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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Henry Boot PLC | AQSE:BOOT.GB | Aquis Stock Exchange | Ordinary Share | GB0001110096 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 212.50 | 195.00 | 230.00 | 215.24 | 212.50 | 212.50 | 2,487 | 16:29:31 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Jan 2023 to Jan 2025
TIDMBOOT
RNS Number : 8302M
Boot(Henry) PLC
19 September 2023
19 September 2023
HENRY BOOT PLC
('Henry Boot', the 'Company' or the 'Group')
Ticker: BOOT.L: Main market premium listing: FTSE: Real Estate Investment and Services.
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHSED 30 JUNE 2023
A resilient operational performance driven by land promotion disposals and property development completions, despite economic headwinds
Henry Boot PLC, a Company engaged in land promotion, property investment and development, and construction, announces its unaudited interim results for the six months ended 30 June 2023.
Tim Roberts, Chief Executive Officer, commented:
"The first half of the year has seen our markets slow as interest rates have continued to rise, but, as these results show, our focus on prime strategic sites, high quality development and premium homes has provided us with a degree of resilience. This has helped us to report a very respectable underlying profit before tax of GBP23.3m, an increase in NAV of 3%, plus the confidence to grow our interim dividend by 10%.
Whilst uncertainty in our markets has increased, we believe we have enough momentum to carry us through the year, although the outlook for 2024 for the time being is not so clear. However, we have conviction in our three markets which are driven by structural trends and I am pleased to report that we remain on track to hit our strategic growth and return targets over the medium term."
Financial highlights
-- 24.5% increase in revenue to GBP179.8m (June 2022: GBP144.4m) driven by land disposals and housing completions
-- Underlying profit before tax(1) of GBP23.3m (June 2022: GBP37.8m) or GBP25.0m (June 2022: GBP38.8m) on a statutory basis, supported by the resilient performance of residential land sales and industrial development activity
-- ROCE(2) of 6.3% (June 2022: 10.1%), expected to be around the lower end of our medium-term target of 10%-15% by the year-end
-- NAV(3) per share is up by 2.6% to 303p (December 2022: 295p), due to robust operational performance. Excluding the defined benefit pension scheme surplus, the NAV per share showed an underlying increase of 2.9% to 298p (December 2022: 291p)
-- Strong balance sheet, with net debt(4) of GBP70.8m (December 2022: GBP48.6m) reflecting continued investment in committed developments and a decision to limit further acquisitions. Gearing remains within our optimal stated range of 10%-20% at 17.5% (December 2022: 12.3%)
-- EPS of 14.0p (June 2022: 24.1p); Interim dividend of 2.93p declared (June 2022: 2.66p), an increase of 10%, reflecting the Group's resilient operational performance and progressive dividend policy
Operational highlights
-- GBP129.3m of property sales led by our land promotion, development and housebuilding businesses, despite weakening markets. Only GBP3.9m of acquisitions. GBP22.1m of investment in our high quality committed development programme where costs are 98% fixed
-- Land promotion
o 1,900 plots sold (June 2022: 3,447), increased profit per plot to GBP11,400 (December 2022: GBP6,066) due to significant sale at Tonbridge, offsetting the volume reduction
o The total land bank has grown to 97,095 plots (December 2022: 95,704 plots)
o 8,335 plots with planning permission (December 2022: 9,431), all held at cost
-- Property investment & development
o High quality committed development programme of GBP186m, with 52% pre-sold or pre-let
o c.700,000 sq ft of Industrial & Logistics development underway (HB share: GBP96m GDV)
o GBP1.5bn development pipeline (HB share GBP1.26bn GDV), 62% of which is focused on Industrial & Logistics markets, where occupier demand remains robust
o The investment portfolio value increased to GBP112m (December 2022: GBP106m). Total return of 3.3% continues to be ahead of the CBRE index for the six months to June 2023
o GBP11.1m post H1 23 investment sales, including Banner Cross Hall our Head Office, at a combined 19% above book value
o Stonebridge Homes during H1 sold 99 units (30 June 2022: 39 units) and at the end of August has secured 97% of its annual sales target of 250 units for 2023, with a total owned and controlled land bank at 997 plots (December 2022: 1,094 plots) keeping us on track to scale up this business
-- Construction
o The construction segment achieved turnover of GBP56.2m (June 2022: GBP66.5m) in a challenging market
o Henry Boot Construction remains focused on delivering its current projects with 72% of its 2023 target order book secured following delays in bringing activity to site as customers proceed cautiously
-- Responsible Business
o Making good progress against our Responsible Business Strategy targets set in January 2022, with the launch of our Health and Wellbeing programme and continued progress in achieving our GHG emissions target to support reaching NZC by 2030
NOTES:
(1) Underlying profit before tax is an alternative performance measure (APM) and is defined as profit before tax excluding revaluation movements on completed investment properties. Revaluation movement on completed investment properties includes gains of GBP1.4m (2022: GBP1.0m gain) on wholly owned completed investment property and gains of GBP0.3m (2022: GBP0.6m gains) on completed investment property held in joint ventures. This APM provides the users with a measure that excludes specific external factors beyond management's controls and reflects the Group's underlying results. This measure is used in the business in appraising senior management performance
(2) Return on Capital Employed (ROCE) is an APM and is defined as operating profit/ average of total assets less current liabilities (excluding DB pension surplus) at the opening and closing balance sheet dates
(3) Net Asset Value (NAV) per share is an APM and is defined using the statutory measures net assets/ordinary share capital
(4) Net (debt)/cash is an APM and is reconciled to statutory measures in note 14
For further information, please contact:
Enquiries:
Henry Boot PLC
Tim Roberts, Chief Executive Officer
Darren Littlewood, Chief Financial Officer
Daniel Boot, Group Communications Manager
Tel: 0114 255 5444
www.henryboot.co.uk
Numis Securities Limited
Joint Corporate Broker
Ben Stoop/Will Rance
Tel: 0207 260 1000
Peel Hunt LLP
Joint Corporate Broker
Ed Allsopp/Charles Batten
Tel: 0207 418 8900
FTI Consulting
Financial PR
Giles Barrie/Richard Sunderland
Tel: 020 3727 1000
henryboot@fticonsulting.com
A webcast for analysts and investors will be held at 9.30am today and presentation slides will be available to download via www.henryboot.co.uk . Details for the live dial-in facility and webcast are as follows:
Participants (UK): Tel: +44 (0) 33 0551 0200 Password: Henry Boot Webcast link: https://stream.brrmedia.co.uk/broadcast/64b59edbedb1b705b3cdcddd
About Henry Boot PLC
Henry Boot PLC (BOOT.L) was established over 135 years ago and is one of the UK's leading and long-standing property investment and development, land promotion and construction companies. Based in Sheffield, the Group is comprised of the following three segments:
Land Promotion:
Hallam Land Management Limited
Property Investment and Development:
HBD (Henry Boot Developments Limited), Stonebridge Homes Limited
Construction:
Henry Boot Construction Limited , Banner Plant Limited , Road Link (A69) Limited
The Group possess a high-quality strategic land portfolio, an enviable reputation in the property development market backed by a substantial investment property portfolio and an expanding, jointly owned, housebuilding business. It has a construction specialism in both the public and private sectors, a long-standing plant hire business, and generates strong cash flows from its PFI contract through Road Link (A69) Limited.
www.henryboot.co.uk
CEO Review
Henry Boot traded in line with the Board's expectations over the half year, achieving an underlying profit before tax of GBP23.3m (June 2022: GBP37.8m), or GBP25.0m (June 2022: GBP38.8m) on a statutory basis. Our expectations for the full year remain in line with market consensus*. The Group's balance sheet remains strong, with NAV per share increasing by 2.6% to 303p (Dec 2022: 295p), or by 2.9% to 298p (Dec 2022: 291p) excluding the defined benefit pension scheme surplus. Whilst the first half of the year has been impacted by continued economic uncertainty, principally as a result of persistent inflation and rising interest rates, we have delivered a resilient performance, completing GBP129.3m of sales within our land promotion, development and housebuilding businesses. Acquisitions have only been GBP3.9m.
According to JLL, in H1 23 the volume of UK commercial property transactions has slowed markedly to GBP14.2bn, down 53% on the same period in 2022. Much of the reduction has been driven by fewer large deals with demand remaining more resilient in those sectors benefiting from rental growth such as Industrial & Logistics (I&L) and build to rent (BtR), both are sectors that we focus on. House prices have been more resilient than many commentators predicted having reduced by 1.2% during the six months to June according to Nationwide and are now 5.3% below the peak in August 2022. Reductions in the price of new homes have generally been smaller than this. Whilst strategic land sale volumes have reduced housebuilders continue to selectively acquire land, with an emphasis on sites in prime locations which remains a focal point for our land promotion business. In support of this, we currently have nine sites under offer to housebuilders.
With this backdrop in mind, we have had a good six months, supported by the resilience of our three long-term markets, I&L, Residential and Urban Development. In the half-year:
-- Hallam Land Management (HLM) disposed of 1,900 plots (June 2022: 3,447 plots). Although plots sold in the period has decreased, we have increased profit per plot to GBP11,400 (December 2022: GBP6,066), offsetting the volume reduction. This was due to a significant and very profitable freehold sale at Tonbridge, which has shown an ungeared internal rate of return of 27% p.a. HLM continue to receive selective bids for its land, especially on smaller prime sites from national and regional housebuilders. The total land bank has grown to 97,095 plots (December 2022: 95,704 plots), of which 8,335 plots have planning permission.
-- HBD completed on a total Gross Development Value (GDV) of GBP70m (HBD share) - of which 100% has been pre-let/ pre-sold with a committed development programme of GBP186m GDV (HBD share) - 52% of which is pre-let or pre-sold. The part which is not pre-let/ pre-sold comprises three high quality schemes; Island our NZC office scheme in the heart of Manchester; Setl which offers premium apartments in the Jewellery Quarter in the centre of Birmingham and; Momentum an NZC I&L scheme in Rainham serving Greater London. All three complete at various times in 2024 and we continue to expect good customer interest. To replenish the committed development programme, we have a number of I&L schemes which we are looking to commit to providing we can appropriately manage risk through pre-letting or forward sales.
-- Stonebridge Homes (SH) secured 88% of its 250-unit sales target for this year during H1 23, achieving a slightly reduced sales rate of 0.48 houses per week per outlet, alongside a firm average selling price of GBP499,000. Post half-year, we have secured a further 21 units, achieving a sales rate of 0.52 houses per week per outlet in the months from July to August. This takes us to 97% secured for the year. Despite a slower market, price against budget has up to the end of August been running at plus 0.8%. We believe this is due to the high quality of our homes and the prime locations of our sites.
-- Henry Boot Construction (HBC) has experienced challenging trading conditions with industry wide supply constraints and subcontractor and material availability issues giving rise to delays and budget challenges on two of its largest projects - the GBP47m BtR residential scheme Kangaroo Works in Sheffield and Block H, the GBP42m urban development scheme also in Sheffield. The GBP47m Cocoa Works, York, remains on time and budget.
Despite low economic growth and slowing markets, we have maintained our strategic ambition to grow and are still looking to invest into prime opportunities. Rightly, we have been cautious during H1 23 towards acquisitions, with our main focus on investment in building out HBD's committed development programme. Investment in this area totals GBP22.1m, with a further GBP3.9m made on land purchases for both HLM and SH's land bank.
We have also continued to invest in other strategic objectives that support our long-term ambitions. For our people, we have launched a refreshed reward strategy which offers more clarity on career progression and remuneration, and we continue to invest in modernising both digital and technology capabilities and our marketing and customer relationship functions.
An example of this, is our imminent head office relocation to the Isaac's Building in Sheffield city centre. The building offers strong ESG credentials and will provide our people with a more open and collaborative workspace. In regard to Banner Cross Hall, our current head office, after receiving strong interest, we have completed the sale of the building, retaining a short-term lease on the premises until we relocate. The buyer intends to refurbish the Hall primarily into serviced office space.
Overall, these investments have resulted in our gearing increasing to 17.5%, which is still within our stated optimal range of 10%-20%. Whilst the Group's GBP105m banking facility runs until January 2025 we have already had positive conversations with our existing lenders about its renewal and expect to agree terms during Q4 23, with an aim to have renewed facilities in place in Q2 24.
*Market expectations being the average of current analyst consensus of GBP37.8m profit before tax, comprising three forecasts from Numis, Peel Hunt and Panmure Gordon.
Dividend
The Board has declared an interim dividend of 2.93p (June 2022: 2.66p), an increase of 10%, which reflects our progressive dividend policy. This will be paid on 13 October 2023 to shareholders on the register at the close of business on 29 September 2023.
Strategy
The Group set a medium-term strategy in 2021 to grow the size of the business by increasing capital employed by 40% focusing on its three key markets: I&L, Residential and Urban Development, whilst maintaining ROCE within a 10-15% range. Since setting this strategy, we have successfully grown our capital employed by 13% to GBP413m. Good progress has been made against our stated medium-term targets as set out below:
Hot Features
Premium
Measure Medium term H1 23 Performance Progress
target
Capital employed To over GBP500m GBP413m as at On track to grow
30 June 2023 capital employed
to over GBP500m
-------------------- --------------------- ---------------------------
Return on average 10-15% pa 6.3% in H1 23 We maintain our
capital employed aim to be within
the target range
for FY23
-------------------- --------------------- ---------------------------
Land promotion c.3,500 pa 1,900 plots in The running five
plot sales H1 23 year average has
increased to 3,175
plots pa. So, we
remain on track
to achieve our medium-term
target.
-------------------- --------------------- ---------------------------
Development Our share c.GBP200m Our share: GBP70m We are on course
completions pa in H1 23, with to carry on growing
committed programme our completed developments
of GBP186m for to GBP200m pa as
2023 we look to draw
down on our future
pipeline of GBP1.26bn.
-------------------- --------------------- ---------------------------
Grow investment To around GBP150m GBP112m as at Value increased
portfolio 30 June 2023 primarily due to
retained I&L developments.
We have made accretive
tactical sales and
will be patient
building the portfolio
back up to its target.
-------------------- --------------------- ---------------------------
Stonebridge Up to 600 units 99 homes completed Already looking
Homes sales pa in H1 23, out to expand our annual
of a delivery target in 2024,
target of 250 in line with overall
homes strategic objective
of 600 units.
-------------------- --------------------- ---------------------------
Construction Minimum of 65% 18% at H1 23 Difficult market
order book secured for the following for 2024 conditions impacting
year order book for 2024.
In response, the
opportunity pipeline
has been refocused,
with GBP85m PCSA's
in progress.
-------------------- --------------------- ---------------------------
Responsible Business
We launched our Responsible Business Strategy in January 2022, with our primary aim to be NZC by 2030 with respect to Scopes 1 & 2. I am pleased with the progress we have made so far against our 2025 objectives and targets. Our strategy is guided by three principal objectives:
-- To further embed ESG factors into commercial decision making so that the business adapts, ensuring long-term sustainability and value creation for the Group's stakeholders.
-- To empower and engage our people to deliver long term meaningful change and impact for the communities and environments Henry Boot works in.
-- To focus on issues deemed to be most significant and material to the business and hold ourselves accountable by reporting regularly on progress.
18-month performance against our 2025 target
Our People Performance Our Places Performance
Develop and deliver The Health and Contribute GBP1,000,000 We contributed
a Group-wide Wellbeing Strategy of financial (financial and
Health and Wellbeing and Programme (and equivalent) equivalent value
Strategy was launched to value to our of) over GBP400,000
the Group in February charitable partners to our charitable
2023 with a range and community
of resources, partners.
activities and
guidance delivered
throughout 2023.
---------------------------- -------------------------- ------------------------
Increase gender We have made progress, Contribute 7,500 More than 3,500
representation with female representation volunteering volunteering
in the business, across our workforce hours to a range hours have been
aiming for 30% increasing to of community, delivered.
of our team and 27% (2022: 26%). charity, and
line managers education projects
being female
---------------------------- -------------------------- ------------------------
Our Planet Performance Our Partners Performance
---------------------------- -------------------------- ------------------------
Reduce Scope Total direct GHG Pay all of our The Living Wage
1 and 2 GHG emissions emissions (Scopes suppliers the Foundation has
by over 20% to 1 and 2) in 2022 real living wage been engaged
support reaching were 2,930 tonnes and secure accreditation and a review
NZC by 2030 which equates with the Living is currently
to a 12% reduction Wage Foundation being undertaken
from the 2019 of the requirements
baseline. Remain to secure membership.
on course to achieve
the decarbonisation
trajectory.
---------------------------- -------------------------- ------------------------
Reduce consumption Sustainability Collaborate with We continue to
of avoidable audits completed all our partners engage with membership
plastic by 50% and a reduction to reduce our organisations
action plan is environmental (including Yorkshire
in development. impact Climate Action
Coalition and
the UK Green
Building Council)
and our supply
chain to share
knowledge and
best practice.
---------------------------- -------------------------- ------------------------
The Group is also committed to ensuring that all the properties within the investment portfolio have a minimum EPC rating of 'C'. Currently 73% (December 2022: 70%) of these properties have a rating of 'C' or higher, of which 45% (December 2022: 39%) of the total portfolio are rated 'A-B'. The majority of the remaining 27% of the portfolio that are currently below a 'C' rating, have redevelopment potential with a target range of 'A' or 'B'.
Outlook
There is no doubt that the rapid increase in short term rates is slowing the economy, reducing customer demand across our markets, and putting pressure, not least due to the funding costs, on the viability of residential and commercial schemes. As its designed to do, tighter monetary policy is curbing cost pressures, and we have seen the rate of inflation come down throughout the Group with the prospect of more to come by the year end giving us a degree of confidence in being able to achieve our current year ambitions. Henry Boot is not immune to these pressures, but its focus on high quality real estate and customer care affords us some resilience:
-- HLM promotes high quality, significant sites, with the majority in the South of England, and c.24,000 plots around the golden growth triangle demarked by London, Cambridge and Oxford. Whilst uncertainty around the timing of disposals has increased over the short-term we have no doubt that the structural demand for homes in the UK will continue to outstrip supply and that these sites will be in demand from housebuilders.
-- HBD delivers institutional quality development in and around the major regional cities and the main road networks, offering high ESG credentials. 64% of its speculative committed development is NZC. The majority of our pipeline is industrial where structural occupier demand endures.
-- SH builds premium homes, in affluent locations, and over the year whilst it's been harder work to sell, as mortgage rates and uncertainty have increased, sales rates have remained resilient. By the end of August, in effect, 97% of this year's target has been sold and we have increased overall volume by 43%, in line with our ambition to scale up this business.
Our balance sheet offers the same quality and resilience, with development and land promotion opportunities held at the lower of cost or value whilst gearing is managed over the cycle at between 10-20%. Our NAV has shown consistent growth through cycles. This allows us to invest in opportunities, such as land, both to promote in the medium term and to build houses as we scale up SH. It also allows us to build out our high quality committed development programme.
We have confidence in the long-term fundamentals of our market, supported by our people and their skillsets, plus the financial resources to meet the business's strategic growth and return ambitions.
Business Review
Land Promotion
HLM had a good first half, achieving an operating profit of GBP17.0m (June 2022: GBP17.2m) from selling 1,900 plots (June 2022: 3,447 plots). Although the number of plots sold in the year has decreased, average gross profit per plot increased to GBP11,400 (December 2022: GBP6,066) due primarily to a significant freehold sale of land at Tonbridge, Kent, offsetting the volume reduction.
UK greenfield land values decreased by 2.8% in the six months to June 2023 according to Savills Research. Transactions slowed significantly relative to the same period in 2022, with downward pressures on land values reflecting many housebuilders more modest new build sales rates. However, with 17% fewer homes granted planning consent in H1 23 compared to the same period in 2022, the reduction in land supply coming forward has resulted in selective demand for prime deliverable sites.
HLM's land bank has grown to 97,095 plots (December 2022: 95,704 plots), of which 8,335 plots (December 2022: 9,431 plots) have planning permission (or Resolution to Grant subject to S106). The decrease in plots with planning permission reflects the continued delays in the planning system due to a growing number of complexities. One such complexity is the emerging Draft National Planning Guidance, which looks to be slowing down local authority development plan making and planning application determination with 58 development plans having been withdrawn or paused since the December 2022 announcements. Notwithstanding this, HLM has gained planning permission on 804 plots over H1 23, which is a significant increase from the 435 plots granted in 2022. During the period, there were 689 plots submitted for planning, taking the total plots awaiting determination to 12,182 (December 2022: 12,297 plots).
HLM's land bank remains well positioned to benefit from the delays and complexities in the planning system due to the high levels of stock both with planning and awaiting determination, and the team's specialist skill set and its strategically placed regional coverage. Despite the challenges, the number of plots in the portfolio continues to increase, giving us confidence in the medium term that our stock levels with planning will return to similar levels seen in previous years.
There is significant latent value in the Group's strategic land portfolio, which is held as inventory at the lower of cost or net realisable value. As such, no uplift in value is recognised within our accounts relating to any of the 8,335 plots with planning, and any increase in value created from securing planning permission will only be recognised on disposal.
Residential Land Plots
With permission In planning Future Total
b/f granted sold c/f
------- -------- -------- -------
2023 9,431 804 (1,900) 8,335 12,182 76,578 97,095
------- -------- -------- ------- ------------ ------- -------
2022 12,865 435 (3,869) 9,431 12,297 73,976 95,704
2021 15,421 452 (3,008) 12,865 11,259 68,543 92,667
2020 14,713 2,708 (2,000) 15,421 8,312 64,337 88,070
2019 16,489 1,651 (3,427) 14,713 10,665 51,766 77,144
------- -------- -------- ------- ------------ ------- -------
-- In relation to significant schemes:
o At Tonbridge, Kent, we concluded an agreement for the sale of 125 plots to national housebuilder Cala Homes. The site was originally contracted under option in 2004, with the freehold subsequently purchased by HLM in 2021. The scheme includes additional community benefits such as new cycle and pedestrian links to a local railway station and a contribution to improved public transport infrastructure. The sale will complete in two phases across 2023 (81 plots) and 2024 (44 plots). The final completion will result in an ungeared internal rate of return of 27% p.a in 2024.
o At Pickford Gate, Coventry (formerly known as Eastern Green), a 2,400 plot site, a 250 plot sale concluded to the Vistry Group in April. Marketing will commence for the next tranche in September, which will comprise up to 1,000 plots.
o At Swindon, the 2,000-plot site with outline consent that is being promoted through an option agreement jointly held with Taylor Wimpey (TW), as previously reported, terms for acquisition were nearly settled with the landowners, but stalled due to the market disruption in Q4 2022. Alongside TW, HLM is now working to exchange on the purchase later this year, with completion expected to fall into 2024.
Property Investment and Development
Property Investment and Development, which includes HBD and Stonebridge Homes, delivered a combined operating profit of GBP8.5m (June 2022: GBP19.6m).
According to the CBRE Monthly Index, commercial property values declined by 0.4% in the six months to June 2023. Industrial property was the best performing sector with values up 1.4% during the first half of the year ahead of retail up 1.0%, whilst offices declined by 3.5%. The rate of yield expansion has slowed during 2023 following the significant capital value correction in the second half of 2022. Industrial continues to deliver the highest rental growth at 3.2% in six months to June 2023. Whilst take up has slowed from record levels during the pandemic, occupier demand is proving resilient due to the longer-term structural drivers and limited supply of high-quality space. At the same time the outlook for BtR remains positive with rental growth for multifamily assets of 8.2% in the year to March 2023 according to CBRE driven by continued strong demand and a lack of available units.
HBD completed on two developments with a total GDV of GBP70m (HBD share), with 100% of these either sold or let:
-- Completed on a GBP54m (GDV) I&L scheme, Power Park, located on the former Imperial Tobacco plant in Nottingham. The 426,000 sq ft scheme, comprising seven units, was pre-sold to Oxenwood Logistics Fund, on a forward funding basis in 2021. Each of the seven units meet BREEAM "Very Good" standards.
-- Completed an 85,000 sq. ft. building at the 83-acre Butterfield Business Park in Luton, Bedfordshire. The GBP16m (GDV) unit was pre-let to Shoal Group, an electrical component supplier, and has been retained within the investment portfolio.
The committed development programme now totals a GDV of GBP341m (HBD share: GBP186m GDV) of which 52% is currently pre-let or pre-sold, with 98% of the development costs fixed.
2023 Committed Programme
GDV HBD Share of GDV Commercial Residential Size
Scheme (GBPm) (GBPm) ('000 sq ft) (Units) Status Completion
------------------- -------- ------------------- -------------- ----------------- ------------------ -----------
Industrial
Rainham, Momentum 120 24 380 - Speculative Q1 24
Southend, Ipeco2
and Cama, 20 20 156 - Pre-Sold Q1 24
Walsall, SPARK
Remediation 37 37 - - Forward funded Q2 24
Preston, East DPD Pre-let and
& DHL 30 15 150 - forward funded Q4 23
207 96 686 -
-------- ------------------- -------------- -----------------
Urban Residential
Birmingham, Setl 32 32 - 102 Speculative Q1 24
York, TDT 22 22 54 - Pre-sold Q3 23
Aberdeen, Bridge
of Don 12 1 - TBC Under-offer Q2 24
Aberdeen, Pre-sold and DM
Cloverhill 2 2 - 500 fee Q4 23
-------- ------------------- -------------- -----------------
68 57 54 602
-------- ------------------- -------------- -----------------
Urban Commercial
Manchester, Island 66 33 91 - Speculative Q3 24
Total for the Year 341 186 831 602
------------------- -------- ------------------- -------------- -----------------
% sold or pre-let
(incl Island) 36% 52%
Within the committed programme there is currently nearly 700,000 sq ft of I&L space (HBD share: GBP96m GDV), a total of 602 urban residential units (HBD share: GBP57m GDV) and 91,000 sq ft of commercial space (HBD share: GBP33m GDV). In this regard:
-- Two freehold Design and Build transactions, at HBDs 52 acre I&L scheme in Southend, Essex, have been added and agreed at a total price of GBP20m and a combined c.156,000 sq ft of warehouse space. A 129,000 sq ft headquarters facility will be developed for Ipeco Holdings, the world leader in aircraft seating. CAMA Asset Store, specialists in sustainable storage for the creative industries, will take occupation of a 27,600 sq ft warehouse facility with ancillary office accommodation.
-- SETL, the 102 premium apartment scheme in Birmingham, is on track to complete in Q1 24 and marketing of selective apartments will start shortly with the remainder to be sold post PC during 2024. Although the market has slowed, the aim is to achieve sales in line with our stated GBP32m GDV.
-- At Momentum, Rainham (in an 80:20 JV with Barings) a 380,000 sq ft speculative I&L development targeting NZC serving Greater London, is ahead of building schedule and is now targeting completion in Q1 24. Marketing of the scheme is underway and is attracting encouraging occupier interest.
-- HBD and Greater Manchester Pension Fund are working in a 50:50 JV to deliver 91,000 sq ft of NZC offices within Manchester City Centre. Island will include 12,500 sq ft of amenity areas including social, meeting and event spaces and a communal roof terrace. The scheme is on track to be completed in Q3 24 and is again generating occupier interest.
-- Post half-year, HBD has completed The Disabilities Trust, York (HBD share: GBP22m GDV), a 54,000 sq ft scheme with state of the art care facilities. The building is low carbon and has achieved BREEAM 'Excellent' rating. This is the fourth phase of our highly successful Chocolate Works development, in York.
-- HBD are looking to replenish the programme by committing to further schemes such as the development of I&L schemes at Walsall Spark, Roman Way, Preston and Welwyn, subject to demand and viability.
HBD's total development pipeline has been maintained at a GDV of GBP1.5bn (HBD share: GBP1.26bn GDV). All of these opportunities sit within the Company's three key markets of I&L (62%), Urban Commercial (21%) and Urban Residential (17%). Significant schemes include:
-- At Golden Valley, Cheltenham, HBD continues preparations to submit a planning application for the first phase of the scheme (HBD share: GBP50m GDV), with the council signing off the Funding Agreement in Q3 2023. The scheme comprises a mixed-use campus clustered around 150,000 sq ft of innovation space.
-- At Neighbourhood, Birmingham (HBD share: GBP140m GDV), after securing planning approval for a 414-unit BtR development, HBD are continuing preparatory works but have delayed seeking funding until the new year.
The total value of the investment portfolio (including share of properties held in JVs) has increased to GBP112m (December 2022: GBP106m). Following the significant repricing of UK commercial real estate in Q4 2022, capital values have stabilised in the first six months of 2023 with an underlying valuation increase of 0.8% for the investment portfolio, principally as a result of the growth in rental values for I&L assets with the equivalent yield unchanged at 6.2%. The total property return of 3.3% for the six months to June 2023, was ahead of the return from the CBRE UK Monthly Index (2.5%). During the period occupancy increased to 89% (December 2022: 88%) with the weighted average unexpired lease term now 10.6 years (8.9 years to first break).
Post half year, the Group has also completed four sales of smaller assets for a total of GBP11.1m including Banner Cross Hall, at an average 19% premium to December 2022 valuation.
The UK housing market remained subdued during H1 23 as homebuyer demand continued to be impacted by higher mortgage rates. According to Nationwide UK house prices decreased by 1.2% during the six months to June and are now 5.3% below the August 2022 peak. Whilst higher mortgage rates are suppressing activity with monthly housing transactions around 15% below pre-pandemic levels unemployment is expected to remain low by historic standards which should provide some support to house prices.
Against this backdrop demand for housing has remained resilient, with pricing remaining firm, leaving SH still on track to meet its annual sales target having secured 88% (144 private/77 social) of its 2023 delivery target of 250 units at 30 June. The average selling price for private units to 30 June is GBP499k (June 2022: GBP512k) alongside an average sales rate of 0.48 (June 2022: 0.6) units per week per outlet, for private houses (PH), in line with target. Sales prices achieved were 1.2% above budget whilst build cost inflation has started to moderate, reducing from c.10% in 2022 to 8% currently. Negotiations with suppliers and subcontractors are ongoing and are likely to lead to further falls in cost inflation.
Post H1 23, SH have secured an additional 21 units (PH) taking them to 97% (164 private/78 social) secured for the year, meaning only a further eight units (PH) need to be secured between 1 September and the end of October to achieve its annual sales target. The year to date sales rate achieved to the end of August was 0.49 houses per week per outlet.
SH total owned and controlled land bank comprises 997 plots (June 2022: 1,164) of which 775 plots have detailed or outline planning and has 2.21 years supply based on a one-year rolling forward sales forecast for land with planning or 2.38 years for its full land bank. SH have a number of sites where terms are agreed in order to grow its land bank in line with stated scale up plans. However, the business is being patient in negotiations, in light of the slowing house sales market and the more subdued land market.
The strategic objective of growing the business to achieve 600 completions per annum over the medium term remains on track.
Construction
Trading in the Group's construction segment has been below expectations in H1 23, achieving an operating profit of GBP4.4m (2022: GBP6.3m).
UK construction activity slowed during the first half of 2023, with monthly output increasing by 1.0% following the strong increase of 6.2% in 2022. All new work decreased by 2.1% with the most significant reduction of 6.7% for private housing. Construction output in June 2023 was 7.3% above the February 2020 pre-CV-19 level.
HBC is trading below management's expectations, having experienced difficult operating conditions in line with the UK construction market. The slowdown in UK construction has resulted in HBC securing only 72% of its turnover for 2023 (94% of its costs have fixed price orders placed or contractual inflation clauses) and has experienced several delays on Pre-Construction Services Agreements (PCSAs). However, there is a healthy pipeline of opportunities that HBC is actively pursuing, with a target of GBP85m PCSA's across urban development and residential opportunities.
Despite both schemes suffering delays, subcontractor and material availability issues, the Kangaroo Works, a GBP47m BtR scheme, completed in August 2023, with the Heart of the City, Sheffield Block H, a GBP42m urban development scheme, due to complete in phases between August and October 2023. The Cocoa Works, a GBP47m residential development in York, remains on time and to budget.
Banner Plant is trading slightly below expectations, seeing a slight reduction in demand in line with the wider slowdown in construction activity. The business has refocused on core hire products and cost management. Road Link is performing in line with management expectations.
FINANCIAL REVIEW
Consolidated statement of comprehensive income
Group revenue for the period increased by 24.5% to GBP179.8m (30 June 2022: GBP144.4m) as the Land Promotion business completed additional freehold sales and Stonebridge continued to grow completions, achieving 99 unit sales in H1 (30 June 2022: 39 unit sales). The Group continued to generate strong revenues from property development activity and construction work during the period.
Gross profit was slightly below that of the prior period at GBP40.8m (30 June 2022: GBP43.9m) and shows the ongoing resilience of the Group despite challenging market conditions. Other income of GBP4.8m relates to a legal settlement on a property development contract completed in 2016. Administrative expenses (excluding pension costs) increased by GBP2.2m (30 June 2022: increased GBP2.5m) reflecting the current and future growth ambitions of the business, and includes investment in our people, systems, marketing and ESG.
Fair value of investment properties increased by GBP0.6m (30 June 2022: increase GBP3.4m) with Group assets continuing to outperform the CBRE index. Profits on sale of investment properties were GBP0.1m (30 June 2022: GBPnil). The Group's share of profit from joint ventures and associates was GBP0.2m (30 June 2022: GBP10.4m), including investment property valuation gains of GBP0.3m (30 June 2022: GBP0.6m), the prior year included an individually significant disposal of a residential site in Aberdeen.
Property revaluation gains/(loss) H1 23 H1 22 2022
GBP'm GBP'm GBP'm
----------------------------------------------------- ------- ------- -------
Wholly owned investment property:
- Completed investment property 1.4 1.0 (7.3)
- Investment property in the course of construction (0.8) 2.4 2.4
----------------------------------------------------- ------- ------- -------
0.6 3.4 (4.9)
Joint ventures and associates:
- Completed investment property 0.3 0.6 (3.2)
- Investment property in the course of construction - - -
----------------------------------------------------- ------- ------- -------
0.3 0.6 (3.2)
----------------------------------------------------- ------- ------- -------
0.9 4.0 (8.2)
----------------------------------------------------- ------- ------- -------
This results in a 34% reduction in operating profit to GBP25.7m (30 June 2022: GBP39.1m) which generated an underlying profit before tax(1) of GBP23.3m or GBP25.0m on a statutory basis (30 June 2022: GBP37.8m underlying or GBP38.8m statutory), which remains a robust result given current market conditions. Earnings per share followed, reducing to 14.0p (30 June 2022: 24.1p).
Return on capital employed
Lower operating profits in the period resulted in a decreased return on capital employed (ROCE) of 6.3% over a six-month period (30 June 2022: 10.1%). Over a 12-month period we continue to believe a target return of 10-15% is appropriate for our current operating model, although in current market conditions we would expect to be at the lower end of this range.
Finance and gearing
Financing costs were GBP2.5m (30 June 2022: GBP0.9m) reflecting the impact of rising interest rates on borrowings. This is partially offset by finance income of GBP1.8m (30 June 2022: GBP0.5m) as an element of financing costs are recovered through our joint venture arrangements.
At 30 June 2023, net debt was GBP70.8m (31 December 2022: GBP48.6m). This reflects an increase in deferred land sale receipts as well as continued investment in strategic land, property development and our growing housebuilder.
Gearing levels have increased to 17.5% (31 December 2022: 12.3%) and remain within our preferred operating range of 10%-20%. We remain selective on new investments in an uncertain market but ready to react to any compelling opportunities that might arise.
Cash flows
Operating cash inflows before movements in working capital were GBP22.0m (30 June 2022: GBP23.4m).
Working capital requirements have increased as a result of land transactions on deferred payment terms and from investment in inventory, resulting in working capital outflows of GBP15.8m (30 June 2022: GBP22.9m outflow) which, in turn, meant that operations generated funds of GBP6.1m (30 June 2022: GBP0.5m). After interest paid of GBP1.9m (30 June 2022: GBP0.5m) and tax paid of GBP0.9m (30 June 2022: GBP1.0m) net cash inflows from operating activities were GBP3.3m (30 June 2022: GBP1.1m outflows).
Including expenditure on investment properties of GBP7.0m (30 June 2022: GBP0.3m) and advances to joint ventures and associates of GBP6.8m (30 June 2022: GBP2.1m), net cash outflows from investing activities were GBP12.3m (30 June 2022: GBP7.8m inflow).
The final dividend on ordinary shares for 2022 increased by 10% to GBP5.3m (30 June 2022: GBP4.8m).
Statement of financial position
Total non-current assets were GBP206.1m (31 December 2022: GBP183.3m). Significant movements arose as follows:
- a GBP5.5m increase in right of use assets (30 June 2022: GBP0.3m decrease) due to investment in plant acquired on hire purchase and a lease on the Group's new head office;
- a GBP5.6m increase (30 June 2022: decrease GBP3.4m) in the value of investment properties, being subsequent capital expenditure of GBP7.0m (30 June 2022: GBPnil), transfers from inventory GBPnil (30 June 2022: GBP4.5m) a revaluation gain of GBP0.6m (30 June 2022: gain of GBP3.4m), disposals of GBP1.0m (30 June 2022: GBPnil), and transfers to assets held for sale of GBP1.0m (30 June 2022: GBP11.1m);
- Investments in joint ventures and associates increased by GBP0.2m to GBP10.2m (31 December 2022: GBP10.0m), being profits generated of GBP0.2m;
- an increase in non-current trade receivables of GBP14.6m (30 June 2022: GBP1.3m decrease) following a number of strategic land sales made on deferred terms;
- The pension scheme asset has increased GBP1.9m to GBP8.1m (31 December 2022: GBP6.2m) largely due to the effect of the increasing liabilities discount rate offset by asset returns during the period; and a deferred tax asset which remains consistent at GBP0.2m (30 June 2022: GBP3.1m decrease).
Current assets were GBP8.9m higher at GBP404.0m (31 December 2022: GBP395.0m) resulting from:
- an uplift in inventories to GBP297.7m (31 December 2022: GBP291.8m) due to growth in housebuilding inventory;
- lower trade and other receivables of GBP65.2m (31 December 2022: GBP66.6m);
- cash and cash equivalents which were GBP3.1m higher at GBP20.5m (31 December 2022: GBP17.4m) due to current cash requirements and timing on loan repayments; and
- assets held for sale of GBP3.1m (31 December 2022: GBPnil) which relates to two property assets, one in Southend and a second being the Group's Head Office building in Sheffield (as the Group prepares to relocate to Sheffield City Centre in Q4).
Total liabilities rose to GBP204.7m (31 December 2022: GBP156.6m) with the most significant changes arising from:
- trade and other payables, including contract liabilities, decreased GBP8.5m to GBP95.9m (31 December 2022: GBP104.4m); and,
- borrowings, including lease liabilities, increased to GBP91.3m (31 December 2022: GBP66.0m) as the Group continues to invest in operational assets and transact on deferred payment terms.
Retained earnings increased net assets to GBP405.4m (31 December 2022: GBP394.3m) with the net asset value per share increasing by 2.6% to 303p (31 December 2022: 295p), an underlying increase of 2.9% to 298p (Dec 2022: 291p) when excluding the defined benefit pension scheme surplus net of tax liability.
NOTES:
(1) Underlying profit before tax is an alternative performance measure (APM) and is defined as profit before tax excluding revaluation movements on completed investment properties. Revaluation movement on completed investment properties includes gains of GBP1.4m (2022: GBP1.0m gain) on wholly owned completed investment property and gains of GBP0.3m (2022: GBP0.6m gains) on completed investment property held in joint ventures. This APM provides the users with a measure that excludes specific external factors beyond management's controls and reflects the Group's underlying results. This measure is used in the business in appraising senior management performance.
(2) Return on Capital Employed (ROCE) is an APM and is defined as operating profit/ average of total assets less current liabilities (excluding DB pension surplus) at the opening and closing balance sheet dates
(3) Net Asset Value (NAV) per share is an APM and is defined using the statutory measures net assets/ordinary share capital
(4) Net (debt)/cash is an APM and is reconciled to statutory measures in note 14
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
for the half year ended 30 June 2023
Half year Half year Year
ended ended ended
30 June 30 June 31 December
2023 2022 2022
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
---------------------------------------------------- --------- --------- -----------
Revenue 179,756 144,414 341,419
Cost of sales (138,909) (100,528) (259,829)
---------------------------------------------------- --------- --------- -----------
Gross profit 40,847 43,886 81,590
Other income 4,800 - -
Administrative expenses (20,831) (18,596) (40,455)
24,816 25,290 41,135
Increase/(decrease) in fair value of investment
properties 595 3,443 (4,921)
Profit on sale of investment properties 86 16 646
Loss on sale of assets held for sale - - (149)
Profit on disposal of joint ventures - - 667
Share of profit of joint ventures and associates 188 10,376 9,079
Operating profit 25,685 39,125 46,457
Finance income 1,769 535 1,641
Finance costs (2,495) (883) (2,503)
Profit before tax 24,959 38,777 45,595
Tax (5,805) (6,071) (7,725)
---------------------------------------------------- --------- --------- -----------
Profit for the period from continuing operations 19,154 32,706 37,870
---------------------------------------------------- --------- --------- -----------
Other comprehensive (expense)/income not being reclassified
to profit or loss in subsequent periods:
Revaluation of Group occupied property (86) - 315
Deferred tax on property revaluations 15 - (23)
Actuarial (loss)/gain on defined benefit pension
scheme (2,049) 18,842 14,994
Deferred tax on actuarial loss/(gain) 512 (4,710) (3,749)
Total other comprehensive (expense)/income not
being reclassified to profit or loss in subsequent
periods (1,608) 14,132 11,537
---------------------------------------------------- --------- --------- -----------
Total comprehensive income/(expense) for the period 17,546 46,838 49,407
---------------------------------------------------- --------- --------- -----------
Profit for the period attributable to:
Owners of the Parent Company 18,661 32,065 33,319
Non-controlling interests 493 641 4,551
---------------------------------------------------- --------- --------- -----------
19,154 32,706 37,870
---------------------------------------------------- --------- --------- -----------
Total comprehensive income attributable to:
Owners of the Parent Company 17,053 46,197 44,856
Non-controlling interests 493 641 4,551
---------------------------------------------------- --------- --------- -----------
17,546 46,838 49,407
---------------------------------------------------- --------- --------- -----------
Basic earnings per ordinary share for the profit
attributable
to owners of the Parent Company during the period 14.0p 24.1p 25.0p
---------------------------------------------------- --------- --------- -----------
Diluted earnings per ordinary share for the profit
attributable
to owners of the Parent Company during the period 13.7p 23.7p 24.6p
---------------------------------------------------- --------- --------- -----------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (UNAUDITED)
as at 30 June 2023
30 June 30 June 31 December
2022
2023 Restated(1) 2022
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
---------------------------------------------------- --------- ------------ -----------
Assets
Non-current assets
Intangible assets 2,552 3,321 2,933
Property, plant and equipment 24,210 27,975 28,766
Right of use assets 6,476 1,290 997
Investment properties 102,716 100,740 97,116
Investment in joint ventures and associates 10,178 15,581 9,990
Retirement benefit asset 8,108 8,361 6,188
Trade and other receivables 51,648 34,827 37,029
Deferred tax assets 249 332 249
---------------------------------------------------- --------- ------------ -----------
206,137 192,427 183,268
---------------------------------------------------- --------- ------------ -----------
Current assets
Inventories 297,664 252,894 291,778
Contract assets 17,421 12,761 19,257
Trade and other receivables 65,207 74,296 66,601
Cash and cash equivalents 20,538 21,526 17,401
Assets classified as held for sale 3,142 11,137 -
403,972 372,614 395,037
---------------------------------------------------- --------- ------------ -----------
Liabilities
Current liabilities
Trade and other payables 90,243 82,250 95,827
Contract liabilities 1,468 7,730 4,006
Current tax liabilities 7,664 2,876 3,793
Borrowings 85,000 60,000 65,000
Lease liabilities 1,539 559 426
Provisions 2,836 4,511 4,003
---------------------------------------------------- --------- ------------ -----------
188,750 157,926 173,055
---------------------------------------------------- --------- ------------ -----------
Net current assets 215,222 214,688 221,982
---------------------------------------------------- --------- ------------ -----------
Non-current liabilities
Trade and other payables 4,235 2,571 4,568
Lease liabilities 4,770 791 607
Deferred tax liability 4,878 6,573 4,401
Provisions 2,057 855 1,385
---------------------------------------------------- --------- ------------ -----------
15,940 10,790 10,961
---------------------------------------------------- --------- ------------ -----------
Net assets 405,419 396,325 394,289
---------------------------------------------------- --------- ------------ -----------
Equity
Share capital 13,798 13,747 13,763
Property revaluation reserve 2,281 2,060 2,352
Retained earnings 378,213 370,229 365,692
Other reserves 8,246 7,139 7,482
Cost of shares held by ESOP trust (966) (966) (967)
---------------------------------------------------- --------- ------------ -----------
Equity attributable to owners of the Parent Company 401,572 392,209 388,322
Non-controlling interests 3,847 4,116 5,967
---------------------------------------------------- --------- ------------ -----------
Total equity 405,419 396,325 394,289
---------------------------------------------------- --------- ------------ -----------
(1) See 'Prior year restatements' for further details in the 'Basis of preparation and accounting policies'
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)
for the half year ended 30 June 2023
Attributable to owners of the Parent
Company
-----------------------------------------------------------
Cost
of
shares
Property held Non-
Share revaluation Retained Other by ESOP controlling Total
capital reserve earnings reserves trust Total interests equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- -------- ----------- -------- -------- ------- ------- ----------- -------
At 1 January 2022 13,732 2,060 328,348 6,744 (1,044) 349,840 5,446 355,286
---------------------------- -------- ----------- -------- -------- ------- ------- ----------- -------
Profit for the period - - 32,065 - - 32,065 641 32,706
Other comprehensive income - - 14,132 - - 14,132 - 14,132
---------------------------- -------- ----------- -------- -------- ------- ------- ----------- -------
Total comprehensive income - - 46,197 - - 46,197 641 46,838
---------------------------- -------- ----------- -------- -------- ------- ------- ----------- -------
Equity dividends - - (4,833) - - (4,833) (1,971) (6,804)
Proceeds from shares issued 15 - - 395 - 410 - 410
Share-based payments - - 517 - 78 595 - 595
---------------------------- -------- ----------- -------- -------- ------- ------- ----------- -------
15 - (4,316) 395 78 (3,828) (1,971) (5,799)
---------------------------- -------- ----------- -------- -------- ------- ------- ----------- -------
At 30 June 2022 (unaudited) 13,747 2,060 370,229 7,139 (966) 392,209 4,116 396,325
---------------------------- -------- ----------- -------- -------- ------- ------- ----------- -------
At 1 January 2022 13,732 2,060 328,348 6,744 (1,044) 349,840 5,446 355,286
------------------------------------- ------ ----- ------- ----- ------- ------- ------- --------
Profit for the year - - 33,319 - - 33,319 4,551 37,870
Other comprehensive income - 292 11,245 - - 11,537 - 11,537
------------------------------------- ------ ----- ------- ----- ------- ------- ------- --------
Total comprehensive income - 292 44,564 - - 44,856 4,551 49,407
------------------------------------- ------ ----- ------- ----- ------- ------- ------- --------
Equity dividends - - (8,383) - - (8,383) (4,030) (12,413)
Proceeds from shares issued 31 - - 738 - 769 - 769
Share-based payments - - 1,163 - 77 1,240 - 1,240
------------------------------------- ------ ----- ------- ----- ------- ------- ------- --------
31 - (7,220) 738 77 (6,374) (4,030) (10,404)
------------------------------------- ------ ----- ------- ----- ------- ------- ------- --------
At 31 December 2022 (audited) 13,763 2,352 365,692 7,482 (967) 388,322 5,967 394,289
------------------------------------- ------ ----- ------- ----- ------- ------- ------- --------
Profit for the period - - 18,661 - - 18,661 493 19,154
Other comprehensive expense - (71) (1,537) - - (1,608) - (1,608)
------------------------------------- ------ ----- ------- ----- ------- ------- ------- --------
Total comprehensive income/(expense) - (71) 17,124 - - 17,053 493 17,546
------------------------------------- ------ ----- ------- ----- ------- ------- ------- --------
Equity dividends - - (5,347) - - (5,347) (2,613) (7,960)
Proceeds from shares issued 35 - - 764 - 799 - 799
Share-based payments - - 744 - 1 745 - 745
------------------------------------- ------ ----- ------- ----- ------- ------- ------- --------
35 - (4,603) 764 1 (3,803) (2,613) (6,416)
------------------------------------- ------ ----- ------- ----- ------- ------- ------- --------
At 30 June 2023 (unaudited) 13,798 2,281 378,213 8,246 (966) 401,572 3,847 405,419
------------------------------------- ------ ----- ------- ----- ------- ------- ------- --------
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
for the half year ended 30 June 2023
Half year Half year Year
ended ended ended
30 June 30 June 31 December
2023 2022 2022
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
----------------------------------------------------------- --------- --------- -----------
Cash flows from operating activities
Cash generated from operations 6,140 518 (16,549)
Interest paid (1,949) (549) (1,829)
Tax paid (930) (1,030) (2,918)
----------------------------------------------------------- --------- --------- -----------
Net cash flows from operating activities 3,261 (1,061) (21,296)
----------------------------------------------------------- --------- --------- -----------
Cash flows from investing activities
Purchase of property, plant and equipment (926) (335) (971)
Purchase of investment property (6,975) 283 (9,301)
Purchase of investment in associate - - (2,112)
Proceeds on disposal of property, plant and equipment
(excluding assets held for hire) 21 184 10,987
Proceeds on disposal of assets held for hire - - 270
Proceeds on disposal of investment properties 1,013 - 8,146
Repayment of loans from joint ventures and associates - 2,483 10,904
Advances to joint ventures and associates (6,752) (2,101) (8,560)
Proceeds on disposal of investment in joint ventures - - 6,873
Distributions received from joint ventures and
associates - 6,960 7,160
Interest received 1,299 372 1,153
Net cash flows from investing activities (12,320) 7,846 24,549
----------------------------------------------------------- --------- --------- -----------
Cash flows from financing activities
Proceeds from shares issued 801 410 769
Movement in payables from joint ventures and associates 4 358 355
Decrease in borrowings (15,000) (30,000) (70,000)
Increase in borrowings 35,000 40,000 85,000
Principal element of lease payments (648) (339) (679)
Dividends
paid - ordinary shares (5,336) (4,822) (8,362)
- non-controlling interests (2,614) (1,971) (4,030)
- preference shares (11) (11) (21)
---------------------------------------------------------- --------- --------- -----------
Net cash flows from financing activities 12,196 3,625 3,032
----------------------------------------------------------- --------- --------- -----------
Net increase in cash and cash equivalents 3,137 10,410 6,285
Net cash and cash equivalents at beginning of period 17,401 11,116 11,116
----------------------------------------------------------- --------- --------- -----------
Net cash and cash equivalents at end of period 20,538 21,526 17,401
----------------------------------------------------------- --------- --------- -----------
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
for the half year ended 30 June 2023
1. GENERAL INFORMATION
The Company is a public limited company, listed on the London Stock Exchange and incorporated and domiciled in the United Kingdom. The address of its registered office is Banner Cross Hall, Ecclesall Road South, Sheffield, United Kingdom, S11 9PD.
The financial information set out above does not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006 and is neither audited nor reviewed. The Financial Statements for the year ended 31 December 2022, which were prepared in accordance with UK-adopted International Accounting Standards, have been reported on by the Group's auditors and delivered to the Registrar of Companies. The Independent Auditors' Report was unqualified and did not contain any statement under Section 498 of the Companies Act 2006.
2. Basis of preparation and accounting policies
The half-yearly financial information has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority and with UK adopted International Accounting Standard IAS 34 'Interim Financial Reporting'.
The half-yearly financial information has been prepared using the same accounting policies and methods of computation as compared with the annual Financial Statements for the year ended 31 December 2022.
A number of other standards, amendments and interpretations became effective from 1 January 2023, which do not have a material impact on the Group's financial statements or accounting policies.
Prior year restatements
Amounts owed by joint ventures and associates
Amounts owed by joint ventures and associates have been restated for the period ended 30 June 2022. The Group previously recognised amounts owed by joint ventures and associates as being entirely due within one year on the basis these amounts were repayable on demand. Following a review of the Group's historic practice and future plans not to call on all intercompany receivables in the short term, GBP22,824,000 of amounts owed by joint ventures and associates at 30 June 2022 have been reclassified to non-current in line with IAS 1. There is no impact on the Consolidated Statement of Comprehensive Income, Statement of Changes in Equity or Statement of Cash Flows.
Government loans
The Group's borrowings and trade receivables have been restated for the period ended 30 June 2022. The Group previously recognised a government loan payable to the Homes and Communities Agency (HCA) amounting to GBP2,941,000 and a corresponding trade receivable from the related housebuilder. Following legal guidance on the nature of the agreement it has been concluded that the Group has no residual obligation to the HCA in respect of the loan which is payable directly by the related housebuilder and therefore no rights to receive a corresponding trade receivable from the related housebuilder. This has resulted in previously reported borrowings reducing by GBP2,941,000 and trade receivables decreasing by the same. There is no impact on the Consolidated Statement of Comprehensive Income, Statement of Changes in Equity or Statement of Cash Flows.
Going Concern
The Group meets its day-to-day working capital requirements through a secured loan facility. The facility was renewed on 23 January 2020, at a level of GBP75m, for a period of three years and extended by one year in January 2021 and a further year in January 2022 taking the facility renewal to 23 January 2025 on the same terms as the existing agreement. The facility includes an accordion to increase the facility by up to GBP30m, which was called on by the Group on 9 October 2022, increasing the overall facility to GBP105m.
The Directors have considered the Group's principal risk areas, including the risk of continued economic slowdown, that they consider material to the assessment of going concern.
The Directors have prepared forecasts to 31 December 2024 covering a base case and severe downside scenario.
Having conducted significant stress testing at the year-end they have further considered the outcome of our half year position and their latest forecasts, whilst taking into account the current trading conditions, the markets in which the Group's businesses operate and associated credit risks together with the available committed banking facilities and the potential mitigations that can be taken, to protect operating profits and cash flows.
The severe downside scenario considered includes short-term curtailment in transactional activity and percentage reductions in other activities mirroring recent downturn experiences. This is followed by a short to medium-term recovery, coupled with the ability to manage future expenditure as described in the 2022 Annual Report.
As reported in the 2022 Annual Report, the most sensitive covenant in our facilities relates to the ratio of EBIT (Earnings Before Interest and Tax) on a 12-month rolling basis to senior facility finance costs. Our downside modelling, which reflects a near 50% reduction in revenue and near 67% reduction in profit before tax from our base case for 2023, demonstrates significant headroom over this covenant throughout the forecast period to the end of December 2024.
Their review supports the view that the Group will have adequate resources, liquidity and available bank facilities to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis of accounting in preparing the half-yearly financial information.
Estimates and Judgements
The preparation of half-yearly financial information requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expense. Actual results may differ from these estimates.
In preparing these half-yearly financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the Consolidated Financial Statements for the year ended 31 December 2022.
Goodwill
Goodwill is subjected to an impairment test at the reporting date or when there has been an indication that the goodwill should be impaired, any loss is recognised immediately through the Consolidated Statement of Comprehensive Income and is not subsequently reversed.
3. Segment information
For the purpose of the Board making strategic decisions, the Group is currently organised into three operating segments: Property Investment and Development; Land Promotion; and Construction. Group overheads are not a reportable segment; however, information about them is considered by the Board in conjunction with the reportable segments.
Operations are carried out entirely within the United Kingdom.
Inter-segment sales are charged at prevailing market prices.
The accounting policies of the reportable segments are the same as the Group's accounting policies as detailed above.
Segment profit represents the profit earned by each segment before tax and is consistent with the measure reported to the Group's Board for the purpose of resource allocation and assessment of segment performance.
Half year ended 30 June 2023 Unaudited
-----------------------------------------------------------------------
Property
investment
and Land Group
development promotion Construction overheads Eliminations Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------- ----------- --------- ------------ --------- ------------ --------
Revenue
External sales 71,517 52,645 55,594 - - 179,756
Inter-segment sales 144 - 585 156 (885) -
--------------------------------- ----------- --------- ------------ --------- ------------ --------
Total revenue 71,661 52,645 56,179 156 (885) 179,756
--------------------------------- ----------- --------- ------------ --------- ------------ --------
Gross profit/(loss) 11,117 21,143 8,467 134 (14) 40,847
Other income 4,800 - - - - 4,800
Administrative expenses (8,297) (4,168) (4,087) (4,293) 14 (20,831)
Other operating income/(expense) 872 (3) - - - 869
--------------------------------- ----------- --------- ------------ --------- ------------ --------
Operating profit/(loss) 8,492 16,972 4,380 (4,159) - 25,685
Finance income 4,219 529 229 140 (3,348) 1,769
Finance costs (2,455) (263) (217) (2,163) 2,603 (2,495)
Profit/(loss) before
tax 10,256 17,238 4,392 (6,182) (745) 24,959
Tax (2,338) (4,076) (1,098) 1,707 - (5,805)
--------------------------------- ----------- --------- ------------ --------- ------------ --------
Profit/(loss) for the
period 7,918 13,162 3,294 (4,475) (745) 19,154
--------------------------------- ----------- --------- ------------ --------- ------------ --------
Half year ended 30 June 2022 Unaudited
-----------------------------------------------------------------------
Property
investment
and Land Group
development promotion Construction overheads Eliminations Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------ ----------- --------- ------------ --------- ------------ --------
Revenue
External sales 56,837 24,741 62,836 - - 144,414
Inter-segment sales 145 - 3,685 214 (4,044) -
------------------------ ----------- --------- ------------ --------- ------------ --------
Total revenue 56,982 24,741 66,521 214 (4,044) 144,414
------------------------ ----------- --------- ------------ --------- ------------ --------
Gross profit/(loss) 13,042 20,409 10,368 85 (18) 43,886
Administrative expenses (7,233) (3,250) (4,040) (4,091) 18 (18,596)
Other operating income 13,835 - - - - 13,835
------------------------ ----------- --------- ------------ --------- ------------ --------
Operating profit/(loss) 19,644 17,159 6,328 (4,006) - 39,125
Finance income 724 310 482 5 (986) 535
Finance costs (740) (77) (190) (1,074) 1,198 (883)
Profit/(loss) before
tax 19,628 17,392 6,620 (5,075) 212 38,777
Tax (1,904) (3,304) (1,717) 854 - (6,071)
------------------------ ----------- --------- ------------ --------- ------------ --------
Profit/(loss) for the
period 17,724 14,088 4,903 (4,221) 212 32,706
------------------------ ----------- --------- ------------ --------- ------------ --------
Year ended 31 December 2022 Audited
-----------------------------------------------------------------------
Property
investment
and Land Group
development promotion Construction overheads Eliminations Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------ ----------- --------- ------------ --------- ------------ --------
Revenue
External sales 168,990 43,820 128,609 - - 341,419
Inter-segment sales 290 - 4,453 386 (5,129) -
------------------------ ----------- --------- ------------ --------- ------------ --------
Total revenue 169,280 43,820 133,062 386 (5,129) 341,419
------------------------ ----------- --------- ------------ --------- ------------ --------
Gross profit/(loss) 36,488 24,320 20,720 99 (37) 81,590
Administrative expenses (16,142) (6,971) (8,636) (8,743) 37 (40,455)
Other operating income 5,322 - - - - 5,322
------------------------ ----------- --------- ------------ --------- ------------ --------
Operating profit/(loss) 25,668 17,349 12,084 (8,644) - 46,457
Finance income 4,015 744 1,507 26,576 (31,201) 1,641
Finance costs (2,226) (213) (374) (3,373) 3,683 (2,503)
Profit/(loss) before
tax 27,457 17,880 13,217 14,559 (27,518) 45,595
Tax (3,411) (3,451) (2,771) 1,908 - (7,725)
------------------------ ----------- --------- ------------ --------- ------------ --------
Profit/(loss) for the
year 24,046 14,429 10,446 16,467 (27,518) 37,870
------------------------ ----------- --------- ------------ --------- ------------ --------
30 June 30 June 31 December
2022
2023 Restated(1) 2022
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
------------------------------------ --------- ------------ -----------
Segment assets
Property investment and development 375,023 336,185 355,491
Land promotion 152,251 139,678 149,598
Construction 48,116 55,395 45,766
Group overheads 5,826 3,564 3,612
------------------------------------ --------- ------------ -----------
581,216 534,822 554,467
Unallocated assets
Retirement benefit assets 8,108 8,361 6,188
Deferred tax assets 249 332 249
Cash and cash equivalents 20,536 21,526 17,401
------------------------------------ --------- ------------ -----------
Total assets 610,109 565,041 578,305
------------------------------------ --------- ------------ -----------
Segment liabilities
Property investment and development 52,955 35,104 59,113
Land promotion 14,183 10,753 13,114
Construction 28,427 48,035 36,994
Group overheads 5,274 4,025 568
------------------------------------ --------- ------------ -----------
100,839 97,917 109,789
Unallocated liabilities
Current tax liabilities 7,664 2,876 3,793
Deferred tax liabilities 4,878 6,573 4,401
Current lease liabilities 1,539 559 426
Current borrowings 85,000 60,000 65,000
Non-current lease liabilities 4,770 791 607
Total liabilities 204,690 168,716 184,016
------------------------------------ --------- ------------ -----------
Total net assets 405,419 396,325 394,289
------------------------------------ --------- ------------ -----------
(1) See 'Prior year restatements' for further details in the 'Basis of preparation and accounting policies'
4. REVENUE
The Group's revenue is derived from contracts with customers. In the following table, revenue is disaggregated by primary activity, being the Group's operating segments and timing of revenue recognition:
Timing of revenue Timing of revenue
recognition recognition
------------------- -------------------
30 June 30 June
2023 At a 2022
Unaudited point Over Unaudited At a point Over
Activity in the United Kingdom GBP'000 in time time GBP'000 in time time
---------- ------- ---------- ----------- ------
Construction contracts:
- Construction 41,096 - 41,096 48,004 - 48,004
- Property investment and
development 24,663 - 24,663 12,356 - 12,356
Sale of land and properties:
- Property investment and
development 12,836 12,836 - 26,509 26,509 -
- House builder unit sales 31,012 31,012 - 15,007 15,007 -
- Land promotion 52,502 52,502 - 24,645 24,645 -
PFI concession 6,502 6,502 - 6,162 6,162 -
Revenue from contracts with
customers 168,611 102,852 65,759 132,683 72,323 60,360
------------------------------- ---------- ---------- ------- ---------- ----------- ------
Plant and equipment hire 7,996 8,670
Investment property rental
income 3,002 2,914
Other rental income - property
development 4 51
Other rental income - land
promotion 143 96
------------------------------- ---------- ---------- ------- ---------- ----------- ------
179,756 144,414
------------------------------- ---------- ---------- ------- ---------- ----------- ------
5. Earnings per ordinary share
Earnings per ordinary share is calculated on the weighted average number of shares in issue being 133,386,168 (30 June 2022: 132,978,061). Diluted earnings per ordinary share is calculated on the weighted average number of shares in issue adjusted for the effects of any dilutive potential ordinary shares.
6. Dividends
Half year Half year Year
ended ended ended
30 June 30 June 31 December
2023 2022 2022
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
------------------------------------------------------ --------- --------- -----------
Amounts recognised as distributions to equity holders
in period:
Preference dividend on cumulative preference shares 11 11 21
Interim dividend for the year ended 31 December
2022 of 2.66p per share (2021: 2.42p) - - 3,540
Final dividend for the year ended 31 December 2022
of 4.00p per share (2021: 3.63p) 5,336 4,822 4,822
------------------------------------------------------ --------- --------- -----------
5,347 4,833 8,383
------------------------------------------------------ --------- --------- -----------
An interim dividend amounting to GBP3,910,000 (2022: GBP3,540,000) will be paid on 13 October 2023 to shareholders whose names are on the register at the close of business on 29 September 2023. The proposed interim dividend has not been approved at the date of the Consolidated Statement of Financial Position and so has not been included as a liability in these Financial Statements.
7. Tax
Half year Half year Year
ended ended ended
30 June 30 June 31 December
2023 2022 2022
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
-------------------------------------------------- --------- --------- -----------
Current tax:
UK corporation tax on profits for the period 4,886 5,733 8,690
Adjustment in respect of earlier periods (85) - (152)
-------------------------------------------------- --------- --------- -----------
Total current tax 4,801 5,733 8,538
-------------------------------------------------- --------- --------- -----------
Deferred tax:
Origination and reversal of temporary differences 1,004 338 (813)
Total deferred tax 1,004 338 (813)
-------------------------------------------------- --------- --------- -----------
Total tax 5,805 6,071 7,725
-------------------------------------------------- --------- --------- -----------
Corporation tax is calculated at 23.5% (31 December 2022: 19%) of the estimated assessable profit for the period being management's estimate of the weighted average corporation tax rate for the period. The Group's effective rate of tax of
23.3% is lower than the standard rate of corporation tax due to non-taxable property valuation increases.
In the Spring Budget 2021, the Government announced that from 1 April 2023 the main rate of UK corporation tax would increase to 25%. This new law was substantively enacted on 24 May 2021; deferred tax balances at the period end have been measured at 25% (2022: 25%), being the rate at which timing differences are expected to reverse.
8. Investment properties
Investment
Completed property
investment under
property construction Total
GBP'000 GBP'000 GBP'000
----------------------------------------------- ----------- ------------- ---------
Fair value
At 1 January 2023 (audited) 87,198 9,918 97,116
Subsequent expenditure on investment property 83 6,892 6,975
Disposals (928) - (928)
Transfer to assets held for sale (1,042) - (1,042)
Increase/(decrease) in fair value in period 1,405 (810) 595
----------------------------------------------- ----------- ------------- ---------
At 30 June 2023 (unaudited) 86,716 16,000 102,716
----------------------------------------------- ----------- ------------- ---------
Adjustment in respect of tenant incentives (2,213) - (2,213)
----------------------------------------------- ----------- ------------- ---------
Market value at 30 June 2023 84,503 16,000 100,503
----------------------------------------------- ----------- ------------- ---------
Fair value
At 1 January 2022 95,177 9,000 104,177 Subsequent expenditure on investment property (48) - (48) Disposals (3) - (3) Transfer from inventory 4,542 - 4,542 Transfer to assets held for sale - (11,371) (11,371) Increase in fair value in period 1,072 2,371 3,443 At 30 June 2022 (unaudited) 100,740 - 100,740 ----------------------------------------------- ----------- ------------- --------- Adjustment in respect of tenant incentives (2,132) - (2,132) Market value at 30 June 2022 98,608 - 98,608 ----------------------------------------------- ----------- ------------- --------- Fair value At 1 January 2022 95,177 9,000 104,177 Subsequent expenditure on investment property 8 9,265 9,273 Capitalised letting fees 2 26 28 Amortisation of capitalised letting fees (25) - (25) Disposals (7,500) - (7,500) Transfer from inventory 6,827 391 7,218 Transfer to assets held for sale - (11,134) (11,134) Increase/(decrease) in fair value in period (7,291) 2,370 (4,921) ----------------------------------------------- ----------- ------------- --------- At 31 December 2022 (audited) 87,198 9,918 97,116 Adjustment in respect of tenant incentives 2,234 - 2,234 Market value at 30 June 2023 89,432 9,918 99,350 ----------------------------------------------- ----------- ------------- ---------
At 30 June 2023, the Group had entered into contractual commitments for the acquisition and repair of investment property amounting to GBP711,000 (31 December 2022: GBPnil).
9. Borrowings
Half year Half year Year
ended ended ended
30 June 30 June 31 December
2022
2023 Restated(1) 2022
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
------------------ --------- ------------ -----------
Bank loans 85,000 60,000 65,000
Lease liabilities 6,309 1,350 1,033
------------------ --------- ------------ -----------
91,309 61,350 66,033
------------------ --------- ------------ -----------
(1) See 'Prior year restatements' for further details in the 'Basis of preparation and accounting policies'
Movements in borrowings are analysed as follows:
GBP'000
-------------------------------- --------
At 1 January 2023 66,033
Secured bank loans 35,000
Repayment of secured bank loans (15,000)
New leases 5,851
Repayment of lease liabilities (575)
At 30 June 2023 91,309
-------------------------------- --------
Bank loans include the Group's revolving loan facility which runs to January 2025 and is drawn for durations of up to six months.
10. Provisions for liabilities and charges
Since 31 December 2023, the following movements on provisions for liabilities and charges have occurred:
-- The road maintenance provision represents management's best estimate
of the Group's liability under a five-year rolling programme for
the maintenance of the Group's PFI asset. During the period GBP867,000
has been utilised and additional provisions of GBP583,000 have
been made, all of which were due to normal operating procedures.
-- The Land promotion provision represents management's best estimate
of the Group's liability to provide infrastructure and service
obligations, which remain with the Group following the disposal
of land. During the period, GBP887,000 has been utilised and additional
provisions of GBP23,000 have been made.
11. Defined benefit pension scheme
The main financial assumptions used in the valuation of the liabilities of the scheme under IAS 19 are:
30 June 30 June 31 December
2023 2022 2022
% % %
----------------------------------------------- ------- ------- -----------
Retail Prices Index (RPI) 3.30 3.90 3.20
Consumer Prices Index (CPI) 2.70 2.75 2.60
Rate in increase to pensions in payment liable
for Limited Price Indexation (LPI) 2.70 2.75 2.60
Revaluation of deferred pensions 2.70 2.75 2.60
Liabilities discount rate 5.40 3.90 4.90
----------------------------------------------- ------- ------- -----------
Amounts recognised in the Consolidated Statement of Comprehensive Income in respect of the scheme are as follows:
Half year Half year Year
ended ended ended
30 June 30 June 31 December
2023 2022 2022
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
----------------------------------------------------------- --------- --------- -----------
Service cost:
Ongoing scheme expenses 439 266 644
Net interest (income)/expense (196) 112 209
Pension Protection Fund 45 98 136
----------------------------------------------------------- --------- --------- -----------
Pension expenses recognised in profit or loss 288 476 989
----------------------------------------------------------- --------- --------- -----------
Remeasurement on the net defined benefit liability:
Return on plan assets (excluding amounts included
in net interest expense) 6,451 32,573 50,365
Actuarial losses/(gains) arising from changes
in demographic assumptions 986 - (1,070)
Actuarial losses/(gains) arising from experience
adjustments 2,138 (721) (721)
Actuarial gains arising from changes in financial
assumptions (7,526) (50,694) (63,568)
Actuarial losses/(gains) recognised in other comprehensive
income 2,049 (18,842) (14,994)
----------------------------------------------------------- --------- --------- -----------
Total 2,337 (18,366) (14,005)
----------------------------------------------------------- --------- --------- -----------
The amount included in the Statement of Financial Position arising from the Group's obligations in respect of the scheme is as follows:
Half year Half year Year
Ended ended ended
30 June 30 June 31 December
2023 2022 2022
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
------------------------------------ --------- --------- -----------
Present value of scheme obligations 147,410 168,369 152,576
Fair value of scheme assets (155,518) (176,730) (158,764)
------------------------------------ --------- --------- -----------
(8,108) (8,361) (6,188)
------------------------------------ --------- --------- -----------
12. Related party transactions
There have been no material transactions with related parties during the period.
There have been no material changes to the related party arrangements as reported in note 28 to the Annual Report and Financial Statements for the year ended 31 December 2022.
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.
13. SHARE CAPITAL
Half year Half year Year
ended ended ended
30 June 30 June 31 December
2023 2022 2022
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
----------------------------------------------------- --------- --------- -----------
400,000 5.25% cumulative preference shares of
GBP1 each (31 December 2022: 400,000) 400 400 400
133,984,551 ordinary shares of 10p each (31 December
2022: 133,627,922) 13,398 13,347 13,363
----------------------------------------------------- --------- --------- -----------
13,798 13,747 13,763
----------------------------------------------------- --------- --------- -----------
14. Cash generated from operations
Half year Half year Year
ended ended ended
30 June 30 June 31 December
2023 2022 2022
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
--------------------------------------------------- --------- --------- -----------
Profit before tax 24,959 38,777 45,595
Adjustments for:
Amortisation of PFI asset 279 293 579
Goodwill impairment 102 102 203
Depreciation of property, plant and equipment 2,125 1,926 3,957
Depreciation of right-of-use assets 287 298 597
Revaluation (increase)/decrease in investment
properties (595) (3,443) 4,921
Amortisation of capitalised letting fees - - 25
Share-based payment expense 744 595 1,241
Pension scheme credit (3,969) (1,747) (3,422)
(Profit)/loss on disposal of property, plant and
equipment (excluding equipment held for hire) 14 (113) (176)
Profit on disposal of equipment held for hire (596) (389) (1,070)
Loss on disposal of right-of-use assets - 1 -
Profit on disposal of investment properties (85) - (646)
Loss on disposal of assets held for sale - - 150
Gain on disposal of joint ventures - - (667)
Finance income (1,769) (535) (1,641)
Finance costs 2,495 883 2,503
Share of profit of joint ventures and associates (188) (10,376) (9,079)
--------------------------------------------------- --------- --------- -----------
Operating cash flows before movements in equipment
held for hire 23,803 26,272 43,070
Purchase of equipment held for hire (2,538) (3,450) (5,454)
Proceeds on disposal of equipment held for hire 722 550 1,343
--------------------------------------------------- --------- --------- -----------
Operating cash flows before movements in working
capital 21,987 23,372 38,959
Increase in inventories (5,886) (22,140) (63,701)
Increase in receivables (6,005) (7,619) (3,763)
Increase/(decrease) in contract assets 1,836 (5,205) (11,701)
(Increase)/decrease in payables (3,252) 9,413 24,684
(Increase)/decrease in contract liabilities (2,540) 2,697 (1,027)
Cash generated from operations 6,140 518 (16,549)
--------------------------------------------------- --------- --------- -----------
Net debt is an alternative performance measure used by the Group and comprises the following(1) :
Analysis of net debt(1) : Cash and cash equivalents 20,538 21,526 17,401 Bank overdrafts - - - ------------------------------ -------- -------- -------- Net cash and cash equivalents 20,538 21,526 17,401 Bank loans (85,000) (60,000) (65,000) Lease liabilities (6,309) (1,350) (1,033) Net debt (70,771) (39,824) (48,632) ------------------------------ -------- -------- --------
(1) See 'Prior year restatements' for further details in the 'Basis of preparation and accounting policies'
15. GROUP RISKS AND UNCERTAINTIES
The Directors consider that the principal risks and uncertainties which could have a material impact on the Group's performance over the remaining six months of the 2023 financial year remain consistent with those set out in the Strategic Report on pages 52 to 56 of the Group's Annual Report and Financial Statements. These risks and uncertainties include:
Safety; Environmental and climate change; Economic; People and culture; Funding; Cyber; Pensions; Construction contracts; Property assets; Property development; Land sourcing; Land demand; Political.
The Group is mindful of sustained inflation, increasing interest rates and the low levels of growth in the UK economy, and particularly the impact this has on the residential housing market. This continues to be mitigated by maintaining a robust balance sheet, prudent levels of gearing and being selective of the opportunities we progress.
The Group operates a system of internal control and risk management in order to provide assurance that it is managing risk while achieving our business objectives. No system can fully eliminate risk and therefore the understanding of operational risk is central to the management process within Henry Boot. The long-term success of the Group depends on the continual review, assessment and control of the key business risks it faces.
16. Approval
The issue of these statements was formally approved by a duly appointed committee of the Board on 19 September 2023.
RESPONSIBILITY STATEMENTS OF THE DIRECTORS
The Directors confirm that these condensed interim Financial Statements have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and that the interim management report includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8, namely:
-- an indication of important events that have occurred during the
first six months and their impact on the condensed set of financial
statements, and a description of the principal risks and uncertainties
for the remaining six months of the financial year; and
-- material related-party transactions in the first six months and
any material changes in the related-party transactions described
in the last Annual Report.
The Directors of Henry Boot PLC are listed in the Henry Boot PLC Annual Report for the year ended 31 December 2022. A list of current Directors is maintained on the Henry Boot PLC Group website: www.henryboot.co.uk .
On behalf of the Board
T A ROBERTS D L LITTLEWOOD Director Director 19 September 2023 19 September 2023
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END
IR UWOBROUUKAAR
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