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Keepmoat Annual Report 2020

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

NOTES TO THE

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 7 – Goodwill and other intangible assets (continued) Impairment review of goodwill The Group tests goodwill annually for impairment or more frequently if there are indications the goodwill might be impaired. In testing goodwill and other intangible assets for impairment, the recoverable amount of the Group has been determined from value in use calculations. The key assumptions for the value in use calculations are those regarding the forecast revenue and profit, discount rates and long-term growth rates by market sector. Future forecast revenue is based on management’s knowledge of actual results from prior years and latest forecasts for the current year, along with secured works, management’s expectation of the future level of work available within the market sector and expected changes in selling volumes and prices for completed houses. In establishing future profit margins, the margins currently being achieved are considered in conjunction with expected inflation rates in each cost category and the current market value of land being acquired. Cash flows beyond the five-year plan period are extrapolated using an estimated growth rate of 2% (31 October 2019: 2%) per annum. The growth rate used is an estimate of the average long-term growth rate for the market sectors where the Group operates. A pre-tax discount rate of 11.9% (31 October 2019: 10.7%) has been applied, being the estimated weighted average cost of capital, adjusted for current market conditions. Following the UK’s exit from the European Union and the uncertainty surrounding the COVID-19 pandemic, the Group has undertaken a detailed exercise around assumptions used in the cash flows noted above and a sensitivity analysis on those cashflows. The sensitivity analysis to changes in cashflow indicated head-room which was materially above the carrying value, so the directors are of the opinion that no impairment of goodwill is required. 8 – Property, plant and equipment Leasehold property improvements Plant, equipment, fixtures & fittings Total £’000 £’000 £’000 Cost At 1 November 2018 174 4,195 4,369 Additions - 1,539 1,539 At 31 October 2019 174 5,734 5,908 Additions - 962 962 Disposals - (30) (30) Transfers between classes - (204) (204) At 31 October 2020 174 6,462 6,636 Accumulated depreciation At 1 November 2018 24 2,822 2,846 Charge for the year 14 1,040 1,054 At 31 October 2019 38 3,862 3,900 Charge for the year 106 1,215 1,321 Disposals - (15) (15) Transfers between classes - (81) (81) At 31 October 2020 144 4,981 5,125 Net book amount At 31 October 2020 30 1,481 1,511 At 31 October 2019 136 1,872 2,008 At 31 March 2018 150 1,373 1,523 During the year ended 31 October 2020 it was noted that some IT software had been misclassified in the prior year disclosure within property, plant and equipment. Therefore, the opening balance of cost and amortisation has been correctly reflected in intangible assets and corrected in the comparative disclosure above and in Note 7. There has been no impairment of property, plant and equipment during the year. 88 KEEPMOAT.COM

FINANCIAL REVIEW 9 – Non-controlling interests On 18 August 2014 the Company subscribed for the entire issued share capital of Keystone Topco Limited for consideration of £1. On 28 November 2014 the Company made an additional investment totalling £1,700,000 in the issued ordinary share capital of Keystone Topco Limited, resulting in the Company holding 85% of the issued share capital with management subscribing for the remaining 15%. During the year ended 31 October 2018 the Group repurchased, from certain members of management 7,713 Ordinary A shares, 36,997 Ordinary B1 shares and 1,057 B2 Ordinary shares for a total of £3,147,004. This increased the Company’s holding in Keystone TopCo Limited to 89% of the issued share capital with management subscribing for the remaining 11%. During the year ended 31 October 2019 the Group repurchased, from certain members of management 72 Ordinary A shares and 2,260 Ordinary B1 shares of Group company Keystone TopCo Limited for a total consideration of £321,000. During the year ended 31 October 2019, the Group issued 6,833 shares to certain members of management, the shares had previously been held in Treasury. The total consideration received was £489,653. The share transactions meant that the Company’s holding in Keystone TopCo Limited decreased to 88.6% from 89.0%. During the year ended 31 October 2020 the Group issued 6,443 Ordinary B1 shares of Keystone TopCo Limited to certain members of the management for consideration of £751,000. These were split as 4,427 which had previously been held in Treasury and 2,016 previously owned by Keystone JVco Limited. The share transactions meant that the Company’s holding in Keystone TopCo Limited decreased to 88.5% from 88.6%. Summarised financial information for Keystone Topco Limited and the resultant non-controlling interest is as follows: 31 October 2020 31 October 2019 SUMMARISED CONSOLIDATED BALANCE SHEET £’000 £’000 Current assets 571,341 493,898 Current liabilities (256,328) (189,970) Net current assets 315,013 303,926 Non-current assets 57,198 45,831 Non-current liabilities (270,536) (240,302) Net assets 101,675 109,455 Net assets attributable to non-controlling interests at 11.5% (31 October 2019: 11.4%) 11,450 12,327 ANNUAL REPORT & FINANCIAL STATEMENTS 2020 89