TIDMCSH
RNS Number : 5641D
Civitas Social Housing PLC
30 June 2021
30 June 2021
CIVITAS SOCIAL HOUSING PLC
ANNUAL FINANCIAL REPORT
YEAR TO 31 MARCH 2021
Strong Financial & Operational Performance; Enhanced ESG
Programme; New Dividend Target
Civitas Social Housing PLC ("Civitas" or the "Company"), the
UK's leading care-based and healthcare REIT, presents its full year
results for the year ended 31 March 2021, with a positive financial
performance, strong social delivery and with a raised dividend
target of 5.55 pence per share to 31 March 2022.
Civitas has continued to grow its market leading position
providing much-needed housing with care to vulnerable adults across
the UK, with rents received as expected, unaffected by
COVID-19.
The full Annual Report and Financial Statements can be accessed
via the Company's website at http://www.civitassocialhousing.com or
by contacting the Company Secretary by telephone on 01392
477500.
Performance Highlights
Property Valuation and Performance Mar 21 Mar 20 Change
Investment property (GBPm) 915.58 878.74 +4.2%
IFRS NAV per share (diluted)
(p) 108.30 107.87 +0.4%
Financial Performance
Rent roll annualised (GBPm) 50.78 48.42 +5.0%
Rental income (GBPm) 47.85 45.91 +4.4%
EPRA earnings (GBPm) 30.60 28.81 +6.3%
Operating Cash Flow(1) (GBPm) 36.11 32.91 +9.7%
IFRS earnings per share (diluted)
(p) 5.80 6.06 -4.3%
EPRA earnings per share (diluted)(2)
(p) 4.93 4.63 +6.5%
Dividends per share (p) 5.40 5.30 +1.5%
Total shareholder return(3)
(%) 26.48 20.36 +29.9%
Financing
Loan to value ratio 34.48 26.90
Weighted average cost of
debt (%) 2.40 2.46
(1) Gross of a GBP10.0m consideration payment made in the
ordinary course of investment in respect of acquiring additional
rental income from new build facilities in Wales, completion of
which was announced by RNS on the 24 August 2020. From a technical
perspective, the consideration has been classed as a lease
incentive rather than a capital item in accordance with accounting
standards IAS 40 and IFRS 16 (leases) so reducing stated operating
cash flow and increasing stated trade receivables. This reflects
the GBP10.0m payment being made in respect of the acquisition of
additional rental income under an existing lease rather than an
entirely new property purchase.
(2) See Appendix 1 - Notes to the calculation of EPRA and other
alternative performance measures in these financial statements for
supporting workings.
(3) On an Ordinary Share held since launch (percentage not
annualised)
Highlights
-- Continued strong financial and operational resilience to the COVID-19 pandemic
-- Growth in our portfolio of high-quality properties for mid-to-high acuity care needs
-- Expansion and diversification of counterparties to include a
number of charities and discussions progressing with the NHS; now
expanding into Advanced Homelessness Provision ("AHP")
-- Post year end, announced a strategic framework agreement with
E.ON to implement a programme of carbon reducing energy
enhancements and cost savings across the portfolio
-- Independent study confirms Civitas created a social value of
GBP127 million in the year at 31 March 2021, including GBP79.5
million of savings to the public purse
Investment Property Portfolio Enhanced
-- Portfolio value increased to GBP915.6 million (IFRS)
-- IFRS valuation average net initial yield (NIY) of 5.24%
-- IFRS NAV increased to 108.30 pence per share
Rent Roll Up and Expected to Increase Further
-- Annualised rent roll increased to GBP50.8 million
-- Rents received as expected, unaffected by COVID-19
-- EPRA earnings per share (diluted) increased to 4.93 pence per share
-- EPRA earnings (diluted) increased to GBP30.6 million
Diversified Portfolio of 619 Properties Providing Homes to over
4,295 Residents
-- Providing accommodation to working age adults with learning
disabilities, autism and mental health disorders with an average
tenant age of 32 years
-- Research confirms tenants each receiving on average 43 hours of care per week
-- Properties located across 164 Local Authority areas in
England and Wales and leased to 16 approved providers, with support
provided by 118 Care Providers
-- Over one third of the portfolio on back-to-back 25-year leases, with leading Care Providers
Dividend
-- Target dividend of 5.40 pence per share to 31 March 2021 now fully paid
-- Target raised to 5.55 pence per share for YE 31 March 2022
-- EPRA run-rate dividend cover of 100% as at 31 March 2021
-- EPRA dividend cover of 91.6% on an actual basis over the year
to 31 March 2021 up from 87.4% the prior year and expected to
increase further following the subsequent deployment of additional
debt facilities
Debt Facilities & Credit Rating
-- New GBP84.5m debt facility drawn down from M&G
-- The debt facility will support further acquisitions of high
quality, immediately income generating properties throughout
2021
-- Secured a high quality investment credit rating from Fitch
Ratings of "A" secured and "A-" unsecured, enabling access to
broader long-term funding markets
Post Year End Highlights and Opportunities
-- Acquisition of 15 supported living and care facilities in the
South of Wales for a total consideration of GBP10.9 million
-- Acquisition of 10 supported living properties across
Hertfordshire, Essex, Suffolk and Wales for a total consideration
of GBP8.6 million
-- A substantial pipeline of over GBP200 million has been
developed with long standing and trusted counterparties for high
quality mid-to-higher acuity healthcare facilities
Michael Wrobel, Non-Executive Chairman of the Company,
commented:
"In an extremely challenging year due to the global pandemic,
the Board gives its heartfelt thanks to the staff at all our
partners for their dedicated efforts to provide for some of the
most vulnerable members of our society.
I am delighted to announce that the Company has reported a
strong set of financial results, unaffected by COVID-19. During the
year, our Investment Adviser has continued to acquire new
properties following the signing of a new debt facility. It has
also implemented a number of initiatives to enhance our future
prospects including environmental improvements to the portfolio,
recruitment of additional skills and launching real-time data
systems to both manage properties and rent collection.
Unfortunately, the UK has a substantial and structural mismatch
between the need for social housing and its availability,
especially bespoke specialist care based social housing. Civitas is
leading in the sector, helping to reduce this deficit by creating
long term, suitable and sustainable community-based housing
solutions for vulnerable adults with lifelong care needs. The
Company has identified a strong pipeline of acquisition
opportunities.
The Board views the future with confidence based on the strength
of our portfolio and financial position, such that we have raised
the dividend target for the coming year to 5.55 pence per share, an
increase of 2.7%."
For further information, please contact:
Civitas Investment Management
Limited
Andrew Dawber Tel: +44 (0)20 3058 4846
Paul Bridge Tel: +44 (0)20 3058 4844
Panmure Gordon
Sapna Shah Tel: +44 (0)20 7886 2783
Tom Scrivens Tel: +44 (0) 20 7886 2648
Liberum Capital Limited
Chris Clarke / Darren Vickers Tel: +44 (0 ) 20 3100 2000
/ Owen Matthews
Buchanan
Helen Tarbet / Henry Wilson Tel: +44 (0) 20 7466 5000
Hannah Ratcliff / George Beale civitas@buchanan.uk.com
Notes:
Civitas Social Housing PLC (CSH) was created in 2016 by Civitas
Investment Management Limited as the first dedicated London listed
REIT, to raise long-term, sustainable, institutional capital to
invest in care-based social homes and healthcare facilities across
the UK. CSH has completed more than 120 individual transactions to
build the largest portfolio of its kind that has been independently
valued at GBP915.6 million (31 March 2021). CSH now provides homes
for 4,391 working age adults with long-term care needs, in 648
bespoke properties that are supported by 119 specialist care
providers, 16 approved providers and working with over 178
individual local authorities.
Chairman's Statement
Dear Shareholder
The COVID-19 pandemic has been with us for more than a year and
has created significant challenges across society that have in turn
been met by an extraordinary response from many people,
particularly front-line workers. The Board gives its heartfelt
thanks to the staff at all of our partners whose dedicated efforts
have achieved:
-- Continued very low incidence of COVID-19 across our 4,295 residents;
-- High standards of care and management of homes; and
-- Ongoing delivery of asset management services for the benefit of residents.
Financial Performance
I am pleased to report a robust financial performance with good
rent recovery, as shown in the growth in underlying operating
cashflow. This reflects the work of our Investment Adviser, Civitas
Investment Management ("CIM") and our partners, together with the
Government backed nature of our income which is supporting the most
vulnerable people in society.
During the period under review, our portfolio generated rental
income of GBP48.2 million, representing a 5.2% increase over the
corresponding period - a result of indexation of rents and new
properties purchased during the period.
IFRS net asset value of the Company increased from 107.87 pence
per ordinary share as at 31 March 2020 to 108.30 pence per ordinary
share as at 31 March 2021.
The Company has met the stated dividend target of 5.40p per
share for the year to 31 March 2021 and the Board has set a new
dividend target of 5.55p per share for the year to 31 March
2022.
The Board is pleased to note the continued improved performance
of the share price. This allowed 250,000 shares to be sold from
treasury on 24 March 2021 at a price of 109.8 pence per share.
Since the year end, the balance of the shares held in treasury
(565,000) were sold. The Company no longer holds shares in
Treasury.
During the year, there were six property acquisitions, proving
homes for a further 79 vulnerable adults,
including two higher-acuity state of the art facilities in
Wales. The drawdown of an GBP84.5m facility with M&G in
February 2021 has allowed our acquisition programme to recommence
since the period end, with 25 properties purchased for a
consideration of GBP19.5m, housing a further 92 people with
significant lifelong care needs.
New Initiatives
The Board is pleased to note a number of new initiatives that
have been developed by CIM, which are set out more fully within the
Investment Adviser's Report, and include the following:
-- A strategic initiative to enhance the environmental standing
of the portfolio and to drive down our carbon footprint and reduce
energy costs;
-- The launch of a real-time data system under the "WebTerrier"
brand to bring all properties fully online with in-depth data
access;
-- With our administrator Link, implementing a system within
'Yardi' to integrate a rent demand and invoicing system; and
-- An expansion of the CIM asset management team to focus on the
continued physical enhancement of the properties in our
portfolio.
Expansion into Advanced Homeless Provision
The Board is pleased to now be providing accommodation to
several local authorities in London which have identified the
long-term need for adapted specialist housing for homelessness
provision, where properties are designed to enable the delivery of
a significant level of care and support ("Advanced Homeless
Provision"). This is aimed to break the cycle of homelessness and
offer the potential of a new start for residents.
A commitment to Social Impact and ESG
Accompanying the financial results is the latest independent
Social Impact Report prepared by the specialist consultancy The
Good Economy ("TGE"). In its report TGE confirms that the Company
continues to be "an authentic "impact investor"" according to IFC
Operating Principles". It also highlighted that the Company's
portfolio generated a total Social Value of GBP127.0 million
including GBP75.9 million of fiscal savings for public budgets in
the year to 31 March 2021.
More broadly we continue to work closely with housing
associations, charitable and not-for-profit partners ("Approved
Providers") to assist in driving management and governance
standards. This includes the work of CIM in leading quarterly best
practice seminars open to all holders of the Company's leases,
together with other regulatory and sector influential entities and
individuals.
We also maintain and develop new partnerships with sector
leading charities and seek to ensure we are at the forefront of
maximising the impact of our market leading position. The Board was
pleased to support an additional two charities this year focusing
upon mental health and the welfare of residents during the
pandemic.
I am pleased that this year we continued to meet the
recommendations of the Hampton-Alexander Review target of 33% women
on Boards.
The Board is aware of the recommendations of the Parker Review
and will take these into consideration on part of its succession
planning.
As noted above, the Board is pleased to report the commencement
of a market leading programme of
environmental enhancements and carbon reduction to the portfolio
with national provider E.ON. This is made possible by the national
presence enjoyed by the Company and will lead to reduced
maintenance and energy bills for tenants without placing any
additional funding obligations on the Company's Approved
Providers.
Credit Rating
The Company has recently secured an investment grade A secured
and A- unsecured credit rating from
Fitch Ratings. This in part reflects the strengths of the
Government supported eco-system in which the
Company's properties reside. This positive rating has allowed
CIM to commence the detailed examination of issuance in the
Sterling bond markets at what should provide advantageous interest
rates at longer tenures.
Annual General Meeting
The Company's Annual General Meeting is scheduled to be held on
22 September 2021 at the offices of Cadwalader, Wickersham &
Taft LLP, 100 Bishopsgate, London EC2N 4AG at 2.00 pm. The Board
looks forward to meeting shareholders. In due course, the notice of
AGM will be circulated in accordance with the requirements of the
Company's Articles of Association.
Due to the current COVID-19 outbreak, many companies have either
postponed their AGMs or made alternative arrangements for
conducting these meetings. We hope that by 22 September 2021 the
Company will be able to hold its AGM in the usual manner. However,
given the uncertain nature of this situation, should the Company
need to alter its AGM arrangements, it will communicate these
changes to shareholders through a regulatory announcement. This
information will also be made available on the Company's website.
Shareholders are advised to check the website to ensure they have
the most up-to-date information available regarding the AGM.
Brexit
The Board has considered the changing political and economic
environment in light of Brexit and does not consider there to be
any material impacts or risks relevant to the Group.
Outlook
It continues to be the case that there is a substantial
structural mismatch between the need for social housing of all
types and its availability - this is particularly so for housing
with care that is delivered by the private sector without recourse
to government grant or capital funding.
Civitas plays a pivotal role in investing responsible capital on
a substantial basis to provide quality social homes for life. We
continue to have excellent long-term relationships across the
sector which provides us with the access to a substantial pipeline
of opportunities with a range of quality counterparties that is in
excess of the Company's remaining debt facilities.
Michael Wrobel
Chairman
29 June 2021
Financial Highlights
As at 31 March 2021
GBP915.6m Investment property independent valuation (see note
15)
5.40p Dividends declared and paid in respect of the year
ended 31 March 2021
108.30p IFRS NAV per Ordinary share
GBP50.8m Annualised rent roll: based upon GBP915.6m of real
estate at the end of the year
5.80p Pence per share earnings based on comprehensive income
and property valuations
22.6yrs Weighted average unexpired lease term
Growth
Growing base of global investors
Civitas invests on behalf of a wide range of global, national
and local investors seeking exposure to sustainable long term
income together with measurable social impact and high levels of
ESG delivery.
Four Continents...
...52 locations
Amsterdam, Birmingham, Boston, Bradford, Bristol, Brussels,
Chicago, Columbus, Denver, Douglas, Dublin, Edinburgh, Exeter, Fort
Lauderdale, Frankfurt, Geneva, Glasgow, Guernsey, Heerlen,
Illinois, Jersey, Kuwait City, Liverpool, London, Los Angeles,
Luxembourg, Montreal, Munich, New Jersey, New York, New Zealand,
Newark, Oslo, Paris, Perth, Philadelphia, Richmond, Sacramento, San
Francisco, Seattle, Seoul, Singapore, Smithfield, Sydney, Tokyo,
Toronto, Tunbridge Wells, Vancouver, Windsor, Zurich.
Our strategy for growth
Demand for the accommodation provided by Civitas is strong and
expected to remain so over the long term. The pandemic has further
evidenced the need for safe and secure homes for the most
vulnerable people in society.
Civitas is a go-to partner for an increasing range of major
vendors and counterparties.
Civitas is the market leader with the largest portfolio and
deeply ingrained relationships with care providers, local
authorities, Approved Providers and charities across the UK.
Continuing to take delivery of new build higher acuity
properties with more opportunities being offered.
Continuing to work closely with The Social Housing Family CIC to
enable it to expand and play a broader role in the sector.
Civitas now works with a broader range of counterparties
including charities and other non-for-profit organisations.
Becoming part of critical local authority pathways, leading to
many opportunities in specialist supported living and advanced
homelessness.
Expanding into significant markets across the UK, now including
Scotland and Northern Ireland.
Our portfolio
By UK Region
Region Properties Funds invested Annualised rent
(percentage) roll (percentage)
------------------- ----------- --------------- -------------------
North East 64 6.1 6.7
North West 100 10.3 10.0
Yorkshire and the
Humber 49 10.3 10.0
East Midlands 58 8.9 8.9
West Midlands 101 11.8 11.6
East of England 20 2.9 2.9
South East 64 10.4 10.2
South West 120 16.0 15.9
Wales 17 10.0 10.2
London 26 13.3 13.6
Market Value (%)(1)
Region Market Value
-------------------------- -------------
South West 16.0%
London 12.5%
West Midlands 11.8%
Wales 10.6%
South East 10.3%
Yorkshire and the Humber 10.2%
North West 9.9%
East Midlands 9.1%
North East 6.7%
East of England 2.9%
Total GBP915.6m
Tenancies(1)
Region Tenancies
-------------------------- ----------
South West 759
North West 594
West Midlands 502
North East 462
Yorkshire and the Humber 422
South East 415
East Midlands 374
London 338
Wales 307
East of England 122
Total 4,295
(1) As at 31 March 2021.
By Approved Provider
Annualised rent roll (%)(1)
Approved Provider Annualised rent roll (%)
--------------------- -------------------------
Auckland 23.7%
Falcon 19.9%
BeST 13.2%
Inclusion 8.7%
Westmoreland 6.1%
Encircle 5.9%
Trinity 5.3%
Pivotal 3.9%
Harbour Light 3.7%
Chrysalis 3.4%
New Walk 2.8%
My Space 1.2%
IKE 1.1%
Hilldale 1.0%
Blue Square 0.1%
Qualitas Housing(2) 0.0%
Total GBP50.8m
Properties(1)
Approved Provider Properties
------------------- -----------
Falcon 117
Auckland 103
BeST 74
Inclusion 72
Trinity 43
New Walk 41
Westmoreland 41
Harbour Light 27
Pivotal 27
Chrysalis 23
Encircle 16
Hilldale 15
IKE 10
My Space 8
Blue Square 1
Qualitas Housing 1
Total 619
Market Value (%)(1)
Approved Provider Market Value
--------------------- -------------
Auckland 24.3%
Falcon 20.2%
BeST 13.6%
Inclusion 8.6%
Westmoreland 6.0%
Trinity 5.3%
Encircle 4.9%
Pivotal 3.9%
Harbour Light 3.7%
Chrysalis 3.4%
New Walk 2.8%
IKE 1.1%
My Space 1.1%
Hilldale 1.0%
Blue Square 0.1%
Qualitas Housing(2) 0.0%
Total GBP915.6m
Tenancies(1)
Approved Provider Tenancies
------------------- ----------
Falcon 858
Auckland 719
BeST 591
Inclusion 466
Trinity 242
Westmoreland 239
Pivotal 238
Harbour Light 214
Encircle 205
New Walk 194
Chrysalis 145
My Space 71
IKE 68
Hilldale 39
Blue Square 4
Qualitas Housing 2
Total 4,295
(1) As at 31 March 2021.
(2) Qualitas Housing accounts for 0.02%
Investment Adviser's Report
A Year of Developments
In the year to March 2021 CIM, working with the CSH Board, has
led the development of a range of key initiatives to strengthen and
position CSH and the portfolio for the future.
New M&G Debt Facility Secured GBP84.55m
Fitch ratings "A"/ "A- "
High quality investment grade rating.
Environmental Framework Signed
Innovative approach to permanently reduce the Portfolio's Carbon
footprint.
Extensive CIM Recruitment Programme
Asset Management, Healthcare, Finance/Housing Benefit,
Transactions and Investments.
Digital Administration Advances
New real-time data systems for asset management and billing
platforms.
Extended Asset Management Resource
Recruited highly experienced Directors to provide:
-- Detailed control framework for counterparties within the CSH
portfolio
-- Additional oversight and direction of third party property
management providers within the physical environment.
Thank you
"On behalf of the Board and CIM, we would like to say thank you
to all our partners who have continued to provide such high-quality
care, support and housing throughout the pandemic."
Paul Bridge
CEO, Civitas Investment Management Limited
Overview of Results
CSH is a market leader in providing much-needed long-term
housing with care in the United Kingdom and leading the charge for
ethical investment in the sector. These annual results demonstrate
a number of key achievements:
-- Continued strong resilience to the COVID-19 pandemic,
operationally, financially, and most importantly on a human
level;
-- Rents indexed at CPI or CPI+1 and collected as expected with no disruption from COVID-19;
-- A growing, market-leading portfolio of high quality, medium to high acuity properties;
-- High levels of care provided to each and every resident, on average 43 hours per week;
-- Award winning approach to ESG and to reducing carbon emissions in collaboration with E.ON;
-- Expansion and diversification of counterparties and into
accommodation for those with advanced homelessness
requirements;
-- New debt facility drawn down from M&G;
-- A high-quality investment credit rating from Fitch Ratings of
A secured and A- unsecured which will allow access to broader
long-term funding markets;
-- An investment adviser whose team continues to grow with a mix
of high-level skills from real estate, fund management, social
housing, care and asset management, unrivalled in terms of
expertise in the sector;
-- EPRA run rate dividend cover at 100%, expected to increase
further following the subsequent deployment of M&G debt
facilities;
-- A progressive dividend policy. On track to meet target of
5.4p for the year to 31 March 2021 and targeting a dividend of
5.55p to 31 March 2022;
-- IFRS NAV increased to 108.30 pence per Ordinary Share; and
-- Ongoing Charges Ratio(#) of 1.37%.
(#) Alternative Performance Measure
Introduction
Throughout the COVID-19 period CSH has focused upon the
following priorities:
-- Ensure measurable positive social outcomes :
Ensuring full support is given to our counterparties in managing
their response to the pandemic and ensuring every resident
continued to receive the care they need and deserve;
-- Ensure business continuity : Maintaining and improving the
portfolio whilst ensuring the safety of our team through home
working and managing a socially distanced return to the office;
-- Achieve financial objectives : Grow rental income, deliver
strong operational cash flow, meet dividend targets, drive dividend
cover and enhance asset values; and
-- Deliver social value : Maintain our evidence based approach
with independent analysis of the positive impact and cost savings
generated by the Company's portfolio and our broader activities in
the sector, along with a particular focus on the active
implementation of the carbon reduction programme.
Business continuity and safety
The primary concern during the continuing pandemic has been to
ensure the safety and resilience of the sector, and the ongoing
maintenance and improvement of the Company's portfolio.
We have throughout the year continued to see very low incidences
of COVID-19 amongst residents. The type of personalised care that
is being provided, the bespoke nature of the buildings adapted for
care use and the focussed and efficient response from our partners
has resulted in a high resilience to the virus. Coupled with this
our residents are young, with an average age of 32, living in
self-contained homes and community environments. Our approved
provider partners have continued to report excellent levels of
compliance with health and safety measures.
CSH, through CIM, took the following measures to support its
partners during the pandemic:
-- Established fortnightly contact calls with key approved
providers;
-- Used the approved provider network established three years
ago as a forum to share best practice on responses to COVID-19 and
working practices; and
-- Liaised with local authorities to assist them in housing
homeless people who as part of the Government's response to the
pandemic were required to be housed immediately under the "Bring
Everyone In" policy. CSH continues to provide 29 bed spaces in
Islington and is in discussion with a number of other local
authorities who wish to house homeless people in longer stay
housing to ensure they receive the care they require. This has led
to the further commissioning of a specialist homelessness facility
in Golders Green by Barnet Council for 43 bed spaces with advanced
support.
CIM relocated to home working with full technological support
and video conferencing in March 2020. The office was made COVID-19
compliant and a phased return to working in the office was achieved
in September 2020. The further lockdown was observed and a further
phased return to the office achieved in April 2021.
Overall Market Context
The social housing sector on a macro level continues to
demonstrate significant demand for all forms of subsidised housing.
The ability of the largest approved providers to deliver social
housing through cross subsidy of selling open market homes has to
some extent been constrained by the additional costs of health and
safety post Grenfell and the costs of removing cladding. These
costs do not apply to the providers with which we work as the
portfolio is low rise and without over-building cladding and the
providers do not undertake development.
The Government White Paper on the future of social housing
called "The Charter for Social Housing Residents' was published in
November 2020 and proposed the current regulatory system was
maintained namely that the Regulator of Social Housing will
continue to oversee the governance and viability of approved
providers and is likely to have an enhanced role in overseeing
consumer regulation. Post Grenfell there has been a view that the
interests of residents have not always been sufficiently heard and
included in the management of general needs social housing. Homes
England will continue to oversee government investment into social
housing.
The implications of the Charter for Social Housing Residents are
likely to be positive for housing with care as the nature of
relationship the Approved Provider (AP) has with residents and the
care provider is far more involved than in general needs housing.
This has been reflected in the performance of the RPs during the
pandemic with high levels of compliance and rent collection and low
levels of COVID-19. CIM has been assisting in ensuring residents
voices are heard through the commissioning of independent surveys
referred to later in this report.
The Government has recently announced additional funding for new
housing. However, its key priority in terms of providing capital
support is through the 95% mortgage guarantee scheme to enable
first time buyers with a 5% deposit to purchase their first home.
For the specialist supported housing provided by CSH, the private
sector will continue to play a vital role.
New legislation on building standards and planning are, at the
time of writing, being enacted with the aim of improving the
quality of new build residential homes as well as enabling the
level of house building to rise with the primary government focus
being upon home ownership. It is also likely that Leasehold reform
will be enacted to establish more rights for those purchasing new
build homes. It is unlikely that this legislation will have an
impact on CSH as the portfolio comprises low rise, freehold
traditional construction homes with no cladding and we do not
undertake new development within the Civitas Portfolio.
Specialist supported housing has a long provenance with the
first significant long stay hospital closure programme being
launched in the 1990s with a view to ensuing that everyone with a
learning disability or other substantial care need could live
within their own community in suitably adapted homes with care
support.
As has been repeatedly demonstrated the social benefits
experienced by residents and their families of community-based care
housing for life are substantial and this is described in more
detail in the more recent independent reports by The Good Economy
incorporating the Social Profit Calculator. It has also been long
established by government and independent sources that the cost of
care and housing against remote institutional care is considerably
reduced often by a factor or more than half.
A key part of the rationale for providing housing with care has
always been that it significantly improves the health and social
outcomes of those who benefit, and it is more cost-effective than
the alternatives. Important further evidence of the continued
efficacy of this argument was provided by Mencap in its 2021
report, 'Tea, Smiles and Empty Promises: Winterbourne View, and a
decade of failures- a collection of family stories".
In its report Mencap found that:
-- Many people (over 50%) (with long-term care needs) live with
elderly parents, who worry about what will happen to their children
when they can no longer care for them;
-- Over 3,000 people with a learning disability are currently
placed in inpatient units, miles away from
their family, often for a long time;
-- 82% of local authorities say they have a shortage of suitable
housing for adults with a learning disability and 67% say that it
has become more difficult for adults with a learning disability to
have their housing needs met; and
--Due to this lack of appropriate local housing and the support
options that go with it, many people with a learning disability do
not get a choice about where they live or who they live with. Too
often they are
moved into accommodation far away from family and friends,
especially if they have complex needs.
Financial Review
Rental income in the period grew to GBP47.8 million, a 4%
increase over the corresponding year (31 March 2020: GBP45.9
million) with annualised rental income of GBP50.8 million at 31
March 2021.
This increase has been generated as a result of new investments
made in the period, on track indexation of rents and the effect of
rental income on properties purchased prior to the period, being
included for the full twelve months.
A fair value gain on investment properties of GBP5.5 million was
recorded in the period and underlying operational cash flow
increased strongly to GBP36.1 million* (31 March 2020: GBP32.9
million) adjusted for non-cash items and reflecting strong cost
control.
*Gross of a GBP10.0m consideration payment made in the ordinary
course of investment in respect of acquiring additional rental
income from new build facilities in Wales, completion of which was
announced by RNS on 24 August 2020. From a technical perspective,
the consideration has been classed as a lease incentive rather than
a capital item in accordance with accounting standards IAS 40 and
IFRS 16 (leases) so reducing stated operating cash flow and
increasing stated trade receivables. This reflects the GBP10.0m
payment being made in respect of the acquisition of additional
rental income under an existing lease rather than an entirely new
property purchase.
Earnings per share were 5.80 pence for the twelve-month period
compared to 6.06 pence for the full year to 31 March 2020. This
movement is as result of a comparatively lower valuation gain
compared to March 2020 due to low CPI rates during the year and
increased finance costs. EPRA earnings per share were 4.93 pence
over the twelve-month period compared to 4.63 pence for the full
year to 31 March 2020. EPRA earnings per share is calculated after
removing any change in fair value of investment property.
The Company paid one dividend of 1.325 pence (from the prior
period) and three of 1.350 pence during the period (with a further
1.350 pence paid after the year end) fully in line with the
distribution target of 5.4p announced for the year to 31 March
2021. Our priority is to reach a fully covered dividend as soon as
possible and we are pleased to note that the EPRA run rate dividend
cover at 31 March 2021 was 100%. The actual dividend cover for the
year to 31 March 2021 was 91.6% compared to 87.4% as at 31 March
2020.
As at 31 March 2021, the IFRS net asset value of the Company was
108.30 pence per share, a slight increase on the 107.87 pence per
share at 31 March 2020. Together with the dividends of 5.375 pence
paid in the period this gives a total return since IPO of 26.48% on
an IFRS basis and 39.15% on a Portfolio basis.
The Ongoing Charges Ratio(#) , reflecting total costs expressed
as a percentage of the average net asset value over the
twelve-month period was 1.37% in the period compared to 1.36% in
the year to 31 March 2020.
The portfolio was independently valued on an individual IFRS
asset basis by JLL at GBP915.6 million as at 31 March 2021
reflecting a net initial yield of 5.24%. This compares to an
average purchase yield of 5.84% (prior to purchase costs) and
reflects the ability of the Company to use its scale and market
position to buy well, often off-market, and generally avoid taking
part in auctions.
The acquisition programme has continued post year end with the
acquisition of 15 supported living and care facilities in the South
of Wales for a total consideration of GBP10.9 million and the
acquisition of 10 supported living properties across Hertfordshire,
Essex, Suffolk and Wales for a total consideration of GBP8.6
million
(#) Alternative Performance Measure.
The Portfolio - Asset Management and Future Proofing
We are, and always will be, an active manager of the portfolio
and undertake property assessments on a regular basis with our
approved provider partners and surveyors to determine whether
properties are achieving an optimal outcome. We have expanded our
asset management team with senior individuals from the real estate
and care sectors to ensure we have a sector leading approach to
capital works and enhancements.
We continue to invest carefully in order to expand properties
and to ensure that they are as future proofed as possible. This
might include small adaptations to enable a building to function
better for an approved provider or a care provider and this modest
investment is typically above and beyond the repair and maintenance
obligations in the lease.
We also undertake reviews to ensure that each property is
working in an optimal manner within the overall sector eco-system
in terms of interaction with the local authority as well as the
approved provider and the care provider.
To complement this work, we have upgraded our asset management
software, which enables us to monitor building, investment, and
performance on a live basis with direct access to all key
counterparties.
Now that we have established a substantial portfolio, we have
taken opportunities to move certain properties between approved
providers to promote diversification and efficiencies, based on
lease assignments on the same lease terms.
This action is taken where a particular approved provider has
for example a strong relationship with a particular local authority
that facilitates engagement or where we can achieve concentrations
that assist approved providers in undertaking maintenance and
repairs and also to bring together properties that deliver high
acuity care with approved providers that are particularly skilled
in working with such residents and care providers.
We will also respond to requests from approved providers who
might themselves want to reduce or
reshape their geographic coverage so that they can become more
efficient and have a business that is more easily managed and can
better meet the requirements set by the RSH.
The Portfolio - Rental Income
The annualised rental income as at 31 March 2021 increased to
GBP50.8 million and this is expected to increase further as
additional indexation is applied and the balance of the existing
debt is invested.
Rental income is generated from leases with 16 approved
providers.
Annualised rent roll (1) (%)
Approved Provider Rental Income
---------------------- --------------
Auckland 23.7%
Falcon 19.9%
BeST 13.2%
Inclusion 8.7%
Westmoreland 6.1%
Encircle 5.9%
Trinity 5.3%
Pivotal 3.9%
Harbour Light 3.7%
Chrysalis 3.4%
New Walk 2.8%
My Space 1.2%
IKE 1.1%
Hilldale 1.0%
Blue Square 0.1%
Qualitas Housing (2) 0.0%
Total GBP50.8m
Market Value (1) (%)
Approved Provider Market Value
---------------------- -------------
Auckland 24.3%
Falcon 20.2%
BeST 13.6%
Inclusion 8.6%
Westmoreland 6.0%
Trinity 5.3%
Encircle 4.9%
Pivotal 3.9%
Harbour Light 3.7%
Chrysalis 3.4%
New Walk 2.8%
IKE 1.1%
My Space 1.1%
Hilldale 1.0%
Blue Square 0.1%
Qualitas Housing (2) 0.0%
Total GBP915.6m
(1) As at 31 March 2021.
(2) Qualitas Housing accounts for 0.02%
Portfolio Characteristics
The key features of the CSH portfolio can be summarised as
follows:
-- Fully converted and specially adapted for care use;
-- High number of care hours: over 43 hours a week on
average;
-- Median rents tested/compared against market equivalent;
-- Properties always well located within the community and with
commissioner support;
-- Over one third of the portfolio on back-to-back 25-year
leases with care providers mirroring the obligations in the lease
to approved providers;
-- An own front door policy; and
-- Over one third of properties bought when new, without
development or forward funding risk;
The high quality of the Company's portfolio reflects the ability
of CIM to source off market transactions through its extensive
network of care provider relationships, with the aim of achieving
value growth over time.
Building characteristics
CSH has 619 properties across 164 local authority areas. The
average building size comprises 7 bed spaces and are either
stand-alone houses or apartment blocks typically of between 10 and
15 flats with individual front doors. The nature of community-based
housing with care is best delivered by acquiring traditional
properties in traditional streets near to community facilities and
local infrastructure.
As with all properties CSH acquires, a full independent
condition survey is carried out prior to acquisition. As a result,
over GBP500m of transactions have been rejected as it did not meet
the Company's standards with regards to either the rent levels,
building location, layout/suitability, or reputation of the
vendor.
Where a building proceeds to acquisition a full condition report
specifying all works that must be carried out at the vendor's cost
is undertaken. This may include bespoke adaptations for the
resident, health and safety works and environmental enhancements to
improve thermal efficiency. These works will then be carried out
and inspected by a separate independent surveying practice before
final handover.
All of the portfolio is traditional construction with no
system-built properties or over-building cladding and is property
suitable for various types of community use and accommodation.
Overview of activities of CIM
CIM has undertaken additional recruitment over the last 12
months attracting additional high calibre senior professionals from
Healthcare, Asset Management, Finance, Transactions and Social
Housing and Welfare. This has enabled CIM to bring significant
additional added value to CSH through a range of new initiatives
including:
1. New M&G Facility
In February 2021, the Company secured a new debt facility with a
new lender M&G, for GBP84.5m to support the ongoing acquisition
of further high-quality properties.
M&G debt facility Terms
Security Assets
Facility Size GBP84,550,000
Term 7 years
Termination date 21 January 2028
Cost 275bps margin (floating) + 3-month libor swap
rate (314bps
LTV 55% (event of default covenant)
ICR Projected Interest cover for the next 12 months
>250%
2. Fitch Ratings
CIM has worked with Fitch Ratings on an intensive ground up due
diligence process, which led to a leading "A" secured and "A-"
unsecured rating for the Company, which compares very well with a
selection of well-established real estate companies.
The rating has opened up the Company's access to broader longer
term funding markets and offers the potential for a material
increase in tenure of facilities with competitive pricing for the
benefit of the Company and its shareholders.
3. New Bespoke Dedicated Property
Management platforms
"WebTerrier"
CIM has implemented a dedicated integrated asset management
platform "WebTerrier" to enable real
time interaction with all 619 properties to include an ongoing
monitoring programme. The cloud-based asset management software is
leveraged to monitor:
--Works;
--Rent reviews;
--Renewals;
--Adaptions;
--Compliance and health and safety; and
--Portfolio management
"Yardi"
CIM has implemented with Link an integrated rent demand and
invoicing system to support CSH. This allows:
--Integration of invoices and receipts into the book and records
for CSH; and
--Scope for further automation of rent receipts and provision of
debtor balances.
Social Impact and Social Value
The Company's latest independent report from The Good Economy
was published today and provides details of CSH's portfolio and the
continued success in delivering measurable social impact. Findings
include:
1. 33% of CSH's 619 properties have been brought into the social
housing sector for the first time.
2. CSH's regular engagement with its Approved Providers (APs) to
monitor the quality of its stock continued through the COVID-19
pandemic.
3. Improvement works have enhanced the energy efficiency of
homes, with 99.92% of homes with an EPC rating of A-E.
4. CSH's homes continue to serve vulnerable individuals and play
a significant role in improving resident
wellbeing, particularly when individuals are coming out of
higher-acuity facilities.
5. Social value analysis revealed that, overall, the portfolio
generates GBP127 million of social value per
year, including fiscal savings to public budgets of GBP75.9
million per year.
Environmental, Social and Governance
Earlier this year, the Board of CSH set out its commitment to a
continuous improvement process in its approach to Environmental
Social and Governance (ESG) integration. CIM is responsible for the
implementation of the commitment to integrate ESG considerations in
its investment strategy.
Over the last year, we have engaged with ESG rating agencies
such as GRESB (formerly Global Real Estate Sustainability
Benchmark), MSCI (Morgan Stanley Capital International),
Sustainalytics, and S&P Global. CSH achieved a strong B score
following the GRESB Public Disclosure Assessment 2020 compared with
the peer group average score of C. CSH is now in the 2nd position
within its Comparison Group (UK Residential). GRESB is an investor
driven global ESG framework, and the next phase is to focus on full
participation in GRESB Real Estate Assessment. CSH has an ESG Risk
Rating score of 14.1 (Low Risk) on Sustainalytics which measures
how well companies manage ESG issues that are most material to
their business. We are working towards improving the current CSH
MSCI ESG rating of B and have maintained CSH's accreditation as an
impact investor under International Finance Corporation (IFC)
Principles.
CSH is an Early Adopter of the '"Sustainability Reporting
Standard for Social Housing" (the "Standard") which has been
developed through a collaboration between housing associations,
banks and investors.
CIM has also been engaged in an Equity Investor Impact Reporting
Project to produce the sector standard impact measurement approach
for equity investments in social and affordable housing. The
project aim is to develop a framework to inform the engagement
process between investors, intermediaries, and investees. It will
also help articulate, measure, and actively manage positive social
impact contributions. It is envisaged that publication/ launch will
take place summer 2021.
4. Environmental: Carbon Reduction/
Energy Cost Savings
We have been actively engaged with our counterparties to assess
the environmental impact of the portfolio and from this to begin an
active programme of carbon reduction.
Initially we completed four pilot projects to establish
potential cost and efficacy of the initiatives. The
deployment of low carbon technologies at the properties reduced
the carbon footprint of the dwellings by up to 67% and will
generate annual energy cost savings of up to 57% for the bill
payer. In addition, the housing providers will benefit from export
tariff income generated from any excess energy generated by solar
panels. This will contribute to reducing operational costs.
In addition, we have improved the environmental performance of
our portfolio with 99.92% of CSH homes meeting the Government's
minimum energy efficiency standard of EPC grade E (up from 98% in
March 2020). Work is underway to achieve 100% compliance by the end
of the Company's Q1 2021 which relates to one property.
Following the success of these pilots we are pleased to have
agreed a significant national framework agreement with E.ON Energy
Installation Services, a part of E.ON UK group - a leading energy
supplier and pioneer in sustainable solutions for reducing carbon
emissions. The collaboration has identified an initial batch of 55
properties that will be upgraded with various forms of energy
saving measures including, solar panels with storage batteries,
external wall insulation, cavity wall insulation, loft insulation
and air source heat pumps.
The objective, drawing upon available government grants for
elements of the investment is to achieve at least a 25% carbon
reduction across these properties and for this to lead to material
energy cost savings for the bill payer and the public purse. It
will move the 55 properties from EPC rating E to D and above. The
current split is 52% A-C and 47.9% D/E.
We expect works to commence over the coming months following
site surveys and for a further tranche of properties to be selected
thereafter creating a rolling programme of carbon reduction.
The goal for the Company and indeed the sector is to achieve
carbon neutrality for which increased support in the form of grants
from government will be required.
Social: Charities
Crisis
For the last four years CSH has supported Britain's biggest
homelessness charity Crisis and CIM regularly collaborate on the
emerging knowledge required to undertake advanced homelessness
schemes. These are vital to enable people who have been at risk of
or experienced homelessness to rebuild their lives but require
considerable care and support in addition to a safe home in the
community. Our case study on Golders Green as outlined in The Good
Economy's latest CSH Social Impact Report, and Holloway Road shown
in the 2020 interim report provide real examples of these type of
schemes.
Choir With No Name
With support from the Company, this charity now runs five choirs
across the country for those who are in need. The charity has also
provided team building events for the CIM team.
House of St Barnabas and Women in Social Housing
CSH continues to work closely with and support these social
housing charities.
Care workers Charity and Little Sprouts
CSH has developed new relationships with these charities: the
first supports care workers and the second provides meals for those
with mental health issues affected by the pandemic.
Market position
CSH continues to lead the sector and CIM has headlined a range
of conferences in healthcare, social housing and Real Estate. We
have featured in many Investors forums and conferences; we continue
our position as a leading member of EPRA.
There has been considerable interest from local and national
media and the financial press and a range
of articles which can be found on the Company's website
(www.civitassocialhousing.com).
Counterparties
CSH works with 16 approved provider partners and shareholders
have approved an extension to its mandate to work with a wider
group of regulated counterparties, such as the NHS and registered
charities. The primary reason for this is that specialist supported
housing is managed by a range of counterparties under different
regulatory regimes.
The Social Housing Family CIC (TSHF CIC)
As previously reported Auckland Homes Solutions was the founding
member of TSHF CIC in September 2019. Since then, Auckland has
benefited from the additional infrastructure and skills TSHF CIC
has been able to provide to enhance its business including
recruiting a new executive team, growing its portfolio in an
orderly way.
In August 2020 the CIC was joined by Qualitas Housing, a
Community Benefit Society dedicated to management of housing with
care.
It is anticipated that other organisations will join TSHF CIC in
due course.
Regulation
CSH always welcomes the engagement of the RSH with our approved
provider counterparties. Both CIM and the Company support the work
the RSH has undertaken in making recommendations for improvements
in the sector over the last five years. The RSH continues to engage
with all approved providers, including those with which the Company
maintains a relationship.
It is clear that the RSH will rightly publish information as to
the improvements it wishes to see and whenever this occurs CSH will
provide support to its partners as appropriate.
CSH, through CIM, has been at the forefront of addressing the
RSH's concerns about the long-term risk planning of approved
providers by pioneering the introduction of caps and collars on the
indexation of rents of between 1% and 4% plus force majeure clauses
which set out appropriate steps in the unlikely event of a formal
change in central Government policy and funding. We will continue
to work with our counterparties and the RSH to ensure that CSH
fulfills its intentions as one of the largest owners of SSH in the
country to enable the sector to evolve and to maintain the
improvements already made.
Outlook
As the vaccine roll-out continues and a greater degree of
normality returns what is clear is the ongoing need for a
significant increase in the supply of all forms of social housing.
It is clear that the Government recognises the vital role that both
the public and private sector can play in meeting the country's
housing need and in particular in the provision of housing with
care.
The evidence is overwhelming that housing the most vulnerable
individuals in our society in proper homes in the community is of
paramount importance and not only transforms people's lives but
also is more cost-effective for the public purse.
CSH sees compelling opportunities to invest further in this
sector. A substantial pipeline of over GBP200m
has been developed with long standing and trusted counterparties
and a good start made on deploying the recently acquired debt
facility from M&G. The pipeline leaves open the prospect of
future equity raises subject to market conditions and investors'
views.
We remain committed to generating growth and shareholder value
through ethical investing. We look to the future with
confidence.
Civitas Investment Management Limited
Investment Adviser
29 June 2021
Corporate Social Responsibility Report
Sustainability
The business model of the Company is to provide long-term
suitable homes for individuals with care needs; acting in a
sustainable manner is key to achieving this aim. Properties that
are owned by the Company are tailored to meet the future needs of
the tenants and, where required, are actively asset managed to
provide long-term functionality and value to the wider
community.
Environment
During the investment due diligence phase, the Company looks
closely at the environmental impact of each potential acquisition,
and encourages a sustainable approach for maintenance and upgrading
properties. Through collaborating with specialist developers and
vendors, the high standards the Company expects from each
investment in the care-based housing sector is adopted by other
companies in the sector.
Once within the portfolio, the properties of the Company are
actively asset managed, and the Investment Adviser assesses whether
there are opportunities to improve the environmental efficiency of
the properties, in addition to other asset management initiatives
factoring heavily in addition to other asset management
initiatives. Further details can be found in the ESG section of the
full Annual Report.
The Board has considered the requirements to disclose the annual
quantity of emissions; further detail on this is included in the
Report of the Directors in the full Annual Report.
Diversity
The Company does not have any employees or office space and as
such, the Company does not operate a diversity policy with regards
to any administrative and management functions.
Whilst recognising the importance of diversity in the boardroom,
the Company does not consider it to be in the interest of the Group
and its shareholders to set prescriptive diversity criteria or
targets. The Board has adopted a diversity policy in respect of
appointments to be made to the Board and will continue to monitor
diversity, taking such steps as it considers appropriate to
maintain its position as a meritocratic and diverse business. The
Board's objective is to maintain effective decision-making,
including the impact of succession planning. All Board appointments
will be made on merit and have regard to diversity regarding
factors such as gender, ethnicity, skills, background and
experience. See
Corporate Governance Statement in the full Annual Report.
The Board comprises three male and two female non-executive
Directors. Throughout the year, the Company complied with the
Hampton-Alexander Review's target of a minimum 33% representation
of women on FTSE 350 boards.
The Board is aware of the recommendations of the Parker Review,
which will be taken into consideration as part of the Board's
succession planning. See the Corporate Governance Statement set out
in the full Annual Report.
The boards of directors of the Company's subsidiaries, which are
non-operational, each comprise up to one female and four male
directors.
Human Rights
Given the Company's turnover for the year under review, it now
falls within the scope of the Modern Slavery Act 2015. The Company
will publish a slavery statement in due course.
The Board is satisfied that, to the best of its knowledge, the
Company's principal advisers, which are listed in the Company
Information section of the full Annual Report, comply with the
provisions of the UK Modern Slavery Act 2015.
The Company's business is solely in the UK and therefore is
considered to be low risk with regards to human rights abuses.
Community and Employees
The Company's properties enable the provision of care to some of
the most vulnerable people in the community, ensuring safe and
secure accommodation, tailored to meet individual care needs. The
Company has increased the provision of care-based housing, bringing
new supply to the sector and providing homes to over 4,200 people.
All of the Company's properties enable the provision of high levels
of care, generating local jobs and helping to support local
economies.
The Company has no employees and accordingly no requirement to
separately report on this area.
The Investment Adviser is an equal opportunities employer who
respects and seeks to empower each individual and the diverse
cultures, perspectives, skills and experiences within its
workforce.
Section 172 (1) Statement and Stakeholder Engagement
Overview
The Directors' overarching duty is to act in good faith and in a
way that is most likely to promote the success of the Company as
set out in section 172 of the Companies Act 2006. In doing so,
Directors must take into consideration the interests of the various
stakeholders of the Company, the impact the Company has on the
community and the environment, take a long-term view on
consequences of the decisions they make, as well as aim to maintain
a reputation for high standards of business conduct and fair
treatment between the members of the Company.
Fulfilling this duty naturally supports the Company in achieving
its investment objective and helps to ensure that all decisions are
made in a responsible and sustainable way. In accordance with the
requirements of the Companies (Miscellaneous Reporting) Regulations
2018, the Company explains how the Directors have discharged their
duties under section 172 below.
To ensure that the Directors are aware of, and understand, their
duties, they are provided with the pertinent information when they
first join the Board as well as receiving regular and ongoing
updates and training on the relevant matters. Induction and access
to training is provided for new Directors. They also have continued
access to the advice and services of the Company Secretary, and
when deemed necessary, the Directors can seek independent
professional advice. The Schedule of Matters Reserved for the
Board, as well as the Terms of Reference of its committees, are
reviewed regularly and further describe Directors' responsibilities
and obligations and include any statutory and regulatory duties.
The Audit and Management Engagement Committee has the
responsibility for the ongoing review of the Company's risk
management systems and internal controls and, to the extent that
they are applicable, risks related to the matters set out in
section 172 are included in the Company's risk register and are
subject to periodic and regular reviews and monitoring.
Long-term Success
The strategy of the Company can be found below. Any deviation
from, or amendment to, that strategy is subject to Board and, if
necessary, shareholder approval. The Company's business model,
which can be found in the full Annual Report, provides that the
Board consider the long-term consequences of its investment
decisions. The Company grants long term leases, generally 20 years
in length, to its tenants. The Company seeks to maintain lasting
relationships with its tenants and supports its tenants in adapting
properties to meet their needs, particularly improving and
enhancing properties. Further details can be found below.
Stakeholders
A company's stakeholders are normally considered to comprise its
shareholders, its employees, its customers, its suppliers as well
as the wider community in which the company operates and impacts.
The Company is different in that as an investment trust it has no
employees and, in terms of suppliers, the Company receives
professional services from a number of different providers,
principal among them being the Investment Adviser. Through regular
engagement with its stakeholders, the Board aims to gain a rounded
and balanced understanding of the impact of its decisions. In the
main, that information is gathered in the first instance by the
Investment Adviser and communicated to the Board in its regular
quarterly meetings and otherwise as required. The importance of
stakeholders is taken into account at every Board meeting, with
discussions involving careful consideration of the longer-term
consequences of any decisions and their implications for
stakeholders. The following section explains why these stakeholders
are considered of importance to the Company and the actions taken
to ensure that their interests are taken into account by the Board
as part of its decision making.
Our Key areas of interest How we engage
stakeholders
-------------- ------------------------------------------------------------ ------------------------------------------------------------
Shareholders The Board welcomes shareholders'
Continued * Current and future financial performance views and places great importance
shareholder on communication with the shareholders
support and of the Company. The Board is
engagement * Strategy and business model responsible for the content
are critical of communication regarding
to the corporate issues and for communicating
existence * Corporate governance its views to shareholders.
of the The Board aims to ensure that
business shareholders are provided with
and the * ESG performance and sustainability sufficient information to understand
delivery the risk/reward balance to
of the which they are exposed by the
long-term * Dividend holding of shares in the Company.
strategy of Active engagement with shareholders
the is carried out throughout the
business. year and regular communication
is undertaken to ensure that
they understand the performance
of the business. The Board
is committed to maintaining
open channels of communication
and to engaging with shareholders
in a manner which they find
most meaningful, in order to
gain an understanding of the
views of shareholders. These
channels include:
Annual General Meeting - The
Company welcomes and encourages
attendance, voting and participation
from shareholders at the AGM,
at which shareholders have
the opportunity to meet the
Directors and Investment Adviser
and to address questions to
them directly. The Investment
Adviser attends the AGM and
provides a presentation on
the Group's performance and
its future outlook. The Company
values any feedback and questions
it may receive from shareholders
ahead of and during the AGM
and takes action, as appropriate.
For the 2021 AGM, which will
be held on 22 September 2021,
the Board hopes that shareholders
will be able to attend in person.
Arrangements for the AGM will
be released in August and will
take account of the latest
Government guidance and advice.
Publications - The Annual Report
and Half-Year Results are made
available on the Company's
website and the Annual Report
is circulated to those shareholders
who have elected to receive
hardcopies from the Company.
These reports provide shareholders
with a clear understanding
of the Group's portfolio and
financial position. In addition
to the Annual and Half-Year
Reports, regularly updated
information is available on
the Company website, including
quarterly factsheets, key policies,
the investor relations policy
and details of the investment
property portfolio. Feedback
and/or questions the Company
receives from the shareholders
help the Company evolve its
reporting aiming to render
the reports and updates transparent
and understandable.
Shareholder meetings - Shareholders
are able to meet with the Investment
Adviser and the Company's Joint
Brokers throughout the year
and the Investment Adviser
provides information on the
Company on the Company's website.
Feedback from all shareholder
meetings with the Investment
Adviser and/or the Joint Brokers,
and shareholders' views, are
shared with the Board on a
regular basis. The Chairman
and other members of the Board,
including the Senior Independent
Director and Chair of the Audit
Management Committee, are available
to meet with shareholders to
understand their views on governance
and the Company's performance
where they wish to do so.
Shareholder concerns - The
Board gives due consideration
to any corporate governance
matters raised by shareholders.
In the event shareholders wish
to raise issues or concerns
with the Board or the Investment
Adviser, they are welcome to
write to the Company at the
registered office address set
out in the full Annual Report.
Other members of the Board
are also available to shareholders
if they have concerns that
have not been addressed through
the normal channels.
Investor relations updates
- The Board regularly monitors
the shareholder profile of
the Company. With the majority
of shareholders being a combination
of institutional investors
and private client brokers,
the Board receives regular
updates on investors' views
and attitudes from the Company's
Brokers and the Investment
Adviser. During the year, several
investor update meetings were
held between the shareholders
and one or more of the Chairman,
the Investment Adviser and
the Brokers. The results of
these meetings were reported
to the Board as part of the
formal reporting undertaken
by both the Investment Adviser
and the Brokers. Included in
the Report of the Directors
within the full Annual Report
are details of substantial
shareholdings in the Company.
On a regular basis (sometimes
weekly) and at Board meetings,
the Directors receive updates
from the Company's Brokers
on the share trading activity,
share price performance and
any shareholders' feedback,
as well as an update from the
Company's Investor Relations
adviser, Buchanan, and the
Investment Adviser on any publications
or comments by the press. To
gain a deeper understanding
of the views of its shareholders
and potential investors, the
Investment Adviser maintains
regular contact with them and
also undertakes investor roadshows.
Any relevant feedback is taken
into account when Directors
discuss any possible fundraising
or the future dividend policy.
-------------- ------------------------------------------------------------ ------------------------------------------------------------
Investment The management of the Company's
Adviser * Current and future financial performance portfolio is delegated to the
Holding the Investment Adviser, which manages
Company's the assets in accordance with
shares offers * Shared commercial objectives with the Company the Company's objectives and
investors an policies. At each Board meeting,
investment representatives from the Investment
vehicle * Operational excellence Adviser are in attendance to
through which present reports to the Directors
they can covering the Company's current
obtain * Long-term development of its business and resources and future activities, portfolio
exposure to of assets and its investment
the performance over the preceding
Company's * ESG performance and sustainability period.
portfolio Maintaining a close and constructive
of working relationship with the
properties. Investment Adviser is crucial
The as the Board and the Investment
Investment Adviser both aim to continue
Adviser's to achieve consistent long-term
performance returns in line with the Company's
is critical investment objective. Important
for components in the collaboration
the Company with the Investment Adviser,
to representative of the Company's
successfully culture are:
deliver its
investment * operating in a fully supportive, co-operative and
strategy and open environment and maintaining ongoing
meet its communication with the Board between formal meetings;
objective
to provide
shareholders
with an * encouraging open discussion with the Investment
attractive Adviser, allowing time and space for original and
level of innovative thinking;
income,
together with
the potential
for capital * recognising that the interests of stakeholders and
growth. the Investment Adviser are for the most part well
aligned, adopting a tone of constructive challenge;
* drawing on Board members' individual experience and
knowledge to support the Investment Adviser in its
monitoring of and engagement with other stakeholders;
and
* willingness to make the Board members' experience
available to support the Investment Adviser in the
sound long-term development of its business and
resources, recognising that the long-term health of
the Investment Adviser is in the interests of
shareholders in the Company.
-------------- ------------------------------------------------------------ ------------------------------------------------------------
Other service The Company's main functions
providers * Current and future financial performance are delegated to a number of
In order to service providers, including
function the Administrator, the Company
as an * Shared commercial objectives with the Company Secretary, the AIFM, the Registrar,
investment the Corporate Brokers and the
trust with a Depositary, each engaged under
premium * Operational excellence separate contracts. The Board
listing maintains regular contact with
on the London its key external providers
Stock * Long-term development of the service providers' and receives regular reporting
Exchange, businesses from them, both through the
the Company Board and Committee meetings,
relies as well as outside of the regular
on a diverse * Sustainability meeting cycle. Their advice,
range of as well as their needs and
reputable views, are routinely taken
advisers for into account. Through its Audit
support in and Management Engagement Committee,
meeting the Board formally assesses
all their performance, fees and
relevant continuing appointment at least
obligations. annually to ensure that the
key service providers continue
to function at an acceptable
level and are appropriately
remunerated to deliver the
expected level of service.
The Audit and Management Engagement
Committee also reviews and
evaluates the control environment
in place at each service provider.
-------------- ------------------------------------------------------------ ------------------------------------------------------------
Care At the outset, it is important
providers * Current and future performance to note that the Company does
not have any legal or operational
responsibility for the delivery
* Welfare of tenants of care in the properties within
the portfolio. However, the
Board and the Investment Adviser
* Lease obligations have taken the view that they
wish to have a detailed understanding
of the delivery of care and
* Void management the interaction with the major
care providers who deliver
this care.
Accordingly, the Investment
Adviser maintains an active
dialogue with many of the care
providers to build constructive
and informed relationships.
At the same time, as part of
transaction due diligence at
the time of acquisition of
properties, the Investment
Adviser undertakes due diligence
with respect to the operational
and financial performance of
all care providers who are
proposed to deliver care into
the particular properties.
This includes the financial
standing of the care provider,
its CQC ratings and the nature
of the SLA agreement covering
voids between the care provider
and the Approved Provider.
The Investment Adviser is noted
as having demonstrated considerable
expertise and understanding
of the care taking place within
its properties.
-------------- ------------------------------------------------------------ ------------------------------------------------------------
Tenants The Company's properties are
* Greater independence adapted for the use of individuals
with long-term care needs within
a community setting with the
* Maintaining high level of care specific aim of achieving better
personal outcomes and independence
for the individuals.
* Improved personal outcome The sector in which the Company
operates is regarded as having
achieved significant success
in delivering these positive
outcomes compared to long-term
older style remote institutional
care.
On a regular basis, members
of the Investment Adviser visit
properties accompanied by Approved
Provider and care provider
partners to see first hand
the nature of the housing and
care provision that is being
delivered. Whilst this process
has slowed as a result of the
pandemic, the Investment Advisor
has engaged with its tenants.
This is supported by the regular
Approved Provider seminars
at which the wellbeing of tenants
is discussed in detail.
In addition, the Company undertakes
resident case studies through
careful and considered interaction
via the care provider to assess
the positive impact our properties
and associated specialised
care have had on the individual
and their wellbeing.
-------------- ------------------------------------------------------------ ------------------------------------------------------------
Regulator of The Company is not itself regulated
Social * Financial and operational viability by the RSH, but it is important
Housing (RSH) to maintain open and regular
dialogue to ensure that the
* Governance Company and the RSH are working
together to improve the sector.
A senior representative from
* Compliance with health and safety, and regulatory the RSH attended the Company's
standards Board meeting in March 2020
to share thoughts on the sector
and the ways in which the Company
* Safety and wellbeing of underlying tenants could further evolve in order
to assist the work of the RSH.
This meeting was regarded by
both parties as being very
useful and constructive.
A senior representative of
the RSH also attended the quarterly
Housing Association seminar
to discuss the Housing White
paper.
In addition, the Investment
Adviser has a regular and ongoing
dialogue with the RSH and with
the Housing Association partners
regulated by the RSH.
The Company also publishes
responses to the regulatory
judgements of the RSH regarding
the Approved Providers with
the Company s part of the RSH's
general review of Approved
Providers engaged in the provision
of property services for vulnerable
people as announced in May
2018. This demonstrates the
Company's desire to maintain
aa dialogue with the RSH and
its desire to see that the
positions improve where needed.
-------------- ------------------------------------------------------------ ------------------------------------------------------------
Other The Company regularly considers
regulatory * Compliance with statutory and regulatory requirements how it meets various regulatory
authorities and statutory obligations and
The Company follows voluntary and best
can * Governance based on best practice guidance practice guidance, and how
only operate any governance decisions it
with the makes can have an impact on
approval * Better reporting to shareholders and other its shareholders and wider
of its stakeholders stakeholders, both in the shorter
regulators and in the longer term.
who have a
legitimate
interest in
how
the Company
operates
in the market
and treats
its
shareholders.
-------------- ------------------------------------------------------------ ------------------------------------------------------------
Local It is important for the Company
authorities * Provision of safe and secure properties of a high to build and maintain relationships
quality with local authorities as they
have an important role in identifying
areas of high demand, agreeing
* Sustainability for long-term placements rents and referrals to the
Company's schemes.
The Company will engage with
the local authority commissioner
either directly, or through
specialist consultants, Approved
Provider and care provider
partners as part of the Company's
due diligence to ensure that
each property being acquired
has been commissioned by the
relevant local authority and
that rent levels have been
discussed and agreed.
-------------- ------------------------------------------------------------ ------------------------------------------------------------
Lenders The Company has arranged debt
Availability * Current and future financial performance of the facilities from a wide range
of funding business of lenders and engages with
and these on a regular basis through
liquidity are regular meetings and presentations
crucial to * Openness and Transparency to ensure they are informed
the on all relevant areas of the
Company's business. The continual dialogue
ability * Proactive approach to communication helps to support the credit
to take relationships.
advantage During the year, the Company
of investment * Operational excellence arranged a GBP84.55m seven
opportunities year term facility with M&G
as they in order to support the Company's
arise. continuing growth plans and
delivering on the Company's
mission to provide stable long-term
income for the Company's shareholders
and long-term accommodation
for the residents of the Company's
properties.
The Company achieved an Investment
Grade High Credit Quality Rating
from Fitch Ratings of "A" (senior
secured) and a Long-Term IDR
(Issuer Default Rating) of
A- with a Stable Outlook. This
will enable the Company to
pursue its strategy in relation
to debt funding in addition
to continuing to work with
the Company's existing lenders
with whom the Company has built
strong relationships.
-------------- ------------------------------------------------------------ ------------------------------------------------------------
Communities A key component of the Company's
The Company's * Acceptance of care in the community portfolio is that the properties
assets rely within it are set within community
on environments so that individuals
a strong, * Availability of local facilities for tenants are able as part of their care
positive plan to interact with the local
connection community rather than being
with isolated.
the local This is achieved in consultation
communities with local authorities in determining
in which its that the initial settings are
business appropriately diversified within
operates. the respective community and
are not clustered in a way
that would lead to isolation.
This assists the individuals
and also ensures appropriate
integration within the community.
On a day-to-day basis, care
providers and Approved Providers
operate policies to ensure
positive relationships with
neighbours and surrounding
dwellings. The activities within
the Company's properties create
employment within the local
community for both housing
and care workers.
-------------- ------------------------------------------------------------ ------------------------------------------------------------
Charity The Company supports a number
partners * Delivering needed support to vulnerable adults of organisations whose objectives
are to provide improved outcomes
for vulnerable adults affected
* Improved well-being of vulnerable adults by homelessness and other care
needs.
The Company commits targeted
* ESG performance and sustainability financial support to fund specific
programmes which help those
affected by homelessness by
teaching them skills and offering
support to prevent them from
being in that position again.
The Company ensures regular
calls and meetings with our
charity partners to update
on progress and projects being
undertaken, as well as attending
events in support of their
work.
During the year, the Company
amended its investment objective
and investment policy to enable
it to enter into long-term
leases with the NHS and with
registered charities operating
within areas of investment
interest to the Company. The
amendments will allow the Company
access to a wider range of
pipeline opportunities and
will assist in providing the
currently unmet demand in these
areas.
-------------- ------------------------------------------------------------ ------------------------------------------------------------
Approved The Company's Approved Provider
Providers * Current and future performance partners are an important part
of the investment model as
the responsibility for collection
* Sustainability of housing benefit and subsequent
payment of rent, the maintenance
of the properties under the
* Compliance and property management full repairing and insuring
leases and, most importantly,
the safeguarding of the underlying
* Welfare of tenants tenants through the above means,
lies with the Approved Providers
.
* Lease obligations The Investment Adviser works
closely with the Company's
Approved Provider partners
to improve standards and governance
and to introduce practices
and procedures that make the
Company's investment processes
ever more robust.
The Investment Adviser has
a constant open dialogue with
the Approved Provider partners,
liaising monthly on compliance,
health and safety, maintenance
and future-proofing schemes,
as well as hosting quarterly
seminars to discuss current
themes/trends affecting the
sector, to troubleshoot and
this serves as an opportunity
to build relationships and
share best practice.
The Investment Adviser has
continued its regular and extensive
dialogue with Approved Providers
which since the start of the
pandemic includes detailed
reports on pandemic responsiveness.
These reports have shown a
high degree of resilience to
the pandemic with few serious
cases of COVID-19 reported
due to the quality of the buildings
people live in, the attention
and dedication of the one-to-one
care they receive and the age
profile of the residents.
The Investment Adviser supported
the establishment of The Social
Housing Family CIC, a not-for-profit
community interest company
operated independently of the
Company whose stated aim is
to enable Approved Providers
holding the Company's leases
to increase skills and experience
and to provide funding to promote
enhanced performance. Membership
is open to any Approved Provider
that holds Civitas leases and
the effect of membership is
to transfer ownership of the
Approved Provider to the social
housing family. Auckland Homes
Solutions was the first Approved
Provider to join and has now
recruited a very experienced
and senior executive team and
board of management. Qualitas
community benefit society has
also now joined the CIC.
-------------- ------------------------------------------------------------ ------------------------------------------------------------
The above mechanisms for engaging with stakeholders are kept
under review by the Directors and will be discussed on a regular
basis at Board meetings to ensure that they remain effective.
Principal decisions
Principal decisions have been defined as those that have a
material impact to the Group and its key stakeholders.
In taking these decisions, the Directors considered their duties
under section 172 of the Act. Two principal decisions made during
the year were as follows:
Widening of the Company's Investment Policy
During the year, the Board sought, and was granted approval by
shareholders, to widen the Company's investment policy to enable it
to enter into long-term lease agreements with additional
counterparties including the National Health Service ("NHS"). In
considering whether to amend the investment policy, the Board has
regard to the interests of the Company's shareholders, the
community and local authorities.
The Board believed that the widening of the investment policy
was in the best interest of shareholders, local authorities and the
community as it would allow the Company to access a wider range of
pipeline opportunities and allow the Company to assist in providing
the currently unmet demand for the delivery of care for long-term
conditions such as learning disability, autism and mental health,
in addition to other urgent needs with significant unmet demand
including homelessness and step-down accommodation for the NHS.
This provides housing to local authorities and has also a positive
impact on the community providing homes for unmet demand.
Seven Year Term Facility with M&G
During the year, the Board secured a new seven-year term,
interest only, loan facility of GBP84.55m (the "Facility") from
M&G Investment Management Limited ("M&G"), a new lender to
the Company. In considering whether to approve the new Facility the
Board had regard to the interests of the Company's shareholders,
the community and its lenders.
The Board believed that the Facility was in the best interest of
its shareholders as part of the Company's ambitions to evolve its
debt funding strategy around the sourcing and delivery of debt
facilities and provide additional capital for investment. This is
in addition to continuing to work with the Company's existing
lenders with whom the Company has built strong relationships. The
Board also considered that the Facility provides more funds for the
Company to invest in social housing to benefit the wider
community.
Strategic Overview
Purpose of the Company
The Company was established in 2016 with the purpose of
delivering long-term responsible, stable returns to investors and
achieving positive measurable social impact and ESG benefits on a
large scale. It should achieve this as a result of introducing
long-term equity capital into the social housing sector with a
particular focus on care-based community housing. By doing so, this
would form a bridge between equity investors and the social housing
sector and bring together aspects of healthcare with social
housing.
The Company has since developed the largest portfolio of
care-based community housing in the UK that provides long-term
homes for more than 4,200 individuals across half the local
authorities in England and Wales.
As a result of this success, the Company has recently extended
its mandate to be able to enter into transactions directly with the
NHS and with leading charities with an interest in the provision of
specialist housing that has a strong care or support element, is
consistent with public policy and whose costs are met by the public
purse for which it offers value for money.
Investment Objective
The Company's investment objective is to provide shareholders
with an attractive level of income, together with the potential for
capital growth from investing in a portfolio of Social Homes, which
benefits from inflation adjusted long-term leases or occupancy
agreements with Approved Providers and to deliver, on a fully
invested and geared basis, a targeted dividend yield of 5% per
annum(1) , which the Company expects to increase broadly in line
with inflation.
(1) The dividend yield is based on the original IPO price of 100
pence per Ordinary share. The target dividends are targets only and
do not represent a profit forecast. There can be no assurance that
the targets can or will be met and should not be taken as an
indication of the Company's expected or actual future results.
Accordingly, potential investors should not place any reliance on
these targets in deciding whether or not to invest in the Company
or assume that the Company will make any distributions at all and
should decide for themselves whether or not the target dividend
yields are reasonable or achievable.
Investment Policy
The Company's investment policy is to invest in a diversified
portfolio of Social Homes throughout the United Kingdom. The
Company intends to meet the Company's investment objective by
acquiring, typically indirectly via Special Purpose Vehicles,
portfolios of Social Homes and entering into long-term inflation
adjusted leases or occupancy agreements for terms primarily ranging
from 10 years to 40 years with Approved Providers, where all
management and maintenance obligations will be serviced by the
Approved Providers. The Company will not undertake any development
activity or assume any development or construction risk. However,
the Company may engage in renovating or customising existing homes,
as necessary.
The Company may make prudent use of leverage to finance the
acquisition of Social Homes and to preserve capital on a real
basis.
The Company is focused on delivering capital growth and expects
to hold its Portfolio over the long term and therefore it is
unlikely that the Company will dispose of any part of its
Portfolio. In the unlikely event that a part of the Portfolio is
disposed of, the Directors intend to reinvest proceeds from such
disposals in assets in accordance with the Company's investment
policy.
Investment restrictions
The Company invests and manages the Portfolio with the objective
of delivering a high quality, diversified Portfolio through the
following investment restrictions:
-- the Company only invests in Social Homes located in the United Kingdom;
-- the Company only invests in Social Homes where the
counterparty to the lease or occupancy agreement is an Approved
Provider;
-- no lease or occupancy agreement shall be for an unexpired
period of less than 10 years, unless the shorter leases or
occupancy agreements represent part of an acquisition of a
portfolio which the Investment Adviser intends to reorganise such
that the average term of lease or occupancy agreement is increased
to 15 years or above;
-- the aggregate maximum exposure to any single Approved
Provider is 25% of the Gross Asset Value, once the capital of the
Company is fully invested;
-- no investment by the Company in any single geographical area,
in relation to which the houses and/or apartment blocks owned by
the Company are located on a contiguous or largely contiguous
basis, exceeds 20% of the Gross Asset Value of the Company;
-- the Company only acquires completed Social Homes and will not
forward finance any development of new Social Homes;
-- the Company does not invest in other alternative investment
funds or closed-end investment companies; and
-- the Company is not engaged in short selling.
The investment limits detailed above apply at the time of the
acquisition of the relevant investment in the Portfolio once fully
invested. The Company would not be required to dispose of any
investment or to rebalance the Portfolio as a result of a change in
the respective valuations of its assets.
Gearing limit
The Directors seek to use gearing to enhance equity returns. The
level of borrowing is set on a prudent basis for the asset class
and seeks to achieve a low cost of funds, whilst maintaining the
flexibility in the underlying security requirements and the
structure of both the Portfolio and the Company.
The Company may, following a decision of the Board, raise debt
from banks and/or the capital markets and the aggregate borrowings
of the Company is always subject to an absolute maximum, calculated
at the time of drawdown, of 40% of the Gross Asset Value. This is
the overall gearing target of the Company.
Debt is secured at asset level, whether over a particular
property or a holding entity for a particular series of properties,
without recourse to the Company and also potentially at Company
level with or without a charge over the Portfolio (but not against
particular assets), depending on the optimal structure for the
Company and having consideration to key metrics including lender
diversity, cost of debt, debt type and maturity profiles. Otherwise
there will be no cross-financing between investments in the
Portfolio and the Company will not operate as a common treasury
function between the Company and its investments.
Use of derivatives
The Company may choose to utilise derivatives for efficient
portfolio management. In particular, the Directors may engage in
full or partial interest rate hedging or otherwise seek to mitigate
the risk of interest rate increases on borrowings incurred in
accordance with the gearing limits as part of the management of the
Portfolio.
Cash management
Until the Company is fully invested, and pending re-investment
or distribution of cash receipts, the Company invests in cash, cash
equivalents, near cash instruments and money market
instruments.
REIT status
The Directors conduct the affairs of the Company so as to enable
it to remain qualified as a REIT for the purposes of Part 12 of the
Corporation Tax Act 2010 (and the regulations made thereunder).
Culture
The Directors agree that establishing and maintaining a healthy
corporate culture among the Board and in its interaction with the
Investment Adviser, shareholders and other stakeholders will
support the delivery of its purpose, values and strategy. The Board
seeks to promote a culture of openness, debate and integrity
through ongoing dialogue and engagement with its service providers,
principally the Investment Adviser.
As detailed in the Corporate Governance Statement, the Company
has a number of policies and procedures in place to assist with
maintaining a culture of good governance, including those relating
to diversity and Directors' conflicts of interest. The Board
assesses and monitors compliance with these policies as well as the
general culture of the Board through Board meetings and, in
particular, during the annual evaluation process which is
undertaken by each Director (for more information, see the
performance evaluation section in the full report).
The Board's culture itself is one of openness, collaboration and
constructive debate to ensure the effective contribution of all
Directors, particularly in respect of the Board's decision making.
Consideration of our Stakeholders is embedded in the Board's
decision making process. Please see our section 172 Statement
above.
Key Performance Indicators ("KPIs")
Measure Explanation Result
----------------------------- --------------------------------- --------------------------------------------------
Increase in IFRS NAV Target to achieve capital IFRS NAV increase of 10.30p per share or 11%
per share appreciation whilst maintaining from IPO.
a low risk strategy from
enhancing the quality of
cash flows from investments,
by physical improvement of
properties and by creating
a significantly diversified,
high-quality portfolio.
----------------------------- --------------------------------- --------------------------------------------------
Dividends per share For the year ended 31 March Total dividend of 5.4p per share declared for
2021, the Company targeted the year to 31 March 2021.
a dividend of 5.4p per share.
----------------------------- --------------------------------- --------------------------------------------------
Number of Local Authorities, Target risk mitigation through As at 31 March 2021:
Approved Providers and a diversified portfolio (once
care providers fully invested) with no more -- 164 Local Authorities
than 25% exposure to any -- 16 Approved Providers
one Local Authority or single -- 118 Care Providers
Approved Provider and no
more than 20% exposure to The Company's largest single exposure is to
any single geographical area, Auckland Home Solutions CIC and currently stands
once the capital of the Company at 24%. The largest geographical concentration
is fully invested. is in the South West, being 16%.
----------------------------- --------------------------------- --------------------------------------------------
Loan to Gross Assets Assets Target debt drawn Leverage as at 31 March 2021 of 34.48% of gross
of 35% of gross assets. assets.
----------------------------- --------------------------------- --------------------------------------------------
EPRA
The Company is a member of the European Public Real Estate
Association ("EPRA"). EPRA has developed and defined the following
performance measures to give transparency, comparability and
relevant financial reporting across entities which may use
different accounting standards. The Company is pleased to disclose
the following measures which are calculated in accordance with EPRA
guidance.
For reporting periods starting on or after 1 January 2020, EPR
NAV and EPRA NNNAV have been replaced with three specific new EPRA
NAV measures. The table below shows the new metrics, and the new
measure most comparable to the EPRA NAV is EPRA Net Tangible
Assets.
EPRA
Performance EPRA Performance 31 March 31 March
Measure Definition Purpose Measure 2021 2020
------------------ -------------------- -------------------- -------------------- --------------- ---------------
EPRA Earnings Earnings from A key measure of a EPRA Earnings GBP30,630,000 GBP28,814,000
operational company's
activities . underlying
operating results
and an indication
of the extent
to which current
dividend
payments are
supported by
earnings.
EPRA Earnings
per share (basic
and diluted) 4.93p 4.63p
EPRA Net EPRA NAV metric The EPRA NAV set of EPRA NRV GBP674,042,000 GBP671,042,000
Reinstatement which assumes metrics
Value ("NRV") the entities never make adjustments to
sell assets the NAV
and aims to per the IFRS
represent the financial
value required to statements
rebuild to provide
the entity. stakeholders with
the most relevant
information
on the fair value
of the assets
and liabilities of
a real
estate investment
company,
under different
scenarios.
------------------ -------------------- --------------------
EPRA NRV per
share (diluted) 108.38p 107.95p
--------------------------------------------------------------------------------- --------------- ---------------
EPRA Net EPRA NAV metric EPRA NTA GBP671,476,000 GBP671,042,000
Tangible which assumes
Assets ("NTA") that entities buy
and sell
assets, thereby
crystallising
certain levels of
unavoidable
deferred tax.
EPRA NTA per
share (diluted) 107.97p 107.95p
EPRA Net EPRA NAV metric EPRA NDV GBP671,476,000 GBP667,560,000
Disposal which represents
Value ("NDV") the shareholders'
value under
a disposal
scenario, where
deferred tax,
financial
instruments
and certain other
adjustments
are calculated to
the full
extent of their
liability,
net of any
resulting tax.
------------------ --------------------
EPRA NDV per
share (diluted) 107.97p 107.39p
--------------------------------------------------------------------------------- --------------- ---------------
Annualised rental
income A comparable
based on the crash measure for
rents portfolio
passing at the valuations. These
balance sheet measures
date, less should make it
non-recoverable easier for
property operating investors to judge
expenses, themselves,
divided by the how the valuation
market value of portfolio
EPRA Net of the property X compares with
Initial with (estimated) portfolio
Yield ("NIY") purchases' costs. Y. EPRA NIY 5.24% 5.26%
------------------ -------------------- -------------------- -------------------- --------------- ---------------
This measure incorporates
an adjustment to the EPRA
NIY in respect of the expiration
of rent-free periods (or
other unexpired lease incentives
EPRA 'Topped-up' such as discounted rent periods EPRA 'Topped-up'
NIY and stepped rents). NIY 5.24% 5.26%
------------------ ------------------------------------------ ------------------- --------------- ---------------
Estimated Market
Rental Value A 'pure' (%)
("ERV") of vacancy measure of
space investment
divided by ERV of property space
EPRA Vacancy the whole that is vacant, EPRA Vacancy
Rate portfolio. based on ERV. Rate 0% 0%
------------------ -------------------- -------------------- -------------------- --------------- ---------------
Administrative and
operating
costs (including A key measure to
and excluding enable meaningful
costs of direct measurement of the
vacancy) changes
EPRA Costs divided by gross in a company's
Ratio rental income. operating costs. EPRA Costs Ratio 20.33% 21.48%
------------------ -------------------- --------------------
EPRA Costs Ratio
(excluding direct
vacancy costs) 20.33% 21.48%
--------------------------------------------------------------------------------- --------------- ---------------
Past performance is not a reliable indicator of future
performance
For detailed workings reconciling the above measures to the IFRS
results, please see Appendix 1 to these financial statements
below.
Principal Risks and Risk Management
The Board considers that the risks detailed below are the
principal risks facing the Group currently, along with the risks
detailed in note 33.0 to the financial statements. These are the
risks that could affect the ability of the Company to deliver its
strategy. The Board confirms that the principal risks of the
Company, including those which would threaten its future
performance, solvency or liquidity, have been robustly assessed
throughout the year ended 31 March 2021, taking into account the
evolving COVID-19 risk, and that processes are in place to continue
this assessment. The Audit Committee takes responsibility for
overseeing the effectiveness of risk management and internal
control systems on behalf of the Board and advises the Board on the
principal risks facing the business.
Further details of risk management processes that are in place
can be found in the Corporate Governance Statement in the full
Annual Report. The principal and emerging risks and uncertainties
relating to the Group are regularly reviewed by the Board along
with the internal controls and risk management processes that are
used to mitigate these risks. The principal risks and management of
those risks are described below:
Principal risks and uncertainties
1. Strategy and Impact How managed/mitigated
competitiveness
risks
------------------------- ------------------------------------ ------------------------------------- --------------
The Company and Any change in the laws, regulations The Company focuses on niche real Impact: Very
its operations and/or government policy affecting estate sectors where it believes High
are subject to the Company and its operations the regulatory framework to be
laws and regulations may have a material adverse robust. Probability:
enacted by national effect on the ability of the Unlikely
and local governments Company to successfully pursue The Investment Adviser has strong
and government its investment policy and industry contacts and has good
policy. meet its investment objective knowledge
and on the value of the Company on policy opinion and direction.
and the shares.
The Board obtains regular updates
from professional advisers to
monitor
developments in regulation and
legislation.
------------------------- ------------------------------------ ------------------------------------- --------------
2. Strategy and Impact How managed/mitigated
competitiveness
risks
------------------------- ------------------------------------ ------------------------------------- --------------
As a result of The rate of capital deployment The Company has strong links with Impact: High
competition from would drop, decreasing returns vendors and a robust pipeline of
other purchasers to shareholders. future acquisitions. Probability:
of social housing Unlikely
properties, the The Board regularly reviews the
Company's ability pipeline of potential acquisitions
to deploy capital and monitors the market landscape.
effectively within
a reasonable timeframe
may be restricted
or the net initial
yields at which
the Company can
acquire properties
may decline such
that target returns
cannot be met.
------------------------- ------------------------------------ ------------------------------------- --------------
3. Investment Impact How managed/mitigated
management risk
------------------------- ------------------------------------ ------------------------------------- --------------
Tenant defaulting Loss of rental income in the The portfolio is diversified to Impact:
under the terms short term. reduce the impact of default. Medium
of a lease. Extensive
diligence is undertaken on all Probability:
assets, Likely
which is reviewed and challenged
by the Board.
The Board is provided with regular
updates on the tenants with any
concerns raised for discussion.
------------------------- ------------------------------------ ------------------------------------- --------------
4. Investment management Impact How managed/mitigated
risk
------------------------- ------------------------------------ ------------------------------------- --------------
The value of the The valuation of the Company's The Company invests in projects Impact:
investments made assets would fall, decreasing with stable, predetermined, High
by the Company the NAV and yields of the long-term
may change from Company. leases in place with CPI or CPI Probability:
time to time according plus 1% indexation and its strategy Unlikely
to a variety is not focused on sale of
of factors, including properties.
movements in interest
rates, inflation The Board receives regular updates
and general market on factors that might impact
pricing of similar investment
investments. valuations, such as the current
COVID-19 pandemic.
------------------------- ------------------------------------ ------------------------------------- --------------
5. Investment management Impact How managed/mitigated
risk
------------------------- ------------------------------------ ------------------------------------- --------------
Due diligence may The Company would overpay The Company undertakes detailed Impact:
not reveal all for assets impairing shareholder due diligence on the properties, High
facts and circumstances value, reducing rental income their condition, the proposed rental
that may be relevant and therefore returns. levels - benchmarking against Probability:
in connection with comparable Unlikely
an investment and schemes using both external
may not prevent consultants
an acquisition where required and its own
being materially proprietary
overvalued or rental database - and on the Approved
streams being at Providers
risk. and care providers involved in each
property to ensure that the purchase
price is robust.
The Board considers the due
diligence
undertaken when approving
acquisitions.
------------------------- ------------------------------------ ------------------------------------- --------------
6. Investment management Impact How managed/mitigated
risk
------------------------- ------------------------------------ ------------------------------------- --------------
Loss of key staff Negative investor sentiment The Board considers the risk of Impact:
at the Investment leading to a reduction in the Investment Adviser losing key High
Adviser. share price. Reduction in staff and the succession plans the
ability to source off market Investment Adviser has in place. Probability:
and favourable deals. Unlikely
------------------------- ------------------------------------ ------------------------------------- --------------
7. Investment management Impact How managed/mitigated
risks
------------------------- ------------------------------------ ------------------------------------- --------------
Failure to monitor Deterioration in the underlying Contingent actions are regularly Impact:
that contingent quality, and therefore value monitored and followed up. Medium
activities are of the Company's property.
completed by the The Board is kept apprised of any Probability:
Approved Providers breach of lease obligations. Unlikely
or other parties.
------------------------- ------------------------------------ ------------------------------------- --------------
Emerging risks
Emerging risk are considered during the regular risk review, and
would be specifically debated and evaluated as they arise during
the year, Input from the Investment Adviser on emerging risk is
considered by the Audit Committee.
Key emerging risks identified and considered during the year
include:
-- COVID-19 - the impact of COVID-19 pandemic and associated
lockdowns. Although there has been minimal impact of COVID-19 on
the Company, the Board continues to closely monitor the crisis.
--Climate Change- the impact of climate change on the business.
The Company is committed to understanding ESG risk, including the
impact of climate change on the business. Climate change poses an
indirect risk to the Company's operations, the environment and
society, and the Board is aware that appropriate action is required
to reduce its impact.
Please see the Company's ESG Report set out in the full report
for further details.
The Listing Rules require premium-listed commercial companies to
disclose in their annual report whether they have reported on how
climate change affects their business in a manner consistent with
the recommendations of the Task Force on Climate-related Financial
Disclosures ("TCFD"), and to provide an explanation and other
information if they are unable to do so. In addition, the UK
Government intends to introduce mandatory climate-related
disclosures to supplement the requirements under the Listing Rules.
These requirements are expected to be applicable to the Company in
the financial year 2024.
Going Concern and Viability Statement
Going Concern
The Board regularly reviews the position of the Company and its
ability to continue as a going concern at its meetings. The
financial statements set out the current financial position of the
Company.
The Company acquires high-quality property with a particular
focus on property providing care for the long term. The properties
acquired are on long-term full repairing and insuring leases in a
sector of the market with very high levels of need. The cost base
of the Company is proportionately low compared to revenue and there
is a high level of certainty over cost to be incurred. On this
basis, the Company is expected to be viable well beyond the
five-year term considered in the Company's testing below.
As at 31 March 2021, the Company held cash balances of GBP107
million (net of operating and financing amounts due). The Board has
evaluated the financial position of the Company and has secured a
premium investment grade rating from Fitch Ratings Ltd a
well-established rating agency with a strong familiarity to the
alternative healthcare real estate space ), which gives the Company
confidence in the ability to raise future debt and/ or equity
capital in order to fund the Company's investments for the long
term and to facilitate the payment of dividends to shareholders at
the targeted rate. Based on this, the Board believes that the
Company is in a position to manage its financial risks.
The Directors believe that there are currently no material
uncertainties in relation to the Company's ability to continue in
operation for a period of at least 12 months from the date of
approval of the Company's financial statements and therefore have
adopted the going concern basis in the preparation of the financial
statements.
Viability Statement
The Directors present the Company's viability statement which
summarises the results of their assessment of the Company's current
position, its principal risks and prospects over a period to 31
March 2026.
The assumptions underpinning the forecast cashflows and covenant
compliance forecasts were sensitised to explore the resilience of
the Company to the potential impact of the Company's significant
risk and COVID 19.
The prospects were assessed over a five-year period,
acknowledging that the Company will have its first continuation
vote in 2022, for the following reasons:
i) the Company's long-term forecast covers a five-year period;
ii) the length of service level agreements between Approved
Providers and care providers is typically five years; and
iii) the Company's leases are typically 25 years on fully
repairing and insuring leases, enabling reasonable certainty of
income over the next five years.
The Company's five-year forecast incorporates assumptions
related to the Company's investment strategy and principal risks
from which performance results, cash flows and key performance
indicators are forecast. The principal risks are set out above. Of
these risks, those which are expected to have a higher impact on
the Company's longer-term prospects are those related to future
government housing policies. The Company has considered its
strategy over a longer term and, in light of the inherent demand
for the Company's properties and the vulnerable nature of the
ultimate tenant, the risk of change in future housing policy is
considered to be limited. The principal risks are mitigated by the
Company's risk management and internal control processes which
function on an ongoing basis. The Board, via delegation to the
Audit and Management Engagement Committee, monitors the
effectiveness of the Company's risk management and internal control
processes on an ongoing basis. The monitoring activities are
described in the Report of the Audit and Management Engagement
Committee in the full Annual Report and include direct review and
challenge of the Company's documented risks, risk ratings and
controls, and review of performance and compliance reports prepared
by the Company's advisers and the independent external
auditors.
The Board of Directors has carried out a robust assessment of
the principal and emerging risks facing
the Company, including those that would threaten its business
model, future performance, solvency and liquidity. Where
appropriate, the Company's forecasts are subject to sensitivity
analysis, which involves applying severe conditions and flexing a
number of assumptions simultaneously. The sensitivities performed
were designed to provide the Directors with an understanding of the
Company's performance in the event of severe but plausible
scenarios, taking full account of mitigating actions that could be
taken to avoid or reduce the impact or occurrence of the underlying
risks outlined below:
-- 10% of tenants defaulting under a lease. The outcome of this
scenario reduces profits on average over the five year forecast by
11% per annum. Cash is reduced however, the Board is still
comfortable that dividends could be paid; and
-- deterioration in economic outlook, such as any negative
impact due to Brexit, impact of COVID-19, or change in government
housing policy which could impact the fundamentals of the social
housing sector, including a negative impact on valuations and a 5%
reduction in annual rents. The outcome of the 'severe downside
scenario' was that the Company covenant headroom on existing debt
(i.e. the level at which the investment property values would have
to fall before a financial breach occurs) reduces by 26%, prior to
any mitigating actions such as asset sales, which indicates that
covenants on existing facilities would not be breached.The impact
of Covid 19 and Brexit on going concern is immaterial.
The remaining principal risks and uncertainties, whilst having
an impact on the Company's business, are not considered by the
Directors to have a reasonable likelihood of impacting the
Company's viability over the five-year period, therefore the
scenarios outlined above are the only ones that have been
specifically tested. Based on the results of their assessment, the
Directors have a reasonable expectation that the Company will be
able to continue in operation and meet its liabilities as they fall
due over the five-year period of their assessment.
Approval of Strategic Report
The Group Strategic Report was approved by the Board and signed
on its behalf by:
Michael Wrobel
Chairman
29 June 2021
Further details on the Environmental, Social & Governance
framework of the Company and the Social Impact report are set out
in the full Report.
Board of Directors
Michael Wrobel (Chairman)
Peter Baxter (Senior Independent Director)
Caroline Gulliver (Chair of the Audit and Management Engagement
Committee)
Alison Hadden (Director)
Alastair Moss (Director)
Extracts from the Report of the Directors
Results and Dividends
The results for the year are shown below.
The following dividends were paid on the Ordinary shares during
the year:
First dividend 1.325p per share paid on 12 June
2020
---------------- ------------------------------------
Second dividend 1.35p per share paid on 7 September
2020
---------------- ------------------------------------
Third dividend 1.35p per share paid on 4 December
2020
---------------- ------------------------------------
Fourth dividend 1.35p per share paid on 1 March
2021
---------------- ------------------------------------
Since the year end, the Company has declared the following
dividend:
Quarterly dividend 1.35p per share paid on 10 May
2021
------------------- -------------------------------
No final dividend is being recommended on the Ordinary
shares.
Capital Structure
Issue of shares
At the AGM held on 8 September 2020, the Directors were
authorised to issue equity securities up to an aggregate nominal
amount of GBP621,646 (being approximately 10% of the issued
Ordinary share capital). The Company was also authorised to
disapply pre-emption rights in respect of equity securities and to
issue equity securities for cash up to an aggregate nominal amount
equal to GBP621,646
(being approximately 10% of the issued Ordinary share
capital).
250,000 Ordinary shares were issued from Treasury under these
authorities during the year. These shares were issued at a price of
not less than the net asset value per share at the time of issue
plus an amount to cover the cost.
The issuance was made with a view to balancing the premium to
NAV and satisfying market demand for additional shares in the
Company.
Post the year end, the Company issued 565,000 Ordinary shares
from Treasury. At the date of this Report, the Company does not
hold any shares in Treasury.
Proposals for the renewal of the Directors' authority to issue
shares will be set out in the Notice of AGM.
Purchase of own shares
At the AGM held on 8 September 2020, the Directors were granted
the authority to buy back up to 93,184,792 Ordinary shares, being
14.99% of the Ordinary shares in issue at the time of the passing
of the resolution.
During the year, no shares were bought back for Treasury or
cancellation.
The authority to buy back up to 93,184,792 shares will expire at
the conclusion of the forthcoming AGM, when a resolution for its
renewal will be proposed. Further information will be contained in
the Notice of AGM, which will be circulated to shareholders in due
course.
Current share capital
As at 31 March 2021, there were 622,461,380 Ordinary shares in
issue, of which 565,000 shares were held in treasury. The total
voting rights of the Company as at 31 March 2021 was
621,646,380.
As at the date of signing this Report, the total voting rights
of the Company was 622,461,380.
Statement of Directors' Responsibilities
The directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law and
regulation.
Company law requires the directors to prepare financial
statements for each financial year. Under that law the directors
have prepared the Group financial statements in accordance with
international accounting standards in conformity with the
requirements of the Companies Act 2006 and the company financial
statements in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards,
comprising FRS 101 "Reduced Disclosure Framework", and applicable
law). Additionally, the Financial Conduct Authority's Disclosure
Guidance and Transparency Rules require the directors to prepare
the Group financial statements in accordance with international
financial reporting standards adopted pursuant to Regulation (EC)
No 1606/2002 as it applies in the European Union.
Under company law, directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Group and Company and of the
profit or loss of the Group for that period. In preparing the
financial statements, the directors are required to:
-- select suitable accounting policies and then apply them
consistently;
-- state whether applicable international accounting standards
in conformity with the requirements of the Companies Act 2006 and
international financial reporting standards adopted pursuant to
Regulation (EC) No 1606/2002 as it applies in the European Union
have been followed for the Group financial statements and United
Kingdom Accounting Standards, comprising FRS 101 have been followed
for the company financial statements, subject to any material
departures disclosed and explained in the financial statements;
-- make judgements and accounting estimates that are reasonable
and prudent; and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group and Company
will continue in business.
The directors are also responsible for safeguarding the assets
of the Group and Company and hence for taking reasonable steps for
the prevention and detection of fraud and other irregularities.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group's and
Company's transactions and disclose with reasonable accuracy at any
time the financial position of the Group and Company and enable
them to ensure that the financial statements and the Directors'
Remuneration Report comply with the Companies Act 2006 and as
regards the Group financial statements Articles 4 of the IAS
Regulation.
The directors are responsible for the maintenance and integrity
of the Company's website. Legislation in the United Kingdom
governing the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
Directors' confirmations
The directors consider that the annual report and accounts,
taken as a whole, is fair, balanced and
understandable and provides the information necessary for
shareholders to assess the Group's and Company's position and
performance, business model and strategy.
Each of the directors, whose names and functions are listed
above confirm that, to the best of their knowledge:
--the Group financial statements, which have been prepared in
accordance with international accounting
standards in conformity with the requirements of the Companies
Act 2006 and international financial
reporting standards adopted pursuant to Regulation (EC) No
1606/2002 as it applies in the European Union, give a true and fair
view of the assets, liabilities, financial position and profit of
the Group;
--the Company financial statements, which have been prepared in
accordance with United Kingdom
Accounting Standards, comprising FRS 101, give a true and fair
view of the assets, liabilities, financial position and profit of
the Company; and
--the Group Strategic Report includes a fair review of the
development and performance of the business
and the position of the Group and Company, together with a
description of the principal risks and
uncertainties that it faces.
Approval
This Statement of Directors' Responsibilities was approved by
the Board and signed on its behalf by:
Michael Wrobel
Chairman
29 June 2021
NON-STATUTORY ACCOUNTS
The financial information set out below does not constitute the
Company's statutory accounts for the year ended 31 March 2021 or
the year ended 31 March 2020 but is derived from those accounts.
Statutory accounts for the period ended 31 March 2020 have been
delivered to the Registrar of Companies and those for the year
ended 31 March 2021 will be delivered in due course. The Auditor
has reported on those accounts; their report was (i) unqualified,
(ii) did not include a reference to any matters to which the
Auditor drew attention by way of emphasis without qualifying their
report and (iii) did not contain a statement under Section 498 (2)
or (3) of the Companies Act 2006. The text of the Auditor's report
can be found in the Company's full Annual Report and financial
statements at www.civitassocialhousing.com .
Consolidated Statement of Comprehensive Income
For the year ended 31 March 2021
For the For the
year ended year ended
31 March 2021 31 March 2020
Note GBP'000 GBP'000
--------------- ---------------
Revenue
Rental income 5.0 49,020 46,165
Less direct property expenses 5.0 (1,175) (259)
--------------- ---------------
Net rental income 47,845 45,906
Directors' remuneration 6.0 (198) (176)
Investment advisory fees 8.0 (6,117) (6,183)
General and administrative expenses 9.0 (3,183) (3,501)
--------------- ---------------
Total expenses (9,498) (9,860)
Change in fair value of investment
properties 15.0 5,511 9,389
--------------- ---------------
Operating profit 43,858 45,435
Finance income 10.0 20 110
Finance expense - relating to
bank borrowings 11.0 (7,737) (7,342)
Change in fair value of interest
rate derivatives 21.0 (66) (478)
--------------- ---------------
Profit before tax 36,075 37,725
Taxation 12.0 - -
--------------- ---------------
Profit being total comprehensive income
for the year 36,075 37,725
--------------- ---------------
Earnings per share - basic and
diluted 13.0 5.80p 6.06p
All amounts reported in the Consolidated Statement of
Comprehensive Income above arise from continuing operations.
The notes set out below are an integral part of these
consolidated financial statements.
Consolidated Statement of Financial Position
As at 31 March 2021
31 March 2021 31 March 2020
Note GBP'000 GBP'000
Assets
Non-current assets
Investment property 15.0 893,684 867,988
Other receivables 17.0 21,905 10,755
915,589 878,743
Current assets
Trade and other receivables 17.0 12,821 10,838
Cash and cash equivalents 18.0 107,097 58,374
-------------- --------------
119,918 69,212
-------------- --------------
Total assets 1,035,507 947,955
-------------- --------------
Liabilities
Current liabilities
Trade and other payables 19.0 (9,345) (7,743)
Bank and loan borrowings 20.0 (59,937) (59,730)
-------------- --------------
(69,282) (67,473)
Non-current liabilities
Bank and loan borrowings 20.0 (292,183) (209,440)
Interest rate derivatives 21.0 (544) (478)
-------------- --------------
Total liabilities (362,009) (277,391)
-------------- --------------
Total net assets 673,498 670,564
-------------- --------------
Equity
Share capital 22.0 6,225 6,225
Share premium reserve 23.0 292,463 292,405
Capital reduction reserve 24.0 331,140 330,926
Retained earnings 25.0 43,670 41,008
-------------- --------------
Total equity 673,498 670,564
-------------- --------------
Net assets per share - basic
and diluted 26.0 108.30p 107.87p
-------- --------
These consolidated financial statements above were approved by
the Board of Directors of Civitas Social Housing PLC and authorised
for issue and signed on its behalf by:
Michael Wrobel
Chairman and Independent Non-Executive Director
29 June 2021
Company No: 10402528
The notes set out below are an integral part of these
consolidated financial statements.
Consolidated Statement of Changes in Equity
For the year ended 31 March 2021
Share Capital
Share premium reduction Retained Total
capital reserve reserve earnings equity
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------- -------- ---------- --------- ---------
Balance at 1 April 2019 6,225 292,405 331,625 36,253 666,508
Profit and total comprehensive income for
the year - - - 37,725 37,725
Issue of Ordinary shares
Shares bought back into treasury - - (699) - (699)
Dividends paid
Total interim dividends for the year ended
31 March 2020 (5.30p) 14.0 - - - (32,970) (32,970)
-------- -------- ---------- --------- ---------
Balance at 31 March 2020 6,225 292,405 330,926 41,008 670,564
-------- -------- ---------- --------- ---------
Profit and total comprehensive income for
the year - - - 36,075 36,075
Issue of Ordinary shares
Shares reissued from treasury - 58 214 - 272
Dividends paid
Total interim dividends for the year ended
31 March 2021 (5.375p) 14.0 - - - (33,413) (33,413)
-------- -------- ---------- --------- ---------
Balance at 31 March 2021 6,225 292,463 331,140 43,670 673,498
-------- -------- ---------- --------- ---------
The notes set out below are an integral part of these
consolidated financial statements.
Consolidated Statement of Cash Flows
For the year ended 31 March 2021
For the For the
year ended year ended
31 March 2021 31 March 2020
Note GBP'000 GBP'000
--------------- ---------------
Cash flows from operating activities
Profit for the year before taxation 36,075 37,725
- Change in fair value of investment
properties (5,511) (9,389)
- Change in fair value of interest
rate derivatives 66 478
- Rent and incentive straight
line adjustments 68 (87)
- Bad debt expense 289 -
Finance income (20) (110)
Finance expense 7,737 7,342
Increase in lease incentive receivable (11,217) -
Increase in trade and other receivables (3,150) (3,290)
Increase in trade and other payables 1,762 126
--------------- ---------------
Cash generated from operations 26,099 32,795
Interest received 20 110
--------------- ---------------
Net cash flow generated from operating
activities 26,119 32,905
--------------- ---------------
Investing activities
Purchase of investment properties (19,462) (17,986)
Acquisition costs (938) (9,737)
Purchase of subsidiary company - (19,829)
Sale proceeds on sale of subsidiary
company - 2,221
Lease incentives paid - (6,844)
Release(/increase) in restricted
cash held for investing activities 14,232 (9,726)
--------------- ---------------
Net cash flow used in investing
activities (6,168) (61,901)
--------------- ---------------
Financing activities
Cost of shares bought into treasury 24.0 - (699)
Dividends paid to equity shareholders (33,319) (32,889)
Bank borrowings advanced 20.0 84,550 64,053
Bank borrowing issue costs paid (2,811) (1,364)
Loan interest paid (5,981) (5,804)
--------------- ---------------
Net cash flow generated from financing
activities 42,439 23,297
--------------- ---------------
Net increase/(decrease) in cash
and cash equivalents 62,390 (5,699)
Unrestricted cash and cash equivalents
at the start of the year 18.0 41,429 47,128
--------------- ---------------
Unrestricted cash and cash equivalents
at the end of the year 18.0 103,819 41,429
--------------- ---------------
The notes set out below are an integral part of these
consolidated financial statements.
Notes to the Consolidated Financial Statements
For the year ended 31 March 2021
1.0 Corporate information
Civitas Social Housing PLC (the "Company") was incorporated in
England and Wales under the Companies Act 2006 as a public company
limited by shares on 29 September 2016 with company number 10402528
under the name Civitas REIT PLC, which was subsequently changed to
the existing name on 3 October 2016.
The address of the registered office is Beaufort House, 51 New
North Road, Exeter, EX4 4EP. The Company is registered as an
investment company under section 833 of the Companies Act 2006 and
is domiciled in the United Kingdom.
The Company did not begin trading until 18 November 2016 when
the shares were admitted to trading on the London Stock Exchange
("LSE").
The Company's Ordinary shares are admitted to the Official List
of the Financial Conduct Authority ("FCA") and traded on the
LSE.
The principal activity of the Company and its subsidiaries (the
"Group") is to provide shareholders with an attractive level of
income, together with the potential for capital growth from
investing in a portfolio of social homes.
2.0 Basis of preparation
The Group's consolidated financial statements have been prepared
in accordance with International Financial Reporting Standards
("IFRS"), as adopted pursuant to Regulation (EC) No 1606/2002 as it
applies in the European Union and in accordance with international
accounting standards in conformity with the requirements of the
Companies Act 2006.
The Group's consolidated financial statements have been prepared
on a historical cost basis, as modified for the Group's investment
properties and derivative financial instruments at fair value
through profit or loss.
The Group has chosen to adopt EPRA best practice guidelines for
calculating key metrics such as net asset value and earnings per
share. These are disclosed with supporting calculations in Appendix
1 in the full Annual Report.
2.1 Functional and presentation currency
The financial information is presented in Pounds Sterling which
is also the functional currency of the Company, and all values are
rounded to the nearest thousand pounds (GBP'000s), except where
otherwise indicated.
2.2 Going concern
The Group benefits from a secure income stream from long leases
with the Approved Providers, which are not overly reliant on any
one tenant and present a well-diversified risk. The Group's cash
balances as at 31 March 2021 were GBP107,097,000, of which
GBP3,278,000 was held as restricted cash. Details of this can be
found in note 18.0.
To date, the Company's financial performance has not been
negatively impacted by COVID-19. The Company and its Investment
Adviser, Civitas Investment Management Limited ("CIM") continues to
work closely with the Company's major counterparties to monitor the
position on the ground and, should it be needed, to offer
assistance and guidance where possible. The Board of Directors
believes that the Company operates a robust and defensive business
model and that social housing and specialist healthcare are proving
to be some of the more resilient sectors within the market, given
that they are based on non-discretionary public sector expenditure
and that demand exceeds supply.
On 27 November 2020, an extension was granted for the HSBC
facility, which now expires in November 2022.
Further, positive discussions are progressing with Lloyds to
refinance its facility. The facility has been performing throughout
its term, with all covenants being comfortably met.
The facility with Lloyds Bank plc has also been successfully
re-financed with a 2 year Revolving Credit Facility expiring in
July 2023.
As a result of the positive cash balances and the positive
future outlook regarding the social housing and specialist
healthcare sector, the Directors believe that the Group is well
placed to manage its financing and other business risks and that
the Group will remain viable, continuing to operate and meet its
liabilities as they fall due.
The Board of Directors believes that there are currently no
material uncertainties in relation to the Group's ability to
continue for the period of at least 12 months from the date of the
Group's consolidated financial statements. The Board is, therefore,
of the opinion that the going concern basis adopted in the
preparation of the consolidated financial statements is
appropriate.
2.3 New standards, amendments and interpretations
The following new standards are now effective and have been
adopted for the year ended 31 March 2021.
-- Amendments to IAS 1 'Presentation of Financial Statements'
and IAS 8 'Accounting Policies, Changes in Accounting Estimates and
Errors: (effective for annual periods beginning on or after 1
January 2020). These amendments clarify the definition of
'material'. The amendments make the standards more consistent but
have no significant impact on the preparation of these financial
statements.
-- Amendments to IFRS 3 Business Combinations: (effective for
periods beginning on or after 1 January 2020).These amendments
clarify the definition of a business and the subsequent accounting
treatment applied. Careful consideration is given to the accounting
treatment for each acquisition. Most acquisitions made by the Group
are treated as an asset acquisition, so the amendments to this
standard have not had any impact on the Group financial
statements
2.4 New standards, amendments and interpretations effective for
future accounting periods
The following are new standards, interpretations and amendments,
which are not yet effective and have not been early adopted in this
financial information, that will or may have an effect on the
Group's future financial statements:
-- Interest Rate Benchmark Reform-Phase 2: Amendments to IFRS 9
'Financial Instruments', IAS 39 'Financial Instruments; Recognition
and Measurement', IFRS 7 'Financial Instruments: Disclosures', IFRS
4 'Insurance Contracts' and IFRS 16 'Leases' (effective for periods
beginning on or after 1 January 2021). These amendments address
issues that might affect financial reporting when an existing
interest rate benchmark is replaced with an alternative benchmark
interest rate.
The Group's borrowings with Lloyds Bank plc, HSBC Bank PLC and
National Westminster Bank Plc will be transitioning from the London
Interbank Offer Rate (LIBOR) benchmark to the Sterling Overnight
Index Average (SONIA) benchmark in due course. There is expected to
be negligible cost involved in the borrowing facility transition
and the respective hedge instrument amendments.
The Directors are currently assessing the impact of the changes
in accounting standards but as the Group does not apply hedge
accounting, it is anticipated that the accounting standard
amendments will not have a significant impact on the preparation of
the financial statements.
-- Amendments to IAS 1 'Presentation of Financial Statements
(effective for periods beginning on or after 1 January 2022) -
clarifies that liabilities are classified as either current or
non-current, depending on the rights that exist at the end of the
reporting period and not expectations of or actual events after the
reporting date. The amendments also give clarification to the
definition of settlement of a liability. The amendments are not
expected to have a significant impact on the preparation of the
financial statements.
-- Amendments to IFRS 3 'Business Combinations' (effective for
periods beginning on or after 1 January 2022) - gives clarification
on the recognition of contingent liabilities at acquisition and
clarifies that contingent assets should not be recognised at the
acquisition date. The amendments are not expected to have a
significant impact on the preparation of the financial
statements.
2.5 Segmental information
IFRS 8 Operating Segments requires operating segments to be
identified on the basis of internal financial reports about
components of the Group that are regularly reviewed by the Chief
Operating Decision Maker, which in the Group's case is delegated to
the Investment Adviser, who has formed an Executive Team, in order
to allocate resources to the segments and to assess their
performance.
The internal financial reports received by the Investment
Adviser's Executive Team contain financial information at a Group
level as a whole and there are no reconciling items between the
results contained in these reports and the amounts reported in the
consolidated financial statements.
The Directors consider the Group's property portfolio represents
a coherent and diversified portfolio with similar economic
characteristics and as a result the whole portfolio of properties
represents a single operating segment. In the view of the Directors
there is accordingly one reportable segment under the provisions of
IFRS 8.
All of the Group's properties are based in the UK. Geographical
information is provided to ensure compliance with the
diversification requirements of the Company, other than this no
geographical grouping is contained in any of the internal financial
reports provided to the Investment Adviser's Executive Team and,
therefore no geographical segmental analysis is required by IFRS
8.
3. Significant accounting judgements, estimates and
assumptions
In the application of the Group's accounting policies, which are
described in note 4.0, the Directors are required to make
judgements, estimates and assumptions about the carrying amounts of
assets and liabilities that are not readily apparent from other
sources. The estimates and associated assumptions that have a
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year
are outlined below:
3.1 Significant estimate - valuation of investment property
The Group uses the valuation carried out by its independent
valuers as the fair value of its property portfolio. The valuation
is based upon assumptions including future rental income and the
appropriate discount rate. The valuers also make reference to
market evidence of transaction prices for similar properties.
Further information is provided in note 15.
The Group's properties have been independently valued by Jones
Lang LaSalle Limited ("JLL" or the "Valuer") in accordance with the
current Royal Institution of Chartered Surveyors' Valuation -
Global Standards, incorporating the IVS, and the RICS Valuation -
Global Standards 2017 UK national supplement (the RICS "Red Book").
JLL is one of the most recognised professional firms within social
housing valuation and has sufficient current local and national
knowledge of both social housing generally and Specialist Supported
Housing ("SSH") and has the skills and understanding to undertake
the valuations competently.
In accordance with RICS guidelines the Material Valuation
Uncertainty that had previously been applied to the valuation of
the majority of classes of real estate as a result of the COVID-19
pandemic had, for the year ended 31 March 2021, been lifted from
the Company's portfolio. RICS confirmed that the condition would no
longer be applied to specialist supported housing of both C2 and C3
designations let on full repairing and insuring leases.
With respect to the Group's consolidated financial statements,
investment properties are valued at their fair value at each
balance sheet date in accordance with IFRS 13 which recognises a
variety of fair value inputs depending upon the nature of the
investment. Specifically:
-- Level 1 - Unadjusted, quoted prices for identical assets and
liabilities in active (typically quoted) markets.
-- Level 2 - Quoted prices for similar assets and liabilities in active markets.
-- Level 3 - External inputs are "unobservable". Value is the
Directors' best estimate, based on advice from relevant
knowledgeable experts, use of recognised valuation techniques and a
determination of which assumptions should be applied in valuing
such assets and with particular focus on the specific attributes of
the investments themselves.
Given the bespoke nature of each of the Group's investments, the
particular requirements of due diligence and financial contribution
obtained from the vendors together with the recent emergence of
SSH, all of the Group's investment properties are included in Level
3.
3.2. Significant judgement - business combinations
The Group acquires subsidiaries that own investment properties.
At the time of acquisition, the Group considers whether each
acquisition represents the acquisition of a business or the
acquisition of an asset. Management considers the substance of the
assets and activities of the acquired entity in determining whether
the acquisition represents the acquisition of a business.
The Group accounts for an acquisition as a business combination
where an integrated set of activities is acquired in addition to
the property. Where such acquisitions are not judged to be the
acquisition of a business, they are not treated as business
combinations. Rather, the cost to acquire the corporate entity is
allocated between the identifiable assets and liabilities of the
entity based upon their relative fair values at the acquisition
date. Accordingly, no goodwill or additional deferred tax
arises.
All corporate acquisitions made during the year have been
treated as asset purchases rather than business combinations
because no integrated set of activities was acquired.
During the comparative year, the Group entered into a
transaction to acquire the freehold properties operated by New
Directions Flexible Social Care Solutions Ltd and Vision MH Ltd.
Upon the acquisition of the companies, investment properties were
transferred into other Group companies and the companies, along
with their associated operations, were sold to TLC Care Homes
Limited. Further details are shown in note 16 to the financial
statements.
The acquired companies met the definition of a business under
IFRS 3, and the transaction was therefore recorded as a business
combination.
Because the Group acquired the company with the intent to sell
the business, management applied the short-cut method under IFRS 5
- Subsidiaries acquired with a view to resale. Under this method,
the subsidiary is recorded at fair value less costs to sell, and
there is no requirement to fair value the subsidiary's individual
assets and liabilities.
3.3. Significant judgement - operating lease contracts - the
Group as lessor
The Group has acquired investment properties that are subject to
commercial property leases with Approved Providers. The Group has
determined, based on an evaluation of the terms and conditions of
the arrangements, particularly the duration of the lease terms and
minimum lease payments, that it retains all the significant risks
and rewards of ownership of these properties and so accounts for
the leases as operating leases.
3.4. Significant judgement - REIT Status
Civitas Social Housing Plc. is a Real Estate Investment Trust
(REIT). The UK REIT regime applies when entities meet certain
conditions with the effect that the income profits and capital
gains of the qualifying property rental business are exempt from
tax. Within these conditions at least 90% of the Group's property
income must be distributed as dividends to Shareholders and the
Group must ensure that the property rental business represents more
than 75% of total profits and assets. It is management's judgement
that the Group will continue as a REIT for the foreseeable
future.
4.0 Summary of significant accounting policies
The principal accounting policies applied in the preparation of
the consolidated financial statements are set out below. The
policies have been consistently applied to all periods presented,
unless otherwise stated.
4.1. Basis of consolidation
The consolidated financial statements comprise the financial
information of the Group as at the year end date.
Subsidiaries are all entities over which the Group has control.
The Group controls an entity when the Group is exposed to, or has
rights to, variable returns from its involvement with the entity
and has the ability to affect those returns through its power to
direct the activities of the entity. All intra-group transactions,
balances, income and expenses are eliminated on consolidation. The
financial information of the subsidiaries is included in the
consolidated financial statements from the date that control
commences until the date that control ceases.
If an equity interest in a subsidiary is transferred but a
controlling interest continues to be held after the transfer then
the change in ownership interest is accounted for as an equity
transaction.
Accounting policies of the subsidiaries are consistent with the
policies adopted by the Company.
4.2. Investment property
Investment property, which is property held to earn rentals
and/or for capital appreciation, is initially measured at cost,
being the fair value of the consideration given, including
expenditure that is directly attributable to the acquisition of the
investment property. After initial recognition, investment property
is stated at its fair value at the balance sheet date. Gains and
losses arising from changes in the fair value of investment
property are included in profit or loss for the period in which
they arise in the Consolidated Statement of Comprehensive
Income.
Subsequent expenditure is capitalised only when it is probable
that future economic benefits are associated with the expenditure.
Ongoing repairs and maintenance are expensed as incurred.
An investment property is derecognised upon disposal or when the
investment property is permanently withdrawn from use and no future
economic benefits are expected from the disposal. Any gain or loss
arising on derecognition of the property (calculated as the
difference between the net disposal proceeds and the carrying
amount of the asset) is incurred in profit or loss in the period in
which the property is derecognised.
Significant accounting judgements, estimates and assumptions
made for the valuation of investment properties are discussed in
note 3.1.
4.3. Leases
Leases are classified as finance leases whenever the terms of
the lease transfer substantially all the risks and rewards of
ownership to the lessee. All other leases are classified as
operating leases.
The Company has determined that it retains all the significant
risks and rewards of ownership of the properties and accounts for
the contracts as operating leases as discussed in note 3.3.
Properties leased out under operating leases are included in
investment property in the Consolidated Statement of Financial
Position. Rental income from operating leases is recognised on a
straight line basis over the term of the relevant leases.
Lease incentive costs are recognised as an asset and amortised
over the life of the lease.
4.4. Financial Assets
Classification
The Group classifies its financial assets in the following
measurement categories:
-- those to be measured subsequently at fair value (either
through other comprehensive income or through profit or loss);
and
-- those to be measured at amortised cost.
The classification depends on the entity's business model for
managing the financial assets and the contractual terms of the cash
flows. For assets measured at fair value, gains and losses will
either be recorded in profit or loss or other comprehensive
income.
Trade and other receivables
Trade and other receivables are amounts due in the ordinary
course of business. If collection is expected in one year or less,
they are classified as current assets. If not, they are presented
as non-current assets.
Trade receivables are recognised initially at fair value and
subsequently are measured at amortised cost using the effective
interest method, less impairment provision. The Group holds the
trade receivables with the objective to collect the contractual
cash flows.
Impairment
The Group's financial assets are subject to the expected credit
loss model.
For trade receivables, the Group applies the simplified approach
permitted by IFRS 9, which requires expected lifetime losses to be
recognised from initial recognition of the receivables.
The expected loss rates are based on the payment profiles of
lease income over a period of up to 36 months before 31 March 2021
or 1 April 2020, respectively, and the corresponding historical
credit losses experienced within this period. The historical loss
rates are adjusted to reflect current and forward-looking
information on macroeconomic factors affecting the liability of the
tenants to settle the receivable. Such forward-looking information
would include: changes in economic, regulatory, technological and
environmental factors (such as industry outlook, GDP, employment
and politics); external market indicators; and tenant base.
Based on the assessment and the specific work that is underway
around collection of aged arrears, a provision of GBP256,400 has
been reflected in the annual results.
Trade receivables are written off when there is no reasonable
expectation of recovery.
Indicators that there is no reasonable expectation of recovery
include, among others, the probability of insolvency or significant
financial difficulties of the debtor. Impaired debts are
derecognised when they are assessed as uncollectible.
Cash and cash equivalents
Cash and cash equivalents include cash in hand, cash held by
lawyers and liquidity funds with a term of no more than three
months that are readily convertible to a known amount of cash and
which are subject to an insignificant risk of changes in value.
Restricted cash represents amounts held for specific
commitments, tenant deposits and retention money held by lawyers in
relation to deferred payments subject to achievement of certain
conditions, other retentions and cash segregated to fund repair,
maintenance and improvement works to bring the properties up to
satisfactory standards for the Group and the tenants.
4.5. Financial liabilities
The Group recognises a financial liability when it first becomes
a party to the contractual rights and obligations in the
contract.
All financial liabilities are initially recognised at fair
value, minus (in the case of a financial liability that is not at
fair value through profit or loss) transaction costs that are
directly attributable to issuing the financial liability. Financial
liabilities are subsequently measured at amortised cost, unless the
Group opted to measure a liability at fair value through profit or
loss.
A financial liability is derecognised when the obligation under
the liability is discharged or cancelled or expires.
Trade and other payables
Trade and other payables are classified as current liabilities
if payment is due within one year or less. If not, they are
presented as non-current liabilities. Trade and other payables are
recognised initially at their fair value and subsequently measured
at amortised cost until settled. The fair value of a non-interest
bearing liability is its discounted repayment amount. If the due
date of the liability is less than one year, discounting is
omitted.
Bank and other borrowings
All bank and other borrowings are initially recognised at fair
value less directly attributable transaction costs. After initial
recognition, all bank and other borrowings are measured at
amortised cost, using the effective interest method. Any
attributable transaction costs relating to the issue of the bank
borrowings are amortised through the Group's Statement of
Comprehensive Income over the life of the debt instrument on a
straight-line basis.
Derivative financial instruments
Derivative financial instruments, which comprise interest rate
swaps for hedging purposes, are initially recognised at fair value
at acquisition and are subsequently measured at fair value, being
the estimated amount that the Group would receive or pay to sell or
transfer the agreement at the period end date, taking into account
current interest rate expectations and the current credit rating of
the lender and its counterparties. The gain or loss at each fair
value remeasurement date is recognised in the Group's Consolidated
Statement of Comprehensive Income.
The Group uses valuation techniques that are appropriate in the
circumstances and for which sufficient data is available to measure
fair value, maximising the use of relevant observable inputs and
minimising the use of unobservable inputs significant to the fair
value measurement as a whole.
4.6. Provisions
Provisions are recognised when the Group has a present
obligation (legal or constructive) as a result of a past event, it
is probable that the Group will be required to settle that
obligation and a reliable estimate can be made of the amount of the
obligation.
The amount recognised as a provision is the best estimate of the
consideration required to settle the present obligation at the
balance sheet date, taking into account the risks and uncertainties
surrounding the obligation.
4.7. Taxation
Taxation on the profit or loss for the period not exempt under
UK REIT regulations is comprised of current and deferred tax. Tax
is recognised in the Consolidated Statement of Comprehensive Income
except to the extent that it relates to items recognised as a
direct movement in equity, in which case it is recognised as a
direct movement in equity. Current tax is expected tax payable on
any non-REIT taxable income for the period, using tax rates enacted
or substantively enacted at the balance sheet date, and any
adjustment to tax payable in respect of previous periods.
The current tax charge is calculated on profits arising in the
period and in accordance with legislation which has been enacted or
substantially enacted at the balance sheet date.
Deferred tax is provided on temporary differences between the
carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes. The amount of
deferred tax that is provided is based on the expected manner of
realisation or settlement of the carrying amount of assets and
liabilities, using tax rates enacted or substantively enacted at
the balance sheet date.
4.8. Capital management
The Group's objectives when managing capital are to safeguard
the Group's ability to continue as a going concern in order to
provide returns for shareholders and to maintain an optimal capital
structure to reduce the cost of capital.
Capital assets comprise the following:
31 March 2021 31 March 2020
GBP'000 GBP'000
-------------- --------------
Proceeds from the issue of Ordinary shares
and retained earnings thereon 673,498 670,564
Bank and loan borrowings 352,120 269,170
-------------- --------------
1,025,618 939,734
-------------- --------------
Until the Group is fully invested and pending re-investment or
distribution of cash receipts, the Group will invest in cash, cash
equivalents, near cash instruments and money market
instruments.
The Directors may use gearing to enhance equity returns. The
level of borrowing will be on a prudent basis for the asset class
and will seek to achieve a low cost of funds, whilst maintaining
the flexibility in the underlying security requirements and the
structure of the Group.
The Group may, following a decision of the Board, raise debt
from banks and/or the capital markets and the aggregate borrowings
of the Group will always be subject to an absolute maximum,
calculated at the time of drawdown, of below 40% of the Gross Asset
Value on a fully invested basis.
4.9. Dividends payable to shareholders
Dividends are included in the financial statements in the year
in which they are paid.
4.10. Rental income
Rental income from investment property is recognised on a
straight-line basis over the term of ongoing leases and is shown
gross of any UK income tax. Lease incentives are spread evenly over
the lease term.
Insurance recharges and other similar receipts are included in
net rental and property income gross of the related costs as the
Directors consider the Group acts as principal in this respect.
4.11. Finance income
Finance income is recognised as interest accrued on cash and
cash equivalent balances held by the Group.
4.12. Finance costs
Finance costs consist of interest and other costs that the Group
incurs in connection with bank and other borrowings. Bank interest
and bank charges are recognised on an accruals basis. Borrowing
transaction costs are amortised over the period of the loan.
4.13. Expenses
All expenses, including investment advisory fees, are recognised
in the Consolidated Statement of Comprehensive Income on an
accruals basis.
4.14. Share issue costs
The costs of issuing or reacquiring equity instruments (other
than in a business combination) are accounted for as a deduction
from equity.
4.15 Share held in treasury
The costs, including directly attributable transactions costs,
of purchasing the Company's own shares to be held in treasury is
deducted from equity and the costs are shown in the Consolidated
Statement of Changes in Equity. Consideration received, net of
transaction costs, for the resale of these shares is also included
in equity. Whilst the Company holds shares in treasury, the
calculations for net asset value and earnings per share are
adjusted to exclude these shares.
5.0 Rental income
For the For the
year ended year ended
31 March 2021 31 March 2020
GBP'000 GBP'000
--------------- ---------------
Rental income from investment property 48,201 45,819
Rent straight line adjustments 372 361
Lease incentive adjustments (439) (274)
Rechargeable costs received 886 259
Rental income 49,020 46,165
Less direct property expenses (1,175) (259)
Net rental income 47,845 45,906
--------------- ---------------
Rechargeable costs received represent insurance costs paid by
the Group and recharged to the Approved Providers.
Direct property expenses represent insurance costs of GBP886,000
(2020: GBP259,000) and bad debt expense of GBP289,000 (2020:
GBPnil).
As per the lease agreement with the Group and Approved
Providers, the Approved Providers are responsible for the
settlement of all present and future rates, taxes and other
impositions payable in respect of the property. As a result, no
further direct property expenses were incurred.
6.0 Directors' remuneration
For the For the
year ended year ended
31 March 2021 31 March 2020
GBP'000 GBP'000
--------------- ---------------
Directors' fees 182 162
Employer's National Insurance Contributions 16 14
Total 198 176
--------------- ---------------
The Directors are remunerated for their services in accordance
with the Remuneration Policy which sets parameters within which
Directors' remuneration may be set. The Remuneration Policy is
approved by shareholders.
7.0 Particulars of employees
The Group had no employees during the period (2020: nil).
8.0 Investment advisory fees
For the For the
year ended year ended
31 March 2021 31 March 2020
GBP'000 GBP'000
--------------- ---------------
Advisory fee 6,117 6,131
Disbursements - 52
--------------- ---------------
Total 6,117 6,183
--------------- ---------------
On 7 May 2020, Civitas Housing Advisors Limited changed its name
to Civitas Investment Management Limited ("CIM"). CIM is the
appointed Investment Adviser of the Company. Under the current
Investment Management Agreement, the Advisory Fee shall be an
amount calculated in respect of each Quarter, in each case based
upon the Net Asset Value most recently announced to the market at
the relevant time (as adjusted for issues or repurchases of shares
in the period between the date of such announcement and the date of
the relevant calculation), on the following basis:
a) on that part of the Net Asset Value up to and including
GBP250 million, an amount equal to 1% of such part of the Net Asset
Value;
b) on that part of the Net Asset Value over GBP250 million and
up to and including GBP500 million, an amount equal to 0.9% of such
part of the Net Asset Value;
c) on that part of the Net Asset Value over GBP500 million and
up to and including GBP1,000 million, an amount equal to 0.8% of
such part of the Net Asset Value;
d) on that part of the Net Asset Value over GBP1,000 million, an
amount equal to 0.7% of such part of the Net Asset Value.
The appointment of the Investment Adviser shall continue in
force unless and until terminated by either party giving to the
other not less than 12 months' written notice, such notice not to
expire earlier than 30 May 2024.
Prior to 26 April 2019, the Advisory Fee calculation was based
upon the higher Portfolio NAV which is defined in Appendix 1 in the
full Annual Report.
9.0 General and administrative expenses
For the For the
year ended year ended
31 March 2021 31 March 2020
GBP'000 GBP'000
--------------- ---------------
Legal and professional fees 1,044 1,081
Administration fees 983 1,070
Consultancy fees 116 148
Audit fees 361 246
Abortive costs 174 303
Valuation fees 96 96
Depositary fees 71 71
Grants and donations 19 88
Insurance 65 49
Marketing 179 269
Regulatory fees 19 14
Sundry expenses 56 65
Directors' expenses - 1
--------------- ---------------
Total 3,183 3,501
--------------- ---------------
Abortive costs represent legal and professional fees incurred in
relation to the acquisition of investment properties and proposed
share issues that were considered but subsequently aborted.
Services provided by the Company's auditors and their
associates
The Group has obtained the following services from the Group's
auditors and their associates:
For the For the
year ended year ended
31 March 2021 31 March 2020
GBP'000 GBP'000
--------------- ---------------
Fees payable to the group's auditor
and its associates for auditing financial
statements:
Audit of the financial statements* 272 195
Audit of the Company's subsidiaries 32 -
--------------- ---------------
Total fees payable for audit services: 304 195
Fees payable to the group's auditor
and its associates for other services:
Audit related services - review of
the half year financial statements 57 51
Total 361 246
--------------- ---------------
*Includes GBP50,000 cost in relation to the prior year audit
10.0 Finance income
For the For the
year ended year ended
31 March 2021 31 March 2020
GBP'000 GBP'000
--------------- ---------------
Interest and dividends received on
liquidity funds 11 81
Bank interest received 9 29
--------------- ---------------
Total 20 110
--------------- ---------------
11.0 Finance expense
For the For the
year ended year ended
31 March 2021 31 March 2020
GBP'000 GBP'000
--------------- ---------------
Bank charges 3 2
Interest paid and payable on bank
borrowings 6,416 5,795
Bank borrowing commitment fees - 220
Amortisation of loan arrangement fees 1,293 1,325
Other interest 25 -
--------------- ---------------
Total 7,737 7,342
--------------- ---------------
12.0 Taxation
As a UK REIT, the Group is exempt from corporation tax on the
profits and gains from its property investment business, provided
it meets certain conditions as set out in the UK REIT regulations.
For the current period ended 31 March 2021, the Group did not have
any non-qualifying profits and accordingly there is no tax charge
in the period. If there were any non-qualifying profits and gains,
these would be subject to corporation tax.
It is assumed that the Group will continue to be a UK REIT for
the foreseeable future, such that deferred tax has not been
recognised on temporary differences relating to the property rental
business.
For the For the
year ended year ended
31 March 2021 31 March 2020
GBP'000 GBP'000
--------------- ---------------
Corporation tax charge/(credit) for
the period - -
--------------- ---------------
Total - -
--------------- ---------------
The tax charge for the period is less than the standard rate of
corporation tax in the UK of 19%. The differences are explained
below.
For the For the
year ended year ended
31 March 2021 31 March 2020
GBP'000 GBP'000
--------------- ---------------
Group
Profit before taxation 36,075 37,725
--------------- ---------------
UK corporation tax rate 19.00% 19.00%
Theoretical tax at UK corporation
tax rate 6,854 7,168
Effects of:
Change in value of exempt investment
properties (1,047) (1,784)
Exempt REIT income (6,511) (6,136)
Amounts not deductible for tax
purposes 171 175
Unutilised residual current period
tax losses 533 577
--------------- ---------------
Total - -
--------------- ---------------
A deferred tax asset of GBP1,508,000 (2020: GBP1,128,000) has
not been recognised in respect of the unutilised residual current
year losses as it is not anticipated that sufficient residual
profits will be generated in the future.
The standard rate of corporation tax is currently 19%. The
Government has announced that the corporation tax standard rate is
to be kept at to 19% for the foreseeable future.
REIT exempt income includes property rental income that is
exempt from UK Corporation Tax in accordance with Part 12 of
Corporation Tax Act 2010.
13.0 IFRS Earnings per share
Earnings per share ("EPS") amounts are calculated by dividing
profit for the year attributable to ordinary equity holders of the
Company by the weighted average number of Ordinary shares in issue
during the year.
The calculation of basic and diluted earnings per share is based
on the following:
For the For the
year ended year ended
31 March 2021 31 March 2020
--------------- ---------------
Calculation of Basic Earnings per share
Net profit attributable to Ordinary
shareholders (GBP'000) 36,075 37,725
Weighted average number of Ordinary
shares 621,651,859 622,103,798
Earnings per share - basic and diluted 5.80p 6.06p
--------------- ---------------
14.0 Dividends
For the For the
year ended year ended
31 March 2021 31 March 2020
GBP'000 GBP'000
--------------- ---------------
Dividend of 1.325p for the 3 months
to 31 March 2020
(1.325p 3 months to 31 March 2019) 8,237 8,248
Dividend of 1.350p for the 3 months
to 30 June 2020
(1.325p 3 months to 30 June 2019) 8,392 8,248
Dividend of 1.350p for the 3 months
to 30 September 2020
(1.325p 3 months to 30 September 2019) 8,392 8,238
Dividend of 1.350p for the 3 months
to 31 December 2020
(1.325p 3 months to 31 December 2019) 8,392 8,236
--------------- ---------------
Total 33,413 32,970
--------------- ---------------
On 11 May 2020, the Company announced a dividend of 1.325 pence
per share in respect of the period 1 January 2020 to 31 March 2020.
The dividend payment was made on 12 June 2020 to shareholders on
the register as at 22 May 2020.
On 6 August 2020, the Company announced a dividend of 1.350
pence per share in respect of the period 1 April 2020 to 30 June
2020. The dividend payment was made on 7 September 2020 to
shareholders on the register as at 14 August 2020.
On 6 November 2020, the Company announced a dividend of 1.350
pence per share in respect of the period 1 July 2020 to 30
September 2020. The dividend payment was made on 4 December 2020 to
shareholders on the register as at 20 November 2020.
On 2 February 2021, the Company announced a dividend of 1.350
pence per share in respect of the period 1 October 2020 to 31
December 2020. The dividend payment was made on 1 March 2021 to
shareholders on the register as at 12 February 2021.
On 11 May 2021, the Company announced a dividend of 1.350 pence
per share in respect of the period 1 January 2021 to 31 March 2021
totalling GBP8,396,000. The dividend payment was made on 11 June
2021 to shareholders on the register as at 21 May 2021. The
financial statements do not reflect this dividend.
15.0 Investment property
For the For the
year ended year ended
31 March 2021 31 March 2020
GBP'000 GBP'000
--------------- ---------------
Balance at beginning of year 878,743 826,918
Property acquisitions 19,129 33,194
Acquisition costs 1,056 5,311
Lease incentives recognised 11,150 3,931
Change in fair value of investment
properties 5,511 9,389
--------------- ---------------
Value advised by the property valuers 915,589 878,743
Adjustments for lease incentive assets
and rent straight line assets recognised (21,905) (10,755)
--------------- ---------------
Total 893,684 867,988
--------------- ---------------
Acquisitions include capital expenditure to enhance lettable
space of GBP4,077,000 (2020: GBP1,757,000).
New incentives undertaken in the year include a GBP10,000,000
payment following a rent review on two properties.
In accordance with "IAS 40: Investment Property", the investment
property has been independently valued at fair value by JLL, an
accredited external valuer with recognised and relevant
professional qualifications and recent experience of the location
and category of the investment property being valued, however, the
valuations are the ultimate responsibility of the Directors.
Valuation
JLL valued the Civitas Social Housing PLC property portfolio on
the basis of each individual property and the theoretical sale of
the properties without the benefit of any corporate wrapper at
GBP915,589,000 as at 31 March 2021 (2020: GBP878,743,000).
JLL has provided valuation services to the Company with regards
to the properties during the year. In relation to the year ended 31
March 2021, the proportion of the total fees payable by the Company
to JLL's total fee income was less than 5% and is therefore
minimal. Additionally, JLL has a rotation policy in place whereby
the signatories on the valuations rotate after seven years.
With the exception of acquisitions in the prior year detailed in
note 16.0, all corporate acquisitions during the year and the
comparative year have been treated as asset purchases rather than
business combinations because following review of the IFRS 3
concentration test, they are considered to be acquisitions of
properties rather than businesses (note 3.2).
The following table provides the fair value measurement
hierarchy for investment property:
Quoted prices Significant Significant
in active observable unobservable
markets inputs inputs
Total (Level 1) (Level 2) (Level 3)
GBP'000 GBP'000 GBP'000 GBP'000
---------- ---------------- ------------ --------------
Investment properties
measured at fair value:
31 March 2021 893,684 - - 893,684
---------- ---------------- ------------ --------------
31 March 2020 867,988 - - 867,998
---------- ---------------- ------------ --------------
There have been no transfers between Level 1 and Level 2 during
any of the years, nor have there been any transfers between Level 2
and Level 3 during any of the years.
The valuations have been prepared in accordance with the RICS
Valuation - Professional Standards (incorporating the International
Valuation Standards) by JLL, one of the leading professional firms
engaged in the social housing sector.
As noted previously all of the Group's investments are reported
as Level 3 in accordance with IFRS 13 where inputs are not based on
observable market data and the value is based upon advice from
relevant knowledgeable experts.
In this instance, the determination of the fair value of
investment property requires an examination of the specific merits
of each property that are in turn considered pertinent to the
valuation.
These include:
i) the regulated social housing sector and demand for the
facilities offered by each SSH property owned by the Group;
ii) the particular structure of the Group's transactions where
vendors, at their own expense, meet the majority of the
refurbishment costs of each property and certain purchase
costs;
iii) detailed financial analysis with discount rates supporting
the carrying value of each property;
iv) a full repairing and insuring lease with annual indexation
based on CPI or CPI+1% and effectively 25 years outstanding in most
cases with a Housing Association itself regulated by the Regulator
of Social Housing.
The following descriptions and definitions relating to valuation
techniques and key unobservable inputs made in determining fair
values are as follows:
Valuation techniques: income approach
Fair value is defined as the price that would be received to
sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date
(i.e. an exit price).
The valuation methodology used by the valuers follows the income
approach. This approach considers the rental income currently
payable; the next uplift due in that income on review; the
likelihood of a continuation of that rental income - with growth in
accordance with the leases - over the remaining terms; and then a
long-term reversion which, considers the likely ability of the
properties to continue to generate rent through supported housing
occupation, as distinct from a reversion to vacant possession
value.
Risks are involved in both assessing the value of the rental
income over the remaining terms of the leases and in also
predicting that income will continue beyond the end of the existing
leases. This is a balanced judgment, which can properly be
reflected in the exit yield applied to the final year's income and
in the overall return to a purchaser.
Appropriate taxation calculations are adopted for every property
based on its value and on the assumption of the sale of the
property assets directly as opposed to shares of a subsidiary
company holding the property and have considered the individual
characteristics of the properties.
There are two main unobservable inputs that determine the fair
value of the Group's investment property:
i) The rate of 2.00% per annum has been used for CPI over the
term of the subject properties' leases in line with the Bank of
England's long-term inflation targets for CPI. It should be noted
that all leases benefit from either CPI or CPI+1 indexation.
ii) The discount rate applied to the rental flows.
Key factors in determining the discount rates applied include
the regulated social housing sector and demand for each SSH
property owned by the Group, costs of acquisition and refurbishment
of each property, the anticipated future underlying cash flows for
each property, benchmarking of each underlying rent for each
property (passing rent), and the fact that all of the properties
within the Group's portfolio have the benefit of full repairing and
insuring leases entered into by an Approved Provider.
As at the balance sheet date, the lease lengths within the
Group's portfolio ranged from an effective 15 years to 37 years
with a weighted average unexpired lease term of 22.6 years (2020:
23.7). The greater the length of the lease, then, all other metrics
being equal, the greater the value of the property.
Sensitivities of measurement of significant unobservable
inputs
As set out within significant accounting estimates at 3.1 above,
the Group's property investment valuation is open to inherent
uncertainties in the inputs that determine fair value. As a result,
the following sensitivity analysis has been prepared:
Average discount rate and range
The average discount rate used by the valuer in the Group's
property Portfolio Valuation is 6.0% (2020: 5.3%).
The range of discount rates used by the valuer in the Group's
property Portfolio Valuation is from 4.7% to 10.7% (2020: 4.9% to
10.7%).
In assessing the range of discounts, the valuer considers the
likely net initial yield which would be sought by the investment
market and builds in additional discounts to reflect added risk
into the discount rate of the term and, in some cases, the discount
rate for the reversion. For example, were larger rental growth is
allowed during the leave, an additional discount is built into the
reversion because of the greater risk of a fall in the rent at the
end of the lease.
Similarly additional discounts are considered where properties
are in the process of being re-purposes and premiums are considered
where residential care assets are funded by back-to-back leases
with care providers.
The table below illustrates the change to the value of
investment properties if the discount rate and CPI used for the
portfolio valuation calculations are changed:
-0.5% in +0.5% in
discount discount +0.25% in -0.25% in
rate rate CPI CPI
GBP'000 GBP'000 GBP'000 GBP'000
---------- ---------- ---------- ----------
Increase/(decrease) in the
IFRS fair value of investment
properties at:
31 March 2021 34,131 (31,776) 27,211 (26,175)
---------- ---------- ---------- ----------
31 March 2020 34,733 (32,245) 26,917 (25,846)
---------- ---------- ---------- ----------
16.0 Subsidiary resale
For the For the
year ended year ended
31 March 2021 31 March 2020
GBP'000 GBP'000
---------------- ---------------
Balance at the beginning
of the year - -
Acquisition - 19,829
Transfer to investment
property - (17,608)
Sale proceeds - (2,221)
---------------- ---------------
- -
------------------------------------------- ---------------
On 11 March 2020, the Group entered into a transaction to
acquire the freehold properties operated by New Directions Flexible
Social Care Solutions Ltd and Vision MH Ltd. Upon the acquisition
of the companies for GBP19,829,000, investment properties were
transferred into other Group companies and the companies, along
with their associated operations, were sold to TLC Care Homes
Limited for GBP2,221,000.
17.0 Trade and other receivables
Amounts falling due in less than one 31 March 2021 31 March 2020
year GBP'000 GBP'000
-------------- --------------
Trade receivables 4,869 4,307
Less provision for impairment of trade
receivables (256) -
Accrued income 5,264 4,267
Prepayments and other receivables 2,944 2,264
-------------- --------------
Total 12,821 10,838
-------------- --------------
Prepayments and other receivable amounts include prepaid legal
and professional fees of GBP200,000 (2020: GBP469,000) that have
been incurred in connection with acquisitions yet to be completed
and GBP817,000 (2020: GBP1,695,000) in respect of ongoing works on
the property portfolio.
The increase in accrued income relates mainly to rent accrued
for the period but not yet demanded.
31 March 2021 31 March 2020
GBP'000 GBP'000
-------------- --------------
Amounts falling due after more than one
year
Debtor arising from straight line adjustments 1,524 1,152
Lease incentives 20,381 9,603
-------------- --------------
21,905 10,755
-------------- --------------
The aged analysis of trade receivables was as follows:
31 March 2021 31 March 2020
GBP'000 GBP'000
Current 2,128 1,594
< 30 days 817 657
30-60 days 322 319
> 60 days 1,602 1,737
-------------- --------------
4,869 4,307
Less provision for impairment (256) -
-------------- --------------
Total 4,613 4,307
-------------- --------------
The Directors consider the fair value of receivables equals
their carrying amount.
The table above shows the aged analysis of trade receivables
included in the table above which are past due.
Other categories within trade and other receivables do not
include impaired assets.
The provision for impairment movement was as follows:
31 March 2021 31 March 2020
GBP'000 GBP'000
Balance at beginning of year - -
Impairment provision made 289 -
Amounts written off (33) -
Balance at end of year 256 -
-------------- --------------
18.0 Cash and cash equivalents
31 March 2021 31 March 2020
GBP'000 GBP'000
-------------- --------------
Cash held by solicitors 721 3,325
Liquidity funds 10,485 10,475
Cash held at bank 92,613 27,629
-------------- --------------
Unrestricted cash and cash equivalents 103,819 41,429
Restricted cash 3,278 16,945
-------------- --------------
Total 107,097 58,374
-------------- --------------
Liquidity funds refer to money placed in money market funds.
These are highly liquid funds with accessibility within 24 hours
and subject to insignificant risk of changes in value.
Cash held by lawyers is money held in escrow for expenses
expected to be incurred in relation to investment properties
pending completion. These funds are available immediately on
demand.
Restricted cash represents amounts held for specific
commitments, tenant deposits and retention money held in relation
to deferred payments subject to achievement of certain conditions,
other retentions and cash segregated to fund repair, maintenance
and improvement works to bring the properties up to satisfactory
standards for the Group and the tenants.
19.0 Trade and other payables
31 March 2021 31 March 2020
GBP'000 GBP'000
-------------- --------------
Deferred income 646 245
Acquisition costs accrued 3,706 5,068
Finance costs 1,557 1,014
Dividends withholding tax payable 892 798
Accruals and other creditors 1,979 618
Tenant deposits 565 -
Total 9,345 7,743
-------------- --------------
Acquisition costs accrued also includes the balance of retention
monies of GBP2,508,000 (2020: GBP4,819,000).
20.0 Bank and loan borrowings
Bank borrowings are secured by charges over individual
investment properties held by certain asset-holding subsidiaries.
The banks also hold charges over the shares of certain subsidiaries
and any intermediary holding companies of those subsidiaries. Any
associated fees in arranging the bank borrowings unamortised as at
the year end are offset against amounts drawn on the facilities as
shown in the table below:
For the For the
year ended year ended
31 March 2021 31 March 2020
GBP'000 GBP'000
---------------- ---------------
Balance at start of year 272,500 208,447
Bank borrowings drawn 84,550 64,053
---------------- ---------------
Bank borrowings drawn at end of year 357,050 272,500
---------------- ---------------
Unamortised costs at start of year (3,330) (3,291)
Less: loan issue costs incurred (2,893) (1,364)
Add: loan issue costs amortised 1,293 1,325
---------------- ---------------
Unamortised costs at end of year (4,930) (3,330)
At end of year 352,120 269,170
---------------- ---------------
Loan Balance* Loan Balance Loan Principle Loan Principle
31 March 2021 31 March 2020 31 March 2021 31 March 2020
GBP'000 GBP'000 GBP'000 GBP'000
--------------- --------------- --------------- ---------------
Maturity of bank borrowings:
Repayable within 1
year 59,937 59,730 60,000 60,000
Repayable between
1 to 2 years 99,256 99,004 100,000 100,000
Repayable between
2 to 5 years 59,102 58,840 60,000 60,000
Repayable after 5
years 133,825 51,596 137,050 52,500
Total 352,120 269,170 357,050 272,500
--------------- --------------- --------------- ---------------
* Loan balance net of unamortised costs.
The Group is party to the following loan facility
agreements:
A 10-year Sterling Term Facility Agreement dated 2 November 2017
for up to GBP52,500,000 with Scottish Widows Limited. Interest is
fixed at a total of 2.9936% per annum.
The borrowings include amounts secured on investment property to
the value of GBP170,831,000 (2020: GBP170,599,000).
A 3-year Sterling Revolving Credit Facility Agreement dated 15
November 2017 for up to GBP40,000,000 (increased to GBP60,000,000)
with Lloyds Bank plc. Interest is charged at LIBOR +1.50% margin.
This facility was extended in the normal course to November 2021.
Since the year end, the facility with Lloyds Bank plc has been
successfully re-financed with a 2 year Revolving Credit Facility
expiring in July 2023.
The borrowings include amounts secured on investment property to
the value of GBP149,728,000 (2020: GBP147,475,000).
A 3-year Revolving Credit Facility Agreement dated 28 November
2018 for up to GBP100,000,000 with HSBC Bank PLC. Interest is
charged at LIBOR +1.70% margin. During the year this facility was
extended to 27 November 2022 with interest charged at LIBOR + 1.90%
margin.
The borrowings include amounts secured on investment property to
the value of GBP219,606,000 (2020: GBP216,026,000).
A 5-year loan facility with National Westminster Bank Plc, dated
15 August 2019, for up to GBP60,000,000. Interest is charged at
LIBOR +2.00% margin and has been fixed by way of a 5-year swap. The
swap fixes interest on GBP20,000,000 at 0.7105% and GBP40,000,000
at 0.5475%. The loan can be extended for an additional 2 years and
there is the option of a further GBP40,000,000 accordion.
The borrowings include amounts secured on investment property to
the value of GBP131,283,000 (2020: GBP129,933,000).
A 7-year loan facility with M&G Investment Management
Limited, dated 22 January 2021, for up to GBP84,550,000. Interest
is fixed at a total of 3.137% per annum.
The borrowings include amounts secured on investment property to
the value of GBP225,221,000.
At 31 March 2021, the Group is in compliance with all
covenants.
The covenants in place under the five agreements are summarised
in the table below:
Historical
and projected
Loan interest cover Loan to Value ratio
----------------------------------------- ---------------- --------------------
Scottish Widows Limited 10-year facility At least 325% Must not exceed 40%
Lloyds Bank plc 3-year revolving
credit facility At least 250% Must not exceed 55%
HSBC Bank PLC 3-year facility At least 250% Must not exceed 60%
National Westminster Bank Plc 5-year
facility At least 250% Must not exceed 50%
M&G Investment Management Limited
7-year facility At least 250% Must not exceed 55%
The Group's borrowings with Lloyds Bank plc, HSBC Bank PLC and
National Westminster Bank Plc will be transitioning from the London
Interbank Offer Rate (LIBOR) benchmark to Sterling Overnight Index
Average (SONIA) benchmark in due course. There is expected to be
negligible cost involved in the borrowing facility transition and
the respective hedge instrument amendments.
21.0 Interest rate derivatives
The Group has entered into interest rate swap agreements with
NatWest Markets in order to mitigate the risk of changes in
interest rates on its loan with National Westminster Bank Plc under
which GBP60,000,000 is currently drawn.
The swaps have a notional value of GBP60,000,000 and fix
interest at 2.60% (including the 2% margin rate on the bank
loan).
For the For the
year ended year ended
31 March 2021 31 March 2020
GBP'000 GBP'000
---------------- ---------------
At start of year (478) -
Change in fair value during the year (66) (478)
---------------- ---------------
At end of the year (544) (478)
---------------- ---------------
The table below shows the fair value measurement hierarchy for
interest derivatives:
Quote prices Significant Significant
In active Observable unobservable
Markets Inputs Inputs
(Level 1) (Level 2) (Level 3)
GBP'000 GBP'000 GBP'000
------------- ------------ --------------
31 March 2021 - (544) -
31 March 2020 - (478) -
------------- ------------ --------------
There have been no transfers between Level 1 and Level 2 during
the year nor have there been any transfers between Level 2 and
Level 3 during the year.
22.0 Share capital
Share capital represents the nominal value of consideration
received by the Company for the issue of Ordinary shares.
For the For the
year ended year ended
31 March 2021 31 March 2020
GBP'000 GBP'000
---------------- ---------------
Share capital
At beginning and end of year 6,225 6,225
---------------- ---------------
Number of shares issued and fully
paid
Ordinary shares of GBP0.01 each
At beginning and end of year 622,461,380 622,461,380
The Company holds 565,000 (2020: 815,000) Ordinary shares in
treasury. On 24 March 2021, the Company reissued 250,000 Ordinary
shares from treasury.
The number of Ordinary shares used to calculate the net asset
value is 621,896,380 (2020: 621,646,380).
23.0 Share premium reserve
The share premium reserve represents the amounts subscribed for
Ordinary share capital in excess of nominal value less associated
issue costs of the subscriptions.
For the For the
year ended year ended
31 March 2021 31 March 2020
GBP'000 GBP'000
---------------- ---------------
At beginning of year 292,405 292,405
Premium arising on shares reissued
from treasury 58 -
At end of year 292,463 292,405
---------------- ---------------
24.0 Capital reduction reserve
The capital reduction reserve is a distributable reserve to
which the value of the cancelled share premium has been
transferred. Pursuant to Article 3 of The Companies (Reduction of
Share Capital) Order 2008, the balance held in the capital
reduction reserve is to be treated for the purposes of Part 23 of
the Companies Act 2006 as a realised profit and therefore available
for distribution in accordance with section 830 of the Companies
Act. The Company has used this reserve for the costs of buying back
shares to be held in treasury.
For the For the
year ended year ended
31 March 2021 31 March 2020
GBP'000 GBP'000
---------------- ---------------
At beginning of year 330,926 331,625
Shares bought back into treasury - (699)
Shares reissued from treasury 214 -
At end of year 331,140 330,926
---------------- ---------------
The Company holds 565,000 (2020: 815,000) Ordinary shares in
treasury. The shares will continue to be held in treasury until
either re-issued or cancelled.
During the year, the Company re-issued 250,000 Ordinary shares
from treasury for a total of GBP272,000.
During the comparative year, the Company purchased 815,000
Ordinary shares for a total cost of GBP699,000 to be held in
treasury.
25.0 Retained earnings
This reserve represents the profits and losses of the Group.
For the For the
year ended year ended
31 March 2021 31 March 2020
GBP'000 GBP'000
---------------- ---------------
At beginning of year 41,008 36,253
Profit for the year 36,075 37,725
Dividends paid in the year (as per
note 14.0) (33,413) (32,970)
---------------- ---------------
At end of year 43,670 41,008
---------------- ---------------
26.0 Net asset value
Basic NAV per share is calculated by dividing net assets in the
Consolidated Statement of Financial Position attributable to
ordinary equity holders of the parent by the number of Ordinary
shares outstanding at the end of the year.
Net asset values have been calculated as follows:
31 March 2021 31 March 2020
-------------- --------------
Net assets (GBP'000) 673,498 670,564
-------------- --------------
Number of Ordinary shares in issue
at end of year 622,461,380 622,461,380
Number of Ordinary shares held in
treasury (565,000) (815,000)
-------------- --------------
Number of Ordinary shares excluding
treasury shares held by the Company 621,896,380 621,646,380
-------------- --------------
NAV - basic and diluted 108.30p 107.87p
-------------- --------------
27.0 Reconciliation of liabilities to cash flows from
financing
For the
Interest rate Bank year ended
derivatives borrowings 31 March 2021
GBP'000 GBP'000 GBP'000
-------------- ----------- --------------
At beginning of year (478) 269,170 268,692
Cash flows from financing activities
Loan draw down - 84,550 84,550
Loan arrangement costs paid - (2,811) (2,811)
Non cash movements
Loan arrangement fees payable - (82) (82)
Amortisation of loan arrangement
costs - 1,293 1,293
Change in valuation (66) - (66)
-------------- ----------- --------------
At end of year (544) 352,120 351,576
-------------- ----------- --------------
For the
Interest rate Bank year ended
derivatives borrowings 31 March 2020
GBP'000 GBP'000 GBP'000
-------------- ----------- --------------
At beginning of year - 205,156 205,156
Cash flows from financing activities
Loan draw down - 64,053 64,053
Loan arrangement costs paid - (1,364) (1,364)
Non cash movements
Amortisation of loan arrangement
costs - 1,325 1,325
Change in valuation (478) - (478)
At end of year (478) 269,170 268,692
-------------- ----------- --------------
28.0 Operating leases
The Group is party to a number of operating leases on its
investment properties with Approved Providers. The future minimum
lease payments under non-cancellable operating leases receivable by
the Group are as follows:
31 March 2021 31 March 2020
GBP'000 GBP'000
-------------- --------------
Amounts receivable
< 1 year 50,367 48,416
1-2 years 50,410 48,451
2-5 years 151,511 145,545
> 5 years 873,826 886,677
At end of year 1,126,114 1,129,089
-------------- --------------
Leases are direct-let agreements with Approved Providers for a
term between 15 to 37 years with indexed linked annual rent
reviews. All current leases are full repairing and insuring leases;
the tenants are therefore obliged to repair, maintain and renew the
properties back to the original conditions.
The following table gives details of percentage of annual rental
income per Approved Provider:
31 March 2021 31 March 2020
% %
-------------- --------------
Auckland Home Solutions 23.88 22.73
Falcon Housing Association CIC 19.74 20.43
Bespoke Supportive Tenancies 13.25 11.05
Inclusion Housing CIC 8.70 8.74
Westmoreland Supported Housing Limited 6.07 7.97
Encircle Housing Limited 5.96 6.11
Trinity Housing Association Limited 5.31 5.50
Pivotal Housing Association 3.91 3.96
Harbour Light Assisted Living CIC 3.67 3.76
Chrysalis Supported Association Limited 3.38 3.49
New Walk Property Management CIC 2.80 2.87
My Space Housing Solutions 1.16 1.19
IKE Supported Housing Limited 1.12 1.15
Hilldale Housing Association Limited 0.96 0.98
Blue Square Limited 0.07 0.07
Qualitas Housing 0.02 -
Total 100.0 100.0
-------------- --------------
The Group is also party to a number of operating leases on its
long leasehold properties. The ground rent payment
commitments under these operating leases are negligible so the
future minimum lease payments under these leases have not been
disclosed in these financial statements.
29.0 Controlling parties
As at 31 March 2021, there is no ultimate controlling party.
30.0 Related party disclosures
The Directors are remunerated for their services at such rate as
the Directors shall from time to time determine. The aggregate
remuneration and benefits in kind of the Directors of the Company
(in each case, solely in their capacity as such) in respect of the
year ended 31 March 2021 payable out of the assets of the Company
is not expected to exceed GBP200,000.
Fees of GBP182,000 (2020: GBP162,000) were incurred and paid to
the Directors.
As at 31 March 2021, the Directors held the following number of
shares:
31 March 2021 31 March 2020
Director Ordinary shares Ordinary shares
---------------- ----------------
Michael Wrobel Chairman 100,598 100,598
Alastair Moss Director 11,766 11,766
Alison Hadden Director - -
Audit and Management Engagement
Caroline Gulliver Committee Chair 58,832 58,832
Peter Baxter Director 47,065 47,065
------------------- --------------------------------- ---------------- ----------------
Remuneration
The Investment Adviser has reviewed its remuneration policies
and procedures to ensure incentives are aligned with the
requirements of AIFMD. It includes measures to avoid conflicts of
interest such as providing staff with a fixed monthly salary and
determining discretionary payments by the performance of the
Investment Adviser as a whole and not linked to any one AIF in
particular. The Investment Adviser and its staff receive no
remuneration through profit share, carried interest, co-investment
or other schemes related to the Company's performance.
31.0 Transactions with the Investment Adviser
On 1 November 2016, Civitas Investment Management Limited
("CIM") was appointed as the Investment Adviser of the Company.
Fees of GBP6,117,000 (2020: GBP6,131,000) were incurred and paid
to CIM. In addition, disbursements of GBPnil (2020: GBP52,000) were
paid in the year.
As at 31 March 2021, a net amount of GBP13,000 (2020: GBPnil)
was due from CIM.
As at 31 March 2021, CIM held 50,000 Ordinary shares in the
Company.
32.0 Consolidated entities
The Company has provided a guarantee under s479C of the
Companies Act 2006 in respect of the financial year ended 31 March
2021 for a number of its subsidiary companies (as indicated in the
table below). The guarantee is over all outstanding liabilities to
which the subsidiary companies are subject at 31 March 2021 until
they are satisfied in full.
The Group consists of a parent company, Civitas Social Housing
PLC, incorporated in England and Wales (company number 10402528)
and a number of subsidiaries held directly by Civitas Social
Housing PLC, which operate and are incorporated in England and
Wales or Jersey.
The Group owns 100% equity shares of all subsidiaries listed
below and has the power to appoint and remove the majority of the
board of directors of those subsidiaries. The relevant activities
of the below subsidiaries are determined by the Board of Directors
based on the purpose of each company.
Therefore, the Directors concluded that the Group has control
over all these entities and all these entities have been
consolidated within the consolidated financial statements.
A list of all related undertakings included within these
consolidated financial statements are noted below. Indirectly held
subsidiary companies are marked by an indentation in the table
below.
Name Registered Country of Ownership
number incorporation
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Principal %
activity
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Civitas Social Housing Finance Finance England &
Company 1 Limited ++ 10997707 company Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Civitas Social Housing Jersey Holding
1 Limited 124129 company Jersey 100.00%
--------------------------------------------------- ----------- ------------ --------------- ----------
Property England &
Civitas SPV1 Limited ++ 10518729 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV2 Limited ++ 10114251 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV11 Limited ++ 10546749 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV15 Limited ++ 09777380 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV25 Limited ++ 10791473 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV27 Limited ++ 10883112 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV33 Limited ++ 10546407 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV35 Limited ++ 10588530 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV38 Limited ++ 10738318 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV39 Limited ++ 10547333 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV40 Limited ++ 10738510 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV41 Limited ++ 10738542 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV50 Limited ++ 10775419 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Civitas Social Housing Finance Finance England &
Company 2 Limited ++ 10997698 company Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Civitas Social Housing Jersey Holding
2 Limited 124876 company Jersey 100.00%
--------------------------------------------------- ----------- ------------ --------------- ----------
Property England &
Civitas SPV3 Limited ++ 10156529 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV4 Limited ++ 10433744 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV5 Limited ++ 10479104 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV6 Limited ++ 10674493 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV9 Limited ++ 10536388 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV10 Limited ++ 10535243 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV12 Limited ++ 10546753 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV17 Limited ++ 10479036 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV18 Limited ++ 10546651 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV19 Limited ++ 10548932 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV20 Limited ++ 10588735 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV22 Limited ++ 10743958 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV24 Limited ++ 10751512 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV26 Limited ++ 10864336 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV29 Limited ++ 10911565 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV30 Limited ++ 10956025 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV31 Limited ++ 10974889 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV32 Limited ++ 11007173 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV34 Limited ++ 10738381 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV36 Limited ++ 10588792 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV42 Limited ++ 10738556 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV43 Limited ++ 10534877 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV45 Limited ++ 10871854 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV46 Limited ++ 10871910 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV47 Limited ++ 10873270 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV48 Limited ++ 10873295 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV51 Limited ++ 10826693 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV52 Limited ++ 10827006 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV63 Limited ++ 10937805 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV64 Limited ++ 10938411 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV70 Limited ++ 10770201 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV71 Limited ++ 10888639 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV72 Limited ++ 10938022 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV74 Limited ++ 11001855 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV75 Limited ++ 11001834 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV80 Limited ++ 11001998 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Civitas Social Housing Finance Finance England &
Company 3 Limited ++ 10997714 Company Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV8 Limited ++ 10536157 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV28 Limited ++ 10895228 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV53 Limited ++ 11021625 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV55 Limited ++ 11056455 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV57 Limited ++ 11091444 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV60 Limited ++ 11111908 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV61 Limited ++ 10937662 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV66 Limited ++ 10937898 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV77 Limited ++ 11166491 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV78 Limited ++ 11170099 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV79 Limited ++ 11236544 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV81 Limited ++ 11192811 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV82 Limited ++ 11380796 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV83 Limited ++ 11371128 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV85 Limited ++ 11300749 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV95 Limited ++ 11208184 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV97 Limited ++ 11463890 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV103 Limited ++ 11500596 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV105 Limited ++ 11532177 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV106 Limited ++ 11532179 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV107 Limited ++ 11532182 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV116 Limited ++ 11504399 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV117 Limited ++ 11504445 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Civitas Social Housing Finance Finance England &
Company 4 Limited ++ 11906660 Company Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV23 Limited ++ 10746881 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV54 Limited ++ 11039750 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV59 Limited ++ 11111912 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV69 Limited ++ 11142372 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV73 Limited ++ 10939075 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV84 Limited ++ 11381455 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV86 Limited ++ 11418432 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV87 Limited ++ 10888903 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV88 Limited ++ 10939044 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV90 Limited ++ 10939131 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV91 Limited ++ 10941377 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV92 Limited ++ 11449913 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV93 Limited ++ 11043111 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV94 Limited ++ 11208105 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV96 Limited ++ 11270786 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV100 Limited ++ 11069703 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV101 Limited ++ 09978282 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV102 Limited ++ 11521555 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV109 Limited ++ 11532120 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV112 Limited ++ 11579750 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV114 Limited ++ 11579733 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV115 Limited ++ 11522178 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV118 Limited ++ 11411498 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV121 Limited ++ 11099917 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV122 Limited ++ 11482646 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV126 Limited ++ 11459821 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV127 Limited ++ 10941401 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV129 Limited ++ 11664994 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV130 Limited ++ 11705074 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV131 Limited ++ 11675132 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV132 Limited ++ 11473735 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Holding England &
Civitas SPV145 Limited ++ 11842306 company Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
SPV153 Limited (previously Property England &
Fieldbay Limited) 5219012 investment Wales 100.00%
--------------------------------------------------- ----------- ------------ --------------- ----------
Property England &
Civitas SPV148 Limited ++ 11632633 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV149 Limited ++ 11462691 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV150 Limited ++ 11462555 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
FPI CO 324 Ltd ++ 11633019 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Civitas Social Housing Finance Finance England &
Company 5 Limited 13083077 Company Wales 100.00%
--------------------------------------------------- ----------- ------------ --------------- ----------
Property England &
Civitas SPV7 Limited ++ 10536368 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV13 Limited ++ 09517692 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV37 Limited ++ 10738450 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV44 Limited ++ 10588783 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV49 Limited ++ 11031349 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV56 Limited ++ 11056465 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV62 Limited ++ 10937528 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV65 Limited ++ 10938467 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV67 Limited ++ 10937929 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV68 Limited ++ 10938269 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV98 Limited ++ 11478695 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV99 Limited ++ 11478707 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV104 Limited ++ 11532174 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV108 Limited ++ 11532135 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV113 Limited ++ 11580068 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV123 Limited ++ 08253452 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV133 Limited ++ 11698972 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV134 Limited ++ 11689461 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV135 Limited ++ 11579880 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV136 Limited ++ 11579760 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV143 Limited ++ 11546808 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV144 Limited ++ 11546696 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Holding England &
Civitas SPV146 Limited ++ 11861500 Company Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Bryn Eithin (2019) Limited ++ 11844898 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Holding England &
Civitas SPV147 Limited ++ 11861974 Company Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Mynydd Mawr (2019) Limited ++ 11844917 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV152 Limited ++ 11955719 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV155 Limited ++ 12044281 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV156 Limited ++ 12081093 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV157 Limited ++ 12188610 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV158 Limited ++ 12202674 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV160 Limited ++ 12272906 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Bedford SPV1 Limited ++ 12315518 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Bridge Property Herts Limited ++ 12435985 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Bridge Propco Limited ++ 12445439 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
FPI Co 294 Ltd ++ 11519226 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV14 Limited ++ 10479041 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV16 Limited ++ 09917557 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV21 Limited ++ 10631541 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
Property England &
Civitas SPV159 Limited ++ 12258313 investment Wales 100.00%
-------------------------------------------- ----- ----------- ------------ --------------- ----------
++ These entities are exempt from the requirements of the
Companies Act 2006 relating to the audit of individual financial
statements by virtue of Section 479A of that Act. These are all
entities that have a year end of 31 March 2021.
The registered addresses for the subsidiaries are consistent
based on their country of incorporation and are as follows:
-- England & Wales entities: Beaufort House, 51 New North
Road, Exeter, Devon, EX4 4EP
-- Jersey entities: 12 Castle Street, St Helier, Jersey, JE2
3RT
33.0 Financial risk management
33.1. Financial instruments
The Group's principal financial assets and liabilities are those
that arise directly from its operations: trade and other
receivables, trade and other payables and cash and cash
equivalents. The Group's other principal financial liabilities are
bank borrowings, the main purpose of which is to finance the
acquisition and development of the Group's investment property
portfolio, and interest rate derivatives as detailed in notes 20.0
and 21.0.
All financial liabilities are measured at amortised cost, except
interest rate derivatives, which are measured at fair value. All
financial instruments were designated in their current categories
upon initial recognition.
Set out below is a comparison by class of the carrying amounts
and fair value of the Group's financial instruments that are
carried in the financial statements:
Book value Book value Fair value
31 March Fair value 31 March 31 March
2021 31 March 2021 2020 2020
GBP'000 GBP'000 GBP'000 GBP'000
----------- --------------- ----------- -----------
Financial assets
Trade and other receivables(1) 11,667 11,667 8,595 8,595
Cash and cash equivalents 107,097 107,097 58,374 58,374
----------- --------------- ----------- -----------
Financial liabilities
Trade and other payables(2) 8,699 8,699 7,498 7,498
Bank borrowings 352,120 354,142 269,170 269,174
Interest rate derivatives 544 544 478 478
----------- --------------- ----------- -----------
(1) Excludes prepayments and debtors arising on rent
smoothing.
(2) Excludes deferred income and tax liabilities.
The Group has five bank loans: a 10-year fixed rate loan of
GBP52,500,000 provided by Scottish Widows Limited; a 3-year
revolving credit facility variable rate loan of GBP60,000,000
provided by Lloyds Bank plc; a 3-year revolving credit facility
variable rate loan of GBP100,000,000 provided by HSBC Bank PLC; a
5-year revolving credit facility variable rate loan of
GBP60,000,000 provided by National Westminster Bank Plc; and a
7-year fixed rate loan of GBP84,550,000 with M&G Investment
Management Limited. The fair value of the fixed rate loan is
determined by comparing the discounted future cash flows.
Financial risk management
The Group is exposed to market risk, interest rate risk, credit
risk and liquidity risk in the current and future periods. The
Board of Directors oversees the management of these risks. The
Board of Directors reviews and agrees policies for managing each of
these risks that are summarised below.
33.2. Market risk
The Group's activities will expose it primarily to the market
risks associated with changes in property values and changes in
interest rates.
Risk relating to investment in property
Investment in property is subject to varying degrees of risk.
Some factors that affect the value of the investment in property
include:
-- changes in the general economic climate;
-- competition for available properties;
-- obsolescence; and
-- government regulations, including planning, environmental and
tax laws.
Variations in the above factors can affect the valuation of
assets held by the Group and as a result can influence the
financial performance of the Group.
Risk relating to liquidity funds classified as cash and cash
equivalents
The Group holds positions in two AAA rated liquidity funds that
invest in a diversified range of government and non-government
money market securities, which are subject to varying degrees of
risk. Some factors that affect the value of the liquidity funds
include:
-- the performance of the underlying government and
non-government money market securities; and
-- interest rates.
Variations in the above factors can affect the valuation of
assets held by the Group and as a result can influence the
financial performance of the Group.
33.3. Interest rate risk
Interest rate risk is the risk that the fair value or future
cash flows of a financial instrument will fluctuate because of
changes in market interest rates.
The Group's interest rate risk principally arises from long-term
borrowings. To manage this, the Group has entered into a fixed rate
bank loan and three variable rate bank loans. The Group has entered
into an interest rate swap on the 5-year loan facility with
National Westminster Bank Plc in order to mitigate the risk of
rising interest rates.
At 31 March 2021, 55% (2020: 41%) of the Group's borrowings are
subject to a fixed rate of interest.
The exposure of the Group to variable rates of interest is
considered upon drawing of any new loan facilities, to ensure that
the Group's exposure to interest rate fluctuations is within
acceptable levels.
The Investment Adviser monitors the Group's exposure to any
changes in interest rate on an ongoing basis, with the Board
updated on a quarterly basis of the current exposure of the Group's
loan facilities.
As at 31 March 2021, if interest rates had been 100 basis points
higher/(lower) with all other variables held constant the impact on
profits after taxation for the year would be as below. The
Investment Adviser anticipates these levels are reasonably possible
based on the observation of current market conditions that interest
rates would not fluctuate more than 1%.
31 March 2021 31 March 2020
GBP'000 GBP'000
-------------- --------------
(Decrease)/increase in profits due to
interest rates
100 basis points higher (529) (1,016)
100 basis points lower 1,600 1,535
-------------- --------------
The average effective interest rates of financial instruments at
31 March 2021 were as follows:
31 March 2021 31 March 2020
% %
-------------- --------------
Bank borrowings - fixed rate 2.93584 2.31950
Bank borrowings - variable rate 1.75639 2.80046
Cash and cash equivalents - 0.11048
-------------- --------------
The Group's borrowings with Lloyds Bank plc, HSBC Bank PLC and
National Westminster Bank Plc will be transitioning from the London
Interbank Offer Rate (LIBOR) benchmark to Sterling Overnight Index
Average (SONIA) benchmark in due course. There is expected to be
negligible cost involved in the borrowing facility transition and
the respective hedge instrument amendments.
33.4. Credit risk
Credit risk is the risk that a counterparty will not meet its
obligations under a financial instrument or customer contract,
leading to a financial loss. The Group is exposed to credit risks
from both its leasing activities and financing activities,
including deposits with banks and financial institutions.
Debtors and accrued income represent rent due or accrued, these
amounts due are diversified between a number of different Approved
Providers of differing financial strength, see note 28.0 for
details of the different counterparties. None of the Approved
Providers have listed debt and as such do not have a credit rating,
however, the diversified nature of this asset supports the credit
quality.
The Group has policies in place to ensure that rental contracts
are entered into only with lessees with an appropriate credit and
operational history, and limits exposure to any one tenant. The
credit risk is considered to be further reduced as the source of
the rents received by the Group is ultimately provided by the
Government, by way of housing benefit and care provision, via a
diverse range of Local Authorities.
For details of provisions for impairment please refer to note
17.0
Credit risk related to financial instruments and cash
deposits
One of the principal credit risks of the Group will arise with
the banks and financial institutions. The Board of Directors
believes that the credit risk on short-term deposits and current
account cash balances is limited because the counterparties are
banks considered to be of good credit quality. In the case of cash
deposits held with lawyers, the credit risk is limited because the
cash is held by the lawyers within client accounts at banks with
high credit quality.
The credit ratings for banks where balances are held by the
Group are as follows:
Lloyds Bank plc A+/F1
HSBC Bank plc A+/F1
RBS International Limited A/FI
National Westminster Bank plc A+/F1
Ratings advised by Fitch.
33.5. Liquidity risk
The Group manages its liquidity and funding risks by considering
cash flow forecasts and ensuring sufficient cash balances are held
within the Group to meet future needs. Prudent liquidity risk
management implies maintaining sufficient cash and marketable
securities, the availability of financing through appropriate and
adequate credit lines, and the ability of customers to settle
obligations within normal terms of credit. The Group ensures,
through forecasting of capital requirements, that adequate cash is
available.
The following table details the Group's maturity profile in
respect of its financial instrument liabilities based on
contractual undiscounted payments:
On demand <1 year 1-5 years > 5 years Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------- --------- ---------- ---------- ---------
31 March 2021
Trade and other
payables 8,699 - - 8,699
Bank borrowings - 67,909 181,048 144,602 393,559
8,699 67,909 181,048 144,602 402,258
---------- --------- ---------- ---------- ---------
31 March 2020
Trade and other
payables 7,498 - - - 7,498
Bank borrowings - 66,896 174,785 55,002 296,683
7,498 66,896 174,785 55,002 304,181
---------- --------- ---------- ---------- ---------
The profile above shows the maturity profile at 31 March 2021
and included within the contracted payments is GBP36,509,000 (2020:
GBP24,183,000) of loan interest payable up to the point of
maturity.
34.0 Capital Commitments
At 31 March 2021, the Company had no outstanding capital
commitments (2020: GBP22,100,000). As at 31 March 2020,
GBP12,100,000 related to two properties under development, for
which the Company had entered into a conditional sale and purchase
agreement contingent on the completion of development.
GBP10,000,000 related to a capital payment for the same properties
contingent on the operators achieving certain financial
obligations.
Amounts totalling GBPNil (2020: GBP850,000) have been allocated
for capital works expenditure on properties, subject to future
proofing activities to ensure the longevity of occupation by
residents.
35.0 Post balance sheet events
Acquisitions
In April 2021, the Group completed the purchase of a portfolio
consisting of 13 existing specialist supported housing properties
for 51 adults with learning difficulties in South Wales together
with two appurtenant day care accommodation facilities which are
integral to the care provided to the adults in the supported living
accommodation. The purchase price was c.GBP10,900,000.
In May 2021, the Group also successfully completed on the
acquisition of an additional portfolio of 10 properties each let to
an existing Housing Association on a 15 year lease for which the
purchase price was c.GBP8,600,000.
Dividends
On 11 May 2021, the Board declared a quarterly dividend in
respect of the Ordinary shares for the three months to 31 March
2021 of 1.350 pence per Ordinary share totalling GBP8,396,000. The
dividend was paid on 11 June 2021 to holders of Ordinary shares on
the register as at 21 May 2021. The dividend was paid as a REIT
property income distribution ("PID").
Remuneration
From 1 April 2021, the remuneration of the Directors, Audit and
Management Engagement Committee Chairman and Chairman's annual fee
will increase by 4%. The Audit and Management Engagement Committee
Chairman will also receive an additional GBP1,000 annually.
Financing
The facility with Lloyds Bank plc has also been successfully
re-financed with a 2 year Revolving Credit Facility expiring in
July 2023.
Sale of Treasury Shares
Since the year end, the balance of the Company's shares held in
treasury (565,000) were sold. Gross consideration before the
deduction of fees was GBP654,000. The Company no longer holds any
shares in treasury.
Company Statement of Financial Position
As at 31 March 2021
31 March 2021 31 March 2020
Note GBP'000 GBP'000
-------------- --------------
Assets
Non-current assets
Investment in subsidiaries 7.0 720,918 706,920
-------------- --------------
Current assets
Trade and other receivables 8.0 3,644 4,727
Cash and cash equivalents 9.0 15,447 29,011
-------------- --------------
19,091 33,738
-------------- --------------
Total assets 740,009 740,658
-------------- --------------
Liabilities
Current liabilities
Trade and other payables 10.0 (171,655) (191,942)
-------------- --------------
(171,655) (191,942)
-------------- --------------
Total liabilities (171,655) (191,942)
-------------- --------------
Total net assets 568,354 548,716
-------------- --------------
Equity
Share capital 11.0 6,225 6,225
Share premium reserve 292,462 292,405
Capital reduction reserve 331,140 330,926
Accumulated losses 12.0 (61,473) (80,840)
-------------- --------------
Total equity 568,354 548,716
-------------- --------------
The Company has taken advantage of the provisions of Companies
Act 2006 s408 and does not disclose the Company's individual profit
and loss account. Profits for the year were GBP52,780,000 (2020:
loss of GBP9,110,000).
The Company financial statements above were approved by the
Board of Directors of Civitas Social Housing PLC and authorised for
issue and signed on its behalf by:
Michael Wrobel
Chairman and Independent Non-Executive Director
29 June 2021
Company No: 10402528
The notes set out below are an integral part of these financial
statements.
Company Statement of Changes in Equity
For the year ended 31 March 2021
Share Capital
Share premium reduction Accumulated Total
Capital reserve reserve losses equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------------- -------- -------- ---------- ------------ ---------
Balance at 1 April 2019 6,225 292,405 331,625 (38,760) 591,495
Loss and total comprehensive expense for
the year - - - (9,110) (9,110)
Issue of Ordinary shares
Share bought back into treasury - - (699) - (699)
Dividends paid
Total interim dividends for the year ended
31 March 2020 (5.30p) - - - (32,970) (32,970)
Balance at 31 March 2020 6,225 292,405 330,926 (80,840) 548,716
-------- -------- ---------- ------------ ---------
Profit and total comprehensive income for
the year - - - 52,780 52,780
Issue of Ordinary shares
Share reissued from treasury - 57 214 - 271
Dividends paid
Total interim dividends for the year ended
31 March 2021 (5.375p) - - - (33,413) (33,413)
Balance at 31 March 2021 6,225 292,462 331,140 (61,473) 568,354
-------- -------- ---------- ------------ ---------
The notes set out below are an integral part of these financial
statements.
Notes to the Company Financial Statements
For the year ended 31 March 2021
1.0 Corporate information
Civitas Social Housing PLC ("the Company") was incorporated in
England and Wales under the Companies Act 2006 as a public company
limited by shares on 29 September 2016 with company number 10402528
under the name Civitas REIT PLC, which was subsequently changed to
the existing name on 3 October 2016.
The address of the registered office is Beaufort House, 51 New
North Road, Exeter, Devon EX4 4EP. The Company is registered as an
investment company under section 833 of the Companies Act 2006 in
England and Wales and is domiciled in the United Kingdom.
The Company did not begin trading until 18 November 2016 when
the shares were admitted to trading on the London Stock Exchange
("LSE").
The Company's Ordinary shares have been admitted to the Official
List of the Financial Conduct Authority ("FCA"), and are traded on
the LSE.
The principal activity of the Company is to act as the ultimate
parent company of its subsidiaries (the "Group") and to provide
shareholders with an attractive level of income, together with the
potential for capital growth from investing in a portfolio of
social homes.
2.0 Basis of preparation
The financial statements have been prepared on a historical cost
basis and in accordance with Financial Reporting Standard 100
Application of Financial Reporting Requirements ("FRS 100"),
Financial Reporting Standard 101 Reduced Disclosure Framework ("FRS
101") and the Companies Act 2006 as applicable to companies using
FRS 101.
In preparing these financial statements, the Company applies the
recognition, measurement and disclosure requirements of
International Financial Reporting Standards ("Adopted IFRSs"), but
makes amendments where necessary in order to comply with the
Companies Act 2006 and has set out below where advantage of the FRS
101 disclosure exemptions has been taken.
In preparing these financial statements the Company has taken
advantage of all disclosure exemptions conferred by FRS 101.
Therefore, these financial statements do not include:
-- certain comparative information as otherwise required by IFRS;
-- certain disclosures regarding the Company's capital;
-- certain disclosures in relation to IFRS 15 Revenue Contracts with Customers
-- a statement of cash flows;
-- the effect of future accounting standards not yet adopted;
-- the disclosure of the remuneration of key management personnel; and
-- disclosure of related party transactions with other wholly
owned members of Civitas Social Housing PLC.
In addition, and in accordance with FRS 101, further disclosure
exemptions have been adopted because equivalent disclosures are
included in the Company's consolidated financial statements. These
financial statements do not include certain disclosures in respect
of:
-- share based payments;
-- financial instruments; and
-- fair value measurement other than certain disclosures
required as a result of recording financial instruments at fair
value.
The Company has taken advantage of the exemption in section 408
of the Companies Act 2006 not to present its own income statement
or statement of comprehensive income.
New standards, amendments and interpretations
The following new standards are now effective and have been
adopted for the year ended 31 March 2021.
-- Amendments to IAS1 'Presentation of Financial Statements' and
IAS 8 'Accounting Policies, Changes in Accounting Estimates and
Errors': (effective for annual periods beginning on or after 1
January 2020). These amendments clarify the definition of
'material'. The amendments make the standards more consistent but
have no significant impact on the preparation of these financial
statements.
Going concern
The financial statements have been prepared on a going concern
basis.
As discussed in the Group financial statements above, the
underlying assets of the Company benefit from a secure income
stream and to date performance has not been negatively impacted by
COVID-19.
The Company financial statements show an accumulated loss,
however, this is due to a time-lag on profits from subsidiary
companies being moved up the structure in the form of
dividends.
The Company has a net current liability position of
GBP152,564,000 (2020: GBP158,204,000). This balance arises due to
the intercompany balances totalling GBP169,465,000 (2020:
GBP187,911,000) with the Company's subsidiary companies. The
amounts principally relate to bank loans drawn in the Company's
subsidiary companies in order to finance the purchase of new
acquisitions in accordance with the Group's business model. The
directors of the subsidiary companies have provided a letter of
comfort that they will not seek repayment of these balances within
the next 12 months.
After review of these items, the Directors believe there are
currently no material uncertainties in relation to the Company's
ability to continue for a period of at least 12 months from the
date of the Company's financial statements and therefore it is
appropriate that the financial statements have been prepared on a
going concern basis.
Significant judgements and sources of estimation uncertainty
The key source of estimation uncertainty relates to the
Company's investment in Group companies, and is stated in the
Company's separate financial statements at cost less impairment
losses, if any. Impairment losses are determined with reference to
the investment's fair value less estimated selling costs. Fair
value is derived from the subsidiaries', and their subsidiaries',
net assets at the balance sheet date. Investment properties held by
the subsidiary companies are supported by independent valuation.
Judgements and assumptions associated with the property values of
the investments held by the subsidiary companies are detailed in
the Group financial statements .
3.0 Accounting policies
The financial statements of the Company follow the accounting
policies laid out in the Group's consolidated financial statements
along with the following accounting policies which have been
consistently applied:
Investments in subsidiaries
The investments in subsidiary companies are included in the
Company's Statement of Financial Position at cost less provision
for impairment. Impairment losses are determined with reference to
the investment's fair value less estimated selling costs. Fair
value is derived from the subsidiaries', and their subsidiaries',
net assets at the balance sheet date. On disposal, the difference
between the net disposal proceeds and its carrying amount is
included in the income statement.
The investment in a subsidiary company may include both the
purchase of shares and an intercompany loan which is subsequently
capitalised in return for shares in the subsidiary company. The
intercompany loan capitalised is disclosed in note 7.0 as a
transfer between the shares and loan columns.
Loans to subsidiaries
Loans made to subsidiary companies which arise as part of the
transactions for the acquisition of investments and are
subsequently capitalised by the issue of shares are recognised as
investment in subsidiaries at cost. At the point the loan is
capitalised, this transaction is recognised as a transfer within
the table in note 7.0.
Amounts due to subsidiary companies
Balances arising with subsidiary companies of a temporary nature
are initially recognised at fair value and subsequently measured at
amortised cost.
4.0 Dividends
Dividends are included in the financial statements in the year
in which they are paid.
5.0 Employee information
Details of Directors' remuneration are included in note 6.0 of
the consolidated financial statements. The Company had no employees
during the year (2020: nil).
6.0 Audit fees
Audit fees in relation to the Company's financial statements
total GBP272,000 (31 March 2020: GBP195,000). For further details,
please refer to note 9.0 of the Group financial statements.
7.0 Investments in subsidiaries
For the
Shares in Loans to year ended
subsidiaries subsidiaries 31 March 2021
GBP'000 GBP'000 GBP'000
--------------- --------------- ----------------
Balance at the beginning of the
year 678,247 28,673 706,920
Increase in investments 928 14,383 15,311
Loans transferred 25,573 (25,573) -
Impairment (1,313) - (1,313)
At the end of the year 703,435 17,483 720,918
--------------- --------------- ----------------
Following a review comparing cost of investments to the
underlying net assets of subsidiary companies, an impairment
provision has been made of GBP1,313,000 (2020: GBPnil).
For the
Shares in Loans to year ended
subsidiaries subsidiaries 31 March 2020
GBP'000 GBP'000 GBP'000
--------------- --------------- ---------------
Balance at the beginning of the
year (as restated) 590,208 86,288 676,496
Increase in investments 4,015 28,232 32,247
Loans transferred 84,024 (84,024) -
Additions due to internal group
restructure 93,289 - 93,289
Disposals due to internal group
restructure (93,289) (1,823) (95,112)
--------------- --------------- ---------------
At the end of the year 678,247 28,673 706,920
--------------- --------------- ---------------
Internal group restructures have taken place in the year in
order to facilitate borrowings. As part of the restructures, a
number of subsidiary companies where the assets are used as
security for bank loans are now directly held by other Group
companies.
8.0 Trade and other receivables
31 March 2021 31 March 2020
GBP'000 GBP'000
-------------- --------------
Trade receivables 722 -
Prepayments and other receivables 1,433 3,357
Accrued income 1,489 1,370
-------------- --------------
Total 3,644 4,727
-------------- --------------
Prepayments and other receivable amounts include prepaid legal
and professional fees of GBP200,000 (2020: GBP469,000) that have
been incurred in connection with acquisitions yet to be completed
and GBP817,000 (2020: GBP1,695,000) in respect of uncompleted works
on the property portfolio.
9.0 Cash and cash equivalents
31 March 2021 31 March 2020
GBP'000 GBP'000
-------------- --------------
Cash held by solicitors 720 3,419
Liquidity funds 10,485 10,475
Cash held at bank 3,381 338
-------------- --------------
Cash and cash equivalents 14,586 14,232
Restricted cash 861 14,779
-------------- --------------
Total cash held at bank 15,447 29,011
-------------- --------------
Liquidity funds refer to money placed in money market funds.
These are highly liquid funds with accessibility within 24 hours
and subject to insignificant risk of changes in value.
Cash held by lawyers is money held in escrow for expenses
expected to be incurred in relation to investment properties
pending completion. These funds are available immediately on
demand.
Restricted cash represents amounts held for specific
commitments, tenant deposits and retention money held by lawyers in
relation to deferred payments subject to achievement of certain
conditions, other retentions and cash segregated to fund repair,
maintenance and improvement works to bring the properties up to
satisfactory standards for the Group and the tenants.
10.0 Trade and other payables
31 March 2021 31 March 2020
GBP'000 GBP'000
-------------- --------------
Retentions 490 2,653
Accruals 450 580
Dividends payable 892 798
Deferred income 358 -
Amounts due to subsidiary companies 169,465 187,911
Total 171,655 191,942
-------------- --------------
11.0 Share capital
Share capital represents the nominal value of consideration
received by the Company for the issue of Ordinary shares.
For the For the
year ended year ended
31 March 2021 31 March 2020
GBP'000 GBP'000
--------------- ---------------
Share capital
At beginning and end of year 6,225 6,225
--------------- ---------------
Number of shares issued and fully paid
For the For the
year ended year ended
31 March 2021 31 March 2020
---------------- ---------------
Ordinary shares of GBP0.01 each
At beginning and end of year 622,461,380 622,461,380
----------------
The Company holds 565,000 (2020: 815,000) Ordinary shares in
treasury. The number of Ordinary shares used to calculate the net
asset value is 621,896,380 (2020: 621,646,380).
12.0 Accumulated losses
This reserve represents the profits and losses of the
Company
For the For the
year ended year ended
31 March 2021 31 March 2020
GBP'000 GBP'000
--------------- ---------------
Balance at the beginning of the year (80,840) (38,760)
Profit/(loss) for the year 52,780 (9,110)
Dividends paid in the year (33,413) (32,970)
--------------- ---------------
At end of year (61,473) (80,840)
--------------- ---------------
13.0 Controlling parties
As at 31 March 2021, there is no ultimate controlling party.
14.0 Related party transactions
For all related party transactions and transactions with the
Investment Adviser please make reference to notes 30.0 and 31.0 of
the Group's consolidated financial statements, along with note 10.0
of the Company financial statements.
15.0 Post balance sheet events
Acquisition
In April 2021, the Group completed the purchase of a portfolio
consisting of 13 existing specialist supported housing properties
for 51 adults with learning difficulties in South Wales together
with two appurtenant day care accommodation facilities which are
integral to the care provided to the adults in the supported living
accommodation. The purchase price was c.GBP10,900,000.
In May 2021, the Group also successfully completed on the
acquisition of an additional portfolio of 10 properties each let to
an existing Approved Provider on 1 15-year lease for which the
purchase price was c.GBP8,600,000.
Dividends
On 11 May 2021, the Board declared a quarterly dividend in
respect of the Ordinary shares for the three months to 31 March
2021 of 1.350 pence per Ordinary share totalling GBP8,396,000. The
dividend was paid on 11 June 2021 to holders of Ordinary shares on
the register as at 21 May 2021. The dividend was paid as a REIT
property income distribution ("PID").
Remuneration
On 11 May 2021, the remuneration of the Directors, Audit and
Management Engagement Committee Chairman and Chairman's annual fee
will increase by 4%. The Audit and Management Engagement Committee
Chairman will also receive an additional GBP1,000 annually.
Financing
The facility with Lloyds Bank plc has also been successfully
re-financed with a 2 year Revolving Credit Facility expiring in
July 2023.
Sale of Treasury Shares
Since the year end, the balance of the Company's shares held in
treasury (565,000) were sold. Gross consideration before the
deduction of fees was GBP654,000. The Company no longer holds any
shares in treasury.
Glossary
ALMO means an arm's length management organisation, a
not-for-profit company that provides housing services
on behalf of a Local Authority.
Alternative Performance Measures (APMs) means a financial
measure of historical or future financial performance, financial
position, or cash flows, other than a financial measure denied or
specified in the applicable financial reporting framework.
Approved Provider means Approved Providers, Local Authorities,
ALMOs, Community Interest Companies, Registered Charities and other
regulated organisations directly or indirectly in receipt of
payment from local or central government including the NHS.
Care Provider means a provider of care services to the occupants
of Specialist Supported Housing, registered with the Care Quality
Commission.
CIM means Civitas Investment Management Limited or CIM (formerly
known as Civitas Housing Advisors Limited until its change of name
on 7 May 2020).
Community Interest Company or CIC means a company approved by
the Office of the Regulator of Community
Interest Companies as a community interest company and
registered as such with Companies House.
Company means Civitas Social Housing PLC, a company incorporated
in England and Wales with company number 10402528.
CMA Order means the Statutory Audit Services Order 2014, issued
by the Competition and Markets Authority.
Current Leverage means the percentage taken as total bank
borrowings over total assets.
Dividend Yield means the ratio of the total annual dividend
payments over market price per share.
EPRA means the European Public Real Estate Association.
EPRA EPS is the EPRA earnings divided by the weighted average
number of shares in issue in the period.
EPRA Net Reinstatement Value ("EPRA NRV ") is a new EPRA NAV
metric which assumes that entities never sell assets and aims to
represent the value required to rebuild the entity.
EPRA Net Tangible Assets ("EPRA NTA") is a new EPRA NAV metric
which assumes that entities buy and sell assets, thereby
crystallising certain levels of unavoidable deferred tax.
EPRA Net Disposal Value ("EPRA NDV") is a new EPRA NAV metric
which represents the shareholders' value under a disposal scenario,
where deferred tax, financial instruments and certain other
adjustments are calculated to the full extent of their liability,
net of any resulting tax.
EPRA Run Rate means the ratio of a company's earnings (excluding
fair value gains/losses) over dividends paid to shareholders.
Gross Asset Value means total assets.
Group means the Company and its subsidiaries.
Housing Association or HA means an independent society, body of
trustees or company established for the purpose of providing
low-cost social housing for people in housing need generally on a
non-profit making basis. Any trading surplus is typically used to
maintain existing homes and to help finance new ones. Housing
Associations are regulated by the Regulator of Social Housing.
IFRS Net Asset Value or IFRS NAV means the net asset value of
the Group on the relevant date, prepared in accordance with IFRS
accounting principles.
Investment Adviser means Civitas Investment Management Limited
("CIM"), a company incorporated in England and Wales with company
number 10278444, in its capacity as investment adviser to the
Company.
IPO means Initial Public Offering.
IRR means internal rate of return.
Levered IRR means the internal rate of return including the
impact of debt.
Local Authority or LA means the administrative bodies for the
local government in England comprising of 326 authorities
(including 32 London boroughs).
Net Initial Yield means the ratio of net rental income and gross
purchase price of a property.
NHS means the publicly funded healthcare system of the United
Kingdom comprising The National Health Service in England, NHS
Scotland, NHS Wales and Health and Social Care in Northern Ireland,
including, for the
avoidance of doubt, NHS Trusts.
NHS Trust means a legal entity, set up by order of the Secretary
of State under section 25 of, and Schedule 4 to, the National
Health Service Act 2006, to provide goods and services for the
purposes of the health service.
Ongoing Charges (previously Total Expense Ratios or TERs) means
the figure published annually by the Company which shows the drag
on performance caused by operational expenses. More specifically,
it is the annual percentage reduction in shareholder returns as a
result of recurring operational expenses assuming markets remain
static and the portfolio is not traded. Although the Ongoing
Charges figure is based on historical information, it provides
shareholders with an indication of the likely level of costs that
will be incurred in managing the Company in the future.
Portfolio means the Group's portfolio of assets.
Portfolio Net Asset Value or Portfolio NAV means the net asset
value of the Company, with assets aggregated rather than valued on
an asset by asset basis, as at the relevant date, calculated on the
basis of an independent Portfolio Valuation. See note 7.0 to
Appendix 1 for a rreconciliation to IFRS NAV.
Portfolio Basis means the Portfolio NAV (as defined above).
Portfolio Valuation means an independent valuation of the
Portfolio by Jones Lang LaSalle Limited or such other property
adviser as the Directors may select from time to time, based upon
the Portfolio being held, directly or indirectly, within a
corporate vehicle or equivalent entity which is a wholly owned
subsidiary of the Company and otherwise prepared in accordance with
RICS "Red Book" guidelines.
REIT means a qualifying real estate investment trust in
accordance with the UK REIT Regime introduced by the UK Finance Act
2006 and subsequently re-written into Part 12 of the Corporation
Tax Act 2010.
RICS means Royal Institution of Chartered Surveyors.
RSH means the Regulator of Social Housing, the executive
non-departmental public body, sponsored by the Ministry of Housing,
Communities and Local Government, which is the regulator for Social
Homes providers in England and Wales.
Social homes or social housing means social rented homes and
other accommodation that are offered at rents subsidised below
market level or are constituents of other appropriate rent regimes
such as exempt rents or are subject to bespoke agreement with
entities such as NHS Trusts and are provided by Approved
Providers.
Specialist Supported Housing or SSH means social housing which
incorporates some form of care or other ancillary service on the
premises.
SPV means special purpose vehicle, a corporate vehicle in which
the Group's properties are held.
Target Return means the target return on investment.
Valuation means an independent valuation of the Portfolio by
Jones Lang LaSalle or such other property adviser as the Directors
may select from time to time, prepared in accordance with RICS "Red
Book" guidelines and based upon a valuation of each underlying
investment property rather than the value ascribed to the portfolio
and on the assumption of a theoretical sale of each property rather
than the corporate entities in which all of the Company's
investment properties are held.
Appendix 1 (unaudited)
Notes to the calculation of EPRA and other alternative
performance measures
1.0 EPRA Earnings
For the For the
year ended year ended
31 March 2021 31 March 2020
--------------- ---------------
Earnings from operational activities
Profit after taxation (GBP'000) 36,075 37,725
Change in fair value of derivative financial
instruments (GBP'000) 66 478
Changes in value of investment properties
(GBP'000) (5,511) (9,389)
EPRA Earnings (GBP'000) 30,630 28,814
Weighted average number of shares in issue
(adjusted for shares held in treasury) 621,651,859 622,103,798
EPRA Earnings per share (EPS) - basic &
diluted 4.93p 4.63p
2.0 New EPRA NAV Metrics
EPRA has advised three new NAV measures to replace the EPRA NAV
& EPRA NNNAV.
For Civitas Social Housing Group, the EPRA NAV calculation has
been replaced by the EPRA Net Reinstatement Value and the EPRA
NNNAV by the EPRA Net Disposal Value. Upon adoption of these new
metrics there are no changes to these calculations.
2.1. EPRA Net Reinstatement Value
EPRA NAV metric which assumes that entities never sell assets
and aims to represent the value required to rebuild the entity.
31 March 31 March
2021 2020
----------- -----------
Net assets (GBP'000) 673,498 670,564
Fair value of derivative financial instruments
(GBP'000 544 478
----------- -----------
EPRA Net Reinstatement Value (GBP'000) 674,042 671,042
----------- -----------
Number of Ordinary shares in issue
(adjusted for shares held in treasury) 621,896,380 622,646,380
EPRA Net Reinstatement Value per share 108.38p 107.95p
2.2. EPRA Net Tangible Assets
EPRA NAV metric which assumes that entities buy and sell assets,
thereby crystallising certain levels of unavoidable deferred
tax.
31 March 31 March
2021 2020
------------ ------------
Net assets (GBP'000) 673,498 670,564
Fair value of derivative financial instruments
(GBP'000) 544 478
------------ ------------
EPRA Net Tangible Assets (GBP'000) 674,042 671,042
------------ ------------
Number of Ordinary shares in issue
(adjusted for shares held in treasury) 621,896,380 621,646,380
EPRA Net Tangible Asset per share 108.38p 107.95p
2.3. EPRA Net Disposal Value
EPRA NAV metric which represents the shareholders' value under a
disposal scenario, where deferred tax, financial instruments and
certain other adjustments are calculated to the full extent of
their liability, net of any resulting tax.
31 March 31 March
2021 2020
---------------------------------------- ----------- -----------
Net assets (GBP'000) 673,498 670,564
Fair value of bank borrowings (GBP'000) (2,022) (3,004)
---------------------------------------- ----------- -----------
EPRA Net Disposal Value (GBP'000) 671,476 667,560
---------------------------------------- ----------- -----------
Number of Ordinary shares in issue
(adjusted for shares held in treasury) 621,896,380 621,646,380
EPRA Net Disposal Value per share 107.97p 107.39p
3.0 EPRA Net Initial Yield
31 March 31 March
2021 2020
--------- --------
Investment property (GBP'000) 915,589 878,743
Allowance for estimated purchasers' costs
(GBP'000) 53,753 51,182
--------- --------
Gross up completed property portfolio
(GBP'000) 969,342 929,925
--------- --------
Annualised net rents (GBP'000) 50,780 48,891
Add: notional rent expiration of rent
free periods or other lease incentives
(GBP'000) - -
--------- --------
Topped-up net annualised rent 50,780 48,891
--------- --------
EPRA NIY 5.24% 5.26%
EPRA "topped-up" NIY 5.24% 5.26%
4.0 EPRA Vacancy Rate
Estimated Market Rental Value ("ERV") of vacancy space divided
by ERV of the whole portfolio.
31 March 2021 31 March 2020
-------------- --------------
Estimated Market Rental Value (ERV) of
vacant spaces (GBP'000) - -
Estimated Market Rental Value (ERV) of
whole portfolio (GBP'000) 50,380 48,416
-------------- --------------
EPRA Vacancy Rate 0% 0%
-------------- --------------
5.0 EPRA Costs Ratio
Administrative and operating costs divided by gross rental
income.
For the For the
year ended year ended
31 March 2021 31 March 2020
--------------- ---------------
Total administrative and operating costs
(GBP'000) 9,787 9,860
Gross rental income (GBP'000) 48,134 45,906
--------------- ---------------
EPRA cost ratio 20.33% 21.48%
--------------- ---------------
6.0 EPRA Table of Capital Expenditure
For the For the
year ended year ended
31 March 2021 31 March 2020
GBP'000 GBP'000
Acquisitions including incidental costs
of purchase 16,108 36,747
Investment properties portfolio expenditure
Enhancing lettable space 4,077 1,758
Tenant incentives 11,217 3,844
Total Capital Expenditure 31,402 42,349
--------------- ---------------
Conversion from accruals to cash basis 215 9,826
--------------- ---------------
Total Capital Expenditure on a cash basis 31,617 52,175
--------------- ---------------
7.0 Portfolio NAV
IFRS NAV adjusted to reflect investment property valued on a
portfolio basis rather than individual asset basis.
31 March 31 March
2021 2020
----------- -----------
Net assets (GBP'000) 673,498 670,564
Adjustment for change to property valuation
(GBP'000) 63,270 65,140
Portfolio net assets (GBP'000) 736,768 735,704
----------- -----------
Number of Ordinary shares in issue
(adjusted for shares held in treasury) 621,896,380 621,646,380
Portfolio Net Assets per share 118.47p 118.35p
8.0 Leveraged Internal rate of return (IRR)
31 March 31 March
2021 2020
----------------------------------------- ----------------------------- -------------------- --------------------
IFRS NAV per share 108.300p 107.870p
31 May 2017 Interim dividend 0.750p 0.750p
31 August 2017 Interim dividend 0.750p 0.750p
30 November 2017 Interim dividend 0.750p 0.750p
9 March 2018 Interim dividend 0.750p 0.750p
8 June 2018 Interim dividend 1.250p 1.250p
7 September 2018 Interim dividend 1.250p 1.250p
30 November 2018 Interim dividend 1.250p 1.250p
11 January 2019 Interim dividend 1.110p 1.110p
28 February 2019 Interim dividend 0.140p 0.140p
7 June 2019 Interim dividend 1.325p 1.325p
6 September 2019 Interim dividend 1.325p 1.325p
29 November 2019 Interim dividend 1.325p 1.325p
28 February 2020 Interim dividend 1.325p 1.325p
12 June 2020 Interim dividend 1.325p -
7 September 2020 Interim dividend 1.350p -
4 December 2020 Interim dividend 1.350p -
1 March 2021 Interim dividend 1.350p -
----------------------------------------- ----------------------------- -------------------- --------------------
126.980p 121.170p
IFRS NAV per share at launch 98.00p 98.00p
Levered IRR 6.54% 6.82%
------------------------------------------------------------------------ -------------------- --------------------
ANNUAL GENERAL MEETING
The AGM of the Company will be held at 2.00p.m. on 22 September
2021 at the offices of Cadwalader, Wickersham & Taft LLP, at
100 Bishopsgate, London EC2N 4AG. The Notice of AGM will be
circulated to shareholders in due course.
NATIONAL STORAGE MECHANISM
A copy of the Annual Report and Financial Statements will be
submitted shortly to the National Storage Mechanism ("NSM") and
will be available for inspection at the NSM, which is situated at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism .
LEI: 213800PGBG84J8GM6F95
ENDS
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