You are viewing 1 of your 1 free articles
Giant housing association L&Q has seen its surplus stabilise in the year to March 2020, but completions of new homes dropped by 15%.
Unaudited year-end results for the 95,000-home landlord show that its post-tax surplus for 2019/20 stabilised at £202m. This is the same surplus it posted for 2018/19, having fallen by 42% from £350m in 2017/18.
London-based L&Q, which was the sector’s biggest builder in 2018/19, saw completions fall from 2,874 that year to 2,439 in 2019/20 – 49% of which are for social housing tenures.
It comes after a leaked email from chief executive David Montague, seen by Inside Housing, in September 2019 said the association would be slowing its development programme following a market downturn and increased investment costs for existing housing stock.
L&Q topped Inside Housing’s Biggest Builders Survey in 2019.
Other financial metrics strengthened, with earnings before interest, taxes, depreciation and amortisation (EBITDA) for 2019/20 at £302m compared with £236m last year – a rise of 28%. EBITDA social housing lettings interest cover was 134% – up from 111% the year before.
Turnover fell from £937m in 2018/19 to £914m in 2019/20, with sales accounting for 45% of the total – down slightly from 46% in 2018/19.
Investment in existing housing stock dropped from £91m to £61m, but spending on planned and reactive maintenance rose from £159m to £168m.
That figure includes £35m spent on implementing fire safety measures, up from the £24m spent on fire safety in 2019.
Waqar Ahmed, group finance director at L&Q, said: “L&Q’s preliminary unaudited results show EBITDA at £302m and net debt at £5.4bn, with better than expected performance on margins, interest coverage and debt metrics compared to [quarter three] guidance, further reflecting the expected stabilisation in financial results.
“Surplus after tax at £202m excludes a material credit to the statement of comprehensive income that will be applied to the audited financial statements to represent the fair value of Trafford Housing Trust on acquisition.”
L&Q completed the acquisition of the North West housing association in October.
The end of year results also noted the impact coronavirus was having with the association recording 957 payment deferral requests made by residents on a portfolio of 113,525 units.
Rolling four-week arrears have increased form 5.04% to 5.43% (6.03% for social tenures and 3.35% for non-social tenures), equating to a £3m increase in arrears.
Mr Ahmed said: “Given this ongoing uncertainty we have temporarily suspended financial guidance until the overall impact of COVID-19 becomes clearer.
“However, we remain confident that L&Q retains the financial flexibility to adapt to a changing economic outlook supported by our strong balance sheet, robust liquidity position and G1/V1 ratings, the highest possible ratings for governance and viability as reaffirmed by the Regulator of Social Housing in March 2020.”
As of 31 March 2020, the landlord’s liquidity in the form of committed un-drawn revolving credit facilities and non-restricted cash was £595m, down from £751m in 2019.
Already have an account? Click here to manage your newsletters
Already have an account? Click here to manage your newsletters