Annual Report & Financial Statements 2011
Annual report and financial statements
Page
Members, executives and advisors
2
Operating and financial review
3
Governance
15
Internal control
18
Statement of Board responsibilities
19
Independent Auditor Report
20
Income and expenditure account
22
Reconciliation of movement in net assets
22
Balance sheet
23
Cash flow statement
24
Notes to the financial statements
25
Annual Report 2011
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Annual report and financial statements
The Board Mr I Gittens Mr J Rides Mr A Ashton Mr J Clowes Mr D Davies Mrs W Davies Mr B Jarvis Mrs S Lee Mr N Oâ€&#x;Leary Mr W Phillips Mrs K Smart Mr J Williams Mrs A Wiggan
Chair of the Board (Shareholder); Board Representative Slocombe Cottages for the Aged and Infirm and also for Bridgend Care and Repair Resident Board Member; Vice Chair of the Board; Member of Probity and Audit Committee; Board Member Cambria Maintenance Services Limited Shareholder Board Member; Lead Member for Finance Shareholder Board Member; Lead Member Development; Board Member Cambria Maintenance Services Limited Resident Board Member; Lead Member for Support Services; Board Representative on Staff Council; Board Representative Merthyr Care and Repair Shareholder Board Member; Board Representative for Slocombe Cottages for the Aged and Infirm, Member of Probity and Audit Committee Resident Board Member Shareholder Board Member; Lead Member for Housing; Appointed 28 April 2011 Shareholder Board Member; Lead Member Property Services; Chair of the Cambria Maintenance Services Limited Board Shareholder Board Member; Member Probity and Audit Committee Shareholder Board Member; Chair of Probity and Audit Committee Resident Board Member; Member Probity and Audit Committee, Board Representative Flintshire Care and Repair Shareholder Board Member; Resigned 28 April 2011
Executive Officers Mrs Anne Hinchey Mr Shayne Hembrow Mr Tony Wilson
Chief Executive and Secretary; Board Member Cambria Maintenance Services Limited Operations Director; Board Member Cambria Maintenance Services Limited Finance Director; Board Member Cambria Maintenance Services Limited
Registered Office 3 Alexandra Gate Ffordd Pengam Tremorfa Cardiff CF24 2UD Independent Auditors Haines Watts Wales LLP Registered as a charitable Association under the Industrial and Provident Societies Act 1965, Registration Number 21114R Registered with the National Assembly for Wales, Registration Number L032
Annual Report 2011
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Annual report and financial statements
Operating and financial review The Board presents its report and the audited financial statements for the year ended 31 December 2011.
What we stand for As a leading housing provider in Wales, our residents come first and are at the heart of what we do. For this reason, our purpose is to achieve strong sustainable growth to make a difference in people’s lives, homes and communities. Our mission and the desire to offer real choice are key drivers for the organisation. Together these underpin what we do and what we are about. While the Association is aiming to achieve many things, our main aims are:
To To To To To
provide homes for people in housing need. continuously improve the quality of landlord services. maximise the potential of the group. minimise the impact on the environment by the Association and its residents. work with residents and communities to make a positive impact.
Our values and operating principles are of great importance to us and are at the core of our culture. Our values are: Fair:
Balanced, giving praise where due and constructively critical. Inclusive in our approach, respecting the dignity and individuality of everyone.
Open:
Open to change, committed to continuous improvement and learning. Transparent, honest and trustworthy.
Responsible: Professional, challenging existing arrangements, taking ownership of issues and using our initiative to see them through to resolution. Supportive: Easy to deal with, approachable and accessible. Welcoming, caring, listening and responsive. Efficient:
Make best use of resources and maximise the impact of our activities.
Our operating principles are:
We We We We We We
will will will will will will
make decisions based on data and knowledge. find out what matters to customers before we take action. only measure what matters to customers. experiment to learn. enable people to make decisions to deliver what matters to customers. only do what matters to customers.
In this operating and financial review, we have set out our progress in the year under the themes of strong sustainable growth and making a difference, augmented by an overview of how the organisation is run.
Annual Report 2011
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Annual report and financial statements
Strong Sustainable Growth We intend to continue to grow by building new homes, expanding the in-house provision of maintenance services and by continuing to increase the range of services we provide to our residents.
Building new homes In 2011 we brought into management 165 newly developed properties. Within this are 17 units for supported living including a homeless project in Brecon, and 6 properties for intermediate rent under a try before you buy arrangement.
Number of homes developed in 2011 Nant y Mor, Prestatyn - 59 Unit Extra Care
6
Coed Castell, Bridgend - 16 social rented
6
Stoneleigh Manor, Brecon - 6 supported housing
26
59
Brewery Mews, Merthyr - 20 social rented Ty Binwydden, Mold - 6 supported hosuing
5
Ponciau, Wrexham - 15 social rented Ponciau, Wrexham - 5 supported housing
15
Plough Court, Brecon - 26 social rented
6 16 20
6
Llys Pont Helyg, Wrexham - 6 social rented Parc Tyn y Coed, Bridgend - 6 intermediate rented
Our first Extra Care scheme, Nant Y Mor in Prestatyn, was handed over on 24 January 2011. The scheme has 59 apartments, which are a mix of 1 and 2 bedrooms, together with a restaurant, hairdressers, guest rooms, treatment rooms and communal areas. The scheme cost ÂŁ8.5m to build. We worked in partnership with Denbighshire County Council to develop the scheme. Extra Care Schemes are designed to promote independent living for residents over 60 years of age with care and support needs. We held our official opening in November 2011 and we were delighted to have the First Minister Carwyn Jones as our guest of honour to open the scheme for us.
Annual Report 2011
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Annual report and financial statements In October we were also honoured to have Huw Lewis, Minister for Housing, Regeneration and Heritage and AM for Merthyr Tydfil and Rhymney, open our new development at Brewery Court and Brewery Mews in Merthyr Tydfil. This is a significant development for us as it is the first we have completed in Merthyr Tydfil for some time. During 2011 our Code 4 development at St Athan in the Vale was awarded exemplar project status by the Building Research Establishment and Constructing Excellence. In addition to new developments, our mortgage rescue scheme helps home owners who are struggling to pay their mortgages and are at risk of repossession. Our 50th Mortgage rescue property purchase was completed on the 6 June 2011 in Bridgend, enabling people to remain in their own homes during difficult times. We intend to continue with strong sustainable development growth and our development investment over the five years to 2015 is set out below. Development spend 2011-2015 30 25
ÂŁm
20 Development Spend
15
Social Housing Grant Loan Funding
10 5 0 2011
2012
2013
2014
2015
In previous years virtually all of our developments were undertaken with the benefit of Social Housing Grant (SHG), which in recent years amounted to approximately 58% of the development costs. As a result of reducing grant allocations for Wales, much less SHG is likely to be available going forward and therefore much of the Associationâ€&#x;s future property developments can be expected to be a combination of intermediate rental and low cost home ownership units. Demand for affordable housing generally remains high and a large number of enquiries are received for all types of rented housing. The Association successfully increased its land bank in the year and owns 8 sites which are currently being developed. The most notable was the addition of the Kingsmills Road, Wrexham site which was won in competition and represents a flagship development for the Association. This will contain a mix of socially rented and intermediate rented homes. The access to a strong land bank has been invaluable for the Association to continue to receive social housing grant and further acquisitions will remain a priority.
Annual Report 2011
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Annual report and financial statements Cambria Since January 2011 our Cambria Maintenance Services Limited (Cambria) subsidiary has undertaken most of our reactive maintenance works in south and mid Wales. This has been successful and we achieved our primary aim of an uninterrupted maintenance service for our residents. The first year of trading is summarised below:
Cambria income and expenditure 3 2
£m
1 0 Turnover
Labour
Materials
Overheads
Profit
The business has undertaken over 17,500 repairs over the course of the year and employs 35 staff. Cambria has delivered savings to the Association, which would not have been delivered with a third party contractor, in respect of retained profit and VAT savings on its labour costs. Excluding set up costs, this saving equates to around £200k in the first year and we expect this to rise to £280k in 2012. In the Association‟s accounts this has enabled our maintenance cost per property to remain unchanged at £423 in mid and south Wales, offsetting all material and labour cost increases and expect this to continue in 2012, delivering a real saving of 8% over the first two years. Cambria measures its operational performance using four measures; end to end times, first visit fix, jobs received and completed and customer satisfaction. Customer satisfaction has been high with 86% of surveys undertaken giving a 10/10 score for the service. Our end to end times average 19 days and our first visit fix averages 75%. We will work going forward to apply our operating principles across the whole repairs service end to end, which will result in further service and cost benefits. This will provide a platform to expand our in-house maintenance services over the next five years.
Telecare and out of hours We have increased our efforts to grow the telecare and emergency alarm services provided by our customer services centre over the last two years. As well as providing a 24 hour telecare and emergency alarm service to our retirement scheme residents, we provide services to a number of other housing associations. We have been successful in adding further contracts for firstly an out of hours service and secondly an emergency alarm and telecare package. These add to the three external contracts we were already operating, taking the total number of homes monitored to close to 4,000. We are now providing an out of hours service to more than 17,000 homes and we will seek further growth in both these areas in the coming year.
Solar PV We had planned to install solar PV panels on 2,500 roofs prior to 31 March 2012, with a view to residents having the free use of the electricity generated. Obtaining the necessary consents for this to happen proved to be complex and the Government‟s announcement at short notice to halve the feed in tariff income resulted in the postponement of the project. This was disappointing for us and other associations similarly affected. We will review the situation such that if price and technology changes render PV installations viable once more, we will again consider what can be achieved. In the event we did manage to install £500k worth of solar panels on the roofs of five of our blocks of apartments and also on 82 houses.
Annual Report 2011
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Annual report and financial statements
Making a Difference Our residents Everything we do is about making a difference to people‟s lives, homes and communities. First and foremost we put our residents first. This means it is important to understand what matters to them and what they think of the service we provide. We carry out resident satisfaction surveys annually with one third of our residents being surveyed every year. The results of our latest survey are set out below and represent our highest ever level of customer satisfaction:
Resident satisfaction Keeping residents informed Listening to residents views Repairs satisfaction Overall satisfaction
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
One of our corporate priorities is to work with residents and communities to make a positive impact. One of the ways we have done this is through digital inclusion, which we recognise makes a difference to the lives of residents. We estimate that only 20% of older residents currently access broadband. We have been working in partnership with the Connect Project at our scheme at Ty Pontrhun, Merthyr Tydfil, as part of the Welsh Government‟s Communities 2.0 initiative. This is supporting older people to learn how to use the internet. In order to use their new-found skills, we are investing £10,000 in a pilot project at Ty Pontrhun to install 1Mb broadband for each resident. The cost per person will be less than £1 per week. Subject to the success of this trial we intend to roll out this scheme-based broadband provision across 100 older persons‟ scheme across Wales, investing approximately £1m of our own money in this project. Supporting people back into employment is also part of our work to make a positive impact. Our repairs contractors have all supported additional apprenticeships, trainee places and training as a result of the work that we commission them to do to keep our homes in good condition. We make it a condition of our contracts with our development contractors that they use local labour and provide apprenticeships. Our work under the ARBED energy efficiency scheme has seen the creation of nine additional posts with our contractors. During 2011 we worked in partnership with Job Match Bridgend to support two people to work for us, via the Employment Routes programme, which helps people who have been long-term unemployed get back into employment.
Annual Report 2011
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Annual report and financial statements Making a very real difference in communities is what we are about. A great example is the Barracksfield Tenants‟ Association and Youth Forum, Wrexham which achieved first place in the Tenant Participation Projects Award for their Multi Use Games Area (MUGA) project in May 2011. The project was started in 2007 to give young people somewhere to play off the streets. Four years on the groups have, with support from WWHA‟s Community Development Projects Officer, Vy Cochran, raised over £65,000 and the MUGA has become the heart of the community. One of our other priorities is to minimise our impact on the environment. At our Western Court retirement scheme in Bridgend, our residents have worked hard to create a better estate where people are able to live better lives. With support from the Association‟s environment fund, raised beds have been installed, and now huge crops of fruit and veg are being grown and shared amongst the residents. A compost area has been created, bird feeders and bird houses put up, and flowers and other plants purchased and placed throughout the courtyard. The estate is a nice community to live in, where residents socialise often, celebrate birthdays and hold barbecues in the courtyard garden. This year we held our fourth Making a Difference Awards, which are our way of honouring the community spirit shown by so many people who live in our properties. Many of the media stories about housing association residents paint a bleak picture, but we know that the reality is different and therefore the awards are our way of recognising their contribution. In all, 9 awards were presented on the night, in categories including good neighbour, local hero and community project. The winners on the night are pictured above.
Annual Report 2011
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Annual report and financial statements Our services Embedding cultural change continued to be a key feature of the year. Since adopting the systems thinking approach the Association has completed reviews of the majority of its services. Systems thinking challenges the conventional approach to management and this change takes time to embed across the organisation. The operating principles we developed along with our values continue to provide a strong focus. The maintenance of our homes remains the litmus test for customer satisfaction. The creation of Cambria provided the opportunity to repeat the 2007 review of the service and to understand better how we could act on the whole repairs system. The redesign has retained elements of the previous system and allowed experimentation with new improvements such as timed appointments at the first point of contact. Maintenance performance remains strong as shown below:
Repairs performance Satisfaction with reactive service Stay Fixed Complete one visit 0%
20%
40%
60%
80%
100%
The review of the rents system has brought a change in emphasis to one which focuses on helping people to pay and supporting them to stay out of debt. The change is significant in how the Association works and how staff spend their time. More attention is placed on starting tenancies „clean‟, in particular on setting up direct debit arrangements which now covers almost a third of those residents making payments to us. More time is spent on assisting with housing benefit claims, budgeting and agreeing sustainable payment plans. The introduction of rent panels as a „last-chance‟ meeting with residents has been very successful in continuing the reduction in the numbers of evictions and other court actions. As an example, in the 4th quarter 13 Panels were held, and in all cases agreed payment plans have subsequently been maintained. The total number of tenancies in arrears has remained fairly constant in the last year and has declined when viewed over two years. While the value of rent arrears has increased slightly, the greater focus on debt management and sustainable repayment arrangements will mean that residents do come out of debt and are more likely to stay that way. Our first mini system intervention looking at the Physical Adaptations Grant (PAG) system continued this year and a new flow for the front end of the system will be trialed in early 2012. Halfway through 2011 we began a second mini intervention into our Dispersed Alarm Units (DAU) process. A new flow has been developed which will be trialed once training for staff in the new system has been completed and some new DAU fitters are trained to cover the whole of Wales. Levels of anti social behaviour and estate nuisance increased markedly during the year with noise and youth nuisance being the most common problems that residents asked for assistance with. A full system review commenced in February 2012 and while satisfaction for the majority is strong, the initial scoping exercise revealed areas where improvements can be achieved. The Association uses a variety of indicators and measures, which provide information about how well the various systems in the Association are operating. Some indicators give information on the scale of demand from residents while others provide information about the outcomes for residents and their satisfaction. Trends are reported to the Board and reviewed monthly by the senior management team. No targets are set as they would elicit inappropriate behaviour away from what matters to residents. The information is provided to frontline staff and their managers so that they can understand the outcomes they achieve for their customers and respond to customer demand.
Annual Report 2011
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Annual report and financial statements Our properties We manage 9,541 units of housing stock in 14 different local authority areas across Wales. The vast majority of our stock is let at social housing rents, which are below market rents. An analysis of our stock by type is set out below:
Social housing - general needs
112 81
59
595
Social housing - older persons
599
Supported housing Extra care
1658
Other housing 6437
Owner occupied - right to buy Owner occupied - retirement housing
Number of properties The average occupancy rate remained high at 99.3% (2010; 99.2%) which is testament to the quality of our stock and good performance in turning around empty properties. We brought 165 newly built properties into our portfolio in the year, whilst divesting of 84 properties from our stock. We are clear that we wish to work in local authority areas where we can make a difference to lives, homes and communities. Where we have a small number of properties in a local authority area then it is difficult for us to make that difference and therefore we are selling on these properties to local housing associations that are better able to add value. We will then re-invest the proceeds into new developments where we already have a high concentration of stock. As a result of these disposals we no longer have a presence in Carmarthenshire or Ynys Mon and we have advanced plans to sell our stock in Gwynedd (one scheme) and Ceredigion (four schemes). We invest significantly in improving the quality of our homes and are well on track to meet the Welsh Housing Quality Standard (WHQS) by the target date of March 2013. Our investment over the last three years is set out below, and this level of investment will continue in 2012 to meet the WHQS deadline.
Investment in properties 12.00 ÂŁm / %age
10.00 8.00 6.00 4.00 2.00 -
2009
2010
2011
Investment in homes ÂŁm
10.31
10.61
9.93
%age compliance with WHQS
55%
69%
76%
Annual Report 2011
The majority of the investment has been capitalised in the Balance Sheet, with the remainder expensed as repairs. The average unit cost prices achieved for kitchens and bathrooms during 2011 was consistent with those achieved in 2010, and are expected to be similar again in 2012. During 2011 we replaced over 650 kitchens and 600 bathrooms. Over the last 4 years we have completed stock condition surveys over almost all of our properties, including 2,000 units assessed during 2011. Page 10 of 42
Annual report and financial statements
Our organisation Our people We were pleased to be awarded 8th place on The Sunday Times list of the 100 Best Places to Work list from throughout the UK in the not for profit sector in 2012. This made us the highest placed Welsh company on the list. Companies are accredited between zero and three stars and we achieved the highest level with an amazing three stars. This improves on our two stars in 2011, and is a real achievement of which we are very proud. We were also runners up from throughout the UK in the wellbeing special award, demonstrating how our flexible working arrangements are appreciated throughout our organisation.
Weâ€&#x;ve also been named one of the top 30 family-friendly firms in the UK by Working Families, an organisation which campaigns for work-life balance. This is another significant achievement because we are the only Welsh housing association to make this list and one of only two housing associations in the whole of the UK. On the list we are rubbing shoulders with blue-chip giants including Deutsche Bank, Dell Corporation, McDonalds and Sainsburys.
People
Chief Executives dept
11 35
Development
14 31 Finance & IS
51
Housing
81
148
Property services
Support services
Cambria
The Association continues to support all staff with learning and development activities. During 2011 we co-ordinated 269 topics across a range of learning activities, and a further 16 individuals are undertaking professional qualifications. Our recruitment process saw 50 individuals appointed to positions during 2011, of which 23 were filled by internal candidates and 27 externally. Our sickness and absence rates continue to fall, from 4.7% in 2009 to 3.7% in 2010 and to 3.6% in 2011. There has been an average of 336 staff in the Association in 2011, compared to 321 in 2010. A further 35 staff are employed by Cambria, taking the total headcount in the Group to 371. In addition we have an unpaid Board of 12 volunteers.
Number of staff
Annual Report 2011
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Annual report and financial statements Our finances The overall financial result was a surplus for the year of £7.9million (2010 - £4.6million). An analysis of the results compared with 2010 is set out below:
40
£m
30 2010
20
2011
10 -
Turnover
Operating Costs
Operating Surplus
Interest Payable
Property Net Surplus Disposals
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:
Total group income
£m
40 30
Other
20
Service Charge Rent
10 2009
2010
2011
There was a 6.0% increase in rental income, mainly driven by the permitted regulatory increase of 5.6% from April 2011. The permitted increase from April 2012 is 5.1%. The remainder of the increase in rent was due to the greater number of properties in the year. Our costs have been controlled below the increase in rents, with an annual increase of 4.5%. An analysis of our costs (and cash outflows) is set out below:
Total group costs Other
60
Premises
50
Capital expenditure Major repairs
£m
40
Interest
30
Site services Routine maintenance
20
People
10
Property component replacements
-
Property development
2009
2010
2011
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Annual report and financial statements An explanation of the costs is as follows:
Other includes a total of £16,322 (2010; £15,884) was donated to charities comprising three Care and Repair agencies and match funding to a range of charities supported through staff initiatives. Premises represent the costs of our Cardiff and Flint offices. Capital expenditure is comprised of replacement of site assets such as lifts and CCTV systems, expenditure on our premises and IT equipment. Major repairs are works such as boundaries, footpaths and communal areas which are charged as costs to the Income and Expenditure account as they arise. Interest represents the net interest payable arising on our borrowings. Site services comprise services such as emergency alarm, scheme manager support, cleaning and gardening. Certain services, principally emergency alarm related, are also provided to other persons, including residents of several other housing associations. The Association seeks to recover all site service direct costs, together with management charges to cover administrative costs, through service charges. Routine maintenance comprises day to day repairs and annual servicing. Since January 2011 more than half of repairs have been undertaken by the Group‟s maintenance subsidiary Cambria. People costs are comprised of staff salaries, employer national insurance, pensions, expenses and training. Property component replacements such as new kitchens, bathrooms and windows are also capitalised in our balance sheet. Property development represents the gross expenditure (before grant) of developing new properties. These are capitalised in our balance sheet.
As at 31 December 2011, the Association had borrowings of £93.2m. An analysis of these loans is shown below: Fixed Rate £49.4m Index Linked £10.4m Variable Rate £33.4m
The average interest rate on the loan portfolio was 5.0% (2010; 5.3%). The total interest cost was £4.6m (2010 £4.5m), with increased costs on the index linked loans due to higher inflation being partially offset by a greater proportion of lower rate variable borrowings.
The Association‟s loans have maturity dates ranging from 2021 to 2049. Some loans currently require regular principal repayments, others will require regular repayments commencing at future dates, and two loans are repayable in full in one go at maturity. Principal loan repayments due in 2012 amount to £2.7million. As at 31 December 2011 the Association had in place £13.5million of confirmed bank facility to call upon under a long-term loan agreement. Whilst this would ordinarily be sufficient for the operational needs for 2012, a further £20m facility is being arranged which should be sufficient to fund continuing developments and other business needs through to September 2013. Further facilities will be required from that time to fund property development aspirations. The Association is operating well within existing loan covenants. The operating surplus for the year was 224% of interest payable (2010; 203%) and gearing (loan as a percentage of the sum of reserves and Social Housing Grant liability) as at 31 December 2011 was 36%. With less Social Housing Grant available to part fund future development, gearing will rise more quickly than it otherwise would. The Association is nevertheless able to continue with its development plans and remain compliant with loan covenants for the foreseeable future.
Annual Report 2011
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Annual report and financial statements 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.
Cash flow summary 2011 £m
2010 £m
0.7
(0.2)
Net development spend Sale of properties
(4.6) 2.9
(7.2) 0.0
Cash outflow before financing
(1.0)
(7.4)
Loans repaid Loans drawn down
(2.9) 6.5
(1.9) 8.5
2.6
(0.8)
Free cash
Increase in cash
Free cash flow surpluses have been achieved in 2011 and are forecast in 2012 and positive values are required in the long term to meet interest cover requirements and principal repayments on loans. Development costs are funded from grant and additional bank and bond based borrowing. In addition, the net proceeds from sales of schemes, where the Association has rationalised its stock, are available for reinvestment in future developments.
Summary representations of the balance sheets as at 31 December 2011 and 31 December 2010 are shown below. There are no reportable post balance sheet events.
Balance Sheet 400
£m
300 2010
200
2011
100 Housing Properties
Social Housing Grant
Loans
Reserves
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 £14.9m in the period to 2016.
Annual Report 2011
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Governance The Association is controlled by a voluntary Board of Management which comprises up to fifteen members. Up to eight members are elected from shareholders, up to four are residents elected directly by residents and up to three may be co-opted from time to time to fill a skill shortage should one arise. Working together, all Board members guide the Association in the delivery of quality homes and services. This includes overseeing finances, agreeing policies, monitoring performance, making strategic decisions, developing implementation plans and generally ensuring that all matters are conducted properly. There is a separate Board for Cambria which reports to the 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 drives a robust, evidence based and outcome focused annual self assessment 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 WG, which publishes a set of delivery outcomes and guidance to make clear its expectations of the sector as a whole. The intention is that the self-assessment process should be an integral part of organisational service and business planning. The Association has a well established corporate planning cycle, which takes account of WG‟s expected delivery outcomes. Progress against the corporate priorities is reviewed quarterly by the Board following presentation of a Strategic, Operational and Financial update which also embraces new challenges and opportunities. A suite of service trend measures are used by the Board to understand the operational performance of the business and the quality of service for residents. The emphasis is on measuring what matters most to residents in terms of outcomes along with indications of the type and frequency of customer demands so that the Board and staff can easily see the changing profile of customer requests. Board members are not remunerated but are entitled to receive properly authorised expenses when incurred on Association business. A Board member acting in good faith will not be liable to the Association for any loss. The Board meets on a formal basis every six weeks, including a full day away from the office twice each year to consider the strategic direction and priorities of the Association. A Probity and Audit Committee meets when required, typically three times a year. Some Board members are designated as lead members, in which capacity they are expected to develop greater in-depth knowledge in their lead area to help the Board as a whole. Ad-hoc working groups are also established from time to time for special purposes as needs arise. These are referred to as “task and finish groups” and their function is to help the executive management to develop solutions to issues. These groups include a number of Board members and staff, and can also include others such as professional advisors, residents and shareholders who take an active interest in the workings of the Association. Shareholding Board members Shareholding Board members are elected to the Board of Management at the Annual General Meeting when nominations exceed available places. They must be either an existing Board member standing for re-election or be a shareholder nominated by an existing shareholder. Elections are by way of ballot of shareholders utilising postal and in-person voting. Shareholders are required to pay a one pound subscription fee and must not be a minor, must not have previously been expelled as a shareholder (unless authorised by a special resolution at a general meeting), and cannot be an employee of the Association. Shareholders must demonstrate that they can positively contribute to the future management of the Association and are obliged to act in the interests of the Association, for the benefit of the community.
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Annual report and financial statements 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) (b) (c)
are not on an Introductory Tenancy; are not bankrupt or subject to an agreement with creditors; have not been convicted of an indictable offence within the last five years.
The Board decides the method of election of Resident Board members. system is: (a)
(b) (c) (d)
(e) (f) (g)
The current
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; Nominations to the Board of Management are requested in advance of the Annual General Meeting from those residents who have attended an Information Day; 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; 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; Ten other residents must support the nomination; A postal ballot of all residents is held if nominations exceed available places; Those with the most votes become members of the Board of Management and their appointments are announced at the Annual General Meeting.
Co-opted Board members The elected Board can appoint up to three co-opted members to the Board should the Board at any time determine that there is a need for supplementary skills. Co-opted members are appointed for a finite period and have the same voting rights as elected Board members save that they are not entitled to vote on matters pertaining to positions of office to the Board or issues affecting shareholders. All Board members Members are elected at the Annual General Meeting for a three year term. A maximum of three consecutive terms can be served. There must be a clear 12 month gap following the serving of the three consecutive terms before a member can re-join the Board in any capacity. Any period spent as a co-optee or casual vacancy holder does not count towards the maximum consecutive time. The collective and personal obligations of Board members are to:
Understand and uphold the values and objectives of the Association. Monitor, supervise and control the Association‟s affairs as custodians of its mission. Act objectively at all times and serve the interests of the Association before their own or the interests of any particular sector of the community served by the Association. Use independent judgement on strategy, performance and accountability. Act as an ambassador of the Association at all times.
Annual Report 2011
Page 16 of 42
Annual report and financial statements All Board members (continued)
Ensure that an effective contribution is made by preparing for meetings and events, attending regularly and participating in discussions and decision-making. Acknowledge that an objective is to be „business-like‟ without turning the Association into a business which trades purely for profit. Abide by the Association‟s rules and code of governance. 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:
have a balance of appropriate skills including (but not exhaustively) legal, business, financial, technical, community work, housing sector experience, relevant public sector experience, human resources and governance; reflect the communities wherein the Association operates; reflect the diversity of society in terms of a balance of gender, age, minority groups such as BME and disabled.
Individually they must also: be able to give the appropriate amount of time necessary to be trained, attend and prepare for meetings; be able to work within a team and put personal considerations aside; demonstrate an empathy with social housing. Extent to which these requirements are met by those Board members continuing in office, and those retiring and intending to re-offer themselves for election Following the annual extensive Board appraisal exercise the Board is happy to report that the requirements for the skills, qualities and experience, which it needs from its members, are fully met by those Board members continuing in office, and those retiring and intending to re-offer themselves for election.
Annual Report 2011
Page 17 of 42
Annual report and financial statements
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) (b) (c)
the reliability of financial information used within the Association and Group or for publication; the maintenance of proper accounting records ; and 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)
(b)
(c)
(d) (e) (f)
(g)
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; 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; 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; all significant new initiatives, major commitments and investment projects are subject to a formal authorisation procedure, through relevant committees comprising Board members and others; the Board undertakes an annual review of the major risks facing the Association and the Group; 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 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.
Annual Report 2011
Page 18 of 42
Annual report and financial statements
Statement of Board Responsibilities The Board is responsible for preparing the financial statements in accordance with applicable law and United Kingdom Generally Accepted Accounting Practice. The Industrial and Provident Societies Acts and Registered Social Landlord legislation requires the Board to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the Association and the Group and of the surplus or deficit of the Association and the Group for that period. In preparing those financial statements, the Board is required to select suitable accounting policies, as described on pages 25 to 28, and then apply them on a consistent basis, making judgements and estimates that are prudent and reasonable. The Board must also prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Association and the Group will continue in business. The Board is responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Association and the Group and to enable them to ensure that the financial statements comply with the relevant legislation. The Board is also responsible for safeguarding the assets of the Association and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Board is responsible for the maintenance and the integrity of the corporate and financial information included on the Associationâ€&#x;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 26 April 2012. By order of the Board
Mr. I Gittens Chair of the Board
Annual Report 2011
Page 19 of 42
Independent Auditor Report to Members of Wales & West Housing Association Limited Year ended 31 December 2011 We have audited the financial statements of Wales & West Housing Association Limited („the Association‟) for the year ended 31 December 2011 which comprise the Group Income and Expenditure Account, the Group and Parent Balance Sheets, the Group Cash Flow Statement and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice). This report is made solely to the 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 19, the Board is responsible for the preparation of financial statements which give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practice 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. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report. Opinion on internal control In our opinion, with respect to the 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.
Annual Report 2011
Page 20 of 42
Annual report and 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 2011 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.
Haines Watts Wales LLP Statutory Auditor Pagefield House 24 Gold Tops Newport South Wales NP20 4PG
Annual Report 2011
Page 21 of 42
Income and expenditure account for the year ended 31 December
Notes
2011 £’000
GROUP 2010 £‟000
ASSOCIATION 2011 2010 £’000 £‟000
Turnover Continuing operations
2
36,063
33,684
36,063
33,684
(25,786)
(24,621)
Operating costs Continuing operations
2
Operating surplus Surplus on sale of fixed assets
5
(25,632) (24,621)
10,431
9,063
10,277
9,063
2,091
0
2,091
0
0
0 21
115 14
0 21
Gift aid Interest receivable and similar income
8
Interest payable and similar charges
9
Surplus on ordinary activities before taxation
8 (4,590)
(4,471)
(4,590)
(4,471)
7,907
4,613
10
7,940 (4)
4,613
Taxation
0
0
0
Surplus for year transferred to reserves
21
7,936
4,613
7,907
4,613
The Group has no recognised gains and losses other than the surplus above and therefore no separate statement of total recognised gains and losses has been presented. There is no difference between the surplus on ordinary activities before taxation and the retained surplus for the year as stated above and their historical cost equivalents.
Reconciliation of movements in net assets for the year ended 31 December 2011 £’000 Surplus for the year
GROUP 2010 £‟000
ASSOCIATION 2011 2010 £’000 £‟000
7,936
4,613
7,907
4,613
Opening net assets as previously reported
20,354
15,741
20,354
15,741
Closing net assets
28,290
20,354
28,261
20,354
Annual Report 2011
Page 22 of 42
Balance sheet at 31 December GROUP Notes Tangible fixed assets Housing land and buildings – gross cost Less: Social Housing grants
11 12a
2011 £’000
392,606
2010 £‟000
375,952
(235,323) (232,050)
Other grants
12b
(1,037)
Depreciation
12c
ASSOCIATION 2011 £’000
392,606
2010 £‟000
375,952
(235,323) (232,050)
(1,037)
(1,037)
(1,037)
(35,068)
(33,712)
(35,068)
(33,712)
121,178
109,153
121,178
109,153
Fixed asset investments Equity loans
14a
430
548
430
548
Less: grants
14b
(352)
(470)
(352)
(470)
Other tangible fixed assets
15
Total fixed assets
78
78
78
78
4,255
3,387
4,203
3,387
125,511
112,618
125,459
112,618
5,143
3,163
5,353
3,366
4,316 9,459
1,816 4,979
4,173 9,526
1,613 4,979
Current assets Debtors: amounts falling due within one year
16
Cash at bank and in hand
24
Creditors: amounts falling due within one year
17
Net current liabilities Total assets less current liabilities Non-current liabilities Creditors: amounts falling due after more than one year Provisions for liabilities and charges
18 19
(16,191)
(10,325)
(16,239)
(10,325)
(6,732)
(5,346)
(6,713)
(5,346)
118,779
107,272
118,746
107,272
(90,365)
(86,733)
(90,365)
(86,733)
(124)
(185)
(120)
(185)
28,290
20,354
28,261
20,354
Capital and reserves Called up share capital
20
0
0
0
0
Special reserve
21
131
131
131
131
Major repairs designated reserve
21
Revenue reserve Total capital and reserves
21
9,880 18,279
9,880 10,343
9,880 18,250
9,880 10,343
28,290
20,354
28,261
20,354
The financial statements on pages 22 to 42 were approved by the Board on 28 March 2012 and were signed on its behalf by:
Chair of the Board – Mr I Gittens
Secretary – Mrs A Hinchey
Annual Report 2011
Page 23 of 42
Cash flow statement for the year ended 31 December
2011 £’000
Notes Net cash inflow from operating activities
22
Interest received Interest paid Net cash outflow from returns on investment and servicing of finance
Purchase and development of properties Grant received Property component replacements Purchase of other fixed assets Proceeds of sale of properties and other fixed assets
12,765
14,016
12,562
8 (4,069)
60 (3,986)
14 (4,069)
60 (3,986)
(4,061)
(3,926)
(4,055)
(3,926)
2,879
(1,034)
Decrease in short-term deposits Management of liquid resources
Net increase/(decrease) in cash
0
(11,008) (16,043)
Net cash outflow before financing
ASSOCIATION 2011 2010 £’000 £‟000
14,035
(11,832) (18,718) 7,225 11,460 (8,103) (8,574) (1,177) (211)
Net cash outflow from capital expenditure and financial investment
Housing loans received Housing loans repaid Net inflow from financing activities
GROUP 2010 £‟000
0 0
(7,204)
(11,832) (18,718) 7,225 11,460 (8,103) (8,574) (1,104) (211) 2,879
0
(10,935) (16,043) (974)
3,003 3,003
0 0
(7,407)
3,003 3,003
6,500 (2,966)
5,500 (1,917)
6,500 (2,966)
5,500 (1,917)
23
3,534
3,583
3,534
3,583
23
2,500
Annual Report 2011
(618)
2,560
Page 24 of 42
(821)
Notes to the financial statements for the year ended 31 December
1
Principal accounting policies
A summary of the more important accounting policies are set out below.
Format of accounts The financial statements have been prepared in accordance with applicable financial reporting standards in the United Kingdom, including the Statement of Recommended Practice (SORP) for “Accounting by Registered Social Housing Providers” as updated in 2010, and comply with the Accounting Requirements for Social Landlords registered in Wales General Determination 2009.
Basis of accounting The financial statements are prepared on the historical cost basis of accounting.
Basis of consolidation The consolidated accounts include the results of Wales & West Housing Association Ltd and its subsidiary undertaking, Cambria Maintenance Services Ltd. Consolidated accounts are required under the Industrial and Provident Act 1968. Wales & West Housing Association Ltd is the parent entity and the ultimate parent entity. Where any conflict arises between the SORP 2010 and applicable financial reporting standards, then the SORP prevails.
Turnover Turnover represents rental and service charge income net of empty properties, fees and revenue based grants receivable. All turnover is derived from United Kingdom operations.
Housing properties – fixed asset capitalisation and depreciation Housing properties are stated at cost. The cost of properties is their purchase price together with incidental costs of acquisition and direct costs of the development process. "Housing properties in the course of construction" are stated at cost and are transferred into "housing properties" when completed. Any overhead costs directly attributable to bringing fixed assets into their working condition for their intended purpose are capitalised. Expenditure on the initial purchase of land and buildings is capitalised and disclosed as part of housing properties in the course of construction. Interest on borrowings attributable to the net investment in a property during the course of construction is capitalised. Profits or losses on disposals of properties are recognised as at the date a sale becomes certain. The profit or loss arising on a disposal of a property is the difference between the sale price and the aggregate of the depreciated cost, and any associated costs of disposal such as legal and valuation fees. The grant originally received on a property is repayable in full in the case of a disposal, demolition or change of use to an ineligible activity, save that in circumstances where the Welsh Government considers appropriate it may reduce the amount repayable. Where this arises on a disposal, the grant repayable so waived is added back to the profit or loss on that disposal. Some residents have rights under their tenancy agreement to purchase their homes at prices which are at a discount to the open market price. Some properties have been partially sold under shared ownership arrangements. Occupiers have full use of the properties concerned and pay a rent which reflects the proportional interest retained by the Association. In the balance sheet the 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.
Annual Report 2011
Page 25 of 42
Notes to the financial statements
(continued)
for the year ended 31 December
1
Principal accounting policies (continued)
Housing properties – fixed asset capitalisation and depreciation (continued) Depreciation is charged on the historic cost of property components after deducting grants. Grant is allocated to land and the main structure of the property, but not to other components. Freehold land is not depreciated. Leasehold land is depreciated over the remaining term of the leases. The depreciable amount is written off over the estimated useful lives from the date of purchase/build. Where a housing property comprises two or more major components with substantially different useful economic lives, each component is accounted for separately and depreciated over its individual useful economic life. Expenditure relating to the subsequent replacement or renewal of components is capitalised as incurred. Deprecation is charged on cost less social housing grant on a straight line basis over the componentâ€&#x;s expected economic useful life as follows: House main structure Flat main structure
years 150 100
Other components: Back doors Bathrooms Boilers Electrics Front doors Kitchens: general needs Kitchens: retirement housing Roofs Windows: installed pre 2000 Windows: installed post 2000
40 30 15 60 30 17 20 80 20 40
Components on leasehold land are depreciated over the shorter of the above and the remaining period of the lease. Freehold land is not depreciated.
Grants Where developments have been financed wholly or partly by grants, the cost of these developments has been reduced by the amount of the grant received. These grants are received from central government agencies and local authorities and are offset against the cost of housing properties on the face of the balance sheet. The Companies Act 2006 requires tangible fixed assets to be included at purchase price, or production cost, less any provision for depreciation or diminution in value. However, this requirement conflicts with the generally accepted accounting principles for Registered Social Housing Providers set out in the SORP: Accounting by Registered Social Housing Providers. The purpose of grants is to subsidise the capital cost of affordable housing. Accordingly, management consider it necessary to adopt the accounting treatment set out in the SORP to give a true and fair view. Grants are allocated proportionally against the historic cost of the land and main structure component of each property. No grant is allocated to other property components. Where grants are received in advance they are carried forward as current liabilities to be matched against future capital expenditure as it is incurred. Grant receivable in respect of completed schemes or those under construction is included as a debtor in the financial statements. Grants are repayable under certain circumstances, primarily following the sale of a property. Such repayable grants are included within creditors in the balance sheet.
Annual Report 2011
Page 26 of 42
Notes to the financial statements
(continued)
for the year ended 31 December
1
Principal accounting policies (continued)
Repairs and maintenance The costs of repairs and maintenance are expensed as incurred on the basis of work done at the balance sheet date.
Impairment Housing properties are annually reviewed for impairment. Where there is evidence of impairment, housing properties are written down to their recoverable amount.
Fixed assets – investments Equity loans have been made, under low cost home ownership arrangements, to homeowners who were not otherwise able to fully afford their homes using commercially available mortgages. Equity loans are included in the balance sheet at historic cost. The Association is entitled to a proportion of the market value corresponding to the equity interest at a time when homeowners either dispose of their property or when they choose to repurchase some, or all, of the equity loan.
Other fixed assets and depreciation Other tangible fixed assets are stated at cost less accumulated depreciation. Depreciation is charged on a straight line basis so as to write off the cost less estimated residual value of assets over their expected useful economic lives as follows: Motor vehicles Office equipment Site equipment Office buildings
3 years 3 to 10 years 3 to 10 years written off over periods up to 60 years
Reserves A major repairs designated reserve is held to fund future major repairs to the housing stock of the Association. Transfers to and from the reserve are determined by the Board.
Pension costs The Group makes payments to defined benefit pension and defined contribution schemes on behalf of its employees. The schemes are funded by contributions partly from the employees and partly by the Group at rates determined by independent actuaries. The assets of the defined benefit schemes are invested separately from the Group assets in independently administered multi-employer funds. All pension costs have been calculated as if they arose within defined contribution schemes, as permitted by Financial Reporting Standard 17 (Retirement Benefits), as it is not possible to separately identify the scheme assets attributable to the Group on a consistent and reasonable basis.
Operating leases Costs in respect of operating leases are amortised on a straight line basis over the lease term.
Value added tax The Group is partially exempt for VAT purposes, and claims are made for repayment of VAT on items that are specifically allowable. Expenditure is shown inclusive of irrecoverable VAT.
Annual Report 2011
Page 27 of 42
Notes to the financial statements
(continued)
for the year ended 31 December
1
Principal accounting policies (continued)
Taxation The Association adopted charitable rules with effect from 20 January 2005. No corporation tax is expected to arise after that date on charitable object activities. The remaining members of the group are liable to Corporation Tax at the prevailing rate of taxation.
Loans Loan arrangement fees are capitalised and are amortised on a straight line basis over the duration of the loans. Interest is recognised in the income and expenditure account under the accruals principle, including that related to index linked loans where the cash settlement may be deferred.
Sinking fund deferred income Certain residents are required to contribute towards the costs of maintaining properties. Monies received in advance of maintenance expenditure are credited to sinking fund deferred income accounts, to which interest is applied.
Provisions Provisions are recognised where uncertainty exists in relation to the timing or amount that may be required to settle potential liabilities. Any amounts provided are charged to the Income and Expenditure account and credited to the Balance Sheet based upon the Group‟s best estimate of potential liabilities.
2
Analysis of turnover and costs (a)
Particulars of turnover, operating costs and operating surplus ASSOCIATION Operating Operating Operating Operating Turnover costs surplus Turnover costs surplus 2011 2011 2011 2010 2010 2010 £'000 £'000 £'000 £'000 £'000 £'000
Social housing lettings Non-social housing activities Lettings Other Total
34,654
(24,357)
114 1,295
(98) (1,331)
36,063
(25,786)
10,297
16 (36) 10,277
32,280
(23,105)
65 1,339
(74) (1,442)
33,684
(24,621)
9,175
(9) (103) 9,063
The analysis above represents the results of Wales & West Housing Association Limited, which is the only registered housing provider in the Group. The other member of the Group, Cambria Maintenance Services Limited, contributed a further £154k to the operating surplus, taking the Association reported operating surplus of £10,277k to the Group reported operating surplus of £10,431k. A detailed analysis of the social housing turnover and related operating costs is provided in note 2(b).
Annual Report 2011
Page 28 of 42
Notes to the financial statements
(continued)
for the year ended 31 December
2
Analysis of turnover and costs (continued) (b)
Particulars of income and expenditure from social housing lettings ASSOCIATION General Other social needs and housing sheltered Supported letting housing housing income
2011 Total
2010 Total £‟000
£’000
£’000
£’000
£’000
Income Rent receivable Service charge income Grant income for support services Other revenue grants
29,633 4,212 352 61
355 0 0 0
41 0 0 0
30,029 4,212 352 61
28,301 3,594 385 0
Turnover from social housing lettings
34,258
355
41
34,654
32,280
Operating costs Management Service charges Routine maintenance Major repairs expenditure Bad debts Depreciation of housing properties Other costs
(5,005) (4,576) (7,396) (2,818) (218) (3,293) (838)
(50) 0 (73) (27) 0 (33) (8)
(15) 0 (3) (1) 0 (1) (2)
(5,070) (4,576) (7,472) (2,846) (218) (3,327) (848)
(5,043) (4,083) (6,906) (2,918) (209) (3,277) (669)
(24,144)
(191)
10,114
164
19
10,297
9,175
330
0
0
330
319
Operating costs on social housing activities Operating surplus on social housing lettings Memorandum information: Rent foregone due to properties being vacant
(22) (24,357) (23,105)
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: GROUP & ASSOCIATION 2011 2010 £’000 £‟000 Aggregate emoluments of executive officers 303 295 Aggregate emoluments of Board members 0 0 Emoluments of highest paid director (Chief Executive), excluding 114 111 pension contributions Retirement benefits are accruing under defined benefit schemes. The Chief Executive is an ordinary member of a contributory pension scheme (Cardiff and Vale of Glamorgan Pension Fund). No enhancement or special terms apply and the Association makes no contribution to any individual pension arrangement. The accrued pension and the accrued lump sum (comprising contributions from both employee and employer) in respect of the highest paid director (Chief Executive) at 31 December 2011 were £39,164 (2010: £37,030) and £96,473 (2010: £95,782) respectively.
Annual Report 2011
Page 29 of 42
Notes to the financial statements
(continued)
for the year ended 31 December
3(a) Directors' emoluments (continued) GROUP & ASSOCIATION 2011 2010 £’000 £‟000 Expenses reimbursed to directors not chargeable to United Kingdom taxation for the year ended 31 December
14
13
3(b) Employee information The average number of staff (including executives) employed during the year was:
Actual Full time equivalent
Staff costs (for the above persons): Wages and salaries Social security costs Pension costs
4
GROUP 2010 Staff 321 266
ASSOCIATION 2011 2010 Staff Staff 336 321 283 266
2011 £’000
2010 £‟000
2011 £’000
2010 £‟000
8,148 663 917
6,989 538 734
7,490 605 913
6,989 538 734
9,728
8,261
9,008
8,261
2011 £’000
GROUP 2010 £‟000
Operating surplus
Operating surplus is stated after charging: Depreciation Bad debts Auditors' remuneration: - In their capacity as auditors - In respect of other services Operating lease rentals - Land and buildings - Other assets
5
2011 Staff 371 317
ASSOCIATION 2011 2010 £’000 £‟000
4,268 239
3,874 233
4,248 239
3,874 233
32 7
21 6
26 7
21 6
54 37
52 15
54 37
52 15
Surplus on sale of fixed assets GROUP & ASSOCIATION 2011 £’000
Sales proceeds: Housing properties Cost of sales: Housing properties Surplus on sale of fixed assets
Annual Report 2011
2010 £‟000
2,879
0
2,879
0
(788)
0
(788)
0
2,091
0
Page 30 of 42
Notes to the financial statements
(continued)
for the year ended 31 December
6
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 2010 was £0.4million. 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 2010 was £22.6million and from the Cardiff and Vale of Glamorgan Pension Fund as at 31 March 2007 was £1.1million. As events which could crystallise the debt are unlikely to arise in the foreseeable future, no provision is deemed necessary.
7
Impairment of asset values
In 1989 the Association acquired land from a university under a 125 year lease, on which it constructed a hall of residence, which was then leased back to that university, also on a 125 year lease. The building was constructed at a cost of £1,422,000 and was originally funded by £826,000 of Housing Association Grant (HAG) and a mortgage loan of £596,000. Over the loan mortgage period to 2026, the contractual arrangement with the university will ensure that the Association will recover its operating costs before depreciation relating to the hall of residence, together with an amount equivalent to the 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.
8
Interest receivable and similar income 2011 £’000
Interest receivable from investments
9
8
GROUP 2010 £‟000 21
ASSOCIATION 2011 2010 £’000 £‟000 14
21
Interest payable and similar charges 2011 £’000
On bank loans and overdrafts and other loans: Repayable wholly or partly in more than 5 years Interest payable to sinking funds
Annual Report 2011
GROUP 2010 £‟000
ASSOCIATION 2011 2010 £’000 £‟000
4,582 8
4,471 0
4,582 8
4,471 0
4,590
4,471
4,590
4,471
Page 31 of 42
Notes to the financial statements
(continued)
for the year ended 31 December
10
Corporation Tax GROUP 2010 £‟000
2011 £’000
ASSOCIATION 2011 2010 £’000 £‟000
Deferred Tax Origination and reversal of timing differences
4
0
0
0
Tax on ordinary activities
4
0
0
0
The Association adopted charitable status with effect from 20 January 2005 and therefore no taxation is payable on the profits arising from the charitable activities it undertakes. Cambria Maintenance Services Limited is liable to UK corporation tax but the current taxable profits have been reduced to £nil by a gift aid payment to the Association as its parent company. A deferred tax liability has arisen in Cambria and has been provided for in full.
11
Tangible fixed assets – Housing land and buildings – gross cost
At 1 January 2011 Property acquisistions Schemes completed Component additions to existing properties Components removed Housing property disposals At 31 December 2011
Social Housing Shared Other Properties ownership Properties £’000 £’000 £’000 348,226 564 2,362 1,169 0 0 24,623 0 0 9,367 (1,897) (2,326) 379,162
GROUP & ASSOCIATION Properties in the course of construction Total £’000 £’000 24,800 375,952 10,341 11,510 (24,623) 0
0 0 0
0 0 0
0 0 0
564
2,362
10,518 2011 £’000
Housing properties comprise: Freehold land and buildings Long leasehold land and buildings Short leasehold land and buildings
9,367 (1,897) (2,326) 392,606 2010 £‟000
364,914 27,625 67
348,596 27,291 65
392,606
375,952
12(a) Tangible fixed assets - Social housing grants GROUP & ASSOCIATION Properties Social in the Housing Shared Other course of Properties ownership Properties construction Total £’000 £’000 £’000 £’000 £’000 At 1 January 2011 Property acquisitions Schemes completed Housing property disposals At 31 December 2011
216,724 2,543 12,167 (1,224) 230,210
389 0 0 0 389
826 0 0 0 826
14,111 1,954 (12,167) 0 3,898
Grant received or receivable to date is wholly attributable to capital works
Annual Report 2011
Page 32 of 42
232,050 4,497 0 (1,224) 235,323
Notes to the financial statements
(continued)
for the year ended 31 December
12(b) Tangible fixed assets - Other grants
Social Housing Shared Other Properties ownership Properties £’000 £’000 £’000 402 0 0 160 0 0 562 0 0
At 1 January 2011 Property acquisitions At 31 December 2011
12(c) Tangible Depreciation
fixed
At 1 January 2011 Charge for the year Components removed Housing property disposals At 31 December 2011
13
assets
–
Housing
GROUP & ASSOCIATION Properties in the course of construction Total £’000 £’000 635 1,037 (160) 0 475 1,037
land
Social Housing Shared Other Properties ownership Properties £’000 £’000 £’000 33,217 26 469 3,594 (2) 52 (1,897) 0 0 (391) 0 0 34,523 24 521
and
buildings
–
GROUP & ASSOCIATION Properties in the course of construction Total £’000 £’000 0 33,712 0 3,644 0 (1,897) 0 (391) 0 35,068
Units in management
Available for social housing rent Supported housing Scheme managers Extra care Shared ownership Sub total social housing units Market rented Intermediate rented Equity stake Managed for another HA Properties managed for private owners Sub total non social housing units Total units owned and managed
Opening units at 01/01/11 8,085 66 25 0 24 8,200
New Mortgage Build Rescue 83 8 17 0 59 0 159
8
GROUP & ASSOCIATION Closing units at Sales Transfers 31/12/11 (83) 2 8,095 (2) 81 25 59 24 (83)
0
6
6 6 39 12
6 33 12
7
8,284
(1)
1,194
1,194
1,245
6
7
(1)
0
1,257
9,445
165
15
(84)
0
9,541
Within social housing available to rent 81 units were vacant as at 31 December 2011 (31 December 2010: 70 units).
Annual Report 2011
Page 33 of 42
Notes to the financial statements
(continued)
for the year ended 31 December
14
Fixed asset investments
14(a) Equity loans GROUP & ASSOCIATION 2011 2010 £’000 £‟000 At 1 January Additions Disposals At 31 December
548 0 (118)
444 104 0
430
548
14(b) Grants GROUP & ASSOCIATION 2011 2010 £’000 £‟000 At 1 January Additions Disposals At 31 December
15
470 0 (118)
365 105 0
352
470
Other tangible fixed assets GROUP Motor Office Site vehicles equipment equipment £’000 £’000 £‘000
Cost At 1 January 2011 Additions Disposals
Freehold office property £’000
Total £’000
32 0 (21)
2,062 434 (146)
3,786 1,092 (74)
1,751 0 0
7,631 1,526 (241)
At 31 December 2011
11
2,350
4,804
1,751
8,916
Depreciation At 1 January 2011 Charge for year Eliminated on disposals
32 0 (21)
1,661 201 (131)
2,000 390 (55)
551 33 0
4,244 624 (207)
At 31 December 2011
11
1,731
2,335
584
4,661
At 31 December 2011
0
619
2,469
1,167
4,255
At 1 January 2011
0
401
1,786
1,200
3,387
Net book value
Annual Report 2011
Page 34 of 42
Notes to the financial statements
(continued)
for the year ended 31 December
15
Other tangible fixed assets (continued) Motor Office Site vehicles equipment equipment £’000 £’000 £‘000
Cost At 1 January 2011 Additions Disposals
ASSOCIATION Freehold office property Total £’000 £’000
32 0 (21)
2,062 381 (146)
3,786 1,073 (74)
1,751 0 0
7,631 1,454 (241)
At 31 December 2011
11
2,297
4,785
1,751
8,844
Depreciation At 1 January 2011 Charge for year Eliminated on disposals
32 0 (21)
1,661 187 (131)
2,000 384 (55)
551 33 0
4,244 604 (207)
At 31 December 2011
11
1,717
2,329
584
4,641
At 31 December 2011
0
580
2,456
1,167
4,203
At 1 January 2011
0
401
1,786
1,200
3,387
Net book value
16
Debtors
Amounts falling due within one year Rental and service charge debtors Bad debt provision for rental and service charges Capital debtors Inter-group balances Loans to employees Other debtors and prepayments
2011 £’000
GROUP 2010 £‟000
1,913 (940) 3,164 0 4 1,002 5,143
1,965 (832) 1,322 0 5 703 3,163
ASSOCIATION 2011 2010 £’000 £‟000 1,913 (940) 3,164 215 4 997 5,353
1,965 (832) 1,322 203 5 703 3,366
The loans to employees were advanced to enable employees to purchase cars. The loans are for a period of up to 5 years and the interest charged is variable at a rate of ¼% above the Inland Revenue official rate. The average rate charged during 2011 was 4.25% (2010: 4.25%). This facility is no longer offered to staff though the existing loans and terms are being honoured. The remaining balances on employee loans are repayable as follows:
2011 £’000 Due within: One year or less Between one and two years
Annual Report 2011
4 0 4
GROUP 2010 £‟000
ASSOCIATION 2011 2010 £’000 £‟000
1 4 5
Page 35 of 42
4 0 4
1 4 5
Notes to the financial statements
(continued)
for the year ended 31 December
17
Creditors: amounts falling due within one year
Housing loans Capitalised loan fees Rents and service income received in advance Grants received and receivable in advance Taxation and social security Sinking fund deferred income Accrued interest Intergroup balance Accruals and other deferred income
18
2011 £’000
GROUP 2010 £‟000
2,648 (12) 757 5,028 231 300 276 0 6,963 16,191
2,236 (8) 656 180 212 664 281 0 6,104 10,325
ASSOCIATION 2011 2010 £’000 £‟000 2,648 (12) 757 5,028 229 300 276 191 6,822 16,239
2,236 (8) 656 180 212 664 281 0 6,104 10,325
Creditors: amounts falling due after more than one year
Grants repayable to Recycled Capital Grant Fund Housing loans Capitalised loan fees
2011 £’000 1 90,638 (274) 90,365
GROUP 2010 £‟000 1 86,990 (258) 86,733
ASSOCIATION 2011 2010 £’000 £‟000 1 1 90,638 86,990 (274) (258) 90,365 86,733
Housing loans are secured by specific charges on the Association's housing properties. Rates of interest during the year ranged from 0.8% up to 15.9%. The weighted average rate of interest for 2011 was 4.95% (2010: 5.25%). As at 31 December 2011, 53% of loans were at fixed rates and 11% were at rates indexed to the retail price index. The loans are repayable as follows:
2011 £’000 Due within: One year or less Between one and two years Between two and five years In five years or more
Repayable otherwise than by instalments in more than five years Repayable by instalments wholly or partly in more than five years In five years or more
Annual Report 2011
GROUP 2010 £‟000
ASSOCIATION 2011 2010 £’000 £‟000
2,648 2,719 8,928 78,991 93,286
2,236 2,548 8,292 76,150 89,226
2,648 2,719 8,928 78,991 93,286
2,236 2,548 8,292 76,150 89,226
16,500
9,000
16,500
9,000
62,491 78,991
67,150 76,150
62,491 78,991
67,150 76,150
Page 36 of 42
Notes to the financial statements
(continued)
for the year ended 31 December
19
Provisions for liabilities and charges
Contractual obligations include potential liabilities in respect of dilapidations, an onerous lease and deferred taxation. Insurance provisions relate to excess levels on known insurable claims yet to be settled. GROUP Contractual Deferred obligations Insurance taxation At 1 January 2011 Utilised during the year Released during the year Additions during the year At 31 December 2011
£’000
£’000
39 (10) 0 21
128 (25) (65) 20
50
58
Other
Total
£‘000
£’000
0 0 0 4
18 (6) 0 0
185 (41) (65) 45
4
12
124
£’000
ASSOCIATION Deferred Contractual obligations Insurance taxation £’000 £’000 £’000 39 128 0 (10) (25) 0 0 (65) 0 21 20 0
At 1 January 2011 Utilised during the year Released during the year Additions during the year At 31 December 2011
20
50
58
Other £‘000 18 (6) 0 0
0
12
Total £’000 185 (41) (65) 41 120
Called-up share capital GROUP & ASSOCIATION 2011 2010 £ £
Allotted, issued and fully paid At 1 January Issued during the year Shares cancelled during the year
88 5 (10)
93 5 (10)
83
88
At 31 December
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.
21
Reserves Major repairs Special designated reserve reserve £'000 £'000
At 1 January 2011
GROUP Revenue reserve £'000
Surplus for the year Transfer from major repairs designated reserve
131 0 0
9,880 0 0
10,343 7,936 0
Balance at 31 December 2011
131
9,880
18,279
Annual Report 2011
Page 37 of 42
Notes to the financial statements
(continued)
for the year ended 31 December
21
Reserves (continued)
Special reserve £'000 131 0 0
At 1 January 2011 Surplus for the year Transfer from major repairs designated reserve Balance at 31 December 2011
ASSOCIATION Major repairs designated Revenue reserve reserve £'000 £'000 9,880 10,343 0 7,907 0 0
131
9,880
18,250
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.
22 Reconciliation of surplus before taxation to net cash inflow from operating activities
Surplus for the year before taxation Interest payable Interest receivable Depreciation Surplus on sale of fixed assets Movement in working capital Net cash inflow from operating activities
23
2011 £’000
GROUP 2010 £‟000
7,940 4,590 (8) 4,268 (2,091) (664)
4,613 4,471 (21) 3,874 0 (172)
14,035
12,765
ASSOCIATION 2011 2010 £’000 £‟000 7,907 4,590 (14) 4,248 (2,091) (624) 14,016
4,613 4,471 (21) 3,874 0 (375) 12,562
Reconciliation of net cashflow to movement in net debt GROUP 2011 £’000
(Decrease)/increase in cash in year (Increase)/decrease in short-term deposits (Increase) in debt Net cash outflow before financing Accrued interest added to principal Net debt at 1 January Net debt at 31 December
2,500
2010 £‟000 (618)
ASSOCIATION 2011 £’000 2,560
2010 £‟000 (821)
0 (3,534)
(3,003) (3,583)
0 (3,534)
(3,003) (3,583)
(1,034) (526) (87,410)
(7,204) (478) (79,728)
(974) (526) (87,613)
(7,407) (478) (79,728)
(88,970)
(87,410)
(89,113)
(87,613)
Annual Report 2011
Page 38 of 42
Notes to the financial statements
(continued)
for the year ended 31 December
24
Analysis of net debt GROUP
Cash at bank and in hand Loans
At 1 January 2011 £’000 1,816 (89,226)
Accrued interest added to principal £’000 0 (526)
Cash flow during the year £’000 2,500 (3,534)
At 31 December 2011 £’000 4,316 (93,286)
(87,410)
(526)
(1,034)
(88,970)
ASSOCIATION At 1 January 2011 £’000 1,613 (89,226) (87,613)
Cash at bank and in hand Loans
25
Accrued interest added to principal £’000 0 (526) (526)
Cash flow during the year £’000 2,560 (3,534) (974)
At 31 December 2011 £’000 4,173 (93,286) (89,113)
Capital commitments GROUP & ASSOCIATION 2011 2010 £’000 £‟000
Capital expenditure that has been contracted for but has not been provided for in the financial statements
9,378
6,034
Capital expenditure that has been authorised by the Board but has not yet been contracted for
1,545
1,547
At 31 December 2011 the Association intended to fund this expenditure from social housing grants and by loan drawdown from loan facilities already in place.
26
Operating leases
At 31 December the Group had annual commitments under operating leases as follows: GROUP & ASSOCIATION 2011 2010 Land and Office Motor Land and Office Motor buildings equipment vehicles buildings equipment vehicles £’000 £’000 £’000 £‟000 £‟000 £‟000 Leases expiring: Within one year 0 6 3 0 6 0 Between two and five years 68 10 10 54 8 0 68 17 13 54 14 0
Annual Report 2011
Page 39 of 42
Notes to the financial statements
(continued)
for the year ended 31 December
27
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 multiemployer 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 7.2% in respect of the CARE structure and 8.6% in respect of the final salary structure. Member contributions were 7.7% in respect of the CARE structure and 9.2% of the final salary structure. In addition the Association made a monthly contribution towards the past service deficit of £32,521 to March 2011 and £34,050 from April 2011. As at the balance sheet date there were 189 active members (2010: 185) of the Scheme employed by the Association. The annual pensionable payroll in respect of these members was £5,172,198. 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 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 2008 by a professionally qualified Actuary using the Projected Unit Method. The market value of the Scheme‟s assets at the valuation date was £1,527 million. The valuation revealed a shortfall of assets compared with the value of liabilities of £663 million, equivalent to a past service funding level of 69.7%. The financial assumptions underlying the valuation as at 30 September 2008 were as follows: Valuation Discount Rates:
% p.a.
Pre-Retirement Non Pensioner Post Retirement Pensioner Post Retirement Pensionable Earnings Growth Price Inflation
7.8% 6.2% 5.6% 4.7% 3.2%
Annual Report 2011
Page 40 of 42
Notes to the financial statements
(continued)
for the year ended 31 December
27
Pension schemes (continued)
Pension Increases: Pre 88 GMP Post 88 GMP Excess Over GMP
0.0% 2.8% 3.0%
Expenses for death-in-service insurance, administration and Pension Protection Fund (PPF) levy are included in the contribution rate. The Scheme Actuary has prepared an Actuarial Report that provides an approximate update on the funding position of the Scheme as at 30 September 2010. Such a report is required by legislation for years in which a full actuarial valuation is not carried out. The funding update revealed an increase in the assets of the Scheme to £1,985 million and indicated a reduction in the shortfall of assets compared to liabilities from £663 million to approximately £497 million, equivalent to a past service funding level of 80.0%. 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 was 27.0% from 1 April 2009 to 31 March 2010, 29.4% from 1 April 2010 to 31 March 2011 and fell to 22.7% from 1 April 2011. In addition, from April 2011, the Association made a monthly contribution towards the past service deficit of £6,325. The total pension cost of the Association for the defined benefit schemes was £911,287 (2010: £778,681). The Group also contributed to money purchase schemes. Contributions in the year totalled £5,596 (2010: £79).
28
Subsidiary Undertakings
The Association has one subsidiary undertaking, Cambria Maintenance (Registration No. 7389484), in which it owns 100% of the issued share capital.
Services
Ltd
During the year Cambria billed £2,762,000 in respect of reactive maintenance services. At the year end £191,000 was outstanding. The Association made a loan of £100,000 to provide working capital. This was outstanding at the year end together with £115,000 in respect of gift aid.
Annual Report 2011
Page 41 of 42
Notes to the financial statements
(continued)
for the year ended 31 December
29
Related party transactions
The following members of the Board were also residents of the Association during the year: Mr Mr Mr Mr
D Davies J Rides J Williams B Jarvis
Elected Elected Elected Elected
26 24 30 29
April April April April
2007 2006 2009 2010
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 £5,428 (2010: £5,036). During the year three Board members were also board members of Care and Repair agencies, which have received donations from the Association after their demerger from the Association. The donations made during 2011 were as follows: Agency Merthyr Care and Repair Agency Flintshire Care and Repair Agency Bridgend Care and Repair Agency
30
Donation £2,492 £3,436 £3,894
Member Mr D Davies Mr J Williams Mr I Gittens
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.
Annual Report 2011
Page 42 of 42
Cardiff Office (registered) 3 Alexandra Gate Unit Pengam Green Tremorfa Cardiff CF24 2UD Fax: 02920 415380
Flint Office 2 Acorn Business Park Aber Road Flint Flintshire CH6 5YN Fax: 01352 736340
Tel: 0800 052 2526 Minicom: 0800 052 5205 Email: info@wwha.co.uk Website: www.wwha.net If you would like this document in Braille, large print, Welsh or another language or format, or if you would like the services of an interpreter, please contact us.
Wales & West Housing Association is registered as a charitable association under the Industrial and Provident Societies Act 1965 No. 21114R