Social housing firm suffers accounting loss because of £117m interest charge on debt
Social housing contractor Keepmoat recorded a £50m loss in 2011 when taking into account the interest paid on its debt.
The loss was shown in accounts filed at Companies House by Lakeside 1, Keepmoat’s ultimate holding company set up to hold its debt. Lakeside 1’s turnover rose 12% to £677m for the year to 31 March 2011 but it recorded the huge paper loss because of a £117m interest charge on its £706m debt mountain.
In addition Lakeside 1, which is negotiating a merger with rival Apollo, had to write off £30.3m in goodwill amortisation. The loss, however is still lower than last year’s £194m loss, which included a £154m write-off of the value of the firm as the market declined.
Operating firm Keepmoat Ltd also filed consolidated accounts this week, reporting a £70m cash profit on the £677m revenue. The difference between Keepmoat’s profit and Lakeside 1’s loss is because the debt for the original purchase of the firm, and therefore the interest payments, is held in Lakeside 1.
Keepmoat was bought by the Bank of Scotland for £783m at the height of the market in 2007. The accounts cover the period during which Keepmoat was then sold to private equity group Cavendish Square, a joint venture between private equity firm Coller Capital and Lloyds Banking Group.
The accounts say Lakeside 1 stayed within its banking covenants at all times. These are based on generating enough cash to service the portion of its cash interest payments, which is less than half the total. It said it generated £46.6m, enough to cover the £41.2m of interest payments required in cash.
It was also forced to write off £3.2m over an aborted joint venture to manufacture its own off-site modular units.
None of the group’s debt is to be paid until 2013 at the earliest.
David Blunt, Keepmoat CEO, said: “We have delivered an excellent trading performance […] which reflects on an outstanding effort by everyone at Keepmoat.”
Keepmoat in numbers: 2011 (2010)
Homes built 1,220 (654)
Turnover £677m (£604m)
Pre-tax loss before goodwill amortisation £50.4m (£40.3m)
Debt mountain £706m (£863m)
Interest payment £117m (109m)