TIDM44EB
RNS Number : 3048J
London & Quadrant Housing Trust
20 August 2021
London & Quadrant Housing Trust Trading Update for the
period ending 30 June 2021
London & Quadrant Housing Trust ('L&Q') is today issuing
its consolidated unaudited trading update for the three months
ending 30 June 2021 ('2021 Q1'). All statement of comprehensive
income comparatives are to L&Q's consolidated unaudited prior
year equivalent period being the three months ending 30 June 2020
('2020 Q1').
HIGHLIGHTS
-- There are 119,120 units in management (as at 31 March 2021: 117,788)
-- L&Q has completed 1,003 new residential homes (2020 Q1: 150)
-- Turnover was GBP286m (2020 Q1: GBP209m)
-- EBITDA(1) was GBP121m (2020 Q1: GBP96m)
-- EBITDA margin(2) was 36% (2020 Q1: 44%)
-- EBITDA margin (excluding sales)(3) was 59% (2020 Q1: 57%)
-- Gross sales margin(4) was 20% (2020 Q1: 20%)
-- Net sales margin(5) was 15% (2020 Q1: 8%)
-- EBITDA / interest cover(6) was 327% (2020 Q1: 260%)
-- EBITDA social housing lettings interest cover(7) was 189% (2020 Q1: 213%)
-- Operating surplus was GBP112m (2020 Q1: GBP84m)
-- Debt to assets(8) was 41% (2020 Q1: 42%)
-- Sales as a % of turnover(10) was 51% (2020 Q1: 25%)
Commenting on the results Waqar Ahmed, Group Director, Finance
said:
"L&Q continues to recover from the restrictions imposed
during the Covid-19 pandemic with our unaudited Q1 trading results
demonstrating a material year-on-year increase in turnover, EBITDA
and housing completions whilst retaining an exceptionally strong
liquidity position.
Forward guidance to the year ending 31(st) March 2022 remains
unchanged from our last trading update. This reflects our continued
strategy to divert a greater level of expenditure towards our
residents' homes as we commit to delivering those targets set out
in our five-year corporate strategy which prioritises investment in
safety and the quality of existing homes and services.
L&Q's renewed focus on residents' homes and services will
not diminish L&Q's commitment to tackling the UK housing crisis
through investment in new homes. In the three months to 30(th) June
2021, L&Q has completed 1,003 new residential homes, of which
64% are for social tenure - a clear signal that we are committed to
our social purpose and lowering our risk profile."
FORWARD GUIDANCE FOR THE YEARING 31ST MARCH 2022
The following assumes that current market conditions continue
and is unchanged from the guidance issued in our last trading
statement.
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) 24%
EBITDA margin (excluding sales)(3) 39%
Net sales margin(5) 10%
EBITDA interest cover(6) 220%
Social housing lettings EBITDA interest Cover(7) 136%
Debt to assets(8) 43%
Gross debt to EBITDA(9) 17x
Sales as a % of turnover(10) 51%
-------------------------------------------------- ----------------------------------
HOUSING COMPLETIONS
L&Q, including joint ventures, has completed 1,003 (2020 Q1:
150) residential homes in the financial year to date. This
comprises of 646 (2020 Q1: 91) completions for social housing
tenures and 357 (2020 Q1: 59) completions for market tenures.
During that same time 651 new build residential homes commenced on
site (2020 Q1: 760).
DEVELOPMENT PIPELINE
L&Q, including joint ventures, is operating from 196 (2020
Q1: 158) active sites. L&Q has approved an additional 135 (2020
Q1: 141) residential homes during the financial year to date
bringing total homes in the approved development pipeline to 31,888
(2020 Q1: 28,403), of which 69% are currently on site. This
represents 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 80,950 (2020 Q1: 72,042) 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 GBP4.9bn (2020 Q1: GBP5.3bn ) of which GBP4.1bn
(84%) is currently committed (2020 Q1: GBP4.3bn).
UNAUDITED FINANCIALS
The unaudited financials exclude further adjustments that are
subject to audit review:
Statement of Comprehensive Income
2021 Q1 (GBPm) 2020 Q1 (GBPm) Change
----------------------------------------------------- --------------- --------------- -------
Turnover
Non-sales 171 169
Sales 115 40
----------------------------------------------------- --------------- --------------- -------
286 209 37%
Operating costs and cost of sales
Non-sales (105) (98)
Sales (100) (38)
----------------------------------------------------- --------------- --------------- -------
(205) (136) (51%)
Surplus on disposal of fixed assets and investments 21 9
Share of profits from joint ventures 10 2
Change in value of investment property - -
----------------------------------------------------- --------------- --------------- -------
Operating surplus 112 84 33%
Net interest charge (26) (26)
Other finance income/ (costs) (1) (1)
Taxation - -
----------------------------------------------------- --------------- --------------- -------
Surplus for the period after tax 85 57 49%
----------------------------------------------------- --------------- --------------- -------
EBITDA and Net Cash Interest Paid
2021 Q1 (GBPm) 2020 Q1 Change
(GBPm)
---------------------------------------- --------------- -------- -------
Operating surplus 112 84
Change in value of investment property - -
Amortised government grant (6) (6)
Depreciation 23 23
Impairment - -
Capitalised major repairs (8) (5)
---------------------------------------- --------------- -------- -------
EBITDA 121 96 26%
---------------------------------------- --------------- -------- -------
Net interest charge (26) (26)
Capitalised interest (11) (12)
---------------------------------------- --------------- -------- -------
Net cash interest paid (37) (38) 3%
---------------------------------------- --------------- -------- -------
Statement of Financial Position
2021 Q1 (GBPm) 31 March 2021 (GBPm) Change (GBPm)
-------------------------------------------- --------------- --------------------- --------------
Housing properties 10,950 10,906 44
Other fixed assets 78 78 -
Investments 1,616 1,592 24
Net current assets 548 484 64
-------------------------------------------- --------------- --------------------- --------------
Total assets less current liabilities 13,192 13,060 132
-------------------------------------------- --------------- --------------------- --------------
Loans due > one year 5,183 5,152 31
Unamortised grant liabilities 2,132 2,123 9
Other long term liabilities 379 372 7
Capital and reserves 5,498 5,413 85
-------------------------------------------- --------------- --------------------- --------------
Total non-current liabilities and reserves 13,192 13,060 132
-------------------------------------------- --------------- --------------------- --------------
Non-Sales Activities
2021 Q1 2020 Q1 Change (GBPm)
(GBPm) (GBPm)
------------------------------------- --------- -------- --------------
Net rents receivable 159 157 2
Charges for support services 3 2 1
Amortised government grants 6 6 -
Other income 3 4 (1)
------------------------------------- --------- -------- --------------
Turnover 171 169 2
Management costs (15) (13) (2)
Service costs (21) (22) 1
Maintenance costs (40) (28) (12)
Support costs (3) (3) -
Depreciation & impairment (23) (23) -
Other costs (3) (9) 6
------------------------------------- --------- -------- --------------
Operating costs (105) (98) (7)
Surplus on disposal of fixed assets 21 9 12
------------------------------------- --------- -------- --------------
Operating surplus 87 80 7
------------------------------------- --------- -------- --------------
Sales Activities
The cost of sales is inclusive of impairment, capitalised
interest and overhead costs:
2021 Q1 (GBPm) 2020 Q1 (GBPm) Change (GBPm)
-------------------------------------- --------------- --------------- --------------
Property sales income 90 18 72
Land sales income 25 22 3
-------------------------------------- --------------- --------------- --------------
Turnover from sales (excluding JV's) 115 40 75
Cost of property sales (75) (17) (58)
Cost of land sales (18) (14) (4)
Operating costs (7) (7) -
-------------------------------------- --------------- --------------- --------------
Total costs (excluding JV's) (100) (38) (62)
-------------------------------------- --------------- --------------- --------------
Operating Surplus (excluding JV's) 15 2 13
-------------------------------------- --------------- --------------- --------------
Joint venture turnover 54 16 38
Joint venture cost of sales (43) (14) (29)
Joint venture operating costs (1) - (1)
-------------------------------------- --------------- --------------- --------------
Share of profits from joint ventures 10 2 8
-------------------------------------- --------------- --------------- --------------
AVERAGE SELLING PRICE
The average selling price, including JV's, for outright market
sales during the financial year to date was GBP461k (2020 Q1:
GBP468k) of which 83% were conducted under Help to Buy (2020 Q1:
75%). The average selling price of first tranche shared ownership
sales during the financial year to date was GBP470k (2020 Q1:
GBP431k) with an average first tranche sale of 34% (2020 Q1: 35%).
Shared ownership average selling price is higher than the outright
market sales due to the geographical location of properties sold in
the year to date.
SALES MARGINS
The cost of sales is inclusive of impairment, capitalised
interest and overhead costs:
Shared Outright Land Sales Outright Sales (JV's) Q1 2021 Q1 2020 Change
Owner- Sales (Non-JV)
ship
(GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm)
------------------- -------- ---------------- ----------- ---------------------- -------- --------- -------
Turnover 33 57 25 54 169 56 113
Cost of sales (25) (50) (18) (43) (136) (45) (91)
------------------- -------- ---------------- ----------- ---------------------- -------- --------- -------
Gross profit 8 7 7 11 33 11 22
------------------- -------- ---------------- ----------- ---------------------- -------- --------- -------
Gross margin 24% 12% 28% 20% 20% 20% -
------------------- -------- ---------------- ----------- ---------------------- -------- --------- -------
Operating costs (1) (3) (3) (1) (8) (7) (1)
------------------- -------- ---------------- ----------- ---------------------- -------- --------- -------
Operating surplus 7 4 4 10 25 4 21
------------------- -------- ---------------- ----------- ---------------------- -------- --------- -------
Net margin 21% 7% 16% 19% 15% 8% 7%
------------------- -------- ---------------- ----------- ---------------------- -------- --------- -------
UNSOLD STOCK
As at 30 June 2021, L&Q, including joint ventures, held 639
completed homes as unsold stock with a projected revenue of
GBP111m. Projected revenue for shared ownership assumes a first
tranche sale of 25%. Of the total unsold stock 42% has been held as
stock for less than one month.
L&Q's forward order book excluding joint ventures consists
of 15 exchanged homes with projected revenue of GBP3m and 192
reservations with projected revenue of GBP32m.
Tenure Projected Revenue No. of Homes <1 Month 1-3 Months 3-6 Months 6-12 Months >12 Months
(GBPm)
------------------- ------------------ ------------- --------- ----------- ----------- ------------ -----------
Shared Ownership 55 470 219 69 78 75 29
Outright Sale
(non-JV's) 33 77 16 6 5 9 41
------------------- ------------------ ------------- --------- ----------- ----------- ------------ -----------
Total excluding
JV's 88 547 235 75 83 84 70
Outright Sale
(JCA's) 1 4 0 1 3 0 0
Outright Sale
(JCE's) 22 88 36 1 17 11 23
------------------- ------------------ ------------- --------- ----------- ----------- ------------ -----------
Total Joint
Ventures 23 92 36 2 20 11 23
------------------- ------------------ ------------- --------- ----------- ----------- ------------ -----------
Total Unsold Stock 111 639 271 77 103 95 93
------------------- ------------------ ------------- --------- ----------- ----------- ------------ -----------
NET DEBT AND LIQUIDITY
As at 30 June 2021, net debt (excluding derivative financial
liabilities) was GBP5,449m (as at 31 March 2021: GBP5,385m) and
available liquidity within the group in the form of committed
un-drawn revolving credit facilities and non-restricted cash was at
GBP1,107m (as at 31 March 2021: GBP1,159m). Approximately 54% of
L&Q's loan facilities and 65% of drawn loan facilities are at a
fixed cost.
UNENCUMBERED ASSETS
Q1 2021 31 March 2021
---------------------------------------------------------------------------- --------- --------------
No. of units under management 119,120 117,788
No. of social housing homes provided as collateral against debt facilities (59,051) (60,085)
No. of private rented homes provided as collateral against debt facilities (1,107) (1,107)
---------------------------------------------------------------------------- --------- --------------
Total no. of unencumbered units under management 58,962 56,596
% of units under management held as collateral against debt facilities 51% 52%
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 / 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
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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