44,000-home association reports 78% drop in surplus as it is hit by contractor insolvencies on two schemes
Hyde Group has built just 57% of the homes it originally targeted in 2023/24 as it was forced to write-down £39m due to contractor insolvencies on two schemes.
The 44,000-home association, in its financial statement for the year to 31 March, completed 630 homes in 2023/24. This was in line with last year’s figure of 625, but down against its original target of 1,105.
The group said the completions figure was lower than target as it “proactively managed” its development pipeline to reduce its exposure to build and sales risk.
It said: “We also benefited by switching tenures and providing more shared ownership new homes and less outright sales, thereby offering more affordable homes to new customers in response to the higher costs of mortgages. We’re managing our development programme carefully, as we reduce our exposure to market risks, by delivering more homes through our strategic partnerships.”
It started 823 homes, down on the 2,105 posted last year. The housing association said it still has an aim of delivering an average of between 1,500 and 2,000 homes each year. It said it intends to complete 4,760 homes between 2024 and 2028, with three quarters of them for affordable tenures.
The group also posted a big drop in its surplus for the year. Its total surplus was £26m, down on the £117.5m posted last year. The group said this was due to net impairments and write-downs totalling £37.6m this year, set against £57.2m of net gains from swap valuations and loan breakage costs the previous year. Its operating surplus fell from £110m to £72.9m. The group said its ‘core operating surplus’ excluding one-off costs increased from £57.4m to £64.6m.
In total, the group recognised £39.4m of impairment charges. It said this related to contractor insolvencies on two schemes under construction, along with scheme re-appraisals and a change of intended use.
It said: “An assessment was undertaken to review works costs under the original contract and those costs that will require re-work under the new contract. These were determined to be sub-optimal and were impaired.” Hyde also said the two schemes were re-appraised prior to a design and build contract being entered, while one scheme had a change of intended use relating to 76 homes.
>>See also: Hyde enters merger talks with non-compliant Tower Hamlets Community Housing
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Hyde Group’s turnover for the year fell from £363m to £350.9m. Social housing lettings income increased by £11m to £282m, and shared ownership first tranche revenue rose by £3.3m to £31m. However, this was offset by a £33m drop in turnover from outright property sales.
The group’s operating margin was 7.3% against a target of 15.8%. However, Hyde said that excluding impairment, this figure would have been 18.1%.
Hyde invested £109.2m on maintaining, repairing and improving existing homes, up from £94.3m the previous year.
Housing association financial statements 2023/24
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