Keepmoat in profit but debt a burden for its parent

Doncaster-based Keepmoat made a 68.85m pre-tax profit for the 12 months to March 31, up from 63.9m, despite Britain being stuck in recession throughout 2009.

David Blunt, chief executive, hailed it as a strong result delivered against a "difficult and uncertain economic environment".

Lakeside 1, however, recorded a 70.38m pre-tax loss, as it paid interest on the debt acquired in the August 2007 deal.

The parent company narrowed losses from nearly 195m the previous year.

Its most recent accounts showed net interest at 108.65m and a goodwill write-down of 30.08m. Much of Lakeside 1's more negative position is down to interest paid on senior debt and 'rolled-up' interest on the shareholder finance but directors remain confident about its long-term position.

Lakeside 1 was formed from the 783m management buyout of Keepmoat in August 2007.

It was the subject of the biggest buyout on record in Yorkshire with backing from Bank of Scotland's integrated finance arm, now part of Lloyds Banking Group, and has maintained the same structure since the deal.

Mr Blunt said: "(The report) reflects on a remarkable effort of the Keepmoat Group amidst a difficult and uncertain economic environment which allowed us to deliver exemplary results."

In a cautious statement, he also sounded a note of optimism for the social housing regeneration firm over the next year.

"The uncertainties over the limited visibility of public expenditure in our markets will lift with the budget and the autumn's comprehensive spending review.

"Both parties to the coalition Government have made pre-election commitments to the UK's socio-economic agendas on public services, regeneration and social inclusion."

Keepmoat's operating profit was 68.91m.

The firm, which operates through Bramall Construction, Frank Haslam Milan and Keepmoat Homes, bought Yorkshire-based specialist contractor Milnerbuild in January.

The group expects to see an increased demand for new-build social housing and 'retro-fitting' of existing UK housing stock to ensure it meets environmental standards.