Hyde Group slides to deficit after £155m refinancing costs 

Despite the deficit, Rod Holdsworth, chief financial and resources officer at Hyde, said: “We’re underpinned by an exceptionally strong balance sheet, resilient long-term financial plan and a low cost of capital, as a result of the completion of our refinancing programme.”

Underlying surplus before break costs, fair value adjustments and tax was £87.8m, compared with £115.1m the previous year. The group said that the difference was mainly due to one-off disposal proceeds received in 2020 as it completed its major stock rationalisation programme.

The group is currently recruiting for a permanent chief executive as Peter Denton was appointed in June to head up Homes England.

Hyde’s annual report, published today, also revealed it has now spent £63.7m on fire safety work since the Grenfell Tower tragedy in 2017. Eleven of its blocks above 18 metres had “unsafe” cladding but all of them have now had it replaced, Hyde said.

Its fire safety spend in 2020/21 fell to £12.6m, compared to £20.2m the prior financial year.

However it warned about future costs on smaller buildings. On the 2,000 blocks it owns that are four storeys and above but lower than 18 metres, Hyde estimates having to spend £100m – covering Type 4 fire risk assessments, external wall inspections and remedial work – over the next 10 years.

But it added: “This estimate doesn’t include 3,000 buildings that are three storeys and lower. If we have to carry out intrusive fire risk assessments on these, we may have to spend more. These estimated costs also don’t include replacing timber decking on balconies.”

The G15 group said earlier this year that the collective bill for building safety could be £3bn over the next 10 years, while Geeta Nanda, the group’s new boss, told Social Housing this figure is “only going to go up”.

Hyde also disclosed that during 2021, it recovered a combined £12.9m from taking legal action against contractors and the government’s Building Safety Fund. Social Housing first revealed in 2019 that a clutch of G15 landlords were attempting to recoup costs from construction firms in light of the building safety crisis.

Hyde reported a flat group turnover of £365.4m. In its core social housing lettings business, turnover rose to £253.1m, generating an operating surplus of £92.5m.

Its core operating margin fell to 31.3 per cent, down from 31.8 per cent the year before.

The group’s net debt rose to £1.49bn, up by £77m on the previous year. Gearing was 47.7 per cent, compared to 44.6 the prior year.

Hyde saw completions fall five per cent to 651 – a more moderate decrease than some of its peers affected by last year’s first lockdown.

The group started 1,926 homes, compared to 1,042 starts the year before. It expects to complete 6,848 homes between 2021 and 2026.

Hyde sold 171 shared ownership properties, up from 145 the prior year, collecting turnover of £20.6m. The group is upping its interest in this space, having struck a partnership deal with investor M&G to help fuel a £500m pipeline.

The number of private sale property transactions for Hyde fell sharply to 255, from 401 the previous year.