L&Q reports record investment in existing and new homes as it publishes financial results 2022
L&Q today publishes financial results which demonstrate how the housing association is investing record amounts to deliver a step change in the quality and safety of existing homes while transforming services and building thousands of new affordable homes.
In the year-ended 31 March 2022, L&Q achieved an operating surplus of £271m (2021: £307m), EBITDA at £327m (2021: £374m) and a reduction in net debt which is £64m lower year-on-year at £5.3bn.
This strong financial performance enabled material increased investment in residents’ homes, with major repairs spend at £71m (2021: £34m) and total maintenance spend of £274m (2021: £192m).
Available liquidity at greater than £1.2bn demonstrates that L&Q has been successful in implementing prudent measures to conserve cash flows. This strong liquidity position leaves the organisation well placed to address future external uncertainty, which is supported by the strength of its balance sheet and the financial resilience and flexibility that it has demonstrated.
Building safety remains a priority, with L&Q continuing the delivery of one of the largest inspection and remediation programmes in the country, covering some 1,800 buildings containing over 32,300 homes. It has now completed safety inspections on 556 buildings, including a full intrusive inspection on all 192 buildings that are above 18 metres in height.
In December 2021 it became the first major housing association to commit to rectifying safety defects for leaseholders in buildings it had built at no cost to them, and at the beginning of 2022, it set a target to fully remediate all potential fire risks in buildings over 18 metres by 2026.
L&Q is also upgrading homes in other ways, providing new kitchens and bathrooms, heating and window upgrades, and low carbon measures such as air and ground source heat pumps and solar panels. Measures in the next couple of years include mechanical and engineering works, estate and environmental works, cyclical decorations, fire safety works, and works to specialist L&Q Living (LQL) homes, while also working towards an average Energy Performance Certificate (EPC) C’.
This investment will be in addition to spending on routine repairs and services to ensure the quality and safety of homes.
Waqar Ahmed, Group Finance Director at L&Q, said:
“These financial results demonstrate how we remain focused on the delivery of our strategic objectives, which prioritise investment in safety and the quality of existing homes and services.
“We expect that, over five years, these improvements to our residents’ homes will lead to a 30% reduction of customer contacts regarding maintenance issues. But where customers do need to contact us, we’re investing to provide great service, every time. Our aim is that 90% of issues will be resolved at the first point of contact. We want our customers to find us locally responsive and easy to deal with.
“As we make these changes, the views of our residents will be our guide and, ultimately, our judges. To ensure their voices are heard and acted on, we have a Residents Services Board and a resident sits on our main Group Board and is our Senior Independent Director.”
L&Q also remains committed to building more homes. In the last year, it completed a record 4,157 homes, of which 61% were for social tenures. Quality is paramount, and customers are reporting 90% satisfaction with the quality of their new homes, showing that a rigorous approach and a new design code is paying off. During the year, L&Q also started building an additional 2,103 homes.
Mr Ahmed said:
“Our investment in existing homes is coupled with a realistic and sustainable increase in new high-quality homes. At least half of the homes we build will be affordable and any profit we make on open market sales will support our core social purpose. We believe in, and will provide, mixed communities."
Crucial to L&Q’s social purpose is helping residents who are feeling the cost of living pressure, or who might need other support. Specialist teams have been recruited as part of a housing management restructure to support the most vulnerable residents, and the L&Q Foundation continues to invest in a range of far-reaching initiatives that tackle fuel and food poverty, educational programmes and opportunities for young people.
Mr Ahmed added:
“Our Pound Advice Service helps thousands of residents maximise income and minimise debt in the last financial year. We provide training programmes for over 1,000 residents every year, and our Place Makers fund works with local resident committees to channel grants to local groups that promote the wellbeing of residents by, for example, funding activities to help improve physical and mental health and bring communities together.
“L&Q Living continues to provide a range of Care and Support Services for 6,000 people across London and the South East. These services range from Later Life Living to Supported Living, alongside a small number of registered care homes.”
Following L&Q’s acquisition of Trafford Housing Trust (THT) in 2019, there has also been significant investment in the North West. The
Investment in existing THT homes has increased by £21m, including £11m spent on fire safety, and an increase of £2m per year in refurbishing empty homes to a higher standard. L&Q has reaffirmed long-term growth plans for 20,000 new homes in the North West as it works towards full integration with THT in 2023.
The following figures are selected highlights from L&Q’s Financial Statements 2022.
- Turnover increased by £60m to £1,112m (2021: £1,052m), the highest L&Q has ever achieved. Of this, 55% was generated from core social housing lettings activities (2021: 57%). A further 37% (2021: 35%) of turnover was from market sales activity, 3% (2021: 3%) from market rents and 5% other (2021: 4%).
- EBITDA fell by 13% in the year to £327m (2021: £374m). EBITDA MRI interest cover was 222% (2021: 254%), comfortably above lender covenants, and the EBITDA margin was 24% (2021: 30%).
- Surplus after tax was £154m, which was £54m lower compared to like-for-like performance in the previous year (2021: £208m).
Every penny of this will be reinvested into L&Q’s social purpose.
- Net debt was reduced by £64m to £5.3bn(2021: £5.3bn) through careful cash conservation and management during the year enabling repayment of loans.
- The Group continues to maintain a strong financial position with net assets increasing by £174m to £5,587m in the year (2021: £5,413m). The housing properties portfolio grew by £120m to £11,026m (2021: £10,906m) with the additions from a mix of investment in capital maintenance works and continued growth from the development programme, offset by stock rationalisation completed in the year.
- During the year L&Q invested £531m (2021: £523m) in new social housing, as it makes progress with its ambition to tackle the housing crisis. A further £114m (2021: £38m) was invested in private housing developed in-house and £76m (2021: £23m) in partnerships through joint ventures to generate profits to re-invest in the delivery of social housing.
- Total reserves stand at £5,587m (2021: £5,413m).
- Customer satisfaction with service delivery improved by 1% to 82% (2021: 81%).
- Top tier regulatory ratings remain at G1 for governance and a V1 for viability. We await confirmation of our ratings following an in-depth assessment by the regulator in July.
- At the date of publication, L&Q’s credit ratings are unchanged at A+/Stable (Fitch), A3/Stable (Moodys) and A-/Stable (S&P).
- The CQC rated 100% of care schemes as outstanding or good.
- In line with previous commitments, £322m has been set aside to undertake building safety works on a priority risk basis, as well as pursuing developers and applying for funding wherever possible.