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Keepmoat Annual Report 2020

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Keepmoat has released its Group financial results for the year ending 31 October 2020.

NOTES TO THE

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 4 – Exceptional items Year ended 31 October 2020 Year ended 31 October 2019 £’000 £’000 Included within administrative expenses: Onerous lease provision - (1,270) Restructuring costs 1,337 - Other costs 1,123 - Total 2,460 (1,270) Onerous lease provision As part of the restructuring of the West Midlands region, during the year ended 31 March 2018 the Group made an onerous lease provision in respect of the lease obligation for the regional office at Coleshill, which became surplus to ongoing operational requirements. During the year ended 31 October 2019 the lease was reassigned, resulting in a release of the outstanding provision for future liability and a credit to the income statement. Restructuring costs A regional and divisional restructuring exercise, including redundancies, was undertaken during the year ended 31 October 2020. As part of this the North West regional presence was consolidated into a single regional office and the South West office will act as a satellite to the West Midlands region. Aligned with these regional changes, the business has simplified its divisional structure with the regions now reporting through two, North & South Divisions. Exceptional restructuring costs relate to redundancy costs and other costs associated with these actions. Other costs During the year ended 31 October 2020, the Group incurred professional advisor costs of £1.1m relating to refinancing and corporate finance matters. 5 – Finance income and expense Year ended 31 October 2020 Year ended 31 October 2019 £’000 £’000 Other interest receivable 93 229 Interest receivable on loans to joint venture partners 627 156 Finance income 720 385 Interest payable on bank loans and overdrafts (754) (1,303) Finance charge on senior secured notes* - (2,140) Interest payable on term loan** (15,788) (10,796) Interest payable on subordinated shareholder loan notes (45) (127) Interest payable on other loans - (415) Unwind of discount on deferred land payments (8,336) (6,766) Interest payable on leases (note 14) (535) - Finance expense (25,458) (21,547) Net finance expense (24,738) (21,162) * Interest payable on the senior secured notes comprises interest, issue costs, write-off of the remaining unamortised issue costs on redemption and unwinding of discount calculated using the effective interest rate method. ** Interest payable on the term loan comprises interest and amortisation of issue costs. 84 KEEPMOAT.COM

FINANCIAL REVIEW 6 – Income tax charge Year ended 31 October 2020 Year ended 31 October 2019 £’000 £’000 Current tax UK corporation tax on (loss)/profit for the year at 19% (31 October 2019: 19%) (506) 4,698 Adjustment in respect of prior year* 139 546 Current tax (credit)/charge (367) 5,244 Deferred tax Origination and reversal of timing differences (4,343) (227) Adjustment in respect of prior year* (3) 1,826 Difference in applicable tax rates (399) 81 Deferred tax (credit)/charge (4,745) 1,680 Income tax (credit)/charge for the year (5,112) 6,924 The table below reconciles the income tax expense for the year to tax at the UK statutory rate: Year ended 31 October 2020 Year ended 31 October 2019 £’000 £’000 (Loss)/profit before tax from continuing operations (19,525) 37,669 Income tax (credit)/charge at UK corporation tax rate at 19% (31 October 2019: 19%) Effects of: *Adjustment in respect of prior year relates to the reactivation of previously disallowed interest under the Corporate Interest Restriction legislation. Factors affecting current and future tax charges: (3,710) 7,157 Expenses not deductible for tax purposes 483 649 Non-taxable income - (346) Utilisation of tax losses - (1,655) Land remediation relief (592) (524) Deferred tax previously not recognised (796) (950) Adjustment in respect of prior year* - 2,374 Adjustment for joint venture (192) 138 Difference in applicable tax rates (399) 81 Prior year adjustment 136 - Other 147 - Share options (71) - IFRS 16 transition (118) - Income tax (credit)/charge for the year (5,112) 6,924 Under the 2020 Spring Budget it was announced that the corporation tax rate would remain at 19%. Deferred tax is calculated in full on temporary differences under the liability method, using a tax rate of 17% (31 October 2019: 17%). ANNUAL REPORT & FINANCIAL STATEMENTS 2020 85