TIDM14MD TIDM14MD
RNS Number : 1585J
Stonewater Funding PLC
18 December 2020
Statement
18 December 2020
Stonewater first-half operating margin and rental income
grow
Key highlights of unaudited trading for the six months ending 30
September 2020 include:
- Operating margin was 33.1% versus 32.4% over the same period last year
- Excluding variance on asset disposals, the operating surplus
in the six months to 30 September 2020 increased by GBP4.6m
- Swift action taken to support customers and business
operations during the COVID-19 pandemic meant a much lower bad debt
charge than expected at 1.5%
- Income from rents and service charges was up GBP3.6m on the
first half of the previous year, due to rent increase of 2.7% after
end of four years 1% annual rent cuts
- Void losses were 0.8% (2019/20 half-year (H1): 1.1%)
- 67 shared ownership homes were sold at a 19% margin,
generating a surplus of GBP1.3m (2019/20 H1: 58 units generating a
surplus of GBP1.2m). Full-year sales are projected in line with
revised plans at 180
- 217 properties were handed over and the total for the full
year is projected to exceed 679 homes
- A GBP75m private placement was issued with US investors in
June, to further support the development programme and to maintain
financial strength
- Liquidity of GBP427.8m in cash and undrawn banking facilities
(excluding GBP103m deferred bond funding) as at 30 September
2020
Stonewater made a rapid and effective response to the COVID-19
pandemic, and is able to report an increased operating margin and
reduced void losses in the first six months of 2020/21.
The unaudited results for the six months ending 30 September
2020 also saw a rise in shared ownership sales and operating
surplus up by GBP4.6m, excluding variance on asset disposals.
Income from rents and service charges was up GBP3.6m on the
first half of the previous year, due to rent increases of 2.7%
following the end of four years of 1% annual rent cuts.
Excluding surpluses on disposal of fixed assets and charitable
donations, Stonewater's operating margin was 33.1% vs 32.4% over
the same period last year. Void losses in this half year were 0.8%
(2019/20 half-year (H1): 1.1%). The target for the full year is
1%.
The timing of shared ownership sales is dependent on handovers
of new developments. The expected slowdown in sales, due to the
COVID-19 lockdown, resulted in a revised target of 180 sales to be
achieved in the current financial year. 67 units were sold in the
first half of the year at a strong margin of 19%, generating a
surplus of GBP1.3m (2019/20 H1: 58 units generating a surplus of
GBP1.2m). Sales for the full year are projected to be in line with
revised plans at 180.
Stonewater made an unaudited operating surplus of GBP34.4m in
the first six months of 2020/21, against GBP39.8m for the same
period in 2019/20. Last year included GBP12.8m surplus from asset
disposals which comprised GBP5.6m surplus from Voluntary Right To
Buy (VRTB) and GBP7.2m from disposal of London stock.
After net interest expense of GBP16.5m, the surplus after
interest was GBP17.9m, against GBP23.9m for the same period last
year.
Asset disposals
Existing properties are sold for asset management reasons and in
this half year the surplus on disposals added GBP2.7m to the
operating surplus. The equivalent figure for 2019/20 H1 was
GBP12.8m, which included sale of London stock at a GBP7.2m
surplus.
Development and Capital Expenditure
Despite initial disruption to construction in the early parts of
the year caused by the pandemic, the majority of Stonewater
contractors returned to site from the end of May 2020 and the
handovers in the six months to 30 September 2020 were in line with
our expectations.
Our annual development spend target was revised from GBP220m to
GBP164m. Spending on the expanding development programme in the
first six months was GBP64m (2019/20 H1 GBP66m) out of the
full-year budget of GBP164m.
In the first half of 2020/21, 217 properties were handed over
and the total for the full year is projected to exceed 679 units.
Two-thirds of these will be for rent - predominantly affordable
rent - and the remainder will be shared ownership. Stonewater has
an ambitious plan to increase development to 1,500 units per year
by 2023/24, in the same tenure proportions.
Capital maintenance spending was GBP2.8m (2019/20 H1: GBP5.5m)
out of the full-year budget of GBP13.0m (2019/20 actual: GBP16.0m).
The component replacement programme has been impacted by lockdown
and spend in the first six months of 2020/21 is significantly lower
than in the previous year.
Funding
Further financing was sought in early 2020, with a GBP75m
private placement with US investors completing in June.
John Bruton, Executive Director - Finance for Stonewater, said :
"In this extraordinary year, it is good to be able to report a
strong set of unaudited half-year results. We quickly adapted our
operations to COVID-19 restrictions and took appropriate
precautionary action to reduce our costs. Our Brexit preparations
have remained under review and we have conducted extensive
financial modelling, stress-testing and risk-mitigation planning on
the threats to our business plan. This is in line with regulatory
requirements.
"Demand for our shared ownership homes has remained strong, so,
although there have been some programme delays due to lockdown, our
prices and margins have been robust. We expect to sell around 180
homes in the full year and also to increase our completion of all
homes to more than 679 - two-thirds of which will be for
predominantly affordable rent.
"Although we are fortunate in that we do not have any
significant fire safety exposure, we are increasing investment in
our existing homes to ensure they continue to be safe.
"We continue to enjoy good investor support and we are confident
we have the stress-testing checks in place to ensure we are able to
continue to deliver on our business plan commitments for our
customers across the country."
Ends
For more information, contact:
Stonewater: Stuart Macdonald, See Media
E-mail: stuart.macdonald@see-media.co.uk
Tel: 07788 474 260
About Stonewater
Stonewater is a social housing provider, with a mission to
deliver good quality, affordable homes to people who need them
most. We manage around 32,500 homes in England for over 70,000
customers, including affordable properties for general rent, shared
ownership and sale, alongside specialist accommodation such as
retirement and supported living schemes for older and vulnerable
people, domestic abuse refuges, a dedicated LGBTQ+ Safe Space, and
young people's foyers.
Our ambitious house-building programme aims to build a minimum
of 1,500 new homes a year from 2023/24 and we have a good pipeline
of development to achieve this, driven by our vision of everyone
having the opportunity to have a place that they can call home. We
plough our surplus into building new homes, improving our existing
housing stock and investing in customer services.
Our 800+ employees embody our values - being ambitious,
passionate, agile, commercial and ethical. For the second
consecutive year we achieved a 'One Star' rating in the 2020 Best
Companies Top 100 best not-for-profit organisations to work for and
made the list for the top 25 best housing sector organisations to
work for in the UK.
With an annual turnover of around GBP191 million and GBP1.8
billion in assets, Stonewater is a
strong, dynamic and well-managed social business, with a
long-term rating of A+ (stable outlook) by independent credit
ratings agency, S&P Global Ratings and a top G1/V1 governance
and viability ranking from the Regulator of Social Housing.
For more information, visit our website at
https://www.stonewater.org/media-pack/media-kit/
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END
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