Financial results underline L&Q’s commitment to quality, safety and social purpose
L&Q today announces financial results which underline a commitment to investing record amounts in the safety and quality of existing homes, tackling the housing crisis by creating 100,000 new homes, and transforming services to put customers at the heart of everything it does.
In a challenging year with an expected reduction in year-on-year post-tax surplus, an increase in health and safety costs and a significant remediation bill, the charitable housing association has still achieved a turnover of £937 million, a surplus of £202 million and maintained its top-tier ratings for governance and viability. L&Q’s surpluses will be re-invested back into its core social mission.
Other highlights include:
- L&Q completed 2,874 new homes and started on site on an additional 6,428 homes. Some 60% of these homes will help low to intermediate income households have a place to call home.
- L&Q’s development pipeline now stands at 50,400, with 16,000 new homes already on site. In addition, L&Q Estates currently controls land capable of delivering another 46,500 homes, bringing the total number of plots under L&Q’s control to 96,900.
- Plans were announced for L&Q to invest £4 billion to create 20,000 quality new homes and neighbourhoods in the North West through the proposed acquisition of Trafford Housing Trust. Talks between L&Q and THT continue to progress.
- Over the last year, cladding was removed on 13 blocks and replacement will be completed this summer. Additionally, more than 2,000 fire doors were replaced, a sprinkler refit programme commenced, and more than 2,500 fire risk assessments were completed.
- Over the last year L&Q responded to 300,000 reactive repairs, completed 8,000 internal and external redecoration jobs, and installed 3,000 kitchens, 2,000 windows and doors, 750 roofs, 400 bathrooms, 2,700 boilers, and remote monitoring systems for lifts in 56 blocks.
- The L&Q Foundation helped over 600 people find jobs and supported a further 227 through education and training. The Foundation awarded £5.7 million in grants to goods causes that will directly benefit local neighbourhoods.
- A new “void standard” was introduced to abolish inequality between residents of new and old homes, resulting in a 30% increase in satisfaction with re-lets.
- L&Q’s commitment to its motivated and talented workforce was confirmed with the achievement of the Investors in People standard at Gold level.
Waqar Ahmed, Group Director of Finance at L&Q, said: “Our financial results reflect what has undoubtedly been a challenging year. However, behind the headline figures is the story of how L&Q has put social purpose, quality homes, health and safety, tackling the housing crisis and the needs of our customers at the heart of everything we do.
“Against a background of political and economic uncertainty, we took the decision to invest record amounts in the quality and safety of existing homes, continue tackling the housing crisis by creating more new homes, continue investing in our communities, and investing in the transformation of our business for the benefit of our residents, colleagues and stakeholders.”
Mr Ahmed added: “Whilst the decisions made and weaker market conditions have resulted in a year-on-year reduction in surplus after tax, we remain confident in our future prospects supported by the strength of our balance sheet, our geographical expansion, our ability to service debt and our strong liquidity position.
“As always, L&Q faces the year ahead in a strong financial position, with an engaged and committed workforce that will enable us to navigate all risks and take advantage of further opportunities as we deliver services and homes that everyone can be proud of.”
NOTES TO EDITORS
The following figures are selected highlights from L&Q’s Financial Statements 2019. The full statements can be downloaded at https://www.lqgroup.org.uk/about/finance-performance-and-governance/financial-statements/
- Invested £251 million in improving and maintaining existing homes (2018: £173 million) of which £241 million was on social housing;
- Total investment of £1,136 million to help build much needed new homes;
- Invested £6 million in community investment initiatives through the £250 million fund made available to the L&Q Foundation;
- Turnover for the period was £937million (2018: £1,026 million), of which 58% was from core social housing lettings activities (2018: 51%);
- Operating margins on core business social lettings remained strong at 37% (2018: 46%) against 2018 sector average of 30%, with the decrease attributable to the increase expenditure on maintenance.
- Rent arrears are 4.5% (2018: 3.5%) on general needs provision, through a proactive approach to rent collection and managing the ongoing risks of welfare reform. This puts L&Q in the top quartile among its peers;
- Total reserves stand at £4.78 billion (2018: £4.58 billion);
- The group continues to maintain a strong financial position with net assets increasing by £192m to £4,776m in the year (2018: £4,584m).
- Gearing being net debt to total assets less current liabilities is within internally set parameters at 46% and EBITDA MRI to interest payable is at 166%.
The safety of residents is L&Q’s number one priority, but the fire safety work undertaken comes at a considerable cost.
L&Q has already invested £18 million on fire safety improvements, including replacing ACM cladding where necessary, and a further £4.6 million installing over 2,000 new fire doors and carrying out Fire Risk Assessments. These assessments will continue, and any issues raised will be dealt with immediately.
Post-Grenfell, L&Q also joined the Government’s early adopters steering group, working with the Ministry of Housing, Communities and Local Government (MHCLG) to trial ways of working in line with the recommendations of Dame Judith Hackitt’s review of building regulations and directly testing policy to determine the practicalities and effectiveness of implementation ahead of legislation. L&Q is fully committed to sharing best practice to encourage culture change and leadership across the industry.
Quality has naturally been in the spotlight since Grenfell, and L&Q was shown to have let residents down at a new development in South London in a national newspaper article last summer. Group Board and Executive Group immediately established a ‘Task Force’ to urgently identify all other challenging schemes and resolve their issues, with an independent review commissioned to look into wider issues.
The task force identified 16 challenging schemes, and by July this year L&Q had completed 81% of the key work packages that were reported to the regulator. Ten of the 16 schemes identified are now complete, and the work packages that remain outstanding are because of some more complex issues requiring greater work than initially expected.
The independent review has found that L&Q is making excellent progress and very much on the right track, but L&Q will not rest until all these works are completed and will learn from mistakes to ensure they are not repeated in future.
While there was a strong focus on these challenging schemes, L&Q has intensified its focus on quality more generally. Over the last year L&Q completed 8,000 internal and external redecoration jobs, and installed 1,500 kitchens, 2,800 windows and doors, 750 roofs, 350 bathrooms, 2,700 boilers, and remote monitoring systems for lifts in 56 blocks. A new void standard has seen a 30 per cent increase in satisfaction with re-lets, and the inspection regime for all new homes to ensure compliance with the new quality standard has been substantially increased.
We have also established a new product innovation team to look at how we can use technology to drive supply and quality through standardising components.