THAMES VALLEY HOUSING ASSOCIATION LIMITED Consolidated Financial StatementsYear ended 31 March 2013

BUSINESS & FINANCIAL REVIEW } YEAR ENdEd 31 MARCH 2013

Rosa Domi is a single parent living with her two children in Twickenham. She has lived in her home for a year. Originally from Albania, she moved into her TVH home when she divorced. She is a professional make up artist and is particularly pleased by her home’s location, which gives her easy access to central London and to the South East.

Thames Valley Housing Association Limited – Homes and Communities Agency Registration No. L0514.Registered under the Industrial & Provident Societies Act 1965 (17375R).

The Board of Thames Valley Housing Association Limited is pleased to present the audited consolidated financial statements of Thames Valley Housing Association Limited (“the Association”) and the Thames Valley Housing Association Group (“the Group”) for the year ended 31 March 2013.

Registered Office:Premier House, 52 London Road, Twickenham, Middlesex, TW1 3RP

Chair’s Message 2-3

Chief Executive’s Message 4-5

Board Members, Executive Management and Group Company Secretary 6-8

Business and Financial Review 9-27

Report of the Independent Auditors on the Financial Statements 28-29

Income and Expenditure Accounts 30

Statement of Total Recognised Surpluses and deficits 31

Balance Sheets 32

Consolidated Cash Flow Statement 33

Notes on the Financial Statements 34-67

BUSINESS & FINANCIAL REVIEW } YEAR ENdEd 31 MARCH 20132

CHAir’S MESSAgEThames Valley Housing, like all housing associations,

is still adapting to changing Government housing and welfare policies, funding pressures, and

challenging economic conditions.

“Our continued delivery of affordable housing to help meet demand for social housing is much

appreciated by our local authority partners”

3

The UK economy and housing market remained difficult over 2012/13. Household incomes remain under pressure and housing and living costs in London and the South East continue to impact upon affordability for social and private tenants and home-owners. Mortgages were hard to come by and young people continued to be priced out of home ownership. Would-be first-time buyers turned to private renting, contributing to rising market rents. Almost one in four Londoners now lives in private rented accommodation, and this proportion is rising.

Our new Corporate Plan for 2012/15 has laid the foundations for Thames Valley Housing to continue to deliver a strong performance in the face of these challenges, for the benefit of both our business and our customers.

Our business model allows us to leverage our expertise as a landlord and use our balance sheet to increase the number of new homes built. This expansion is underpinned by a strong balance sheet and already negotiated finance facilities. We had a particularly strong financial year with our operating margin increasing to 38% and a surplus of £14.8m. We have ambitious plans in place for expansion across our business streams. The programme of diversification reported last year is well underway, with the three established business streams of general needs rented housing, shared ownership and key worker housing have been joined by Fizzy Living, our market rent subsidiary, and Opal Land, our private sale business.

Our Strategic Objectives, “Deliver high quality and efficient customer services” and “Maintain organisational capability” keep us focused on our core business and delivery. Objectives to “increase support services to residents”, “grow and diversify the business” and “Be innovators within the housing sector” directly address our challenges.

With Fizzy Living, we focus on the “rentysomething” market segment, really understanding what those customers are looking for and delivering it in terms of the quality of the property and the services that go with it. Thames Valley Housing was pleased to contribute to Sir Adrian Montague’s report on the private

rented sector and be cited as an example of innovation with the launch of Fizzy Living. The former Housing Minister, Mark Prisk, has referred to our innovative rental model, followed by a visit to our first Fizzy Living scheme in Canning Town.

Thames Valley Housing has since secured £40m loan finance for Fizzy Living, which with our own £30m investment is helping to fund a pipeline of further site acquisitions. We plan to scale up the business by bringing in significant equity investment. institutional interest has been strong and we expect to finalise a deal in 2013/14.

Since publication of the Montague report into the private rented sector in August 2012, the Mayor of London and the government have responded with various initiatives to promote higher standards and attract investment into this market, including a £1bn fund for construction of new housing. Such swift responses to the report are encouraging.

Our build-for-sale business, Opal Land, has also made strong progress. Opal is a joint venture with galliford Try and exploits the strengths of each organisation. So far, two sites have been acquired in Southwark and Slough, the latter expected to see its first house sales in 2013/14.

Our new market rent and private sale business streams have strengthened our business model and provide a natural hedge against the property business cycle.

At the same time, the change in the delivery mechanism for public subsidy in social housing in the Affordable rent Programme has been taking effect. grant rates for capital subsidy have been reduced, and “affordable” rents established at up to 80% of the local market rent. During the last year, we have been able to achieve rents on new affordable homes delivered by our development consortium at a creditable 70% on average of the local market rate.

Our continued delivery of affordable housing to help meet demand for social housing is much appreciated by our local authority partners.

Shared ownership schemes are viewed particularly favourably where good affordability thresholds can be delivered. We have researched and refined our shared

ownership offer with the aim of improving customer service. Further innovation in this area will be seen with the launch of a pilot project in 2013/14.

Over the past year all new housing developments – affordable as well as open market housing – have been within London, Surrey and Berkshire. However we operate across a wide area with housing stock in as many as 42 local authority districts. To deliver value for money, a programme of rationalisation of stock and outsourcing of housing management to local providers in outlying areas remains in place in order to optimise our area of operations.

We streamlined our Board structure and membership during the year to ensure we continue to operate efficiently and can respond quickly to the fast changing external environment and business challenges. The majority of board members are now common to both Thames Valley Housing Association and Thames Valley Charitable Housing Association and board meetings are now held in common. A new Customer Services Committee with resident members has also been established to provide a dedicated focus on our customers and service delivery.

We were particularly pleased this year to be awarded “Housing Association of the Year” by What House. The judges said: “...while many other housing associations are still pondering how to react to the multiplicity of challenges created by the financial crisis and the Coalition government’s policies, Thames Valley Housing is out there doing”.

This award reflects both the innovative ethos of Thames Valley Housing and the creativity, commitment and leadership of our Executive Team and staff.

We remain confident that we have a sustainable “housing business with a social purpose” model for the future.

John GarrityChair, Thames Valley Housing

BUSINESS & FINANCIAL REVIEW } YEAR ENdEd 31 MARCH 20134

CHiEF EXECUTiVE’S MESSAgEGrowthThames Valley Housing is in a strong place to respond to the new landscape. We reported last year about our business diversification through the introduction of market rent and market sale business streams.

Our core activity continues to be our delivery of social housing under the Affordable Homes Programme. We are on target to deliver the programme of 801 homes across the development consortium that we lead: Bracknell Forest Homes, inquilab, Ability and richmond Housing Partnership. The consortium has worked well to deliver both homes for Affordable rent (at an average of 70% of market rents), and shared ownership homes.

We were also successful in winning a Private Finance initiative in Woking. This is through our “Evolution” partnership with the Kier group to develop 224 homes for rent and 149 for sale. This was the happy conclusion to a bidding process that has been in train for five years.

ServicesDuring this last year, we have done much work in examining shared ownership, to see what improvements can be made, both to the product itself, and the services we provide in our delivery of it. Shared ownership continues to be really popular for those unable to buy on the open market, but satisfaction levels remain stubbornly low, despite our work on service improvements.

We commissioned the University of Cambridge Centre for Housing and Planning research Unit to research shared owners experiences and satisfaction with the tenure. This showed that purchasers fell into two distinct groups: those who see shared ownership as a lifetime tenure; and those who see it as a stepping-stone to full ownership and intend to “staircase” to 100% ownership. Dissatisfaction occurs when customers expect to be in the latter group, but find themselves in the former.

As a result of this research, we have reviewed our sales processes, and establishing new affordability criteria to help ensure customers take into account

the long-term financial commitments they’re making when they buy shared ownership. We are also developing a product that is a variant on the standard shared ownership tenure, which gives customers more certainty over long-term costs. We plan to launch a pilot next year to test the concept.

The impact of the Welfare reform Act, which was passed in March 2012, has kept us busy. We anticipate that 10% of our 5,500 general needs rented customers will be affected – 500 by the introduction of the spare room subsidy and only a small number, probably fewer than 20, by the introduction of the overall cap. Historically, much housing benefit has been paid direct to the landlord, but with the advent of Universal Credit in 2014, funds will be paid direct from the Department of Work and Pensions to the individual. We are working with our customers to ensure they’re aware of the impact of the changes, and make the necessary arrangements to pay their rent. We have increased front-line resources, with advisors working directly with tenants, informing them of the changes and the options available to them.

in 2012 we reorganised our Housing Services teams to provide a dedicated home ownership team to our shared owners; and a more personal service to our tenants. Customers now have direct access to their housing officer, who has wider responsibilities over smaller geographical patches. Our new gardening and cleaning services contracts went live in November 2011 with an overall 16.7% reduction in cost combined with a 12% increase in satisfaction with the grounds maintenance service and a 5% increase with cleaning.

Satisfaction LevelsSatisfaction in our general needs rented stock reached 79%, which compares favourably with the benchmark upper quartile of 78%. Similarly in key worker housing, satisfaction reached 86%, compared to a benchmark of 80% in the sector. We continue to strive to improve our shared owner satisfaction rates and review the service offer.

Asset ManagementOur asset management strategy has identified schemes that are no longer sustainable for us to maintain in their current form. Following our review of shared cluster accommodation, we were successful in selling the Claremont grove scheme in Chiswick in January 2013. The proceeds from this will be used to re-model another cluster scheme within the London Borough of Hounslow.

Working With CustomersWorking with our customers is at the core of our work and we have introduced a number of new ways in which they can help us improve our services. This year residents put together a conference for those who are most involved, to celebrate the achievements arising from their involvement and look at how we can further develop this approach. This event was attended by 38 residents and was well received.

Community InvestmentOur community investment work continued to prosper and in October 2012 we were pleased to win the National Housing Federation’s South East region Community impact awards.

So far this year we have supported:

} 63 tenants into employment } 180 into training } 30 into work experience opportunities } 926 signposted to services provided by

our partners

We provide help with modern job search techniques, CV writing and interview skills. This is delivered face to face at the job club we run here at our Twickenham offices, supported with online tools for those that can use them.

We set up Academy4Housing in January 2012, in partnership with Shepherd’s Bush, Sentinel and gateway Housing Associations. it provides training services for those working and living in the social housing sector. in our first year of operation we are pleased to report that we were successful in winning a big lottery bid for £500,000 for employment work with residents across the

5

partner organisations. With welfare reform hitting hard, helping those into employment is a large part of our work.

Our community chest fund awarded £53,400 to 25 community projects and has leveraged in an additional £236,425 in direct and in-kind funding.

Our diverse business streams mean that we are very able to deal with the impending risks to our revenue income through welfare reform and enables us to support our residents through this difficult period.Our commitment to being a Housing Business with a Social Purpose means focusing on delivering good services to all our residents – investing in their homes and building new homes – and contributing to the communities in which we work.

The quality of our staff and board and the commitment they show to enable us to thrive in this changing environment will ensure we continue to meet the housing challenges ahead.

Geeta Nanda, OBEChief Executive, Thames Valley Housing Association Limited

“Our core activity continues to be our delivery of social housing under the Affordable Homes Programme”

BUSINESS & FINANCIAL REVIEW } YEAR ENdEd 31 MARCH 20136

BOArD MEMBErS AND EXECUTiVE MANAgEMENTBoard Members John garrity Chair

Peter Williams* Deputy Chair (Appointed Deputy Chair on 13 April 2012)

Emma Cariaga

Ben Denton (Appointed on 1 April 2012)

Brian Hendon* Chair of group Audit and risk Committee

geeta Nanda

Frank Nelson (Appointed on 27 September 2012)

David Smith* (Appointed on 27 September 2012)

Jack Stephen

Steve Marsden* (Appointed on 27 September 2012)

Maggie rafalowicz (Appointed On 27 September 2012)

gerard McCormack (resigned on 27 September 2012)

Benita Mehra (resigned on 27 September 2012)

*Member of the group Audit and risk Committee

Executive Management geeta Nanda Chief Executive

Jack Stephen Finance Director/Deputy Chief Executive

Mark Allnutt group Development Director

John Baldwin Housing and Neighbourhood Services Director

Jayne Hilditch Corporate Services Director

Patricia Etter group Company Secretary

7

PrOFiLES OF CUrrENT BOArD MEMBErS CHAIR – JOHN GARRITY, MA (Hons), DipTP, MCIM, MAPM, MCIH, MRTPI has served on the Board for over ten years. He is Chair of the governance, remuneration & Nominations Committee and a member of the Customer Services Committee. John is Head of the Central Private Finance Unit at the Department for Communities and Local government. He has extensive experience across the housing sector including with central and local government, housing associations and the private sector.

DEPUTY CHAIR – PETER WILLIAMS, BA, MSc, PhD, FCIH, FRGS has served on the Board for eight years (six years as Chair). He is a member of the group Audit & risk Committee and the governance, remuneration & Nominations Committee. He is Director of the University of Cambridge Centre for Housing & Planning research, Executive Director of the intermediary Mortgage Lenders Association and Chairman of Acadametrics, a house price consultancy and a Board Member of the National Housing Federation. He has extensive experience of home ownership and social housing. A former Board Member of the Housing Corporation and Housing for Wales and Chairman of the National Housing and Planning Advice Unit, and previously Deputy Director general of the Council of Mortgage Lenders and Professor of Housing at the University of Wales, Cardiff.

EMMA CARIAGA, BSc (Hons), DipTP has served on the Board for two years. She is Chair of the group investment Committee and a member of the governance, remuneration & Nominations Committee. Emma is Development Director at Land Securities plc and a Board Member of the Housing Forum, Planning Committee Member of the British Property Federation and a Trustee of STEM4.

BEN DENTON, MRICS, BSc (Hons), Dip BA joined the group Board in April 2012. He is a member of the group investment Committee and group Treasury Committee. Ben is the Strategic Director for Housing, regeneration & Property at Westminster City Council. Prior to this he worked for First Base Limited.

Ben is a Director of two affordable housing providers in central London.

BRIAN HENDON, FCA has served on the Board for three years and is Chair of the group Audit and risk Committee, a member of the governance, remuneration & Nominations Committee and group Treasury Committee. Brian is a Non Executive Director of royal Berkshire NHS Foundation Trust and also holds positions as Non Executive Chairman in various private sector companies. Brian is a Chartered Accountant and has worked in the USA and UK in various Finance Director and Managing Director roles.

STEVE MARSDEN, MA has served on the Board for two years. He is a member of the group Audit & risk Committee and Customer Services Committee. Steve has extensive experience as a global business manager in the commercial sector, having previously worked for the Hay group for over 20 years. He is a non-executive director of Hertfordshire Partnership NHS Foundation Trust and has experience as the Vice Chair of a further education college.

GEETA NANDA, OBE, BSc, PG DIP Housing, CIH, Chief Executive joined Thames Valley Housing in 2008. geeta has worked in the housing sector for over 25 years in housing associations, local government and research. Previously she was group Director of Operations at Notting Hill Housing Trust and has served on the Boards of several housing organisations. Currently she is a Trustee of SCOPE, Chair of the NHF South East regional Committee and Chair of Academy4Housing, a training social enterprise set up by TVHA. geeta is a Director of Fizzy Living.

FRANK NELSON, FCMA joined the Board in September 2012. He is Chair of the group Treasury Committee and a member of the group investment Committee. Frank has over 25 years experience in the construction, property and energy sectors. Currently interim CFO of Lamprell plc, Frank was Finance Director of construction and house-building group galliford Try Plc for

12 years, until September 2012. Prior to this, as Finance Director of Try group plc he led the company through its flotation on the London Stock Exchange in 1989, its expansion throughout the 1990s, and Try’s merger with galliford in 2001. He began his career as a Management Consultant with Coopers & Lybrand where he led major Monopolies and Mergers Commission projects in the energy generation sector and large international contracting assignments.

MAGGIE RAFALOWICZ, BA, has served on the Board for two years and is a member of the group investment Committee and Customer Services Committee. Maggie has worked in housing for more than 20 years with senior experience in development, regeneration, strategy and supported housing. She was Assistant Director of Housing & Community Care for the London Borough of Brent and has also worked at senior levels for The Housing Corporation and Solon Co-operative Housing Services. She is currently a Management Consultant working with local authorities and ALMOs, housing associations and developers.

DAVID SMITH, BSc, MSc, PhD, FCIH has served on the Board for five years. David is a member of the group Audit and risk Committee and group investment Committee. Until 2007 David was group Chief Executive of First Wessex Housing group and has served on the Board of several housing organisations. David then undertook a variety of housing related consultancy assignments until his retirement in 2012.

JACK STEPHEN, MA (Hons) CA, Finance Director and Deputy Chief Executive joined Thames Valley Housing in 1994 having previously held positions of Finance Director, Financial Controller and Treasurer with banks and other international companies. Jack has also served on the Board of a housing organisation and is currently Chair of the Sector’s SOrP Working Party. He is also Chair of Trustees of a Homelessness Charity. Jack is a Director of Fizzy Living and of Opal Land.

BUSINESS & FINANCIAL REVIEW } YEAR ENdEd 31 MARCH 20138

PrOFiLES OF EXECUTiVE MANAgEMENTCHIEF EXECUTIVE GEETA NANDA, OBE

FINANCE DIRECTOR & DEPUTY CHIEF EXECUTIVE JACK STEPHEN

HOUSING & NEIGHBOURHOOD SERVICES DIRECTOR JOHN BALDWIN, BA MCIH joined Thames Valley Housing in 2008. Has worked in the housing sector for over 20 years with roles including policy, supported housing and general needs. Was Assistant Director for Westside Housing and Director of Housing Management at Notting Hill Housing Trust.

GROUP DEVELOPMENT DIRECTOR MARK ALLNUTT BA (Hons) joined Thames Valley Housing in 2008. Has worked in the housing sector for 18 years, and in private sector organisations in insurance and construction. Was Assistant Director of Development at Sovereign Housing group. Mark is a Director of Fizzy Living and of Opal Land. A member of the NHF intermediate and Market Housing Advisory group.

CORPORATE SERVICES DIRECTORJAYNE HILDITCH, BSc, CIPFA, joined Thames Valley Housing in 2011. Has worked in the housing sector for 20 years, initially in finance roles at Winchester District Housing Association and Servite Houses, and Corporate Services Director at Notting Hill Housing Trust. Was Chief Operating Officer for a leading online job board. Jayne is a Director of Fizzy Living.

Resigned Board MembersSince our last report, two members have left the Board:

} gerard McCormack stood down in September 2012 having served on the Board for a full 12 year term.

} Benita Mehra resigned in September 2012 having served on the Board for five years.

9

COrPOrATE gOVErNANCE

The Board has adopted a Code of Conduct, which reflects the requirements set out in the National Housing Federation’s Code, “Excellence in Standards of Conduct: Code for Members”. The Board receives annual reports on compliance with the Code. in 2010 the Board resolved to reduce Board Member’s maximum term of office from 12 to 9 years. However, 2010-2014 is a period of transition while some Board Members remain on the Board for a period longer than the nine year maximum term of office in order to ensure we avoid the loss of leadership and essential skills on the Board.

The Board is responsible for the leadership of the group and ensuring, where appropriate risks are taken, they are properly managed. The Board ensures that the group has the necessary financial and staff resources to deliver its objectives

and sets ethical and health and safety standards. The Board reviews the skills profile of the members annually and on the retirement of members. All Non Executive Board Members are subject to re-election every three years, and are appraised annually. The governance, remuneration and Nominations Committee is responsible for an annual appraisal of the Chairs of TVHA and TVCHA.

Board structures are clear and include details of the timing and membership of the Board and its committees. During the year, the Board held six board meetings and two strategy days. Minutes of the group Audit and risk Committee, governance, remuneration and Nominations Committee, investment Committees and Customer Services Committee meetings are sent to the Board. Board members are provided

with regular detailed briefings on the group’s business and have access to a suite of key performance information. Board Members are able to obtain independent advice when they deem it appropriate. The group Audit and risk Committee has a right of access to all information within the group. Board Members are encouraged to undertake further training and new board members have a tailored induction programme. Board members are remunerated at levels consistent with the group’s scale of activities and sector norms.

BOARD AND COMMITTEE MEMBER ATTENDANCEThe number of principal Board and Committee meetings attended by each current director during the financial year was as follows:

Emma Cariaga

Ben denton

John Garrity

Brian Hendon

Steve Marsden

Geeta Nanda

Frank Nelson

Maggie Rafalowicz

david Smith

Jack Stephen

Peter Williams

BoardMeetings &

Strategy Days

(7/8)

(5/8)

(8/8)

(8/8)

(8/8)

(8/8)

(7/7)

(7/8)

(7/8)

(8/8)

(8/8)

GroupInvestment Committee

(2/3)

(2/3)

(2/2)

(1/1)

(2/2)

(2/2)

(2/2)

(1/2)

Governance, Remuneration & Nominations

Committee

(3/3)

(4/4)

(3/3)

(0/1)

(4/4)

Group Audit & Risk

Committee

(3/3)

(3/3)

(2/2)

(3/3)

Customer Services

Committee

(2/2)

(1/2)

(1/2)

BUSINESS & FINANCIAL REVIEW } YEAR ENdEd 31 MARCH 201310

BOArD COMMiTTEES Governance Remuneration And Nominations CommitteeThe governance remuneration and Nominations Committee oversees the appointment of new board members. in addition it acts as a remuneration Committee determining annual pay awards, staff related policies and Board remuneration for all group companies. The members of the Committee are the Chair and Deputy Chair of TVHA and the Chairs of the other group Committees. The Committee meets at least twice a year.

Group Treasury CommitteeMembers are chosen for their expertise in treasury management and meet as and when required. The Committee considers and recommends to the Board the group Treasury Strategy and approves borrowings, loans, derivative transactions and certain investments.

Group Investment CommitteeThe group investment Committee makes investment decisions which otherwise would require Board approval and fall outside of the authority delegated to the Executive Directors. The Committee meets as and when required.

Group Audit And Risk CommitteeThe group Audit and risk Committee has responsibility for reviewing the risk management systems, monitoring the integrity of the financial statements and providing oversight of the internal and external audit process. The Committee meets at least four times per year. On at least one occasion each year, the Committee meets with the external and internal auditors without the presence of Executives.

Customer Services CommitteeThe Customer Services Committee was constituted in October 2012. it will meet four times per year. The Committee scrutinises and makes decisions in relation to management and maintenance services provided to residents. The Committee includes Board Members and residents.

VisionOur vision is to be a leading provider of homes, creating communities where people are proud to live. We provide modern services and housing products that our customers value. We collaborate openly with partners to deliver growth and impact.

ValuesThe group has five core values that are embedded in everything it does:

} To value and respect others’ individuality and culture

} To inspire people to make things better

} To be open and take responsibility for what we do

} To understand the aspirations of our customers

} To flourish in a transparent environment of trust and integrity

Principal Activities The principal activities of the group are:

} The management and development of social housing for people who cannot afford to purchase their own homes outright or rent a home in the private sector.

} Working with local authorities to help create communities.

The management and development of social housing is carried out by Thames Valley Housing Association and its subsidiary, Thames Valley Charitable Housing Association. Both associations are registered Providers and development partners to the Homes and Communities Agency (HCA), and have preferred partner status with a number of local authorities.

To achieve its social purpose the group also has significant activities in:

} The development and management of a portfolio of market rented properties in London and the South East.

} The development of housing for outright sale.

THE grOUP’S ViSiON, VALUES AND PriNCiPAL ACTiViTiES

11

This was the first year of our new corporate plan 2012/15, which focuses on the following five strategic objectives:

} Delivering high quality and efficient customer service;} increasing support services for residents;} growing and diversifying the business;} innovating within the housing sector;} Maintaining organisational capability.

HOW WE PErFOrMED AgAiNST OUr STrATEgiC OBJECTiVES FOr THE YEAr

DELiVEriNg HigH QUALiTY AND EFFiCiENT CUSTOMEr SErViCEThis was a year in which we focused on improving customer service while cutting costs. Our range of services was broadened to include more options for rent payments and housing transfer opportunities. At the same time, residents continued to be involved in setting standards and in a wide range of service improvement initiatives. general needs resident satisfaction increased to 79%.

Our customer satisfaction with the repairs service was 92.7% overall. 96.6% of residents were happy with their appointment times and 87.7% satisfied with the repair quality. 100% of gas appliances were inspected in the year. Planned and cyclical maintenance programmes delivered improvements to 1,195 general needs homes and all of our housing stock meets the Decent Homes Standard.

A full review of our repair services were undertaken in the year in preparation for a major re-procurement of this service in 2014.

New cleaning and grounds service contractors provided improved services at lower costs and with improving levels of resident satisfaction. The number of our residents who act as estate inspectors increased from 95 to 118 with additional support and training provided to them.

This was a successful year for our key worker housing. rent arrears at year end were 0.6% against a target of 3% or less, and property voids were at 3% against a target of 5.5% or less. resident satisfaction was high at 86% compared with an 80% or more target.

BUSINESS & FINANCIAL REVIEW } YEAR ENdEd 31 MARCH 201312

SUPPOrT FOr rESiDENTSFinancial Inclusion Strategy For Residentsin the year, we began rolling out to our residents a new financial inclusion strategy ahead of the impending welfare benefit changes. This strategy provides our residents with budgeting classes, general benefits advice, one-to-one advice for those affected by the benefit changes and training to improve employment opportunities.

Residents’ Training And Employment InitiativesOur residents’ Training and Employment Team trebled the number of our residents it helped into employment or apprenticeships compared with the previous year. The team works closely with employers, contractors and other partners to create employment and training opportunities for our residents. Additional funding has been received from various partners, such as the Department of Work and Pensions, Way to Work, Hounslow Manor and Heathrow Academy. The team assists with job searches, CV

writing, interview skills and completion of job application forms. Pre-employment training was provided to 180 residents during the year, helping 63 of them into work and a further 30 into work experience places. 926 other residents were directed to services provided by our partners.

Community Investment StrategyThe Community investment Strategy grew out of a recognition that our role as a provider of social housing must extend beyond bricks and mortar and into the creation of sustainable and vibrant communities. Our investment covers health and education; culture and heritage; and working in such areas as poverty and financial inclusion. Since its launch in 2008, we have invested £168k in 73 projects across 12 local authority areas. in 2012/13, the investment totalled £53k and involved 24 projects.

Projects in reading and rushmoor helped bring local authority, voluntary sector and private sector organisations together to pool resources and ensure

free, fun activities for young people throughout school summer holidays. Activities included street dance, football, basketball, cooking classes and accredited qualifications in sports coaching.

in Farnborough and Aldershot some 4,000 teenagers have taken advantage of free swimming sessions in local pools during the school holidays, subsidised by us. This scheme has helped build community spirit and it is probably no coincidence that anti-social behaviour in the area has dropped significantly.

Our Young Peacemakers’ Project in rushmoor won the National Housing Federation Community impact Award for creating safer streets. in partnership with rushmoor Borough Council and specialist charity Aik Saath, this unique project equips young people with the skills needed to find non-violent solutions to social conflicts within their lives.

How We Help Residents Back To Work: Sandra’s StorySandra, 49, now works as a housekeeper at a serviced apartment company. it’s a job she managed to get earlier this year after over a decade out of work. Like anyone enduring long-term unemployment, Sandra’s self-confidence was very low. “i didn’t work for over 10 years,” she says. “i never had confidence for anything else – sat in all the time, didn’t do anything, never spoke to anybody.” Sandra was contacted by our residents’ Training and Employment Team and invited to join one of its training courses for unemployed people. Eventually, after encouragement from her daughter, Kerry, Sandra decided to attend.

Training was held over several weeks. This involved building up Sandra’s confidence to feel able to go back into work, and know what to expect in a job interview. Practical skills training included basic iT and writing CVs. Kerry joined her on the course and was the first to get a job – a big inspiration to her mother. Before long Sandra was sending out her CV to local employers, and by spring 2013 she landed the job. “Now i’m out working,” she says, “i’ve got something to do and i’m not sitting around moping”. Sandra wants more, though. She is hopeful of securing additional work – caring for elderly people. “i used to do this sort of work and i loved it”.

“She is hopeful of securing additional work – caring for elderly people”

13

grOWiNg AND DiVErSiFYiNg THE BUSiNESSDevelopment Of New Social And Affordable Rent HomesThis was the first full year of our delivery of the Affordable Homes Programme which is being delivered over the four years through to April 2015. in total, we will provide 801 new homes, 401 for our group and 400 for a consortium, led by us, of four other registered Providers. By the year end, 56 new affordable homes were completed for consortium members with a further 298 units under construction for them.

For our own Group:

} 170 units of affordable rented homes were completed in the year with 117 units under construction at year end.

} 167 low cost home ownership properties were completed and sold. 74 new units were under construction at year end.

} Planning consents were achieved on four sites during 2012/13, including Newman House in Horley, which will deliver 75 units for shared ownership and 15 units for affordable rents.

WORKING IN PARTNERSHIP

Reigate & BansteadThames Valley Housing has a proven track record when it comes to partnership working in the Borough of reigate & Banstead. Having acquired the prominent Newman House site from the Local Authority, we are now in the process of constructing a mixed use development that includes 90 new apartments and 1,100m² of commercial space. Our flagship scheme is to make a significant contribution towards the regeneration of Horley Town Centre which is a key strategic priority for the Local Authority.

Woking PFIThames Valley Housing is working with Woking Borough Council and the Kier group to deliver a Housing PFi scheme on a previously undeveloped 10 hectare site in the Westfield area of Woking. As the Council’s preferred bidder for the project, our partnership with the Kier group has secured detailed planning consent for 371 new homes, 224 of which will be for social rent. The scheme will meet local housing need by providing predominantly three and four bed family houses. The scale of the scheme will enable us to anchor our services in a permanent on-site community facility with a management office from where we will provide a full-time management for the new homes. Thames Valley Housing and the Council are also working to implement a community investment panel to deliver an annual programme of grants for community-led local projects and initiatives.

Land Banking And New Property DesignWith an expanding development programme, TVHA has sought to take more control of its own destiny by increasing its strategic landholdings. The group has become an active player in the land market following the acquisition of a key, 92-acre development site in Wokingham in 2010. During 2012/13 we bought further development land in Hounslow, Merton, Bracknell Forest, reading and reigate & Banstead. A new design brief has also been implemented and the proportion of group-branded schemes now exceeds 50% of total social housing development.

Future Development Of Social HousingOur group remains committed to growing its core social housing business. Finance has

been put in place and the balance sheet strengthened to allow us to significantly increase our future development programme. We have the financial capacity to start in 2013/14 a new “post affordable rent” development programme. We have the resources capable of delivering at least 400 new social housing and shared ownership homes a year for the next ten years.

Investment In Build To Sell Through Opal LandOur group has built and sold shared ownership property for many years, and so the move into open market residential development through its joint venture with galliford Try is a logical diversification but with the comfort of a leading house builder as partner. We have committed £25m of finance to a 50% stake in Opal Land.

Opal Land represents low-risk diversification which will fulfil a key priority for us, generating profits from commercial activity that can be invested in social housing. This joint venture has also given us further experience of urban regeneration and access to development land that we would not normally be able to buy.

This was an important year for Opal Land, which made significant progress on its first two sites following two years of planning and preliminary work. Land has been purchased on Blackfriars road in the London Borough of Southwark, where we are now seeking planning approval for a mixed-use building which will include apartments, shops and restaurants.

Opal Land has also secured planning consent at St Bernard’s School in Langley, Slough. Construction has started on a mixed-tenure development of 117 homes alongside new sports facilities for the school. The first homes are due to be sold in autumn 2013.

BUSINESS & FINANCIAL REVIEW } YEAR ENdEd 31 MARCH 201314

Fizzy LivingWe launched Fizzy Living in 2012 as the UK’s first large-scale, build-to-let initiative, aimed specifically at young professionals squeezed out of the housing market. As with Opal Land, the same principles of low-risk diversification have informed the creation of Fizzy Living, which represents an expansion into the in-demand private rented sector, harnessing our expertise in rental property. We have added to our expertise by recruiting resources and skills from the commercial sector in response to the different demands of this new and different market. We have invested £30m in Fizzy Living and with £40m of additional funding secured during the year from Macquarie Capital, we are on

course to acquire or develop our target of 1,000 units in London and the South East by 2016. All profits from Fizzy Living will be ploughed back into TVHA’s core social housing business.

Fizzy Living bought its first three buildings during the year. The first, 75 units and part of the Vermilion development in Canning Town, launched in September 2012. The second launched in early 2013 in a 63 unit block built beside Epsom station in Surrey. The momentum has continued with the acquisition of a third site, from Bellway Homes in Poplar, East London – which is due to provide 45 new-build flats by December 2013.

iNNOVATiNg WiTHiN THE HOUSiNg SECTOrin 2012/13 we commissioned research into the secondary market for shared ownership and as a result have made significant changes to our re-sales service and procedure for “staircasing” to 100% ownership. This research by the University of Cambridge Centre for Housing and Planning research Unit revealed a mismatch in consumer expectations for shared ownership. Of 145,000 shared ownership purchases identified in England since 2001, only 27,908 have staircased to full ownership. The research identified that the regulations governing staircasing have been perceived as inflexible.

The issues around shared ownership are not of course confined to our group, but following the research we have acted to

reduce the costs of our sales process and improve our service in the re-sales market. We have also taken steps to ensure that prospective buyers are fully aware of the realities and long-term responsibilities of shared ownership before signed up to this tenure.

A new website – www.tvhsales.co.uk – has been established to help customers make an informed decision.

The group is also finalising the details of a new shared ownership product, which will be launched in 2013/14. This will provide customers with greater certainty over their long-term costs.

15

Our StaffOur staff are, of course fundamental to our ability to deliver our strategy and objectives. This is emphasised through our induction process at the point of recruitment and subsequently reinforced through our comprehensive performance management systems.

We carried out a range of training and development activities this year, from digital skills to new workshops to support new ways of working following a Housing Management restructure. Our investors in People gold Award is recognition of the high standards we expect of ourselves and our commitment to training.

Capacity To Finance GrowthWe have maintained and improved our organisational and financial capabilities to direct and fund our objectives and deliver sustained and ambitious expansion of both our core social housing and commercial investment over the next five years. Our balance sheet has been strengthened and fully committed loan finance is in place to cover all of our current and projected funding requirements. in anticipation of our diversification into commercial activities, governance arrangements have been revised to ensure continuing tight control and strategic direction over our expansion.

Offices And SystemsWe moved during the year from temporary accommodation back to our

comprehensively refurbished head office in Twickenham. This gave us the opportunity to upgrade our iT infrastructure and improve our remote and mobile working capabilities. We have also grown our digital skills over the year, using social media to connect with partners and customers. Our office provides a good quality, well-located base from which to operate while a long term lease, with fixed service charges, gives us certainty over future costs. The refurbished office also embodies our approach to sustainability.

SustainabilityThe refurbishment of our head office in Twickenham achieved a gold Ska rating from the royal institution of Chartered Surveyors (riCS). The Ska rating is an environmental benchmark set by riCS for the fitout of older commercial property. Ska comprises more than 100 “good practice” measures, covering energy and carbon emissions, waste, water, materials, pollution, wellbeing and transport.

But the office refit represents just one part of a wider sustainability strategy to improve the environmental performance of our operations and our housing stock. in 2012/13 we carried out energy efficiency improvements to 251 homes and, following surveys of residents, drew up plans to start installing smart meters. We also supported 10 separate projects across our sites, which helped 267 residents with the greening of their communal areas.

Since the year end, we have produced our first statement on sustainability – published on our website, with a pledge to reduce the group’s carbon footprint, waste and water usage.

Equality And DiversityThe group promotes equality and celebrates diversity. We have a whole organisational approach to equality and diversity, and believe that no person should suffer disadvantage by reason of race, religion, faith, gender, sexuality, marital or civil partnership status, pregnancy or maternity, age, or disability. We tailor our services to the needs of all categories of our residents.

Health And SafetyWe are committed to stretching Health and Safety targets, and employ an external firm of Health and Safety specialists who report annually to the Board. Our Health and Safety procedures are subject to regular review by KPMg LLP, our internal Auditor. Last year there were six reported incidents of minor accidents, with no riDDOr accidents (reporting of injuries, Diseases and Dangerous Occurrences regulations).

MAiNTAiNiNg OrgANiSATiONAL CAPABiLiTY

BUSINESS & FINANCIAL REVIEW } YEAR ENdEd 31 MARCH 201316

OUr PriNCiPAL riSKS AND HOW THEY ArE MANAgEDThe Board received regular risk management reports from the Chief Executive throughout the year. These reports were also considered in detail by the group Audit and risk Committee and used to decide the year’s internal audit programme undertaken by KPMg LLP and which provides further reassurance.

The internal Control section of this report sets out the group’s overall framework for internal control, setting the context for the identification, control and monitoring of the principal risks faced by the group.

The principal risks to the group at this time and how they are controlled are as follows:

Risk

Adverse impact of welfare benefit restrictions on ability to maintain satisfactory rent collection level.

Increased exposure to commercial activities.

Implementation of Financial Reporting Standards FRS102: potential adverse impact on balance sheet and business plan.

Rent inflation for social rented housing differs from business plan assumptions.

Affordable Homes Programme Consortium members fail to deliver an element or all of their individual affordable rent programmes.

developers/Contractors become insolvent.

Inadequate security for future debt requirements.

Potential increase in SHPS pension deficit and increased demand on our Group.

Controls

} Improved rent collection, arrears and money advice procedures.} Financial inclusion strategy to help residents cope with the benefit changes.} Resident employment and training strategy implemented.

} Investments in commercial activities are reviewed and approved by specialist sub-groups of the Board.

} detailed external legal, accounting and investment advice is obtained for all significant investment.

} The commercial activities are legally ringfenced to remove the risks to social housing assets.

} The most significant impacts on financial strength have already been estimated and action taken to maintain balance sheet strength.

} Business plan incorporates capacity to cope easily with potential reductions.} Government’s recent announcement proposing CPI + 1% increase brings

more certainty.

} Consortium partner legal agreements are in place.} Regular monitoring of programme.} Our Group has the right to remove consortium partners and re-distribute grant or

repay HCA.

} Appropriate bonds, warranties and guarantees secured for development schemes. } All payments signed off by employers’ agent guaranteeing works have

been completed.} Credit assessments produced for each contract.

} Five year forward planning of security requirements, provides sufficient security cover for future increase in debt.

} Provision for pension shortfall is recognised in Business Plan.} Expansion plans take account of the known deficit funding provision.

17

VALUE FOr MONEY

Value For Money In Asset ManagementA major focus of our value for money initiative has continued to be on improved efficiency in managing our housing assets. Over the past three years we completed a detailed review of the projected maintenance costs of all of our housing stock. Our asset disposal strategy generated capital receipts of £5.9m in 2010/11, £11.5m in 2011/12 and £5m in 2012/13.

We have built on this asset management strategy by adopting a value maximisation approach which identifies land parcels within our existing property capable of small development, while continuing to dispose of properties outside our core geographic areas which have high future maintenance costs.

We commenced last year a programme of selling or converting our cluster flats in Hounslow with the sale of the first block achieved in the year. This eliminated high management and maintenance costs typical of this type of accommodation and generated a capital receipt of £4.5m.

Value For Money In Use Of Financial ResourcesOur investment in Fizzy Living and Opal Land, our commercial businesses, utilises finance that is available and generates profits to feedback into and subsidise the provision of new social housing. The new commercial business streams have been developed within existing development and finance staff headcount enabling costs to be spread over an enlarged revenue base reducing the average operating costs of each of our activities.

Further business diversification has gathered pace with our build for sale joint ventures with galliford Try and our Training Centre moving to a joint venture Social Enterprise, “Academy4Housing”. We have also maximised the use of our staff resources in providing the leadership in our consortium development of affordable housing and providing further development and sales services to other registered providers and local authorities, and consultancy to private sector companies.

Further value for money analysis can be found on the following weblink:www.tvha.co.uk/about-us/value-for-money

BUSINESS & FINANCIAL REVIEW } YEAR ENdEd 31 MARCH 201318

FiNANCiAL rEViEWOverview And Headline ResultsThe year has seen a consistently strong financial performance by the group, delivering a net surplus of £14.8m. The previous year’s surplus of £17.6m benefitted from an unusually large profit of £11.7m generated by the sale of housing which was surplus to our requirements. in 2012/13, the profits from housing property sales reduced by £6.1m.

Turnover at £82m is slightly down on the prior year. This was the result of having fewer shared ownership properties to sell due to the timing of delivery of our Affordable Homes Programme.

Operating Surplus has improved to £31.9m from £27.6m in the previous year as the group’s value for money and asset management strategies generated significant results.

The operating surplus generated by our Social Housing properties increased by £3.2m from £27.2m to £30.4m. Turnover increased by £5.4m, but Operating Costs increased by only £2.2m, resulting in a surplus increase of £3.2m. The group Operating Margin has increased from 32% to 38%.

Surplus on Sale of Fixed Assets decreased from £11.7m to £5.5m. in 2011/12 the group completed a programme of 250 property sales as part of a stock rationalisation exercise, with 136 properties in Hounslow, Kensington & Chelsea and Fulham sold. in 2012/13 the Surplus on Sale of Fixed Assets was achieved through the sale of a reduced number of properties which were assessed as no longer being fit for purpose. The proceeds from sale of these properties are reinvested in the group’s development programme.

Net interest payable increased from £21.7m to £22.3m in line with increased debt and after capitalisation of £0.3m of interest.

Income and Expenditure

2013 2012 £’000 £’000

TURNOVER 82,073 84,583

Cost of Sales (11,127) (19,949)

Operating Costs (39,063) (37,012)

OPERATING SURPLUS 31,883 27,622

Operating Surplus as a percentage of Turnover (%) 38.8 32.6

Surplus on Sale of Fixed Assets 5,545 11,694

Net Interest Payable (22,322) (21,679)

Share In Results Of Joint Ventures (316) –

SURPLUS 14,790 17,637

Surplus as a percentage of Turnover (%) 18.0 20.8

19

Balance Sheet

2013 2012 £’000 £’000

Housing Properties at Cost 1,018,414 998,249

Social Housing Grant (409,291) (400,379)

depreciation (46,240) (37,503)

Net Housing Properties 562,883 560,367

Net Investments in Joint Ventures 7,961 2,951

Homebuy Equity Loans 82,208 87,142

Grant on Homebuy Equity Loans (67,667) (72,005)

debt (496,727) (470,772)

Stock 11,341 18,559

Cash 73,506 58,377

Other 11,506 (14,686)

Net Assets 185,011 169,933

Reserves 185,011 169,933

Revaluation Gains 326,220 270,603

Social Housing grant increased by £9m to £409m from £400m, as new grant was secured for the development programme through the Affordable Homes Programme and the use of recycled grant from staircasing sales and Homebuy Loan redemptions.

investment in Market rent Property increased with investments across two developments in Epsom and Canning Town through the Fizzy Living Brand within the Fizzy group comprising a total of 138 units.

Debt grew by £26m to £496.7m as the group drew down agreed facilities to secure the availability of funds in accordance with professional treasury advice and our aim of holding secured funds for four years of development spend.

The debt includes £10.9m of commercial debt specific to the Fizzy group, secured and utilised against one of the market rent properties in operation at the year end.

reserves increased to £185m from £169.9m.

Properties are held at cost but the existing use value of the property portfolio is used for gearing calculations by our lenders. Property values increased to £326.2m in excess of cost, £55.6m higher than the previous year surplus of £270.6m.

BUSINESS & FINANCIAL REVIEW } YEAR ENdEd 31 MARCH 201320

Housing AssetsThe group owns, manages and administers 14,903 homes in total.

Operating Cashflow increased from £36.1m to £50.2m driven partly by improved operational surpluses from efficiency gains.

Cashflow from Property Sales (first tranches of Shared Ownership properties and Sales of Fixed Assets) decreased by £5.1m from £20.4m to £15.3m.

Expenditure on Construction of Housing Properties reduced to £35.5m as the development activity reflects the timing of the delivery of our Affordable Homes Programme for 2012-15.

Other cashflow movements include acquisition of properties by our Fizzy Living subsidiaries.

36% General Rented & Other Housing27% Shared Ownership14% Key Worker Loans11% Key Worker NHS8% Leasholder3% Student Accommodation1% Market & Intermediate Rent

CASHFLOWA summary of the cashflow for the year is set out below:

2013 2012 £’000 £’000

Operating Cashflow 50,159 36,068

Net Interest Paid (22,597) (23,540)

Property Sales 15,336 20,399

Construction of Housing Properties (35,455) (55,116)

Social Housing Grant Received 2,046 8,506

Other (20,315) 2,288

Loans Received 53,380 5,753

Loans Repaid (27,425) (3,019)

Increase/(Decrease) in Cash 15,129 (8,661)

21

TrEASUrYThe group is financed by a combination of revenue reserves, long-term loan facilities and social housing grant received either directly from government or from our recycled Capital grant Fund.

group priorities are to ensure that there is sufficient liquidity to fund operations for a minimum of two years, the protection against the impact of adverse movements in interest rates to ensure loan covenants are comfortably met, and prioritising the preservation of capital over financial returns when making investment decisions.

Loan StructureAt 31 March 2013, excluding the Fizzy group’s debt, drawn loans totalled £492m, with undrawn loan facilities of £25m all of this in Thames Valley Charitable Housing Association. The undrawn loan facilities are fully secured and available for drawing within 48 hours. Cash held at the year end, totalled £66m (£38m in Thames Valley Housing Association, £28m in Thames Valley Charitable Housing Association), leaving net group debt at £426m (2011/12: £430m).

The Fizzy group has a facility with Macquarie Capital totalling £40m, of which £10.9m was drawn at 31 March 2013.

Debt RestructuringOver the past two financial years all debt and loan facilities of Thames Valley Housing Association have been novated to Thames Valley Charitable Housing Association, so as to leave Thames Valley Housing Association with both no debt and the group with no group-wide loan covenants while ensuring that Thames Valley Charitable Housing Association has capacity to fund its development programme.

Thames Valley Housing Association with £110m of revenue reserves and totally ungeared, will continue to develop shared ownership and invest in other housing for the foreseeable future. This will be financed in the first instance by its reserves.

Total Drawn Loans Of Thames Valley Charitable Housing Association and Fizzy Group By Lender are Analysed BelowBarclays Bank is the main lender to Thames Valley Charitable Housing Association with drawn loans totalling £217m. The remaining loan debt has been provided by various banks and building societies, bond issues and the European investment Bank through The Housing Finance Corporation.

43% Barclays16% Santander UK14% Bank of Scotland6% Nationwide Building Society5% Dexia Credit Local4% Newcastle Building Society3% Housing Association Finance3% Housing Association Funding plc3% THFC - European Investment Bank2% Macquarie Capital1% RBS Nat West

BUSINESS & FINANCIAL REVIEW } YEAR ENdEd 31 MARCH 201322

Debt Repayment ProfileThe weighted average duration of Thames Valley Charitable Housing Association’s drawn debt is 16 years. The treasury strategy is to ensure that refinance risk is minimised. Capital repayments for Thames Valley Charitable Housing Association as a percentage of total committed facilities in any one year are never more than 9% and do not start to become significant until 2019. An analysis of the capital repayment profile combined for Thames Valley Charitable Housing Association and the Fizzy group is shown below. The Fizzy group drawn debt of £10.9m is due to be repaid in early 2015.

CAPITAL REPAYMENTS - £’M

NUMBER OF YEARS

200 –

180 –

160 –

140 –

120 –

100 –

80 –

60 –

40 –

20 –

0 –0-1 1-5 5-10 10-20 20+

Cash ManagementThe group retained significant cash balances throughout the year, protecting the business from extreme market shocks. given the ongoing global difficulties being encountered by banks, particularly in Europe, we have adopted a very prudent approach to financial liquidity.

Our current cash management strategy requires us to hold cash equivalent to six months net cash requirement.

We have also tightened our credit requirements in our cash investment operations. Our very conservative investment parameters require that cash may be only invested short term with AAA rated money market funds and repurchase agreements.

Currency RiskThe group borrows and invests surplus cash only in sterling and does not have currency risk.

Interest Rate ManagementAt the financial year end, 84% of (86.1% excluding Fizzy Living) debt was fixed (2011/12: 91%). We project that this fixed percentage will drop to 79%, including Fizzy Living (80.7%, excluding Fizzy Living) by April 2014. The fixed rate element of debt is achieved largely through the use of embedded swaps with a small amount of index linked bonds. We have no exposure to derivative margin calls. Cost of borrowing in the year for Thames Valley Charitable Housing Association was 4.69% (2011/12: 4.83%). £10.9m debt was drawn in the Fizzy group in January 2013. The interest cost for this debt had an insignificant impact on the group’s average cost of borrowing.

23

80% –

70% –

60% –

50% –

40% –

30% –

20% –

10% –

0% –

} Actual Interest Cover } Minimum Interest Cover Requirements } Actual Gearing } Maximum Gearing Requirements

250% –

200% –

150% –

100% –

50% –

0% –2011/12 2011/122012/13 2012/13

Loan Covenant ComplianceThere are no group loan covenant requirements, all debt is in Thames Valley Charitable Housing Association and lenders have no recourse to Thames Valley Housing Association. Loan covenants are primarily determined by interest cover, gearing ratios and asset cover, based on property asset values.

Covenants are monitored continuously and were comfortably met throughout the year and at the year end for all loan facilities.

Surplus Assets For Future Debt SecurityThere are currently 2,144 unsecured completed housing properties in Thames Valley Charitable Housing Association not required for charging to existing debt facilities. These are sufficient to secure an additional £178m of future new debt on an asset cover ratio of 1.25%.

in addition, the current development programme will complete over the next two years approximately 415 new properties funded by existing already charged debt. These 415 properties will be surplus security available for charging sometime in the future and would secure further new debt for Thames Valley Charitable Housing Association.

Future Funding OptionsAt 31 March 2013, £93m (2011/12: £113m) of finance was available to Thames Valley Charitable Housing Association, comprising of £25m (2011/12: £68m) undrawn facilities £66m (2011/12: £45m) of cash; this is sufficient funding over the next four years, to March 2017 for all committed and pipeline developments and the contractually committed affordable rent programme. We are currently working on options to fund planned growth in the subsequent years from 2016 onwards.

We are also considering a number of offers from third parties of equity and debt finance of TVHA’s expansion into market rent properties. All funding of market rent properties has so far been achieved through the use of TVHA’s cash surpluses and £10.8m external loan from Macquarie Capital.

Going ConcernThe Board is satisfied that no material or significant exposures exist other than as reflected in these financial statements and that the group has adequate resources to continue operations for the foreseeable future. For this reason the going concern basis has continued to be used in preparing the financial statements.

BUSINESS & FINANCIAL REVIEW } YEAR ENdEd 31 MARCH 201324

iNTErNAL CONTrOLThe Board has complied with the National Housing Federation’s Code, “Excellence in governance: Code for Members” and adopted it as the group’s Code of governance. in 2010 the Board resolved to reduce Board Member’s maximum term of office from 12 to 9 years, thus complying with the Code of governance. 2010-2014 is a period of transition while some Board Members remain on the Board for a period longer than the nine year maximum term of office, in order to ensure we avoid the loss of leadership and essential skills on the Boards.

The Board has adopted a group Code of Conduct, which reflects the requirements set out in the National Housing Federation’s Code, “Excellence in Standards of Conduct: Code for Members”.

The Board has responsibility for ensuring that a whole system of internal control is established and maintained and for reviewing its effectiveness.

The Board recognises that no system of internal control can provide absolute assurance or eliminate all risk. The system of internal control is designed to manage risk and to provide reasonable assurance that key business objectives and expected outcomes will be achieved. it also exists to give reasonable assurance about the preparation and reliability of financial and operational information and the safeguarding of the Association’s assets and interests.

in meeting its responsibilities, the Board has adopted a risk-based approach to internal controls which are embedded

within the normal management and governance process. This approach includes the regular evaluation of the nature and extent of risks to which the Association is exposed.

regular management reporting on control issues provides assurance to successive layers of management and to the Board. The arrangements include rigorous procedures, monitored by the group Audit and risk Committee, for ensuring that corrective action is taken in relation to any significant control issues.

The internal control framework and risk management process are subject to regular review by internal Audit who are responsible for providing independent assurance to the Board via the group Audit and risk Committee. The group Audit and risk Committee consider internal control and risk at its meetings during the year.

The internal audit function is externally resourced and reports directly to the group Audit and risk Committee. The internal audit programme is linked to the risk identification process.

As part of the system of internal control the Board has a strategy controlling the prevention of fraud and bribery. The group has a Money Laundering Officer.

The Board has received the Executive Directors’ annual report on internal controls assurance, including arrangements for managing fraud and bribery. The annual review of the effectiveness of the system of internal control from the group Audit and risk Committee and the annual

Health & Safety report and has taken account of any changes needed to maintain the effectiveness of the risk management and control process. The Board confirms that there is an ongoing process for identifying, evaluating and managing significant risks faced by the Association. This process has been in place throughout the year under review, up to the date of the annual report, and is regularly reviewed by the Board. No significant failings or weaknesses were identified and there were no reported cases of fraud and bribery recorded in the fraud and bribery register.

The process adopted by the Board in reviewing the effectiveness of the system of internal control, together with some of the key elements of the control framework includes:

} Identification and evaluation of key risks Management responsibility has been

clearly defined for the identification, evaluation and control of significant risks. There is a formal and ongoing process of management review in each area of the Association’s activities. This process is co-ordinated through a regular reporting framework by the Executive, Senior Management Team, investment Management and Health & Safety groups which regularly consider reports on significant risks facing the Association. The Chief Executive is responsible for reporting to the Board any significant changes affecting key risks. The group Audit and risk Committee has a responsibility to ensure that appropriate disaster recovery and contingency plans are in place and are tested regularly.

25

} Monitoring and corrective action A process of control self-assessment and

regular management reporting on control issues provides hierarchical assurance to successive levels of management and to the Board. This includes a rigorous procedure for ensuring that corrective action is taken in relation to any significant control issues, particularly those with a material impact on the financial statements. The group’s Audit and risk Committee has responsibility for reviewing the Association’s risk management systems.

A Performance Monitoring Unit oversees the production of a monthly reporting suite which covers key performance indicators used to monitor the business plan. Performance outcomes are given a traffic light assessment and management responses are formally recorded for required control action.

} Control environment and control procedures

The Board retains responsibility for a defined range of issues covering strategic, operational, financial and compliance issues including treasury strategy and new investment projects. The Association follows risk-averse policies to shield it from adverse movements in interest rates. The Board disseminates its requirements to all employees through the Thames Valley Housing group’s policies with regard to the quality, integrity and ethics of its employees. it is supported by a framework of policies and procedures with which all employees must comply.

These cover issues such as delegated authority, segregation of duties, accounting, treasury management, health and safety, data and asset protection and fraud prevention and detection. The group Audit and risk Committee receive and consider internal audit reports which include recommendations to strengthen the control environment. The group Audit and risk Committee receive twice a year a risk Management review report from the Chief Executive. The Board of the Association also receives quarterly risk Management review reports. The group Audit and risk Committee have reviewed the proportionality, independence and appropriateness of the group’s whistle blowing policy and follow up action. it also receives a report on the entries in the gifts and hospitality register and any instance of fraud.

The group investment Committee considers and makes investment decisions which require Board approval and which fall outside of the Board Meeting cycle. The group investment Committee has delegated authority to consider and to approve the funding of projects within the approved Thames Valley Charitable Housing Association investment in Opal Land. Minutes of the group investment Committee are reported to the Board.

The Fizzy investment Committee considers and makes investment decisions within the approved delegated authority of the funding of projects in the Fizzy Living group of subsidiaries.

} Information and financial reporting systems

Financial reporting procedures include for the Association a detailed budget for the year ahead with a monthly reporting cycle that identifies variances and forecasts for subsequent years with a comprehensive Business Plan for the next 30 years. These are reviewed and approved by the Board. The Board also regularly reviews key performance indicators to assess progress towards the achievement of key business objectives, targets and outcomes.

BUSINESS & FINANCIAL REVIEW } YEAR ENdEd 31 MARCH 201326

STATEMENT OF BOArD rESPONSiBiLiTiES The Board is responsible for preparing financial statements in accordance with applicable law and United Kingdom generally Accepted Accounting Practice for each financial year, which gives a true and fair view of the state of affairs of the Association and the group and of the surplus or deficit for that period. in preparing those financial statements, the Board is required to:

} Select suitable accounting policies and then apply them consistently;

} Make judgements and estimates that are reasonable and prudent;

} State whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

} Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Association and the group will continue in business.

The Board is responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Association and the group and to enable it to ensure that the financial statements comply with the industrial & Provident Societies Acts 1965 to 2002, the industrial & Provident Societies (group Accounts) regulations 1969, the Housing and regeneration Act 2008 and the Accounting Direction for Private registered Providers of Social Housing 2012. it has general responsibility for taking reasonable steps to safeguard the assets of the Association and to prevent and detect fraud and other irregularities.

SHARE CAPITALThe non executive Board Members of TVHA and TVCHA each hold one fully paid share of £1 in the Association which carries no rights to dividends or other income. The group Company Secretary and Executive Officers hold no interest in the Association’s share capital.

AUDITORSAll the current Board Members have taken all of the steps that they ought to have taken to make themselves aware of information needed by the Association’s auditors for the purpose of their audit and to establish that the auditors are aware of that information. The Board is not aware of any relevant audit information of which the auditors are unaware.

A resolution to reappoint BDO LLP as auditors to Thames Valley Housing Association Limited will be proposed at the next Annual general Meeting.

BY ORDER OF THE BOARD

JOHN GARRITYChair

Date: 10 September 2013

27

Merton Road development, South Wimbledon

notes on the Financial statements } Year ended 31 March 201328 RepoRt oF the independent auditoRs on the Financial statements } Year ended 31 March 2013

RepoRt of the Independent AudItoRs

on the fInAncIAl stAtements

single parent lorraine pederson has lived in her tVh home for 2 years. she moved in with her 13 year old son, the youngest of her three, after she lost her home when she divorced. she loves the sense of community and the safety and security her home provides her and her son.

29

to the members of thames Valley housing association limitedWe have audited the financial statements of thames Valley housing Association limited for the year ended 31 march 2013 which comprise the consolidated and association income and expenditure accounts, the consolidated and association balance sheets, the consolidated statement of total recognised surpluses and deficits, the consolidated note of historical cost surpluses and deficits, the consolidated 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, in accordance with the housing and Regeneration Act 2008 and section 9 of the friendly and Industrial and provident societies Act 1968. 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 auditorsAs explained more fully in the statement of board member responsibilities, the board members are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. our responsibility is to audit 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 practices Board’s ethical standards for Auditors.

scope of the audit of the financial statementsA description of the scope of an audit of financial statements is provided on the financial Reporting council’s website at www.frc.org.uk/auditscopeukprivate

opinion on financial statementsIn our opinion the financial statements:

} give a true and fair view of the state of the group’s and parent association’s affairs as at 31 march 2013 and of the group’s and parent association’s surplus for the year then ended;

} have been properly prepared in accordance with united Kingdom Generally Accepted Accounting practice; and

} have been prepared in accordance with the requirements of the Industrial and provident societies Acts 1965 to 2002, the Industrial and provident societies (Group Accounts) Regulations 1969, the housing and Regeneration Act 2008 and the Accounting direction for private Registered providers of social housing 2012.

matters on which we are required to report by exceptionWe have nothing to report in respect of the following matters where we are required to report to you if, in our opinion:

} the information given in the Report of the Board for the financial year for which the financial statements are prepared is not consistent with the financial statements;

} adequate accounting records have not been kept by the parent association, or returns adequate for our audit have not been received from branches not visited by us; or

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

} the parent association financial statements are not in agreement with the accounting records and returns; or

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

Bdo llp, statutory auditor Gatwick, West sussex united Kingdom

date: 10 september 2013

Bdo llp is a limited liability partnership registered in england and Wales (with registered number oc305127).

30 income and expendituRe accounts } Year ended 31 March 2013

Group association

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

tuRnoVeR 2 82,073 84,583 41,994 46,274

cost Of Sales 2 (11,127) (19,949) (23,723) (19,949)

Operating costs 2 (39,063) (37,012) (13,254) (17,950)

opeRatinG suRplus 31,883 27,622 5,017 8,375

Surplus On Sale Of Fixed assets 4 5,545 11,694 (20) 71,244

Share Of Losses Of Joint Ventures 28 (316) – – –

Interest receivable 7 1,114 1,133 2,141 571

Interest Payable 8 (23,436) (22,812) (56) (6,383)

suRplus on oRdinaRY actiVities BeFoRe tax 9 14,790 17,637 7,082 73,807

charitable donation Paid 28 – – (1,900) (32,585)

Tax On Surplus On Ordinary activities 10 – – – –

RepoRted suRplus on oRdinaRY actiVities 22 14,790 17,637 5,182 41,222

31

All amounts relate to continuing activities. there is no difference between the results disclosed in the Income and expenditure accounts and those on an unmodified historical cost basis.

the notes on pages 34 to 67 form part of these financial statements.

STaTeMenTS OF TOTaL recOGnISed SUrPLUSeS and deFIcITS Group association

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

RepoRted suRplus on oRdinaRY actiVities 14,790 17,637 5,182 41,222

Unrealised Surplus/(deficit) On revaluation Of Investment Properties 13 364 1,230 – (10)

total surpluses Recognised For the Year 15,154 18,867 5,182 41,212

Prior Year adjustment 33 – (9,831) – 833

total surpluses Recognised since the last annual Financial statements 15,154 9,036 5,182 42,045

statements oF total RecoGnised suRpluses and deFicits } Year ended 31 March 2013

32 Balance sheets } Year ended 31 March 2013

Group association

note 2013 2012 2013 2012 £’000 £’000 £’000 £’000 Fixed assets

housing Properties at cost 11 1,018,414 998,249 40,733 14,968

Social housing Grant 11 (409,291) (400,379) (14,001) (5,961)

depreciation 11 (46,240) (37,503) (1,225) (1,254)

562,883 560,367 25,507 7,753

Investments In Joint Ventures:

Share Of Gross assets 28 11,316 8,336 – –

Share Of Gross Liabilities (3,355) (5,385) – –

Other Fixed assets 13 34,369 9,925 6,536 3,995

homebuy equity Loans advanced 14 82,208 87,142 – –

Grant received On homebuy equity Loans 14 (67,667) (72,005) – –

619,754 588,380 32,043 11,748

cuRRent assets

Stock 15 11,341 18,559 24,378 52,889

debtors:

amounts receivable Within One Year 16 10,554 7,497 30,149 46,844

amounts receivable after One Year 16 1,032 779 1,032 779

cash at Bank and In hand 73,506 58,377 37,683 13,519

96,433 85,212 93,242 114,031

cReditoRs

amounts Falling due Within One Year 17 (22,852) (23,769) (8,446) (9,737)

net cuRRent assets 73,581 61,443 84,796 104,294

total assets less cuRRent liaBilities 693,335 649,823 116,839 116,042

cReditoRs

amounts Falling due after More Than

One Year 17 508,324 479,890 6,913 11,298

capital and ReseRVes

non-equity Share capital 21 – – – –

revenue reserve 22 183,267 168,477 109,718 104,536

Investment Property revaluation reserve 22 1,843 1,456 208 208

Minority Interest (99) – – –

693,335 649,823 116,839 116,042

these financial statements were approved and authorised for issue by the Board on 16 July 2013 and signed on its behalf by:

John GaRRitY BRian hendon JacK stephen patRicia etteRchair chair, Group audit & risk committee Finance director Group company Secretary

the notes on the pages 34 to 67 form part of these financial statements

33

2013 2012

note £’000 £’000 £’000 £’000

net cash inFloW FRom opeRatinG actiVities 23 50,159 36,068

RetuRns on inVestments and seRVicinG oF Finance

Interest received 1,114 1,133

Interest Paid (23,711) (24,673)

(22,597) (23,540)

27,562 12,528

capital expendituRe and Financial inVestment

Proceeds From Sales Of Low cost home Ownership Subsequent Tranches and right To Buy/acquire 15,336 20,399

construction and Purchase Of housing Properties (35,455) (55,116)

Purchase Of Other Fixed assets (25,249) (3,233)

Social housing Grant received 2,046 8,506

homebuy Grants received – –

homebuy Loans advanced – (425)

homebuy Loans redeemed 4,934 5,946

net cash outFloW FRom capital expendituRe and Financial inVestment (38,388) (23,923)

cash outFloW BeFoRe FinancinG (10,826) (11,395)

FinancinG

Loans received 53,380 5,753

Loans repaid (27,425) (3,019)

net cash inFloW FRom FinancinG 23 25,955 2,734

incRease/(decRease) in cash in the YeaR 23 15,129 (8,661)

the notes on pages 34 to 67 form part of these financial statements.

consolidated cash FloW statement } Year ended 31 March 2013

notes on the Financial statements } Year ended 31 March 201334

1. PrIncIPaL accOUnTInG POLIcIeS

the financial statements have been prepared under the historical cost convention, as modified by the revaluation of investment properties, and in accordance with:

} the Industrial and provident societies Acts 1965 to 2002.

} the Industrial and provident societies (Group Accounts) Regulations 1969.

} the Accounting direction for private Registered providers of social housing 2012.

} Applicable Accounting standards with special regard to the statement of Recommended practice; Accounting by Registered social housing providers update 2010.

Joint Ventures Joint Ventures are accounted for in accordance with financial Reporting standard 9 ‘Associates and Joint Ventures’ in the consolidated financial statement using the ‘Gross equity’ method, and in the Association’s individual financial statements as a current asset investment shown at cost.

investments in subsidiaries Investments in subsidiaries are shown at cost.

Basis of consolidationthe consolidated accounts comprise the financial statements of thames Valley housing Association limited and its subsidiary undertakings as listed in note 28. Intra-group transactions are eliminated on consolidation. the consolidated financial statements have been prepared in accordance with fRs2 “Accounting for subsidiary undertakings”.

turnoverturnover represents rental income receivable (after deducting lost rent from void properties available for letting), first tranche sales of low cost home ownership housing properties developed for sale, service charges receivable, income from homebuy activities, revenue grants from the hcA and proceeds from the sale of land and property.

housing propertieshousing properties in the course of construction are stated at cost, and included in fixed assets. properties under construction are transferred to completed housing properties when they are ready for letting.

If housing properties are being developed on behalf of other associations outside the Group under agency arrangements, the costs concerned are dealt with under current assets as properties held for resale.

completed housing properties are stated at cost.

separate disclosure of a valuation of the housing properties based on existing use Value for social housing (euV-sh) and market Value (mV) is also provided in note 12 on the financial statements.

housing properties are subject to annual impairment reviews. this has been done on a portfolio basis in accordance with the way these properties are managed.

If housing properties have suffered impairment, the fall in value to the recoverable amount is recognised in the income and expenditure account after deducting any related social housing Gran