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Keepmoat Annual Report 2020

  • Text
  • Lease
  • Keepmoat
  • Strategic
  • Annual
  • Income
  • Assets
  • Limited
  • Homes
  • Statements
  • October
Keepmoat has released its Group financial results for the year ending 31 October 2020.

PRINCIPAL RISKS AND

PRINCIPAL RISKS AND UNCERTAINTIES Principal risks and uncertainties In order that we can meet our strategic objectives, it is paramount that we are effectively managing risk and that mitigating processes and controls are embedded. Our risk management framework considers strategic and operational risk throughout the business and ensures we have sufficient controls and measures in place, or future planned actions, to bring residual risk to appropriate levels. This year has tested the effectiveness of our risk management and increased the residual risk associated with some of our principal risks and, whilst a global pandemic was not specifically called out in previous risk registers, its potential impacts and how we mitigate them certainly were and this is reflected in the direction of travel of some of the risks identified below: 54 KEEPMOAT.COM

STRATEGIC REPORT Risk and description Possible impact Mitigation Movement External economic factors A number of external factors, over which the group has limited control, have the potential to impact our revenue and business, including: • Changes in the UK and European macroeconomic environments • House price inflation and interest rates • Unemployment levels • Mortgage availability • Post-Brexit uncertainty • Central and local government housing policy • Government incentives, such as the ‘Help to Buy’ scheme: and • The spread of an infectious disease on a pandemic scale Significant policy changes, a decline in the housing market or additional lending restrictions could have an adverse impact on revenue, profit and cash generation. Strong partner relationships and the use of multi-tenure across all sites result in a well-defined pipeline of future volumes, providing high levels of forward visibility of revenue. Management regularly assess future revenue risk through analysis of the land pipeline and adjusts the scale of structural investment accordingly. Regular monitoring and communication of Government policy and participation in industry consultation. Regular monitoring of key performance indicators including; enquiries, visitor numbers, reservation rates, cancellation rates and achieved prices. Maintenance of an appropriate capital structure and balance sheet control, with a healthy balance sheet as at 31 October 2020 and committed bank facilities of £232.5m Strong short-term cash flow management at a Group level including regular assessment of the most effective use of cash for WIP and land spend. Regular communication with our panel of IFA’s and participation in future finance initiatives. Our product mix and pricing strategy is regionally assessed and implemented. The introduction of online reservations and appointment booking, which has significantly addressed recent market conditions. Demand for low cost housing remains strong. Robust and tested business interruption planning, including procedures to slow down and stop activity. Our working practices are monitored and updated to ensure that they comply fully with applicable social distancing guidelines. Increased. Both COVID-19 and Brexit have increased the level of economic uncertainty. Whilst current performance and lead indicators remain positive, the longer-term impacts of the current situation remain unknown and could impact construction and sales through for example more restrictive on-site working practices and mortgage availability. The change in Help to Buy and the impending end of the Stamp Duty are additional upcoming changes within the wider housing market, although any impact on Keepmoat would be relatively reduced given our relatively low average selling price and high proportion of first time buyers. ANNUAL REPORT & FINANCIAL STATEMENTS 2020 55