Cohesive Consistent Confident

Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Financial Statements
Notes to the Financial Statements continued
for the year ended 31 December 2015
12. Property, plant and equipment continued
The following table provides an analysis of the fair values of land and buildings by the degree to which the fair value is observable:
Level 1
£’000
Level 2
£’000
Level 3
£’000
2015
£’000
2014
£’000
Increase/
(decrease)
in fair
value in
year
Freehold land — — 60 60 60 —
Buildings — — 6,825 6,825 6,715 110
Total fair value — — 6,885 6,885 6,775 110
The Group’s policy is to recognise transfers into and out of fair value hierarchy levels as of the date of the event or change in
circumstances that causes the transfer. The Directors determine the applicable hierarchy that land and buildings fall into by
assessing the level of comparable evidence in the market which that asset falls into and the inherent level of activity. As at the
reporting date and throughout the year, all land and buildings were determined to fall into Level 3 and so there were no transfers
between hierarchies.
Explanation of the fair value hierarchy:
• Level 1 – fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or
liabilities that the entity can access at the measurement date;
• Level 2 – fair value measurements are those derived from the use of a model with inputs (other than quoted prices included in
Level 1) that are observable from directly or indirectly observable market data; and
• Level 3 – fair value measurements are those derived from use of a model with inputs that are not based on observable market
data.
Information about fair value measurements using significant unobservable inputs (Level 3):
Class
Buildings
Valuation technique
Yield
Rental value per sq ft (£) – weighted average 5.72
– low 2.34
– high 12.51
Yield % – weighted average 8.43
– low 7.02
– high 10.31
The sensitivity analysis to significant changes in unobservable inputs relating to fair value measurements (Level 3) are set out below:
Impact on
valuation
£’000
Buildings
Yield – improvement by 0.5% 398
Rental value per sq ft – increase by £1 average 1,115
The sensitivities have been selected by management on the basis that they consider these measures to be a reasonable
expectation of likely changes to the significant unobservable inputs in the next twelve months.
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