14MD Stonewater Fund

TIDM14MD

RNS Number : 1961V

Stonewater Funding PLC

30 November 2023

Half-Year Results Update

Stonewater Funding plc

30 November 2023

Stonewater Funding plc

STONEWATER H1 2023/24 RESULTS UPDATE

Stonewater's Half-Year Results Update covering the period to 30 September 2023

Chief Financial Officer's Statements

Against the backdrop of a continuing, challenging operating environment, high levels of inflation and increased costs, we're pleased to report that Stonewater remains financially strong through our first six months of trading in 2023-24. This strength allows us to continue to support our customers through the ongoing cost- of- living crisis.

These interim, unaudited results highlight our robust underlying performance, reflected in our improved key indicators on operating margin, sales margin and interest cover since the end of our previous financial year 2022-23 .

The recent affirmation of our A credit rating by Standard & Poor's is positive news. We also retain the top regulatory scores of G1/V1 and have significant liquidity, with more than 85% of our debt at fixed rates - above the sector average of 80%. We maximise investment in existing and new homes to help customers tackle the cost-of-living crisis, making sure homes are affordable to live in .

Stonewater has a relatively young stock profile and we have an ongoing development programme of affordable homes. Although our plans have been moderated to reflect wider economic conditions, first tranche shared ownership sales increased compared to the same period last year and at a healthy margin.

We're continuing to grow as well through partnerships and home purchases. This has included 370 homes across the Thames Valley from another housing association and the announcement of a planned partnership with 1,600-home Mount Green Housing Association in Surrey and North Sussex.

Our journey to net zero-carbon by 2050 is also moving forward on several fronts. In July, we established a GBP200m sustainability linked loan, with a KPI-linked to our SHIFT score. We are currently rated as "Gold" in the SHIFT sustainability framework, with the aim of achieving SHIFT "Platinum" - which no other social housing provider currently holds. We will be making energy efficiency improvements to over 800 homes across eight projects in the West Midlands and South West of England. In total we will be retrofitting approximately 1,050 homes over the next two financial years, using the GBP9m Decarbonisation Fund secured earlier in 2023.

In November, we'll hold our first event as part of Greenoak's Centre of Excellence, which teams at Stonewater and Greenoak are working together to launch. Created as part of Greenoak becoming a subsidiary of Stonewater in early 2023, the Centre of Excellence will look at how the social housing sector can create a more sustainable, zero-carbon future, by holding events, webinars and, in future, looking to set up standards and processes which other organisations can follow.

Overall, I am proud of what our dedicated colleagues have achieved in the first half of 2023-24. Stonewater's Vision, for everyone to have the opportunity to have a place that they can call home, has never been more relevant. Providing affordable homes to people in housing need, managing and maintaining them so they're safe and fit for future generations, improving and investing in our communities, is our core purpose and our financial strength is the foundation on which we can achieve our aims.

Anne Costain

Chief Financial Officer

Financial Performance

Stonewater is pleased to report its consolidated financial results for the six months ended 30 September 2023 (2023-24 HY). These figures are unaudited and for information purposes only.

*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.

(1) The 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).

Operational Performance

-Metrics

- Donations, grants, mergers and acquisitions

-- Stonewater has made GBP0.9m donation in June 2023 to its charity partner, the Longleigh Foundation.

-- Stonewater has received GBP10m of grant delivered under the SPP2 programme in the first quarter and will be receiving an additional GBP15m for the second quarter.

-- Stonewater has secured over GBP9m in Social Housing Decarbonisation Fund in the beginning of the year.

-- Stonewater has completed in August 2023 the purchase of 370 properties located across Thames Valley from another housing association.

-- Also in August 2023, Stonewater has announced a partnership with Mount Green Housing Association. Subject to lender and regulatory approval, we expect it to be effective by 31 March 2024. Mount Green owns and / or manages around 1,600 homes across Surrey and North Sussex.

-- Stonewater announced in Oct 2023 the Transfer of Engagements from Puttenham and Wanborough Housing Society and also Bristowe Housing Association for around 90 homes in total. Subject to lender and regulatory approval, we expect the two separate transactions to complete by 31 March 2024.

Environmental Performance

   --     EPC Band ratings over the first half year period: 

o 332 new homes built to EPC Band B or above, which represents 88% of all new homes built.

o 40 homes were retrofitted to C or above.

-- Converted a GBP200m revolving credit facility to a sustainability linked loan in July 2023, with three KPIs including one linked to our SHIFT score.

-- We will be making energy efficiency improvements to over 800 homes across eight projects in the West Midlands and South West of England. In total we will be retrofitting approximately 1,050 homes over the next two financial years, using the GBP9m Decarbonisation Fund secured in this fiscal year.

-- We are working out a methodology to set carbon reduction targets for the business in line with our Net Zero by 2050 target.

-- We are developing a Biodiversity and Water Strategy to outline our climate resilience and mitigate risks, such as flooding.

Change in Board and Management

Gareth Lloyd joined Stonewater on 27 March 2023 as Chief Information & Transformation Officer with responsibility for IT, Data, People and Communications.

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Disclaimer

The information contained herein (the "Trading Update") has been prepared by Stonewater Limited (the

"Parent") and its subsidiaries (the "Group"), including Stonewater Funding plc, (the "Issuer") and is for information purposes only.

The Trading Update should not be construed as an offer or solicitation to buy or sell any securities issued by the Parent, the Issuer or any other member of the Group, or any interest in any such securities, and nothing herein should be construed as a recommendation or advice to invest in any such securities.

Statements in the Trading Update, including those regarding possible or assumed future or other performance of the Group as a whole or any member of it, industry growth or other trend projections may constitute forward-looking statements and as such involve risks and uncertainties that may cause actual results, performance or developments to differ materially from those expressed or implied by such forward-looking statements. Accordingly, no assurance is given that such forward-looking statements will prove to have been correct. They speak only as at the date of the Trading Update and neither the Parent nor any other member of the Group undertakes any obligation to update or revise any forward-looking statements, whether as a result of new information, future developments, occurrence of unanticipated events or otherwise.

None of the Parent, any member of the Group or anyone else is under any obligation to update or keep current the information contained in the Trading Update. The information in the Trading Update is subject to verification, does not purport to be comprehensive, is provided as at the date of the Trading Update and is subject to change without notice. No reliance should be placed on the information or any projections, targets, estimates or forecasts and nothing in the Trading Update is or should be relied on as a promise or representation as to the future. No statement in the Trading Update is intended to be an estimate or forecast.

No representation or warranty, express or implied, is given by or on behalf of the Parent, any other member of the Group or any of their respective directors, officers, employees, advisers, agents or any other persons as to the accuracy or validity of the information or opinions contained in the Trading Update (and whether any information has been omitted from the Trading Update). The Trading Update does not constitute legal, tax, accounting or investment advice.

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November 30, 2023 04:00 ET (09:00 GMT)