L&Q has reported a post-tax surplus of 268% last year but new home starts fell 70%, its latest unaudited figures have shown.
Waqar Ahmed said L&Q was “committed” to lowering its risk profile (picture: L&Q)
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The large London housing association posted a post-tax surplus of £147m for the 2023-24 financial year, up 268% compared to the £40m it recorded in 2022-23.
Meanwhile its operating surplus, which excludes some one-off payments, more than doubled from £162m to £366m.
The rise in surplus came partly due to a rise in non-sales turnover, lower operating costs and a fall in the value of the landlord’s investment property.
However, L&Q warned that its results excluded any impairments subject to audit review. The landlord estimated that it could face impairment charges of £25m-£65m, which would lower the operating surplus figure.
Earnings before interest, taxes, depreciation and amortisation (EBITDA) – which would not be affected by any impairment charges – were £349m, up year on year from £313m but “lower than guidance” due to “further development defects and prolonged cost inflation”.
Turnover in 2023-24 was £1.12bn, slightly lower than the previous year’s £1.18bn.
Meanwhile, L&Q’s development programme showed signs of slowing. It completed 2,955 new homes in 2023-24, down from 4,047 the previous year. These completions comprised of 2,017 social and affordable homes and 938 market tenure homes.
At the same time, just 813 new build homes were started on site compared to 2,760 in 2022-23, a fall of 71%. The total number of approved homes in L&Q’s development pipeline stood at 21,209, down from 25,594 the previous year.
Due to higher mortgage rates, sales of new homes were “subdued”, although demand remained stable for shared ownership.
Average first tranche sales stood at 31%, similar to the previous year’s 35%. Sales as a percentage of overall turnover continued to fall at 35%, down from 48% in 2022-23.
The landlord invested £328m in its maintenance programme in 2023-24, down from £378m in 2022. It also began the first year of a £3bn, 15-year major works programme to bring all homes up to the Decent Homes Standard.
Waqar Ahmed, group director of finance at L&Q, said the landlord had entered into contracts for new housing and finance management systems that will “enhance operational efficiency and the service we offer to our residents”.
He said that L&Q “retained a well-capitalised balance sheet” with net debt broadly stable at £5.4bn and available liquidity of £1bn.
“We remain committed to lower our risk profile,” he said. “The projected cost to complete our development pipeline continues to reduce” at £2.5bn, down from £3.1bn in 2023.
“We are also lowering risk and improving our ability to offer more focused customer service by divesting of some homes outside our core strategic areas of London and Manchester via our stock rationalisation programme,” he added.
For the 2024-25 financial year, L&Q said it projected an operating surplus between £410m and £430m, and EBITDA in the range of £320m to £340m.
It expected to deliver 2,600 new homes, of which 80% would be affordable housing tenures.
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