Stonewater reports sharp drop in half-year surplus, but hails ‘financial strength’

Stonewater’s operating surplus was also affected by the sale of fewer shared ownership staircasing units, the group said. 

Higher spending on salaries, service charges, and repairs and maintenance also had an impact, the Leicester-headquartered landlord reported.

In its last full year, Stonewater’s surplus more than doubled after it was boosted by acquiring small Surrey-based landlord Mount Green.

However last November, Stonewater had its S&P Global credit rating downgraded to A- over concerns that its “elevated” spending on existing stock will “weaken” its debt metrics. 

Anne Costain, chief financial officer at Stonewater, said the downgrade was expected due to the “wider challenges” facing the sector and pointed out that its credit outlook from S&P is stable.

In the new filing, she said: “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.”

Stonewater’s capital investment in existing homes was £8.7m in its most recent half year, compared to £11.5m in the same period last year. A total of 143 homes were retrofitted in the period to Energy Performance Certificate Band C or above. 

The group invested £89.4m in new homes in its latest half year and completed 437 new properties. This was up from 378 completions in the same period last year. 

Stonewater has an “ambition” to build 1,500 homes a year, according to its 2022 to 2030 strategic plan. 

The latest results also showed that Stonewater sold 162 first tranche shared ownership homes in the six months, up from 135 last year. However the margin on sales was down to 12.1 per cent, against 15.5 per cent in 2023-24.

On its overall financial position, the group reported an EBITDA interest cover figure of 86.6 per cent at the half-year point, down from 145.3 per cent at the same point last year. Gearing was 51 per cent, up from 49.2 per cent in the 2023-24 half year. 

The group has access to £344m of cash and undrawn facilities, down from £445m at the same point the year before. 

Ms Costain pointed to Stonewater’s continuing “financial strength”, based on the regulator reaffirming its top grades of G1/V1 in November. 

Last April, the group agreed £254m in new revolving credit facilities with five banks, with more than half of the total linked to sustainability targets.