L&Q's strong financial performance boosts housing supply
Published by Max Salsbury for 24dash.com in Housing and also in Development, Finance
L&Q's strong financial performance to boost housing supply
Social landlord L&Q says it has boosted the supply of new housing and delivered record investment in existing homes and communities across London and the South East on the back of its strong financial performance.
In the year ending March 2014, L&Q invested more than £300 million to build 1,000 new homes, bringing its total stock to 71,000, and will complete a further 2,000 in the year ahead.
Its development pipeline is now the largest of any housing association in London, with 13,000 new homes planned over the next five years.
L&Q was also able to increase investment in existing properties to around £50m last year, with almost 2,000 residents now having a new kitchen and over 1,600 more a new bathroom.
A further £100m was spent on reactive works to keep homes in good repair throughout the year, especially during the worst winter since records began.
And through the L&Q Foundation around 900 residents have started work or training. The most financially challenged are collectively £2.3m better off and a new L&Q apprentices programme has been launched to offer opportunities within the organisation to residents and young people.
Additionally, the EnergySave programme, funded by the foundation, has seen experts visit 20,000 homes and independent evaluation shows that residents who took part have saved more than £400 on average.
To build on these successes, the foundation’s annual budget is being increased from £3m to £7m through an allocation of £100m of L&Q’s capacity.
Last year, L&Q's surplus increased to £174m (£118m in 2013), and the provider says that every penny has been reinvested in its "social mission".
L&Q's financial highlights:
• Surplus was generated by: £84m from driving procurement, treasury and operational efficiencies in the core business; £58m from commercial activities (open market sale, first tranche shared ownership sales, market rent); and £32m from asset disposals.
• During the year exceeded completion targets, providing around 1,000 new homes, of which 700 were for sub-market rent or low-cost homeownership.
• Turnover increased from £457m to £579m, which includes the sale of 965 homes (292 for shared ownership and 673 for outright sale).
• The 43% (2013: 46%) operating margin on social housing lettings remains amongst the best in the sector.
• Net gearing is well within parameters at 52% (down from 56% due to current levels of cash receipts from sales) and interest cover including asset sales is up to 386% (248% excluding asset sales). Loan facilities stand at £2.1 billion.
• Revenue reserves increased from £667m to £843m.
• The estimated open market value of assets increased by £1bn to £13bn, with a book value of £5bn.
Waqar Ahmed, L&Q Group director of finance, said: “The strength of our balance sheet combined with our financial results enables us to maintain the strongest confidence of our key stakeholders including investors. We have maintained our position in the top quartile of housing association credit ratings with Moody’s and Standard & Poor’s.
“The reduction in government grant levels means that we must seek funds from elsewhere if we are to continue to increase the provision of social housing. L&Q is a social enterprise and our business model is based on taking measured commercial risk and driving efficiencies in the engine room to increase capacity and deliver our social mission.
“This year, our surplus has allowed for further investment of £236m on new affordable housing properties, £48m on improving existing properties, £81 million on properties for sale, £23m on market rented properties, and an additional £5m on a Real Lettings property fund with the homelessness charity Broadway.
“Over the next 5 years we will spend some £4 billion developing over 13,000 new homes with at least a further 4,000 homes per annum thereafter."