TIDM44EB
RNS Number : 3937V
London & Quadrant Housing Trust
09 August 2022
London & Quadrant Housing Trust Trading Update for the
period ending 30 June 2022
London & Quadrant Housing Trust ('L&Q') is today issuing
its consolidated unaudited trading update for the three months
ended 30 June 2022 ('2022'). All statement of comprehensive income
comparatives are to L&Q's consolidated unaudited prior year
equivalent period being the three months ended 30 June 2021 ('2021
Q1'). All Statement of Financial Position comparatives are to
L&Q's consolidated unaudited Statement of Financial Position as
at 31 March 2022 as disclosed in L&Q's Q4 Trading Statement for
the period ending 31 March 2022. L&Q expects to publish its
consolidated audited financial statement for the year ending 31
March 2022 on or around 1 September 2022.
HIGHLIGHTS
-- There are 119,480 units in management (as at 31 March 2022: 118,434)
-- L&Q has completed 1,295 new residential homes (2021 Q1: 1,003)
-- Turnover was GBP244m (2021 Q1: GBP286m)
-- EBITDA(1) was GBP94m (2021 Q1: GBP121m)
-- EBITDA margin(2) was 26% (2021 Q1: 36%)
-- EBITDA margin (excluding sales)(3) was 42% (2021 Q1: 59 %)
-- Gross sales EBITDA margin(4) was 15% (2021 Q1: 20%)
-- Net sales EBITDA margin(5) was 10% (2021 Q1: 15%)
-- EBITDA / interest cover(6) was 231% (2021 Q1: 327%)
-- EBITDA social housing lettings interest cover(7) was 192% (2021 Q1: 189%)
-- Operating surplus was GBP89m (2021 Q1: GBP112m)
-- Debt to assets(8) was 39% (2021 Q1: 41%)
-- Sales as a % of turnover(10) was 51% (2021 Q1: 51%)
Commenting on the results Waqar Ahmed, Group Director, Finance
said:
"Our focus, as demonstrated by our Q1 trading results, remains
on the delivery of our strategic objectives which prioritises
investment in safety and the quality of existing homes and
services. We continue to make strong progress against our building
safety inspection programme and have completed safety inspections
on 556 buildings including a full intrusive inspection on all 192
buildings that are above 18 metres in height. Further details can
be found at
https://www.lqgroup.org.uk/building-and-fire-safety/fire-safety-building-inspections
We remain mindful of wider economic uncertainty, supply chain
constraints as well as the pressures on cost of living caused by
rising energy prices, inflation and interest rates that have the
potential to impact our residents and our future forward guidance.
We will continue to monitor and manage in accordance with our
governance arrangements. L&Q's Q1 trading results are in line
with expectations, and we remain on track to deliver against our
forward guidance for the year ending 31 March 2023 which is
unchanged."
FORWARD GUIDANCE FOR THE YEARING 31 MARCH 2023
The following assumes that current market conditions continue
and remain unchanged from the guidance issued in our last trading
statement.
We project EBITDA to be in the range of GBP330m to GBP350m and
gross capital expenditure(11) to be in the range of GBP900m to
GBP950m. Included within our EBITDA projections is a c.30% increase
in total maintenance costs including c.GBP45m of gross costs
assigned to conduct fire remedial and safety works. Our projections
for surplus after tax are expected to be in the range of GBP260m to
GBP280m. Net debt is expected to be in the range of GBP5.6bn to
GBP5.7bn.
Financial Metrics Forward Guidance to 31 March 2023
-------------------------------------------------- ----------------------------------
EBITDA margin(2) 24% - 26%
EBITDA margin (excluding sales)(3) 35% - 37%
Gross sales EBITDA margin(4) 12% - 14%
EBITDA interest cover(6) 200% - 220%
Social housing lettings EBITDA interest Cover(7) 120% - 135%
Debt to assets(8) 41%
Gross debt to EBITDA(9) 17x - 18x
Sales as a % of turnover(10) c.47%
-------------------------------------------------- ----------------------------------
HOUSING COMPLETIONS
L&Q, including joint ventures, has completed 1,295 (2021 Q1:
1,003) residential units in the financial year. This comprises of
807 (2021 Q1: 646) completions for social housing tenures and 488
(2021 Q1: 357) completions for market tenures. During that same
time 698 new build residential units commenced on site (2021 Q1:
651).
DEVELOPMENT PIPELINE
L&Q, including joint ventures, is operating from 192 (2021
Q1: 196) active sites. L&Q has approved an additional 206 (2021
Q1: 135) residential units during the financial year bringing total
units in the approved development pipeline to 28,261 (2021 Q1:
31,888), of which 73% are currently on site, representing a
significant investment in new supply and affordable output. Of the
units approved in the development pipeline 57% are for social
housing tenures and 43% are for market tenures. L&Q holds a
further potential 75,780 (2021 Q1: 80,950) 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 GBP4.0bn (2021 Q1: GBP4.9bn) of which GBP3.3bn
(82%) is currently committed (2021 Q1: GBP4.1bn).
UNAUDITED FINANCIALS
The unaudited financials exclude further adjustments that are
subject to audit review.
Statement of Comprehensive Income
2022 Q1 (GBPm) 2021 Q1 (GBPm) Change
----------------------------------------------------- --------------- --------------- --------
Turnover
Non-sales 1 81 1 71
Sales 63 115
----------------------------------------------------- --------------- --------------- --------
244 286 ( 15 %)
Operating costs and cost of sales
Non-sales (127) (105)
Sales (59) (100)
----------------------------------------------------- --------------- --------------- --------
(186) (205) 9%
Surplus on disposal of fixed assets and investments 16 21
Share of profits from joint ventures 15 10
Change in value of investment property - -
----------------------------------------------------- --------------- --------------- --------
Operating surplus 89 112 (21%)
Net interest charge (30) (26)
Other finance income/ (costs) - (1)
Taxation - -
----------------------------------------------------- --------------- --------------- --------
Surplus for the period after tax 59 85 (31%)
----------------------------------------------------- --------------- --------------- --------
EBITDA and Net Cash Interest Paid
2022 Q1 (GBPm) 2021 Q1 (GBPm) Change
---------------------------------------- --------------- --------------- -------
Operating surplus 89 112
Change in value of investment property - -
Amortised government grant (6) (6)
Depreciation 25 2 3
Impairment - -
Capitalised major repairs (14) (8)
---------------------------------------- --------------- --------------- -------
EBITDA 94 1 21 (22%)
---------------------------------------- --------------- --------------- -------
Net interest charge (30) (26)
Capitalised interest (11) (11)
---------------------------------------- --------------- --------------- -------
Net cash interest paid (41) (37) (11%)
---------------------------------------- --------------- --------------- -------
Statement of Financial Position
2022 Q1 (GBPm) 31 March 2022 (GBPm) Change (GBPm)
-------------------------------------------- --------------- ---------------------- --------------
Housing properties 11,146 11,043 103
Other fixed assets 84 8 5 (1)
Investments 1,708 1,692 16
Net current assets 723 784 (61)
-------------------------------------------- --------------- ---------------------- --------------
Total assets less current liabilities 13,661 13,604 57
-------------------------------------------- --------------- ---------------------- --------------
Total loans measured at amortised cost 5,542 5,521 21
Deferred social housing grant 2,077 2,083 (6 )
Other long-term liabilities 368 380 (12)
Capital and reserves 5,674 5,620 54
-------------------------------------------- --------------- ---------------------- --------------
Total non-current liabilities and reserves 13,661 13,604 57
-------------------------------------------- --------------- ---------------------- --------------
Non-Sales Activities
2022 Q1 2021 Q1 Change (GBPm)
(GBPm) (GBPm)
---------------------------------------- --------- -------- --------------
Net rents receivable 1 67 159 8
Charges for support services 3 3 -
Amortised government grants 6 6 -
Other income 5 3 2
---------------------------------------- --------- -------- --------------
Turnover 181 171 10
--------- -------- --------------
Management costs (19) (15) (4)
Service costs (24) (21) (3)
Maintenance costs (48) (40) (8)
Support costs (3) (3) -
Depreciation & impairment (25) (23) (2)
Other costs (8) (3) ( 5)
---------------------------------------- --------- -------- --------------
Operating costs (127) (105) (22)
Surplus on disposal of fixed assets 16 21 ( 5)
Change in value of investment property - - -
---------------------------------------- --------- -------- --------------
Operating surplus 70 87 (17)
---------------------------------------- --------- -------- --------------
Sales Activities
The cost of sales is inclusive of capitalised interest and
overhead costs:
2022 Q1 (GBPm) 2021 Q1 (GBPm) Change (GBPm)
-------------------------------------- --------------- --------------- --------------
Property sales income 61 9 0 (29)
Land sales income 2 2 5 (23)
-------------------------------------- --------------- --------------- --------------
Turnover from sales (excluding JV's) 63 1 15 (52)
Cost of property sales (52) (75) 23
Cost of land sales - (18) 1 8
Operating costs (7) (7) -
Impairment - - -
-------------------------------------- --------------- --------------- --------------
Total costs (excluding JV's) (59) (100) 41
-------------------------------------- --------------- --------------- --------------
Operating Surplus (excluding JV's) 4 1 5 (11 )
-------------------------------------- --------------- --------------- --------------
Joint venture turnover 118 5 4 64
Joint venture cost of sales (101) (43) (58)
Joint venture operating costs (2) ( 1) ( 1)
Impairment of investment in JV's - - -
-------------------------------------- --------------- --------------- --------------
Share of profits from joint ventures 15 10 5
-------------------------------------- --------------- --------------- --------------
AVERAGE SELLING PRICE
The average selling price, including JV's, for outright market
sales during the financial year to date was GBP565k (2021 Q1:
GBP461k) of which 34% were conducted under Help to Buy (2021 Q1:
83%). The average selling price of first tranche shared ownership
sales during the financial year to date was GBP393k (2021 Q1:
GBP470k) with an average first tranche sale of 37% (2021 Q1:
34%).
SALES MARGINS
The cost of sales is inclusive of capitalised interest and
overhead costs but excludes impairment:
Shared Outright Land Sales Outright Sales (JV's) 2022 Q1 2021 Q1 Change
Owner- Sales (Non-JV)
ship
(GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm)
----------------------- -------- ---------------- ----------- ---------------------- -------- --------- -------
Turnover 3 4 2 7 2 118 1 81 1 69 12
Cost of sales (30) (22) - (101) (153) (136) (17)
----------------------- -------- ---------------- ----------- ---------------------- -------- --------- -------
Gross profit 4 5 2 17 2 8 33 (5)
----------------------- -------- ---------------- ----------- ---------------------- -------- --------- -------
Gross sales EBITDA
margin 12% 19% - 14% 15% 20% (5%)
----------------------- -------- ---------------- ----------- ---------------------- -------- --------- -------
Operating costs (3) (2) (2) (2) (9) (8) (1)
----------------------- -------- ---------------- ----------- ---------------------- -------- --------- -------
Operating surplus 1 3 - 15 19 25 (6)
----------------------- -------- ---------------- ----------- ---------------------- -------- --------- -------
Net sales EBITDA
margin 3% 11% - 13% 1 0 % 15% (5%)
----------------------- -------- ---------------- ----------- ---------------------- -------- --------- -------
UNSOLD STOCK
As at 30 June 2022, L&Q, including joint ventures, held
1,503 completed homes as unsold stock with a projected revenue of
GBP246m. Projected revenue for shared ownership assumes a first
tranche sale of 25%. Of the total unsold stock 30% has been held as
stock for less than one month.
The increase in completed homes held as unsold stock compared to
L&Q's last trading statement reflects a high quantity of
handovers of shared ownership properties on specific schemes.
L&Q's forward order book excluding joint ventures consists
of 71 exchanged homes with projected revenue of GBP15m and 359
reservations with projected revenue of GBP69m. Of the 236 completed
homes held as unsold stock in joint ventures, 62% are either
reserved or exchanged.
Tenure Projected Revenue No. of Homes <1 Month 1-3 Months 3-6 Months 6-12 Months >12 Months
(GBPm)
------------------- ------------------ ------------- --------- ----------- ----------- ------------ -----------
Shared Ownership 117 1 ,068 2 83 3 04 1 38 236 107
Outright Sale
(non-JV's) 86 1 99 9 6 7 3 4 4 5 17
------------------- ------------------ ------------- --------- ----------- ----------- ------------ -----------
Total excluding
JV's 203 1,267 379 3 11 172 2 81 124
Outright Sale
(JCA's) 5 88 22 - 64 1 1
Outright Sale
(JCE's) 39 148 43 31 28 21 25
------------------- ------------------ ------------- --------- ----------- ----------- ------------ -----------
Total Joint
Ventures 44 236 65 31 92 22 26
------------------- ------------------ ------------- --------- ----------- ----------- ------------ -----------
Total Unsold Stock 246 1,503 444 342 264 303 150
------------------- ------------------ ------------- --------- ----------- ----------- ------------ -----------
NET DEBT AND LIQUIDITY
As at 30 June 2022, net debt (excluding derivative financial
liabilities) was GBP5,354m (as at 31 March 2022: GBP5,314m) and
available liquidity within the group in the form of committed
un-drawn revolving credit facilities and non-restricted cash was at
GBP1,130m (as at 31 March 2022: GBP1,179m). Approximately 54% of
L&Q's loan facilities and 64% of drawn loan facilities are at a
fixed cost.
UNENCUMBERED ASSETS
2022 Q1 31 March 2022
---------------------------------------------------------------------------- --------- --------------
No. of units under management 119,480 118,434
No. of social housing homes provided as collateral against debt facilities (59,380) (59,258)
No. of private rented homes provided as collateral against debt facilities (1,295) (1,107)
---------------------------------------------------------------------------- --------- --------------
Total no. of unencumbered units under management 58,805 58,069
% of units under management held as collateral against debt facilities 51% 51%
Unencumbered asset ratio(12) 44% 44%
---------------------------------------------------------------------------- --------- --------------
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+/Stable
------------------------- ---------- ---------- ----------
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 + impairment / turnover from sales
including joint ventures
(5) Operating surplus from sales + impairment / 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 (total loans measured at amortised cost +
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
the 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
END
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