Henry Boot : 2023 Annual Report and Financial Statements

Henry Boot has been at the forefront of Real Estate in the UK for 138 years and is established as one of the leading land management, property investment and development, and construction companies in the country.

Our premium portfolio is focused on high quality projects in prime locations with exemplary sustainability credentials.

OUR FUTURE

Our focus on today

and our future...

OUR LEGACY

...builds on our past and strengthens our legacy.

CONTENTS

OVERVIEW

STRATEGIC REPORTGOVERNANCE

FINANCIALS

SHAREHOLDERS

Financial Highlights

Group Revenue

£359.4m

Return on Capital

Employed

9.9%

Net Asset Value per

Ordinary Share

306p

Profit Before Tax

£37.3m

Capital Employed

£416.7m

Dividend per Ordinary Share

7.33p

Responsible Business Highlights

People

People are at the heart of our business. We succeed

by investing in our own people, improving internal communications, creating a sense of shared purpose, and via policies that include industry-leading approaches on equality, diversity and inclusion (EDI), continuing professional development (CPD), pay and reward structures, employee wellbeing, and health and safety.

Highlights

• We launched our Health and Wellbeing Strategy which is guided by the vision that our people are healthy, fulfilled, and feel supported and empowered. A broad range of resources, events and support was provided throughout the year.
• Nearly 50 of our people completed Mental Health First Aid training to provide support to our people and partners.
• We increased the gender diversity of our workforce to 28% female and reduced our gender pay gap to 20.98%

Partners

We will succeed by developing long term, productive

partnerships with those outside the business, through fair terms and conditions (T&Cs), best practice, safety, and through our unwavering commitment to high standards, quality and delivery

- in everything we do.

Highlights

• We engaged with experts at the Living Wage Foundation to understand the requirements for us to secure accreditation.
• We engaged business membership organisations including the UK Green Building Council, Business in the Community (BITC) and the Yorkshire Climate Action Coalition to collaborate on key industry issues.

Places

We generate impact through placemaking: via our charitable

and community work, as well as by a commitment to creating healthy, high quality communities and neighbourhoods that people can live and work in - and enjoy, for generations.

Highlights

• We concluded our charity partnership with Place2Be raising over £55,000 for this amazing charity.
• We contributed over £225,000 of value to our charity and community partners across our communities.
• Our people contributed over 3,000 volunteering hours to a diverse range of community and charity partners.
• We were a founding member of the Sheffield Pride of Place Board.
• We developed our Early Careers Strategy which is due to be published in 2024.

Planet

Our positive impacts are delivered not only through

the sustainability targets in our Responsible Business Strategy, but also by adopting a sustainable mindset across the whole Group. We measure success not just

by short-term targets but by the lasting impact our sustainable approach generates.

Highlights

• We reduced our direct greenhouse gas (GHG) emissions by 14% from our 2019 baseline in alignment with our decarbonisation trajectory.
• We reduced our electricity usage by 23% and gas usage by 39%, from our 2019 baselines.
• We engaged the Carbon Trust to support the Group to monitor our Scope 3 GHG emissions.
• Our people-led Group Climate Forum monitors delivery of our net zero carbon (NZC) framework and oversees knowledge transfer and innovation across the Group.

OVERVIEW

STRATEGIC REPORTGOVERNANCE

FINANCIALS

SHAREHOLDERS

PETER MAWSON CHAIR

I am pleased to report that we remain in a strong financial position and have continued to make good progress against our medium term objectives".

£359.4m

REVENUE (2022: £341.4M)

£37.3m

PROFIT BEFORE TAX (2022: £45.6M)

Henry Boot has performed resiliently in 2023, delivering a profit before tax (PBT) of £37.3m (2022: £45.6m) or on an underlying profit basis £36.7m (2022: £56.1m), after excluding revaluation movements on completed investment property. Throughout last year, the Group traded in a slowing economy, facing stubbornly high inflation and rising interest rates. Despite these conditions, our focus on high quality land and development in prime locations has meant the Group delivered an increase in overall sales, growing revenue to £359.4m (2022: £341.4m).

As previously reported, we expect a lag in performance for 2024 due to the time it takes for projects and sales to complete, and we remain cautious of the near-term trading environment. Whilst believing that it is crucial that any new government deals with a reform of the planning system,

the outlook for both inflation and interest rates are improving, supported by recent reductions in mortgage rates. With this in mind, it feels as though the UK economy has turned a corner, leaving us with continued conviction in achieving our medium term growth and return targets.

The Group remains in a strong financial position, with a robust balance sheet and NAV per share increasing by 3.7% to 306p (2022: 295p) or by 3.4% to

300p (2022: 290p), excluding the defined benefit pension scheme surplus. Net debt increased to £77.8m (2022: £48.6m) as we maintained our focus on investing in our prime land portfolio, building out our high quality committed development programme and continuing to grow our premium housebuilder. Additionally, there was

continued investment to support our long term ambitions, including the relocation of our head office as well as investment in our people, marketing and technology. This resulted in our gearing moving to 19.0%, which remains within our optimum stated range of 10-20%.

On other strategic objectives that support our long term ambitions of the business, I am pleased to report:

• After launching our Responsible Business Strategy in 2022, we continue to make great progress against our targets. In 2023, we launched our Health and Wellbeing Strategy which includes resources and guidance on a range of key topics, such as neurodiversity and mental health.

• In regard to reducing our total direct greenhouse gas emissions (Scopes 1 and 2), at the end of 2023 there was a 14% reduction against the 2019 baseline, and we are on track to hit net zero carbon (NZC) by 2030.
• In November 2023, we relocated our head office to the Isaacs Building in Sheffield city centre. Our new HQ supports the aim to reduce our carbon footprint and the goal of achieving NZC by 2030, with an expected emission reduction of 79% compared with the former head office. On top of this, it offers a far superior working environment which not only encourages greater collaboration and cohesiveness across our teams but also helps us retain and attract talent.

• The results of our annual Group Employee Engagement Survey were positive, achieving an employee Net Promoter Score of 30 (2022:39). This allows us to gain feedback from our people so we can continually improve our employee experience, and despite a slight decrease in our eNPS, the score is considered very good and 46 points higher than construction and heavy industry averages, while continuing to show very high levels of advocacy, pride and loyalty in Henry Boot.
• Finally, during 2023, we began to assess our brand value proposition by completing a series of internal and external workshops. As a result, I am pleased to say that in early summer we will be launching our refreshed brand, which focuses on improving customer experience and giving greater clarity to our business model.

The Board proposes to pay a final dividend of 4.40p per share which, together with the 2.93p interim dividend, gives a total of 7.33p (2022: 6.66p), an increase of 10.0% for the year. Subject to approval at the AGM, this will be paid on 31 May 2024 to shareholders on the register at the close of business on 3 May 2024.

On behalf of the Board, I would like to thank everyone at Henry Boot for their dedication and hard work. Once again, their expertise and high levels of engagement have been instrumental in the business producing, against a challenging backdrop, resilient results.

PETER MAWSON

CHAIR

Read more about The relocation of our Head Office on page 19:

NOTES:

This report contains the following alternative performance measures (APM): Underlying profit. Return on Capital Employed. Net Asset Value (NAV) per share. Net (debt)/cash. Total Property Return. Total Accounting Return.

More details can be found on page 47.

OVERVIEW

STRATEGIC REPORTGOVERNANCE

FINANCIALS

SHAREHOLDERS

Industrial & logistics

A market in which we have a strong track record of delivering prime industrial and logistics units across England

• In 2023 the Group completed on 661,000 sq ft of I&L development at a total combined GDV of £104m (HBD share: £89m)
• Henry Boot has a wealth of experience in this market and currently has 59% of its £1.3bn development pipeline sitting within I&L opportunities

Residential

A market in which we continue to grow our presence through one of the largest strategic land portfolios in the country and a growing premium housebuilder

• The Group's land portfolio increased to over 100,000 plots in 2023
• Our jointly owned housebuilder, Stonebridge Homes, increased its annual sales by 43% to 251 homes, whilst simultaneously growing its land bank to over 1,500 plots

Urban development

A market that continues to recover from both the social and economic impact of COVID, with the continued belief that more people will be living in urban areas than rural by 2050

We are currently developing city centre projects in both Birmingham and Manchester:

• Setl the 102 premium apartment scheme in Birmingham (£32m GDV)
• Island, a 91,000 sq ft NZC office building in Manchester (£33m GDV our share)

... BUILDS ON OUR PAST AND STRENGTHENS OUR LEGACY

Evolving our brand

As a long-standing business with 138 years of history, Henry Boot has always recognised the importance of embracing change.

OVERVIEW

Whether that be due to market conditions, ever-evolving partner or customer expectations, innovations in technology or simply to seize an opportunity, our aim has always been to remain distinct, yet relevant.

In a post-COVID, challenging economy, this need to evolve has never been more prevalent as brands are continually scrutinised for what 'value' they deliver, not just for shareholders but for all their stakeholders including investors, partners, employees and the communities in which they work.

Like any progressive business that seeks buy-in from others in order to succeed, our impact is now measured in more ways than financial performance alone. We now measure the impact of our work on our people, our partners, our places and our planet. Our brand needs to connect with our target audiences and it needs to stand for something in order to resonate in the hearts and minds of the people we work with and for; and especially with the talent we need to attract in order to progress, grow and succeed.

In 2023 we have undertaken an extensive rebrand exercise to better understand what our 'value' is, what we stand for and how we activate and articulate our brand as a modern, progressive and inclusive business.

We began this journey by facilitating two significant projects. The first was the BVP (brand value proposition) project, an externally facing body of work to discover what 'value' we provide for our external audiences and, secondly, the EVP (employer value proposition) project to unearth what value as an employer we provide for all our people, aside from salaries.

Brand Value Proposition

The BVP project started with diagnosis and research canvassing insights from a broad range of external stakeholders. We then took the findings of that research to our people via three internal workshops to inform how we articulate our positioning, purpose, values, key messaging and our tone of voice. The participants in the workshops were selected from across the group of businesses, from a range of positions and roles, seniority, length of service, ethnicity and gender, to ensure the broadest representation possible.

Employer Value

Proposition

In quick succession following the BVP, we quickly launched our second project, the EVP. Again, we canvassed the opinion of another large group of people from across our business to articulate the reasons why people should join Henry Boot and reasons why they should stay. We also explored employee mindsets and personas to help improve internal communications and employee engagement. The insight gathered has informed our talent attraction and talent retention strategies as well as practical business-as-usual people needs such as our on-boarding process, health and wellbeing, skills development and career progression.

What's next?

In 2024, we plan to implement a refreshed corporate brand identity for all our businesses which will be showcased in our next Annual Report.

STRATEGIC REPORTGOVERNANCE

FINANCIALS

SHAREHOLDERS