TIDM44EB
RNS Number : 4391Y
London & Quadrant Housing Trust
09 May 2019
London & Quadrant Housing Trust Trading Update for the
period ending 31 March 2019
London & Quadrant Housing Trust ('L&Q') is today issuing
its consolidated trading update for the year ended 31 March 2019
('2019').
All comparatives are to L&Q's consolidated audited financial
statements for the year ended 31 March 2018 ('2018').
Highlights:
-- There are 103,594 units in management (as at 31 March 2018: 100,672)
-- Turnover for the period was GBP937m (2018: GBP1,026m)
-- Operating surplus for the period was GBP289m (2018: GBP420m)
-- Operating margin(1) on social housing lettings(2) was 39% (2018: 46%)
-- Operating margin(1) on all lettings(4) was 41% (2018: 45%)
-- Net margin on all sales(5) was 9% (2018: 19%)
-- The surplus for the period was GBP191m (2018: GBP348m)
Commenting on the results Waqar Ahmed, Group Director, Finance
said:
"Despite a challenging year whereby our financial results
reflect our decision to increase investment in our immediate
priorities of health and safety and the quality of our homes
against a backdrop of political and economic uncertainty, we have
completed 2,874 residential units and our preliminary unaudited
results show a surplus after tax for the financial year ending 31
March 2019 of GBP191m, each of which is aligned to the projections
made in our Q3 Trading Update published on 31 January 2019.
As outlined in our Q3 Trading Update, the year-on-year decrease
in surplus after tax reflects increased maintenance expenditure to
address our immediate priorities, a reduction in sales turnover and
profit and increased interest costs. Items that have not impacted
cashflow but have impacted on surplus after tax include accounting
adjustments as advised in the Q3 Trading Update and lower
year-on-year changes in the value of investment property.
Whilst the decisions made and weaker market conditions have
resulted in a year-on-year reduction in surplus after tax, we
remain confident in our future prospects supported by the strength
of our balance sheet, our geographical expansion, the proposed
acquisition of Trafford Housing Trust, our ability to service debt
and our strong liquidity position. For the financial year ending 31
March 2020, we expect stronger operating performance to deliver a
surplus after tax in the range of GBP250m - GBP270m and to complete
over 3,200 new build residential units. Our projections for the
year ending 31 March 2020 show net debt at GBP5.3bn and
strengthening profitability, leverage and debt service ratios that
determine board approved financial risk appetite".
Housing Completions
L&Q, including joint ventures, has completed 2,874 (2018:
2,453) residential units in the financial year comprising of 1,582
(2018: 1,342) completions for social housing tenures and 1,292
(2018: 1,111) completions for market tenures. During that same
time, 6,428 newbuild residential units commenced on site (2018:
2,698). As at 31 March 2019, L&Q, excluding joint ventures,
held 136 completed market sale units as unsold stock. Of these, 38%
have been held as stock for less than one month. The average
selling price, excluding JV's, for outright market sales during the
financial year was GBP578k of which 55% were conducted under Help
to Buy. The average selling price of first tranche shared ownership
sales during the financial year to date was GBP420k with an average
first tranche sale of 36%.
Development Pipeline
L&Q, including joint ventures, is operating from 157 (as at
31 March 2018: 127) active sites. L&Q has approved an
additional 9,188 residential units during the financial year
bringing total units in the development pipeline to 50,400 (as at
31 March 2018: 46,500). Some 31% of the approved pipeline (15,800
units) is on site. The future projected cost of the entire
development pipeline (including work in progress and developments
not yet on site) that extends until the financial year ending 31
March 2040 is estimated at GBP6.8bn (as at 31 March 2018: GBP4.8bn)
of which GBP3.9bn (57%) is currently committed. L&Q holds a
further potential 56,273 (as at 31 March 2018: 46,700) strategic
land plots.
Unaudited Financials
The unaudited financials exclude further adjustments that are
subject to audit review:
Statement of Comprehensive Income 2019 2018 Change
(GBPm) (GBPm)
----------------------------------------------------- --------- --------- -------
Turnover 937 1,026
Operating costs and cost of sales (729) (724)
Share of profits from joint ventures 20 16
Surplus on disposal of fixed assets and investments 50 54
Change in value of investment property 11 48
----------------------------------------------------- --------- --------- -------
Operating surplus 289 420 (31%)
----------------------------------------------------- --------- --------- -------
Recurring net interest payable (110) (90)
Other finance income/ (costs) (7) 24
Taxation 19 (6)
----------------------------------------------------- --------- --------- -------
Surplus for the period after tax 191 348 (45%)
----------------------------------------------------- --------- --------- -------
Statement of Financial Position 2019 2018 Change
(GBPm) (GBPm)
-------------------------------------------- -------- --------- -------
Housing properties 9,477 9,089 4%
Other tangible fixed assets 69 65 6%
Investments 1,591 1,266 26%
Net current assets 995 933 7%
-------------------------------------------- -------- --------- -------
Total assets less current liabilities 12,132 11,353 7%
-------------------------------------------- -------- --------- -------
Loans due > one year 4,966 4,314 15%
Unamortised grant liability 2,039 2,041 -
Other long term liabilities 354 416 (15%)
Capital and reserves 4,773 4,582 4%
-------------------------------------------- -------- --------- -------
Total non-current liabilities and reserves 12,132 11,353 7%
-------------------------------------------- -------- --------- -------
Net debt (excluding derivative financial liabilities) was
GBP4,866m (as at 31 March 2018: GBP4,179m) and available liquidity
within the group in the form of committed un-drawn revolving credit
facilities and non-restricted cash is at GBP838m (as at 31 March
2018: GBP846m). Approximately 50% of L&Q's loan facilities and
57% of drawn loan facilities are at a fixed cost.
Financial Metrics
Statement of Comprehensive Income 2019 2018
------------------------------------------------------- ----- -----
Operating margin(1) on social housing lettings(2) 39% 46%
Operating margin(1) on non-social housing lettings(3) 44% 42%
Operating margin(1) on all lettings(4) 41% 45%
Net margin on sales(5) 9% 19%
EBITDA MRI / Net Cash Interest Paid(6) 170% 284%
------------------------------------------------------- ----- -----
Statement of Financial Position 2019 2018
--------------------------------- ---------- ----------
Leverage(7) 40% 37%
Net debt per unit in management GBP46,971 GBP41,511
--------------------------------- ---------- ----------
L&Q Credit Ratings - as at date of trading statement
release
Rating Agency S&P Moody's Fitch
Long-term credit ratings A/Negative A3/Stable A+/Stable
------------------------- ----------- ---------- ----------
Notes:
(1) Operating Surplus / Turnover
(2) General Needs, Supported Housing, Intermediate Market Rent,
Low Cost Home Ownership and Affordable rent tenures.
(3) Market Rent, Student Accommodation, Commercial, Leaseholder
and Other tenures
(4) Social Housing Lettings(2) and non-Social Housing
Lettings(3)
(5) First Tranche Shared Ownership, Land and Outright Sales
(including those conducted in Joint Ventures)
(6) (Operating Surplus + Depreciation + Amortisation +
Impairment + Capitalised Major Repairs) / Net Cash Interest
Paid
(7) Net Debt (excluding Derivative Financial Liabilities) /
Total Assets less Current Liabilities
This trading update contains certain forward looking statements
about the future outlook for L&Q. Although the Directors
believe that these statements are based upon reasonable
assumptions, any such statements should be treated with caution as
future outlook may be influenced by factors that could cause actual
outcomes and results to be materially different.
For further information, please contact:
Martin Watts, Director of Treasury 0300 456 9998
For media enquiries, please contact:
Gavin Jefferies, Assistant Director
Communications 0300 456 9998
www.lqgroup.org.uk
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London Stock Exchange. RNS is approved by the Financial Conduct
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Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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