REG - Boot(Henry) PLC - 2014 Half-yearly Results <Origin Href="QuoteRef">BHY.L</Origin> - Part 2
29/10/2014 14:40
- Part 2: For the preceding part double click ID:nRSV7780Pa
Group
development development Construction overheads Eliminations Total
Revenue £'000 £'000 £'000 £'000 £'000 £'000
External sales 37,623 37,655 78,516 - - 153,794
Inter-segment sales 296 8 3,726 656 (4,686) -
Total revenue 37,919 37,663 82,242 656 (4,686) 153,794
Operating profit/(loss) 3,056 11,896 8,180 (4,112) 6 19,026
Finance income 1,629 750 1,398 25,245 (28,328) 694
Finance costs (7,202) (1,506) (580) (3,726) 11,488 (1,526)
Share of profit of joint ventures 183 - - - - 183
Profit/(loss) before tax (2,334) 11,140 8,998 17,407 (16,834) 18,377
Tax (173) (2,587) (2,228) (150) (5) (5,143)
Profit/(loss) for the year (2,507) 8,553 6,770 17,257 (16,839) 13,234
30 June 30 June 31 December
2014 2013 2013
Unaudited Unaudited Audited
£'000 £'000 £'000
Segment assets
Property investment and development 168,162 173,819 172,749
Land development 113,751 110,035 113,251
Construction 31,156 32,142 27,117
Group overheads and other 1,975 2,300 2,118
315,044 318,296 315,235
Unallocated assets
Deferred tax assets 5,989 6,942 5,411
Cash and cash equivalents 4,848 3,267 15,587
Total assets 325,881 328,505 336,233
Segment liabilities
Property investment and development 3,944 4,903 4,280
Land development 18,551 21,289 22,976
Construction 42,222 46,062 39,248
Group overheads and other 1,790 2,089 1,966
66,507 74,343 68,470
Unallocated liabilities
Current tax liabilities 2,652 1,236 2,505
Current borrowings 31,834 36,748 46,492
Non-current borrowings 6,143 5,346 5,207
Retirement benefit obligations 22,683 22,277 20,075
Total liabilities 129,819 139,950 142,749
Total net assets 196,062 188,555 193,484
4. Earnings per ordinary share
Earnings per ordinary share is calculated on the weighted average number of
shares in issue. Diluted earnings per ordinary share is calculated on the
weighted average number of shares in issue adjusted for the effects of any
dilutive potential ordinary shares.
5. Dividends
Half year Half year Year
ended ended ended
30 June 30 June 31 December
2014 2013 2013
Unaudited Unaudited Audited
£'000 £'000 £'000
Amounts recognised as distributions to equity holders in year:
Preference dividend on cumulative preference shares 10 10 21
Interim dividend for the year ended 31 December 2013 of 1.95p per share (2012: 1.80p) - - 2,551
Final dividend for the year ended 31 December 2013 of 3.15p per share (2012: 2.90p) 4,115 3,787 3,786
4,125 3,797 6,358
An interim dividend amounting to £2,756,000 (2013: £2,551,000) will be paid on
24 October 2014 to shareholders whose names are on the register at the close
of business on 26 September 2014. The proposed interim dividend has not been
approved at the date of the Consolidated Statement of Financial Position and
so has not been included as a liability in these Financial Statements.
6. Tax
Half year Half year Year
ended ended ended
30 June 30 June 31 December
2014 2013 2013
Unaudited Unaudited Audited
£'000 £'000 £'000
Current tax:
UK corporation tax on profits for the year 2,201 1,534 4,064
Adjustment in respect of earlier years 201 24 (13)
Total current tax 2,402 1,558 4,051
Deferred tax:
Origination and reversal of temporary differences 180 259 1,092
Total deferred tax 180 259 1,092
Total tax 2,582 1,817 5,143
Corporation tax is calculated at 21.5% (2013: 23.25%) of the estimated
assessable profit for the period being management's estimate of the weighted
average corporation tax rate for the period.
Deferred tax balances at the period end have been measured at 21% and 20%
(June 2013: 23%), being the rates expected to be applicable at the date the
actual tax will arise.
7. Investment properties
Investment
Completed property
investment under
property construction Total
£'000 £'000 £'000
Fair value
At 1 January 2013 96,149 44,226 140,375
Subsequent expenditure on investment property 626 3,212 3,838
Capitalised letting fees 68 33 101
Amortisation of capitalised letting fees (30) (5) (35)
Disposals (202) (175) (377)
Transfer to inventories (193) (648) (841)
(Decrease)/increase in fair value in year (711) 199 (512)
At 30 June 2013 (unaudited) 95,707 46,842 142,549
Adjustment in respect of tenant incentives 4,543 - 4,543
Adjustment in respect of tax benefits (671) - (671)
Market value at 30 June 2013 99,579 46,842 146,421
Fair value
At 1 January 2013 96,149 44,226 140,375
Subsequent expenditure on investment property 1,297 4,903 6,200
Capitalised letting fees 169 48 217
Amortisation of capitalised letting fees (87) (1) (88)
Disposals (361) (1,528) (1,889)
Transfers to assets held for sale (10,511) - (10,511)
Transfer to inventories (68) (279) (347)
Transfers within investment property 5,040 (5,040) -
Decrease in fair value in year (1,101) (462) (1,563)
At 31 December 2013 (audited) 90,527 41,867 132,394
Subsequent expenditure on investment property 2,027 1,303 3,330
Capitalised letting fees 35 24 59
Amortisation of capitalised letting fees (14) (1) (15)
Disposals (17) (100) (117)
Transfers to assets held for sale (1,100) - (1,100)
Transfer to inventories (80) (150) (230)
Transfers within investment property 1,405 (1,405) -
Increase/(decrease) in fair value in year 2,477 (638) 1,839
At 30 June 2014 (unaudited) 95,260 40,900 136,160
Adjustment in respect of tenant incentives 2,610 - 2,610
Adjustment in respect of tax benefits (474) - (474)
Market value at 30 June 2014 97,396 40,900 138,296
At 30 June 2014, the Group had entered into contractual commitments for the
acquisition and repair of investment property amounting to £4,539,000 (31
December 2013: £321,000).
8. Borrowings
Half year Half year Year
ended ended ended
30 June 30 June 31 December
2014 2013 2013
Unaudited Unaudited Audited
£'000 £'000 £'000
Bank overdrafts 50 5,254 -
Bank loans 33,114 33,720 48,746
Government loans 4,813 2,920 2,953
Loans from related parties - 200 -
37,977 42,094 51,699
Movements in borrowings are analysed as follows:
£'000
At 1 January 2014 51,699
Secured bank loans 12,000
Repayment of secured bank loans (27,632)
Government loans 2,160
Repayment of Government loans (300)
Movement in bank overdrafts 50
At 30 June 2014 37,977
9. Provisions for liabilities and charges
Since 31 December 2013 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 £693,000 has been utilised and additional provisions of £215,000 have been made, all of which were due to normal operating procedures; and
· the Land development provision represents management's best estimate of the Group's liability to provide infrastructure and service obligations, which remain with the Group following the disposal of land. During the period £2,811,000 has been utilised and additional provisions of £314,000 have been made.
10. Defined benefit pension scheme
The assumptions that have been used in the calculations of the defined benefit
pension scheme by its actuary were as follows:
30 June 30 June 31 December
2014 2013 2013
% % %
Retail Prices Index (RPI) 3.00 2.75 3.00
Retail Prices Index 'Jevons' (RPIJ) 2.40 - 2.40
Consumer Prices Index (CPI) 2.00 2.00 2.00
Pensionable salary increases 1.00 1.00 1.00
Rate in increase to pensions in payment liable for Limited Price Indexation (LPI) 2.40 2.75 2.40
Revaluation of deferred pensions 2.00 2.00 2.00
Liabilities discount rate 4.30 4.80 4.50
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
2014 2013 2013
Unaudited Unaudited Audited
£'000 £'000 £'000
Current service cost (591) (596) (1,200)
Ongoing scheme expenses (165) (199) (340)
Net interest expense (428) (654) (1,288)
Pension Protection Fund (106) (103) (206)
Pension expenses (1,290) (1,552) (3,034)
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
2014 2013 2013
Unaudited Unaudited Audited
£'000 £'000 £'000
Present value of scheme obligations 162,112 153,628 156,254
Fair value of scheme assets (139,429) (131,351) (136,179)
22,683 22,277 20,075
11. Related party transactions
There have been no material transactions with related parties during the
period.
There have been no material changes to the related party arrangements as
reported in note 29 of the Annual Report and Financial Statements for the year
ended 31 December 2013.
Transactions between the Company and its subsidiaries, which are related
parties, have been eliminated on consolidation and are not disclosed in this
note.
12. Key risks
In common with all organisations, the Group faces risks which may affect its
performance. These are general in nature and include: obtaining business on
competitive terms, retaining key personnel, successful integration of new
business streams and market competition.
The Group operates a system of internal control and risk management in order
to provide assurance that we are managing risk whilst achieving our business
objectives. No system can fully eliminate risk and therefore the understanding
of operational risk is central to the management process within Henry Boot.
The long-term success of the Group depends on the continual review, assessment
and control of the key business risks it faces.
The Directors do not consider that the principal risks and uncertainties have
changed since the publication of the Annual Report for the year ended 31
December 2013. To enable shareholders to appreciate what the business
considers are the main operational risks, they are briefly outlined below:
Development
· Not developing marketable assets for both tenants and the investment market on time and cost-effectively.
· Rising market yields on completion making development uneconomic.
· Construction and tenant risk which is not matched by commensurate returns on development projects.
Land
· The inability to source, acquire and promote land would have a detrimental effect on the Group's strategic land bank and income stream.
· Prices may be affected by changes in Government policy, legislation, planning environment and taxation.
· A dramatic change in house builder funding sentiment and demand for housing can have a marked change on the demand and pricing profile for land.
Investments
· Identifying and retaining assets which have the best opportunity for long-term rental and capital growth or, conversely, selling those assets where capital values have been maximised.
Interest rates
· Significant upward changes in interest rates affect interest costs, yields and asset prices and reduce demand for commercial and residential property.
Treasury
· The lack of readily available funding to either the Group or third parties to undertake property transactions can have a significant impact on the marketplace in which the Group operates.
Planning
· Increased complexity, cost and delay in the planning process may slow down the project pipeline.
· Significant changes in demand for housing and the attendant decline in land prices may have a detrimental effect on the supply of land being brought to market by landowners.
· Changes in Government or Government policy, as happened in 2010, towards planning policies could impact on the speed of the consent process or the value of sites.
Personnel
· Attraction and retention of the highest calibre people with the appropriate experience is crucial to our long-term growth in the highly competitive labour markets in which the Group works.
Pension
· The Group operates a defined benefit pension scheme which has been closed to new members for some time. Whilst the trustees have a prudent approach to the mix of both return seeking and fixed interest assets, times of economic instability can have an impact on those asset values with the result that the reported pension deficit increases. Furthermore, the relationship between implied inflation and long-term gilt yields has a major impact on the pension deficit and the business has little control over those
variables.
Environmental
· The Group is inextricably linked to the property sector and environmental considerations are paramount to our success.
· Stricter environmental legislation will increase development and house building costs and therefore could impact on profitability if capital and land values do not increase to reflect this more efficient energy performance.
Economic
· The Group operates solely in the UK and is closely allied to the real estate, house building and construction sectors. A strong economy with strong tenant demand is vital to create long-term growth in rental and asset values, whilst at the same time creating a healthy market for the construction and plant hire divisions. The much publicised reductions in public spending, the more difficult planning regime and comparatively low levels of property lending could have an impact on the Group's business.
· The referendum on Scottish independence gives rise to uncertainty over the economic, taxation and legislative impact of a vote for independence. We have £16m of assets in Scotland which could be affected by this change.
Counterparty
· Depends on the stability of customers, suppliers, funders and development partners to achieve success.
13. Approval
At the Board meeting on 21 August 2014 the Directors formally approved the
issue of these statements.
RESPONSIBILITY STATEMENTS OF THE DIRECTORS
We confirm that to the best of our knowledge:
a) the unaudited Condensed Consolidated Financial Statements have been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the European Union;
b) the Half-yearly Report includes a fair review of the information required by Section DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and
c) the Half-yearly Report includes a fair review of the information required by Section DTR 4.2.8R (disclosure of related parties transactions and changes therein).
The Directors of Henry Boot PLC are listed in the Henry Boot PLC Annual Report
for the year ended 31 December 2013. A list of current Directors is maintained
on the Henry Boot PLC Group website: www.henryboot.co.uk.
On behalf of the Board
E J BOOTDirector21 August 2014 J T SUTCLIFFE Director21 August 2014
J T SUTCLIFFE
Director
21 August 2014
This information is provided by RNS
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