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Riverside boss admits ‘financial challenges’ from One Housing merger remain
The outgoing chief executive of Riverside has admitted it is still working through “short-term financial challenges” related to it taking on One Housing as a subsidiary, as the expanded group’s operating surplus fell 38%.
Carol Matthews, whose exit from the 75,000-home landlord was announced last month, pointed to a “prevalence” of high-rise buildings needing fire remediation work, as well as write-down costs on “historic investments” and exiting a loss-making luxury care home business.
Riverside took on One Housing as a subsidiary in late 2021, just months after the latter G15 landlord reported an annual deficit of £25.5m, partly due to fire safety costs.
A year ago, the larger landlord announced it was speeding up its amalgamation of One Housing due to “economic uncertainty”.
Writing in Riverside’s latest financial report for 2022-23, Ms Matthews said it had “de-risked” by creating a single entity through a transfer of engagements.
However, she added: “We have resisted rushing operational integration, which needs to be handled very carefully, and so for now have retained the One Housing brand as a trading name for our operations in London.”
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It came as Riverside reported an operating surplus of £49.2m in the year to the end of March 2023, compared with a restated figure of £79.2m the year before.
Overall, Riverside recorded a pre-tax deficit of £2.7m, compared with a surplus of £702.7m the previous year. But it said the change was “predominantly” due a one-off gain of £642.4m the year before from the gift of net assets from the One Housing merger.
The latest figures are the first full-year in which One Housing has been included in the group results. As a result, Riverside said both its costs and revenue had increased.
Repairs costs jumped by £51.5m due to fire remediation work, tackling damp and mould issues, and inflation driving up the cost of materials, the group said. Spending on fire safety work more than doubled to £84.4m.
Riverside’s overall operating margin fell from 13% to 5.1%, which was hit by the operating surplus from social housing lettings nearly halving to £26.4m.
The group’s EBITDA MRI figure also significantly reduced, down to 46% from 136%. This was due to a fall in operating surplus, increased repair costs, and higher financing costs due to more borrowing and higher interest rates, Riverside said.
The group’s revenue rose by £177.3m to £625.4m, with 80% coming from social housing rent. Operating costs were £593.6m, compared to £390m the year before.
On development, Riverside reported that it delivered 765 homes for affordable rent and shared ownership, while One Housing built 70. The landlord said this was “less than anticipated” due to delays caused by labour and material shortages.
Ms Matthews added: “We look ahead with optimism. It sometimes feels as if we’re in a whirlwind as we manage the twin challenge of focusing on our customers and planning for the future.
“But we are making progress and gradually imposing order, with a clear plan for the coming years and some massive milestones already met.”
Although an exact date has not yet been disclosed, Ms Matthews will step down as chief executive of Riverside in 2024.
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