very long term, especially in the land promotion business

and increasingly within property development. The Group’s strategy

and experience in the markets in which we operate has been

built up over many years. Over the last ten years, the Group has

reported an average profit before tax of £37.0m per annum, added

over £200.8m to net assets (an increase of some 104%) and paid

64.0p per share in dividends, all from the trading segments it now

operates, and at no stage in the last economic downturn, between

2008 and 2010, nor during 2020 and 2021 with the outbreak of

COVID, did the Group make a trading loss.

The assessment processes

The Group’s prospects are assessed through a three year forecasting

process led by the PLC Board Executive Directors and the Boards

of the individual subsidiaries. A detailed three-year bottom up base

case is agreed prior to the commencement of the current financial

year, reforecast each month throughout the financial year within

each business and consolidated at a Group level. As a largely deal-

driven business, it is considered inappropriate to attempt to prepare

detailed bottom-up forecasts over a longer-term period. Whilst our

strategic land promotion business commenced 2023 with 9,431

plots with planning permission which, at a five-year average disposal

rate of 3,175 plots would imply that we have almost three years of

sales already in hand and a property development pipeline of over

£1.25bn Gross Development Value (GDV) to be delivered over a

period extending beyond five years, it becomes difficult to accurately

forecast the timing of transactions beyond year three.

We have stress tested our financial results based on the downside

scenario modelled to December 2024, as described in the Going

Concern statement on page 56 and 57 followed by an assumed

return to planned levels of activity for year three. Our modelling

assumes that deferred land sale debtors falling due of £31.8m as

at 28 February 2023 will continue to be received during the period

either directly from the debtors themselves or via the use of our debt

purchase facilities or promissory notes which management consider

to be viable alternatives facilitated by UK banks. These models

highlight that as economic conditions worsen and construction

activity, developments and land sales do not happen as envisaged,

deferred land sale receipts, reduced investment and tight cost

control sees the Group retain cash in the short to medium term,

although long-term profitability would be significantly lower if the

aforementioned mitigating actions were required to preserve cash.

Assessment of viability

The long-term strategy: the three year monthly forecasts reflect the

Directors’ best estimates of the prospects for the business and the

Directors consider a three-year period to be appropriate over which

to assess the viability of the Group. In addition to the downside

modelled, we have also reviewed several potential viability risks to

the Group and consider that the following represent scenarios which,

if not carefully managed, could impact on the Group’s viability.

Firstly, overtrading developments in progress with the attendant

increase in leverage, at the same time as the property cycle turns

down, asset values are falling, and schemes must be completed

to create best value. This creates a potentially damaging scenario

where debt is rising, and asset values are falling. Mindful of this

scenario, we look to maintain prudent debt levels (even at maximum

facility utilisation of £105m) and we have pre-sold or pre-let 63%

of the committed development pipeline and secured 97% of the

development costs on fixed price contracts.

Secondly, a decline in residential property markets where margins

decline due to a lack of government support and planning delays

or rejections, compounded by lower sales prices, higher build costs

and increased legislative costs. Where possible the Group mitigates

this risk by providing quality products from healthy land banks

(including consented land) in prime locations.

Finally, a health and safety-related breach that causes a fatality (or

similar serious outcome). We manage this risk through a very robust

health and safety policy, zero tolerance towards policy breaches and

consider health and safety at all of our Company board meetings.

Our safety scores continue to be well into the top quartile of the UK

construction industry and we have achieved a very safe working

environment over the last 20 years.

Viability statement

Based on their assessment of prospects and viability above, the

Directors confirm that they have a reasonable expectation that

the Group will be able to continue in operation over the three-year

viability period.

Net debt is an APM and is reconciled to statutory measures in note 32.

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

SECTION 172 STATEMENT AND

STAKEHOLDER ENGAGEMENT STRATEGY

Introduction

It is the aim of our Board and its Committees always to give proper

consideration to stakeholder interests when taking decisions,

and whilst recognising that not all decisions will be equally positive

for all stakeholders, it is nevertheless important for all issues to

be considered.

The Board formally adopted a Stakeholder Policy in 2019, which

has been reviewed and revised in successive years, to ensure that

the Board is proactively considering the most effective methods of

incorporating stakeholder views into decision-making and providing

effective engagement with all groups. More detail on this can be

found below.

The Board is keenly aware that stakeholder views, and the

considerations of ensuring a sustainable and long-term business,

as well as maintaining the highest standards of business conduct,

are all essential aspects of its decision-making processes. Set out

below are some of the ways we ensure this, and decision-making

processes will remain under review at ExCo and Board level to

ensure that they remain dynamic and rounded. Within this report we

also set out a substantial case study on one of the Board’s biggest

decisions in 2022, detailing the consideration of s.172 factors and

how this has shaped the Board’s approach.

Board Information

•

Our Board and senior leaders regularly engage with stakeholders as described on pages 59 to 60

•

Board papers on Reserved Matters include consideration of stakeholder interests and views

•

Gerald Jennings’ role as designated NED for liaison with the Group Employee Forum ensures that the Board consider

the views of, and impacts on, the workforce of various decisions

•

Leadership and management receive training on Directors’ duties to maintain awareness of the Board’s responsibilities

under s.172

Decision making

•

The Company’s culture is a core consideration when making decisions. The Board reflects on whether the action

aligns with The Henry Boot Way and our values: Integrity, Respect, Delivery, Collaboration, Loyalty and Adaptability

•

Actions directly brought about as a result of Board engagement – some examples are set out in the Employee

Engagement section on pages 96 to 97

•

Where appropriate, outcomes of decisions are re-assessed, and further engagement and dialogue undertaken

Long-term Strategic Considerations

•

The Board reflects on the Responsible Business Strategy and whether the outcome of its decisions support and

contribute to the agreed targets

•

The Board remains mindful of the Company’s corporate objectives and KPIs which are discussed regularly, and have a

wholesale review at annual Strategy Days

•

Papers seeking Board approval are required to explain how the matter aligns with the Company’s long-term strategy.

Any items that deviate from the strategy are given additional scrutiny

Our stakeholders

The Board identified our key stakeholders during our work

on the Henry Boot Way in 2017, being those groups whose

interests and views are vital to the operation and culture of the

Group, as embodied within our Purpose:

“To empower and develop our people to create long-term

value and sustainable growth for our stakeholders.

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.”

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Board Stakeholder Engagement Strategy

The Board Stakeholder Policy, reviewed annually, is key in setting the existing status of current and future engagement with all of the Group’s

key stakeholders. During the 2022 review, three additional stakeholders were identified as having relevance in relation to Board engagement

– Regulators, Media, and Professional Associations. Engagements with these groups are planned for 2023 and will be reported on next year.

It is important to note that the below sets out Board specific engagements, not the broad and thorough range of engagements undertaken

by the wider Group with each of these stakeholders.

Stakeholder

Why is it important for the

Board to engage with this

stakeholder group How we the Board engaged in 2022

How we the Board

responded

Shareholders

Dialogue with our shareholders

to understand issues that are

important to them is vital in

shaping the approach of the

Board, and the wider Group,

in ensuring the delivery of our

strategy, growth plans and

returns

•

Bi-annual Investor Roadshows and structured

feedback sessions with institutional investors

and major family and other shareholders

•

Focussed investor communication regarding

significant issues as required

•

Regular Board updates on investor and proxy

advisor sentiment collated by management /

brokers / PR consultants

•

Informal and ad hoc shareholder engagement

with family and other substantial shareholders

•

Attendance by all Board members at the AGM,

available to answer questions and engage

directly with shareholders

•

Ongoing and structured

communications on

results

•

Consideration of

appropriate guidance to

be issued where required

•

Communication of

key initiatives such

as strategy and ESG

objectives

Employees

Our people are the biggest

asset of the Group, and

ensuring that their priorities are

understood makes sure that

the Board can take their views

into account when delivering

on our strategic aims

See our Employee Engagement report on pages 96

to 97, plus:

•

Subsidiary board MDs and department heads

attended Board meetings to discuss issues

relevant to their company/team and the Group

•

Board members attended subsidiary board and

other meeting opportunities throughout the year

•

See examples within

employee engagement

report plus case study

on page 61

Customers

Making sure that the services

we offer are well received

by customers is vital as a

long-standing business with a

reputation for longevity in its

relationships

•

Board site visits arranged to not only view sites

in construction/development but also potentially

interact with customers. This has now been

supplemented by providing Board members with

details of all subsidiary meetings / visits that they

can attend on an individual basis if convenient

•

Reports regarding customer engagement

across the Group comes to Board meetings

twice annually

•

Introduction of structured

customer feedback

initiatives within each

subsidiary

•

Inclusion of customer

feedback mechanisms

within wider Marketing and

Communications Strategy

as considered at the

Strategy Days

Pensioners

As former employees of

the business, pensioner

engagement ensures we

maintain focus on our

investment outcomes and

returns

•

Pensioner’s lunch arranged by the company

invitations extended to Board members

•

Ad hoc attendance by Board members at ad

hoc events for pensioners and family members

•

Pension Newsletter produced on an annual

basis and a copy issued to relevant members

•

Pensions report presented bi-annually at

Board meeting to show the performance of the

pension scheme

•

CFO attends Pension Trustee meeting as a

representative of the Company

•

Oversight of pension

related matters on a

regular basis

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

SECTION 172

STATEMENT

Stakeholder

Why is it important for the

Board to engage with this

stakeholder group How we the Board engaged in 2022

How we the Board

responded

Suppliers

As with customers, our supply

chain is crucial, and our long-

standing relationships ensure

we are able to deliver on our

commitments

•

Board site visits arranged to not only view sites

in construction/development but also potentially

interact with suppliers, supplemented by

providing Board members with details of all

subsidiary meetings / visits that they can attend

on an individual basis if convenient

•

Matters Reserved for the Board reports from

Group subsidiary companies contain sections

on stakeholder engagement including suppliers

•

Inclusion of supplier

feedback mechanisms

within wider Marketing and

Communications Strategy

as considered at the

Strategy Days

Communities

Being a responsible corporate

citizen of the areas we operate

in aligns with our values and

is a substantial aspect of our

Responsible Business Strategy

•

Much work has been done on an individual

project basis and also subsidiary and Group

wide on community engagement, particularly

through the Responsible Business Strategy,

overseen by the Responsible Business

Committee, and set out in this report on page 34

•

Matters Reserved for the Board reports

from Group subsidiary companies contains

sections on stakeholder engagement including

communities

•

Community partnership

targets included within

the Responsible Business

Strategy – see page 34

Environment

Similar to communities,

responsibility to the

environment as our wider

stakeholder is integral to

delivery of our ESG objectives,

as well as ensuring we operate

within our environments in a

responsible manner

•

Matters Reserved for the Board reports

from Group subsidiary companies contain

sections on stakeholder engagement including

environment

•

Current environmental assessment and

reporting is captured in the Responsible

Business section of the Annual Report, which is

reviewed by the Board

•

H&S report brought to each PLC Board

meeting setting out inspections and issues

noted, plus any interactions with authorities

such as the HSE

•

Employees from across the Group who are

involved in delivery of the Climate Change

Framework are invited to relevant Responsible

Business Committee meetings to share updates.

•

Environmental targets

included within the

Responsible Business

Strategy – see pages 35

•

Responsible Business

Committee approved

adoption of Climate

Change Framework –

more detail on this within

the Responsible Business

Committee Report on

page 117

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Consideration of s.172 factors

Likely consequences of

decisions in the long term

The Board has considered the fitness for purpose of

Banner Cross Hall post-refurbishment, noting that due to

the listed nature of the building, it would have remained as

a predominantly cellular structure, not allowing for many

open-plan options or to accommodate post-pandemic

working needs. Also, although the environmental impact of

the building would have been mitigated, it would have been

unlikely to achieve a good EPC rating.

Interests of the Company’s workforce

Naturally this has been one of the primary considerations for

the Board to take into account as part of making this decision,

and the methods of incorporating the expressed interests and

concerns of the workforce are as set out in the timeline above.

Need to foster relationships with

suppliers, customers and others

The Board took into account when considering the alternative

office location the ease of transport links to a central

city location, proximity to key customers and suppliers,

and enhanced space to provide interactions with all key

stakeholders, as well as improved ability to attract talent to

the business.

Impact on community and environment

The impact on the local community of vacating the building at

Banner Cross Hall has been discussed by the Board as part of

its decision making, also taking into account the environmental

impact of the building versus an alternative option (also see

above), as well as the contribution that could be made to

creating a vibrant city centre by being located within it.

CASE

STUDY

Relocation of the Group’s Head Office

For some years, the Board and senior managers within the business have been reviewing options for the Group’s Head Office

in Sheffield. The existing office building, Banner Cross Hall, is a Grade II listed former stately home in one of Sheffield suburbs,

occupied by the Group for around 90 years. As such, although an imposing and impressive building, it has a number of

features that are not conducive to modern office working, following a review of our working needs post-pandemic; as well as

being in need of extensive modernisation for environmental and other reasons. For this reason, alternative options including

a move to a purpose-built office within Sheffield city centre were also explored. The options, having been considered by the

Board, triggered a process of engaging with and considering various stakeholders as part of the ultimate decision being

progressed throughout 2022 and into 2023.

The following timeline sets out the progress of the Board’s decision-making and interactions that incorporated stakeholder

views within the process:

Work has continued on progressing the development of the relocation plans with regular updates to the Board, and the project

team structure will remain under review during 2023 as the Group looks to move to its new head office as required.

June 2022 external workspace design support

appointed and Working Groups commence

gathering initial employee feedback on workspace

considerations

May 2022 decision to relocate to alternative office

space communicated to employees. Project team

established comprising of a Steering Group and

dedicated workstream leads as well as employee-led

working groups focussing on key areas raised during

the feedback consultation: Culture and Heritage;

Agile Working; Personal Safety, Travel and Parking;

Collaboration; and Location

September 2022 presentation of initial workspace

design to Board for feedback

April 2022 having further considered the options

and feedback received, the Board determined that

it wished to progress with the option to relocate to

alternative office space

July 2022 following collation of feedback, it is

incorporated into initial workspace design and consultants

engage with key teams throughout the business for

additional views

March 2022 town hall meeting held at Banner Cross

Hall (broadcast as live webinar to the Group) explaining

the options being considered – Banner Cross Hall

refurbishment and relocation to alternative office space, with

benefits and drawbacks of both explained. Consultation

exercise launched within the Group, offering both open and

confidential methods for employees to provide feedback

February 2022 following identification of alternative

office space within Sheffield, Board resolved to carry out

engagement with employees on the options

November 2021 options in principle considered by

Board at 2021 Strategy Days, including detailed costing

for Banner Cross Hall refurbishment. Board resolved to

continue exploring this option along with alternatives

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

OUR

PEOPLE

Our Approach

Our people are our greatest asset and are vital to our long-term

strategic success and sustainability. Engaging and developing our

people is crucial to our continued performance and growth.

We collaborate with our people to enable them to achieve their

best. We work to continually develop and maintain a culture of

inclusivity that enables us to attract and retain the best talent to

work at every level. Our people are committed to working as part of

our team and support and represent our Values.

We remain committed to investing the time and resources to

support, engage, and motivate our people to feel valued, to be

able to develop rewarding careers, and want to stay and progress

with us. We recruit and promote from within wherever possible

to provide the best possible progression opportunities. As our

business continues to develop and grow, we understand that by

retaining and inspiring effective and committed people, we can

continue to deliver excellence to all.

Agile Working

In July 2021 we launched our Agile Working Framework and we

continue to enshrine the learnings we adopted from the Pandemic

in our future ways of working.

The Framework’s vision is to change the way we work to improve

work-life balance for our people, while maintaining high levels of

engagement and service for our stakeholders. We believe an element

of agility can be achieved in all our job roles, but we recognise that

not all tasks can be done from alternative locations or from home.

For roles that must be performed in a particular location, we

continually work to identify opportunities to be agile in different ways,

such as adapting start and finish times to minimise commuting time,

fulfil personal commitments, or make time for hobbies.

We believe empowering our people to work in an agile manner will

support their health and wellbeing and allow us to quickly adapt to

any changes in circumstances. It will enable our people to work in

a manner that is most beneficial to their needs whilst continuing to

deliver high quality results.

We convened an Agile Working Group to review the Group’s

approach and this formed one of the Employee Working Groups

established as part of the Isaacs Head Office relocation project

(see page 61). The Group members represent a range of job roles,

seniority, location and function across our business and they have

developed recommendations for how we can further improve and

refine our Agile Working Framework. We will be incorporating these

recommendations into an updated version of the Framework which

will be launched in 2023.

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

OUR

PEOPLE

The overall objective of conducting

the survey is to gain an in-depth

understanding of our people’s

experience whilst working at Henry

Boot. The survey is focused on gaining

our people’s feedback so we can

support a culture and an environment

where they can be the best version of

themselves at work.

The survey and our findings focus on the

Group as a whole. Whilst we can look

at our subsidiaries as separate entities

(which will be beneficial for business

specific feedback), we have opted

to look at the scoring holistically as a

Group to push for more collaboration, a

collective responsibility and a joined-up

approach to culture and engagement.

Our Process

Our process facilitated by HIVE (our

employee engagement partner), saw our

annual Employee Engagement Survey

housing a framework of 34 questions

that were used to measure progress

when compared with the responses

within our previous survey conducted

during 2021. Some questions were

based on those posed previously to

allow for statistical analysis of change;

however, other questions were more

focused on 2022 and specifically how

we have, and continue to, adapt to

issues such as the cost of living crisis.

71%

RESPONSE

RATE

(INCREASE

FROM

2021)

Our Objectives

The survey results show that our people

have remained resilient, optimistic,

and focused on working as a team to

maintain delivering an exceptionally high

standard for our clients and partners.

The survey results and feedback

are carefully reviewed by our Board,

Executive Committee, and Group

Employee Forum to identify any areas

where there is scope for increased

engagement with, and support for,

our people.

VERY

GOOD

GROUP

eNPS

SCORE

(an increase of 13 points from 2021)

8.8

We received an 8.8 employee

engagement score when our people

were asked whether they have good

relationships with others in their team.

8.4

We received an 8.4 employee

engagement score when people were

asked if they feel proud to work for

Henry Boot.

Our Findings

Did You Know?

Each year, our Group Employee

Forum are tasked with a project

focused on the results of the

survey. In 2022, they focused

on health and wellbeing and,

particularly, on maintaining

boundaries between professional

and personal lives. The findings

from their project were shared with

the Board and incorporated in

to the new Health and Wellbeing

Strategy.

Working collaboratively

Our eNPS of 39 (26 in 2021) was

significantly higher than last year. We

believe this is in response to the positive

actions taken, in collaboration with

our people, to address any issues or

experiences they raised in the 2021

survey. The actions we took focused on

three key themes – involving employees

about decisions in the future, creating

an enjoyable work environment, and

investing in our people.

Wellbeing

Wellbeing was again a key theme in

the 2022 survey and we have been

working hard to support the health and

wellbeing of our people (see page 65

for more information). We recognise that

our people experience pressure and

we remain committed to implementing

our new Health and Wellbeing Strategy

(which has been influenced by the

survey results and feedback from our

Group Employee Forum). This will

support our people to establish and

maintain positive work-life boundaries

and feel empowered to switch off when

not working.

As part of the Employee Engagement

Survey, we continue to roll out our

Open-Door platform where our people

can provide us with confidential honest

feedback. This platform has been well

adopted and has demonstrated the

real sense of honesty and integrity that

underpins our workplace culture, the

Henry Boot Way.

In relation to employee engagement

more widely and the role of the

Board in this, please also see our

Employee Engagement section on

pages 96 to 98.

Key Outcomes

Employee Engagement Survey

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Did You Know?

We recognised the impact that the cost of living and energy

crisis could have for our people’s financial security and

wellbeing. In response, we provided a one-off cost of living

payment of £1,000 in September 2022 to the lowest paid two

thirds of our workforce

Reward Strategy

We launched our Reward Strategy in September 2022 which aims

to ensure that all our people are fairly rewarded. We intend to clearly

outline and align the pay and progression structures across the

Group in support of our aspirations to attract and retain a talented

and diverse workforce.

Our Strategy is strongly linked to our Values and behaviours and

introduces a new grading and pay structure and bonus scheme

which provides everyone with an earnings opportunity linked to

performance. It can be summed up in these five principles which

guided the changes we are making:

Competitiveness – offering competitive pay so we can both

retain people and attract new talent into the business

Fairness – ensuring that our reward structure is fair and

rewards people for the level of performance and contribution

they give

Structure, transparency and inclusivity – providing regular

updates on how we are performing, as well as giving clarity on

how the performance of our people will be managed, linking it

more closely with personal development and wellbeing

A ‘One Henry Boot’ approach – reward that’s right for us

Simplicity and consistency – making sure that the

processes are clear, easy to understand, and consistent for

everyone.

By having a structure in place that is consistent and easy to

understand, we hope our people will be able to see what the next

step looks like for them, not just in terms of reward but also in terms

of skills development, responsibility, and career progression.

Health and Wellbeing

Our people are our greatest asset and investment in their health and

wellbeing is critical to ensure that they are healthy, productive, and

fulfilled in their roles.

Whilst the health and wellbeing of our people has long been

a primary consideration, we recognise that a more strategic,

interventionist, and collaborative approach is needed. This will

ensure that we provide the best possible support to our people and

continue to be successful and enjoy commercial growth driven by

fulfilled and productive people.

The development of a new Health and Wellbeing Strategy is

a primary objective of both the Group’s People Strategy and

Responsible Business Strategy. In the materiality assessment

undertaken in the development of the latter, the health and

wellbeing of our people was ranked the highest material issue that

we should focus on by both internal and external stakeholders.

Our Health and Wellbeing Strategy was developed throughout 2022

by the Group HR team who engaged the Group Employee Forum,

a cross-Group working party, and a range of external partners to

share knowledge and solutions. The Strategy launched in 2023

and consolidates our existing offer making it more accessible whilst

adding additional initiatives, resources, and training that our people

can access to ensure we respond to their individual needs. The

Strategy focuses on the Group’s support for our people across four

key areas of wellbeing – physical, mental, digital, and financial.

Financial Wellbeing

We are committed to ensuring that our people are well rewarded

for their hard work and have access to resources to support their

financial wellbeing.

We operate the Henry Boot PLC Group Stakeholder Pension Plan

(defined contribution pension), where the Group pays contributions

to an independently administered fund (AVIVA) based upon a fixed

percentage of employee’s salary. Member benefits from the plan

are determined by the amount of contributions paid by the Group

and the member, the investment returns on the investments made

by the individual based on their risk appetite (with most people

remaining in the pre-selected Default Fund), and the decisions

made by the member on retirement age and how they choose to

receive their retirement benefits. We have implemented the UK’s

auto-enrolment pension requirements, including re-enrolment on a

triennial basis, and our people are informed of auto-enrolment and

other pension choices through our online portal and the Hub.

We partnered with ISIO to provide our people with financial coaching

sessions with one of their expert finance coaches. The individual

sessions gave access to a professional and independent financial

coach, who provided a confidential ‘health check’ of finances and

answered any questions about managing finances. 43 sessions were

delivered and further sessions will be made available to our people in

2023 as part of our Health and Wellbeing Strategy.

In October 2022 we granted share options to all our people who

met the eligibility criteria for the Company Share Option Plan

(CSOP). We also sent invitations to those who were eligible to

participate in the Group’s 2022 Sharesave scheme, which allows

people to contribute a maximum of £500 per month to one or a

combination of current Sharesave schemes. The Remuneration

Committee agreed to apply a 20% discount off the share price, the

maximum discount allowed under the HMRC rules. At the close of

the invitation, 54.9% of those who were eligible had joined one or

more Sharesave schemes.

EDI

We aim to create a fair, accessible, diverse, and inclusive working

environment, while recognising the challenges our sector has

traditionally experienced, particularly in relation to gender and

ethnicity representation and diversity. We want to foster a

sustainable culture in which all our people can be themselves at

work so that they can thrive, add value, and feel valued. We believe

that this will bring out the best in our people and lead to long term

success and sustainability. You can read more about our strategic

approach to EDI and 2022 performance on page 33.

Did You Know?

In 2022, we supported Sheffield City Council’s Future Proof work

experience scheme. We partnered up with a Sheffield based

secondary school and worked with their students to develop

a fictional marketing campaign that Henry Boot could run to

improve our diversity. The winning team then met with our EDI

Steering Group to share their ideas and receive feedback.

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

OUR

PEOPLE

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Although we recognise that the ambitions and objectives in our

Responsible Business Strategy will take time to achieve, we are fully

committed to working with key partners to engage with under-

represented groups through various networks. We will encourage

diversity of thought and approach amongst our people, and open

up opportunities for under-represented groups to experience and

access employment in our industry. We continue to forge links with

local groups and educational establishments to encourage diversity

and to change perceptions and influence others to view our industry

as a positive career choice. Examples of the networks we are

members of and actively support are Building Equality, Women in

Property, the Considerate Constructor’s Scheme, and Business in

the Community (BITC).

We support our people wherever possible, whether they are new to

the Group or have been with us for some time. Our opportunities

for learning, career development, and promotion are inclusive to all

our people. We are proactively engaging with external stakeholders

(including local government and special education providers) to learn

about how we can best support those who are disabled or have

special educational needs (SEND) into meaningful employment and

to offer SEND students rewarding career education experiences.

The Board Diversity Policy is set out in more detail as part of our

Nomination Committee report on pages 104-110. Our gender pay

gap (when measured as a median average) is currently 21.43%.

This continues to reflect the current ratio of men and women

employed rather than an issue relating to how we pay our people.

Our Responsible Business Strategy sets out ambitious targets for

us to increase our workforce diversity and we recognise that further

improving our gender diversity in our workforce and management

teams will support us to further reduce this gap. We are also

currently undertaking the necessary preparations to begin reporting

on our ethnicity pay gap.

The Strategy will guide us to ensure our recruitment processes

attract diverse talent and ensure our workforce reflects the diversity

of the communities in which we live and work, by increasing

opportunities and reducing barriers to under-represented groups.

All employees

Female Male

121 356

Senior Managers

Female Male

3 15

Directors

Female Male

2 5

Professional Development

Delivering a workplace culture and positive career experience that

attracts new and diverse talent and retains experienced people will

give us the ability to compete successfully and ensure long term

sustainability. The Group has a relatively low level of people turnover

as the retention and development of our internal talent remains

critical to our success. Our turnover in 2022 was 16.1%. Our high

retention rates ensure that we have a solid base on which our

people can grow, develop and achieve their potential. Our directly

employed headcount was 477 at the end of 2022.

We recruited a further 9 apprentices in 2022, which brings our

total number of current apprentices to 20 with a further 6 trainees.

Our trainees and apprentices are enrolled on formal courses of

education and supplement their learning through in house training

and experiential development.

Our preferred succession planning method is one of in-house

development and growth; consequently, we also have a number

of experienced employees enrolled on formalised education

programmes to enhance their skills and knowledge, in anticipation

of career development and promotion within the business in which

they operate. Throughout 2022, 6 of our people completed their

education programmes and a further 2 progressed onto the next

level of their employment programme. We have key pathways in

place for our apprentices and trainees to ensure our talent pipeline

continues to flourish.

Throughout 2022, our senior leaders who participated on our

Senior Leadership Development Programme (SLDP) have continued

to develop their own skills and knowledge and have continued

with coaching and mentoring activities. A further 2 participants

completed this Programme in 2022.

Throughout 2022, we also hosted our Leadership Development

Programme (LDP) which has been attended by 15 of our middle

managers. This unique programme of development and support

aims to encourage further aspiration and development and

progression potential in our future leaders. We also piloted a new

Management Development Programme (MDP) which will be rolled

out in 2023 and aims to provide Line Managers in the business with

enhanced people focused skills and behaviours..

We delivered 1,773.5 learning and development days (an average of

3.7 days per person) and there was also an unquantifiable amount

of ad hoc learning and development, which takes place on a daily

basis at our sites, offices, depots and via remote engagement. The

coming year will see a renewed learning and development provision

being rolled out across all subsidiaries which includes a focus on

developmental outputs from building capacity and capability at all

levels, provision of mentoring and other interventions, which will seek

to build resilience and increase performance amongst our people.

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Our Performance Development Review (PDR) process places

focus on a quality, two-way conversation, aimed at developing our

people, sustaining and improving performance across the business.

Our approach is to encourage this conversation throughout the

year, through a process of interim and midyear reviews, to ensure

our people know what is expected of them and have support in

achieving this.

In 2022, we took the decision to begin to have a more open and

transparent conversation about performance against SMART

objectives and how our people were progressing against those.

We introduced Performance ratings and SMART objectives, with a

focus on not only tasks and operational deliverables, but Values

and behaviours.

This is an evolving process, which will continually develop over

the years ahead through engagement with our people across the

whole business.

Health and Safety

One of our most important responsibilities as a business is making

sure that the health, safety and wellbeing of our people, partners

and the wider public is safeguarded, together with protecting the

environment in all our areas of operations.

Our team are enthusiastic experts in this area and work hard in

collaboration with our project teams and supply chain to drive

innovation and achieve best practice.

Our Performance

Our Accident Incidence Rate (AIR) and Accident Frequency Rate

(AFR) performance remains strong, and we are delighted to report

that for the eleventh consecutive year, our construction related AIR

and AFR for our directly employed people and operatives is zero.

We are pleased to report a strong overall (including subcontractors)

Accident Incidence Rate (AIR) of 276 (injuries per 100,000 persons)

and Accident Frequency Rate (AFR) of 0.14. This result is a

combination of the effectiveness of our management processes,

the commitment of our project teams, our continuous improvement

approach and Zero Harm initiatives. This strong health and safety

management culture has resulted in securing a prestigious RoSPA

Gold Medal Award for the 13th consecutive year resulting in a

RoSPA Presidents Award.

In 2022, our Construction segment successfully maintained

approval to the ISO 45001 (Occupational Health and Safety

Management System) standard, in addition to ISO 14001

(Environmental Management) and ISO 9001 (Quality Management)

standards which are assessed by Lloyd’s Register Limited.

We continue to be a Considerate Constructors Scheme Partner,

registering two of our projects as ‘Ultra Sites’ which commits the

sites to the highest standards of considerate construction in the

‘Respect the Community’, ‘Care for the Environment‘ and ‘Value

their Workforce’ scoring criteria. We are delighted to report our

average score for 2022 was 42.67 (industry average score is 39.77).

We have also enjoyed success in further industry awards including

the Constructing Excellence, LABC Awards, Chartered Institute of

Building (CIOB), Insider Yorkshire Property Awards and Generation

for Change (G4C).

Our Supply Chain

Our partnership with our supply chain is critical to our success and

we work hard to engage and collaborate with all of our suppliers and

partners to create and maintain long term successful relationships.

We have a commitment to securing the services of predominantly

local subcontractors and utilising local suppliers to minimise the miles

and emissions that working with us produces and to generate social

value for the communities in which we work. This continues to be a

strong and responsible approach for our business.

Human Rights

Our business is totally committed to supporting and working to the

UN’s Guiding Principles on Business and Human Rights. Protecting,

preserving and respecting human rights is fully embedded in our

culture and is fundamental to our Values. This commitment is

reflected in and demonstrated by our routinely updated policies

including:

•

Anti-Bribery and Corruption

•

Equality, Diversity and Inclusion

•

Ethics

•

Modern Slavery

•

Rights to Work

•

Whistleblowing

In addition to our policies, we aim to demonstrate this commitment

through all our behaviour and actions towards our people, suppliers,

partners and the communities in which we operate.

Modern Slavery

We recognise that our industry is vulnerable to the impacts of

modern slavery and therefore we have implemented and embedded

a number of measures, which seek to bring about greater

transparency and scrutiny into our various supply chains in order to

combat slavery and trafficking activities.

We keep our Human Trafficking and Slavery Statement (the

‘Statement’) under regular review and set out the activities we

undertake to reduce the risk of slavery and trafficking activities being

present within our business operations. These measures include

enforcing our Modern Slavery Policy, due diligence requirements,

and mandatory contract clauses seeking compliance by our supply

chain with appropriate anti-slavery measures. Following completion

of a Modern Slavery Assessment Tool (MSAT), we have signed up

to the Gangmasters & Labour Abuse Authority (GLAA) Construction

Protocol. In addition, we have also engaged NGOs and other

supply chain bodies to understand where our practices may be

strengthened.

We commit to collaborating closely with our people, partners,

contractors and suppliers to monitor our performance, share

knowledge, and maintain vigilance throughout our business and

supply chains.

Anti-Bribery and Anti-Corruption

Delivering our services with a zero-tolerance approach to corruption

in any form is essential for us to demonstrate our Values, long-

standing commitment to ethical behaviour and integrity, and to

uphold our reputation and image. Our Anti-Bribery and Corruption

Policy sets out the standards expected of all Group employees and

supply chain members in relation to anti-bribery and corruption and

the Board has overall responsibility for ensuring this policy complies

with the Group’s legal and ethical obligations and that everyone in

our organisation and supply chain complies.

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Board oversight

of climate-

related risks and

opportunities

GOVERNANCE

TASK FORCE ON CLIMATE-RELATED

FINANCIAL

DISCLOSURES

(TCFD)

RECOMMENDATIONS

REPORT

Compliance Statement

Over the course of 2022 Henry Boot has continued to implement

the recommendations of the Task Force on Climate-related

Financial Disclosures (TCFD), and the accompanying guidance

notes, to further embed the requirements within our wider

Responsible Business approach. The table below sets out in

more detail where we have assessed ourselves in relation to our

level of consistency with the recommendations of TCFD, and an

explanation of the steps yet to be taken where we are not currently

fully consistent. Where we have indicated ‘Full’ consistency with

the recommendations of the TCFD, this means that we believe

we have achieved the minimum of the recommendations set out,

but nevertheless acknowledge that there will be further work to

do to refine and enhance this approach in coming years. ‘Partial’

consistency indicates that we have carried out some work but are

not yet fully consistent with the recommendations. Where we have

stated we are at the ‘Beginning of the journey’ we have plans in

place to achieve full consistency but recognise that the bulk of the

work has not yet commenced and may take more than the following

Compliance Assessment Table

Provision/

Consistency

12 months to complete. The table also provides references to

other sections within this Annual Report where further detail can be

found. We expect that over the course of 2023, we will continue to

delve into this and understand the wider impacts it may have on our

strategic focus, to ensure that our strategy development is properly

debated and embedded within our operations. For this reason, as

we set out below, in some areas we have chosen to explain the

extent of current consistency with the recommendations and the

direction of travel as we move forwards.

Given that the industries represented within our Group include

construction and property development, we are aware that we are

classed as a “higher risk business” and acknowledge that we need

to continuously develop our level of disclosure to ensure that it is

more thorough and progressively advanced. This will be an area of

further development for us over the course of 2023 and beyond,

as well as involving appropriate levels of external assurance to the

risks and opportunities we identify, the scenario modelling work we

undertake, and the materiality of the financial impacts those risks

may present to the business.

Level Achieved to Date Future Developments Information

•

Responsible Business Committee established,

providing Board-level importance to all ESG related

matters, including oversight of the Group’s Climate

Change Framework, and achievement of all ESG

related targets within the Responsible Business

Strategy

•

Climate related risks and opportunities form part of

the annual risk management procedures

•

Remuneration Committee has oversight of the

incorporation of ESG related metrics into executive

remuneration

•

Skills and experience in climate issues formed part

of recent Non-executive Director recruitment and

are assessed in the Board skills assessment

•

Reporting within the Strategy Days assessed

how the business as a whole and the individual

subsidiaries had performed against ESG metrics

and targets. All strategies include ESG related

objectives

•

An extensive governance structure is in place for all

ESG related matters

•

Training and engagement sessions held with

subject matter experts and Responsible Business

Committee

•

Budgeting process accounts for all ESG

related expenditure required for achievement of

Responsible Business Strategy

•

Increased amount of ESG

updates to ExCo and Board

planned for 2023

•

With Serena Lang assuming

the role as the Chair of

the Responsible Business

Committee, we will be working

to ensure that her knowledge

and experience further develops

the role of the Committee in

interrogating areas of delivery

and focus

•

Further training and upskilling

sessions to be held with

Responsible Business

Committee, Executive

Committee and other senior

leaders within the business

during 2023

•

Strategy planning to follow

for November 2023 Strategy

Days including incorporation of

scenario modelling work into

longer term strategies, to be

reviewed by Board and ExCo,

and to further develop the

corporate objectives linking with

ESG risks and opportunities

Responsible

Business

Committee

Report, (pages

116 to 119)

Governance

Structure,

(page 87)

Director’s

Remuneration

Report (pages 120

to 136)

Risk Report

(pages 50-56)

Key:

Full compliance

Partial compliance, progress made

Beginning of the journey, plans are in place to address

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Provision/

Consistency

Level Achieved to Date Future Developments

Information

GOVERNANCE

Management’s

•

Executive Committee members are responsible for

delivering against specific targets calibrated to ensure

each business contributes to achievement of climate-

related goals, and are periodically updated about

progress against Responsible Business Strategy

•

The ESG Steering Group (comprising of the Chief

Executive Officer, Chief Financial Officer, Finance

Director, HR Director, General Counsel and Company

Secretary, and Responsible Business Manager) helps

to assess all ESG related issues including climate

issues, to support the Board, and bringing leaders

from across the Group together for a multi-disciplinary

approach. This considers progress against the

Responsible Business Strategy but also cross cutting

issues such as property environmental performance

and associated objectives

•

The Chief Executive Officer has ultimate oversight of the

Group’s environmental performance and achievements,

which is reported on to the Executive Committee along

with the Board, and disseminated down to other senior

management and more widely within the business

through planned information releases

•

Increased amount of ESG

updates to ExCo and Board

planned for 2023

•

Further training and upskilling

sessions to be held with

Responsible Business

Committee, Executive

Committee and other senior

leaders within the business

during 2023

•

Governance structure will

continue to be assessed

during 2023 to ensure it is fit

for purpose and is providing

sufficient focus to all required

areas. In addition, wider climate

issues with the potential to

impact strategic direction will

be considered more holistically

within the groups established, as

appropriate

Responsible

Business

Committee

Report,

governance

arrangements

(page 118)

Responsible

Business

Committee

Report,

management roles

on committee and

groups (page 117)

role in assessing

and managing

climate-related

risks and

opportunities

STRATEGY

Climate-related

•

These have been identified and are as set out in the

table within this report on pages 72 to 75

•

These will remain under review

on an annual basis in line with

our usual risk review process,

with the additional developments

regarding the risk review process

that are outlined on page 71

Risk Report

(pages 50 to 56)

risks and

opportunities

identified over the

short, medium,

and long term

Impact of climate-

•

Responsible Business Strategy was considered

by the Board and Executive Committee at the

Strategy Days in 2021 prior to its introduction. The

overarching objective of the Strategy is to embed

ESG into the Group’s commercial decision-making

processes

•

Strategy Days in 2022 reflected on progress

achieved in delivery of the Responsible Business

Strategy

•

Group’s five-year business planning (into which ESG

related expenditure was incorporated)

•

Scenario modelling work had not

been completed in sufficient time

prior to the 2022 Strategy Days to

enable these to be reflected within

the strategy documents and will

be completed in 2023

•

Strategy planning to follow

for November 2023 Strategy

Days including incorporation of

scenario modelling work into

longer term strategies, to address

risks and opportunities identified,

to then also be reflected more

fully within the budgeting and

financial planning process

related risks and

opportunities on

the organisation’s

business,

strategy, and

financial planning

Resilience of the

strategy, taking

into consideration

different climate-

related scenarios

•

Scenario modelling work to date is captured within

the scenario modelling section of this report

•

Qualitative scenario modelling

work is ongoing and

consideration will turn in the

next 18 months to quantitative

scenario modelling and how this

could further impact on strategic

considerations and further

financial planning

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

OUR RESPONSIBLE BUSINESS

TCFD

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Provision/

Consistency

Level Achieved to Date Future Developments

Information

RISK

Processes

for identifying

and assessing

climate-

related risks

•

As set out in the accompanying notes to the table

within this report

•

We will continue to deepen our

exploration of how these risks

are prioritised against the other

principal risks as identified, and

our assessment of their materiality,

over the course of 2023

Processes

for managing

climate-

related risks

•

As set out in the table within this report

•

Qualitative scenario modelling

work relating to the risk identified

is ongoing and consideration will

turn in the next 18 months to

quantitative scenario modelling

and how this could further impact

on strategic considerations and

further financial planning

How processes

for identifying,

assessing,

and managing

climate-related

risks are

integrated into

the organisation’s

overall risk

management

•

The Group undertakes an annual review of its principal

risks as documented in pages 50 to 56 of this report.

This review which is undertaken at a subsidiary level

includes consideration of the risks and opportunities

relating to climate change. The financial impact of

the risks is in part quantified in our NZC transition

workings, although are not material to the business.

As part of the assessment of the climate-related risks

and opportunities, the management and/or mitigation

of each item identified sets out the response, and a

decision to Treat, Tolerate, Terminate or Transfer each

relevant item following such management or mitigation

was indicated

•

We will continue to deepen our

exploration of how these risks

are prioritised against the other

principal risks as identified,

and our assessment of their

materiality, over the course

of 2023

Risk Report

(pages 50 to 56)

METRICS

AND

TARGETS

Metrics used by

•

Metrics relating to GHG emissions have been adopted

as part of overall Responsible Business Strategy – see

page 35 of the Responsible Business Report and

page 76

•

GHG emissions reduction target supported by

sub-targets focused on reduction of business travel,

fleet electrification, sustainable generator usage and

reduction of water usage

•

Remuneration related targets on GHG emissions have

been incorporated into the bonus objectives for the

Executive Committee and will also be incorporated into

LTIP objectives from 2023

•

Further work will be required

following the climate-related

scenario planning work which

will commence in 2023, to

understand the impact that these

outcomes have on the Group’s

Responsible Business Strategy

and Group Strategy, and whether

this should alter any metrics

previously determined

•

Additional metrics to be

established to incorporate the

required cross-industry, climate-

related metrics

Responsible

Business Report

(page 35)

Director’s

Remuneration

Report

(page 135)

NZC

Framework at

henryboot.co.uk

the organisation

to assess climate-

related risks and

opportunities

in line with its

strategy and risk

management

process

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Provision/

Consistency

Level Achieved to Date Future Developments

Information

METRICS

AND

TARGETS

Scope 1, Scope 2,

and if appropriate,

Scope 3 GHG

emissions, and

the related risks

•

Scope 1 and Scope 2 GHG emissions are set

out below

•

The risks related to these have not

been fully quantified and will be

the subject of further review and

assessment

•

Work to identify a partner to

assist in assessing our Scope

3 GHG emissions will be

undertaken during 2023 to

commence this work in 2024 and

beyond

Responsible

Business Report

(page 35)

Targets used by

the organisation

to manage

climate-related

risks and

opportunities

and performance

against targets

•

Targets relating to a number of environmental factors

have been adopted as part of overall Responsible

Business Strategy – see page 35 of the Responsible

Business Report and page 76

•

Further work will be required

following the climate-related

scenario planning work to

understand the impact that these

outcomes have on the Group’s

Responsible Business Strategy

and Group Strategy, and whether

this should alter any targets

previously determined

Responsible

Business Report

(page 35)

Key:

Full consistent

Partial consistent, progress made

Beginning of the journey, plans are in place to address

Governance

The Group has set up a comprehensive governance structure

incorporating a Responsible Business Committee of the Board, plus

a number of special interest groups, committees, steering groups

and working groups, which is set out in further detail on page 118

within the Responsible Business Committee Report. Through this

structure we can ensure that necessary activities are delegated to

the appropriate groups to provide the required focus to these areas,

with the Responsible Business Committee, and ultimately the Board,

maintaining overall oversight and direction. In addition, page 117 of

the Responsible Business Committee Report sets out the roles of

various senior managers within the business, and their links to the

various groups, to outline how senior management has the necessary

oversight and involvement with responsible business delivery.

Risks and Opportunities and Risk

Management Process

A risk and opportunity assessment has been carried out in

conjunction with the managing directors of each subsidiary

business, the Executive Committee, Audit and Risk Committee

and Responsible Business Committee, to identify potential risks

and review the likelihood and impact. This focussed on each area

of physical and transitional risk identified as being pertinent to the

industries in which we operate. Once completed, this was compiled

into an overall matrix of risk and opportunity, which can be seen in

the tables on pages 72-75. As this exercise has been performed in

respect of each part of the business, it has included assessment of

risk by sector (and geography to the extent it is relevant).

During 2023, we will be carrying out further work with the various

subsidiary businesses to re-review the risks and opportunities

identified, and further develop the strategy for whether these

climate-related risks should be mitigated, transferred, accepted, or

controlled. The review will also determine the potential materiality of

the financial risks that may be posed, assessed by reference to the

two scenarios that are identified within the table below, and how

this may impact on strategic direction, as well as the opportunities

that each part of the business should focus on in developing their

strategies. This can then be fully modelled within the subsidiaries’

and Group’s strategies for the Strategy Days in November 2023.

This will be reported on more fully in next year’s report. This work

needs to be carried out before determining the extent to which those

strategies may be altered by this exercise.

In relation to the timeframes considered for the risks and

opportunities identified below, these have been reconsidered

following last year’s reporting, and the Group considers short term

to be up to 2030, medium term to be up to 2040 and long term

to be up to 2050. The financial commitments required to address

the short-term risks are embedded in the Group’s short-term

budget and five-year business plan. We have taken this approach

as we recognise that the response to climate change is evolving

rapidly and, whilst it is essential to deliver cost projections for the

investment needed to tackle climate change, we must maintain

flexibility to adapt our projections to take into account changes

in the regulatory and legislative landscape and the evolving

technological response and availability.

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

OUR RESPONSIBLE BUSINESS

TCFD

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Risk Table

Low emissions scenario:

2°C warming

Transition

Risk

Potential

financial impact 2030 2040 2050 Response

In this scenario the business

Technology

Capital cost of

replacing/upgrading

plant and vehicles

Subsidiaries affected:

BP and HBC

A balanced transition to carbon friendly

plant and vehicles considering our

customer base, the Group’s NZC

targets and availability of technological

advancements. The Group have

assessed the cost of transitioning as

part of our NZC framework, including

the transition of cabins, generators and

electrification of the fleet. These costs

are included in the Group’s five-year

business plan. We will look at scenario

modelling the costs of transition in the

next 18 months.

is exposed to significant

transition risks, including more

stringent reporting regulation

and short-notice legislative

changes with requirements

to adopt new or alternative

materials and technologies

that deliver low-carbon

whole-life infrastructure

assets and buildings. It

includes associated supply

chain impacts and potential

cost increases.

Financial

Increase in supply

chain costs as their

transition costs

(including technological

and legislative) are

passed through to main

contractor/developer

Subsidiaries affected:

HBD and HBC

It remains difficult to predict the speed

at which our supply chain will transition

and the likely increase in cost to the

Group or indeed our ability to share the

cost with our customers. The Group’s

aim is to maintain healthy margins

on all developments by appropriately

fixing costs and pricing accordingly

while also supporting the transition of

our Group and others to a low carbon

economy.

Unmitigated risk Significant risk Elevated risk Low risk

Subsidiary

HBC = Henry Boot Construction

HLM = Hallam Land Management

HBD = Henry Boot Developments

BP = Banner Plant

SBH = Stonebridge Homes

RL = Roadlink (A69)

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Low emissions scenario:

2°C warming

Transition

Risk

Potential

financial impact 2030 2040 2050 Response

In this scenario the business

is exposed to significant

transition risks, including more

stringent reporting regulation

and short-notice legislative

changes with requirements

to adopt new or alternative

materials and technologies

that deliver low-carbon whole-

life infrastructure assets

and buildings. It includes

associated supply chain

impacts and potential cost

increases (cont.)

Market Demand for sustainable The Group continues to invest in

assets rapidly increase sustainable schemes and assets in

/ reduced appetite for line with Group targets and to position

assets that do not meet ourselves favourably in the market.

sustainability criteria

The increasing cost of switching

Subsidiaries affected: to sustainable options will in some

HBD, BP and HBC cases be passed to customers or be

embedded within initial appraisals,

we also expect the Group will retain

costs in some cases as a responsible

employer and where this is the case

provision is made in the Group’s

budget and business plan.

Policy

and legal

Government legislation The Group closely monitors existing

designed to reduce and emerging legislation such as

emissions (such as the Future Homes Standard and

emissions trading biodiversity requirements in advance

schemes/carbon of committing to a scheme. Appraisals

tax requirements, then fully embed additional legislative

biodiversity net gain costs which currently remain within

or Future Homes accepted target return levels.

standards) changes

specifications and

increases costs of

schemes impacting

viability.

Subsidiaries affected:

HLM, HBD and SBH

Strategic Land values Strategic Land forecasts recognise

reduce as housebuilders potential decreases in profit per

and developers look plot although we will look to begin

to pass on additional modelling the full financial impact in the

building standards costs next 18 months.

as well as additional

site planning and

infrastructure cost

requirements.

Subsidiaries affected:

HLM

Unmitigated risk Significant risk Elevated risk Low risk

Subsidiary

HBC = Henry Boot Construction

HLM = Hallam Land Management

HBD = Henry Boot Developments

BP = Banner Plant

SBH = Stonebridge Homes

RL = Roadlink (A69)

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

OUR RESPONSIBLE BUSINESS

TCFD

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

High emissions scenario:

4°C warming

Transition

Risk

Potential

financial impact 2030 2040 2050 Response

In this scenario the business

is exposed to significant

physical risks, both acute

and chronic, including

exposure to flooding, strong

winds and heat stress

resulting in damage to assets,

prolonged project delivery

timescales and more onerous

whole-of-life obligations on

buildings and assets to ensure

materials can withstand

temperature extremes.

Extreme Delayed build Current scheme appraisals make

weather programmes due to allowance for delays and contractual

conditions – extreme weather events, protections are used where possible.

Precipitation,

leading to additional We therefore do not expect any

flood, wind risk/costs. Ground material short term financial losses.

or site conditions/ In the longer term where the Group

location is affected by is unable to contractually mitigate the

climate events which risk it could result in margin erosion on

means that they are no schemes although we do not foresee

longer viable for their this resulting in scheme losses due to

intended use. the healthy margins currently achieved.

Subsidiaries affected:

HBC, SBH and HBD

Heat stress Design criteria evolved The Group remains mindful to develop

to combat overheating. sustainable assets and of the health

Construction site and well-being impact on our people.

conditions and practices While some costs will inevitably be

will need to ensure passed on to the end user there will

worker health and safety also be some financial impact on the

and well-being. Group.

Subsidiaries affected:

HBC, SBH and HBD

Flooding Already a key Flood assessments are considered

requirement of planning on all schemes with a particular focus

process. Increased on Strategic Land which can be held

number of flood plains for longer durations. In the long term

in future may reduce we could experience a reduction in

land values the volume of suitable land available

Subsidiaries affected:

leading to reduced margins or the

HLM, SBH and HBD

impairment of land values where

flooding becomes more prevalent. This

is mitigated in the medium term by the

suitable strategic land bank we hold in

prime locations. We will look to begin

modelling the financial impact in the

next 18 months.

Identified above are the primary risks to the Group – however, we continue to consider lesser risks which, if they were to increase in either

likelihood or impact, would be elevated to primary risks. These include:

•

the cost of investing in new technology to monitor our environmental impact;

•

cost of capital;

•

the valuation impact of environmental factors on investment property; and

•

increase in insurance costs.

Unmitigated risk Significant risk Elevated risk Low risk

Subsidiary

HBC = Henry Boot Construction

HLM = Hallam Land Management

HBD = Henry Boot Developments

BP = Banner Plant

SBH = Stonebridge Homes

RL = Roadlink (A69)

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Opportunities

Opportunities Description Response

Resources

Recruitment of modern thinking and

progressive people

The Group’s delivery on ESG matters, and in particular climate

change, have already impacted the recruitment process with

candidates often reflecting on this as a reason they join Henry Boot.

Financial

Availability and cost of capital to

the Group

Discussed potential targets with our funders and plan to incorporate

climate targets at our next renewal in January 2025 as a means to

reduce interest costs.

Market

Green credentials open tendering

opportunities

Diversified offerings to customers (green

products, retrofitting, redevelopment)

Increased premium on products

Environmental credentials and reporting have supported numerous

bids in the year, in particular our position on public sector framework

contracts in the construction segment.

This opportunity will be progressed in line with our NZC targets

to 2030.

Energy source

and usage

Ability to attract tenants

Lower operating costs

The Group is progressing multiple developments which are

operationally net zero and BREEAM excellent. This opportunity will

be progressed as we recycle and develop assets, including the

Group’s investment property.

Innovation and

resilience

Digital transformation

As a Group we continue to invest heavily in digital transformation and

systems as we believe this will support efficiency and effectiveness

as the Group grows. This is an ongoing opportunity with key system

upgrades currently in process.

Strategy

Currently we are in the process of carrying out qualitative scenario modelling work, the results of which are reflected (to the extent carried

out) in the risks table set out above. Over the course of the next 18 months we intend to develop this further to encompass quantitative

scenario modelling and use this to formulate a transition plan, which will specifically link to each identified risk and opportunity. The transition

plan will be discussed with the subsidiary businesses, incorporating any short-term as well as longer-term milestones, preparing for and

addressing those medium-term or long-term risks identified above.

Scenario modelling will also include the potential financial impact and will link to any relevant disclosures on this within the financial

statements, as well as linking to the relevant risks or opportunities identified. This information will then be crucial for use during the

businesses’ preparation for its November 2023 Strategy Days, enabling the factors identified to be incorporated within the strategies to be

considered by the Board and Executive Committee at that time.

Metrics and Targets

The metrics we currently set relate predominantly to GHG emissions, though we are conscious that additional metrics will be required in relation

to climate related risks and opportunities, capital deployment, internal carbon pricing and remuneration. We have a target to reach NZC for

all direct (Scope 1 and 2) GHG emissions by 2030. In achieving this target, we are aiming to fully electrify our fleet of vans (and make initial

progress in adapting our fleet of heavy goods vehicles), decarbonise operational emissions, and adapt our properties. Our Decarbonisation

Trajectory (see below) plots our projected path to achieve NZC.

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

OUR RESPONSIBLE BUSINESS

TCFD

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Carbon Trajectory

4.0

3.0

2.0

1.0

0.0

19 20 21 22 23 24 25 26 27 28 29 30

2019 2020 2021 2022 2023 2024 2025 2030

Total direct emissions –

scope 1 and 2 (tonnes of CO2e)

3,313

2,562

2,706

2,930

Carbon reduction plan total direct

emissions - scope 1 and 2

(tonnes of CO

3,313

3,204

3,095

2,985

2,875

2,765

2,653

1,392

Total emissions (tonnes of CO

4,404

3,357

3,654

3,958

Total energy consumed –

scopes 1, 2 and 3 (MWh)

n/a

11,551

12,600

13,647

In 2020, the Group worked with external consultants to establish a carbon reduction trajectory. From a 2019 baseline, reductions were

forecast based on the Group NZC strategy which included fleet electrification, generator replacement and retrofitting of controlled sites

amongst other activities. The trajectory forecast a reduction in direct emissions to 2,653 tonnes by 2025 and to 1,392 tonnes by 2030. The

Group is meeting the reduction targets albeit having been largely impacted by the pandemic in 2020. Although our actions in respect of

decarbonisation may evolve due to changes in legislation, and technology, we still believe that our 2025 and 2030 targets can be achieved.

As seen below, we saw a moderate increase in our direct GHG emissions in 2022. This is partly due to increased productivity associated

with the end of the COVID pandemic restrictions. It has also been exacerbated by a reliance on diesel powered generators for construction

operations where it has not been possible to access electricity via a mains supply.

Despite these factors, we are pleased that we have made strong progress in our efforts to decarbonise our operations. Our energy usage

decreased by 37% less gas and 9% less electricity used when compared with our 2019 baseline and business travel reduced by 34% (also using

a 2019 baseline) as our colleagues adapted to new ways of working (these figures are not inclusive of Stonebridge Homes). We trialled a number of

innovative technological solutions (including sustainable site-based generator solutions) which we hope will support a reduction in site based GHG

emissions. We remain committed to our decarbonisation targets and are optimistic that we will achieve these.

In addition to our direct emissions, we are committed to reducing our indirect GHG emissions (Scope 3). In 2023, we will be undertaking

a project to analyse our indirect emissions ahead of establishing a reduction target and action plan. This target will require significant

collaboration with our people, supply chain and customers to ensure we take a collaborative approach to reaching NZC.

In addition to our decarbonisation targets, we have also established a range of additional targets (see page 35) focused on the reduction of

waste, water and plastic usage. Utilising circular economy principles, we seek to expand on our strong existing performance to implement

commercial processes that utilise resources and avoid creating waste. We are also committed to implementing nature stewardship into our

commercial delivery and to innovate and work with key partners to enhance natural habitats and ecosystems in the environments in which

we work.

This holistic approach to tackling the impacts of climate change will support our business to adapt to the evolving framework of regulation

and stakeholder expectations, and to protect natural capital and reduce environmental damage.

Original

Trajectory

Actual

1,392

tonnes

offset

Tonnes

(k CO

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Henry Boot Group CO

footprint by source

Henry Boot Group CO

e emissions

2022

Tonnes

2021

Tonnes Trend

Scope 1: Combustion of fuel and operation of facilities (Location based)

2,453

2,303

Rise

Combustion of fuel and operation of facilities (Market based)

2,453

2,303

Scope 2: Electricity, heat, steam and cooling purchased for own use (Location based)

477

403

Rise

Electricity, heat, steam and cooling purchased for own use (Market based)

–

Total direct emissions

2,930

2,706

Rise

Total direct emissions per employee

5.5 tonnes CO

No change

Scope 3: Upstream and downstream indirect emissions (Location based)

1,028

948

Rise

Upstream and downstream indirect emissions (Market based)

906

834

Total emissions (Location based)

3,958

3,654

Rise

Total emissions per employee

7.4 tonnes CO

No change

Employee numbers are based on the monthly average for the year.

Carbon Emissions by Segment

Henry Boot Group Energy Usage

2022

MWh

2021

MWh Trend

Total energy consumed (scopes 1, 2 and 3)

13,647

12,600 Rise

per 1,000 sq. ft

of investment

property with

Property investment and development

1,089

9.29

757

11.47

communal areas

Fall

Land development

0.94

1.17

per employee

Fall

Construction

2,740

21.12

2,739

26.68

per £1m of turnover

Fall

Group overheads

1.17

122

1.85

per employee

Fall

Total gross controlled emissions

3,958

3,654

Our carbon emissions for the year ended 31 December 2022 were calculated using the GHG Protocol Corporate Accounting and Reporting

Standard, which provides requirements and guidance for companies calculating their GHG emissions and in accordance with the March

2019 BEIS ‘Environmental Reporting Guidelines: Including streamlined energy and carbon reporting guidance’ and the EMA methodology

for SECR Reporting.

Our direct and indirect operational carbon emissions are shown in the tables above. These sources fall within our consolidated financial

statements. We do not have responsibility for any emission sources that are not included in our financial statements. Overall, the Group’s

carbon emissions have increased by 8% when compared with the previous year, although remains comparable on a tonnes per employee

basis. When compared to 2019 pre COVID levels the Group has reduced carbon emissions by 10%; this equates to a decrease of 0.7

tonnes per employee.

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

2022

intensity

2021

2022

ratio

2021

intensity

Henry Boot Group

tonnes of

ratio tonnes

Intensity

Trend of

e emissions

of CO

basis

intensity

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

GOVERNANCE

Board of Directors 80

Executive Committee 82

Chairman’s Introduction 84

Governance at a Glance 86

Corporate Governance Report

–

Division and Responsibilities 87

–

Board Leadership and Company Purpose 90

–

Composition, Success and Evaluation 99

–

Nomination Committee Report 104

–

Audit and Risk Committee Report 111

–

Responsible Business Committee Report 116

–

Directors’ Remuneration Report 120

–

Annual Report on Remuneration 127

–

Directors Report 137

–

Statement of the Directors’

Responsibility in Respect of Financial Statements

143

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

DARREN

LITTLEWOOD

Chief

Financial

Officer

A R B

BOARD OF

DIRECTORS

Date of appointment

October 2015

Independent

Yes

Additional roles held

Non-executive Chairman

of Nexus Planning Limited,

Board Representative for

Paradise Circus Project for

the Greater Birmingham

& Solihull Local Enterprise

Partnership.

Brings to the Board

Key strengths:

•

Wide-ranging experience

in senior leadership and

practitioner roles across

the built environment

•

Property development

and planning knowledge

in both the public and

private sector

Peter has a wealth

of experience in the

management and leadership

of professional service

firms, together with senior

practitioner expertise across

the built environment, from

both public and private sector

perspectives.

Date of appointment

January 2020

Independent

Additional roles held

Previously Director of British

Land PLC, and Non-executive

Director of Songbird PLC.

Brings to the Board

Key strengths:

•

Strong strategic and

corporate experience

accumulated as past

longstanding Director

•

Strong property and

leadership experience

•

Extensive experience

in delivering significant

property development

projects

Tim joined Henry Boot as

Chief Executive Officer

in January 2020. He is

responsible for developing

and implementing Group

Strategy and has ultimate

responsibility for Group

profitability. Tim leads the

engagement with all the

Company’s stakeholders,

including interaction with

investors and our people. He

is also the Director responsible

for all health, safety and

environmental matters.

Date of appointment

January 2016

Independent

Additional roles held

Director of the Company’s

six principal operating

subsidiaries and Member

of the CBI Yorkshire and

Humber Regional Council.

Brings to the Board

Key strengths:

•

In depth Group and

financial experience

•

Establishing and

delivering strategy whilst

protecting assets in

the Group

Darren joined the Group in

1999 prior to his appointment

as Group Finance Director in

2016. He became qualified as

a member of the Chartered

Institute of Management

Accountants in 2007 and is

responsible for all financial

and risk matters relating to the

Group. He is heavily involved

in investor communications

and, along with Tim Roberts,

is also responsible for

communicating strategy and

results to both private and

institutional investors.

Date of appointment

October 2015

Independent

Yes

Additional roles held

Non-executive Chair of

Made Tech Group plc, Non-

executive Director of Gateley

(Holdings) Plc, Non-executive

Director of Pollen Street PLC

and Non-executive Director of

Braemar PLC.

Brings to the Board

Key strengths:

•

Extensive financial and

investment banking

experience

•

In depth knowledge of

strategy and governance

Joanne has over 30 years’

experience in accountancy

and investment banking,

including with Panmure

Gordon, Evolution Securities,

Williams de Broe and

Pricewaterhouse. She is a

Chartered Accountant and

a Fellow of the Chartered

Institute for Securities &

Investment and of the ICAEW,

and is a member of the

ICAEW’s Corporate Finance

Faculty. Joanne became the

Senior Independent Director

on 26 May 2022.

Key

Committee Membership

Nomination Audit and Risk Remuneration Responsible Business Committee Chair

JOANNE

LAKE

Senior

Independent

Director

TIM

ROBERTS

Chief

Executive

Officer

N B R

PETER

MAWSON

Chair

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

N B

N A R

N A R B

Date of appointment

March 2011

Independent

Additional roles held

Chairman and Partner in

the London office of Saffery

Champness Chartered

Accountants, which he

joined in 1987. He is a Non-

executive Director of Saffery

Champness business in

Guernsey.

Brings to the Board

Key strengths:

•

Significant strategic land

knowledge

•

Sound financial

background and

experience

As a partner in the Private

Wealth and Estates Group at

Saffery Champness he has

many years’ experience in the

UK strategic land market and

brings that experience to Board

decision making generally but

particularly to Hallam Land

Management Limited.

Date of appointment

October 2015

Independent

Yes

Additional roles held

Non-executive Chairman

of Social Communications

(Leeds) Limited, Chair of the

Morley Town Deal Board and

Director of G R Jennings

Properties Ltd.

Brings to the Board

Key strengths:

•

Widespread industry

experience in retail and

property

•

Successful track record

of delivering significant

development projects and

working with a wide range

of stakeholders.

•

Extensive experience in

asset management

•

A variety of executive

and non-executive roles

over the years within the

private, public and third

sectors

Gerald has over 30 years’

experience in the retail and

property industry and the

delivery of major development

projects and adding value

through proactive asset

management.

Date of appointment

August 2022

Independent

Yes

Additional roles held

Chairman of Eleco plc and

Non-executive Director of

Ainscough Crane Hire Ltd.

Brings to the Board

Key strengths:

•

Extensive strategic

leadership, growth and

digital transformation

experience

•

Experience in

industrial, engineering

and construction

environments and

culturally diverse markets

•

Strong sustainability

credentials, specifically in

the Built Environment

•

Diversity of thought to

the Board having worked

across multiple industries

Prior to joining Eleco plc in

2014, she previously held

executive roles as Enterprise

Client Executive at Invensys

(now Schneider Electric),

Global VP of Transformation

at BP plc and as an Executive

Consultant at Capgemini

Ernst & Young.

SERENA

LANG

Non-executive

Director

GERALD

JENNINGS

Non-executive Director

and

Designated Non-executive

Director for Workforce

Engagement

JAMES

SYKES

Non-executive

Director

Date of appointment

October 2018

Independent

Additional roles held

Trustee of St Luke’s Hospice,

Sheffield and member of

Business in the Community’s

(BITC) Yorkshire and

Humber Board.

Brings to the Board

Key strengths:

•

Significant legal,

compliance, regulatory

and corporate

governance experience

•

Robust knowledge of all

aspects of commercial

law and practice

Having obtained her

qualifications at the

Universities of Nottingham

(LLB Hons) and Sheffield

(PG Dip LP), Amy qualified

as a solicitor in 2006 and

as a Chartered Secretary in

2019. She is an experienced

lawyer with a demonstrated

history of working in-house

in the public sector and

construction industry. With

a broad range of expertise

across contract and

commercial law and practice,

construction matters,

corporate governance and

compliance matters, Amy

has worked at Henry Boot

PLC since 2014, becoming

Company Secretary in 2018

and General Counsel in 2021.

AMY

STANBRIDGE

General Counsel and

Company Secretary

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

EXECUTIVE

COMMITTEE

Date of appointment

Managing Director in 2016

Brings to the

Executive Committee

Nick Duckworth MRTPI

began his career in a private

sector planning consultancy,

Phillips Planning Services,

in 1990. He left there in late

1992 and joined Hallam

Land’s then newly established

Northampton office. In 1997,

Nick set up the South West

office of Hallam Land in Bristol

and became the Regional

Manager. He was appointed a

Director in 2002 and became

Managing Director in 2016.

Date of appointment

Managing Director in 2018

Brings to the

Executive Committee

Edward Hutchinson BSc

(Hons), MRICS started his

career in quantity surveying

before quickly progressing

into project management.

He joined Henry Boot

Developments in 2004 as

a Project Manager rapidly

rising to the position of Senior

Project Manager in 2006.

Edward was appointed a

Director in 2012 and became

Managing Director in 2018.

In January 2021, he became

a board member of the

Yorkshire Board of LandAid,

following which he assumed

the position of Chair in

January 2023.

Date of appointment

Managing Director in 2021

Brings to the

Executive Committee

Tony Shaw joined Henry Boot

Construction Limited as a

Trainee in 1985 and with a

background in production

planning and project

management, he has held

a number of positions in the

business including Regional

Manager and Operations

Director. Tony is North East

Regional Chair and a Director

of the National Federation of

Builders (NFB) and a Director

of the Yorkshire Builders

Federation (YBF). Tony took

over as Managing Director in

July 2021.

Date of appointment

Managing Director in 2021

Brings to the

Executive Committee

Jonathan Fisher joined

the Henry Boot Group in

2021, bringing with him

extensive experience in

hospitality and facilities

management. He began his

career as a General Manager

with Whitbread before

transitioning into sales and

management within facilities

management. At the Algeco

Group, Jonathan worked as

an Account Director before

being promoted to Regional

Director, overseeing four

production facilities. He also

served as UK Sales Director

before becoming Managing

Director at Banner Plant. In

addition to his professional

achievements, Jonathan is

a foundation governor at his

local high school.

JONATHAN

FISHER

Banner

Plant

Limited

TONY

SHAW

Henry Boot

Construction

Limited

EDWARD

HUTCHINSON

Henry Boot

Developments

Limited

NICK

DUCKWORTH

Hallam Land

Management

Limited

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Date of appointment

Chief Executive in 2010

Brings to the

Executive Committee

Darren Stubbs has a

wealth of experience in the

housebuilding industry and

a proven track record in

delivering successful housing

developments, spanning

a 39-year career. Darren

founded Stonebridge Homes

in 2010, a jointly-owned

company with Henry Boot

PLC. Darren is the Chairman

of The Yorkshire Children’s

Charity and Vice Chair of

Zarach, a charity who

provide beds to children living

in poverty.

Date of appointment

HR Director in 2022

Brings to the

Executive Committee

Rachel White joined Henry

Boot PLC in 2001 as a

graduate. She has held a

number of roles in the HR

team, before taking the role

of HR Director in July 2022.

Rachel leads the delivery

of our People Strategy to

meet the requirements of

our internal stakeholders

including employee relations,

succession planning, talent

management, diversity and

inclusion, wellbeing, reward

and recognition, employee

benefits and employee

engagement.

Rachel is also a Trustee

Director for Henry Boot

Pension Trustees Limited

and is a member of the

Governance Committee for

the Henry Boot PLC Group

Stakeholder Pension Plan.

In 2022, Rachel became a

Trustee of The Children’s

Hospital Charity and is also a

volunteer befriender to lonely

older people through b:Friend.

RACHEL

WHITE

Henry

Boot

PLC

DARREN

STUBBS

Stonebridge Homes

Limited

Additional Executive

Committee Members

AMY

STANBRIDGE

General Counsel and

Company Secretary

DARREN

LITTLEWOOD

Chief

Financial

Officer

TIM

ROBERTS

Chief

Executive

Officer

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

CHAIR’S

INTRODUCTION

PETER

MAWSON

CHAIR

Dear Shareholders,

his year has seen quite a change for us as a

Board, most significantly with the retirement

of Jamie Boot as our Chairman, my

appointment to the role and the recruitment

of a new Non-executive Director, Serena

Lang. This represents a substantial shift for

the Board, with us reflecting on the loss

of Jamie’s many years of experience and

expertise in navigating the challenges faced by the business

during his tenure, and we wish Jamie all the best in his

well-deserved retirement. It has also presented us with the

scope to progress our succession planning approach, and I

am naturally delighted to have been given the opportunity to

step into the role as the Chair. It is my intention to ensure that

we carry on the great work we have had underway for many

years under Jamie’s direction in our approach to governance,

and also make further progress on our journey towards

greater diversity and inclusion throughout the business,

whilst strengthening our succession and leadership support.

We wholeheartedly welcome Serena to her position on the

Board and also, from the beginning of 2023, as the Chair of

the Responsible Business Committee, an area in which she

brings a wealth of knowledge and expertise.

During 2022 we further developed our methodology for

strategic planning and, during a year in which there has been

a substantial degree of turbulence, this tested our adaptability

to not only weather this challenging time to come but also

used it as an opportunity to reflect on areas of the business

in which we can progress some material programmes of

modernisation. I believe this is a testament to how robust and

aspirational our ambitions are. This is something that we have

debated thoroughly as a Board and I am confident that, with

the enhanced Executive Committee support and input that

we now receive, we are set up well to move forwards.

Succession Planning and Diversity

As a Board, we have been carefully thinking about our

wider succession planning approach and how we ensure

a diverse representation of views on our Board, which

you can read about in more detail in the Nomination

Committee Report on pages 104 to 110. Further work on

our recruitment ambitions will be delivered during 2023

and 2024, which I believe will bolster the resilience and

expertise of the Board and we are mindful that whilst doing

so we want to maintain the excellent working relationships

we have always enjoyed as a team. To facilitate our future

approach to recruitment, we have also rethought the ways

in which we analyse the skills and expertise of our wider

senior leadership team, which you can read more about on

pages 107 to 108.

Strategy

The Company continues to enhance its methods of

reviewing Company strategy, holding our Strategy Days in

November 2022. We were not only joined by the Executive

Committee but a range of other senior leaders from within

the business, who presented on and debated key aspects

of both subsidiary and the wider Group approach on issues

such as people, marketing and IT. By restructuring these

discussions, the Board had the ability to obtain greater

insight of these key areas and fully analyse our resilience,

ambition and focus. Whilst the main strategic direction

of the Group has not changed, by being able to discuss

issues directly with a range of senior leaders, it also gave

a great opportunity to us to interact more widely and gave

visibility to important members of the wider leadership

team. More details on this can be found on page 91.

Leadership Development and Oversight

In a number of areas this year, the Board has overseen

initiatives intended to reshape our approach to reward

and recognition, leadership development and broader

succession issues. The launch by the Group of an

overarching Reward Strategy has been a major move

forwards for us. Ensuring that this compliments the

existing Remuneration Policy, as well as being rolled

out thoughtfully, this has been overseen by the Board

and Remuneration Committee. Thinking about how we

communicate programmes such as this also touches

on how we bring our leaders along with us on important

initiatives and we have overseen a programme of

development activity for our Executive Committee, as

well as some other senior leadership upskilling sessions,

to support this. The next phase of our leadership

development is Aspire, our Management Development

Programme, will launch in early 2023 and alongside this we

are reviewing wider succession plans and talent grids to

ensure that the oversight of this area is robust.

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Responsible Business

Delivering on our Responsible Business

goals remains a key focus for the Board

and, as well as embedding our Responsible

Business Committee activity in 2022, we

welcomed a range of guest speakers to

help us develop our thinking on key topics.

Areas developed this year included our

climate change framework, health and

wellbeing approach as well as volunteering

and charitable giving. You can read more

about this in detail on pages 116 to 119.

In addition, to strengthen our governance

in this area, an ESG Steering Group,

which feeds into the Responsible Business

Committee, was formed. I look forward

to working closely with Serena Lang as

she assumes the role as the Chair of

the Responsible Business Committee to

continue refining its operations and ensuring

that we support the business with its

ambitions in this area.

The following report sets out our

structure, governance processes and key

activities undertaken by the Board and its

Committees during 2022. We welcome

feedback from our stakeholders and I would

encourage you to get in touch with us on

any governance matters. I hope to see

many of you at our AGM on 25 May 2023

(see page 208 for full details).

PETER

MAWSON

CHAIR

12 April 2023

Code

Compliance

During 2022 the Board and its Committees have continued to keep their focus on ensuring wherever

possible that compliance with the Code can be achieved, improving its operations and governance.

This is demonstrated throughout this Corporate Governance Report and of particular note are the

Code principles below with references to further detail as applicable.

Given our long history as a family business, and as a FTSE Small Cap company, we have adopted

alternative solutions to the provisions where we believe this is appropriate. The Code recognises that

good governance can be achieved by other means, and the Board believes the approach we have

taken is the most appropriate for the Company and its shareholders, while remaining consistent with

the spirit of the Code.

Division and responsibilities

Read more on pages 59 to 60

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

CORPORATE

GOVERNANCE REPORT

DIVISION

RESPONSIBILITIES

UK Corporate Governance Code 2018

The Board is committed to achieving high governance standards and

following best practice. Where we do not strictly follow the Code,

considerable thought is given to ensuring that our approach aligns with

the spirit of good governance, helps to promote high ethical standards

and sustains the success of the Company over the long term.

For this financial year, as a premium listed company, the Company

was subject to compliance with the UK Corporate Governance

Code 2018 (Code). Further details of how the Code has been

applied are set out throughout this Corporate Governance section

and a statement of Code compliance is presented on page 118.

The Board

The names, responsibilities and other details of each of the

Directors of the Board are set out on pages 80 and 81. Jamie

Boot resigned as a Director and Chair on 26 May 2022, with Peter

Mawson stepping into the Chair role. Serena Lang joined the Board

as Non-executive Director on 1 August 2022. Biographies for each

Director are shown on page 80 to 81 and roles and responsibilities

can be viewed on the website.

Peter Mawson

Non-executive Director

Tim Roberts

Chief Executive Officer

Darren Littlewood

Chief Financial Officer

Joanne Lake

Board composition

Board tenure

Board gender

Male

72%

Female

28%

Senior Independent Director

James Sykes

Non-executive Director

Gerald Jennings

Non-executive Director

Serena Lang

Non-executive Director

Jamie Boot

Non-executive Director

Meetings attended Eligible meetings

Throughout the year there have been six scheduled Board

meetings attended by all Directors, and two separate Board

meetings to approve one-off, urgent matters. In addition to the

formal Board meetings, two Strategy Days were held in November

with a selection of sessions attended by the Executive Committee

and senior management.

The number of Committee meetings are reported in each

Committee report.

Board composition and independence

The governance structures in place are designed to reflect the

individuality of the Company and the composition of both its

institutional shareholders and individual shareholders, many of

whom have family ties to the Company. James Sykes is classed

as non-independent, having been appointed to represent the

substantial shareholdings of the Reis family interests (see page 139).

The Company values the importance of its independent Non-

executive Directors who provide objective advice and challenge the

Executive Directors. Their diverse backgrounds in various sectors

and knowledge of the wider business environment are critical when it

comes to strategy development. The Non-executive Directors meet

without the Executive Directors present, usually the evening before

the Board meetings and on other occasions throughout the year.

Executive

29%

Independent

Non-executive

43%

Independent

Non-executive Chair

14%

Non-independent

Non-executive

14%

6+ years

72%

0-2 years

14%

3-5 years

14%

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

CORPORATE

GOVERNANCE REPORT

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Employee

Forums

Responsible

Business

Committee

Land Promotion

Hallam Land

Management

Property

Investment and

Development

Henry Boot

Developments

Stonebridge

Homes

Executive Committee

You can read

about the

structure for the

Board’s oversight

of climate-

related risks and

opportunities in

the Responsible

Business

Committee report

on page 118.

Audit and

Risk

Committee

Nomination

Committee

Remuneration

Committee

Group

Employee

Forum

Subsidiary

Employee

Forums

Construction

Henry Boot

Construction

Banner

Plant

Road

Link (A69)

DIVISION

RESPONSIBILITIES

Governance framework

Board

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Key features

Board

•

The Board maintains a formal schedule of matters reserved for its decision that cannot be delegated

elsewhere (available to view on the website)

•

This schedule is reviewed at least annually and includes:

−

establishing long-term strategy and objectives

−

overseeing culture and stakeholder engagement

− approval of annual budgets, financial results and the dividend policy

−

approval of capital expenditure above an agreed amount

− the determination and monitoring of the Company’s principal and emerging risks including the

effectiveness of internal controls

•

When matters require Board approval, management is required to present a detailed paper which includes

any input or feedback received from stakeholders, assessment of key risks and how the matter links to Group

strategy

Board

Committees

•

Delegated authority from the Board to look after specific areas of responsibility

•

Each Committee operates under its own written Terms of Reference which are reviewed at least annually and

are available on the website

•

Report to the Board and work alongside the other Committees eg the Responsible Business Committee

works alongside the Audit and Risk Committee to fully consider the TCFD reporting requirements

•

Responsible Business Committee formed in 2021 – see page 116 for more information

•

Have access to external consultants where necessary

•

See pages 104 to 135 for more information on the work of each Committee

Executive

Committee

•

Members are set out on pages 82 to 83

•

Re-formed in December 2020, the Board has reviewed and approved their updated Terms of Reference and

delegated levels of authority

•

Meets ten times a year to debate strategic issues that affect the Group, to collaborate and share best practice

and make recommendations to the Board

•

Appointments to the Executive Committee are overseen by the Nomination Committee and the Board.

Members of the Executive Committee attend the Board meetings regularly and are part of the Board

Strategy Days.

Subsidiary

Boards

•

Day-to-day operational management of the subsidiary companies sits with their respective boards and MDs

•

The CEO and CFO sit on all the principal subsidiary company boards

•

The MDs are invited to attend the Strategy Days and the Board meetings on a rotational basis to discuss

business plans and strategy

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

CORPORATE

GOVERNANCE REPORT

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

BOARD

LEADERSHIP

AND

COMPANY

PURPOSE

Enabling long-term sustainable success

Henry Boot’s long-term success is founded upon a clear purpose and supporting strategy,

which considers the views and needs of its many stakeholders.

Details of the Board’s contribution to the long-term success of the Company whilst ensuring

responsible governance, strategy implementation and oversight of operations is set out below.

Contributing to the

Group’s strategy in its

dedicated Strategy Days

on page 91

Committed to engaging

with wider stakeholders

and hearing their voices

in decision-making

on page 58

Developing and

embedding our approach

to ESG matters, through

the launch and embedding

of our Responsible

Business Strategy

on page 32

Supporting

Henry Boot’s

long-term

success

Oversight of the

Group’s sustainable

business model

on page 20

History of managing

gearing, and the balance

sheet, effectively through

the cycle

on page 57

Consideration of the

risks and opportunities

facing the business (with an

additional focus on climate-

related risks and opportunities)

and aligning with strategy

on page 50

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Board Leadership and Company Purpose

The Board has a rolling 12-month Forward Business Schedule which is regularly reviewed to check that there is appropriate balance across the

year between forward-looking vs backward-looking discussion and between strategy, risk, operations and governance. It includes routine items

that are included on every agenda such as health and safety and financial updates as well as one-off topical items or decisions for approval.

The schedule ensures that all stakeholder groups are discussed and, where appropriate, attendance from management and colleagues across the

different businesses is encouraged.

Area

Stakeholders

considered

Link to

Strategy What was reviewed and considered?

Contributing to the

Group’s Strategy

Days

The Board held a productive session over two days joined by the Executive Committee

and other senior management. Strategies for each of the subsidiary businesses were

debated with a renewed focus on the types of opportunities we want to pursue and

how to build upon existing relationships with customers. Alongside this, time was

dedicated to ensuring that the strategies for some of the central support functions

(IT, Marketing and People) were aligned and able to help the businesses deliver their

long-term ambitions. The key themes, actions and decisions from the sessions were

captured, shared with senior management and will be regularly reviewed.

History of managing

gearing and the

balance sheet

effectively through

the cycle

Throughout our 135-year history, Henry Boot has successfully navigated its way through

many economic crises and cyclical downturns thanks to its sustainable business model.

The Board monitors the level of gearing at every meeting ensuring that it remains within

the agreed target range. More than ever, the Board has considered how best to employ

capital to maximise returns and make progress against the agreed strategic objectives.

Before coming to any investment decision, the Board considers gearing, the Group’s

positioning in each of its key three markets and the level of risk involved.

Consideration of

the risk facing the

businesses

The Audit and Risk Committee and the Board review the Group’s principal and

emerging risks twice a year (see pages 50 to 56 for more information) but given the

level of uncertainty in the market, the Board has taken a heightened approach to risk

management.

At the start of the year, the Board concentrated specifically on the risks posed to the

business from the war in Ukraine and the measures that had been put in place to mitigate

them, such as having 97% of the committed development programme as fixed cost.

Risks relating to individual investment decisions are considered in detail before approval,

particularly for speculative schemes where the Board actively manages the amount

of speculative vs pre-sold or pre-let projects within the committed development

programme.

Overseeing the

health and safety

arrangements in

place

As one of Henry Boot’s core strategic objectives, safety remains a key priority at

Board level. Health and Safety KPIs are discussed at every Board meeting alongside

reporting on accidents and near misses.

The Group Health & Safety Manager meets with the Board to present the annual

Health and Safety reports for each of the principal businesses and outlines his

recommendations for improvement.

Commitment to

development and

increasing our

knowledge of the

business and culture

In October, the Board held an interactive session with the Vice Chair of the TCFD to

discuss his role on the TCFD steering group and good practice around reporting. Other

development opportunities during 2022 included a discussion with a Sustainability Lead

from Natwest Bank who specialised in the real estate and housing sector to explore

key themes and trends and also a refresher course on Directors’ statutory duties. An

extensive programme of training and development has been prepared for 2023 with a

focus on the ESG agenda.

On an operational level during 2022, the Board visited the Setl and Neighbourhood sites

in Birmingham, Phoenix 10 in Walsall and New Horizon in Nottingham. Informal lunches

have been held with various teams and offices following Board meetings and most

Non-executive Directors have also attended a sample of subsidiary board meetings

across the 12 months providing opportunities to engage with talent throughout the

organisation and give an insight into culture and health and safety practices.

Group strategic priorities

Safety People Growth Delivery

Stakeholders

Employees

Customers

Suppliers

Pensioners

Shareholders

Communities

Environment

OVERVIEW

STRATEGIC REPORT

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GOVERNANCE REPORT

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

BOARD

LEADERSHIP

AND

COMPANY

PURPOSE

Our Culture

The Henry Boot Group adopted its Purpose, Vision and Values in 2017 after extensive work had been carried out through numerous Group

employee engagements – this is referred to as the ‘Henry Boot Way’. By approaching the definition of our culture in this way, we ensured that

we could capture the thoughts of employees through a ‘bottom-up’ approach and articulated a culture that reflected all. Since then, we have

been on a journey to reflect the Henry Boot Way throughout our business, and it remains a key element in our Group strategy. The Board

recognises that not only does it have a key role to play in living the Values itself, but also the need to ensure that the overall culture of the Group

is embedded within its strategy and general approach to business. Over the course of 2023 and 2024, the Board along with the Executive

Committee will be looking again at culture, how it is understood throughout the business and how it is monitored, alongside work on the brand

value proposition and employee value proposition, which will be reported on in subsequent years.

Our purpose

To empower and develop

our people to create

long-term value and

sustainable growth for

our stakeholders

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

How the Board monitored culture in 2022

Action

Link to culture, and

effectiveness of

engagement method

Values upheld

or impacted

Outcomes, development

of culture and addressing

culture issues

Engagement

surveys

The cycle of undertaking and

reflecting on the outcomes of

the main employee survey has

now become well established

by the Board, Executive

Committee and subsidiary

boards. To continue the

process adopted in 2021,

the Group Employee Forum

(GEF) was asked to reflect on

some of the areas identified

as requiring further focus

within the survey results, and

attended a Board meeting

to discuss their views and

proposals for addressing the

issues raised.

During 2022 and in support of

our revised Reward Strategy,

we also engaged with our

people to establish the value

they placed on the various

employment benefits offered

by the Group and to establish

if there were any gaps in

our offer.

The outcomes of an

engagement survey which can

build a picture year on year

regarding the shift of attitude

by employees relating to

culture are essential. It gives

a good baseline for the Board

to measure against, and as

a method of engagement it

ensures that it reaches all areas

of the Group. In addition, being

able to hear directly from GEF

members on issues that impact

them and their areas of the

business enables the Board to

understand directly whether

those employees feel that the

culture of the business is being

upheld, and where it is not,

what employees feel could be

done to address this.

During the cost of living crisis

our people are looking to

the Group for guidance and

support more than ever in

different ways, by engaging

with our people to provide

valued benefits we hope to

have alleviated some of the

pressure being felt.

Loyalty

Integrity

Collaboration

The Board reviewed the

survey outcome as a whole

and through the direct

engagement with the GEF,

focussed on areas that had

not scored as well within

the survey, such as ability to

balance work with home life,

and switch off from work.

The Board and Responsible

Business Committee

have incorporated these

suggestions within the Health

and Wellbeing Strategy,

launched in early 2023.

We continue to say that our

people are our greatest asset,

and at times of challenge,

we can provide stability and

support in various guises.

This goes to the heart of the

culture of the Group, that we

are nothing without the people

who make our business a

success.

Health and

Wellbeing

The Health and Wellbeing

Strategy, and the work that

has been done to produce this

(including substantial input by

the Group Employee Forum)

and launch it, is covered in

more detail on page 65

The formulation of the Health

and Wellbeing Strategy

reflects the outcomes of our

engagement surveys and

issues that have particularly

resonated with our employees,

as set out above. Engagement

methods in developing our

Strategy included:

−

GEF reflection and Board

presentations (see more on

page 96)

−

Health and Wellbeing

Working Group

−

HR Management team

−

A range of other internal

engagements

Respect

Adaptability

Integrity

The Health and Wellbeing

Strategy discussed above

aims to develop our culture as

a progressive and proactive,

supportive employer of choice.

OVERVIEW

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GOVERNANCE REPORT

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

BOARD

LEADERSHIP

AND

COMPANY

PURPOSE

Action

Link to culture, and

effectiveness of

engagement method

Values upheld

or impacted

Outcomes, development

of culture and addressing

culture issues

Employee

forum

As well as the direct Board

interaction outlined above,

and as described on page

96, linkage to the Board is

provided by the designated

Non-executive Director

appointed to liaise with the

GEF, so that the entire Board

can benefit from hearing the

feedback and respond to

issues as necessary.

The Group and Subsidiary

Employee Forums provide

a key method of employee

engagement on several issues

including cultural matters

and perceptions throughout

the Group. The designated

NED feeds back on issues

discussed by the GEF at every

Board meeting, to ensure that

relevant issues are taken into

account in decision-making

as well as the general view

across the Group on matters

impacting on culture. Bringing

together interested members

of the Group, who can speak

directly to the designated NED,

means that a cross section of

views from around the Group

can be heard.

Collaboration

Respect

The Board, represented by

the designated NED, attended

all GEF meetings in the year

and provided insight to the

GEF around several matters,

including the socialisation of

our new reward strategy for

our people. Other NEDs and

the Executive Directors have

also attended the GEF by

invitation where relevant to

the agenda. Views of the GEF

have been taken into account

when discussing those issues

at the Board, as reported in

more detail on pages 96 to 97.

Whistleblowing

response

In 2022, a whistleblowing

report was received in respect

of cultural issues within

Henry Boot Construction,

in particular in relation to

the position of and working

practices impacting women

within the business.

Following receipt of the

whistleblowing report,

immediate action was taken

by the CEO supported by the

HR Director to implement an

investigation into the allegations

made. This was overseen by a

director from one of our other

subsidiaries, and took the

form of interviews and data

gathering to create a robust

assessment. The report was

shared and accepted by the

board of HBC and formed a

basis on which a cultural action

plan has been developed

and is being implemented

during 2023.

Integrity

Loyalty

Respect

We have always encouraged

our people to speak up if there

is something that is causing

concern, recognising that this

may not always be possible

through overt routes, so a

whistleblowing line is in place

for those times where a direct

report might not be possible.

Our ongoing engagement

with our people through

various routes means that

the use of our whistleblowing

line is minimal and that any

perceived issues can be dealt

with openly. This matter has

also received Board oversight

and guidance to the subsidiary

affected, ensuring that the

culture issues identified are

addressed.

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Action

Link to culture, and

effectiveness of

engagement method

Values upheld

or impacted

Outcomes, development

of culture and addressing

culture issues

Head office

proposals

As explored in detail within

our section 172 statement

on pages 58 to 61, the

broad and deep consultation

process undertaken as part

of the Board’s decision to

relocate its head office in

Sheffield resulted in a number

of engagements across

the Group.

A number of methods of

communication and feedback

were employed during the

consultation exercise on the

proposed head office move,

such as:

− Webinars

− Town hall meetings

−

Feedback channels via

both email and confidential

portals

−

The establishment of

Group-wide Working

Groups on particular areas

of interest

Further outlines of these

methods of engagement are

contained at page 61

Adaptability

Delivery

In order to take our people

with us on this change journey,

we adopted a structure of

Working Groups to focus on

specific aspects of the project

which were highlighted by our

people as being important to

them, with a remit to develop

their thinking into broader

Group wide policies. It was

therefore key that there was

cross Group representation

on these working groups,

who feedback their views into

the project Steering Group,

Executive Committee and the

Board to shape the ultimate

proposals. We are immensely

proud of our culture and our

heritage, it was therefore fitting

that these two aspects were

the sole focus of one of the

Working Groups.

Strategy Days

The Group’s People Strategy,

alongside the wider strategy

of the operational businesses,

was discussed at the 2022

Strategy Days with the Board

and Executive Committee.

The culture of the business

and how this can be influenced

by the senior leadership

teams, including the Board,

was a key part of the People

Strategy and also an underlying

element of the Marketing and

Communications Strategy,

focusing on the offer to our

people through its employee

value proposition.

Delivery

Integrity

The Board and Executive

Committee recognise that

culture is the key to success,

and that without a positive

and engaging culture even

the best formulated strategies

will struggle. We have placed

our people at the heart of

all we do and therefore the

focus that the Board and

Executive Committee are

giving to the People Strategy

as a key lever of change and

also a shared priority will be

more meaningful to our wider

internal stakeholders.

Responsible

Business

Committee

The Responsible Business

Committee (see page 116 for

the work of the Committee

during the year) is a further

strand of connection to the

wider workforce as well as

to the Group’s customers,

suppliers, professional service

providers, professional

associations and community,

charity and education

partners.

The Committee focusses on a

number of issues that relate to

culture in practice across the

Group, and how the culture of

the business is also perceived

by external stakeholders and

as employees, as well as the

embedding of the Values within

our Responsible Business

Strategy.

Respect

Integrity

Delivery

The view of employees

and external stakeholders

influenced the shaping

of a number of policies

and strategies supporting

the delivery of our overall

Responsible Business

Strategy, including elements

such as health and wellbeing

(as discussed above), EDI

Strategy, charitable giving,

community partnerships

and volunteering. These are

intrinsic to delivering the

established culture of Henry

Boot as a business that cares

about its links with the wider

community and its people.

OVERVIEW

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CORPORATE

GOVERNANCE REPORT

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

BOARD

LEADERSHIP

AND

COMPANY

PURPOSE

Employee Engagement

As we often state, Henry Boot’s greatest assets are its people

and as such are a key focus across the organisation, including at

Board level, to ensure that employee views are being taken into

account. The Board has established two key methods of direct

Board employee engagement, also demonstrating compliance with

Provision 5 of the Code:

•

the founding of a network of employee forums across the

Group; and

•

the appointment of a designated Non-executive Director of the

Board to liaise with the Group Employee Forum.

In addition, there are a number of ways that employee engagement

is addressed in our Responsible Business report on page 117, and

in this section, we outline the ways in which that engagement has

specifically taken place with the Board.

Employee forum

Our Group and subsidiary Employee Forums, launched in

2019 and have continued to meet to discuss a range of key Group

issues during 2022. Each main wholly-owned subsidiary

(and Henry Boot PLC) have their own ‘Subsidiary Employee

Forum’ (SEF), the Chair of each of which meets to form the ‘Group

Employee Forum’ (GEF).

The Group is constantly looking to develop and strengthen its

approach to employee engagement, and recognises the Employee

Forums as a pivotal route to hearing the voice of employees.

Subsidiary Employee Forums have been asked to strengthen their

offering in a number of ways, by recruiting new members, and

refreshing those holding the role as Chair of each SEF. SEF Chairs

have also appointed a Deputy Chair, who has been able to shadow

them at certain meetings, and have been invited to subsidiary board

meetings to represent their views directly to their respective boards.

The GEF has worked with the Marketing and Communications team

to ensure that the outcomes of their work and engagements are

more widely publicised to the Group.

Outcomes

A number of the key issues discussed by the GEF, some of which

have been referred up to the Board or elsewhere throughout the

Group for resolution and/or discussion and feedback, or have

otherwise been overseen by the Board are outlined here:

What employees requested

or were consulted on Method and outline of engagement How the Board responded

Employee engagement

survey results

As referred to in Our Culture (page 92), in 2022 the GEF

were tasked by the PLC Board to undertake a research

project focused on the lowest scoring questions in the

2021 Employee Engagement Survey. These were:

“I am able to quickly switch off and reenergise when not

at work” and

“Over the last 12 months my workload has felt

manageable.”

As an increased workload is likely to result in an inability

to switch-off from work, they decided to address both

topics together under a “wellbeing” umbrella. The GEF

undertook extensive engagement with people from

across each of the subsidiary businesses and shared

their proposals with the Board in September 2022.

The outcomes of the GEF’s work

consolidated the responses into a series

of proposals including:

•

The provision of guidance and

training for line managers on how to

manage agile working and working

from home

•

Raising awareness of the need for

individuals to create self-imposed

boundaries between work and home,

including rest breaks

•

Providing education around available

technology

•

Reviewing resourcing levels in

locations that had an upturn in

turnover.

Following their initial presentation to the

Board, their proposals were incorporated

into the Health and Wellbeing Strategy

considered by the Executive Committee

and Responsible Business Committee,

detailed further in the Responsible

Business Committee Report on pages

116 to 119.

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

What employees requested

or were consulted on Method and outline of engagement How the Board responded

Reward strategy

As outlined in our 2021 Report, the GEF were

instrumental in bringing forward priorities in relation

to transparency in reward and also promotion and

performance management. Throughout the latter part

of 2021 and into early 2022 the Executive Committee,

with external guidance and internal resource, worked

collaboratively to create a Reward Strategy that

would be relevant to all our subsidiaries despite their

market differences. Our people, through the GEF and

other networks, were consulted and involved in the

development of several key aspects of the Reward

Strategy and the subsequent roll out. This has been

undertaken on a phased basis to ensure adequate

socialisation of what is a significant step for the Group

towards total reward transparency.

The Board and management through

the Executive Committee supported

the development of a significantly

different approach to reward in the

Group. Engagement with the GEF will

continue in order to refine and add to the

communication as we continue with our

journey towards reward transparency.

Head office relocation

Following the decision to relocate our Head Office, the

Group consulted widely with all those individuals directly

affected by the decision to allow the dialogue to be

relevant and also to take into account the views of our

people. The formation of several Working Groups which

included colleagues from other parts of the Group not

directly affected by the decision has been of importance

to ensure that the cultural shift that will ensue from the

relocation (agile working, collaboration, more visibility)

is not just limited to those in the Isaacs Building but

also has influence Group wide and informs Group

protocols. Due to the expansive nature of this remit, the

GEF has been engaged in the process albeit on a more

peripheral basis than other projects. More detail on this

can be found on page 61.

The Board and management, through

regular updates from the Isaacs Steering

Group, have had oversight of the direction

of travel being proposed on a number

of key initiatives. Through extensive

consultation, which has included externally

supported stakeholder interviews with

the design team, it is anticipated that the

move to Isaacs Building will be pivotal to

the next phases of our modernisation and

transformation agenda.

Induction

Our Group induction programme was relaunched in

2022 for the first time since the Covid pandemic. An

initial proposal was shared with the GEF for feedback

from our people before a final solution was delivered.

The first in-person session was piloted in November

2022. Feedback from participants and stakeholders

was positive, highlighting the collaboration and

networking benefits, plus opportunities to learn about

other subsidiaries, with minimal enhancements required.

Phase two is underway with an eLearning module

created to give the history of the Group and services

offered by subsidiaries, allowing the in-person event to

focus on the here and now. While the eLearning module

content will remain stable, we expect the in-person

event to continuously be updated to reflect participant

feedback and changing projects.

Engagement with the GEF in relation to

induction and onboarding will continue

in order to refine and ensure relevance of

the programme.

CORPORATE

GOVERNANCE REPORT

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

CASE

STUDY

Peter Mawson – Chair engagement visits

Since his appointment as the Chair in May 2022, Peter has

undertaken a programme of visits and engagements with

employees across the Group, a summary of these are set

out below:

Banner Plant

•

Visits from June 2022 into 2023 to: Leicester Plant depot;

Rotherham Access & Tools depot; Derby Plant & Tool Hire

depot; Leeds Tool Hire depot; Leicester Tool Hire depot;

and Chesterfield Tool Hire depot. Also carried out a ‘Meet

the Team’ event at the Dronfield Headquarters, Plant

Depot & Accommodation Depot in October 2022.

Hallam Land Management

•

Visits to Northampton team and Bristol team in June/July

2022 followed by local site visits. Leeds team engagement

in August 2022, as well as with the management team

in Sheffield and the London and Glasgow teams in

November 2022.

Henry Boot Construction

•

Site visits to Block H, Block G & Kangaroo Works

in Sheffield in July 2022, to Cocoa Works in York in

August 2022, and a ‘Meet the Team’ at the Dronfield

Headquarters in October 2022.

PLC

•

‘Meet the Team’ events from July to September 2022,

including: finance team; legal, company secretarial

and insurance teams; HR team; IT department and

Responsible Business Manager.

Q&A WITH RECENTLY JOINED GEF MEMBERS

Matt Pruce, the Chair of the Hallam Land Management SEF, is

a Senior Development Planner. Lee Pratt is the Depot Manager

of Banner Plant’s Leicester Depot, and Chair of the Banner

Plant SEF. As both of them have joined the Group Employee

Forum within the past 18 months, we asked them for their

views on their roles on the GEF.

Q: How have you found it being part of the GEF this year?

Lee: I have really enjoyed it. I joined the GEF as Chair in

December 2021, and since then it has been a bit of a

whirlwind, as the first meeting with the GEF was to discuss our

proposal on Health and Wellbeing to be raised with the Board

in March 2022. However, I have loved every minute and really

feel as a group the GEF has made a change in the business.

Matt: I have found being part of the GEF a very rewarding

experience, it’s been great to work with my fellow forum

members to understand views from across the business and

have such positive dialogue with Executive Committee and the

Board about our approach and feedback.

Q: Is the GEF supporting the culture of the business

and the work of the Board?

Matt: The GEF continually strives to engage with and listen

to our colleagues to understand the key matters within the

Stonebridge Homes

•

Meetings with various leaders within the business from August

to November 2022.

HBD

•

‘Meet the Team’ events in Leeds in August 2022, and in

Manchester, Glasgow and London offices in November 2022,

as well as the management team in Sheffield.

Roadlink

•

Visit to the Road Link team at Stocksfield in August 2022.

This has enabled Peter to hold one-to-one meetings with teams

and individuals across the business, to provide visibility of his role

as Chair and to get to know as many of our people as possible,

facilitating meaningful discussions on issues relevant to each of the

businesses.

“It was really important to me that, having become the Chair,

I was able to commit time to have some quality discussions with

our people across the businesses, to introduce myself and get to

know people on a personal level. I believe this helps to open up vital

conversations and enable me to also get to know what the priorities

are for our Group, and how I can help to facilitate these.”

Peter Mawson, Chair

workplace. Each year we focus on one key topic area which

we have identified through this engagement and make a set

of recommendations to the Board on how we can improve the

business which will ultimately influence its culture and priorities.

Lee: We discuss with all our subsidiaries ways to improve the

business. Using ideas from our employees creates a massive buy

in, and with that and the PLC Board taking on all the ideas we can

all build a better future for the business as one.

Q: In what ways do you feel that having a seat at the GEF

helps people within your subsidiary to be heard?

Lee: I feel that by having a seat, I am the voice of Banner Plant,

speaking for all the employees and making sure all their views are

heard as a collective. The Banner Subsidiary Employee Forum

team are collecting lots of views that we then discuss, and it

is then my responsibility to make sure that their opinions are

understood by a wider audience. It helps in a massive way as we

are making changes as a business as a result of their views.

Matt: Although all of the Henry Boot subsidiaries work within

the property and construction industry, our working practices

differ from company to company, and therefore our lived working

experiences differ. Being Hallam’s representative means I can

relay and make sure the key issues of my colleagues are heard

by ExCo and the Board.

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

COMPOSITION,

SUCCESSION

AND

EVALUATION

Board performance review

Although Henry Boot is not required to conduct an externally

facilitated performance review, as it sits outside the FTSE 350, the

Nomination Committee did seriously consider whether to engage an

external provider for 2022. Whilst the value of such a process was

fully appreciated, the Committee concluded that it was not the right

time to conduct such an exercise and would review the decision

again in 2023.

A formal and rigorous internal performance review was undertaken

for the Board, its Committees, the Chair and each individual Director.

Attendees at Board meetings were again asked to complete an

anonymous questionnaire seeking their thoughts on preparing for,

attending and receiving feedback after the meetings. This step

offered an additional layer of rigour to the evaluation process.

The process and results are set out below.

Process

STEP

In March 2022, the Nomination Committee

considered whether to conduct an externally

facilitated performance review but agreed to

proceed with an internal approach.

Questionnaire deadline, results

collated and reports written.

STEP

The Board discussed and agreed an

approach in September 2022.

At the year-end, results were reviewed

with the Board and respective Committees,

and actions were agreed for 2023.

Progress against the 2022 actions

was also discussed.

STEP

Question content was agreed with the

respective Chairs and the questionnaires

issued. 1:1 interviews were also arranged

with Peter Mawson to discuss individual

performance and training needs.

Mid-year reviews will be carried out in

summer 2023 to discuss performance

against the agreed actions before a full

review at the year-end.

Board focus areas:

•

Overseeing the development

of the marketing, branding and

communication approach

•

Allowing time for idea generation

and innovation

•

Improving and maximising the

Board attendee experience

Areas where the Board

scored strongly:

•

Collaborative and welcoming

environment

•

Clear oversight of the

work undertaken by the

executive team

•

Sufficient time and focus

dedicated to discuss

strategic issues

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

CORPORATE

GOVERNANCE REPORT

COMPOSITION,

SUCCESSION

AND

EVALUATION

100

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

AUDIT

AND

RISK

Customer

Regular updates to the Board on the

development of the customer feedback

processes for each business and review where

direct Board involvement would be beneficial

Agenda

Review the Forward Business Schedule in H2

with the aim of reassessing agenda structure and

priorities

Key Project Oversight

Introduce a more structured process for

monitoring projects that have received Board

approval and increased focus to be given to

capturing lessons learned

Board Visibility

Continue to seek additional opportunities to

increase interaction between the Board and the

wider business, including informal meetings and

presence within offices, particularly to familiarise

Peter with the Group and its people upon him

taking up the role as Chair

•

Following an initial conversation in December 2021, an update on the approach to customer engagement

and the wider communications and marketing strategy was discussed at the July 2022 meeting

•

Group Marketing and Communications Director presented an update at the November Strategy Days

•

An approach for 2023 was agreed at the December 2022 meeting

•

Forward Business Schedule brought to the Board in January and July 2022

•

More streamlined and harmonised reporting approach agreed with ExCo members

•

More papers have been moved out of the main Board pack into an additional reading shelf to prioritise

other items on the agenda and/or provide simpler updates

•

Post completion report for all reserved matter projects (and any other exceptional projects) to be

brought back to the Board for review

•

Lunch with HBC senior management in February 2022 and Birmingham office in July 2022

•

GEF invited to the Board for the March and September meetings and also to the AGM

•

Board attendance at the town hall meeting to discuss the future of the Head Office

•

Visits around Birmingham to meet site-based staff in July 2022

•

Video from Peter sent to all employees in May 2022

•

Peter has visited every regional office, seven Banner depots and a number of construction sites, as

well as meeting each of the teams at Banner Cross Hall and Dronfield (see page 98 for more details)

Action areas for 2023

Brand

Innovation

Culture

Oversee the marketing, branding and

Build time into the Forward Business Schedule to

Formulate an approach to understanding and

communications strategy as it develops

concentrate on innovation, idea generation and

assessing culture within the business

and is rolled out

opportunity identification

Internal controls

Monitor and implement (as required) the new

requirements arising from the BEIS consultation

Climate-related risks

Evolve our approach to the assessment of

climate-related risks and climate scenario

planning in line with TCFD recommendations

Independence Policy

Refine Company policy and protocols for

maintaining independence from the external auditors

•

KPMG internal audit of financial controls undertaken to the standards anticipated by the audit reform

requirements, to identify current gaps and requirements

•

Further updates to be provided when confirmation is provided on the full detail of the requirements

•

Discussion held at July Responsible Business Committee regarding direction of travel on scenario

planning work, to be progressed alongside Scope 3 emissions work

•

Benchmarking exercise ongoing to look at disclosures and reporting by other companies on TCFD

to inform discussions on approach and budgeting for 2023

•

TCFD report for 2022 ARA has been reviewed in line with all best practice guidance from a number

of regulatory and big 4 sources to improve disclosures. More work on incorporating risk and

opportunities into scenario planning to be undertaken in 2023

•

New policy approved and in place

Action areas for 2023

Training

New Audit Reform

Risk Review

Cyber & IT approach

Provide specialist training for

Processes

Agree new risk review

Oversee a wholesale review of the Group’s cyber

the Committee on the new audit

Begin internal preparations to

procedures to be implemented

and IT security approach, receiving updates

reform when the guidance is

our systems and processes to

and rolled out in 2023

arising from the cyber internal audit of 2022 but

finalised

be in the best position to adapt

(supported by Board and ExCo

placing these into a broader perspective of the

to the new audit reform

training)

overall risk management for IT and cyber

Progress during 2022

2022 action areas

Progress during 2022

2022 action areas

BOARD

101

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Executive Succession

Review succession plans for each ExCo

member and those prepared by the MDs of

each business

Skills Matrix

Re-evaluate the approach to the skills mix

on the Board, ensuring that skills required to

deliver the Group’s future strategy are fully

considered

Diversity

Work with recruitment partners to ensure

that the long list and short list for Board

appointment is adequately diverse to find

the best possible candidate for the role

EDI

Continue to monitor and support EDI

initiatives across the Group with the

corresponding link that this represents in

providing progress against diversity targets

in the Board Diversity Policy

•

Detailed discussions on formailisation of succession plans deferred until March 2023 following the 2022

performance review process when the talent grids were updated

•

Further work on the talent grids to be undertaken in 2023

•

Skills matrix reviewed and revised approach taken to also include ExCo

•

Skills carefully considered for the role description for Board recruitment and will be considered for future

recruitment to address skills gaps so far as possible

•

Use of Facet5 for Board members considered

•

Women on Boards (WoB) co-appointed to recruit new Non-executive Director with a view to improve

diversity on the Board

•

Diverse long and shortlist provided by Norman Broadbent as lead recruiter, including WoB candidate

•

Improved diversity of skills and gender balance due to changes on the Board

•

Further improvements planned for future recruitment activities

•

EDI training rolled out across whole Group during 2022

•

Directors supported People targets included in the Responsible Business Strategy through work with

Responsible Business Committee (exceeded 2022 Group gender targets)

•

Inclusion of diversity related objectives within executive remuneration in conjunction with the

Remuneration Committee

•

EDI Steering Group meeting in September attended by Joanne Lake

•

Board Diversity Policy refreshed with updated FCA targets

Action areas for 2023

Diversity & Inclusion

Diversity Reporting

Reverse Mentoring

Talent Grids

Hold a session with the EDI

Oversee the development of

Oversee a reverse mentoring

Continue to develop succession

Steering Group to gain insight

wider diversity reporting in

programme with ExCo members

planning and talent grids for ExCo

into barriers to recruitment /

categories other than gender

and Board members

and other senior leaders within the

progression and understand

(eg ethnicity, disability)

business

how this could be improved

Progress during 2022

2022 action areas

NOMINATION

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

CORPORATE

GOVERNANCE REPORT

COMPOSITION,

SUCCESSION

AND

EVALUATION

102

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Executive Committee pay

Review the salaries and structure of the Executive

Committee members’ variable pay to ensure

a consistent approach and alignment with the

Executive Directors and the wider workforce

Workforce remuneration

Monitor the roll out of the new workforce strategy,

seeking feedback from the Group Employee

Forum at various stages

•

ExCo salaries were benchmarked as part of the reward strategy project and information included in

the September 2022 papers. Further benchmarking carried out throughout the year where needed

•

ExCo Bonus and LTIP structure discussed in early 2022 and revised in September 2022 to bring

ExCo members in line with the Executive Directors and the wider workforce strategy

•

LTIP award increased and 25% of Annual Bonus now deferred into shares

•

Meeting held between the Group Employee Forum and Gerald Jennings and Tim Roberts in

February 2022 to discuss alignment of reward between Executive Directors and the new workforce

reward strategy

•

Board approval for the new reward strategy was given in July 2022

•

Update on reward strategy implementation and employee communications in September 2022 and

December 2022

•

Opportunity for all directors to meet the GEF twice a year informally in March and September

Action areas for 2023

Workforce communications

Oversee improved communications between the

Committee, ExCo and employees particularly

with regards to the roll out of the workforce

reward strategy and Performance review process,

seeking feedback from the GEF at various stages

Target setting

Ensure targets for Executive Directors are

sufficiently stretching at the time of setting and

seek advice from advisors on best practice and

market expectations

Workforce reward

Check for consistency across workforce benefits,

particularly with regards to pension contribution

2022 action areas Progress during 2022

REMUNERATION

103

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Specialist speakers

To engage with a series of specialist guest speakers who will inform the Committee

on a variety of ESG topics including the regulatory and legislative framework

Training

Working with the Responsible Business Manager and Company Secretary, to identify

and commission specialist third parties to provide training and/or updates on the

ESG regulatory and legislative framework to the Committee and the workforce

Engagement

To engage with all Henry Boot working groups, including the Group Employee Forum,

focusing on responsible business throughout the year to understand their roles,

opinions, and aspirations

Best practice

To identify peers (in our sector and beyond) that are performing well on ESG and

continually work with the Responsible Business Manager to benchmark Henry Boot’s

performance

•

Marcos Navarro of Natwest Bank joined the Committee and

Executive Committee in June 2022 to discuss ESG approaches,

particularly in relation to the housing market and key themes and

trends.

•

In addition, Graeme Pitkethly of Unilever met with the Committee

and Executive Committee in November 2022 to discuss his role

on the TCFD Steering Group and the expectations of the market

regarding good practice in TCFD reporting.

•

The Committee has liaised closely with the Company Secretary

and Responsible Business Manager to identify focus areas

where training and upskilling could provide improved knowledge

and performance.

•

A Training Programme is currently under development for

implementation in 2023. This will include training and guidance

on the ESG regulatory framework, climate change, and health

and wellbeing.

•

Committee Members have been appointed as Sponsors of

the Group’s responsible business focus areas. Joanne Lake

(EDI Sponsor) attended the EDI Steering Group in September

2022 to engage them in a discussion on performance and

focus. Gerald Jennings continued to liaise closely with the

Group Employee Forum with a particular focus on community

engagement.

•

The Committee continued to proactively engage with the

Responsible Business Manager to identify peers (both within

our sector and the broader market) who perform strongly on

ESG. This information has been used to continually benchmark

Henry Boot’s approach and performance against competitors

and peers.

Action areas for 2023

Materiality

Specialist

Training

Engagement

Best practice

Assessment

speakers

Work with the Responsible

To engage with Henry Boot

To identify peers (in our

To support the

To continue to

Business Manager and

working groups focusing

sector and beyond) that are

development and

engage with a series

Company Secretary, to identify

on responsible business

performing well on ESG and

delivery of the

of specialist guest

and commission specialist

throughout the year to

continually work with the

materiality assessment

speakers who will

third parties to provide training

understand their roles,

Responsible Business Manager

to be undertaken with

inform the Committee

and/or updates on the ESG

opinions, and aspirations

to benchmark Henry Boot’s

key stakeholders

on a variety of ESG

regulatory and legislative

performance

topics including

framework

the regulatory and

legislative

framework

2022 action areas Progress during 2022

RESPONSIBLE

BUSINESS

CORPORATE

GOVERNANCE REPORT

COMPOSITION,

SUCCESSION

AND

EVALUATION

104

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

“This year we have seen a lot of exciting

developments in our approach to succession

planning, development, diversity and skills.”

Review of the year

n order to evolve a number of key initiatives this year,

the Nomination Committee (Committee) met five times

during 2022 to review and discuss matters such as

succession planning, leadership development and

talent management, diversity and inclusion, and skills.

You can read an in-depth review of the approach we

have taken to the Board Chair and Non-executive

Director recruitment, how we have taken steps during

this process to support greater diversity and inclusion within

our Board, and thought carefully about the appropriate

ways of undertaking our recruitment activity to constantly

strive to balance on our Board in as many areas as possible

including in relation to the mix of skills and experience.

We have also continued to broaden our understanding

of the talent below the Board level, and have monitored

the Senior Leadership Development Programme and the

Leadership Development Programme, to provide practical

skills to our managers. This has helped to inform the

Committee’s oversight of wider talent grids for the entire

business to ensure that succession planning throughout

the business, not just at Board level, is more developed.

Time has been spent reviewing the skills, knowledge and

overall effectiveness of the Board and its Committees, as

well as rationalising the memberships of our Committees

for Code compliance and time commitment purposes, the

results of which are set out in this report.

Those serving as members of the Committee for 2022 were

myself, Joanne Lake, Gerald Jennings, Jamie Boot and

James Sykes. Within the year Serena Lang was welcomed to

the Committee following her appointment to the Board, with

Joanne Lake stepping down as a Committee member, and

Jamie Boot also stepping down, having retired in May 2022.

On behalf of the Board and the Committee, I am pleased

to present the Directors’ Nomination Report for the year

ended 31 December 2022.

PETER MAWSON

CHAIR OF THE

NOMINATION

COMMITTEE

NOMINATION

COMMITTEE

REPORT

JAMES

SYKES

COMMITTEE

MEMBER

JOANNE

LAKE

COMMITTEE

MEMBER

GERALD

JENNINGS

COMMITTEE

MEMBER

JAMIE

BOOT

COMMITTEE

MEMBER

SERENA

LANG

COMMITTEE

MEMBER

Nomination Committee attendance key

Meetings

attended

Eligible

meetings

Following a review of Committee memberships, Joanne stepped

down as a member of the Nomination Committee with effect from

September 2022

Jamie retired in May 2022

Serena joined the Committee with effect from her appointment on

the 1 August 2022

105

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Board Succession Planning

and Chair Appointment

The Committee continued the work commenced in 2021 regarding

succession planning for Board, reviewing its proposed activity for

2023/2024 alongside its ambitions in relation to diversity and inclusion,

as well as the need to plan for the future and also to consider

appropriate methods of addressing outcomes of its skills evaluation.

Recruitment of Non-executive Director

Committee

memberships

Read more on

pages 108 to 110

External recruitment partners were selected by the Committee to assist

with the recruitment process for a new independent Non-executive

Director to the Board. The Committee’s appointed partner was

Norman Broadbent, who was used in conjunction with Women on

Boards, to help the Committee shape its requirements for the role and

to propose strategies to achieve greater diversity on the Board.

January 2022

Recruitment timeline and approach approved by Nomination

Committee

February 2022

External recruitment partners appointed

March 2022

Candidate briefing pack and role profile issued to recruitment

partners

May 2022

Longlist of candidates received, shortlisting for interviews

June 2022

Initial informal conversations held with five shortlisted

candidates; list reduced to two

July 2022

Final interviews held with shortlisted candidates and Serena

Lang selected and recommended to Board for approval of

appointment

August 2022

New independent Non-executive Director appointed

Chair Appointment

Q & A with Peter Mawson

Q: What are your thoughts about the Chair recruitment process?

A: Having taken soundings from across the Board, from key

stakeholders and from the Executive team, there was universal

agreement that an appointment from within the existing group

of Non-executive Directors would be in the best interests of

the Group. The CEO, in consultation with the HR Director,

ensured a rigorous assessment and review process for those

of us who were prospective candidates, ultimately leading to

a formal interview involving both Executive and Non-executive

Directors. I am, of course, delighted to have been invited to take

on the role but, more importantly, I do feel that the Board had

confidence in the robust approach to Chair selection.

Board and Chair succession planning

Read more on page 110

Q&A with Serena Lang

Q: What attracted you to a role as a Non-executive at

Henry Boot PLC?

A: The core themes that attracted me to Henry Boot are:

1. A really robust business that thinks long term and has the

ability to ride the economic waves with its portfolio across

the Built Environment;

2. A strong focus on sustainability;

3. A clear sense of purpose; and

4. A strong leadership team with a great culture from Board

level down

Q: What were your thoughts about the recruitment and

induction process?

A: The recruiters were able to clearly articulate the business

and its strategy, and had been well briefed. There was clarity

around the skillsets required from the appointment that would

be additive to the existing Board. As a result of the above I

was quickly able to determine that this was a business I was

interested in and could add value to. After the initial research

call, there were 3 interviews which allowed for the appropriate

due diligence on both sides.The induction was extensive and

really beneficial and I was able to join a strategy meeting 3

months in with an understanding of each of the businesses.

Q: What do you anticipate will be your areas of focus within your

Board and Committee roles?

A: There is significant expertise on the Board, particularly in

relation to sector and financial knowledge. I anticipate being

able to specifically add value in the areas of sustainability,

digitising the built environment, strategy and marketing.

Henry Boot PLC Board

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

CORPORATE

GOVERNANCE REPORT

COMPOSITION,

SUCCESSION

AND

EVALUATION

Nomination Committee Report

106

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Q: What steps did you think were important to take in relation to the

handover from Jamie Boot as the previous Chairman?

A: Jamie was always going to be a hard act to follow! I cannot ever

hope to have his intimate knowledge of the business, but I have

felt it important to become visible within the business, meet

with as many of our people as possible and be available to all

of our stakeholders. I am conscious that I and the Board have

responsibility for a business which has a long and successful

history, with a strong legacy of continuity and family ownership.

At the same time, we are a Group which is constantly evolving

and modernising in this ever more complex and uncertain

world, and we continue to attract major institutional and private

investors who recognise our commercial strength built on that

legacy. I feel it is important to strive to maintain that balance as

we drive successfully forwards.

Q: What do you believe will be your key areas of focus as the Chair

of the Board in 2023?

A: I believe we have a clear and well-expressed strategy but

maintaining strategic oversight will continue to be a focus for

me. We need to further develop Board succession planning

and achieve greater diversity as a part of that succession plan.

Meanwhile, despite our commercial strength, our excellent pool

of committed, talented people and a unified, inclusive culture we

have a way to go in projecting our brand and market position

effectively across our markets. This will be a key focus for me.

Primarily, though, my core role will be to support our people

across the Group. It is their committed contribution that makes

Henry Boot a great business and allows us successfully to

deliver on behalf of all of our stakeholders.

The Committee took the informed decision not to appoint an

external recruitment partner to select a new Chair, considering

instead that maintaining continuity of experience was vital to ensure

a smooth transition to a new Chair. However, the Committee

considers it to be a major step to have an independent Non-

executive Director taking the Chair role, and that the approach

taken ensures a good balance of independence alongside

maintenance of the knowledge acquired from a Director who has

been on the Board for a number of years.

Other matters of note and next steps

As a consequence of me having taken up the role as Chair of the

Board, the Senior Independent Director position has been assumed

by Joanne Lake. The Board took the decision to retire the role of

Deputy Chair, which was previously held by Joanne, as it is not

considered to be usual for a company of this nature.

Further independent Non-executive Directors will be appointed during

2023 and 2024, replacing those approaching their 9-year tenure,

to ensure that Board membership is progressively refreshed. These

recruitments will take into account the need to ensure sufficient time

for new Non-executive Directors to be assimilated into their roles,

particularly where it is anticipated that they will be assuming a Chair

role for one of the Board Committees. We are conscious that with the

retirement of Joanne Lake in 2024, one of the recruitment activities

will need to ensure that a successor has recent and relevant financial

experience in order to be able to fulfil the Code requirements for

Audit and Risk Committee Chair. In addition, there is anticipated to

be a further period during which the flexibility permitted by Provision

19 of the Code, will be utilised to allow me to remain in my role as

Chair past the nine-year period of tenure. This is to ensure that all

new Non-executive Directors who have been recruited have had the

opportunity to develop detailed knowledge of the business, before

becoming eligible to be considered for the Chair role.

The anticipated timeline for future Non-executive Director recruitment

is as follows:

March 2023 sign off preferred approach

April 2023 finalise person specification and role profile as

well as preferred recruitment partner

May 2023 preferred recruitment partner to commence

seeking candidates for long list

August 2023 shortlisting

September 2023 Committee members meet shortlisted

candidates informally

October 2023 formal interview of preferred shortlisted

candidates to select appointee, for

recommendation to the Committee

January 2024 appointee commences role as Non-executive

Director, enabling a period to shadow Joanne

as Audit and Risk Committee Chair until

September 2024 at which point they will

assume the role

January 2024 finalise person specification and role profile

as well as preferred recruitment partner,

with refreshed look at any required skills or

experience

March 2024 preferred recruitment partner to commence

seeking candidates for long list

May 2024 shortlisting

June 2024 Committee members meet shortlisted

candidates informally

July 2024 formal interview of candidates to select

appointee, for recommendation to the

Committee

August 2024 appointee commences role as Non-executive

Director.

The Committee fully recognises the commitments within its Board

Diversity Policy (see page 108) to achieving greater diversity and

inclusion within its members and will be seeking to meet these

objectives within these recruitment activities, whilst acknowledging

that it will take time to be able to put these objectives fully

into action through this succession approach. In addition, the

Committee will be considering the extent to which it can address

any outcomes from its skills assessment in the recruitment activities,

whilst acknowledging that it will also need to fulfil any other

regulatory requirements in relation to Committee Chair requirements

and Committee membership.

First appointment (future ARC Chair)

Second appointment

107

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Committee membership

Given that membership of the Committees increasingly requires greater time commitments than previously (for meeting attendance and pack

reading), the memberships were reviewed by the Committee and refined. In order to enable a complete induction experience for Serena Lang

as our newest Non-executive Director, membership of all Committees for her has currently been allocated, though at a later point this could be

reviewed if required. As a result, Committee membership from September 2022 was revised as follows:

Joanne

James

Gerald

Peter

Serena

Tim

Darren

Audit and Risk

Remuneration

Nomination

Responsible Business

C= Chair M= Member

Those Non-executive Directors who are not formal members of

any given Committee are very welcome to attend if their time

commitments allow, and all Board members still have access to

all the relevant papers and packs on our Board portal, as well as

the Board reviewing and ratifying any necessary decisions of the

Committees.

Leadership succession planning

Succession planning at all levels within the Group is an area of

significant interest and the Board has continued to support the

development of our people through a variety of mechanisms

including formalised Leadership Development Programmes,

coaching and mentoring.

For Executive Directors and Executive Committee, the Committee

regularly reviews the talent grids which are overseen by our HR

Director with input, where appropriate, from Executive Directors,

Executive Committee and external partners who have gained insight

into our people through the delivery of our suite of development

opportunities. The aim of the regular review is to identify suitable

internal talent who are capable of taking on senior roles within the

Group in the future and to ensure that we nurture and address any

identified development needs to support success.

The Committee has oversight of the Company’s Senior Leadership

Development Programme (SLDP) through which we have given

development opportunities to a significant number of senior

management. In 2020, we developed the Leadership Development

Programme (LDP) which was delivered remotely and in person during

the pandemic and addressed development in our next levels of

management. The SLDP and LDP will continue to be available for our

people as required and identified by the business as being a priority.

In 2022, the Company piloted Aspire, a Management Development

Programme which aims over a period of nine months to develop

junior managers and aspiring managers to develop both themselves

personally and professionally to become more effective in their roles

and drive performance in their teams.

Our investment in learning, development, talent and succession at

all levels in the business is pivotal in achieving our key objectives:

•

Delivering our purpose which is: “To empower and develop our

people”; and ensure that this applies at all levels including our

senior teams

•

To strengthen our short and medium-term succession planning

across the whole business; whilst providing the foundations for

longer-term talent planning

•

To provide the right level of development support to ensure

that we all continue to make the maximum contribution to the

wider business

The Committee will continue to oversee the leadership development

opportunities in the business and monitor the ongoing impact on

succession planning and talent pipelines throughout the Group.

Board evaluation and skills assessment

Formal performance reviews were carried out at the end of 2022 and

you can read about the process and results on pages 99 to 103.

In addition to the performance reviews outlined on page, the

Committee reviewed the assessment of the Board’s key skills and

experience. We have streamlined the skills evaluation activity to

align more with the core expertise required, to ensure strong links

between the skills evaluated and the core strategic objectives,

and focus on those areas most relevant to an effective overall

governance structure. In addition, given the closer ways of working

and inputs received from the Executive Committee in relation to a

number of key strategic areas, the assessment of skills has been

extended to all Executive Committee members.

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

CORPORATE

GOVERNANCE REPORT

COMPOSITION,

SUCCESSION

AND

EVALUATION

Nomination Committee Report

108

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

The Skills Matrix will be key to determining the role profile for recruiting new Board members as it aims to address any areas in which skills

could be usefully supplemented.

Board Diversity Policy

The Committee reviewed and approved an updated Board Diversity

Policy during the year, which is aligned to the recommendations

of the Hampton Alexander Review regarding gender diversity

on boards, and the Parker Review on ethnic minority board

representation, as well as reflecting the amended targets introduced

by the updated Listing Rules. The full policy is available to view at

www.henryboot.co.uk/our-responsibility. The Committee ensured

that the objectives set out within the Board Diversity Policy were

fully incorporated within the recruitment activity undertaken

during 2022, and will also ensure that our ambitions in this area

are captured in forthcoming rounds of recruitment. As such, we

anticipate being able to make progress towards achievement of

those objectives through this further period of Board refresh.

Our key strategic priorities, which are centred around safety,

people, growth and delivery can only be enhanced by seeking

diversity of opinion which is achieved through having a varied

Board membership. One of the four pillars of our Responsible

Business Strategy, launched in January 2022, is dedicated to Our

People. This pillar aligns with our goal to champion diversity and

incorporates the strategic objectives of our Group-wide People

Strategy and Responsible Business Strategy (see page 33 for more

information). We are committed to improving our position on Board

diversity when appropriate opportunities arise. It is recognised

that there will be periods of change on the Board and that these

objectives may be reliant upon the Board being refreshed, however,

it is our longer-term intention to achieve these objectives. The Board

and Nomination Committee will also take into account the prevailing

skills and diversity of the Board and the wider Group as and when

seeking to appoint a new Director to the Board.

Board & Executive Committee Skills Questionnaire

Strategy

Business

Leadership

Organisation

& Culture

Property

& Real Estate

Construction

& Plant Hire

Legal,

Compliance

& Regulatory

ESG

People

Management

Commercial

Finance

& Audit

Risk

Management

IT & Cyber

Marketing

Comms

& Branding

Stakeholder

Engagement

109

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Objective Progress against objective Status

The Board will ensure that it is made up of

an appropriate mix of skills, experience and

knowledge required to effectively oversee and

support the management of the Group.

Detailed review of effectiveness undertaken confirming that the Board is

adequately resourced and performing well.

The Board has set a target to meet the objective

of the Hampton Alexander Review, in that at

least 40% of our Board members are women.

At least 40% female representation remains our goal but currently stands at

28% (2 out of 7). We will continue to ensure that our recruitment processes

maximise the diversity included in our long and short lists.

We are fully committed to achieving and exceeding this goal with our Non-

executive Director succession planning and Group-wide diversity initiatives.

In addition, the Board shall have as its

objective that at least one of the four senior

board positions (Chair, Chief Executive Officer

(CEO), Chief Financial Officer (CFO) or Senior

Independent Director (SID)) shall be a woman,

as per the Listing Rules objective.

The role of Senior Independent Director is held by Joanne Lake, who is female.

The Board has set a target to meet the

objectives of the Parker Review for at least one

Board member to be from an ethnic minority

background excluding white ethnic groups

(as set out in categories used by the Office for

National Statistics).

We currently have no members on the Board from an ethnic minority

background. It is our ambition to achieve this objective over the next rounds of

recruitment and internal progression.

The Board will consider candidates for

appointment as Non-executive Directors from

a wider pool including those with little or no

previous FTSE Board experience.

We have consciously worked with our recruitment partners to ensure that

our briefs for Non-executive Director appointments encouraged diverse

candidates, and a number of those on our long list had no previous FTSE

experience. We will continue to ensure that previous FTSE experience is not a

specified requirement in future recruitment rounds in order to attract a broad

pool of applicants.

The Board will work with external recruitment

consultants to provide support for Board

appointments and will ensure that Non-

executive Director ‘long lists’ include both

women and candidates from an ethnic minority

background excluding white ethnic groups.

In 2022, we appointed external recruitment partners to work with us on our

recruitment exercise, and ensured that the long list for the candidates provided

a wealth of individuals from diverse backgrounds. We will continue this

approach for successive appointments during 2023 and 2024.

As previously discussed on page 106, we did not engage an external recruiter

for the appointment of the new Chair. This was a considered decision to

prioritise the continuity of the leadership of the Board after Jamie Boot, a major

shareholder and Boot family member, retired as a Director after 40 years’

service.

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

CORPORATE

GOVERNANCE REPORT

COMPOSITION,

SUCCESSION

AND

EVALUATION

Nomination Committee Report

110

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Objective Progress against objective Status

The Board (in conjunction with the Committee

and the Responsible Business Committee)

will support and monitor Group activities to

increase the percentage of senior management

roles held by women and other under-

represented groups across the Group. Activities

may include, but not be limited to, the hiring of

diverse external senior managers and internal

promotion activity but also continued emphasis

on diverse pipeline, graduate and apprentice

recruitment to support this objective long term.

Through a series of peer sharing forums and information exchanges, led by our

HR team, we have worked to elevate the built environment and real estate as a

positive career option for women and under-represented groups. Whilst there

is still more to do in this area, the intent to develop a pipeline of talent for the

Group which meets our diversity aspirations is crucial.

During the year, the Committees have approved improved maternity and

paternity policies, as well as the introduction of new policies aimed at improving

the experience for women at work, such as the Menopause Policy.

The Committee (together with the Responsible

Business Committee), on behalf of the Board,

will monitor, challenge and support internally

set targets for diversity and inclusion at all levels

across the organisation.

Phase 2 of the Responsible Business Strategy launched in January 2022

includes People-related targets. The Strategy was reviewed by the Responsible

Business Committee and approved by the Board.

ESG-related targets now also form 25% of the personal objective element of

the Annual Bonus award for Executive Directors (equating to 10% of salary).

These include quantitative targets for improving the gender mix and reducing

the gender pay gap.

The Committee (together with the Responsible

Business Committee), on behalf of the Board,

will report annually against these objectives

and other initiatives taking place within the

Company which promote gender and other

forms of diversity.

We have improved disclosure of progress against our targets for this year.

Whilst we have not achieved all our targets yet, we remain determined to drive

improvements and hope to have made further progress during 2023.

Key: Objective achieved Objective achieved in part Objective remains a work in progress

The gender balance of those in senior management positions and

their direct reports is shown on page 66. You can read more about

our EDI Strategy and workforce diversity initiatives on page 33.

Terms of reference

In September 2022, the Committee reviewed its terms of reference

in line with the scope of its operations, and the requirements of

the Code, to ensure that they remained appropriate. Some minor

amendments were proposed and approved, and the full terms of

reference is available to view on the Company’s website.

Board effectiveness and time commitment

The Board believes it has an appropriate balance of Executive and

Non-executive, and independent and non-independent Directors

having regard to the size and nature of the business. Further to a

review by the Committee it is felt that the overall combination of

experience, skills, knowledge and lengths of service of the current

Board members provides an appropriate level of balance which

contributes to effective decision-making and helps to mitigate risk.

A detailed succession plan for the Non-executive Directors, as set

out within this report will address any gaps needed to achieve our

strategic objectives.

The Committee discussed the skills, independence, length of tenure

and time commitments of all the Directors and reviewed the results

of the 2022 performance reviews (see pages 99 to 103 for more

information) as well as the Board skills evaluation completed during

the year. During this process, we noted that Joanne Lake held

directorships in other publicly-listed companies including a chair

person role at Made Tech Group plc. Joanne’s time spent at her

other directorships now equates to, on average, 10 days a month

and therefore the Committee agreed that this leaves sufficient time

to carry out her duties. Among other things, her experience from

other listed businesses provides helpful insight into governance

matters and best practice and we value her input. We do not see

any indication that these other directorships negatively impact her

contribution to the Group and remain wholly satisfied with her time

commitments and performance.

Following the review, I can confirm on behalf of the Committee that

the performance of the Directors, the Board and its committees,

continues to be effective and that all individuals show commitment

to their roles. All Directors will seek re-election at the upcoming

AGM, biographies are shown on pages 80 to 81, and a further

summary of Board roles and responsibilities can be found on our

website at henryboot.co.uk.

PETER

MAWSON

CHAIR

THE

NOMINATION

COMMITTEE

12 April 2023

111

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

MMITTEE

JOANNE

LAKE

CHAIR OF THE

UDIT

AND RISK CO

MITTEE

AUDIT AND

RISK

COMMITTEE

AUDIT,

RISK

AND

INTERNAL

CONTROL

“Through embedding our external and

internal auditor resource further this

year, the Committee has set itself

up well to ensure a systematic and

thorough approach to our audit and

risk practices.”

Review of the year

n behalf of the Board and the Audit and

Risk Committee (the Committee), as

Chair of the Committee, I am pleased

to present the Directors’ Audit and Risk

Committee Report for the year ended

31 December 2022.

This year, the Audit and Risk Committee

has commenced its first year of internal

audit work with KPMG as the internal audit partner,

appointed during the latter part of 2021, approving their

annual plan and overseeing the outcomes of their review.

Alongside the Responsible Business Committee, we

also reviewed the approach to assessing climate related

risks and opportunities and the reporting around this as it

relates to the TCFD disclosures, integrating this approach

with our general risk review procedures. We continued to

develop the relationship with EY as the external auditor of

the Group, overseeing all external and internal audit activity

and internal controls regarding risk. The Committee is also

aware of the impending introduction of the audit reforms

relating to internal controls, which is discussed in more

detail on page 113, and which will be the subject of further

work during 2023.

Those serving as members of the Committee were myself

(Committee Chair) and Gerald Jennings, with Peter

Mawson stepping down from the Committee during the

year in compliance with Corporate Governance Code

requirements, and being replaced by Serena Lang.

Internal audit

Given the size of the Group and extent of the internal

audit activities required, the Committee considers that an

externally appointed internal auditor is appropriate. This

provides independence to the internal audit activities as

well as ensuring that any required areas of specialism

and knowledge of audit processes can be provided by

the auditor.

From early 2022 onwards, our internal audit partner has

been KPMG LLP (KPMG). During 2022, the following

internal audit reviews were carried out by KPMG:

PETER

MAWSON

COMMITTEE

MEMBER

GERALD

JENNINGS

COMMITTEE

MEMBER

SERENA

LANG

COMMITTEE

MEMBER

Audit and Risk attendance key

Meetings

attended

Eligible

meetings

Following his appointment as Chair of the Board, Peter stepped

down as a member of the Audit and Risk Committee with effect from

September 2022

Serena joined the Committee with effect from her appointment on the

1 August 2022

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

CORPORATE

GOVERNANCE REPORT

112

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

AUDIT,

RISK

AND

INTERNAL

CONTROL

Topic Outline

Cyber Security

The objective of this audit was to provide a risk-based assessment of the Group’s Cyber Security capabilities

and to highlight gaps or areas requiring control improvement. This work has focused predominantly on

the Group’s Cyber Security maturity but also included consideration of Stonebridge Homes. The Internal

Audit was conducted using KPMG’s Cyber Security Framework, consisting of nine different domains, which

comprise: Leadership and Governance; Information Risk Management; Human Factors; Third Parties;

Resilience; Compliance; Technical Security; Security Architecture; and Security Operation.

Financial Controls

Gap Analysis

This audit performed a gap analysis, to understand and document the flow of information within each in-

scope process, identify the various controls in place to mitigate key risks and identify and document the

control gaps that exist within each process, where risks are currently not being adequately remediated.

The scope of the internal audit focused on understanding and covering the following key areas:

Record to Report (R2R) – accounting and financial reporting procedures including journals, balance sheet

reconciliations and month end closing;

Order to Cash (O2C) – end to end cycle from contracting with customers through to receipt of payment for

goods and services; and

Purchase to Pay (P2P) – end to end cycle from selection of supplier through to processing of payment for

goods and services.

Construction

Contracts - Supply

Chain Resilience

The scope of this audit focused on understanding and covering the following key areas:

Pre-construction governance - procedures undertaken prior to contracting, including governance and

approval processes for tender submission and contract award;

Project controls - a high-level assessment of the structure around the management of capital projects; and

Supply chain due diligence and monitoring - processes for compiling the approved supply chain and

ongoing monitoring of subcontractors, as well as the processes in place for maintaining due diligence over,

and monitoring subcontractors who are not part of the approved supply chain.

The results of this internal audit activity were reviewed by the Committee during the year, and will continue to be monitored on an ongoing

basis, including implementation of any recommendations and the overall status of the audit result.

113

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Audit and Risk Committee Report

Internal audit effectiveness review

The Committee determined that an assessment of the effectiveness of

the internal auditor was not appropriate for 2022 due to the fact that

the internal auditor had only commenced its activities in early 2022,

and had been tested through the tendering exercise and appointment

process. A review of the first full year of internal auditing activities will

be carried out during 2023 and reported on in the following year.

In determining their initial testing plan for 2022, KPMG reviewed

the Group’s risk reporting materials, previous internal audit report

and met with all senior stakeholders in the business. Their plan was

presented and approved by the Committee in February 2022.

Cyber Security

As highlighted above and in previous Committee reports, as well

as in the risk report at pages 50 to 56, cyber security continues

to be an area of focus, to ensure that appropriate procedures

and systems are in place. The Group has not been subject to an

information security breach within the previous three years (the

last incident having occurred in 2018), and is accredited by Cyber

Essentials Plus, an externally audited certification. Cyber risk is an

area where we continue to review the appropriateness of relevant

mitigation factors, such as information security insurance products,

but it is not currently felt that such products offer value for money

in relation to the risk that would be insured. The Group continues

to mitigate the risks in other ways, through the biannual provision

of detailed eLearning, supplemented by phishing email campaigns

– with failures being dealt with by targeted user training, as well as

having a suite of information security policies and protocols being

updated in line with ISO27001 recommendations. Following the

recommendations of KPMG as a result of the internal audit activity

highlighted on the previous page, the Group has put additional

measures in place, including: USB disablement; multi-factor

authentication on all users and cloud systems; procurement of new

backup products; and data migrated from local storage to cloud

storage to help visibility.

Audit Reform

As a Committee, we are keenly aware that the audit-related

corporate governance reforms led by the FRC have been in

progress and that measures will need to be put in place to ensure

full compliance with the requirements when finalised. Policies and

protocols will be reviewed under the supervision of the Committee,

and a gap analysis carried out. The Committee has been advised

on the details of this by both our external and internal auditors, and

will continue to review how to use those resources to shape our

approach over the coming year.

External audit effectiveness review

The Committee oversaw a full review of the effectiveness of the

external auditor in July 2022, which collated feedback from the

Committee, finance teams, Managing Directors and other key

stakeholders within the Group. Within the scope of the review, the

following were considered:

•

Planning and half year work performed August to September 2021

•

Interim audit carried out November 2021

•

Year end audit carried out January to April 2022

Overall, the review concluded that EY conducted a thorough and

comprehensive audit providing robust and independent challenge

where needed. The strong working relationships with the external audit

team, the collaborative nature of the work carried out on the going

concern evaluation, and the level of challenge being fair and balanced

were reflected upon. Constructive discussions were held with EY

around ways of refining the flow of information between internal teams

and the audit team, to ensure continuous improvements in methods

of engagement. It was also noted that many of these areas would

continue to improve with the embedding of those internal protocols

around information sharing, which did not impact on the quality of

audit work or audit opinion, and so were not considered to be matters

of any significant concern.

Extent to which external auditor

challenged management

The external auditor has provided robust challenge, particularly

around areas of complexity or judgement, including contract, property

and inventory valuations, as well as going concern and viability. Its

procedures and findings are detailed in its report to this Committee.

Independence of the external auditor

In order to ensure the independence of the external auditor, the

Committee monitors the non-audit services provided by it to the

Group and has a policy on the provision of non-audit services by

the external auditor with the objective that such services do not

compromise the independence or objectivity of the external auditor.

In addition, an External Auditor Independence Policy has been

developed to supplement our approach on external auditor

independence, which was approved in early 2023.

The Committee is required to approve services provided by the

external auditor in excess of £25,000. All other services below

this threshold are also monitored to ensure that the performance

of regulatory requirements is not impaired by the provision of

permissible non-audit services.

EY did not provide any non-audit services to the Group during the year.

Details of amounts paid to the auditors for audit services are set out

in note 3 to the Financial Statements. Deloitte will provide the Group’s

corporation taxation services for the year ended 31 December 2022.

In accordance with best practice, the Company will require its

external audit partner to rotate every five years, this being the

second year to which this relates. The statutory auditor signing the

Audit Report for 2022 is Victoria Venning.

The Committee members meet with the audit partner and other

members of the audit team without management present to discuss

any potential areas of concern. There are no issues to report

in relation to this. The Committee also reviews a letter from the

external auditor on an annual basis outlining the measures taken

by it to ensure that its independence is not compromised. The

Committee reviews the safeguards and policies in place to maintain

a high level of objectivity.

Following a review of all these elements, the Committee is satisfied

that the independence and objectivity of the external auditor is

not impaired and that the amount of non-audit fees is at a level

which does not compromise the overall quality and rigour of the

work undertaken.

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

CORPORATE

GOVERNANCE REPORT

114

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

AUDIT,

RISK

AND

INTERNAL

CONTROL

Audit and Risk Committee Report

Effectiveness of risk management and internal controls

Risk assessment and risk management reporting across the Group has continued to be monitored during the year. Details of the key risks

which the Group faces, the key controls in place to manage and mitigate those risks and the enhanced system of risk management adopted

by the Company are set out in more detail on pages 50 to 56. The Committee, and ultimately the Board, oversee these processes and

review the risk reporting and principal and emerging risks on an ongoing basis.

Significant issues

The Committee considered the following key accounting issues and matters of judgement in relation to the Group’s Financial Statements

and disclosures. In addition to these disclosures, the Independent Auditor’s Report on page 146 discusses other key audit matters which

were also considered by the Committee.

Focus Matters considered Committee outcome

Valuation of investment

properties

The investment property portfolio accounts for a large

proportion of the Group assets and the assessment

is subject to a degree of judgment and assumptions.

In line with our accounting policy, completed

investment properties are held at fair value. Other

than houses, the portfolio is valued twice a year

by external, independent valuers. Assets under

construction are valued by management at fair value

using the residual method.

The Committee critically reviewed the

valuations and any key movements during

the year. Having discussed the valuations

during the meeting and considered

EY’s assessment, the Committee was

comfortable with the values adopted.

Valuation of housebuilder

inventory

Inventories are stated at the lower of cost or net

realisable value.

Inventories comprise all the direct costs incurred in

bringing the individual inventories to their present

state at the reporting date, less the value of any

impairment losses.

Net realisable value of inventories is determined by

reference to expected future sales value and costs to

complete assumptions which are subject to estimation.

During the year, the Committee reviewed the

carrying value of housebuilder inventories

and judgements in relation to recoverable

amounts. Following discussions with EY, the

Committee was satisfied that the carrying

values are appropriate.

Construction accounting

estimates

As explained more fully in our accounting policy

on construction contracts, a significant element of

turnover is attributable to construction contracts.

Contract costs and revenues may be affected by a

number of uncertainties that are dependent on the

outcome of future events and therefore estimates

may need to be revised as events unfold and

uncertainties are resolved.

During the year, the Committee examined

the judgements and methodologies applied

to uncertainties and were in agreement with

the position adopted.

Terms of Reference

During 2022, the Committee reviewed its terms of reference in line with the scope of its operations, and the requirements of the Code, to

ensure that they remained appropriate. Some minor amendments were proposed and adopted as part of that review and the Terms of

Reference were reapproved, and are available on the Company’s website.

Approved by the Board and signed on its behalf by

JOANNE

LAKE

CHAIR

THE

AUDIT

AND

RISK

COMMITTEE

12 April 2023

115

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

CORPORATE

GOVERNANCE STATEMENT

CORPORATE

GOVERNANCE

STATEMENT

Compliance statement

During 2022, the Board and its Committees have been continuing

its work to embed the requirements of the Code and improve

wherever possible its operations and governance. The Company

has complied with all the principles of the UK Corporate

Governance Code 2018 for the year ended 31 December 2022

and the vast majority of the provisions. This is demonstrated

throughout this Corporate Governance report, and of particular note

are the issues below with references to further detail as applicable.

However, as in previous years, there are some instances where the

Company has chosen to take advantage of the flexibility offered with

the “comply or explain” rule when applying certain provisions.

Given our 135-year history as a family business, and as a FTSE

Small Cap company, we have adopted alternative solutions to

the provisions where we believe this is appropriate. The Code

recognises that good governance can be achieved by other means

and the Board believes the approach we have taken is the most

appropriate for the Company and its shareholders whilst remaining

consistent with the spirit of the Code.

To provide further clarification, we will shortly be uploading details

of our position against every principle and provision to the

Company’s website.

Provisions 9 and 19

As previously disclosed, the former Chair of the Board (Jamie Boot)

was not independent on appointment, having served as Group

Managing Director and a member of the Board for 30 years. In May

2022, Peter Mawson, an independent Non-executive Director of

the Company, was appointed as the new Chair and the Company is

now compliant with provisions 9 and 19.

We foresee that there is likely to be a period of non-compliance with

provision 19 from 1 October 2024 when Peter Mawson will remain

as Chair, despite his nine-year tenure, for a period of time to allow

the Non-executive Directors recently recruited to the Board to have

the opportunity to develop detailed knowledge of the business,

before becoming eligible to be considered for the Chair role.

Provision 11

As previously foreseen, following the retirement of Jamie Boot from

the Board in May 2022, there was a short period of non-compliance

with provision 11 in relation to the number of independent and non-

independent Directors on the Board, with only two independent

Non-executive Directors (excluding the Chair) being in place, versus

three non-independent Directors (Tim Roberts, Darren Littlewood,

and James Sykes). This position was resolved when Serena Lang

joined as an independent Non-executive Director in August 2022

and the Company is now compliant.

Provision 20

During the succession planning for the Chair role, the Board

determined that its strong preference was not to appoint an external

recruitment agency to source a new Chair for the Board, but to

ensure continuity of experience within the Chair role by appointing

one of its existing independent Non-executive Directors as the

Chair. Within the longer-term succession plan, provision is made

for a further Chair appointment process to commence within

the next 5 years, which will once again enable all Non-executive

Directors in post at that time to apply for the role as Chair. The

Board feels strongly that it is important for its Chair to have had

some knowledge and experience of the business prior to assuming

the role as Chair, and accordingly has planned for this approach

to maintain that continuity. An external recruitment agency was

appointed to carry out the search for Serena Lang and will be used

for future Non-executive Director appointments, as reported on

page 106.

Provision 24

Peter Mawson became Chair on 26 May 2022 and remained a

member of the Audit and Risk Committee until 16 September 2022.

The Committee composition is now in line with provision 24.

20% vote against – AGM

At the AGM in 2022, no resolution proposed received more than

20% of the vote against it.

AMY

STANBRIDGE

COMPANY

SECRETARY

12 April 2023

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

CORPORATE

GOVERNANCE REPORT

116

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

TEE

PETER MAWSON

CHAIR OF THE

RESPONSIBLE

BUSINESS

COMMIT

RESPONSIBLE

BUSINESS

COMMITTEE

CORPORATE

GOVERNANCE

REPORT

Review of the year

he Responsible Business Committee (the

Committee) met three times during the

year, as well as attending two additional

engagement sessions with guest speakers

to provide insight on some key areas

of practice. The responsibilities of the

Committee are to provide oversight and

leadership on the Company’s strategic

approach to, and performance on, all responsible business

practices. It provides an independent review and oversight

of the development and delivery of the Group’s Responsible

Business Strategy, which guides the Company’s approach

to delivery of long term ESG activity and objectives.

During the year the Committee has been responsible

for overseeing the approval and delivery of the Group’s

Responsible Business Strategy, which was launched in

early 2022. The Committee is also alive to the interactions

required in relation to incorporation of ESG-related targets

into executive remuneration (in conjunction with the

Remuneration Committee) and oversight of climate-related

risks (along with the Audit and Risk Committee).

Those serving as members of the Committee during the

year were myself, Joanne Lake, Gerald Jennings, James

Sykes, Tim Roberts and Darren Littlewood. Within the year

Serena Lang was welcomed to the Committee following her

appointment to the Board, with Gerald stepping down as a

Committee member, and it is my pleasure to hand over the

reins of the Committee to Serena as Chair with effect from 1

January 2023.

On behalf of the Board and the Responsible Business

Committee (the Committee), as Chair of the Committee, I

am pleased to present the Directors’ Responsible Business

Committee Report for the year ended 31 December 2022.

“In the last year, we have launched our progressive Strategy for Responsible Business

and this Committee continues to focus on making sure that the business delivers against

its commitments as well as ensuring it has the right governance in place to manage the

broad spectrum of activities this entails.”

SERENA

LANG

COMMITTEE

MEMBER

DARREN

LITTLEWOOD

COMMITTEE

MEMBER

TIM

ROBERTS

COMMITTEE

MEMBER

Responsible Business Committee attendance key

Meetings

attended

Eligible

meetings

Following a review of Committee memberships, Gerald stepped down

as a member of the Responsible Business Committee with effect from

September 2022

Serena joined the Committee with effect from her appointment on the

1 August 2022

JAMES

SYKES

JOANNE

LAKE

GERALD

JENNINGS

COMMITTEE

MEMBER

117

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Henry Boot PLC Board

Responsible Business Committee -

key responsibilities

•

Oversight of the setting of, and achievement of the objectives

within, the Responsible Business Strategy;

•

Review of all sustainability and ESG reporting, including

implementation of the recommendations of the TCFD and all

associated governance arrangements (see more on pages

68 to 77);

•

Ensuring that the Board maintains up to date awareness of the

Company’s impact on the communities it serves, the environment

it operates within and the charitable support it is able to give;

•

Monitoring culture and alignment with the Company’s Purpose,

Vision and Values; and

•

Monitoring and supporting the development of employee

diversity and inclusion across the Company and its leadership.

Responsible Business Strategy

Throughout 2022, the Committee approved and then monitored the

delivery of the Responsible Business Strategy, which was launched

in January 2022. This included periodic assessment of the progress

of the Group against the targets and metrics set within the Strategy.

Individual Non-executive Directors were assigned to represent

key areas of the Strategy – with myself being sponsor of the NZC

Framework, Joanne Lake sponsoring our EDI Strategy and Gerald

Jennings sponsoring the Community Partnership Plan.

Given the changes in Committee membership, we will be

undertaking a review of the Committee Sponsorship roles in

early 2023.

Throughout 2022, the Committee regularly monitored delivery of

the Responsible Business Strategy targets and considered how the

development of new initiatives (including the Reward Strategy – see

page 65) took into account ESG factors and aligned with existing

responsible business initiatives.

Other significant issues considered

Focus Matters considered Committee outcome

TCFD and Scope

3 GHG Emissions

approach

Throughout the year, TCFD reporting in relation to certain

specific elements of quantitative scenario modelling, and

the development of the Group’s approach to Scope 3 GHG

Emissions evaluation, has been assessed. As noted in the

TCFD report within this Annual Report and Accounts, further

progress in these areas is required, and the Committee has

been reviewing the approaches to addressing this.

The TCFD Steering Group has been tasked with

compiling an approach to TCFD and Scope 3

reporting, including use of external consultants,

with proposals to be approved by the Committee

during the year.

Climate Change

Framework

(CCF)

Linked to the subject above, in December 2022 the

Committee reviewed a consolidated framework developed

by the ESG Steering Group and TCFD Steering Group, which

brought together the proposed approach on NZC, TCFD,

Biodiversity, Nature Stewardship and Carbon Offsetting.

The purpose of the CCF is to provide an internal reporting

mechanism that aligns the existing and forthcoming strategies,

reporting requirements, and initiatives focused on how the

Group is responding to climate change. This approach intends

to provide a clearer strategic structure and more clarity for

monitoring progress and impact.

The Committee noted the interactions with

the Audit and Risk Committee in relation to

assessment of risk, and felt that having an

overarching Framework to bring together all of

the elements relating to climate change was

beneficial. The individual strands within the CCF

will continue to be developed and overseen by

the Committee during the year.

Health and

Wellbeing

Following a round of review by the Executive Committee, and

having been contributed to by the GEF (see pages 65 to 96),

the Health and Wellbeing Strategy was considered by the

Committee in December 2022.

The Committee agreed that the Strategy, which

was an evolution of the current approach, was

an appropriate response to provide a more

collaborative and proactive support for our

people. Alignment with other initiatives, such as

the Agile Working approach and employee value

proposition work, was noted.

EDI Action Plan

Whilst the overall EDI Strategy has been subsumed within the

Group’s overall Responsible Business Strategy, the Group’s

EDI Steering Group continues to operate and had explored

ways in which targets for 2022 could be defined and achieved.

The 2022 Action Plan contained a range of measures including

a revision of parental leave policies to provide greater support

to parents throughout the Group, and also a menopause and

pregnancy loss policy being introduced.

Discussing these important initiatives, the

Committee supported the work done to date and

approved the amended policies. The proposed

actions for 2023, and for the remaining years of

the Responsible Business Strategy, will address

encouraging greater levels of diversity throughout

the workforce and management, reducing the

gender pay gap, reporting on the ethnicity pay

gap and other training and initiatives to increase

awareness of EDI matters.

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

CORPORATE

GOVERNANCE REPORT

118

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Focus Matters considered Committee outcome

Engagement

sessions with

guest speakers

Marcos Navarro of Natwest Bank joined the Committee

and Executive Committee in June 2022 to discuss ESG

approaches, particularly in relation to the housing market and

key themes and trends.

In addition, Graeme Pitkethly of Unilever met with the

Committee and Executive Committee in November 2022

to discuss his role on the TCFD Steering Group and the

expectations of the market regarding good practice in

TCFD reporting.

These sessions have provided greater

engagement of the Committee members with

peers and subject matter experts, and upskilling

in key areas relating to current topics of debate.

The Committee, in conjunction with the Board

and Nomination Committee, will continue to

identify further areas for development through

these engagement sessions.

Oversight of climate related disclosures and governance

Set out below is a summary of the approach that has been developed within the Group to ensure that key stakeholders are involved in, and

providing relevant reporting on, ESG-related activities throughout the business. These governance structures enable specialists and subject

matter experts, as well as our people from throughout the various parts of the Group, to get involved in areas that are closest to them, and

ensure that the input to our Committee comes from as broad a range of employee stakeholders as possible.

Responsibilities of senior leaders and management

Senior Leader Membership Summary of Role

Chief Executive Officer

Board

Responsible Business Committee

ESG Steering Group

Executive Committee

The Chief Executive Officer assumes overall responsibility for the

delivery of the Group’s Responsible Business Strategy and responsible

business performance.

Chief Financial Officer

Board

Responsible Business Committee

ESG Steering Group

Executive Committee

The Chief Financial Officer supports the Chief Executive Officer to monitor

and lead the Group’s responsible business performance and to embed

ESG within commercial decision making.

Responsible Business

Manager

Responsible Business Committee

(attendee)

ESG Steering Group

Executive Committee (attendee)

Responsible Business Steering Group

EDI Steering Group

Climate Change Forum

Charity Committee

The Responsible Business Manager:

•

is responsible for monitoring the Group’s performance against the

Responsible Business Strategy and routinely updating Executive

Committee and the Responsible Business Committee

•

fulfils the secretary role for the Responsible Business Committee

•

assumes responsibility for the management and objectives of the

Climate Change Forum and EDI Steering Group

•

assists with preparation of the Group’s TCFD disclosures

Finance Director

Responsible Business Committee

(attendee)

ESG Steering Group

TCFD Steering Group

The Finance Director:

•

collaborates with the Responsible Business Manager to monitor and

measure progress against quantative targets within the Responsible

Business Strategy

•

provides advice on alignment with the Group’s risk framework and

commercial opportunities

•

assists with preparation of the Group’s TCFD disclosures

General Counsel and

Company Secretary

Board (attendee)

Responsible Business Committee

(attendee)

ESG Steering Group

Executive Committee

EDI Steering Group

TCFD Steering Group

The Company Secretary is the Group’s executive ESG Lead and assumes

responsibility to inform strategic direction on ESG and alignment with the

expectations of shareholders and the market, as well as assisting with

preparation of the Group’s TCFD disclosures.

HR Director

Executive Committee

EDI Steering Group

ESG Steering Group

Responsible Business Committee

(attendee)

The HR Director assumes responsibility for overseeing the alignment of the

Responsible Business Strategy with the People Strategy and leads the EDI

Steering Group.

Managing Directors

Executive Committee

The Managing Directors all advise on the Group’s strategic approach to

ESG and assume responsibility for the responsible business performance

for their respective businesses.

119

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

ESG Governance Structure

Key

Delegating

Reporting

Proposing

Terms of reference

During 2022, the Committee reviewed its terms of reference in line with the scope of its operations and key areas of focus to ensure

that they remained appropriate. Some minor amendments were proposed and adopted as part of that review and the Terms of

Reference were reapproved, and are available on the Company’s website.

PETER

MAWSON

FORMER

CHAIR

THE

RESPONSIBLE

BUSINESS

COMMITTEE

12 April 2023

SERENA

LANG

CHAIR

THE

RESPONSIBLE

BUSINESS

COMMITTEE

12 April 2023

TCFD Steering

Group

Oversight and delivery of TCFD

implementation reporting.

Responsible Business

Committee

Reviewing and approving overall Responsible

Business strategy and all linked policies and

frameworks including climate change framework,

EDI strategy, charitable giving and volunteering –

plus achievement

Climate Change

Forum

Overseeing delivery of

climate change framework

ESG Steering Group

Initial development and

review of all ESG related

items for the Responsible

Business Committee

including strategy,

frameworks and policies.

EDI Steering

Group

Formulates Group EDI Strategy

and annual action plans

Charity

Committee

Oversees the application

of the Group’s Charitable

Giving Policy

Responsible

Business Steering

Group

Overseeing delivery of

Responsible Business

aims in relation to their

communication and impact

on our people.

Nomination

Committee

Sets Board diversity policy.

Audit and Risk

Committee

Audit oversight of ESG

delivery setting and

monitoring risk management.

Board

Ultimate responsibility to approve and oversee:

•

Delivery of ESG targets in Responsible

Business Strategy

•

Risk management framework

•

Setting and adjusting of Strategy and

overall budget

Remuneration

Committee

Oversee alignment of

Remuneration objectives

with ESG targets.

Subsidiaries

•

Delivery of subsidiary-specific ESG targets

•

Contribution to Working Groups and

committees

Executive Committee

•

Oversight of deliverables

•

Endorsement of approach on Strategy,

policies etc

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

CORPORATE

GOVERNANCE REPORT

120

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

INGS

Remuneration Committee attendance key

Meetings

attended

Eligible

meetings

GERALD

JENN

NGS

CHAIR OF THE

REMUNERATIO

COMMITTEE

DIRECTORS’

REMUNERATION

REPORT

REMUNERATION

JOANNE

LAKE

PETER

MAWSON

SERENA

LANG

COMMITTEE

MEMBER

Annual Statement from the

Chair of the Remuneration Committee

n behalf of the Board and the Remuneration

Committee (the Committee), I am pleased to present

the Directors’ Remuneration Report for the year

ended 31 December 2022.

This report is divided into three sections:

•

This Annual Statement, which summarises the

work of the Committee and our approach to

Directors’ remuneration.

•

The Remuneration Policy section, which provides a summary of the

policy approved at the 2021 AGM. The full Remuneration Policy can

be found on pages 111 to 118 of the 2020 Annual Report (and is also

available on the Company website).

•

The Annual Report on Remuneration, which sets out the remuneration

outcomes for the financial year ended 31 December 2022 and

the proposed implementation of the Remuneration Policy for the

upcoming year.

Company performance

Henry Boot performed well in 2022, achieving the Group’s

best ever underlying profit, whilst continuing to make good

progress against our strategic objectives.

The key highlights are listed below:

•

Record underlying profit of £56.1m driven by residential

land and property development sales

•

Profit before tax increased by 30% to £45.6m

•

Increased ROCE of 12.0%, up 240 bps, within our

medium-term strategic target of 10–15%

•

EPS grew to 25.0p, up 17.9%

•

Dividend increased by 10% to 6.66p with dividend

cover increased to 3.8x

•

Sold 3,869 plots at an average gross profit of £6.1k

per plot

•

Completed on £83m (HBD Share) of developments

with 92% let/sold

•

Maintained a strong average selling price for private

homes of £503k

•

2023 construction order book 68% secured – 94% of

costs are fixed

“We have delivered strong operational

performance resulting in our best ever

underlying profit and increased the

dividend by 10%. We believe this is

reflected in the incentive payouts during

the year. We are pleased to introduce

a measure based on our Responsible

Business Strategy into the LTIP grant in

2023 to drive a reduction in GHG and

improve equality”

121

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Remuneration outcomes

Annual Bonus

The 2022 annual bonus was based on PBT (66.7%) and personal

objectives (33.3%). Operating performance of the business was

excellent, having benefited from strong sales within our property

development and strategic land businesses, driving the Group’s

best ever financial results on an underlying profit basis. Our non-

financial operational performance was also excellent with significant

progress made against our business strategy.

In line with the fall of UK commercial property values in the second

half of 2022, the investment portfolio reduced in value, with the

result that the 2022 underlying profitability from operations was

negatively impacted by £10.5m. As the bonus is designed to reward

strong operational performance within management’s control, this

negative impact is not included in the formulaic outcome of the

bonus (in contrast to the LTIP which includes EPS and ROCE,

which are both impacted by movements in property values). On this

basis, this would have led to a maximum 66.7% pay out against the

stretching PBT target range set at the start of the year. However,

the Committee reviewed this outcome and determined that

downward discretion should be exercised to reduce the pay out to

a target level for this element (so 33.3% rather than 66.7% of the

total bonus opportunity), recognising that the reduction in property

values had led to a reduction of statutory PBT and weakening of the

share price in the final quarter of 2022.

Management performance was strong against the strategic

objectives that were set, with a pay-out of 28.3% and 28.8% of

33.3% for the CEO and CFO, respectively. As a result, the formulaic

outcome of the bonus is 61.6% of maximum for the CEO and

62.1% of maximum for the CFO.

The Committee is comfortable that the bonus outcome reflects

the wider business performance of the Company over the year.

As part of the process for approving Executive Director bonuses,

the Committee also considered the bonus awards payable to less

senior management and employees more widely. The pay-out

is considered proportionate and is broadly consistent with wider

workforce bonuses.

One third of the bonus is deferred in to shares and held for

three years.

LTIP award for performance period FY20–22

The three-year performance period for the 2020 LTIP award ended

on 31 December 2022. Performance was based on EPS (33.3%),

ROCE (33.3%) and TSR (33.4%). The EPS and ROCE targets were

set before the impact of the COVID pandemic and have not been

adjusted to reflect the significant detrimental impact this had on

our financial performance. ROCE was measured on an average

basis across all three years (including a very low ROCE in 2020

caused by significant business disruption) and the 2022 EPS had

not recovered sufficiently compared to the 2019 EPS, which was a

pre COVID high point for measuring the growth targets. This meant

that the minimum performance threshold was not achieved in either

case. The Total Shareholder Return performance element achieved

partial vesting based on our stock market performance relative to

the companies in the FTSE Small Cap Index over the performance

period. Overall, 15.1% of the LTIP will vest. The Committee believes

that this outcome is appropriate and chose not to apply discretion

on the incentive outcome.

The Committee is aware of investor and proxy agency concerns

regarding LTIP “windfall gains” and has considered whether market

movements risk creating a windfall gain for Executive Directors on

the vesting of the 2020 LTIP. The award was granted in June 2020

when the share price was 256p, having recovered from the sharp

market drop in March 2020. As this is higher than the share price at

the time of writing (223p on 31 March 2023), there is currently no

windfall gain.

The Committee is comfortable that actions taken on pay during

the year across the Company were appropriate and balanced

the interests of all stakeholders and that the Remuneration Policy

operated as intended.

Board Changes

Jamie Boot retired from his role as Chairman on 26 May 2022,

following the Company’s AGM. After undertaking a considered

selection process to determine succession, the Group was

delighted to announce that Peter Mawson would succeed Jamie

as Chair. As a consequence of Peter’s changing role, the Senior

Independent Director position was assumed by Joanne Lake.

The Board has taken the decision to retire the role of Deputy

Chair, which was previously held by Joanne. As a part of the work

undertaking in the search for a successor to Jamie Boot, the Chair

fee was reviewed. The market data suggested that the current

fees payable were below market. Taking into account the market

positioning and the time commitment for the role, the Chair fee for

Peter was set at £105,000 effective 26 May 2022.

Later in the year, Serena Lang was appointed as a Non-executive

Director with effect from 1 August 2022. Serena took over as Chair

of the Responsible Business Committee on 1 January 2023.

Application of the Directors’

Remuneration Policy for 2023

The key decisions for 2023 are set out below.

Salary and fees

The Committee reviewed the out of cycle salary increases that had

been made in 2022 and the one-off cost of living payment for the

lowest paid employees. Building on this support for the lower paid

employees, for 2023 the Committee determined that there should

be a tiered approach to salary increases, favouring the lowest paid.

On this basis the lowest paid cohort of employees will receive a

standard salary increase of between 5-7%, the next lowest paid

4-6%, the Executive Committee 3-5% and the Executive Directors

3%. The average overall salary increase, excluding the Executive

Directors and Executive Committee, is 6.24%.

The Non-executive Director and Chair’s fees have been increased

by 4% for 2023.

Annual Bonus

The maximum annual bonus for Executive Directors will remain at

120% of salary. The annual bonus will again be based two-thirds on

financial measures and one-third on strategic objectives, of which

a quarter are related to ESG targets. One third of the bonus is

deferred in to shares and held for three years.

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

CORPORATE

GOVERNANCE REPORT

122

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

REMUNERATION

Directors’ Remuneration Report

LTIP

The 2023 LTIP awards will be granted at the normal maximum grant

level, 125% of salary for the CEO and 100% of salary for the CFO.

The 2023 LTIP awards will again be based on EPS, ROCE and

TSR (30% of the award each) and, for the first time, we are pleased

to introduce a measure based on our Responsible Business

Strategy, for the remaining 10%. This year’s award will be based on

achievement against two targets from our Responsible Business

Strategy; a reduction to our scope 1 and Scope 2 emissions by

2025, reflecting our ambition to be net zero for such emissions by

2030 (5%), and a stretching target to improve our gender balance

across the workforce (5%). In future years we may evolve these

measures to reflect other aspects of our broader ESG agenda.

The ranges for the EPS and ROCE targets have been set to be

equivalently challenging to prior years, taking into account internal

business plans and current market conditions.

Wider workforce considerations

Salary levels across the workforce were reviewed during the year,

taking into account the unusually high levels of inflation and cost

of living challenges, including a spike in energy costs. This resulted

in out of cycle salary increases for over 100 employees (22.8% of

the workforce). Also, in September, we made a one-off payment of

£1,000 to the lowest paid two thirds of the workforce.

The Committee also has oversight of the annual bonus and the

long-term incentive schemes across the business and ensures that a

consistent approach is taken between executive schemes and those

applying to the workforce generally.

As a part of the Policy review in the upcoming year, the Committee

will review the cascade of the Remuneration Policy below Board to

ensure our approach is competitive and aligns with the strategy of

the business.

In my dual capacity as Committee Chair and designated Non-

executive Director for workforce engagement, I meet regularly

with the Group Employee Forum. We dedicate one entire session

to discuss how executive remuneration aligns with the workforce

reward strategy. Feedback has been positive with the Group

Employee Forum appreciating the link between the strategy, company

performance and reward with the corporate objectives feeding down

through the business from the Executive Directors to all our people.

Executive remuneration and the implementation of the Remuneration

Policy were not raised as issues during the engagement and so no

amendments were required to the proposed implementation of the

Remuneration Policy in 2023 as a result of the engagement.

Shareholder engagement

The Committee consults with its larger shareholders on executive

pay matters, where considered appropriate. As there are no

significant changes in the implementation of the Remuneration

Policy, we have not carried out a further formal consultation

with shareholders in relation to the policy or its operation in

2023. However, I am always happy to make myself available to

shareholders to discuss any concerns or feedback they may have.

We will consult with larger shareholders during the Remuneration

Policy review process ahead of the 2024 AGM.

Closing remarks

Should you have any queries or comments, please do not hesitate

to contact me or the Company Secretary, as we value engaging

with our shareholders.

I hope that you will be able to support the Directors’ Remuneration

Report at this year’s AGM.

GERALD

JENNINGS

CHAIR

THE

REMUNERATION

COMMITTEE

12 April 2023

123

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Remuneration at a glance

Performance snapshot

Annual bonus performance

Achievement

Scenario Charts (£’000)

£2,500

Measure Performance (% of max)

£2,000

£1,991

LTIP performance

Measure Performance

Achievement

(% of max)

£1,500

£1,000

£500

£545

£1,6970

£1,121

£365

£705

£1,045

£1,199

£0

Minimum

Target

Maximum

Tim

Roberts

Minimum

Target

Maximum

Darren

Littlewood

Fixed Pay Annual Bonus LTIP 50% share price growth on LTIP

Executive pay

Total Remuneration (£’000)

1000

800

600

400

200

Implementation for 2023

2022

2021

2022

2021

Tim

Roberts

Darren

Littlewood

Salary Benefits Pension Annual Bonus LTIP Other

The 2021 figure includes a salary repayment during the year of £43,046

for Tim Roberts and £25,000 for Darren Littlewood relating to FY2020 –

see page 128 for more details.

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

100%

49%

25% 26%

32%

33%

35%

100%

52%

26% 22%

35%

35% 30%

Underlying PBT (66.7%) £56.1m

50%

Individual/Strategic

objectives (33.3%) See pages 129 to 130

85%

Relative

vs FTSE

TSR

Small

Cap

Between median and

upper quartile

45%

EPS

-4% pa

ROCE

8.98%

Base salary

3% increase for all Executive Directors

•

CEO – £470,200

•

CFO – £309,000

Benefits

No change

Pension

8% of salary (in line with the wider workforce)

Annual

Bonus

•

Maximum opportunity: 120% of salary

•

Subject to underlying profit and strategic

objectives

LTIP

•

CEO – 125% of salary

•

CFO – 100% of salary

•

Subject to EPS, ROCE, TSR and ESG

targets

•

Two year holding period applies

Shareholding

guidelines

200% of salary (to be held for 2 years

post-employment)

CORPORATE

GOVERNANCE REPORT

124

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

REMUNERATION

Remuneration policy

This part of the Directors’ Remuneration Report sets out a summary

of the Remuneration Policy approved by shareholders at the 2021

AGM on 20 May 2021.

The Company’s policy on remuneration is designed to ensure that

Executive Directors earn sufficient remuneration to be motivated

to achieve our strategy with the addition of appropriate incentives,

aligned to our vision and strategic objectives, that encourage

enhanced performance without excessive risk.

The Committee annually reviews market practices and levels

of remuneration for directors in similar roles within companies

of comparable size and complexity. This review considers

remuneration within our wider workforce, pay increases awarded

and bonus levels generally in the Group, with the aim that we

reward all employees fairly according to their role, performance,

the economic environment and the Group’s financial performance.

The Policy has been tested against the six factors listed in Provision

40 of the UK Corporate Governance Code:

•

Clarity – the Committee made alterations to the Remuneration

Policy to make it clearer, including a simplified annual bonus

structure. The elements of the Remuneration Policy were

described clearly to investors during the consultation process

and to the workforce during the engagement with the Group

Employee Forum.

•

Simplicity – remuneration structures have been simplified. All

structures are as simple as possible whilst providing a strong link

between reward and performance and avoiding reward for failure.

•

Risk – the Remuneration Policy has been designed to

discourage inappropriate risk taking including a balance between

short-term and long-term elements, as well as bonus deferral,

recovery and withholding provisions, in addition to in-employment

and post-cessation shareholding requirements. To avoid conflicts

of interest, Committee members are required to disclose any

conflicts or potential conflicts ahead of Committee meetings. No

Executive Director or other member of management is present

when their own remuneration is under discussion.

•

Predictability – elements of the Policy are subject to caps and

dilution limits. An illustration of pay levels for different levels of

performance are shown in the scenario charts in the notes to

the Policy table. The Committee has the discretion to adjust

the formulaic outcomes of the incentive arrangements if the

outcome is considered inappropriate.

•

Proportionality – There is a broadly equal balance between

fixed pay and incentives at target performance and there is also

a broadly equal balance between short-term and long-term

incentives, reflecting the importance of both short-term and

long-term performance.

•

Alignment to culture – Henry Boot’s distinctive company

culture was taken into consideration with the incentivisation of

the Executive Directors to continue to develop the Group with

our people at the forefront of our strategies, whilst formulating a

Policy to drive sustainable long-term growth.

125

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Summary of the Directors’ Remuneration Policy

and its implementation in 2023

Below is a summarised version of the Policy you can read the full Policy on our website:

http://www.henryboot.co.uk/investors/governance/remuneration-policy/

Element Purpose and link to strategy Key features 2023 implementation

Salary

Core element of fixed remuneration

•

Reviewed annually

•

Average workforce increase: 6.24%

reflecting role, experience and market

•

Increases generally awarded in line

•

Tim Roberts: £470,200

rates. Assists in recruitment and retention

with the workforce average unless (3% increase)

compelling

reasons

for

higher

rise

•

Darren Littlewood: £309,000 (3%

increase)

Benefits

Provided on a market competitive basis

•

Level of benefits reviewed to reflect

•

No change from last year

and assists in recruitment and retention market practice

•

Include car allowance, private

health insurance, permanent health

insurance, death in service cover

and participation in SAYE scheme

Pension

Contribution

towards

retirement

income

•

Choice of participating in defined

•

Tim Roberts and Darren Littlewood

contribution scheme or cash in lieu receive cash in lieu of pension

•

Aligned to the rate applying to the

contribution at a level of 8% of base

majority of the workforce (8%)

salary in line with the majority of

employees

Annual bonus

To incentivise the delivery of financial

•

Targets set annually, majority of

•

Stretching PBT target set for two

performance, operational targets which will be financial thirds of the opportunity

and individual objectives over the

•

Maximum bonus opportunity of

•

Personal objectives set for one third of

financial year

120% of salary the opportunity. 25% of this element will

•

No more than 10% pay-out for

be based on ESG targets

threshold performance and 50%

pay-out for target performance

•

Two thirds paid in cash and one third

invested in shares and deferred for

three years

•

Committee discretion and malus

clawback provision apply

LTIP

Provides a clear and strong

•

Performance conditions and targets

•

Expected grant in FY23 is 125% of

link between Executive Director set annually linked to strategy / TSR salary for Tim Roberts and 100%

remuneration and value creation for

•

Normal levels are 125% of salary

salary for Darren Littlewood

shareholders

for

achieving

longer

term

for

CEO

and

100%

salary

for

CFO

•

Mixture of EPS, ROCE, TSR and

strategic objectives

(Maximum level is 175% of salary – ESG targets performance criteria

above normal levels require major

shareholder consultation)

•

No more than 25% vests for threshold

performance

•

Three-year award with two-year

holding period

•

Committee discretion and malus

clawback provision apply

Shareholding

guidelines

Aligns their long-term interests to those

•

Requirement to build and maintain

•

Current holdings for Executive

of shareholders equivalent to 200% of base salary for Directors shown on page 132

Executive Directors

•

Executive Directors are expected

to retain at least 50% of any

LTIP awards or deferred bonus

awards until holdings reach the

required level.

•

Post-cessation requirement to hold

lower of shares held or 200% of

salary for at least two years (market

purchased shares excluded)

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

CORPORATE

GOVERNANCE REPORT

126

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

REMUNERATION

Element Purpose and link to strategy Key features 2023 implementation

Non-executive

Director fees

Fee levels set to assist recruitment and

retention of high calibre Non-executive

Directors

•

Chair fee set by the Committee

•

Non-executive fees set by the

Board (excluding the Non-executive

Directors)

•

Non-executive Director fees will be

increased by 4%, lower than the

increase for the wider workforce

of 6.24%

•

Increases aligned generally to the

workforce rate

•

Non-executive Directors not involved

in share schemes or pension

arrangements

Service contracts and letters of appointment

The Executive Directors have a service contract requiring twelve months’ notice of termination from either party as shown below:

Executive

Director

Date of

appointment

Date of current

contract

Notice from

the Company

Notice from

the individual

Unexpired period

of service contract

Tim Roberts

1 January 2020

1 August 2019

12 months

Rolling

Darren Littlewood

1 January 2016

12 months

Rolling

The table below details the letters of appointment for each Non-executive Director.

Non-executive

Directors

Date of appointment

Date of current

letter of appointment

Notice from

the Company

Notice from

the individual

Peter Mawson

1 October 2015

30 July 2015

3 months

James Sykes

22 March 2011

21 August 2019

3 months

Joanne Lake

1 October 2015

30 July 2015

3 months

Gerald Jennings

1 October 2015

30 July 2015

3 months

Serena Lang

1 August 2022

28 July 2022

3 months

127

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Annual report on remuneration

The following section provides details of how Henry Boot’s Remuneration Policy

was implemented during the financial year. The labelled parts of the Directors’

Remuneration Report are subject to audit.

The Remuneration Committee

The primary role of the Committee is to:

•

Review, recommend and monitor the level and structure of the remuneration packages of the Executive Directors and senior management;

•

Set and approve the remuneration package for the Executive Directors; and

•

Determine a balance between base pay and performance-related elements of the remuneration package in an effort to align the interests

of stakeholders more widely (including shareholders) with those of the Executive Directors.

The members of the Committee and their attendance at Committee meetings is set out page on 120. The key activities of the Committee

during the year are set out below:

•

Oversight of Remuneration Policy and its implementation.

•

Reviewed and approved salaries for the Executive Directors and senior management.

•

Reviewed formulaic incentive outcomes for the Executive Directors, senior management and the wider workforce. Considered whether

they were aligned to Company performance over the short and long term.

•

Reviewed the LTIP awards for the Executive Directors and senior management.

•

Engaged with the wider workforce on the alignment between executive pay and the wider workforce.

External Advisers

Following a formal and robust tender process, the Committee appointed Korn Ferry as its advisers with effect from 11 June 2020.

During the year the Committee received independent advice on Directors’ remuneration from Korn Ferry who are a member of the

Remuneration Consultants Group and adhere to its Code of Conduct which requires its advice to be objective and impartial. Korn Ferry

provided advice on market practice updates, benchmarking and supported management with undertakings such as producing the

Directors’ remuneration report to the extent this did not impact the independence of its advice. The fees paid to Korn Ferry for providing

advice to the Committee in relation to Directors’ remuneration was £47,100.

Korn Ferry provided other human capital related services during the year, but these services were carried out by a team separate to the

remuneration advisory team. As a result, the Committee is satisfied that the advice received was objective and independent.

Statement of voting at the last Annual General Meeting (AGM)

At the 2022 AGM, shareholders were asked to approve the 2021 Annual Report on Remuneration. The Directors’ Remuneration Policy was

approved by shareholders at the 2021 AGM. The votes received are set out below:

2022 AGM (26 May 2022) Nature of vote Votes for % Votes against %

Votes total

Votes withheld

Approve the 2021 Directors’ Remuneration

report (excluding the Remuneration Policy)

Advisory

83,537,884

94.99 4,407,409

5.01 87,945,293 12,669

2021 AGM (20 May 2021) Nature of vote Votes for % Votes against %

Votes total

Votes withheld

Approve the 2021 Directors’ Remuneration

report (excluding the Remuneration Policy)

Binding 87,300,759 98.03 1,754,384 1.97 89,055,143 9,626

Single total figure of remuneration (Audited)

The table below reports the total remuneration receivable by Directors in respect of qualifying services during the year.

Tim Roberts

457

535

338

403

938

Darren Littlewood

300

359

224

262

621

Jamie Boot

James Sykes

Joanne Lake

Gerald Jennings

Peter Mawson

Serena Lang

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

Salary

and

Taxable

Pension-

Total

Annual

Long-term

Total

Year ended

fees

benefits

Other

fixed

bonus

incentives

Variable

Remuneration

31 December 2022

£’000

CORPORATE

GOVERNANCE REPORT

128

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

REMUNERATION

Year

ended

Salary

and

fees

1,4

Taxable

benefits

Pension-

benefits

Other

Total

fixed

Annual

bonus

Long-term

incentives

Total

Variable

Total

Remuneration

31 December 2021

£’000

Tim Roberts

478

548

435

–

435

983

Darren Littlewood

300

379

275

304

683

Jamie Boot

–

James Sykes

–

Joanne Lake

–

Gerald Jennings

–

Peter Mawson

–

Salary includes the value subject to salary sacrifice.

Tim Roberts and Darren Littlewood participated in the SAYE all employee plan, further details are set out on page 132.

Value of shares based on a three-month average share price of £2.38 to 31 December 2022. This value will be restated next year based on the actual share

price on the date of vesting.

As stated in the 2021 annual report, the Board voluntarily reduced salaries by 20% from 1 April 2020, for the duration of the most severe impact of the

pandemic. Salaries and fees were reinstated in full on 1 October 2020. For Executive Directors, the total salary waived was £43,046 for the CEO and £25,000

for the CFO. These salary reductions for Tim Roberts and Darren Littlewood were repaid in 2021, to mirror the experience of the wider workforce. The

Chairman’s fee and the Non-executive Director’s fees were reduced by 20%. The fee reductions were not reinstated.

The 2019 LTIP award vested on 30 April 2022, the value included in the table is based on the value of the award on vesting and includes dividend equivalents

of 496 shares. The value is based on the share price on the date of vesting.

Taxable benefits include the provision of a company car or a cash allowance alternative, permanent health insurance and private medical

insurance. The value of benefits is not pensionable.

The information in the single total figure of remuneration in the table on page 127 is derived from the following:

Salary or fees

The amount of salary or fees received in the year

Taxable benefits

The taxable benefits received in the year by Executive Directors.

Annual bonus

The value of bonus payable and the calculations underlying this are disclosed on pages 128 and 129.

Long-term incentives

The value of LTIP awards are those related to shares that vested as a result of the performance over the

three- year period ended 31 December of the reporting year.

Pension-related

benefits

Pension-related benefits represent the cash value of pension contributions or salary in lieu of contributions

received by Executive Directors at a rate of 8% salary for both Tim Roberts and Darren Littlewood.

Other

SAYE awards granted to Executive Directors during the year

Individual elements of remuneration

Pension entitlement

Tim Roberts and Darren Littlewood receive a salary supplement in lieu of pension contribution equivalent to 8% of salary, in line with the

workforce rate.

2022 bonus

The maximum annual bonus opportunity for the Executive Directors was 120% of salary. Two thirds of the bonus was subject to stretching

PBT targets and one third personal strategic objectives. Performance against the targets is set out in the table below.

Weighting

Threshold Target Stretch

Outcome

(% of maximum)

Measure

(% of

maximum)

10% of

maximum

50% of

maximum

100% of

maximum

Actual

result

Tim

Roberts

Darren

Littlewood

Financial

Underlying PBT

66.7%

£45.2m

£50.3m

£52.8m

£56.1m

66.7%

Non-financial

Personal objectives

33.3%

See below

28.3%

28.8%

Formulaic outcome

See below

95.0%

95.5%

Outcome following Committee discretion

61.6%

62.1%

129

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Operating performance of the business was excellent, having benefited from strong sales within our property development and strategic

land businesses, driving the Group’s best ever financial results on an underlying profit basis. Our non-financial operational performance was

also excellent with significant progress made against our business strategy.

In line with the fall of UK commercial property values in the second half of 2022, the investment portfolio reduced in value, with the result that

the 2022 underlying profitability from operations was negatively impacted by £10.5m. As the bonus is designed to reward strong operational

performance within management’s control, this negative impact is not included in the formulaic outcome of the bonus (in contrast to the

LTIP which includes EPS and ROCE, which are both impacted by movements in property values). On this basis, this would have led to

a maximum 66.7% pay out against the stretching PBT target range set at the start of the year. However, the Committee reviewed this

outcome and determined that downward discretion should be exercised to reduce the pay out to a target level for this element (so 33.3%

rather than 66.7% of the total bonus opportunity), recognising that the reduction in property values had led to a reduction of statutory PBT

and weakening of the share price in the final quarter of 2022.

The Committee also evaluated the performance of the Executive Directors against their 2022 personal strategic objectives. The proportion of

objectives achieved was assessed as follows:

2022 personal objectives – Tim Roberts

Objective Details

Weighting

(% of salary) Performance against objective

Outcome

(% of

salary)

Implement Group strategy, identifying strategic

smart objectives, taking account of risk

15%

Strong: Continued prudent deployment of capital with a more

thorough approach to the cascade of strategic objectives

throughout ExCo and to wider management teams aligned to

Corporate objectives.

12%

Communicating the Group’s strategy, vision

and values both internally and externally

Strong: Key appointment of Communications and Marketing

Director and a more strategic focus on the messages shared

with all stakeholders to ensure consistency of narrative.

Develop senior leadership team and review

Group remuneration

Strong: Continued development of Executive Committee

with focus on collaboration and customer. Supported the

implementation of a Group wide reward strategy to provide

clarity and transparency.

Lead good Health and Safety practices around

the Group to avoid any major Health and

Safety incidents

Excellent: All major KPIs have been achieved and continue to

be monitored closely.

Attract new shareholders to the register,

achieving positive feedback from meetings with

existing shareholders and analysts by clear key

messaging and Investor Relations (IR) Policy

Strong: Continued refinement of our equity narrative.

Attracted 1 major new investor to the register.

2.5%

Implement Environment Social and

Governance (ESG) Policy, and promote an

open, diverse and progressive organisation

10%

Excellent: Successful policy launch and development of ESG

targets for all parts of the business. We achieved our gender

target for the year and a reduction in our gender pay gap

aligned to our longer term goals.

9.5%

Total out of max 40%

40% 34%

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

CORPORATE

GOVERNANCE REPORT

130

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

REMUNERATION

2022 personal objectives – Darren Littlewood

Weighting

Outcome

(% of

Objective Details (% of salary) Performance against objective salary)

Implement Group strategy, identifying strategic

smart objectives, taking account of risk

10%

Strong: Continued prudent deployment of capital across

all activities with focus on alignment to the refreshed Group

strategy and implementation of technology solutions.

Continued management of the pension liabilities.

8.5%

Implement IT strategy with a focus on identifying

business process improvements, efficiencies and

systems

Strong: Appointment of IT Director to deploy the IT strategy

and align to the requirements of the Group and continued

focus on cyber security. Group wide process mapping has

been implemented and has identified a number of areas of

efficiency and where technology solutions can be deployed.

6.5%

Developing strategic influence within the

business and profile within the wider industry

Excellent: Continued commitment to ExCo development with

focus on customer and collaboration. Positive feedback from

stakeholders in relation to profile raising and representation on

wider trade bodies and forums.

Developing the Finance/IT/Comms team’s profile

and skillsets, developing their integration across

the Group and encouraging the departments to

become more pro-active business partners

Excellent: Development of wider skills within the Group to

strengthen delivery to internal stakeholders.

2.5%

Management and development of financial

reporting within each business, to the Board and

to the investor community

Excellent: Continued to develop compelling equity narrative

supported by relevant and consistent financial reporting.

2.5%

Undertake a review of internal and external audit

and tender the Group’s provision of tax services

Good: Reviewed external audit with feedback to ARC; tax

services were successfully tendered with Deloitte being

appointed. Internal audit review will be carried over into 2023.

Support the implementation of the Group’s

ESG Policy

10%

Excellent: Successful policy launch and implementation of

appropriate ESG targets in all parts of the business. Success

has been achieved in increasing female representation and

reducing the gender pay gap.

9.5%

Total out of max 40%

40% 34.5%

Based on performance to 31 December 2022 and downward discretion used by the Committee, the adjusted annual bonus outcome for

Executive Directors during the year are shown below.

Executive

Annual Bonus outcome

% of maximum % of salary Bonus outcome (£)

Tim Roberts 61.6% 74% £337,812

Darren Littlewood 62.1% 74.5% £223,500

Two thirds of the bonus will be payable in cash. The remaining one third will be invested in shares and deferred for three years. No further

performance conditions or service requirements apply.

Long-Term Incentive Plan (LTIP)

LTIP Awards were granted to Tim Roberts and Darren Littlewood on 22 June 2020. The LTIP shares in this award were subject to the

performance criteria set out in the table below.

Pay-out of

Performance condition

Weighting

Threshold

(25% vesting)

Maximum

(100% vesting)

Actual

performance

element

(% of max)

EPS growth

33.3%

RPI+3% p.a.

RPI+7% p.a.

-4% p.a

ROCE

33.3%

10%

13%

8.97%

TSR

33.4%

Median

TSR: -11%

Upper quartile

TSR: 24%

Rank 56 out of 128

TSR: -5.2%

15.1%

Total vesting (out of 100%)

15.1%

The TSR comparator group was comprised of the FTSE Small Companies Index (excluding investment trusts).

131

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

The Committee is comfortable that the level of vesting is in line with underlying performance and shareholder experience over the

performance period and that no discretion would apply. As a result, the following shares will vest.

Executive Director

Number

of shares

granted

Number of

shares due

to vest

Estimated

Number of

shares for

dividend

equivalents Total

Tim Roberts 168,039 25,369 1,941 £64,998

Darren Littlewood 97,592 14,733 1,127 £37,747

The share price was £2.56 at the time of grant, compared to the three-month average share price of £2.38 to 31 December 2022. Therefore, No part of the

award is currently attributable to share price appreciation. No discretion was applied.

After awards vest, subject to selling sufficient shares to pay tax, shares must be held for a further two years.

Dividend equivalent shares will be awarded on the shares that vest and will be valued on an average share price for the three business days before the vest

date of 22 June 2023. For the purpose of the table above, the estimated number of dividend equivalents has been based on the three-month average share

price up to 31 December 2022. For the FY23 Annual Report, this figure will be restated.

The total value above has been calculated based on the three-month average share price up to 31 December 2022.

LTIP awards granted in the year (audited)

LTIP awards were granted during the year to Tim Roberts and Darren Littlewood on 29 April 2022.

Type of award % of salary

Number of

Face value of

grant at 324.33p

per share

% of award

vesting at

threshold

Tim Roberts LTIP – nil cost options 125% 175,938 £570,620 25%

Darren Littlewood LTIP – nil cost options 100% 92,497 £299,996 25%

The share price is calculated based on the average share price for the three days preceding the grant.

The awards are subject to the following performance conditions which will be measured over the three-year period ending 31 December 2024:

Measure

Weighting

Threshold

(25% of max)

Maximum

(100% of max)

EPS in 2024

33.3%

28p

35p

Return on Capital Employed (average over three years)

33.3%

11%

14%

TSR relative to the FTSE Small Cap Index (excluding investment trusts)

33.4%

Median performance

Upper quartile

Sharesave options granted during the year (audited)

During the year Tim Roberts and Darren Littlewood were granted options under the Company’s Sharesave scheme. The details are set

out below:

Name

Number

of options

granted

Exercise

price

Face value

at grant

% of award

vesting at

threshold

Date on which

exercisable

Tim Roberts 9,090 198p £22,437 N/A 1 December 2025

Darren Littlewood 9,090 198p £22,437 N/A 1 December 2025

Both Directors opted to save £500 a month over the 3-year savings period equating to 9,090 shares based on the exercise price.

The exercise price is calculated based on the average share price for the three days preceding the grant (246.83p). The Board then applied a 20% discount

on the price for all participants in line with HMRC rules.

Payments to past Directors

The only payment to a past Director during the year, in respect of services provided to the Company as a Director, was in relation to LTIPs

granted to John Sutcliffe in 2019. As a good leaver, the number of shares available to vest was 5,797 shares, having been prorated for his

time in employment. This equated to a market valuation on exercise of £18,782.

Payments made for loss of office

Jamie Boot stepped down from the Board on 26 May 2022 and received fees to that date (£40k). There were no additional payments.

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

CORPORATE

GOVERNANCE REPORT

132

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

REMUNERATION

Statement of Directors’ shareholdings and share interests (Audited)

The following table sets out the shareholdings and share interests in ordinary shares of the Directors and connected persons in the

Company as at 31 December 2022. The Executive Directors are subject to a shareholding requirement of 200% of salary under the

Remuneration Policy. Executive Directors are expected to retain at least 50% of any LTIP awards or deferred bonus awards until holdings

reach the required level. There are no holding requirements for Non-executive Directors.

At 31 December 2022

Unvested

Share-

Beneficially

Unvested

Options

holding

owned at

Options with

without

Vested

as a % of

1 January

Beneficially

performance

unexercised

salary or

Director

2022

owned

conditions

options

Total interests

fees

Tim Roberts

279,067

303,258

550,876

9,090

–

863,224

152%

Darren Littlewood

205,404

225,380

294,784

9,090

–

529,254

171%

Peter Mawson

13,200

–

13,200

28%

James Sykes

20,000

–

20,000

89%

Joanne Lake

10,710

–

10,710

41%

Gerald Jennings

19,900

–

19,900

77%

Serena Lang

N/A

–

Jamie Boot

5,665,002

–

5,665,002

13,921%

All outstanding scheme interests are in the form of options.

The table above includes the holdings of persons connected with each of the Directors.

The shareholding as a percentage shown above is based on the share price at 31 December 2022 (235p). The salary used for this calculation is that which

commences on 1 January 2023.

Shareholding for Jamie Boot is shown at 26 May 2022 when he stepped down from the Board in relation to his fee at that time.

Tim Roberts increased his holding by 42,000 shares to 345,258 on 26 January 2023. There have been no other transactions between

31 December 2022 and 31 March 2023.

LTIP

Date of grant

Market price

at date of

grant

At 1 January

2022

Grant during

the year

Exercised

during the

year

Lapsed

during the

year

At 31

December

2022

Actual

exercise

date/earliest

vesting date

Tim Roberts

22/06/2020

256.17p

168,039

–

168,039

22/06/2023

23/06/2021

262.67p

206,899

–

206,899

23/06/2024

29/04/2022

324.33p

–

175,938

–

175,938

29/04/2025

374,938

175,938

–

550,876

Darren Littlewood

30/04/2019

272.3p

82,619

–

9,094

1,2

74,021

–

30/04/2022

22/06/2020

256.17p

97,592

–

97,592

22/06/2023

23/06/2021

262.67p

104,695

–

104,695

23/06/2024

29/04/2022

324.33p

–

92,497

–

92,497

29/04/2025

284,906

92,497

9,094

74,021

294,784

Shares exercised under the LTIP includes 496 dividend equivalent shares.

Darren Littlewood exercised 9,094 options during the year under the LTIP. The aggregate gain on exercise was £29,465 based on a share price on the date

of exercise of 324p.

Sharesave plan

Date of

grant

At 1

January

2022

Granted

during the

year

Exercised

during the

year

Lapsed

during the

year

At 31

December

2022

Exercise

price

Date from

which

exercisable Expiry date

Tim Roberts

15/10/2021

8,000

–

8,000

–

225p

–

21/10/2022

–

9,090

–

9,090

198p

01/12/2025

01/06/2026

Darren Littlewood 15/10/2021

8,000

–

8,000

–

225p

–

21/10/2022

–

9,090

–

9,090

198p

01/12/2025

01/06/2026

Both Tim Roberts and Darren Littlewood pulled out of the 2021 Sharesave plan and opted to join the 2022 Sharesave plan instead.

133

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Share price

The middle market price for the Company’s shares at 31 December 2022 was 235p and the range of prices during the year was 227p to 345p.

Ten-year TSR performance graph

The chart below shows the TSR for the Company compared to the FTSE Small Cap Index over ten years. The FTSE Small Cap index has

been chosen as Henry Boot is a constituent of the FTSE Small Cap index.

450

400

350

300

250

200

150

100

Dec 12

Dec 13

Dec 14

Dec 15

Dec 16

Dec 17

Dec 18

Dec 19

Dec 20

Dec 21 Dec 22

Source: Datastream (Thomson Reuters)

Henry Boot PLC FTSE SmallCap Index

CEO remuneration for the previous ten years

Year 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Name

Jamie

Boot

Jamie

Boot

Jamie

Boot

Jamie

Boot

John

Sutcliffe

John

Sutcliffe

John

Sutcliffe

John

Sutcliffe

Tim

Roberts

Tim

Roberts

Tim

Roberts

Percentage change in Directors remuneration

The table below sets out in relation to salary, taxable benefits and annual bonus the percentage increase in remuneration for Directors

compared to the wider workforce.

Average percentage change

2021/22

Average percentage change

2020/21

Average percentage change

2019/20

Salary/

fees

Taxable

benefits

Annual

bonus

Salary/

fees

Taxable

benefits

Annual

bonus

Salary/

fees

Taxable

benefits

Annual

bonus

Chief Executive Officer

-5%

-22%

68%

N/A

Chief Financial Officer

11%

-19%

87%

11%

-51.10%

Jamie Boot

N/A

James Sykes

N/A

Joanne Lake

21%

N/A

15.36%

N/A

Gerald Jennings

21%

N/A

20.55%

N/A

Peter Mawson

85%

N/A

27.81%

N/A

Serena Lang

N/A

Workforce

6.24%

54.89%

9.55%

3.99%

-40.81%

As stated in the 2021 annual report, the Board voluntarily reduced salaries by 20% from 1 April 2020, for the duration of the most severe impact of the

pandemic. Salaries and fees were reinstated in full on 1 October 2020. For Executive Directors, the total salary waived was £43,046 for the CEO and £25,000

for the CFO. These salary reductions for Tim Roberts and Darren Littlewood were repaid in 2021, to mirror the experience of the wider workforce. The

Chairman’s fee and the Non-executive Director’s fees were reduced by 20%.

Jamie Boot stepped down from the Board on 26 May 2022. As he did not serve a full year in 2022, the change has not been included as it would not be

representative.

In line with general market practice, additional fees were introduced for FY22 onwards for those Directors with additional responsibilities to reflect the

increased time commitment required to effectively undertake these roles.

Peter Mawson succeeded Jamie Boot as Chair on 26 May 2022, as a result, his fees increased year on year.

Serena Lang was appointed as a Non-executive Director on 1 August 2022. As a result no year-on-year change can be provided.

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

Value (£) (Rebased)

Total Remuneration

(£’000)

962

1,054

1,000

981

1,118

1,277

1,250

912

715

982

938

Annual bonus

(% of max)

58.3

83.3

94.5

87.8

91.1

99.2

76.8

64.8

50.0

83.3

61.6

LTIP

(% of max)

100

nil

15.1

CORPORATE

GOVERNANCE REPORT

134

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

REMUNERATION

CEO pay ratio

The CEO pay ratio comparing the CEO single total figure of remuneration to the equivalent pay for the lower quartile, median and upper

quartile of UK employees (calculated on a full-time equivalent basis). The ratios have been calculated in accordance with the Companies

(Miscellaneous Reporting) Regulations.

The Committee selected Option A as the method of calculation as it is generally recognised as the most statistically robust and is consistent

with approach used historically. The pay and benefits for UK employees was calculated on 24 March 2023 using the same method as used

for the single total figure. No estimates or adjustments have been made.

Each employee’s pay and benefits were calculated using each element of remuneration on a full-time basis, consistent with the CEO.

No adjustments (other than the approximate up-rating of pay elements to achieve full-time equivalent rates) were made, with the exception

of annual bonuses for Stonebridge and Road Link where the amount paid during 2021 was used as the FY22 bonus figures had not yet

been determined at the time this report was produced. No components of pay have been omitted.

25th

percentile

50th

percentile

75th

percentile

Salary/wages

£28,000

£38,600

£48,783

Total remuneration

£33,227

£45,629

£74,060

In 2022, the CEO pay ratio is broadly in line with previous years but has reduced slightly in comparison to 2021. This is in part due to lower

annual bonus payments than 2021 and higher remuneration for employees due to the increase in base pay and higher bonus pay-outs.

The Committee is satisfied that the median pay ratio reported this year is consistent with our wider pay, reward and progression policies for

employees.

Relative importance of the spend on pay

The following table sets out the percentage change in dividends, and the overall spend on pay across our whole organisation:

2022

£’000

2021

£’000

Change

Ordinary dividends

8,840

8,016

10.0%

Overall expenditure on pay

39,444

38,144

3.4%

Implementation of Remuneration Policy in 2023

The section below sets out the implementation of the Remuneration Policy in 2023. Other than the introduction of an ESG performance

condition into the LTIP, there are no significant changes.

Executive Directors Salaries effective from

Base salary and fees

The salary increase for 2023 is set out below:

1 January

2023

1 January

2022

Change

Tim Roberts

£470,200

456,503

Darren Littlewood

£309,000

300,000

Pension

The Executive Directors will continue to receive cash in lieu of pension contribution at a level of 8% of base salary in line with the

majority of employees.

2023 bonus

The maximum bonus opportunity for Executive Directors is 120% of salary. The 2023 bonus will be based two thirds on financial measures

and one third on strategic personal objectives of which a quarter are related to ESG targets. In line with the Policy, 10% of the bonus will pay

out for threshold performance, 50% at target. The profit targets are considered to be commercially sensitive and will therefore be disclosed

retrospectively in next year’s report. An overview of the strategic personal objectives for each Executive Director is set out below.

Method

25th

percentile

pay ratio

Median pay

ratio

75th

percentile

pay ratio

2022

Option A

28:1

20:1

12:1

2021

Option A

31:1

22:1

14:1

2020

Option A

26:1

18:1

11.1

2019

Option A

41:1

27:1

17:1

135

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

2023 strategic personal objectives – Tim Roberts

Objective

Weighting

(% of

salary)

Evaluate and oversee implementation of Group strategy

15%

Enhance the Henry Boot profile through effective communication of our strategy, purpose, vision and values

Oversee and drive culture of high performance through enhancing leadership capabilities and developing strategic

capacity

Oversee and direct Group wide Health and Safety practices to avoid any major Health and Safety incidents

Create and share compelling narrative to engage with our shareholders and encourage new investors

Oversee implementation of ESG Policy and influence the modernisation agenda with oversight of nurturing our

culture and embracing new ways of working

10%

2023 strategic personal objectives – Darren Littlewood

Objective

Weighting

(% of

salary)

With CEO, support the implementation of the Group Strategy 10%

Oversee the implementation of the IT Strategy to encourage business improvement and efficiencies 10%

Encourage strategic development of talent in group and continue to develop own profile amongst peers 2%

Support modernisation agenda and key internal changes across Group support functions to achieve a more 4%

aligned business partner model

Oversee and develop financial reporting to support compelling equity narrative to encourage development of the 4%

shareholder register

Support implementation of ESG Policy and influence our modernisation agenda 10%

Two-thirds of any bonus earned will be payable in cash and for the remaining one third of the bonus, Executive Directors will be required to

invest this into shares which must be held for three years.

2023 LTIP Awards

LTIP awards will be granted at 125% of base salary to the CEO and 100% of salary for the CFO. The 2023 LTIP awards will again be based on

EPS, ROCE and TSR (30% of the award each) and, for the first time, we are pleased to introduce a measure based on our ESG strategy, for the

remaining 10%. This year’s award will be based on achievement against two targets from our Responsible Business Strategy; a reduction to our

Scope 1 and Scope 2 emissions by 2025, reflecting our ambition to be net zero for such emissions by 2030 (5%), and a desire to improve our

gender balance across the workforce (5%). In future years we may evolve these measures to reflect our broader ESG agenda.

The detailed performance metrics, which will be measured over the three-year period to 31 December 2025, is as follows:

EPS (30% weighting)

We strive to grow earnings per share sustainably over the long-term. This should give rise

to an ability to grow dividends faster than inflation; a key driver to long-term growth in

shareholder value.

Return on Average Capital Employed

(30% weighting)

We strive to achieve a 10% profit before tax return on balance sheet net assets. This should

give rise to at least two times dividend cover, thereby generating growth in the Group’s retained

capital to reinvest and grow. This is a further driver to long-term shareholder value growth.

Total Shareholder Return (TSR) relative to

constituent companies of the FTSE Small

Companies Index (30% weighting)

We strive to achieve high shareholder returns. TSR reflects the extent to which

shareholders and the market consider that the Company strategy is appropriate and is

being implemented and articulated well by the Executive Directors.

ESG – Scope 1 and 2 GHG reductions

(5% weighting)

Workforce Gender Balance

(5% weighting)

We strive to ensure that our business decisions create sustainable and long-term value for

all our stakeholders. We want to deliver our commercial purpose whilst leaving a lasting

positive legacy.

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

CORPORATE

GOVERNANCE REPORT

136

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

REMUNERATION

These four performance criteria provide a good balance between financial and stock market performance and broader stakeholder interests.

The range of the financial targets for the 2023 awards have been set to be equivalently challenging to prior years’ awards, taking into

account internal business plans and current market conditions.

For the new ESG related targets, the Scope 1 and 2 emissions targets represent, approximately a 10% reduction from the 2022 figure of

2,930 tonnes. This is considered a stretching goal and is line with the Responsible Business Strategy target for 2025. The performance

target has been determined based on the current size of the business and will adjust based on growth or contraction of the business, to

ensure that it remains equivalently challenging irrespective of the size of the business in three years’ time. Our current gender balance is

74.5:25.5, male : female and 70:30 represents a clear and simple goal for the business.

We considered whether there should be sliding scales set, but determined that this was unnecessary as each represents just 5% of the

overall LTIP opportunity and the target in each case is sufficiently stretching.

Weighting

Threshold target

(25% of maximum)

Maximum target

(100% of maximum)

EPS in 2025

30%

20p

28p

Return on Average Capital Employed (average over 3 years)

30%

9.5%

12%

TSR relative to the FTSE Small Cap Index (excluding Investment

Trusts)

30%

Median performance

Upper quartile performance

Scope 1 and 2 GHG reduction

2,650 tonnes

Workforce Gender Balance by 2025

70 male : 30 female*

*Individuals identifying as male or female

Awards will be subject to a two-year holding period post vesting.

Non-executive Directors

Non-executive Director and Chair’s fees have been increased by 4% for FY23, lower than the average increase for the workforce of 6.24%.

Fees effective from

1 January

2023

1 January

2022

Change

Chair fee

109,200

105,000

Base Non-executive Director fee

52,654

50,629

Remuneration & Audit and Risk Committee Chair fee

5,200

5,000

Responsible Business Committee Chair

2,600

2,500

Non-executive Director designated to workforce engagement

2,600

2,500

Senior Independent Director

3,640

3,500

Fee includes role as Chair of Nomination Committee.

Peter Mawson was appointed as Chair on 26 May 2022. The fee for the Chair represents his fee on appointment.

Approved by the Board and signed on its behalf by

GERALD

JENNINGS

CHAIR

THE

REMUNERATION

COMMITTEE

12 April 2023

137

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

DIRECTORS’

REPORT

The Directors’ Report for the financial year ended 31 December

2022 is detailed below.

Activities of the Group

The principal activities of the Group are land promotion, property

investment and development, and construction.

Strategic Report

In accordance with the Companies Act 2006, we are required

to present a fair review of the Group’s business along with a

description of the principal risks and uncertainties it faces. The

Strategic Report for the year ended 31 December 2022 is set out

on pages 02 to 77.

Corporate governance statement

The Disclosure Guidance and Transparency Rules of the

Financial Conduct Authority require certain information to be

included in a corporate governance statement in the Directors’

Report. Information that fulfils the requirements of the Corporate

Governance Statement can be found in Governance on pages 84

to 143, and also within this Director’s Report.

Results for the year and dividends

The results are set out in the Consolidated Statement of

Comprehensive Income on page 155. The companies affecting the

profit or net assets of the Group in the year are listed in note 35 to

the Financial Statements.

The Directors recommend that a final dividend of 4.00p per ordinary

share be paid on 2 June 2023, subject to shareholder approval at

the 2023 AGM to be held on 25 May 2023, to ordinary shareholders

on the register at the close of business on 5 May 2023. If approved,

this, together with the interim dividend of 2.66p per ordinary share

paid on 14 October 2022, will make a total dividend of 6.66p per

ordinary share for the year ended 31 December 2022. Further details

are disclosed in note 10 to the Financial Statements on page 174.

Financial instruments

The Group’s policy in respect of financial instruments is set out

within the Accounting Policies on page 166 and details of credit risk,

capital risk management, liquidity risk and interest rate risk are given

respectively in notes 18, 24, 25 and 27 to the Financial Statements.

Going concern and viability statement

The Directors have, at the time of approving the Financial

Statements, a reasonable expectation that the Company and

the Group have adequate resources to continue in operational

existence for the foreseeable future. Further detail is contained in

the Strategic Report on pages 56 to 57.

Accountability and audit

Details of the Directors’ responsibilities and the Statement of

Directors’ Responsibilities are contained on page 143. The

Independent Auditors’ Report is given on pages 146 to 154.

Fair, balanced and understandable

The Audit and Risk Committee and the Board have assessed the tone,

balance and language of the Annual Report and Financial Statements,

being mindful of the requirements of the UK Corporate Governance

Code and the need for consistency between the narrative section

of the document and the Financial Statements. The Board’s formal

statement on the Annual Report and Financial Statements being fair,

balanced and understandable is contained within the Statement of

Directors’ Responsibilities which can be found on page 143.

Political donations

The Company made no political donations in the year or in the

previous year.

Directors and their interests

Details of the Directors who held office during the financial year

ending 31 December 2022 and as at the date of this Annual Report

and Financial Statements can be found on pages 80 and 81. At

no time during the year has any Director had any interest in any

significant contract with the Company.

The interests of Directors and persons closely associated with them

in the share capital of the Company as at 31 December 2022, are

disclosed in the Directors’ Remuneration Report on page 132.

Between 31 December 2022 and 31 March 2023, being a date

not more than one month prior to the date of the Notice of the

AGM, Tim Roberts purchased 42,000 ordinary shares. There were

no other changes in the beneficial interests of any of the current

Directors during this period.

Details of Directors’ long-term incentive awards and share options

are provided in the Directors’ Remuneration Report on pages 130

to 132.

Directors’ service contracts and

letters of appointment

Details of unexpired terms of Directors’ service contracts and/

or letters of appointment of the Executive Directors proposed for

reappointment at the AGM on 25 May 2023 are set out in the

Directors’ Remuneration Policy.

Tim Roberts and Darren Littlewood each have a one-year rolling

service agreement in accordance with our policy on Directors’

contracts. Termination of these arrangements would therefore be

subject to their contractual terms and conditions which require a

notice period of one year to the Director. Contractual compensation

in the event of early termination provides for compensation at basic

salary, pension and benefits for the notice period.

Non-executive Directors, including the Chair, do not have service

contracts. All Non-executive Directors have letters of appointment

and their appointment and subsequent reappointment is subject to

approval by shareholders. Non-executive Director appointments are

typically for three years; however, they may be terminated without

compensation at any time. The full 2022 Directors’ Remuneration

Policy can be viewed on the website, with a summary set out on

pages 125 to 126.

Training and development

Formal and tailored inductions are arranged for all new Directors

and continued development is monitored by the Chair as part of the

evaluation process. The programme of induction includes attendance

at PLC Board and subsidiary meetings, meetings with key internal

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

CORPORATE

GOVERNANCE REPORT

138

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

DIRECTORS’

REPORT

and external stakeholders, training on director duties and other

developments to ensure a seamless integration into the business.

You can read more about the induction for Serena Lang on page 105

and Peter Mawson’s transition to the Chair role on pages 106.

Non-executive Directors are encouraged to familiarise themselves

with the Company’s business, and throughout the year they

have regularly attended subsidiary board meetings and other

management meetings. You can read more about training during

2023 on page 91 and engagement with employees and other

stakeholders on pages 96 to 98.

Specific training requirements were considered as part of the Board’s

performance review, details of which can be found on pages 107 to

108. General updates on regulations and best practice are provided

through a mixture of briefings, Board papers and email updates.

Employment policy and involvement

Employees

Employees are at the heart of all that we do; our culture ensures that

employees can grow, thrive and succeed. Details of how we seek to

promote and achieve this are set out in the people section on pages

63 to 67, the employee engagement report on pages 96 to 98 and

Nomination Committee Report on pages 104 to 110.

Employee engagement

Details of our employee engagement activities can be found on

pages 96 to 98.

Employee communications

Employee communications has become a focus during 2022 with

the creation of a new role and the subsequent appointment of a

Group Marketing & Communications Director. We are undertaking

a review of how we communicate with our people and have issued

a survey to understand employee preferences on the regularity,

nature and medium of our interactions. The results will be analysed

and discussed with the Group Employee Forum and will feed into a

revised strategy that will be rolled out in 2023.

During the year, we have had regular communications and

interactions with employees and directors through townhalls,

email, live webinars and recorded video messages from the

CEO. Collaboration and inclusion is encouraged; live webinars

are recorded so that they can be watched on demand and Q&A

sessions are included where possible.

Employee share schemes

The Group encourages participation in employee share schemes

of the Company to share in the potential growth and any future

success of the Group. From 2018, eligible employees have been

invited to participate in Sharesave and either the Company Share

Option Plan or the Long Term Incentive Plan based on their role on

an annual basis. Details of employee share schemes are set out in

note 29 to the Financial Statements.

Directors’ indemnity provisions

Directors risk personal liability under civil and criminal law for

many aspects of the Company’s main business decisions. As a

consequence, the Directors could face a range of penalties including

fines and/or imprisonment. In keeping with normal market practice,

the Company believes that it is prudent and in the best interests

of the Company to protect the individuals concerned from the

consequences of innocent error or omission.

As a result, the Company operates a Directors’ and officers’ liability

insurance policy in order to indemnify Directors and other senior

officers of the Company and its subsidiaries, as recommended

by the UK Corporate Governance Code. This insurance policy

does not provide cover where the Director or officer has acted

fraudulently or dishonestly.

In addition, subject to the provisions of and to the extent permitted

by relevant statutes, under the Articles of Association of the

Company, the Directors and other officers throughout the year,

and at the date of approval of these Financial Statements, were

indemnified out of the assets of the Company against liabilities

incurred by them in the course of carrying out their duties or the

exercise of their powers.

Health and safety

The Health and Safety of our employees and others is paramount.

Further information on our approach to Health and Safety is

provided in the People section on page 67.

Relationship with stakeholders

Details of how we engage with stakeholders and uphold our

Director’s duties more widely under s.172 of the Companies Act

2006 can be found on pages 58 to 61.

Shareholder relations

The Company actively communicates with its institutional and

private shareholders and values a two-way conversation on key

Company issues. It is this close relationship with shareholders that

is viewed as one of the Company’s particular strengths.

During the year a number of formal presentations were made by

members of the Board to institutional shareholders and feedback from

these meetings was provided to the Board by our brokers or through

written reports. In addition, informal feedback sessions regarding the

Annual Report were carried out with institutional investors. At every

Board meeting an update is given to the Non-executive Directors

on any feedback from investors, particularly after investor roadshow

programmes. The Board receive a report at every meeting on share

movements during the period and any market trends. The Company

uses the Investor Relations section of its website, henryboot.co.uk, to

publish statutory documents and communications to shareholders,

such as the Annual Report and Financial Statements. The website is

designed to communicate with both present and potential investors

and includes all London Stock Exchange announcements, investor

presentations and press releases.

Greenhouse gas emissions

The GHG emissions disclosures required by the Companies Act

2006 (Strategic Report and Directors’ Report) Regulations 2013

are included within the Strategic Report on pages 76 to 77. This

information is incorporated by reference into (and shall be deemed

to form part of) this report.

139

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Substantial interests in voting rights

Excluding Directors, as at 31 March 2023, being a date not more

than one month prior to the date of the Notice of the AGM, the

information in the table below had been disclosed to the Company

in accordance with the requirements in the Listing Rules and the

Disclosure Guidance and Transparency Rules of the Financial

Conduct Authority.

Voting rights over ordinary

Number % of issued

Rysaffe Nominees and

J J Sykes (joint holding)

20,532,155 15.40

David John Gladman 11,319,548 8.48

The London & Amsterdam

Statement of disclosure of

information to auditors

The Directors of the Company who held office at the date of

approval of this Annual Report each confirm that:

•

so far as they are aware, there is no relevant audit information

(information needed by the Company’s auditors in connection

with preparing their report) of which the Company’s auditors are

unaware; and

•

they have taken all the steps that they ought to have taken as

Directors in order to make themselves aware of any relevant

audit information and to establish that the Company’s auditors

are aware of that information.

Independent auditors

Rysaffe Nominees and James Sykes are joint registered holders on behalf of

various Reis family trusts and are therefore not included under the beneficial

interests of James Sykes set out in the Directors’ Remuneration Report.

The shares of the Fulmer Charitable Trust, a recognised charity, are

registered in the names of Mr John Spencer Reis, Mrs Sally Anne Reis and

Mrs Caroline Mary Mytum as Trustees.

These figures represent the number of shares and percentage held

as at the date of notification to the company.

Details of Directors’ holdings can be found on page 132.

Shares held by the Henry Boot PLC

Employee Trust

The Company has an established Employee Trust (the Trust) for

the benefit of the Group’s employees to satisfy existing grants by

the Company under various share-based payment arrangements.

Details of the Company’s share-based payment arrangements

are provided in note 29 to the Financial Statements. The Trustee

of the Trust, a subsidiary of the Company of which the Directors

throughout 2022 were Tim Roberts, Darren Littlewood and Amy

Stanbridge (Jamie Boot resigned as a Director on 1 July 2022),

exercises the voting rights in relation to shares held as it, in its

absolute discretion, thinks fit, but having regard to the interests of

the beneficiaries. In respect of the financial year of the Company

ended on 31 December 2022, the Trust has waived the right to

receive from the Company all dividends (if any) in respect of the

shares held within the Trust.

There were no purchases during 2022 by the Trust who makes

purchases of ordinary shares in the Company from time to time in

order to satisfy upcoming grants. Further details are provided in

note 31 to the Financial Statements.

Future developments

Important events since the financial year end and likely future

developments are described in the Strategic Report on pages 18 to

77 and in note 34 to the Financial Statements.

and Risk Committee to fix their remuneration (Resolution 12) will be

proposed at the AGM.

Annual General Meeting (AGM)

The Notice of the AGM can be found on pages 208 to 211, which

also details methods of shareholder engagement to take place in

conjunction with the AGM. It is also available at henryboot.co.uk,

where a copy can be viewed and downloaded.

Additional shareholder information

This section sets out details of other matters on which the Directors

are required to report annually, but which do not appear elsewhere

in this document.

The information below summarises certain provisions of the current

Articles of Association of the Company (as adopted by special

resolution on 27 May 2011) (the Articles) and applicable English law

concerning companies (the Companies Act 2006). This is a summary

only and the relevant provisions of the Companies Act 2006 or the

Articles should be consulted if further information is required.

Share capital

The Company’s issued share capital comprises two classes of shares

being, respectively, ordinary shares of 10p each (ordinary shares) and

cumulative preference shares of £1 each (preference shares). Further

details of the share capital of the Company are set out in note 29 to

the Financial Statements. As at 31 March 2023, the ordinary shares

represent 97.10% of the total issued share capital of the Company

by nominal value and the preference shares represent 2.90% of such

total issued share capital. The ordinary shares and the preference

shares are in registered form. Both classes of share are admitted to

the Official List maintained by the Financial Conduct Authority.

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

Trust Company Limited

8,487,371

6.37

The external auditors, Ernst & Young LLP, have carried out the audit

The Fulmer Charitable Trust

5,739,580

4.40

of the 2022 financial results. Resolutions re-appointing Ernst and

Polar Capital

4,176,337

3.14

Young LLP as auditors (Resolution 11) and authorising the Audit

CORPORATE

GOVERNANCE REPORT

140

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

DIRECTORS’

REPORT

The Company’s ordinary shares are categorised as “Premium

Listed” and its preference shares as “Standard Listed”. A Standard

Listing is based on EU minimum standards for floating a company

on a public market whereas a Premium Listing requires compliance

with additional requirements set out in the Listing Rules of the

Financial Conduct Authority.

The Notice of the AGM on pages 208 to 211 includes the

following resolutions:

•

An ordinary resolution (Resolution 13) to renew the authority of

the Directors to allot shares up to a maximum nominal amount

of £4,457,727 representing approximately one-third (33.33%)

of the Company’s issued ordinary share capital at 31 March

2023. The authority will expire on 24 August 2024 or at the

conclusion of the next AGM, whichever is the earlier, but it is

the present intention of the Directors to seek annual renewal of

this authority. The Directors do not have any present intention of

exercising the authority.

•

A special resolution (Resolution 14) to enable the Directors to

continue to allot equity securities for cash in connection with

a rights or other issue pro rata to the rights of the existing

shareholders, but subject to certain exceptions, and for any

other purpose provided that the aggregate nominal value of

such allotments does not exceed £668,659 (approximately 5%

of the Company’s issued ordinary share capital at 31 March

2023). The authority will expire on 24 August 2024 or at the

conclusion of the next AGM, whichever is the earlier, but it is the

present intention of the Directors to seek annual renewal of this

authority. The Directors also confirm their intention that, in line

with the Pre-Emption Group’s Statement of Principles, no more

than 7.5% of the issued ordinary share capital of the Company

(excluding treasury shares) will be issued for cash on a non pre-

emptive basis during any rolling three-year period without prior

consultation with shareholders.

•

A special resolution (Resolution 15) to renew the authority of the

Company to make market purchases of up to 13,373,182 of

its own issued ordinary shares (10% of the Company’s issued

ordinary share capital at 31 March 2023). The minimum price

that may be paid under the authority for an ordinary share is 10p

and the maximum price is limited to not more than 5% above

the average of the middle market quotations for an ordinary

share as derived from the London Stock Exchange Daily Official

List for the five business days before the purchase is made. The

Directors will exercise the authority only if they are satisfied that it

would be likely to result in an increase in expected earnings per

share of the ordinary share capital in issue and that any purchase

will be in the best interests of shareholders generally. If the

Directors do decide to exercise the authority, ordinary shares

so acquired will either be cancelled or held as treasury shares,

depending upon the circumstances prevailing at the time.

Rights and obligations attaching to shares

Subject to the Companies Act 2006 and other shareholders’ rights,

any share may be issued with such rights and restrictions as the

Company may by ordinary resolution decide or, if no such resolution

has been passed or so far as the resolution does not make specific

provision, as the Board of Directors for the time being of the

Company (the Board) may decide. Subject to the Companies Act

2006, the Articles and any resolution of the Company, the Board

may deal with any unissued shares as it may decide.

Rights of preference shares

The preference shares carry the following rights in priority to the ordinary

shares but carry no further right to participate in profits or assets:

•

the right to receive out of the profits of the Company a fixed

cumulative preferential dividend at the rate of 5.25% per annum

on the capital paid up thereon;

•

the right on a return of assets on a winding up to payment of

the capital paid up thereon together with a sum calculated at

the rate of 6.00% per annum in respect of any period up to the

commencement of the winding up for which such preferential

dividend as referred to above has not been paid; and

•

the right on a return of assets in a reduction of capital to

repayment of the capital paid up thereon together with a sum

equal to all arrears (if any) of such preferential dividend as

referred to above. The preference shares shall not confer on the

holders of them any right to receive notice of or to be present or

to vote at any general meeting unless either:

•

a resolution is proposed directly affecting the rights or

privileges of the holders of the preference shares as a

separate class; or

•

at the date of the notice convening the general meeting,

the fixed cumulative preferential dividend provided in the

Articles shall be in arrears for more than six months.

Voting

For 2023, the Company has determined that voting on each

resolution will be conducted by way of a poll. The Company believes

that a poll is more representative of shareholders’ voting intentions

because shareholder votes are counted according to the number of

votes held and all votes tendered are taken into account. The results

of the poll will be announced to the London Stock Exchange and will

be made available on the Company’s website at www.henryboot.

co.uk as soon as practicable following the conclusion of the AGM.

Under the Companies Act 2006, shareholders are entitled to appoint

a proxy to exercise all or any of their rights to attend and to speak

and vote on their behalf at a general meeting or class meeting.

Restrictions on voting

A shareholder shall not be entitled to vote at any general meeting or

class meeting in respect of any shares held by him unless all calls

and other sums presently payable by him in respect of that share

have been paid. In addition, holders of default shares (as defined

in the Articles) shall not be entitled to vote during the continuance

of a default in providing the Company with information concerning

interests in those shares required to be provided (following relevant

notification) under the Companies Act 2006.

141

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Deadlines for voting rights

Full details of the deadlines for exercising voting rights in respect of

the resolutions to be considered at the AGM to be held on 25 May

2023 are set out in the Notice of AGM on pages 208 to 211.

Dividends and distributions

The Company may, by ordinary resolution, declare a dividend to be

paid to the shareholders but no dividend shall exceed the amount

recommended by the Board. The Board may pay interim dividends

and also any fixed rate dividend whenever the financial position

of the Company justifies its payment in the opinion of the Board.

If the Board acts in good faith, none of the Directors shall incur

any liability to the holders of shares with preferred rights for any

loss they may suffer in consequence of the payment of an interim

dividend on other shares.

Variation of rights

The Articles specify that the special rights attached to any class of

shares may, either with the consent in writing of holders of three-

quarters of the issued shares of that class or with the sanction of

a special resolution passed at a separate meeting of such holders

(but not otherwise), be modified or abrogated.

Transfer of shares

Under and subject to the restrictions in the Articles, any shareholder

may transfer some or all of their shares in certificated form by

transfer in writing in any usual form or in any other form which the

Board may approve. Uncertificated shares must be transferred

by means of a relevant system, such as CREST. The Board may,

save in certain circumstances, refuse to register any transfer of a

certificated share not fully paid up. The Board may also refuse to

•

in respect of only one class of shares;

•

duly stamped or exempt from stamp duty;

•

delivered to the office or at such other place as the Board may

decide for registration; and

•

accompanied by the certificate for the shares to be transferred

and such other evidence (if any) as the Board may reasonably

require to show the right of the intending transferor to transfer

the shares.

In addition, the Board may refuse to register any transfer of shares

which is in favour of (i) a child, bankrupt or person of unsound mind

or (ii) more than four transferees.

Repurchase of shares

Subject to the provisions of the Companies Act 2006 and to any

rights conferred on the holders of any class of shares, the Company

may purchase all or any of its shares of any class, including any

redeemable shares.

Amendment to the Articles of Association

Any amendments to the Articles may be made in accordance with the

provisions of the Companies Act 2006 by way of special resolution.

Appointment and replacement of Directors

The Directors shall not, unless otherwise determined by an ordinary

resolution of the Company, be less than three nor more than 15 in

number. Directors may be appointed by the Company by ordinary

resolution or by the Board. A Director appointed by the Board shall

retire from office at the next AGM of the Company but shall then

be eligible for reappointment. The Board may appoint one or more

Directors to hold any office or employment under the Company for

such period (subject to the Companies Act 2006) and on such terms

as it may decide and may revoke or terminate any such appointment.

At each AGM any Director who has been appointed by the Board

since the previous AGM and any Director selected to retire by

rotation shall retire from office. At each AGM, one-third of the

Directors who are subject to retirement by rotation or, if the number

is not an integral multiple of three, the number nearest to one-third

but not exceeding one-third shall retire from office. In addition,

there shall also be required to retire by rotation any Director who

at any AGM of the Company shall have been a Director at each

of the preceding two AGMs of the Company, provided that they

were not appointed or reappointed at either such AGM and they

have otherwise ceased to be a Director and been reappointed by

general meeting of the Company at or since either such AGM. The

Company’s policy is that all of the Directors should be, and are,

subject to annual re-election.

The Company may, by ordinary resolution of which special notice

has been given in accordance with the Companies Act 2006,

remove any Director before their period of office has expired

notwithstanding anything in the Articles or in any agreement

between them and the Company. A Director may also be removed

from office by the service on them of a notice to that effect signed

by or on behalf of all the other Directors, being not less than three in

number. The office of a Director shall be vacated if:

they are prohibited by law from being a Director;

ii.

they become bankrupt or make any arrangement or

composition with their creditors generally;

iii.

they are physically or mentally incapable of acting as a Director,

in the opinion of a registered medical practitioner who is

treating them;

iv.

a court makes an order that they are prevented from exercising

their powers or rights by reasons of their mental health;

for more than six months they are absent, without special leave

of absence, from the Board, from meetings of the Board held

during that period, and the Board resolves that their office be

vacated; or

vi.

they serve on the Company notice of their wish to resign.

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

CORPORATE

GOVERNANCE REPORT

142

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

DIRECTORS’

REPORT

Powers of the Directors

The business of the Company shall be managed by the Board

which may exercise all the powers of the Company, subject to

the provisions of the Articles and any resolution of the Company’s

shareholders.

The Articles specify that the Board may exercise all the powers

of the Company to borrow money and to mortgage or charge all

or any part of its undertaking, property and assets and uncalled

capital and to issue debentures and other securities, subject to the

provisions of the Articles.

Takeovers and significant agreements

The Company is a party to the following significant agreements

that take effect, alter or terminate on a change of control of the

Company following a takeover bid:

•

the Company’s share schemes and plans; and

•

bank facilities whereby upon a “change of control” the lenders

shall consult with the Company for a period not greater than

30 days (commencing on the date of the change of control) to

determine whether and on what basis the lenders are prepared

to continue the facility.

Information rights

Beneficial owners of shares who have been nominated by the

registered holder of those shares to enjoy information rights under

Section 146 of the Companies Act 2006 are required to direct all

communications to the registered holder of their shares, rather than

to the Company’s registrars, Computershare Investor Services PLC

or to the Company directly.

Approved by the Board and signed by its order by

AMY

STANBRIDGE

COMPANY

SECRETARY

12 April 2023

The following table sets out where stakeholders can find relevant Non-Financial information within this Annual Report, further to the Financial

Reporting Directive requirements contained in sections 414CA and 414CB of the Companies Act 2006. Where possible, it also states where

additional information can be found that support these requirements.

Reporting requirement Relevant Henry Boot policies and procedures Where to read more in this report Page

Business Model

20 to 23

Principal risks and impact of

business activity

Risks and Uncertainties

Audit and Risk Committee Report

50 to 57

111 to 114

Non-financial KPIs

Strategy

Key Performance Indicators

28 to 31

Employee Engagement

Board Diversity Policy

Board Stakeholder Policy

Our People

Section 172

Employee Engagement

63 to 67

59 to 60

96 to 98

Human Rights

Modern slavery statement & Policy

Rights to Work

Whistleblowing

Our People

63 to 67

Social matters

Board Stakeholder Policy

Our Responsible Business

Section 172

32 to 36

59 to 60

Anti-bribery and corruption

Anti-bribery and Corruption Policy

Our People

63 to 67

Environmental matters

Board Stakeholder Policy

Our Planet

TCFD

Section 172

Employee Engagement

68 to 77

59 to 60

96 to 98

143

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

STATEMENT

DIRECTORS’

RESPONSIBILITIES

RESPECT

THE

FINANCIAL

STATEMENTS

The directors are responsible for preparing the annual report and

the financial statements in accordance with applicable United

Kingdom law and regulations.

Company law requires the directors to prepare financial statements

for each financial year. Under that law the directors have elected

to prepare the group and parent company financial statements in

accordance with UK-adopted international accounting standards

(“IFRSs”). Under company law the directors must not approve the

financial statements unless they are satisfied that they give a true and

fair view of the state of affairs of the group and the company and of

the profit or loss of the group and the company for that period.

In preparing these financial statements the directors are required to:

•

select suitable accounting policies in accordance with IAS 8

Accounting Policies, Changes in Accounting Estimates and

Errors and then apply them consistently;

•

make judgements and accounting estimates that are

reasonable and prudent;

•

present information, including accounting policies, in a manner

that provides relevant, reliable, comparable and understandable

information;

•

provide additional disclosures when compliance with the

specific requirements in IFRSs is insufficient to enable users to

understand the impact of particular transactions, other events

and conditions on the group and company financial position

and financial performance;

•

in respect of the group financial statements, state whether

UK-adopted international accounting standards have been

followed, subject to any material departures disclosed and

explained in the financial statements;

•

in respect of the parent company financial statements, state

whether UK-adopted international accounting standards, have

been followed, subject to any material departures disclosed and

The directors are responsible for keeping adequate accounting

records that are sufficient to show and explain the company’s and

group’s transactions and disclose with reasonable accuracy at

any time the financial position of the company and the group and

enable them to ensure that the company and the group financial

statements comply with the Companies Act 2006. They are also

responsible for safeguarding the assets of the group and parent

company and group and hence for taking reasonable steps for the

prevention and detection of fraud and other irregularities.

Under applicable law and regulations, the directors are also

responsible for preparing a strategic report, directors’ report,

directors’ remuneration report and corporate governance statement

that comply with that law and those regulations. The directors are

responsible for the maintenance and integrity of the corporate and

financial information included on the company’s website.

The directors confirm, to the best of their knowledge:

•

that the consolidated financial statements, prepared in

accordance with UK-adopted international accounting

standards give a true and fair view of the assets, liabilities,

financial position and profit of the parent company and

undertakings included in the consolidation taken as a whole;

•

that the annual report, including the strategic report, includes a

fair review of the development and performance of the business

and the position of the company and undertakings included in

the consolidation taken as a whole, together with a description

of the principal risks and uncertainties that they face; and

•

that they consider the annual report, taken as a whole, is fair,

balanced and understandable and provides the information

necessary for shareholders to assess the company’s position,

performance, business model and strategy.

Approved by the Board and signed on its behalf by

explained in the financial statements; and

•

prepare the financial statements on the going concern basis

unless it is inappropriate to presume that the company and/ or

the group will continue in business.

TIM

ROBERTS

DIRECTOR

12 April 2023

DARREN

LITTLEWOOD

DIRECTOR

12 April 2023

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

144

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

FINANCIAL

Independent Auditors’ Report 146

Consolidated Statement of

Comprehensive Income

155

Statements of Financial Position 156

Statements of Changes in Equity 157

Statements of Cash Flows 158

Notes to the Financial Statements 159

145

INDEPENDENT

146

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

AUDITORS’

REPORT

to the members of Henry Boot PLC

Opinion

In our opinion:

•

Henry Boot PLC’s group financial statements and parent company

financial statements (the “financial statements”) give a true and fair

view of the state of the group’s and of the parent company’s affairs

as at 31 December 2022 and of the group’s profit for the year

then ended;

•

the group financial statements have been properly prepared in

accordance with UK adopted international accounting standards;

•

the parent company financial statements have been properly

prepared in accordance with UK adopted international accounting

standards as applied in accordance with section 408 of the

Companies Act 2006; and

•

the financial statements have been prepared in accordance with

the requirements of the Companies Act 2006.

We have audited the financial statements of Henry Boot PLC (the

‘parent company’) and its subsidiaries (the ‘group’) for the year

ended 31 December 2022 which comprise:

Group Parent Company

The non-audit services prohibited by the FRC’s Ethical Standard

were not provided to the group or the parent company and we

remain independent of the group and the parent company in

conducting the audit.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that

the directors’ use of the going concern basis of accounting in

the preparation of the financial statements is appropriate. Our

evaluation of the directors’ assessment of the group and parent

company’s ability to continue to adopt the going concern basis of

accounting included:

•

confirming our understanding of management’s going concern

assessment process, through our walkthrough of the Group’s

financial close process and engaging with management early

to ensure all key factors we identified were considered in their

assessment.

•

obtaining management’s going concern assessment,

including the cash forecast and forecast covenant calculation,

which covers the period to 31 December 2024. The Group

has modelled a base scenario and a severe but plausible

Group statement of financial

position as at 31 December 2022

Group statement of comprehensive

income for the year then ended

Group statement of changes in

equity for the year then ended

Parent Company statement

of financial position as at 31

December 2022

Parent Company statement of

changes in equity for the year

then ended

Parent Company statement of

cash flows for the year then

ended

downside scenario in their cash forecasts and covenant

calculations in order to incorporate unexpected changes to

the forecasted liquidity of the Group. This downside scenario

models a significant curtailment of activity and is modelled on a

recessionary environment similar to that experienced during the

global financial crisis in 2008.

•

testing the factors and assumptions included in each modelled

scenario for the cash forecast and covenant calculation which

included consideration of whether climate change could impact

Group statement of cash flows for Related notes 1 to 36 to the

the assessment. We also considered the appropriateness

the year then ended

Related notes 1 to 36 to the

financial statements, including a

summary of significant accounting

policies

financial statements including a

summary of significant accounting

policies

of the models used to calculate the cash forecasts and

covenant calculations to determine if they were appropriately

sophisticated to be able to make an assessment on going

concern.

•

testing the integrity and clerical accuracy of the model.

•

considering the mitigating factors included in the cash forecasts

and covenant calculations that are within control of the

The financial reporting framework that has been applied in their

preparation is applicable law and UK adopted international

accounting standards and as regards the parent company financial

statements, as applied in accordance with section 408 of the

Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards

on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities

under those standards are further described in the Auditor’s

responsibilities for the audit of the financial statements section of

our report. We believe that the audit evidence we have obtained is

sufficient and appropriate to provide a basis for our opinion

Independence

We are independent of the group and parent in accordance with

the ethical requirements that are relevant to our audit of the financial

statements in the UK, including the FRC’s Ethical Standard as

applied to listed public interest entities, and we have fulfilled our

other ethical responsibilities in accordance with these requirements.

Group, for example, reducing uncommitted development and

acquisition expenditure. This included an assessment of the

Group’s non-operating cash outflows.

•

verifying the credit facilities available to the Group, being the

secured loan facility of £105m.

•

performing reverse stress testing in order to identify what

factors would lead to the Group utilising all liquidity or breaching

the financial covenant during the going concern period.

•

reviewing the Group’s going concern disclosures included in

the annual report in order to assess that the disclosures were

appropriate and in conformity with the reporting standards.

147

Other procedures

Full scope components

95%

Specific scope

components

Other procedures

Full scope components

83%

Specific scope

components

15%

Based on the work we have performed, we have not identified

any material uncertainties relating to events or conditions that,

individually or collectively, may cast significant doubt on the group

and parent company’s ability to continue as a going concern for a

period to 31 December 2024.

In relation to the group and parent company’s reporting on how they

have applied the UK Corporate Governance Code, we have nothing

material to add or draw attention to in relation to the directors’

statement in the financial statements about whether the directors

considered it appropriate to adopt the going concern basis of

accounting.

Our responsibilities and the responsibilities of the directors with

respect to going concern are described in the relevant sections of

this report. However, because not all future events or conditions can

be predicted, this statement is not a guarantee as to the group’s

ability to continue as a going concern.

Overview of our audit approach

Audit scope

•

We performed an audit of the complete

financial information of six components and

audit procedures on specific balances for a

further ten components.

•

The components where we performed full

or specific audit procedures accounted for

93% of Profit before tax, 99% of Revenue

and 98% of Total assets.

within that component that we considered had the potential for

the greatest impact on the significant accounts in the financial

statements either because of the size of these accounts or their risk

profile.

The reporting components where we performed audit procedures

accounted for 93% (2021: 95%) of the Group’s Profit before tax,

99% (2021: 99%) of the Group’s Revenue and 98% (2021: 96%)

of the Group’s Total assets. For the current year, the full scope

components contributed 81% (2021: 71%) of the Group’s Profit

before tax, 95% (2021: 94%) of the Group’s Revenue and 83%

(2021: 84%) of the Group’s Total assets. The specific scope

component contributed 12% (2021: 24%) of the Group’s Profit

before tax, 4% (2021: 5%) of the Group’s Revenue and 15%

(2021: 12%) of the Group’s Total assets. The audit scope of

these components may not have included testing of all significant

accounts of the component but will have contributed to the

coverage of significant accounts tested for the Group.

Of the remaining 39 components that together represent 7% of

the Group’s Profit before tax, none are individually greater than

4% of the Group’s Profit before tax. For these components, we

performed other procedures, including analytical review and testing

of consolidation journals and intercompany eliminations to respond

to any potential risks of material misstatement to the Group financial

statements.

The charts below illustrate the coverage obtained from the work

performed by our audit teams.

Key audit

matters

•

Valuation of contract balances and

associated revenue and profit recognition

•

Valuation of house building inventories and

profit recognition

Profit before tax

•

Valuation of investment properties

Materiality

•

Overall

group

materiality

£2.4m

which

represents 5% of Profit before tax.

An overview of the scope of the Parent

Company and group audits

Tailoring the scope

Our assessment of audit risk, our evaluation of materiality and our

allocation of performance materiality determine our audit scope for

each company within the Group. Taken together, this enables us

to form an opinion on the consolidated financial statements. We

take into account size, risk profile, the organisation of the group

and effectiveness of group-wide controls, changes in the business

environment, the potential impact of climate change and other

factors such as recent Internal audit results when assessing the

level of work to be performed at each company.

In assessing the risk of material misstatement to the Group financial

statements, and to ensure we had adequate quantitative coverage

of significant accounts in the financial statements, of the 55

reporting components of the Group, we selected 16 components

covering entities, which represent the principal business units within

the Group.

Of the 16 components selected, we performed an audit of the

complete financial information of six components (“full scope

components”) which were selected based on their size or risk

characteristics. For the remaining ten components (“specific scope

components”), we performed audit procedures on specific accounts

Revenue

Total assets

Involvement with component teams

All audit work performed for the purposes of the audit was

undertaken by the Group audit team.

Other procedures

Full scope components

81%

Specific scope

components

12%

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

INDEPENDENT

AUDITOR’S REPORT

to the members of Henry Boot PLC

148

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Climate change

Stakeholders are increasingly interested in how climate change

will impact Henry Boot PLC. The Group has determined that

the most significant future impacts from climate change on their

operations will be from various factors that are explained on

pages 72 to 75 in the required TCFD on page 52 in the principal

risks and uncertainties. They have also explained their climate

commitments on page 35. All of these disclosures form part of the

“Other information,” rather than the audited financial statements.

Our procedures on these unaudited disclosures therefore consisted

solely of considering whether they are materially inconsistent with

the financial statements, or our knowledge obtained in the course of

the audit or otherwise appear to be materially misstated, in line with

our responsibilities on “Other information”.

In planning and performing our audit we assessed the potential

impacts of climate change on the Group’s business and any

consequential material impact on its financial statements.

The Group has explained in the Basis of preparation note how

they have reflected the impact of climate change in their financial

statements. Significant judgements and estimates relating to climate

change are included on page 161.

Our audit effort in considering the impact of climate change on the

financial statements was focused on evaluating management’s

assessment of the impact of climate risk, physical and transition,

their climate commitments, the effects of material climate risks

disclosed on pages 72 to 75 and the significant judgements and

estimates disclosed on page 161 and whether these have been

appropriately reflected in asset values and associated disclosures.

As part of this evaluation, we performed our own risk assessment,

supported by our climate change internal specialists, to determine

the risks of material misstatement in the financial statements from

climate change which needed to be considered in our audit.

We also challenged the Directors’ considerations of climate

change risks in their assessment of going concern and viability and

associated disclosures. Where considerations of climate change

were relevant to our assessment of going concern, these are

described above.

Based on our work we have considered the impact of climate

change on the financial statements to impact certain key audit

matters. Details of our procedures and findings are included in

our explanation of the valuation of investment properties key audit

matter below.

Key audit matters

Key audit matters are those matters that, in our professional

judgment, were of most significance in our audit of the financial

statements of the current period and include the most significant

assessed risks of material misstatement (whether or not due to

fraud) that we identified. These matters included those which had

the greatest effect on: the overall audit strategy, the allocation of

resources in the audit; and directing the efforts of the engagement

team. These matters were addressed in the context of our audit of

the financial statements as a whole, and in our opinion thereon, and

we do not provide a separate opinion on these matters.

149

Risk Our response to the risk

Key observations

communicated

to the Audit Committee

Valuation of contract

balances and associated

revenue and profit

recognition

Refer to the Audit & Risk Committee

Report (page 112); Accounting policies

(page 162); and Notes 1, 17 and 21 of

the Consolidated Financial Statements

(pages 169, 187 and 190)

The Group has reported revenues

from construction and development

contracts for the year of £154.7m

(2021 - £78.8m) and cost of sales of

£140.1m (2021 - £84.1m). The Group

has reported contract assets of £19.3m

(2021 - £7.5m) and contract liabilities of

£4.0m (2021 - £5.0m).

For construction and development

contract activity the performance

obligation is satisfied over time. This

means that revenue is recognised

by measuring the progress towards

completing the performance obligation

satisfactorily. This assessment requires

management to estimate the stage

of completion of construction and

development contract activity and

assess costs to complete. Forecasting

is highly subjective and is an area that

could lead to misstatement of revenue,

profit and related construction and

development contract balances either

through error or management bias.

We performed a walkthrough to understand the key processes

and identify key controls.

We challenged the cost to complete assumptions by:

•

Holding discussions with project managers and quantity

surveyors to understand the basis for the assumptions

and for a sample of incomplete contracts, attending the

year end valuation meetings where the costs to complete

are challenged internally;

•

Testing a sample of costs to complete by agreeing through

to purchase order, contract or other evidence;

•

Understanding the nature of costs to come and evaluating

the split between fixed and variable costs to assess the

cost volatility risk;

•

For contracts where costs with sub-contractors are fixed,

we assessed management’s consideration of key supplier

resilience; and

•

We obtained the post year end Cost Variance Reports

(‘CVR’s’) to ascertain whether there had been any

unfavourable or favourable margin movements that should

have been reflected at year end.

We performed sensitivity analysis to determine what level of

cost increase or project delays would be required to have a

material impact on the amounts recognised as revenue and

cost of sales in the year.

We recalculated the percentage completion and margin

recognised in the year.

We analysed historical accuracy of forecasting by comparing

original forecast margins to their final actual margins on

contracts completed in the year.

We agreed total expected revenue for the contract through to

signed contracts and approved variation orders.

Based on our audit

procedures we have

concluded that the

contract balances, revenue

and profit recognised in

the year are not materially

misstated.

We tested costs incurred in the period to third party invoices

and the allocation of costs to the correct contracts.

We visited the three largest contract sites to gain a deeper

understanding of the projects and to identify any contra-

indicators of the stage of completion through inspection and

discussion with the onsite project managers.

We agreed key contractual terms to customer contracts.

We reviewed board minutes and the legal claims log to

determine whether there are any claims not reflected in the

year end contract assessments.

We assessed the completeness of onerous contracts to

ensure that these are accounted correctly in line with IAS 37.

We performed full and specific scope audit procedures

over this risk area in two components, which covered

100% of the risk amount.

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

INDEPENDENT

AUDITOR’S REPORT

to the members of Henry Boot PLC

150

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Risk Our response to the risk

Key observations

communicated

to the Audit Committee

Valuation of house building

inventories and profit

recognition

Refer to the Audit Committee Report

(page 112); Accounting policies (page

165); and Note 20 of the Consolidated

Financial Statements (page 189)

The Group holds house building

inventories of £80.6m (2021 - £52.5m).

There is a risk that the margin used to

recognise profit on each development

is incorrect and that the carrying

value of inventory could be subject to

impairment write downs.

The carrying value of inventory is

determined by reference to a number

of assumptions inherent in the site

forecasts, such as costs to complete

and expected selling price. These are

used to calculate the expected margin

on each development and the cost of

sale recorded when a plot is sold. There

is a risk that these assumptions may

be subject to management override

or error.

We performed a walkthrough to understand the key process

and identified key controls.

For completed sites, we compared the budgeted and

actual costs and margin to assess the historical accuracy of

management’s forecasting and used this to profile where the

greatest risk lies in the cost of sales recognised in the year.

We tested a sample of costs incurred in the year to purchase

invoice and checked they were allocated to the appropriate site.

We challenged the cost to complete assumptions on all

incomplete sites by performing the following procedures;

•

We held a meeting with the commercial director to assess

the status and performance to date of the active sites and

the basis for the cost to complete assumptions made,

including understanding the reasons behind any excess

costs or savings recognised on the site since the initial

forecast. This also enabled us to challenge whether the

costs to complete assumptions include future market

indicators of inflation and raw material cost increases;

•

We tested a sample of costs to complete by agreeing

through to third party support (e.g. tender, purchase order);

•

We compared the original budgeted margin to the current

expected site margin to assess the historical accuracy of

management’s forecasting and the impact on cost of sales;

•

We compared the margin recognised to date to the current

expected site margin to identify any significant deviations.

Where there were significant deviations we understood the

drivers and substantiated these;

Based on our audit

procedures we have

concluded that the house

building inventory balance

and profit recognised in

the year are not materially

misstated.

•

We performed a stress test to see by how much costs to

complete would have to change to have material impact on

the margin recognised in the financial statements; and

•

Where available, we inspected the post year end site

forecasts to ascertain whether there had been any

significant margin movements that should have been

reflected at year end.

•

We challenged the expected selling price assumptions on all

incomplete sites by performing the following procedures;

•

We held a meeting with the commercial director to assess

the basis for the expected selling price assumptions made.

This enabled us to challenge whether the expected selling

price assumptions include future market indicators for

house prices;

•

We inspected industry publications to assess expectations

regarding house prices to identify any contradictory

evidence for the expected selling price; and

•

We tested a sample of expected selling prices to the current

market price on the external website or the most recent

selling price for the same/similar house type.

We performed a stress test to see what expected selling prices

would have to change by to result in a material write down to

inventory.

We performed full and specific scope audit procedures over

this risk area in one component which covered 100% of the

risk amount.

151

Risk Our response to the risk

Key observations

communicated

to the Audit Committee

Valuation of investment

properties

Refer to the Audit Committee Report

(page 112); Accounting policies (page

164); and Note 14 of the Consolidated

Financial Statements (pages 180 to 184)

We performed walkthroughs to understand the key process

and identify key controls. This is done by selecting relevant

transactions and tracing them through the process.

For a sample of investment properties, we used our internal

EY valuations specialists to assess the appropriateness of

the valuations provided by Management’s specialist valuer.

We assessed these through reading the external valuer

reports and testing the underlying data used by the external

valuer in forming their valuation. This included validating key

assumptions around rent, yields and commerical property

values to supporting third party evidence or market activity,

and by holding discussions directly with the external valuer to

confirm their valuation approach, including their consideration

of climate risk. We also considerd if there was any contrary

evidence to management’s valuations.

Where applicable, we tested a sample of properties in the

course of construction by agreeing the valuation through to

relevant agreements and progress reports.

Tested the appropriateness of any material adjustments from

the valuation determined by the external valuer to the book

value recorded.

Based on our audit

procedures we have

concluded that the

contract balances, revenue

and profit recognised in

the year are not materially

misstated.

The Group holds Investment property of

£97.1m (2021 - £104.2m).

There is a risk that the carrying value

of investment properties is misstated,

given that the carrying value of these

assets is based on a number of

assumptions which contain inherent

uncertainties and which require

management judgement. Uncertainties

in the valuations include yields,

market rent, actual rent achieved and

commercial property values amongst

other building specific assumptions.

In addition, there is a risk that management

inappropriately override the valuation

determined by the external valuer.

We performed full and specific scope audit procedures over

this risk area in six components, which covered 98% of the

risk amount.

Our application of materiality

We apply the concept of materiality in planning and performing the

audit, in evaluating the effect of identified misstatements on the

audit and in forming our audit opinion.

Materiality

The magnitude of an omission or misstatement that, individually

or in the aggregate, could reasonably be expected to influence

the economic decisions of the users of the financial statements.

Materiality provides a basis for determining the nature and extent of

our audit procedures.

We determined materiality for the Group to be £2.4 million (2021:

£1.8 million), which is 5% (2021: 5%) of Profit before tax (2021:

Profit before tax). We believe that Profit before tax provides us with

an appropriate basis of materiality and is the most relevant measure

for stakeholders as it is a focus of both management and investors

We determined materiality for the Parent Company to be £2.4

million (2021: £2.0 million), which is 2% (2021: 2%) of Equity (2021:

Equity). The increase in materiality is due to dividends received from

subsidiaries in the year.

Performance materiality

The application of materiality at the individual account or balance

level. It is set at an amount to reduce to an appropriately low level

the probability that the aggregate of uncorrected and undetected

misstatements exceeds materiality.

On the basis of our risk assessments, together with our assessment

of the Group’s overall control environment, our judgement was

that performance materiality was 75% (2021: 75%) of our planning

materiality, namely £1.8m (2021: £1.3m). We have set performance

materiality at this percentage due to this being a recurring audit with

a history of few misstatements.

Audit work at component locations for the purpose of obtaining

audit coverage over significant financial statement accounts is

undertaken based on a percentage of total performance materiality.

The performance materiality set for each component is based

on the relative scale and risk of the component to the Group as

a whole and our assessment of the risk of misstatement at that

component. In the current year, the range of performance materiality

allocated to components was £0.4m to £1.8m (2021: £0.3m to

£1.3m).

Reporting threshold

An amount below which identified misstatements are considered as

being clearly trivial.

We agreed with the Audit Committee that we would report to them

all uncorrected audit differences in excess of £0.1m (2021: £0.09m),

which is set at 5% of planning materiality, as well as differences

below that threshold that, in our view, warranted reporting on

qualitative grounds.

We evaluate any uncorrected misstatements against both the

quantitative measures of materiality discussed above and in light of

other relevant qualitative considerations in forming our opinion.

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

INDEPENDENT

AUDITOR’S REPORT

to the members of Henry Boot PLC

152

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Other information

The other information comprises the information included in the

annual report set out on pages 1 to 143, other than the financial

statements and our auditor’s report thereon. The directors are

responsible for the other information contained within the annual

report.

Our opinion on the financial statements does not cover the other

information and, except to the extent otherwise explicitly stated in

this report, we do not express any form of assurance conclusion

thereon.

Our responsibility is to read the other information and, in doing so,

consider whether the other information is materially inconsistent

with the financial statements or our knowledge obtained in the

course of the audit, or otherwise appears to be materially misstated.

If we identify such material inconsistencies or apparent material

misstatements, we are required to determine whether this gives rise

to a material misstatement in the financial statements themselves.

If, based on the work we have performed, we conclude that there is

a material misstatement of the other information, we are required to

report that fact.

We have nothing to report in this regard.

Opinions on other matters prescribed

by the Companies Act 2006

In our opinion, the part of the directors’ remuneration report to

be audited has been properly prepared in accordance with the

Companies Act 2006.

In our opinion, based on the work undertaken in the course of

the audit:

•

the information given in the strategic report and the directors’

report for the financial year for which the financial statements

are prepared is consistent with the financial statements; and

•

the strategic report and the directors’ report have been

prepared in accordance with applicable legal requirements.

Matters on which we are required

to report by exception

In the light of the knowledge and understanding of the group and

the parent company and its environment obtained in the course

of the audit, we have not identified material misstatements in the

strategic report or the directors’ report.

We have nothing to report in respect of the following matters in

relation to which the Companies Act 2006 requires us to report to

you if, in our opinion:

•

adequate accounting records have not been kept by the parent

company, or returns adequate for our audit have not been

received from branches not visited by us; or

•

the parent company financial statements and the part of

the Directors’ Remuneration Report to be audited are not in

agreement with the accounting records and returns; or

•

certain disclosures of directors’ remuneration specified by law

are not made; or

•

we have not received all the information and explanations we

require for our audit

Corporate Governance Statement

We have reviewed the directors’ statement in relation to going

concern, longer-term viability and that part of the Corporate

Governance Statement relating to the group and company’s

compliance with the provisions of the UK Corporate Governance

Code specified for our review by the Listing Rules.

Based on the work undertaken as part of our audit, we have

concluded that each of the following elements of the Corporate

Governance Statement is materially consistent with the financial

statements or our knowledge obtained during the audit:

•

Directors’ statement with regards to the appropriateness of

adopting the going concern basis of accounting and any

material uncertainties identified set out on page 57;

•

Directors’ explanation as to its assessment of the company’s

prospects, the period this assessment covers and why the

period is appropriate set out on page 57;

153

•

Director’s statement on whether it has a reasonable expectation

that the group will be able to continue in operation and meets

its liabilities set out on page 57;

•

Directors’ statement on fair, balanced and understandable set

out on page 137;

•

Board’s confirmation that it has carried out a robust assessment

of the emerging and principal risks set out on page 50 to 56;

•

The section of the annual report that describes the review of

effectiveness of risk management and internal control systems

set out on page 111 to 114; and;

•

The section describing the work of the audit committee set out

on page 111 to 114.

Responsibilities of directors

As explained more fully in the directors’ responsibilities statement

set out on page 143, the directors are responsible for the

preparation of the financial statements and for being satisfied

that they give a true and fair view, and for such internal control

as the directors determine is necessary to enable the preparation

of financial statements that are free from material misstatement,

whether due to fraud or error.

In preparing the financial statements, the directors are responsible

for assessing the group and parent company’s ability to continue

as a going concern, disclosing, as applicable, matters related to

going concern and using the going concern basis of accounting

unless the directors either intend to liquidate the group or the parent

company or to cease operations, or have no realistic alternative but

to do so.

Auditor’s responsibilities for the audit

of the financial statements

Our objectives are to obtain reasonable assurance about whether

the financial statements as a whole are free from material

misstatement, whether due to fraud or error, and to issue an

auditor’s report that includes our opinion. Reasonable assurance

is a high level of assurance, but is not a guarantee that an audit

conducted in accordance with ISAs (UK) will always detect a

material misstatement when it exists. Misstatements can arise from

fraud or error and are considered material if, individually or in the

aggregate, they could reasonably be expected to influence the

economic decisions of users taken on the basis of these financial

statements.

Explanation as to what extent the audit was

considered capable of detecting irregularities,

including fraud

Irregularities, including fraud, are instances of non-compliance

with laws and regulations. We design procedures in line with our

responsibilities, outlined above, to detect irregularities, including

fraud. The risk of not detecting a material misstatement due to fraud

is higher than the risk of not detecting one resulting from error, as

fraud may involve deliberate concealment by, for example, forgery

or intentional misrepresentations, or through collusion. The extent

to which our procedures are capable of detecting irregularities,

including fraud is detailed below.

However, the primary responsibility for the prevention and detection

of fraud rests with both those charged with governance of the

company and management.

•

We obtained an understanding of the legal and regulatory

frameworks that are applicable to the group and determined

that the most significant are those that relate to the reporting

framework (UK adopted international accounting standards

as applied in accordance with section 408 of the Companies

Act 2006), the relevant tax compliance regulations in the UK,

employment law and building safety regulations

•

We understood how Henry Boot PLC is complying with those

frameworks by making enquiries of management, Internal Audit,

those responsible for legal and compliance procedures and the

Company Secretary. We corroborated our enquiries through

our review of board minutes and papers provided to the Audit

Committee.

•

We assessed the susceptibility of the group’s financial

statements to material misstatement, including how fraud

might occur by meeting with management from various parts

of the business to understand where it considered there was a

susceptibility to fraud. We also considered performance targets

and their propensity to influence efforts made by management

to manage earnings. We considered the programmes and

controls that the Group has established to address risks

identified, or that otherwise prevent, deter and detect fraud;

and how senior management monitors those programmes

and controls. Where the risk was considered to be higher, we

performed audit procedures to address each identified fraud

risk, as set out in the Key Audit Matters section above. These

procedures included testing manual journals and were designed

to provide reasonable assurance that the financial statements

were free from material fraud and error.

•

Based on this understanding we designed our audit procedures

to identify non-compliance with such laws and regulations.

Our procedures involved journal entry testing, with a focus on

manual consolidation journals, and journals indicating large

or unusual transactions based on our understanding of the

business; enquiries of Group management and Internal Audit;

and focused testing, as referred to in the key audit matters

section above. In addition, we completed procedures to

conclude on the compliance of the disclosures in the Annual

Report and Accounts with the requirements of the relevant

accounting standards, UK legislation and the UK Corporate

Governance Code 2018.

A further description of our responsibilities for the audit of the

financial statements is located on the

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

INDEPENDENT

AUDITOR’S REPORT

to the members of Henry Boot PLC

154

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Other matters we are required to address

•

Following the recommendation from the audit committee, we

were appointed by the company on 26 May 2022 to audit the

financial statements for the year ending 31 December 2022 and

subsequent financial periods.

•

The period of total uninterrupted engagement including

previous renewals and reappointments is three years, covering

the years ending 31 December 2020 to 31 December 2022.

•

The audit opinion is consistent with the additional report to the

audit committee.

Use of our report

This report is made solely to the company’s members, as a body, in

accordance with Chapter 3 of Part 16 of the Companies Act 2006.

Our audit work has been undertaken so that we might state to the

company’s members those matters we are required to state to

them in an auditor’s report and for no other purpose. To the fullest

extent permitted by law, we do not accept or assume responsibility

to anyone other than the company and the company’s members

as a body, for our audit work, for this report, or for the opinions we

have formed.

VICTORIA

VENNING

(SENIOR

STATUTORY

AUDITOR)

for and on behalf of Ernst & Young LLP, Statutory Auditor

Manchester

12 April 2023

155

CONSOLIDATED STATEMENT OF

COMPREHENSIVE INCOME

for the year ended 31 December 2022

Note

2022

£’000

2021

£’000

Revenue

Cost of sales

341,419

(259,829)

230,598

(175,052)

Gross profit

Administrative expenses

Pension expenses

81,590

(36,143)

(4,312)

55,546

(32,174)

(6,039)

41,135

17,333

(Decrease)/increase in fair value of investment properties 14

(4,921)

7,972

Profit on sale of investment properties

646

1,340

Loss on sale of assets held for sale

(149)

—

Share of profit of joint ventures and associates 16

9,079

8,928

Profit on disposal of joint ventures 16

667

—

Operating profit

46,457

35,573

Finance income

1,641

724

Finance costs

(2,503)

(1,155)

Profit before tax

45,595

35,142

Tax 7

(7,725)

(4,482)

Profit for the year from continuing operations

37,870

30,660

Other comprehensive income/(expense) not being reclassified to

profit or loss in subsequent years:

Revaluation of Group occupied property 12

315

—

Deferred tax on property revaluations 19

(23)

(282)

Actuarial gain on defined benefit pension scheme 27

14,994

23,297

Deferred tax on actuarial gain 19

(3,749)

(4,840)

Total other comprehensive income not being reclassified to profit or loss in

subsequent years

11,537

18,175

Total comprehensive income for the year

49,407

48,835

Profit for the year attributable to:

Owners of the Parent Company

33,319

28,160

Non-controlling interests

4,551

2,500

37,870

30,660

Total comprehensive income attributable to:

Owners of the Parent Company

44,856

46,335

Non-controlling interests

4,551

2,500

49,407

48,835

Basic earnings per ordinary share for the profit attributable to owners of the

Parent Company during the year 9

25.0p

21.2p

Diluted earnings per ordinary share for the profit attributable to owners of the

Parent Company during the year 9

24.6p

20.9p

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

STATEMENTS

156

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

FINANCIAL

POSITION

as at 31 December 2022

Group Parent Company

2021

Note

2022

£’000

(restated

)

£’000

2022

£’000

(restated

)

£’000

Assets

Non-current assets

Intangible assets 11

2,933

3,716

—

Property, plant and equipment 12

28,766

26,349

380

317

Right-of-use assets 13

997

1,581

Investment properties 14

97,116

104,177

—

Investments 15

—

37,771

Investment in joint ventures and associates 16

9,990

12,165

—

Retirement benefit asset 27

6,188

—

6,188

—

Trade and other receivables 18

37,029

37,107

185,206

176,689

Deferred tax assets 19

249

3,389

307

3,522

183,268

188,484

229,915

218,375

Current assets

Inventories 20

291,778

235,296

—

Contract assets 17

19,257

7,556

—

Trade and other receivables 18

66,601

64,615

40,149

27,845

Current tax receivable

—

1,828

—

1,551

Cash

17,401

11,116

10,316

2,691

395,037

320,411

50,465

32,087

Liabilities

Current liabilities

Trade and other payables 22

95,827

72,155

89,308

86,173

Contract liabilities 21

4,006

5,033

—

Current tax liabilities

3,793

—

2,356

—

Borrowings 25

65,000

50,000

65,009

50,000

Lease liabilities 13

426

639

Provisions 26

4,003

5,427

—

173,055

133,254

156,707

136,214

Net current assets/(liabilities)

221,982

187,157

(106,242)

(104,127)

Non-current liabilities

Trade and other payables 22

4,568

1,669

—

Lease liabilities 13

607

1,021

Retirement benefit obligations 27

—

12,228

—

12,228

Deferred tax liability 19

4,401

4,582

1,548

—

Provisions 26

1,385

855

—

10,961

20,355

1,578

12,265

Net assets

394,289

355,286

122,095

101,983

Equity

Share capital 29

13,763

13,732

13,763

13,732

Property revaluation reserve 30

2,352

2,060

—

Retained earnings 30

365,692

328,348

100,680

81,414

Other reserves 30

7,482

6,744

8,619

7,881

Cost of shares held by ESOP trust 31

(967)

(1,044)

(967)

(1,044)

Equity attributable to owners

of the Parent Company

388,322

349,840

122,095

101,983

Non-controlling interests

5,967

5,446

—

Total equity

394,289

355,286

122,095

101,983

See ‘prior year restatements’ on page 159.

The Parent Company made a profit for the year of £15,987,000 (2021: £8,938,000).

The Financial Statements on pages 155 to 206 of Henry Boot PLC, registered number 160996, were approved by the Board of Directors

and authorised for issue on 12 April 2023.

On behalf of the Board

Tim Roberts

Director

Darren Littlewood

Director

157

STATEMENTS OF

CHANGES IN EQUITY

for the year ended 31 December 2022

Attributable to owners of the Parent Company

Cost of

Profit for the year

—

33,319

—

33,319

4,551

37,870

Other comprehensive income

—

292

11,245

—

11,537

—

11,537

Total comprehensive income

—

292

44,564

—

44,856

4,551

49,407

Equity dividends

—

(8,383)

—

(8,383)

(4,030)

(12,413)

Proceeds from shares issued

—

738

—

769

—

769

Share-based payments

30, 31

—

1,163

—

1,240

—

1,240

—

(7,220)

738

(6,374)

(4,030)

(10,404)

At 31 December 2022

13,763

2,352

365,692

7,482

(967)

388,322

5,967

394,289

capital

Retained

earnings

Other

reserves

Cost of

shares held

by ESOP

trust

Total

equity

Parent Company

Note

£’000

At 1 January 2021

13,718

61,357

7,541

(1,176)

81,440

Profit for the year

—

8,938

—

8,938

Other comprehensive expense

—

18,457

—

18,457

Total comprehensive expense

—

27,395

—

27,395

Equity dividends

—

(7,620)

—

(7,620)

Proceeds from shares issued

—

340

—

354

Share-based payments

—

282

—

132

414

(7,338)

340

132

(6,852)

At 31 December 2021

13,732

81,414

7,881

(1,044)

101,983

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

Profit for the year

—

15,987

—

15,987

Other comprehensive income

—

11,245

—

11,245

Total comprehensive income

—

27,232

—

27,232

Equity dividends

—

(8,383)

—

(8,383)

Proceeds from shares issued

—

738

—

769

Share-based payments

—

417

—

494

(7,966)

738

(7,120)

At 31 December 2022

13,763

100,680

8,619

(967)

122,095

capital

Property

revaluation

reserve

Retained

earnings

Other

reserves

held

by ESOP

trust

Total

Non-

controlling

interests

Total

equity

Group Note

£’000

At 1 January 2021

13,718

2,342

288,514

6,404

(1,176)

309,802

3,686

313,488

Profit for the year 30

—

28,160

—

28,160

2,500

30,660

Other comprehensive income

—

(282)

18,457

—

18,175

—

18,175

Total comprehensive income

—

(282)

46,617

—

46,335

2,500

48,835

Equity dividends 10

—

(7,620)

—

(7,620)

(740)

(8,360)

Proceeds from shares issued

—

340

—

354

—

354

Share-based payments 30, 31

—

837

—

132

969

—

969

—

(6,783)

340

132

(6,297)

(740)

(7,037)

At 31 December 2021

13,732

2,060

328,348

6,744

(1,044)

349,840

5,446

355,286

STATEMENTS

158

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

CASH

FLOWS

for the year ended 31 December 2022

Group

Parent Company

Note

2022

£’000

2021

£’000

2022

£’000

2021

£’000

Cash flows from operating activities

Cash generated from operations 32

Interest paid

Tax paid

(16,549)

(1,829)

(2,918)

(38,665)

(792)

(4,299)

(10,473)

(3,031)

(1,500)

(9,037)

(2,272)

(2,750)

Net cash flows from operating activities

(21,296)

(43,756)

(15,004)

(14,059)

Cash flows from investing activities

Purchase of intangible assets 11

—

(203)

—

Purchase of property, plant and equipment 12

(971)

(861)

(205)

(280)

Capital expenditure on investment property 14

(9,301)

(17,317)

—

Purchase of investment in associate 16

(2,112)

(2)

—

Proceeds on disposal of property, plant and equipment

(excluding equipment held for hire)

270

301

—

Proceeds on disposal of assets held for sale

10,987

—

Proceeds on disposal of investment properties

8,146

6,651

—

Advances of loans to joint ventures and associates

(8,560)

(12,999)

—

Repayment of loans from joint ventures and associates

10,904

—

Advances made to subsidiary undertakings

—

(22,676)

(87,409)

Repayments received from subsidiary undertakings

—

10,677

15,185

Proceeds on disposal of investment in joint ventures 16

6,873

4,252

—

Interest received

1,153

129

4,544

Dividends received from joint ventures and subsidiaries 16, 8

7,160

2,155

26,491

14,530

Net cash flows from investing activities

24,549

(17,894)

14,372

(53,430)

Cash flows from financing activities

Proceeds from shares issued

769

354

769

354

Movement in payables from joint ventures and associates

355

(701)

—

Advances received from subsidiary undertakings

—

4,713

5,007

Repayments made to subsidiary undertakings

—

(3,803)

(7,625)

Repayment of borrowings

(70,000)

(14,969)

(70,000)

(5,000)

Proceeds from new borrowings

85,000

55,000

85,000

55,000

Principal elements of lease payments

(679)

(683)

(48)

(130)

Dividends paid – ordinary shares 10

(8,362)

(7,599)

(8,362)

(7,599)

– non-controlling interests

(4,030)

(740)

—

– preference shares 10

(21)

Net cash flows from financing activities

3,032

30,641

8,248

39,986

Net increase/(decrease) in cash and cash equivalents

6,285

(31,009)

7,616

(27,503)

Cash and cash equivalents at beginning of year

11,116

42,125

2,691

30,194

Cash and cash equivalents at end of year

17,401

11,116

10,307

2,691

159

NOTES TO THE

FINANCIAL STATEMENTS

for the year ended 31 December 2022

The principal Accounting Policies adopted in the preparation of the Group’s Financial Statements are set out below. These policies have

been consistently applied to all years presented, unless otherwise stated.

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, England, United Kingdom S11 9PD.

Basis of preparation and statement of compliance

The Consolidated Financial Statements of the Group and the Financial Statements of the Parent Company have been prepared in

accordance with UK-adopted International Accounting Standards. They have been prepared on the historical cost basis, except for financial

instruments, investment properties and Group occupied land and buildings, which are measured at fair value.

The Directors have taken advantage of the exemption available under Section 408 of the Companies Act and not presented a statement

of comprehensive income for the Parent Company alone. See note 8.

The Group has considered the impact of climate change when preparing the financial statements. In particular, the potential effect on

balance sheet assets arising from either future physical or transition risk. Having undertaken this process we are satisfied no impairments are

required at this time, largely due to the natural churn and development of property assets, continued investment and replacement of plant

hire equipment and the consideration of appraisal processes on land acquisitions.

Prior year restatements

Amounts owed by Group undertakings (parent only) and joint ventures and associates

Amounts owed by Group undertakings (parent only) and joint ventures and associates have been restated for the period ended 31 December

2021. The Group previously recognised amounts owed by Group undertakings (parent only) and joint ventures and associates as been

entirely due within one year on the basis these amounts were repayable on demand. Following a review of the Group’s historic practice and

future plans not to call on all intercompany receivables in the short term, £176,689,000 of current intercompany receivables (parent only)

and £23,803,000 of amounts owed by joint ventures and associates at 31 December 2021 have been reclassified to non-current in line

with IAS 1. There is no impact on the Consolidated Statement of Comprehensive Income, Statement of Changes in Equity or Statement of

Cash Flows. The impact on the 31 December 2020 balance sheet would be to reclassify £102,181,000 of current intercompany receivables

(parent only) and £10,300,000 of amounts owed by joint ventures and associates to non-current receivables.

Government loans

The Group’s borrowings and trade receivables have been restated for the period ended 31 December 2021. The Group previously

recognised a government loan payable to the Homes and Communities Agency (HCA) amounting to £2,941,000 (2020: £2,941,000)

and a corresponding trade receivable from the related housebuilder. Following legal guidance on the nature of the agreement it has been

concluded that the Group has no residual obligation to the HCA in respect of the loan which is payable directly by the related housebuilder

and therefore no rights to receive a corresponding trade receivable from the related housebuilder. This has resulted in previously reported

borrowings reducing by £2,941,000 and trade receivables decreasing by the same. There is no impact on the Consolidated Statement of

Comprehensive Income, Statement of Changes in Equity or Statement of Cash Flows. The impact on the 31 December 2020 balance sheet

would be to decrease borrowings and trade receivables by £2,941,000.

Consolidation

The Consolidated Financial Statements are a consolidation of the Financial Statements of the Parent Company and all entities controlled by

the Company (its subsidiaries) made up to 31 December each year. Subsidiaries are all entities over which the Group has control. The Group

controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to

affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the

Group. They are deconsolidated from the date that control ceases.

Where necessary, adjustments are made to the Financial Statements of subsidiaries to bring the Accounting Policies used in line with those

used by the Group. All intra-group transactions, balances, income and expenses are eliminated on consolidation. The results of subsidiaries

acquired or disposed of during the year are included in the Consolidated Statement of Comprehensive Income from the effective date of

acquisition or to the effective date of disposal. Non-controlling interests in the fair value of the net assets of consolidated subsidiaries are

identified separately from the Group’s equity therein. Non-controlling interests consist of the amount of those interests at the date of the

original business combination and the non-controlling interests’ share of changes in equity since the date of the combination.

Investments in subsidiaries are accounted for at cost less impairment. Cost also includes direct attributable costs of investment.

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

NOTES TO THE

FINANCIAL STATEMENTS

for the year ended 31 December 2022

160

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Going concern

In undertaking their going concern review, which covers the period to December 2024, the Directors considered the Group’s principal risk

areas that they consider material to the assessment of going concern.

As the UK economy moves at a slow pace, the Directors have assessed the Group’s ability to operate in a more uncertain environment

in modelling a base case scenario. They have also modelled what they consider to be a severe downside scenario, including further

curtailments in activities. This downside scenario shows a c.50% reduction in sales and c.67% reduction in profits from the base case.

Construction and Development activity only takes place where contracted and likewise for Hallam Land where no sales are assumed in 2023

unless already contracted. For Stonebridge Homes a 10% decline in house prices is assumed along with a 25% reduction in the number of

plots sold and Banner Plant revenue declines c.25%. This downside model assumes that acquisition and development spend is restricted

other than that already committed and is all consistent with previous experience in recessionary environments. Having started 2023 with net

debt of £48.6m, and with c.£63.2m net debt at 28 February 2023, against facilities of £105.0m the Directors have concluded that the Group

is able to control the level of uncommitted expenditure, whilst delivering contracted schemes, allowing it to retain and even improve the cash

position in the event of a severe downside scenario, although the impact of doing so on the profit and loss account would be unavoidable.

The Group meets its day-to-day working capital requirements through a secured loan facility. The facility was renewed on 23 January 2020,

at a level of £75m, for a period of three years and extended by one year in January 2021 and a further year in January 2022 taking the

facility renewal to 23 January 2025 on the same terms as the existing agreement. The facility includes an accordion to increase the facility

by up to £30m, which was called on by the Group on 9 October 2022, increasing the overall facility to £105m. None of the modelling

undertaken by the Directors gives rise to any breach of bank facility covenants. The most sensitive covenant in our facilities relates to the

ratio of EBIT (Earnings Before Interest and Tax) on a 12-month rolling basis to senior facility finance costs. Our downside modelling, which

reflects a near 50% reduction in revenue and near 67% reduction in profit before tax from our base case for 2023, demonstrates significant

headroom over this covenant throughout the forecast period to the end of December 2024.

At the time of approving the Financial Statements, the Directors expect that the Company and the Group will have adequate resources,

liquidity and available bank facilities to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt

the going concern basis of accounting in preparing the Financial Statements. Further detail is contained in the Strategic Report on

pages 56 and 57.

Operating segments

The chief operating decision maker is the person or group that allocates resources to and assesses the performance of the operating

segments of an entity. The Group has determined that its chief operating decision maker is the Board of Henry Boot PLC (the ‘Board’).

Management has determined the operating segments based on the reports reviewed by the Board in making strategic decisions.

The Board considers the business based on the following operating segments:

•

Property Investment and Development, inclusive of property investment, property development, housebuilding and associated trading

activities;

•

Land Promotion, inclusive of land management, development and trading activities; and

•

Construction, inclusive of its PFI company and plant hire activities.

Whilst the following is not a reportable segment, information about it is considered by the Board in conjunction with the reportable

segments:

•

Group overheads, comprising central services, pensions, head office administration, in-house leasing and financing activities.

Joint ventures and associates

Joint ventures are all entities in which the Group has shared control with another entity, established by contractual agreement. Associates

are all entities over which the Group has significant influence but not control, generally accompanied by a share of between 20% and 50% of

the voting rights. Joint ventures and associates are accounted for using the equity method of accounting and are initially recognised at cost.

The Group’s share of profits or losses is recognised in the Consolidated Statement of Comprehensive Income. If the share of losses equals

its investment, the Group does not recognise further losses, except to the extent that there are amounts receivable that are long-term and

may not be settled in the foreseeable future. Unrealised gains on transactions between the Group and its joint ventures and associates are

eliminated to the extent of the Group’s interest in them. Unrealised losses are also eliminated unless the transaction provides evidence of an

impairment of the asset transferred. The accounting policies of the joint ventures and associates are consistent with those of the Group.

161

Business combinations and goodwill

Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration for each acquisition is

measured as the aggregate of the fair values (at the date of exchange) of assets given, liabilities incurred or assumed, and equity instruments

issued by the Group in exchange for control of the acquiree.

The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration agreement. Subsequent

changes in fair value of contingent consideration classified as a financial asset or financial liability are accounted for in accordance with

IFRS 9. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at

their fair values at the acquisition date. Acquisition-related costs are recognised in the Consolidated Statement of Comprehensive Income

as incurred.

Goodwill arising on consolidation of subsidiary undertakings is recognised as an asset and initially measured at cost, being the excess of the

cost of the business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities

recognised. Goodwill is subsequently measured at cost less any accumulated impairment losses. Goodwill is subjected to an impairment

test at the reporting date or when there has been an indication that the goodwill should be impaired, any loss is recognised immediately

through the Consolidated Statement of Comprehensive Income and is not subsequently reversed. For the purpose of impairment testing,

goodwill is allocated to cash-generating units. The allocation is made to those cash-generating units that are expected to benefit from the

business combination in which goodwill arose.

Critical judgements and estimates

The critical judgements and estimates in applying the Group’s Accounting Policies that have the most significant effect on the amounts

recognised in the Financial Statements, apart from those noted below, relate to revenue recognition and inventories. These are referred to on

page 163 and each is interpreted by management in the light of IFRS 15 ‘Revenue from Contracts with Customers’ and IAS 2 ‘Inventories’.

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, and that could have a

material adjustment to the carrying amounts of assets and liabilities over the ensuing year, are:

•

Retirement benefit costs — the estimates used in retirement benefit costs are arrived at in conjunction with the scheme’s actuary and

advisers, those having the most significant impact being the liabilities discount rate, RPI and mortality rates. Note 27 to the Financial

Statements gives details of the sensitivity surrounding these estimates;

•

Fair value of investment properties and of Group occupied properties — the fair value of completed investment property and of Group

occupied property is determined by independent valuation experts using the yield method valuation technique. The fair value of investment

property under construction has been determined using the residual method by the Directors of the Company. The most significant

estimates used in these valuations are rental values, yields and costs to complete. Notes 12 and 14 to the Financial Statements give

details of the valuation methods used and the sensitivity surrounding these estimates. In determining fair value measurement, the impact of

climate-related matters, including legislation, which may affect the fair value measurement of investment property has been considered; and

•

Provisions — amounts recognised in relation to provisions are based on assumptions in respect of cost estimates, the timing of cash

flows and discount rates used. Note 26 to the Financial Statements gives details of the sensitivity surrounding these estimates.

Revenue recognition

Revenue is measured based on the consideration specified in a contract with a customer at an amount that reflects the consideration to

which the Group expects to be entitled in exchange for transferring promised goods or services to a customer and excluding amounts

collected on behalf of third parties. The Group recognises revenue when it transfers control over a product or service to a customer. Where

consideration is not specified within the contract and therefore subject to variability, the Group estimates the amount of consideration to be

received from its customer. The consideration recognised is the amount which is highly probable not to result in a significant reversal in future

periods. Where a modification to an existing contract occurs, the Group assesses the nature of the modification and whether it represents a

separate performance obligation required to be satisfied by the Group or whether it is a modification to the existing performance obligation.

The Group has some contracts where the period between the transfer of the promised goods or services to the customer and payment by

the customer exceeds one year. The Group adjusts its transaction price for the time value of money.

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

NOTES TO THE

FINANCIAL STATEMENTS

for the year ended 31 December 2022

162

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

The Group’s activities are wide-ranging, and, as such, depending on the nature of the product or service delivered and the timing of when

control is passed to the customer, the Group will account for revenue over time or at a point in time. Where revenue is measured over time,

the Group uses the input method to measure progress of delivery.

Product and Service

Nature, timing of satisfaction of performance obligations and significant payment terms.

Construction contracts

Typically, the Group’s construction contracts consist of one performance obligation, being delivery of

the construction works. However, for certain contracts (for example where contracts involve separate

phases or products that are not highly interrelated), multiple performance obligations exist. Where

multiple performance obligations exist, total transaction price is allocated to performance obligations

based on the relative standalone selling prices of each performance obligation.

Revenue attributed to each performance obligation is recognised over time based on the percentage

of completion, as the benefit is transferred to the customer, reflecting the enhancement in value of

the customer’s asset. The percentage of completion is calculated as the costs incurred to date as a

percentage of the total costs expected to satisfy the performance obligation. Estimates of revenues,

costs or extent of progress toward completion are revised if circumstances change. Any resulting

increases or decreases in estimated revenues or costs are reflected in the percentage of completion

calculation in the period in which the circumstances that give rise to the revision become known.

Losses are recorded in full when the unavoidable costs of fulfilling a contract exceed the economic

benefits.

Any revenues recognised in excess of amounts invoiced are recognised as contract assets within

current assets. Any payments received in excess of revenue recognised are recognised as contract

liabilities within current liabilities.

Sale of land and

properties

Revenue from the sale of land and properties is generally a single performance obligation which is

satisfied at the point in time when control of the land and properties has passed, typically on legal

completion when legal title has transferred.

Land and properties are treated as disposed when control of the asset is transferred to the buyer.

Typically, this will either occur on unconditional exchange or on completion. Where completion is

expected to occur significantly after exchange, or where the Group continues to have significant

outstanding obligations after exchange, the control will not usually transfer to the buyer until

completion.

Variable consideration such as overages are estimated based on the amount of consideration the

Group expects to be entitled to, taking into account the terms which may give rise to variability and

it is only recognised where it is highly probable there will not be a significant future reversal. This is

estimated at contract inception and reassessed over the life of the contract.

Revenue includes the fair value of consideration received or receivable on the sale of part exchange

properties.

PFI Concession

Revenue from the Group’s PFI concession is recognised at the point in time, by the calculation of

‘shadow tolls’ based on individual vehicle usage of the A69.

The concession is accounted for in accordance with IFRIC 12 ‘Service Concession Arrangements’

using the intangible asset model.

Operating leases

(recognised as income

under IFRS 16 ‘Leases’)

Revenue from operating leases is recognised on a straight-line basis over the lease term, except for

contingent rental income which is recognised in the period in which it was earned. When the Group

provides incentives to its tenants, the cost of incentives is recognised over the lease term, on a

straight-line basis, as a reduction to revenue.

Plant and equipment

hire (recognised as

income under IFRS 16

‘Leases’)

Revenue from plant and equipment hire is measured as the fair value of rental proceeds which relate

to the period of account.

163

Critical judgements and estimates in applying IFRS 15 Revenue from Contracts with Customers

The following are the critical judgements and estimates in applying accounting policies that the Directors have made in the process of

applying IFRS 15 Revenue from Contracts with Customers and that have the most significant effect on the amounts recognised in the

Consolidated Financial Statements.

Estimates in determining the recognition of revenue on construction contracts over time – construction contract revenue is recognised in

accordance with the stage of completion of the contract where the contract’s outcome can be estimated reliably. The principal method used

to recognise the stage of completion is the input method using cost incurred to date as a percentage of estimated total costs to complete.

The assessment of the final outcome of each contract is determined by regular review of the revenues and costs to complete that contract

by an in-house or external survey of the work.

Judgement in determining the recognition of revenue at a point in time on land sale contracts – there is often judgement involved in

evaluating when a customer obtains control of land during a sale, particularly where the contract includes licensing (or the granting early

access to housebuilders before completion), risk or deferred payment term clauses. In determining the revenue recognition the Directors

consider the present right for payment, legal title, physical possession, risks and rewards of ownership and acceptance of the asset in

forming their opinion. Where necessary third party advice is taken.

Interest income and expense

Interest income and expense are recognised within ‘Finance income’ and ‘Finance costs’ in the Consolidated Statement of Comprehensive

Income using the effective interest rate method, except for borrowing costs relating to qualifying assets, which are capitalised as part of the

cost of that asset. The Group has chosen not to capitalise borrowing costs on all qualifying assets which are measured at fair value.

The effective interest rate method is a method of calculating the amortised cost of a financial asset or financial liability and of allocating the

interest income or interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future

cash payments or receipts throughout the expected life of the financial instrument, or a shorter period where appropriate, to the net carrying

amount of the financial asset or financial liability.

Leasing

Where the Group acts as a lessor in the case of operating leases, rentals receivable are recognised on a straight-line basis over the term of

the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased

asset and recognised over the lease term on the same basis as rental income.

Leases

The Group assesses whether a contract is or contains a lease, at inception of the contract. The Group recognises a right-of-use asset and

a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for short-term leases (defined as leases

with a lease term of 12 months or less) and leases of low value assets. For these leases, the Group recognises the lease payments as an

operating expense on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time

pattern in which economic benefits from the leased assets are consumed.

Lease liability: The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date,

discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the Group uses an incremental borrowing rate

which is the rate of interest that the lessee would have to pay to borrow over a similar term, and with a similar security, the funds necessary

to obtain an asset of a similar value to the right-of-use asset in a similar economic environment.

Right-of-use assets: The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at

or before the commencement day and any initial direct costs. They are subsequently measured at cost less accumulated depreciation and

impairment losses. Right-of-use assets are depreciated over the shorter period of lease term and useful life of the underlying asset.

The Group applies IAS 36 to determine whether a right-of-use asset is impaired and accounts for any identified impairment loss in line with

the Group’s existing impairment accounting policy.

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

NOTES TO THE

FINANCIAL STATEMENTS

for the year ended 31 December 2022

164

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Share-based payments

Equity-settled share-based payments to employees of the Company and its subsidiary undertakings are measured at fair value of the equity

instruments at the date of grant and are expensed on a straight-line basis over the vesting period. Fair value is measured by a Monte Carlo

pricing model, taking into account any market performance conditions and excludes the effect of non-market-based vesting conditions.

Details regarding the determination of the fair value of equity-settled share-based transactions are set out in note 29. At each reporting

period date, the Group estimates the number of equity instruments expected to vest as a result of the effect of non-market-based vesting

conditions. The impact of the revision, if any, is recognised in the Consolidated Statement of Comprehensive Income with a corresponding

adjustment to equity reserves.

SAYE share options are treated as cancelled when employees cease to contribute to the scheme. This results in accelerated recognition

of the expenses that would have arisen over the remainder of the original vesting period.

Intangible assets excluding goodwill

Intangible assets are stated at cost less accumulated amortisation and impairment. The PFI asset which is accounted for under IFRIC 12

‘Service Concession Arrangements’ represents the capitalised cost of the initial project, together with the capitalised cost of any additional

major works to the road and structures, which are then amortised, on a straight-line basis, over 20 years or the remaining life of the

concession. The concession lasts a period of 30 years and has a further three years to run.

Property, plant and equipment

Group occupied properties are stated in the Statement of Financial Position at their revalued amounts, being the fair value, based on market

values, less any subsequent accumulated depreciation or subsequent accumulated impairment loss. Fair value is determined annually by

independent valuers. Surpluses on revaluations are recorded in OCI and credited to the revaluation reserve. However, to the extent that it

reverses a revaluation deficit of the same asset previously recognised in profit or loss, the increase is recognised in profit or loss. Deficits on

revaluations are charged against the revaluation reserve to the extent that there are available surpluses relating to the same asset and are

otherwise charged to profit or loss in the Consolidated Statement of Comprehensive income.

In respect of land and buildings, depreciation is provided where it is considered significant, having regard to the estimated remaining useful

lives and residual values of individual properties.

Equipment held for hire, vehicles and office equipment are stated at cost less accumulated depreciation and any recognised impairment loss.

Cost includes the original purchase price of the asset plus any costs attributable to bringing the asset to its working condition for its intended use.

Depreciation is charged so as to write off the cost or valuation of assets over their estimated useful lives, using the straight-line method,

mainly at the following annual rates:

•

Equipment held for hire – between 6% and 50%

•

Vehicles – between 10% and 25%

•

Office equipment – between 25% and 33%

Investment property

Investment properties are those properties which are not occupied by the Group and which are held for long-term rental yields, capital

appreciation or both. Investment property also includes property that is being constructed or developed for future use as investment property.

Investment properties are initially measured at cost, including related transaction costs.

At each subsequent reporting date, investment properties are remeasured to their fair value; further information regarding the valuation

methodologies applied can be found in note 14 to the Financial Statements. Movements in fair value are included in the Consolidated

Statement of Comprehensive Income.

Where the Group employs professional valuers, the valuations provided are subject to a comprehensive review to ensure they are based

on accurate and up-to-date tenancy information. Discussions are also held with the valuers to test the valuation assumptions applied and

comparable evidence utilised to ensure they are appropriate in the circumstances.

Subsequent expenditure is capitalised to the asset’s carrying value only where it is probable that the future economic benefits associated

with the expenditure will flow to the Group. All other expenditure is expensed to the Consolidated Statement of Comprehensive Income in

the period in which it arises.

Investment property is derecognised when it is disposed of at its carrying value.

Where specific investment properties have been identified as being for sale within the next 12 months, a sale is considered highly probable

and the property is immediately available for sale, their fair value is shown under assets classified as held-for-sale within current assets,

measured in accordance with the provisions of IAS 40 ‘Investment Property’.

165

Inventories

Inventories are stated at the lower of cost and estimated net realisable value and are subject to regular impairment reviews.

Inventories comprise developments in progress, land held for development or sale, options to purchase land and planning promotion agreements.

•

Property developments in progress includes properties being developed for onward sale.

•

Housebuilder land and work in progress includes construction of residential housing for onward sale.

•

Land held for development or sale is land owned by the Group that is promoted through the planning process in order to gain planning

permission, adding value to the land.

•

Options to purchase land are agreements that the Group entered into with the landowners whereby the Group has the option to

purchase the land within a limited time frame. The landowners are not generally permitted to sell to any other party during this period,

unless agreed to by the Group. Within the time frame the Group promotes the land through the planning process at its expense in order

to gain planning permission. Should the Group be successful in obtaining planning permission it would trigger the option to purchase

and subsequently sell on the land.

•

Planning promotion agreements are agreements that the Group has entered into with the landowners, whereby the Group acts as

promoter for the landowners in exchange for a fee of a set percentage of the proceeds or profit of the eventual sale. The Group

promotes the land through the planning process at its own expense. If the land is sold the Group will receive a fee for its services.

•

The Group capitalises various costs in promoting land held under planning promotion agreements. In some instances the agreements

allow for the Group to be reimbursed certain expenditure following the conclusion of a successful sale, at which point the reimbursed

costs are recognised as revenue. These costs are held in inventory at the lower of cost and estimated net realisable value.

Inventories comprise all the direct costs incurred in bringing the individual inventories to their present state at the reporting date, including

any reimbursable promotion costs, less the value of any impairment losses.

Impairment reviews are considered on a site-by-site or individual development basis by management at each reporting date; write-downs or

reversals are made to ensure that inventory is then stated at the lower of cost or net realisable value.

Net realisable value is considered in the light of progress made in the planning process, feedback from local planning officers, development

appraisals and other external factors that might be considered likely to influence the eventual outcome. Where it is considered that no future

economic benefit will arise, costs are written off to the Consolidated Statement of Comprehensive Income.

Where individual parcels of land held for development are disposed of out of a larger overall development site, costs are apportioned

based on an acreage allocation after taking into account the cost or net realisable value of any remaining residual land which may not form

part of the overall development site or which may not be available for development. Where the Group retains obligations attached to the

development site as a whole, provisions are made relating to these disposals on the same acreage allocation basis.

Critical judgements and estimates in applying IAS 2 Inventories

The following are the critical estimates in applying accounting policies that the Directors have made in the process of applying IAS 2

Inventories and that have the most significant effect on the amounts recognised in the Consolidated Financial Statements.

Estimates in determining the carrying value of work in progress inventory – there is often estimation involved in forecasting future costs

to complete and selling prices which can be affected by market conditions and unexpected events. In determining the carrying value the

Directors consider previous experience, communications with suppliers and market trends in forming their opinion. Where necessary third

party advice is taken.

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

NOTES TO THE

FINANCIAL STATEMENTS

for the year ended 31 December 2022

166

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Assets classified as held for sale

Non-current assets are classified as held for sale when their carrying amount is to be recovered principally through a sale transaction and a

sale is considered highly probable. They are stated at the lower of carrying amount and fair value less costs to sell, or fair value in the case of

Investment Property, if their carrying amount is to be recovered principally through a sale transaction rather than through continuing use and

a sale is considered highly probable.

Tax

The tax charge on the profit or loss for the year comprises the sum of tax currently payable and any deferred tax movements in the year.

Tax currently payable is based on taxable profit for the year adjusted for any tax payable or repayable in respect of earlier years. Taxable

profit differs from net profit as reported in the Consolidated Statement of Comprehensive Income because it excludes items of income or

expense that are taxable or deductible in other years and items that may never be taxable or deductible.

The Group’s liability for current taxation is calculated using tax rates that have been enacted or substantively enacted by the reporting date.

Corporation tax liabilities of wholly owned subsidiary companies are generally transferred to and paid by the Parent Company and credit is

given by the Parent Company for loss relief surrendered.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the

Financial Statements and the corresponding tax bases used in computing taxable profits.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that

sufficient taxable profits or gains will be available to allow all or part of the assets to be recovered.

The carrying value of the Group’s investment property is assumed to be realised by sale and the deferred tax is then calculated based on the

respective temporary differences and tax consequences arising from this assumption.

Deferred tax is calculated at tax rates that are expected to apply in the period when the liability is settled or the asset is realised, based

on rates that have been enacted or substantively enacted at the reporting date. Deferred tax is charged or credited in the Consolidated

Statement of Comprehensive Income, except when it relates to items charged or credited directly to equity, in which case the deferred tax is

also dealt with in equity.

Deferred tax assets and deferred tax liabilities are offset where the Group has a legally enforceable right to do so and when the deferred tax

assets and liabilities relate to tax levied by the same tax authority where there is an intention to settle the balances on a net basis.

Financial instruments

The Group retains such financial instruments as are required, together with retained earnings, in order to finance the Group’s operations.

Financial assets or financial liabilities are recognised by the Group in the Statement of Financial Position only when the Group becomes a

party to the contractual provisions of the instrument.

The principal financial instruments are:

•

Trade and other receivables are measured initially at fair value and then amortised cost — where the time value of money is material,

receivables are amortised using the effective interest rate method (see Interest income and expense in notes 5 and 6). IFRS 9’s simplified

approach to provisioning is used to calculate the Group’s lifetime expected credit loss;

•

Cash and cash equivalents, which comprise cash in hand, demand deposits and other short-term highly liquid investments that are

readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value with an original maturity of

three months or less;

•

Trade and other payables which are on normal credit terms, are not interest bearing and are stated at their nominal values — where the

time value of money is material, payables are carried at amortised cost using the effective interest rate method (see Interest income and

expense in notes 5 and 6); and

•

Borrowings — see below.

For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above, net

of outstanding bank overdrafts as they are considered an integral part of the Group’s cash management.

167

Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost;

any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the Consolidated Statement of

Comprehensive Income over the period of the borrowings using the effective interest method.

Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some

or all of the facility will be drawn down. In this case, the fee is deferred and amortised until the drawdown occurs. To the extent that there is

no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a pre-payment for liquidity services

and amortised over the period of the facility to which it relates.

Government grants

Government grants are recognised at their fair value in the Consolidated Statement of Financial Position, within deferred income, where

there is reasonable assurance that the grant will be received and all attached conditions will be complied with.

Government grants relating to revenue items are released to the Statement of Comprehensive Income and recognised within cost of sales

over the period necessary to match the grant on a systematic basis to the costs that they are intended to compensate.

Government grants relating to capital items are released against the carrying value of the grant supported assets when the completion

conditions of those assets are met.

Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event. It is probable that the

Group will be required to settle that obligation with an outflow of economic benefits and a reliable estimate can be made of the amount of

the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting date,

taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to

settle the present obligation, its carrying amount is the present value of those cash flows. Onerous contracts are provided for at the lower of

costs or termination.

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is

recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

The land promotion provision represents management’s best estimate of the Group’s liability to provide infrastructure and services as a

result of obligations which remain with the Group following the disposal of land. Where the infrastructure and services obligations relate

to developments on which land is being disposed of over a number of phases, provisions are calculated based on an acreage allocation

methodology taking into account the expected timing of cash outflows to settle the obligations.

The Group regularly reviews its contract obligations and whether they are considered to be onerous. In the event that the costs of meeting

the obligations exceed the economic benefits expected to be received through the life of the development, a provision would be recognised

based on the lower of the cost of fulfilling the contract or terminating the contract.

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.

Other provisions include any liabilities where the Directors anticipate that a present obligation would result in a future outflow of resources,

including legal and regulatory penalties or claims, being taken into account in the Financial Statements.

Specific details of the Group’s provisions relating to land promotion and road maintenance can be found in note 26.

Retirement benefit costs

Payments to the defined contribution retirement benefit scheme are charged as an expense as they fall due.

The cost of providing benefits under the defined benefit retirement scheme is determined using the Projected Unit Credit Method, with

actuarial calculations being carried out at each reporting date. Actuarial gains and losses are recognised in full in the period in which they

occur. They are recognised within ‘Other comprehensive income’ within the Consolidated Statement of Comprehensive Income. The

net periodic benefit cost, comprising the employer’s share of the service cost and the net interest cost, is charged to the Consolidated

Statement of Comprehensive Income. The Group’s net obligations in respect of the scheme are calculated by estimating the amount of

future benefit that employees have earned in return for their service in the current and prior periods. This is then discounted to present value

and the fair value of the scheme’s assets is then deducted.

Share capital

Ordinary share capital is classified as equity. Preference share capital is classified as equity as it is non-redeemable or is redeemable only

at the Company’s option and any dividends are discretionary. Dividends on preference share capital classified as equity are recognised as

distributions within equity.

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

NOTES TO THE

FINANCIAL STATEMENTS

for the year ended 31 December 2022

168

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Dividends

The Group recognises a liability to pay a final dividend when the distribution is authorised and the distribution is no longer at the discretion

of the Group. Under UK company law a distribution is authorised when it is approved by the shareholders. An interim dividend is recognised

when paid. A corresponding amount is then recognised directly in equity.

Impact of accounting standards and interpretations

At the date of authorisation of these Financial Statements, the following standards, amendments and interpretations to existing standards

are effective or mandatory for the first time for the accounting year ended 31 December 2022:

Effective from

IFRS 4 (amended 2020)

‘Extension of the temporary exemption from applying IFRS 9’

Immediately available

IFRS 16 (amended 2021)

‘Covid-related rent concessions beyond June 2021’

1 April 2021

IFRS 3 (amended 2020)

‘Reference to the Conceptual Framework’

1 January 2022

IAS 16 (amended 2020)

‘Proceeds before intended use’

1 January 2022

IAS 37 (amended 2020)

‘Costs of fulfilling a contract’

1 January 2022

Annual Improvements (issued 2020)

‘Annual improvements to IFRS standards 2018 - 2020’

1 January 2022

The adoption of these standards and interpretations has not had a significant impact on the Group.

At the date of the authorisation of these Financial Statements, the following standards, amendments and interpretations were in issue but

not yet effective:

Effective from

IFRS 17 (issued 2017) ‘Insurance Contracts’ 1 January 2023

IFRS 17 (amended 2020) ‘Implementation challenges’ 1 January 2023

IAS 1 (amended 2021) ‘Disclosure of accounting policies’ 1 January 2023

IAS 8 (amended 2021 ‘Definition of accounting estimates’ 1 January 2023

IAS 12 (amended 2021) ‘Deferred tax related to Assets and Liabilities arising from a single

transaction’

1 January 2023

IFRS 17 (amended 2021) ‘Initial application of IFRS 17 and IFRS 9 1 January 2023

IAS 1 (amended 2020) ‘Classification of liabilities as current or non-current’ 1 January 2024

IAS 1 (amended 2022) ‘Non-current liabilities with covenants’ 1 January 2024

IFRS 16 (amended 2022) ‘Lease liability in a sale and leaseback’ 1 January 2024

A review of the impact of these standards, amendments and interpretations has been conducted and the Directors do not believe that they

will give rise to any significant financial impact.

In 2022, the Group did not early adopt any new or amended standards and does not plan to early adopt any of the standards issued but not

yet effective.

169

Construction contracts:

– Construction

97,571

—

97,571

74,431

—

74,431

– Property Investment and

Development

57,177

—

57,177

4,405

—

4,405

Sale of land and properties:

– Property Investment and

Development

34,726

—

9,622

—

– Housebuilder unit sales

70,631

—

49,494

—

– Land Promotion

43,672

—

58,410

—

PFI

concession

13,590

—

11,115

—

Revenue from contracts

with customers

317,367

162,619

154,748

207,477

128,641

78,836

Plant and equipment hire

17,447

17,129

Investment property rental income

6,444

5,772

Other rental income – Property

Investment and Development

Other rental income – Land Promotion

149

153

341,419

230,598

Construction segment

Property Investment and Development segment

Land Promotion segment

Contingent rents recognised as investment property rental income during the year amount to £435,000 (2021: £357,000).

2. Segment information

For the purpose of the Board making strategic decisions, the Group is currently organised into three operating segments: Property

Investment and Development; Land Promotion; and Construction. Group overheads are not a reportable segment; however, information

about them is considered by the Board in conjunction with the reportable segments.

Operations are carried out entirely within the United Kingdom.

Inter-segment sales are charged at prevailing market prices.

The accounting policies of the reportable segments are the same as the Group’s Accounting Policies. The Group’s Principal Accounting

Policies are described on pages 159 to 168.

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.

Revenues from external sales are detailed in note 1.

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

1. Revenue

Analysis of the Group’s revenue is as follows:

Timing of revenue

recognition

Timing of revenue

recognition

2022

At a point

in time Over time

2021

At a point

in time Over time

Activity in the United Kingdom

£’000

£’000 £’000

£’000

£’000 £’000

NOTES TO THE

FINANCIAL STATEMENTS

for the year ended 31 December 2022

170

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

2. Segment information continued

2022

Property

Investment and

Land

Group

Development

Promotion

Construction

overheads

Eliminations

Total

Revenue

£’000

External sales

168,990

43,820

128,609

—

341,419

Inter-segment sales

290

—

4,453

386

(5,129)

—

Total revenue

169,280

43,820

133,062

386

(5,129)

341,419

Gross profit

36,488

24,320

20,720

(37)

81,590

Administrative expenses and pension

(16,142)

(6,971)

(8,636)

(8,743)

(40,455)

Other operating income

5,322

—

5,322

Operating profit/(loss)

25,668

17,349

12,084

(8,644)

—

46,457

Finance income

4,015

744

1,507

26,576

(31,201)

1,641

Finance costs

(2,226)

(213)

(374)

(3,373)

3,683

(2,503)

Profit before tax

27,457

17,880

13,217

14,559

(27,518)

45,595

Tax

(3,411)

(3,451)

(2,771)

1,908

—

(7,725)

Profit for the year

24,046

14,429

10,446

16,467

(27,518)

37,870

Other information

Capital additions

9,450

—

5,884

392

—

15,726

Depreciation of plant, property and

equipment and right-of-use assets

312

3,755

472

—

4,569

Impairment

(15)

—

203

—

188

Amortisation of intangible assets

—

580

—

580

Decrease in fair value of investment

properties

4,921

—

4,921

Provisions

—

775

683

—

1,458

Pension scheme credit

—

(3,422)

—

(3,422)

2021

Property

Investment and

Land

Group

Development

Promotion

Construction

overheads

Eliminations

Total

Revenue

£’000

External sales

69,360

58,563

102,675

—

230,598

Inter-segment sales

290

—

7,606

526

(8,422)

—

Total revenue

69,650

58,563

110,281

526

(8,422)

230,598

Gross profit

14,924

23,257

17,363

(50)

55,546

Administrative expenses and pension

(14,959)

(5,726)

(8,401)

(9,177)

(38,213)

Other operating income/(expense)

18,296

(56)

—

18,240

Operating profit/(loss)

18,261

17,475

8,962

(9,125)

—

35,573

Finance income

4,538

698

765

19,060

(24,337)

724

Finance costs

(7,002)

(139)

(467)

(2,303)

8,756

(1,155)

Profit before tax

15,797

18,034

9,260

7,632

(15,581)

35,142

Tax

(2,927)

(2,244)

(1,798)

2,487

—

(4,482)

Profit for the year

12,870

15,790

7,462

10,119

(15,581)

30,660

Other information

Capital additions

17,430

—

6,524

380

—

24,334

Depreciation of plant, property and

equipment and right-of-use assets

2,864

584

—

3,534

Impairment

285

—

203

—

488

Amortisation of intangible assets

—

602

—

602

Increase in fair value of investment

properties

(7,972)

—

(7,972)

Provisions

—

1,051

1,499

—

2,550

Pension scheme credit

—

(920)

—

(920)

171

2. Segment information continued

2022

£’000

2021

(restated

)

£’000

Segment assets

Property Investment and Development

355,491

310,421

Land Promotion

149,598

142,655

Construction

45,766

43,205

Group overheads

3,612

2,323

554,467

498,604

Unallocated assets

Deferred tax assets

249

3,389

Current tax receivables

—

1,828

Retirement benefit asset

6,188

—

Cash and cash equivalents

17,401

11,116

Total assets

578,305

514,937

Segment liabilities

Property Investment and Development

59,113

36,169

Land Promotion

13,114

11,523

Construction

36,994

40,418

Group overheads

568

3,071

109,789

91,181

Unallocated liabilities

Current tax liabilities

3,793

—

Deferred tax liabilities

4,401

4,582

Current lease liabilities

426

639

Current borrowings

65,000

50,000

Non-current lease liabilities

607

1,021

Retirement benefit obligations

—

12,228

Total liabilities

184,016

159,651

Total net assets

394,289

355,286

See ‘prior year restatements’ on page 159.

Includes investment in joint ventures and associates of £9,990,000 (2021: £12,165,000).

3. Operating profit

Operating profit has been arrived at after charging/(crediting):

2022

£’000

2021

£’000

Depreciation of property, plant and equipment (note 12)

3,972

3,534

Depreciation of right-of-use assets (note 13)

597

598

Impairment of goodwill included in administrative expenses (note 11)

203

Reversal of impairment of land and buildings included in administrative expenses (note 12)

(75)

—

Impairment of land and buildings included in administrative expenses (note 12)

285

Amortisation of PFI asset included in cost of sales (note 11)

580

602

Amortisation of capitalised letting fees (note 14)

Impairment losses recognised on trade receivables (note 18)

432

779

Decrease/(increase) in fair value of investment property (note 14)

4,921

(7,972)

Cost of inventories recognised as expense

85,594

80,241

Employee costs

39,088

38,439

Amounts payable to Mazars LLP by Road Link (A69) Limited in respect of audit services

Gross profit on sale of equipment held for hire

(1,070)

(981)

Gain on sale of other property plant and equipment

(176)

(16)

Loss on disposal of right-of-use assets

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

NOTES TO THE

FINANCIAL STATEMENTS

for the year ended 31 December 2022

172

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

3. Operating profit

continued

The remuneration paid to Ernst & Young LLP, the Company’s external auditors, was as follows:

2022

£’000

2021

£’000

Fees payable for the audit of the Company’s annual Financial Statements and Consolidated

Financial Statements

Fees payable to the auditors and their associates for other services:

– audit of the Company’s subsidiaries pursuant to legislation

200

330

167

298

Total audit fees

530

465

4. Employee costs

Group

Parent Company

2022

£’000

2021

£’000

2022

£’000

2021

£’000

Wages and salaries

29,671

27,689

5,130

3,968

Share-based payment expense

1,240

968

496

413

Social security costs

3,821

3,448

649

593

Defined benefit pension costs (see note 27)

989

3,407

989

2,855

Defined contribution pension costs (see note 27)

3,251

2,521

449

316

Other pension costs

111

Other employee costs

295

—

39,088

38,439

7,735

8,162

Included within 2021 employee costs is a £820,000 debit for repayment of furlough grant income from the Government’s Job Retention

Scheme introduced in response to the Covid pandemic.

The average monthly number of employees during the year, including Executive Directors, was:

2022

Number

2021

Number

Property Investment and Development

121

112

Land Promotion

Construction

149

151

Plant Hire

146

137

Parent Company

533

496

5. Finance income

2022

£’000

2021

£’000

Interest on bank deposits

Interest on other loans and receivables

Unwinding of discounting: trade receivables

146

1,007

488

127

595

1,641

724

173

6. Finance costs

2022

£’000

2021

£’000

Interest on bank loans and overdrafts

Interest on other loans and payables

Unwinding of discounting: trade payables and borrowings

2,136

322

747

349

2,503

1,155

7. Tax

2022

£’000

2021

£’000

Current tax:

UK corporation tax on profits for the year

Adjustment in respect of earlier years

8,690

(152)

2,752

(1,683)

Total current tax

8,538

1,069

Deferred tax (note 19):

Origination and reversal of temporary differences

Adjustment in respect of prior years

Impact of rate change

(813)

—

3,457

105

(149)

Total deferred tax

(813)

3,413

Total tax

7,725

4,482

Corporation tax is calculated at 19% (2021: 19%) of the estimated assessable profit for the year.

In the Spring Budget 2021, the Government announced that from 1 April 2023 the main rate of UK corporation tax would increase to 25%.

This new law was substantively enacted on 24 May 2021; deferred tax balances at the year end have been measured at 25% (2021: 25%),

being the rate at which timing differences are expected to reverse.

The charge for the year can be reconciled to the profit per the Consolidated Statement of Comprehensive Income as follows:

2022

£’000

2021

£’000

Profit before tax

45,595

35,142

2022

2021

Tax at the UK corporation tax rate

19.00

Effects of:

Permanent differences

(0.80)

0.48

Capital gains

0.27

(0.78)

Impact of rate differences

—

(0.42)

Deferred tax adjustment in respect of prior years

—

0.30

Corporation tax adjustment in respect of earlier years

(0.33)

(4.79)

Joint venture results reported net of tax

(1.20)

(1.03)

Effective tax rate

16.94

12.76

The tax charge in the year is lower (2021: lower) than the standard rate of corporation tax predominantly due to joint ventures reported net of

tax (2021: due to adjustments in respect of earlier years arising from additional loss relief on asset disposals).

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

NOTES TO THE

FINANCIAL STATEMENTS

for the year ended 31 December 2022

174

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

7. Tax continued

In addition to the amount charged to profit for the year, the following amounts relating to tax have been recognised in other

comprehensive income:

2022

£’000

2021

£’000

Deferred tax:

–

property revaluations

–

actuarial gain

(23)

(3,749)

(282)

(4,840)

Total tax recognised in other comprehensive income/(expense)

(3,772)

(5,122)

Results of Parent Company

As permitted by Section 408 of the Companies Act 2006, the Statement of Comprehensive Income of the Parent Company is not presented

as part of these Financial Statements. The profit dealt with in the Financial Statements of the Parent Company and approved by the Board on

12 April 2023 is £15,987,000 (2021: £8,938,000) and includes dividends received from subsidiaries of £26,490,500 (2021: £14,530,000).

Earnings per ordinary share

The calculation of the basic and diluted earnings per share is based on the following information:

2022

£’000

2021

£’000

Profit for the year

Non-controlling interests

Preference dividend

37,870

(4,551)

(21)

30,660

(2,500)

(21)

33,298

28,139

2022

No.

2021

No.

Weighted average number of shares in issue

133,449,943

133,264,346

Less shares held by the ESOP on which dividends have been waived

(401,672)

(439,261)

Weighted average number for basic earnings per share

133,048,271

132,825,085

Adjustment for the effects of dilutive potential ordinary shares

2,290,780

2,645,458

Weighted average number for diluted earnings per share

135,339,051

135,470,543

2022 2021

Basic earnings per share

Diluted earnings per share

25.0p

24.6p

21.2p

20.9p

The Group has two types of dilutive potential ordinary shares, being: those share options granted to employees where the exercise price is

less than the average market price of the Company’s ordinary shares during the year; and expected future vesting of shares under the 2015

Long-Term Incentive Plan.

10.

Dividends

2022

£’000

2021

£’000

Amounts recognised as distributions to equity holders in the year:

Preference dividend on cumulative preference shares

Final dividend for the year ended 31 December 2021 of 3.63p per share (2020: 3.30p)

Interim dividend for the year ended 31 December 2022 of 2.66p per share (2021: 2.42p)

4,822

3,540

4,383

3,216

8,383

7,620

The proposed final dividend for the year ended 31 December 2022 of 4.00p per share (2021: 3.63p) makes a total dividend for the year of

6.66p (2021: 6.05p).

The proposed final dividend is subject to approval by shareholders at the AGM and has not been included as a liability in these Financial

Statements. The total estimated dividend to be paid is £5,300,000.

Notice has been received from Moore Street Securities Limited waiving its right as corporate trustee for the Employee Share Ownership Plan

(‘ESOP’) to receive all dividends in respect of this and the previous financial year.

Dividends paid to non-controlling interests during the year amounted to £4,030,000 (2021: £740,000).

175

11. Intangible assets

Goodwill

PFI

asset

Total

£’000

Cost

At 1 January 2021

4,973

18,973

23,946

Additions at cost

—

203

At 31 December 2021 and 2022

4,973

19,176

24,149

Accumulated impairment losses and amortisation

At 1 January 2021

3,324

16,304

19,628

Amortisation

—

602

Impairment losses for the year

203

—

203

At 31 December 2021

3,527

16,906

20,433

At 31 December 2021 1,446 2,270 3,716

The Group acquired the trade and assets of Premier Plant Tool Hire & Sales Limited on 30 March 2017. They were immediately hived up into

the immediate parent company Banner Plant Limited, which sits in the Construction segment. The goodwill arising on the acquisition, which

has a current net book value of £903,000 (2021: £903,000), represents the excess of consideration over net assets acquired and is subject

to an impairment test at the reporting date. The cash generating units assessed for impairment are the Leicester depots of Banner Plant

Limited, which were formerly Premier Plant Tool Hire & Sales Limited’s only operational sites. Impairment calculations use pre-tax cash flow

projections including revenue growth of 3.0% (2021: 3.0%) per annum into perpetuity which reflects past experience and management’s

future expectations. Management estimates discount rates that reflect current market assessments of the time value of money and risk

specific to the cash generating unit of 5.0% (2021: 3.5%).

The Group’s investment in Road Link (A69) Holdings Limited is 61.2%. The goodwill arising on the acquisition which has a current net book

value of £340,000 (2021: £543,000) represents the excess of consideration over net assets acquired and is subject to an impairment test

at the reporting date. This company’s subsidiary, Road Link (A69) Limited, operates a PFI concession which comprises managing and

maintaining the A69 Carlisle to Newcastle trunk road. The Company receives payment from National Highways based on the number and

type of vehicles using the road. The concession lasts for a period of 30 years and has a further three years to run, at the end of which the

road reverts to National Highways. Whilst the impairment test demonstrates significant headroom based on forecast levels of return being

consistent with prior years, an impairment charge of £203,000 (2021: £203,000) has been recognised during the year. This reflects the fact

that the PFI concession will revert to National Highways at the end of the 30-year period, at which point no goodwill should remain. There

were no significant changes to these arrangements during the year.

Amortisation of the PFI asset is recognised within cost of sales in the Consolidated Statement of Comprehensive Income.

Although the Companies Act 2006 Section 390(5) requires a coterminous year end, the subsidiary company’s accounting reference date is

31 March in order to align with National Highways financial year end and hence interim Financial Statements are prepared for incorporation

into these Consolidated Financial Statements.

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

Amortisation

Impairment losses for the year

—

203

580

—

580

203

At 31 December 2022

3,730

17,486

21,216

Carrying amount

At 31 December 2022

1,243

1,690

2,933

NOTES TO THE

FINANCIAL STATEMENTS

for the year ended 31 December 2022

176

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

12. Property, plant and equipment

Land and

Equipment

held

Office

Group

buildings

£’000

for hire

£’000

Vehicles

£’000

equipment

£’000

Total

£’000

Cost or fair value

At 1 January 2021

7,322

39,885

5,835

3,267

56,309

Additions at cost

—

5,952

473

388

6,813

Disposals

—

(2,449)

(976)

(47)

(3,472)

At 31 December 2021

7,322

43,388

5,332

3,608

59,650

Additions at cost

Disposals

Increase in fair value in year

—

315

5,454

(3,275)

—

612

(597)

—

304

—

6,425

(3,872)

315

At 31 December 2022

7,692

45,567

5,347

3,912

62,518

Being:

Cost

—

45,567

5,347

3,912

54,826

Fair value at 31 December 2022

7,692

—

7,692

45,567

5,347

3,912

62,518

Accumulated depreciation and impairment

At 1 January 2021

427

26,394

2,842

2,828

32,491

Charge for year

—

2,474

786

274

3,534

Impairment

285

—

285

Eliminated on disposals

—

(2,271)

(692)

(46)

(3,009)

At 31 December 2021

712

26,597

2,936

3,056

33,301

Charge for year

—

3,059

660

253

3,972

Reversal of impairment

(75)

—

(75)

Impairment

—

Eliminated on disposals

—

(3,002)

(504)

—

(3,506)

At 31 December 2022

697

26,654

3,092

3,309

33,752

Carrying amount

At 31 December 2022

6,995

18,913

2,255

603

28,766

At 31 December 2021 6,610 16,791 2,396 552 26,349

At 31 December 2022, the Group had entered into contractual commitments for the acquisition of property, plant and equipment amounting

to £1,566,000 (2021: £3,420,000).

Fair value measurements of the Group’s land and buildings

Land and buildings have been revalued at 31 December 2022 by Jones Lang LaSalle Limited and Dove Haigh Phillips LLP in accordance

with the Practice Statements contained in the RICS Appraisal and Valuation Standards on the basis of market value at £6,995,000 (2021:

£6,610,000). Jones Lang LaSalle Limited and Dove Haigh Phillips LLP are professional valuers who hold recognised and professional

qualifications and have recent experience in the location and category of the land and buildings being valued.

The valuation conforms to International Valuation Standards and was based on recent market transactions with similar characteristics and

location using the yield method valuation technique. The yield method of valuation involves applying market-derived capitalisation yields, and

the actual or market-derived future income streams where appropriate, with adjustments for letting voids or rent-free periods as applicable

to each item of land and buildings.

On the historical cost basis, the land and buildings would have been included at a carrying amount of £4,339,000 (2021: £4,269,000).

177

12. Property, plant and equipment

continued

The following table provides an analysis of the fair values of land and buildings by the degree to which the fair value is observable:

Increase

Level

£’000

Level

£’000

Level

£’000

2022

£’000

2021

£’000

in year

£’000

Freehold land

Buildings

—

6,935

6,550

—

385

Total fair value

—

6,995

6,610

385

The Group’s policy is to recognise transfers into and out of fair value hierarchy levels as of the date of the event or change in circumstances

that causes the transfer. The Directors determine the applicable hierarchy that land and buildings fall into by assessing the level of

comparable evidence in the market which that asset falls into and the inherent level of activity. As at the reporting date and throughout the

year, all land and buildings were determined to fall into Level 3 and so there were no transfers between hierarchies.

Explanation of the fair value hierarchy:

Level 1 – fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets

or liabilities that the entity can access at the measurement date;

Level 2 – fair value measurements are those derived from the use of a model with inputs (other than quoted prices included

in Level 1) that are observable from directly or indirectly observable market data; and

Level 3 – fair value measurements are those derived from use of a model with inputs that are not based on observable

market data.

Information about fair value measurements using significant unobservable inputs (Level 3):

Class

Buildings

Valuation technique

Yield

Rental value per sq ft (£)

– weighted average

6.92

– low

3.31

– high

16.25

Yield %

– weighted average

9.56

– low

7.62

– high

11.83

The sensitivity analysis to significant changes in unobservable inputs relating to fair value measurements (Level 3) are set out below:

Impact on

valuation

£’000

Buildings

Yield – improvement by 0.5% 360

Rental value per sq ft – increase of £1 average 1,000

The sensitivities have been selected by management on the basis that they consider these measures to be a reasonable expectation of likely

changes to the significant unobservable inputs in the next 12 months.

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

NOTES TO THE

FINANCIAL STATEMENTS

for the year ended 31 December 2022

178

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

12.

Property, plant and equipment

continued

Parent Company

Cost

Office

equipment

£’000

At 1 January 2021 1,068

Additions 279

Disposals —

At 31 December 2021 1,347

Additions

Disposals

205

—

At 31 December 2022

1,552

Accumulated depreciation

At 1 January 2021

886

Charge for year

144

Disposals

—

At 31 December 2021

1,030

Charge for year

Disposals

142

—

At 31 December 2022

1,172

Carrying amount

At 31 December 2022

380

At 31 December 2021 317

13.

Leases

The Group as lessee

Group Parent Company

Right-of-use assets

2022

£’000

2021

£’000

2022

£’000

2021

£’000

Land and buildings

Vehicles

Office equipment

775

221

1,249

330

—

997

1,581

Lease liabilities

Due within one year

426

639

Due after more than one year

607

1,021

1,033

1,660

Contractual maturities of lease liabilities including future interest:

On demand or within one year

449

676

In the second year

282

447

In the third to fifth years inclusive

322

564

In more than five years

—

Total contractual cash flows

1,084

1,750

Future finance charges on lease liabilities

(51)

(90)

(1)

(2)

Present value of contractual cash flows

1,033

1,660

Additions to the right-of-use assets during the 2022 financial year were £14,000 (2021: £69,000) for the Group and £32,000 (2021: £65,000)

for the Parent Company.

179

Depreciation charge of right-of-use assets

Land and buildings

Vehicles

Office equipment

474

122

470

123

—

597

598

Interest expense (included in finance cost)

The total cash outflow for leases in 2022 was £679,000 (2021: £683,000) for the Group and £48,000 (2021: £131,000) for the Parent Company.

The Group leases various offices, equipment and vehicles. Rental contracts are typically made for fixed periods of 4 to 10 years and may

have extension options.

Contracts may contain both lease and non-lease components. The Group allocates the consideration in the contract to the lease and

non-lease components based on their relative stand-alone prices. However, for leases of real estate for which the Group is a lessee, it has

elected not to separate lease and non-lease components and instead accounts for these as a single lease component.

Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not

impose any covenants other than the security interests in the leased assets that are held by the lessor. Leased assets may not be used as

security for borrowing purposes.

Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the

following lease payments:

•

Fixed payments (including in-substance fixed payments), less any lease incentives receivable;

•

Variable lease payments that are based on an index or a rate, initially measured using the index or rate as at the commencement date;

•

Amounts expected to be payable by the Group under residual value guarantees;

•

The exercise price of a purchase option if the Group is reasonably certain to exercise that option; and

•

Payments of penalties for terminating the lease, if the lease term reflects the Group exercising that option.

Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability.

The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is generally

the case for leases in the Group, the lessee’s incremental borrowing rate is used.

The Group is exposed to potential future increases in variable lease payments based on an index or rate, which are not included in the lease

liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is reassessed and

adjusted against the right-of-use asset.

Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease period so as to

produce a constant periodic rate of interest on the remaining balance of the liability for each period.

Right-of-use assets are measured at cost comprising the following:

•

The amount of the initial measurement of lease liability

•

Any lease payments made at or before the commencement date less any lease incentives received

•

Any initial direct costs, and restoration costs

Right-of-use assets are generally depreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis. If the

Group is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying asset’s useful life. While

the Group revalues its land and buildings that are presented within property, plant and equipment, it has chosen not to do so for the right-of-

use buildings held by the Group.

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

13. Leases continued

The statement of profit or loss shows the following amounts relating to leases:

Group

Parent Company

2022

£’000

2021

£’000

2022

£’000

2021

£’000

NOTES TO THE

FINANCIAL STATEMENTS

for the year ended 31 December 2022

180

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

13. Leases continued

Payments associated with short-term leases of equipment and vehicles and all leases of low-value assets are recognised on

a straight-line basis as an expense in profit or loss and amount to £nil (2021: £nil) in the period. Short-term leases are leases

with a lease term of 12 months or less. Low-value assets comprise IT equipment and small items of office furniture. Cash

outflows during the period related to these leases equal the rent expense and are included within operating activities in the

Statement of Cash Flows.

The Group as lessor

The Group has entered into operating leases on its investment property portfolio which typically have lease terms between

one and 25 years, and include clauses to enable periodic upward revision of the rental charge according to prevailing market

conditions. Ordinarily, the lessee does not have an option to purchase the property at the expiry of the lease period and

some leases contain options to break before the end of the lease term.

Future aggregate minimum rentals receivable under non-cancellable operating leases at 31 December are as follows:

2022

£’000

2021

£’000

Within one year

5,186

4,048

Between 1-2 years

4,672

4,803

Between 2-3 years

4,477

3,898

Between 3-4 years

4,137

3,105

Between 4-5 years

3,583

2,706

More than five years

32,989

47,052

55,044

65,612

14. Investment properties

Fair value measurements recognised in the Statement of Financial Position

The following table provides an analysis of the fair values of investment properties recognised in the Statement of Financial Position by the

degree to which the fair value is observable:

Level

£’000

Level

£’000

Level

£’000

2022

£’000

2021

£’000

Increase/

(decrease)

in year

£’000

Completed investment property

Industrial

—

52,927

46,796

6,131

Leisure

—

9,208

9,598

(390)

Mixed-use

—

7,483

(7,483)

Residential

—

4,322

4,127

195

Office

—

6,275

9,938

(3,663)

Retail

—

14,466

17,235

(2,769)

—

87,198

95,177

(7,979)

Investment property under

construction

Industrial

—

9,918

9,000

918

—

9,918

9,000

918

Total carrying amount

—

97,116

104,177

(7,061)

The Group’s policy is to recognise transfers into and out of fair value hierarchy levels as of the date of the event or change in circumstances

that causes the transfer. The Directors determine the applicable hierarchy that a property falls into by assessing the level of comparable

evidence in the market which that asset falls into and the inherent level of activity. As at the reporting date and throughout the year, all

property was determined to fall into Level 3 and so there were no transfers between hierarchies.

181

14. Investment properties

continued

Explanation of the fair value hierarchy:

Level 1 – fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets

or liabilities that the entity can access at the measurement date;

Level 2 – fair value measurements are those derived from the use of a model with inputs (other than quoted prices included

in Level 1) that are observable from directly or indirectly observable market data; and

Level 3 – fair value measurements are those derived from use of a model with inputs that are not based on observable

market data.

Investment properties have been split into different classes to show the composition of the investment property portfolio of the Group as at

the reporting date. Management has determined that aggregation of the results would be most appropriate based on the type of use that

each property falls into, which is described below:

Class

Industrial

Includes manufacturing and warehousing, which are usually similar in dimensions and construction method.

Leisure

Includes restaurants and gymnasiums or properties in which the main activity is the provision of entertainment and

leisure facilities to the public.

Mixed-use

Includes schemes where there are different types of uses contained within one physical asset, the most usual

combination being retail, office and leisure.

Residential

Includes dwellings under assured tenancies.

Retail

Includes any property involved in the sale of goods.

Land

Office

Includes land held for future capital appreciation as an investment.

Includes buildings occupied for business activities not involving storage or processing of physical goods.

Investment properties under construction are categorised based on the future anticipated highest and best use of the property.

Completed investment property

Carrying value

At 1 January

46,796

9,598

7,483

4,127

9,938

17,235

95,177

78,730

Initial

acquisition

—

11,268

Subsequent expenditure on

investment property

—

502

Capitalised letting fees

—

129

Amortisation of capitalised letting fees

(12)

(10)

—

(3)

—

(25)

(41)

Disposals

—

(7,493)

(7)

—

(7,500)

(5,312)

Transfer from inventory

6,827

—

6,827

1,517

Transfers from investment property

under construction

—

3,741

Increase/(decrease) in fair value in year

(694)

(380)

205

(3,663)

(2,769)

(7,291)

4,643

At 31 December

52,927

9,208

—

4,322

6,275

14,466

87,198

95,177

Adjustment in respect of tenant

incentives

948

202

—

625

459

2,234

1,560

Market value at 31 December

53,875

9,410

—

4,322

6,900

14,925

89,432

96,737

Tenant incentives are included in trade receivables.

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

Industrial

Leisure

Mixed-use

Residential

Office

Retail

Class

Level

2022

2021

Fair value hierarchy

£’000

NOTES TO THE

FINANCIAL STATEMENTS

for the year ended 31 December 2022

182

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

14. Investment properties

continued

There is no actively traded market for the Group’s commercial property and as such the adopted valuation is completed using the professional

judgement of the Group’s professional valuers, who use the yield method to determine fair value. The calculation of the capital value of a

property under this method uses a yield to multiple against the rental income stream with due allowance for a fixed assumed purchaser’s

cost. The primary variables of the yield method are thus: the yield, which is based on historic yields for properties that are similar but to which

there may be adjustment to take into account, factors such as geographical location and lease terms; and the contracted rent, which is based

on contracted rents that exist at the balance sheet date, but may also include a provision for rents that may be achieved in the future after

accounting for a period of vacancy, such rents being based on rental income terms that exist in similar properties, adjusted for geographic

location and lease terms.

With the exception of the residential class, completed investment property has been revalued at 31 December 2022 by Jones Lang

LaSalle Limited in accordance with the Practice Statements contained in the RICS Valuation - Global Standards (the ‘Red Book’) on the

basis of market value at £85,110,000 (2021: £92,609,000). Jones Lang LaSalle Limited are professional valuers who hold recognised and

professional qualifications and have recent experience in the location and category of the investment property being valued. The valuation

conforms to International Valuation Standards, as incorporated within the Red Book and was based on recent market transactions with

similar characteristics and location using the yield method valuation technique. The yield method of valuation involves applying market-

derived capitalisation yields, and the actual or market-derived future income streams where appropriate, with adjustments for letting voids

or rent-free periods as applicable to each property. For all completed investment properties, their current use equates to the highest and

best use.

Residential properties are valued using recent comparable sales transactions with a significant unobservable input being the discount

used, to reflect the lower value achieved where properties are held under an assured tenancy, that typically earn a low market level of rent.

The discount applied recognises that the value is higher where the house is offered with the benefit of vacant possession at the end of the

assured tenancy.

The fair value of the residential class at 31 December 2022 has been determined by the Directors of the Company at £4,322,000

(2021: £4,127,000). The fair value takes into account market evidence based on recent comparable sale transactions adjusted to take into

account the tenanted nature of the properties.

Information about fair value measurements using significant unobservable inputs (Level 3):

2022

Class

Industrial

Leisure

Mixed-use

Residential

Office

Retail

Valuation technique

Yield

Sales

comparison

Yield

Rental value per sq ft (£) – weighted average

6.40

15.55

4.95

—

27.05

14.06

– low

0.67

1.82

2.75

—

26.60

7.33

– high

13.00

45.05

9.00

—

28.06

25.38

Yield % – weighted average

6.05

6.68

10.90

—

12.44

5.78

– low

3.38

5.84

8.21

—

9.61

4.49

– high

7.75

9.76

12.69

—

15.95

8.83

% discount applied to houses held under assured

tenancies

—

25.00

—

2021

Class

Industrial

Leisure

Mixed-use

Residential

Office

Retail

Sales

Valuation technique

Yield

comparison

Yield

Rental value per sq ft (£)

– weighted average

4.44

15.88

15.26

—

26.82

14.57

– low

0.56

1.75

7.50

—

26.50

8.21

– high

11.00

45.05

24.65

—

27.50

21.40

Yield %

– weighted average

4.98

6.54

5.08

—

8.96

5.08

– low

2.73

4.79

3.09

—

6.91

3.97

– high

9.05

9.76

24.26

—

11.70

9.00

% discount applied to houses held under assured

tenancies

—

25.00

—

There is considered to be no inter-relationship between observable and unobservable inputs.

183

14. Investment properties

continued

The sensitivity analysis to significant changes in unobservable inputs relating to fair value measurements (Level 3) is set out below:

Impact on valuation 2022 £’000

Industrial Leisure Mixed-use Residential Office Retail

Yield – improvement by 0.5%

3,834

662

219

—

356

1,206

Rental value per sq ft – increase by £1

average

8,243

607

1,013

—

328

1,002

Tenancy discount – increase by 1%

—

Impact on valuation 2021 £’000

Industrial

Leisure

Mixed-use

Residential

Office

Retail

Yield – improvement by 0.5%

4,519

719

377

—

668

1,393

Rental value per sq ft – increase by £1

average

11,083

644

255

—

456

1,378

Tenancy discount – increase by 1%

—

The sensitivities have been selected by management on the basis that it considers these measures to be a reasonable expectation of likely

changes to the significant unobservable inputs in the next 12 months.

The property rental income earned by the Group from its occupied investment property, all of which is leased out under operating leases,

amounted to £5,757,000 (2021: £5,772,000). Direct operating expenses arising on investment property generating rental income in the year

amounted to £1,229,000 (2021: £1,274,000). Direct operating expenses arising on the investment property which did not generate rental

income during the year amounted to £122,000 (2021: £162,000).

At 31 December 2022, the Group had entered into contractual commitments for the acquisition and repair of investment property amounting

to £nil (2021: £nil).

Investment property under construction

Class

Fair value hierarchy

Industrial

Level

£’000

2022

£’000

2021

£’000

Carrying value

At 1 January 9,000

9,000

3,993

Subsequent expenditure on investment property 9,265

9,265

5,419

Capitalised letting fees 26

—

Transfer from inventory 391

391

—

Transfer to completed investment property —

—

(3,741)

Transfers to assets held for sale (11,134)

(11,134)

—

Increase in fair value in year 2,370

2,370

3,329

At 31 December

9,918

9,000

Adjustment in respect of tenant incentives

—

Market value at 31 December

9,918

9,000

One property was transferred to ‘assets held for sale’ during the year and was subsequently disposed of prior to the year end.

Tenant incentives are included in trade receivables.

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

NOTES TO THE

FINANCIAL STATEMENTS

for the year ended 31 December 2022

184

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

14.

Investment properties

continued

Investment property under construction

Information about fair value measurements using significant unobservable inputs (Level 3):

2022

Class Industrial

Valuation technique Residual

Rental value per sq ft (£)

– weighted average

10.21

– low

10.21

– high

10.21

Yield %

– weighted average

4.5

– low

4.5

– high

4.5

2021

Class

Industrial

Valuation technique

Residual

Rental value per sq ft (£)

– weighted average

6.10

– low

6.10

– high

6.10

Yield %

– weighted average

4.1

– low

4.1

– high

4.1

The sensitivity analysis to significant changes in unobservable inputs relating to fair value measurements (Level 3) is set out below:

Impact on

valuation 2022

£’000

Industrial

Yield – improvement by 0.5%

1,025

Rental value per sq ft – increase by £1 average

1,804

Impact on

valuation 2021

£’000

Industrial

Yield – improvement by 0.5%

1,037

Rental value per sq ft – increase by £1 average

358

Investment properties under construction are developments which have been valued at 31 December 2022 at fair value by the Directors

of the Company using the residual method at £9,918,000 (2021: £9,000,000). The residual method of valuation involves estimating the

gross development value of the property using market-derived capitalisation yields and market-derived future income streams. From this

gross development value the remaining gross development costs to be incurred are deducted, using market-derived data cost estimates

or the actual known costs and including cost contingencies for construction risk as appropriate. In addition, a deduction for the anticipated

development profits yet to be earned is made, taking into account the progress of the development to date in line with key milestones.

185

—

37,771

15.

Investments

Parent Company – shares in Group undertakings

Cost

At 1 January 2021, 31 December 2021 and 31 December 2022

Adjustments

At 1 January 2021, 31 December 2021 and 31 December 2022

Carrying amount

At 31 December 2022

Total

£’000

At 31 December 2021 37,771

Amounts due from and to subsidiary companies are listed in notes 18 and 22 and details of all subsidiary companies are listed in note 35. All

trading subsidiaries operate in the United Kingdom and are wholly owned, with the exception of:

•

Road Link (A69) Holdings Limited and its subsidiary Road Link (A69) Limited which is 61.2% owned by Henry Boot Construction

Limited;

•

Plot 7 East Markham Vale Management Company Limited which is 66.7% owned by, and under board control of, Henry Boot

Developments Limited;

•

Capitol Park Property Services Limited which is 4.6% owned by, and under board control of, Henry Boot Developments Limited; and

•

Stonebridge Homes Group Limited and its wholly owned subsidiaries (as indicated in note 35) which is 50% owned by, and under board

control of (by virtue of majority voting rights), Henry Boot Land Holdings Limited.

They are all incorporated in the United Kingdom. All subsidiary companies have only one class of ordinary issued share capital.

16.

Investment in joint ventures and associates

Cost

At 1 January

12,165

—

12,165

5,688

152

5,840

Share of profit/(loss) for the year

9,524

(445)

9,079

9,064

(136)

8,928

Dividends received

(7,160)

—

(7,160)

(2,155)

—

(2,155)

Additions

—

2,112

—

Disposals

(6,206)

—

(6,206)

(432)

(18)

(450)

At 31 December

8,323

1,667

9,990

12,165

—

12,165

During the year, the Group increased its equity investment in Rainham Holdco SARL, an associate undertaking, by a further £2.1m which

maintains our interest at 20%.

The Group’s share of its joint ventures’ and associates’ aggregated assets, liabilities and results are as follows:

Investment property

9,311

—

9,311

21,676

—

21,676

Current assets

24,283

6,062

30,345

25,711

5,692

31,403

Non-current assets

—

Total assets

33,594

6,062

39,656

47,388

5,699

53,087

Current liabilities

(22,848)

(4,395)

(27,243)

(32,122)

(2,130)

(34,252)

Non-current liabilities

(2,423)

—

(2,423)

(3,101)

(3,569)

(6,670)

Net investment

8,323

1,667

9,990

12,165

—

12,165

37,771

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

2022

2021

Joint

ventures

Associates

Total

Joint

ventures

Associates

Total

Group

£’000

2022

2021

Joint

ventures

Associates

Total

Joint

ventures

Associates

Total

£’000

NOTES TO THE

FINANCIAL STATEMENTS

for the year ended 31 December 2022

186

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

16. Investment in joint ventures and associates

continued

2022

2021

Joint

ventures

Associates

Total

Joint

ventures

Associates

Total

£’000

Revenue

38,101

38,114

18,944

18,997

Administration and other expenses

(23,569)

(154)

(23,723)

(15,388)

(67)

(15,455)

(Decrease)/increase

fair

value

investment properties

(3,232)

—

(3,232)

6,970

—

6,970

Operating profit/(loss)

11,300

(141)

11,159

10,526

(14)

10,512

Finance costs

(403)

(287)

(690)

(375)

(121)

(496)

Profit/(loss) before tax

10,897

(428)

10,469

10,151

(135)

10,016

Tax

(1,373)

(17)

(1,390)

(1,087)

(1)

(1,088)

Share of profits/(losses) after tax

9,524

(445)

9,079

9,064

(136)

8,928

Details of the Group’s investments in joint ventures and associates are listed in note 35.

Material joint ventures and associates

The Directors considers Pennine Property Partnership LLP, Montagu 406 Regeneration LLP, Newmarket Lane Holdings Limited (Group) and

Cognito Oak LLP to be the only material joint venture or associate they hold an interest in.

Pennine Property Partnership LLP is a property development joint venture between the Group and Calderdale and Huddersfield NHS

Foundation Trust, the LLP is incorporated in England and the Group has ownership of 50%. The joint venture is accounted for using the

equity method of accounting. Montagu 406 Regeneration LLP is a property development joint venture between the Group and The Mayor

and Burgesses of the London Borough of Enfield. The LLP is incorporated in England and the Group has ownership of 50% of the LLP.

The joint venture is accounted for using the equity method of accounting. Newmarket Lane Holdings Limited (Group) (henceforth the

“NML Group”) is a property development joint venture between the Group, two individual shareholders, and Hazeltime Limited. The NML

Group includes three legal entities, Newmarket Lane Holdings Limited, Newmarket Lane Limited, and Newmarket Lane Management

Company Limited. The NML Group is incorporated in England, and the Group has ownership of 50% of the NML Group. The joint venture

is accounted for using the equity method of accounting. Cognito Oak LLP is a property development joint venture between the Group and

Wraith Real Estate Limited, the LLP is incorporated in England and the Group has ownership of 50%. The joint venture is accounted for

using the equity method of accounting.

The table below provides summarised financial information for Pennine Property Partnership LLP, Montagu 406 Regeneration LLP,

Newmarket Lane Holdings Limited (Group) and Cognito Oak LLP. The information disclosed reflects the amounts presented in the financial

statements of Pennine Property Partnership LLP, Montagu 406 Regeneration LLP, Newmarket Lane Holdings Limited (Group), and Cognito

Oak LLP and not the Group’s share of those amounts.

Summarised balance sheet

Pennine Property

Partnership LLP

Montagu 406

Regeneration LLP

Newmarket Lane

Holdings Limited (Group)

Cognito

Oak LLP

2022 2021

2022

2021

£’000 £’000

£’000

Investment properties (non-current)

—

17,401

18,611

25,950

—

Inventories

—

141

889

—

15,336

19,050

—

1,710

Trade and other receivables

—

138

656

143

9,319

2,303

—

Cash and cash equivalents

—

252

420

—

1,665

1,850

—

348

Trade and other payables

—

(4,516)

(15,720)

(14,454)

(13,077)

(19,791)

(1)

(2,375)

Borrowings (non-current)

—

(2,590)

—

Net assets/(liabilities)

—

10,826

4,856

11,639

13,243

3,412

(1)

(249)

Reconciliation to carrying

amount:

Opening net assets 1 January

10,826

8,956

11,639

(5)

3,412

(24)

(249)

(41)

Profit/(loss) for the period

1,215

2,920

(6,783)

11,644

9,831

3,455

14,826

(208)

Other distribution

(12,041)

(1,050)

—

(19)

(14,578)

—

Closing net assets

—

10,826

4,856

11,639

13,243

3,412

(1)

(249)

Group’s share in %

—

50%

Group’s share in £

—

5,413

2,428

5,820

6,622

1,706

(1)

(125)

Carrying amount

—

5,413

2,428

5,820

6,622

1,706

(1)

(125)

187

16.

Investment in joint ventures and associates

continued

Summarised statement of comprehensive income

Revenue

Movement in fair value of

investment property

1,318

300

752

2,356

564

(6,764)

—

11,695

36,218

—

19,435

—

17,208

—

1,572

—

Profit/(loss) for the year

1,215

2,920

(6,783)

11,644

9,831

3,455

14,826

(208)

The Group disposed of one joint venture investment in the year:

Pennine Property Partnership LLP

On 1 September 2022 the Group, through its subsidiary Henry Boot Developments Limited, disposed of its interest in Pennine Property

Partnership LLP for a total consideration of £6,873,000.

2022

£’000

Sale proceeds

6,873

Book value of net assets

(6,206)

Profit on disposal

667

17.

Contract assets

2022

£’000

2021

£’000

Construction contracts – Construction segment

Construction contracts – Property Investment and Development segment

4,882

14,375

2,291

5,265

19,257

7,556

Due within one year

Due after more than one year

19,257

—

7,556

—

19,257

7,556

Amounts relating to construction contracts are balances due from customers under construction contracts that arise when the Group

receives payments from customers in line with a series of performance-related milestones. The Group will previously have recognised a

contract asset for any work performed but not yet invoiced as conditional to reaching certain agreed milestone. Any amount previously

recognised as a contract asset is reclassified to trade receivables at the point at which it is invoiced to the customer.

Contract assets have increased as the Group has provided more construction contract services in the property investment and development

segment.

There were no impairment losses recognised on any contract asset in the reporting period (2021: £nil).

The Group does not recognise any assets arising from the costs incurred to obtain a contract as the related amortisation period would have

been less than one year.

18.

Trade and other receivables

Group Parent Company

2021

2022

£’000

(restated

)

£’000

2022

£’000

(restated

)

£’000

Trade receivables

70,245

66,889

484

168

Loss allowance

(1,682)

(1,269)

—

Prepayments

9,751

8,442

2,085

949

Amounts owed by joint ventures and associates

25,316

27,660

—

Amounts owed by Group undertakings

—

222,786

203,417

103,630

101,722

225,355

204,534

Due within one year

66,601

64,615

40,149

27,845

Due after more than one year

37,029

37,107

185,206

176,689

103,630

101,722

225,355

204,534

See ‘prior year restatements’ on page 159.

Amounts due after more than one year relate to deferred consideration included in trade receivables on inventory sold that are discounted to

present value and are due for payment between January 2024 and July 2026, and amounts owed by joint ventures and associates that are

not expected to be recovered in the next 12 months.

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

2022

2021

2022

2021

2022

2021

2022

2021

£’000

NOTES TO THE

FINANCIAL STATEMENTS

for the year ended 31 December 2022

188

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

18. Trade and other receivables continued

Group

Movement in the trade receivables loss allowance

2022

£’000

2021

£’000

At 1 January

1,269

691

Impairment losses recognised

417

779

Amounts written off as uncollectable (utilisation)

(4)

(196)

Amounts recovered during the year

—

(5)

Impairment losses reversed

—

At 31 December

1,682

1,269

The loss allowance as at 31 December 2022 and 31 December 2021 for trade receivables was determined as follows:

2022

Expected

loss rate

Gross

carrying

amount

£’000

Loss

allowance

£’000

0-30 days

—

63,962

30–60 days

1.3

1,462

60–90 days

1.2

520

90–120 days

5.9

341

120+ days

40.7

3,960

1,612

70,245

1,682

2021

Expected

Gross

carrying

amount

Loss

loss rate

(restated

)

£’000

allowance

£’000

0-30 days

—

60,464

30–60 days

0.6

2,895

60–90 days

2.9

548

90–120 days

24.2

128

120+ days

41.1

2,854

1,173

66,889

1,269

See ‘prior year restatements’ on page 159.

The Directors consider that the carrying amount of trade and other receivables of the Group and Parent Company approximates to their

fair value.

Parent Company

Amounts owed by Group undertakings include loans of £213.4m (2021: £203.7m) and are repayable on demand, unsecured and are stated

net of provisions for impairment of £1,498,000 (2021: £1,500,000), of which £nil (2021: £3,000) has been provided in the year, £2,000

(2021: £87,000) has been recovered in the year and £nil (2021: £nil) was written off. Expected credit losses are based on the assumption

that repayment of the loan is demanded at the reporting date. Where there are insufficient liquid assets the Parent Company considers

the expected manner of recovery to measure expected credit losses. This might be a ‘repay over time’ strategy, or a fire sale of less liquid

assets. Interest is charged annually at 0% (2021: 2.85%).

The Parent Company has no impaired trade receivables (2021: nil).

189

18.

Trade and other receivables

continued

Credit risk

The Group’s principal financial assets are bank balances and cash, and trade and other receivables, which represent the Group’s maximum

exposure to credit risk in relation to financial assets.

The Group’s credit risk is primarily attributable to its trade receivables. The amounts presented in the Statement of Financial Position are

net of loss allowances for doubtful receivables, estimated by the Group’s management based on prior experience and forward-looking

assessments of the economic environment in accordance with IFRS 9 ‘Financial Instruments’.

The Group has no significant concentration of credit risk, with exposure spread over a large number of counterparties and customers.

The credit risk on liquid funds is limited because the counterparties are banks with high credit ratings assigned by international credit rating agencies.

19.

Deferred tax

Deferred tax assets and deferred tax liabilities are offset where the Group has a legally enforceable right to set off current tax assets against

current tax liabilities and when the deferred tax assets and liabilities relate to tax levied by the same tax authority where there is an intention

to settle the balances on a net basis. The amounts after offsetting are as follows:

Recognised in profit or loss

(593)

2,345

(856)

(83)

813

Recognised in other comprehensive income

—

(23)

(3,749)

—

(3,772)

At 31 December 2022

(787)

(2,066)

(1,548)

249

(4,152)

Deferred tax asset

—

249

Deferred tax liability

(787)

(2,066)

(1,548)

—

(4,401)

Parent Company

At 1 January 2021

—

6,924

355

7,347

Recognised in profit or loss

—

973

1,015

Recognised in other comprehensive income

—

(4,840)

—

(4,840)

At 31 December 2021

104

—

3,057

361

3,522

Recognised in profit or loss

(76)

—

(856)

(82)

(1,014)

Recognised in other comprehensive income

—

(3,749)

—

(3,749)

At 31 December 2022

—

(1,548)

279

(1,241)

Deferred tax asset

—

279

307

Deferred tax liability

—

(1,548)

—

(1,548)

Deferred tax assets relating to deductible temporary differences are recognised if it is probable that they can be offset against future taxable

profits or existing temporary differences.

In the Spring Budget 2021, the Government announced that from 1 April 2023 the main rate of UK corporation tax rate would increase to

25%. This new law was substantively enacted on 24 May 2021. As a result, deferred tax balances at the year end have been measured at

25% (2021: 25%), being the rate at which timing differences are expected to reverse. Management does not expect any significant reversal

of deferred tax assets or liabilities in the next 12 months.

20.

Inventories

2022

£’000

2021

£’000

Property developments in progress

91,213

75,161

Housebuilder land and work in progress

80,629

52,464

Land held for development or sale

57,475

47,682

Options to purchase land

11,893

13,558

Planning promotion agreements

50,568

46,431

291,778

235,296

Within property developments in progress, £nil (2021: £1,277,000) has been written down and recognised as an expense in the year.

These costs relate to development projects no longer likely to proceed. Within land held for development or sale, options to purchase land

and planning promotion agreements, £2,019,000 (2021: £1,170,000) has been written down and recognised as an expense in the year.

These costs relate to land, options and planning promotion agreements where planning permission for development has been refused or is

deemed to be doubtful.

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

Accelerated

capital

allowances

Property

revaluations

Retirement

benefit

scheme

Other

timing

differences

Total

Group

£’000

At 1 January 2021

—

6,924

333

7,342

Recognised in profit or loss

(279)

(4,106)

973

(1)

(3,413)

Recognised in other comprehensive income

—

(282)

(4,840)

—

(5,122)

At 31 December 2021

(194)

(4,388)

3,057

332

(1,193)

NOTES TO THE

FINANCIAL STATEMENTS

for the year ended 31 December 2022

190

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

21.

Contract liabilities

2022

£’000

2021

£’000

Construction contracts – Construction segment

Construction contracts – Property Investment and Development segment

4,006

—

5,033

—

4,006

5,033

Due within one year

4,006

5,033

2022

£’000

2021

£’000

Revenue recognised that was included in the contract liability balance at the beginning of the period

Construction contracts – Construction segment

5,033

7,280

Construction contracts – Property Investment and Development segment

—

150

Revenue recognised from performance obligations satisfied in previous periods

Construction contracts – Construction segment

—

Construction contracts – Property Investment and Development segment

—

Contract liabilities have decreased in the year as the Group invoicing remains more closely aligned with the level of construction of work

undertaken on these contracts.

22.

Trade and other payables

Group Parent Company

2022

£’000

2021

£’000

2022

£’000

2021

£’000

Trade payables

80,069

56,420

1,492

1,409

Social security and other taxes

2,273

4,119

427

572

Accrued expenses

3,911

9,441

1,279

1,024

Deferred income

13,777

3,834

—

Amounts owed to joint venture and associates

365

—

Amounts owed to Group undertakings

—

86,110

83,168

100,395

73,824

89,308

86,173

Due within one year

95,827

72,155

89,308

86,173

Due after more than one year

4,568

1,669

—

100,395

73,824

89,308

86,173

The Directors consider that the carrying amount of trade payables approximates to their fair value.

Amounts due after more than one year include £1,343,000 (2021: £1,669,000) of deferred income and £3,225,000 (2021: £nil) of trade payables

relating to deferred land payments. Included within deferred income is £1,669,000 relating to an advanced payment from National Highways

(2021: £1,874,000). This is being released as revenue and interest within the income statement under the terms of the A69 Road Link contract.

During the year, £519,000 (2021: £445,000) has been recognised as revenue and £314,000 (2021: 332,000) recognised as interest. The balance

of deferred income represents advanced receipts for construction of a pre-sold asset in the property investment and development segment which

is due to complete in 2023.

Parent Company

Amounts owed to Group undertakings (including loans of £85.8m (2021: £81.1m)) are repayable on demand, unsecured and bear interest

at rates of between 0%-5.20% (2021: 2.85%).

23.

Government grants

Government grants have been received in relation to the infrastructure of one of the Group’s land promotions and one of the Group’s

property developments.

Grant income received relating to revenue grants are included within deferred income and released to the Consolidated Statement of

Comprehensive Income on a systematic basis to match the costs it is intended to compensate. There are no unfulfilled conditions or

contingencies attached to the grants that have been recognised.

Amounts credited to the Consolidated Statement of Comprehensive Income during the year were £130,000 (2021: £723,000).

Grant income relating to capital grants is included within deferred income until the completion conditions are met; at this point the grant is

transferred to offset the cost of the asset.

191

24.

Capital risk management

The Group’s objectives when managing capital are:

•

To safeguard the Group’s ability to continue as a going concern and have the resources to provide returns for shareholders and benefits

for other stakeholders; and

•

To maximise returns to shareholders by allocating capital across our businesses based on the level of expected return and risk.

The Group sets the amount of capital in proportion to risk. The Group manages the capital structure and makes adjustments to it in the light

of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure,

the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to

reduce debt.

The Group monitors capital on the basis of net debt to equity. Net debt is total debt less cash and cash equivalents and at 31 December

2022 this was £48.6m (2021: £43.5m). Equity comprises all components of equity and at 31 December 2022 this was £394.3m (2021:

£355.3m).

During 2022 the Group’s achieved its strategy, to maintain the debt to equity ratio below 30% (2021: 30%). This level was chosen to ensure

that we can access debt relatively easily and inexpensively if required.

In January 2020, the Group concluded negotiations with three banking partners to put in place a £75m facility to replace the £72m facility

we had in place at 31 December 2019. The renewed facilities commenced on 23 January 2020, with a renewal date of 23 January 2023

and an option to extend the facilities by one year, each year, for the next two years occurring on the anniversary of the facility. The renewed

facilities, on improved terms, maintain covenants on the same basis as the previous facilities. On 19 January 2022 the banks agreed to the

Group’s second request to extend the facility to 23 January 2025 and on 9 October 2022 to call on the facility accordion increasing the total

commitments by £30m to £105m. The Group had drawn £65m of the facility at 31 December 2022 (2021: £50m).

The Group’s secured bank facilities are subject to covenants over loan-to-market value of investment properties, interest cover, EBIT cover,

gearings and minimum consolidated tangible assets value. The Group operated comfortably within all of its requirements throughout the

year and continues to do so over forecast periods.

On the 17 December 2021, the Group entered into a Receivables Purchase Agreement with HSBC Invoice Finance (UK) Limited. The

Receivables Purchase Agreement allows the Group to sell eligible deferred receivables generated through its land sale activities to HSBC

Invoice Finance (UK) Limited. Under the terms of the agreement the Group irrevocably assigns all rights to HSBC Invoice Finance (UK)

Limited and all tangible risks and rewards of ownership of the financial asset are transferred. Upon transfer of contractual rights, the deferred

receivable asset is derecognised in the financial statements of the Group. There is a maximum agreement limit of £25m of which receivables

due from eligible housebuilders can be sold. Amounts of £7.6m (2021: nil) were sold under the agreement at the year end.

The Group’s capital risk management disclosures are consistent with the Parent Company.

25.

Borrowings

Bank overdrafts

—

Bank loans

65,000

50,000

65,000

50,000

65,000

50,000

65,009

50,000

Due within one year

65,000

50,000

65,009

50,000

Due after one year

—

65,000

50,000

65,009

50,000

Contractual maturities of borrowings, including future interest, as follows:

On demand or within one year

65,000

50,000

65,009

50,000

In the second year

—

In the third to fifth years inclusive

—

65,000

50,000

65,009

50,000

Due within one year

65,000

50,000

65,009

50,000

Due after one year

—

65,000

50,000

65,009

50,000

See ‘prior year restatements’ on page 159.

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

Group

Parent Company

2022

2021

(restated

)

2022 2021

£’000

£’000 £’000

NOTES TO THE

FINANCIAL STATEMENTS

for the year ended 31 December 2022

192

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

25.

Borrowings

continued

The weighted average interest rates paid were as follows:

2022

2021

Bank overdrafts

2.72

1.24

Bank loans – floating rate

4.59

1.51

Bank loans – floating rate (relating to Stonebridge Homes Limited)

—

1.98

Bank overdrafts are repayable on demand and bank loans are drawn for periods of between one and six months.

Borrowings are recognised at amortised cost.

Liquidity risk

The Company’s objectives when managing liquidity are:

•

To safeguard the Group’s ability to meet expected and unexpected payment obligations at all times; and

•

To maximise the Group’s profitability.

Interest on floating rate borrowings is arranged for periods from one to six months. These borrowings are secured by a fixed and floating

charge over the assets of the Group excluding those of Road Link (A69) Limited.

The Stonebridge Homes Limited revolving loan facility is secured by a specific charge over the freehold property of that company and is

guaranteed by Henry Boot PLC. On 25 January 2019 the Stonebridge Homes facility was increased to £10,000,000 with full and final

settlement becoming due on 24 January 2022. On 17 December 2021, the facility was settled in full with Stonebridge Homes now being

funded through the Henry Boot PLC group facility.

Other borrowings are arranged at floating rates, thus exposing the Group to cash flow interest rate risk.

Based on approximate average borrowings during 2022, a 1.0% (2021: 0.5%) change in interest rates, which the Directors consider to be a

reasonably possible change, would affect profitability before tax by £618,000 (2021: £82,000).

The fair value of the Group’s borrowings is not considered to be materially different from the carrying amounts.

At 31 December 2022, the Group had available £40,000,000 (2021: £25,000,000) undrawn committed borrowing facilities.

26.

Provisions

Land

promotion

Road

maintenance

Total

£’000

At 1 January 2021

3,936

1,992

5,928

Additional provisions in year

1,051

1,499

2,550

Utilisation of provisions

(570)

(1,626)

(2,196)

At 31 December 2021

4,417

1,865

6,282

Included in current liabilities

3,562

1,865

5,427

Included in non-current liabilities

855

—

855

4,417

1,865

6,282

Additional provisions in year

Utilisation of provisions

775

(1,637)

683

(715)

1,459

(2,352)

At 31 December 2022

3,555

1,833

5,388

Included in current liabilities

Included in non-current liabilities

2,170

1,385

1,833

—

4,003

1,385

3,555

1,833

5,388

193

26. Provisions continued

The land promotion provision represents management’s best estimate of the Group’s liability to provide infrastructure and service obligations,

which remain with the Group following the disposal of land. The provision is calculated using the present value of the estimated cash flows

required to settle the present obligations, pro rata on an acreage allocation basis where disposals occur over a number of phases, such

that provisions are only made in relation to the land which has been disposed of. Based on a 1.0% change in the discount rate and a 5.0%

change in the estimated cash outflows, both of which the Directors consider to be a reasonably possible change, land promotion provisions

would change and affect profitability before tax by £32,000 and £182,000 respectively (2021: £11,000 and £101,000).

The Group maintains rigorous forecasting and budgeting for the infrastructure and services contracts to which our provisions relate. The

Group’s outstanding obligations are not considered to be ‘onerous’ contracts, as the costs of meeting the obligations are not anticipated to

exceed the economic benefits expected to be received throughout the life of the developments.

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. Based on a 5.0% change in the estimated cash outflows, which the Directors consider to be a

reasonably possible change, the road maintenance provision would change and affect profitability before tax by £129,000 (2021: £206,000).

Off balance sheet arrangements

The Group is currently undertaking the infrastructure of land promotions at Bridgwater and Cranbrook, spanning 122 and 53 acres

respectively (2021: 122 and 53). The Group is liable for various planning and infrastructure obligations required to be met under section

agreements imposed by the local Councils. The Group shares its planning and infrastructure obligations relating to the Cranbrook site with

two other parties, the Group’s share being 30%. These shared obligations are secured by performance bonds and legal charges. The Group

deems the possibility of default by the other parties as highly remote. The infrastructure of these developments is anticipated to continue

until 2023 and 2025 respectively, with costs being incurred throughout these periods.

The Group has cumulatively disposed of 117 and 50 acres respectively (2021: 117 and 48), and has subsequently recognised provisions to

the value of £3,451,000 (2021: 4,351,000), being the Group’s best estimate of the consideration required to settle the present obligations at

the reporting date. Subsequent disposals are expected to occur over a number of phases; provisions are made in relation to the land which

has been disposed of. The present value of the estimated cash flows relating to future disposals, amounting to £185,000 (2021: £617,000),

has therefore not been recognised in these Financial Statements.

Contingent liabilities

Contingent liabilities may arise in respect of subcontractor and other third party claims made against the Group, in the normal course of

trading. These claims can include those relating to cladding/legacy fire safety matters, and defects. A provision for such claims is only

recognised to the extent that the Directors believe that the Group has a legal or constructive obligation as a result of a past event and it is

probable that an outflow of economic benefit will be required to settle the obligation. However, such claims are predominantly covered by

the Group’s insurance arrangements.

27. Retirement benefit obligations

Defined contribution pension plan

The Group operates a defined contribution pension plan for all qualifying employees. The plan is administered and managed by Aviva and

the Group matches member contributions, providing a minimum of 5% (2021: 5%) of salary is paid by the employee, on a pound-for-pound

basis up to a maximum of 8% (2021: 8%).

The total cost charged to income of £3,251,000 (2021: £2,521,000) represents contributions payable to the plan by the Group.

Defined benefit pension scheme

The Group sponsors a funded defined benefit pension scheme in the UK. The scheme is administered within a Trust which is legally

separate from the Group. Trustees are appointed by both the Group and the scheme’s membership and act in the interest of the scheme

and all relevant stakeholders, including the members and the Group employers. The Trustees are also responsible for the investment policy

for the scheme’s assets.

Existing scheme members accrued benefits up until 19 March 2021 at which point the scheme closed to future accrual. To 19 March 2021

members accrued an annual pension of either 1/45th or 1/60th of final pensionable salary for each year of pensionable service. Increases

in pensionable salary were limited to 1% per annum. Once in payment, pensions increase in line with inflation. The scheme also provides a

two-thirds spouse’s pension on the death of a member.

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

NOTES TO THE

FINANCIAL STATEMENTS

for the year ended 31 December 2022

194

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

27. Retirement benefit obligations

continued

Up to the date of closure active members of the scheme paid contributions at the rate of either 5% or 7% of pensionable salary and the

Group employers paid the balance of the cost as determined by regular actuarial valuations. The Trustees are required to use prudent

assumptions to value the liabilities and costs of the scheme, whereas the accounting assumptions must be best estimates.

The Group has not recognised any obligation under a minimum funding requirement as it is entitled to a refund of any residual assets once

all members have left the scheme.

The scheme poses a number of risks to the Group. These include:

Investment risk

The present value of obligations is calculated using a discount rate determined by reference to high quality corporate bond yields. If the

return on the scheme’s assets is below this rate the scheme deficit will increase.

Interest rate risk

A decrease in the yield on high-quality corporate bonds will reduce the discount rate and thus increase the value placed on the scheme’s

liabilities. However, this would be partially offset by an increase in the value of the scheme’s bond investments.

Inflation risk

The present value of the liabilities is calculated by reference to a best estimate of future inflation. If inflation turns out to be higher than this

estimate then the deficit will increase.

Longevity risk

The present value of the liabilities is calculated using a best estimate of the life expectancy of scheme members. An increase in life

expectancies will increase the scheme’s liabilities.

A formal actuarial valuation was carried out as at 31 December 2021. The results of that valuation have been projected to 31 December 2022 by

a qualified independent actuary and the next formal valuation will be 31 December 2024. The figures in the following disclosure were measured

using the projected unit method. The main financial assumptions used in the valuation of the liabilities of the scheme under IAS 19 are:

2022

2021

Retail Prices Index (RPI)

3.20

3.30

Consumer Prices Index (CPI)

2.60

2.70

Pensionable salary increases

—

Rate in increase to pensions in payment liable for Limited Price Indexation (LPI)

2.60

2.70

Revaluation of deferred pensions

2.60

2.70

Liabilities discount rate

4.90

2.00

Mortality assumptions

2022

Years

2021

Years

Retiring today (aged 65)

Male

Female

21.7

23.8

21.8

24.1

Retiring in 20 years (currently aged 45)

Male

22.7

22.8

Female

25.0

25.3

The mortality assumptions adopted are the Self Administered Pension Schemes (SAPS) tables with allowance for future improvements in line

with Continuous Mortality Investigation (CMI) 2021 with an annual improvement of 1% per annum.

The sensitivities regarding the principal assumptions used to measure the scheme liabilities are set out below:

Impact on scheme liabilities

Change in

assumption

Increase in

assumption

Decrease in

assumption

Rate of inflation 0.25% Increase by 2.3% Decrease by 2.3%

Liabilities discount rate 0.25% Decrease by 2.9% Increase by 3.1%

Rate of mortality 1 year Increase by 3.7% Decrease by 3.6%

195

27. Retirement benefit obligations

continued

Amounts recognised in the Consolidated Statement of Comprehensive Income in respect of the scheme are as follows:

2022

£’000

2021

£’000

Service cost:

Current service cost

—

180

Ongoing scheme expenses

644

502

Past service cost

—

2,074

Net interest expense

209

505

Pension protection fund

136

146

Pension expenses recognised in profit or loss

989

3,407

Remeasurement on the net defined benefit liability:

Return on plan assets (excluding amounts included in net interest expense)

50,365

(13,239)

Actuarial gain arising from changes in demographic assumptions

(1,070)

(277)

Actuarial gain arising from changes in financial assumptions

(63,568)

(9,781)

Actuarial gain arising from experience assumptions

(721)

—

Actuarial gain recognised in other comprehensive income

(14,994)

(23,297)

Total

(14,005)

(19,890)

The amount included in the Statement of Financial Position arising from the Group’s obligations in respect of the scheme is as follows:

2022

£’000

2021

£’000

Present value of scheme obligations

Fair value of scheme assets

152,576

(158,764)

221,660

(209,432)

(6,188)

12,228

This amount is presented in the Statement of Financial Position as follows:

2022

£’000

2021

£’000

Non-current (assets)/liabilities

(6,188)

12,228

Movements in the present value of scheme obligations in the year were as follows:

2022

£’000

2021

£’000

At 1 January

221,660

235,143

Current service cost

—

180

Interest on obligation

4,353

4,201

Actuarial losses

(65,359)

(10,058)

Past service cost

—

2,074

Benefits paid

(8,078)

(9,880)

At 31 December

152,576

221,660

Movements in the fair value of scheme assets in the year were as follows:

2022

£’000

2021

£’000

At 1 January

209,432

198,698

Interest income

4,144

3,696

Actuarial (losses)/gains on scheme assets

(50,365)

13,239

Employer contributions

4,275

4,181

Benefits paid

(8,078)

(9,880)

Ongoing scheme expenses

(644)

(502)

At 31 December

158,764

209,432

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

NOTES TO THE

FINANCIAL STATEMENTS

for the year ended 31 December 2022

196

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

27.

Retirement benefit obligations

continued

The categories of plan assets are as follows:

2022

£’000

2021

£’000

Quoted investments, including pooled diversified growth funds:

Equity

14,381

47,796

Diversified credit funds

46,483

63,641

Cash and net current assets

2,979

3,222

Unquoted investments:

Direct lending

18,969

22,536

Liability driven investment

33,283

34,369

Infrastructure

21,319

20,101

Special situations

21,350

17,767

At 31 December

158,764

209,432

The weighted average duration of the defined benefit obligation is 12 years (2021: 16 years).

The current estimated amount of total contributions expected to be paid to the scheme during the 2023 financial year is £1,300,000, being

£1,300,000 payable by the Group and £nil payable by scheme members.

The Company’s level of recovery plan funding to the scheme is £100,000 per month from March 2023 to December 2024 with a provision to

suspend contributions if in surplus over £3m for two quarters or increase contributions to £300,000 if in deficit over £3m for two quarters. In

addition to this, the Company contributes a further £260,000 per annum towards the administration expenses of the scheme.

28.

Related party transactions

Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are

disclosed below:

Parent Company

2022

£’000

2021

£’000

Management charges receivable

4,670

2,456

Interest receivable

—

4,544

Interest payable

(1,447)

(1,753)

Rents payable

(159)

(158)

Recharge of expenses

(25)

(39)

Transactions between the Company and its remaining related parties are as follows:

Purchases of goods and services

2022

£’000

2021

£’000

Related companies of key management personnel (amounts paid for Non-executive Director services)

Amounts owing by related parties (note 18) or to related parties (note 22) are unsecured, repayable on demand and will be settled in cash. No

guarantees have been given or received. No significant provisions have been made for impaired receivables in respect of the amounts owed by

related parties. Other than as disclosed above and in note 16, there are no further related party transactions with joint ventures and associates.

Remuneration of key management personnel

The key management personnel of the Group are the Board of Directors and members of the Executive Committee, as presented on pages

80 to 83. They are responsible for making all of the strategic decisions of the Group and its subsidiaries, as detailed on pages 28 and 31.

The remuneration of the Board of Directors is set out in the Remuneration Report on pages 120 to 136. The remuneration of the relevant

six (2021: eight) members of the Senior Management team is set out below, in aggregate, for each of the categories specified in IAS 24

‘Related Party Disclosures’.

2022

£’000

2021

£’000

Short-term employee benefits

Post-employment benefits

Share-based payments

1,648

1,976

1,748

2,091

197

29.

Share capital

Authorised, allotted,

issued and fully paid

2022

£’000

2021

£’000

400,000 5.25% cumulative preference shares of £1 each (2021: 400,000)

133,627,922 ordinary shares of 10p each (2021: 133,323,967)

400

13,363

400

13,332

13,763

13,732

The Company has one class of ordinary share which carries no rights to fixed income, but which entitles the holder thereof to receive notice of

and attend and vote at general meetings or appoint a proxy to attend on their behalf. During the year, 303,955 ordinary shares (2021: 142,430)

were issued in satisfaction of share option exercises.

Subject to Board approval, the preference shares carry the right to a cumulative preferential dividend payable half yearly at the rate of

5.25% per annum. They also carry a right, in priority to the ordinary equity, on a return of assets on a winding-up or reduction of capital, to

repayment of capital, together with the arrears of any preferential dividend. With the exception of any resolution proposed to directly affect

the rights or privileges of the holders of the preference shares, the holders thereof are not entitled to receive notice of, be present or vote at

any general meeting of the Company.

Share-based payments

The Company operates the following share-based payment arrangements:

(i)

The Henry Boot 2010 Sharesave Plan

This savings-related share option plan was approved by shareholders in 2010 and is HMRC approved. Grants of options to participating

employees were made on 24 October 2017 at a price of 270.0p at a discount of 10%, on 4 October 2018 at a price of 262.0p at a discount

of 5.8%, on 3 October 2019 at a price of 224.0p at a discount of 9.7%, on 5 October 2020 at a price of 237.0p at a discount of 6.0%,

on 15 October 2021 at a price of 225.0p at a discount of 20.5% and on 21 October 2022 at a price of 198.0p at a discount of 15.7%.

These become exercisable for a six-month period from 1 December 2021, 1 December 2022, 1 December 2023, 1 December 2024 and

1 December 2025 respectively. There are no performance criteria attached to the exercise of these options which are normally capable

of exercise up to six months after the third anniversary of the Sharesave contract commencement date. The right to exercise options

terminates if a participating employee leaves the Group, subject to certain exceptions.

2021

Options

outstanding at

1 January

2021

Options

granted

Options

lapsed

Options

exercised

Options

outstanding at

31 December

2021

October 2017 grant

179,553

—

(84,366)

(95,187)

—

October 2018 grant

86,499

—

(13,050)

(17,806)

55,643

October 2019 grant

734,761

—

(104,709)

(5,712)

624,340

October 2020 grant

312,039

—

(102,825)

—

209,214

October 2021 grant

—

444,640

(4,000)

—

440,640

Weighted average exercise price

236p

225p

243p

267p

228p

2022

Options

outstanding at

1 January

Options

outstanding at

31 December

2022

granted

lapsed

exercised

2022

The weighted average share price at the date of exercise for share options exercised during the year was 257.07p (2021: 278.10p).

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

October 2018 grant

55,643

—

(5,153)

(50,490)

—

October 2019 grant

624,340

—

(45,243)

(168,879)

410,218

October 2020 grant

209,214

—

(52,617)

—

156,597

October 2021 grant

440,640

—

(167,227)

(933)

272,480

October 2022 grant

—

1,007,374

(15,270)

—

992,104

Weighted average exercise price

228p

198p

226p

233p

211p

NOTES TO THE

FINANCIAL STATEMENTS

for the year ended 31 December 2022

198

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

29. Share capital continued

(ii)

The Henry Boot 2015 Long-Term Incentive Plan

This plan was approved by shareholders at an AGM held on 21 May 2015. Details of the plan and the vesting requirements are also set out

in the Directors’ Remuneration Policy which is also available to view on the website.

In respect of (ii) above, the aggregate total of movements in share options granted and awards of shares is as follows:

2022

Number

2021

Number

Share options granted at 1 January

1,365,397

1,078,207

Lapses of share options in year

(385,427)

(177,367)

Awards of shares in year

(31,486)

(53,085)

Share options granted in year

647,331

517,642

Share options granted at 31 December

1,595,815

1,365,397

The weighted average share price at the date of exercise for share options exercised during the year was 323.00p (2021: 278.00p).

The weighted average exercise price of all share options issued in the scheme is nil.

(iii)

The Henry Boot PLC 2010 Approved Company Share Option Plan

This plan, more commonly known as a CSOP, was approved by shareholders in 2010 and is HMRC approved. Any full-time Director or

employee (full-time or part-time) is eligible to participate at the discretion of the Remuneration Committee of the Board. Options are granted

by deed with no consideration payable by the participant. The aggregate subscription price at the date of grant of all outstanding options

granted to any one participant under the plan and any other HMRC approved plan operated by the Company (but excluding options

granted under any savings-related share option plan) must not exceed £30,000. The aggregate market value at the date of grant of ordinary

share options which may be granted to any one participant in any one financial year of the Company shall not normally exceed two times

the amount of a participant’s remuneration for that financial year. The Remuneration Committee may impose objective conditions as to

the performance of the Group which must normally be satisfied before options can be exercised. Options are normally exercisable only

within the period of three to ten years after the date of grant. The right to exercise options generally terminates if a participant leaves the

Group, subject to certain exceptions. The first grant of options under the plan was made to certain senior employees (none of whom at the

time were Directors of Group companies) on 17 May 2011 at an option price of 121.5p. The second grant of options under the plan was

made to certain senior employees (none of whom at the time were Directors of Group companies) on 1 October 2014 at an option price of

191.0p. The third grant of options under the plan was made to certain senior employees (none of whom at the time were Directors of Group

companies) on 6 October 2017 at an option price of 298.9p. The fourth grant of options under the plan was made to certain employees

(two of whom at the time were Directors of Group companies) on 14 September 2018 at an option price of 291.0p. The fifth grant of

options under the plan was made to certain employees (two of whom at the time were Directors of Group companies) on 3 October 2019

at an option price of 249.0p. The sixth grant of options under the plan was made to certain employees (none of whom at the time were

Directors of Group companies) on 5 October 2020 at an option price of 263.0p. The seventh grant of options under the plan was made to

certain employees (none of whom at the time were Directors of Group companies) on 29 September 2021 at an option price of 281.0p. The

eighth grant of options under the plan was made to certain employees (none of whom at the time were Directors of Group companies) on 5

October 2022 at an option price of 247.0p. There were no performance conditions imposed on either of these grants.

2021

Options

outstanding at

1 January

2021

Options

granted

Options

lapsed

Options

exercised

Options

outstanding at

31 December

2021

May 2011 grant

5,000

—

(5,000)

—

October 2014 grant

15,000

—

(5,000)

10,000

October 2017 grant

130,507

—

(34,298)

—

96,209

September 2018 grant

263,565

—

(43,396)

—

220,169

October 2019 grant

437,406

—

(88,779)

(8,420)

340,207

October 2020 grant

416,316

—

(65,847)

(566)

349,903

September 2021 grant

–

413,230

(8,890)

—

404,340

Weighted average exercise price

266p

281p

269p

198p

271p

199

29.

Share capital

continued

2022

Options

outstanding at

1 January

2022

Options

granted

Options

lapsed

Options

exercised

Options

outstanding at

31 December

2022

October 2014 grant

10,000

—

10,000

October 2017 grant

96,209

—

(13,386)

(25,936)

56,887

September 2018 grant

220,169

—

(19,500)

(54,294)

146,375

October 2019 grant

340,207

—

(36,306)

(5,277)

298,624

October 2020 grant

349,903

—

(37,213)

(2,093)

310,597

September 2021 grant

404,340

—

(42,132)

(792)

361,416

September 2022 grant

—

605,010

(7,450)

—

597,560

Weighted average exercise price

271p

247p

270p

290p

262p

The weighted average share price at the date of exercise for share options exercised during the year was 323.36p (2021: 274.80p).

Fair value

Fair value is measured by a Monte Carlo pricing model using the following assumptions:

Weighted

average

exercise price

Weighted

average

share price

Expected

volatility

Expected life

Risk-free rate

Expected

dividend yield

LTIP

Nil

241.0p to

324.0p

29.37% to

38.73%

3 years

0.00% to

1.65%

1.95% to

3.24%

CSOP 2011

121.5p

41.47%

3 years

1.67%

5.02%

CSOP 2014

191.0p

31.17%

3 years

1.23%

3.16%

CSOP 2017

298.9p

309.0p

30.37%

3 years

0.51%

3.02%

CSOP 2018

291.0p

29.28%

3 years

0.91%

2.90%

CSOP 2019

249.0p

29.25%

3 years

0.28%

3.24%

CSOP 2020

263.0p

38.07%

3 years

0.00%

2.61%

CSOP 2021

281.0p

38.60%

3 years

0.41%

2.49%

CSOP 2022

247.0p

250.0p

38.25%

3 years

4.15%

1.95%

Sharesave

2017

270.0p

300.0p

30.30%

3 years

0.51%

3.02%

Sharesave

2018

262.0p

278.0p

29.53%

3 years

0.99%

2.90%

Sharesave

2019

224.0p

248.0p

29.25%

3 years

0.28%

3.24%

Sharesave

2020

237.0p

263.0p

38.07%

3 years

0.00%

2.61%

Sharesave

2021

225.0p

2.83.0p

38.60%

3 years

0.58%

2.49%

Sharesave 2022

198.0p

235.0p

38.25%

3 years

3.89%

1.95%

The volatility measured at the standard deviation of continuously compounded share returns is based on statistical analysis of daily share

prices over the last three years.

The weighted average fair value of share options granted during the year was 96.78p (2021: 92.71p).

Expense recognised in the Consolidated Statement of Comprehensive Income

2022

£’000

2021

£’000

The total expense recognised in the Consolidated Statement of Comprehensive Income

arising from share-based payment transactions

1,241

969

The total expense recognised in the Consolidated Statement of Comprehensive Income arose solely from equity-settled share-based

payment transactions.

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

NOTES TO THE

FINANCIAL STATEMENTS

for the year ended 31 December 2022

200

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

30. Reserves

Other

Property

revaluation

Retained

earnings

Capital

redemption

premium

Capital

Total

other

Group

£’000

At 1 January 2021

2,342

288,514

271

5,924

209

6,404

Profit for the year

—

28,160

—

Dividends paid

—

(7,620)

—

Proceeds from shares issued

—

340

—

340

Arising on employee share schemes

—

837

—

Deferred tax on revaluation surplus

(282)

—

Actuarial gain on defined benefit pension

scheme

—

23,297

—

Deferred tax on actuarial gain

—

(4,840)

—

At 31 December 2021

2,060

328,348

271

6,264

209

6,744

Profit for the year

— 33,319

—

Dividends paid

— (8,383)

—

Proceeds from shares issued

— —

—

738

—

738

Arising on employee share schemes

— 1,163

—

Increase in fair value in year

315 —

—

Deferred tax on revaluation surplus

Actuarial gain on defined benefit pension

scheme

(23) —

— 14,994

—

Deferred tax on actuarial gain

— (3,749)

—

At 31 December 2022

2,352 365,692

271

7,002

209

7,482

Other

Retained

earnings

Investment

revaluation

Capital

redemption

premium

Capital

Total

other

Parent Company

£’000

At 1 January 2021

61,357

1,135

271

5,924

211

7,541

Profit for the year

8,938

—

Dividends paid

(7,620)

—

Premium arising from shares issued

—

340

—

340

Arising on employee share schemes

282

—

Unrecognised actuarial loss

23,297

—

Deferred tax on actuarial loss

(4,840)

—

At 31 December 2021

81,414

1,135

271

6,264

211

7,881

Profit for the year

15,987

—

Dividends paid

(8,383)

—

Premium arising from shares issued

—

738

—

738

Arising on employee share schemes

417

—

Unrecognised actuarial loss

14,994

—

Deferred tax on actuarial loss

(3,749)

—

At 31 December 2022

100,680

1,135

271

7,002

211

8,619

201

30.

Reserves continued

Property revaluation reserve

The property revaluation reserve represents the unrealised surpluses arising on revaluation of the Group occupied land and buildings and is

not available for distribution until realised on disposal.

Retained earnings

Retained earnings represent the accumulated profits and losses of the Group. This reserve is distributable to the extent it does not arise

from revaluation gains.

Capital redemption reserve

The capital redemption reserve represents the purchase and cancellation by the Company of its own shares and comprises the aggregate

nominal value of all the ordinary shares repurchased and cancelled. This reserve in not distributable.

Share premium reserve

The share premium reserve represents the difference between the sums received from the issue of shares and their nominal value net of

share issue expenses. This reserve is not distributable.

Capital reserve

The capital reserve represents realised profits arising on the disposal of investments and is available for distribution.

Investment revaluation reserve

This reserve was carried forward from previous accounting framework, and represents accumulated unrealised revaluation gains. This is

distributable only when the related investment in subsidiaries are sold or impaired.

31.

Cost of shares held by the ESOP trust

2022

£’000

2021

£’000

At 1 January

Disposals

1,044

(77)

1,176

(132)

At 31 December

967

1,044

Quoted investments represent own shares held by the Henry Boot PLC Employee Trust as an ESOP to provide an incentive to greater

ownership of shares in the Company by its employees.

At 31 December 2022, the Trustee held 391,003 shares (2021: 422,489 shares) with a cost of £966,483 (2021: £1,044,311) and a market

value of £918,858 (2021: £1,187,195). All of these shares were committed to satisfy existing grants by the Company under the Henry Boot

PLC 2015 Long-Term Incentive Plan. In accordance with IAS 32, these shares are deducted from shareholders’ funds. Under the terms of the

Trust, the Trustee has waived all dividends on the shares it holds.

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

NOTES TO THE

FINANCIAL STATEMENTS

for the year ended 31 December 2022

202

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

32. Cash generated from operations

Group

Parent Company

2022

£’000

2021

£’000

2022

£’000

2021

£’000

Profit before tax

45,595

35,142

14,001

7,211

Adjustments for:

Amortisation of PFI asset 11

579

602

—

Goodwill impairment 11

203

—

Depreciation and impairment of property, plant and

equipment 12

3,957

3,819

142

144

Depreciation of right-of-use assets 13

597

598

Revaluation (decrease)/increase in investment properties 14

4,921

(7,972)

—

Amortisation of capitalised letting fees 3

—

Share-based payment expense 4

1,241

968

495

413

Pension scheme credit

(3,422)

(920)

(3,422)

(920)

Movements on provision against loans to subsidiaries

—

(1)

(84)

Profit on disposal of property, plant and equipment 3

(176)

(16)

—

Profit on disposal of equipment held for hire 3

(1,070)

(981)

—

Loss on disposal of right-of-use assets 3

—

Profit on disposal of investment properties

(646)

(1,340)

—

Loss on disposal of assets held for sale

150

—

Gain on disposal of joint ventures

(667)

—

Finance income 5

(1,641)

(724)

(85)

(4,544)

Dividends received from subsidiaries

—

(26,491)

(14,530)

Finance costs 6

2,503

1,155

3,372

2,275

Share of profit of joint ventures and associates 16

(9,079)

(8,928)

—

Operating cash flows before movements in

equipment held for hire

43,070

21,647

(11,944)

(9,908)

Purchase of equipment held for hire

(5,454)

(5,952)

—

Proceeds on disposal of equipment held for hire

1,343

1,159

—

Operating cash flows before movements in working capital

38,959

16,854

(11,944)

(9,908)

Increase in inventories

(63,701)

(36,025)

—

(Increase)/decrease in receivables

(3,763)

(22,643)

(1,183)

4,677

(Increase)/decrease in contract assets

(11,701)

5,772

—

Increase/(decrease) in payables and provisions

24,684

(226)

2,654

(3,806)

Decrease in contract liabilities

(1,027)

(2,397)

—

Cash generated from operations

(16,549)

(38,665)

(10,473)

(9,037)

Net debt is an alternative performance measure used by the Group and comprises the following:

Analysis of net debt

Cash and cash equivalents

17,401

11,116

10,316

2,691

Bank overdrafts

—

(9)

—

Net cash and cash equivalents

17,401

11,116

10,307

2,691

Bank loans

(65,000)

(50,000)

(65,000)

(50,000)

Lease liabilities

(1,033)

(1,660)

(64)

(78)

Net debt

(48,632)

(40,544)

(54,757)

(47,387)

See ‘prior year restatements’ on page 159.

203

33.

Guarantees and contingencies

The Parent Company has guaranteed the performance of certain contracts entered into by Group undertakings in the ordinary course of

business. These guarantees are impracticable to quantify.

The Parent Company has given cross guarantees to certain of the Group’s bankers and bondsmen in respect of facilities available to

Group undertakings in the normal course of business. At the year end amounts guaranteed against these facilities were £65,000,000 and

£19,036,000 respectively.

In the opinion of the Directors, no loss is expected to arise in connection with these matters.

34.

Events after the balance sheet date

Since the balance sheet date the Group has proposed a final dividend for 2022, further information can be found in note 10.

There were no other significant events since the balance sheet date which may have a material effect on the financial position or

performance of the Group.

35.

Additional information – subsidiaries, joint ventures and associates

Details of the Company’s subsidiaries, joint ventures and associates, all of which are incorporated in England (unless otherwise stated) and

are either consolidated or equity accounted in the Group Financial Statements at 31 December 2022, are as follows:

Subsidiary name

Proportion of

ownership

Direct or

indirect Activity

Airport Business Park Southend Management Limited

8.9% Indirect Management company

Airport Business Park (Quad) Management Limited 83.3% Indirect Management company

Banner Plant Limited 100% Direct Plant Hire

Butterfield Quad Management Company Limited

12.5% Indirect Management company

Butterfield Quad 2 Management Company Limited

33.3% Indirect Management company

Capitol Park Property Services Limited

4.6% Indirect Management company

Chocolate Works York Management Company Limited 100% Indirect Management company

Clock Tower (York) Management Company Limited 100% Indirect Management company

Comstock (Kilmarnock) Ltd. 100% Indirect Land promotion

FB Shelfco 2022 Limited 100% Indirect Inactive

First National Housing Trust Limited 100% Direct Property investment

Glasgowend Limited 100% Direct Inactive

Hallam Land Management Limited 100% Direct Land promotion

HB Island Limited 100% Direct Holding company

HBGP Limited 100% Direct Holding company

HBD City Court Limited 100% Indirect Property investment and development

HBD Summerhill Limited 100% Indirect Property investment and development

HBD X Factory Limited 85% Indirect Property development

Henry Boot Biddenham Limited 100% Direct Land promotion

Henry Boot Construction Limited 100% Direct Construction

Henry Boot Contracting Limited 100% Direct Inactive

Henry Boot Developments Limited 100% Direct Property investment and development

Henry Boot Cornwall House Limited 100% Indirect Property development

Henry Boot Estates Limited 100% Direct Property investment

Henry Boot Investments 1 Limited 100% Indirect Property development

Henry Boot Inner City Limited 100% Direct Inactive

Henry Boot ‘K’ Limited 100% Indirect Property investment and development

Henry Boot Land Holdings Limited 100% Direct Holding company

Henry Boot (Launceston) Limited 100% Direct Land promotion

Henry Boot Leasing Limited 100% Direct Motor vehicle leasing to Group companies

Henry Boot (Manchester) Limited 100% Direct Property development

Henry Boot Nottingham Limited 100% Indirect Inactive

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

NOTES TO THE

FINANCIAL STATEMENTS

for the year ended 31 December 2022

204

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Subsidiary name

Proportion of

ownership

Direct or

indirect Activity

Henry Boot Projects Limited 100% Direct Inactive

Henry Boot Swindon Limited 100% Direct Inactive

Henry Boot Tamworth Limited 100% Indirect Inactive

Henry Boot Wentworth Limited 100% Direct Property development

IAMP Management Company Limited 100% Indirect Management company

Investments (North West) Limited 100% Indirect Property development

Marboot Centregate Ltd 100% Indirect Inactive

Marboot Centregate 2 Limited 100% Indirect Inactive

Moore Street Securities Limited 100% Direct Employee benefit trust

Plot 7 East Markham Vale Management Company Limited 66.7% Indirect Management company

Preston East Management Company Limited 100% Indirect Management company

Road Link (A69) Holdings Limited 61.2% Indirect Holding company

Road Link (A69) Limited 61.2% Indirect PFI road maintenance

St John’s Manchester Limited 100% Indirect Property development

Saltwoodend Limited 100% Indirect Inactive

SJ Manchester Limited Partnership 100% Indirect Inactive

SJM GP Limited 100% Indirect Holding company

SJM (Nominee) Limited 100% Indirect Holding company

Stonebridge Homes Group Limited

50% Indirect Holding company

Stonebridge Homes Limited

50% Indirect Property development

Stonebridge Offices Limited

50% Indirect Property investment

Winter Ground Limited 100% Indirect Inactive

Wyvern Park Skipton Management Company Limited 100% Indirect Management company

Stonebridge-related entities are included as subsidiaries due to the Group’s additional voting rights, having two of the three director appointments.

Subsidiary by virtue of management control

205

35.

Additional information – subsidiaries, joint ventures and associates

continued

Joint ventures and associates

Proportion of

ownership

Direct or

indirect Activity

Aytoun Street Developments Limited 50% Indirect Property development

Bigmouth Manchester Limited 50% Indirect Property development

Cognito Oak LLP 50% Indirect Property development

Crimea Land Mansfield LLP 50% Indirect Land promotion

HBB Preston East Ltd 50% Indirect Property development

HBB Roman Way Limited 50% Indirect Property development

Henry Boot Barnfield Limited 50% Indirect Property development

I-Prop Developments Limited 50% Indirect Inactive

Island Site Limited Partnership 50% Indirect Property development

Island Site (General Partner) Limited 50% Indirect Holding company

Island Site (Nominee) Limited 50% Indirect Property development

Kirklees Henry Boot Partnership Limited 50% Indirect Inactive

Montagu 406 Regeneration LLP 50% Indirect Property investment

MVNE LLP 50% Indirect Property development

Newmarket Lane Holding Limited 50% Indirect Property development

Newmarket Lane Limited 50% Indirect Property development

Newmarket Lane Management Company Limited 50% Indirect Management company

Rainham HoldCo S.a.r.l. 20%

Indirect Property investment and development

Road Link Limited 37.6%

Indirect Inactive

The address of the registered office of all subsidiaries, joint venture and associates is the same as the Parent Company, with the exception of:

Road Link Limited, Road Link (A69) Limited and Road Link (A69) Holdings Limited whose registered office is Stocksfield Hall, Stocksfield,

Northumberland, NE43 7TN. Comstock (Kilmarnock) Ltd. whose registered office is 48 St. Vincent Street, Glasgow, G2 5HS.

Henry Boot Barnfield Limited, HBB Roman Way Limited and HBB Preston East Limited whose registered office is 8 Kenyon Road,

Lomeshaye Industrial Estate, Nelson, Lancashire, England, BB9 5SP. Kirklees Henry Boot Partnership Limited whose registered office is

Legal Services, 2nd Floor Civic Centre 3, Huddersfield, West Yorkshire, HD1 2WZ. Cognito Oak LLP whose registered office is Union Plaza

(6th Floor), 1 Union Wynd, Aberdeen, Scotland, AB10 1DQ. Island Site Limited Partnership whose registered office is Guardsman Tony

Downes House, 5 Manchester Road, Droylsden, Tameside, M43 6SF. Crimea Land Mansfield LLP whose registered office is C/O Harworth

Group, Advantage House Poplar Way, Catcliffe, Rotherham, S60 5TR, United Kingdom. Rainham HoldCo S.a.r.l. whose registered office is

1 Rue Isaac Newton, L-2242, Luxembourg.

Residents Management Companies

The companies listed below are Residents Management Companies (RMCs). All RMCs are companies limited by guarantee without share

capital (unless otherwise stated) and incorporated in the UK. The capital, reserves and profit or loss for the year has not been stated for

these RMCs as beneficial interest in any assets or liabilities of these companies is held by the residents. These companies have not been

included in the consolidated accounts, are temporary members of the Group and will be handed over to residents in due course. The

registered office of each RMC is 1 Featherbank Court, Horsforth, Leeds, LS18 4QF.

RMCs controlled by the Group:

Woodside Park Newlay Estate Management Company Limited, Fox Valley Management Company Limited

, Moorlands Cleckheaton

Management Company Limited, Brookfield Garth Hampsthwaite Management Company Limited, Kingsley Road Harrogate Management

Company Limited, Weyland Road Management Company Limited, Willow Crest Cawood Management Company Limited, The Willows

Whinney Lane Management Company Limited, Victoria Gardens (Headingley) Management Company Ltd

, Derry Hill Menston Management

Company Limited and Hawbank Field Skipton Management Company Limited.

Company limited by share capital

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

NOTES TO THE

FINANCIAL STATEMENTS

for the year ended 31 December 2022

206

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

36.

Partly-owned subsidiaries

Financial information of subsidiaries that have a material non-controlling interests is provided below:

Name Country of incorporation

2022

£’000

2021

£’000

Name

2022

£’000

2021

£’000

Accumulated balances of material non-controlling interest:

Stonebridge Homes Limited

3,687

2,624

Road Link (A69) Limited

2,280

2,822

Profit allocated to material non-controlling interest:

Stonebridge Homes Limited

2,182

1,033

Road Link (A69) Limited

2,369

1,467

The summarised financial information of these subsidiaries is provided below. This information is based on amounts before

inter-company eliminations.

Stonebridge Homes Limited Road Link (A69) Limited

2022

£’000

2021

£’000

2022

£’000

2021

£’000

Summarised statement of profit or loss

Revenue

70,643

49,505

13,590

11,115

Cost of sales

(56,613)

(39,790)

(5,106)

(5,458)

Administrative and other expenses

(6,572)

(6,331)

(691)

(657)

Net finance costs

(2,039)

(835)

(254)

(331)

Profit before tax

5,419

2,549

7,539

4,669

Tax

(1,054)

(482)

(1,432)

(887)

Profit for the year

4,365

2,067

6,107

3,782

Total comprehensive income

4,365

2,067

6,107

3,782

Attributable to non-controlling interests

2,182

1,033

2,369

1,467

Dividends paid to non-controlling interests

1,121

740

2,910

–

Summarised balance sheet

Non-current assets

1,110

1,257

1,690

2,271

Inventories

80,629

52,464

–

Trade and other receivables

6,703

4,682

4,710

3,227

Cash and cash equivalents

550

879

4,080

6,778

Current liabilities

(81,150)

(53,514)

(3,260)

(3,335)

Non-current liabilities

(468)

(520)

(1,343)

(1,669)

Net assets

7,374

5,248

5,877

7,272

Equity holders of parent

3,687

2,624

3,597

4,450

Non-controlling interest

3,687

2,624

2,280

2,822

Summarised cash flow

Operating

1,951

(6,468)

4,742

(601)

Investing

(33)

(73)

(202)

Financing

(2,351)

4,800

(7,500)

–

Net decrease in cash and cash equivalents

(433)

(1,741)

(2,698)

(803)

Stonebridge Homes Limited

England

50%

Road Link (A69) Limited

England

61.2%

Henry Boot PLC

SHAREHOLDER

Notice of Annual General Meeting 208

Financial

Calendar 212

Advisers 212

Group Contact Information 213

Glossary 214

Henry Boot PLC Annual R

port and Financial Statements for the year ended 31 December 2022

207

NOTICE OF ANNUAL

GENERAL

MEETING

208

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

THIS DOCUMENT IS IMPORTANT and requires your immediate

attention. If you are in any doubt about the action you should take,

you should immediately consult your stockbroker, bank manager,

solicitor, accountant or other independent professional adviser

authorised under the Financial Services and Markets Act 2000.

If you have sold or otherwise transferred all your shares in Henry

Boot PLC, please forward this document and the accompanying

Form of Proxy to the person through whom the sale or transfer

was effected, for transmission to the purchaser or transferee.

The Board of Henry Boot PLC considers all of the proposed

resolutions to be in the best interests of shareholders as a whole

and accordingly recommends that shareholders vote in favour of

all the resolutions proposed.

Notice of Annual General Meeting

Notice is hereby given that the Annual General Meeting (AGM) of

Henry Boot PLC (Company) will be held at DoubleTree by Hilton

Hotel Sheffield Park, Chesterfield Road South, Sheffield, S8 8BW

on Thursday 25 May 2023 at 12.30pm, for the following purposes:

To consider and if thought fit, pass the following resolutions, which

will be proposed as ordinary resolutions of the Company.

Resolution 1

To receive the Directors’ Report, Auditors’ Report, Strategic

Report and the Financial Statements for the year ended

31 December 2022.

Resolution 2

To declare a final dividend of 4.00p per ordinary share.

Resolution 3

To approve the Directors’ Remuneration Report (other than the part

containing the Directors’ Remuneration Policy) for the year ended

31 December 2022.

Resolution 4

To reappoint Timothy Roberts as a Director of the Company.

Resolution 5

To reappoint Darren Littlewood as a Director of the Company.

Resolution 6

To reappoint Joanne Lake as a Director of the Company.

Resolution 7

To reappoint James Sykes as a Director of the Company.

Resolution 8

To reappoint Peter Mawson as a Director of the Company.

Resolution 9

To reappoint Gerald Jennings as a Director of the Company.

Resolution 10

To reappoint Serena Lang as a Director of the Company.

Resolution 11

To reappoint Ernst & Young LLP as auditors of the Company.

Resolution 12

To authorise the Audit and Risk Committee to fix the auditors’

remuneration.

Resolution 13

THAT pursuant to Section 551 of the Companies Act 2006, the

Directors be and are generally and unconditionally authorised to allot

shares in the Company or to grant rights to subscribe for or to convert

any security into shares in the Company up to an aggregate nominal

amount of £4,457,727, provided that (unless previously revoked,

varied or renewed) this authority shall expire on 24 August 2024 or at

the conclusion of the next AGM of the Company after the passing of

this resolution, whichever is the earlier, save that the Company may

make an offer or agreement before this authority expires which would

or might require shares to be allotted or rights to subscribe for or

to convert any security into shares to be granted after this authority

expires and the Directors may allot shares or grant such rights

pursuant to any such offer or agreement as if this authority had not

expired. This authority is in substitution for all existing authorities under

Section 551 of the Companies Act 2006 (which, to the extent unused

at the date of this resolution, are revoked with immediate effect).

To consider and if thought fit, pass the following resolutions, which will

be proposed as special resolutions of the Company.

209

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Resolution 14

THAT subject to the passing of Resolution 13 and pursuant to

Section 570 of the Companies Act 2006, the Directors be and are

generally empowered to allot equity securities (within the meaning

of Section 560 of the Companies Act 2006) for cash pursuant to

the authority granted by Resolution 13 as if Section 561(1) of the

Companies Act 2006 did not apply to any such allotment, provided

that this power shall be limited to the allotment of equity securities:

in connection with an offer of equity securities (whether by way

of a rights issue, open offer or otherwise):

to holders of ordinary shares in the capital of the Company

in proportion (as nearly as practicable) to the respective

numbers of ordinary shares held by them; and

ii.

to holders of other equity securities in the capital of the

Company, as required by the rights of those securities or,

subject to such rights, as the Directors otherwise consider

necessary,

but subject to such exclusions or other arrangements as the

Directors may deem necessary or expedient in relation to treasury

shares, fractional entitlements, record dates or any legal or practical

problems under the laws of any territory or the requirements of any

regulatory body or stock exchange; and

otherwise than pursuant to paragraph a. of this resolution, up to

an aggregate nominal amount of £668,659,

and (unless previously revoked, varied or renewed) this power shall

expire on 24 August 2024 or at the conclusion of the next AGM of

the Company after the passing of this resolution, whichever is the

earlier, save that the Company may make an offer or agreement

before this power expires which would or might require equity

securities to be allotted for cash after this power expires and the

Directors may allot equity securities for cash pursuant to any such

offer or agreement as if this power had not expired. This power

is in substitution for all existing powers under Section 570 of the

Companies Act 2006 (which, to the extent unused at the date of

this resolution, are revoked with immediate effect).

Resolution 15

THAT pursuant to Section 701 of the Companies Act 2006, the

Company be and is hereby generally and unconditionally authorised

to make market purchases (within the meaning of Section 693(4)

of the Companies Act 2006) of ordinary shares of 10p each in the

capital of the Company (ordinary shares) provided that:

the maximum aggregate number of ordinary shares hereby

authorised to be purchased is 13,373,182;

the minimum price (excluding expenses) which may be paid for

an ordinary share is 10p;

the maximum price (excluding expenses) which may be paid for

an ordinary share is not more than the higher of:

an amount equal to 105% of the average of the middle

market quotations for an ordinary share as derived from

the London Stock Exchange Daily Official List for the five

business days immediately preceding the day on which the

purchase is made; and

ii.

an amount equal to the higher of the price of the last

independent trade of an ordinary share and the highest

current independent bid for an ordinary share on the trading

venue where the purchase is carried out;

the authority hereby conferred shall expire at the conclusion

of the next AGM of the Company after the passing of this

resolution or, if earlier, on 24 August 2024; and

the Company may make a contract to purchase ordinary shares

under the authority hereby conferred prior to the expiry of such

authority which will or may be completed or executed wholly or

partly after the expiry of such authority.

By order of the Board

AMY

STANBRIDGE

COMPANY

SECRETARY

12 April 2023

HENRY BOOT PLC

Registered Office:

Banner Cross Hall

Ecclesall Road South

Sheffield

United Kingdom

S11 9PD

Registered in England and Wales No. 160996

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

NOTICE OF ANNUAL

GENERAL

MEETING

210

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

Notes

1. The holders of preference shares in the Company are not

entitled to attend and vote at the AGM.

2. The right to vote at the meeting is determined by reference to the

in the register of members of the Company as at the close of

business on 23 May 2023 (or, if the meeting is adjourned, at the

close of business on the date which is two working days before

the date of the adjourned meeting) shall be entitled to attend

and vote at the meeting in respect of the number of ordinary

shares registered in their name at that time. Changes to entries

in the register of members after that time shall be disregarded in

determining the rights of any person to attend or vote (and the

number of votes they may cast) at the meeting.

3. Voting on each resolution will be conducted by way of a poll.

The Company believes that a poll is more representative of

shareholders’ voting intentions because shareholder votes are

counted according to the number of votes held and all votes

tendered are taken into account. The results of the poll will be

announced to the London Stock Exchange and will be made

available on the Company’s website at www.henryboot.co.uk as

soon as practicable following the conclusion of the AGM.

4. An ordinary shareholder is entitled to appoint any other person

as his or her proxy to exercise all or any of his or her rights to

attend and to speak and vote at the meeting. A proxy need

not be a shareholder of the Company. An ordinary shareholder

may appoint more than one proxy in relation to the meeting,

provided that each proxy is appointed to exercise the rights

attached to a different ordinary share or ordinary shares held

by that ordinary shareholder. Failure to specify the number of

ordinary shares each proxy appointment relates to or specifying

a number which when taken together with the numbers of

ordinary shares set out in the other proxy appointments is in

excess of the number of ordinary shares held by the ordinary

shareholder may result in the proxy appointment being invalid.

5. APPOINTMENT OF PROXY BY JOINT HOLDERS: In the case

of joint holders, where more than one of the joint holders

purports to appoint a proxy, only the appointment submitted by

the most senior holder will be accepted. Seniority is determined

by the order in which the names of the joint holders appear

in the Company’s register of members in respect of the joint

holders (the first-named being the most senior).

6. A proxy may only be appointed in accordance with the procedures

set out in notes 7 to 9 below and the notes to the form of

proxy. The appointment of a proxy will not preclude an ordinary

shareholder from attending and voting in person at the meeting.

7. A form of proxy is enclosed with the notice issued to

holders of ordinary shares. When appointing more than one

proxy, complete a separate proxy form in relation to each

appointment. Additional proxy forms may be obtained by

contacting the Company’s registrar or the proxy form may be

photocopied. State clearly on each proxy form the number

of shares in relation to which the proxy is appointed. To

be valid, a form of proxy must be received by post (during

normal business hours only) at the offices of the Company’s

registrars, Computershare Investor Services PLC, The Pavilions,

Bridgwater Road, Bristol BS99 6ZY, no later than 12.30pm

on 23 May 2023 (or, if the meeting is adjourned, 48 hours

(excluding any part of a day that is not a working day) before

the time of any adjourned meeting).

8. As an alternative to completing the hard copy form of

proxy, an ordinary shareholder may appoint the Chair as

his or her proxy electronically using the online service at

www.investorcentre.co.uk/eproxy. For an electronic proxy

appointment to be valid, the appointment must be received

by Computershare Investor Services PLC no later than

12.30pm on 23 May 2023 (or, if the meeting is adjourned,

no later than 48 hours (excluding any part of a day that is not

a working day) before the time of any adjourned meeting).

Proxymity Voting – if you are an institutional investor you may

also be able to appoint a proxy electronically via the Proxymity

platform, a process which has been agreed by the Company

and approved by the Company’s registrar. For further information

regarding Proxymity, please go to proxymity.io. Your proxy must

be lodged by 12.30pm on 23 May 2023 (or, if the meeting is

adjourned, no later than 48 hours (excluding any part of a day

that is not a working day) before the time of any adjourned

meeting) in order to be considered valid. Before you can

appoint a proxy via this process you will need to have agreed to

Proxymity’s associated terms and conditions. It is important that

you read these carefully as you will be bound by them and they

will govern the electronic appointment of your proxy.

9. CREST members who wish to appoint a proxy or proxies for the

AGM (or any adjournment of it) through the CREST electronic

proxy appointment service may do so by using the procedures

described in the CREST Manual, which is available at euroclear.

com. CREST personal members or other CREST sponsored

members, and those CREST members who have appointed a

voting service provider(s), should refer to their CREST sponsor

or voting service provider(s), who will be able to take the

appropriate action on their behalf.

In order for a proxy appointment or instruction made using the

CREST service to be valid, the appropriate CREST message (a

‘CREST Proxy Instruction’) must be properly authenticated in

accordance with Euroclear UK & Ireland Limited’s specifications

and must contain the information required for such instructions,

as described in the CREST Manual. The message, regardless

of whether it constitutes the appointment of a proxy or is an

amendment to the instruction given to a previously appointed

proxy, must, in order to be valid, be transmitted so as to be

received by Computershare Investor Services PLC (ID: 3RA50)

no later than 12.30pm on 23 May 2023 (or, if the meeting is

adjourned, 48 hours (excluding any part of a day that is not a

working day) before the time of any adjourned meeting). For

this purpose, the time of receipt will be taken to be the time (as

determined by the timestamp applied to the message by the

CREST Applications Host) from which Computershare Investor

Services PLC is able to retrieve the message by enquiry to

CREST in the manner prescribed by CREST. After this time, any

change of instructions to proxies appointed through CREST

should be communicated to the appointee through other means.

CREST members and, where applicable, their CREST sponsors

or voting service providers should note that Euroclear UK &

Ireland Limited does not make available special procedures in

CREST for any particular messages. Normal system timings

and limitations will therefore apply in relation to the input

of CREST Proxy Instructions. It is the responsibility of the

CREST member concerned to take (or, if the CREST member

is a CREST personal member or sponsored member or has

appointed a voting service provider(s), to procure that his or her

211

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

CREST sponsor or voting service provider(s) take(s)) such action

as shall be necessary to ensure that a message is transmitted

by means of the CREST system by any particular time. In this

connection, CREST members and, where applicable, their

CREST sponsors or voting service providers are referred, in

particular, to those sections of the CREST Manual concerning

practical limitations of the CREST system and timings.

The Company may treat a CREST Proxy Instruction as invalid

in the circumstances set out in Regulation 35(5)(a) of the

Uncertificated Securities Regulations 2001.

10. An ordinary shareholder which is a corporation may authorise

one or more persons to act as its representative(s) at the

meeting. Each such representative may exercise (on behalf of the

corporation) the same powers as the corporation could exercise

if it were an individual shareholder, provided that (where there is

more than one representative and the vote is otherwise than on a

show of hands) they do not do so in relation to the same shares.

11. Where a copy of this notice is being received by a person who

has been nominated to enjoy information rights under Section

146 of the Companies Act 2006 (Nominated Person):

the Nominated Person may have a right under an

agreement between him/her and the shareholder by

whom he/she was nominated to be appointed, or to have

someone else appointed, as a proxy for the meeting; or

if the Nominated Person has no such right or does not wish

to exercise such right, he/she may have a right under such

an agreement to give instructions to the shareholder as to

the exercise of voting rights.

The statement of the rights of ordinary shareholders in relation to

the appointment of proxies in notes 5 to 9 above does not apply

to a Nominated Person. The rights described in such notes can

only be exercised by ordinary shareholders of the Company.

12. A shareholder or shareholders having a right to vote at the meeting

and holding at least 5% of the total voting rights of the Company

(see note 17 below), or at least 100 shareholders having a right

to vote at the meeting and holding, on average, at least £100 of

paid up share capital, may require the Company to publish on its

website a statement setting out any matter that such shareholders

propose to raise at the meeting relating to either the audit of the

Company’s Financial Statements (including the Auditors’ Report

and the conduct of the audit) that are to be laid before the meeting

or any circumstances connected with auditors of the Company

ceasing to hold office since the last AGM of the Company in

accordance with Section 527 of the Companies Act 2006.

Any such request must:

identify the statement to which it relates, by either setting

out the statement in full or, if supporting a statement

requested by another shareholder, clearly identifying the

statement that is being supported;

comply with the requirements set out in note 13 below; and

be received by the Company at least one week before the

meeting.

Where the Company is required to publish such a statement on

its website:

it may not require the shareholders making the request to

pay any expenses incurred by the Company in complying

with the request;

ii.

it must forward the statement to the Company’s auditors no

later than the time when it makes the statement available

on the website; and

iii.

the statement may be dealt with as part of the business of

the meeting.

13. Any request by a shareholder or shareholders to require the

Company to publish audit concerns as set out in note 12:

may be made either:

in hard copy, by sending it to the Company Secretary,

Henry Boot PLC, Banner Cross Hall, Ecclesall Road

South, Sheffield S11 9PD; or

ii.

in electronic form, by sending it by email to

cosec-ir@henryboot.co.uk. Please state

‘Henry Boot PLC: AGM’ in the subject line of the email;

must state the full name(s) and address(es) of the

shareholder(s); and

where the request is made in hard copy form, it must be

signed by the shareholder(s).

14. Shareholders have the right to ask questions at the meeting

relating to the business being dealt with at the meeting in

accordance with Section 319A of the Companies Act 2006.

The Company must answer any such question unless:

to do so would interfere unduly with the preparation for

the meeting or would involve the disclosure of confidential

information;

the answer has already been given on a website in the form

of an answer to a question; or

it is undesirable in the interests of the Company or the good

order of the meeting that the question be answered.

15. The information required by Section 311A of the Companies Act

2006 to be published in advance of the meeting, which includes

the matters set out in this notice and information relating to the

voting rights of shareholders, is available at henryboot.co.uk

16. Except as expressly provided above, shareholders who wish

to communicate with the Company in relation to the meeting

should do so using the following means:

telephone 0114 255 5444; or

email cosec-ir@henryboot.co.uk.

No other methods of communication will be accepted.

17. As at 03 April 2023 (being the last practicable date before

publication of this notice), the Company’s issued ordinary share

capital was 133,731,826 ordinary shares, carrying one vote

each and representing the total number of voting rights in the

Company.

18. The following documents will be available for inspection during

normal business hours at the registered office of the Company

from the date of this notice until the time of the meeting. They

will also be available for inspection at the place of the meeting

from at least 15 minutes before the meeting until it ends.

Copies of the service contracts of the Executive Directors.

Copies of the letters of appointment of the Non-executive

Directors.

19. Biographies for each of the Directors are shown on pages 80 to

81 of the annual report for the year ended 31 December 2022.

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

212

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

FINANCIAL

CALENDAR

London Stock

Exchange announcements

Annual Results 2022:

21 March 2023

Interim Results 2023:

19 September 2023

Pre-close Trading Statement 2023:

end January 2024

Annual Report and

Financial Statements

Annual Report and Financial Statements 2022

(available and online):

by 24 April 2023

Annual General Meeting

25 May 2023

Dividends paid on ordinary shares

2022 Final dividend date (subject to approval at AGM):

02 June 2023

2023 Interim dividend date (subject to approval):

13 October 2023

ADVISERS

Chartered Accountants

and Statutory Auditors

Ernst & Young LLP

1 Bridgewater Place

Water Lane

Leeds LS11 5QR

Bankers

Barclays Bank PLC

1 St Paul’s Place

121 Norfolk Street

Sheffield S1 2JW

HSBC UK Bank Plc

City Point

29 Kings Street

Leeds LS1 2HL

National Westminster Bank PLC

2 Whitehall Quay

Leeds LS1 4HR

Corporate Finance

KPMG Corporate Finance

1 Sovereign Square

Sovereign Street

Leeds LS1 4DA

Financial PR

FTI Consulting

200 Aldersgate

Aldersgate Street

London EC1A 4HD

Registrars

Computershare Investor Services PLC

The Pavilions

Bridgwater Road

Bristol BS13 8AE

Solicitors – Corporate

DLA Piper UK LLP

1 St Paul’s Place

Sheffield S1 2JX

Solicitors – Operational

Irwin Mitchell LLP

Riverside East House

2 Millsands

Sheffield S3 8DT

Stockbrokers

Numis Securities Limited

Joint Corporate Broker

The London Stock Exchange Building

10 Paternoster Square

London EC4M 7LT

Peel Hunt LLP

Joint Corporate Broker

Moor House

120 London Wall

EC2Y 5ET

213

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

GROUP CONTACT

INFORMATION

Land Promotion

Hallam Land

Management Limited

Registered office and Head office

Banner Cross Hall, Ecclesall Road South,

Sheffield S11 9PD

t: 0114 255 5444

e: info@hallamland.co.uk

w: hallamland.co.uk

Regional offices

Bristol, Glasgow, Leeds, London and

Northampton

Property Investment

and Development

Henry Boot

Developments Limited

Registered office and Head office

Banner Cross Hall, Ecclesall Road South,

Sheffield S11 9PD

t: 0114 350 4477

e: hello@hbd.co.uk

w: hbd.co.uk

Regional offices

Birmingham, Bristol, Glasgow, Leeds,

London and Manchester

Stonebridge Homes Limited

Registered office

Banner Cross Hall, Ecclesall Road South,

Sheffield S11 9PD

Head office

1 Featherbank Court, Horsforth, Leeds

LS18 4QF

t: 0113 357 1100

e: sales@stonebridgehomes.co.uk

w: stonebridgehomes.co.uk

Construction

Henry Boot

Construction Limited

Registered office

Banner Cross Hall, Ecclesall Road South,

Sheffield S11 9PD

Head office

Callywhite Lane, Dronfield, Derbyshire

S18 2XN

t: 01246 410111

e: hbc@henryboot.co.uk

w: henrybootconstruction.co.uk

Banner Plant Limited

Registered office

Banner Cross Hall, Ecclesall Road South,

Sheffield S11 9PD

Head office

Callywhite Lane, Dronfield, Derbyshire,

S18 2XS

t: 01246 299400

e: dronfield@bannerplant.co.uk

w: bannerplant.co.uk

Hire centres

Chesterfield, Derby, Dronfield, Leicester,

Leeds, Rotherham and Wakefield

Road Link (A69) Limited

Registered office and Head office

Stocksfield Hall, Stocksfield,

Northumberland NE43 7TN

t: 01661 842842

e: enquiries@roadlinka69.co.uk

OVERVIEW

STRATEGIC REPORT

GOVERNANCE

FINANCIALS

SHAREHOLDERS

214

Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2022

GLOSSARY

We have used some terms in this report to explain how we run our business that might be unfamiliar to you. The following list gives a definition

for some of the more frequently used terms:

Commercial property

This refers to buildings or land intended to

generate a profit, either from capital gain

or rental income, such as office building,

industrial property, retail stores, etc.

Disclosure and

Transparency Rules (DTR)

Issued by the United Kingdom Listing

Authority.

Dividend

A distribution of a portion of a company’s

earnings, decided by the board of directors,

to a class of its shareholders.

Earnings per share (EPS)

Profit for the period attributable to equity

shareholders divided by the average number

of shares in issue during the period.

ESG

Environmental, Social and Governance

Gearing

Net debt expressed as a percentage of

equity shareholders’ funds.

IAS

International Accounting Standard.

IFRS

UK-adopted International Financial

Reporting Standard.

SONIA

The effective overnight interest rate paid

by banks for unsecured transactions in the

British sterling market.

Net asset value per

share (NAV)

Equity shareholders’ funds divided by the

number of shares in issue at the balance

sheet date.

Operating profit

Profit earned from a company’s core

activities.

Option agreement

A legal agreement between a landowner

and another party for the right to buy land

within a set time scale at the conclusion of a

satisfactory planning permission.

Ordinary share

Any shares that are not preferred shares

and do not have any predetermined

dividend amounts. An ordinary share

represents equity ownership in a company

and entitles the owner to a vote in matters

put before shareholders in proportion to

their percentage ownership in the company.

PFI contract

A Private Finance Initiative contract is a

contract between a public body and a

private company and involves the private

sector making capital investment in the

assets required to deliver improved services.

They are typified by long contract lengths,

often 30 years or more.

Planning Promotion

Agreement (PPA)

A legal agreement between a landowner

and another party for a set time scale and

financial consideration to promote land

through the UK planning system.

Pre-let

A lease signed with a tenant prior to

completion of a development.

Retail Prices Index (RPI)/

Consumer Prices Index (CPI)

Monthly inflation indicators based on

different ‘baskets’ of products issued by the

Office of National Statistics.

Return on average capital

employed (ROCE)

Operating profit/capital employed where

capital employed is the average of total

assets less current liabilities and pension

asset/obligation at the opening and closing

balance sheet dates.

S106

Section 106 agreements (S106) are private

agreements made between local authorities

and developers. They can be attached to

a planning permission to make acceptable

development which would otherwise be

unacceptable in planning terms.

Subsidiary company

A company whose voting stock is more than

50% controlled by another company, usually

referred to as the parent company or holding

company.

A subsidiary is a company that is partly or

completely owned by another company that

holds a controlling interest in the subsidiary

company.

TCFD

Task Force on Climate-related Financial

Disclosures’ (https://www.fsb-tcfd.org/)

Total shareholder return (TSR)

Dividends and capital growth in the share

price, expressed as a percentage of the

share price at the beginning of the year.

Total accounting return (TAR)

The growth in NAV per share plus dividends

paid, expressed as a percentage of NAV per

share at the beginning of the period.

UK planning system

This system consists of the process of

managing the development of land and

buildings. The purposes of this process are

to save what is best of our heritage and

improve the infrastructure upon which we

depend for a civilised existence.

The production of this report supports the work of the Woodland Trust,

the UK’s leading woodland conservation charity. Each tree planted will

grow into a vital carbon store, helping to reduce environmental impact as

well as creating natural havens for wildlife and people.

Henry Boot PLC

Registered office:

Banner Cross Hall, Ecclesall Road South

Sheffield, S11 9PD United Kingdom

Registered in England and Wales no. 160996

Tel: 0114 2555444

Email: cosec-ir@henryboot.co.uk

Stock Code: BOOT.L