2011 Annual Report and Financial Statements

Annual Report & Financial Statements2011

Annual report and financial statements

Annual Report 2011 Page 1 of 42

Page

Members, executives and advisors 2

Operating and financial review 3

Governance 15

Internal control 18

Statement of Board responsibilities 19

Independent Auditor Report 20

Income and expenditure account 22

Reconciliation of movement in net assets 22

Balance sheet 23

Cash flow statement 24

Notes to the financial statements 25



Registered Office

3 Alexandra Gate

Ffordd Pengam

Tremorfa

Cardiff

CF24 2UD

Independent Auditors

Haines Watts Wales LLP

Registered as a charitable Association under the Industrial and Provident Societies Act 1965,

Registration Number 21114R

Registered with the National Assembly for Wales, Registration Number L032

The Board

Mr I Gittens Chair of the Board (Shareholder); Board Representative

Slocombe Cottages for the Aged and Infirm and also for

Bridgend Care and Repair

Mr J Rides Resident Board Member; Vice Chair of the Board; Member of

Probity and Audit Committee; Board Member Cambria

Maintenance Services Limited

Mr A Ashton Shareholder Board Member; Lead Member for Finance

Mr J Clowes Shareholder Board Member; Lead Member Development;

Board Member Cambria Maintenance Services Limited

Mr D Davies Resident Board Member; Lead Member for Support Services;

Board Representative on Staff Council; Board

Representative Merthyr Care and Repair

Mrs W Davies Shareholder Board Member; Board Representative for

Slocombe Cottages for the Aged and Infirm, Member of

Probity and Audit Committee

Mr B Jarvis Resident Board Member

Mrs S Lee Shareholder Board Member; Lead Member for Housing;

Appointed 28 April 2011

Mr N OLeary Shareholder Board Member; Lead Member Property Services; Chair of the Cambria Maintenance Services

Limited Board

Mr W Phillips Shareholder Board Member; Member Probity and Audit

Committee

Mrs K Smart Shareholder Board Member; Chair of Probity and Audit

Committee

Mr J Williams Resident Board Member; Member Probity and Audit

Committee, Board Representative Flintshire Care and Repair

Mrs A Wiggan Shareholder Board Member; Resigned 28 April 2011

Executive Officers

Mrs Anne Hinchey Chief Executive and Secretary; Board Member Cambria

Maintenance Services Limited

Mr Shayne Hembrow Operations Director; Board Member Cambria Maintenance

Services Limited

Mr Tony Wilson Finance Director; Board Member Cambria Maintenance

Services Limited



Operating and financial review

The Board presents its report and the audited financial statements for the year ended 31

December 2011.

What we stand for

As a leading housing provider in Wales, our residents come first and are at the

heart of what we do. For this reason, our purpose is to achieve strong

sustainable growth to make a difference in peoples lives, homes and communities.

Our mission and the desire to offer real choice are key drivers for the organisation.

Together these underpin what we do and what we are about. While the Association is

aiming to achieve many things, our main aims are:

To provide homes for people in housing need.

To continuously improve the quality of landlord services.

To maximise the potential of the group.

To minimise the impact on the environment by the Association and its residents.

To work with residents and communities to make a positive impact.

Our values and operating principles are of great importance to us and are at the

core of our culture. Our values are:

Fair: Balanced, giving praise where due and constructively critical. Inclusive in

our approach, respecting the dignity and individuality of everyone.

Open: Open to change, committed to continuous improvement and learning.

Transparent, honest and trustworthy.

Responsible: Professional, challenging existing arrangements, taking ownership of

issues and using our initiative to see them through to resolution.

Supportive: Easy to deal with, approachable and accessible. Welcoming, caring,

listening and responsive.

Efficient: Make best use of resources and maximise the impact of our activities.

Our operating principles are:

We will make decisions based on data and knowledge.

We will find out what matters to customers before we take action.

We will only measure what matters to customers.

We will experiment to learn.

We will enable people to make decisions to deliver what matters to customers.

We will only do what matters to customers.

In this operating and financial review, we have set out our progress in the year under

the themes of strong sustainable growth and making a difference, augmented by an

overview of how the organisation is run.



Strong Sustainable Growth

We intend to continue to grow by building new homes, expanding the in-house provision

of maintenance services and by continuing to increase the range of services we provide

to our residents.

Building new homes

In 2011 we brought into management 165 newly developed properties. Within this are

17 units for supported living including a homeless project in Brecon, and 6 properties for

intermediate rent under a try before you buy arrangement.

Our first Extra Care scheme,

Nant Y Mor in Prestatyn, was

handed over on 24 January 2011.

The scheme has 59 apartments,

which are a mix of 1 and 2

bedrooms, together with a

restaurant, hairdressers, guest

rooms, treatment rooms and

communal areas. The scheme

cost 8.5m to build. We worked

in partnership with Denbighshire

County Council to develop the

scheme. Extra Care Schemes are

designed to promote independent

living for residents over 60 years

of age with care and support

needs. We held our official opening in November 2011 and we were delighted to have

the First Minister Carwyn Jones as our guest of honour to open the scheme for us.

59

16

6 20

6

15

5

26

6 6

Number of homes developed in 2011

Nant y Mor, Prestatyn - 59 Unit Extra Care

Coed Castell, Bridgend - 16 social rented

Stoneleigh Manor, Brecon - 6 supportedhousing

Brewery Mews, Merthyr - 20 social rented

Ty Binwydden, Mold - 6 supported hosuing

Ponciau, Wrexham - 15 social rented

Ponciau, Wrexham - 5 supported housing

Plough Court, Brecon - 26 social rented

Llys Pont Helyg, Wrexham - 6 social rented

Parc Tyn y Coed, Bridgend - 6 intermediaterented



In October we were also honoured

to have Huw Lewis, Minister for

Housing, Regeneration and

Heritage and AM for Merthyr Tydfil

and Rhymney, open our new

development at Brewery Court

and Brewery Mews in Merthyr

Tydfil. This is a significant

development for us as it is the

first we have completed in

Merthyr Tydfil for some time.

During 2011 our Code 4

development at St Athan in the

Vale was awarded exemplar

project status by the Building

Research Establishment and

Constructing Excellence.

In addition to new developments, our mortgage rescue scheme helps home owners who

are struggling to pay their mortgages and are at risk of repossession. Our 50th Mortgage

rescue property purchase was completed on the 6 June 2011 in Bridgend, enabling

people to remain in their own homes during difficult times.

We intend to continue with strong sustainable development growth and our development

investment over the five years to 2015 is set out below.

In previous years virtually all of our developments were undertaken with the benefit of

Social Housing Grant (SHG), which in recent years amounted to approximately 58% of

the development costs. As a result of reducing grant allocations for Wales, much less

SHG is likely to be available going forward and therefore much of the Associations future property developments can be expected to be a combination of intermediate rental and

low cost home ownership units. Demand for affordable housing generally remains high

and a large number of enquiries are received for all types of rented housing.

The Association successfully increased its land bank in the year and owns 8 sites which

are currently being developed. The most notable was the addition of the Kingsmills Road,

Wrexham site which was won in competition and represents a flagship development for

the Association. This will contain a mix of socially rented and intermediate rented homes.

The access to a strong land bank has been invaluable for the Association to continue to

receive social housing grant and further acquisitions will remain a priority.

0

5

10

15

20

25

30

2011 2012 2013 2014 2015

m

Development spend 2011-2015

Development Spend

Social Housing Grant

Loan Funding



Cambria

Since January 2011 our Cambria Maintenance Services Limited (Cambria) subsidiary has

undertaken most of our reactive maintenance works in south and mid Wales. This has

been successful and we achieved our primary aim of an uninterrupted maintenance

service for our residents. The first year of trading is summarised below:

The business has undertaken over 17,500 repairs over the course of the year and

employs 35 staff. Cambria has delivered savings to the Association, which would not

have been delivered with a third party contractor, in respect of retained profit and VAT

savings on its labour costs. Excluding set up costs, this saving equates to around 200k

in the first year and we expect this to rise to 280k in 2012. In the Associations accounts this has enabled our maintenance cost per property to remain unchanged at

423 in mid and south Wales, offsetting all material and labour cost increases and

expect this to continue in 2012, delivering a real saving of 8% over the first two years.

Cambria measures its operational performance using four measures; end to end times,

first visit fix, jobs received and completed and customer satisfaction. Customer

satisfaction has been high with 86% of surveys undertaken giving a 10/10 score for the

service. Our end to end times average 19 days and our first visit fix averages 75%. We

will work going forward to apply our operating principles across the whole repairs service

end to end, which will result in further service and cost benefits. This will provide a

platform to expand our in-house maintenance services over the next five years.

Telecare and out of hours

We have increased our efforts to grow the telecare and emergency alarm services

provided by our customer services centre over the last two years. As well as providing a

24 hour telecare and emergency alarm service to our retirement scheme residents, we

provide services to a number of other housing associations. We have been successful in

adding further contracts for firstly an out of hours service and secondly an emergency

alarm and telecare package. These add to the three external contracts we were already

operating, taking the total number of homes monitored to close to 4,000. We are now

providing an out of hours service to more than 17,000 homes and we will seek further

growth in both these areas in the coming year.

Solar PV

We had planned to install solar PV panels on 2,500 roofs prior to 31 March 2012, with a

view to residents having the free use of the electricity generated. Obtaining the

necessary consents for this to happen proved to be complex and the Governments announcement at short notice to halve the feed in tariff income resulted in the

postponement of the project. This was disappointing for us and other associations

similarly affected. We will review the situation such that if price and technology changes

render PV installations viable once more, we will again consider what can be achieved. In

the event we did manage to install 500k worth of solar panels on the roofs of five of our

blocks of apartments and also on 82 houses.

0

1

2

3

Turnover Labour Materials Overheads Profit

Cambria income and expenditure

m



Making a Difference Our residents

Everything we do is about making a difference to peoples lives, homes and communities. First and foremost we put our residents first. This means it is important to

understand what matters to them and what they think of the service we provide.

We carry out resident satisfaction surveys annually with one third of our residents being

surveyed every year. The results of our latest survey are set out below and represent

our highest ever level of customer satisfaction:

One of our corporate priorities is to work with residents and communities to make a

positive impact. One of the ways

we have done this is through

digital inclusion, which we

recognise makes a difference to

the lives of residents. We

estimate that only 20% of older

residents currently access

broadband. We have been

working in partnership with the

Connect Project at our scheme

at Ty Pontrhun, Merthyr Tydfil,

as part of the Welsh

Governments Communities 2.0 initiative. This is supporting

older people to learn how to use

the internet. In order to use their new-found skills, we are investing 10,000 in a pilot

project at Ty Pontrhun to install 1Mb broadband for each resident. The cost per person

will be less than 1 per week. Subject to the success of this trial we intend to roll out

this scheme-based broadband provision across 100 older persons scheme across Wales, investing approximately 1m of our own money in this project.

Supporting people back into employment is also part of our work to make a positive

impact. Our repairs contractors have all supported additional apprenticeships, trainee

places and training as a result of the work that we commission them to do to keep our

homes in good condition. We make it a condition of our contracts with our development

contractors that they use local labour and provide apprenticeships. Our work under the

ARBED energy efficiency scheme has seen the creation of nine additional posts with our

contractors. During 2011 we worked in partnership with Job Match Bridgend to support

two people to work for us, via the Employment Routes programme, which helps people

who have been long-term unemployed get back into employment.

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Overall satisfaction

Repairs satisfaction

Listening to residents views

Keeping residents informed

Resident satisfaction



Making a very real difference

in communities is what we are

about. A great example is the

Barracksfield Tenants Association and Youth Forum,

Wrexham which achieved first

place in the Tenant

Participation Projects Award

for their Multi Use Games

Area (MUGA) project in May

2011. The project was started

in 2007 to give young people

somewhere to play off the

streets. Four years on the

groups have, with support

from WWHAs Community Development Projects Officer,

Vy Cochran, raised over 65,000 and the MUGA has become the heart of the community.

One of our other priorities is to minimise

our impact on the environment. At our

Western Court retirement scheme in

Bridgend, our residents have worked hard

to create a better estate where people

are able to live better lives. With support

from the Associations environment fund, raised beds have been installed, and now

huge crops of fruit and veg are being

grown and shared amongst the residents.

A compost area has been created, bird

feeders and bird houses put up, and

flowers and other plants purchased and

placed throughout the courtyard. The

estate is a nice community to live in,

where residents socialise often, celebrate

birthdays and hold barbecues in the courtyard garden.

This year we held our

fourth Making a

Difference Awards,

which are our way of

honouring the

community spirit shown

by so many people who

live in our properties.

Many of the media

stories about housing

association residents

paint a bleak picture,

but we know that the

reality is different and

therefore the awards

are our way of

recognising their

contribution. In all, 9 awards were presented on the night, in categories including good

neighbour, local hero and community project. The winners on the night are pictured

above.



Our services

Embedding cultural change continued to be a key feature of the year. Since adopting the

systems thinking approach the Association has completed reviews of the majority of its

services. Systems thinking challenges the conventional approach to management and

this change takes time to embed across the organisation. The operating principles we

developed along with our values continue to provide a strong focus.

The maintenance of our homes remains the litmus test for customer satisfaction. The

creation of Cambria provided the opportunity to repeat the 2007 review of the service

and to understand better how we could act on the whole repairs system. The redesign

has retained elements of the previous system and allowed experimentation with new

improvements such as timed appointments at the first point of contact. Maintenance

performance remains strong as shown below:

The review of the rents system has brought a change in emphasis to one which focuses

on helping people to pay and supporting them to stay out of debt. The change is

significant in how the Association works and how staff spend their time. More attention is

placed on starting tenancies clean, in particular on setting up direct debit arrangements which now covers almost a third of those residents making payments to us. More time is

spent on assisting with housing benefit claims, budgeting and agreeing sustainable

payment plans. The introduction of rent panels as a last-chance meeting with residents has been very successful in continuing the reduction in the numbers of evictions and

other court actions. As an example, in the 4th quarter 13 Panels were held, and in all

cases agreed payment plans have subsequently been maintained. The total number of

tenancies in arrears has remained fairly constant in the last year and has declined when

viewed over two years. While the value of rent arrears has increased slightly, the greater

focus on debt management and sustainable repayment arrangements will mean that

residents do come out of debt and are more likely to stay that way.

Our first mini system intervention looking at the Physical Adaptations Grant (PAG)

system continued this year and a new flow for the front end of the system will be trialed

in early 2012. Halfway through 2011 we began a second mini intervention into our

Dispersed Alarm Units (DAU) process. A new flow has been developed which will be

trialed once training for staff in the new system has been completed and some new DAU

fitters are trained to cover the whole of Wales.

Levels of anti social behaviour and estate nuisance increased markedly during the year

with noise and youth nuisance being the most common problems that residents asked

for assistance with. A full system review commenced in February 2012 and while

satisfaction for the majority is strong, the initial scoping exercise revealed areas where

improvements can be achieved.

The Association uses a variety of indicators and measures, which provide information

about how well the various systems in the Association are operating. Some indicators

give information on the scale of demand from residents while others provide information

about the outcomes for residents and their satisfaction. Trends are reported to the Board

and reviewed monthly by the senior management team. No targets are set as they

would elicit inappropriate behaviour away from what matters to residents. The

information is provided to frontline staff and their managers so that they can understand

the outcomes they achieve for their customers and respond to customer demand.

0% 20% 40% 60% 80% 100%

Complete one visit

Stay Fixed

Satisfaction with reactive service

Repairs performance



Our properties

We manage 9,541 units of housing stock in 14 different local authority areas across

Wales. The vast majority of our stock is let at social housing rents, which are below

market rents. An analysis of our stock by type is set out below:

The average occupancy rate remained high at 99.3% (2010; 99.2%) which is testament

to the quality of our stock and good performance in turning around empty properties.

We brought 165 newly built properties into our portfolio in the year, whilst divesting of

84 properties from our stock. We are clear that we wish to work in local authority areas

where we can make a difference to lives, homes and communities. Where we have a

small number of properties in a local authority area then it is difficult for us to make that

difference and therefore we are selling on these properties to local housing associations

that are better able to add value. We will then re-invest the proceeds into new

developments where we already have a high concentration of stock. As a result of these

disposals we no longer have a presence in Carmarthenshire or Ynys Mon and we have

advanced plans to sell our stock in Gwynedd (one scheme) and Ceredigion (four

schemes).

We invest significantly in improving the quality of our homes and are well on track to

meet the Welsh Housing Quality Standard (WHQS) by the target date of March 2013.

Our investment over the last three years is set out below, and this level of investment

will continue in 2012 to meet the WHQS deadline.

6437

1658

81 59

112

599 595

Social housing - general needs

Social housing - older persons

Supported housing

Extra care

Other housing

Owner occupied - right to buy

Owner occupied - retirement

housing

Number of properties

2009 2010 2011

Investment inhomes m

10.31 10.61 9.93

%age compliancewith WHQS

55% 69% 76%

-

2.00

4.00

6.00

8.00

10.00

12.00

m

/ %

age

Investment in properties The majority of the investment

has been capitalised in the

Balance Sheet, with the

remainder expensed as repairs.

The average unit cost prices

achieved for kitchens and

bathrooms during 2011 was

consistent with those achieved in

2010, and are expected to be

similar again in 2012. During

2011 we replaced over 650

kitchens and 600 bathrooms.

Over the last 4 years we have

completed stock condition

surveys over almost all of our

properties, including 2,000 units assessed during 2011.



Our organisation Our people

Weve also been named one of the top 30 family-friendly firms in the UK by Working Families, an organisation which

campaigns for work-life balance. This is another significant

achievement because we are the only Welsh housing

association to make this list and one of only two housing

associations in the whole of the UK. On the list we are

rubbing shoulders with blue-chip giants including Deutsche

Bank, Dell Corporation, McDonalds and Sainsburys.

The Association continues to

support all staff with learning

and development activities.

During 2011 we co-ordinated

269 topics across a range of

learning activities, and a

further 16 individuals are

undertaking professional

qualifications. Our recruitment

process saw 50 individuals

appointed to positions during

2011, of which 23 were filled

by internal candidates and 27

externally. Our sickness and

absence rates continue to fall,

from 4.7% in 2009 to 3.7% in

2010 and to 3.6% in 2011.

There has been an average of

336 staff in the Association in

2011, compared to 321 in

2010. A further 35 staff are

employed by Cambria, taking

the total headcount in the

Group to 371. In addition we

have an unpaid Board of 12

volunteers.

We were pleased to be awarded 8th place on The Sunday

Times list of the 100 Best Places to Work list from

throughout the UK in the not for profit sector in 2012.

This made us the highest placed Welsh company on the

list. Companies are accredited between zero and three

stars and we achieved the highest level with an amazing

three stars. This improves on our two stars in 2011, and

is a real achievement of which we are very proud. We

were also runners up from throughout the UK in the

wellbeing special award, demonstrating how our flexible

working arrangements are appreciated throughout our organisation.

14

11

31

148 81

51

35

People

Chief Executives dept

Development

Finance & IS

Housing

Property services

Support services

Cambria

Number of staff



Our finances

The overall financial result was a surplus for the year of 7.9million (2010 - 4.6million).

An analysis of the results compared with 2010 is set out below:

Rent and service charges from our properties account for virtually all of our revenue

streams and cash inflow, as set out below for the last three years:

There was a 6.0% increase in rental income, mainly driven by the permitted regulatory

increase of 5.6% from April 2011. The permitted increase from April 2012 is 5.1%. The

remainder of the increase in rent was due to the greater number of properties in the

year. Our costs have been controlled below the increase in rents, with an annual

increase of 4.5%. An analysis of our costs (and cash outflows) is set out below:

-

10

20

30

40

Turnover OperatingCosts

OperatingSurplus

InterestPayable

PropertyDisposals

Net Surplus

m

2010

2011

-

10

20

30

40

2009 2010 2011

m

Total group income

Other

Service Charge

Rent

-

10

20

30

40

50

60

2009 2010 2011

m

Total group costs

Other

Premises

Capital expenditure

Major repairs

Interest

Site services

Routine maintenance

People

Property component replacements

Property development



An explanation of the costs is as follows:

Other includes a total of 16,322 (2010; 15,884) was donated to charities

comprising three Care and Repair agencies and match funding to a range of

charities supported through staff initiatives.

Premises represent the costs of our Cardiff and Flint offices.

Capital expenditure is comprised of replacement of site assets such as lifts and

CCTV systems, expenditure on our premises and IT equipment.

Major repairs are works such as boundaries, footpaths and communal areas which

are charged as costs to the Income and Expenditure account as they arise.

Interest represents the net interest payable arising on our borrowings.

Site services comprise services such as emergency alarm, scheme manager

support, cleaning and gardening. Certain services, principally emergency alarm

related, are also provided to other persons, including residents of several other

housing associations. The Association seeks to recover all site service direct costs,

together with management charges to cover administrative costs, through service

charges.

Routine maintenance comprises day to day repairs and annual servicing. Since

January 2011 more than half of repairs have been undertaken by the Groups maintenance subsidiary Cambria.

People costs are comprised of staff salaries, employer national insurance,

pensions, expenses and training.

Property component replacements such as new kitchens, bathrooms and windows

are also capitalised in our balance sheet.

Property development represents the gross expenditure (before grant) of

developing new properties. These are capitalised in our balance sheet.

As at 31 December 2011, the Association had borrowings of 93.2m. An analysis of

these loans is shown below:

The average interest rate on the loan

portfolio was 5.0% (2010; 5.3%).

The total interest cost was 4.6m

(2010 4.5m), with increased costs

on the index linked loans due to

higher inflation being partially offset

by a greater proportion of lower rate

variable borrowings.

The Associations loans have maturity dates ranging from 2021 to 2049. Some loans currently require regular principal repayments, others will require regular repayments

commencing at future dates, and two loans are repayable in full in one go at maturity.

Principal loan repayments due in 2012 amount to 2.7million. As at 31 December 2011

the Association had in place 13.5million of confirmed bank facility to call upon under a

long-term loan agreement. Whilst this would ordinarily be sufficient for the operational

needs for 2012, a further 20m facility is being arranged which should be sufficient to

fund continuing developments and other business needs through to September 2013.

Further facilities will be required from that time to fund property development

aspirations.

The Association is operating well within existing loan covenants. The operating surplus

for the year was 224% of interest payable (2010; 203%) and gearing (loan as a

percentage of the sum of reserves and Social Housing Grant liability) as at 31 December

2011 was 36%. With less Social Housing Grant available to part fund future

development, gearing will rise more quickly than it otherwise would. The Association is

nevertheless able to continue with its development plans and remain compliant with loan

covenants for the foreseeable future.

Fixed Rate -49.4m

Index Linked -10.4m

Variable Rate -33.4m



As part of the new Welsh Government (WG) regulatory framework all housing associations

with at least 250 units in management are subject to a regulatory financial review and are

issued with a financial viability judgement. We received a pass judgement which is the highest rating awarded to associations or groups that are adequately resourced to meet

current and future business and financial commitments.

The Association uses the metric of free cash inflow to measure its ability to generate

sufficient cash to meet all of its non-development activities without the need for further

borrowing.

Free cash flow surpluses have

been achieved in 2011 and are

forecast in 2012 and positive

values are required in the long

term to meet interest cover

requirements and principal

repayments on loans.

Development costs are funded

from grant and additional bank

and bond based borrowing. In

addition, the net proceeds from

sales of schemes, where the

Association has rationalised its

stock, are available for

reinvestment in future

developments.

Summary representations of the balance sheets as at 31 December 2011 and 31

December 2010 are shown below. There are no reportable post balance sheet events.

The Association annually publishes a five-year business plan which sets the aims and

strategic direction of the Association and is the basis of financial projections for the next

30 years. The current five year plan is published on the Associations website and shows operating surpluses for each year and total positive free cash flows of 14.9m in the

period to 2016.

-

100

200

300

400

HousingProperties

Social HousingGrant

Loans Reserves

m

Balance Sheet

2010

2011

Cash flow summary

2011 2010

m m

Free cash 0.7 (0.2)

Net development spend (4.6) (7.2)

Sale of properties 2.9 0.0

Cash outflow before financing (1.0) (7.4)

Loans repaid (2.9) (1.9)

Loans drawn down 6.5 8.5

Increase in cash 2.6 (0.8)



Governance

The Association is controlled by a voluntary Board of Management which comprises up to

fifteen members. Up to eight members are elected from shareholders, up to four are

residents elected directly by residents and up to three may be co-opted from time to

time to fill a skill shortage should one arise. Working together, all Board members guide

the Association in the delivery of quality homes and services. This includes overseeing

finances, agreeing policies, monitoring performance, making strategic decisions,

developing implementation plans and generally ensuring that all matters are conducted

properly. There is a separate Board for Cambria which reports to the Associations Board, to allow the Associations Board to consider the strategic direction of the Group and to ensure that the affairs of the Group are conducted properly.

The Board drives a robust, evidence based and outcome focused annual self assessment

that is corroborated by the Associations staff, residents and partners. This is part of the requirements of the regulation of the Association by the WG, which publishes a set of

delivery outcomes and guidance to make clear its expectations of the sector as a whole.

The intention is that the self-assessment process should be an integral part of

organisational service and business planning.

The Association has a well established corporate planning cycle, which takes account of

WGs expected delivery outcomes. Progress against the corporate priorities is reviewed quarterly by the Board following presentation of a Strategic, Operational and Financial

update which also embraces new challenges and opportunities. A suite of service trend

measures are used by the Board to understand the operational performance of the

business and the quality of service for residents. The emphasis is on measuring what

matters most to residents in terms of outcomes along with indications of the type and

frequency of customer demands so that the Board and staff can easily see the changing

profile of customer requests.

Board members are not remunerated but are entitled to receive properly authorised

expenses when incurred on Association business. A Board member acting in good faith

will not be liable to the Association for any loss.

The Board meets on a formal basis every six weeks, including a full day away from the

office twice each year to consider the strategic direction and priorities of the Association.

A Probity and Audit Committee meets when required, typically three times a year. Some

Board members are designated as lead members, in which capacity they are expected to

develop greater in-depth knowledge in their lead area to help the Board as a whole.

Ad-hoc working groups are also established from time to time for special purposes as

needs arise. These are referred to as task and finish groups and their function is to help the executive management to develop solutions to issues. These groups include a number

of Board members and staff, and can also include others such as professional advisors,

residents and shareholders who take an active interest in the workings of the Association.

Shareholding Board members

Shareholding Board members are elected to the Board of Management at the Annual

General Meeting when nominations exceed available places. They must be either an

existing Board member standing for re-election or be a shareholder nominated by an

existing shareholder. Elections are by way of ballot of shareholders utilising postal and

in-person voting.

Shareholders are required to pay a one pound subscription fee and must not be a minor,

must not have previously been expelled as a shareholder (unless authorised by a special

resolution at a general meeting), and cannot be an employee of the Association.

Shareholders must demonstrate that they can positively contribute to the future

management of the Association and are obliged to act in the interests of the Association,

for the benefit of the community.



Potential shareholders can obtain more information by writing to the Secretary of the

Association.

Resident Board members

The first Resident Board members were elected in 2002 to further enhance resident

participation and involvement. As vacancies arise, Association residents have the

opportunity to stand for election to the Board of Management, providing that they:

(a) are not on an Introductory Tenancy;

(b) are not bankrupt or subject to an agreement with creditors;

(c) have not been convicted of an indictable offence within the last five years.

The Board decides the method of election of Resident Board members. The current

system is:

(a) Prior to the election process commencing an advert is placed within In Touch, the Associations resident magazine, asking for residents who are interested in becoming Board members. For those who are interested, an Information Day is held. Attendance at an Information Day is a compulsory requirement for

those wishing to become Resident Board members;

(b) Nominations to the Board of Management are requested in advance of the

Annual General Meeting from those residents who have attended an Information

Day;

(c) Interested residents must complete an expression of interest in becoming a

Resident Board member form stating how they meet the Boards requirements in terms of skills, qualities and experience;

(d) After attending a meeting with the Chief Executive to receive an explanation of

the obligations of a Resident Board member, they must complete a nomination

form which includes a statement of 100 words in support of their nomination to

be used on the ballot paper;

(e) Ten other residents must support the nomination;

(f) A postal ballot of all residents is held if nominations exceed available places;

(g) Those with the most votes become members of the Board of Management and

their appointments are announced at the Annual General Meeting.

Co-opted Board members

The elected Board can appoint up to three co-opted members to the Board should the

Board at any time determine that there is a need for supplementary skills. Co-opted

members are appointed for a finite period and have the same voting rights as elected

Board members save that they are not entitled to vote on matters pertaining to positions

of office to the Board or issues affecting shareholders.

All Board members

Members are elected at the Annual General Meeting for a three year term. A maximum of

three consecutive terms can be served. There must be a clear 12 month gap following the

serving of the three consecutive terms before a member can re-join the Board in any

capacity. Any period spent as a co-optee or casual vacancy holder does not count towards

the maximum consecutive time.

The collective and personal obligations of Board members are to:

Understand and uphold the values and objectives of the Association.

Monitor, supervise and control the Associations affairs as custodians of its mission.

Act objectively at all times and serve the interests of the Association before

their own or the interests of any particular sector of the community served by

the Association.

Use independent judgement on strategy, performance and accountability.

Act as an ambassador of the Association at all times.



All Board members (continued)

Ensure that an effective contribution is made by preparing for meetings and

events, attending regularly and participating in discussions and decision-making.

Acknowledge that an objective is to be business-like without turning the Association into a business which trades purely for profit.

Abide by the Associations rules and code of governance. Handle key Association appointments.

Statement of the Boards requirements for the skills, qualities and experience of its members

The Boards requirements for the skills, qualities and experience of its members are that collectively they must:

have a balance of appropriate skills including (but not exhaustively) legal,

business, financial, technical, community work, housing sector experience,

relevant public sector experience, human resources and governance;

reflect the communities wherein the Association operates;

reflect the diversity of society in terms of a balance of gender, age, minority

groups such as BME and disabled.

Individually they must also:

be able to give the appropriate amount of time necessary to be trained, attend

and prepare for meetings;

be able to work within a team and put personal considerations aside;

demonstrate an empathy with social housing.

Extent to which these requirements are met by those Board members

continuing in office, and those retiring and intending to re-offer themselves for

election

Following the annual extensive Board appraisal exercise the Board is happy to report

that the requirements for the skills, qualities and experience, which it needs from its

members, are fully met by those Board members continuing in office, and those

retiring and intending to re-offer themselves for election.



Internal Control The Board acknowledges its responsibility for ensuring that the Association and the

Group have in place a system of controls that are appropriate to the various business

environments in which they operate. These controls are designed to give reasonable

assurance with respect to:

(a) the reliability of financial information used within the Association and Group or

for publication;

(b) the maintenance of proper accounting records ; and

(c) the safeguarding of assets against unauthorised use or disposition.

It is the Boards responsibility to establish and maintain systems of internal financial control. Such systems can only provide reasonable and not absolute assurance against

material financial mis-statement or loss. Key elements include ensuring that:

(a) formal policies and procedures are in place, including the documentation of

key systems and rules relating to the delegation of authorities, which allow

the monitoring of controls and restrict the unauthorised use of the

Associations assets; (b) experienced and suitably qualified staff take responsibility for important

business functions. Annual procedures have been established to maintain

standards of performance, as well as self-certification of risk control in all

areas;

(c) forecasts and budgets are prepared which allow the Board to monitor the key

business risks and objectives and progress towards financial plans set for the

year and the medium term; regular management accounts are prepared

promptly, providing relevant, reliable and up-to-date financial and other

information and significant variances from budgets are investigated as

appropriate;

(d) all significant new initiatives, major commitments and investment projects are

subject to a formal authorisation procedure, through relevant committees

comprising Board members and others;

(e) the Board undertakes an annual review of the major risks facing the

Association and the Group;

(f) the Probity and Audit Committee reviews reports from management, the

Internal Audit Manager and from the external auditors to provide reasonable

assurance that control procedures are in place and are being followed.

Committee makes regular reports to the Board; and

(g) formal procedures have been established for instituting appropriate action to

correct weaknesses identified from the above reports.

The Board is satisfied that the Association and the Group has adequate resources to

continue in operational existence for the foreseeable future and at present sees no

reason for the situation to change. The Board is also satisfied that there are no

weaknesses in the Associations system of internal control which might lead to material losses, contingencies or uncertainties which require disclosure in the financial statements

or the auditors report on the financial statements.



Statement of Board Responsibilities

The Board is responsible for preparing the financial statements in accordance with

applicable law and United Kingdom Generally Accepted Accounting Practice.

The Industrial and Provident Societies Acts and Registered Social Landlord legislation

requires the Board to prepare financial statements for each financial year which give a

true and fair view of the state of affairs of the Association and the Group and of the

surplus or deficit of the Association and the Group for that period.

In preparing those financial statements, the Board is required to select suitable

accounting policies, as described on pages 25 to 28, and then apply them on a

consistent basis, making judgements and estimates that are prudent and reasonable.

The Board must also prepare the financial statements on the going concern basis unless

it is inappropriate to presume that the Association and the Group will continue in

business.

The Board is responsible for keeping proper accounting records which disclose with

reasonable accuracy at any time the financial position of the Association and the Group

and to enable them to ensure that the financial statements comply with the relevant

legislation. The Board is also responsible for safeguarding the assets of the Association

and the Group and hence for taking reasonable steps for the prevention and detection of

fraud and other irregularities.

The Board is responsible for the maintenance and the integrity of the corporate and

financial information included on the Associations website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ

from legislation in other jurisdictions.

In so far as the Board is aware:

there is no relevant audit information of which the Association's and the Groups

auditors are unaware; and

the Board has taken all steps that they ought to have taken to make itself aware

of any relevant audit information and to establish that the auditors are aware of

that information.

A resolution to re-appoint Haines Watts Wales LLP as auditors will be proposed at the

Annual General Meeting on 26 April 2012.

By order of the Board

Mr. I Gittens

Chair of the Board


Independent Auditor Report to Members of Wales & West Housing Association

Limited

Year ended 31 December 2011

We have audited the financial statements of Wales & West Housing Association Limited (the Association) for the year ended 31 December 2011 which comprise the Group Income and Expenditure Account, the Group and Parent Balance Sheets, the Group Cash Flow Statement

and the related notes. The financial reporting framework that has been applied in their

preparation is applicable law and United Kingdom Accounting Standards (United Kingdom

Generally Accepted Accounting Practice).

This report is made solely to the Associations members, as a body corporate, in accordance with the requirements of the Industrial and Provident Societies Acts 1965 to 2002, schedule 1

to the Housing Act 1996 and the Accounting Requirements for Social Landlords Registered in

Wales - General Determination 2009. Our audit work has been undertaken so that we might

state to the Associations members those matters we are required to state to them in an auditors report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Association and the Associations members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of the Board and the auditor

As explained more fully in the Statement of Boards responsibilities, set out on page 19, the Board is responsible for the preparation of financial statements which give a true and fair view.

Our responsibility is to audit and express an opinion on the financial statements in accordance

with applicable law and International Standards on Auditing (UK and Ireland). Those standards

require us to comply with the Auditing Practice Boards Ethical standards for Auditors.

We review whether the Boards statement on internal financial control reflects the Groups compliance with the Housing for Wales Circular HFW 02/10 Internal controls and reporting and we report whether the statement is not inconsistent with the information of which we are

aware from our audit of the financial statements. We are not required to form an opinion on

the effectiveness of the Groups corporate governance procedures or its internal financial

control.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial

statements sufficient to give reasonable assurance that the financial statements are free from

material misstatement, whether caused by fraud or error. This includes an assessment of:

whether the accounting policies are appropriate to the Associations circumstances and have been consistently applied and adequate disclosed; the reasonableness of significant accounting

estimates made by the Board; and the overall presentation of the financial statements. In

addition, we read all the financial and non-financial information in the Board report to identify

material inconsistencies with the audited financial statements. If we become aware of any

apparent material misstatements or inconsistencies we consider the implications for our report.

Opinion on internal control

In our opinion, with respect to the Boards statement on internal financial control:

the Board has provided the disclosures required by the Circular and the statement is

not inconsistent with the information of which we are aware from our audit work on the

financial statements.



Opinion on financial statements

In our opinion the financial statements:

give a true and fair view of the state of the Groups and of the parent Associations affairs as at 31 December 2011 and of the Groups income and expenditure for the year then ended;

have been properly prepared in accordance with the Industrial and Provident Societies

Acts 1965 to 2002, schedule 1 to the Housing Act 1996 and the Accounting

Requirements for Social Landlords Registered in Wales - General Determination 2009;

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Industrial and

Provident Societies Acts 1965 to 2002 require us to report to you if, in our opinion:

a satisfactory system of control over transactions has not been maintained; or

the parent Association financial statements are not in agreement with the accounting

records and returns; or

the financial statements are not in agreement with the books of account; or

we have not received all the information and explanations we need for our audit.

Haines Watts Wales LLP

Statutory Auditor

Pagefield House

24 Gold Tops

Newport

South Wales

NP20 4PG


Income and expenditure account for the year ended 31 December

2011 2010 2011 2010

000 000 000 000

Turnover

Continuing operations 2 36,063 33,684 36,063 33,684

Operating costs

Continuing operations 2 (25,632) (24,621) (25,786) (24,621)

Operating surplus 10,431 9,063 10,277 9,063

Surplus on sale of fixed assets 5 2,091 0 2,091 0

Gift aid 0 0 115 0

Interest receivable and similar income 8 8 21 14 21

Interest payable and similar charges 9 (4,590) (4,471) (4,590) (4,471)

Surplus on ordinary activities before

taxation 7,940 4,613 7,907 4,613

Taxation 10 (4) 0 0 0

Surplus for year transferred to reserves 21 7,936 4,613 7,907 4,613

Notes

ASSOCIATIONGROUP

The Group has no recognised gains and losses other than the surplus above and therefore no

separate statement of total recognised gains and losses has been presented.

There is no difference between the surplus on ordinary activities before taxation and the retained

surplus for the year as stated above and their historical cost equivalents.

Reconciliation of movements in net assets for the year ended 31 December

2011 2010 2011 2010

000 000 000 000

Surplus for the year 7,936 4,613 7,907 4,613

Opening net assets as previously reported 20,354 15,741 20,354 15,741

Closing net assets 28,290 20,354 28,261 20,354

GROUP ASSOCIATION


Balance sheet at 31 December

GROUP ASSOCIATION

2011 2010 2011 2010

000 000 000 000

Tangible fixed assets

Housing land and buildings gross cost

11392,606 375,952 392,606 375,952

Less: Social Housing grants 12a (235,323) (232,050) (235,323) (232,050)

Other grants 12b (1,037) (1,037) (1,037) (1,037)

Depreciation 12c (35,068) (33,712) (35,068) (33,712)

121,178 109,153 121,178 109,153

Fixed asset investments

Equity loans 14a 430 548 430 548

Less: grants 14b (352) (470) (352) (470)

78 78 78 78

Other tangible fixed assets 15 4,255 3,387 4,203 3,387

Total fixed assets 125,511 112,618 125,459 112,618

Current assets

Debtors: amounts falling due within

one year16

5,143 3,163 5,353 3,366

Cash at bank and in hand 24 4,316 1,816 4,173 1,613

9,459 4,979 9,526 4,979

Creditors: amounts falling due

within one year 17 (16,191) (10,325) (16,239) (10,325)

Net current liabilities (6,732) (5,346) (6,713) (5,346)

Total assets less current liabilities 118,779 107,272 118,746 107,272

Non-current liabilities

Creditors: amounts falling due after

more than one year18

(90,365) (86,733) (90,365) (86,733)

Provisions for liabilities and charges 19 (124) (185) (120) (185)

28,290 20,354 28,261 20,354

Capital and reserves

Called up share capital 20 0 0 0 0

Special reserve 21 131 131 131 131

Major repairs designated reserve 21 9,880 9,880 9,880 9,880

Revenue reserve 21 18,279 10,343 18,250 10,343

Total capital and reserves 28,290 20,354 28,261 20,354

Notes

The financial statements on pages 22 to 42 were approved by the Board on 28 March 2012 and

were signed on its behalf by:

Chair of the Board Mr I Gittens

Secretary Mrs A Hinchey


Cash flow statement for the year ended 31 December

2011 2010 2011 2010

000 000 000 000

Net cash inflow from operating

activities 22 14,035 12,765 14,016 12,562

Interest received 8 60 14 60

Interest paid (4,069) (3,986) (4,069) (3,986)

Net cash outflow from returns on

investment and servicing of finance (4,061) (3,926) (4,055) (3,926)

Purchase and development of properties (11,832) (18,718) (11,832) (18,718)

Grant received 7,225 11,460 7,225 11,460

Property component replacements (8,103) (8,574) (8,103) (8,574)

Purchase of other fixed assets (1,177) (211) (1,104) (211)

Proceeds of sale of properties and other

fixed assets 2,879 0 2,879 0

Net cash outflow from capital

expenditure and financial investment(11,008) (16,043) (10,935) (16,043)

Net cash outflow before financing (1,034) (7,204) (974) (7,407)

Decrease in short-term deposits 0 3,003 0 3,003

Management of liquid resources 0 3,003 0 3,003

Housing loans received 6,500 5,500 6,500 5,500

Housing loans repaid (2,966) (1,917) (2,966) (1,917)

Net inflow from financing activities 23 3,534 3,583 3,534 3,583

Net increase/(decrease) in cash 23 2,500 (618) 2,560 (821)

Notes

GROUP ASSOCIATION

Notes to the financial statements for the year ended 31 December


1 Principal accounting policies

A summary of the more important accounting policies are set out below.

Format of accounts

The financial statements have been prepared in accordance with applicable financial reporting

standards in the United Kingdom, including the Statement of Recommended Practice (SORP) for

Accounting by Registered Social Housing Providers as updated in 2010, and comply with the Accounting Requirements for Social Landlords registered in Wales General Determination 2009.

Basis of accounting

The financial statements are prepared on the historical cost basis of accounting.

Basis of consolidation

The consolidated accounts include the results of Wales & West Housing Association Ltd and its

subsidiary undertaking, Cambria Maintenance Services Ltd. Consolidated accounts are required

under the Industrial and Provident Act 1968. Wales & West Housing Association Ltd is the

parent entity and the ultimate parent entity. Where any conflict arises between the SORP 2010

and applicable financial reporting standards, then the SORP prevails.

Turnover

Turnover represents rental and service charge income net of empty properties, fees and revenue

based grants receivable. All turnover is derived from United Kingdom operations.

Housing properties fixed asset capitalisation and depreciation

Housing properties are stated at cost. The cost of properties is their purchase price together with

incidental costs of acquisition and direct costs of the development process.

"Housing properties in the course of construction" are stated at cost and are transferred into

"housing properties" when completed. Any overhead costs directly attributable to bringing fixed

assets into their working condition for their intended purpose are capitalised. Expenditure on the

initial purchase of land and buildings is capitalised and disclosed as part of housing properties in

the course of construction. Interest on borrowings attributable to the net investment in a

property during the course of construction is capitalised.

Profits or losses on disposals of properties are recognised as at the date a sale becomes

certain. The profit or loss arising on a disposal of a property is the difference between the sale

price and the aggregate of the depreciated cost, and any associated costs of disposal such as

legal and valuation fees. The grant originally received on a property is repayable in full in the

case of a disposal, demolition or change of use to an ineligible activity, save that in

circumstances where the Welsh Government considers appropriate it may reduce the amount

repayable. Where this arises on a disposal, the grant repayable so waived is added back to the

profit or loss on that disposal.

Some residents have rights under their tenancy agreement to purchase their homes at prices

which are at a discount to the open market price. Some properties have been partially sold

under shared ownership arrangements. Occupiers have full use of the properties concerned

and pay a rent which reflects the proportional interest retained by the Association. In the

balance sheet the Associations interest is shown as a proportion of the original historic cost, corresponding to the interest retained. Occupiers are able to purchase some or all of that

retained interest at a corresponding proportion of the current market value when that

transaction arises.

Notes to the financial statements (continued) for the year ended 31 December


1 Principal accounting policies (continued)

Housing properties fixed asset capitalisation and depreciation (continued)

Depreciation is charged on the historic cost of property components after deducting grants.

Grant is allocated to land and the main structure of the property, but not to other components.

Freehold land is not depreciated. Leasehold land is depreciated over the remaining term of the

leases. The depreciable amount is written off over the estimated useful lives from the date of

purchase/build.

Where a housing property comprises two or more major components with substantially different

useful economic lives, each component is accounted for separately and depreciated over its

individual useful economic life. Expenditure relating to the subsequent replacement or renewal of

components is capitalised as incurred. Deprecation is charged on cost less social housing grant

on a straight line basis over the components expected economic useful life as follows:

years

House main structure 150

Flat main structure 100

Other components:

Back doors 40

Bathrooms 30

Boilers 15

Electrics 60

Front doors 30

Kitchens: general needs 17

Kitchens: retirement housing 20

Roofs 80

Windows: installed pre 2000 20

Windows: installed post 2000 40

Components on leasehold land are depreciated over the shorter of the above and the remaining

period of the lease. Freehold land is not depreciated.

Grants

Where developments have been financed wholly or partly by grants, the cost of these

developments has been reduced by the amount of the grant received. These grants are received

from central government agencies and local authorities and are offset against the cost of housing

properties on the face of the balance sheet. The Companies Act 2006 requires tangible fixed

assets to be included at purchase price, or production cost, less any provision for depreciation or

diminution in value. However, this requirement conflicts with the generally accepted accounting

principles for Registered Social Housing Providers set out in the SORP: Accounting by Registered

Social Housing Providers. The purpose of grants is to subsidise the capital cost of affordable

housing. Accordingly, management consider it necessary to adopt the accounting treatment set

out in the SORP to give a true and fair view.

Grants are allocated proportionally against the historic cost of the land and main structure

component of each property. No grant is allocated to other property components.

Where grants are received in advance they are carried forward as current liabilities to be

matched against future capital expenditure as it is incurred. Grant receivable in respect of

completed schemes or those under construction is included as a debtor in the financial

statements.

Grants are repayable under certain circumstances, primarily following the sale of a property.

Such repayable grants are included within creditors in the balance sheet.




Repairs and maintenance

The costs of repairs and maintenance are expensed as incurred on the basis of work done at the

balance sheet date.

Impairment

Housing properties are annually reviewed for impairment. Where there is evidence of

impairment, housing properties are written down to their recoverable amount.

Fixed assets investments

Equity loans have been made, under low cost home ownership arrangements, to homeowners

who were not otherwise able to fully afford their homes using commercially available

mortgages. Equity loans are included in the balance sheet at historic cost. The Association is

entitled to a proportion of the market value corresponding to the equity interest at a time

when homeowners either dispose of their property or when they choose to repurchase some,

or all, of the equity loan.

Other fixed assets and depreciation

Other tangible fixed assets are stated at cost less accumulated depreciation. Depreciation is

charged on a straight line basis so as to write off the cost less estimated residual value of assets

over their expected useful economic lives as follows:

Motor vehicles 3 years

Office equipment 3 to 10 years

Site equipment 3 to 10 years

Office buildings written off over periods up to 60 years

Reserves

A major repairs designated reserve is held to fund future major repairs to the housing stock of

the Association. Transfers to and from the reserve are determined by the Board.

Pension costs

The Group makes payments to defined benefit pension and defined contribution schemes on

behalf of its employees. The schemes are funded by contributions partly from the employees and

partly by the Group at rates determined by independent actuaries. The assets of the defined

benefit schemes are invested separately from the Group assets in independently administered

multi-employer funds. All pension costs have been calculated as if they arose within defined

contribution schemes, as permitted by Financial Reporting Standard 17 (Retirement Benefits), as

it is not possible to separately identify the scheme assets attributable to the Group on a

consistent and reasonable basis.

Operating leases

Costs in respect of operating leases are amortised on a straight line basis over the lease term.

Value added tax

The Group is partially exempt for VAT purposes, and claims are made for repayment of VAT on

items that are specifically allowable. Expenditure is shown inclusive of irrecoverable VAT.




Taxation

The Association adopted charitable rules with effect from 20 January 2005. No corporation tax

is expected to arise after that date on charitable object activities. The remaining members of

the group are liable to Corporation Tax at the prevailing rate of taxation.

Loans

Loan arrangement fees are capitalised and are amortised on a straight line basis over the

duration of the loans. Interest is recognised in the income and expenditure account under the

accruals principle, including that related to index linked loans where the cash settlement may

be deferred.

Sinking fund deferred income

Certain residents are required to contribute towards the costs of maintaining properties. Monies

received in advance of maintenance expenditure are credited to sinking fund deferred income

accounts, to which interest is applied.

Provisions

Provisions are recognised where uncertainty exists in relation to the timing or amount that may

be required to settle potential liabilities. Any amounts provided are charged to the Income and

Expenditure account and credited to the Balance Sheet based upon the Groups best estimate of potential liabilities.

2 Analysis of turnover and costs

(a) Particulars of turnover, operating costs and operating surplus

ASSOCIATION

Turnover

Operating

costs

Operating

surplus Turnover

Operating

costs

Operating

surplus

2011 2011 2011 2010 2010 2010

'000 '000 '000 '000 '000 '000

Social housing lettings 34,654 (24,357) 10,297 32,280 (23,105) 9,175

Non-social housing

activities

Lettings 114 (98) 16 65 (74) (9)

Other 1,295 (1,331) (36) 1,339 (1,442) (103)

Total 36,063 (25,786) 10,277 33,684 (24,621) 9,063

The analysis above represents the results of Wales & West Housing Association Limited, which is

the only registered housing provider in the Group. The other member of the Group, Cambria

Maintenance Services Limited, contributed a further 154k to the operating surplus, taking the

Association reported operating surplus of 10,277k to the Group reported operating surplus of

10,431k.

A detailed analysis of the social housing turnover and related operating costs is provided in note

2(b).



2 Analysis of turnover and costs (continued)

(b) Particulars of income and expenditure from social housing lettings

ASSOCIATION

General

needs and

sheltered

housing

Supported

housing

Other social

housing

letting

income

2011

Total

2010

Total

000 000 000 000 000

Income

Rent receivable 29,633 355 41 30,029 28,301

Service charge income 4,212 0 0 4,212 3,594

Grant income for support services 352 0 0 352 385

Other revenue grants 61 0 0 61 0

Turnover from social housing

lettings 34,258 355 41 34,654 32,280

Operating costs

Management (5,005) (50) (15) (5,070) (5,043)

Service charges (4,576) 0 0 (4,576) (4,083)

Routine maintenance (7,396) (73) (3) (7,472) (6,906)

Major repairs expenditure (2,818) (27) (1) (2,846) (2,918)

Bad debts (218) 0 0 (218) (209)

Depreciation of housing properties (3,293) (33) (1) (3,327) (3,277)

Other costs (838) (8) (2) (848) (669)

Operating costs on social

housing activities (24,144) (191) (22) (24,357) (23,105)

Operating surplus on social

housing lettings 10,114 164 19 10,297 9,175

Rent foregone due to

properties being vacant 330 0 0 330 319

Memorandum information:

3(a) Directors' emoluments

The remuneration paid to the directors (defined as members of the Board and the Executive

Officers) of the Group and Association was:

2011 2010

000 000

Aggregate emoluments of executive officers 303 295

Aggregate emoluments of Board members 0 0

Emoluments of highest paid director (Chief Executive), excluding

pension contributions 114 111

GROUP & ASSOCIATION

Retirement benefits are accruing under defined benefit schemes. The Chief Executive is an

ordinary member of a contributory pension scheme (Cardiff and Vale of Glamorgan Pension

Fund). No enhancement or special terms apply and the Association makes no contribution to any

individual pension arrangement. The accrued pension and the accrued lump sum (comprising

contributions from both employee and employer) in respect of the highest paid director (Chief

Executive) at 31 December 2011 were 39,164 (2010: 37,030) and 96,473 (2010: 95,782)

respectively.



3(a) Directors' emoluments (continued)

2011 2010

000 000

Expenses reimbursed to directors not chargeable to United Kingdom

taxation for the year ended 31 December 14 13

GROUP & ASSOCIATION

3(b) Employee information

The average number of staff (including executives) employed during the year was:

GROUP ASSOCIATION

2011 2010 2011 2010

Staff Staff Staff Staff

Actual 371 321 336 321

Full time equivalent 317 266 283 266

2011 2010 2011 2010

000 000 000 000

Staff costs (for the above persons):

Wages and salaries 8,148 6,989 7,490 6,989

Social security costs 663 538 605 538

Pension costs 917 734 913 734

9,728 8,261 9,008 8,261

4 Operating surplus

ASSOCIATION

2011 2010 2011 2010

000 000 000 000

Operating surplus is stated after charging:

Depreciation 4,268 3,874 4,248 3,874

Bad debts 239 233 239 233

Auditors' remuneration:

- In their capacity as auditors 32 21 26 21

- In respect of other services 7 6 7 6

Operating lease rentals

- Land and buildings 54 52 54 52

- Other assets 37 15 37 15

GROUP

5 Surplus on sale of fixed assets

GROUP & ASSOCIATION

2011 2010

000 000

Sales proceeds:

Housing properties 2,879 0

2,879 0

Cost of sales:

Housing properties (788) 0

(788) 0

Surplus on sale of fixed assets 2,091 0



6 Contingent liabilities

The Association is a participating employer member of the Pension Trusts Growth Plan. This is a multi-employer pension scheme, which is in most respects a money purchase arrangement but it

also has some guarantees. Employees of the Association have participated in the Growth Plan

primarily through the use of additional voluntary contributions (AVCs). In accordance with the

Occupational Pension Schemes (Employer Debt on Withdrawal) Regulations 2005, a potential

debt can arise on employers that participate in the Growth Plan. The debt will only crystallise in

the event that the Association ceases to participate in the scheme or in the event of the scheme

winding up at a time when it is not fully funded on a buy-out basis. The Association has been

notified by the Pensions Trust that the estimated employer debt on withdrawal from the plan

based on the financial position of the plan as at 30 September 2010 was 0.4million. Similarly

an employer debt could arise on withdrawal from the Associations main final salary pension scheme arrangements through the Social Housing Pension Scheme (SHPS) and the Cardiff and

Vale of Glamorgan Pension Fund. The estimated employer debt for the Association on withdrawal

from the SHPS plan based on the financial position of the scheme as at 30 September 2010 was

22.6million and from the Cardiff and Vale of Glamorgan Pension Fund as at 31 March 2007 was

1.1million. As events which could crystallise the debt are unlikely to arise in the foreseeable

future, no provision is deemed necessary.

7 Impairment of asset values

In 1989 the Association acquired land from a university under a 125 year lease, on which it

constructed a hall of residence, which was then leased back to that university, also on a 125

year lease. The building was constructed at a cost of 1,422,000 and was originally funded by

826,000 of Housing Association Grant (HAG) and a mortgage loan of 596,000. Over the loan

mortgage period to 2026, the contractual arrangement with the university will ensure that the

Association will recover its operating costs before depreciation relating to the hall of residence,

together with an amount equivalent to the Associations net of HAG investment of 596,000. After the loan mortgage period expires there is uncertainty as to whether the income

receivable from the university relating to the hall of residence over the remaining term of the

lease will exceed the operating costs by at least 826,000, being the balance of the gross

investment in the property. There is also uncertainty as to how much of the 826,000 of HAG

received, if any, will become repayable at the time ownership of the property reverts to the

university and how much will be waived from repayment by the Welsh Government and be

available to offset any residual balance of gross investment in the property. Although there is

uncertainty, it is not currently envisaged that a material write off of the investment will be

necessary when the lease arrangements expire, and accordingly no impairment of the

investment in this leased asset is deemed necessary at the present time.

8 Interest receivable and similar income

2011 2010 2011 2010

000 000 000 000

Interest receivable from investments 8 21 14 21

ASSOCIATIONGROUP

9 Interest payable and similar charges

2011 2010 2011 2010

000 000 000 000

On bank loans and overdrafts and other loans:

Repayable wholly or partly in more than 5 years 4,582 4,471 4,582 4,471

Interest payable to sinking funds 8 0 8 0

4,590 4,471 4,590 4,471

GROUP ASSOCIATION



10 Corporation Tax

2011 2010 2011 2010

000 000 000 000

Deferred Tax

Origination and reversal of timing differences 4 0 0 0

Tax on ordinary activities 4 0 0 0

GROUP ASSOCIATION

The Association adopted charitable status with effect from 20 January 2005 and therefore no

taxation is payable on the profits arising from the charitable activities it undertakes. Cambria

Maintenance Services Limited is liable to UK corporation tax but the current taxable profits

have been reduced to nil by a gift aid payment to the Association as its parent company. A

deferred tax liability has arisen in Cambria and has been provided for in full.

11 Tangible fixed assets Housing land and buildings gross cost

Social

Housing

Properties

Shared

ownership

Other

Properties

Properties

in the

course of

construction Total

000 000 000 000 000

At 1 January 2011 348,226 564 2,362 24,800 375,952

Property acquisistions 1,169 0 0 10,341 11,510

Schemes completed 24,623 0 0 (24,623) 0

Component additions to

existing properties 9,367 0 0 0 9,367

Components removed (1,897) 0 0 0 (1,897)

Housing property disposals (2,326) 0 0 0 (2,326)

At 31 December 2011 379,162 564 2,362 10,518 392,606

2011 2010

000 000

364,914 348,596

27,625 27,291

67 65

392,606 375,952

GROUP & ASSOCIATION

Housing properties comprise:

Freehold land and buildings

Long leasehold land and buildings

Short leasehold land and buildings

12(a) Tangible fixed assets - Social housing grants

Social

Housing

Properties

Shared

ownership

Other

Properties

Properties

in the

course of

construction Total

000 000 000 000 000

At 1 January 2011 216,724 389 826 14,111 232,050

Property acquisitions 2,543 0 0 1,954 4,497

Schemes completed 12,167 0 0 (12,167) 0

Housing property disposals (1,224) 0 0 0 (1,224)

At 31 December 2011 230,210 389 826 3,898 235,323

GROUP & ASSOCIATION

Grant received or receivable to date is wholly attributable to capital works



12(b) Tangible fixed assets - Other grants

Social

Housing

Properties

Shared

ownership

Other

Properties

Properties

in the

course of

construction Total

000 000 000 000 000

At 1 January 2011 402 0 0 635 1,037

Property acquisitions 160 0 0 (160) 0

At 31 December 2011 562 0 0 475 1,037

GROUP & ASSOCIATION

12(c) Tangible fixed assets Housing land and buildings Depreciation

Social

Housing

Properties

Shared

ownership

Other

Properties

Properties

in the

course of

construction Total

000 000 000 000 000

At 1 January 2011 33,217 26 469 0 33,712

Charge for the year 3,594 (2) 52 0 3,644

Components removed (1,897) 0 0 0 (1,897)

Housing property disposals (391) 0 0 0 (391)

At 31 December 2011 34,523 24 521 0 35,068

GROUP & ASSOCIATION

13 Units in management

GROUP & ASSOCIATION

New

Build

Mortgage

Rescue Sales Transfers

Available for social housing rent 8,085 83 8 (83) 2 8,095

Supported housing 66 17 (2) 81

Scheme managers 25 0 25

Extra care 0 59 59

Shared ownership 24 0 24

Sub total social housing

units 8,200 159 8 (83) 0 8,284

Market rented 6 6

Intermediate rented 6 6

Equity stake 33 7 (1) 39

Managed for another HA 12 12

Properties managed for private

owners1,194 1,194

Sub total non social housing

units 1,245 6 7 (1) 0 1,257

Total units owned and

managed9,445 165 15 (84) 0 9,541

Opening

units at

01/01/11

Closing

units at

31/12/11

Within social housing available to rent 81 units were vacant as at 31 December 2011 (31

December 2010: 70 units).



14 Fixed asset investments

14(a) Equity loans

GROUP & ASSOCIATION

2011 2010

000 000

At 1 January 548 444

Additions 0 104

Disposals (118) 0

At 31 December 430 548

14(b) Grants

GROUP & ASSOCIATION

2011 2010

000 000

At 1 January 470 365

Additions 0 105

Disposals (118) 0

At 31 December 352 470

15 Other tangible fixed assets

GROUP

Motor

vehicles

Office

equipment

Site

equipment

Freehold

office

property Total

000 000 000 000 000

Cost

At 1 January 2011 32 2,062 3,786 1,751 7,631

Additions 0 434 1,092 0 1,526

Disposals (21) (146) (74) 0 (241)

At 31 December 2011 11 2,350 4,804 1,751 8,916

Depreciation

At 1 January 2011 32 1,661 2,000 551 4,244

Charge for year 0 201 390 33 624

Eliminated on disposals (21) (131) (55) 0 (207)

At 31 December 2011 11 1,731 2,335 584 4,661

Net book value

At 31 December 2011 0 619 2,469 1,167 4,255

At 1 January 2011 0 401 1,786 1,200 3,387



15 Other tangible fixed assets (continued)

ASSOCIATION

Motor

vehicles

Office

equipment

Site

equipment

Freehold

office

property Total

000 000 000 000 000

Cost

At 1 January 2011 32 2,062 3,786 1,751 7,631

Additions 0 381 1,073 0 1,454

Disposals (21) (146) (74) 0 (241)

At 31 December 2011 11 2,297 4,785 1,751 8,844

Depreciation

At 1 January 2011 32 1,661 2,000 551 4,244

Charge for year 0 187 384 33 604

Eliminated on disposals (21) (131) (55) 0 (207)

At 31 December 2011 11 1,717 2,329 584 4,641

Net book value

At 31 December 2011 0 580 2,456 1,167 4,203

At 1 January 2011 0 401 1,786 1,200 3,387

16 Debtors

GROUP ASSOCIATION

2011 2010 2011 2010

000 000 000 000

Amounts falling due within one year

Rental and service charge debtors 1,913 1,965 1,913 1,965

Bad debt provision for rental and service charges (940) (832) (940) (832)

Capital debtors 3,164 1,322 3,164 1,322

Inter-group balances 0 0 215 203

Loans to employees 4 5 4 5

Other debtors and pr

2011 Annual Report and Financial Statements

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