Stonewater turnover increased to £191m; Underlying surplus after interest up by £3.5m

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Key highlights from Stonewater 2018/19 financial statements to 31 March 2019:

- Turnover up 1.9% to £190.7m
- Underlying operating surplus performance* up £3.5m to £25.5m
- Charitable donation to partner Longleigh Foundation increased to £3m
- £2.5m profit on closing out an interest rate swap

In 2018/19 Stonewater increased its turnover by 1.9% to £190.7m and built 548 affordable homes in communities across England.

Stonewater’s underlying performance from managing the lettings and sales of affordable, social and shared ownership housing, after interest, saw an increased surplus. This rose 16.1% to £25.5m compared with £22.0m in 2017/18. This performance came despite the third year of the government annual rent cut of 1% – rents will return to CPI+1% from April 2020.

Stonewater recently retained its A+ credit rating from S&P, although with a negative outlook mirroring that on the sovereign rating. Stonewater also retains the top governance and viability rating from the Regulator of Social Housing at G1 and V1.

*Underlying operating performance, after interest, is before exceptional and/or non-cash items, including:

• Donation to Longleigh Foundation (up £2m to £3m)
• A non-cash movement of -£10.7m from the early termination of interest rate swaps. This represents the write-off of the balance held in the cashflow hedge reserve. Stonewater paid £8.2m to terminate the swaps and realised a cash profit of £2.5m. There was also a non-cash movement in the fair value of non-hedged financial instruments of -£1.4m (2018: +£2.4m).
• Surplus on Disposal of Fixed Assets was £9.4m; the previous year surplus of £15.6m included the £8.2m surplus on the disposal of Southport stock.

When these items are included, Stonewater’s Surplus for the Year was £22.3m (2018: £39.0m).

The 32,000-home housing provider is at the heart of a new government partnership with Homes England and Guinness to begin building 4,500 affordable homes by March 2022. The partnership is the largest to date and is receiving £224m in Homes England funding.

Commenting on the Homes England Partnership, George Blunden, chair of Stonewater, said: "By accelerating our development programme in this way, we will be able to play a greater role in tackling the national housing crisis – particularly vital work at a time when homelessness continues to rise across the UK."

Nicholas Harris, chief executive of Stonewater, said: "Our statement of financial position remains robust, supporting our significant and ambitious growth plans. This resilience and adaptability puts us in a strong position to predict and respond to the evolving social and political landscape, and we are well prepared for these fast-changing times.

"Our ambitious house-building programme is 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."

Stonewater’s annual financial statements may be found here.