Arhag Annual Report 2021

Turnover Social housing turnover has reduced by 3% from£6,675k to £6,478k with the disposal of the 10 units south of the river and the handing back of the temporary social housing units inNewhamnot being substitutedwith replacement, income- generating units. During the previous financial year ARHAG received the second and final £0.5m instalment of the £1.0mgrant in respect of the Tampon Tax Fund for projects supporting the improvement of lives of disadvantaged girls andwomen. During that year ARHAG spent slightlymore than this income during the year, as a social investment, to ensure the work startedwas completed fully. However, the ending of our period of involvement with the Tampon Tax fund has further reduced our income, as has the Covid-19 restrictions on the use of the office, which resulted in lower recharges to our partners. Disposal of Fixed Assets Through the sale of the 10 units in south London to a local registered provider, we generated sale proceeds of £1,471k. With the social housing grant on the units transferringwith the properties, this sale delivered a strong surplus. Operating Costs ARHAGmade a conscious decision to use the surplus generated by the sale of the units to invest in our underlying fire safety and health & safety compliance position and in continuing to depreciate the costs of moving to the StratfordHub over a relatively short period of five years. There has been a strong drive to get boiler and gas certifications up to date and, during the financial year, the asset management andmaintenance department continued to undertake fire risk assessments and concentrated on bringing properties transferred to us in previous years up to an acceptable standard. As a consequence, our operating costs, for this one year, have not decreased in linewith our turnover but have instead increased. Overall, our operating costs, including the depreciation of theHub as our administrative facility for the social business, has increased by 1% from £5,793k to £5,849k. Whilst theM&RHub has not been used during theCovid-19 lockdown period, both ARHAGand the partners who share the office are now looking to return to Stratford soon. Consequently, considerationwill need to be given by ARHAG’s Board to the appropriate useful economic lives of the various elements of the buildingwith these lives being applied to the remaining carrying value of the building. Net Interest Our net financing costs during the year decreasedwith the repayment during the year of £2mof our loan facility with RBS/NatWest in addition to the other loan repayments of £1.3m in linewith previous years. Debt and Liquidity ARHAG’s loan facilities are heldwith four banks, against whichwe carry a cash reserve of £2.5 -3.0m. At the end of the financial year, our net debt had reduced from£28.0m to £25.2mof which £1.2m is falling due for repayment within each of the following two years. Our total liquidity as of 31March 2021 of £2.55mcomprises immediately available bank deposits and resident payments made to our 3rd party vendor and in transit to ARHAG. We have reviewed and updated our medium and long-termfinancial forecasts and shared thesewith our lenders to understand and identify our funding requirements. 10 UNITS have been sold in south London to a local registered provider £822K increased surplus in 2020/2021 The board has assessed the viability of the association inMay 2021 using this long- termfinancial forecast. The board is, to the best of its knowledge, satisfied that covenant compliance is maintained throughout the course of the plan thus confirming the future viability of the association. After making enquiries, the board has reasonable expectation that the association has adequate resources to remain in operational existence for a period of at least 12months from the date of approval of the financial statements. VIABILITY STATEMENT The association has considerable financial resources together with long-termcash- generating assets. As a consequence, the board is satisfied that the association is well placed tomanage its business risks successfully. For this reason, it continues to adopt the going concern basis in preparing the association’s financial statements. Nomaterial uncertainties related to events or conditions that may cause significant doubt about the ability of the association to continue as a going concern have been identified by keymanagement personnel after taking into account the relevant facts and circumstances. Annual Report 2020-2021 23