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
Annual report and financial statements
Annual Report 2011 Page 2 of 42
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
Annual report and financial statements
Annual Report 2011 Page 3 of 42
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.
Annual report and financial statements
Annual Report 2011 Page 4 of 42
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
Annual report and financial statements
Annual Report 2011 Page 5 of 42
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
Annual report and financial statements
Annual Report 2011 Page 6 of 42
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
Annual report and financial statements
Annual Report 2011 Page 7 of 42
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
Annual report and financial statements
Annual Report 2011 Page 8 of 42
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.
Annual report and financial statements
Annual Report 2011 Page 9 of 42
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
Annual report and financial statements
Annual Report 2011 Page 10 of 42
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.
Annual report and financial statements
Annual Report 2011 Page 11 of 42
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
Annual report and financial statements
Annual Report 2011 Page 12 of 42
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
Annual report and financial statements
Annual Report 2011 Page 13 of 42
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
Annual report and financial statements
Annual Report 2011 Page 14 of 42
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)
Annual report and financial statements
Annual Report 2011 Page 15 of 42
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.
Annual report and financial statements
Annual Report 2011 Page 16 of 42
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.
Annual report and financial statements
Annual Report 2011 Page 17 of 42
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.
Annual report and financial statements
Annual Report 2011 Page 18 of 42
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.
Annual report and financial statements
Annual Report 2011 Page 19 of 42
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
Annual Report 2011 Page 20 of 42
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.
Annual report and financial statements
Annual Report 2011 Page 21 of 42
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
Annual Report 2011 Page 22 of 42
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
Annual Report 2011 Page 23 of 42
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
Annual Report 2011 Page 24 of 42
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
Annual Report 2011 Page 25 of 42
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
Annual Report 2011 Page 26 of 42
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.
Notes to the financial statements (continued) for the year ended 31 December
Annual Report 2011 Page 27 of 42
1 Principal accounting policies (continued)
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.
Notes to the financial statements (continued) for the year ended 31 December
Annual Report 2011 Page 28 of 42
1 Principal accounting policies (continued)
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).
Notes to the financial statements (continued) for the year ended 31 December
Annual Report 2011 Page 29 of 42
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.
Notes to the financial statements (continued) for the year ended 31 December
Annual Report 2011 Page 30 of 42
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
Notes to the financial statements (continued) for the year ended 31 December
Annual Report 2011 Page 31 of 42
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
Notes to the financial statements (continued) for the year ended 31 December
Annual Report 2011 Page 32 of 42
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
Notes to the financial statements (continued) for the year ended 31 December
Annual Report 2011 Page 33 of 42
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).
Notes to the financial statements (continued) for the year ended 31 December
Annual Report 2011 Page 34 of 42
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
Notes to the financial statements (continued) for the year ended 31 December
Annual Report 2011 Page 35 of 42
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