Group Financial Statements 2012 - Riverside

riverside.org.uk

Group Financial Statements 2012 - Riverside

Financial Statements

Year ended 31 March 2012

The Riverside Group Limited


These statements

demonstrate the

excellent financial

performance of

Riverside, showing a

Group operating surplus

for 2011/12 of £40.1m,

which represents 15%

of our annual turnover.

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Highlights – five year summary 2

The Board, Executives and Advisors 4

Group Chairman’s statement6

Operating and financial review9

Report of the Board 17

Report of the independent auditors23

Group statements

Association statements

Income and expenditure account 24

Statement of total recognised

surpluses and deficits 25

Balance sheet 26

Cash flow statement 27

Income and expenditure account 28

Statement of total recognised

surpluses and deficits 29

Balance sheet 30

Notes to the financial statements 31

Financial Statements

For the year ended 31 March 2012

The Riverside Group Limited

Industrial and Provident Society Registered Number 30938R


Highlights – five year summary

These highlights demonstrate our continued

financial viability and show we are in a strong

position to deliver our vision of transforming

lives and revitalising neighbourhoods.

£270,800,000 Turnover

£1,743,999,000 Tangible

assets

53,774 Total

housing stock, owned and managed

£22,098,000 Surplus

on ordinary activities before tax

2.0 Group

interest cover

63.5% Gearing

2.2% Voids

and bad debts

12.5 days Rent

arrears

2


For the year ended 31 March 2012 2011 2010 2009 2008

Restated

Income and expenditure account

Turnover £’000 270,800 256,780 257,260 249,278 251,801

Operating surplus £’000 40,139 42,897 18,980 24,950 34,496

Surplus on ordinary activities before tax £’000 22,098 18,031 14,374 9,736 13,315

Balance sheet

Tangible assets £’000 1,743,999 1,617,683 1,555,459 1,692,132 1,648,068

Loans repayable after more than one year £’000 701,740 605,090 596,109 621,674 569,313

Reserves: Designated and restricted £’000 16,157 8,663 73,623 66,269 63,696

Income and expenditure £’000 218,726 206,815 108,936 89,653 80,092

Consolidation £’000 — — 382 152,340 155,815

Accommodation figures

Total housing stock, owned and managed Units 53,774 51,499 50,313 51,762 52,339

Statistics

Group interest cover 2.0 1.9 2.0 1.9 1.7

(surplus before interest payable, depreciation &

impairment divided by net interest payable)

Gearing % 63.5 57.5 59.9 63.9 59.6

(long term loans as % of Social Housing Grant

plus reserves)

Voids and bad debts as % of rent % 2.2 2.2 2.7 2.7 4.4

and service charge receivable

Rent arrears Days 12.5 13.8 14.3 14.5 17.8

(rent arrears divided by net rent and service

charges receivable multiplied by 365 days)

All figures have been extracted from current and prior years’ audited financial statements.

3


The Board, Executives and Advisors

The board is responsible for Riverside’s

overall policy and strategy and is

committed to integrity and accountability

in the stewardship of the group’s affairs.

Group Directors

(Left to right)

Joy Baggaley*

Group Deputy Chief Executive

& Group Finance Director

John Wood

Group Director, Housing Services

Carol Matthews*

(Appointed 6 February 2012)

Group Chief Executive

Ronnie Clawson

Group Director of Corporate Services

Derek Caren

Managing Director ECHG

David Jepson*

Group Deputy Chief Executive

*Co-opted Board Members

4


The key to delivering our high

level of performance is the

effectiveness of Riverside’s boards.

Paul Brant

Group Chair

Philip Raw

Group Vice Chairman

Max Steinberg

Group Vice Chairman

Susan Jee

Group Treasurer

Philip Han

Member

Anne-Marie Jones

Member

Yashar Turgut

Member

Jo Kennefick*

Member

Deborah Shackleton*

(Retired 31 December 2011)

Group Chief Executive

*Co-opted Board Members

Registered auditors

KPMG LLP

St James’ Square

Manchester

M2 6DS

Principal bankers

National Westminster

Bank PLC

28 Castle Street

Liverpool

L2 OUP

Principal solicitors

Brabners Chaffe Street

Horton House

Exchange Flags

Liverpool

L2 3YL

Trowers & Hamlins

Sceptre Court

40 Tower Hill

London

EC3N 4DX

Secretary and

Registered Office

Lynn McCracken

Solicitor

2 Estuary Boulevard

Estuary Commerce Park

Liverpool

L24 8RF

Registered Numbers

Industrial and

Provident Society

Registered number: 30938R

Tenant Services Authority

Registered Number: L4552

5


Group Chairman’s statement

These financial statements provide important

evidence about how Riverside is responding

and give an indication of how the Group is

likely to fare over the coming months and

years. I believe they demonstrate that, despite

all the challenges in our external environment,

Riverside continues to thrive.

Thank you for taking the time to read Riverside’s

financial statements for the year 2011/12. Whilst this

document primarily concerns itself with numbers, they

help tell an important story about the health and

resilience of Riverside as an organisation. Let me put

them in context.

It is now almost a cliché to state that we are living

through an era of profound change, rooted in a

succession of economic shocks and the way these

are playing out for governments, businesses and

households. Yet for once the hyperbole seems

appropriate, and it has become increasingly

difficult for even the experts to anticipate what is

coming next.

We cannot escape the fact that the UK’s economy

has shrunk at an alarming rate, and recovery is likely

to take far longer than anyone could reasonably have

predicted, with ongoing uncertainty fuelled by the crisis

in the Euro zone. The government’s response, founded

on a determination to reduce the national deficit at an

ambitious pace, means that public services have been

scaled back at an unprecedented rate, with arguably

the worst still to come. In the world of housing, subsidy

to develop new affordable homes has been reduced by

two thirds, at a time when the need to build more has

never been greater.

And for our customers, whilst most households have

faced a real reduction in incomes, at times like these

it is the poorest who bear the brunt, as they are

exposed to rising unemployment and stringent cuts

in welfare benefits.

These financial statements provide important

evidence about how Riverside is responding and give

an indication of how the Group is likely to fare over

the coming months and years. I believe they

demonstrate that, despite all the challenges in our

external environment, Riverside continues to thrive.

We are certainly not immune from wider economic

pressures, however as an independent social business

with an income stream underpinned by the inexorable

growth in demand for our housing products, and

a portfolio of assets worth £1.7bn, we are better

equipped than many others to face the future with

confidence, manage risk, and even see opportunity

where others see threat.

This year we have generated a bottom line surplus

of £22.1m, of which £11.6m was generated through

the fair value accounting for our new Scottish

subsidiary, Irvine Housing Association, on its joining

the Group. This represents a return of around 8% of

annual turnover.

6


“Our Boards today follow traditions set by

our founder Chairman, Clifford Cook, whose

death I am sorry to announce. Having served

Riverside for over 30 years, on his retirement

Clifford was awarded the honorary title

of President, a fitting recognition of his

valuable contribution to Riverside;

the organisation has been fortunate

that its early years were charted by so

dedicated a leader.”

Clifford Cook

For an organisation of our scale this may seem

relatively modest, however as a social business it is

important that we strike the right balance between

bolstering our reserves to mitigate against future

financial threats, and re-investing in new homes, and

our existing stock and neighbourhoods. We believe

that we are getting that balance right and of course,

as a social business, we don’t seek to create surplus for

surplus sake. Our fundamental goal is to use business

efficiency in our core operations to develop the

financial capacity to add value for our customers and

communities by extending and improving our services.

Looking beyond the bottom line, what outcomes have

we delivered over the past year? Operationally, 2011-12

has been a year of solid achievement. We have seen

improvement in all of our performance indicators,

with six out of ten exceeding the ambitious stretch

targets we set a year ago. Our organisational footprint

has changed significantly as we have established our

first foothold in Scotland following a constitutional

partnership with Irvine. Despite the challenge of

reduced subsidy, we have carved out a programme to

deliver 1,500 new homes over the next three years.

In the circumstances, this is impressive – however it

is sobering to reflect that even this will represent an

annualised reduction in our development output of

around 40% at a time when the nation needs us to do

more. Elsewhere, we are rationalising our outlying stock

through strategic disposals, to help us deliver excellent

services to our tenants in places where we have a

significant presence, and deliver greater operating

efficiencies which will build our capacity to do more.

As government funding is scaled back, diversifying

our income stream through commercial activity has

become a key element of our strategy. This year

we acquired Evolve Facility Services as a property

maintenance subsidiary, enabling us to achieve savings

on both margin and VAT, whilst working together to

ensure our tenants get a high quality repairs service.

However continued stagnation in the housing market

has meant that returns from Prospect, our commercial

development subsidiary, have been lower than

anticipated, with the prolonged recession enforcing a

further assessment of the valuation on the balance

sheet of market rented homes. But we are in this for

the long term and an independent review has provided

reassurance that the underlying business is sound, with

some optimism on sales of new homes and increased

interest in commercial property letting.

7


Looking ahead, Compendium Living, our joint venture

with Lovell, has been successful in its bid to work with

Derby City Council on one of the city’s most important

regeneration projects, the £100m Castleward Urban

Village scheme which is projected to generate

significant returns over the next eight years.

I am particularly pleased that our resilience has been

recognised by the social housing regulator and, once

again, Riverside has been awarded its highest ratings

in terms of both financial viability and governance.

Of course the two are interlinked – financial strength is

founded on good governance, and it is appropriate to

pay tribute to the unstinting service of Board members

across the Group who bring their skills and local

knowledge to provide the leadership which is at the

heart of the Riverside story. Our Boards today follow

traditions set by our founder Chairman, Clifford Cook,

whose death I am sorry to announce. Having served

Riverside for over 30 years, on his retirement Clifford

was awarded the honorary title of President, a fitting

recognition of his valuable contribution to Riverside;

the organisation has been fortunate that its early years

were charted by so dedicated a leader.

The Board is supported by an excellent executive team

and earlier in the year I had the particular pleasure

of welcoming Carol Matthews, our new Chief Executive.

Carol is already making her mark, bringing a passion

for customers, and a real determination to develop

services which are contemporary and cost effective

through a style of leadership which encourages our

people to give their best. I would like to thank our

whole team, staff, executives and Board for excellent

work this year, in very challenging circumstances.

So where do we go from here? We are one year into

our current three year Corporate Plan, and following

a comprehensive review, we see no compelling reason

to change course. The next 12 months will see us

delivering new homes under the affordable homes

programme we have secured, continuing to rationalise

our footprint based upon a more rigorous assessment

of the financial performance of our stock, and

developing a differentiated, more proactive, service

offer for tenants. However this will only be achieved

through an increased emphasis on ‘strategic’ value for

money, in the new vocabulary of the regulator. Given

all we have achieved in recent years I believe we are

well placed to achieve this.

Paul Brant

Group Chair

8


Operating and financial review

The Group provides affordable homes for rent

and shared ownership throughout England and

in Scotland, together with housing support for

vulnerable and elderly residents. Through its

commercial subsidiaries and joint venture

companies Riverside also has interests in major

regeneration projects and in commercial property

development and investment which complement

its social business activities and generate profits

to support those activities financially.

Overview of the business

The Riverside Group Limited is registered with

the Homes and Communities Agency (HCA) as a

Registered Provider (RP) of affordable housing. Our

Scottish subsidiary, Irvine Housing Association Limited,

is registered with the Scottish Housing Regulator

(SHR). The Group provides affordable homes for rent

and shared ownership throughout England and in

Scotland, together with housing support for vulnerable

and elderly residents. Through its commercial

subsidiaries and joint venture companies Riverside

also has interests in major regeneration projects and

in commercial property development and investment

which complement its social business activities and

generate profits to support those activities financially.

A leading member of the RP sector, the Group owns or

manages 53,774 dwellings. 37,188 of these dwellings

are homes rented to people in need of affordable

housing, 9,646 are for people in need of additional

care and support and 2,355 are shared ownership

properties for people making their first move into

owner occupation.

The objects of Riverside are to carry on, for the

benefit of the community, “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 the aged, disabled,

handicapped (whether physically or mentally) or

chronically sick people”.

Riverside carries out its objectives for the public

benefit as set out in these financial statements. The

Board considers legal advice and Charity Commission

guidance when determining the activities that

Riverside undertakes.

Objectives and strategies

Riverside’s vision is ‘transforming lives, revitalising

neighbourhoods’. The strategy for achieving this vision

is set out in the three year (2011-14) Corporate Plan.

The plan has six themes which are incorporated into

staff appraisals, Key Performance Indicators (KPI’s) and

training in order to provide direction and ensure focus

on achieving common goals.

9


Of the six themes there are four goals the Group aims

to achieve:

As good as the best

Deliver good value and consistent service for all by

focusing energy and resources and improving our

weakest areas; improving information held about

customers in order to better understand their needs;

and tackling issues before they become problems,

through regular planned visits and annual property

inspections.

Customers facing tough times

Offer opportunities for the most vulnerable by growing

Riverside ECHG’s housing support services; developing

a clear service offer for older residents living in general

needs homes; and delivering improved welfare advice

and helping tenants find work.

Maintaining decent, sustainable homes

Invest in homes to meet people’s needs and tackle

rising fuel costs by investing more than £130m in

properties over the next three years; finding new ways

to improve the most difficult to heat homes; and

providing more money for adaptations to help older

and disabled tenants to remain in their homes.

More homes fewer places

Build new affordable homes and focus on places where

we can make a difference by building more homes

under the Government’s new affordable housing

framework; growing by seeking merger opportunities

with like-minded organisations where we can deliver

real benefits to customers; and selling homes in areas

where the Group is not well placed to deliver good

services.

The remaining themes are organisational, based

upon the way Riverside will operate to achieve these

objectives.

Valuing and developing people

Offer better development of employees so they can do

more for others by delivering comprehensive training

and development, with more on-line learning; listening

carefully to colleagues through the Group’s Employee

Experience programme; and supporting and developing

Board members to ensure they have the skills and

knowledge to lead the Group through challenging

times.

10


A fitter leaner Riverside

Achieve better value for money and increase

commercial income by finding more savings on the

Group’s main activities; using IT more effectively,

investing in systems to help manage contact with

customers and improve access to performance

information at all levels; and generating extra income

by developing new commercial opportunities.

Value for money

Riverside has long been committed to adopting a

comprehensive approach to managing its resources

to provide cost effective, quality services and homes

that meet tenants’ and potential tenants’ needs.

Uncertain economic conditions are now putting

increasing pressure on all businesses to operate ever

more effectively to maintain a high quality service.

This is particularly the case for not for profit

businesses, and this has been recognised in the

increased emphasis on VFM and efficiency written

into the new regulatory framework. VFM is now

classified as an economic standard, with a broader

definition encompassing business strategy as well

as operational performance.

The achievement of VFM is defined by reference to

customer priorities, which Riverside aims to meet

with an optimum balance of economy, efficiency and

effectiveness. In the coming year, a strategic appraisal

of alternative options for the achievement of business

objectives will be carried out to add extra value to the

corporate planning cycle.

Areas reviewed this year which have enabled us to

achieve economies of scale and improve the efficiency

of our processes include the acquisition of Evolve

Facility Services Ltd which provides responsive repairs

in the North West. This will deliver substantial VAT

savings to the Group. Riverside has also extended

its cost effective repairs partnering arrangements,

awarding a five year contract to a maintenance

specialist in the Midlands. The integration of Irvine HA

into the Group has allowed more efficient provision of

locally based functions through centralisation, whilst

review of the cost of central services has continued

with a restructure of the development function.

Financial performance in the period

The detailed results of the year are set out in the Group

Income and Expenditure Account on page 24 and the

notes to the accounts on pages 31 to 83. The following

table provides a summary of the Group’s results:

For the year ended 31 March 2012 2011

£m £m

Group turnover 271 257

Operating surplus 40 43

Surplus on sale of property 6 7

Exceptional items 11 —

Net interest payable (35) (32)

Surplus for the year 22 18

Interest cover 2.0 1.9

At the operational level, VFM will continue to be

dealt with as part of service review and improvement

processes, with outcomes built into existing business

management practice, integrating benchmarking, cost

analysis/reduction and performance improvement.

The new regulatory requirement to produce a robust

self assessment will summarise the many facets of

VFM adopted by Riverside.

600

The Group has seen the completion

of over 600 affordable homes during

2011/12.

80%

80% of tenants are satisfied with the

condition of their property compared

to 71% in 2007.

11


Turnover has increased year on year, compared

to the previous year, following two acquisitions.

On 1 October Irvine Housing Association joined the

Group. Riverside’s first move into Scotland brought

2,196 homes, generating income of £3.5m in the year.

On 1 December, the Group acquired Evolve Facilities

Services Limited, a Merseyside based repairs contractor,

which contributed £3.5m to turnover. The Group also

benefited from the organic growth delivered by the

development programme of 600 units and from the

RPI linked annual rent increase.

Operating surplus has fallen since last year. This is

explained mainly by accounting changes, following

the introduction of component accounting, which

increased the charge for major repairs and depreciation

by £3m, and by impairment provisions made in the

commercial part of the business (£4.6m) and the

housing stock (£2m). Operating costs of management

and maintenance were held at last year’s levels.

The contribution from property disposals reflects

the implementation of the Group’s active asset

management strategy. The exceptional credit taken in

the year relates to the goodwill arising on the year’s

two acquisitions.

The Group’s interest bill increased slightly from last

year, with the drawdown of banking facilities to fund

the development programme. The Group continues

to demonstrate its ability comfortably to exceed its

interest cover covenant requirements.

Balance Sheet

The full balance sheet is provided on page 26 and

supporting details can be found in the notes to the

accounts on pages 31 to 83.

The following table provides a summary of the key

elements of the Group Balance Sheet.

For the year ended 31 March 2012 2011

£m £m

Goodwill 4 —

Tangible fixed assets 1,744 1,618

Social Housing Grant (881) (841)

Investments 26 24

Fixed assets 893 801

Net Current Assets 84 91

Total Assets less current liabilities 977 892

Creditors falling due after more

than one year 742 677

Reserves 235 215

977 892

Gearing (%) 63.5 57.5

Key highlights are:

— a significant increase in fixed assets as a result of

the acquisition of Irvine, together with investment

in new properties and in improvements to existing

properties

— this is matched by the increase in long term

creditors

— the Group’s gearing ratio (measured as long term

loans as % of Social Housing Grant plus reserves)

has increased from 57.5% to 63.5%. This is in

line with expectations following the change in

structures of grant funding for development.

5,701

We said that we would refer 1,500

tenants for sustainable employment

or volunteering. We did refer 5,701.

1,604

We said that we would help 500 older

tenants access Riverside services in Live

Time pilot areas. We did help 1,064.

12


Capital structure and treasury policy

Effective treasury risk management is essential for

both financial performance and balance sheet

stability. Treasury management is operated

centrally in accordance with Board approved

objectives and operating parameters, set out in the

Group treasury policy and a treasury strategy which

is revised annually.

Key issues the treasury strategy seeks to address are

funding and liquidity risk, interest rate risk, covenant

compliance and exposure to counterparties. The

Group borrows at both fixed and floating interest

rates. Derivative instruments are used to manage its

exposure to interest rate fluctuations. Strategies are

tested by business plan sensitivities and are developed

through a process of regular review and refinement.

Regular updates on all treasury activities are given to

the Group Finance Committee.

Group borrowings total £716m (2011: £618m).

The movement reflects loans drawn to fund stock

development and improvement, net of scheduled debt

repayments, together with the consolidation of Irvine.

New debt drawn in the year totalled £64.8m (2011:

£19.6m). Interest costs are at £37.6m (2011: £34.4m).

The average rate of interest paid in the year was 5.1%

(2011: 5.3%).

The Group aims to minimise cash held whilst ensuring

that sufficient loan facilities are available to finance a

minimum of one year’s cash flow. At the year end the

Group had £60m of unutilised committed borrowing

facilities.

Operating performance in the year

2011-12 has been another year in which the Group

has made significant progress in improving operational

performance towards its strategic objectives.

The following paragraphs give some highlights of the

Group’s achievements.

As good as the best

There are a number of key performance indicators

which are monitored towards achieving the goal of

being as good as the best.

The latest customer satisfaction survey (STAR) shows

that 82% of tenants said that they were satisfied with

the services Riverside provides for them.

13


Fig 1: Customer satisfaction with

Riverside’s services

100%

50%

0%

Fig 2: Current rent arrears

10.0%

5.0%

0.0%

Fig 3: Re let days

60

40

82% 82% 64% 68%

2012 2010 2007 2003

5.5% 5.9% 6.3% 6.7% 8.0%

2012 2011 2010 2009

2008

This is consistent with last year and is particularly

pleasing in these uncertain times. This has

improved markedly over the last 10 years and

reflects the investment made in services, homes

and neighbourhoods, and is a testimony to the

effectiveness of excellent staff working closely with

committed tenants and residents. Fig1.

The five year improvement in respect of current rent

arrears illustrated in chart Fig2 is particularly laudable

as the economy tightens and places pressure on

tenants.

Re-let times are a real cost to the business, the

improvement over the last five years increases

income by £1.25m. Fig3.

Customers facing tough times

There are a number of initiatives in place to support

tenants during tough times. Many of these are new

initiatives and change depending on external focus

but some of the key indicators which help us monitor

the success of our initiatives are:

— we said that we would refer 1,500 tenants

for sustainable employment or volunteering –

we did refer 5,701.

— we said that we would help 500 older tenants

access Riverside services in Live Time pilot areas –

we did help 1,064.

Maintaining decent, sustainable homes

Riverside aims to maintain homes and neighbourhoods

where people want to live and the results would

suggest real improvements in performance.

80% of tenants are satisfied with the condition of their

property compared to 71% in 2007.

The percentage of tenants satisfied with the area as a

place to live has risen to 83% from 73% five years ago.

20 29 37.7 43.7 39.7 52.7

0

2012 2011 2010 2009

2008

14


More homes, fewer places

The year has been more difficult than anticipated,

with delays to the completion of the contract for the

new development programme holding up the start

of the four year programme and we said we would

commit 333 new homes, but actually committed to

86 new homes. However, the Group is committed to

catching up and achieving the four year target of

1,224 homes.

Valuing and developing our people

Employee engagement is the key to success and the

vehicle we use to measure this is the Sunday Times

Best Companies survey. Last year we scored 631.7

and have seen a 3.1% improvement to 651.2.

A fitter leaner Riverside

Achieving value for money is a key objective and cost

control is one of the building blocks in its achievement.

The Operational management and maintenance cost

per unit has reduced by 19% over the last five years.

Development of affordable homes

The Group has seen the completion of over 600

affordable homes during 2011/12.

However, with the significant changes in grant funding

arrangements and availability, the Group has been

working even harder on securing a forward funding

programme. As well as receiving grant from the HCA

under the Affordable Homes Programme, Riverside

is planning to exploit other opportunities to such an

extent that over the three years of the Riverside Plan

the Group will build over 1,200 new affordable homes,

a mix of homes for rent and shared ownership.

Whilst representing around 60% of output during

the last Corporate Plan period, given market and

funding conditions, this is a considerable achievement

leaving ‘spare’ capacity in relation to key financial

covenants to continue to pursue additional

development opportunities, the most notable being

an innovative partnership scheme in Liverpool

involving the City Council and Prospect (GB) Ltd.

The Group targets its development to support its

neighbourhood investment strategies as well as

ensuring the efficient operation and delivery of

housing services.

The programme plans new homes in the East Midlands,

Merseyside, Cumbria, the North East, London and now

South West Scotland, that is in every operating region

in accordance with the Group’s Growth Strategy.

Between 15 – 20% of the overall programme will be

for low cost home ownership (lower than the original

Riverside Plan target of 30%) and nearly 20% for

elderly and vulnerable customer groups (almost double

the original target of 10%).

The Group has led the development of the Cutting

Edge Procurement Framework, working with other

housing associations to maximise purchasing power to

achieve efficiencies in construction costs. This is further

supported by The Riverside Materials Framework.

The Group is the lead member of The Riverside

Consortium which has successfully concluded a recent

compliance audit from the HCA.

Dynamics of the Group

The Group faces a number of key risks that could

impact on future performance. The process for

identification of risk is described in the report of the

Board. The main risks that may confront the Group

include:

— public sector spending restraints on both revenue

and capital income streams

— the impact of the welfare reforms affecting

tenants ability to pay

— implementation of the affordable rent regime

— continuing limitations on the availability of

mortgage finance for home buyers

— increased pressure on services from an ageing

tenant base, due to longer life expectancies

— changes in the Supporting People income regime

— requirements to fund future pension liabilities

— changes to Decent Home Standards and

Eco-homes ratings.

As part of its risk management process the Group

has allocated actions, as appropriate, to attempt to

mitigate these risks.

15


Investment for the future

There are significant challenges facing Registered

Providers of affordable housing and the protection of

Riverside’s robust financial health is more important

than ever. The excellent financial results and

improvements in performance enable investment to

ensure continuing financial stability, improvements

to services and the development of new homes.

The results also serve to maintain the confidence

the Group’s funders have in the organisation and help

protect against the unexpected.

The Group remains committed to its vision of

“transforming lives and revitalising neighbourhoods”

and the surplus delivered over the last financial year

combined with a business plan that reflects the

current operating environment and associated risks

ensure the Group remains well placed for the

successful achievement of this vision.

Going concern

After due consideration, the Board is confident that

The Riverside Group has adequate resources to

continue in operational existence for the foreseeable

future. Accordingly, it continues to adopt the going

concern basis in preparing The Riverside Group’s

financial statements.

Statement of compliance

The form and content of the operating and

financial review has been prepared in line with the

recommended practice provided by the Statement

of Recommended Practice ‘Accounting for Registered

Social Landlords 2010’. The statement has also

been prepared in accordance with Reporting

Standard 1 (Operating and Financial Review).

Joy Baggaley

Group Deputy Chief Executive &

Group Finance Director

16


Report of the Board

The Board is pleased to present its

report and the audited consolidated

financial statements for the year

ended 31 March 2012.

Principal activity

The Riverside Group Limited is an Industrial and

Provident Society incorporated under the Industrial

and Provident Societies Act 1965 and is the ultimate

holding company within a group structure (‘The

Riverside Group’). It is registered with The Homes and

Communities Agency as a Registered Provider of social

housing as defined by the Housing and Regeneration

Act 2008. Details of members of The Riverside Group

are given on page 55 of these financial statements.

The Riverside Group Limited is responsible for

establishing The Riverside Group’s overall policies and

strategies, for monitoring compliance with Group

values and performance against Group targets, within

a clearly defined framework of delegation and system

of control.

The Riverside Group Limited oversees the work of

The Riverside Group, providing a number of corporate

services to Group members.

The principal activity of The Riverside Group is

the provision of affordable homes for rent and

shared ownership, together with housing support

for vulnerable and elderly residents.

Post balance sheet events

The Board confirm that there have been no events

since the financial year end that have had a material

effect on the financial position of the Group.

Review of business and future developments

The review of business and future developments is

discussed in the Group Chairman’s statement and the

operating and financial review on pages 6 to 16.

The Board of The Riverside Group Limited

The Board members of The Riverside Group Limited

holding office during the period 1 April 2011 to 5 July

2012 are detailed below:

— Joy Baggaley

— Paul Brant

— Philip Han

— Susan Jee

— David Jepson

— Anne-Marie Jones

— Jo Kennefick

— Carol Matthews (Appointed 6 February 2012)

— Philip Raw

— Deborah Shackleton

(Retired 31 December 2011)

— Max Steinberg

— Yashar Turgut

In accordance with the rules, Susan Jee, Philip Raw and

Max Steinberg retire at the Annual General Meeting,

and being eligible, offer themselves for re-election.

During the year payments made to Board Members

were £697k (2011: £640k), which were 0.26%

(2011: 0.25%) of the annual turnover.

Payment of Group Chair and Group Board members is

calculated by taking into account the size of the Group

and industry norms.

The Board carries out an annual appraisal of its

performance and an annual appraisal of individual

board members. The Chair is appraised by an external

consultant every other year. The Board reviewed the

scheme of remuneration in 2011 and concluded that

the present scheme remains appropriate.

17


Group Directors

Whilst the Board is responsible for The Riverside

Group’s overall policy and strategy, management is

delegated to the Group Chief Executive. The Group

Directors are the senior management team and act

as executives within the authority delegated by the

Board. They meet formally under the chairmanship

of the Group Chief Executive in order to consider all

major management issues.

This meeting is a key decision making forum for the

management of The Riverside Group, reviewing all

proposed policy changes and performance across

the Group.

The Group Directors hold no interest in the share

capital of any member of The Riverside Group.

Corporate governance

The Board is committed to integrity and accountability

in the stewardship of The Riverside Group’s affairs.

The National Housing Federation (NHF) Code of

Governance is a Riverside Group policy requirement

underpinning all governance issues. Riverside chose this

code because it is tailored to the housing sector and it

is a widely recognised example of best practice.

The Riverside Group complies with the NHF Code

of Governance (July 2010 revision) except that, to

allow an appropriate balance between renewal and

continuity, the Chair of the Board may be requested to

extend his or her service as Chair for a limited period;

(the service of Paul Brant has been extended under this

provision until 30 April 2016) and that, to promote a

culture of openness, Audit Committees within Riverside

meet with staff present.

The Group has reviewed its governance in 2011-12,

including roles, responsibilities and accountabilities of

the Board, Chair and Chief Executive and is satisfied

that its arrangements are clear and effective.

The external auditors have undertaken non-audit work

for the Group during the year ended 31 March 2012.

More information about the level of fees paid for this

work is set out in note 9 to the financial statements.

The Group Audit Committee has a protocol with

the external auditors, which sets out policies for

determining what non-audit work can be undertaken

by the external auditors and procedures for periodic

review and selection of external auditors.

18


Corporate role of the Board

The Board comprises eight non-executive Board

members, together with the Group Chief Executive

and the two Group Deputy Chief Executives who are

co-opted executive members.

Terms of reference are issued to the Board. Board

members act in the interest of The Riverside Group

and not on behalf of any other interest group.

The principal obligations of the Board to The Riverside

Group are to:

— be committed to the values and objectives of

The Riverside Group

— develop strategy and implement The Riverside

Group’s core policies

— uphold the NHF Code of Governance

— represent The Riverside Group and enhance its

profile externally.

The Board is drawn from a wide background and

its members are selected to ensure that they bring

relevant experience, skills and understanding to the

discussions and decision making process of the Board.

A system of regular appraisal is in place, both in

relation to individual members and the Board as

a whole.

The Board meets formally six times a year for

regular business, including approval of the budget

and business plan. Board members also attend an

annual conference to discuss future strategy. Also in

attendance at Board meetings are the other Group

Directors and the Assistant Company Secretary.

Reporting to the Board are the Group Membership

Committee, the Group Finance Committee, the Group

Audit Committee and the Remuneration Committee.

The terms of reference for both the Group Finance and

Group Audit Committees were revised during 2011-12

and their individual responsibilities are listed below.

However, both committees consider the financial

statements of the Group at a joint meeting and

together will recommend to the Board the adoption

of the annual financial statements.

Group Membership Committee

The Group Membership Committee is a non-executive

committee. It considers Board appointments, including

co-options, and submits recommendations to the

Board.

A range of recruitment techniques are used to secure a

wide choice of candidates for vacancies on the Board,

including advertising externally. It comprises Paul Brant

(Chair), Susan Jee, Philip Raw and Max Steinberg.

Group Finance Committee

The Group Finance Committee is a non-executive

committee and meets four times a year. Its members

are Susan Jee (Chair), Paul Brant, Philip Han and Yashar

Turgut. It advises the Board on notable technical or

complex financial matters that may have a significant

financial impact on the Group.

Group Audit Committee

The Group Audit Committee is a non-executive

committee and meets four times a year, addressing

internal and external audit issues and advising the

Board on risk management policies and processes.

Its members are Philip Han (Chair), Susan Jee,

Nora Rimmer, who is a member of the Residents and

Tenants group and Mark Taylor, Treasurer of Mersey

South divisional board.

Remuneration Committee

The Remuneration Committee is a non-executive

committee. Its members are Paul Brant, Susan Jee

and Jo Kennefick. It agrees the appointment of Group

Directors and their remuneration, after taking external

advice. The Directors are not present at the meeting

when their salaries are determined. It also agrees

the brief within which the Group Chief Executive can

negotiate staff salaries with the union, Unite.

Jackie Green, an independent director of Human

Resources joins the Committee as the Chair to consider

non-executive remuneration. The Committee also

takes specialist human resources advice from external

consultants as appropriate.

The following three administrative committees

advise the Group Board. Their membership is drawn

from Divisional Boards.

Group Investment Committee

The Group Investment Committee has two functions:

— the scrutiny and evaluation of historic investment

— consideration of the shape of future programmes

of investment.

Consideration is being given as to whether the

amalgamation of the Group Investment Committee

into the Group Finance Committee is appropriate.

19


Scotland Committee

The Scotland Committee is made up of three nominees

from the Board of Irvine Housing Association Limited

and three nominees from the Board of The Riverside

Group Limited. The Committee meets twice yearly

overseeing and monitoring the implementation of the

Group business strategy for Scotland.

Housing Services Committee

The Housing Services Committee has the following

functions:

— performance oversight of general needs

housing services

— development of housing policy and the

Group-wide continuous improvement framework

— promoting a Group-wide culture of excellence

and the sharing of best practice

— acting as conduit between Group Board

and Divisions.

Internal controls assurance

The Board is the ultimate governing body and is

responsible for the Group’s system of internal control.

The Board, advised by the Group Audit Committee, has

reviewed the effectiveness of the system of internal

control for the year ended 31 March 2012 and to the

date of approval of these financial statements. For the

year ended 31 March 2012, the Board can make the

following statements.

— The system of internal control is designed to

provide the Board with reasonable but not

absolute assurance that risks are identified on

a timely basis and dealt with appropriately;

that assets are safeguarded; that proper

accounting records are maintained; and that the

financial information used within the business

or for publication is reliable. Control is exercised

through an organisational structure with clearly

defined levels of authority, responsibility and

accountability.

— A consistent approach to managing risk is adopted

throughout the Group. Detailed procedures set out

how individual risks are managed.

— The Group is committed to the effective

management of risk. The Board (advised by

Committees where appropriate) monitors the risk

profile of the Group and approves any business

developments involving significant risk.

— The framework of internal control is subject to

a regular programme of review. In particular,

the Group maintains a fully resourced Corporate

Audit team reporting directly to the Group Audit

Committee. Service delivery risk is monitored

through the continuous improvement, quality

self-assessment and tenant scrutiny processes.

All this ensures that the control environment

remains robust during a period of continued

external change.

— The Group is committed to sound financial

management in all aspects of its business. It has

a robust business planning process and all parts

of the Group have detailed annual budgets and

longer term business plans. The Group has a

comprehensive system of management reporting.

This includes a monthly reporting package on

financial results and key performance indicators.

Overall scrutiny is provided by the Board.

— The Group maintains a suite of policies covering

the main elements of its business. The policies are

subject to a rolling programme of review to confirm

their continued appropriateness with all policies

approved by the Board.

— In reviewing the effectiveness of the Group’s

system of internal control, the Board has considered

a range of sources of assurance including:

— management reports;

— key performance indicators;

— audit reports;

— quality management systems; and

— external regulator reports.

— The anti-fraud policy sets out the commitment

to preventing fraud. All staff are responsible

for ensuring that systems of internal control

are operated effectively. Confidential reporting

arrangements are in place to allow staff to voice

their concerns and know that they will be properly

investigated. A register of all frauds and losses is

maintained and scrutinised by the Group Audit

Committee.

— The Riverside Group has a written code on business

ethics which sets out guidelines for all staff to

ensure the highest standards of conduct in business

dealings and this has been adopted throughout

the Group, in addition to the NHF ‘Excellence in

Standards of Conduct’ code for members with

which the Group complies. The Board led on the

strategy and action plan to ensure compliance

with the provisions of the Bribery Act.

20


— During the year there were no weaknesses in

internal controls which resulted in material

losses, contingencies or uncertainties that require

disclosure in these financial statements.

Statement of the Board’s responsibilities in respect

of the Board’s report and the financial statements

The Board is responsible for preparing the Board’s

Report and the financial statements in accordance

with applicable law and regulations.

Industrial and Provident Society law requires the Board

to prepare financial statements for each financial year.

Under those regulations the Board have elected to

prepare the financial statements in accordance with

UK Accounting Standards.

The financial statements are required by law to give a

true and fair view of the state of affairs of the Group

and Association and of the Group and Association

surplus or deficit for that period.

In preparing these 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 UK Accounting Standards

and the Statement of Recommended Practice

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 Group will continue in business.

The Board is responsible for keeping proper accounting

records that disclose with reasonable accuracy at any

time the financial position of the Group and enable

them to ensure that its financial statements comply

with the Industrial and Provident Societies Acts 1965

to 2003 and the Industrial and Provident Societies

(Group Accounts) Regulations 1969, the Housing

and Regeneration Act 2008 and the Accounting

Requirements for Registered Social Landlords

General Determination 2006. The Board has general

responsibility for taking such steps as are reasonably

open to it to safeguard the assets of the Group and to

prevent and detect fraud and other irregularities.

21


The Board is responsible for the maintenance and

integrity of the corporate and financial information

included on the Group’s website. Legislation in the

UK governing the preparation and dissemination of

financial statements may differ from legislation in

other jurisdictions.

Employees

The Riverside Group’s policy is to consult directly

with employees through regular team meetings and

through negotiation and consultation with the union,

Unite. Additional information is given through internal

communication systems.

Emphasis is placed on training for all staff using both

internal and external facilities to encourage staff in

personal development.

Suitable procedures are in operation to support The

Riverside Group’s policy that disabled persons shall be

considered for employment and subsequent training,

career development and promotion on the basis of

their aptitudes and abilities.

Equality and diversity

The Riverside Group’s policies reflect its commitment

to equality and the value it places on diversity in all

aspects of its work.

Financial contributions to housing related work

Contributions by The Riverside Group to housing

related activities during the year totalled £nil

(2011: £nil). No donations for political purposes

were made during the year.

Policy on payment of creditors

In the absence of any dispute, The Riverside Group’s

policy is to pay non-development invoices within

30 days of the date of approval of the invoice.

Development creditors, paid under certificate, are

settled within 21 days of the valuation date.

Single European currency

The accounting system is capable of accommodating

the Euro.

Tenant involvement

The Board actively encourages tenants’ involvement

in decision making by promoting formal and informal

mechanisms of tenant involvement; effective

engagement with tenants provides serious scrutiny of

Riverside’s performance.

There is a tenant member on the Group Board and

another who sits as observer. There are over 30 tenants

actively involved in governance through their roles as

divisional Board members.

The Tenants’ and Residents’ Federation consider

changes to policies and strategies across Riverside,

assess the quality of service delivery and commission

tenant inspections of the Group’s work. Locally, tenants

and residents meet in Neighbourhood Forums working

with staff and local partners to consider and address

service improvements.

Investment power

The Group’s Rules permit investment of monies not

immediately required to carry out its objectives as it

determines and is permitted by law.

Annual General Meeting

The Annual General Meeting will be held on

20 September 2012.

Auditors

A resolution to re-appoint the auditors KPMG LLP

will be put to the Annual General Meeting.

Paul Brant

Group Chair

5 July 2012

Changes in fixed assets

The movements in fixed assets during the year are

set out in note 11 to the financial statements.

Severance and redundancy payments

The total amount of severance and redundancy

payments made during the year was £0.6m

(2011: £1.7m). This was as a result of a restructure in

Riverside ECHG Division which began last year and

other smaller restructures elsewhere in the Group.

22


Report of the independent auditors

to the members of The Riverside Group Limited

We have audited the financial statements of The

Riverside Group Limited for the year ended 31 March

2012 which comprise the Group and Association

Income and Expenditure Accounts, the Group and

Association Statements of Recognised Surpluses and

Deficits, the Group and Association Balance Sheets,

the Group Cash Flow Statement and the related

notes. The financial reporting framework that has

been applied in their preparation is applicable law

and UK Accounting Standards (UK Generally Accepted

Accounting Practice).

This report is made solely to the Group’s members, as

a body, in accordance with section 128 of 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 Group’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 Group and the

Group’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 auditor

As more fully explained in the Statement of Board’s

Responsibilities set out on pages 21 and 22, the

Group’s 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 Practices Board’s (APB’s) Ethical

Standards for Auditors.

Scope of the audit of the financial statements

A description of the scope of an audit of financial

statements is provided on the APB’s website at

www.frc.org.uk/apb/scope/private.cfm

Opinion on financial statements

In our opinion the financial statements:

— give a true and fair view, in accordance with UK

Generally Accepted Accounting Practice, of the

state of affairs of the Group and Association as at

31 March 2012 and of the Group and Association

surplus for the year then ended; and

— have been properly prepared in accordance with

the Industrial and Provident Societies Acts 1965

to 2003 and the Industrial and Provident Societies

(Group Accounts) Regulations 1969, the Housing

and Regeneration Act 2008 and the Accounting

Requirements for Registered Social Landlords

General Determination 2006.

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 2003 and the Industrial and Provident

Societies (Group Accounts) Regulations 1969 require us

to report to you if, in our opinion:

— a satisfactory system of control over transactions

has not been maintained; or

— the Group 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.

Martin Newsholme for and on behalf of KPMG LLP

Statutory Auditor

Chartered Accountants

St James’ Square

Manchester

M2 6DS

24 August 2012

23


Group income and expenditure account

for the year ended 31 March 2012

Notes 2012 2011

£’000 £’000

Restated

Turnover: Group and share of joint venture 272,537 257,277

Less: share of joint venture turnover (1,737) (497)

———— ————

Group turnover 2 270,800 256,780

Operating costs 2 (230,661) (213,883)

———— ————

Group operating surplus 2 40,139 42,897

Share of operating loss in joint ventures (93) (203)

Surplus on sale of property 6 5,817 7,384

Exceptional items 31 10,777 —

———— ————

Surplus on ordinary activities before interest 9 56,640 50,078

Interest receivable and other income 7 3,067 2,357

Interest payable and similar charges 8 (37,609) (34,404)

———— ————

Surplus on ordinary activities before tax 22,098 18,031

Taxation 10 435 343

Share of joint venture taxation (6) (5)

———— ————

Surplus for the year 22,527 18,369

———— ————

Income and expenditure account at 1 April 2011 206,815 108,936

Surplus for the year 22,527 18,369

Transfer to reserves 20 (16,951) (31,136)

Transfer from reserves 20 10,278 27,852

Prior period adjustment 32 — 4,137

Actuarial (loss)/gain on pension scheme 20 & 26 (3,943) 8,373

Consolidation adjustment on amalgamation 20 — 367

Reclassification 32 — 69,917

———— ————

Income and expenditure account at 31 March 2012

————

218,726

————

206,815

All of the above results derive from continuing operations.

There is no material difference between the surplus on ordinary activities before tax

and the surplus for the year as reported and their historical cost equivalent.

The notes on pages 31 to 83 form an integral part of the financial statements.

There are no historical cost surpluses or deficits other than those recognised within

the income and expenditure account.

24


Group statement of total recognised surpluses and deficits

for the year ended 31 March 2012

Notes 2012 2011

£’000 £’000

Restated

Surplus for the financial year 22,527 18,369

Actuarial (loss)/gain on pension scheme 20 & 26 (3,943) 8,373

Consolidation on amalgamation 20 — 610

Revaluation of investments 20 (204) 1,037

Donations received 20 1,025 11

Prior period adjustment 20 — 4,137

———— ————

Total recognised surplus relating to the year

————

19,405

————

32,537

Group reconciliation of movement of funds

for the year ended 31 March 2012

2012 2011

£’000 £’000

Total recognised surplus 19,405 32,537

Total funds at 1 April 2011 20 215,478 182,941

———— ————

Total funds at 31 March 2012 20

————

234,883

————

215,478

The notes on pages 31 to 83 form an integral part of the financial statements.

25


Group balance sheet

as at 31 March 2012

Notes 2012 2011

£’000 £’000 £’000 £’000

Restated Restated

Fixed assets

Intangible assets:

Goodwill 31 4,089 —

Tangible assets 11 1,743,999 1,617,683

Social Housing Grant 11 (881,086) (841,143)

Investments 12 26,375 24,036

Investment in joint ventures

Group share of gross assets of joint ventures 12 841 731

Group share of gross liabilities of joint ventures 12 (771) (666)

———— ————

70 65

———— ————

893,447 800,641

———— ————

Debtors: amounts receivable after

more than one year 13 22,861 39,217

Current assets

Investments 12 38,842 22,763

Debtors 13 104,328 98,291

Properties for sale 14 54,307 53,668

Cash at bank and in hand 7,596 9,123

———— ————

205,073 183,845

Creditors: amounts falling due within one year 15 (144,343) (131,459)

———— ————

Net current assets 60,730 52,386

———— ————

Total assets less current liabilities 977,038 892,244

———— ————

Creditors: amounts falling due after

more than one year 16 708,470 621,453

Deferred income 19 209 262

Provisions for liabilities and charges 28 33,476 55,051

Capital and reserves

Non-equity share capital 1 — —

Restricted reserves 20 4,216 4,420

Designated reserves 20 11,941 4,243

Income and expenditure account 20 218,726 206,815

———— ————

977,038 892,244

The financial statements on pages 31 to 83 were approved by

the Board on 5 July 2012 and were signed on its behalf by:

— Paul Brant, Group Chairman

— Susan Jee, Group Treasurer

— Joy Baggaley, Group Deputy Chief Executive & Group Finance Director

— Lynn McCracken, Secretary

The notes on pages 31 to 83 form an integral part of the financial statements.

———— ————

26


Group cash flow statement

for the year ended 31 March 2012

2012 2011

£’000 £’000 £’000 £’000

Net cash inflow from operating activities (note 21) 79,153 56,068

Returns on investments and servicing of finance

Interest received 3,311 2,232

Interest paid (35,198) (36,717)

———— ————

Net cash outflow from returns on investments

and servicing of finance (31,887) (34,485)

Taxation

Tax paid (6) (21)

Capital expenditure and financial investment

Cash paid for housing construction (54,567) (93,554)

Cash paid for other fixed assets (3,880) (4,453)

Cash flow for fixed asset investments (2,956) 61

Expenditure on capitalised improvements (51,187) (21,778)

Social Housing Grant received 13,344 31,077

Receipts from property sales 13,081 34,936

———— ————

Net cash outflow from capital expenditure

and financial investment (86,165) (53,711)

Management of liquid resources

Decrease in short term deposits (16,079) (3,037)

———— ————

Net cash outflow from management

of liquid resources (16,079) (3,037)

———— ————

Net cash (outflow)/inflow before financing (54,984) (35,186)

Financing

Loans raised 64,811 19,603

Loan principal repayments (11,354) (9,864)

———— ————

Net cash inflow from financing 53,457 9,739

———— ————

(Decrease)/increase in cash (note 22)

————

(1,527)

————

(25,447)

The notes on pages 31 to 83 form an integral part of the financial statements.

27


Association income and expenditure account

for the year ended 31 March 2012

Notes 2012 2011

£’000 £’000

Restated

Turnover 2 252,550 247,291

Operating costs 2 (210,462) (205,227)

———— ————

Operating surplus 2 42,088 42,064

Surplus on sale of property 6 5,866 7,296

———— ————

Surplus on ordinary activities before interest 9 47,954 49,360

Interest receivable and other income 7 4,032 2,760

Interest payable and similar charges 8 (34,995) (32,679)

———— ————

Surplus for the year before taxation 16,991 19,441

Taxation 10 435 —

———— ————

Surplus after taxation 17,426 19,441

Transfer to reserves 20 (16,951) (31,136)

Transfer from reserves 20 10,278 27,852

———— ————

Surplus for the year 10,753 16,157

———— ————

Income and expenditure account at 1 April 2011 219,842 121,258

Actuarial gain/(loss) in pension scheme 20 (3,462) 8,373

Prior period adjustment 32 — 4,137

Reclassification — 69,917

———— ————

Income and expenditure account at 31 March 2012

————

227,133

————

219,842

All of the above results derive from continuing operations.

The notes on pages 31 to 83 form an integral part of the financial statements.

There are no historical cost surpluses or deficits other than those recognised

within the income and expenditure account.

28


Association statement of total recognised surpluses

and deficits

for the year ended 31 March 2012

Notes 2012 2011

£’000 £’000

Restated

Surplus for the financial year 17,426 19,441

(Loss)/gain in pension scheme 20 & 26 (3,462) 8,373

Revaluation of investments 20 (204) 1,037

Donation received 1,025 11

Prior period adjustment — 4,137

———— ————

Total recognised surplus relating to the year

————

14,785

————

32,999

Reconciliation of movements in funds

for the year ended 31 March 2012

Notes 2012 2011

£’000 £’000

Total recognised surplus 14,785 32,999

Total funds at 1 April 2011 20 228,446 195,447

———— ————

Total funds at 31 March 2012

————

243,231

————

228,446

The notes on pages 31 to 83 form an integral part of the financial statements.

29


Association balance sheet

as at 31 March 2012

2012 2011

Notes £’000 £’000

Restated

Fixed assets

Tangible assets 11 1,668,865 1,617,770

Social Housing Grant 11 (857,244) (841,051)

Investments 12 36,846 23,969

———— ————

848,467 800,688

Debtors: amounts receivable after more than one year 13 48,767 55,516

Current assets

Properties for sale 14 23,763 23,473

Debtors 13 99,221 97,827

Investments 12 37,842 22,763

Cash at bank and in hand 5,975 7,450

———— ————

166,801 151,513

Creditors: amounts falling due within one year 15 (138,698) (130,702)

———— ————

Net current assets 28,103 20,811

———— ————

Total assets less current liabilities

————

925,337

————

877,015

Creditors: amounts falling due after more than one year 16 649,002 593,256

Deferred income 19 210 262

Provisions for liabilities and charges 28 32,894 55,051

Capital and reserves

Non-equity share capital 1 — —

Restricted reserves 20 4,216 4,420

Designated reserves 20 11,882 4,184

Income and expenditure account 20 227,133 219,842

———— ————

————

925,337

————

877,014

The financial statements on pages 33 to 79 were approved by the Board

on 5 July 2012 and were signed on its behalf by:

— Paul Brant, Group Chairman

— Susan Jee, Group Treasurer

— Joy Baggaley, Group Deputy Chief Executive and Group Finance Director

— Lynn McCracken, Secretary

The notes on pages 31 to 83 form an integral part of the financial statements.

30


Notes to the

financial statements*

for the year ended 31 March 2012

*All notes relate to The Riverside Group unless otherwise stated.


1

Principal accounting policies

The financial statements are group statements and

consolidate the financial statements of The Riverside

Group Limited and its subsidiary undertakings.

Basis of accounting

The financial statements have been prepared under

the historical cost convention, and in accordance

with applicable United Kingdom Accounting and

Financial Reporting Standards and the Statement

of Recommended Practice for Registered Social

Landlords issued in 2010. The financial statements are

in accordance with the Housing and Regeneration Act

2008 and comply with the Accounting Requirements

for Registered Social Landlords General Determination

2006. The accounting policies adopted have been

applied consistently year on year.

Basis of consolidation

The financial statements are group statements and

consolidate the financial statements of The Riverside

Group Limited and its subsidiary undertakings. The

financial statements have been prepared in accordance

with FRS 2 ‘Accounting for Subsidiary Undertakings’.

The consolidated income and expenditure account

includes the results of the Group’s equity interests and

results of the Group’s joint ventures in accordance with

FRS 9 ‘Associates and Joint Ventures’.

Details of subsidiaries and joint ventures are included in

note 12 to the financial statements.

Supported housing

In addition to its own directly managed supported

housing schemes, The Riverside Group owns a number

of schemes that are run by outside agencies. Where

The Riverside Group carries the financial risk all the

scheme’s income and expenditure is included in

the income and expenditure account. Where the

agency carries the financial risk only the income and

expenditure which relates solely to The Riverside Group

is included. Other income and expenditure of schemes

in this category is excluded from the income and

expenditure account.

Supporting People Contract Income

Supporting People (SP) contract income received

from Administering Authorities is accounted for as

SP income in the turnover in note 2 to the financial

statements. The related support costs are matched

against this income.

Turnover

Turnover comprises rental and service charge income

receivable, certain revenue grants from local authorities

and the Homes and Communities Agency together

with other income.

32


Retirement benefits

The Group operates a group pension scheme,

contributes to local government pension schemes and

the Social Housing Pension Scheme (SHPS). All are

defined benefit schemes. The assets of the schemes

are held separately from those of the Group. The Group

also contributes to defined contribution schemes.

The assets of the pension schemes are measured

using market values. The liabilities of the pension

schemes are measured using a projected unit method

discounted at the current rate of return on a high

quality corporate bond of equivalent term and currency

to the liabilities.

Due to the nature of SHPS, it is not possible to

identify the share of underlying assets and liabilities

belonging to individual participating employers. As a

result, no surplus or deficit is included in the financial

statements and the accounting charge for the period is

represented by the employer contribution payable.

Excluding SHPS, the surpluses of the pension schemes

(to the extent that they are recoverable) or deficits

are recognised in full. The movements in the schemes’

surpluses/deficits are included in the income and

expenditure account and shown in the statement

of total recognised surpluses and deficits, under the

heading actuarial gains and losses.

Fixed assets

Tangible fixed assets are stated at cost less

accumulated depreciation. The cost of housing land

and properties comprises purchase price together

with incidental costs of acquisition and improvements,

including related administration charges.

Housing properties are principally properties available

for rent. Cost includes the cost of acquiring the land

and buildings, development costs and expenditure

incurred in respect of improvements.

Depreciation and impairment

During the year ended 31 March 2012 The Riverside

Group adopted full component accounting in relation

to the capitalisation and depreciation of its completed

housing property stock.

Until 31 March 2011 The Riverside Group depreciated

housing properties over the estimated useful lives of

the asset as a whole.

33


From 1 April 2011 all housing properties have been

split between their land and structure costs and a

specific set of major components which require periodic

replacement.

Replacement or restoration of such major components

is capitalised and depreciated over the estimated

individual useful economic life of the component as

follows:

Component

Useful Economic Life (years)

Structure – new build 100

Structure – rehabilitated 50

Kitchens 20

Bathrooms 30

Roof 60

Boiler 15

Full heating system 30

Windows and doors 25

Depreciation on non housing property stock is charged

on a straight line basis over the expected useful

economic lives of the assets at the following rates:

Asset

Useful Economic Life (years)

freehold and long leasehold

offices to residual value 15

fixtures and fittings 10

IT equipment 3 – 5

leasehold improvements

over the term

of the lease

Assets in the course of construction are held at cost

and are not depreciated until reclassified as housing

properties completed.

An annual impairment review of housing properties is

undertaken in accordance with FRS 11 ‘Impairment

of Fixed Assets and Goodwill’, and where appropriate

the carrying value is adjusted to take account of

permanent diminutions in value.

34


First tranche shared ownership sales

Shared ownership properties are split proportionally

between current and fixed assets based on the first

tranche proportion. First tranche proportions are

accounted for as current assets and the related sales

proceeds shown in turnover. The remaining element of

the shared ownership property is accounted for as a

fixed asset so that any subsequent sale is treated as

a part disposal of a fixed asset.

Amortisation of goodwill

Goodwill arising on the acquisition of subsidiaries

represents the excess of the fair value of the

identifiable net assets acquired over the fair value of

the consideration given and is included in reserves.

Goodwill is recognised in the income and expenditure

account in the periods in which the non-monetary

assets are recovered, whether through depreciation

or sale.

Improvements to property

Expenditure incurred on general repairs to housing

properties is charged to the income and expenditure

account in the year in which it is incurred.

Expenditure on refurbishment or replacement of

identified housing property components is capitalised.

Pre-contract costs

Costs incurred in bidding for and securing contracts for

the supply of products and services under the Private

Finance Initiative are recognised as expenses incurred

up to the date of announcement of preferred bidder.

Where the Group is successful in attaining preferred

bidder status, those costs incurred after attaining

preferred bidder status that are directly attributable

to the contract are recognised as an asset.

Properties for sale

Completed properties for outright sale and property

under construction are valued at the lower of cost

and net realisable value. Cost comprises materials,

direct labour and direct development overheads.

Net realisable value is based on estimated sales

price after allowing for all further costs of completion

and disposal.

Social Housing Grant

Where developments have been financed wholly or

partly by Social Housing Grant (SHG) and other capital

subsidies, the cost of these developments has been

reduced by the amount of the grant received. SHG

received in excess of current development costs is

shown as a current liability.

SHG received for items of cost written off in the

income and expenditure account is matched against

those costs. When properties are demolished, with the

intention of redevelopment, a contingent liability is

recognised related to the repayment of SHG.

If a property is sold, SHG may be repayable but is

normally available to be recycled and is credited to a

Recycled Capital Grant Fund or Disposal Proceeds Fund

and included in the balance sheet in creditors.

Other grants

Other grants are receivable from local authorities

and other organisations. Capital grants are utilised to

reduce the capital cost of housing properties, including

land costs. Grants in respect of revenue expenditure

are credited to the income and expenditure account

in the same period as the expenditure to which they

relate.

Capitalisation of administration costs

Administration costs relating to development activities

are capitalised only to the extent that they are directly

attributable to the development process and in

bringing the properties into their intended use.

Investments

Fixed asset investments are stated at market value.

Investment properties are carried at the lower of cost

and net realisable value, and in accordance with SSAP

19 ‘Accounting for Investment Properties’ are revalued

annually.

Current asset investments are stated at cost.

35


“The financial statements have been

prepared under the historical cost

convention, and in accordance with

applicable United Kingdom Accounting

and Financial Reporting Standards

and the Statement of Recommended

Practice for Registered Social Landlords

issued in 2010”.

Liquid resources

Liquid resources are readily disposable current asset

investments, which include some money market

deposits, held for more than 24 hours that can only be

withdrawn without penalty on maturity, or by giving

notice of more than one working day.

Value Added Tax

The Riverside Group is partially exempt in relation

to Value Added Tax (VAT), and accordingly is able to

recover from HM Revenue and Customs part of the

VAT incurred on expenditure. At the year end VAT

recoverable or payable is included in the balance sheet.

Irrecoverable VAT is accounted for in the income and

expenditure account.

Taxation

The charge for taxation is based on the surplus or

deficit for the year and takes into account deferred

taxation arising from timing differences between the

treatment of certain items for taxation and

accounting purposes.

Leased assets

Rentals payable in respect of operating leases are

charged to the income and expenditure account

on a straight-line basis over the lease term.

Work in progress

Work in progress on developments for sale is stated

at the lower of cost and net realisable value.

Loan issue costs and interest payable

The cost of raising loans is amortised over the

period of the loan.

The deferred cost is offset against the liability and

included within creditors: amounts falling due after

more than one year, in accordance with FRS 4

‘Capital Instruments’.

Loan interest payable is charged to the income and

expenditure account at the relevant rates based on

the carrying amount of the debt.

Designated reserves

These represent reserves earmarked for a specific

use and are not part of free reserves.

36


Charitable reserve

This reserve represents donations and legacies received

for which expenditure has not yet been incurred.

Some of the funds have restricted use, but the

non-restricted funds in the reserve are available

to meet expenditure that falls within the Group’s

objectives for which statutory or other finance is

not available.

Consolidation reserve

This represents the excess of the fair value of assets

acquired over the consideration given in respect of the

identifiable assets and liabilities acquired. The reserve

is amortised to the income and expenditure account

in the periods in which the non monetary assets are

recovered, whether through depreciation or sale.

Derivatives

The Group applies the provisions of FRS 13 ‘Derivatives

and other Financial Instruments’ in the treatment

of financial instruments and derivatives. The Group

uses interest rate swaps to reduce exposure to future

increases in interest rates on floating rate loans.

The notional principal is not reflected in the Group’s

balance sheet. Payments made under swaps are

accrued over the payment period on a straight line

basis and adjusted against interest payable on loans.

Non-equity share capital

The Riverside Group Limited is an Industrial and

Provident Society incorporated under the Industrial and

Provident Society Act 1965 with 20 £1 ordinary shares

in issue. In the event of a winding up, the liability of

individual members to contribute towards the liabilities

of the company shall not exceed £1.

37


2

Turnover, operating costs and operating surplus

Group

2012

Operating

Turnover Cost of sales Operating costs surplus/(deficit)

£’000 £’000 £’000 £’000

Social housing activities

Lettings (note 3) 233,222 — (195,595) 37,627

Other social housing activities

Development for sale 3,854 (3,525) — 329

Management services 1,377 — (383) 994

Community regeneration 188 — (5,901) (5,713)

Other 13,703 — (6,612) 7,091

———— ———— ———— ————

252,344 (3,525) (208,491) 40,328

———— ———— ———— ————

Non-social housing activities

Lettings 5,264 — (7,984) (2,720)

Developments for sale 11,189 (9,697) — 1,492

Other 2,003 — (964) 1,039

———— ———— ———— ————

18,456 (9,697) (8,948) (189)

———— ———— ———— ————

Total

————

270,800

————

(13,222)

————

(217,439)

————

40,139

2011

Operating

Turnover Cost of sales Operating costs surplus/(deficit)

£’000 £’000 £’000 £’000

Social housing activities

Lettings (note 3) 222,472 — (186,260) 36,212

Other social housing activities

Development for sale 2,717 (2,445) — 272

Management services 1,394 — (342) 1,052

Community regeneration 376 — (4,427) (4,051)

Other 16,283 — (10,180) 6,103

———— ———— ———— ————

243,242 (2,445) (201,209) 39,588

———— ———— ———— ————

Non-social housing activities

Lettings 4,249 — (2,691) 1,558

Developments for sale 7,050 (7,100) — (50)

Other 2,239 — (438) 1,801

———— ———— ———— ————

13,538 (7,100) (3,129) 3,309

———— ———— ———— ————

Total

————

256,780

————

(9,545)

————

(204,338)

————

42,897

38


2

Turnover, operating costs

and operating surplus – continued

Association

2012

Operating

Turnover Cost of sales Operating costs surplus/(deficit)

£’000 £’000 £’000 £’000

Social housing activities

Lettings (note 3) 229,424 — (192,569) 36,855

Other social housing activities

Development for sale 3,854 (3,525) — 329

Management services 1,377 — (383) 994

Community regeneration 188 — (5,901) (5,713)

Other 13,156 — (6,605) 6,551

———— ———— ———— ————

247,999 (3,525) (205,458) 39,016

———— ———— ———— ————

Non-social housing activities

Lettings 3,907 — (1,140) 2,767

Development for sale — — — —

Gift Aid 322 — — 322

Other 322 — (339) (17)

———— ———— ———— ————

4,551 — (1,479) 3,072

———— ———— ———— ————

Total

————

252,550

————

(3,525)

————

(206,937)

————

42,088

2011

Operating

Turnover Cost of sales Operating costs surplus/(deficit)

£’000 £’000 £’000 £’000

Social housing activities

Lettings (note 3) 222,452 — (185,902) 36,550

Other social housing activities

Development for sale 2,717 (2,445) — 272

Management services 1,394 — (342) 1,052

Community regeneration 376 — (4,392) (4,016)

Other 16,635 — (10,758) 5,877

———— ———— ———— ————

243,574 (2,445) (201,394) 39,735

———— ———— ———— ————

Non-social housing activities

Lettings 3,184 — (1,372) 1,812

Development for sale — — — —

Gift Aid 467 — — 467

Other 66 — (16) 50

———— ———— ———— ————

3,717 — (1,388) 2,329

———— ———— ———— ————

Total

————

247,291

————

(2,445)

————

(202,782)

————

42,064

39


3

Income and expenditure from social housing lettings

Group

General Supported Shared Key worker 2012 2011

housing housing ownership housing Total Total

£’000 £’000 £’000 £’000 £’000 £’000

Income from lettings

Rent receivable net of

identifiable service charges 138,091 34,314 2,842 1,163 176,410 164,750

Income for support services 3,809 24,336 — — 28,145 27,024

Service charges receivable 4,260 23,879 — 303 28,442 26,563

———— ———— ———— ———— ———— ————

Net rental income 146,160 82,529 2,842 1,466 232,997 218,337

———— ———— ———— ———— ———— ————

Homes and Communities Agency

grants for major repairs 4 221 — — 225 800

Other revenue grants — — — — — 3,335

———— ———— ———— ———— ———— ————

Turnover from lettings 146,164 82,750 2,842 1,466 233,222 222,472

———— ———— ———— ———— ———— ————

Expenditure on lettings

Management (26,960) (12,695) (301) (104) (40,060) (43,264)

Services and support services (7,805) (45,499) — (261) (53,565) (52,400)

Routine maintenance (47,450) (7,693) (11) (103) (55,257) (50,642)

Major repairs expenditure (13,821) (5,880) (2) (8) (19,711) (28,224)

Bad debts (1,345) (481) (85) 5 (1,906) (1,410)

Depreciation of housing properties (19,905) (2,348) (451) (72) (22,776) (10,320)

Impairment of housing properties (321) (1,999) — — (2,320) —

———— ———— ———— ———— ———— ————

Operating costs on lettings (117,607) (76,595) (850) (543) (195,595) (186,260)

———— ———— ———— ———— ———— ————

Operating surplus

on social housing lettings 28,557 6,155 1,992 923 37,627 36,212

———— ———— ———— ———— ———— ————

Void loss (1,056) (2,177) — (90) (3,323) (3,232)

———— ———— ———— ———— ———— ————

2012 2011

£’000 £’000

Particulars of turnover from non-social housing lettings

Student accommodation 27 27

Market rent 5,237 4,222

———— ————

————

5,264

————

4,249

40


3

Income and expenditure from

social housing lettings – continued

Association

General Supported Shared Key worker 2012 2011

housing housing ownership housing Total Total

£’000 £’000 £’000 £’000 £’000 £’000

Turnover from lettings

Rent receivable net of

identifiable service charges 134,650 34,138 2,842 1,163 172,793 164,730

Income for support services 3,809 24,336 — — 28,145 27,024

Service charges receivable 4,204 23,754 — 303 28,261 26,563

———— ———— ———— ———— ———— ————

Net rental income 142,663 82,228 2,842 1,466 229,199 218,317

———— ———— ———— ———— ———— ————

Homes and communities agency

grants for major repairs 4 221 — — 225 800

Other revenue grants — — — — — 3,335

———— ———— ———— ———— ———— ————

Turnover from lettings 142,667 82,449 2,842 1,466 229,424 222,452

———— ———— ———— ———— ———— ————

Expenditure on lettings

Management (25,746) (12,671) (301) (104) (38,822) (43,134)

Services and support services (7,864) (45,251) — (261) (53,376) (52,380)

Routine maintenance (46,560) (7,662) (11) (103) (54,336) (50,474)

Major repairs expenditure (13,570) (5,880) (2) (8) (19,460) (28,184)

Bad debts (1,378) (480) (85) 5 (1,938) (1,410)

Depreciation of housing properties (19,767) (2,348) (451) (72) (22,638) (10,320)

Impairment of housing properties — (1,999) — — (1,999) —

———— ———— ———— ———— ———— ————

Operating costs on lettings (114,885) (76,291) (850) (543) (192,569) (185,902)

———— ———— ———— ———— ———— ————

Operating surplus

on social housing lettings 27,782 6,158 1,992 923 36,855 36,550

———— ———— ———— ———— ———— ————

Void loss (1,051) (2,175) — (90) (3,316) (3,232)

———— ———— ———— ———— ———— ————

2012 2011

£’000 £’000

Particulars of turnover from non-social housing lettings

Student accommodation 27 27

Market rent 3,880 3,157

———— ————

————

3,907

————

3,184

41


4

Directors’ and senior staff emoluments

The Directors are defined for the purpose of this note as the members of the Board and Group Directors of The Riverside

Group Limited. Directors appointed after the end of the financial year are not included in the disclosure. This satisfies

the definition included in the Accounting Requirements for Registered Social Landlords General Determination 2006.

The Group Directors do not receive any chargeable benefits in kind other than company cars. The emoluments of the

Directors are set out below. There are three Group Directors included within the total below who are not board members.

Group

2012 2011

£’000 £’000

Emoluments (including pension contributions and benefits in kind)

————

1,235

————

1,185

Highest paid Director – Former Group Chief Executive

Emoluments (excluding pension contributions)

————

227

————

232

———— ————

Expenses reimbursed to Directors not chargeable to income tax 9 11

Payment to the former Group Chief Executive included sums due for holiday and pension contributions not taken

and a bonus deferred from 2008/09.

The number of executive Directors who received emoluments (excluding pension contributions) in the following

ranges was:

2012 2011

Number Number

£25,001 — £30,000 1 —

£115,001 — £120,000 — 1

£120,001 — £125,000 1 1

£125,001 — £130,000 1 —

£140,001 — £145,000 — 1

£150,001 — £155,000 1 —

£160,001 — £165,000 — 1

£165,001 — £170,000 — 1

£170,001 — £175,000 1 —

£180,001 — £185,000 1 —

£225,001 — £230,000 1 —

£230,001 — £235,000 — 1

———— ————

————

7

————

6

The new Chief Executive took office on 6 February 2012. She is an ordinary member of the CARE section of The Riverside

Group Pension Scheme.

Emoluments of Group Directors include a non consolidated retention payment awarded by the Board to ensure continuity

of management over the period of transition following the retirement of Deborah Shackleton. They received the same

consolidated pay award as other staff.

42


4

Directors’ and senior staff emoluments – continued

Certain Group Directors, including the former Group Chief Executive, were required under their contracts of employment

to retire at the age of 60; consequently, the benefits provided to them by The Riverside Group Pension Scheme were

amended to reflect this commitment, which is not applicable to any other staff. In all other respects, the former Group

Chief Executive was an ordinary member of the CARE section of the scheme accruing benefits calculated on Career

Average Revalued Earnings. The Group does not make any further contribution to an individual pension arrangement

for the Group Chief Executive. Contributions were made to The Riverside Group Pension Scheme at a rate of 17.5% of

pensionable salary in 2012. This applies to all staff including Group Directors. Further details on the Scheme are given in

note 26 to the financial statements.

2012 2011

The fees paid to non-executive Directors were: £’000 £’000

Paul Brant 25 23

Philip Han — —

Susan Jee 18 18

Anne-Marie Jones 9 9

Jo Kennefick 9 9

Philip Raw 13 13

Max Steinberg 9 9

John Tarn (Resigned 30 April 2010) — 2

Yashar Turgut 9 9

The Riverside Group Ltd has adopted early the Accounting Direction for Social Housing in England in relation to the

disclosure of senior staff emoluments.

The number of staff whose remuneration is £60,000 or more (excluding pension contributions) is disclosed below:

2012 2011

£60,000 — £65,000 3 3

£65,001 — £70,000 2 4

£70,000 — £75,000 5 3

£75,001 — £80,000 7 9

£80,001 — £85,000 5 5

£85,001 — £90,000 7 6

£90,001 — £95,000 2 2

£95,001 — £100,000 3 1

£120,001 — £125,000 — 1

———— ————

————

34

————

34

43


5

Employee information

Staff numbers

The average number of persons (including the Group Directors) employed during the year was:

Group

2012 2011

Number Number

Full time equivalent

————

2,464

————

2,354

Staff costs (for the above persons) 2012 2011

£’000 £’000

Wages and salaries 58,601 57,632

Social security costs 4,972 4,651

Other pension costs 4,282 4,098

———— ————

————

67,855

————

66,381

Staff costs and numbers referred to above relate to all staff employed by The Riverside Group, but exclude staff costs

and numbers employed by the managing agents at supported housing schemes.

Association

2012 2011

Number Number

Full time equivalent

————

2,260

————

2,338

Staff costs (for the above persons) 2012 2011

£’000 £’000

Wages and salaries 55,263 57,274

Social security costs 4,582 4,614

Other pension costs 4,009 4,090

———— ————

————

63,854

————

65,978

44


6

Surplus on sale of property

Group

2012 2011

£’000 £’000

Proceeds of sales 13,039 40,454

Cost of sales (7,222) (33,070)

———— ————

Surplus on sale of property

————

5,817

————

7,384

Association

2012 2011

£’000 £’000

Proceeds of sales 13,039 40,198

Cost of sales (7,173) (32,902)

———— ————

Surplus on sale of property

————

5,866

————

7,296

7

Interest receivable and other income

Group

2012 2011

£’000 £’000

Bank and other interest receivable 2,989 2,272

Income from listed investments 78 85

———— ————

————

3,067

————

2,357

Association

2012 2011

£’000 £’000

Bank and other interest receivable 2,918 2,262

Income from listed investments 78 85

Intercompany interest from subsidiary 1,036 413

———— ————

————

4,032

————

2,760

45


8

Interest payable and similar charges

Group

2012 2011

£’000 £’000

Bank loans and overdrafts 26,766 25,503

Other loans 9,728 8,341

Other interest payable 1,115 560

———— ————

————

37,609

————

34,404

Association

2012 2011

£’000 £’000

Bank loans and overdrafts 24,199 23,680

Other loans 9,728 8,341

Other interest payable 1,068 658

———— ————

————

34,995

————

32,679

46


9

Surplus on ordinary activities

Group

2012 2011

£’000 £’000

Surplus on ordinary activities is stated after charging:

Depreciation for the year

Housing properties 23,371 11,503

Other tangible fixed assets 2,423 1,977

Impairment charge for the year

Housing properties 2,320 —

Investment properties and properties awaiting sale 4,581 —

Auditors’ remuneration

For audit services 179 138

For non-audit services

– tax advisory 167 174

– other 66 63

Operating lease rentals

Land and buildings 1,586 1,506

Other

————

383

————

450

Association

2012 2011

£’000 £’000

Surplus on ordinary activities is stated after charging:

Depreciation charge for the year

Houses 23,373 11,526

Other tangible fixed assets 2,349 1,973

Impairment charge for the year

Housing properties 1,999 —

Auditors’ remuneration

For audit services 138 128

For non-audit services

– tax advisory 167 174

– other 60 63

Operating lease rentals

Land and buildings 1,506 1,506

Other

————

370

————

432

47


10

Tax on surplus on ordinary activities

Group

2012 2011

£’000 £’000

Analysis of charge in period

Current tax (credit)/charge (429) 5

Deferred tax (credit) — (343)

———— ————

————

(429)

————

(338)

Factors affecting tax charge for period

The tax assessed for the year is lower than the

standard rate of corporation tax in the UK (28%).

The differences are explained below:

2012 2011

£’000 £’000

———— ————

of corporation tax in the UK of 26% (2011: 28%) 5,745 5,048

Effects of:

Expenses not deductible for tax purposes 127 125

Profits exempt from tax due to charitable exemption (4,565) (5,508)

Adjustment to tax charge in respect of previous periods (435) —

Utilisation of tax losses 1,460 327

Depreciation (less than) capital allowances 14 13

Short term differences (5) —

Fair value and joint venture not taxable (2,770) —

———— ————

Current tax (credit)/charge

————

(429)

————

8

Deferred taxation

The movement in the year is as follows:

2012 2011

£’000 £’000

Profit on ordinary activities before tax 22,098 18,030

Profit on ordinary activities multiplied by the standard rate

At the beginning of the year (1,312) (1,323)

(Credit) for the year — (343)

Consolidation adjustments (5) 354

———— ————

At the end of the year

————

(1,317)

————

(1,312)

The elements of the deferred tax asset and amounts not provided are as follows:

Provided Unprovided

£’000 £’000

Difference between accumulated

depreciation and capital allowances 509 —

Losses (1,829) (1,260)

Other timing differences 3 —

———— ————

————

(1,317)

————

(1,260)

48


10

Tax on surplus on ordinary activities – continued

Association

2012 2011

£’000 £’000

Analysis of charge in period

Current tax charge — —

Deferred tax charge — —

Prior period tax credit (435) —

———— ————

————

(435)

————


Factors affecting tax charge for period

The tax assessed for the year is higher than the

standard rate of corporation tax in the UK (28%).

The differences are explained below:

2012 2011

£’000 £’000

———— ————

of corporation tax in the UK of 26% (2011: 28%) 4,417 5,443

Effects of:

Losses

Adjustment to tax charge in respect of previous periods (435) —

Expenses not deductible for tax purposes — —

Depreciation in excess of capital allowances — —

Profits exempt from tax as a result of charitable exemption (4,417) (5,443)

———— ————

Current tax credit

————

(435)

————


Deferred taxation

The movement in the year is as follows:

2012 2011

£’000 £’000

Profit on ordinary activities before tax 16,991 19,441

Profit on ordinary activities multiplied by the standard rate

At the beginning of the year — —

Charge/(credit) for the year — —

———— ————

At the end of the year

————


————


The elements of the deferred tax asset and amounts not provided are as follows:

Provided Unprovided

£’000 £’000

Difference between accumulated

depreciation and capital allowances — —

Losses — —

Other timing differences — —

———— ————

————


————


49


11

Tangible fixed assets

Group Social Non-social Total Social

housing housing housing housing

properties properties properties properties

held for held for held for under

letting letting letting construction

£’000 £’000 £’000 £’000

Cost

At 1 April 2011 restated 1,501,815 1,821 1,503,636 74,342

Schemes completed 70,398 — 70,398 (70,398)

Additions 1,130 — 1,130 40,817

Improvements to existing properties 36,025 — 36,025 —

Disposals (10,789) — (10,789) —

Reclassification — — — —

Received on acquisition 78,042 — 78,042 3,830

———— ———— ———— ————

At 31 March 2012

————

1,676,621

————

1,821

————

1,678,442

————

48,591

Depreciation

At 1 April 2011 restated 95,691 110 95,801 —

Charge for the year 22,885 37 22,922 —

Eliminated in respect of disposals (3,524) — (3,524) —

Received on acquisition 6,837 — 6,837 —

Impairment 1,999 — 1,999 —

———— ———— ———— ————

At 31 March 2012

————

123,888

————

147

————

124,035

————


———— ———— ———— ————

Net book value (before SHG)

at 31 March 2012 1,552,733 1,674 1,554,407 48,591

Net book value (before SHG)

at 31 March 2011 – restated 1,406,124 1,711 1,407,835 74,342

———— ———— ———— ————

Social Housing Grant

At 1 April 2011 745,282 — 745,282 56,718

Receivable in the year (net) — — — 19,505

Schemes completed 38,229 — 38,229 (38,601)

Disposals (5,022) — (5,022) —

Received on acquisition 20,316 — 20,316 3,434

———— ———— ———— ————

At 31 March 2012 798,805 — 798,805 41,056

———— ———— ———— ————

at 31 March 2012 753,928 1,674 755,602 7,535

———— ———— ———— ————

Net book value (after SHG)

————

660,842

————

1,711

————

662,553

————

17,624

at 31 March 2011 – restated

Net book value (after SHG)

50


11

Tangible fixed assets – continued

Group Shared Fixtures

Completed ownership Freehold vehicles

shared properties and long and

ownership under Total leasehold computer

properties construction properties offices equipment Total

£’000 £’000 £’000 £’000 £’000 £’000

Cost

At 1 April 2011 restated 111,980 11,476 1,701,434 12,488 12,208 1,726,130

Schemes completed 10,024 (12,474) (2,450) — — (2,450)

Additions 20 10,147 52,114 501 1,976 54,591

Improvements to existing properties — — 36,025 — — 36,025

Disposals (1,419) — (12,208) (1,137) (3,318) (16,663)

Reclassification — — — (526) — (526)

Received on acquisition — — 81,872 411 538 82,821

———— ———— ———— ———— ———— ————

At 31 March 2012

————

120,605

————

9,149

————

1,856,787

————

11,737

————

11,404

————

1,879,928

Depreciation

At 1 April 2011 restated 1,632 — 97,433 5,378 5,636 108,447

Charge for the year 449 — 23,371 615 1,808 25,794

Eliminated in respect of disposals — — (3,524) (864) (3,207) (7,595)

Received on acquisition — — 6,837 191 256 7,284

Impairment — — 1,999 — — 1,999

———— ———— ———— ———— ———— ————

At 31 March 2012

————

2,081

————


————

126,116

————

5,320

————

4,493

————

135,929

———— ———— ———— ———— ———— ————

Net book value (before SHG)

at 31 March 2012 118,524 9,149 1,730,671 6,417 6,911 1,743,999

Net book value (before SHG)

at 31 March 2011 – restated 110,348 11,476 1,604,001 7,110 6,572 1,617,683

———— ———— ———— ———— ———— ————

Social Housing Grant

At 1 April 2011 34,757 4,386 841,143 — — 841,143

Receivable in the year (net) — 2,175 21,680 — — 21,680

Schemes completed 3,298 (3,125) (199) — — (199)

Disposals (266) — (5,288) — — (5,288)

Received on acquisition — — 23,750 — — 23,750

————

————

————

————

————

————

————

————

————

————

————

————

———— ———— ———— ———— ———— ————

———— ———— ———— ———— ———— ————

Improvements to existing properties consists of £36.0m capitalised costs in addition to £19.7m non-capitalised

improvements, which have been charged to the income and expenditure account.

At 31 March 2012 37,789 3,436 881,086 — — 881,086

Net book value (after SHG)

at 31 March 2012 80,735 5,713 849,585 6,417 6,911 862,913

Net book value (after SHG)

at 31 March 2011 – restated 75,591 7,090 762,858 7,110 6,572 776,540

The net book value of tangible fixed assets includes £Nil (2011: £Nil) in respect of assets held under finance leases.

51


11

Tangible fixed assets – continued

Association

Social Non-social Total Social

housing housing housing housing

properties properties properties properties

held for held for held for under

letting letting letting construction

£’000 £’000 £’000 £’000

Cost

At 1 April 2011 restated 1,501,670 1,821 1,503,491 75,140

Schemes completed 70,398 — 70,398 (70,398)

Additions 1,131 — 1,131 40,817

Improvements to existing properties 36,025 — 36,025 —

Disposals (10,789) — (10,789) —

Reclassification — — — —

———— ———— ———— ————

At 31 March 2012

————

1,598,435

————

1,821

————

1,600,256

————

45,559

Depreciation

At 1 April 2011 restated 95,690 110 95,800 —

Charge for the year 22,886 37 22,923 —

Eliminated in respect of disposals (3,524) — (3,524) —

Impairment 1,999 — 1,999 —

———— ———— ———— ————

At 31 March 2012

————

117,051

————

147

————

117,198

————


———— ———— ———— ————

Net book value (before SHG)

at 31 March 2012 1,481,384 1,674 1,483,058 45,559

Net book value (before SHG)

at 31 March 2011 – restated 1,405,980 1,711 1,407,691 75,140

———— ———— ———— ————

Social Housing Grant

At 1 April 2011 745,190 — 745,190 56,718

Receivable in the year (net) — — — 19,505

Schemes completed 38,229 — 38,229 (38,601)

Disposals (5,022) — (5,022) —

————

————

————

————

———— ————

———— ————

———— ———— ———— ————

———— ———— ———— ————

At 31 March 2012 778,397 — 778,397 37,622

Net book value (after SHG)

at 31 March 2012 702,987 1,674 704,661 7,937

Net book value (after SHG)

at 31 March 2011 – restated 660,790 1,711 662,501 18,422

52


11

Tangible fixed assets – continued

Association

Shared

Fixtures

Completed ownership Freehold vehicles

shared properties and long and

ownership under Total leasehold computer

properties construction properties offices equipment Total

£’000 £’000 £’000 £’000 £’000 £’000

Cost

At 1 April 2011 restated 111,980 11,476 1,702,087 11,962 12,055 1,726,104

Schemes completed 10,024 (12,474) (2,450) — — (2,450)

Additions — 10,147 52,095 277 1,937 54,309

Improvements to existing properties — — 36,025 — — 36,025

Disposals (1,419) — (12,208) (1,137) (3,274) (16,619)

Reclassification 20 — 20 — — 20

———— ———— ———— ———— ———— ————

At 31 March 2012

————

120,605

————

9,149

————

1,775,569

————

11,102

————

10,718

————

1,797,389

Depreciation

At 1 April 2011 restated 1,632 — 97,432 5,378 5,524 108,334

Charge for the year 451 — 23,374 615 1,754 25,743

Eliminated in respect of disposals — — (3,524) (864) (3,164) (7,552)

Reclassification — — 1,999 — — 1,999

———— ———— ———— ———— ———— ————

At 31 March 2012

————

2,083

————


————

119,281

————

5,129

————

4,114

————

128,524

———— ———— ———— ———— ———— ————

Net book value (before SHG)

at 31 March 2012 118,522 9,149 1,656,288 5,973 6,604 1,668,865

Net book value (before SHG)

at 31 March 2011 – restated 110,348 11,476 1,604,655 6,584 6,531 1,617,770

———— ———— ———— ———— ———— ————

Social Housing Grant

At 1 April 2011 34,755 4,388 841,051 — — 841,051

Receivable in the year (net) — 2,175 21,680 — — 21,680

Schemes completed 3,298 (3,125) (199) — — (199)

Disposals (266) — (5,288) — — (5,288)

———— ———— ———— ———— ———— ————

At 31 March 2012 37,787 3,438 857,244 — — 857,244

———— ———— ———— ———— ———— ————

———— ———— ———— ———— ———— ————

———— ———— ———— ———— ———— ————

Improvements to existing properties consists of £36.0m capitalised costs in addition to £17.8m non capitalised

improvements, which have been charged to the income and expenditure account. In addition a further £5.4m has been

included in the opening balance restated as a result of a prior period adjustment for Component Accounting.

Net book value (after SHG)

at 31 March 2012 80,735 5,711 799,044 5,973 6,604 811,621

Net book value (after SHG)

at 31 March 2011 – restated 75,593 7,088 763,604 6,584 6,531 776,719

53


11

Tangible fixed assets – continued

Housing properties and offices include freehold and long leasehold land and buildings

as analysed below (net of SHG and depreciation):

Group

2012 2011

£’000 £’000

Restated

Housing Properties

Freehold 848,275 756,983

Long leasehold 1,310 5,875

———— ————

————

849,585

————

762,858

Offices

Freehold 5,279 5,693

Long leasehold 1,138 1,417

———— ————

————

6,417

————

7,110

Association

2012 2011

£’000 £’000

Restated

Housing Properties

Freehold 797,734 757,729

Long leasehold 1,310 5,875

———— ————

————

799,044

————

763,604

Offices

Freehold 4,835 5,167

Long leasehold 1,138 1,417

———— ————

————

5,973

————

6,584

54


12

Investments

A. Fixed assets

Name of undertaking Nature of undertaking Principal activity

Circle Limited 3 Joint Venture company incorporated and Construction waste recycling

limited by shares under the Companies Act 1985

Compendium Group Limited 4 Joint Venture company incorporated and limited Strategic urban regeneration

by shares under the Companies Act 1985

and development

Donald Bates Charity Charitable Trust Management of supported

housing

ECHG (Harrow) Homes plc 1 Public Limited Company Property investment

ECHG (Kensington & Chelsea) Public Limited Company Property investment

Homes plc 1

ECHG (No 1) Limited Registered Industrial and Provident Society Property investment

Eleanor Godfrey Crittal Chairty Charitable Trust Management of supported

housing

Eventide Homes Trust Charitable Trust Management of supported

housing

Evolve Facility Services Limited Company incorporated and limited by Property maintenance

shares under the Companies Act 1985

Irvine Housing Association Limited Registered Industrial and Provident Society Registered Social Landlord

Naylands (51-68) Limited 2 Company incorporated and limited by Property management

guarantee under the Companies Act 1985

Prospect (GB) Limited Company incorporated and limited by Property development and

shares under the Companies Act 1985

investment

Riverside Consultancy Services Limited Company incorporated and limited by Design and build services

shares under the Companies Act 1985

Riverside Housing Association Charitable Trust Funding charitable activities

Charitable Trust

Riverside Housing Repairs Limited Company incorporated and limited by Dormant

shares under the Companies Act 1985

Riverside Regeneration Limited Company incorporated and limited by Urban regeneration initiatives

shares under the Companies Act 1985

Riverside Urban Services Limited Company incorporated and limited by Leasing of office premises

guarantee under the Companies Act 1985

The St Michael’s Housing Trust Charitable Trust Management of supported

housing

Key to numbering

1 Entity is a wholly-owned subsidiary undertaking of ECHG (No 1) Limited.

2 Entity is 76% owned by The Riverside Group Limited.

3 Entity is 22.5% owned by The Riverside Group Limited.

4 Entity is 50% owned by The Riverside Group Limited.

55


12

Investments – continued

Group

2012 2011

£’000 £’000

(i) Other investments

8¾% Treasury Stock 2017 309 335

Charifund 7,668 7,418

Investment properties (see ii below) 15,158 14,028

Homebuy 1,382 173

Other 1,858 2,082

———— ————

26,375 24,036

Investment in joint ventures 70 65

———— ————

————

26,445

————

24,101

Association

2012 2011

£’000 £’000

(i) Other investments

8¾% Treasury Stock 2017 309 335

Charifund 7,668 7,418

Investment in subsidiaries 26,271 13,500

Investment in Joint Ventures 841 731

Homebuy 14 14

Other 1,743 1,971

———— ————

————

36,846

————

23,969

Group

2012 2011

£’000 £’000

(ii) Investment properties

Valuation at 1 April 2011 14,028 14,001

Additions 1,045 27

Reclassification 526 —

Revaluation 46 —

Impairment (487) —

———— ————

Valuation at 31 March 2012

————

15,158

————

14,028

56


12

Investments – continued

B. Current assets

Group

2012 2011

£’000 £’000

Unit Trusts, Investment Trusts and listed investments

on the London Stock Exchange 3,498 3,410

Money market deposits and charged bank accounts 35,344 19,353

———— ————

————

38,842

————

22,763

Association

2012 2011

£’000 £’000

Unit Trusts, Investment Trusts and listed investments

on the London Stock Exchange 3,498 3,410

Money market deposits and charged bank accounts 34,344 19,353

———— ————

————

37,842

————

22,763

57


13

Debtors

Group

2012 2011

£’000 £’000

———— ————

Amounts falling due after more than one year: 22,861 39,217

Amounts falling due within one year:

Gross rent arrears 10,827 12,478

Less: bad debt provision (2,683) (3,078)

———— ————

Net rental debtors 8,144 9,400

Social Housing Grant receivable 7,068 9,512

Other debtors 83,164 72,835

Prepayments and accrued income 4,596 5,176

Corporation tax 1,317 1,312

Amount due from joint venture 39 56

———— ————

————

104,328

————

98,291

Included in debtors due after more than one year is £22.9m (2011: £39.0m) representing the obligation of the local

authorities that transferred stock to the Group to have improvement work carried out to the properties. The Group is

contracted by the local authorities to carry out these improvement works on their behalf.

Association

2012 2011

£’000 £’000

Amounts falling due in more than one year:

Improvement programmes 22,861 38,999

Intra group debtors 25,906 16,517

———— ————

48,767 55,516

———— ————

Amounts falling due within one year:

Gross rent arrears 10,655 12,478

Less: bad debt provision (2,566) (3,078)

———— ————

Net rental debtors 8,089 9,400

Due from subsidiary undertakings — 673

Social Housing Grant receivable 7,068 9,202

Other debtors 79,591 73,435

Prepayments and accrued income 4,473 5,117

———— ————

————

99,221

————

97,827

58


14

Properties for sale

Group

2012 2011

£’000 £’000

Properties under construction 31,624 30,475

Completed properties 22,683 23,193

———— ————

————

54,307

————

53,668

Association

2012 2011

£’000 £’000

Properties under construction 1,159 4,341

Completed properties 22,604 19,132

———— ————

————

23,763

————

23,473

59


15

Creditors: amounts falling due within one year

Group

2012 2011

£’000 £’000

Bank loans (see note 17) 10,130 9,320

Trade creditors 12,000 11,398

Rent and service charges received in advance 4,068 4,755

Social Housing Grant received in advance 4,469 11,039

Other taxation and social security payable 972 969

Other creditors 54,820 45,434

Recycled Capital Grant Fund (see note 16a) 7,839 3,850

Disposal Proceeds Fund (see note 16a) 201 76

Accruals and deferred income 49,832 44,188

Corporation tax 12 430

———— ————

————

144,343

————

131,459

Association

2012 2011

£’000 £’000

Bank loans (see note 17) 10,130 9,320

Trade creditors 10,279 6,221

Rent and service charges received in advance 3,814 4,755

Social Housing Grant received in advance 4,416 11,039

Other taxation and social security payable 821 436

Other creditors 55,441 44,981

Recycled Capital Grant Fund (see note 16a) 7,839 3,850

Disposals Proceeds Fund (see note 16a) 201 76

Accruals and deferred income 43,839 46,245

Intra group creditors 1,918 3,779

———— ————

————

138,698

————

130,702

Social Housing Grant received in advance will be utilised against the related capital expenditure during the next

twelve months.

60


16

Creditors: amounts falling due after more than one year

Group

2012 2011

£’000 £’000

Long term loans (see note 17) 701,740 605,090

Recycled Capital Grant Fund (see note 16a) 6,198 10,050

Disposal Proceeds Fund (see note 16a) 465 678

Other 67 5,635

———— ————

————

708,470

————

621,453

Long term loans are secured by fixed and floating charges on The Riverside Group’s properties.

Association

2012 2011

£’000 £’000

Long term loans (see note 17) 642,274 577,154

Recycled Capital Grant Fund (see note 16a) 6,198 10,050

Disposal Proceeds Fund (see note 16a) 465 678

Other 65 5,374

———— ————

————

649,002

————

593,256

Long term loans are secured by fixed and floating charges on The Riverside Group’s properties.

61


16a

Creditors: analysis of disposal proceeds fund

and recycled capital grant fund

Group and Association

2012 2011

£’000 £’000

Disposal Proceeds Fund

Opening balance 754 2,214

Grants recycled — 455

Interest accrued 3 7

Major repairs and works to existing stock (91) (1,922)

———— ————

Closing balance

————

666

————

754

No amounts are due for repayment to the Homes and Communities Agency.

2012 2011

£’000 £’000

Recycled Capital Grant Fund

Opening balance 13,900 17,802

Grants recycled 3,504 3,074

Interest accrued 77 64

Major repairs and works to existing stock (3,444) (7,040)

———— ————

Closing balance

————

14,037

————

13,900

No amounts are due for repayment to the Homes and Communities Agency.

62


17

Debt analysis

Group

2012 2011

£’000 £’000

Due within one year

Bank loans 8,367 8,054

Other loans 1,763 1,266

———— ————

————

10,130

————

9,320

Due after more than one year

Bank loans 605,196 528,492

Local authority loans 67 488

Other loans 100,333 79,774

Less finance costs capitalised (3,856) (3,664)

———— ————

————

701,740

————

605,090

Housing loans, included in creditors falling due within one year and creditors falling due after more than one year, bear

rates of interest between 1.1% and 11.6%, and fall due for repayment as follows:

2012 2011

£’000 £’000

Debt maturity profile

In one year or less 10,130 9,320

Between one and two years 49,186 11,263

Between two and five years 60,325 82,115

In five years or more 596,085 515,376

———— ————

715,726 618,074

Less:

Loans due in one year or less (10,130) (9,320)

Finance costs capitalised (3,856) (3,664)

———— ————

————

701,740

————

605,090

63


17

Debt analysis – continued

Association

2012 2011

£’000 £’000

Due within one year

Bank loans 8,367 8,054

Other loans 1,763 1,266

———— ————

————

10,130

————

9,320

Due after more than one year

Bank loans 545,401 500,304

Local authority loans 67 488

Other loans 100,333 79,774

Less finance costs capitalised (3,526) (3,412)

———— ————

————

642,275

————

577,154

Housing loans, included in creditors falling due within one year and creditors falling due after more than one year, bear

rates of interest between 1.1% and 11.6% and fall due for repayment as follows:

2012 2011

£’000 £’000

Debt maturity profile

In one year or less 10,130 9,320

Between one and two years 22,284 11,260

Between two and five years 42,051 53,930

In five years or more 581,466 515,376

———— ————

655,931 589,886

———— ————

Loans due in one year or less (10,130) (9,320)

Finance costs capitalised (3,526) (3,412)

———— ————

————

642,275

————

577,154

Less:

64


18

Derivatives and financial instruments

Group

The operating and financial review on pages 9 to 14 includes an explanation of the role financial instruments have had

during the period in managing the risks The Riverside Group faces in its treasury activities.

Financial assets and liabilities

Financial assets and liabilities at 31 March 2012 have book and fair values as detailed below.

2012 2012 2011 2011

Book value Fair value Book value Fair value

£’000 £’000 £’000 £’000

Charifund 7,668 7,668 7,423 7,423

8¾% Treasury stock 2017 309 309 335 335

Interest rate swap agreements — (41,430) — (18,003)

Unit trusts, investment trusts and listed investments 3,498 3,498 3,410 3,410

Unlisted investments 1,859 1,859 1,966 1,966

———— ———— ———— ————

————

13,334

————

(28,096)

————

13,134

————

(4,869)

Fixed asset investments are detailed at note 12A. The investment in 8¾% Treasury Stock 2017 is held as a requirement

of the loan from Funding For Homes Limited and cannot be disposed of until the loan has been repaid (see note 27). The

investment in Charifund is held by virtue of a Board decision to actively provide for the bullet repayment of the loans due

to HACO Limited and Funding For Homes Limited in 2017 and 2018 respectively.

The fair value of the interest rate swap agreement at 5 July 2012 was £47.7m in favour of the counterparties.

Interest rate risk profile of financial assets

With the exception of the investment of £309,375 (2011: £335,500) in 8¾% Treasury Stock 2017, all investments have

variable rates of return. Money market deposits and other cash deposits, all of which are denominated in sterling, bear

interest at variable rates based upon LIBOR.

Interest rate risk profile of financial liabilities 2012 2011

£’000 £’000

Floating rate 138,221 56,631

Fixed rate 577,017 560,955

Interest free 488 488

———— ————

————

715,726

————

618,074

The floating rate financial instruments comprise sterling denominated bank borrowings that bear interest at rates based

upon LIBOR. The weighted average rate of interest paid on the fixed rate debt during the year is 5.9% and the weighted

average of the period for which the interest rates are fixed is 8.6 years.

65


18

Derivatives and financial instruments – continued

Borrowing facilities

Undrawn committed borrowing facilities at 31 March 2012 were as follows:

Group and Association

2012 2011

£’000 £’000

Expiring in less then 1 year 17,636 20,900

Expiring between 1 and 5 years 5,000 3,000

Expiring in more than 5 years 37,000 119,829

———— ————

————

59,636

————

143,729

£8.8m of the undrawn committed borrowing facilities requires fixed charged security to be placed with the lender before

it can be utilised.

Association

The operating and financial review on pages 9 to 14 include an explanation of the role financial instruments have had

during the year in managing the risks the Association faces in its treasury activities.

Financial assets and liabilities

Financial assets and liabilities at 31 March 2012 have book values and fair values as detailed below:

2012 2012 2011 2011

Book value Fair value Book value Fair value

£’000 £’000 £’000 £’000

Charifund 7,668 7,668 7,423 7,423

8¾% Treasury Stock 2017 309 309 335 335

Interest rate swap agreements — (40,317) — (16,644)

Unit trusts, Investment Trusts and listed investments 3,498 3,498 3,410 3,410

Unlisted investments 1,743 1,743 1,966 1,966

———— ———— ———— ————

————

13,218

————

(27,099)

————

13,134

————

(3,510)

Fixed asset investments are detailed at note 12A. The investment in 8¾% Treasury Stock 2017 is held as a requirement

of the loan from Funding for Homes Limited and cannot be disposed of until the loan has been repaid (note 27). The

investment in Charifund is held by virtue of a Board decision to actively provide for the bullet repayment of the loans due

to HACO Limited and Funding for Homes Limited in 2017 and 2018 respectively.

The fair value of the interest rate swap agreement at 5 July 2012 was £46.7m in favour of the counterparties.

66


18

Derivatives and financial instruments – continued

Interest rate risk profile of financial assets

With the exception of the investment of £309,375 (2011: £335,500) in 8¾% Treasury Stock 2017, all investments have

variable rates of return. Money market deposits and other cash deposits, all of which are denominated in sterling, bear

interest at variable rates based upon LIBOR.

Interest rate risk profile of financial liabilities 2012 2011

£’000 £’000

Floating rate 102,491 52,068

Fixed rate 552,952 537,330

Interest free 488 488

———— ————

————

655,931

————

589,886

The floating rate financial instruments comprise sterling denominated bank borrowings that bear interest at rates based

upon LIBOR. The average weighted rate of interest paid on the fixed rate debt during the year is 5.9% and the weighted

average of the period for which the interest rates are fixed is 9.0 years.

19

Deferred income

Deferred income relates to a receipt of £1.1m arising from the transfer to The Riverside Group of another association’s

HACO fixed interest debt of £11.0m as compensation for the decrease in long-term interest rates. The balance of £0.2m

(2011: £0.3m) is released over the remaining life of the loan.

67


20

Reserves

Group

Revaluation Other Income and

Consolidation reserve reserves expenditure

reserve (restricted) (designated) account Total

£’000 £’000 £’000 £’000 £’000

At 1 April 2011 382 4,420 73,778 132,761 211,341

Prior period adjustment (382) — (69,535) 74,054 4,137

———— ———— ———— ———— ————

At 1 April 2011 restated — 4,420 4,243 206,815 215,478

Surplus for the year — — — 22,527 22,527

Transfer to income and

expenditure account from reserves — — (10,278) 10,278 —

Revaluation of investments — (204) — — (204)

Transfer from income and

expenditure account to reserves — — 16,951 (16,951) —

Actuarial gain on pension scheme — — — (3,943) (3,943)

Donations — — 1,025 — 1,025

———— ———— ———— ———— ————

At 31 March 2012

————


————

4,216

————

11,941

————

218,726

————

234,883

Association

Revaluation Other Income and

reserve reserves expenditure

Goodwill (restricted) (designated) account Total

£’000 £’000 £’000 £’000 £’000

At 1 April 2011 382 4,420 73,719 145,788 224,309

Prior period adjustment (382) — (69,535) 74,054 4,137

———— ———— ———— ———— ————

At 1 April 2011 restated — 4,420 4,184 219,842 228,446

Surplus for the year — — — 17,426 17,426

Donations and other movements — — 1,025 — 1,025

Transfer to income and

expenditure account from reserves — — (10,278) 10,278 —

Revaluation of investments — (204) — — (204)

Transfer from income and

expenditure account to reserves — — 16,951 (16,951) —

Actuarial gain on pension scheme — — — (3,462) (3,462)

———— ———— ———— ———— ————

At 31 March 2012

————


————

4,216

————

11,882

————

227,133

————

243,231

Within other reserves are the charitable reserves of £2.0m analysed between restricted reserves £1.5m and unrestricted

reserves £0.5m.

In addition there is a further £0.8m restricted reserve relating to 50% of proceeds on qualifying land disposals which are

subject to a clawback agreement with Carlisle City Council.

68


21

Reconciliation of operating surplus to net cash

inflow from operating activities

Group

2012 2011

£’000 £’000

Operating surplus 40,139 42,897

Depreciation and impairment 28,794 13,469

Decrease in other debtors and prepayments (8,253) 6,262

Increase/(decrease) in other creditors and accruals 9,948 6,166

(Increase)/decrease in rent arrears 1,256 (1,567)

Fixed assets disposals 7,269 (11,159)

———— ————

Net cash inflow from operating activities

————

79,153

————

56,068

22

Reconciliation of net cash flow to movement in net debt

Group

2012 2011

£’000 £’000

(Decrease)/increase in cash in the year (1,527) (25,447)

Increase in loans (53,457) (9,739)

Movement in liquid resources 16,079 3,037

———— ————

Change in net debt resulting from cash flows (38,905) (32,149)

Due to acquisition (44,003) —

Non cash adjustments including captilised finance costs — (64)

———— ————

(82,908) (32,213)

Net debt at 1 April 2011 (582,524) (550,311)

———— ————

Net debt at 31 March 2012 (see note 23)

————

(665,432)

————

(582,524)

69


23

Analysis of net debt

Group

1 April Cash Other 31 March

2011 flows changes 2012

£’000 £’000 £’000 £’000

Cash at bank and in hand 9,123 (1,527) — 7,596

Loans due within one year (see note 15) (9,320) 11,354 (12,164) (10,130)

Loans due after one year (see note 17) (605,090) (64,811) (31,839) (701,740)

Current asset investments (see note 12b) 22,763 16,079 — 38,842

———— ———— ———— ————

Total

————

(582,524)

————

(38,905)

————

(44,003)

————

(665,432)

24

Capital commitments

Group and Association

2012 2011

£’000 £’000

Capital expenditure that has been contracted for but which

has not been provided for in the financial statements 29,626 61,470

———— ————

———— ————

2012 2011

£’000 £’000

Capital expenditure that has been authorised by the

Board but which has not yet been contracted for 13,653 15,081

———— ————

———— ————

Grants to be generated from the above expenditure contracted not provided for 3,661 16,325

Grants to be generated from the above expenditure authorised by the Board 3,191 1,830

The remaining commitments will be fully financed from internal cash resources and existing loan facilities as required.

70


25

Financial commitments

At 31 March 2012 annual commitments under non-cancellable operating leases were as follows:

Group

2012 2011

£’000 £’000

Land &

Land &

buildings Other buildings Other

Expiring within one year 120 229 — 238

Expiring between two and five years 1,304 154 1,344 231

Expiring in five or more years 162 — 162 —

———— ———— ———— ————

————

1,586

————

383

————

1,506

————

469

Association

2012 2011

£’000 £’000

Land &

Land &

buildings Other buildings Other

Expiring within one year 41 202 — 229

Expiring between two and five years 1,304 154 1,344 219

Expiring in five or more years 162 — 162 —

———— ———— ———— ————

————

1,507

————

356

————

1,506

————

448

71


26

Pension information

i) The Riverside Group Pension Scheme

The Riverside Group operates a pension scheme providing benefits based on final pensionable pay. The contributions are

determined by an independent qualified actuary on the basis of triennial valuation using the projected unit method. The

most recent formal valuation was 31 March 2011. This has been updated for FRS 17 purposes to 31 March 2012 by an

independent qualified actuary. The assumptions used are the best estimates chosen from a range of possible actuarial

assumptions which, due to the timescale covered, may not necessarily be borne out in practice.

The major assumptions used in this valuation are:

2012 2011 2010 2009 2008

Inflation CPI (RPI prior to 2011) 1.9% 2.6% 3.5% 2.5% 3.4%

Rate of discount on scheme liabilities 4.6% 5.5% 5.5% 6.7% 6.3%

Rate of salary increase 2.9% 4.3% 4.5% 3.5% 4.4%

Rate of increase of pensions in payment 2.6% 3.3% 3.5% 2.5% 3.4%

Rate of increase of deferred pensions 2.6% 3.3% 3.5% 2.5% 3.4%

Life expectancy male non-pensioner 23.2 23.2 23.1 20.2 20.2

Life expectancy female non-pensioner 26.0 26.0 25.9 23.1 23.1

Life expectancy male pensioner 22.2 22.2 22.1 18.8 18.8

Life expectancy female pensioner 25.0 25.0 25.0 21.7 21.7

The Minister for Pensions announced on 8 July 2010 the Government’s intention to move to using the Consumer Prices

Index (CPI) rather than Retail Prices Index (RPI) as the inflation measure for determining minimum pension increases

to be applied to the statutory index - linked features of retirement benefits. As a result CPI has been applied to future

deferred revaluations, salary increases and increases to Guaranteed Minimum Pensions (GMP). RPI continues to be

applied to CARE revaluations and increases to pensions in excess of GMP.

The fair value of the scheme’s assets at 31 March 2012, which are not intended to be realised in the short term and

may be subject to significant change before they are realised, and the present value of the scheme’s liabilities, which are

derived from cash flow projections over long periods and are thus inherently uncertain, were:

2012 2011 2010 2009 2008

£’000 £’000 £’000 £’000 £’000

Fair value of assets 82,900 78,300 70,600 47,100 54,700

Present value of liabilities (86,500) (81,700) (78,600) (46,700) (57,200)

———— ———— ———— ———— ————

(Deficit)/surplus in the scheme

————

(3,600)

————

(3,400)

————

(8,000)

————

400

————

(2,500)

72


26

Pension information – continued

The market value of the assets of the scheme and the expected long term rates of return at 31 March 2012 were:

2012 2011 2010 2009 2008

£’000 £’000 £’000 £’000 £’000

Market value

Equities 57,400 55,000 47,100 33,100 37,600

Fixed Interest Bonds — — 4,500 5,800 6,900

Index Linked Bonds 11,500 9,500 6,100 3,300 4,300

Corporate Bonds — — 6,300 4,800 5,700

Cash — 200 6,600 100 200

Other 14,000 13,600 — — —

———— ———— ———— ———— ————

Total

————

82,900

————

78,300

————

70,600

————

47,100

————

54,700

2012 2011 2010 2009 2008

Expected long term return

Equities 7.75% 7.50% 7.50% 7.50% 7.50%

Fixed Interest Bonds 2.75% 4.20% 4.40% 3.70% 4.55%

Index Linked Bonds 2.75% 4.20% 4.40% 3.70% 4.55%

Corporate Bonds 5.50% 5.50% 5.50% 6.70% 6.30%

Cash 2.75% 4.20% 4.40% 3.70% 4.55%

Other 4.60% 5.50% — — —

———— ———— ———— ———— ————

Total

————

6.52%

————

6.74%

————

6.57%

————

6.68%

————

6.76%

2012 2011 2010 2009 2008

£’000 £’000 £’000 £’000 £’000

Analysis of the amount charged

to operating profit

Current service cost 2,300 2,100 1,000 2,000 2,400

Past service cost — 1,300 — — —

———— ———— ———— ———— ————

Total operating charge

————

2,300

————

3,400

————

1,000

————

2,000

————

2,400

2012 2011 2010 2009 2008

£’000 £’000 £’000 £’000 £’000

Analysis of the amount credited

to other finance income

Expected return on pension scheme assets 5,400 4,600 3,100 3,300 3,800

Interest on pension liabilities (4,500) (4,300) (3,100) (3,600) (3,200)

———— ———— ———— ———— ————

Net return

————

900

————

300

————


————

(300)

————

600

73


26

Pension information – continued

2012 2011 2010 2009 2008

£’000 £’000 £’000 £’000 £’000

Movement in (deficit)/surplus during year

(Deficit)/surplus in scheme at beginning of the year (3,400) (8,000) 400 (2,500) (4,200)

Movement in year:

Current service cost (2,300) (2,100) (1,000) (2,000) (2,400)

Past service cost — (1,300) — — —

Contributions 2,800 2,900 6,800 2,800 2,400

Other finance income 900 300 — (300) 600

Actuarial gain/(loss) in STRSD (1,600) 4,800 (14,200) 2,400 1,100

———— ———— ———— ———— ————

(Deficit)/surplus in scheme at end of the year

————

(3,600)

————

(3,400)

————

(8,000)

————

400

————

(2,500)

2012 2011 2010 2009 2008

£’000 £’000 £’000 £’000 £’000

Amount recognised in the statement of

total recognised surpluses and deficits (STRSD)

Actual return less expected return on

pension scheme assets (2,700) 600 13,800 (13,100) (6,700)

Experienced gains arising on

the scheme liabilities 1,100 — 300 3,100 500

Changes in assumptions underlying the

present value of the scheme liabilities — 4,200 (28,300) 12,400 7,300

———— ———— ———— ———— ————

Actuarial gain/(loss) recognised in STRSD

————

(1,600)

————

4,800

————

(14,200)

————

2,400

————

1,100

2012 2011 2010 2009 2008

History of experience surpluses and deficits

Difference between actual and expected

returns on assets (£’000) (2,700) 600 13,800 (13,100) (6,700)

% of scheme assets (3.26%) 0.8% 19.7% (27.8%) (12.2%)

Experienced (losses)/gains on liabilities (£’000) 1,100 — 300 3,100 500

% of scheme liabilities 1.27% — 0.4% 6.6% 0.9%

Total amount recognised in STRSD (£’000) (1,600) 4,800 (14,200) 2,400 1,100

% of scheme liabilities (1.85%) 5.9% (18.1%) 5.1% 1.9%

74


26

Pension information – continued

2012 2011

£’000 £’000

Reconciliation of assets

Assets at beginning of period 78,300 70,600

Employer contributions 2,800 2,900

Employee contributions 1,300 1,300

Benefits paid (2,200) (1,700)

Expected return on plan assets 5,400 4,600

Asset performance (2,700) 600

———— ————

Assets at end of period

————

82,900

————

78,300

Reconciliation of liabilities

Projected benefit obligation at the beginning of period 81,700 78,600

Operating charge 2,300 3,400

Interest cost 4,500 4,300

Employee contributions 1,300 1,300

Benefits paid (2,200) (1,700)

Actuarial (loss) (1,100) —

Change in assumptions — (4,200)

———— ————

Projected benefit obligation at end of period

————

86,500

————

81,700

Recognition of surplus

(Deficit)/surplus brought forward (3,400) (8,000)

Finance income 900 300

Actual less expected investment return (2,700) 600

Acutarial gain 1,100 4,200

Contribution gain/(loss) 500 (500)

———— ————

Deficit carried forward

————

(3,600)

————

(3,400)

75


26

Pension information – continued

ii) Other defined benefit pension schemes

The Riverside Group also makes contributions to other defined benefit pension schemes, Merseyside Pension Scheme.

Greater Manchester Pension Fund, East Riding Pension Fund, Cumbria Local Government Pension Scheme and Strathdyle

Pension Fund. Each entity is a participating employer in its respective scheme.

The most recent actuarial valuations of these schemes have been updated for FRS 17 purposes by independent qualified

actuaries. The disclosures represent each entity’s share of the overall scheme’s assets and liabilities. As permitted by FRS

17 the disclosures for these entities have been consolidated. The assumptions used, which have been combined on a

weighted average basis on asset values, are the best estimates chosen from a range of possible actuarial assumptions,

which due to the timescale covered may not necessarily be borne out in practice.

The major assumptions used in this valuation are:

2012 2011 2010 2009 2008

Inflation CPI (RPI prior 2011) 2.08% 2.84% 3.50% 3.28% 3.60%

Rate of discount on scheme liabilities 3.18% 5.45% 5.58% 7.08% 6.17%

Rate of salary increase 3.43% 4.49% 4.68% 4.93% 5.26%

Rate of increase of pensions in payment 2.08% 2.84% 3.50% 3.28% 3.60%

Rate of increase of deferred pensions 2.08% 2.84% 3.50% 3.28% 3.60%

Life expectancy male non-pensioner 23.2 23.2 21.9 21.4 21.4

Life expectancy female non-pensioner 25.9 26.0 24.9 24.2 24.2

Life expectancy male pensioner 21.4 21.5 20.7 21.1 21.1

Life expectancy female pensioner 24.1 24.2 23.7 23.9 23.9

The Chancellor of the Exchequer announced on 22 June 2010 as part of the Emergency Budget that with effect from

April 2011 public service pensions would have their pension increases calculated by reference to CPI rather than RPI. The

majority of local government pension schemes have taken the view that a constructive obligation to increase pensions

in line with RPI exists and as a result the change was regarded as a change in benefits and was shown in 2011 as a credit

to past service cost.

The fair value of the schemes’ assets at 31 March 2012, which are not intended to be realised in the short term and

may be subject to significant change before they are realised, and the present value of the scheme’s liabilities, which are

derived from cash flow projections over long periods and are thus inherently uncertain, were:

2012 2011 2010 2009 2008

£’000 £’000 £’000 £’000 £’000

Fair value of assets 35,044 28,372 26,093 20,137 24,243

Present value of liabilities (39,195) (30,185) (32,987) (21,906) (25,758)

———— ———— ———— ———— ————

Deficit in the schemes

————

(4,151)

————

(1,813)

————

(6,894)

————

(1,769)

————

(1,515)

76


26

Pension information – continued

The market value of the assets of the scheme and the expected long term rates of return at 31 March 2012 were:

2012 2011 2010 2009 2008

£’000 £’000 £’000 £’000 £’000

Market value

Equities 20,550 15,638 14,658 10,511 13,617

Fixed Interest Bonds 4,720 4,694 4,892 3,948 4,670

Index Linked Bonds 4,239 3,166 2,140 1,477 2,075

Property 2,346 1,758 1,538 1,367 1,852

Other 2,209 2,241 1,985 2,142 782

Cash 980 875 880 692 1,247

———— ———— ———— ———— ————

Total

————

35,044

————

28,372

————

26,093

————

20,137

————

24,243

2012 2011 2010 2009 2008

Expected long term return

Equities 6.81% 7.50% 7.51% 7.44% 7.52%

Fixed Interest Bonds 2.66% 4.39% 4.07% 4.16% 4.72%

Index Linked Bonds 3.65% 4.46% 4.45% 5.32% 5.41%

Property 5.57% 6.36% 7.21% 6.32% 6.41%

Other 5.12% 6.44% 1.79% 6.64% 6.65%

Cash 1.21% 0.97% 3.48% 0.90% 5.20%

———— ———— ———— ———— ————

Total

————

5.52%

————

6.21%

————

6.03%

————

6.26%

————

6.57%

2012 2011 2010 2009 2008

£’000 £’000 £’000 £’000 £’000

Analysis of the amount charged to

operating profit

Current service cost 809 714 449 669 682

Past service (credit)/cost 102 (1,960) 77 88 423

———— ———— ———— ———— ————

Total operating (credit)/charge

————

911

————

(1,246)

————

526

————

757

————

1,105

2012 2011 2010 2009 2008

£’000 £’000 £’000 £’000 £’000

Analysis of the amount credited to

other finance income

Expected return on pension scheme assets 2,135 1,643 1,238 1,567 1,730

Interest on pension liabilities (1,961) (1,866) (1,549) (1,606) (1,479)

———— ———— ———— ———— ————

Net return

————

174

————

(223)

————

(311)

————

(39)

————

251

77


26

Pension information – continued

2012 2011 2010 2009 2008

£’000 £’000 £’000 £’000 £’000

Movement in deficit during year

Deficit in scheme at beginning of the year (1,813) (6,894) (1,769) (1,515) (368)

Movement in year:

Current service cost (809) (714) (449) (669) (682)

Past service cost (296) 1,960 (77) (146) (423)

Contributions 936 485 460 526 647

Other finance (expenditure)/income 174 (223) (311) (39) 251

Actuarial (loss)/gain in STRSD (2,343) 3,573 (4,748) 74 (940)

———— ———— ———— ———— ————

Deficit in scheme at end of the year

————

(4,151)

————

(1,813)

————

(6,894)

————

(1,769)

————

(1,515)

2012 2011 2010 2009 2008

£’000 £’000 £’000 £’000 £’000

Amount recognised in the statement of

total recognised surpluses and deficits (STRSD)

Actual return less expected return on

pension scheme assets (1,011) 277 4,740 (4,134) (1,936)

Experienced gains/(losses) arising on the

scheme liabilities (1,332) 3,296 (9,488) 4,208 1,289

Changes in assumptions underlying the present

value of the scheme liabilities — — — — (293)

———— ———— ———— ———— ————

Actuarial gain/(loss) recognised in STRSD

————

(2,343)

————

3,573

————

(4,748)

————

74

————

(940)

2012 2011 2010 2009 2008

History of experience surpluses and deficits

Difference between actual and

expected returns on assets (£’000) (1,011) 277 4,740 (4,134) (1,936)

% of scheme assets (2.88%) 1.0% 14.4% (20.5%) (8.0%)

Experienced (losses)/gains on liabilities (£’000) (1,332) 3,296 (9,488) 4,208 1,289

% of scheme liabilities (3.40%) 10.9% (36.4%) 19.2% 5.0%

Total amount recognised in STRSD (£’000) (2,343) 3,573 (4,748) 74 (940)

% of scheme liabilities (5.98%) 11.8% (15.3%) 0.3% (3.7%)

78


26

Pension information – continued

2012 2011

£’000 £’000

Reconciliation of assets

Assets at beginning of period 28,372 26,093

New schemes brought forward 5,146 416

Employer contributions 936 485

Employee contributions 288 211

Benefits paid (822) (753)

Expected return on plan assets 2,135 1,643

Asset performance (1,011) 277

———— ————

Assets at end of period

————

35,044

————

28,372

Reconciliation of liabilities

Projected benefit obligation at beginning of period 30,185 32,987

New schemes brought forward 5,340 458

Operating charge 911 (1,288)

Interest cost 1,961 1,866

Employee contributions 288 211

Benefits paid (823) (753)

Actuarial gain/(loss) 1,332 (3,296)

———— ————

Projected benefit obligation at end of period

————

39,194

————

30,185

Recognition of surplus

Deficit brought forward (1,813) (6,894)

New schemes brought forward (194) (42)

Finance income 174 (223)

Actual less expected investment return (1,011) 277

Actuarial (loss)/gain (1,332) 3,296

Contribution gain 25 1,773

———— ————

Deficit carried forward

————

(4,151)

————

(1,813)

79


26

Pension information – continued

(iii) Defined contribution pension schemes

The Riverside Group also contributes to defined contribution schemes. The cost for the year was £45.9K (2011: £8.0K).

(iv) The Social Housing Pension Scheme

The Riverside Group participates in the Social Housing Pension Scheme (SHPS). SHPS is a multi-employer defined benefit

scheme. The Scheme is funded and is contracted out of the state scheme.

The Riverside Group has elected to operate the final salary with a 1/60th accrual rate benefit structure for active

members as at 31 March 2010 and from 1 April 2010 CARE for new entrants.

During the accounting period The Riverside Group contributed at the rate of 16.7%. Member contributions varied

between 4.1% and 6.1% depending on their age.

As at the balance sheet date 208 employees of the Group were active members of SHPS. The Riverside Group continue to

offer membership of SHPS to its employees.

It is not possible in the normal course of events to identify the share of underlying assets and liabilities belonging to

individual participating employers. Accordingly, due to the nature of SHPS, the accounting charge for the period under

FRS 17 ‘Retirement Benefits’ represents the employer contribution payable.

Following a change in legislation in September 2005 there is a potential debt on the employer that could be levied by the

Trustee of SHPS. The debt is due in the event of the employer ceasing to participate in SHPS or on the winding up

of SHPS.

The debt for SHPS as a whole is calculated by comparing the liabilities for SHPS (calculated on a buyout basis i.e. the cost

of securing benefits by purchasing annuity policies from an insurer, plus an allowance for expenses) versus the assets of

the Scheme. If the liabilities exceed assets there is a buy-out debt.

The amount of the debt therefore depends on many factors including total liabilities, investment performance, the

liabilities in respect of current and former employees of the employer, financial conditions at the time of the cessation

event and the insurance buy-out market. The amounts of debt can therefore be volatile over time.

80


27

Contingent liabilities

As at 31 March 2012, The Riverside Group had a contingent liability totalling £0.3m (2011: £0.3m) in respect of its entire

holding of 8¾% Treasury Stock 2017. This stock is held by the Trustee for Funding For Homes Limited, subject to certain

rights, and could be sold should a fellow borrower fail to service the interest or repay the stock.

Following the demolition of properties on certain sites in 2010 no further costs have been written off in 2012

(2011: £2.1m). The related grant has been written back and a contingent liability to a maximum of £2.1m (2011: £2.1m)

exists in respect of this grant; in the unlikely event of the sale of the land, the grant becomes repayable to the extent of

any surplus generated on sale.

The Group has performance bonds with Barclays Bank totalling £0.2m (2011: £0.2m).

28

Provisions for liabilities and charges

Group

2012 2011

£’000 £’000

Improvement programme (i) 25,499 49,611

Pension liabilities (ii) 7,751 5,213

Other 226 227

———— ————

At 31 March 2012

————

33,476

————

55,051

(i) Improvement programme

A provision of £25.5m has been made in respect of The Riverside Group’s outstanding contractual and statutory

commitment to carry out improvement work.

(ii) Pension liabilities

In line with the full adoption of FRS 17 ‘Retirement Benefits’ the net deficit on The Riverside Group Pension Scheme and

Local Authority funds are recognised as a liability on the balance sheet (note 26).

Association

2012 2011

£’000 £’000

Improvement programme 25,499 49,611

Pension liabilities 7,168 5,213

Other 227 227

———— ————

At 31 March 2012

————

32,894

————

55,051

81


29

Housing stock

Group &

Group Association Association

2012 2012 2011

Number Number Number

Dwellings owned and in management

Social housing

General housing 37,188 35,041 34,830

Supported housing (bed spaces) 9,646 9,605 9,631

Shared ownership 2,355 2,355 2,164

Key worker/other 497 497 210

———— ———— ————

Total social housing 49,686 47,498 46,835

Dwellings managed for other organisations 1,529 1,529 1,600

———— ———— ————

Total managed social housing 51,215 49,027 48,435

Non social housing 1,064 1,064 1,377

Owned 721 721 851

———— ———— ————

Total owned and managed 53,000 50,812 50,663

———— ———— ————

Awaiting major repair/disposal 774 774 836

———— ———— ————

Total stock 53,774 51,586 51,499

———— ———— ————

———— ———— ————

Accommodation in development at the year end 416 408 1,185

82


30

Related party transactions

One Board member of The Riverside Group Limited is a tenant of The Riverside Group Limited. Their tenancy is on normal

commercial terms, and they cannot use their position to their advantage. There are no other related party transactions.

31

Exceptional items

The exceptional items resulted from the adoption of SORP 2010 on the acquisition of Irvine Housing Association Limited, on

11 October 2011 resulting in negative goodwill £11.1m, less £0.3m amortisation of £4.3m goodwill due to the acquisition of

Evolve Facility Services Limited, on 1 December 2011.

32

Prior period adjustment

The prior period adjustment is due to the adoption of Component Accounting, in accordance with the requirements of SORP

2010. Costs of £5.4m previously expensed have been capitalised and depreciation of £1.3m has been provided for these

components. In addition £69.9m of designated reserves provided for the future replacement of major components have

been transferred to the Income and Expenditure reserve. This is a technical adjustment which has not impacted on future

expenditure and we remain committed to providing quality homes for our tenants.

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Contact us

www.riverside.org.uk

email: info@riverside.org.uk

Customer Service Centre

24 hours a day, 365 days a year

0845 111 0000

With inclusive call packages or mobile phones,

it may be cheaper to call 0345 111 0000

You can also visit your local office

(for more details visit our website or call us)

The Riverside Group Limited

Registered Office:

2 Estuary Boulevard,

Estuary Commerce Park,

Liverpool L24 8RF

A charitable Industrial

and Provident Society

August 2012

Details correct at time of printing

R8/006-0812V4.0C

We are happy to accept Typetalk calls

Minicom: 0845 111 7766

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