L&Q reveals £21m deficit after booking loss from strategic land business sale

It meant L&Q fell to a £21m post-tax deficit in the six months to the end of September, compared with a £51m surplus the previous half-year.

The group’s bottom line was also hurt by £116m in interest charges, compared with £103m in the last half-year.

It emerged last month that L&Q had started paying higher interest on a £300m bond after it failed to hit a key emissions target.

The L&Q Estates sale is part of a shift by the landlord to focus on its core areas of Greater London and Greater Manchester, while investing more in existing stock.

L&Q confirmed today it was also continuing to sell homes outside of its core areas as part of a stock-rationalisation programme. The group generated £58m of earnings in the half-year from asset sales, nearly double that of the same period last year.

The group’s overall turnover also rose, up 7% to £540m. This helped the group’s surplus, on an operating basis, increase by 37% to £217m.

On development, L&Q completed 950 homes in its latest half-year, down from the 1,350 it handed over in the same period last year. Like many of its peers, the G15 landlord is dialling down its development ambitions as it spends more on existing stock.

Last month, Fitch downgraded its credit rating on L&Q to A, due to what it called “worsening financial leverage metrics”. The rating agency also kept its negative outlook on the landlord.

In its last full year, L&Q reported a post-tax surplus of £117m on turnover of £1.12bn.

However, the audited surplus figure was £30m lower than an unaudited figure disclosed in May, mainly due to a £21m impairment on fixed assets.

It was also announced last month that Waqar Ahmed, L&Q’s long-serving group finance director, will step down next March.