accord_fs_2020_JD_FINAL | Page 26

24 | Accord Housing Association
Review of the Year
Total borrowings increased by net £ 35.2m in the year ; drawing from existing secured facilities and were £ 495.2m at year end .
In addition year end cash balances were £ 44.5m and secured revolving credit facilities were £ 95m of which £ 79m was drawn at the year end . The organisation bolstered liquidity through the utilisation of revolving credit at the end of March in mitigation of the Covid-19 pandemic and any potential uncertainty . Management continues to monitor this situation closely and will adjust liquidity levels as appropriate over the coming months .
Secured drawn credit
£ 79m
£ 44.5m
£ 16m
Cash balance
Secured undrawn credit
Management and Control
The organisation manages its exposure to fluctuations in interest rates in order to provide a level of certainty over interest costs whilst balancing our ability to take advantage of low LIBOR rates . Our strategy is to maintain fixed rate borrowing between 60 % and 80 % of our total borrowings . We keep compliance with this policy under constant review and at the year end 70 % ( 2019 73 %) of borrowings were at fixed rates .
Accord has not used stand-alone derivative financial instruments to manage its interest rate exposure during the year . However , the organisation does have the Wider Rule Change and approval from the Regulator of Social Housing to use stand-alone derivative financial instruments , and has facilities in place with three funding institutions to utilise these instruments – there have been no such facilities in place at any point throughout the financial year ( 2019 : nil ).
Principal financial covenants are in respect of loan gearing and interest cover and the Board believes the financial covenants entered into are appropriate for our operations . Gearing at the year end of 49.4 % ( 2019 50.2 %) and interest cover of 205.7 % ( 2019 194.8 %); both of which are comfortably within our tightest requirement . The average interest rate was 3.65 %; slightly lower than the prior year .
Continuity of funding is ensured by arranging a mixed portfolio of short term borrowings and long term committed facilities and by limiting the amount of debt repayable in any one year . During the year the renewal process was started for a £ 10m revolving credit facility which matured in June 2020 , replacing it with a £ 20m five year facility with the same funder . We also made significant progress with securing the final deferred £ 25m tranche of the 2018 private placement from Pension Insurance Corporation ( PIC ) along with a further tranche of £ 30m agreed in 2019 . The chart below provides an analysis of when the debt falls due for repayment .
DEBT REPAYMENT PROFILE
LOAN REPAYMENTS LOAN BALANCE
LOAN BALANCE £ M
600 500 400 300 200 100
0
0-1 1-2 2-3 3-5 5-10 10-15 15-20 20-25 25-30 30 +
200 180 160 140 120 100 80 60 40 20 0
REPAYMENTS £ M
YEARS