Since the outbreak of COVID-19, The Henry Boot Group has implemented multiple measures in line with Government guidance to ensure our people and operations are able to continue safely. Whilst we continue to monitor the evolving situation, our response to this pandemic has been driven by three main priorities:
- Safety and Welfare – of our people, supply chain, customers and communities in which we operate in.
- Operations Response – adapting to Government advice and feedback from our people, customers and supply chain.
- Financial Stability – the long-term financial stability of the Group
- Safety and welfare
In February, a Committee was formed to develop a COVID-19 action plan and to monitor the impact on our Group. The Committee has been agile to meet the needs created by this period of extreme uncertainty, meeting almost daily since mid-March, with the action plan being constantly refreshed to reflect changing circumstances.
Our office network is closed, and since the lockdown, our people who can work remotely are doing so.
At the end of March, we paused work on our construction sites and closed our plant sales centres, except where essential work or supplies were being delivered to vital NHS sites. This allowed us to carry out a review that ensured we are compliant with new government guidelines, had the ability to gain feedback from customers and suppliers, and crucially, that our people remained safe.
Following our review and the pause in construction activity, all of our construction sites and plant sales centres are now open, adhering to the strict precautions, which have naturally affected our output and efficiency. The position is similar in the sites being operated by our development business. However, all recently completed developments are either pre-sold or let, and nearly all our committed developments are also pre-funded or pre-let. Our jointly owned Leeds-based housebuilder is also operating on all of its sites and, following the change in the Government’s guidelines, has reopened its show homes.
The reduced activity affecting construction, housebuilding and plant hire has meant we are utilising the Government’s Coronavirus Job Retention Scheme. A minority of our workforce have been furloughed and their pay has been topped up to 100% by the Group. In recent weeks, we have started to reduce the number of people furloughed as we adapt to new working ways and productivity increases.
Our land promotion business continues to operate remotely, identifying and promoting strategic land over the long term. There are several contracted sales due to complete in the near future, and the majority of these are with the UK’s major housebuilders.
- Financial stability
The Group retains a very strong financial base, with a robust balance sheet, and net cash at 30 April 2020 of £45m (31 December 2019: £27m). In addition, we retain a secured, committed, undrawn banking facility of £75m. This facility is subject to a restriction relating to the value of investment property and deferred income and, at 30 April 2020, £51m of this facility was available to the Group.
In assessing the Group’s going concern and viability, we have considered the potential impact of the COVID-19 pandemic on the Group, and the effect of both a three-month and six-month UK lockdown. This assumes that no activity is undertaken during 2020 unless it is already contracted, followed by a short to medium-term recovery of the economy. Based on this assessment we believe the Group will have adequate resources, liquidity and available bank facilities to continue in operational existence for the foreseeable future.
We have also sought to reduce variable costs, and to preserve cash, where possible. This includes making the following key decisions:
- Paying a reduced final dividend in recognition of the performance for the year ended 31 December 2019 of 1.3p so that the full year dividend payment for 2019 is 5.0p (56% of the 9.0p paid for FY2018)
- Aligning the remuneration of our people with shareholders with only half of all awarded bonuses, in relation to the FY2019, across the Group being paid
- The Board’s executive and non-executive directors have taken a 20% reduction in salary and fees from 1 April
- Measures taken to actively manage cash and curtail both capital and revenue expenditure
As noted in our operations update on 3 April 2020, the Group is currently unable to quantify the impact of COVID-19 on its financial and trading performance for the current year. As a result, we have suspended all existing financial guidance until clarity returns.
There is no doubt that the COVID-19 pandemic is having a material effect on our current operations, but we are on track in our plan to safeguard our people together with maintaining operational capabilities and to preserve our financial resources.
We have always been clear that we are a long-term business, and as such we operate in markets that are dictated by long-term trends:
- The demand for residential development and the land needed to provide much-needed housing
- The development of manufacturing and logistics assets, and urban development concentrated on offices and residential
- Construction with a bias to public sector investment in areas such as hospitals, education and urban regeneration
We believe these long-term trends and markets are sustainable and we are determined in our strategy to make sure we play our part in them in the future.