Keepmoat Half Year Update Report (H1 to 30 September 2017)
Keepmoat continued its strong growth trajectory during the first 6 months of its financial year ended 31 March 2018.
Sale of Regeneration
On 30 April 2017, we completed the sale of our Regeneration business to ENGIE Services Holding UK Limited, for proceeds of £313.3m. Following the disposal, the Group made a cash return to shareholders of £145m in aggregate, followed by the redemption of £163m of bond debt on 15 June 2017. The process to separate Regeneration from the remaining Keepmoat business proceeded smoothly, with all work streams except IT separating fully by 31 July 2017.
Business Performance and Growth
Following the sale of the Regeneration business, Keepmoat’s principal business is Keepmoat Homes. Keepmoat Homes is a leading partnership homebuilder, operating across mainland UK, providing high quality, private affordable homes, primarily to first time buyers and first time movers.
Keepmoat Homes has continued its strong growth trajectory during the first 6 months of FY18, selling 1,570 homes during the period, up +41.2% on prior year (H1 FY17: 1,112 homes). Revenues for the same period grew by £74.7m (+47.8%) to £230.8m (H1 FY18: £156.1m). Revenue growth has been achieved mainly as a result of increased volumes, but Keepmoat has also benefited from an increase in average selling price of +4.7%.
We continue to maintain a healthy pipeline. At 30 September 2017, our pipeline (including sites on which we have been appointed preferred developer) stood at 34,421 plots, representing 10.2 years of supply at LTM house sale rates, and up +36.0% on prior year (H1 FY17: 25,305).
We have successfully secured a number of projects to support our long term pipeline, notably including a significant new partnership with Herefordshire Council, under which we will contribute to the delivery of 800 homes in Hereford’s new urban village.
In addition, we are pleased to announce our investment in a new joint venture company, ILKE Homes Limited. ILKE will construct modular housing, in partnership with Keepmoat.
As part of the Autumn Budget, the Government pledged to provide financial incentives to support the construction of 300,000 more homes per year by the mid-2020’s through measures such as the Housing Infrastructure Fund. Further, the Government pledged to support the development of construction skills across the country. At Keepmoat, we remain committed to the delivery of these much needed new homes, and consider the Government’s support in the sector to be highly encouraging. We continue to work alongside our local authority and housing association partners, to identify and develop land suitable for housing. Our model is highly suited to a continuing policy preference for brownfield development, and makes us an attractive partner for local authorities, housing associations and other owners of land, as demonstrated by our continuing growth.