Series of impairments reduces figure by 拢53m
Housing association giant L&Q Group has been forced to make major additional writedowns in its accounts wiping out more than a quarter of its expected surplus for the 2021/22 financial year.
The 107,000-home association said that the additional impairments reduced its anticipated surplus after tax by 拢53m from the 拢207m it reported in a trading update in May, to just 拢154m in its final audited accounts.
While the trading update had already included significant impairments, the further writedowns, revealed in a statement accompanying publication of its audited accounts, includes a 拢24m charge for 鈥渂uild defect liabilities鈥� that had not originally been anticipated in the earlier trading update. It also included an additional 拢17m of fixed asset impairments and 拢12m of current asset impairments.
The writedown means the London-based association鈥檚 financial performance is well below that of the previous year, when the post-tax surplus was 拢208m, despite its turnover having risen to 拢1.11bn, and the association having completed construction of 4,157 homes 鈥� a record for the sector. It is the lowest surplus it has recorded for the last five years.
The change pushed the social landlord鈥檚 margin down to 24%, from 26% in the numbers given at the trading update, and compare with 30% last year.
In total, L&Q Group wrote off 拢56m against houses under development in the year, with the organisation referencing problems on three significant projects.
L&Q, which appointed its new chief executive Fiona Fletcher-Smith earlier this year, retains the highest ratings from the social housing rating for both financial viability and governance, and has 鈥淎鈥� ratings from all three major credit ratings agencies.
Asked to further explain the change in its reported financial position, a spokesperson for L&Q said that while all the issues had been known when the trading statement was issued, financial rules meant it had to update its estimates for impairments as close as possible to the signing date of the financial statements, and at that later date additional information was available, such as around expected expenditure on build defects.
The spokesperson said: 鈥淭he impairment reported is limited within a few challenging schemes in L&Q鈥檚 large and diverse development pipeline and is not a widespread issue.
鈥淭he impairment reported in the year end accounts reflects the most up to date assessment of development schemes as at the date of publication.鈥�
No comments yet