2010 WWH Annual Report and Financial Statements

P R O V I D I N G Q U A L I T Y H O M E S T H R O U G H O U T W A L E S

D A R P A R U C A R T R E F I O A N S A W D D T R W Y G Y M R U

Annual Report& FinancialStatements 2010

Annual report and financial statements for the year ended 31 December 2010

Page Members, executives and advisors 2 Report of the Board 3 - 15 Statement of the Board’s responsibilities 16 Independent Auditor Report 17 - 18 Income and expenditure account 19 Reconciliation of movements in net assets 19 Balance sheet 20 Cash flow statement 21 Notes to the financial statements 22 - 38

Members, executives and advisors

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Executive Officers Mrs Anne Hinchey Chief Executive and Secretary Mr Shayne Hembrow Operations Director Mr Tony Wilson Finance Director Registered Office Registered with the National Assembly for Wales, Registration

Number L032 3 Alexandra Gate Ffordd Pengam Tremorfa Cardiff CF24 2UD

Registered as a charitable Association under the Industrial and Provident Societies Act 1965, Registration Number 21114R

Independent Auditors Haines Watts Wales LLP

Principal Solicitors Hugh James, Cardiff Morgan Cole, Cardiff Eversheds, Cardiff

Principal Transaction Bankers Royal Bank of Scotland, Cardiff

The Board

Mr I Gittens Chair of the Board (Shareholder); Board Representative Slocombe Cottages for the Aged and Infirm and also for Bridgend Care and Repair

Mr A Ashton Shareholder Board Member; Vice Chair of the Board; Lead Member for Finance

Mr J Clowes Shareholder Board Member; Member of Probity and Audit Committee; Lead Member Development

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

Mr D Davies Resident Board Member; Member of Probity and Audit Committee; Lead Member for Support Services; Board Representative on Staff Council

Mrs W Davies Shareholder Board Member; Board Representative Slocombe Cottages for the Aged and Infirm; Member of Probity and Audit Committee

Mr G Taylor Resident Board Member; Board Representative Slocombe Cottages for the Aged and Infirm and also for Merthyr Care and Repair; Member of Probity and Audit Committee Resigned AGM 29/04/ 2010

Mr K Thomas Co-opted Board Member; Member of Probity and Audit Committee Resigned from Board 06/07/2010

Mrs A Wiggan Shareholder Board Member; Board Representative Denbighshire Care and Repair

Mr J Rides Resident Board Member; Lead Member for Housing Mr N O’Leary Shareholder Board Member; Lead Member Property

Services Mr W Phillips Shareholder Board Member; Member of Probity and Audit

Committee Mr J Williams Resident Board Member; Member of Probity and Audit

Committee; Board Representative Flintshire Care and Repair

Mr B Jarvis Resident Board Member (Elected AGM 29/04/10)

Report of the Board For the year ended 31 December 2010

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The Board presents its report and the audited financial statements for the year ended 31 December 2010. Mission, Values and Objectives The Association’s mission is to be the first choice for homes and services. Its three main over-arching aims are to provide good quality accommodation, to be an excellent landlord and to develop and support communities to meet local needs. The values of the Association 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. The Association’s objects, as laid out in its rules, are to undertake the following for the benefit of the community: (a) the business of providing housing, accommodation and assistance to help house

people and associated facilities and amenities for poor people or for the relief of aged, disabled, handicapped (whether physically or mentally) or chronically sick people; and

(b) any other charitable object that can be carried out by an Industrial and Provident Society registered as a social landlord with the Welsh Assembly Government.

The Association has charitable status and its activities are regulated by the Welsh Assembly Government. Operating Review As at 31 December 2010 the Association managed 9,445 homes and the provision of rented housing remains its principal business activity, with the vast majority of the Association’s stock being for rent. The number that are owner occupied changed little from the previous year at 1,245 homes. A range of site services are provided to the residents of tenanted and owner-occupied properties, and additional supported housing services are provided to older and vulnerable persons. Older persons’ retirement housing continues to represent around a third of the Association’s housing with a mix of rented and owner occupied properties. The Association’s first extra care scheme has been completed and the first new residents moved in from February 2011. 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. In 2010, the Welsh Assembly Government (WAG) published its revised approach to the regulation of registered social landlords. It now requires a robust, evidence based and outcome focused annual self assessment that is driven by the organisation’s Board and corroborated by its staff, residents and partners. WAG published a set of delivery outcomes and guidance to make clear its expectations of the sector as a whole. The intention has been that the self assessment process should be an

Report of the Board (continued) For the year ended 31 December 2010

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Operating Review (continued) integral part of organisational service and business planning and to that end 2010 was allowed as the year to develop appropriate systems. WAG intends to review self assessments and financial performance in April and May of 2011. The Association had a well established service and business planning cycle and prompted by the new regulatory code reviewed its approach to better take account of WAG’s delivery outcomes. The review has led to more radical changes than at first anticipated with a completely new process that provides a flexible, inclusive and responsive planning cycle to deliver a more focused corporate strategy. Financial management and service priorities are now better integrated with the new process through rolling forecasts instead of static annual budgeting, and better management information of service delivery. 2010 is the final year of the current corporate plan and balanced scorecard with the launch of the new corporate strategy (which will incorporate the Association’s self assessment) in May 2011. The previous corporate plan priorities have served the Association well and given focus to areas such as asset management, development growth, financial inclusion and the integration of systems thinking as the organisational operating model. The 2010 balanced scorecard objectives were substantially achieved. In addition much preparation was undertaken in incorporating a new subsidiary to undertake repairs and component renewals and works to empty properties to approximately 6,000 of the Association’s homes. Cambria Maintenance Services Limited is the Association’s first subsidiary and its five year business plan demonstrates the potential for considerable financial savings and service improvements as well as opportunities for growth. The company was registered at the end of September 2010 and commenced trading on 5

January 2011. Progress against the corporate plan and annual balanced scorecard is reported to the Board quarterly so that it is able to keep track of progress. A similar process will be maintained in 2011 though with a greater level of information provided about new challenges and opportunities. A suite of performance and service measures are used by the Board to understand the operation of the business and the quality of service for residents. The 2010 measures have been retained for 2011 with the emphasis remaining on measuring what matters most to residents in terms of outcomes along with indications of the type and frequency of customer demands so the Board and managers can easily see the changing profile of customer requests. The measures are reported quarterly to the Board showing current performance and that for preceding periods. Departmental and functional plans are used by managers to keep track of a wide range of activities planned and undertaken each year. A senior management team of directors and heads of service meet monthly to consider progress with corporate priorities, business performance and opportunities and redirect resources to priority areas where required. Every Board member and all staff have access to the departmental and functional plans through an internal intranet so everyone can see what is planned, by when and by whom. Performance in 2010 was strong despite the continuing weak economic position for many residents. Rent collection remained very high and the continued focus on helping residents meant that arrears did not increase as might have been expected. Of particular note was the turn around of empty homes whereby just under half of general needs housing was let ‘back to back’, incurring no rent loss for the Association. During 2010 the rents systems was the third major system to be reviewed using the Vanguard systems thinking model. The vast majority of residents do want to pay their rent, however the review found that often they need help to get benefits, particularly housing benefit, and assistance to manage their own resources. By listening to Operating Review (continued)


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residents, the emphasis has shifted towards helping residents stay out of debt and make sustainable arrangements when they fall into debt. The number of evictions reduced to a record low of 0.3% of the stock during 2010, reflecting the additional support available to help people pay their rent and the knowledge that former tenant debt is very hard to collect. The Association’s operating principles, developed through the implementation of the systems thinking approach, continue to help shape the culture of the organisation and the way its staff and services are managed and developed. The Association is learning more about how to listen to customers and in so doing let them determine service standards and delivery. Demand for housing generally remains high and a large number of enquiries are received for all types of rented housing, for the Association to purchase homes that people are unable to sell or where people are unable to afford their mortgage. With annual tenancy turnover fairly stable at around 9.3% (762 units in 2010) and a lettings policy that only allocates to those in high levels of housing need, there is a growing mis-match between supply and ever growing demand. In some areas of Wales, the Association has so many current applicants that it is unlikely to be able to help a new applicant for many years. Further mortgage rescue cases were dealt with in the year. In total the Association has ‘rescued’ 39 households from the start of the service, with 28 in the year. Overall, 20 have been outright purchases and 19 have been equity loans to a total value of £4.2million made up of £3million of social housing grant and £1.2million private finance. WAG revised the criteria in 2010 to enable them to better manage their expenditure and limited applications to only those from people in medical need. Demand however, has remained high throughout the year. The Association has committed up to £1million towards a self funded mortgage rescue scheme and has approved one case in 2010. Without some subsidy however, the level of the outstanding mortgage and arrears means that few cases are viable. The size of the organisation has remained fairly constant with an average of 266 full time equivalent staff during 2010, down by 6 from 272 in the previous year. Attendance levels, relating to sickness absence, for the year end reached its lowest level in five years, at a rate of 3.7%. This is 0.5% lower than the average figure for other associations across Wales. This is mirrored by a lower than average staff turnover rate of 7.8%, compared to that of others at an average of 9.7% and less than experienced in 2009. Recruitment activity has been successful, with all 50 vacancies filled in a timely manner, of which 22 (44%) employees secured secondment opportunities/promotion from within the Association. Embedding cultural change through reinforcement of the Association’s values and operating principles was a key feature of the year. A number of activities assisted including a bespoke customer excellence workshop and an in-house coaching programme for all line managers. For the first time the Association entered the Sunday Times Best Companies survey as part of its assessment of cultural change and employee satisfaction. The results confirmed a rating of two stars and a ranking of 14th in the top 100 companies (public sector/charitable status category) of places to work. In addition, employee benefits were enhanced to include a Cash Plan through which staff can receive support ranging from direct counseling to financial support towards healthcare costs. The Association continues to support all staff with learning and development activities with its bespoke model and role specific learning directories. The Association is still Investors in People accredited, together with separate recognition for the Leadership and Management module. The Association also actively encourages its staff to undergo work related qualifications to develop their skills and professionalism. All training and career development opportunities are offered equally to all employees regardless of race, disability, gender, religion and belief, sexual orientation and age.


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Operating Review (continued) While the Association has national coverage it is committed to ensuring the way services are delivered reflects local circumstances and is tailored to what matters most to residents in their communities. The concept of area improvement planning was developed to provide a mechanism for residents and staff to discuss services, improvements and investment in their schemes. Residents are encouraged to discuss and find solutions to the problems they are experiencing, with the Association providing support where it can. Some solutions are in the Association’s gift while others require the action of other agencies. In total 83 area improvement plans are in place across Wales, covering approximately 4,000 households representing around 50% of the Association’s rented housing stock. Area improvement planning has been an important feature of the revised corporate planning process and has informed the Association’s self assessment. The engagement of residents and the planning process is to be further developed in 2011. Satisfaction with services provided by the Association is high. Surveys have been simplified, with residents asked to score the quality of the service they have received out of 10 and to say what could have been done better to achieve a score of 10. With this approach residents, whether satisfied or not, are providing more information about areas for improvement. The same process has been adopted for the Residents’ Satisfaction Survey which up to now has been conducted every three years. In 2010 the process was changed to be an annual survey so that up to date feedback is received from a large number of residents more frequently in order to guide corporate planning. The survey was designed and procured in 2010 and will be completed early in 2011. Performance within the principal areas of activity is described below: Rental Activity The majority of the Association’s income (85%) is derived from renting out properties. There was a 4.3% increase in rental income, mainly due to price increases, coupled with some additional housing stock. The average occupancy rate remained high at 99.2% (2009; 99.3%) due to good performance in turning around empty properties. The total income foregone in both rents and service charges during the year due to properties being empty was £319,000 (2009; £276,000). The small size of some apartments and the over supply of types of retirement housing in some localities means that demand is lower than would be wanted. Three schemes had vacancy levels above 10% though often this was temporary as a result of residents leaving for care or passing away. Only 14 units were vacant for more than 6 months in 2010, demonstrating the small nature of the problem. The Association’s asset management group consider in detail all schemes which under-perform to develop options which may include conversions, redesign and even sale or redevelopment. Excluding sums due from local authorities, rent arrears as a percentage of the annual rent and service charges from current residents increased from 1.79% at the beginning of 2010 to 2.2% as at the end of December. Where tenancies fail, the Association addresses the reasons why and implements appropriate preventative actions to reduce the incidence of future avoidable failures. In this way younger resident support, for example, includes a strong focus on money management. The Association’s specialist money advice officers not only enhance the range of services provided directly but have strong links with other agencies such as Citizen Advice Bureau, Pennysmart and DRAMA. The majority of residents have an April rent review date whereas regulations require rents for some residents to be revised on tenancy anniversary dates. Six property types, amounting to 60% of the Association’s property portfolio, are subject to benchmark regulation and a further 6% are subject to rents determined by a rent officer, who is independent of the Association. From or after April 2010 the Association’s benchmarked


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Operating Review (continued) rents were increased by 2%, which brought benchmark regulated rents up to the maximum permitted levels whilst non-benchmarked rents increased by 4%, which were perceived by the Board to be equitable relative to those benchmarked. The rent for the majority of the Association’s properties will increase by 5.6% from April 2011, being 1% above the retail price index at September 2010, as permitted by the Regulator. The Association’s social housing rental stock of 8,200 homes is let to residents at rents which are more affordable than market rents. Around two thirds of this rental stock is general needs and the other third is retirement housing for older persons, with 24 hour emergency alarm services provided through the Association’s customer service centre and in some cases an on-site scheme manager for a number of hours each weekday. The Association now has comprehensive and up to date information about the condition of its housing assets. To the end of 2010, a total of 6,122 (75%) surveys were completed with external elevations of all blocks already finished. As more surveys have been completed the quality of future investment plans has improved and consequently the Board was able to approve and publish a three year investment programme early in 2010. The programme was developed in consultation with contractors and every resident was informed of the Association’s plans for their scheme and invited to comment on alternative works or different timing for proposed works. The Association is able to robustly measure its compliance with the Welsh Housing Quality Standard (WHQS) and at the end of the year 69% of homes met the standard compared to 55% in 2009. Programmes to replace the four main components; kitchens, bathrooms, heating boilers and windows/doors will see full compliance achieved at the end of 2012 and for some elements of the standard, such as roofs full compliance has already been achieved. Full compliance will include a number of ‘acceptable fails’ within the definition of the standard, where the completion of works is not cost effective. Approximately 1,500 homes will meet all aspects of the standard other than an over-the-bath shower. The replacement of the entire bathroom to these homes is being brought forward to accommodate the shower works as this is the most cost efficient way of completing the works. By 2015 all works will have been completed. Excluding management and overhead costs, the Association invested £10,382,000 on major works during 2010 compared with £9,099,000 during 2009, most of which has been capitalised as fixed assets in the Balance Sheet, and the remainder expensed as repairs. In all over 2,500 homes, more than in previous years, benefited from improvements. Major works in 2011 will be much the same in nature and of a similar scale to ensure the WHQS deadline of 2012 will be achieved. The works contracts which commenced in 2009 have continued to perform well. For major works, the unit cost prices achieved for component replacements such as kitchens and bathrooms have reduced to their lowest average and will be sustained for 2011. The strong relationship built with contractors has enabled efficiencies to be obtained in the flow of work and for additional electrical works (to meet new legislative requirements) to be included for little or no additional cost. Training and increasing employment opportunities was an important outcome from the re-procurement and a total of 33 people have benefitted mainly through apprenticeships. The repairs contract for South Wales terminated on 4 January 2011. While the incumbent contractor was performing satisfactorily, a break clause was actioned to allow the Association to bring the works in-house and have them delivered through a wholly owned subsidiary. Such a move provides the opportunity for financial savings and service improvement gains which could not have been realised with an external contractor. Cambria Maintenance Services Limited was incorporated in September 2010 in readiness to undertake works from 5 January 2011.


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Operating Review (continued) Repairs continue to be a key litmus test of residents’ satisfaction. A sample of between 10 and 20% of residents in receipt of repairs are telephoned to ascertain their levels of satisfaction. The Association’s performance was rated at an average of 9 out of 10 through 2010. The Association is able to let properties at below market rents by utilising interest free Welsh Assembly Government (WAG) funding, called Social Housing Grant (SHG) to finance a large part of site purchase and new build costs, or the purchase of existing dwellings, with the balance being funded through commercial loans. The SHG funding becomes repayable following the disposal of a property though the amount is normally restricted (at the discretion of the WAG) where a loss on disposal might otherwise arise. Some residents have rights under their tenancy agreements to purchase their home at a discount (currently the maximum discount is £16,000). Almost all of the Association’s developments up to now have been SHG funded. In March 2010, the Association was able to maximise grant by taking up under spends made elsewhere and eligible applications for strategic capital investment funds (SCIF). The SHG budget going forward was reduced by over 60% following the comprehensive spending review and the amount available for new social housing is likely to be approximately £30million per annum. With so little SHG available, much of the Association’s future property developments are likely to be a combination of homes for sale, homebuy and intermediate rental. The SHG funding arrangements, as determined by the Welsh Assembly Government, are awarded in accordance with a three-year rolling programme, which is only available to consortia of associations. The Association is a member of the Syniad Consortium along with Pennaf Housing Group and Linc-Cymru Housing Association. Syniad continues to operate successfully and delivered its £20million allocation for new homes plus £6.6million for extra care accommodation for the twelve months ending 31 March 2010. Following a reduction in the overall grant allocation for Wales for 2010/2011, Syniad received an allocation of £6.9million for new homes, including an allocation of £1.5million under the strategic capital investment fund and £5.5million for extra care accommodation in 2010/2011. This budget is expected to be delivered. During 2010 the Association added to its land bank portfolio and at the end of the year owned twelve development sites. Of these, works have commenced on five and these are anticipated to provide 58 homes. The remaining seven sites could provide up to 298 homes which will be developed over the coming five years. A further six sites were also being pursued providing scope for a further 215 dwellings. During 2010 the Association completed developments or otherwise acquired 69 homes, compared with 50 units during 2009. Properties were provided across 5 local authority areas, Cardiff, Bridgend, Powys, Vale of Glamorgan and Wrexham. The completed developments include the Association’s 2 Code Level 4 Schemes at St. Athans and Brecon. Completions also took place at 2 sites in Wrexham, the first new build schemes the Association has delivered in this local authority for over 6 years. Mortgage rescue properties account for 28 completions, of which 17 are equity share and the remaining 11 outright purchases. The 2010 development programme provided a range of properties meeting the identified housing needs of local authority partners, and included general family housing; wheelchair accessible and specific purchases or designs to meet identified family requirements. During 2011 work will proceed on the development of a further 317 homes on sites in Prestatyn, Wrexham, Brecon, Mold, Merthyr, Bridgend, and Henllan. These developments vary in size from 2 units up to a 60 plus extra care project in Mold. The larger developments will not be completed until early 2013.


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Operating Review (continued) Site Services These comprise services such as emergency alarm, scheme manager support, cleaning and gardening. Such services are provided to residents of the Association, including 1,245 owner-occupied units, many of which were purchased from the Association at some time in the past. Certain services, principally emergency alarm related, are also being provided to other persons, including residents of several other housing associations. Service charge income represents approximately 15% of the Association’s income. The Association seeks to recover its direct costs from residents and levies a management charge to cover its administrative costs. While most residents receive some element of site services, those in retirement housing receive the most. The Association’s retirement housing strategy centres around providing flexible and tailored services to enable residents to live independently and remain part of their community in quality accommodation suitable for their needs. Some years ago the role of scheme manager changed from that of being substantially a ‘good neighbour’ to a more professional service aimed at promoting and supporting independent living. Each scheme is assessed for the quantity and range of services required so that the volume of staff time purchased is appropriate and is focused on what matters to residents. All of the Association’s retirement schemes have modern emergency alarms supported by the Association’s Telecare Services Association accredited 24 hour alarm centre. A Dispersed Telephone Alarm service is also offered to general needs residents and to older or vulnerable people in the community who are not resident in Association properties. The Association is the only housing association in Wales to offer an emergency alarm and telecare service and has sought to grow this area of the business. In March 2010, the Association was successful in winning the tender for the provision of emergency alarm services to a North Wales association and has been selected by a West Wales association for out of hours telephone support which is due to commence in April 2011. Some residents qualify for Supporting People Grant to fund support provided by the Association. Where the available grant is insufficient to cover the costs of service delivery the shortfall is borne by the Association. This, together with an under-recovery of management overheads, is the main reason for a deficit on the activity. Supported Housing Services The Association provides housing for people with support needs and previously had management agreements and contracts with support providers. Rents and costs arising for the landlord service to residents in supported housing are included in the Rental activity. Grant income and costs relating to specialised support to residents were previously included in the Supported Housing Services activity. Since 2009 all support providers in Association properties have become Accredited Support Providers, since which time grant income and the corresponding support responsibility for support service delivery has passed directly to the support provider. Financial Review The overall financial result was a surplus for the year of £4.6million (2009 restated; surplus of £4.2million). The statements are prepared in compliance with the 2010 SORP (Statement of Recommended Practice) applicable to housing associations, including the early adoption of “component accounting”, as recommended by the statement. The change in accounting policy that arose on the implementation of component accounting is the reason why the results for 2009 have been restated. Income generated by continuing operations during 2010 was £33.7million (2009; £32.7million) an increase of £1million, resulting mainly from increases in rents and additional rental units.


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Financial Review (continued) Operating costs for the year were £24.6million (2009 restated; £24.5million), an increase of £0.1million, (0.6%). This increase was primarily due to increases in bought in services, such as utilities, which are service chargeable to scheme residents. Despite RPI running at 4.8% for the year to December 2010, the Association’s routine property maintenance costs reduced by £0.6million and overhead costs were almost unchanged. High levels of resident satisfaction, scoring 9 out of 10, were again achieved for the property maintenance activity, as in the previous year. The Board reviews its financial strategy on at least an annual basis and in recent years has sought to limit its exposure to variable interest rates to between 10% and 30% of borrowings. The Association’s strong interest cover, particularly following the implementation of component accounting, enables variations in interest rates to be more readily absorbed, and thus the upper end of the range has been relaxed. With variable rates in the market being substantially lower than fixed rates, the increase in the proportion of variable rate debt has helped keep down the cost of finance. On the other hand the substantial rise in the retail price index (RPI) since 2009 drove up the cost of servicing the Association’s indexed linked loans. Total interest payable for the year was £4.5million (2009; £4.1million). Whilst some of the £0.4million increase was due to borrowings, which on average were £3.6million higher than in the previous year, £0.5million of increase was attributable to the impact of RPI on the indexed loans. As at 31 December 2010 loan balances stood at £89.2million (2009; £85.2million), of which 56% of loans were at rates fixed to maturity, 13% were at rates indexed to inflation and 31% were at variable rates. In 2010 the average rate of interest on the loan portfolio was 5.3% (2009; 5.0%). The Association’s loans have maturity dates ranging from 2023 to 2049. Some loans currently require regular principal repayments, others will require regular repayments commencing at a future date, and one loan is repayable in full in one go at maturity. Principal loan repayments due in 2011 amount to £2.2million. As at 31 December 2010 the Association had in place £20million of confirmed bank facility to call upon under long-term loan agreements. These facilities are sufficient to satisfy the Association’s presently foreseeable cash requirements, including loan principal repayments, through to September 2012. Further facilities will be required from that time to fund property development aspirations and to finance future repayments of existing loans. The Association is operating well within existing loan covenants. The operating surplus for the year was 203% of interest payable (2009; 201%) and gearing (loan as a percentage of the sum of reserves and Social Housing Grant liability) as at 31 December 2010 was 35%. The Association is able to remain compliant with loan covenants for the foreseeable future. However, with less Social Housing Grant available to part fund future development, gearing will rise more quickly than it otherwise would. Thus to fulfill future growth aspirations it may be necessary at some stage to agree higher gearing limits with some lenders. The implementation of component accounting resulted in a £8.7million reduction of reserves as at 31 December 2008. This has been reflected as a prior year adjustment in the financial statements. With surpluses of £4.2million and £4.6million in 2009 and 2010 respectively, the reserves as at 31 December 2010 were £20.3million, a level approximately £3million more than they would have been had component accounting not been implemented. For the purpose of loan covenant compliance, some of the Association’s reserves are earmarked for major repairs. Following the implementation of component accounting, keeping this reserve separate from other reserves might no longer be necessary. Pending agreement of any changes to covenants with lenders, no transfers have been made during 2010 between the general and major repairs reserves. In the balance sheet the gross historical cost of the Association’s portfolio of housing stock as at 31 December 2010 stood at £376million, including £25.1million (2009; £16.6million) of land bank and properties under construction. The housing stock has


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Financial Review (continued) been developed or acquired over a number of years using a mixture of funding sources principally development grants and commercial loans. Details of fixed assets are set out in notes 12 to 16 of the financial statements. Component accounting has resulted in an increase in the gross historical cost of the housing stock as components that had been previously expensed have been reinstated by way of prior year adjustment. Cumulative historic depreciation has also been recalculated on all of the Association’s property stock, as if components had been capitalised as fixed assets in all previous years. The impact of the prior year adjustment arising was a £8.7million reduction in net fixed assets as at 1 January 2009, corresponding to the restatement of reserves referred to above. Prior to investment in growth activity there was a ‘free cash outflow’ from the Association of £0.2million. Free cash outflow is arrived at after spending £8.6million on existing property component replacements, a spend level which is higher than the expected long term average requirement. This arose because the number of components that require replacement in any year is dependent on the numbers of properties developed in previous years. As the build programme has been far from constant, ranging from a low of around 25 units to more than 500 units in some years, the volume of required component replacements will also vary from year to year. Over time the average spend requirement is expected to be closer to £6million per annum. Had component replacements during 2010 been at that level, a positive “free cash inflow” would have arose, being indicative that the existing business is cash generative. After £7.2million on growth activity, being £18.7million paid for property developments less £11.5million received in grants, the net cash outflow during 2010 was £7.4million as shown below.

£m £m Free cash outflow (0.2)Investment in growth activity:Purchase and development of properties (18.7)Development grants received 11.5

(7.2)Net cash outflow before financing (7.4)

The Association had cash and short term deposit balances amounting to £1.6million as at 31 December 2010 (31 December 2009; £5.4million). Whilst the balance sheet shows net current liabilities of £5.3million as at 31 December 2010, the Association had £20million of confirmed loan facility undrawn at that date. The Association has access to more than sufficient funding for the next twelve months. Charitable Donations During 2010 a total of £15,884 (2009; £18,210) was donated to charities comprising three Care & Repair agencies, £9,384, and match funding to a range of charities supported through staff initiatives. Post Balance Sheet Events There are no reportable post balance sheet events Board Members 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 and


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Board Members (continued) developing implementation plans, and generally, ensuring that all matters are conducted properly. 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 a WWHA employee. Shareholders must demonstrate that they can positively contribute to the future management of the Association and are obliged to act in the interests of the Association, for the benefit of the community. Potential shareholders can obtain more information by writing to the Secretary of the Association. Resident Board Members The first Resident Board Members were elected in 2002 to further enhance resident participation and involvement. As vacancies arise, Association residents have the opportunity to stand for election to the Board of Management, providing that they:

(a) are not on an Introductory Tenancy; (b) are not bankrupt or subject to an agreement with creditors; (c) have not been convicted of an indictable offence within the last five years.

The Board decides the method of election of Resident Board Members. The current system is:

(a) Prior to the election process commencing an advert is placed within “In Touch”,

the Association’s resident magazine, asking for residents who are interested in becoming Board Members. For those who are interested, an “Information Day” is held. Attendance at this Information Day is a compulsory requirement for those wishing to become Resident Board Members;

(b) Nominations to the Board of Management are requested in advance of the Annual General Meeting from those residents who attended the Information Day;


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

Resident Board Member form stating how they meet the Board’s requirements in terms of skills, qualities and experience;

(d) After attending a meeting with the Chief Executive to receive an explanation of the obligations of a Resident Board Member, they must complete a nomination form which includes a statement of 100 words in support of their nomination to be used on the ballot paper;

(e) Ten other residents must support the nomination; (f) A postal ballot of all residents is held if nominations exceed available places; (g) Those with the most votes become members of the Board of Management and

their appointments are announced at the Annual General Meeting. Co-opted Board Members The elected Board can appoint up to three co-opted members to the Board should the Board at any time determine that there is a need for supplementary skills. Co-opted members are appointed for a finite period and have the same voting rights as elected Board Members save that they are not entitled to vote on matters pertaining to positions of office to the Board or issues affecting shareholders. All Board Members At least one third of both Shareholding and Resident Board Members are required to resign at each Annual General Meeting, providing they have served at least three consecutive years in office since their last election, and may seek re-election, subject to having served a maximum of three consecutive terms. 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. 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.


Page 14 of 38

Board Members (continued) 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.

System of Internal Financial Control The Board acknowledges its responsibility for ensuring that the Association has in place a system of controls that is appropriate to the various business environments in which it operates. These controls are designed to give reasonable assurance with respect to:

(a) the reliability of financial information used within the Association or for publication;

(b) the maintenance of proper accounting records ; and (c) the safeguarding of assets against unauthorised use or disposition.

It is the Board’s responsibility to establish and maintain systems of internal financial control. Such systems can only provide reasonable and not absolute assurance against material financial mis-statement or loss. Key elements include ensuring that:

(a) formal policies and procedures are in place, including the documentation of key systems and rules relating to the delegation of authorities, which allow the monitoring of controls and restrict the unauthorised use of the Association’s assets;

(b) experienced and suitably qualified staff take responsibility for important business functions. Annual procedures have been established to maintain standards of performance, as well as self-certification of risk control in all areas;

(c) forecasts and budgets are prepared which allow the Board to monitor the key business risks and objectives and progress towards financial plans set for the year and the medium term; regular management accounts are prepared promptly, providing relevant, reliable and up-to-date financial and other information and significant variances from budgets are investigated as appropriate;

(d) all significant new initiatives, major commitments and investment projects are subject to a formal authorisation procedure, through relevant committees comprising Board Members and others;

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

(f) the Probity and Audit Committee reviews reports from management, the Internal Audit Manager and from the external auditors to provide reasonable assurance that control procedures are in place and are being followed. Committee makes regular reports to the Board; and

(g) formal procedures have been established for instituting appropriate action to correct weaknesses identified from the above reports.


Page 15 of 38

System of Internal Financial Control (continued) The Board is satisfied that the Association 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. Auditors A resolution to re-appoint Haines Watts Wales LLP as auditors will be proposed at the Annual General Meeting on 28 April 2011. By order of the Board

Mr I Gittens Chair of the Board

Statement of the Board’s responsibilities

Page 16 of 38

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 of the surplus or deficit of the Association for that period. In preparing those financial statements, the Board is required to select suitable accounting policies, as described on pages 22 to 25, 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 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 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 hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Board is responsible for the maintenance and the integrity of the corporate and financial information included on the Association’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. In so far as the Board is aware:

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

By order of the Board

Mr I Gittens Chair of the Board

Independent Auditor Report to Members of Wales & West Housing Association Limited

Page 17 of 38

Year ended 31 December 2010 We have audited the financial statements of Wales & West Housing Association (‘the Association’) for the year ended 31 December 2010 which comprise the Income and Expenditure Account, Balance Sheet, the 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 the Board’s responsibilities, set out on page 16, 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 Association’s 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 Association’s 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 adequately disclosed; the reasonableness of significant accounting estimates made by the Board; and the overall presentation of the financial statements. Opinion on financial statements In our opinion the financial statements:

give a true and fair view of the state of the Association's affairs as at 31 December 2010 and of its 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.

With respect to the Board’s statement on internal financial control, in our opinion, 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.

Independent Auditor Report to Members of Wales & West Housing Association Limited (continued)

Page 18 of 38

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 requires us to report to you if, in our opinion:

a satisfactory system of control over transactions has not been maintained; or the Association has not kept proper accounting records; 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

Page 19 of 38

Income and expenditure account for the year ended 31 December

2010 2009 £’000 £’000

as restated TurnoverContinuing operations 2 33,684 32,688

Operating costsContinuing operations 2 (24,621) (24,485)

Operating surplus 9,063 8,203

Surplus on sale of fixed assets 5 0 33 Interest receivable and similar income 9 21 69 Interest payable and similar charges 10 (4,471) (4,071)

Surplus on ordinary activities before taxation 4,613 4,234 Taxation 11 0 0

Surplus for year transferred to reserves 22 4,613 4,234

Notes

The Association 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

2010 2009 £’000 £’000

as restated Deficit as previously reported (1,435)Prior year adjustment 5,669 Surplus for the year 4,613 4,234 Opening net assets as previously reported 18,732 20,167 Prior year adjustment (2,991) (8,660)Closing net assets 20,354 15,741

Page 20 of 38

Balance sheet at 31 December

2010 2009 £’000 £’000

as restatedTangible fixed assetsHousing land and buildings – gross cost 12 375,952 350,931 Less: Social Housing grants 13a (232,050) (220,317) Other grants 13b (1,037) (1,018) Depreciation 13c (33,712) (32,510)

109,153 97,086

Fixed assets investmentsEquity loans 15a 548 548 Less: grants 15b (470) (470)

78 78 Other tangible fixed assets 16 3,387 3,510

Total fixed assets 112,618 100,674

Current assetsDebtors: amounts falling due within one year 17 3,366 2,591 Short-term deposits 25 0 3,003 Cash at bank and in hand 25 1,613 2,434

4,979 8,028 Creditors: amounts falling due within one year 18 (10,325) (8,878)Net current liabilities (5,346) (850)

Total assets less current liabilities 107,272 99,824

Non-current liabilitiesCreditors: amounts falling due after more than one year 19 (86,733) (83,878)Provisions for liabilities and charges 20 (185) (205)

20,354 15,741

Capital and reservesCalled up share capital 21 0 0 Special reserve 22 131 131 Major repairs designated reserve 22 9,880 9,880 Revenue reserve 22 10,343 5,730 Total capital and reserves 20,354 15,741

Notes

The financial statements on pages 19 to 38 were approved by the Board on 24 March 2011 and were signed on its behalf by: Chair of the Board – Mr I Gittens

Vice Chair of the Board – Mr A Ashton Secretary – Mrs A Hinchey

Page 21 of 38

Cash flow statement for the year ended 31 December

2010 2009 £’000 £’000

as restated Net cash inflow from operating activities 23 12,562 11,119

Interest received 60 30 Interest paid (3,986) (4,044)Net cash outflow from returns on investment and servicing of finance (3,926) (4,014)

Purchase and development of properties (18,718) (14,814)Grant received 11,460 12,091 Property component replacements (8,574) (8,138)Purchase of other fixed assets (211) (797)Proceeds of sale of properties and other fixed assets 0 445 Net cash outflow from capital expenditure and financial investment (16,043) (11,213)

Net cash outflow before financing (7,407) (4,108)

Decrease in short-term deposits 3,003 (2,688)Management of liquid resources 3,003 (2,688)

Housing loans received 5,500 9,000 Housing loans repaid (1,917) (1,928)Net inflow from financing activities 3,583 7,072

Net (decrease)/increase in cash 25 (821) 276

Notes

Notes to the financial statements for the year ended 31 December

Page 22 of 38

1 Principal accounting policies A summary of the more important accounting policies are set out below. As recommended by the 2010 SORP update, early adoption of component accounting has been implemented during 2010. The change in accounting policy has given rise to prior year adjustments to the results and financial position for the previous year, thereby maintaining consistency of accounting policies in the current and preceding years. Following the implementation of component accounting, certain components of residential properties with asset lives which are different to the main structure, or shell, of those properties have been separately identified for depreciation purposes. On replacement of such assets the original asset is written off and the replacement asset is capitalised and depreciated over its useful life. On implementing the change in accounting policy the depreciation charges on all residential properties have been reinstated as if the policy had always been applied, replacement components previously written off as major repairs have been restated as fixed assets and components which have been replaced have been written off. 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 Landlords” as updated in 2010, and comply with the Accounting Requirements for Social Landlords registered in Wales General Determination 2009. The 2009 Determination required a change in the presentation of segmental information. The comparative data for 2009 in note 2 has accordingly been restated. A subsidiary was incorporated in September 2010 but did not commence trading until 5 January 2011. As the subsidiary was not material during the period, and the Association has no other subsidiaries, no consolidated group accounts have been prepared. Basis of accounting The financial statements are prepared on the historical cost basis of accounting. 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 Assembly Government considers appropriate it may reduce the amount repayable. Where this arises on a disposal, the grant repayable

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

Page 23 of 38

Housing properties – fixed asset capitalisation and depreciation (continued) 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. 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 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 component’s expected economic useful life as follows: years House main structure 150 Flat main structure 100 Other components: Back doors 40 Bathrooms 30 Boilers 15 Electrics 60 Front doors 30 Kitchens general needs 17 Kitchens retirement housing 20 Roofs 80 Windows: installed pre 2000 20 Windows: installed post 2000 40 Components on leasehold land are depreciated over the shorter of the above and the remaining period of the lease. Freehold land is not depreciated. Grants Where developments have been financed wholly or partly by grants, the cost of these developments has been reduced by the amount of the grant received. These grants are received from central government agencies and local authorities and are offset against the cost of housing properties on the face of the balance sheet. The Companies Act 2006 requires tangible fixed assets to be included at purchase price, or production cost, less any provision for depreciation or diminution in value. However, this requirement conflicts with the generally accepted accounting principles for Registered Social Landlords set out in the SORP: Accounting by Registered Social Landlords. 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.


Page 24 of 38

Grants (continued) Where grants are received in advance they are carried forward as current liabilities to be matched against future capital expenditure as it is incurred. Grant receivable in respect of completed schemes or those under construction is included as a debtor in the financial statements. Grants are repayable under certain circumstances, primarily following the sale of a property. Such repayable grants are included within creditors in the balance sheet. Repairs and maintenance The costs of repairs and maintenance are expensed as incurred on the basis of work done at the balance sheet date. Impairment Housing properties are annually reviewed for impairment. Where there is evidence of impairment, housing properties are written down to their recoverable amount. Fixed assets – investments Equity loans have been made, under low cost home ownership arrangements, to homeowners who were not otherwise able to fully afford their homes using commercially available mortgages. Equity loans are included in the balance sheet at historic cost. The Association is entitled to a proportion of the market value corresponding to the equity interest at a time when homeowners either dispose of their property or when they choose to repurchase some, or all, of the equity loan. Other fixed assets and depreciation

Other tangible fixed assets are stated at cost less accumulated depreciation. Depreciation is charged on a straight line basis so as to write off the cost less estimated residual value of assets over their expected useful economic lives as follows: Motor vehicles 3 years Office equipment 3 to 10 years Site equipment 3 to 10 years Office buildings written off over periods up to 60 years Reserves A major repairs designated reserve is held to fund future major repairs to the housing stock of the Association. Transfers to and from the reserve are determined by the Board. Pension costs The Association makes payments to two defined benefit pension schemes on behalf of its employees. The schemes are funded by contributions partly from the employees and partly by the Association at rates determined by independent actuaries. The assets of the schemes are invested separately from the Association's assets in independently multi-employer administered funds. 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 Association 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.


Page 25 of 38

Value added tax The Association is partially exempt for VAT purposes, and claims are made for repayment of VAT on items that are specifically allowable. Expenditure is shown inclusive of irrecoverable VAT. Taxation The Association adopted charitable rules with effect from 20 January 2005. No corporation tax is expected to arise after that date on charitable object activities. 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 Association’s best estimate of potential liabilities. 2 Analysis of turnover and costs

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

TurnoverOperating

costsOperating

surplus TurnoverOperating

costsOperating

surplus

2010 2010 20102009 as restated

2009 as restated

2009 as restated

£'000 £'000 £'000 £'000 £'000 £'000

Social housing lettings 32,280 (23,105) 9,175 31,259 (23,042) 8,217

Other social housing activitiesSupporting people 0 0 0 84 (54) 30

Non-social housing activitiesLettings 65 (74) (9) 53 (75) (22)Other 1,339 (1,442) (103) 1,292 (1,314) (22)

Total 33,684 (24,621) 9,063 32,688 (24,485) 8,203

A detailed analysis of the social housing turnover and related operating costs is provided in note 2(b).


Page 26 of 38

2 Analysis of turnover and costs (continued)

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

General needs and sheltered

housingSupported

housing

Other social housing

letting income

2010 Total

2009 Total as

restated£’000 £’000 £’000 £’000 £’000

IncomeRent receivable 27,949 310 42 28,301 27,130Service charge income 3,594 0 0 3,594 3,739Grant income for support services 385 0 0 385 390

Turnover from social housing lettings 31,928 310 42 32,280 31,259

Operating costsManagement (4,987) (41) (15) (5,043) (5,000)Service charges (4,083) 0 0 (4,083) (3,874)Routine maintenance (6,840) (56) (10) (6,906) (7,476)Major repairs expenditure (2,890) (24) (4) (2,918) (2,506)Bad debts (209) 0 0 (209) (436)Depreciation of housing properties (3,246) (26) (5) (3,277) (3,119)Other costs (662) (5) (2) (669) (631)

Operating costs on social housing activities (22,917) (152) (36) (23,105) (23,042)Operating surplus on social housing lettings 9,011 158 6 9,175 8,217

Rent foregone due to properties being vacant 319 0 0 319 276

Memorandum information:

The comparative figures for 2009 have been reformatted to conform to the Accounting Requirements for Social Landlords Registered in Wales - General Determination 2009. In addition the 2009 figures have been restated following the adoption of component accounting. 3(a) Directors' emoluments The remuneration paid to the directors (defined as members of the Board and the Executive Officers) of Wales & West Housing Association Limited was:

2010 2009£’000 £’000

Aggregate emoluments of executive officers 295 279 Aggregate emoluments of Board members 0 0Emoluments of highest paid director (Chief Executive), excludingpension contributions 111 107


Page 27 of 38

3(a) Directors' emoluments (continued) 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 2010 were £37,030 (2009: £33,740) and £95,782 (2009: £91,869) respectively.

2010 2009£’000 £’000

Expenses reimbursed to directors not chargeable to United Kingdom taxation for the year ended 31 December 13 16

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

2010 2009Staff Staff

Actual 321 330 Full time equivalent 266 272

2010 2009£’000 £’000

Staff costs (for the above persons):Wages and salaries 6,989 6,789 Social security costs 538 524 Pension costs 734 681

8,261 7,994

4 Operating surplus

2010 2009£’000 £’000

as restatedOperating surplus is stated after charging:Depreciation 3,874 3,721 Bad debts 233 457 Auditors' remuneration: - In their capacity as auditors 21 24 - In respect of other services 6 9 Operating lease rentals - Land and buildings 52 49 - Other assets 17 15

Depreciation in 2009 has been restated to reflect the implementation of component accounting.


Page 28 of 38

5 Surplus on sale of fixed assets 2010 2009£’000 £’000

Sales Proceeds:Housing properties 0 445 Offices 0 0 Other fixed assets 0 0

0 445

Cost of sales:Housing properties 0 (412)Offices 0 0 Other fixed assets 0 0

0 (412)

Surplus on sale of fixed assets 0 33

6 Contingent liabilities The Association is a participating employer member of the Pension Trust’s Growth Plan. This is a multi-employer pension, 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 31 March 2008 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 2008 was £23.9million 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 Assembly 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.


Page 29 of 38

8 Prior year adjustment The prior year adjustments related to transferring of spend from major repairs and routine maintenance to Housing fixed assets and the adoption of component accounting affecting the related depreciation. Component accounting has been implemented in accordance with the requirements of the Statement of Recommended Practice (SORP) for Accounting for Social Landlords, as updated in 2010. Implementation of this requirement entailed a change in accounting policy which resulted in the need to restate prior year values. Previously housing land and buildings, held within fixed assets, and social housing grant received, was analysed into only two components, land and buildings, and any subsequent major works such as the replacement of kitchens and bathrooms were expensed as incurred. On implementing component accounting to accord with the updated SORP, the costs relating to buildings has been reanalysed into eleven separate components, each with its own economic useful life for depreciation purposes. Replacement components that had previously been expensed as incurred were reinstated as fixed assets, and the original components were written off. This was a substantial exercise creating around 100,000 separate fixed asset records in place only approximately 16,000 were held previously. With this volume of data requirement, coupled with the fact that the underlying transactions were spread over a 45 year period, a pragmatic approach had to be adopted to the reallocation of asset costs. This approach centred on recent experiences of replacement costs relative to recent experiences of new build costs, and applying those proportions to historic build costs. For depreciation purposes the useful lives of the components are based on recent experiences of the lives derived from original components, suitably amended to reflect changes arising from modern materials, for example UPVC in place of wood. Social housing grant is offset against the cost of fixed assets for the purpose of calculating depreciation. On implementation of component accounting, social housing grant has been allocated proportionately to land and the main structure component only, such that no grant is allocated to the other components, which generally have shorted lives. This was done for pragmatic reasons as otherwise complex adjustments would arise when components are replaced. The adjustments required to the opening balance sheet on 1 January 2009 were as follows:

£'000Net increase in the cost of land and buildings 15,036Net increase in cumulative depreciation (23,696)Net decrease in reserves at 1 January 2009 (8,660)

The impact of the adjustments arising from the change in accounting policy on the results to the year ended 31 December were as follows:

2010 2009£’000 £’000

Deficit under previous accounting policy (1,479) (1,435)

Reduction in major repairs expenses 8,794 8,105Increase in depreciation charge for the year (2,702) (2,436)

Adjusted surplus for the year to 31 December 4,613 4,234


Page 30 of 38

9 Interest receivable and similar income 2010 2009£’000 £’000

Interest receivable from investments 21 69

10 Interest payable and similar charges

2010 2009£’000 £’000

On bank loans and overdrafts and other loans:Repayable within 5 years, not by instalments 0 0 Repayable wholly or partly in more than 5 years 4,471 4,062 Interest payable to sinking funds 0 9

4,471 4,071

11 Corporation Tax The Association adopted charitable status with effect from 20 January 2005. Other than to an immaterial extent only charitable object activities have been undertaken since that date, with the consequence that no corporation tax cash flows are expected to arise for the foreseeable future. Accordingly there are no corporation tax liabilities or assets included in the balance sheet as at 31 December 2010. 12 Tangible fixed assets – Housing land and buildings – gross cost

Social Housing

PropertiesShared

ownershipOther

Properties

Properties in the

course of construction Total

£’000 £’000 £’000 £’000 £’000as restated

At 1 January 2010 as previously reported 308,262 564 2,362 16,602 327,790Prior year adjustment 23,141 23,141At 1 January restated 331,403 564 2,362 16,602 350,931Property acquisistions 5,006 0 0 13,474 18,480Schemes completed 5,276 0 0 (5,276) 0Additions to existing properties 8,794 0 0 0 8,794Disposals from existing properties (2,253) 0 0 0 (2,253)At 31 December 2010 348,226 564 2,362 24,800 375,952

2010 2009£’000 £’000

as restated

375,887 323,98727,291 26,879

65 65375,952 350,931

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

Additions to existing properties related to the replacement of property components. There was a further charge from contractors of £1.6m for major works, which was expensed through the income and expenditure account.


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13(a) Tangible fixed assets- Social Housing grants

Social Housing

PropertiesShared

ownershipOther

Properties

Properties in the course of construction Total

£’000 £’000 £’000 £’000 £’000

At 1 January 2010 209,692 389 826 9,410 220,317Property acquisitions 0 0 0 11,733 11,733 Schemes completed 7,032 0 0 (7,032) 0

At 31 December 2010 216,724 389 826 14,111 232,050

Grant received or receivable to date is wholly attributable to capital works. 13(b) Tangible fixed assets - Other grants

Social Housing

PropertiesShared

ownershipOther

Properties


£’000 £’000 £’000 £’000 £’000At 1 January 2010 383 0 0 635 1,018 Property acquisitions 19 0 0 0 19

At 31 December 2010 402 0 0 635 1,037

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

Social Housing

PropertiesShared

ownershipOther

Properties


£’000 £’000 £’000 £’000 £’000as restated

At 1 January 2010 as previously reported 6,278 23 77 0 6,378 Prior year adjustment 25,787 1 344 0 26,132 At 1 January 2010 as restated 32,065 24 421 0 32,510 Charge for the year 2,892 2 48 0 2,942 Eliminated on disposals (1,740) 0 0 0 (1,740)

At 31 December 2010 33,217 26 469 0 33,712

The restatement to comparative figures for 2009 arose on the implementation of component accounting.


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14 Units in management

New Build

Existing dwellings Transfers

Avaiable for social housing rent 8,029 40 12 4 8,085 Supported housing 68 (2) 66 Scheme managers 27 (2) 25 Shared ownership 24 24

Sub total social housing units 8,148 40 12 0 8,200

Market rented 6 6 Equity stake 16 17 33 Managed for another HA 12 12 Properties purchased under right to buy

599 599

Properties managed for private owners

595 595

Sub total non social housing units 1,228 0 17 0 1,245

Total units owned and managed 9,376 40 29 0 9,445

Opening units at

01/01/10

Within social housing available to rent 70 units were vacant as at 31 December 2010 (31December 2009: 71 units).

Closing units at

31/12/10

15 Fixed asset investments

15(a) Equity loans

2010 2009£’000 £’000

At 1 January 548 444 Additions 0 104 Disposals 0 0 At 31 December 548 548

15(b) Grants

2010 2009£’000 £’000

At 1 January 470 365 Additions 0 105 Disposals 0 0 At 31 December 470 470


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16 Other tangible fixed assets

Motor vehicles

Office equipment

Site equipment

Freehold office

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

CostAt 1 January 2010 47 3,244 3,538 1,751 8,580 Additions 0 60 374 0 434 Disposals (15) (1,242) (126) 0 (1,383)

At 31 December 2010 32 2,062 3,786 1,751 7,631

DepreciationAt 1 January 2010 40 2,725 1,791 514 5,070 Charge for year 7 175 330 37 549 Eliminated on disposals (15) (1,240) (120) 0 (1,375)

At 31 December 2010 32 1,660 2,001 551 4,244

Net book value

At 31 December 2010 0 402 1,785 1,200 3,387

At 1 January 2010 7 519 1,747 1,237 3,510

17 Debtors

2010 2009£’000 £’000

Amounts falling due within one yearRental and service charge debtors 1,965 1,719 Bad debt provision for rental and service charges (832) (715)Capital debtors 1,322 607 Inter-group balances 203 0 Loans to employees 5 11 Other debtors and prepayments 703 969

3,366 2,591

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 2010 was 4.25% (2009: 6.5%). 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: The loans are repayable as follows:

2010 2009£’000 £’000

Due within:One year or less 1 5 Between one and two years 4 6

5 11


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18 Creditors: amounts falling due within one year 2010 2009£’000 £’000

Grant repayable to Recycled Capital Grant Fund 0 52 Housing loans 2,236 1,541 Capitalised loan fees (8) (8)Rents and service income received in advance 656 933 Grants received in advance 180 254 Taxation and social security 212 209 Sinking fund deferred income 664 736 Accrued interest 281 284 Accruals and other deferred income 6,104 4,877

10,325 8,878 19 Creditors: amounts falling due after more than one year

2010 2009£’000 £’000

Grants repayable to Recycled Capital Grant Fund 1 491 Housing loans 86,990 83,624 Capitalised loan fees (258) (237)

86,733 83,878

Of the total balance of £543,000 held in the Recycled Capital Grant Fund as at 1 January 2010, £542,000 was utilised during the year on development schemes, leaving a balance of £1,000 as at 31 December 2010. 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 2010 was 5.25% (2009: 5.0%). As at 31 December 2010, 56% of loans were at fixed rates and 13% were at rates indexed to the retail price index.

2010 2009£’000 £’000

Due within:One year or less 2,236 1,541 Between one and two years 2,548 2,098 Between two and five years 8,292 8,292 In five years or more 76,150 73,234

89,226 85,165

Repayable otherwise than by instalments in more than five years 9,000 9,000 Repayable by instalments wholly or partly in more than five years 67,150 64,234 In five years or more 76,150 73,234

20 Provisions for liabilities and charges Contractual obligations include potential liabilities in respect of dilapidations, an onerous lease, defined benefit commitments to former employees and other potential liabilities. Insurance provisions relate to excess levels on known insurable claims yet to be settled.

Contractualobligations Insurance Other Total

£’000 £’000 £‘000 £’000At 1 January 2010 50 131 24 205 Utilised during the year (10) (1) (6) (17)Released during the year (1) (114) 0 (115)Additions during the year 0 112 0 112

At 31 December 2010 39 128 18 185


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21 Called-up share capital 2010 2009

£ £Allotted, issued and fully paidAt 1 January 93 99 Issued during the year 5 4 Shares cancelled during the year (10) (10)At 31 December 88 93

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. 22 Reserves

Special reserve

Major repairs

designated reserve

Revenue reserve

£'000 £'000 £'000as restated

At 1 January 2010 as previously reported 131 9,880 8,721 Prior year adjustment (2,991)At 1 January restated 131 9,880 5,730 Surplus for the year 0 0 4,613 Transfer from major repairs designated reserve 0 0 0 Balance at 31 December 2010 131 9,880 10,343

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

2010 2009£’000 £’000

as restatedSurplus for the year before taxation 4,613 4,234 Interest payable 4,471 4,071 Interest receivable (21) (69)Depreciation 3,874 3,721 Surplus on sale of fixed assets 0 (33)Movement in working capital (375) (805)Net cash inflow from operating activities 12,562 11,119

24 Reconciliation of net cashflow to movement in net debt

2010 2009£’000 £’000

(Decrease)/increase in cash in year (821) 276 (Increase)/decrease in short-term deposits (3,003) 2,688 (Increase) in debt (3,583) (7,072)Net cash outflow before financing (7,407) (4,108)Accrued interest added to principal (478) (15)Net debt at 1 January (79,728) (75,605)Net debt at 31 December (87,613) (79,728)


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25 Analysis of net debt At 1

January 2010

Accrued interest

added to principal

Cash flow during the

year

At 31 December

2010

£’000 £’000 £’000 £’000Cash at bank and in hand 2,434 0 (821) 1,613 Current short-term deposits 3,003 0 (3,003) 0 Loans (85,165) (478) (3,583) (89,226)

(79,728) (478) (7,407) (87,613)

26 Capital commitments

2010 2009£’000 £’000

6,034 6,450Capital expenditure that has been authorised by the Board but has not yet been contracted for 1,547 10,753

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

At 31 December 2010 the Association intended to fund this expenditure by loan drawdown from loan facilities already in place. 27 Operating leases At 31 December the Association had annual commitments under operating leases as follows:

2010 2009£’000 £’000

Land and buildings:Leases expiring:Within one year 0 14 Between two and five years 54 21

54 35

Office equipment:Leases expiring:Within one year 6 0 Between two and five years 8 15

14 15

28 Pension schemes The Association makes pension contributions on behalf of its employees to two defined benefit schemes. The Association participates in the Social Housing Pension Scheme (SHPS). The Scheme is funded and is contracted out of the state scheme. SHPS is a multi-employer defined benefit scheme. Employer participation in the Scheme is subject to adherence with the employer responsibilities and obligations as set out in the “SHPS House Policies and Rules Employer Guide”. The Association operates a final salary benefit structure with a 1/60th accrual rate for all members. 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 so that the Scheme can meet its pension obligations as they fall due. 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


Page 37 of 38

28 Pension schemes (continued) 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. Since April 2007 the split of the total contribution rate between member and employer has been set at individual employer level. The Association paid contributions at the rate of 14% and employees at a rate of 8% from 1 April 2007 until 31 March 2010. As at the balance sheet date there were 183 (2009: 186) active members of the Scheme employed by the Association. The Association continues to offer membership of the Scheme to its employees. 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 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 £1,527million. The financial assumptions underlying the valuation as at 30 September 2008 were as follows: % pa Valuation Discount rates Pre retirement 7.8 Non Pensioner post retirement 6.2 Pensioner post retirement 5.6 Pensionable earnings growth 4.7 Price inflation 3.2 Pension increases Pre 99 GMP 0.0 Post 88 GMP 2.8 Excess over GMP 3.0 The valuation revealed a shortfall of assets compared with the value of liabilities of £663million (equivalent to a past service funding level of 70%). The long-term joint contribution rate required from employers and members to meet the cost of future benefit accrual with a 1/60th accrual rate was assessed at 17.8%. Following consideration of the results of the actuarial valuation it was agreed that the shortfall of £663million would be dealt with by the payment of deficit contributions of 7.5% of pensionable salaries with effect from 1 April 2010. Accordingly the aggregate required contribution rate became 25.3%. With effect from 1 April 2010 the employer and employee contribution rates for the Association became 16.1% and 9.2% of pensionable salaries respectively. If the valuation assumptions are borne out in practice this pattern of contributions should be sufficient to eliminate the past service deficit by 30 September 2023. The Association also participates in the Cardiff and Vale of Glamorgan Local Government Pension Scheme. 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 22.2% to 31 March 2008, 24.6% from 1 April 2008 to 31 March 2009, 27.0% from 1 April 2009 to 31 March 2010 and rose to 29.4% from 1 April 2010. The total pension cost of the Association for the defined benefit schemes was £778,681 (2009: £680,045). The Association also contributed to a money purchase scheme. Contributions in the year totalled £79 (2009: £940).


Page 38 of 38

29 Related party transactions

year:

Mr D Davies Elected 26 April 2007Mr J Rides Elected 24 April 2006Mr G Taylor Elected 22 April 2004/resigned 29 April 2010Mr J Williams Elected 30 April 2009Mr B Jarvis Elected 29 April 2010

Agency Donation Member

Merthyr Care and Repair Agency £2,400 Mr G Taylor Resigned 29 April 2010Mr D Davies Elected 21 May 2010

Flintshire Care and Repair Agency £3,234 Mr J WilliamsBridgend Care and Repair Agency £3,750 Mr I Gittens

Two Members also held positions on the Board of Slocombe Cottages for the Aged andInfirm, which is a registered Charity and a Registered Social Landlord. The Associationprovides management services to Slocombe Cottages for which it charged £5,036(2009: £4,867).

During the year four Board members were also board members of Care and Repairagencies, which have received donations from the Association after their demergerfrom the Association. The donations made during 2010 were as follows:

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

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

30 Subsidiary company The Association incorporated a non-charitable subsidiary company, Cambria Maintenance Services Limited (Cambria), on 28 September 2010. Cambria is not a Registered Social Housing Provider. Cambria is a wholly owned subsidiary of the Association which commenced trading on 5 January 2011. Since the commencement of trading the sole activity of Cambria has been the delivery of maintenance services under contract to the Association, being primarily routine day-to day maintenance services to approximately two thirds of the Association’s housing stock. The Association has agreed to provide a working capital facility of up to £1million to Cambria. The Association is subletting premises to Cambria and through a cost sharing arrangement is facilitating support services to Cambria, being primarily human resource, financial and accounting, information technology, secretariat and administration. Just prior to 31 December 2010, Cambria took delivery of a fleet of hired vans in readiness for the commencement of trade, and had made arrangements for maintenance stocks to be available when trade commenced in January 2011. Cambria had no employees until 5 January 2011, on which day 30 employees were taken on through a TUPE (Transfer of Undertaking) transfer from the previous contractor, whose contract had come to an end. As at 31 December 2010, amounts owed by Cambria to the Association amounted to £203,126 being a £100,000 advance under the working capital facility, and £103,126 of expenditure incurred on behalf of Cambria in preparation for the commencement of trade in January 2011. In view of the results and financial position of Cambria not being material to the results and financial position of the Association as at 31 December 2010, consolidated accounts have not been prepared as at that date. 31 Legislative provisions The Association is incorporated under the Industrial and Provident Societies Act 1965. The Association adopted charitable rules with effect from 20 January 2005.

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

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

Tel: 0800 052 2526Minicom: 0800 052 5205Email: [email protected]: www.wwha.net

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2010 WWH Annual Report and Financial Statements

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