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| Name | Symbol | Market | Type |
|---|---|---|---|
| London Quad5.5% | LSE:44EB | London | Bond |
| Price Change | % Change | Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| -0.325 | -0.33% | 97.90 | 95.05 | 100.75 | 97.975 | 97.425 | 97.875 | 0 | 16:26:05 |
From Feb 2023 to Feb 2025
TIDM44EB
RNS Number : 9375S
London & Quadrant Housing Trust
09 November 2023
London & Quadrant Housing Trust Trading Update for the period ending 30 September 2023
London & Quadrant Housing Trust ('L&Q') is today issuing its consolidated unaudited trading update for the six months ended 30 September 2023 ('2023 Q2'). All statement of comprehensive income comparatives are to L&Q's consolidated unaudited prior year equivalent period being the six months ended 30 September 2022 ('2022 Q2').
HIGHLIGHTS
-- There are 109,276 units in management (as at 31 March 2023: 108,326) -- L&Q has completed 1,350 new residential homes (2022 Q2: 2,151) -- Turnover was GBP506m (2022 Q2: GBP533m) -- EBITDA(1) was GBP150m (2022 Q2: GBP164m) -- EBITDA margin(2) was 27% (2022 Q2: 23%) -- EBITDA margin (excluding sales)(3) was 35% (2022 Q2: 36%) -- Gross sales EBITDA margin(4) was 11% (2022 Q2: 15%) -- Net sales EBITDA margin(5) was 6% (2022 Q2: 9%) -- EBITDA interest cover(6) was 127% (2022 Q2: 194%) -- EBITDA social housing lettings interest cover(7) was 116% (2022 Q2: 140%) -- Operating surplus was GBP158m (2022 Q2: GBP172m) -- Debt to assets(8) was 40% (2022 Q2: 39%) -- Sales as a % of turnover(10) was 30% (2022 Q2: 51%)
Commenting on the results Waqar Ahmed, Group Director, Finance said:
"L&Q's Q2 trading results continue to reflect our stated objectives to divert a greater level of expenditure towards our resident's existing homes through our GBP3bn major works investment programme to address our strategic priorities of health & safety, quality of homes and improving services. In the year to date we have invested GBP156m (2022 Q2: GBP149m) in our maintenance programme which continues to deliver major internal and external works inclusive of measures to address damp and mould, fire safety, energy efficiency and wide-ranging estate improvements. We have also made significant progress on our transformation programme to deliver a simplified target operating model.
Our commitment to lower our financial risk profile and reduce earnings volatility is reflected by the declining approved development pipeline, lower year-on-year housing starts and completions, and the rationalisation of stock outside our geographical core.
Through management action, we have implemented deleveraging plans and have lowered guidance on gross capital expenditure to c. GBP725m from c. GBP850m. On a look-forward basis, capital expenditure is expected to peak this financial year and fall by c. 50% by the financial year ending 31(st) March 2026. This means that risk within the development pipeline, including inflation, has already been substantially absorbed. Whilst the outright sales market remains subdued, our exposure continues to decline. We remain confident in the shared ownership market that is competitive, well-positioned and resilient despite the ongoing uncertainty in the housing market."
SUSTAINABILITY
During Q2 2023, L&Q published its progress against specific sustainability objectives in accordance with the Sustainability Reporting Standard for Social Housing, a key part of our strategy to build transparency and collaboration. L&Q's Sustainability Report can be found at the following link: www.lqgroup.org.uk/about-landq/sustainability-at-lq
FORWARD GUIDANCE FOR THE YEARING 31 MARCH 2024
L&Q has lowered its guidance on key financial metrics due to c. GBP10m projected accelerated investment in our resident's existing homes, a c. GBP20m deferral of expected profits on the sale of fixed assets that are outside our geographical focus and a c. GBP10m increase in interest in recognition of prolonged and higher interest rate expectations.
We project EBITDA in the range of GBP370m to GBP390m (previous guidance GBP400m to GBP420m) that has a corresponding impact on EBITDA metrics. Gross capital expenditure(11) is expected to be c. GBP725m (previous guidance at c. GBP850m), being the peak in our medium-term projections. Net debt is expected to be stable at c. GBP5.3bn (unchanged). We expect c. 700 starts (previous guidance of c. 1,100) and to deliver c. 3,000 new residential homes (unchanged) of which c. 60% is expected to be for social housing tenures. Guidance on sales as a % of turnover has been lowered to c. 36% (previous guidance at c. 40%).
Financial Metrics Forward Guidance to 31 March 2024 ------------------------------------------------- ---------------------------------- EBITDA margin(2) 29% - 31% EBITDA margin (excluding sales)(3) 41% - 43% Gross sales EBITDA margin(4) 12% - 14% EBITDA interest cover(6) 155% - 165% EBTDA Social housing lettings interest Cover(7) 120% - 130% Debt to assets(8) c. 38% Gross debt to EBITDA(9) 14x - 15x Sales as a % of turnover(10) c.36% ------------------------------------------------- ----------------------------------
HOUSING COMPLETIONS
L&Q, including joint ventures, has completed 1,350 (2022 Q2: 2,151) residential homes in the financial year to date. This comprises of 904 (2022 Q2: 1,474) completions for social housing tenures (67%) and 446 (2022 Q2: 677) completions for market tenures (33%). During that same time 228 new build residential units commenced on site (2022 Q2: 1,173) with the majority of starts being later phases of existing developments.
DEVELOPMENT PIPELINE
L&Q, including joint ventures, is operating from 149 (2022 Q2: 185) active sites. L&Q has approved an additional 2 homes (2022 Q2: 952) during the financial year to date, bringing total homes in the approved development pipeline to 23,948 (2022 Q2: 28,341), of which 84% are currently on site. Of the homes approved in the development pipeline 56% are for social housing tenures and 44% are for market tenures. L&Q holds a further potential 84,519 (2022 Q2: 75,551) 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 GBP2.8bn (2022 Q2: GBP4bn) of which GBP2.3bn (82%) is currently committed (2022 Q2: GBP3.4bn).
UNAUDITED FINANCIALS
The unaudited financials exclude further adjustments that are subject to audit review.
Statement of Comprehensive Income
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2023 Q2 (GBPm) 2022 Q2 (GBPm) Change
----------------------------------------------------- --------------- --------------------- --------
Turnover
Non-sales 405 368
Sales 1 01 165
----------------------------------------------------- --------------- --------------------- --------
506 533 (5%)
Operating costs and cost of sales
Non-sales (288) (272)
Sales (94) (152)
----------------------------------------------------- --------------- --------------------- --------
(382) (424) 10%
Surplus on disposal of fixed assets and investments 3 0 3 9
Share of profits from joint ventures 4 26
Change in value of investment property - ( 2)
----------------------------------------------------- --------------- --------------------- --------
Operating surplus 1 58 172 ( 8 %)
Net interest charge (103) (62)
Other finance income/ (costs) (4) -
Taxation - -
----------------------------------------------------- --------------- --------------------- --------
Surplus for the period after tax 51 110 ( 54 %)
----------------------------------------------------- --------------- --------------------- --------
EBITDA and Net Cash Interest Paid
2023 Q2 (GBPm) 2022 Q2 (GBPm) Change
---------------------------------------- --------------- --------------- -------
Operating surplus 1 58 172
Change in value of investment property - 2
Amortised government grant (13) (1 3 )
Depreciation 5 1 51
Impairment ( 4) (7)
Capitalised major repairs (4 2 ) (4 1 )
---------------------------------------- --------------- --------------- -------
EBITDA 150 164 (9%)
---------------------------------------- --------------- --------------- -------
Net interest charge (103) (62)
Capitalised interest (15) (2 2 )
---------------------------------------- --------------- --------------- -------
Net cash interest paid (118) (84) (40%) ---------------------------------------- --------------- --------------- -------
Statement of Financial Position
2023 Q 2 3 1 March 2023 Change
(GBPm)
(GBPm) (GBPm)
-------------------------------------------- --------- ----------------- --------
Housing properties 11,521 11,354 167
Other fixed assets 81 8 8 (7)
Investments 1,6 12 1,569 43
Net current assets 561 174 387
-------------------------------------------- --------- ----------------- --------
Total assets less current liabilities 13,7 75 13,185 590
-------------------------------------------- --------- ----------------- --------
Loans due > one year 5,683 5,124 559
Unamortised grant liabilities 2,049 2,065 (1 6)
Other long-term liabilities 377 381 (4)
Capital and reserves 5,666 5,615 51
-------------------------------------------- --------- ----------------- --------
Total non-current liabilities and reserves 13,7 75 13,185 5 90
-------------------------------------------- --------- ----------------- --------
Non-Sales Activities
2023 Q2 2022 Q2 Change (GBPm)
(GBPm) (GBPm)
---------------------------------------- --------- -------- --------------
Net rents receivable 3 71 337 34
Charges for support services 6 6 -
Amortised government grants 1 3 13 -
Other income 1 5 12 3
---------------------------------------- --------- -------- --------------
Turnover 405 3 68 37
--------- -------- --------------
Management costs (40) (40) -
Service costs (57) (50) (7)
Maintenance costs (121) (107) (14)
Support costs (6) (6) -
Depreciation & impairment (47) (51) 4
Other costs (17) (18) 1
---------------------------------------- --------- -------- --------------
Operating costs (288) (272) (16)
Surplus on disposal of fixed assets 3 0 3 9 (9)
Change in value of investment property - (2) 2
---------------------------------------- --------- -------- --------------
Operating surplus 1 47 1 33 14
---------------------------------------- --------- -------- --------------
Arrears
Current tenant arrears for all tenures are at 5.91% (as at 31 March 2023: 5.67%).
Sales Activities
The cost of sales is inclusive of capitalised interest and overhead costs:
2023 Q2 (GBPm) 2022 Q2 (GBPm) Change (GBPm)
-------------------------------------- --------------- --------------- --------------
Property sales income 90 146 (56)
Land sales income 1 1 19 (8)
-------------------------------------- --------------- --------------- --------------
Turnover from sales (excluding JV's) 1 01 1 65 (64)
Cost of property sales (82) (116) 34
Cost of land sales (7) (26) 19
Operating costs (5) (17) 12
Impairment - 7 7
-------------------------------------- --------------- --------------- --------------
Total costs (excluding JV's) (94) (152) 58
-------------------------------------- --------------- --------------- --------------
Operating Surplus (excluding JV's) 7 1 3 6
-------------------------------------- --------------- --------------- --------------
Joint venture turnover 68 1 98 130
Joint venture cost of sales (61) (168) 107
Joint venture operating costs (3) ( 4) 1
Impairment of investment in JV's - - -
-------------------------------------- --------------- --------------- --------------
Share of profits from joint ventures 4 26 (22)
-------------------------------------- --------------- --------------- --------------
AVERAGE SELLING PRICE
The average selling price, including JVs, for outright market sales during the financial year to date was GBP516k (2022 Q2: GBP538k). The average selling price of first tranche shared ownership sales during the financial year to date was GBP403k (2022 Q2: GBP393k) with an average first tranche sale of 32% (2022 Q2: 36%).
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) 2023 Q2 2022 Q2 Change
Owner- Sales (Non-JV)
ship
(GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm)
--------------------- -------- ---------------- ----------- ---------------------- -------- --------- -------
Turnover 67 23 11 68 169 3 63 (194)
Cost of sales (6 2 ) (20) (7) (61) (150) (310) 160
--------------------- -------- ---------------- ----------- ---------------------- -------- --------- -------
Gross profit 5 3 4 7 19 5 3 (34)
--------------------- -------- ---------------- ----------- ---------------------- -------- --------- -------
Gross EBITDA margin 7% 13% 36% 10% 11% 15% (4%)
--------------------- -------- ---------------- ----------- ---------------------- -------- --------- -------
Operating costs (4) (1) - (3) (8) (21) 13
--------------------- -------- ---------------- ----------- ---------------------- -------- --------- -------
Operating surplus 1 2 4 4 11 32 (21)
--------------------- -------- ---------------- ----------- ---------------------- -------- --------- -------
Net EBITDA margin 1% 9% 36% 6% 7% 9% (2%)
--------------------- -------- ---------------- ----------- ---------------------- -------- --------- -------
UNSOLD STOCK
As at 30 September 2023, L&Q, including joint ventures, held 1,166 completed homes as unsold stock (2022 Q2: 1,339) with a projected revenue of GBP176m (2022 Q2: GBP211m). Projected revenue for shared ownership assumes a first tranche sale of 25%.
Of the total unsold stock, 6% has been held as stock for less than one month and 89% is for shared ownership, a tenure where we would expect to continue to show a higher comparative level of unsold stock due to bulk handovers in short time periods and limitations to pre-sale meaning gradual sales rates. In the year to date, L&Q has handed over 442 and sold 523 shared ownership homes.
L&Q's forward order book excluding joint ventures consists of 45 exchanged homes with projected revenue of GBP6m and 261 reservations with projected revenue of GBP37m.
Tenure Projected Revenue No. of Homes <1 Month 1-3 Months 3-6 Months 6-12 Months >12 Months
(GBPm)
------------------- ------------------ ------------- --------- ----------- ----------- ------------ -----------
Shared Ownership 138 1 ,040 54 5 290 285 406
Outright Sale
(non-JV's) 30 83 10 6 3 21 43
------------------- ------------------ ------------- --------- ----------- ----------- ------------ -----------
Total excluding
JV's 168 1,123 64 11 293 306 449
Outright Sale - - - - - - -
(JCA's)
Outright Sale
(JCE's) 8 43 2 6 6 5 24
------------------- ------------------ ------------- --------- ----------- ----------- ------------ ----------- Total Joint Ventures 8 43 2 6 6 5 24 ------------------- ------------------ ------------- --------- ----------- ----------- ------------ ----------- Total Unsold Stock 176 1,166 66 17 299 311 473 ------------------- ------------------ ------------- --------- ----------- ----------- ------------ -----------
NET DEBT AND LIQUIDITY
As at 30 September 2023, net debt (excluding derivative financial liabilities) was GBP5.5bn (as at 31 March 2023: GBP5.3bn) and available liquidity within the group in the form of committed un-drawn revolving credit facilities and non-restricted cash was GBP0.9bn (as at 31 March 2023: GBP1.2bn). Approximately 54% of L&Q's loan facilities and 62% of drawn loan facilities are at a fixed cost. L&Q has GBP26m of refinancing risk within the next 12 months.
UNENCUMBERED ASSETS
2023 Q2 31 March 2023
---------------------------------------------------------------------------- --------- --------------
No. of homes owned or managed 109,276 108,326
No. of social housing homes provided as collateral against debt facilities (57,120) (56,924)
No. of private rented homes provided as collateral against debt facilities (1,295) (1,295)
---------------------------------------------------------------------------- --------- --------------
Total no. of unencumbered homes owned or under management 50,861 50,107
% of units under management held as collateral against debt facilities 53% 54%
Unencumbered asset ratio(12) 44% 45%
---------------------------------------------------------------------------- --------- --------------
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/Negative 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 + 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 (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 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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END
TSTUKVWRORUARRA
(END) Dow Jones Newswires
November 09, 2023 04:00 ET (09:00 GMT)
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