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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 13. Investment properties continued The sensitivity analysis to significant changes in unobservable inputs relating to fair value measurements (Level 3) are set out below: Impact on valuation 2015 £’000 Industrial Leisure Mixed-use Residential Retail Yield – improvement by 0.5% 898 979 3,556 — 1,855 Rental value per sq ft – increase by £1 average 2,820 768 4,475 — 2,520 Tenancy discount – increase by 1% — — — 50 — Impact on valuation 2014 £’000 Industrial Leisure Mixed-use Residential Retail Yield – improvement by 0.5% 1,125 608 3,483 — 1,520 Rental value per sq ft – increase by £1 average 3,059 309 3,982 — 1,476 Tenancy discount – increase by 1% — — — 44 — The sensitivities have been selected by management on the basis that it considers these measures to be a reasonable expectation of likely changes to the significant unobservable inputs in the next twelve months. The property rental income earned by the Group from its occupied investment property, all of which is leased out under operating leases, amounted to £8,216,000 (2014: £8,026,000). Direct operating expenses arising on investment property generating rental income in the year amounted to £540,000 (2014: £327,000). Direct operating expenses arising on the investment property which did not generate rental income during the year amounted to £1,023,000 (2014: £1,101,000). At 31 December 2015, the Group had entered into contractual commitments for the acquisition and repair of investment property amounting to £776,000 (2014: £11,167,000). Investment property under construction Class Fair value hierarchy Industrial Level 3 £’000 Land Level 3 £’000 Leisure Level 3 £’000 Office Level 3 £’000 Retail Level 3 £’000 Fair value At 1 January 9,344 6,248 1,833 4,283 20,735 42,443 41,867 Subsequent expenditure on investment property 6,150 184 1,711 1,245 2,441 11,731 10,351 Capitalised letting fees 56 — — — 81 137 73 Amortisation of capitalised letting fees (5) — — — (2) (7) (18) Disposals (2,577) (1,944) — — (408) (4,929) (2,493) Transfer to assets held for sale (11,812) — — — — (11,812) — Transfer to inventories (4,354) (2,376) — — (544) (7,274) (3,081) Transfers to completed investment property — — (3,940) (1,575) (1,777) (7,292) (1,405) (Decrease)/increase in fair value in year 3,716 — 396 547 (6,039) (1,380) (2,851) At 31 December 518 2,112 — 4,500 14,487 21,617 42,443 Adjustment in respect of tenant incentives — — — — — — — Adjustment in respect of tax benefits — — — — — — — Market value at 31 December 518 2,112 — 4,500 14,487 21,617 42,443 2015 £’000 2014 £’000 112
Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2015 www.henryboot.co.uk Stock Code: BHY 13. Investment properties continued Information about fair value measurements using significant unobservable inputs (Level 3): 2015 Class Industrial Land Leisure Office Retail Valuation technique Residual Sales comparison Residual Residual Residual Rental value per sq ft (£) – weighted average — — — 26.00 14.55 – low — — — 26.00 10.00 – high — — — 26.00 33.65 Yield % – weighted average — — — 6.25 5.90 – low — — — 6.25 4.65 – high — — — 6.25 7.49 Costs to complete per sq ft (£) – weighted average — 0.79 — 216.65 154.82 – low — 0.79 — 216.65 64.69 – high — 0.79 — 216.65 225.76 Land value per acre (£’000) – weighted average 120 201 — — — – low 120 102 — — — – high 120 396 — — — Class Industrial Land Leisure Office Retail Valuation technique Residual Sales comparison Residual Residual Residual Rental value per sq ft (£) – weighted average 4.54 — 8.47 25.00 15.79 – low 4.25 — 8.47 25.00 9.09 – high 6.30 — 8.47 25.00 33.65 Yield % – weighted average 7.17 — 5.50 6.25 5.99 – low 6.60 — 5.25 6.00 4.65 – high 7.50 — 5.75 6.50 7.00 Costs to complete per sq ft (£) – weighted average 41.76 3.17 70.57 216.15 161.98 – low 34.24 0.78 70.57 216.15 83.97 – high 70.99 5.23 70.57 216.15 225.76 Land value per acre (£’000) – weighted average — 117 — — — – low — 24 — — — – high — 971 — — — 2014 Shareholder Information Financial Statements Governance Strategic Report Overview 113
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