Financial performance and statements

The Group generated a surplus for the year of £3.6m (2021: £3.1m) at an operating margin of 44% (2021: 46%).  The surplus for the year reflected a higher level of expenditure on routine maintenance and major repairs, due in part to a catch up from the previous year that was affected by Covid-19 restrictions, offset by an increase in the gain on disposal of properties and the reversal of impairment charges.

The operating margin fell slightly but remained comfortably above 40%, due to the gain on the disposal of properties almost doubling to £2.2m (2021: £1.2m).   Excluding the gain on the disposal of properties, the operating margin fell to 38% (2021: 42%), as a result of the additional maintenance expenditure referred to above.

In 2020/21, a provision of £3.9m was made for constructive obligations to undertake fire safety remedial works on a number of low-rise blocks of flats.  The properties are still in their latent defects period and Hastoe has been seeking remedy from the contractors. The provision has been fully reversed in the current year due a settlement agreement reached with one contractor, who has agreed to complete the necessary remedial works at no cost to Hastoe, and confirmation received regarding an NHBC warranty on the other two schemes.  The release of the provision has resulted in the reversal of the £875k associated impairment charge that was made in 2020/21.  Excluding the impact of the provision, the EBITDA MRI cover was 1.3 times for the year (2021: 1.4 times).

At the year end, the Group had committed debt funding of £263m.  Available liquid resources of £50m (cash holdings of £12m and undrawn loan facilities of £38m) are sufficient to meet the Group’s committed expenditure.  The Group’s drawn debt has limited refinancing risk with only around 20% of the Group’s debt maturing within the next ten years.  The undrawn loan facility of £38m is committed until 2025. At the year end, Hastoe Capital plc held £50m of retained bonds.

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