wwh annual report and financial statements 2013

Annual Report & Financial Statements 2013

Annual report and financial statements Page

Members, executives and advisors 2

Operating and financial review 3

Governance 18

Internal Control 21

Statement of Board responsibilities 22

Independent Auditor Report 23

Income and expenditure account 25

Reconciliation of movement in net assets 25

Balance sheet 26

Cash flow statement 27

Notes to the financial statements 28

Annual Report 2013 Page 1 of 49

Annual report and financial statements

Members, executives and advisors

The Board Mrs K Smart Chair of the Board; Shareholder Board Member Mr A Ashton Vice Chair of the Board; Shareholder Board Member; Lead Member for

Finance Mr J Clowes Shareholder Board Member; Resigned 23 May 2013 Mr R Cornish Resident Board Member; Resigned 26 February 2013 Mr D Davies Resident Board Member; Member of Probity and Audit Committee;

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

Ms E Del Torto Shareholder Board Member; Member of Probity and Audit Committee; Appointed 23 May 2013

Ms R Fleri Shareholder Board Member; Chair of the Probity and Audit Committee; Board member Cambria Maintenance Services Limited

Mr I Gittens Shareholder Board Member; Lead Member for Support Services; Board Representative for Slocombe Cottages for the Aged and Infirm; Board Representative Bridgend Care and Repair

Mr B Jarvis Resident Board Member; Resigned 23 May 2013 Mrs S Lee Shareholder Board Member; Lead Member for Housing Mr N O’Leary Shareholder Board Member; Lead Member for Development; Chair of

the Cambria Maintenance Services Limited Board Mr J Rides Resident Board Member; Member of Probity and Audit Committee;

Appointed 23 May 2013 Mr B Scholfield Resident Board Member; Appointed 23 May 2013 Mr J Williams Resident Board Member; Lead Member for Property Services; Board

Member of Cambria Maintenance Services Limited; Board Representative Flintshire Care and Repair

Executive Officers Mrs Anne Hinchey Chief Executive and Secretary; Board Member Cambria Maintenance

Services Limited, Enfys Developments Limited and Castell Homes Limited Mr Shayne Hembrow Deputy Chief Executive and Commercial Director; Board Member

Cambria Maintenance Services Limited, Enfys Developments Limited and Castell Homes Limited

Mr Tony Wilson Finance Director; Board Member Cambria Maintenance Services Limited, Enfys Developments Limited and Castell Homes Limited

Mr Steve Porter Operations Director; Board Member Enfys Developments Limited and Castell Homes Limited

Registered Office Independent Auditors 3 Alexandra Gate Haines Watts Wales LLP Ffordd Pengam Cardiff CF24 2UD

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



Operating and financial review The Board presents its report and the audited financial statements for the year ended 31 December 2013. Our vision and culture

Our vision is:

Strong, sustainable growth to make a difference to people’s lives, homes and communities.

This vision underpins all that we do, driving our corporate priorities and actions. Our priorities follow a number of themes bringing a clear structure to help guide and manage all that the Association hopes to achieve.

• More; providing homes for people in housing need • Better; maximising our impact in all that we do • Greener; minimising the impact on the environment by WWH and our residents • Wiser; making the best use of our assets • Smarter; making the best use of technology • Together; working with residents and communities to make a difference

In this operating and financial review, we have set out our progress during the year under these themes, augmented by an overview of how the organisation is run. The culture at the core of our business is made up from two main strands, our values and our operating principles. Our operating principles guide us in identifying exactly what work we undertake and our values guide us in how we carry out that work.



More; providing homes for people in housing need In 2013 we brought into management 213 newly developed properties across Wales and built and sold a further 3 low cost home ownership properties.

Within this number are 63 units of extra care at Llys Jasmine in Mold, which is our second extra care scheme. This scheme has been shortlisted for large development of the year at the prestigious UK Housing Awards 2014.

Our scheme at Vulcan Court in Merthyr Tydfil, which has provided 15 badly needed social rented homes in that area, has been shortlisted for small development of the year at the same awards. We also completed our first affordable housing development in Conwy for more than ten years, comprising of 12 properties at Llys Bryniau, West Shore, Llandudno, in partnership with Conwy County Borough Council. With the end of the Welsh Government’s mortgage rescue scheme, our self-funded mortgage rescue scheme helps home owners who are struggling to pay their mortgages and are at risk of repossession. During 2013 there were 6 outright mortgage rescue property purchases enabling people to remain in their own homes during difficult times.

63

42 36

23

15

12 9

12

4

Homes developed in 2013 Llys Jasmine, Flintshire - 63 Extra Care

Kingsmill Road, Wrexham - 42 Social Rented

Rivulet Road, Wrexham - 36 Social Rented

Coed Y Castell, Bridgend - 23 Social Rented

Vulcan House, Merthyr - 15 Social Rented

West Shore, Conwy - 12 social Rented

Cwmfalldau, Powys - 9 Social Rented

Brython Drive, Cardiff - 9 Intermediate Rented(S106) / 3 LCHOTy Gwyn, Cardiff - 4 Intermediate Rented (S106)

Total - 216 homes


Annual report and financial statements We are working hard with our local authority partners to continue our strong, sustainable development growth with preparatory or construction work currently ongoing on nine sites, which will bring a further 261 homes into management over the next two years. In addition, the Association has plans to commence work on a further eleven sites in 2014 as part of the Welsh Government’s Housing Finance Grant (HFG) initiative. This sees grant paid annually in installments over 30 years rather than as an upfront payment. We were delighted to participate and to help Welsh Government to meet their aspiration of an additional 1,000 new homes through this initiative of which our share will be over 200 properties.

As demand for affordable housing generally remains high and a large number of enquiries are received for all types of rented housing, we are planning our highest level of investment into new homes for many years, as shown below:

Our Enfys Developments subsidiary company commenced trading in the year, resulting in less irrecoverable value added tax for the Group as a whole.

58

50

40

33

28

20

17 10 5

Number of homes under development as at 31st December 2013

Glan Y Don, Flintshire - 58 Social Rented

Kingsmill Road, Wrexham - 50 SocialRentedNew Road, Porthcawl, Bridgend - 40 SocialRentedFlint House, Flintshire - 33 RetirementHousingMaesgywn, Bridgend - 28 Social Rented

Rivulet Road, Wrexham - 20 Social Rented

Quakers Yard, Merthyr - 17 Social Rented

Elm Street, Cardiff - 10 Retirement Housing

Townmills Road, Vale of Glamorgan - 5Intermediate Rented

Total - 261 homes

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2014 2015 2016 2017 2018

£m

Development spend 2014-2018

Development Spend

Social Housing Grant



Better; maximising our impact in all that we do

Cambria Maintenance Services

Cambria has now almost tripled in size since we set it up in 2010. At the beginning of 2013 we extended our services to North Wales, meaning that Cambria now provides reactive maintenance services to all of our properties across the whole of Wales. Cambria now employs over 100 staff and is also training several apprentices. We see the company continuing to grow and taking on more of the work currently sourced from external contractors. Cambria has made us more efficient and saved us some £1.1 million in the three years since we set it up. This is equivalent to 330 kitchens, 380 bathrooms or 21 new grant funded homes. The business has undertaken over 24,500 repairs over the course of the year, in addition to refurbishing 228 kitchens and 466 bathrooms.

Castell Catering

Following the opening of our second extra care scheme, Llys Jasmine in Mold, we established Castell Catering to provide meals to the residents. Castell Catering operates as a division of Castell Homes Limited, one of our subsidiary companies. Residents are really happy with the quality of meals being produced in Llys Jasmine and since February 2014, the company is also providing meals at our other extra care scheme at Nant y Mor. The business now employs fourteen people and serves over 3,800 meals per month.

Welfare Reform

During the year, we created seven permanent new jobs by employing tenancy support officers for the first time to help reduce the impact of the benefit changes. They visited every one of our residents believed to be under occupying their homes or affected by the benefit cap to explain the changes to their benefits and help them to prepare to pay their rent and other expenses without resorting to expensive loans. We have over 750 residents affected by the under occupancy benefit reductions and over three quarters of them are now keeping up with their on-going rent commitments. The tenancy support officers are well placed to help residents when housing benefit is replaced by universal credit direct payments in the future.



Greener; minimising the impact on the environment by WWH and our residents

Fuel Poverty

Combating fuel poverty is one of our corporate priorities and in 2013 we successfully fuel switched 170 homes to mains gas central heating with a further 360 planned for 2014. Our fuel switching programme, in partnership with British Gas, was shortlisted in the 2013 Housing Innovation Awards in the Most Innovative Refurbishment Project category. To date more than 500 properties have benefited from this programme which swaps expensive electric night storage heaters for affordable gas-fired heating systems using modern efficient boilers. We have been able to lower our residents’ energy bills and ensure they are living in warm and comfortable homes. The environmental impact of this project is significant, with over 18,000 tonnes of CO2 saved over the lifetime of the installations.

Green Residents

We work hard within the communities where we operate and the schemes we manage to help to create a sense of community. One of the ways we can do this and help with the environment is by encouraging the use of communal gardens for growing fruit and vegetables. We were therefore delighted when our residents at Western Court in Bridgend were crowned UK Green Tenants of the Year at the prestigious Sustainable Housing Awards.

The residents came together to grow their own fruit and vegetables in the communal gardens at the scheme and the produce is regularly cooked and eaten by all residents at shared meals, helping to combat loneliness and isolation. They are also committed to recycling whatever materials they can use to create features in their gardens including decking, fencing, plant holders and bird feeders. The group has also encouraged biodiversity in their gardens and has planted a number of rare native Welsh fruit trees such as Denbigh Plum and Snowdon Queen Pear. It’s the second major award the group has won this year following their success at the TPAS Cymru Participation Awards in May, where they won the Improving the Environment category.



Wiser; making the best use of our assets

Our properties

We manage 9,664 units of housing stock in 12 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 of our rented properties remained high at 99.0% (2012; 99.0%) which is testament to the quality of our stock and good performance in turning around empty properties.

Investing in properties We have invested over £43m in the last five years in order to ensure that our residents live in good quality homes, having met the Welsh Housing Quality Standard in 2012. During 2013 we have successfully completed another busy year of improvement works, including over 300 kitchens and 1,400 bathrooms. Once again this has been achieved to a good standard, within cost forecasts and with great resident satisfaction feedback.

5,916 2,278

101

121 134

581 533

Number of properties

Social housing - general needs

Social housing - older persons

Supported housing

Extra care

Other housing

Owner occupied - right to buy

Owner occupied - retirement housing

-

2.00

4.00

6.00

8.00

10.00

12.00

2009 2010 2011 2012 2013

£m

Investment in properties



Smarter; making the best use of technology

Digital inclusion

Many of the Association’s residents do not have access to the internet and during the year the Association has explored how to address this digital exclusion. Following learning from a previous pilot at Ty Pontrhun in Merthyr, we installed a broadband connection at our extra care scheme at Nant y Mor in Prestatyn. This installation provides at least 3 Mb of broadband bandwidth per resident. The availability of a fixed network to each unit enables individual wireless access points to be installed in each apartment and these are supplemented with wireless connections in the communal areas. To help with online skills, high levels of support and training were provided with weekly internet classes delivered by WWH staff and resident volunteers. This pilot was very successful with almost half of the residents signed up and regularly attending the learning sessions.

Following the success of this second trial, a design has been created to install broadband in 108 locations throughout Wales covering approximately a quarter of the Association’s stock and this will be rolled out over the next two to three years providing residents with internet access. The first of these installations took

place at our new extra care scheme at Llys Jasmine in Mold, where 62 homes now have access to the Internet. Telecare and out of hours We have increased our efforts to grow the telecare, emergency alarm and out of hours 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. During the year we have been successful in winning new work with Tai Calon Community Housing and Newport City Homes (NCH), providing both emergency alarm monitoring and out of hours repairs calls for these two customers. On the back of the NCH work, we subsequently also picked up work for five further organisations, including Charter Housing Association. All of these new external contracts take the total number of alarms monitored to close to 8,900 and out of hours service provision to more than 45,000 homes.



Together; working with residents and communities to make a difference

Making a difference

2013 saw the Association’s sixth annual Making a Difference Awards (MAD), which is our way of honouring the community spirit shown by so many people who live in our homes. Over 150 people attended the ceremony and as always the standard of entries was excellent. 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, 10 awards were presented on the night, in categories including good neighbour, local hero and community project. The winners on the night are pictured below.

Foodbanks

Throughout the year we have been supporting a number of foodbanks across the main areas of operation. It is a sad reflection on our society that people have to rely on foodbanks to get by, but it is a fact of life at the moment and that reliance is not going to diminish in the foreseeable future. Support for foodbanks throughout the year included taking part in a supermarket trolley push around Cardiff city centre and volunteers from the Association and Cambria transformed an empty warehouse over a weekend into a new depot for Cardiff Foodbank. In 2013 WWH staff and residents have collected over half a tonne of food for families in crisis.



Our organisation

Our people

We were pleased to be awarded 5th 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 early 2014 based on their 2013 survey. This made us the highest placed Welsh company on the list. Companies are accredited between zero and three stars and we retained the highest level with three stars.

Our chief executive, Anne Hinchey, was also voted the most people focused CEO in the public and not for profit sectors at the HR Excellence awards 2013.

We were delighted that for the third year running we have been recognised as being a top employer for working families. We’ve improved on our previous Top 30 ranking over the last 2 years and made the Top 10 in the whole UK for 2013.We were also the only Welsh organisation in the Top 10. In addition, we were shortlisted for

The Best for Engagement Special Award and won the special award for The Best for Career Progression.

We generated significant publicity in 2013 around our pioneering status as a living wage employer. Currently 52 of our staff members, who would have been paid at the minimum wage, are now paid at the living wage.

We continue to support all staff with learning and development activities. During 2013 we co-ordinated 192 topics across a range of learning activities, and a further 25 individuals are undertaking professional qualifications. Our recruitment process saw 48 individuals appointed to positions during 2013, of which over 50% were filled by internal candidates. There has been an average of 349 total staff in the Association in 2013, compared to 339 in 2012. In addition we have an unpaid Board of 12 volunteers.


Annual report and financial statements Our finances

The overall financial result was a surplus for the year of £8.5million (2012 - £6.5million). An analysis of the results compared with 2011 and 2012 is set out below:

In all three years, the surplus figure has been improved by surpluses made on the disposal of outlying schemes to other housing associations. 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 4.9% increase in rental income, mainly driven by the permitted regulatory increase in April 2013 and increased property numbers.

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45

Turnover Operatingcosts

Operatingsurplus

Interestpayable

Propertydisposals

Exceptionalitem

Net surplus

£m

I&E Account 2011-2013

2011

2012

2013

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10

15

20

25

30

35

40

2011 2012 2013

£m

Total Group income

Other

Service Charge

Rent


Annual report and financial statements Our total costs (including both capital spend, such as on development, component replacements, office / IT equipment, and costs contained within the income and expenditure account) have risen due to increased investments in property developments and component replacements. However the rise in operating costs has remained broadly consistent with the increase in income. An analysis of our total costs (and cash outflows) is set out below:

An explanation of the costs is as follows:

(a) other includes a total of £17,127 (2012; £20,200) donated to charities comprising three Care and Repair agencies and match funding to a range of charities supported through staff initiatives,

(b) premises represent the costs of the Association’s Cardiff and Flint offices and Cambria’s Cardiff and Holywell offices,

(c) replacement capital expenditure is comprised of replacement of site assets such as lifts and CCTV systems, expenditure on our premises and IT equipment,

(d) 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,

(e) interest represents the net interest payable arising on our borrowings, (f) 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,

(g) routine maintenance comprises day to day repairs and annual servicing, (h) people costs are comprised of staff salaries, employer national insurance, pensions,

expenses and training, (i) property component replacements such as new kitchens, bathrooms and windows

are capitalised in our balance sheet, (j) property development represents the gross expenditure (before grant) of

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

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10.0

20.0

30.0

40.0

50.0

60.0

2009 2010 2011 2012 2013

£m

Total group costs

Other

Premises

Replacement capital expenditure

Major repairs

Interest

Site services

Routine maintenance

People

Property component replacements

Property development


Annual report and financial statements As at 31 December 2013, the Association had borrowings of £113m compared to £105m at 31st December 2012. The Association had a total borrowing facility of £127.2m as at that date of which £45m was in facilities which can revolve until 2018. These provide considerable flexibility to the Association in that excess cash can be used to reduce the outstanding loans as an alternative to placing monies on deposit. The total interest cost in 2013 was lower than in 2012 at £4.4m compared with £4.5m despite higher borrowing. This has been due to careful management of the loan portfolio, with a larger proportion (40%) of loans at variable rates to take advantage of the lower interest rate environment. The average interest rate on the total loan portfolio was 4.3% (2012; 4.7%).

The Association’s loans have maturity dates ranging from 2026 to 2042. Some loans currently require regular principal repayments, others will require regular repayments commencing at future dates, and three loans are repayable in full in one go at maturity (£7.5m in 2031, £9.0m in 2035 and £20.0m in 2042). Principal loan repayments due in 2014 amount to £2.0m. As at 31 December 2013 the Association had in place £14.0m of confirmed bank facility to call upon under a long-term loan agreement, and £2.5m of cash and short term deposits of less than three months. During 2013 a new £15m revolving credit facility was arranged. Additionally, as at the year-end date, heads of terms had been signed for a new £25m 30 year facility from AHF, a subsidiary of THFC, specifically to finance schemes attracting the Welsh Housing Finance Grant (HFG). The facility, expected to be available from May 2014, has two elements; £12.5m sourced from the European Investment Bank (EIB) and £12.5m to be sourced from the bond market. This will be the very first issue under the UK Government Guarantee arrangement and is expected to further reduce the Association’s average interest rate. That funding, together with existing facilities is forecast to be sufficient to fund development plans for 2014, and will result in total loans for the Association of £152.2m should they be fully drawn. The Association is operating within loan covenants. Gearing (defined as loan as a percentage of the sum of reserves and Social Housing Grant liability) as at 31 December 2013 was 37.6%. With the commencement of the schemes being developed with the HFG in 2014, gearing will rise more quickly than it otherwise would. Although it will be some years yet

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0

20

40

60

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120

2010 2011 2012 2013

Inte

rest

£m

Loan

bal

ance

£m

Loan Balances and Interest

Loan Balance Interest


Annual report and financial statements before gearing approaches levels constrained by loan covenants, discussions have commenced with lenders with a view to lifting the most onerous gearing covenant limit to a more acceptable level or alternatively removing such a limit completely through refinancing. By these means the Association will be able to continue with its development plans and remain compliant with loan covenants for the foreseeable future. The Association comfortably met its interest cover covenants and made a transfer of £2.5m to the major repairs reserve, from which it can be redrawn if ever required to supplement net income for interest cover calculations. 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. A small free cash flow surplus was achieved in 2013 and a small free cash deficit was made in 2012. Both years contained above average component replacement spend due to the age profile of stock and WHQS compliance. Positive free cash flows are required in the long term to meet principal repayments on loans. Development costs are primarily funded from grant and additional bank and bond based borrowing. Summary representations of the balance sheet as at 31 December 2013 compared with 2011 and 2012 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 Association’s website and shows operating surpluses for each year and total positive free cash flows of £26.2m in the five year period to 2018.

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200

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300

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400

450

Housingproperties

Social housinggrant

Loans Reserves

£m

Balance Sheet 2011-2013

2011

2012

2013


Annual report and financial statements Value for money The Association has continued with its strategy to improve financial and operational efficiency. The strategy focuses on service delivery, procurement, HR and financial (treasury and tax efficiency) with the emphasis on achieving value rather than just saving money. During the year, the Association has continued to work on waste within its systems. The creation of Cambria in 2011 has given much greater visibility and control over the repairs and maintenance system so that improvements have been made on measures such as first visit fix and appointments. A new system to make appointments at the first point of contact and analysis of materials use by operative patch assisted by Jewsons, the Association’s supplier, have helped to reduce the number of visits by operatives and therefore cost. A further example of systems review is in relation to Anti Social Behaviour (ASB) and support services. This has resulted in us being able to redeploy staff to provide additional services, reducing the time and costs of previous activities. Procurement continues to be an area of strong focus. For some years the Association has adopted a policy of in-sourcing and this work continued in the year with the bringing of maintenance services in North Wales in house within Cambria, eliminating previously irrecoverable VAT on labour and the profit previously paid to a third party contractor. This insourcing principle has been extended to the delivery of replacement kitchens, bathrooms and boilers, bringing more of this into Cambria. This has seen the average cost per installation fall. Also during the year an extensive project was started to look at which materials we procure, such that we standardise items such as window locks and light fittings. This enables us to purchase in greater volume (and therefore lower cost) and to reduce the times that a Cambria operative is not able to carry out a repair because that operative does not have the correct part. A suite of training on making good procurement decisions was also rolled out during the year, with over seventy staff attending. This emphasised the need to consider two factors in order to make a good procurement decision – the need to incur the expenditure and achieving good value relative to alternatives. All of the work on procurement has meant that over the last 5 years we have reduced our reactive maintenance cost per property (adjusted for inflation) as follows:

£0

£200

£400

£600

£800

£1,000

2009 2010 2011 2012 2013

Reactive maintenance spend per property (RPI adjusted)

Reactive maintenance spend per property (RPI adjusted)


Annual report and financial statements Development of new properties is a major area of spend. In 2013, work has begun on developing a standard pattern book of new house type designs which will give efficiency in construction procurement. To maximise our tax efficiency in building new homes, during the year we began delivering our property developments through a further subsidiary, Enfys Developments Limited. This allows the recovery of previously irrecoverable VAT and therefore reduces the overall construction cost of developing new properties. As noted above, the Association’s interest cost has reduced even as the loan book has risen, due to a financial strategy that achieves lower cost funding by a mix of fixed and variable rate debt. Fixed rate debt is accessed quickly due to a pool of available security and by bringing our legal function in house, significantly shortening the time from loan agreement to draw down in comparison with external lawyers. The Association has extended its revolving credit facilities during the year with the £15m Santander loan facility and this revolving credit facility helps mitigate the holding cost of long term low rate debt. All of this work has meant that despite continuing investment in the future of the Association, particularly in staff needed to develop new properties, and investment to support our residents through the significant changes to welfare system, our operating cost per unit has remained fairly constant over a number of years.

Finally the Association is developing a suite of efficiency measures which will be reviewed on a trend basis. These will allow the Association to consider improvements in providing value for money over a number of years rather than against “benchmark” figures, most of which are unreliable due to their different methods of preparation.

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500

1,000

1,500

2,000

2,500

3,000

2009 2010 2011 2012 2013

£

Operating Costs per Unit (exc major works and adjusted for RPI)

Operating Costs per Unit (exc major works and adjusted for RPI)



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 achievement of its aims and objectives. This includes overseeing finances, agreeing policies, monitoring performance, making strategic decisions, developing implementation plans and generally ensuring that all matters are conducted properly. There are separate Boards for Cambria, Enfys and Castell, which report annually to the Association’s Board, to allow the Association’s Board to consider the strategic direction of the Group and to ensure that the affairs of the Group are conducted properly.

The Board leads a robust, evidence based and outcome focused self-assessment process that is corroborated by the Association’s staff, residents and partners. This is part of the requirements of the regulation of the Association by the Welsh Government (WG), which publishes a set of delivery outcomes and guidance to make clear its expectations of the sector as a whole. The self-assessment process adopted is an integral part of our approach to service and business planning.

The Association has a well established corporate planning cycle, which takes account of WG’s expected delivery outcomes. Progress against 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 effectiveness 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 approximately every six weeks, including two full days away from the office 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, where 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.


Annual report and financial statements Shareholding Board members (continued) 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 Association’s 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 Board’s 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.


Annual report and financial statements 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:

(a) understand and uphold the values and objectives of the Association, (b) monitor, supervise and control the Association’s affairs as custodians of its mission, (c) 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,

(d) use independent judgement on strategy, performance and accountability, (e) act as an ambassador of the Association at all times, (f) ensure that an effective contribution is made by preparing for meetings and events,

attending regularly and participating in discussions and decision-making, (g) acknowledge that an objective is to be ‘business-like’ without turning the

Association into a business which trades purely for profit, (h) abide by the Association’s rules and code of governance, (i) handle key Association appointments.

Statement of the Board’s requirements for the skills, qualities and experience of its members

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

(a) 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,

(b) reflect the communities wherein the Association operates, (c) reflect the diversity of society in terms of a balance of gender, age, minority groups

such as BME and disabled.

Individually they must also:

(a) be able to give the appropriate amount of time necessary to be trained, attend and prepare for meetings;

(b) be able to work within a team and put personal considerations aside; (c) 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 Board’s 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 Association’s 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 Association’s system of internal control which might lead to material losses, contingencies or uncertainties which require disclosure in the financial statements or the auditor’s 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 28 to 31, 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 Association’s 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 15th May 2014. By order of the Board

Mrs K Smart Chair of the Board



Independent Auditor Report to Members of Wales & West Housing Association Limited Year ended 31 December 2013 We have audited the financial statements of Wales & West Housing Association Limited (‘the Association’) for the year ended 31 December 2013 which comprise the Group and Parent Income and Expenditure Accounts, the Group and Parent Balance Sheets, the Group and Parent Cash Flow Statements 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 Association’s 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 Association’s members those matters we are required to state to them in an auditor’s 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 Association’s 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 Board’s responsibilities, set out on page 22, 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 Board’s Ethical standards for Auditors. We review whether the Board’s 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 Association’s 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 and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.



Independent Auditor Report to Members of Wales & West Housing Association Limited (continued) Opinion on internal control

In our opinion, with respect to the Board’s 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 Group’s and of the parent Association’s affairs as at 31 December 2013 and of the Group’s 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.


Income and expenditure account for the year ended 31 December

2013 2012 2013 2012 £’000 £’000 £’000 £’000

TurnoverContinuing operations 2 40,165 38,268 40,886 38,602

Operating costsContinuing operations 2 (30,024) (27,883) (30,468) (28,165)

Operating surplus 4 10,141 10,385 10,418 10,437

Exceptional item 5 0 (708) 0 (708)Surplus on sale of fixed assets 6 2,755 1,282 2,755 1,282 Interest receivable and similar income 9 42 79 48 85 Interest payable and similar charges 10 (4,400) (4,545) (4,400) (4,545)Surplus on ordinary activities before taxation 8,538 6,493 8,821 6,551 Taxation 11 0 (1) 0 0

Surplus for year transferred to reserves 22 8,538 6,492 8,821 6,551

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

2013 2012 2013 2012 £’000 £’000 £’000 £’000

Surplus for the year 8,538 6,492 8,821 6,551 Opening net assets as previously reported 34,782 28,290 34,812 28,261

Closing net assets 43,320 34,782 43,633 34,812


Balance sheet at 31 December

The financial statements on pages 25 to 47 were approved by the Board on 3rd April 2014 and were signed on its behalf by:

2013 2012 2013 2012 £’000 £’000 £’000 £’000

Tangible fixed assets Housing land and buildings – gross cost 12 445,039 413,715 445,319 413,760 Less: Social Housing grants 13a (250,168) (246,074) (250,168) (246,074) Other grants 13b (4,795) (2,163) (4,795) (2,163) Depreciation 13c (38,036) (36,402) (38,036) (36,402)

152,040 129,076 152,320 129,121 Fixed asset investments Equity loans 15a 3,854 3,947 3,854 3,947 Less: grants 15b (3,526) (3,629) (3,526) (3,629)

328 318 328 318 Other tangible fixed assets 16 5,093 4,233 4,916 4,193 Total fixed assets 157,461 133,627 157,564 133,632 Current assets Debtors 17 3,008 3,302 3,663 3,707 Cash at bank and in hand 25 4,315 10,521 3,757 10,079

7,323 13,823 7,420 13,786 Creditors: amounts falling due within one year 18 (10,611) (10,117) (10,503) (10,060) Net current assets/(liabilities) (3,288) 3,706 (3,083) 3,726 Total assets less current liabilities 154,173 137,333 154,481 137,358

Non-current liabilities Creditors: amounts falling due after more than one year 19 (110,758) (102,378) (110,758) (102,378) Provisions for liabilities and charges 20 (95) (173) (90) (168)

43,320 34,782 43,633 34,812 Capital and reserves Called up share capital 21 0 0 0 0 Special reserve 22 131 131 131 131 Major repairs designated reserve 22 9,880 7,380 9,880 7,380 Revenue reserve 22 33,309 27,271 33,622 27,301 Total capital and reserves 43,320 34,782 43,633 34,812

Notes

ASSOCIATION GROUP


Cash flow statement for the year ended 31 December

2013 2012 2013 2012 £’000 £’000 £’000 £’000

Net cash inflow from operating activities 23 15,689 13,633 15,349 13,371

Interest received 42 19 48 19 Interest paid (4,685) (4,537) (4,685) (4,537)Net cash outflow from returns on investment and servicing of finance (4,643) (4,518) (4,637) (4,518)

Purchase and development of properties (25,045) (18,314) (25,045) (18,314)Grant received 7,374 12,031 7,374 12,031 Property component replacements (9,547) (8,607) (9,547) (8,652)Purchase of other fixed assets (1,600) (302) (1,382) (294)Proceeds of sale of properties and other fixed assets 3,111 1,562 3,111 1,562 Net cash outflow from capital expenditure and financial investment (25,707) (13,630) (25,489) (13,667)

Net cash outflow before financing (14,661) (4,515) (14,777) (4,814)

Exceptional Item 0 (708) 0 (708)

Housing loans received 10,500 23,921 10,500 23,921 Housing loans repaid (2,045) (12,493) (2,045) (12,493)Net inflow from financing activities 24 8,455 11,428 8,455 11,428

Net (decrease) / increase in cash 24 (6,206) 6,205 (6,322) 5,906

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 trading subsidiary undertakings Cambria Maintenance Services Ltd, Enfys Developments Limited and Castell Homes Limited. 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, gift aid, 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. Where properties come into the ownership of the Association under section 106 agreements, these are often purchased at below cost price. Where this is the case the cost is grossed up to the true cost and the cost difference shown as imputed cost which is shown within property acquisitions, with the corresponding balance shown as imputed grant.

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


1 Principal accounting policies (continued)

Housing properties – fixed asset capitalisation and depreciation (continued)

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 Association’s 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.

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 on a straight line basis over the component’s expected economic useful life as follows: years House main structure 150 Flat main structure 100

Other components: years years 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.

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, the Association considers 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 (continued)

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 2 to 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 (with the exception of Enfys Developments Limited) 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. Enfys Developments Limited can recover VAT, if incurred, and so costs are shown exclusive of 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 Group’s best estimate of potential liabilities. 2 Analysis of turnover and costs

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

TurnoverOperating

costsOperating

surplus TurnoverOperating

costsOperating

surplus2013 2013 2013 2012 2012 2012

£'000 £'000 £'000 £'000 £'000 £'000

Social housing lettings 38,591 (28,852) 9,739 36,755 (26,568) 10,187

Other social housing activitiesGift aid 790 0 790 334 0 334

Lettings 264 (198) 66 205 (134) 71 Other 1,241 (1,418) (177) 1,308 (1,463) (155)Total 40,886 (30,468) 10,418 38,602 (28,165) 10,437

Non-social housing activities


Analysis of turnover and costs (continued)

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

The analysis above represents the results of Wales & West Housing Association Limited, which is the only registered housing provider in the Group. The other trading members of the Group, Cambria Maintenance Services Limited, Enfys Developments Limited and Castell Homes Limited contributed a further £512k (2012; £282k), £0k (2012; £0k) and £1k (2012; £0k) respectively to the operating surplus. After deducting gift aid, which nets out on consolidation, this takes the Association reported operating surplus of £10,418k (2012; £10,437k) to the Group reported operating surplus of £10,141k (2012; £10,385k). A detailed analysis of the social housing turnover and related operating costs is provided in note 2(b).

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

General needs and sheltered

housing Supported

housing

Other social housing

letting income 2013 Total 2012 Total

£’000 £’000 £’000 £’000 £’000

Income Rent receivable 32,996 536 46 33,578 32,015 Service charge income 4,693 0 0 4,693 4,347 Grant income for support services 320 0 0 320 351 Other revenue grants 0 0 0 0 42 Turnover from social housing lettings 38,009 536 46 38,591 36,755 Operating costs Management (5,914) (72) (16) (6,002) (5,430) Service charges (4,849) 0 0 (4,849) (4,653) Routine maintenance (8,267) (100) (4) (8,371) (8,160) Major repairs expenditure (3,553) (43) (2) (3,598) (3,348) Bad debts (305) 0 0 (305) (281) Depreciation of housing properties (4,730) (58) (2) (4,790) (3,889) Other costs (924) (11) (2) (937) (807) Operating costs on social housing activities (28,542) (284) (26) (28,852) (26,568) Operating surplus on social housing lettings 9,467 252 20 9,739 10,187

Rent foregone due to properties being vacant 354 0 0 354 337

Memorandum information:

ASSOCIATION


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:

2013 2012£’000 £’000

Aggregate emoluments of executive officers 399 298 Aggregate emoluments of Board members 0 0 Emoluments of highest paid director (Chief Executive), excluding pensioncontributions 124 119

GROUP & ASSOCIATION

In 2013 there were 4 Executive Officers compared to 3 in 2012. 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 2013 were £47,362 (2012; £42,734) and £106,514 (2012; £100,479) respectively.

2013 2012£’000 £’000

Expenses reimbursed to directors not chargeable to United Kingdom taxation for the year ended 31 December 18 20

GROUP & ASSOCIATION

3(b) Employee information The average number of staff (including executives) employed during the year was:

GROUP ASSOCIATION2013 2012 2013 2012Staff Staff Staff Staff

Actual 461 384 349 339 Full time equivalent 407 326 303 286

2013 2012 2013 2012£’000 £’000 £’000 £’000

Staff costs (for the above persons):Wages and salaries 10,986 8,743 8,434 7,810 Social security costs 897 684 657 600 Pension costs 1,250 969 1,238 965

13,133 10,396 10,329 9,375


4 Operating surplus

ASSOCIATION2013 2012 2013 2012

£’000 £’000 £’000 £’000Operating surplus is stated after charging:Depreciation 5,590 4,557 5,514 4,537 Bad debts 305 281 305 281 Auditors' remuneration: - In their capacity as auditors 25 24 25 24 - In respect of other services 19 14 7 9 Operating lease rentals - Land and buildings 71 68 71 68 - Other assets 33 36 33 36

GROUP

5 Exceptional Item ASSOCIATION

2013 2012 2013 2012£’000 £’000 £’000 £’000

Penalty paid on early redemption of index linked loans 0 708 0 708

GROUP

During the previous year the Association repaid its two indexed linked loans before their normal repayment date. These loans were refinanced by a long term 30 year bond and the expectation is that the net present value of the long term interest saving will be greater than the penalty paid for this early redemption.

6 Surplus on sale of fixed assets GROUP & ASSOCIATION

2013 2012£’000 £’000

Sales proceeds:Housing properties 3,138 1,567

3,138 1,567 Cost of sales:Housing properties (383) (285)

(383) (285)Surplus on sale of fixed assets 2,755 1,282

7 Contingent liabilities

The Association is a participating employer member of the Pension Trust’s 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 2011


7 Contingent liabilities (continued) was £0.4m. Similarly an employer debt could arise on withdrawal from the Association’s 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 2011 was £30.8million 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.

8 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 Association’s 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.

9 Interest receivable and similar income

2013 2012 2013 2012 £’000 £’000 £’000 £’000

Interest receivable from investments 42 79 48 85

ASSOCIATIONGROUP

10 Interest payable and similar charges

2013 2012 2013 2012 £’000 £’000 £’000 £’000

On bank loans and overdrafts and other loans:Repayable wholly or partly in more than 5 years 4,400 4,544 4,400 4,544 Interest payable to sinking funds 0 1 0 1

4,400 4,545 4,400 4,545

GROUP ASSOCIATION


11 Corporation Tax

2013 2012 2013 2012 £’000 £’000 £’000 £’000

Deferred Tax

Origination and reversal of timing differences 0 1 0 0

Tax on ordinary activities 0 1 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, Enfys Developments Limited and Castell Homes Limited are liable to UK corporation tax but the current taxable profits in each company have been reduced to £nil by gift aid payments to the Association as the parent company. A deferred tax charge of £398 arose in Cambria Maintenance Services Limited and has been provided for in full.

12 Tangible fixed assets – Housing land and buildings – gross cost

2013 2012

£’000 £’000

416,392 385,62228,580 28,026

67 67445,039 413,715

Housing properties comprise:Freehold land and buildingsLong leasehold land and buildingsShort leasehold land and buildings

Social Housing

Properties Shared

ownership Other

Properties

Properties in the course of construction Total

£’000 £’000 £’000 £’000 £’000 At 1 January 2013 387,875 553 2,362 22,925 413,715 Property acquisitions 1,343 16 0 23,478 24,837 Schemes completed 31,375 0 0 (31,375) 0 Imputed costs 0 0 0 2,607 2,607 Reclassification to/from investments 0 0 0 (250) (250) Component additions to existing properties 8,076 5 0 0 8,081 Components removed (3,127) (3) 0 0 (3,130) Housing property disposals (797) (24) 0 0 (821)

At 31 December 2013 424,745 547 2,362 17,385 445,039

GROUP


12 Tangible fixed assets – Housing land and buildings – gross cost (continued)

Works charged to existing properties that have been capitalised are shown above under component additions to existing properties, works charged through the Income and Expenditure account during 2013 amounted to £2,234,000 (2012; £1,965,000). 13(a) Tangible fixed assets - Social housing grants

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

Social Housing

Properties Shared

ownership Other

Properties


£’000 £’000 £’000 £’000 £’000 At 1 January 2013 387,920 553 2,362 22,925 413,760 Property acquisitions 1,343 16 23,520 24,879 Schemes completed 31,375 (31,375) 0 Imputed costs 2,607 2,607 Reclassification to/from investments 0 (250) (250) Component additions to existing properties 8,269 5 8,274 Components removed (3,127) (3) (3,130) Housing property disposals (797) (24) (821)

At 31 December 2013 424,983 547 2,362 17,427 445,319

2013 2012 £’000 £’000

416,672 385,667 28,580 28,026

67 67 445,319 413,760

ASSOCIATION

Housing properties comprise: Freehold land and buildings Long leasehold land and buildings Short leasehold land and buildings

Social Housing

Properties Shared

ownership Other

Properties


£’000 £’000 £’000 £’000 £’000 At 1 January 2013 228,621 377 826 16,250 246,074 Property acquisitions 183 4,537 4,720 Schemes completed 13,148 (13,148) 0 Reclassification to/from investments 0 0 Housing property disposals (609) (17) (626) At 31 December 2013 241,343 360 826 7,639 250,168

GROUP & ASSOCIATION


13(b) Tangible fixed assets - Other grants

Social Housing

PropertiesShared

ownershipOther

Properties


£’000 £’000 £’000 £’000 £’000At 1 January 2013 1,608 0 0 555 2,163 Internal movement 275 (275) 0 Imputed grant 2,632 0 2,632

At 31 December 2013 4,515 0 0 280 4,795

GROUP & ASSOCIATION

13(c) Tangible fixed assets – Housing land and buildings – Depreciation

14 Units in management

New Build

Conversions

Mortgage Rescue Sales Transfers

Closing units at

31/12/13General needs and retirement 8,091 131 6 (39) 5 8,194 Extra care 58 63 121 Scheme managers 23 (2) (2) 19 Supported housing 90 6 6 (1) 101 Other social housing 24 (2) 22

8,286 200 6 6 (43) 2 8,457 Intermediate rented 23 13 36 Market rented 6 6 Equity stake 38 3 (1) (1) 39 Managed for another HA 12 12

1,193 (78) (1) 1,114

1,272 16 0 0 (79) (2) 1,207 9,558 216 6 6 (122) 0 9,664

Within social housing available to rent 92 units were vacant as at 31 December 2013 (31 December2012: 72 units).

GROUP & ASSOCIATIONOpening units at

01/01/13

Sub total non social housing units

Sub total social housing units

Total units owned and managed

Properties managed for private owners

Social Housing

Properties Shared

ownership Other

Properties


£’000 £’000 £’000 £’000 £’000 At 1 January 2013 35,861 20 521 0 36,402 Charge for the year 4,871 4,871 Components removed (3,127) (3) (3,130) Housing property disposals (107) (107)

At 31 December 2013 37,498 17 521 0 38,036

GROUP & ASSOCIATION


15 Fixed asset investments

15(a) Equity loans GROUP & ASSOCIATION

2013 2012£’000 £’000

At 1 January 3,947 430 Additions 250 145 Imputed costs 25 0 Reclassification to/from social housing 0 3,372 Disposals (368) 0 At 31 December 3,854 3,947

15(b) Grants GROUP & ASSOCIATION

2013 2012£’000 £’000

At 1 January 3,629 352 Additions 0 141 Reclassification to/from social housing 0 3,136 Disposals (103) 0 At 31 December 3,526 3,629

16 Other tangible fixed assets

GROUP

Motor vehicles

Office equipment

Site equipment

Freehold office

property Total£’000 £’000 £‘000 £’000 £’000

CostAt 1 January 2013 11 2,705 4,929 1,826 9,471 Additions 162 389 999 48 1,598 Disposals (6) 0 (29) 0 (35)

At 31 December 2013 167 3,094 5,899 1,874 11,034

DepreciationAt 1 January 2013 11 1,965 2,645 617 5,238 Charge for year 35 252 395 37 719 Eliminated on disposals (1) 0 (15) 0 (16)

At 31 December 2013 45 2,217 3,025 654 5,941

Net book value

At 31 December 2013 122 877 2,874 1,220 5,093

At 1 January 2013 0 740 2,284 1,209 4,233


16 Other tangible fixed assets (continued)

ASSOCIATION

Motor vehicles

Office equipment

Site equipment

Freehold office

property Total£’000 £’000 £‘000 £’000 £’000

CostAt 1 January 2013 11 2,644 4,910 1,826 9,391 Additions 0 377 955 48 1,380 Disposals 0 0 (29) 0 (29)

At 31 December 2013 11 3,021 5,836 1,874 10,742

DepreciationAt 1 January 2013 11 1,937 2,633 617 5,198 Charge for year 0 231 375 37 643 Eliminated on disposals 0 0 (15) 0 (15)

At 31 December 2013 11 2,168 2,993 654 5,826

Net book value

At 31 December 2013 0 853 2,843 1,220 4,916

At 1 January 2013 0 707 2,277 1,209 4,193

17 Debtors

GROUP ASSOCIATION2013 2012 2013 2012

£’000 £’000 £’000 £’000Amounts falling due within one yearRental and service charge debtors 1,940 1,852 1,940 1,852 Bad debt provision for rental and service charges (959) (960) (959) (960)Capital debtors 783 1,475 783 1,475 Inter-group balances 0 0 983 434 Loans to employees 4 4 4 4 Other debtors and prepayments 1,240 931 912 902

3,008 3,302 3,663 3,707


18 Creditors: amounts falling due within one year


£’000 £’000 £’000 £’000Housing loans 2,048 2,105 2,048 2,105 Capitalised loan fees (68) (23) (68) (23)Rents and service income received in advance 792 791 792 791 Grants received and receivable in advance 1,850 0 1,850 0 Taxation and social security 322 265 249 234 Sinking fund deferred income 353 387 353 387 Accrued interest 511 605 511 605 Intergroup balance 0 0 1,606 175 Accruals and other deferred income 4,803 5,987 3,162 5,786

10,611 10,117 10,503 10,060

19 Creditors: amounts falling due after more than one year

2013 2012 2013 2012£’000 £’000 £’000 £’000

Recycled Capital Grant Fund 179 123 179 123 Housing loans 111,121 102,609 111,121 102,609 Accrued mortgage interest 205 205 205 205 Capitalised Loan fees (747) (559) (747) (559)

110,758 102,378 110,758 102,378

ASSOCIATIONGROUP

Housing loans are secured by specific charges on the Association's housing properties. Rates of interest during the year ranged from 0.6% up to 11.2%. The weighted average rate of interest for 2013 was 4.27% (2012; 4.67%). As at 31 December 2013, 60% of loans were at fixed rates and 40% were at variable rates.

The loans are repayable as follows:

2013 2012 2013 2012£’000 £’000 £’000 £’000

Due within:One year or less 2,048 2,105 2,048 2,105 Between one and two years 2,043 2,120 2,043 2,120 Between two and five years 8,795 7,409 8,795 7,409 In five years or more 100,283 93,080 100,283 93,080

113,169 104,714 113,169 104,714

Repayable otherwise than by instalments in more than five years 36,500 36,500 36,500 36,500 Repayable by instalments wholly or partly in more than five years 63,783 56,580 63,783 56,580 In five years or more 100,283 93,080 100,283 93,080

ASSOCIATIONGROUP


19 Creditors: amounts falling due after more than one year (continued)

The movement on the Recycled Capital Grant Fund was as shown below:


£’000 £’000 £’000 £’000At 1 January 2013 (123) 1 (123) 1 Utilised during the year 0 (1) 0 (1)Additions during the year (56) (123) (56) (123)At 31 December 2013 (179) (123) (179) (123)

20 Provisions for liabilities and charges

Deferred taxation arises in Cambria, a 100% subsidiary and represents timing of tax payments due. Insurance provisions relate to excess levels on known insurable claims yet to be settled.

GROUPContractual Deferredobligations Insurance taxation Other Total

£’000 £’000 £’000 £‘000 £’000At 1 January 2013 72 90 5 6 173 Utilised during the year (42) 0 0 (6) (48)Released during the year (30) 0 0 0 (30)Additions during the year 0 0 0 0 0 At 31 December 2013 0 90 5 0 95

ASSOCIATIONContractual Deferredobligations Insurance taxation Other Total

£’000 £’000 £’000 £‘000 £’000At 1 January 2013 72 90 0 6 168 Utilised during the year (42) 0 0 (6) (48)Released during the year (30) 0 0 0 (30)Additions during the year 0 0 0 0 0 At 31 December 2013 0 90 0 0 90

21 Called-up share capital GROUP & ASSOCIATION

2013 2012£ £

Allotted, issued and fully paidAt 1 January 81 83 Issued during the year 3 6 Shares cancelled during the year (10) (8)At 31 December 74 81

Shareholders have no entitlement to dividends or return of monies in respect of shares surrendered or a share in the assets in the event of the Association being wound up. No shareholder may hold more than one share and each share shall carry only one vote. Annual Report 2013 Page 42 of 49

22 Reserves

Special reserve

Major repairs designated

reserveRevenue

reserve£'000 £'000 £'000

At 1 January 2013 131 7,380 27,271 Surplus for the year 0 0 8,538 Transfer from major repairs designated reserve 0 2,500 (2,500)Balance at 31 December 2013 131 9,880 33,309

GROUP

Special reserve

Major repairs designated

reserveRevenue

reserve£'000 £'000 £'000

At 1 January 2013 131 7,380 27,301 Surplus for the year 0 0 8,821 Transfer from major repairs designated reserve 0 2,500 (2,500)Balance at 31 December 2013 131 9,880 33,622

ASSOCIATION

The Special reserve was established following the transfer of engagements of Corlan Housing Association, Corlan Co-op Housing Association and Western Permanent, representing goodwill and capital. 23 Reconciliation of surplus before taxation to net cash inflow from operating activities

2013 2012 2013 2012£’000 £’000 £’000 £’000

Surplus for the year before taxation 8,538 6,492 8,821 6,551 Interest payable 4,400 4,545 4,400 4,545 Interest receivable (42) (79) (48) (85)Depreciation 5,590 4,557 5,514 4,537 Surplus on sale of fixed assets (2,755) (1,282) (2,755) (1,282)Exceptional item 0 708 0 708 Movement in working capital (42) (1,308) (583) (1,603)Net cash inflow from operating activities 15,689 13,633 15,349 13,371

ASSOCIATIONGROUP


24 Reconciliation of net cashflow to movement in net debt

2013 2012 2013 2012£’000 £’000 £’000 £’000

(Decrease)/increase in cash in year (6,206) 6,205 (6,322) 5,906 (Increase) in debt (8,455) (11,428) (8,455) (11,428)Net cash outflow before financing (14,661) (5,223) (14,777) (5,522)Accrued interest added to principal 0 0 0 0 Net debt at 1 January (94,193) (88,970) (94,635) (89,113)Net debt at 31 December (108,854) (94,193) (109,412) (94,635)

ASSOCIATIONGROUP

25 Analysis of net debt

GROUP

At 1 January

2013

Accrued interest

added to principal

Cash flow during the

year

At 31 December

2013£’000 £’000 £’000 £’000

Cash at bank and in hand 10,521 0 (6,206) 4,315 Loans (104,714) 0 (8,455) (113,169)

(94,193) 0 (14,661) (108,854)

At 1 January

2013

Accrued interest

added to principal

Cash flow during the

year

At 31 December

2013£’000 £’000 £’000 £’000

Cash at bank and in hand 10,079 0 (6,322) 3,757 Loans (104,714) 0 (8,455) (113,169)

(94,635) 0 (14,777) (109,412)

ASSOCIATION

26 Capital commitments GROUP & ASSOCIATION

2013 2012£’000 £’000

11,395 20,322 Capital expenditure that has been authorised by the Board but has not yet been contracted for 10,981 9,695

Capital expenditure that has been contracted for but has not been provided for in the financial statements

At 31 December 2013 the Association intended to fund this expenditure from social housing grants, loan drawdown from loan facilities already in place and new bank facilities. As at that date heads of terms had been signed on a new £25 million loan with a view to legal completion during 2014.


27 Operating leases

At 31 December the Group had annual commitments under operating leases as follows:

2013 2012Land and buildings

Office equipment

Motor vehicles

Land and buildings

Office equipment

Motor vehicles

£’000 £’000 £’000 £’000 £’000 £’000Leases expiring:Within one year 0 2 2 6 1 0Between two and five years 68 4 14 65 8 23

68 6 16 71 9 23

GROUP & ASSOCIATION

28 Pension schemes

The Group makes pension contributions on behalf of its employees to defined benefit and money purchase schemes.

Two defined benefit structures are made available through the Social Housing Pension Scheme (SHPS). The Scheme is funded and is contracted out of the state scheme. SHPS is a multi-employer defined benefit arrangement. Employer participation is subject to adherence with the employer responsibilities and obligations as set out in the “SHPS House Policies and Rules Employer Guide”. One of the structures is based on final salary with a 1/60th accrual rate, and the other, which has been open to new members since 1 April 2011, is based on career average revalued earnings (CARE) with a 1/60th accrual rate. The final salary scheme was closed to new members on 31 March 2011.

The Trustee commissions an actuarial valuation of the Scheme every 3 years. The main purpose of the valuation is to establish the financial position of the Scheme in order to determine the level of future contributions required, in respect of each benefit structure, so that the Scheme can meet its pension obligations as they fall due. The split of the total contribution rate between member and employer is set at individual employer level.

The actuarial valuation assesses whether the Scheme’s assets at the valuation date are likely to be sufficient to pay the pension benefits accrued by members as at the valuation date. Asset values are calculated by reference to market levels. Accrued pension benefits are valued by discounting expected future benefit payments using a discount rate calculated by reference to the expected future investment returns.

During the accounting period the Association paid contributions at the rate of 9.05% in respect of the CARE structure and 9.7% in respect of the final salary structure. Member contributions were 9.05% in respect of the CARE structure and 9.7% of the final salary structure. In addition the Association made an annual contribution towards the past service deficit of £0.43m to March 2013 and £0.66m from April 2013. As at the balance sheet date there were 184 (2012; 186) active members of the Scheme employed by the Association. The annual pensionable payroll in respect of these members was £5,296,510 (2012; £4,999,351). The Association continues to offer membership of the Scheme to its employees.

It is not possible in the normal course of events to identify on a reasonable and consistent basis the


28 Pension schemes (continued) share of underlying assets and liabilities belonging to individual participating employers. The SHPS Scheme is a multi-employer scheme, where the assets are co-mingled for investment purposes, and benefits are paid out of total Scheme assets. Accordingly, due to the nature of the Scheme, the accounting charge for the period under FRS17 represents the employer contribution payable.

The last formal valuation of the Scheme was performed as at 30 September 2011 by a professionally qualified Actuary using the Projected Unit Method. The market value of the Scheme’s assets at the valuation date was £2,062 million. The valuation revealed a shortfall of assets compared with the value of liabilities of £1,035 million, equivalent to a past service funding level of 69.7%. The financial assumptions underlying the valuation as at 30 September 2011 were as follows:

Valuation Discount Rates: % p.a.

Pre-Retirement 7.0% Non Pensioner Post Retirement 4.2% Pensioner Post Retirement 4.2% Pensionable Earnings Growth 2.5% per annum for three years, then 4.4% Price Inflation 2.9%

Pension Increases:

Pre 88 GMP 0.0% Post 88 GMP 2.0% Excess Over GMP 2.4%

Expenses for death-in-service insurance, administration and Pension Protection Fund (PPF) levy are included in the contribution rate.

Following consideration of the results of the actuarial valuation, the deficit contribution increased from 1st April 2013 to £0.66m per annum and will increase by an average of 4.2% per annum until 2020, when it is expected to be £0.88m per annum. The contribution in 2021 is expected to be £0.54m per annum and will increase by 4.2% per annum in both 2022 and 2023. The contribution in 2024 is expected to be £0.29m and will increase by 3% per annum in both 2025 and 2026, when contributions are scheduled to end. The Association also participates in the Cardiff and Vale of Glamorgan Local Government Pension Scheme, a defined benefit structure. For funding purposes, the Association’s costs are pooled within a sub-section of small participating bodies of that scheme. Its contributions to the scheme include contributions in respect of just one active employee member as well as deficit contributions relating to past employees of that sub-section. It is not possible to identify the share of underlying assets and liabilities belonging to individual participating employers. Accordingly, due to the nature of the plan, the accounting charge for the period under FRS17 represents the employer contribution payable. The Association’s employer contribution rate has been 22.7% since 1 April 2011. In addition the Association made an annual contribution towards the past service deficit of £79,500 to March 2013 and £83,500 from April 2013.

The total pension cost of the Association for the defined benefit schemes was £1,231,156 (2012; £961,251).

The Group also contributed to money purchase schemes. Contributions in the year totalled £18,077 (2012; £8,103).


29 Subsidiary Undertakings

The Association has three trading subsidiary undertakings, Cambria Maintenance Services Ltd (Registration No. 7389484), Enfys Developments Ltd (Registration No. 8292315) and Castell Homes Ltd (Registration No. 8292028), in which it owns 100% of the issued share capital.

During the year the Cambria turnover was £7,395,365 (2012; £3,471,918) of which £7,326,118 (2012; £3,471,918) was billed to the parent company in respect of reactive and planned maintenance services. At the year end, £482,315 (2012; £174,454) was outstanding. The Association has made a loan of £195,000 to provide working capital. This was outstanding at the year end, together with £569,788 due to the Association in respect of gift aid.

During the year the total Enfys turnover of £25,112,172 (2012; £0) was billed to the parent company in respect of construction management services carried out under design and build contracts. At the year end, £1,122,594 (2012; £0) was outstanding. The Association was due £219,612 in respect of gift aid at the year end.

During the year the total Castell turnover of £41,117 (2012; £0) was billed to the parent company in respect of catering services. At the year end, £2,563 (2012; £0) was outstanding. The Association was due £1,076 in respect of gift aid at the year end. 30 Related party transactions

The following members of the Board were also residents of the Association during the year:

The above Members were on standard Association resident agreement terms and they were forbidden from using their position on the Board to their personal advantage.

Two Members also held positions on the Board of Slocombe Cottages for the Aged and Infirm, which is a registered charity and a Registered Social Landlord. The Association provided management services for which it charged £5,952 (2012; £5,762).

During the year there was one Board member on each of the Boards of the three Care and Repair agencies which have received donations from the Association after their demerger from the Association. The donations made during 2013 were as follows:

Agency Donation Member

Merthyr Care and Repair Agency £2,667 Mr D DaviesFlintshire Care and Repair Agency £3,702 Mr J WilliamsBridgend Care and Repair Agency £4,179 Mr I Gittens

31 Legislative provisions

The Association is incorporated under the Industrial and Provident Societies Act 1965. The Association adopted charitable rules with effect from 20 January 2005.

Mr D Davies Elected 26 April 2007 Mr J Rides Elected 23 May 2013 Mr J Williams Elected 30 April 2009 Mr B Jarvis Resigned 23 May 2013 Mr R Cornish Resigned 26 February 2013 Mr B Scholfield Elected 23 May 2013


Cardiff Offi ce (registered) Flint Offi ce 3 Alexandra Gate Unit 2 Acorn Business Park Pengam Green Aber Road Tremorfa Flint Cardiff Flintshire CF24 2UD CH6 5YN Fax: 02920 415380 Fax: 01352 736340

Tel: 0800 052 2526 Email: [email protected] Website: www.wwha.co.uk @wwha

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Wales & West Housing Association is registered as a charitable associationunder the Industrial and Provident Societies Act 1965 No. 21114R

wwh annual report and financial statements 2013

Documents

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infirm member of probity

financial statements

audited financial statements

financial review

independent auditor

audit committee ms e

development chair