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L&Q’s surplus rises but pandemic causes completions to plummet
L&Q’s operating surplus rose 45% for the first quarter of the financial year, but development fell dramatically due to the impact of COVID-19.
In the three months leading up to 30 June 2020, the 95,000-home landlord completed just 150 homes, down 78% on the 691 homes it completed during the same period in 2019/20.
Waqar Ahmed, group director of finance at L&Q, said the coronavirus crisis has “caused a significant amount of disruption” for the organisation, but confirmed that all of its sites are currently open and operational.
The landlord previously announced a number of measures to mitigate the impact of the pandemic on the business, including a £300m increase in debt facilities and a postponement of £300m of capital expenditure during the current financial year.
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Despite the disruption, L&Q’s end-of-quarter results show that a number of financial measures had strengthened when compared with the same period in 2019/20.
Its operating surplus increased by 45% from £58m in the first quarter of 2019/20 to £84m in the first quarter of 2020/21, while turnover rose 17% from £178m to £209m.
Earnings before interest, taxes, depreciation and amortisation (EBITDA) was £96m, up 75% from £55m in 2019/20.
It comes after recent unaudited end-of-year results for 2019/20 showed that L&Q’s surplus had stabilised after falling by 42% in 2018/19 in what the organisation described as a “challenging” year.
In September last year, the housing association put a pause on new development projects and introduced a recruitment freeze as it battled to deal with a downturn in the housing market and soaring fire safety costs.
It projected surplus after tax in 2020/21 to be “in the range of £200m to £215m”, around the same level as the previous two years.
Commenting on today’s results, Mr Ahmed said: “As expected, the COVID-19 pandemic has caused a significant amount of disruption to our business, particular on construction sites which has led and will continue to lead to handover delays of new residential units.
“However, through the decisive actions taken as announced in our last trading statement released on 15 May 2020, we have demonstrated resilience and flexibility in order to conserve cash flows while fulfilling our commitments to our customers.
He added that the figures “demonstrate the strength of our core operations and improving activity in the sales market” and that L&Q “remains confident that it retains the financial flexibility to adapt supported by our strong balance sheet and liquidity position”.
In June, L&Q accessed the Bank of England’s emergency coronavirus liquidity scheme, selling £300m of short-term debt to the institution.
