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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 | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.275 | 0.28% | 99.60 | 96.75 | 102.45 | 99.90 | 99.45 | 99.55 | 0 | 16:24:11 |
From Nov 2022 to Nov 2024
TIDM44EB
RNS Number : 7889I
London & Quadrant Housing Trust
09 August 2023
London & Quadrant Housing Trust Trading Update for the period ending 30 June 2023
London & Quadrant Housing Trust ('L&Q') is today issuing its consolidated unaudited trading update for the three months ended 30 June 2023 ('2023 Q1'). All statement of comprehensive income comparatives are to L&Q's consolidated unaudited prior year equivalent period being the three months ended 30 June 2022 ('2022 Q1').
HIGHLIGHTS
-- There are 108,825 homes owned or managed (as at 31 March 2023: 108,261) -- L&Q has completed 701 new residential homes (2022 Q1: 1,295) -- Turnover was GBP242m (2022 Q1: GBP244m) -- EBITDA(1) was GBP67m (2022 Q1: GBP94m) -- EBITDA margin(2) was 27% (2022 Q1: 26%) -- EBITDA margin (excluding sales)(3) was 37% (2022 Q1: 42%) -- Gross sales EBITDA margin(4) was 5% (2022 Q1: 15%) -- Net sales EBITDA margin(5) was (7%) (2022 Q1: 10%) -- EBITDA / interest cover(6) was 119% (2022 Q1: 231%) -- EBITDA social housing lettings interest cover(7) was 108% (2022 Q1: 192%) -- Operating surplus was GBP68m (2022 Q1: GBP89m) -- Debt to assets(8) was 40% (2022 Q1: 39%) -- Sales as a % of turnover(10) was 23% (2022 Q1: 51%)
Commenting on the results Waqar Ahmed, Group Director, Finance said:
"L&Q's Q1 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 GBP77m (2022 Q1: GBP62m) 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.
Our Health has carried out over 20,000 homes visits and installed nearly 14,000 humidity sensors. We have completed inspections on 1,031 of the c. 1,800 buildings where this is required by new building safety legislation, begun remediation works on 74 buildings and have replaced, installed or upgraded fire alarm systems benefiting nearly 3,000 homes.
Our commitment to lower our risk profile and focus on our existing development pipeline is reflected by the continued reduction in homes approved of 24,934 (2022 Q1: 28,261), the projected cost to complete of GBP3.0bn (2022 Q1: GBP4.0bn) and declining housing starts and completions. In the year to date we have completed 701 new residential homes (Q1 2022: 1,295) of which 75% (Q1 2022: 62%) are for social housing tenures. For the financial year ending 31 March 2024 we expect c 1,100 starts and c 3,000 handovers.
We continue to remain cautious noting prolonged cost inflation and increasing mortgage rates which is impacting buyer affordability. Reservations for outright sales remain subdued, however, the shared ownership market continues to be resilient despite market headwinds."
FORWARD GUIDANCE FOR THE YEARING 31 MARCH 2024
L&Q's forward guidance is unchanged from our last trading statement, but in recognition of prolonged inflation expectations and higher interest rates we expect EBITDA / interest metrics to be at the lower end of guidance. We project EBITDA in the range of GBP400m to GBP420m and gross capital expenditure(11) to be c. GBP850m, the peak in our medium-term projections. Our projections for surplus after tax are expected to be in the range of GBP300m to GBP320m. Net debt is expected to be stable at c. GBP5.3bn. We expect to deliver c. 3,000 new residential homes of which c. 60% is expected to be for social housing tenures.
Financial Metrics Forward Guidance to 31 March 2024 ------------------------------------------------- ---------------------------------- EBITDA margin(2) 29% - 31% EBITDA margin (excluding sales)(3) 45% - 47% Gross sales EBITDA margin(4) 10% - 12% EBITDA interest cover(6) 170% - 180% EBTDA Social housing lettings interest Cover(7) 120% - 130% Debt to assets(8) c. 39% Gross debt to EBITDA(9) 13x - 14x Sales as a % of turnover(10) c.40% ------------------------------------------------- ----------------------------------
HOUSING COMPLETIONS
L&Q, including joint ventures, has completed 701 (2022 Q1: 1,295) residential units in the financial year to date. This comprises of 523 (2022 Q1: 807) completions for social housing tenures (75%) and 178 (2022 Q1: 488) completions for market tenures. During that same time 10 new build residential units commenced on site (2022 Q1: 698) with the majority of starts being later phases of existing developments.
DEVELOPMENT PIPELINE
L&Q, including joint ventures, is operating from 160 (2022 Q1: 192) active sites. L&Q has approved an additional 92 (2022 Q1: 206) homes during the financial year bringing total units in the approved development pipeline to 24,934 (2022 Q1: 28,261), of which 85% are currently on site. Of the homes approved in the development pipeline 57% are for social housing tenures and 43% are for market tenures. L&Q holds a further potential 83,050 (2022 Q1: 75,780) 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 GBP3.0bn (2022 Q1: GBP4.0bn) of which GBP2.5bn (83%) is currently committed (2022 Q1: GBP3.3bn).
UNAUDITED FINANCIALS
The unaudited financials exclude further adjustments that are subject to audit review.
Statement of Comprehensive Income
Hot Features
Premium
2023 Q1 (GBPm) 2022 Q1 (GBPm) Change
----------------------------------------------------- --------------- --------------- --------
Turnover
Non-sales 199 1 81
Sales 43 63
----------------------------------------------------- --------------- --------------- --------
242 244 ( 1 %)
Operating costs and cost of sales
Non-sales (141) (127)
Sales (46) (59)
----------------------------------------------------- --------------- --------------- --------
(187) (186) (1%)
Surplus on disposal of fixed assets and investments 14 16
Share of profits from joint ventures (1) 15
Change in value of investment property - -
----------------------------------------------------- --------------- --------------- --------
Operating surplus 68 89 ( 24 %)
Net interest charge (49) (30)
Other finance income/ (costs) (4) -
Taxation - -
----------------------------------------------------- --------------- --------------- --------
Surplus for the period after tax 15 59 ( 75 %)
----------------------------------------------------- --------------- --------------- --------
EBITDA and Net Cash Interest Paid
2023 Q1 (GBPm) 2022 Q1 (GBPm) Change
---------------------------------------- --------------- --------------- -------
Operating surplus 68 89
Change in value of investment property - -
Amortised government grant (7) (6)
Depreciation 26 2 5
Impairment - -
Capitalised major repairs (20) (14)
---------------------------------------- --------------- --------------- -------
EBITDA 67 94 (29%)
---------------------------------------- --------------- --------------- -------
Net interest charge (49) (30)
Capitalised interest (8) (11)
---------------------------------------- --------------- --------------- -------
Net cash interest paid (57) (41) (39%)
---------------------------------------- --------------- --------------- -------
Statement of Financial Position
2023 Q 1 (GBPm) 3 1 March 2023 (GBPm) Change (GBPm)
-------------------------------------------- ---------------- ----------------------- --------------
Housing properties 11,388 11,350 38
Other fixed assets 80 8 8 (9)
Investments 1,568 1,559 9
Net current assets 5 43 165 378
-------------------------------------------- ---------------- ----------------------- --------------
Total assets less current liabilities 13,579 13,163 416
-------------------------------------------- ---------------- ----------------------- --------------
Loans due > one year 5,547 5,124 423
Unamortised grant liabilities 2,057 2,065 (7 )
Other long-term liabilities 364 379 (15)
Capital and reserves 5,610 5,595 15
-------------------------------------------- ---------------- ----------------------- --------------
Total non-current liabilities and reserves 13,579 13,163 4 16
-------------------------------------------- ---------------- ----------------------- --------------
Non-Sales Activities
2023 Q1 2022 Q1 Change (GBPm)
(GBPm) (GBPm)
---------------------------------------- --------- -------- --------------
Net rents receivable 1 83 167 16
Charges for support services 3 3 -
Amortised government grants 6 6 -
Other income 7 5 2
---------------------------------------- --------- -------- --------------
Turnover 199 1 81 18
--------- -------- --------------
Management costs (20) (19) (1)
Service costs (28) (24) (4)
Maintenance costs (58) (48) (10)
Support costs (3) (3) -
Depreciation & impairment (26) (25) (1)
Other costs (6) (8) 2
---------------------------------------- --------- -------- --------------
Operating costs (141) (127) (14)
Surplus on disposal of fixed assets 14 16 ( 3)
Change in value of investment property - - -
---------------------------------------- --------- -------- --------------
Operating surplus 7 2 70 ( 1)
---------------------------------------- --------- -------- --------------
Arrears
Current tenant arrears for all tenures are at 5.26% (as at 31 March 2023: 5.67%)
Sales Activities
The cost of sales is inclusive of capitalised interest and overhead costs:
2023 Q1 (GBPm) 2022 Q1 (GBPm) Change (GBPm)
-------------------------------------- --------------- --------------- --------------
Property sales income 43 6 1 (18)
Land sales income - 2 (2)
-------------------------------------- --------------- --------------- --------------
Turnover from sales (excluding JV's) 43 63 (20)
Cost of property sales (41) (52) 11
Cost of land sales - - -
Operating costs (5) (7) 2
Impairment - - -
-------------------------------------- --------------- --------------- --------------
Total costs (excluding JV's) (46) (59) 1 3
-------------------------------------- --------------- --------------- --------------
Operating Surplus (excluding JV's) (3) 4 (7 )
-------------------------------------- --------------- --------------- --------------
Joint venture turnover 14 118 (104)
Joint venture cost of sales (13) (101) 88
Joint venture operating costs (2) ( 2) -
Impairment of investment in JV's - - -
-------------------------------------- --------------- --------------- --------------
Share of profits from joint ventures ( 1) 15 (16)
-------------------------------------- --------------- --------------- --------------
AVERAGE SELLING PRICE
The average selling price for outright market sales during the financial year to date was GBP414k (2022 Q1: GBP565k). The average selling price of first tranche shared ownership sales during the financial year to date was GBP401k (2022 Q1: GBP393k) with an average first tranche sale of 32% (2022 Q1: 37%).
SALES MARGINS
The cost of sales is inclusive of capitalised interest and overhead costs but excludes impairment:
Shared Outright Land Sales Outright Sales 2023 Q1 2022 Q1 Change
Owner- Sales (Non-JV) (JV's)
ship
(GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm)
------------------ -------------- ---------------- ----------- ----------------- -------- ------------ --------
Turnover 3 4 9 - 14 57 1 81 (124)
Cost of sales (32) (9) - (13) (54) (153) 99
------------------ -------------- ---------------- ----------- ----------------- -------- ------------ --------
Gross profit 2 - - 1 3 28 (25)
------------------ -------------- ---------------- ----------- ----------------- -------- ------------ --------
Gross EBITDA
margin 6% - - 7% 5% 15% (10%)
------------------ -------------- ---------------- ----------- ----------------- -------- ------------ --------
Operating costs (2) (1) (2) (2) (7) (9) 3
------------------ -------------- ---------------- ----------- ----------------- -------- ------------ --------
Operating surplus - (1) (2) ( 1) (4) 19 (23)
------------------ -------------- ---------------- ----------- ----------------- -------- ------------ --------
Net EBITDA margin - (11%) - (7%) (7%) 10% (2 7 %)
------------------ -------------- ---------------- ----------- ----------------- -------- ------------ --------
UNSOLD STOCK
As at 30 June 2023, L&Q, including joint ventures, held 1,382 completed homes as unsold stock with a projected revenue of GBP216m. Projected revenue for shared ownership assumes a first tranche sale of 25%.
Of the total unsold stock, 23% has been held as stock for less than one month and 88% 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 360 and sold 268 shared ownership homes.
L&Q's forward order book excluding joint ventures consists of 50 exchanged homes with projected revenue of GBP7m and 265 reservations with projected revenue of GBP34m.
Tenure Projected Revenue No. of Homes <1 Month 1-3 Months 3-6 Months 6-12 Months >12 Months
(GBPm)
------------------- ------------------ ------------- --------- ----------- ----------- ------------ -----------
Shared Ownership 159 1 ,211 2 59 112 250 1 94 396
Outright Sale
(non-JV's) 47 1 19 55 1 - 31 32
------------------- ------------------ ------------- --------- ----------- ----------- ------------ -----------
Total excluding
JV's 206 1,330 3 14 113 250 225 428
Outright Sale - - - - - - -
(JCA's)
Outright Sale
(JCE's) 10 52 4 7 1 28 12
------------------- ------------------ ------------- --------- ----------- ----------- ------------ ----------- Total Joint Ventures 10 52 4 7 1 28 12 ------------------- ------------------ ------------- --------- ----------- ----------- ------------ ----------- Total Unsold Stock 216 1,382 318 120 251 253 440 ------------------- ------------------ ------------- --------- ----------- ----------- ------------ -----------
NET DEBT AND LIQUIDITY
As at 30 June 2023, net debt (excluding derivative financial liabilities) was GBP5,449m (as at 31 March 2023: GBP5,294m) and available liquidity within the group in the form of committed un-drawn revolving credit facilities and non-restricted cash was at GBP1,044m (as at 31 March 2023: GBP1,222m). Approximately 54% of L&Q's loan facilities and 63% of drawn loan facilities are at a fixed cost.
UNENCUMBERED ASSETS
2023 Q1 31 March 2023
---------------------------------------------------------------------------- --------- --------------
No. of homes owned or managed 108,825 108,261
No. of social housing homes provided as collateral against debt facilities (55,775) (56,927)
No. of private rented homes provided as collateral against debt facilities (1,295) (1,295)
---------------------------------------------------------------------------- --------- --------------
Total no. of unencumbered homes owned or under management 51,755 50,039
% held as collateral against debt facilities 52% 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
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August 09, 2023 04:04 ET (08:04 GMT)
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