Stonewater’s surplus decreases 43% as shared ownership staircasing sales dip

Stonewater has reported a 43% drop in its overall surplus for the first half of the year.

The 36,000-home association reported surplus of £12.2m for the first six months to 30 September, down on the 21.4m posted in the same periodlast year.

Its operating surplus excluding one-off costs fell from £41.2m to £36m.

Stonewater said the operating surplus decrease was due to lower revenue from sales of shared ownership staircasing units, along with an increase in staffing, repair and maintenance and service charge costs, and inflation. 

In its half-year unaudited financial results released today, chief financial officer Anne Costain stated that first-tranche shared ownership sales increased compared with the same period last year.

However, fewer people with existing shared ownership homes have bought further staircasing units compared with the previous year.

In addition, Stonewater has not sold as many existing homes to other housing providers as it did in 2022/23, resulting in a reduction in the operating margin on their asset sales from 52.3% last year to 48.5% this year.

Overall, Stonewater has earned a lower percentage of profit compared with its total revenue in the first six months of this financial year.

In the period from March to September last year, the company’s operating margin was 31.5%, while in the same period this year, it has decreased to 24.9%.

A statement noted that Stonewater has retained the top Regulator of Social Housing governance and financial viability grades, G1 and V1. The statement added that Stonewater has retained an A grade S&P credit rating. The housing association’s S&P credit rating was downgraded from an A+ to an A at the beginning of the year due to Stonewater’s “increasing investments in its existing assets” and high forecast capital expenditure on new development.

See also >> Stonewater downgraded as costs rise 

See also >> Regulator of Social Housing issues viability downgrades to four housing providers

Costain said that Stonewater is continuing to grow through partnerships and home purchases, including the acquisition of 370 homes from Metropolitan Thames Valley Housing and the announcement of a planned partnership with Mount Green Housing Association.