TIDM44EB
RNS Number : 4022Y
London & Quadrant Housing Trust
12 May 2021
London & Quadrant Housing Trust Trading Update for the year
ending 31 March 2021
London & Quadrant Housing Trust ('L&Q') is today issuing
its consolidated trading update for the year ended 31 March 2021
('2021'). All comparatives are to L&Q's consolidated audited
prior year equivalent period being the year ended 31 March 2020
('2020').
HIGHLIGHTS
-- There are 118,181 units in management (as at 31 March 2020: 115,003)
-- L&Q has completed 2,699 residential homes (2020: 2,439)
-- Turnover was GBP1,051m (2020: GBP915m)
-- EBITDA(1) was GBP382m (2020: GBP303m)
-- EBITDA margin(2) was 31% (2020: 26%)
-- EBITDA margin (excluding sales)(3) was 49% (2020: 42%)
-- Gross sales margin(4) was 18% (2020: 17%)
-- Net sales margin(5) was 10% (2020: 13%)
-- EBITDA / interest cover(6) was 260% (2020: 193%)
-- EBITDA social housing lettings interest cover(7) was 182% (2020: 137%)
-- Operating surplus was GBP313m (2020: GBP279m)
-- Debt to assets(8) was 41% (2020: 41%)
-- Gross Debt / EBITDA(9) was 14.4x (2020: 18.5x)
-- Sales as a % of turnover(10) was 47% (2020: 46%)
Commenting on the results Waqar Ahmed, Group Director, Finance
said:
"L&Q's preliminary unaudited results show EBITDA at GBP382m,
a 26% year-on-year increase and net debt at GBP5,385m, a GBP45m
year-on-year decrease. We have delivered a material improvement in
EBITDA margins, interest coverage and debt metrics that are ahead
of Q3 guidance and reflect stronger than expected financial
performance during the Covid-19 pandemic, particularly in relation
to completions, sales and rent arrears.
Available liquidity at greater than GBP1.1bn demonstrates that
we have been successful in implementing prudent measures to
conserve cash flows. Our strong liquidity position leaves us well
placed to address future external uncertainty that is supported by
the strength of our balance sheet and the financial resilience and
flexibility that we have demonstrated.
Despite the on-set of the Covid-19 pandemic, housing completions
at 2,699 (2020: 2,439) are up 11% year-on-year of which 57% (2020:
49%) are for social housing tenures which further demonstrates our
commitment to our social purpose and to lower our risk profile.
While the pandemic has impacted our repairs and maintenance
service, we invested GBP186m (2020: GBP231m) in our residents'
homes including GBP25m (2020: GBP35m) implementing additional fire
measures. The expectation, as reflected in our forward guidance for
the year ending 31(st) March 2022 is that we divert a greater level
of expenditure towards our resident's existing homes as we
implement our five year corporate strategy that sets out how we
will put our existing customers first, ensuring that their homes
are safe, high quality and supported by excellent services in
thriving communities."
FORWARD GUIDANCE FOR THE YEARING 31ST MARCH 2022
The following assumes that current market conditions
continue.
We project EBITDA to be in the range of GBP340m to GBP360m and
gross capital expenditure(11) to be in the range of GBP900m to
GBP1bn. Included within our EBITDA projections are c.GBP30m of
costs assigned to conduct fire remedial and safety works. Our
projections for surplus after tax are expected to be in the range
of GBP230m to GBP250m. Net debt is expected to be in the range of
GBP5.7bn to GBP5.8bn.
Financial Metrics Forward Guidance to 31 March 2022
-------------------------------------------------- ----------------------------------
EBITDA margin(2) 26%
EBITDA margin (excluding sales)(3) 40%
Net sales margin(5) 11%
EBITDA interest cover(6) 233%
Social housing lettings EBITDA interest Cover(7) 152%
Debt to assets(8) 43%
Gross debt to EBITDA(9) 16x
Sales as a % of turnover(10) 48%
-------------------------------------------------- ----------------------------------
HOUSING COMPLETIONS
L&Q, including joint ventures, has completed 2,699 (2020:
2,439) residential homes in the financial year. This comprises of
1,556 (2019/20: 1,188) completions for social housing tenures and
1,143 (2020: 1,251) completions for market tenures. During that
same time 3,818 new build residential homes commenced on site
(2020: 3,945).
DEVELOPMENT PIPELINE
L&Q, including joint ventures, is operating from 185 (2020:
158) active sites. L&Q has approved an additional 1,994
residential homes during the financial year bringing total homes in
the approved development pipeline to 32,482 (2020: 29,504), of
which 64% are currently on site, representing a significant
investment in new supply and affordable output. Of the homes
approved in the development pipeline 60% are for social housing
tenures and 40% are for market tenures. L&Q holds a further
potential 81,568 (2020: 70,614) strategic land plots.
The future projected cost of the entire development pipeline
(including work in progress and developments not yet committed or
on site) that extends until the financial year ending 31 March 2040
is estimated at GBP5.2bn (2019/20: GBP5.3bn) of which GBP4.5bn
(85%) is currently committed (2020: GBP4.6bn).
UNAUDITED FINANCIALS
The unaudited financials exclude further adjustments that are
subject to audit review:
Statement of Comprehensive Income
2021 2020 Change
(GBPm) (GBPm)
----------------------------------------------------- -------- -------- -------
Turnover
Non-sales 683 645
Sales 368 270
----------------------------------------------------- -------- -------- -------
1,051 915 15%
Operating costs and cost of sales
Non-sales (488) (504)
Sales (350) (228)
----------------------------------------------------- -------- -------- -------
(838) (732) 14%
Surplus on disposal of fixed assets and investments 59 64
Share of profits from joint ventures 37 25
Change in value of investment property 4 7
----------------------------------------------------- -------- -------- -------
Operating surplus 313 279 23%
Net interest charge (100) (117)
Other finance income/ (costs) (2) 16
Taxation (1) 1
----------------------------------------------------- -------- -------- -------
Pre-exceptional surplus for the period after tax 210 179 17%
----------------------------------------------------- -------- -------- -------
EBITDA and Net Cash Interest Paid
2021 (GBPm) 2020 (GBPm) Change
---------------------------------------- ------------ ------------ -------
Operating surplus 313 279
Change in value of investment property (4) (7)
Amortised government grant (24) (24)
Depreciation 97 91
Impairment 30 24
Capitalised major repairs (30) (61)
---------------------------------------- ------------ ------------ -------
EBITDA 382 303 26%
---------------------------------------- ------------ ------------ -------
Net interest charge (100) (117)
Capitalised interest (48) (42)
---------------------------------------- ------------ ------------ -------
Net cash interest paid (148) (159) (11%)
---------------------------------------- ------------ ------------ -------
Statement of Financial Position
2021 (GBPm) 2020 (GBPm) Change (GBPm)
-------------------------------------------- ------------ ------------ --------------
Housing properties 10,855 10,555 330
Other fixed assets 78 81 (3)
Investments 1,590 1,622 (32)
Net current assets 512 926 (414)
-------------------------------------------- ------------ ------------ --------------
Total assets less current liabilities 13,061 13,184 (123)
-------------------------------------------- ------------ ------------ --------------
Loans due > one year 5,152 5,528 (376)
Unamortised grant liabilities 2,130 2,105 25
Other long term liabilities 342 324 18
Capital and reserves 5,437 5,227 210
-------------------------------------------- ------------ ------------ --------------
Total non-current liabilities and reserves 13,061 13,184 (123)
-------------------------------------------- ------------ ------------ --------------
Non-Sales Activities
2021 2020 Change (GBPm)
(GBPm) (GBPm)
------------------------------------- --------- -------- --------------
Net rents receivable 630 590 40
Charges for support services 10 9 1
Amortised government grants 24 24 -
Other income 19 22 (3)
------------------------------------- --------- -------- --------------
Turnover 683 645 38
Management costs (59) (64) 5
Service costs (89) (80) (9)
Maintenance costs (156) (172) 16
Support costs (13) (10) (3)
Depreciation & impairment (121) (103) 18
Other costs (50) (75) 25
------------------------------------- --------- -------- --------------
Operating costs (488) (504) 16
Surplus on disposal of fixed assets 59 64 (5)
------------------------------------- --------- -------- --------------
Operating surplus 254 205 49
------------------------------------- --------- -------- --------------
Sales Activities
The cost of sales is inclusive of impairment, capitalised
interest and overhead costs:
2021 (GBPm) 2020 (GBPm) Change (GBPm)
-------------------------------------- ------------ ------------ --------------
Property sales income 277 177 100
Land sales income 91 93 (2)
-------------------------------------- ------------ ------------ --------------
Turnover from sales (excluding JV's) 368 270 98
Cost of property sales (247) (150) (97)
Cost of land sales (64) (63) (1)
Operating costs (39) (15) (24)
-------------------------------------- ------------ ------------ --------------
Total costs (excluding JV's) (350) (228) (122)
-------------------------------------- ------------ ------------ --------------
Operating Surplus (excluding JV's) 18 42 (24)
-------------------------------------- ------------ ------------ --------------
Joint venture turnover 218 263 (45)
Joint venture cost of sales (178) (228) 50
Joint venture operating costs (3) (10) 7
-------------------------------------- ------------ ------------ --------------
Share of profits from joint ventures 37 25 12
-------------------------------------- ------------ ------------ --------------
AVERAGE SELLING PRICE
The average selling price, including JV's, for outright market
sales during the financial year to date was GBP495k (2020: 612k) of
which 63% were conducted under Help to Buy (2020: 74%). The average
selling price of first tranche shared ownership sales during the
financial year to date was GBP427k (2020: 387k) with an average
first tranche sale of 33% (2020: 34%).
SALES MARGINS
The cost of sales is inclusive of impairment, capitalised
interest and overhead costs:
Shared Outright Land Sales Outright Sales (JV's) 2021 2020 Change
Owner- Sales (Non-JV)
ship
(GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm)
------------------- -------- ---------------- ----------- ---------------------- ------- ------- -------
Turnover 66 211 91 218 586 533 53
Cost of sales (54) (193) (64) (178) (489) (441) (48)
------------------- -------- ---------------- ----------- ---------------------- ------- ------- -------
Gross profit 12 18 27 40 97 92 11
------------------- -------- ---------------- ----------- ---------------------- ------- ------- -------
Gross margin 18% 9% 30% 18% 18% 17% 1%
------------------- -------- ---------------- ----------- ---------------------- ------- ------- -------
Operating costs (5) (18) (16) (3) (42) (25) (17)
------------------- -------- ---------------- ----------- ---------------------- ------- ------- -------
Operating surplus 7 - 11 37 55 67 (12)
------------------- -------- ---------------- ----------- ---------------------- ------- ------- -------
Net margin 11% 2% 13% 17% 10% 13% (3%)
------------------- -------- ---------------- ----------- ---------------------- ------- ------- -------
UNSOLD STOCK
As at 31st March 2021, L&Q, including joint ventures, held
575 completed homes as unsold stock with a projected revenue of
GBP116m. Projected revenue for shared ownership assumes a first
tranche sale of 25%. Of the total unsold stock, 31% has been held
as stock for less than one month.
L&Q's forward order book excluding joint ventures consists
of 65 exchanged sales with projected revenue of GBP9m and 215
reservations with projected revenue of GBP49m.
Tenure Projected Revenue No. of Units <1 Month 1-3 Months 3-6 Months 6-12 Months >12 Months
(GBPm)
------------------- ------------------ ------------- --------- ----------- ----------- ------------ -----------
Shared Ownership 46 377 134 73 78 60 32
Commercial units 2 1 0 0 0 0 1
Outright Sale
(non-JV's) 38 91 21 2 13 0 55
------------------- ------------------ ------------- --------- ----------- ----------- ------------ -----------
Total excluding
JV's 86 469 155 75 91 60 88
Outright Sale
(JV's) 30 106 25 34 19 5 23
------------------- ------------------ ------------- --------- ----------- ----------- ------------ -----------
Total Joint
Ventures 30 106 25 34 19 5 23
------------------- ------------------ ------------- --------- ----------- ----------- ------------ -----------
Total Unsold Stock 116 575 180 109 110 65 111
------------------- ------------------ ------------- --------- ----------- ----------- ------------ -----------
NET DEBT AND LIQUIDITY
As at 31 March 2021, net debt (excluding derivative financial
liabilities) was GBP5,385m (as at 31 March 2020: GBP5,430m) and
available liquidity within the group in the form of committed
un-drawn revolving credit facilities and non-restricted cash was at
GBP1,159m (as at 31 March 2020: GBP606m). Approximately 54% of
L&Q's loan facilities and 65% of drawn loan facilities are at a
fixed cost.
UNENCUMBERED ASSETS
2021 2020
---------------------------------------------------------------------------- --------- ---------
No. of units under management 118,181 115,003
No. of social housing units provided as collateral against debt facilities (60,085) (55,013)
No. of private rented units provided as collateral against debt facilities (1,107) (1,107)
---------------------------------------------------------------------------- --------- ---------
Total no. of unencumbered units under management 56,989 58,833
% of units under management held as collateral against debt facilities 52% 49%
Unencumbered asset ratio(12) 44% 42%
---------------------------------------------------------------------------- --------- ---------
L&Q CREDIT RATINGS
As at date of trading statement release:
Rating Agency S&P Moody's Fitch
------------------------- ---------- ---------- ------------
Long-term credit ratings A-/Stable A3/Stable A+/Negative
------------------------- ---------- ---------- ------------
Notes:
(1) Operating surplus - change in value of investment properties
- amortised government grant + depreciation + impairment -
capitalised major repairs +/- actuarial losses/gains in pension
schemes
(2) EBITDA / (turnover + turnover from joint ventures -
amortised government grant)
(3) EBITDA from non-sales activities / turnover from non-sales
activities
(4) Gross profit from sales / turnover from sales including
joint ventures
(5) Operating surplus from sales / turnover from sales including
joint ventures
(6) EBITDA / net cash interest paid
(7) EBITDA from social housing lettings / net cash interest
paid
(8) Net debt (excluding derivative financial liabilities) /
total assets less current liabilities
(9) Gross debt / EBITDA
(10) Sales turnover (including joint ventures) / (turnover plus
turnover from joint ventures)
(11) Capitalised development expenditure + acquisition of
investment property + purchase of other fixed assets
(12) 100% less (loans due after more than 1 year + derivative
liabilities + unamortised grant liability) / 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:
investors@lqgroup.org.uk
James Howell, Head of External Affairs 020 8189 1596
www.lqgroup.org.uk
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END
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