Half-Year Results Update
Stonewater Funding plc
STONEWATER H1 2024/25 RESULTS UPDATE
Stonewater's Half-Year Results Update covering the period to 30 September 2024
Chief Financial Officer's Statements
As we look ahead to our 10th anniversary celebrations in January 2025, we are pleased to report our financial results for the six months to end-September 2024.
These interim, unaudited results highlight our underlying performance, reflected in our key indicators on operating margin, sales margin and interest cover since the end of our previous financial year 2023-24.
Over the past ten years, Stonewater has grown to become one of the largest social housing providers in the UK, with 40,000 homes for more than 93,000 customers. Our mission to offer good quality homes and services for people whose needs are not met by the open market remains at the heart of everything we do.
Stonewater has a relatively young stock profile and we have an ongoing development programme of affordable homes, which has been moderated reflecting the broader economic conditions.
There has been significant political change in the UK in the past six months and whilst we welcome the new Government's commitment to build 1.5m homes, we note that funding remains a critical issue in the affordable housing sector and await further clarity on this.
In April, we were delighted to agree £254m funding package with five lenders, which will support our investment in new and existing affordable homes. Provided by both existing funders, including Barclays, NatWest and Nationwide, as well as new partners, ABN AMRO and HSBC, the new revolving credit facilities run for 5 to 10 years.
Our financial strength, confirmed by the affirmation of our top G1 and V1 ratings for governance and viability from the Regulator of Social Housing in November 2024, allows us to continue to invest in existing homes, provide new and much-needed affordable, energy efficient homes and support our customers. We are yet to be assessed for the Regulator's new consumer gradings
Given wider challenges in the sector, the change of credit rating from Standard & Poor's to A- was anticipated. We recognise that our commitment to invest in our existing homes has affected this rating but are confident that the work we have planned will improve the homes we manage and help customers live in warmer, safer homes. The outlook on our credit ratings is now stable.
We're continuing to grow as well through partnerships and home purchases. Bristowe (Fair Rent) Housing Association has completed a transfer of engagements of 79 homes in the Bristol area to the Stonewater Group. Our partnership with 1,600-home Mount Green Housing Association in Surrey and North Sussex was finalised earlier in the year, as was the transfer of engagements of Greenoak Housing Association to Stonewater 5, part of the Stonewater Group.
Our journey to net zero-carbon by 2050 is well under way. In May, we retained our SHIFT Gold award for environmental improvements for the third year running, with a 65% rating being a significant milestone in our journey to SHIFT Platinum, which no other social housing provider currently holds.
We are into the second year of delivery of our retrofit programme, part funded by Wave 2.1 of the Social Housing Decarbonisation Fund. As part of this project, we will be making energy efficiency improvements to over 1,000 across the Midlands and South of England. Of these over 800 homes will be part funded through the Social Housing Decarbonisation Scheme.
I continue to feel great pride in the work done by our dedicated colleagues in the first half of 2024-25. Stonewater's Vision, for everyone to have the opportunity to have a place that they can call home, continues to resonate in our ongoing national housing crisis.
Anne Costain
Chief Financial Officer
Financial Performance
Stonewater is pleased to report its consolidated financial results for the six months ended 30 September 2024 (2024-25 HY). These figures are unaudited and for information purposes only.
| | 2024/25 HY | 2023/24 HY | 2023/24 Full Year |
|
| Actuals | Actuals | Actuals |
| Statement of comprehensive income | £'000 | £'000 | £'000 |
| Turnover from social housing lettings | 133,273 | 115,526 | 235,702 |
| Total turnover | 152,768 | 133,361 | 271,513 |
| Operating surplus* | 33,212 | 35,593 | 51,863 |
| Surplus after interest | 2,581 | 12,182 | 10,209 |
*The overall reduction in operating surplus is a combination of lower gains from asset disposal, specifically the sale of fewer staircasing units, and increased operational costs in areas such as salaries, service charges, and repair & maintenance.
| | 2024/25 HY | 2023/24 HY | 2023/24 Full Year |
| Operating margins | Actuals | Actuals | Actuals |
| Overall operating margin | 20.6% | 24.9% | 21.1% |
| Operating margin on first tranche sales | 12.1% | 15.5% | 20.4% |
| Operating margin on asset disposals | 43.5% | 48.5% | 49.3% |
| | 2024/25 HY | 2023/24 HY | 2023/24 Full Year |
| Key financial ratios | Actuals | Actuals | Actuals |
| EBITDA MRI interest cover1 | 86.6% | 145.3% | 88.0% |
| EBITDA interest cover ratio | 1.6 | 1.9 | 1.7 |
| Social housing interest cover2 | 108.4% | 101.0% | 120.7% |
| Gearing3 | 51% | 49.2% | 49.3% |
1The EBITDA MRI interest cover shown is calculated as (Operating surplus overall -Amortised government grant Interest receivable - Capitalised major repairs expenditure + Depreciation) / Net interest paid.
2 The social housing letting interest cover is calculated as Operating surplus on Social housing lettings / Net interest paid.
3 Gearing is calculated as (Short-term loans + Long-term loans - Cash and cash equivalents) / (Housing properties at cost - work in progress).
| Liquidity | 2024/25 HY | 2023/24 HY |
| Cash and undrawn facilities | £344m | £445m |
| 18 month liquidity replacement | £240m | £231m |
| Ratings | 2024/25 HY | 2023/24 HY |
| S&P credit rating | A - (stable outlook) | A (negative outlook) |
| RSH regulatory rating | G1/V1 | G1/V1 |
Operational Performance
| | 2024/25 HY | 2023/24 HY | 2023/24 Full Year |
| Metric | Actuals | Actuals | Actuals |
| Overall customer satisfaction | 87.3% | 82.5% | 83.5% |
| Gross arrears | 4.8% | 5.3% | 5.0% |
| Void loss | 1.0% | 1.3% | 1.2% |
| New homes | 437 units | 378 units | 1,185 units |
| First tranche sales | 162 units | 135 units | 282 units |
| Capital investment in new homes | £89.4m | £135.5m | £266m |
| Capital investment in existing homes | £8.7m | £11.5m | £34.4m |
Donations, grants, mergers and acquisitions
· Stonewater has made £0.9m donation in June 2024 to its charity partner, the Longleigh Foundation.
· Stonewater has received £16m of grant delivered under the Strategic Partnership Programme (SPP) 2 programme in the first quarter and will be receiving an additional £18m for the second quarter.
· Stonewater completed the Transfer of Engagements from Bristowe Housing Association and Green Oak Housing Association into Stonewater (5) Limited in September 2024.
Environmental Performance
· EPC Band ratings over the first half year period:
o 262 new homes built to EPC Band B or above, which represents 99.6% of all new homes built.
o 143 homes were retrofitted to C or above.
· We are creating an Asset Climate Risk Assessment tool, highlighting what the climate risks are for Stonewater and our customers. In order to mitigate these risks, we are developing projects such as: working with communities to increase biodiversity in key areas; exploring opportunities to install water efficiency devices in areas impacted by water and nutrient neutrality; provide water efficiency advice to those at risk from drought.
· We celebrated our 7000th newly built home in July 2024. This home was part of the 152 brand new homes to the old Leeds City College campus in Horsforth which will not use gas as part of our work to meet net zero targets. The homes feature air source heat pumps, solar panels and electric vehicle charging points to help future-proof them for the benefit of both customers and the environment.
· We have introduced a training programme for customers who are interested in learning about sustainability, whether for personal interest or to help upskill in their job. It has been organised as part of Stonewater's Greenoak Centre of Excellence initiative.
Change in Board and management
Jane Scott joined the Stonewater Board on 1 October 2024, replacing Claire Kearney. Jane is an experienced business leader who specialises in information technology and digital transformation.
ENDS
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