TIDMCSH
RNS Number : 0524V
Civitas Social Housing PLC
09 December 2021
9 December 2021
CIVITAS SOCIAL HOUSING PLC
INTERIM REPORT
SIX MONTHS TO 30 SEPTEMBER 2021
Positive H1 performance, benefitting from active asset
management
Further consistent growth in NAV and Rent Roll
Dividends delivered for targeted 5.5p Annual Distribution
Civitas Social Housing PLC ("Civitas", "CSH" or the "Company"),
the UK's leading care-based and healthcare REIT, presents its
interim results for the six months ended 30 September 2021.
The Interim Report and Financial Statements can be accessed via
the Company's website at
www.civitassocialhousing.com or by contacting the Company Secretary by telephone on 01392 477500.
Performance Highlights
Property Valuation and 30 Sept 30 Sept % Change 31 March
Performance 21 20 21
Investment property IFRS
(GBPm) 946.3 898.5 +5.32% 915.58
IFRS NAV per share (diluted)
(p) 108.49 108.01 +0.36% 108.30
Financial Performance
Rent roll annualised (GBPm) 52.5 49.5 +6.06% 50.78
Rental income (GBPm) 25.1 24.1 +4.15% 47.85
EPRA earnings (GBPm) 14.9 15.5 -3.87% 30.60
Operating Cash Flow (GBPm) 19.8 19.1 +3.66% 36.11(1)
Earnings per share (p) 2.87 2.81 +2.14% 5.80
EPRA earning per share
(diluted) (p) 2.40 2.49 -3.61% 4.93(2)
Dividends per share (p) 2.74 2.68 +2.24% 5.40
Financing
Loan to value ratio (%) 34.55% 26.8% - 34.48%
(1) See Annual Report and Financial Statements 31 March 2021
(page 22) for detailed commentary
(2) See Appendix 1 - Notes to the calculation of EPRA and other
alternative performance measures in the respective financial
statements for supporting workings
Robust financial performance in line with expectations
-- Annualised rent roll increased by 6.06% to GBP52.5 million
-- Very low incidence of Covid-19 across portfolio, reflecting
the specialist nature of buildings and care provided
-- Further increase in net operating cash flow to GBP19.8 million
IFRS NAV per share resilient
-- IFRS property valuation increased to GBP946.3 million
-- IFRS valuation net initial yield of 5.27% compared to average
purchase yield of 5.84% (prior to purchase costs)
-- Growth in IFRS NAV per share to 108.49 pence (30 Sept 20: 108.01 pence per share)
-- Weighted Average Unexpired Lease Term (WAULT) of 22.7 years
Dividend payments and dividend cover
-- Two dividends paid during period totalling 2.74 pence
-- In line with full year target dividend of 5.55 pence for the year to 31 March 2022
-- Actual run-rate dividend cover of 87.5% as at 30 Sept 2021;
reduction principally attributable to the additional finance cost
of the M&G drawdown prior to investment
Diversified and growing portfolio of 648 properties providing
homes to 4,391 people
-- Acquisition of 29 properties for GBP21.9m providing homes for
a further 96 vulnerable adults; the purchases were funded from
existing reserves and the drawdown of the M&G debt facility
-- Growing the Company's capabilities in Advanced Homelessness
Provision, with a specialised property now fully operational in
Golders Green
-- High level of acute care carried out by care providers with
an average of over 43 hours per week across the portfolio
-- Company's portfolio providing accommodation to tenants with
learning disabilities, autism and mental health disorders with an
average tenant age of 32 years
-- Properties located across half the local authorities in
England and Wales and leased to 17 approved providers, with support
provided by 119 care providers
-- 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
-- High level of bespoke adaptation for individual tenants' needs
Positive outlook
-- M&G facility part-invested with balance available for pipeline opportunities
-- Expansion and diversification of counterparties to include a number of charities
-- There continues to be a strong and growing demand for secure
housing with care for vulnerable and disabled adults, which Civitas
is well placed to fulfil
ESG & Social Impact
-- Continuing to successfully implement an enhanced ESG programme
-- Implementation of active delivery programme with E.ON to
reduce carbon emissions across the portfolio
-- Target for portfolio to be EPC "A-C" by 2030 as part of broader implementation
-- Social Impact Report - "Positive contribution to meeting impact objectives"
-- GRESB benchmark assessment rating of "A"
-- Portfolio generates GBP127 million of social value per year,
including fiscal savings to public budgets of GBP75.9 million per
year
Michael Wrobel, Non-Executive Chairman of the Company,
commented:
"These results demonstrate the strong performance of the Company
in financial and social terms. The provision of homes for life for
the most vulnerable remains a priority which in turn enables the
Company to deliver measurable social impact and responsible
economic returns for shareholders. We would like to thank all our
partners for their continuing efforts and support."
For further information, please contact:
Civitas Investment Management Limited
Paul Bridge Tel: +44 (0)20 3058 4844
Andrew Dawber Tel: +44 (0)20 3058 4846
Panmure Gordon
Sapna Shah Tel: +44 (0)20 7886 2783
Tom Scrivens Tel: +44 (0) 20 7886 2648
Liberum Capital Limited
Chris Clarke Tel: +44 (0) 20 3100 2000
Darren Vickers
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 across the UK. So far, Civitas
has completed more than 120 individual transactions to build the
largest portfolio of its kind that has been independently valued at
GBP946.3 million (30 September 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, 17
approved providers and working with over 178 individual local
authorities.
Chairman's Statement
As society continues to respond to the challenges of the ongoing
COVID-19 pandemic, the Company once again thanks the staff at all
our partners whose dedicated efforts have achieved:
-- Continued low incidence of COVID-19 across our portfolio, compliance in our homes; and
-- Ongoing delivery of asset management services for the benefit of residents.
Share Price
In recent months, the Company has been the subject of negative
speculation due to the actions of certain short sellers in the
Company's shares. The latter seek to benefit from driving down the
Company's share price to make a profit at the expense of other
shareholders. On 11 October 2021, the Company issued a 37-page
report that rebutted and corrected suppositions made by a short
seller.
The Board continues to have confidence in the revenue streams
and assets of the Company and has demonstrated this by undertaking
share buy-backs at these depressed levels. The Board and Investment
Adviser have had open dialogue with shareholders to address issues
and provide full transparency. We continue to consider all possible
measures to restore confidence in the Company and its share
price.
Our key focus remains on our tenants and delivering a robust
financial performance for shareholders.
Financial Performance
During the period under review, our portfolio generated rental
income of GBP25.1m (30 September 2020: GBP24.1m) representing a
4.2% increase over the corresponding period - a result of modest
indexation of rents in a previously low CPI-based inflation
environment and a small number of new properties purchased during
the period.
Net cash generated from the operating activities was GBP19.8m, a
slight increase on the comparable half-year period of GBP19.2m.
IFRS net asset value of the Company increased from 108.30 pence
per Ordinary share at 31 March 2021 to 108.49 pence per Ordinary
share at 30 September 2021.
The Company met the stated dividend target of 5.40p per share
for the year to 31 March 2021. The Board set a new dividend target
of 5.55p per share for the year to 31 March 2022 of which the first
quarterly dividend of 1.3875p per share has been declared and
paid.
During the six months to 30 September 2021, the Company invested
GBP22.4m (gross of purchase costs)
in 29 property acquisitions, providing homes for a further 96
vulnerable adults. These purchases were
funded from existing reserves and the drawdown of the GBP84.5m
facility with M&G that was announced in February 2021.
Following this, at 30 September 2021, the Company held cash
reserves of GBP72.0m (including the regular contingency cash
buffer) and in addition owns debt-free properties, valued at more
than GBP45.0m.
New Initiatives
The Board is pleased to note a number of new and continuing
initiatives that have been developed by CIM and which are set out
more fully within the Investment Adviser's Report.
In June 2020, the Company expanded its remit to include
long-term provision 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.
We are now providing accommodation to several local authorities
in London and whilst this will remain a small element of the
Company's overall portfolio the Board is encouraged that this
represents an example of clear additionality in terms of social
delivery above and beyond simply providing temporary
accommodation.
The delivery of this service has featured in a short video that
highlights the nature of the properties and the services that are
being delivered and is supported by a commentary from Barnet
Council, one of the Company's partners. It is available on the
Company's website.
Commitment to Social Impact and ESG
The independent Half-Year Social Impact Report prepared by the
specialist consultancy The Good
Economy ("TGE") accompanies the financial results. The report
confirms that the Company continues
to "make a positive contribution to increasing the supply of
specialist housing" and contributes to solutions based on the
Impact Management Project ("IMP") classification of impact
performance. IMP is a standardised approach to impact measurement
as agreed by 2,000 organisations and uses five categories: What,
Who, How Much, Contribution and Risk.
We continue to assist in the upward drive of management and
governance standards through close working arrangements with
Approved Providers. This includes the work of CIM in leading
quarterly best practice seminars open to all holders of the
Company's leases, together with regulatory and sector influential
entities and individuals. This is intended to enable our partners
to develop and build greater resource and expertise in their own
operations on a stand-alone basis and to be able to represent, and
share, best practice within the sector.
We also maintain and develop new compelling partnerships with
sector-leading charities and seek to ensure we are at the forefront
of maximising the impact of our market-leading position. In its
last report, the Board announced its support for an additional two
charities this year focusing upon mental health and the welfare of
residents during the COVID-19 pandemic. These relationships are
blossoming and the charities are reporting positive outcomes from
the work that they undertake and from their engagement with the
Company.
We have commenced a market-leading programme of environmental
enhancements and carbon reduction to the portfolio. This is made
possible by the national presence enjoyed by the Company and will
lead to reduced energy bills for tenants without placing any
additional funding obligations on the Company's Approved Providers.
Our performance on carbon reduction is disclosed in the full
Report.
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. Our
excellent long-term relationships across the sector provide us with
access to a substantial pipeline of opportunities.
Michael Wrobel
Chairman
8 December 2021
Our Portfolio
By UK Region as at 30 September 2021
Region Properties Funds invested (Percentage) Annualised rent roll (Percentage)
North East 64 5.9 7.1
----------- ---------------------------- ----------------------------------
North West 100 10.0 9.7
----------- ---------------------------- ----------------------------------
Yorkshire and the Humber 49 10.0 9.8
----------- ---------------------------- ----------------------------------
East Midlands 58 8.6 8.7
----------- ---------------------------- ----------------------------------
West Midlands 101 11.5 11.3
----------- ---------------------------- ----------------------------------
East of England 32 4.1 3.9
----------- ---------------------------- ----------------------------------
South East 64 10.2 10.0
----------- ---------------------------- ----------------------------------
South West 120 15.6 15.6
----------- ---------------------------- ----------------------------------
Wales 34 11.2 10.6
----------- ---------------------------- ----------------------------------
London 26 12.9 13.3
----------- ---------------------------- ----------------------------------
Market Value (%)
South West 15.8%
London 12.2%
West Midlands 11.5%
Wales 10.9%
South East 10.2%
Yorkshire and the
Humber 9.9%
North West 9.7%
East Midlands 8.8%
North East 7.1%
East of England 3.9%
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 364
Wales 338
East of England 161
By Approved Provider as at 30 September 2021
Annualised Rent Roll (%)
Approved Provider Rental Income
Falcon 19.3%
Auckland(1) 16.3%
BeST 12.3%
Inclusion 10.0%
Qualitas Housing(1) 7.4%
Westmoreland 5.9%
Encircle 5.8%
Trinity 5.2%
Pivotal 3.8%
Harbour Light 3.6%
Chrysalis 3.6%
New Walk 2.8%
My Space 1.1%
IKE 1.1%
Hilldale 0.9%
Windrush 0.8%
Blue Square 0.1%
Properties
Approved Provider Number of
Properties
Falcon 116
Auckland(1) 100
Inclusion 82
BeST 74
Trinity 43
Westmoreland 41
New Walk 41
Pivotal 27
Chrysalis 27
Harbour Light 27
Encircle 16
Hilldale 15
Windrush 13
IKE 10
My Space 8
Qualitas Housing(1) 7
Blue Square 1
Tenancies
Approved Provider Tenancies
Falcon 850
BeST 591
Auckland(1) 547
Inclusion 507
Trinity 242
Westmoreland 239
Pivotal 238
Harbour 214
Encirle 205
New Walk 194
Qualitas Housing1 182
Chrysalis 149
My Space 71
IKE 68
Windrush 51
Hilldale 39
Blue Square 4
Market Value (%)
Approved Provider Market Value
Falcon 19.5%
Auckland(1) 16.5%
BeST 12.6%
Inclusion 9.9%
Qualitas Housing(1) 7.6%
Westmoreland 6.2%
Trinity 5.1%
Encircle 4.8%
Pivotal 3.8%
Chrysalis 3.6%
Harbour Light 3.6%
New Walk 2.8%
IKE 1.1%
My Space 1.1%
Hilldale 0.9%
Windrush 0.8%
Blue Square 0.1%
(1 Auckland and Qualitas Housing are both members of the Social
Housing Family C.I.C)
Investment Adviser's Report
Civitas Social Housing PLC is the market leader in the delivery
of ethical, care-based residential accommodation that continues to
offer sustainable returns for shareholders, outstanding
community-based homes for residents whilst offering value for money
for the public purse.
The Investment Adviser is Civitas Investment Management Limited
which advises on a number of ethical funds with committed capital
of c.GBP2.5bn.
"Thank you
to all our partners who have continued to provide such
high-quality care, support, and housing throughout the pandemic and
to the Company's investors who enable the provision of over 4,400
quality homes for the most vulnerable people in society."
Paul Bridge
CEO, Social Housing, 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 interim results show a
number of key achievements and themes:
-- Continued strong resilience to the COVID-19 pandemic, both
operationally, financially, and most importantly on a human
level;
-- Rents indexed at CPI and collected as planned with no disruption from COVID-19;
-- M&G debt facility drawdown and part deployment into 29
new properties at a value of GBP22.4m with an average gross yield
of 5.5%;
-- A high-quality investment credit rating from Fitch of A
secured and A- unsecured, maintained;
-- A growing, market-leading portfolio of high-quality, medium
to high acuity properties with asset management led by CIM;
-- High levels of care provided to each and every resident, on
average 43 hours per week, independently verified;
-- Expansion and diversification of counterparties and into
accommodation for those with advanced homelessness requirements
with a sector-leading partnership delivered in the London Borough
of Barnet and featured as a case study which is set out in the full
report.
-- Work has commenced on the decarbonisation of the portfolio in partnership with E.ON;
-- A team that 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 size and breadth in the
sector;
-- Actual run rate dividend cover* at c.87% which has reduced as
a result of the removal of the gain on the SWAP valuation from the
calculation;
-- A continued focus on delivering the progressive dividend
policy meeting target objectives of 5.40p for the year to 31 March
2021 and targeting 5.55p to March 2022;
-- IFRS NAV increased to 108.49p per Ordinary share; and
-- Ongoing Charges Ratio of 1.37%.
* Alternative Performance Measure
Introduction
As outlined in the Chairman's statement, CIM would like to
highlight the continued excellent performance of the portfolio with
continued minimal disruption from, and low incidence of, COVID-19;
high levels of compliance; high standards of care and management of
homes, and ongoing active asset management.
The financial performance has been strong and the Company has
expanded its remit to provide high-level 'advanced homelessness
provision' at the request of local authorities in London with the
aim of breaking the cycle of homelessness and offering the
potential of a new start for residents.
The Company continues to develop and implement high standards of
social impact as measured independently and continues to forge
sector-leading relationships with key charities and sector bodies.
The commitment to tackle the challenge of decarbonisation continues
with the commencement of the retrofit programme, as launched by the
government in late 2020.
As set out below, demand for our properties remains very high
and we remain well placed to deliver on a large pipeline when
opportunity allows.
Overall Market Context
In the context of 'Build Back Better' the government has
indicated the paramount importance of healthcare and housing in
fulfilling its pledge to 'fix social care once and for all'. In
addition, decarbonisation is front and centre across government
policy.
These core issues were reflected in the government spending
review held on 24 October 2021 which
confirmed the pre-announced Health and Social Care levy and
additional funding of GBP3.9bn to decarbonise buildings, GBP11.5bn
to fund up to 180,000 affordable homes between 2021-2026 and
GBP639m per year to 'resource fund' the reduction of rough
sleeping. These commitments indicate the priority and require
substantial private sector investment to meet the demanding targets
set out by the government.
It is important to note that the funding for specialist care for
adults of working age is separate to the social care debate which
is primarily focused upon ensuring those who can pay towards social
care when they are elderly are not forced to realise all of their
assets to do so (effectively placing a cap on contributions of
GBP86,000).
The current spending on the NHS and Social Care is around
GBP235bn a year (Institute for government
24 September 2021). The new Health and Social Care levy will
raise an additional GBP13bn a year through
a hypothecated tax of 1.25% on National Insurance contributions
and a levy on dividend payments,
excluding pensions and property.
It is likely that the initial additional investment will focus
upon reducing the estimated 5.7m people on
consultant referral waiting lists, the highest since 2007 and up
from 4.5m in 2019 pre pandemic (BMA 15 October 2021), and then on
further investment into social care.
Additional investment is welcome and in order for the government
to meet its social and fiscal objectives it is clear that the focus
will continue to be upon ensuring that as much non-acute care as
possible for those of working age and those beyond retirement age
is carried out in community-based settings.
In fact, although additional acute beds were provided during the
pandemic within the NHS, the long-term trend is for as many
conditions as possible to be addressed outside of acute hospital
settings as this leads to improved social outcomes and lower
financial costs (Healthcare Financial Management Association
2019).
The White Hall Report 2020 published each year by The Marwood
Group (a leading think tank on health and social care) comments
"...the events of the last year have served to reinforce
that...
...government decision making is paramount when investing in
health and social care;
Public funding of healthcare services can make healthcare assets
a safe haven in times of economic stress;
The independent sector will always have a role to play across
health, social care and life sciences".
Displacing Healthcare Funding into the Community
The Health and Care Bill likely to be passed in 2022 further
consolidates the trends of joining up healthcare services with
social care through the formation of Integrated Care Systems (ICSs)
to join up NHS services and community care services. This is
supportive of the forms of care and housing delivered by the
Company.
The principal of all forms of care being carried as far as
possible in the community has had cross-party support for over 60
years and this applies to the following groups:
-- Adults of working age with learning disabilities or autism;
-- Adults of working age with physical disabilities;
-- Adults with severe long-standing mental health issues;
-- Elderly adults requiring social care; and
-- Children with mental and/or physical disabilities.
This is underpinned by the Care Act of 2014 which sets out in
one place local authorities' duties in relation to assessing
people's needs and eligibility for publicly funded care and
support. Housing and real estate are critical to these legal
responsibilities as care needs a safe and appropriate building in
which to be carried out. The statute underpinning the needs of
children and young people is set out in the Children and Families
Act 2014.
Social Housing
A renamed government department incorporating levelling up,
housing and communities (LUHC) which essentially oversees all
government policy and investment into housing and local government
was formed in the reshuffle in September 2021. Led by Michael Gove,
it further indicates how critical the government believes housing
is to the wider levelling up agenda.
The White Paper on the future of social housing called "The
Charter for Social Housing Residents" was published in November
2020. It proposed that the current regulatory system was
maintained, namely that the Regulator of Social Housing continues
to oversee the governance and viability of Approved Providers but
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 sufficiently been 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 are likely to
be positive for housing with care as the nature of the type of
relationship the Approved Providers 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 Approved Provider's
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.
New legislation on buildings standards and planning is, 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 housebuilding 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 the Company as the portfolio comprises low rise,
traditional construction homes with no cladding. Further, the
Company does not undertake new developments.
Demand
The National Housing Federation estimated in September 2020 that
there were 8m people in some
form of housing need, 1.6m households on official waiting lists
and at least 129,000 children living in temporary
accommodation.
Given the level of supply of new social homes was, in 2020, only
6,338 (social homes at 50% of market rent) this demand will never
be met. In addition, supply is further constrained by the demands
placed upon existing large housing providers in meeting the costs
generated by fire safety measures post Grenfell, remediation of
cladding, the cost of reducing carbon emissions and additional
consumer regulation proposed in the recent White Paper on social
housing "The Charter for Social Housing Residents".
This all points to the continued very high demand for private
and institutional capital to contribute to meeting the
exceptionally high demand for high-quality specialist social
housing.
Specialist Housing
All independent commentators agree that demand continues to rise
(Mencap 2018 and 2021) for community-based housing driven by the
general rise in the population, better birth outcomes and improved
life expectancy, itself stimulated by more community based
provision. In addition, trends in mental health continue to point
to further high levels of demand. Since the pandemic, levels of
referrals for acute mental health conditions have risen by 70% with
13,000 referrals in the month of May 2021 compared to 7,813
referrals in the equivalent month a year before.
LaingBuisson (a major healthcare consultancy) in its Adult
Specialist Care report of 2020, estimates that in the learning
disability market for care in the community over 90% of providers
come from the
independent sector. For mental health this rises to 96%. This
reflects that over the last 30 years almost all specialist care is
provided by the private sector.
What is also clear is that the principal of community-based
housing for those with other care needs is being extended to other
groups, in particular, those with mental health issues and
addictions. This trend was reinforced by the Homeless Reduction Act
of 2017 which placed a statutory duty upon local
authorities to find homes for those at risk of serious harm
caused by homelessness. Prior to the pandemic, Crisis estimated the
cost of street homelessness to the state was over GBP20,000 per
person annually. This does not include social losses and losses to
the state in tax revenue.
At the start of the pandemic the 'Everyone In' campaign ensured
over 37,000 people rough sleeping were housed in temporary
accommodation, normally hotels. The challenge is now ensuring that
those people are permanently housed with the support required to
overcome often complex needs. This is the purpose of the advanced
homelessness scheme in Barnet which will ensure a secure and stable
home with extensive support.
The clear advantages are the same as housing for disabled groups
with better social outcomes and reduced costs to the taxpayer.
Personal Care in the Homes Saves Lives
In the recent LaingBuisson Homecare and Supported Living market
report sponsored by CIM, it was found that the experience the
Company had of the low impact of COVID-19 on our residents was
replicated across the specialist care and homecare sector. Given
that this outcome applied to both sectors it points to the fact
that where care can be carried out in small home-based settings,
the safety of residents is likely to be more assured.
In addition, LaingBuisson found that almost all specialist care
services are now provided by the private
sector, with state funding, and that both the care and the
housing element of the market attract institutional investment
which wants high social outcomes with long-term low risk indexed
income.
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 ensuring
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. This is described in more detail
in our independent reports by The Good Economy and 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
of more than half.
A key part of the rational for providing housing with care has
always been that it significantly improves the enjoyment of life of
those who benefit and it is cheaper than the alternatives.
Importantly, further evidence of the continued efficiency of this
argument was provided by Mencap in its latest report published in
2021 titled "Tea, smiles and empty promises".
Financial Review
Net rental income of GBP25.1m was generated in the period, a
4.2% increase over the corresponding period (30 September 2020:
GBP24.1m).
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 net fair value gain of GBP2.3m (30 September 2020: GBP2.9m)
was recorded in the period and operational cash flow increased to
GBP19.8m (30 September 2020: GBP19.2m).
As at 30 September 2021, the IFRS net asset value of the Company
was 108.49 pence per share, a slight increase on the 108.30 pence
per share at 31 March 2021.
During the reporting period, the Company paid one dividend of
1.350 pence and one of 1.3875 pence which is fully in line with the
distribution target of 5.55p announced for the year to 31 March
2022.
The portfolio was independently valued on an individual IFRS
individual asset basis by JLL at GBP946.3m as at 30 September 2021
(30 September 2020: GBP898.5m) reflecting a net initial yield of
5.27%. This compares to an average purchase yield of 5.7% (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.
Share Price
CSH has seen significant volatility in its share price over
recent months and as outlined in the Chairman's Statement the Board
has taken action to address this through the letter to
shareholders, the share buyback programme, dialogue with investors
and a capital markets day in 2022.
This volatility is of course a concern and CIM will work with
the Board to demonstrate to shareholders the underlying strength of
the Company's revenues and the portfolio.
The Portfolio - Asset Management and Future Proofing
CSH has 648 properties across 178 local authority areas.
Typically, properties are located close to local community-based
facilities to support tenants, families and staff with minimal
travel requirements.
Prior to acquiring assets, a full review is undertaken of the
suitability and condition. Each property will
have a condition survey report highlighting the accommodation
and current condition, together with any potential improvements
required. This allows us to make an informed decision on the asset.
Where works are highlighted, this will be factored into the cost of
the transaction accordingly. To date, over GBP20m of post
completion works have been completed across the portfolio, which
have been paid for in the main by vendors as part of the
acquisition and transaction process. The works range from minor
repairs for health and safety requirements, to extensive
refurbishments.
We have a dedicated asset management team which specialises in
analysing and executing the best outcomes for the assets at any
given time. This may include repurposing the usage or layout of an
asset to complement the demands and requirements in that particular
geographical location. At each key milestone a review is undertaken
with our Approved Provider and surveying partners to maximise the
outcomes and ensure added value in the project. We support the
enhancement and future proofing of the assets through a number of
workstreams that include energy improvement works, post completion
works and other carefully planned projects. Working closely with
the Company's Approved Provider partners allows a collaborative
approach to improving the outcome for each individual asset and
those occupying it.
Regular requests for adaptations are approved where a tenant's
needs have changed, and alterations are required to support their
occupation and stay within their home. On occasion such requests
may be received and approved prior to a tenant occupying the
property following an occupational health assessment. This is a key
workstream in supporting those that are amongst some of the most
vulnerable within society to integrate within their neighbourhood
and community setting. These are usually paid for by the care
provider and/or the local authority.
We work closely with the Company's energy partner E.ON on a
vital project to improve energy efficiency and reduce carbon
emissions across the portfolio as part of the Company's wider ESG
strategy.
Our dedicated asset management software platform allows projects
and workstreams to be tracked, with secure and restricted access
for some of our partner firms to automatically update the system
with progress and documentation. This streamlined process allows
for operational effectiveness thus allowing the asset management
team to focus on fundamental business operations.
Each year a small number of buildings require future proofing.
The local authority and/or care provider will identify adaptions
required to enable a change of use. This will ensure longevity of
occupation and that optimal resident satisfaction is maintained. A
case study of the Company's property in Barnet which has been
changed to an advanced homelessness facility can be found in the
full report.
The Portfolio - Rental Income by Approved Provider - as at 30
September 2021
The annualised rental income as at 30 September 2021 increased
to GBP52.5m 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 17 Approved
Providers as shown above.
Annualised Rent (%)
Approved Provider Rental Income
Falcon 19.3%
Auckland 16.3%
BeST 12.3%
Inclusion 10.0%
Qualitas Housing 7.4%
Westmoreland 5.9%
Encircle 5.8%
Trinity 5.2%
Pivotal 3.8%
Harbour Light 3.6%
Chrysalis 3.6%
New Walk 2.8%
My Space 1.1%
IKE 1.1%
Hilldale 0.9%
Windrush 0.8%
Blue Square 0.1%
Market Value (%)(1)
Approved Provider Market Value
Falcon 19.5%
Auckland 16.5%
BeST 12.6%
Inclusion 9.9%
Qualitas Housing 7.6%
Westmoreland 6.2%
Trinity 5.1%
Encircle 4.8%
Pivotal 3.8%
Chrysalis 3.6%
Harbour Light 3.6%
New Walk 2.8%
IKE 1.1%
My Space 1.1%
Hilldale 0.9%
Windrush 0.8%
Blue Square 0.1%
(1) Including completed properties only.
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 and compared against market equivalents;
-- 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 portfolio reflects the ability of the
Company to source off market transactions through its extensive
network of care provider relationships, with the aim of achieving
value growth over time.
Overview of Activities of CIM
CIM has undertaken additional recruitment over the last 12
months attracting high calibre senior professionals from
backgrounds in Healthcare, Asset Management, Finance, Transactions
and Social Housing and Welfare. This has enabled CIM to bring
significant additional added value to CSH.
Fitch Ratings
The Company has maintained its Fitch Ratings following the
original, intensive due diligence process which led to a leading
"A" secured and "A-" unsecured rating. This compares very well with
a selection of well-established real estate companies.
The rating has opened up 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.
Environmental, Social and Governance
The Board's commitment to a continuous improvement process in
its approach to Environmental Social and Governance ("ESG")
integration is set out in its ESG Policy. CIM is responsible for
the implementation of the commitment and continues to integrate ESG
considerations in the CSH investment strategy. Please see the full
report for further details on ESG.
In addition, CIM is engaging with ESG rating providers to
improve and sometimes correct data they hold on CSH. CIM has also
made available its own staff policies and procedures on its website
for increased transparency and improved disclosure. Notably, active
participation in the 2021 GRESB Public Disclosure Assessment has
resulted in CSH achieving an A score, an improvement from a B score
in 2020, while the peer group average score remains at C. GRESB is
an investor driven global ESG framework. Meanwhile, the ESG Risk
Rating Score for CSH by Sustainalytics of 13.9 (Low Risk) is
marginally lower than was reported in March 2021. Sustainalytics
measures how well companies manage ESG issues that are most
material to their business.
Environmental: Carbon Reduction/Energy Cost Savings
The Company has been leading on improving the environmental
performance of the portfolio and is working with E.ON (a leading UK
energy and solutions company) under a national framework agreement
in partnership with CSH tenants. The 'fabric first' approach to
reducing the portfolio's carbon footprint includes the installation
of cavity wall insulation, loft insulation, external wall
insulation, air source heat pumps and solar PV and battery storage
to identified properties. The installation of these energy
efficient measures, utilising available government grants and other
funding sources, maximises value for the Company and its
counterparties. The collaboration with E.ON is delivering
significant environmental enhancements without any cost to our
Approved Providers.
As a result of active asset management and property improvements
works, renovations and scheduled
post-completion works, the overall energy performance of the
portfolio, as identified on Environmental Performance Certificates
("EPC"), which reports data, has improved over the last six months.
The proportion of properties with EPC Rating A-C has increased to
c.54% (from 52% in March 2021) and carbon footprint (estimated from
property characteristics) has reduced by 1% per Civitas tenancy
(from 2.73 tonnes of CO2/tenancy to 2.70 tonnes of
CO2/tenancy).
Social Impact and Social Value
The Company's latest independent report from The Good Economy
provides details of CSH's portfolio and the continued success in
delivering measurable social impact. Findings include:
-- 29 properties, housing up to 96 people, have been added to the CSH portfolio;
-- 36% of CSH's 648 properties have been brought into the social
housing sector for the first time;
-- CSH's regular engagement with its Approved Providers to
monitor the quality of its stock continued through the COVID-19
pandemic;
-- Improvement works has enhanced the energy efficiency of
homes, with 99.92% of homes with an EPC rating of E+;
-- 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;
-- Social value analysis (March 2021) revealed that, overall,
the portfolio generates GBP127m of social value per year, including
fiscal savings to public budgets of GBP75.9m per year;
-- 87% of respondents to the resident survey in March 2021
reported that they were satisfied with the quality of their home,
8% reported that they were neither satisfied nor dissatisfied;
and
-- 99% statutory compliance rate by Approved Provider partners
is better than the wider affordable housing sector.
Social: Charities
Crisis
Civitas has supported Britain's biggest homelessness charity
over the last five years and the two organisations 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 whilst receiving considerable care and support in addition to
a safe home in the community.
Choir With No Name
With Civitas' support the charity runs five choirs across the
country for people who are homeless or marginalised. Rehearsals
have been moved back indoors following the pandemic lockdown, and
members, volunteers and staff are reported to be pleased.
Alongside, the charity runs a free online workshop to members, the
wider homeless sector and anyone who wants to attend. The charity
has also provided team building events for the CIM team.
House of St Barnabas
This social enterprise works to support people affected by
homelessness back into long-term employment. Civitas specifically
supports the relationship-based mentoring programme focused on
developing interpersonal skills and communication.
The Employment Academy staff at House of St Barnabas work with
victims of homelessness who have successfully completed the
employment preparation programme into work and help them to
progress in work.
Women in Social Housing (WISH)
WISH promotes the benefits of being part of a networking
community and boosts its members to succeed, advance and flourish
in the UK housing sector. Civitas' support contributes to the
championing of positive outcomes for women working in the
sector.
Care Workers Charity and Little Sprouts
Civitas has developed new relationships with these two
charities. CWC helps care workers through crisis using financial
support and support centres, while Little Sprouts is dedicated to
improving the health and wellbeing of communities through cooking
workshops, surplus food collection, etc. They have also provided
meals for those with mental health issues affected by the
pandemic.
A Place For Me
The Company has, from its inception, been very keen to
understand how residents living and moving into homes owned by it
benefit from their environment, the quality of care received, what
benefits they and their family derive, and how society and the
taxpayer benefits.
We have rigorously challenged ourselves to ensure the social
impact of the Company is maximised and measured independently
through The Good Economy and Social Profit Calculator.
Over the last year, we have been working with a journalist and a
photographer who have published a
book called 'A Place For Me', which tells the stories of 50
residents who live in the Company's properties. The interviews have
been carried out on site and in person and have also involved
families, care workers and other stakeholders. Civitas believes it
will be one of the largest research projects ever carried out into
the lives of those with learning disabilities and mental health
issues.
The book is co-sponsored by a major care provider.
Governance
CIM continues to engage actively with Approved Providers (and
care providers) - providing advice and shared learning. This has
helped to facilitate continued high-level operational performance
on occupancy rates, property compliance matters, and health and
safety.
For more details on the Company's Governance arrangements,
please refer to the 2021 Annual Report.
Regulation
In October 2021, the Regulator of Social Housing ("RSH")
published its annual sector risk profile which seeks to set out its
view on the sources of risk to providers' ongoing compliance with
regulatory standards.
The key areas it highlights for the whole sector are:
-- Increased scrutiny as set out in the social housing white paper;
-- Increased costs associated with fire remediation post
Grenfell and meeting the demands of the Fire Safety Act 2021;
-- The cost of meeting the zero-carbon agenda; and
-- Increased debt required to subsidise improvements to existing stock.
CSH always welcomes the engagement of the RSH with our Approved
Provider counterparties and we 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 Civitas works.
Since the last report, the RSH is now engaging with nine of the
Company's Approved Providers and it is anticipated that further
engagement will continue with both remaining providers and other
providers.
It is clear that the RSH will rightly publish information as to
the improvements it wishes to see. When this occurs CSH will
provide support to its partners as appropriate.
CSH has been at the forefront of addressing the RSH's concerns
about the long-term risk planning of Approved Providers by
pioneering the implementation of the force majeure clause and caps
and collars on the indexation of rents of between 1% and 4%. We
will continue to work with our counterparties and the RSH to ensure
that we fulfil our 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.
A senior figure from the RSH attended the last seminar held for
Approved Providers and reaffirmed the RSH's view that demand is
very high and private capital is required to meet this demand. The
RSH notes that it does not opine on the merits or otherwise of a
particular model but will highlight the risks and other concerns
and continues to seek to assure itself that Approved Providers
recognise the risks they are taking on. This is a key concern also
for the Company and ensures interests are aligned with the RSH.
Below is a summary of the engagement between the Approved
Providers and the RSH.
Approved Provider Grading Type of publication Route
Auckland Home Solutions N/A Regulatory judgement Reactive engagement
Bespoke Supportive Tenancies N/A Regulatory judgement Reactive engagement
Encircle Housing N/A Regulatory judgement Reactive engagement
Falcon Housing Association N/A Regulatory judgement Reactive engagement
Hilldale Housing Association N/A Regulatory judgement Reactive engagement
Inclusion Housing G3/V3 Regulatory judgement IDA and reactive engagement
My Space Housing Solutions G3/V3 Regulatory judgement Reactive engagement
Pivotal Housing Association N/A Regulatory judgement Reactive engagement
Trinity Housing Association G3/V3 Regulatory judgement Reactive engagement
Westmoreland Supported G4/V3 Regulatory judgement Reactive engagement
Housing
Outlook
Healthcare being provided as close to the community as possible
and in homes or small residential settings is clearly demonstrated
to be the focus of government and has considerable cross-party
support. The private sector, both in terms of service delivery and
investment, has a pivotal and essential role to play in this
regard. Civitas is at the forefront of bringing the skills and
experience required to work across sectors to further develop its
high-quality portfolio and be influential in helping the sector to
mature.
We remain committed to generating growth and shareholder value
through ethical investing. We are passionately committed to
ensuring value is maintained for the long term.
Civitas Investment Management Limited
Investment Adviser
8 December 2021
Key Performance Indicators
Measure Explanation Result
----------------------------- ----------------------------- -------------------------------
Increase in IFRS Target to achieve capital IFRS NAV increase of
NAV per share appreciation whilst 10.54p per share or
maintaining a low risk 10.76% from IPO.
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 Targeting 5.55p per Dividends of 2.775p
share for the current per share declared
year growing broadly for the six-month
in line with inflation. period.
----------------------------- ----------------------------- -------------------------------
Number of Local Authorities, Target risk mitigation As at 30 September
Approved Providers through a diversified 2021:
and care providers portfolio (once fully
invested) with no more -- 178 Local Authorities
than 25% exposure to -- 17 Approved Providers
any one local authority -- 119 Care Providers
or single Approved Provider
and no more than 20% The Company's largest
exposure to any single single exposure is
geographical area. to Flacon Housing Association
and currently stands
at 19.5%. The largest
geographical concentration
is in the South West,
being 16%.
----------------------------- ----------------------------- -------------------------------
Loan to Gross Assets Assets Target debt drawn Leverage as at 30 September
of 35% of gross assets. 2021 of 34.55% of gross
assets.
----------------------------- ----------------------------- -------------------------------
Alternative Performance Measures
Alternative Definition Performance 30 September 30 September 31 March
Performance Measure 2021 2020 2021
Measure
------------- ----------------------- --------------- --------------- --------------- ---------------
Portfolio IFRS NAV adjusted Portfolio GBP742,636,000 GBP735,913,000 GBP736,768,000
NAV to reflect investment NAV
property valued 119.74p 118.38p 118.47p
on a portfolio Portfolio
basis rather NAV per share
than on an individual
asset basis.
------------- ----------------------- --------------- --------------- --------------- ---------------
For a reconciliation of the Portfolio NAV to the IFRS results
please see note 7 to Appendix 1 below.
EPRA
The Company is a member of the European Real Estate Association
("EPRA"). EPRA has developed and defined the following performance
measures to give transparency, comparability and relevance of
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.
EPRA EPRA
Performance Performance 30 September 30 September 31 March
Measure Definition Purpose Measure 2021 2020 2021
--------------- --------------- --------------- ---------------- --------------- --------------- ---------------
EPRA Earnings Earnings from A key measure EPRA Earnings GBP14,908,000 GBP15,495,000 GBP30,630,000
operational of a company's
activities. underlying EPRA Earnings 2.40p 2.49p 4.93p
operating per share
results and (Basic and
an indication diluted)
of the extent
to which
current
dividend
payments
are supported
by earnings.
--------------- --------------- --------------- ---------------- --------------- --------------- ---------------
EPRA Net EPRA NAV The EPRA NAV EPRA NRV GBP672,742,000 GBP672,798,000 GBP674,042,000
Reinstatement metric set of metrics
Value ("NRV") which assumes make EPRA NRV 108.23p 108.23p 108.38p
that entities adjustments per share
never sell to the NAV (diluted)
assets and per the IFRS
aims to financial
represent statements
the value to provide
required stakeholders
to rebuild with the most
the entity. relevant
information
on the fair
value of the
assets and
liabilities
of a real
estate
investment
company, under
different
scenarios.
--------------- --------------- --------------- ---------------- --------------- --------------- ---------------
EPRA Net EPRA NAV EPRA NTA GBP672,742,000 GBP672,798,000 GBP674,042,000
Tangible metric
Assets ("NTA") which assumes EPRA NTA 108.47p 108.23p 108.38p
that entities per share
buy and sell (diluted)
assets,
thereby
crystallising
certain levels
of unavoidable
deferred tax.
--------------- --------------- --------------- ---------------- --------------- --------------- ---------------
EPRA Net EPRA NAV EPRA NDV GBP671,524,000 GBP667,202,000 GBP671,476,000
Disposal metric
Value ("NDV") which EPRA NDV 108.27p 107.33p 107.97p
represents per
the share (diluted)
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.
--------------- --------------- --------------- ---------------- --------------- --------------- ---------------
Past performance is not a reliable indicator of future
performance.
EPRA Performance EPRA Performance 30 September 30 September 31 March
Measure Definition Purpose Measure 2021 2020 2021
------------------ ----------------- ------------------ ------------------ ------------- ------------- ---------
Annualised
rental income
based on the
cash rents A comparable
passing at measure for
the balance portfolio
sheet date, valuations.
less These measures
non-recoverable should make
property it easier
operating for investors
expenses, to judge
divided themselves,
by the market how the
value of the valuation
property with of portfolio
EPRA Net (estimated) X compares
Initial purchasers' with portfolio
Yield ("NIY") costs. Y. EPRA NIY 5.19% 5.26% 5.24%
------------------ ----------------- ------------------ ------------------ ------------- ------------- ---------
This measure
incorporates
an adjustment
to the EPRA
NIY in respect
of the expiration
of rent-free
periods (or
other unexpired
lease incentives
such as discounted
rent periods
EPRA 'Topped-up' and stepped EPRA 'Topped-up'
NIY rents). NIY 5.19% 5.26% 5.24%
------------------ ------------------------------------- ----------------- ------------- ------------- ---------
Estimated Market
Rental Value
("ERV") of A 'pure' (%)
vacancy space measure of
divided by investment
ERV of the property space
EPRA Vacancy whole that is vacant, EPRA Vacancy
Rate portfolio. based on ERV. Rate 0.00% 0.00% 0.00%
------------------ ----------------- ------------------ ------------------ ------------- ------------- ---------
EPRA Costs Administrative A key measure EPRA Costs 19.68% 19.22% 20.33%
Ratio and operating to enable Ratio
costs meaningful
(including measurement EPRA Costs 19.68% 19.22% 20.33%
and excluding of the changes Ratio (excluding
costs of direct in a company's direct vacancy
vacancy) operating costs)
divided costs.
by gross rental
income.
------------------ ----------------- ------------------ ------------------ ------------- ------------- ---------
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 principal risks facing the Company are substantially
unchanged since the date of the Annual Report for the financial
year ended 31 March 2021 and continue to be as set out on pages 44
to 47 of that report. Risks faced by the Company include, but are
not limited to, strategy and competitiveness risks, investment
management risks, accounting, legal and regulatory risks and
operational risks, including cyber crime. Financial risks include
market risks in relation to investment in property and liquidity
funds, interest rate risk, credit risk and liquidity risk. Details
of the Company's management of these risks are set out in the 2021
Annual Report.
The Company's Environmental, Social & Governance Updates can
be found in the full report.
Statement of Directors' Responsibilities
The Directors acknowledge responsibility for the Half Year
Report and confirm that, to the best of their knowledge, these
condensed consolidated financial statements have been prepared in
accordance with International Accounting Standard 34, 'Interim
Financial Reporting', as adopted by the UK and give a true and fair
view of the assets, liabilities, financial position and profit for
the period of the Group as required by DTR 4.2.4R. The Directors
confirm that the Interim Management Report (including the
Chairman's Statement and the Investment Adviser's Report) includes
a fair review of the information required by DTR 4.2.7 and DTR
4.2.8, namely:
-- an indication of important events that have occurred during
the six-month period to 30 September 2021 and their impact on the
condensed consolidated financial statements, and a description of
the principal risks and uncertainties for the remaining six months
of the financial year; and
-- material related party transactions in the first six months
and any material changes in the related party transactions
described in the last annual report.
The Directors of the Company are set out below.
The principal risks and uncertainties facing the Group are
consistent with those outlined in the Group's
most recent annual financial statements for the year ended 31
March 2021, reflecting the information
required by DTR 4.2.7R.
This Half Year Report was approved by the Board of Directors and
the above responsibility statement was signed on its behalf by:
Michael Wrobel
Chairman
8 December 2021
Independent review report to Civitas Social Housing PLC
Report on the condensed consolidated interim financial
statements
Our conclusion
We have reviewed Civitas Social Housing PLC's condensed
consolidated interim financial statements (the "interim financial
statements") in the Half Year Report of Civitas Social Housing PLC
for the 6 month period ended 30 September 2021 (the "period").
Based on our review, nothing has come to our attention that
causes us to believe that the interim financial statements are not
prepared, in all material respects, in accordance with UK adopted
International Accounting Standard 34, 'Interim Financial Reporting'
and the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority.
What we have reviewed
The interim financial statements comprise:
-- the Condensed Consolidated Statement of Financial Position as at 30 September 2021;
-- the Condensed Consolidated Statement of Comprehensive Income for the period then ended;
-- the Condensed Consolidated Statement of Cash Flows for the period then ended;
-- the Condensed Consolidated Statement of Changes in Equity for the period then ended; and
-- the explanatory notes to the interim financial statements.
The interim financial statements included in the Half Year
Report of Civitas Social Housing PLC have been prepared in
accordance with UK adopted International Accounting Standard 34,
'Interim Financial Reporting' and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the Directors
The Half Year Report, including the interim financial
statements, is the responsibility of, and has been approved by the
Directors. The Directors are responsible for preparing the Half
Year Report in accordance with the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority.
Our responsibility is to express a conclusion on the interim
financial statements in the Half Year Report based on our review.
This report, including the conclusion, has been prepared for and
only for the company for the purpose of complying with the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority and for no other purpose. We
do not, in giving this conclusion, accept or assume responsibility
for any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly agreed
by our prior consent in writing.
What a review of interim financial statements involves
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and,
consequently, does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the Half Year
Report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants
London
8 December 2021
Condensed Consolidated Statement of Comprehensive Income
For the period from 1 April 2021 to 30 September 2021
From 1 April From 1 April For the
2021 to 2020 to year ended
30 September 30 September 31 March
2021 2020 2021
Unaudited Unaudited Audited
Note GBP'000 GBP'000 GBP'000
Revenue
Rental income 4.0 25,712 24,301 49,020
Less direct property expenses 4.0 (636) (237) (1,175)
--------------------------------------------------------- ---- ------------- ------------- -----------
Net rental income 25,076 24,064 47,845
Directors' remuneration (including Employer's NIC costs) (103) (95) (198)
Investment advisory fees 16.2 (3,080) (3,062) (6,117)
General and administrative expenses (1,757) (1,468) (3,183)
--------------------------------------------------------- ---- ------------- ------------- -----------
Total expenses (4,940) (4,625) (9,498)
Change in fair value of investment properties 9.0 2,258 2,890 5,511
--------------------------------------------------------- ---- ------------- ------------- -----------
Operating profit 22,394 22,329 43,858
Finance income - 19 20
Finance expense - relating to bank borrowings 5.0 (5,228) (3,963) (7,737)
Change in fair value of interest rate derivatives 13.0 686 (908) (66)
--------------------------------------------------------- ---- ------------- ------------- -----------
Profit before tax 17,852 17,477 36,075
Taxation 6.0 - - -
--------------------------------------------------------- ---- ------------- ------------- -----------
Profit being total comprehensive income for the period 17,852 17,477 36,075
--------------------------------------------------------- ---- ------------- ------------- -----------
Earnings per share - basic and diluted 7.0 2.87p 2.81p 5.80p
--------------------------------------------------------- ---- ------------- ------------- -----------
All amounts reported in the Condensed Consolidated Statement of
Comprehensive Income above arise from continuing operations.
The notes below are an integral part of these condensed
consolidated financial statements.
Condensed Consolidated Statement of Financial Position
As at 30 September 2021
30 September 30 September 30 March
2021 2020 2021
Unaudited Unaudited Audited
Note GBP'000 GBP'000 GBP'000
Assets
Non-current assets
Investment property 9.0 923,943 887,056 893,684
Other receivables 9.0 22,351 11,491 21,905
Interest rate derivatives 13.0 142 - -
----------------------------- ---- ------------ ------------ ---------
946,436 898,547 915,589
Current assets
Trade and other receivables 10,704 12,479 12,821
Cash and cash equivalents 11.0 76,494 40,901 107,097
----------------------------- ---- ------------ ------------ ---------
87,198 53,380 119,918
----------------------------- ---- ------------ ------------ ---------
Total assets 1,033,643 951,927 1,035,507
----------------------------- ---- ------------ ------------ ---------
Liabilities
Current liabilities
Trade and other payables (9,179) (9,353) (9,345)
Bank and loan borrowings 12.0 - - (59,937)
----------------------------- ---- ------------ ------------ ---------
(9,179) (9,353) (69,282)
Non-current liabilities
Bank and loan borrowings 12.0 (351,571) (269,776) (292,183)
Interest rate derivatives 13.0 - (1,386) (544)
----------------------------- ---- ------------ ------------ ---------
(351,571) (271,162) (292,727)
----------------------------- ---- ------------ ------------ ---------
Total liabilities (360,750) (280,515) (362,009)
----------------------------- ---- ------------ ------------ ---------
Total net assets 672,884 671,412 673,498
----------------------------- ---- ------------ ------------ ---------
Equity
Share capital 14.0 6,225 6,225 6,225
Share premium reserve 292,626 292,405 292,463
Capital reduction reserve 329,551 330,926 331,140
Retained earnings 44,482 41,856 43,670
----------------------------- ---- ------------ ------------ ---------
Total equity 672,884 671,412 673,498
----------------------------- ---- ------------ ------------ ---------
Net assets per share - basic
and diluted 15.0 108.49p 108.01p 108.30p
These Condensed Consolidated Financial Statements 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
8 December 2021
The notes below are an integral part of these condensed
consolidated financial statements.
Condensed Consolidated Statement of Changes in Equity
For the period from 1 April 2021 to 30 September 2021
Share Capital
Share premium reduction Retained Total
capital reserve reserve earnings equity
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- ------
Six month movements in
equity (unaudited)
Balance at 1 April 2021 6,225 292,463 331,140 43,670 673,498
Profit and total comprehensive
income for the period - - - 17,852 17,852
Issue of Ordinary Shares
Shares reissued from treasury 14.0 - 163 484 - 647
Shares bought back into
treasury 14.0 - - (2,073) - (2,073)
Dividends paid
Total interim dividends
for the period (2.7375p) 8.0 - - - (17,040) (17,040)
-------------------------------- ------ --------- --------- ----------- ----------- -----------
Balance at 30 September
2021 6,225 292,626 329,551 44,482 672,884
-------------------------------- ------ --------- --------- ----------- ----------- -----------
Balance at 1 April 2020 6,225 292,405 330,926 41,008 670,564
Profit and total comprehensive
income for the period - - - 17,477 17,477
Dividends paid
Total interim dividends
for the period (2.675p) 8.0 - - - (16,629) (16,629)
-------------------------------- ------ --------- --------- ----------- ----------- -----------
Balance at 30 September
2020 6,225 292,405 330,926 41,856 671,412
-------------------------------- ------ --------- --------- ----------- ----------- -----------
Balance at 1 April 2020 6,225 292,405 330,926 41,008 670,564
Profit and total comprehensive
income for the period - - - 36,075 36,075
Issue of Ordinary shares
Shares reissued from treasury 14.0 - 58 214 - 272
Dividends paid
Total interim dividends
for the year ended 31
March 2021 (5.375p) 8.0 - - - (33,413) (33,413)
-------------------------------- ------ --------- --------- ----------- ----------- -----------
Balance at 31 March 2021 6,225 292,463 331,140 43,670 673,498
-------------------------------- ------ --------- --------- ----------- ----------- -----------
The notes below are an integral part of these condensed
consolidated financial statements.
Condensed Consolidated Statement of Cash Flows
For the period from 1 April 2021 to 30 September 2021
From 1 April From 1 April For the
2021 to 2020 to Year ended
30 September 30 September 31 March
2021 2020 2021
Unaudited Unaudited Audited
Note GBP'000 GBP'000 GBP'000
---------------------------------- -----
Cash flows from operating
activities
Profit for the period
before taxation 17,852 17,477 36,075
- Change in fair value
of investment properties (2,258) (2,890) (5,511)
- Change in fair value
of interest rate derivatives (686) 908 66
- Rent and incentive straight
line adjustments 149 41 68
- Bad debts (recovered)/expensed (7) - 289
Finance income - (19) (20)
Finance expense 5,228 3,963 7,737
Increase in lease incentive
receivable (595) (349) (11,217)
Decrease/(increase) in
trade and other receivables 1,447 (2,622) (3,150)
(Decrease)/increase in
trade and other payables (1,329) 2,638 1,762
---------------------------------- ----- -------------- -------------- ------------
Cash generated from operations 19,801 19,147 26,099
Interest received - 19 20
---------------------------------- -----
Net cash flow generated
from operating activities 19,801 19,166 26,119
---------------------------------- ----- -------------- -------------- ------------
Investing activities
Purchase of investment
properties (16,491) (17,247) (19,462)
Acquisition costs (1,115) 366 (938)
Purchase of subsidiary
company - including property (13,559) -- -
Sale proceeds on sale
of subsidiary company
- excluding property 2,695 -- -
Utilisation of restricted
cash held for investing
activities 266 13,849 14,232
Net cash flow used in
investing activities (28,204) (3,032) (6,168)
---------------------------------- ----- -------------- -------------- ------------
Financing activities
Cost of shares bought (1,665)
in treasury -- -
Proceeds from shares released
from treasury 919 - -
Dividends paid to equity
shareholders (17,005) (16,597) (33,319)
Bank borrowings advanced 12.0 - - 84,550
Bank borrowing issue costs
paid (1,445) (122) (2,811)
Loan interest paid (4,239) (3,040) (5,981)
---------------------------------- -----
Net cash (used in)/generated
from financing activities (23,435) (19,759) 42,439
---------------------------------- ----- -------------- -------------- ------------
Net (decrease)/increase
in cash and cash equivalents (31,838) (3,625) 62,390
Unrestricted cash and
cash equivalents at the
start of the period 103,819 41,429 41,429
---------------------------------- ----- -------------- -------------- ------------
Unrestricted cash and
cash equivalents at the
end of the period 11.0 71,981 37,804 103,819
---------------------------------- ----- -------------- -------------- ------------
The notes below are an integral part of these condensed
consolidated financial statements.
Notes to the Condensed Consolidated Financial Statements
For the period from 1 April 2021 to 30 September 2021
1.0 Corporate information
These condensed consolidated financial statements for the period
from 1 April 2021 to 30 September 2021 comprise the results of the
Company and its subsidiaries (together the "Group") and were
approved by the Board and authorised for issue on 8 December
2021.
The Company is incorporated in England and Wales under the
Companies Act 2006 as a public company limited by shares with
company number 10402528.
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 principal activity of the Company is to act as the ultimate
parent company of the Group, whose principal activity 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
On 31 December 2020, IFRS as adopted by the European Union at
that date was brought into UK law and became UK adopted
international accounting standards, with future changes being
subject to endorsement by the UK Endorsement Board. The Company
transitioned to UK adopted international accounting standards in
its consolidated financial statements on 1 January 2021. There was
no impact or changes in accounting policies from the
transition.
The Group's condensed consolidated financial statements
("Financial Statements") have been prepared on a going concern
basis and in accordance with the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority ("FCA") and with UK adopted international
accounting standards 34 'Interim Financial Reporting'. The
condensed consolidated financial statements should be read in
conjunction with the Annual Report & Accounts for the year
ended 31 March 2021, which have been prepared in accordance with
IFRSs as adopted pursuant to Regulation (EC) No 1606/2002 as it
applies in the European Union and in accordance with
International
Accounting Standards (IAS) in conformity with the requirements
of the Companies Act 2006.
The current period financial statements have been reviewed, not
audited. The financial statements for the period ended 30 September
2021 do not constitute statutory accounts as defined in section 434
of the Companies Act 2006. A copy of the statutory accounts for the
year ended 31 March 2021 has been delivered to the Registrar of
Companies. The Auditors' report on those accounts was not
qualified. The Auditors' report did not contain statements under
section 498(2) or (3) of the Companies Act 2006.
The comparative periods represent the period from 1 April 2020
to 30 September 2020 as reported in the Group's 2020 Interim
Report, and for the year ended 31 March 2021 as reported in the
Company's 2021 Annual Report.
The same accounting policies, estimates, presentation and
methods of computation are followed in the Half Year Report as
applied in the Group's latest annual audited financial statements,
with the exception of the following items:
-- 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 and HSBC Bank PLC and National Westminster Bank Plc
are transitioning from the London Interbank Offer Rate (LIBOR)
benchmark to the Sterling Overnight Index Average (SONIA)
benchmark. There is expected to be negligible cost involved in the
borrowing facility transition and the respective hedge instrument
amendments.
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:
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.
The Group's condensed consolidated financial statements have
been prepared on a historical cost basis, as modified for the
Group's investment properties and derivatives at fair value through
profit or loss.
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 (GBP'000s) pound, except where
otherwise indicated.
2.2 Going concern
The Group benefits from a secure income stream from long leases
with the Approved Providers and presents a well-diversified risk.
The Group's cash balances as at 30 September 2021 were
GBP76,494,000 of which GBP4,513,000 was held as restricted cash.
Details of this can be found in note 11.0.
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") are working
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 18 November 2021, an extension was granted for the facility
with HSBC Bank PLC which now expires in November 2023.
Cash flow forecasts based on severe but plausible downside
scenarios have been run and 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 Directors believe 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 approving the
Group's condensed consolidated financial statements. The Board is,
therefore, of the opinion that the going concern basis adopted in
the preparation of the condensed consolidated financial statements
is appropriate.
2.3 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
condensed 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 these individual properties have
been aggregated into 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. 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.
3.0 Significant accounting judgements, estimates and assumptions
In the application of the Group's accounting policies, 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 are unchanged from those outlined in the Annual
Report.
4.0 Rental income
From From For the
1 April 2021 to 1 April 2020 to year ended
30 September 30 September 31 March
2021 2020 2021
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Rental income from investment property 25,225 24,105 48,201
Rent straight line adjustments 299 174 372
Lease incentive adjustments (448) (215) (439)
Rechargeable costs received 636 237 886
--------------------------------------- ---------------- ---------------- -----------
Rental Income 25,712 24,301 49,020
Less direct property expenses (636) (237) (1,175)
--------------------------------------- ---------------- ---------------- -----------
Net rental income 25,076 24,064 47,845
--------------------------------------- ---------------- ---------------- -----------
5.0 Finance expense
From From For the
1 April 2021 to 1 April 2020 to year ended
30 September 30 September 31 March
2021 2020 2020
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Interest paid and payable on bank borrowings
and derivatives 4,390 3,208 6,416
Amortisation of loan arrangement fees 814 728 1,293
Loan security fees 21 - -
Bank charges and other interest 3 27 28
--------------------------------------------- ---------------- ---------------- -----------
Total 5,228 3,963 7,737
--------------------------------------------- ---------------- ---------------- -----------
6.0 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 period ended 30 September 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.
A deferred tax assets of GBP2,405,000 (30 September 2020:
GBP1,212,000; 31 March 2021: GBP1,508,000) 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.
From From For the
1 April 2021 1 April 2020 year ended
to to 31 March
30 September 30 September 2021
2021 2020 Audited
Unaudited Unaudited GBP'000
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.
From From For the
1 April 1 April year ended
2021 to 2020 to 31 March
30 September 30 September 2021
2021 2020 Audited
Unaudited Unaudited GBP'000
GBP'000 GBP'000
-------------------------------------- -------------- -------------- ------------
Group
Profit before taxation 17,852 17,477 36,075
-------------------------------------- -------------- -------------- ------------
UK corporation tax rate 19.00% 19.00% 19.00%
Theoretical tax at UK corporation
tax rate 3,392 3,321 6,854
Effects of:
Change in value of exempt investment
properties (429) (549) (1,047)
Exempt REIT income (3,529) (3,263) (6,511)
Amounts not deductible for tax
purposes (22) 255 171
Unutilised residual current period
tax losses 318 236 533
-------------------------------------- -------------- -------------- ------------
Total - - -
-------------------------------------- -------------- -------------- ------------
The standard rate of corporation tax is currently 19%. The
government has announced that the corporation tax standard rise to
25% from 1 April 2022.
REIT exempt income includes property rental income that is
exempt from UK corporation tax in accordance with Part 12 of the
Corporation Tax Act 2010.
7.0 IFRS Earnings per share
Earnings per share ("EPS") amounts are calculated by dividing
profit for the period attributable to equity holders of the Company
by the weighted average number of Ordinary shares in issue during
the period.
The calculation of basic and diluted EPS is based on the
following:
From From For the
1 April 2021 to 1 April 2020 to year ended
30 September 30 September 31 March
2021 2020 2021
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
--------------------------------------------------------------------- ---------------- ---------------- -----------
Calculation of Basic EPS
Net profit attributable to Ordinary shareholders (GBP'000) 17,852 17,477 36,075
Weighted average number of Ordinary shares (excluding shares held in
treasury) 622,260,670 621,646,380 621,651,859
EPS - basic & diluted 2.87p 2.81p 5.80p
--------------------------------------------------------------------- ---------------- ---------------- -----------
8.0 Dividends
From From
1 April 2021 1 April 2020 For the
to to year ended
30 September 30 September 31 March
2021 2020 2021
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
----------------------------------
Dividend of 1.325p for the three
months to
31 March 2020 - 8,237 8,237
Dividend of 1.35p for the three
months to
30 June 2020 - 8,392 8,392
Dividend of 1.35p for the three
months to
30 September 2020 - - 8,392
Dividend of 1.35p for the three
months to
31 December 2020 - - 8,392
Dividend of 1.35p for the three
months to 8,403 - -
31 March 2021
Dividend of 1.3875p for the three
months to 8,637 - -
30 June 2021
---------------------------------- ------------- ------------- -----------
Total 17,040 16,629 33,413
---------------------------------- ------------- ------------- -----------
On 5 November 2021, the Company announced a dividend of 1.3875
pence per share in respect of the period 1 July 2021 to 30
September 2021 totalling GBP8,555,000. The dividend payment will be
paid on or around 13 December 2021 to shareholders on the register
as at 19 November 2020. The financial statements do not reflect
this dividend.
9.0 Investment property
From From
1 April 2021 1 April 2020 For the
to to year ended
30 September 30 September 31 March
2021 2020 2021
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
-------------------------------------- ------------- ------------- -----------
Balance at beginning of period 915,589 878,743 878,743
Property acquisitions 26,886 15,612 19,129
Acquisition costs 1,115 566 1,056
Lease incentives and rent straight
line adjustments recognised 446 736 11,150
Change in fair value during the
period 2,258 2,890 5,511
-------------------------------------- ------------- ------------- -----------
Value advised by the property valuers 946,294 898,547 915,589
Less lease incentive assets and
rent straight line assets (22,351) (11,491) (21,905)
-------------------------------------- ------------- ------------- -----------
Total 923,943 887,056 893,684
-------------------------------------- ------------- ------------- -----------
Acquisitions include capital expenditure to enhance lettable
space of GBP4,940,000 (year ended 31 March 2021: GBP4,077,000;
period from 1 April 2020 to 30 September 2020: GBP460,000).
During the period, the Group acquired a property holding company
from Herleva Properties Ltd which held assets totalling GBP8.6m.
These are included within Property Acquisitions in the note
above.
Herleva Properties Limited is a subsidiary of Specialist
Healthcare Operations Limited ("SHO"). Andrew Dawber and Tom
Pridmore (both directors of the Investment Adviser), are 14.99%
shareholders in SHO. They are not directors of SHO, and have no
operational role in that business. SHO does not meet the definition
of a related party under IAS 24.
In accordance with "IAS 40: Investment Property", the investment
property has been independently valued at fair value by Jones Lang
LaSalle Ltd ("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 Group's properties if they were each sold in
independent transactions in accordance with IFRS, at GBP946,294,000
as at 30 September 2021 (31 March 2021: GBP915,589,000 and 30
September 2020: GBP898,547,000).
JLL has provided additional valuation services on the
acquisition of investment property to the Company during the
period.
In relation to the period ended 30 September 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 the transaction detailed in note 10.0, all
other corporate acquisitions during the period 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.
The following table provides the fair value measurement
hierarchy for investment property:
Significant Significant
Quoted prices 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
30 September 2021 923,943 - - 923,943
31 March 2021 893,684 - - 893,684
30 September 2020 887,056 - - 887,056
---------------------------------------------- --------- ------------------------ ------------ --------------
There have been no transfers between Level 1 and Level 2 during
any of the periods, nor have there been any transfers between Level
2 and Level 3 during any of the periods.
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 external inputs are
"unobservable" and value is the Directors' best estimate, based
upon advice from relevant knowledgeable experts.
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:
1. the regulated social housing sector and demand for the
facilities offered by each SSH property owned by the Group;
2. 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;
3. detailed financial analysis with discount rates supporting
the carrying value of each property;
4. 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 for that income under 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 judgement, which can properly 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:
1. 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 orCPI+1 indexation.
2. 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 15.9 years to 46.5 years with a weighted average
unexpired lease term of 22.7 years. 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
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% ( 30 September 2020: 6.0%; 31
March 2021: 6.0%). The range of discount rates used by the valuer
in the Group's property Portfolio Valuation is from 4.7% to 10.7%
(30 September 2020: 4.7% to 10.7%; 31 March 2021: 4.7% 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 where larger rental growth is
allowed during the lease, 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-purposed 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 discount rate +0.5% in discount rate +0.25% in CPI -0.25% in CPI
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------- ---------------------- ----------------------- ------------- -------------
Increase/(decrease) in the IFRS fair
value of investment properties at
30 September 2021 34,599 (33,316) 29,727 (28,354)
30 September 2020 34,530 (32,100) 27,479 (26,398)
31 March 2021 34,131 (31,776) 27,211 (26,175)
--------------------------------------- ---------------------- ----------------------- ------------- -------------
10.0 Subsidiary resale
From 1 April From 1 April For the
2021 to 2020 to year ended
30 September 30 September 31 March
2021 2020 2021
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
------------------------------------ ------------- ------------- -----------
Acquisition of subsidiary companies
(including intercompany loan) 13,559 - -
Acquisition costs 753 - -
Transfer to investment property (11,617) - -
Sale proceeds (2,695) - -
------------------------------------ ------------- ------------- -----------
Total - - -
------------------------------------ ------------- ------------- -----------
On 23 April 2021, the Group entered into a transaction to
acquire the freehold properties operated by CPI Care Limited. Upon
the acquisition of the companies for GBP13,559,000 plus transaction
costs; the properties were transferred into other group companies
and the company acquired, along with its associated operations, was
sold to Envivo Corundum Bidco Limited for GBP2,695,000.
Envivo Corundum Bidco Limited is a subsidiary of Specialist
Healthcare Operations Limited ("SHO"). Andrew Dawber and Tom
Pridmore (both directors of the Investment Adviser), are 14.99%
shareholders in. They are not directors of SHO and have no
operational role. SHO does not meet the definition of a related
party under IAS 24.
11.0 Cash and cash equivalents
From 1 April From 1 April For the
2021 to 2020 to year ended
30 September 30 September 31 March
2021 2020 2021
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
---------------------------------------
Cash held by solicitors 3,456 1,204 721
Liquidity funds 10,485 10,485 10,485
Cash held at bank 58,040 26,115 92,613
--------------------------------------- ------------- ------------- -----------
Unrestricted cash and cash equivalents 71,981 37,804 103,819
Restricted cash 4,513 3,097 3,278
Total 76,494 40,901 107,097
--------------------------------------- ------------- ------------- -----------
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 solicitors 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.
12.0 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 period end are offset against amounts drawn on the facilities
as shown in the table below:
From 1 April From 1 April For the
2021 to 2020 to year ended
30 September 30 September 31 March
2021 2020 2021
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
-----------------------------------
Bank borrowings at start of period 357,050 272,500 272,500
Bank borrowings drawn - - 84,550
----------------------------------- ------------- ------------- -----------
Bank borrowings drawn at end
of period 357,050 272,500 357,050
----------------------------------- ------------- -----------
Unamortised loan issue costs
at start of period (4,930) (3,330) (3,330)
Less: loan issue costs incurred (1,363) (122) (2,893)
Add: loan issue costs amortised 814 728 1,293
----------------------------------- ------------- ------------- -----------
Unamortised loan issue costs
at the end of period (5,479) (2,724) (4,930)
----------------------------------- ------------- ------------- -----------
At end of period 351,571 269,776 352,120
----------------------------------- ------------- ------------- -----------
From 1 April From 1 April For the
2021 to 2020 to year ended
30 September 30 September 31 March
2021 2020 2021
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
------------------------------- ------------- ------------- -----------
Maturity of bank borrowings
Repayable within 1 year - - 59,937
Repayable between 1 to 2 years 158,660 159,150 99,256
Repayable between 2 to 5 years 59,236 58,970 59,102
Repayable after 5 years 133,675 51,656 133,825
------------------------------- ------------- ------------- -----------
Total 351,571 269,776 352,120
------------------------------- ------------- ------------- -----------
The Group is party to the following loan facility
agreements:
A ten-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 GBP172,994,000 (30 September 2020: GBP169,366,000; 31
March 2021: GBP170,831,000).
A Sterling Revolving Facility Agreement for GBP60 million with
Lloyds Bank plc. The facility has been extended to 15 June 2023,
interest is charged at SONIA + 1.55% margin.
The borrowings include amounts secured on investment property to
the value of GBP152,240,000 (30 September 2020: GBP148,096,000; 31
March 2021: GBP149,728,000).
A Revolving Credit Facility Agreement for up to GBP100 million
with HSBC Bank PLC. Interest is charged at LIBOR + 1.70%
margin.
The borrowings include amounts secured on investment property to
the value of GBP220,291,000 (30 September 2020: GBP218,014,000; 31
March 2021: GBP219,606,000).
The facility maturity has been extended from 27 November 2022
with a further extension agreed after the period end to November
2023 as detailed in note 18.0.
A five-year loan facility with National Westminster Bank Plc,
dated 15 August 2019, for up to GBP60 million. Interest is charged
at LIBOR + 2.00% margin and has been fixed by way of a five-year
swap. The swap fixes interest on GBP20 million at 0.7105% and GBP40
million at 0.5475%. The loan can be extended for an additional two
years and there is the option of a further GBP40 million
accordion.
The borrowings include amounts secured on investment property to
the value of GBP132,134,000 (30 September 2020: GBP131,322,000; 31
March 2021: GBP131,283,000).
A seven-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 GBP226,353,000 (30 September 2020: N/A; 31 March 2021:
GBP225,221,000).
At 30 September 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 to value
Loan interest cover ratio
------------------------------------
Scottish Widows limited 10-year At least 325% Must not exceed
facility 40%
Lloyds Bank plc revolving credit At least 550% Must not exceed
facility 52.5%
At least 250% Must not exceed
HSBC Bank PLC facility 55%
National Westminster Bank Plc 5-year At least 250% Must not exceed
facility 50%
M&G Investment Management Limited Must not exceed
7-year facility At least 250% 55%
------------------------------------ ------------------------ ---------------
The Group's borrowings with Lloyds Bank plc, HSBC Bank PLC and
National Westminster Bank Plc are 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.
13.0 Interest rate derivatives
The Group has entered into an interest rate swap 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
million is currently drawn.
The swap has a notional value of GBP60 million and fixes
interest at 2.60% (including the 2% margin on the bank loan).
30 September 30 September 31 March
2021 2020 2021
Unaudited Unaudited Audited
Interest rate derivative assets/(liabilities) GBP'000 GBP'000 GBP'000
------------------------------------------------
At start of the period (544) (478) (478)
Change in fair value during the
period 686 (908) (66)
------------------------------------------------ ------------ ------------ --------
At end of period 142 (1,386) (544)
------------------------------------------------ ------------ ------------ --------
The table below shows the fair value measurement hierarchy for
interest rate derivatives:
Significant Significant
Quote prices Observable unobservable
In active Markets Inputs (Level Inputs
(Level 1) 2) (Level 3)
GBP'000 GBP'000 GBP'000
------------------
30 September 2021 - 142 -
31 March 2021 - (544) -
30 September 2020 - (1,386) -
------------------ ------------------ -------------- -------------
There have been no transfers between Level 1 and Level 2 during
any of the periods nor have there been any transfers between Level
2 and Level 3 during any of the periods.
14.0 Share capital
Share capital represents the nominal value of consideration
received by the Company for the issue of Ordinary shares.
From 1 April From 1 April
2021 to 30 2020 to 30 For the year
September 2021 September 2020 ended
Unaudited Unaudited 31 March 2021
GBP'000 GBP'000 Audited
GBP'000
---------------------------------- --------------- --------------- ---------------
Share capital
At end of period 6,225 6,225 6,225
---------------------------------- --------------- --------------- ---------------
Number of shares issued and fully
paid Ordinary shares of GBP0.01
each
---------------------------------- --------------- --------------- ---------------
At end of period 622,461,380 622,461,380 622,461,380
---------------------------------- --------------- --------------- ---------------
During the period, the Company sold the 565,000 Ordinary shares
held in treasury at 31 March 2021 for GBP647,000. Later in the
period it purchased 2,250,000 Ordinary shares to be held in
treasury at a cost of GBP2,073,000. Further purchases were made
after the period end as detailed in note 18.0.
The Company holds 2,250,000 (30 September 2020: 815,000 and 31
March 2021: 565,000) Ordinary shares in treasury. The number of
Ordinary shares used to calculate the NAV is 620,211,380 (30
September 2020: 621,646,380; 31 March 2021: 621,896,380) which
excludes the shares held in treasury.
15.0 Net asset value
Basic NAV per share is calculated by dividing net assets in the
Condensed 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 period.
NAVs have been calculated as follows:
30 September 30 September 31 March
2021 2020 2021
Unaudited Unaudited Audited
------------------------------------- ------------ ------------ ------------
Net Assets (GBP'000) 672,884 671,412 673,498
Number of Ordinary shares in
issue at end of period 622,461,380 622,461,380 622,461,380
Number of Ordinary shares held
in treasury (2,250,000) (815,000) (565,000)
------------------------------------- ------------ ------------ ------------
Number of Ordinary Shares excluding
treasury shares held by the Company 620,211,380 621,646,380 621,896,380
------------------------------------- ------------ ------------ ------------
NAV per share - basic and diluted 108.49p 108.01p 108.30p
------------------------------------- ------------ ------------ ------------
16.0 Related party disclosures
16.1 Transactions with the Directors
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 ending 31 March 2022 payable out of the assets of the Company
is not expected to exceed GBP200,000.
As at 30 September 2021, the Directors (including their
connected persons) had beneficial interests in the following number
of shares in the Company:
30 September 30 September 31 March
2021 2020 2021
Ordinary shares Ordinary shares Ordinary shares
------------------ ---------------- ---------------- ----------------
Director
Michael Wrobel 100,598 100,598 100,598
Alastair Moss 11,766 11,766 11,766
Alison Hadden - - -
Caroline Gulliver 58,832 58,832 58,832
Peter Baxter 47,065 47,065 47,065
------------------ ---------------- ---------------- ----------------
For the period from 1 April 2021 to 30 September 2021, fees of
GBP95,000 (1 April 2020 to 30 September 2020: GBP91,000; year ended
31 March 2021: GBP182,000) were incurred and paid to the
Directors.
16.2 Transactions with the Investment Adviser
On 1 November 2016, CIM was appointed as the Investment Adviser
of the Company.
For the period from 1 April 2021 to 30 September 2021, fees of
GBP3,080,000 (1 April 2020 to 30 September 2020: GBP3,062,000; year
ended 31 March 2021: GBP6,117,000 were incurred and paid to
CIM.
As at 30 September 2021, GBP27,000 (30 September 2020: GBP11,000
and 31 March 2021: GBP13,000) were due from CIM.
At 30 September 2021, CIM held 50,000 (30 September 2020 and 31
March 2021: 50,000) Ordinary shares in the Company.
17.0 Capital commitments
As at 30 September 2021, the Company had conditionally exchanged
on a property in Accrington totalling GBP1.4 million. This is
expected to complete over the coming month and as completion is
conditional, the purchase of the property has not been recognised
in the condensed consolidated financial statements.
18.0 Post balance sheet events
Dividends
On 5 November 2021, the Board declared a quarterly dividend in
respect of the Ordinary shares for the three months to 30 September
2021 of 1.3875 pence per Ordinary share totalling GBP8,555,000. The
dividend will be paid on or around 13 December 2021 to holders of
Ordinary shares on the register at 19 November 2021. The dividend
will be paid as a REIT property income distribution ("PID").
Financing
The facility with HSBC Bank PLC has been extended to November
2023 with interest charged at SONIA plus 2.02% margin.
Purchase of Shares into Treasury
Since 30 September 2021, the Company has made purchases of
4,625,000 Ordinary shares into treasury at an average price of
90.94p per Ordinary share. The total cost to the Company including
commission and stamp duty is GBP4,206,000 and following these
transactions, at 7 December 2021 the Company held 6,875,000
Ordinary shares in treasury.
Appendix 1 (unaudited): Notes to the calculation of EPRA and
other alternative Performance Measures
1.0 EPRA Earnings
30 September 30 September 31 March
2021 2020 2021
------------------------------------- ------------- ------------- -------------
Earnings from operational activities
Profit after taxation (GBP'000) 17,852 17,477 36,075
Changes in fair value of derivative
financial instruments (GBP'000) (686) 908 66
Changes in value of investment
properties (GBP'000) (2,258) (2,890) (5,511)
------------------------------------- ------------- ------------- -------------
EPRA Earnings (GBP'000) 14,908 15,495 30,630
------------------------------------- ------------- ------------- -------------
Weighted average number of shares
in issue (adjusted for shares
held in treasury) 622,260,670 621,646,380 621,651,859
------------------------------------- ------------- ------------- -------------
EPRA EPS - basic & diluted 2.40p 2.49p 4.93p
------------------------------------- ------------- ------------- -------------
2.0 New EPRA NAV Metrics
EPRA has advised three new NAV measures to replace the EPRA NAV
& EPRA NNNAV.
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.
30 September 30 September 31 March
2021 2020 2021
--------------------------------------- ------------- ------------- -------------
Net assets (GBP'000) 672,884 671,412 673,498
Fair value of derivative financial
instruments (GBP'000) (142) 1,386 544
--------------------------------------- ------------- ------------- -------------
EPRA Net Reinstatement Value (GBP'000) 672,742 672,798 674,042
--------------------------------------- ------------- ------------- -------------
Dilutive number of shares (adjusted
for shares held in treasury) 620,211,380 621,646,380 621,896,380
EPRA Net Reinstatement Value per
share 108.47p 108.23p 108.38p
--------------------------------------- ------------- ------------- -------------
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.
There is no adjustment for deferred tax in the calculations
below, as detailed in note 6.0 to the Condensed Consolidated
Financial Statements, as the Group operates as a REIT and is exempt
from corporation tax on the profits and gains from its property
investment business.
30 September 30 September 31 March
2021 2020 2021
------------------------------------- -------------- -------------- --------------
Net assets (GBP'000) 672,884 671,412 673,498
Fair value of derivative financial
instruments (GBP'000) (142) 1,386 544
------------------------------------- -------------- -------------- --------------
EPRA Net Tangible Assets (GBP'000) 672,742 672,798 674,042
------------------------------------- -------------- -------------- --------------
Dilutive number of shares (adjusted
for shares held in treasury) 620,211,380 621,646,380 621,896,380
EPRA Net Tangible Asset per
share 108.47p 108.23p 108.38p
------------------------------------- -------------- -------------- --------------
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.
30 September 30 September 31 March
2021 2020 2021
------------------------------------ ------------- ------------- -------------
Net assets (GBP'000) 672,884 671,412 673,498
Fair value of bank borrowings
(GBP'000) (1,360) (4,210) (2,002)
------------------------------------ ------------- ------------- -------------
EPRA Net Disposal Value (GBP'000) 671,524 667,202 671,476
------------------------------------ ------------- ------------- -------------
Dilutive number of shares (adjusted
for shares held in treasury) 620,211,380 621,646,380 621,896,380
EPRA Net Disposal Value per share 108.27p 107.33p 107.97p
------------------------------------ ------------- ------------- -------------
3.0 EPRA Net Initial Yield
30 September 30 September 31 March
2021 2020 2021
-------------------------------------- ------------ ------------- --------
Investment property (GBP'000) 946,294 898,547 915,589
Allowance for estimated purchasers'
costs (GBP'000) 55,365 52,604 53,753
-------------------------------------- ------------ ------------- --------
Gross up completed property portfolio
(GBP'000) 1,001,659 951,151 969,342
-------------------------------------- ------------ ------------- --------
Annualised net rents (GBP'000) 51,966 50,029 50,780
Add: notional rent expiration
of rent free periods or other - - -
lease incentives (GBP'000)
-------------------------------------- ------------ ------------- --------
Topped-up net annualised rent 51,966 50,029 50,780
-------------------------------------- ------------ ------------- --------
EPRA NIY 5.19% 5.26% 5.24%
EPRA "topped-up" NIY 5.19% 5.26% 5.24%
-------------------------------------- ------------ ------------- --------
4.0 EPRA Vacancy Rate
Estimated Market Rental Value ("ERV") of vacancy space divided
by ERV of the whole portfolio.
30 September 30 September 31 March
2021 2020 2021
--------------------------------- ------------ ------------ --------
ERV of vacant spaces (GBP'000) - - -
ERV of whole portfolio (GBP'000) 51,966 49,481 50,380
--------------------------------- ------------ ------------ --------
EPRA Vacancy Rate 0.00% 0.00% 0.00%
--------------------------------- ------------ ------------ --------
5.0 EPRA Costs Ratio
Administrative and operating costs divided by gross rental
income.
30 September 30 September 31 March
2021 2020 2021
Total administrative and operating
costs (GBP'000) 4,940 4,625 9,498
Bad debts (recovered)/expensed
(GBP'000) (7) - 289
------------------------------------ ------------- ------------- ---------
Total costs (GBP'000) 4,933 4,625 9,787
------------------------------------ ------------- ------------- ---------
Rental income (GBP'000) 25,712 24,301 49,020
Less rechargeable costs received
and bad debts recovered (GBP'000) (643) (237) (886)
------------------------------------ ------------- ------------- ---------
Gross rental income (GBP'000) 25,069 24,064 48,134
------------------------------------ ------------- ------------- ---------
EPRA cost ratio 19.68% 19.22% 20.33%
------------------------------------ ------------- ------------- ---------
6.0 EPRA table of Capital Expenditure
From 1 April From 1 April For the
2021 to 2020 to year ended
30 September 30 September 31 March
2021 2021 2021
(unaudited) (unaudited) (unaudited)
GBP'000 GBP'000 GBP'000
----------------------------------- -------------- -------------- -------------
Acquisitions including incidental
costs of purchase 23,061 15,718 16,108
Investment properties portfolio
expenditure
Enhancing lettable space 4,940 460 4,077
Tenant incentives 595 777 11,217
----------------------------------- -------------- -------------- -------------
Total Capital Expenditure 28,596 16,955 31,402
Conversion form accruals to
cash basis 469 275 215
----------------------------------- -------------- -------------- -------------
Total Capital Expenditure on
a cash basis 29,065 17,230 31,617
----------------------------------- -------------- -------------- -------------
7.0 Portfolio
IFRS NAV adjusted to reflect investment property valued on a
portfolio basis rather than individual asset basis.
30 September 30 September 31 March
2021 2020 2021
---------------------------------------- ------------ ------------ -----------
Net assets (GBP'000) 672,884 671,412 673,498
Adjustments for change to property
valuation (GBP'000) 69,752 64,501 63,270
---------------------------------------- ------------ ------------ -----------
Portfolio net assets (GBP'000) 742,636 735,913 736,768
---------------------------------------- ------------ ------------ -----------
Number of Ordinary shares in issue
(adjusted for shares held in treasury) 620,211,380 621,646,380 621,896,380
Portfolio Net Assets per share 119.74p 118.38p 118.47p
---------------------------------------- ------------ ------------ -----------
8.0 Leveraged Internal Rate of Return (IRR)
This is the annual growth rate, based on growth in net asset
value per share since launch and dividends paid to Ordinary
shareholders.
30 30 31 March
September September 2010
2021 2020
----------------------- ----------------------- ---------------------- ---------------------- --------------------
IFRS NAV per share 108.490p 108.010p 108.300p
Interim
31 May 2017 dividend 0.750p 0.750p 0.750p
31 August Interim
2017 dividend 0.750p 0.750p 0.750p
30 November Interim
2017 dividend 0.750p 0.750p 0.750p
9 March Interim
2018 dividend 0.750p 0.750p 0.750p
Interim
8 June 2018 dividend 1.250p 1.250p 1.250p
7 September Interim
2018 dividend 1.250p 1.250p 1.250p
30 November Interim
2018 dividend 1.250p 1.250p 1.250p
11 January Interim
2019 dividend 1.110p 1.110p 1.110p
28 February Interim
2019 dividend 0.140p 0.140p 0.140p
Interim
7 June 2019 dividend 1.325p 1.325p 1.325p
6 September Interim
2019 dividend 1.325p 1.325p 1.325p
29 November Interim
2019 dividend 1.325p 1.325p 1.325p
28 February Interim
2020 dividend 1.325p 1.325p 1.325p
12 June Interim
2020 dividend 1.325p 1.325p 1.325p
7 September Interim
2020 dividend 1.350p 1.350p 1.350p
4 December Interim
2020 dividend 1.350p - 1.350p
1 March Interim
2021 dividend 1.350p - 1.350p
11 June Interim 1.350p - -
2021 dividend
10 Interim 1.3875p - -
September dividend
2021
----------------------- ----------------------- ---------------------- ---------------------- --------------------
129.9025p 123.985p 126.975p
IFRS NAV per share at launch 98.00p 98.00p 98.00p
Levered IRR 6.44% 6.64% 6.54%
------------------------------------------------ ---------------------- ---------------------- --------------------
Shareholder Information
Share Information
The Company's Ordinary shares of 1p each are quoted on the
Official List of the FCA and traded on the premium segment of the
Main market of the LSE.
SEDOL number BD8HBD3
ISIN GB00BD8HBD32
Ticker/TIDM CSH
LEI 213800PGBG84J8GM6F95
Frequency of NAV Publication
The Company's NAV is released to the London Stock Exchange on a
quarterly basis and published on the Company's website
Sources of Further Information
Copies of the Company's Annual and Half-Yearly Reports, Stock
Exchange announcements and further information on the Company can
be obtained from its website www.civitassocialhousing.com .
Share Register Enquiries
The register for the Company's Ordinary shares is maintained by
Link Group. In the event of queries regarding your holding, please
contact the Registrar on 0371 664 0300 (calls are charged at the
standard geographic rate and will vary by provider; calls outside
the UK will be charged at the applicable international rate). Lines
are open between 9.00am and 5.30pm, Monday to Friday, excluding
public holidays in England and Wales. You can also email
enquiries@linkgroup.co.uk.
Changes of name/or address must be notified in writing to the
Registrar: Link Group, 10(th) Floor, Central Square, 29 Wellington
Street, Leeds, LS1 4DL.
Key dates
December 2021 Half-yearly results announced
Payment of third dividend
February 2022 Payment of fourth dividend
March 2022 Company's year end
June 2022 Annual results announced
Payment of first dividend
September 2022 Company's half year end
Annual general meeting
Payment of second dividend
Association of Investment Companies ("AIC")
The Company is a member of the AIC, which publishes statistical
information in respect of member companies. The AIC can be
contacted on 020 7282 5555, enquiries@theaic.co.uk or visit the
website: www.theaic.co.uk.
Electronic communications from the Company
Shareholders now have the opportunity to be notified by email
when the Company's Annual Report, Half Yearly Report and other
formal communications are available on the Company's website,
instead of receiving printed copies by post. This has environmental
benefits in the reduction of paper, printing, energy and water
usage, as well as reducing costs to the Company.
If you have not already elected to receive electronic
communications from the Company and wish to do so, please contact
the Registrar.
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 defined or
specified in the applicable financial reporting framework.
Approved Provider means Housing Associations, 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 Investment 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 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.
EPRA Run Rate Dividend Cover otherwise known as dividend
coverage ratio, indicates an organisation's capacity to pay
dividends from the profit attributable 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,
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 mean internal rate of return. The internal rate of return
(IRR) is the annual rate of growth that an investment is expected
to generate.
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, as at the relevant date, calculated on the
basis of an independent Portfolio Valuation. See note 7.0 in
Appendix 1 for a reconciliation to IFRS NAV.
Portfolio Basis means the Portfolio NAV (as defined below)
Portfolio Valuation means an independent valuation of the
Portfolio by Jones Lang LaSalle or such other property investment
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 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.
Treasury Shares means the Company's own shares that it has
repurchased out of distributable profits into treasury.
Valuation means an independent valuation of the Portfolio by
Jones Lang LaSalle Limited or such other property investment
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.
Company Information
Non-executive Directors
Michael Wrobel, Chairman
Peter Baxter Senior Independent Director and Chair of the
Nomination and Remuneration Committee
Caroline Gulliver Chair of the Audit and Management Engagement
Committee
Alison Hadden
Alastair Moss
Registered Office
Beaufort House
51 New North Road
Exeter
Devon EX4 4EP
Registered no: 10402528
www.civitassocialhousing.com
Alternative Investment Fund Manager
G10 Capital Limited
3 More London Riverside
London SE1 2AQ
Investment Adviser
Civitas Investment Management Limited
13 Berkeley Street
London W1J 8DU
Joint Corporate Brokers
Liberum Capital Limited
Ropemaker Place
25 Ropemaker Street
London EC2Y 9LY
Panmure Gordon (UK) Limited
One New Change
London EC4M 9AF
Company Secretary
Link Company Matters Limited
Beaufort House
51 New North Road
Exeter
Devon EX4 4EP
Administrator
Link Alternative Fund Administrators Limited
Beaufort House
51 New North Road
Exeter
Devon EX4 4EP
Depositary
INDOS Financial Limited
The Scalpel
18(th) Floor
52 Lime Street
London EC3M 7AF
Registrar
Link Group
10(th) Floor
Central Square
29 Wellington Street
Leeds LS1 4DL
Independent Auditor and Reporting Accountant
PricewaterhouseCoopers LLP
7 More London Riverside
London SE1 2RT
Legal and Tax Adviser
Cadwalader, Wickersham & Taft LLP
100 Bishopsgate
London EC2N 4AG
Public Relations Adviser
Buchanan
107 Cheapside
London EC2V 6DN
Tax Adviser
BDO LLP
55 Baker Street
London W1U 7EU
NATIONAL STORAGE MECHANISM
A copy of the Half Year Report 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
S
Neither the contents of the Company's website nor the contents
of any website accessible from hyperlinks on the website (or any
website) is incorporated into, or forms part of, this
announcement.
, the news service of the London Stock Exchange. RNS is approved by
the Financial Conduct Authority to act as a Primary Information
Provider in the United Kingdom. Terms and conditions relating to
the use and distribution of this information may apply. For further
information, please contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
IR FVLLBFLLEFBB
(END) Dow Jones Newswires
December 09, 2021 02:00 ET (07:00 GMT)
Civitas Social Housing (LSE:CSH)
Historical Stock Chart
From Sep 2024 to Oct 2024
Civitas Social Housing (LSE:CSH)
Historical Stock Chart
From Oct 2023 to Oct 2024
