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
Leasing
Where the Group acts as a lessee in the case of operating leases, rentals payable are recognised on a straight line basis over the
term of the relevant lease.
Inventories
Inventories are stated at the lower of cost and estimated net realisable value and are subject to regular impairment reviews.
Inventories comprise developments in progress, land held for development or sale, options to purchase land and planning
promotion agreements.
• Developments in progress includes properties being developed for onward sale.
• Land held for development or sale is land owned by the Group that is promoted through the planning process in order to gain
planning permission, adding value to the land.
• Options to purchase land are agreements that the Group has entered into with the landowners whereby the Group has the option
to purchase the land within a limited time frame. The land owners are not generally permitted to sell to any other party during this
period, unless agreed to by the Group. Within the time frame the Group promotes the land through the planning process at its
expense in order to gain planning permission. Should the Group be successful in obtaining planning permission it would trigger
the option to purchase and subsequently sell on the land.
• Planning promotion agreements are agreements that the Group has entered into with the landowners whereby the Group acts as
an agent to the land owners in exchange for a fee of a set percentage of the proceeds or profit of the eventual sale. The Group
promotes the land through the planning process at its own expense. If the land is sold the Group will receive a fee for its services.
• The Group incurs various costs in promoting land held under planning promotion agreements, in some instances the agreements
allow for the Group to be reimbursed certain expenditure following the conclusion of a successful sale. These costs are held in
inventory at the lower of cost and estimated net realisable value. Upon reimbursement, inventory is reduced by the value of the
reimbursed cost.
Inventories comprise all the direct costs incurred in bringing the individual inventories to their present state at the reporting date,
including any reimbursable promotion costs, less the value of any impairment losses.
Impairment reviews are considered on a site-by-site or individual development basis by management at each reporting date; writedowns
or reversals are made to ensure that inventory is then stated at the lower of cost or net realisable value.
Net realisable value is considered in the light of progress made in the planning process, feedback from local planning officers,
development appraisals and other external factors that might be considered likely to influence the eventual outcome. Where it is
considered that no future economic benefit will arise, costs are written off to the Statement of Comprehensive Income.
Where individual parcels of land held for development are disposed of out of a larger overall development site, costs are
apportioned based on an acreage allocation after taking into account the cost or net realisable value of any remaining residual land
which may not form part of the overall development site or which may not be available for development. Where the Group retains
obligations attached to the development site as a whole, provisions are made relating to these disposals on the same acreage
allocation basis.
Retirement benefit costs
Payments to the defined contribution retirement benefit scheme are charged as an expense as they fall due.
The cost of providing benefits under the defined benefit retirement scheme is determined using the Projected Unit Credit Method,
with actuarial calculations being carried out at each reporting date. Actuarial gains and losses are recognised in full in the period in
which they occur. They are recognised within ‘Other comprehensive income’ within the Consolidated Statement of Comprehensive
Income. The net periodic benefit cost, comprising the employer’s share of the service cost and the net interest cost, is charged to
the Consolidated Statement of Comprehensive Income. The Group’s net obligations in respect of the scheme are calculated by
estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods. This is
then discounted to present value and the fair value of the scheme’s assets is then deducted.
Share-based payments
Equity-settled share-based payments to employees of the Company and its subsidiary undertakings are measured at fair value of
the equity instruments at the date of grant and are expensed on a straight line basis over the vesting period. Fair value is measured
by a Monte Carlo pricing model taking into account any market performance conditions and excludes the effect of non-marketbased
vesting conditions. Details regarding the determination of the fair value of equity-settled share-based transactions are set out
in note 30. At each reporting period date, the Group estimates the number of equity instruments expected to vest as a result of the
effect of non-market-based vesting conditions. The impact of the revision, if any, is recognised in the Consolidated Statement of
Comprehensive Income with a corresponding adjustment to equity reserves.
Shareholder Information Financial Statements
Governance
Strategic Report
Overview
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