TIDMCSH
RNS Number : 7280Q
Civitas Social Housing PLC
30 June 2022
30 June 2022
CIVITAS SOCIAL HOUSING PLC
ANNUAL FINANCIAL REPORT
YEAR TO 31 MARCH 2022
Strong Financial Performance; NAV Increase; Dividend Target
Raised
New Draft Lease Clause to Address Perceived Risk
Civitas Social Housing PLC ("Civitas" or the "Company"), the
UK's leading care-based and healthcare REIT, presents its full year
results for the year ended 31 March 2022, reporting valuation
growth, financial performance in line with expectations, a raised
dividend target and ongoing positive social impact.
The results deliver on the Company's objective to deliver
returns broadly in line with inflation over the long-term, derived
from the largest portfolio of specialist supported housing in the
UK with inflation adjusted long-term tenancies.
Performance Highlights
Property Valuation and Performance Mar 22 Mar 21 Change
Investment property (GBPm) 968.8 915.6 +5.8%
IFRS NAV per share (diluted)
(p) 110.30 108.30 +1.9%
Financial Performance
Rent roll annualised (GBPm) 54.1 50.8 +6.5%
Net rental income (GBPm) 50.7 47.8 +6.1%
EPRA earnings (GBPm) 29.8 30.6 -2.6%
Operating Cash Flow ([1])
(GBPm) 37.5 36.1 +3.8%
IFRS earnings per share (diluted)
(p) 7.23 5.80 +24.7%
EPRA earnings per share (diluted)
([2]) (p) 4.82 4.93 -2.2%
Dividends per share (p) 5.55 5.40 +2.8%
IFRS NAV Total return since
IPO ([3]) (%) 37.2 29.6
Total shareholder return
since IPO ([4]) (%) 11.6 26.5
Financing
Loan to value ratio (%) 34.4 34.5
Weighted average cost of
debt (%) 2.5 2.4
-- Ongoing strong financial performance delivering high social impact
-- New regulatory clause proposed to help counterparties become
better able to achieve regulatory compliance
-- 77 properties acquired during the year: 29 properties for
GBP21.9 million providing homes for vulnerable adults, 47
properties for c.GBP8.1m to deliver asylum accommodation and 1
property in Lancashire for GBP1.4 million providing a home for 13
individuals with learning disabilities and mental health care
needs
Investment Property Portfolio Enhanced
-- Portfolio value increased to GBP968.8m from GBP915.6 million (IFRS)
-- IFRS valuation average net initial yield (NIY) of 5.28%
-- IFRS NAV increased to 110.3 pence per share reflecting
ongoing demand for investment in the asset class as well as the
effect of indexation of inflation adjusted leases
Rent Roll Up Benefiting from Indexation
-- Annualised rent roll increased by 6.5% to GBP54.1 million
-- Rents received as expected
-- EPRA earnings per share (basic and diluted) 4.82 pence per
share (2021: 4.93 pence per share)
Diversified Portfolio of 696 Properties Providing Homes to 4,592
Residents
-- Providing lifelong homes to working age adults with
disabilities and complex care needs with an average tenant age of
c. 32 years
-- High acuity care being provided, with 40% of residents living
in Civitas properties receiving over 50 hours of care per week
-- Properties located across 178 Local Authority partners in
England and Wales and leased to 18 approved providers, with support
provided by 130 Care Providers
-- Over one third of the portfolio on back-to-back 25-year leases, with leading Care Providers
Dividend Target Raised
-- Dividend target raised to at least 5.70 pence per share([5])
for the YE 31 March 2023 continuing unbroken record of dividend
increases since IPO in 2016
-- Dividends of 5.55 pence per share to 31 March 2022 fully paid in quarterly distributions
-- EPRA run-rate dividend cover of 97% (actual 87%) as at 31 March 2022
Debt Facilities and Credit Rating
-- Maintained a high quality investment credit rating from Fitch
Ratings of "A-" (stable) and "A" Secured, enabling access to
broader long-term funding markets
-- Extended maturity of GBP100m loan facility with HSBC Bank plc
to November 2023 at SONIA plus 2.02% margin
-- Post year end the GBP60m facility with Lloyds Bank plc has
also been extended to July 2024 at SONIA plus 1.67% margin
-- Leverage maintained at 34.43%, comfortably within the Company's cap of 40% GAV
Focus on Attaining Best in Class Social and Environmental
Impact
-- Continuing focus on delivering best in class impact delivery
and reporting including in this financial year
-- Phase two of the Company's work with E.ON across 120
properties, targeting reduction in carbon emissions
-- New independent social impact report as at 31 March 2022 published on the Company's website
-- Publication of book, 'A Place for Me', in which 50 Civitas
residents tell their own stories in their own words
-- Clean Energy Strategy to achieve minimum EPC "A-C" by 2030
and further reduction thereafter with a target of net-zero
Post Year End Highlights and Opportunities
-- Acquisition of a supported living and care facility at North
End, Wisbech for a total consideration of GBP0.6 million on 13 May
2022
Michael Wrobel, Non-Executive Chairman of the Company,
commented:
"I am pleased to report that the Company has achieved another
year of strong financial and operational performance.
Our Investment Adviser, Civitas Investment Management Limited
("CIM"), has exceptional knowledge of the industry and continues to
add to its team to enhance our portfolio. CIM has been working on
an initiative to introduce a variation to our leases, that will not
impact revenues or asset values, but which aims to strengthen the
industry by addressing concerns expressed by the Regulator for
Social Housing.
The sector in which the Company invests offers many positive
attributes, in an increasingly uncertain world. We benefit from
high levels of intrinsic underlying demand for our properties. All
of our leases benefit from CPI uplift on rents, some of which are
subject to a 4% cap. Together with our partners, we enable the
delivery of high quality, value for money care services for our
tenants. Our initiatives on new lease clauses and further projects
with E.ON to reduce our carbon footprint, will deliver further
benefit to our stakeholders. We look to the future with
confidence."
For further information, please contact:
Civitas Investment Management
Limited
Andrew Dawber Tel: +44 (0) 20 3058 4846
Paul Bridge Tel: +44 (0) 20 3058 4844
Panmure Gordon
Sapna Shah Tel: +44 (0) 20 7886 2783
Tom Scrivens Tel: +44 (0) 20 7886 2648
Liberum Capital Limited
Chris Clarke / Darren Vickers Tel: +44 (0) 20 3100 2000
/ Owen Matthews
Buchanan
Helen Tarbet / Henry Wilson Tel: +44 (0) 20 7466 5000
Hannah Ratcliff / Verity Parker civitas@buchanan.uk.com
Notes:
Civitas Social Housing PLC (CSH) was created in 2016 by Civitas
Investment Management Limited as the first dedicated London Stock
Exchange listed social care REIT, to raise long-term, sustainable,
institutional capital to invest in care-based community homes and
healthcare facilities across the UK. CSH has completed more than
120 individual transactions to build the largest portfolio of its
kind that has been independently valued at GBP968.8 million (31
March 2022). CSH now provides homes for 4,592 working age adults
with long-term care needs, in 696 bespoke properties that are
supported by 130 specialist care providers, 18 approved providers
and working with over 178 individual local authority partners
Chairman's Statement
Introduction
I am pleased to report that the Company has achieved another
year of strong financial and operational performance. Our positive
social impact is detailed in a report from the independent
specialist consultancy The Good Economy ("TGE").
The year presented many challenges. The pressures of the
COVID-19 pandemic on our tenants and their carers highlights the
benefits of providing community-based care housing for vulnerable
adults of working age. During the year, the Company came under
attack from a small number of investors short-selling the Company's
shares, one of whom published a series of criticisms that the Board
refuted in a very detailed response. The share price, having traded
at a premium to NAV early in the financial year, dropped sharply to
a discount at the year end. One of the Board responses has been to
initiate a share buy-back programme which enhances the Net Asset
Value of the Company and confirms the Board's confidence in the
robust nature of the Company's cashflows and asset values.
Our Investment Adviser, Civitas Investment Management Limited
("CIM"), has exceptional knowledge of the industry and continues to
add to its team to enhance our portfolio. CIM has been working on
an initiative to introduce a variation to our leases, that will not
impact revenues or asset values, but which aims to strengthen the
industry by addressing concerns expressed by the Regulator for
Social Housing.
Financial Performance
During the year under review our portfolio generated rental
income of GBP51.6 million, representing a 5.3% increase over the
corresponding period. This reflects the indexation of lease rents
(during a period of mostly very low inflation) together with new
rents from a small number of properties purchased during the
year.
Cash generated from operations was GBP37.5 million, an increase
of 3.83% over the prior year (on a comparable basis).
IFRS net asset value of the Company increased from 108.30 pence
per Ordinary share as at 31 March 2021 to 110.30 pence per share as
at 31 March 2022.
The Company has met the Board's stated dividend target of 5.55
pence per share for the year to 31 March 2022 and the Board has set
a new dividend target of at least 5.701 pence per share for the
year to 31 March 2023.
Board Governance
The Board is currently looking to recruit a new independent
director, having regard to succession, our breadth of skills and
diversity.
The Board and the Investment Adviser continue an open dialogue
with our shareholders to further demonstrate our commitment to
provide full transparency at all times.
Continuation Vote
The Company's articles of association require the Board to
propose a continuation vote as an ordinary resolution at the annual
general meeting following the fifth anniversary from the initial
public offering of the Company and at every fifth AGM thereafter.
This is referred to later in more detail within the Report of the
Directors. Following discussions with a number of shareholders and
given the strength and nature of the Company's portfolio and
long-term tenants, the Directors are of the opinion that the
continuation resolution at the forthcoming AGM will be passed and
encourage all shareholders to vote in favour.
Outlook
The sector in which the Company invests offers many positive
attributes, in an increasingly uncertain world. We benefit from
high levels of intrinsic underlying demand for our properties. All
of our leases benefit from CPI uplift on rents, some of which are
subject to a 4% cap. Together with our partners, we enable the
delivery of high quality, value for money care services for our
tenants.
Our initiatives on new lease clauses and further projects with
E.ON to reduce our carbon footprint, will deliver further benefit
to our stakeholders. We look to the future with confidence.
Michael Wrobel
Chairman
29 June 2022
(1) Thi s is a target and not a formal dividend forecast or a
profit forecast
Growth
Growing base of global investors
Civitas invests on behalf of a wide range of global, national
and local investors seeking exposure to sustainable long-term
income together with measurable social impact and high levels of
ESG delivery.
Four Continents... ...over 60 Locations
1. Amsterdam 13. Denver 25. Helsinki 37. Montreal 49. Seattle
2. Austin 14. Dublin 26. Hong Kong 38. Munich 50. Singapore
3. Baltimore 15. Edinburgh 27. Illinois 39. New Jersey 51. Surrey
4. Beijing 16. Espoo 28. Japan 40. New York 52. Smithfield
5. Birmingham 17. Exeter 29. Jersey 41. New Zealand 53. Sydney
6. Boston 18. Fort Lauderdale 30. Jersey 42. Oslo 54. Tokyo
City
7. Bradford 19. Frankfurt 31. Leeds 43. Paris 55. Toronto
8. Bristol 20. Geneva 32. London 44. Philadelphia 56. The Hague
9. Brisbane 21. Glasgow 33. Los Angeles 45. Rotterdam 57. Tunbridge
Wells
10. Brussels 22. Guernsey 34. Luxembourg 46. Richmond 58. Vancouver
11. Chicago 23. Halifax 35. Manchester 47. Sacramento 59. Windsor
12. Columbus 24. Heerlen 36. Melbourne 48. San Francisco 60. Zurich
Our Strategy for Growth
Demand for the accommodation provided by Civitas is strong and
expected to remain so over the long-term. The pandemic has further
evidenced the need for safe and secure homes for the most
vulnerable people in society.
Civitas is a go-to partner for an increasing range of major
vendors and counterparties.
Civitas is the market leader with the largest portfolio and
deeply ingrained relationships with care providers, local
authorities, Approved Providers and charities across the UK.
Civitas continues to take delivery of new build higher acuity
properties with more opportunities being offered and expands into
significant markets across the UK, now including Scotland and
Northern Ireland.
The Company continues to work closely with The Social Housing
Family CIC to enable it to expand and play a broader role in the
sector, and becoming part of critical local authority pathways,
leading to many opportunities in specialist supported living and
advanced homelessness.
Civitas now works with a broader range of counterparties
including charities and other not-for-profit organisations, to
expand into significant markets across the UK, now including
Scotland and Northern Ireland.
Our Portfolio By UK Region as at 31 March 2022
Our portfolio
By UK Region
Region Properties Funds invested Annualised rent
(percentage) roll (percentage)
------------------- ----------- --------------- -------------------
North East 64 5.8 7.0
North West 101 10.1 9.8
Yorkshire and the
Humber 96 10.8 10.5
East Midlands 58 8.6 8.5
West Midlands 101 11.3 11.2
East of England 32 4.0 3.9
South East 64 10.1 9.9
South West 120 15.5 15.5
Wales 34 11.0 10.5
London 26 12.8 13.2
Total 696
Market Value (%)
Region Market Value
-------------------------- -------------
South West 15.7%
London 12.1%
West Midlands 11.3%
Wales 10.9%
Yorkshire and the Humber 10.6%
South East 10.1%
North West 9.8%
East Midlands 8.6%
North East 7.0%
East of England 3.9%
Tenancies
Region Tenancies
-------------------------- ----------
South West 759
Yorkshire and the Humber 610
North West 607
West Midlands 502
North East 462
South East 415
Wales 364
London 338
East Midlands 374
East of England 161
Total 4,592
By Approved Provider as at 31 March 2022
Annualised rent roll (%)
Approved Provider Annualised rent roll (%)
--------------------- -------------------------
Falcon 18.6%
Auckland(1) 16.2%
BeST 12.2%
Inclusion 10.0%
Qualitas Housing(1) 8.1%
Westmoreland 5.9%
Encircle 5.9%
Trinity 5.2%
Pivotal 3.8%
Chrysalis 3.6%
Harbour Light 3.6%
New Walk 2.7%
My Space 1.1%
IKE 1.1%
Hilldale 0.9%
Windrush 0.8%
Lily Rose 0.2%
Blue Square 0.1%
Properties
Approved Provider Properties
--------------------- -----------
Falcon 116
Auckland(1) 100
Inclusion 82
BeST 74
Qualitas Housing(1) 54
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
Blue Square 1
Lily Rose 1
Total 696
Tenancies
Approved Provider Tenancies
--------------------- ----------
Falcon 850
BeST 591
Auckland(1) 547
Inclusion 507
Qualitas Housing(1) 370
Trinity 242
Westmoreland 239
Pivotal 238
Harbour Light 214
Encircle 205
New Walk 194
Chrysalis 149
My Space 71
IKE 68
Windrush 51
Hilldale 39
Lily Rose 13
Blue Square 4
Total 4,592
Market Value (%)
Approved Provider Market Value (%)
--------------------- -----------------
Falcon 18.9%
Auckland(1) 16.4%
BeST 12.5%
Inclusion 9.7%
Qualitas Housing(1) 8.4%
Westmoreland 6.2%
Trinity 5.2%
Encircle 4.8%
Pivotal 3.8%
Chrysalis 3.7%
Harbour Light 3.6%
New Walk 2.7%
My Space 1.1%
IKE 1.1%
Hilldale 0.9%
Windrush 0.8%
Blue Square 0.1%
Lily Rose 0.1%
(1) Auckland and Qualitas Housing are both members of the Social
Housing Family C.I.C and subject to common control.
Investment Adviser's Report
Continuous Improvement
In the year to March 2022 CIM, working with the CSH Board, has
led the development of a range of key initiatives to strengthen and
position CSH and the portfolio for the future.
Proposed New Regulatory Clause
-- Counterparties better able to achieve regulatory compliance
-- Enhanced information and step in rights (having regard to
tenant welfare) in addition to existing lease transfer and
assignment rights
-- Unchanged lease and property values supported by strong underlying demand
-- Improved Governance
"A Place for Me"
-- Stories of 50 residents who live in Civitas properties
-- Fully independently compiled and written
-- Extensive number of interviews with residents, their families, friends and their carers
Phase two work with E.ON
-- Continued to work across 120 properties
-- Targeting 25% reduction in carbon emissions
-- Continued access to Government grant funding sources
-- Clean Energy Strategy to achieve minimum EPC "A-C" by 2030
A growing team of specialists
-- Asset Management
-- Finance and operations
-- Transaction sourcing and execution
-- Housing Benefit
"Civitas Social Housing PLC (CSH), is the market leader in the
delivery of ethical, care-based residential housing, delivering
sustainable returns for shareholders and outstanding
community-based homes for residents, while offering value for money
to society. This transforms lives."
Paul Bridge
CEO, Social Housing
Civitas Investment Management Limited
Introduction
Civitas Investment Management Limited (CIM), the Investment
Adviser to CSH, advises on a range of ethically based social and
healthcare real estate funds with committed capital of c.GBP3bn.
CIM advises these funds on behalf of various global investors
together with a wide range of local authority pension funds and
dedicated impact investors.
The increased scale of its operations has enabled CIM to create
a large team of dedicated professionals in the specialist
healthcare sector and to make this expertise available to each of
the advised funds, including CSH.
On behalf of the Investment Adviser and CSH, we would like to
offer our thanks to all of our partners who have continued to
provide high-quality care, support, and housing, and to our
investors who enable the provision of over 4,500 quality homes for
some of the most vulnerable people in society.
Overview of Results
CSH is the market leader in the delivery of much-needed
long-term housing with care in the UK and leading the charge for
ethical investment in the sector. These full year results show a
number of key achievements and themes:
-- Approaching six years of consistent rental growth and
progressive dividend payments that have increased from an initial
3p per share to 5.55p per share reflecting dividend growth ahead of
inflation.
-- Rents indexed in-line with the Consumer Price Index as
Approved Providers are able to claim inflation adjustment payments
from local authorities, and with no disruption from COVID-19.
-- A high-quality investment credit rating from Fitch Ratings of
A secured and A- unsecured, that has been maintained over time.
-- Design, negotiation and announcement of a new market leading
regulatory clause, to be implemented over time on a retrospective
basis, assisting Approved Providers in regulatory discussions with
no diminution to lease or asset values.
-- An actively managed portfolio with a sector-leading team of
professionals assisting and enabling high quality and longevity of
homes and income.
-- Professional support to enable Approved Providers to enhance
the quality of their delivery and demonstrate long-term financial
and operational independence.
-- Ownership of properties that facilitates the delivery of high
levels of care with 40% of residents receiving over 50 hours of
care per week.
-- An active programme working with E.ON to permanently reduce
carbon emissions across the portfolio leading to lower energy costs
for residents and a more carbon neutral portfolio.
Market Commentary
As outlined in the Chairman's Statement, CIM is pleased to note
that the sector has continued to see progress in terms of the
better delivery of the Specialist Supported Housing (SSH) model
with quality commissioning at the heart of projects. This is
essential to ensure that each property is suitable for the needs of
individuals and to meet the objectives set by the relevant local
authority.
Having dedicated considerable CIM resource to working closely
with the Company's Approved Providers we have seen continued
progress in the quality of their performance which has translated
into greatly improved financial results and governance.
Several Approved Providers who had previously stopped taking on
new properties to focus on strengthening their own teams and
systems have now begun to consider new opportunities in a
disciplined manner, consistent with the objective of further
performance enhancement.
At the same time it is fair to say that Approved Providers have
moved at different paces and while some have seen rapid success,
others still need to make further operational and financial
improvements. CIM is supportive of these ambitions and having seen
material improvements in the sector, remains focused on offering
its assistance to drive forward standards for the Company's
partners.
What is clear is that demand for quality community-based housing
remains strong and most commentators believe that providing
vulnerable people with an opportunity to live in their own home or
in smaller facilities near to family is the best solution for
them.
While working closely with Approved Providers and specialist
care providers, CIM has continued to focus on the core fundamentals
of ensuring that the portfolio operates at its very best, for
instance ensuring compliance for all key property metrics and
collecting rental income that is due.
The year saw modest additions to the portfolio of around GBP32
million in new properties including the provision of a number of
properties for those seeking asylum. The properties are backed by
long-term government contracts with counterparties that have strong
covenants.
At the same time, the Company continues to develop and implement
high standards of social impact, which is independently measured,
as well as forging leading relationships with key charities and
other sector bodies. The commitment to tackle the challenge of
decarbonisation continues with the further implementation of the
property retrofit programme.
Background
The sector in which the Company operates is substantially funded
by the State as part of the long-standing commitment to provide
support for vulnerable adults.
The UK is not alone in this approach and indeed the United
Nations developed polices that have been adopted by the UK, the
European Union and 183 States in total that provide a framework for
the provision of this support. The "Convention on the Rights of
Persons with Disabilities" was signed by the then UK Government in
2007 and enacted into law in 2008.
The Convention sets out broad rights for those considered
disabled in Article 1:
"To promote, protect and ensure full and equal enjoyment of all
human rights and fundamental freedoms by all persons with
disabilities and to promote respect for their inherent
dignity."
Article 19 specifically covers housing, including the rights to
live independently and be included in the community, Article 20
refers to personal mobility, Article 26 to habilitation and
rehabilitation, and Articles 29 and 30 to the right to participate
in political and public life, cultural life, recreation and
sports.
Specialist Supported Housing of the type provided by the Company
is designed to fulfill these objectives and predates the
implementation of the UN Convention. The requirement to provide
support for vulnerable people was further enshrined into UK law by
the Care Act 2014 which confirms the responsibility of authorities
to provide appropriate support and care. There is telling testimony
in the publication 'A Place for Me' (Sponsored by CSH and the
National Care Group), highlighted later in this report, on the
transformational effect SSH has upon people's lives.
In terms of current legislation, the Health and Care Bill, was
granted Royal Assent in April 2022, further consolidates the trends
of joining up NHS healthcare services with social care through the
formation of Integrated Care Systems (ICSs). This is supportive of
the forms of care and community housing delivered by the
Company.
Government Policy
The newly combined Government Department for Levelling Up,
Housing and Communities, is a demonstration of how vital the
Government believes decent housing is to its central levelling up
agenda. Indeed, the Levelling Up white paper, published in February
2022, makes clear that the provision of high quality, affordable
housing is a major Government priority.
Civitas was founded in the belief that private capital,
thoughtfully and responsibly invested, is a key element to this
provision, especially in the area of the Specialist Supported
Housing Sector in which CIM specialises. This is because the large
Housing Associations consider themselves poorly suited to
delivering these bespoke and adapted properties, which are often
located on brownfield land within communities, whereas the larger
Housing Associations tend to focus on multi-unit, uniform new
developments. Civitas, therefore, fulfils a need for which there is
a clear market gap and a huge and growing demand.
In addition, the last few years have seen a renewed focus from
the RSH on the requirement to listen carefully to residents' voices
and take their views and needs into account. This is something in
which Civitas already excels: CIM has close and proactive
relationships with our Approved Provider and Care partners, and,
through them, with the residents themselves. Evidence for this can
be seen in the high levels of satisfaction amongst our residents;
the high levels of health and safety compliance and rent
collection; and the low levels of COVID-19 throughout the
pandemic.
Demand for Social Housing
In September 2020 the National Housing Federation estimated that
there were 8 million people in some form of housing need, that 1.6
million households were on official waiting lists and there were at
least 129,000 children living in temporary accommodation.
Supply for new affordable housing is very low and significantly
lower than demand. In addition, supply is further constrained by
the demands placed upon existing large developing 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 White Paper on social housing "A charter for social
housing residents".
When it comes to Specialist Supported Housing, the long-standing
and ongoing rise in working age adults with complex physical,
mental and social care needs, requiring supported housing with
care, means that the demand for high quality SSH of the sort
provided by Civitas is expected to continue to grow.
Summary & Outlook
Civitas is the leading independent operator in a sector in which
there is enormous and growing demand and, due to the highly
specialised nature of the work being carried out, high barriers to
entry. Civitas is acknowledged to be committed to providing safe,
high quality homes with care for its residents, with active and
granular day to day portfolio management being carried out by its
large team of sector specialists. In addition, we are working with
the relevant counterparties to introduce new contractual provisions
which we believe will better position our Approved Provider
partners to achieve compliance under the RSH's Governance and
Financial Viability Standard.
We are continuing to evaluate further portfolio acquisitions,
not only in our core competency but also in areas such as high
quality housing with care for asylum seekers and those affected by
homelessness.
We remain committed to generating growth and enhancing
shareholder value through socially impactful ethical investing. We
are passionately committed to this for the long-term.
Specialist Housing
All leading independent commentators agree that demand continues
to rise for community-based housing (Mencap Annual Report 2021).
This is driven by the general rise in the population, better birth
outcomes and improved life expectancy, in turn stimulated by more
community-based housing of the type the Company provides. Trends in
mental health also contribute to demand. According to the Royal
College of Psychiatrists referrals to mental health services have
risen to an all-time high of 4.3 million people during 2021.
LaingBuisson, a large healthcare consultancy, in its Adult
Specialist Care report of 5th edition published in January 2022
estimates that in the learning disability market for care in the
community, over 90% of providers come from the independent sector.
For specific mental health services this rises to 97% and reflects
the fact that over the past 30 years almost all specialist care has
come to be provided by the private sector and paid for by the
State, whereas it was previously provided by the NHS.
What is also clear is that the principal of community-based
housing is being extended to groups with other care needs, beyond
mental health issues. This trend was reinforced by the Homelessness
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, the leading homeless charity and campaign
group Crisis estimated the cost of street homelessness to the State
was over GBP20,000 per person per year, not including 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 sleeping rough were housed in temporary
accommodation, mostly hotels. The challenge that now remains is how
to ensure those people are permanently housed with the support
required to overcome often complex needs. This is the purpose of
Barnet's Homelessness Scheme supported by CSH which will ensure a
secure and stable home with extensive support.
The clear advantages are the same as housing for disabled
groups: better social outcomes within a community setting and
reduced costs to the taxpayer.
Financial Review
As at 31 March 2022 the IFRS net asset value of the Company was
GBP675.5 million, being 110.30 pence per share, a 1.85% increase on
the 108.30 pence per share at 31 March 2021. A net fair value gain
on investment properties of GBP12.3 million (2021: GBP5.5 million)
was recorded in the year. Operational cash flows increased to
GBP37.5 million were an increase on the prior year.
The portfolio was independently valued on an individual IFRS
asset basis by JLL at GBP968.8 million as at 31 March 2022 (2021:
GBP915.6 million) reflecting a net initial yield of 5.28%. This
compares to an average purchase yield of 5.9% (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.
Net rental income of GBP50.7 million was generated in the
period, a 6.1% increase over the corresponding period (31 March
2021: GBP47.8 million). This increase has been generated as a
result of on-track indexation of rents, the effect of rental income
on properties purchased in the prior period, being included for the
full twelve months and a small number of new investments in the
period. Strong ongoing rental collections throughout the year
supported the Company's healthy operating cash flows.
During the reporting period, the Company paid four dividend
distributions including one dividend of 1.350p and three
instalments of 1.3875p each during the period, fully in line with
the distribution target of 5.55p announced for the year to 31 March
2022.
The Company also extended the maturity of its GBP100m loan
facility with HSBC Bank plc to November 2023 at SONIA plus 2.02%
margin. Since the year end, the GBP60m facility with Lloyds Bank
plc has also been extended to July 2024, at SONIA plus 1.67%
margin. Together, these financings continue to underpin the strong
liquidity position of the Company. The Company has also maintained
leverage at 34.43%, comfortably within the Company's self-imposed
cap of 40% of total assets. Finally of note, the Company retained
its premium Fitch rating from the prior year at "A" secured and
"A-" unsecured.
The CSH Investment Portfolio - Overview
The Civitas portfolio is one of the largest SSH portfolios in
the UK and is diverse geographically, in property size, type of
care and with multiple counterparties. The overall objective is to
have a high-quality portfolio providing long-term accommodation and
stable returns. All CIM's work with care providers and Approved
Providers is collaborative, and part of CIM's commitment to improve
the sector and assist its partners in becoming more
independent.
Portfolio
Largest private portfolio in the country.
-- High acuity with 40% of residents living in Civitas
properties receive over 50 hours of care per week
-- 130 care providers
-- 18 approved providers
-- 178 local authority partners
Team
Established team of specialists across the country.
-- Senior staff from the care industry
-- Housing Benefit
-- Social Housing
-- ESG
-- Legal/Financial
Activities
Key activities comprise of future proofing, optimising quality
for care providers, ensuring Approved Providers benefit from
economies of scale, and introduction of the new Regulatory
clause.
-- Ensuring buildings are meeting the needs of care providers
-- Ensuring rents at appropriate level and efficiently collected
-- Future proofing properties
-- Sounding board on governance and sharing best practice
-- E.ON partnership
Outcomes
Benefits derived from the combination of portfolio, team and
activities.
-- High Occupancy
-- Rents collected and indexation secured
-- Property enhancements, change of use and improvements in quality
-- Progress made by independent Approved Providers in
management, governance and financial performance
-- Reducing carbon emissions whilst utilising public funds and
minimising the financial impact on the Company
Each year a small number of buildings require future proofing
where the Company and CIM identify adaptions are required or in a
few instances a change of use that will ensure longevity of
occupation and optimal resident satisfaction is maintained.
The Portfolio - Rent Roll
The annualised rent roll as at 31 March 2022 increased to
GBP54.1 million from GBP50.8 million in March 2021 and this is
expected to increase further as additional indexation is
applied.
Rental income is generated from leases with 18 Approved
Providers.
Typically, properties are located close to local community-based
facilities to support tenants, families and staff with minimal
travel requirements.
Portfolio Characteristics
The key features of the CSH portfolio can be summarised as
follows:
-- Properties are fully converted and specially adapted for care use
-- High acuity with 40% residents living in Civitas properties
receiving over 50 hours of care per week
-- Median rents tested/compared against market equivalent
-- Properties always well located within the community and with commissioner support
-- Over one third of the portfolio on back-to-back 25-year
leases with care providers mirroring the obligations in the lease
to Approved Providers
-- An 'own front door' policy
-- Over one third of properties bought when new, without development or forward funding risk
The high quality of CSH portfolio reflects the Company's ability
of the Company to source to off-market transactions through its
extensive network of care provider relationships, with the aim of
achieving value growth over time.
Regulation
In October 2021 the Regulator of Social Housing 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 Tower and meeting the demands of the Fire Safety Act
2021
-- The cost of meeting the zero-carbon agenda
-- 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 past 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, set out below:
Approved Provider Grading Type of publication Route
Auckland Home N/A Regulatory Judgement Reactive engagement
Solutions
Bespoke Supportive N/A Regulatory Judgement Reactive engagement
Tenancies
Encircle Housing N/A Regulatory Judgement Reactive engagement
Falcon Housing N/A Regulatory Judgement Reactive engagement
Association
Hilldale Housing N/A Regulatory Judgement Reactive engagement
Association
Inclusion Housing G3/V3 Regulatory Judgement IDA and Reactive
engagement
My Space Housing G3/V3 Regulatory Judgement Reactive engagement
Solutions
Pivotal Housing N/A Regulatory Judgement Reactive engagement
Association
Trinity Housing G3/V3 Regulatory Judgement Reactive engagement
Association
Westmoreland Supported G4/V3 Regulatory Judgement Reactive engagement
Housing
It is clear that the RSH will, rightly, publish information as
to the improvements it wishes to see and whenever this occurs CSH
will provide support to its partners as appropriate.
Through CIM, 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 the Company's
counterparties and the RSH to ensure that the Company fulfills its
intentions as one of the largest owners of SSH in the country to
enable the sector to evolve and to maintain the improvements
already made.
New Regulatory Clause
During 2021 and 2022, the Company's Investment Adviser has
engaged with relevant counterparties, including several
shareholders of CSH, lending banks, valuers and the RSH and
undertaken detailed negotiations with several Housing Association
partners, to explore how the Company can assist those organisations
to be better positioned to achieve regulatory compliance under the
RSH's Governance and Financial Viability Standard (the
"Standard").
The consensus result of these discussions and negotiations is
the development of an approach with a new draft regulatory lease
clause whose principal objectives are to enable Housing
Associations to:
-- achieve greater alignment between income receipts and lease liabilities
-- set achievable capital solvency requirements against lease obligations
-- demonstrate a further degree of risk sharing
Each with the objective of seeking to demonstrate compliance
with the Standard (expressed as gradings V1 - V4 and G1 - G4).
Meanwhile, the draft regulatory clause will provide the Company
with:
-- counterparties better able to achieve regulatory compliance
-- enhanced information and step in rights (having regard to
tenant welfare) in addition to existing lease transfer and
assignment rights
-- unchanged lease and property values supported by strong underlying demand
The draft clause once enacted will operate on a
property-by-property basis to provide for a temporary pass through
of lease rent in certain limited circumstances when the Housing
Association is not in receipt of full payment whilst at the same
time ensuring that the Company does not become responsible for
obligations that are rightly owed by others such as void cover by
care providers. Furthermore, this applies only after an initial
period of time during which all rents remain the responsibility of
the Vendor/Housing Association and then only if paying the rent in
full would cause the Housing Association to fail to meet the
Regulator's standards.
The draft clause also contains provision for the reimbursement
of rental income if that is subsequently recovered by the Housing
Association. Implementation of the clause will codify much of the
general asset management work and the Company's approach to sector
collaboration that already takes place on a day-to-day basis and is
reflected in the Company's existing rent roll but which has to date
not been included within the terms of the Company's leases and so
have not received formal recognition. It is anticipated that the
clause will only be relevant to a small number of properties at any
time and will not have any material impact on the Company's rent
roll.
The Company has sought and obtained formal written confirmation
from valuers that the inclusion of the clause within the Company's
new and existing leases will not of itself cause a diminution in
the value of those leases or in the underlying assets. Indeed, the
Company considers that enhanced regulatory alignment would be
consistent with asset appreciation over the medium term.
At the present time the clause is in draft form and is subject
to further discussion and refinement with several Housing
Association boards assisted by leading sector lawyers together with
other relevant approvals.
It is intended that the clause will be incorporated initially
into a limited number of existing leases on a retrospective basis
commencing with properties that are unencumbered.
On the assumption that it is well received by relevant parties
within the sector and has the potential to achieve the objectives
set out above it will be further rolled out in a controlled manner
over time to other Approved Providers and in respect of new and
existing leases on a retrospective basis. The Company will provide
further updates in due course once the final form of the clause has
been settled.
Social Impact and Social Value
The Company's latest independent report from The Good Economy
was published in June 2022 and provides details of CSH's portfolio
and the continued success in delivering measurable social impact.
Findings include:
-- 77 properties, housing up to 297 people, have been added to
the CSH portfolio within the period
-- 41% of CSH's 696 properties have been brought into the social
housing sector for the first time
-- CSH's regular engagement with its Approved Providers (RPs) to
monitor the quality of its stock continued through the COVID-19
pandemic
-- Improvement works have enhanced the energy efficiency of
homes, with 99.92% of homes having an EPC rating of at least E+
-- CSH 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 GBP127 million of social value per year,
including fiscal savings to public budgets of GBP75.9 million 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
-- 99% statutory compliance rate by housing provider partners is
better than the wider affordable housing sector
Environmental, Social and Governance (ESG)
The ESG Policy is located on the Company's website. It provides
an overview of the Company's investment procedures and sets out the
Board's commitment to a continuous improvement process in its
approach to ESG integration.
ESG Rating Providers
As part of this commitment, CIM engages with ESG rating
providers to set out the activities that are undertaken by CSH and
to ensure this is profiled correctly. This includes increased
disclosure by CIM in respect of various policies that have been
promoted on the CIM website. Notably, active participation in the
2021 GRESB Public Disclosure Assessment has resulted in CSH
achieving an A score which is an improvement from a B score in
2020, whilst 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 16.6 (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
CIM has been leading the sector in 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, maximise value for the Company and for our
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) reports data has improved over the
last twelve months. The proportion of properties with EPC Rating
A-C has remained at c.52% (52% in March 2021) and carbon footprint
(estimated from property characteristics) has reduced by 3% per
Civitas tenancy (from 2.73 tonnes of CO2/tenancy to 2.65 tonnes of
CO2/tenancy). The static year-on-year proportion of homes rated A-C
was due to the acquisition of a significant number of properties
which were acquired with D rating. These homes are subject to
improvement works which should improve their energy performance in
coming months.
Charities
The Company has supported and worked with the following
Charities since IPO.
Crisis
Civitas has supported Britain's biggest homelessness charity
over the past 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 but who require considerable care and support in addition to
a safe home in the community.
Choir With No Name
Civitas is proud to support this charity that 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 over
the moon! Alongside the choirs, 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.
Impact Highlights 2021-22
-- Big increase in average weekly attendance since return to indoor meetings post COVID-19
-- New Cardiff Choir launched in November 2021
-- Steady progress with establishment of new community choirs in Watford and Coventry
House of St Barnabas
A social enterprise and charity that works to support people
affected by homelessness back into long-term employment. Its vision
is of a future where lasting good work, a secure home and
supportive network are a reality for those affected by
homelessness. Civitas specifically supports the relationship-based
mentoring programme focused on developing interpersonal skills and
communication. This helps to underpin its mission of 'Good Work,
Good Home' for all its graduates. 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 helps them to progress in work.
Impact Highlights 2021-22
Employment Preparation Programme:
-- 17 participants successfully graduated from EPP 18 and EPP 19
-- 100% of graduates were successfully matched with a mentor.
Employment and Progression:
-- 33% of working graduates are earning London Living Wage
-- 23% of working graduates are in good work and a good home
-- 70% of mentor relationships with graduates last for at least 6 months
-- HOSB has supported a total of 93 people over the year.
Women in Social Housing (WISH)
WISH promotes the benefits of being part of a networking
community and equips 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
CWC recognises that care workers face everyday challenges such
as loss of income, inconsistent hours, and lack of adequate
resources. It helps care workers in the UK (c.2 million workforce)
through crisis using financial support and support centres. CWC
provides support through one-off crisis grants, COVID-19 Emergency
Fund and a Mental Health Support Programme.
Little Sprouts
L ittle Sprouts promotes the health and wellbeing of communities
through delivery of targeted cooking and food education workshops,
surplus food collection, and other activities. The charity places a
particular focus on supporting deprived communities where the
socio-economic position - housing, employment, or education - has
had a massive contributory effect on well-being and health. It has
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 Civitas benefit
from their environment, the quality of care they 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.
We worked with a journalist and photographer who published a
book 'A Place For Me' which tells the stories of 50 residents who
live in Civitas properties. The interviews were carried out on site
and in person and have also involved families, care workers and
other stakeholders. The book was published in December 2021, and we
believe it is the largest independent project 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 the Company's Approved
Provider partners 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.
The Board carries out an annual Board performance evaluation
exercise. All of the Company's policies and procedures have been
reviewed and, where appropriate, updated.
The Board has five independent non-executive Directors and has
commenced a recruitment programme to recruit a sixth director with
asset management skills to reflect the scale of the portfolio, the
growth of expertise within the Investment Adviser and to assist
with succession planning in the future. Both skills and diversity
will be important considerations with this recruitment.
Summary
Care for the vulnerable being delivered in homes or small
residential settings in the community to promote independent living
and better social outcomes is clearly the long-term focus of
Government policy in this sector with considerable cross-party
support. In this objective, the private sector, both in terms of
service delivery and investment, has a pivotal and essential role
to play. Civitas is at the forefront of this investment and brings
the skills and experience required to further expand the delivery
of this critical service and to be influential in enhancing the
development of sector counterparties.
We remain committed to generating growth and enhancing
shareholder value through socially impactful ethical investing. We
are passionately committed to ensuring this is maintained for the
long-term.
Civitas Investment Management Limited
Investment Adviser
29 June 2022
Civitas Investment Management - A growing team of
specialists
Throughout the pandemic, CIM has continued an active recruitment
programme aimed at increasing the levels of resource and expertise
within the team. Of particular focus has been the dedicated Asset
Management team who are charged with maintaining the quality of the
CSH portfolio and working closely with Approved Providers and other
sector entities including care providers.
During the year to March 2022 a number of senior recruits have
joined the team. The Asset Management team is led by Tom Falconer,
a former local authority SSH commissioning officer. This has been
part of a broader recruitment programme. Selected profiles are set
out below:
Asset Management
MATTHEW FILKIN
Investment Advisory Director
Previously COO at Almacantar (Property investment and
development company)
Matt has over 20 years of real estate experience covering
investment, development, finance and corporate matters. At CIM, he
has an active day-to-day involvement in the operations of the
existing investment strategies working closely with the asset
management team to provide a broad real estate overview. He is also
engaged with a number of specific asset management projects.
TOM FALCONER
Head of Asset Management
Previously Group Property Manager at Lifeways (leading UK
specialist care provider)
Tom is a former local authority commissioner with over 12 years'
experience in asset management, specialist housing delivery, health
and social care integration across the UK. At CIM, Tom leads the
asset management team, working closely with local authorities and
housing associations supporting them in their requirement to meet
the demand for SSH accommodation.
SEAN CORNEY
Director, Asset Management
Previously an executive within Savills' Asset Management
Team
Sean is a specialist in the delivery of asset management with
over 20 years' experience within the property industry, including
supported living and care environments. He is an Associate of the
Royal Institute of Chartered Surveyors (RICS) and a member of the
Institution of Residential Property Management (IRPM). At CIM as
part of the asset management team he is responsible for the
oversight of capital works that supports the enhancement of the
Company's portfolio.
Portfolio Management
CONNELL GROGAN
Senior Portfolio Manager
Previously Senior Portfolio Manager at Resonance Ltd (leading
specialist impact investor)
Connell is a Chartered Surveyor and experienced senior portfolio
manager with over 20 years' experience in real estate. He has
worked previously with a leading impact fund manager with a focus
on homelessness and specialist supported housing. At CIM, Connell
works within the asset management team focusing on delivering
enhancements to the property portfolios.
CHARLES REID
Senior Portfolio Manager
Previously Lead Housing Benefit Officer at London Borough of
Southwark Council
Charles is a housing benefit specialist with a 30-year track
record in assessing housing benefit claims and appeals across many
of the largest London local authorities. At CIM, he works within
the asset management team to assist property due diligence and to
support the work of Approved Provider partners in determining
housing benefit claims and setting appropriate rent levels.
DARYL QUARRY
S enior Portfolio Manager
Previously Head of Change & Transformation at Falcon Housing
Association C.I.C.
Daryl has worked within the social housing sector for over 16
years in business development and change management. Daryl works
collaboratively with the asset management team to support Approved
Providers in implementing software and developing internal
processes to contribute to achieving optimal performance as part of
increased independence.
Finance and Operations
DIPESH DEVCHAND
Group CFO
Previously Managing Director, Head of Fund Finance &
Operations for ICG plc (FTSE 100 listed alternative asset
manager)
Dipesh has over 20 years' experience in finance at a senior
strategic level within a financial services and investment
management environment. At CIM Dipesh leads the finance function,
working closely with CIM's founders and shareholder partners to
deliver the strategic mission of the group. He brings a wealth of
experience covering financing, regulatory reporting, taxation and
operational matters.
SIU-WAI NG
Commercial Director
Previously Partner, Global Head of Product Development at
BlueBay Asset Management
Siu-Wai has over 20 years of experience in the investment
management industry, bringing products to market and building
business platforms in both public and private asset classes. At
CIM, she is the Commercial Director with her remit encompassing all
aspects relating to the implementing and administering of new fund
launches, assisting in the design of new commercial strategies.
NAZLIN NAZRI
Associate Director
Previously Head of Financing Reporting at Tritax Group
Nazlin has over fifteen years of experience in real estate
finance, including financial reporting under various GAAPs,
financial management, group consolidation and fund accounting. At
CIM, she works within the finance team as an associate director on
Civitas Social Housing PLC.
Asset Management Case Studies
As part of the ongoing active management of the CSH portfolio,
CIM has developed an extensive asset management resource that
covers all the key disciplines that are apparent within specialist
supported housing and the residential care sectors.
Capital works are undertaken on a rolling basis with much of the
work being undertaken around the time of initial acquisition and
paid for by the original vendors as part of the purchase agreement.
This ensures that appropriate adaptations are made to deliver a
bespoke property that is suitable for the user's needs over the
long-term. Capital works are also undertaken, from time to time,
during the life of the property, with some or all of the costs
being borne by CSH, where it is deemed appropriate to undertake
improvement works or repositioning of the asset. In some cases this
also leads to an immediate uplift in rent roll and a commensurate
increase in capital values.
Set out below are a number of examples of projects that have
been undertaken.
Mill Lane, Weeley Heath, Clacton-On-Sea (5 beds)
Successful transformation project to support house tenants with
challenging behaviours. The property required enhancements relating
to energy efficiency, improved security, carefully constructed wet
rooms, specialist furniture and redesigned layouts to assist the
care provider in supporting the new tenants. This asset was
acquired as part of a wider portfolio; plans were already in place
with the care provider and local authority commissioner to
undertake minor configuration works with some notable enhancements
given that it was a much needed service in the local authority
area. The care provider contributed to the overall cost of the
works to demonstrate the long-term commitment to the service.
Enhancements within the asset are highlighted below and notably
the energy performance improved from an E rating to a B rating for
the purpose in which it is used for C2 requirements.
-- New wet rooms and a specialist spa bath
-- New suitable furniture throughout
-- EPC rating from an E to a B
-- New stud walls and insulation
-- New boiler and heating system
-- Staff and security office
-- Communal lounge
-- New kitchens
-- New flooring and decoration throughout
-- Communal dining area and sensory room
Delrose House, Southampton (9 beds)
The care provider approached CSH seeking permission to undertake
a refurbishment program within specific areas of the property. Its
plan was to move tenants from one type of care service to another
for long-term full occupancy.
The works were approved by CSH and paid for in full by the care
provider. These included general redecoration and replacement
flooring to enhance appearance, works to the lift to permit
disabled access, refurbishment of wet rooms and replacement
kitchens to be suitable for use by the tenants.
-- Redecoration
-- New flooring in the majority of the rooms and communal space
-- Communal bathroom refurbishment
-- New kitchen, repairs to subfloor, new flooring
-- Repairing and replacing subfloors in certain bathrooms
Heathfield Apartments, Swansea (15 beds)
The property is situated close to the centre of Swansea,
overlooking the city centre towards the harbour. Given the close
proximity to the city centre it provides easy access for staff,
tenants and family members.
Following the acquisition of this asset in 2019 an overhaul of
the exterior was planned to enhance the external appearance and
make some minor repairs, including the rendering and decoration.
The initial stages of works were covered by the vendor, with the
care provider enhancing some of the internal parts of the building
as part of a planned internal refurbishment.
CIM on behalf of CSH completed a review of the works and
undertook some further enhancements to key areas of the higher
elevations of the building with the aim of futureproofing areas of
the roof, rendering, windows and decoration. This should prevent
disruption at the property in the upcoming years. CSH provided some
additional investment into the asset as part of the wider scope of
works to allow the additional enhancements to happen and deliver an
asset of a higher standard to the care provider and tenants. This
is a prime example of positive collaborative working to achieve a
desired outcome.
-- External overhaul and refurbishment
-- New windows and doors installed
-- Rendering replaced and redecorated
-- Roof upgraded whilst scaffolding in place
-- New ramp fitted externally for an additional fire escape route
-- Redecoration to internal areas affected by propping equipment
Corporate Social Responsibility Report
Sustainability
The business model of the Company is to provide long--term
suitable homes for individuals with care needs; acting in a
sustainable manner is key to achieving this aim. Properties that
are owned by the Company are tailored to meet the future needs of
the tenants and, where required, are actively asset managed to
provide long-term functionality and value to the wider
community.
Environment
During the investment due diligence phase, the Company looks
closely at the environmental impact of each potential acquisition,
and encourages a sustainable approach for maintenance and upgrading
properties. Through collaborating with specialist developers and
vendors, the high standards the Company expects from each
investment in the care-based housing sector is adopted by other
companies in the sector.
Once within the portfolio, the properties of the Company are
actively asset managed, and the Investment Adviser assesses whether
there are opportunities to improve the environmental efficiency of
the properties, in addition to other asset management initiatives
factoring heavily in addition to other asset management
initiatives. Further details can be found on below.
The Board has considered the requirements to disclose the annual
quantity of emissions; further detail on this is included in the
Report of the Directors set out in the full report.
Diversity
The Company does not have any employees or office space and, as
such, the Company does not operate a diversity policy with regards
to any administrative and management functions.
Whilst recognising the importance of diversity in the boardroom,
the Company does not consider it to be in the interest of the Group
and its shareholders to set prescriptive diversity criteria or
targets. The Board has adopted a diversity policy in respect of
appointments to be made to the Board and will continue to monitor
diversity, taking such steps as it considers appropriate to
maintain its position as a meritocratic and diverse business. The
Board's objective is to maintain effective decision-making,
including the impact of succession planning. All Board appointments
will be made on merit and have regard to diversity regarding
factors such as gender, ethnicity, skills, background and
experience. See Corporate Governance Statement for more information
as set out in the full report.
The Board comprises three male and two female non-executive
Directors. Throughout the year, the Company complied with the
Hampton-Alexander Review's target of a minimum 33% representation
of women on FTSE 350 boards.
The Board is aware of the recommendations of the Parker Review,
which will be taken into consideration as part of the Board's
succession planning. See Corporate Governance Statement for more
information as set out in the full report.
The Board of Directors of the Company's subsidiaries, which are
non-operational, each comprise one female and up to four male
directors.
Human Rights
Given the Company's turnover for the year under review, it now
falls within the scope of the Modern Slavery Act 2015. The Company
published its modern slavery statement on 22 September 2021.
The Board is satisfied that, to the best of its knowledge, the
Company's principal advisers, which are listed in the Company
Information section, comply with the provisions of the UK Modern
Slavery Act 2015.
The Company's business is solely in the UK and therefore is
considered to be low risk with regards to human rights abuses.
Community and Employees
The Company's properties enable the provision of care to some of
the most vulnerable people in the community, ensuring safe and
secure accommodation, tailored to meet individual care needs. The
Company has increased the provision of care-based housing, bringing
new supply to the sector and providing homes to over 4,500 people.
All of the Company's properties enable the provision of high levels
of care, generating local jobs and helping to support local
economies.
The Company has no employees and accordingly no requirement to
separately report on this area.
The Investment Adviser is an equal opportunities employer who
respects and seeks to empower each individual and the diverse
cultures, perspectives, skills and experiences within its
workforce.
Section 172(1) Statement and stakeholder engagement
Overview
The Directors' overarching duty is to act in good faith and in a
way that is most likely to promote the success of the Company as
set out in section 172 of the Companies Act 2006. In doing so,
Directors must take into consideration the interests of the various
stakeholders of the Company, the impact the Company has on the
community and the environment, take a long-term view on
consequences of the decisions they make, as well as aim to maintain
a reputation for high standards of business conduct and fair
treatment between the members of the Company.
Fulfilling this duty naturally supports the Company in achieving
its investment objective and helps to ensure that all decisions are
made in a responsible and sustainable way. In accordance with the
requirements of the Companies (Miscellaneous Reporting) Regulations
2018, the Company explains how the Directors have discharged their
duties under section 172 below.
To ensure that the Directors are aware of, and understand, their
duties, they are provided with the pertinent information when they
first join the Board as well as receiving regular and ongoing
updates and training on the relevant matters. Induction and access
to training is provided for new Directors. They also have continued
access to the advice and services of the Company Secretary, and
when deemed necessary, the Directors can seek independent
professional advice. The Schedule of Matters Reserved for the
Board, as well as the Terms of Reference of its committees, are
reviewed regularly and further describe Directors' responsibilities
and obligations and include any statutory and regulatory duties.
The Audit and Management Engagement Committee has the
responsibility for the ongoing review of the Company's risk
management systems and internal controls and, to the extent that
they are applicable, risks related to the matters set out in
section 172 are included in the Company's risk register and are
subject to periodic and regular reviews and monitoring.
Long-term Success
The strategy of the Company can be found above. Any deviation
from, or amendment to, that strategy is subject to Board and, if
necessary, shareholder approval. The Company's business model which
can be found above, provides that the Board consider the long-term
consequences of its investment decisions.
The Company grants long-term leases, generally 20 years in
length, to its tenants. The Company seeks to maintain lasting
relationships with its tenants and supports its tenants in adapting
properties to meet their needs, particularly improving and
enhancing properties. Further details can be found in the full
report.
Stakeholders
A company's stakeholders are normally considered to comprise its
shareholders, its employees, its customers, its suppliers as well
as the wider community in which the company operates and impacts.
The Company is different in that as an investment trust it has no
employees and, in terms of suppliers, the Company receives
professional services from a number of different providers,
principal among them being the Investment Adviser.
Through regular engagement with its stakeholders, the Board aims
to gain a rounded and balanced understanding of the impact of its
decisions. Feedback from stakeholders is gathered by the the
Investment Adviser in the first instance and communicated to the
Board in its regular quarterly meetings and otherwise as
required.
The importance of stakeholders is taken into account at every
Board meeting, with discussions involving careful consideration of
the longer-term consequences of any decisions and their
implications for stakeholders. The following section explains why
these stakeholders are considered of importance to the Company and
the actions taken to ensure that their interests are taken into
account by the Board as part of its decision making
Our Key areas How we engage
stakeholders of interest
-------------- ------------------------------------------------------------ ------------------------------------------------------------
Shareholders The Board welcomes shareholders' views
Continued * Current and future financial performance and places great importance on communication
shareholder with the shareholders of the Company.
support and The Board is responsible for the content
engagement * Strategy and business model of communication regarding corporate
are critical issues and for communicating its views
to the to shareholders. The Board aims to
existence * Corporate governance ensure that shareholders are provided
of the with sufficient information to understand
business the risk/reward balance to which they
and the * ESG performance and sustainability are exposed by the holding of shares
delivery in the Company. Active engagement with
of the shareholders is carried out throughout
long-term * Climate Change the year and regular communication
strategy of is undertaken to ensure that they understand
the business. the performance of the business. The
* Dividend Board is committed to maintaining open
channels of communication and to engaging
with shareholders in a manner which
they find most meaningful, in order
to gain an understanding of the views
of shareholders. These channels include:
Annual General Meeting - The Company
welcomes and encourages attendance,
voting and participation from shareholders
at the AGM, at which shareholders have
the opportunity to meet the Directors
and Investment Adviser and to address
questions to them directly. The Investment
Adviser attends the AGM and provides
a presentation on the Group's performance
and its future outlook. The Company
values any feedback and questions it
may receive from shareholders ahead
of and during the AGM and takes action,
as appropriate.
At the Company's AGM on 22 September
2021, the Company received votes representing
27.11% against Resolution 13, the additional
10% pre-emption resolution. In compliance
with the AIC Code of Corporate Governance,
the Board released an announcement
on 16 March 2022 outlining how it,
via the Company's Brokers, had engaged
with those shareholders who had voted
against the resolution. It understood
that these shareholders followed PIRC's
or their own internal recommendation
to vote against this resolution as
when combined with the standard 10%
pre-emption disapplication resolution
it would have resulted in the Company
having authority to issue up to 20%
pre-emptively.
For the 2022 AGM, which will be held
on 15 September 2022, the Board hopes
that shareholders will be able to attend
in person. Arrangements for the AGM
will be released in August 2022 and
will take account of the latest Government
guidance and advice at the time of
publication of the Notice.
Publications - The Annual Report and
Half-Year Results are made available
on the Company's website. These reports
provide shareholders with a clear understanding
of the Group's portfolio and financial
position. In addition to the Annual
and Half-Year Reports, regularly updated
information is available on the Company
website, including quarterly factsheets,
key policies, the investor relations
policy and details of the investment
property portfolio. Feedback and/ or
questions the Company receives from
the shareholders help the Company evolve
its reporting aiming to render the
reports and updates transparent and
understandable.
Shareholder meetings - Shareholders
are able to meet with the Investment
Adviser and the Company's Joint Brokers
throughout the year and the Investment
Adviser provides information on the
Company on the Company's website. Feedback
from all shareholder meetings with
the Investment Adviser and/or the Joint
Brokers, and shareholders' views, are
shared with the Board on a regular
basis. The Chairman and other members
of the Board, including the Senior
Independent Director and Chair of the
Audit and Management Committee, are
available to meet with shareholders
to understand their views on governance
and the Company's performance where
they wish to do so.
Shareholder concerns - The Board gives
due consideration to any matters raised
by shareholders. In the event shareholders
wish to raise issues or concerns with
the Board or the Investment Adviser,
they are welcome to write to the Company
at the registered office address set
out in the full Annual Report. Other
members of the Board are also available
to shareholders if they have concerns
that have not been addressed through
the normal channels.
During the year it was noted that several
activist shareholders had taken a short
position in the Company's shares. In
response to this, the Board sought
to engage with shareholders directly
as well as through the Company's Brokers
and Investment Adviser. Following this,
the Board published a paper providing
detailed responses to the questions
raised by activist shareholders, as
well as specific responses to the allegations
made by the short sellers.
Investor relations updates - The Board
regularly monitors the shareholder
profile of the Company. With the majority
of shareholders being a combination
of institutional investors and private
client brokers, the Board receives
regular updates on investors' views
and attitudes from the Company's Brokers
and the Investment Adviser. The results
of these meetings were reported to
the Board as part of the formal reporting
undertaken by both the Investment Adviser
and the Brokers.
Included in the Report of the Directors
in the full report are details of substantial
shareholdings in the Company.
On a regular basis (sometimes weekly)
and at Board meetings, the Directors
receive updates from the Company's
Brokers on the share trading activity,
share price performance and any shareholders'
feedback, as well as an update from
the Company's Investor Relations adviser,
Buchanan, and the Investment Adviser
on any publications or comments by
the press. To gain a deeper understanding
of the views of its shareholders and
potential investors, the Investment
Adviser maintains regular contact with
them and also undertakes investor roadshows.
Any relevant feedback is taken into
account when Directors discuss any
possible fundraising or the future
dividend policy.
-------------- ------------------------------------------------------------ ------------------------------------------------------------
Investment The management of the Company's portfolio
Adviser * Current and future financial performance is delegated to the Investment Adviser,
Holding the which manages the assets in accordance
Company's with the Company's objectives and policies.
shares * Shared commercial objectives with the Company At each Board meeting, representatives
offers from the Investment Adviser are in
investors attendance to present reports to the
an investment * Operational excellence Directors covering the Company's current
vehicle and future activities, portfolio of
through assets and its investment performance
which they * Long-term development of its business and resources over the preceding period.
can obtain
exposure to Maintaining a close and constructive
the Company's * ESG performance and sustainability working relationship with the Investment
portfolio of Adviser is crucial as the Board and
properties. the Investment Adviser both aim to
The continue to achieve consistent long-term
Investment returns in line with the Company's
Adviser's investment objective. Important components
performance in the collaboration with the Investment
is critical Adviser, representative of the Company's
for the culture are:
Company
to * operating in a fully supportive, co-operative and
successfully open environment and maintaining ongoing
deliver its communication with the Board between formal meetings;
investment
strategy and
meet its
objective * encouraging open discussion with the Investment
to provide Adviser, allowing time and space for original and
shareholders innovative thinking;
with an
attractive
level of
income, * recognising that the interests of stakeholders and
together with the Investment Adviser are for the most part well
the potential aligned, adopting a tone of constructive challenge;
for capital
growth.
* drawing on Board members' individual experience and
knowledge to support the Investment Adviser in its
monitoring of and engagement with other stakeholders;
and
* willingness to make the Board members' experience
available to support the Investment Adviser in the
sound long-term development of its business and
resources, recognising that the long-term health of
the Investment Adviser is in the interests of
shareholders in the Company.
-------------- ------------------------------------------------------------ ------------------------------------------------------------
Other service The Company's main functions are delegated
providers * Current and future financial performance to a number of service providers, including
In order to the Administrator, the Company Secretary,
function as the AIFM, the Registrar, the Corporate
a REIT with * Shared commercial objectives with the Company Brokers and the Depositary, each engaged
a premium under separate contracts. The Board
listing maintains regular contact with its
on the London * Operational excellence key external providers and receives
Stock regular reporting from them, both through
Exchange, the Board and Committee meetings, as
the Company * Long-term development of the service providers' well as outside of the regular meeting
relies on a businesses cycle. Their advice, as well as their
diverse range needs and views, are routinely taken
of reputable into account. Through its Audit and
advisers for * Sustainability Management Engagement Committee, the
support in Board formally assesses their performance,
meeting all fees and continuing appointment at
relevant least annually to ensure that the key
obligations. service providers continue to function
at an acceptable level and are appropriately
remunerated to deliver the expected
level of service. The Audit and Management
Engagement Committee also reviews and
evaluates the control environment in
place at each key service provider.
-------------- ------------------------------------------------------------ ------------------------------------------------------------
Care At the outset, it is important to note
providers * Current and future performance that the Company does not have any
legal or operational responsibility
for the delivery of care in the properties
* Welfare of tenants within the portfolio. However, the
Board and the Investment Adviser have
taken the view that they wish to have
* Lease obligations a detailed understanding of the delivery
of care and the interaction with the
major care providers who deliver this
* Void management care. Accordingly, the Investment Adviser
maintains an active dialogue with many
of the care providers to build constructive
and informed relationships.
At the same time, as part of transaction
due diligence at the time of acquisition
of properties, the Investment Adviser
undertakes due diligence with respect
to the operational and financial performance
of all care providers who are proposed
to deliver care into the particular
properties. This includes the financial
standing of the care provider, its
CQC rating and the nature of the SLA
agreement covering voids between the
care provider and the Approved Provider.
The Investment Adviser is noted as
having demonstrated considerable expertise
and understanding of the care taking
place within its properties.
-------------- ------------------------------------------------------------ ------------------------------------------------------------
Tenants The Company's properties are adapted
* Greater independence for the use of individuals with long-term
care needs within a community setting
with the specific aim of achieving
* Maintaining high level of care better personal outcomes and independence
for the individuals.
* Improved personal outcome The sector in which the Company operates
is regarded as having achieved significant
success in delivering these positive
outcomes compared to long-term older
style remote institutional care.
On a regular basis, members of the
Investment Adviser visit properties
accompanied by Approved Provider and
care provider partners to see first
hand the nature of the housing and
care provision that is being delivered.
Whilst this process has slowed as a
result of the pandemic, the Investment
Advisor has continued to engage with
its tenants. This is supported by the
regular Approved Provider seminars
at which the wellbeing of tenants is
discussed in detail.
In March 2022, the Board undertook
a site visit to a number of the Company's
properties. The Board found this visit
beneficial as it enabled it to engage
with the Company's tenants and to see
first hand the impact the Company has
had on their wellbeing.
In addition, the Company undertakes
resident case studies through careful
and considered interaction via the
care provider to assess the positive
impact our properties and associated
specialised care have had on the individual
and their wellbeing.
-------------- ------------------------------------------------------------ ------------------------------------------------------------
Approved The Company's Approved Provider partners
Providers * Current and future performance are an important part of the investment
model as the responsibility for collection
of housing benefit and subsequent payment
* Sustainability of rent, the maintenance of the properties
under the full repairing and insuring
leases and, most importantly, the safeguarding
* Compliance and property management of the underlying tenants through the
above means, lies with the Approved
Providers.
* Welfare of tenants
The Investment Adviser works closely
with the Company's Approved Provider
* Lease obligations partners to improve standards and governance
and to introduce practices and procedures
that make the Company's investment
processes ever more robust.
The Investment Adviser has a constant
open dialogue with the Approved Provider
partners, liaising monthly on compliance,
health and safety, maintenance and
future-proofing schemes, as well as
hosting quarterly seminars to discuss
current themes/trends affecting the
sector, to troubleshoot and this serves
as an opportunity to build relationships
and share best practice.
The Investment Adviser has continued
its regular and extensive dialogue
with Approved Providers which since
the start of the pandemic includes
detailed reports on pandemic responsiveness.
These reports have shown a high degree
of resilience to the pandemic with
few serious cases of COVID-19 reported
due to the quality of the buildings
people live in, the attention and dedication
of the one-to-one care they receive
and the age profile of the residents.
The Investment Adviser supported the
establishment of The Social Housing
Family CIC, a not-for-profit community
interest company operated independently
of the Company whose stated aim is
to enable Approved Providers holding
the Company's leases to increase skills
and experience and to provide funding
to promote enhanced performance. Membership
is open to any Approved Provider that
holds Civitas leases and the effect
of membership is to transfer ownership
of the Approved Provider to the social
housing family. Auckland Homes Solutions
was the first Approved Provider to
join and has now recruited a very experienced
and senior executive team and board
of management. Qualitas community benefit
society has also now joined the CIC.
-------------- ------------------------------------------------------------ ------------------------------------------------------------
Regulator The Company is not itself regulated
of Social * Financial and operational viability by the RSH, but it is important to
Housing (RSH) maintain open and regular dialogue
to ensure that the Company and the
* Governance RSH are working together to improve
the sector.
* Compliance with health and safety, and regulatory The Investment Adviser has a regular
standards and ongoing dialogue with the RSH and
with the Housing Association partners
regulated by the RSH.
* Safety and wellbeing of underlying tenants
The Company also publishes responses
to the regulatory judgements of the
RSH regarding the Approved Providers
with the Company as part of the RSH's
general review of Approved Providers
engaged in the provision of property
services for vulnerable people as announced
in May 2018. This demonstrates the
Company's desire to maintain aa dialogue
with the RSH and its desire to see
that the positions improve where needed.
-------------- ------------------------------------------------------------ ------------------------------------------------------------
Other The Company regularly considers how
regulatory * Compliance with statutory and regulatory requirements it meets various regulatory and statutory
authorities obligations and follows voluntary and
The Company best practice guidance, and how any
can only * Governance based on best practice guidance governance decisions it makes can have
operate an impact on its shareholders and wider
with the stakeholders, both in the shorter and
approval * Better reporting to shareholders and other in the longer term.
of its stakeholders
regulators The Board receives quarterly regulatory
who have a compliance monitoring updates from
legitimate the Investment Adviser.
interest in The Board receives quarterly compliance
how the updates from the AIFM regarding the
Company Company's compliance with its investment
operates in policy and the Investment Adviser's
the market compliance with the Investment Management
and treats Agreement.
its The Board also has access to the advice
shareholders. of the Company Secretary who provides
updates and advice on regulatory, statutory
and governance matters for consideration
by the Board at its quarterly meetings
and as and when required.
-------------- ------------------------------------------------------------ ------------------------------------------------------------
Local It is important for the Company to
authorities * Provision of safe and secure properties of a high build and maintain relationships with
quality local authorities as they have an important
role in identifying areas of high demand,
agreeing rents and referrals to the
* Sustainability for long-term placements Company's schemes.
The Company will engage with the local
authority commissioner either directly,
or through specialist consultants,
Approved Provider and care provider
partners as part of the Company's due
diligence to ensure that each property
being acquired has been commissioned
by the relevant local authority and
that rent levels have been discussed
and agreed.
-------------- ------------------------------------------------------------ ------------------------------------------------------------
Lenders The Company has arranged debt facilities
Availability * Current and future financial performance of the from a wide range of lenders and engages
of funding business with these on a regular basis through
and liquidity regular meetings and presentations
are crucial to ensure they are informed on all
to the * Openness and Transparency relevant areas of the business. The
Company's continual dialogue helps to support
ability to the credit relationships.
take * Proactive approach to communication
advantage The Company has reaffirmed its Investment
of investment Grade High Credit Quality Rating from
opportunities * Operational excellence Fitch Ratings Limited of "A" (senior
as they secured) and a Long-Term IDR (Issuer
arise. Default Rating) of A- with a Stable
Outlook.
This will enable the Company to pursue
its strategy in relation to debt funding,
in addition to continuing to work with
the Company's existing lenders, with
whom the Company has built strong relationships.
-------------- ------------------------------------------------------------ ------------------------------------------------------------
Communities A key component of the Company's portfolio
The Company's * Acceptance of care in the community is that the properties within it are
assets rely set within community environments so
on a strong, that individuals are able as part of
positive * Availability of local facilities for tenants their care plan to interact with the
connection local community rather than being isolated.
with the
local This is achieved in consultation with
communities local authorities in determining that
in which its the initial settings are appropriately
business diversified within the respective community
operates. and are not clustered in a way that
would lead to isolation.
This assists the individuals and also
ensures appropriate integration within
the community. On a day-to-day basis,
care providers and Approved Providers
operate policies to ensure positive
relationships with neighbours and surrounding
dwellings. The activities within the
Company's properties create employment
within the local community for both
housing and care workers.
-------------- ------------------------------------------------------------ ------------------------------------------------------------
Charity The Company supports a number of organisations
Partners * Delivering needed support to vulnerable adults whose objectives are to provide improved
outcomes for vulnerable adults affected
by homelessness and other care needs.
* Improved well-being of vulnerable adults
The Company commits targeted financial
* ESG performance and sustainability support to fund specific programmes
which help those affected by homelessness
by teaching them skills and offering
support to prevent them from being
in that position again.
The Company ensures regular calls and
meetings with our charity partners
to update on progress and projects
being undertaken, as well as attending
events in support of their work.
In 2020, the Company amended its investment
objective and investment policy to
enable it to enter into long-term leases
with the NHS and with registered charities
operating within areas of investment
interest to the Company. The amendments
will allow the Company access to a
wider range of pipeline opportunities
and will assist in providing the currently
unmet demand in these areas.
-------------- ------------------------------------------------------------ ------------------------------------------------------------
The above mechanisms for engaging with stakeholders are kept
under review by the Directors and will be discussed on a regular
basis at Board meetings to ensure that they remain effective.
Principal Decisions
Principal decisions have been defined as those that have a
material impact to the Group and its key stakeholders.
In taking these decisions, the Directors considered their duties
under section 172 of the Act. Principal decisions made during the
year were as follows:
New Regulatory Clause Initiative
In 2022, the Board considered and agreed a new approach to the
Company's lease model with the goal of supporting additional
regulatory compliance and addressing perceptions of risk. The new
regulatory clause will enable Approved Providers to achieve greater
alignment between income receipts and lease liabilities, set
achievable capital solvency requirements against lease obligations
and demonstrate a further degree of risk sharing. This will assist
the Company's counterparties to demonstrate compliance with the
Regulator of Social Housing's Governance and Financial Viability
Standard.
The new regulatory clause would operate on a property by
property basis and provide for a temporary pass through of lease
rent in certain limited circumstances when an Approved Provider is
not in receipt of full payment and would ensure that the Company
does not become responsible for obligations that are rightly owed
by others such as void cover by care providers. The new regulatory
clause will provide the Company with counterparties which are
better able to achieve regulatory compliance, enhanced information,
step in rights and unchanged lease and property values.
Publication of Market Update
In response to the unfounded comments by an activist
short-seller who took up a position in the Company's shares, the
Board took the decision to publish a Market Update paper on 11
October 2021 to provide a detailed response and also address
principal areas of discussion that had been brought out in
conversations with shareholders.
The Company and CIM have continued to make themselves available
to speak and meet with both new and existing shareholders following
the release of the detailed market update. Both the Board and
representatives of the Investment Adviser continue to be available
to engage with shareholders.
Buyback Programme
During the year, the Board monitored the decline in the
Company's share price which, in its view, was associated with
activity from an activist short seller and subsequent press
coverage, the content of which the Board continues to believe to be
baseless, incorrect and/or misleading. In response to the decline
in the share price, the Board agreed the implementation of a share
buyback programme under certain parameters, which is being operated
by the Company's joint brokers. The impact of share buybacks
continue to enhance IFRS NAV per share by 0.26p at 31 March
2022.
Further information on the Company's buyback programme can be
found in the full report.
Agreement with E.ON to reduce carbon footprint
In June 2021, the Company entered into a national framework
agreement with energy provider E.ON to undertake environmental
enhancements that would help to reduce the carbon footprint of the
Company's portfolio. The agreement was focused on those properties
with lower EPC ratings and formed part of the Company's objective
to reach carbon neutrality. The agreement built on successful pilot
projects already undertaken by the Company and E.ON. It benefits
the Company's Approved Provider and other non-for-profit partners
by reducing maintenance cost and energy bills without any costs
being incurred by them and enabling them to contribute to a reduced
carbon footprint. The project draws on the ECO3 funding scheme, and
the maintenance costs benefited from the Domestic Renewable Heat
Incentive.
Strategic Overview
Purpose of the Company
The Company was established in 2016 with the purpose of
delivering long-term responsible, stable returns to investors and
achieving positive measurable social impact and ESG benefits on a
large scale. It should achieve this as a result of introducing
long-term equity capital into the social housing sector with a
particular focus on care-based community housing. By doing so, this
would form a bridge between equity investors and the social housing
sector and bring together aspects of healthcare with social
housing.
The Company has since developed the largest portfolio of
care-based community housing in the UK that provides long-term
homes for more than 4,500 individuals across half the local
authorities in England and Wales.
As a result of this success, the Company has recently extended
its mandate to be able to enter into transactions directly with the
NHS and with leading charities with an interest in the provision of
specialist housing that has a strong care or support element, is
consistent with public policy and whose costs are met by the public
purse for which it offers value for money.
Investment Objective
The Company's investment objective is to provide shareholders
with an attractive level of income, together with the potential for
capital growth from investing in a portfolio of Social Homes, which
benefits from inflation adjusted long-term leases or occupancy
agreements with Approved Providers and to deliver, on a fully
invested and geared basis, a targeted dividend yield of 5% per
annum1, which the Company expects to increase broadly in line with
inflation.
(1) The dividend yield is based on the original IPO price of 100
pence per Ordinary share. The target dividends are targets only and
do not represent a profit forecast.
There can be no assurance that the targets can or will be met
and should not be taken as an indication of the Company's expected
or actual future results.
Accordingly, potential investors should not place any reliance
on these targets in deciding whether or not to invest in the
Company or assume that the Company will make any distributions at
all, and should decide for themselves whether or not the target
dividend yields are reasonable or achievable.
Investment Policy
The Company's investment policy is to invest in a diversified
portfolio of Social Homes throughout the United Kingdom. The
Company intends to meet the Company's investment objective by
acquiring, typically indirectly via Special Purpose Vehicles,
portfolios of Social Homes and entering into long-term inflation
adjusted leases or occupancy agreements for terms primarily ranging
from 10 years to 40 years with Approved Providers, where all
management and maintenance obligations will be serviced by the
Approved Providers. The Company will not undertake any development
activity or assume any development or construction risk. However,
the Company may engage in renovating or customising existing homes,
as necessary.
The Company may make prudent use of leverage to finance the
acquisition of Social Homes and to preserve capital on a real
basis.
The Company is focused on delivering capital growth and expects
to hold its Portfolio over the long-term and therefore it is
unlikely that the Company will dispose of any part of the
Portfolio. In the unlikely event that a part of the Portfolio is
disposed of, the Directors intend to reinvest proceeds from such
disposals in assets in accordance with the Company's investment
policy .
Investment Restrictions
The Company invests and manages the Portfolio with the objective
of delivering a high quality, diversified Portfolio through the
following investment restrictions:
-- The Company only invests in Social Homes located in the United Kingdom;
-- The Company only invests in Social Homes where the
counterparty to the lease or occupancy agreement is an Approved
Provider;
-- No lease or occupancy agreement shall be for an unexpired
period of less than 10 years, unless the shorter leases or
occupancy agreements represent part of an acquisition of a
portfolio which the Investment Adviser intends to reorganise such
that the average term of lease or occupancy agreement is increased
to 15 years or above;
-- The aggregate maximum exposure to any single Approved
Provider is 25% of the Gross Asset Value, once the capital of the
Company is fully invested;
-- No investment by the Company in any single geographical area,
in relation to which the houses and/or apartment blocks owned by
the Company are located on a contiguous or largely contiguous
basis, exceeds 20% of the Gross Asset Value of the Company;
-- The Company only acquires completed Social Homes and will not
forward finance any development of new Social Homes;
-- The Company does not invest in other alternative investment
funds or closed-end investment companies; and
-- The Company is not engaged in short selling.
The investment limits detailed above apply at the time of the
acquisition of the relevant investment in the Portfolio once fully
invested. The Company would not be required to dispose of any
investment or to rebalance the Portfolio as a result of a change in
the respective valuations of its assets.
Gearing Limit
The Directors seek to use gearing to enhance equity returns. The
level of borrowing is set on a prudent basis for the asset class
and seeks to achieve a low cost of funds, whilst maintaining the
flexibility in the underlying security requirements and the
structure of both the Portfolio and the Company.
The Company may, following a decision of the Board, raise debt
from banks and/or the capital markets and the aggregate borrowings
of the Company is always subject to an absolute maximum of 40% of
Gross Asset Value calculated at the time of drawdown. Current
gearing is 34.43%.
Debt is secured at asset level, whether over a particular
property or a holding entity for a particular series of properties,
without recourse to the Company and also potentially at Company
level with or without a charge over the Portfolio (but not against
particular assets), depending on the optimal structure for the
Company and having consideration to key metrics including lender
diversity, cost of debt, debt type and maturity profiles. Otherwise
there will be no cross-financing between investments in the
Portfolio and the Company will not operate as a common treasury
function between the Company and its investments.
Use of Derivatives
The Company may choose to utilise derivatives for efficient
portfolio management. In particular, the Directors may engage in
full or partial interest rate hedging or otherwise seek to mitigate
the risk of interest rate increases on borrowings incurred in
accordance with the gearing limits as part of the management of the
Portfolio.
Cash Management
Until the Company is fully invested, and pending re-investment
or distribution of cash receipts, the Company invests in cash, cash
equivalents, near cash instruments and money market
instruments.
REIT Status
The Directors conduct the affairs of the Company so as to enable
it to remain qualified as a REIT for the purposes of Part 12 of the
Corporation Tax Act 2010 (and the regulations made thereunder).
Culture
The Directors agree that establishing and maintaining a healthy
corporate culture among the Board and in its interaction with the
Investment Adviser, shareholders and other stakeholders will
support the delivery of its purpose, values and strategy. The Board
seeks to promote a culture of openness, debate and integrity
through ongoing dialogue and engagement with its service providers,
principally the Investment Adviser.
As detailed in the Corporate Governance Statement, the Company
has a number of policies and procedures in place to assist with
maintaining a culture of good governance, including those relating
to diversity and Directors' conflicts of interest. The Board
assesses and monitors compliance with these policies as well as the
general culture of the Board through Board meetings and, in
particular, during the annual evaluation process which is
undertaken by each Director (for more information, see the
performance evaluation section as set out in the full report.
The Board's culture itself is one of openness, collaboration and
constructive debate to ensure the effective contribution of all
Directors, particularly in respect of the Board's decision making.
Consideration of our Stakeholders is embedded in the Board's
decision making process. Please see our section 172 Statement set
out above.
Key Performance Indicators ("KPIs")
Measure Explanation Result
----------------------------- --------------------------------- --------------------------------------------------
Increase in IFRS NAV Target to achieve capital IFRS NAV increase of 12.3p per share or 12.60%
per share appreciation whilst maintaining from IPO (2021:10.3p per share 10.56% from
a low risk strategy from IPO).
enhancing the quality of
cash flows from investments,
by physical improvement of
properties and by creating
a significantly diversified,
high-quality portfolio.
----------------------------- --------------------------------- --------------------------------------------------
Dividends per share For the year ended 31 March Total dividend of 5.55p per share declared
2022, the Company targeted for the year to 31 March 2022 (2021:5.40p).
a dividend of 5.55p per share.
----------------------------- --------------------------------- --------------------------------------------------
Number of Local Authorities, Target risk mitigation through As at 31 March 2022:
Approved Providers and a diversified portfolio (once
care providers fully invested) with no more -- 178 Local Authority partners (2021:164 Local
than 25% exposure to any Authority partners)
one Local Authority or single -- 18 Approved Providers (2021: 16 Approved
Approved Provider and no Providers)
more than 20% exposure to -- 130 Care Providers (2021:118 Care Providers)
any single geographical area,
once the capital of the Company The Company's largest single exposure is to
is fully invested. Auckland Home Solutions CIC and currently stands
at 16% (2021:24%). The largest geographical
concentration is in the South West, being 16%
(2021:16%).
----------------------------- --------------------------------- --------------------------------------------------
Loan to Gross Assets Targeted total debt drawn Leverage as at 31 March 2022 of 34.3% of gross
(Leverage) no more than 40% of gross assets (2021: 34.48%).
assets.
----------------------------- --------------------------------- --------------------------------------------------
EPRA
The Company is a member of the European Public Real Estate
Association ("EPRA"). EPRA has developed and defined the following
performance measures to give transparency, comparability and
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. These are all Alternative Performance measures of the
Company.
Definition EPRA Earnings EPRA Net Reinstatement EPRA Net Tangible EPRA Net Disposal
Value ("NRV") Assets ("NTA") Value ("NDV")
Earnings from EPRA NAV metric EPRA NAV metric EPRA NAV metric
operational which which which represents
activities. assumes that assumes that the
entities never entities buy shareholders'
sell assets and sell assets, value under
and aims to thereby a disposal scenario,
represent the crystallising where deferred
value required certain levels tax,
to rebuild of financial instruments
the entity. unavoidable and
deferred tax. certain other
adjustments
are calculated
to the full
extent of their
liability, net
of any resulting
tax.
----------------------- ----------------------- ---------------------- -----------------------
Purpose A key measure The EPRA NAV set of metrics make adjustments
of a company's to the NAV per the IFRS financial statements
underlying to provide stakeholders with the most
operating results relevant information on the fair value
and an indication of the assets and liabilities of a real
of the extent estate investment company, under different
to which current scenarios.
dividend payments
are supported
by earnings.
----------------------- ------------------------------------------------------------------------
Performance EPRA Earnings EPRA NAV EPRA NTA EPRA NDV
GBP GBP GBP GBP
2022: 29,810,000 2022:673,416,000 2022:673,416,000 2022:678,191,000
2021:30,630,000 2021:674,042,000 2021:674,042,000 2021:671,476,000
2020:28,814,000 2020:671,042,000 2020:671,042,000 2020:667,560,000
----------------------- ----------------------- ---------------------- -----------------------
EPRA Earnings EPRA NRV per EPRA NTA per EPRA NDV per
per share share (diluted) share (diluted) share (diluted)
(Basic and pence pence pence
diluted) pence
2022:4.82 2022:109.96 2022:109.96 2022:110.74
2021:4.93 2021:108.38 2021:108.38 2021:107.97
2020:4.63 2020:107.95 2020:107.95 2020:107.39
----------------------- ----------------------- ---------------------- -----------------------
Definition EPRA Net Initial EPRA Topped-up EPRA Costs EPRA Vacancy
Yield ("NIY") Net Initial Ratio Rate
Yield ("NIY")
----------------------- ----------------------- ---------------------- -----------------------
Annualised This measure Administrative Estimated Market
rental income incorporates and operating Rental Value
based on the an adjustment costs (including ("ERV") of vacant
cash rents to the EPRA and excluding space divided
passing at NIY in respect costs of direct by ERV of the
the balance of the expiration vacancy) divided whole portfolio.
sheet date, of rent-free by gross rental
less nonrecoverable periods (or income.
property operating other unexpired
expenses, divided lease incentives
by the market such as discounted
value of the rent periods
property with and stepped
(estimated) rents).
purchasers'
costs.
----------------------- ----------------------- ---------------------- -----------------------
Purpose A comparable measure for A key measure A 'pure' (%)
portfolio valuations. These to enable meaningful measure of investment
measures should make it measurement property space
easier for investors to of the changes that is vacant,
judge themselves, how the in a company's based on ERV.
valuation of portfolio X operating costs.
compares with portfolio
Y.
------------------------------------------------ ---------------------- -----------------------
Performance EPRA NIY EPRA Topped-up EPRA Costs EPRA Vacancy
NIY Ratio(1) Rate
% % % %
2022:5.28 2022:20.20 2022:0
2022:5.28 2021:5.24 2021:20.33 2021:0
2021:5.24 2020:5.26 2020:21.48 2020:0
2020:5.26
--------------------- ------------------------- ---------------------- -----------------------
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.
(1) The ratios inclusive of vacancy costs are the same as the
ratio exclusive of vacancy costs for 2022,2021 and 2020.
Principal Risks and Risk Management
The Board considers that the risks detailed below are the
principal risks facing the Group currently, along with the risks
detailed in note 31.0 to the financial statements. These are the
risks that could affect the ability of the Company to deliver its
strategy. The Board confirms that the principal risks of the
Company, including those which would threaten its future
performance, solvency or liquidity, have been robustly assessed
throughout the year ended 31 March 2022, taking into account the
emerging risks such as the evolving Ukraine-Russia conflict risk,
climate change risk, cyber security risk and recruitment of staff
at counterparties risk, and that processes are in place to continue
this assessment.
The Audit and Management Engagement Committee has divided the
Company's risks into the following risk type categories:
-- Strategy and Competitiveness;
-- Operational, including Cyber Crime;
-- Investment Management; and
-- Accounting, Legal and Regulatory.
Each risk contained in each category is reviewed for its impact
and probability by the Audit and Management Engagement Committee at
least twice during the year.
The Audit and Management Engagement Committee takes
responsibility for overseeing the effectiveness of risk management
and internal control systems on behalf of the Board and advises the
Board on the principal risks facing the business.
Further details of risk management processes that are in place
can be found in the Corporate Governance Statement set out in the
full report. The principal and emerging risks and uncertainties
relating to the Group are regularly reviewed by the Board along
with the internal controls and risk management processes that are
used to mitigate these risks. The Board has identified four new
principal risks during the year (as set out in the list of
principal risks and uncertainties), with the risk associated with
share price disruption due to an activist shareholder being
identified as having the highest impact and likelihood. The risk
associated with the failure to monitor and ensure that contingent
activities are being completed by Approved Providers was removed as
a principal risk by the Board during the year. Further details on
this and the other principal risks and the management of those
risks are described below:
Principal risks and uncertainties
1. Strategy and Impact How managed/mitigated
Competitiveness
risk
-------------------------- ------------------------------------ ----------------------------------- ---------------
The Company's share The Company is targeted by The Board is committed to Impact: High
price is disrupted a short seller or activist maintaining
due to an activist shareholder leading to a fall open channels of communication Probability:
shareholder. in the Company's share price with Likely
and a widening of the shareholders and engaging in ways
This risk was newly discount to NAV. shareholders find most meaningful,
identified during in order to gain understanding of
the year. Significant numbers of shares shareholder views. Further
may need to be repurchased information
leading to a fall in the size on the Board's engagement with
of the company and liquidity shareholders
implications. can be found above.
The Board seeks to provide full
disclosure on the counterparties
and the structure of transactions
so that all stakeholders are kept
reliably informed on the Company's
business dealings.
The Board regularly reviews the
Company's buyback policy to ensure
this is in alignment with the
interests
of the Company and shareholders.
The Board is also mindful of the
possibility to issue shares and
regularly reviews its policy in
this area to ensure that it is
consistent
with the Company's strategy. It
receives regular updates from the
Company's brokers to help inform
its decisions in this regard.
-------------------------- ------------------------------------ ----------------------------------- ---------------
2. Strategy and Impact How managed/mitigated
competitiveness
risks
-------------------------- ------------------------------------ ----------------------------------- ---------------
The Company and Any change in the laws, regulations The Company focuses on niche real Impact: Very
its operations and/or government policy affecting estate sectors where it believes High
are subject to the Company and its operations the regulatory framework and
laws and regulations may have a material adverse underlying Probability:
enacted by national effect on the ability of the demand dynamics to be robust. Unlikely
and local governments Company to successfully pursue
and government its investment policy and The Investment Adviser has strong
policy. meet its investment objective industry contacts and has good
and on the value of the Company knowledge
This risk remained and the shares. on policy opinion and direction.
at the same level
as the year ended The Board obtains regular updates
31 March 2021. from professional advisers to
monitor
developments in regulation and
legislation.
-------------------------- ------------------------------------ ----------------------------------- ---------------
3. Strategy and Impact How managed/mitigated
competitiveness
risks
-------------------------- ------------------------------------ ----------------------------------- ---------------
As a result of The rate of capital deployment The Company has strong links with Impact: High
competition from would drop, decreasing returns vendors and a robust pipeline of
other purchasers to shareholders. future acquisitions. Probability:
of social housing Unlikely
properties, the The Board regularly reviews the
Company's ability pipeline of potential acquisitions
to deploy capital and monitors the market landscape.
effectively within
a reasonable timeframe The Board is aware of the current
may be restricted competitive social housing market
or the net initial and recognises the impact this may
yields at which have on the Company's ability to
the Company can deploy capital effectively.
acquire properties
may decline such
that target returns
cannot be met.
This risk remained
at the same level
as the year ended
31 March 2021.
-------------------------- ------------------------------------ ----------------------------------- ---------------
4. Investment Impact How managed/mitigated
management risk
-------------------------- ------------------------------------ ----------------------------------- ---------------
Tenant defaulting Loss of rental income in the The portfolio is highly Impact:
under the terms short term. diversified Medium
of a lease. to reduce the impact of default.
Extensive diligence is undertaken Probability:
This risk remained on all assets, which is reviewed Likely
at the same level and challenged by the Board.
as the year ended
31 March 2021. The Investment Adviser works
proactively
with Approved Providers to address
any potential concerns.
The Board is provided with regular
updates on the tenants with any
concerns raised for discussion.
The Board has noted that the
Company's
historic level of defaults has
been
immaterial.
-------------------------- ------------------------------------ ----------------------------------- ---------------
5. Investment Impact How managed/mitigated
management risk
-------------------------- ------------------------------------ ----------------------------------- ---------------
The value of the The valuation of the Company's The Company invests in projects Impact:
investments made assets would fall, decreasing with stable, predetermined, High
by the Company the NAV and yields of the long-term
may change from Company. leases in place with CPI or CPI Probability:
time to time according plus 1% indexation and its Possible
to a variety strategy
of factors, including is not focused on sale of
movements in interest properties.
rates, inflation
and general market The Board receives regular updates
pricing of similar on factors that might impact
investments. investment
valuations.
This was identified
as a heightened
risk during the
year.
-------------------------- ------------------------------------ ----------------------------------- ---------------
6. Investment Impact How managed/mitigated
management risk
-------------------------- ------------------------------------ ----------------------------------- ---------------
Due diligence may The Company would overpay The Company undertakes detailed Impact:
not reveal all for assets impairing shareholder due diligence on the properties, High
facts and circumstances value, reducing rental income their condition, the proposed
that may be relevant and therefore returns. rental Probability:
in connection with levels - benchmarking against Unlikely
an investment and comparable
may not prevent schemes using both external
an acquisition consultants
being materially where required and its own
overvalued or rental proprietary
streams being at database - and on the Approved
risk. Providers
and care providers involved in
This risk remained each
at the same level property to ensure that the
as the year ended purchase
31 March 2021. price is robust.
The Board considers the due
diligence
undertaken when approving
acquisitions.
-------------------------- ------------------------------------ ----------------------------------- ---------------
7. Investment Impact How managed/mitigated
management risk
-------------------------- ------------------------------------ ----------------------------------- ---------------
Loss of key staff Negative investor sentiment The Board considers the risk of Impact:
at the Investment leading to a reduction in the Investment Adviser losing key High
Adviser. share price. Reduction in staff and the succession plans the
ability to source off market Investment Adviser has in place. Probability:
This risk remained and favourable deals. Unlikely
at the same level The Board has noted the ongoing
as the year ended expansion of the Investment
31 March 2021. Adviser's
support team.
-------------------------- ------------------------------------ ----------------------------------- ---------------
8. Strategy and Impact How managed/mitigated
competitiveness
-------------------------- ------------------------------------ ----------------------------------- ---------------
The Company fails Decrease in the value of the Regular review and consideration Impact:
to respond to issues Company's assets and a negative by the Board including the input High
related to climate impact on the Company's share of climate change specialists at
change, either price. the Probability:
directly as enhancements Investment Adviser. Unlikely
to properties or
indirectly via Advice received from external
its climate change professional
reporting. advisers.
This was a newly
identified risk
during the year.
-------------------------- ------------------------------------ ----------------------------------- ---------------
9. Operational, Impact How managed/mitigated
including cyber
crime
-------------------------- ------------------------------------ ----------------------------------- ---------------
Serious accident Reputational damage for the Reporting from Approved Providers Impact: High
or poor Company. and monitoring of
management amongst Approved Providers by the Probability:
Approved Providers Investment Unlikely
due to staff shortages, Adviser.
loss of competence
and vaccination
uptake.
This was identified
as a heightened
risk during the
year.
-------------------------- ------------------------------------ ----------------------------------- ---------------
10. Strategy and Impact How managed/mitigated
competitiveness
-------------------------- ------------------------------------ ----------------------------------- ---------------
The Company is A reduction in the Company's The Board monitors the marketing Impact: Medium
not promoted in share price and a widening and distribution activity
a way which generates of the discount to NAV. undertaken Probability:
investor demand, by the Investment Adviser and the Unlikely
especially with Corporate Brokers at each meeting
regard to ESG focus. as well as
receiving regular reports from its
This was identified PR adviser Buchanan.
as a heightened
risk during the The Board utilises discount
year. control
mechanisms to support promotional
activities.
The Board engages The Good Economy
and Social Profit Calculator and
reports findings to shareholders.
The Board considers ESG reporting
in the Annual Report and Accounts
carefully.
-------------------------- ------------------------------------ ----------------------------------- ---------------
Emerging risks
Emerging risks are considered during the regular risk review,
and would be specifically discussed and evaluated as they arise
during the year. Input from the Investment Adviser on emerging
risks is considered by the Audit and Management Engagement
Committee. Key emerging risks identified and considered during the
year include:
-- Ukraine-Russia Conflict - the impact of Ukraine- Russia
conflict. Although the Company has no direct exposure to Russia or
eastern European territories, the Board continues to closely
monitor this.
-- Long-term Climate Change - the impact of climate change, over
the longer-term on the business. The Company is committed to
understanding ESG risk, including the particular impact of climate
change on the business. Climate change poses an indirect risk to
the Company's operations, the environment and society, and the
Board is aware that appropriate action is required to reduce its
impact.
-- Cyber Security - the impact of a cyber security breach within
the Company or its service providers. During the year, the Board
was made aware of a minor data breach within the Depository. The
breach has had no impact on the Company's operations and no
personal data was compromised. The Board is satisfied that the
Depository has taken appropriate immediate remedial action and has
adequate safeguards in place.
The Listing Rules require premium-listed commercial companies to
disclose in their annual report whether they have reported on how
climate change affects their business in a manner consistent with
the recommendations of the Task Force on Climate-related Financial
Disclosures ('TCFD'), and to provide an explanation and other
information if they are unable to do so. In addition, the UK
Government intends to introduce mandatory climate-related
disclosures to supplement the requirements under the Listing Rules.
The Board has chosen not to adopt the requirements early and
expects these to be applicable to the Company in the financial year
2024.
Going Concern and Viability Statement
Going Concern
The Board regularly reviews the position of the Company and its
ability to continue as a going concern at its meetings. The
financial statements set out the current financial position of the
Company.
The Company acquires high-quality property with a particular
focus on property providing care for the long-term. The properties
acquired are on long-term full repairing and insuring leases in a
sector of the market with very high levels of need. The cost base
of the Company is proportionately low compared to revenue and there
is a high level of certainty over cost to be
incurred. On this basis, the Company is expected to be viable
well beyond the five-year term considered in the Company's testing
below.
As at 31 March 2022, the Company held cash balances of GBP53.3
million (net of operating and financing amounts due). The Board has
evaluated the financial position of the Company and has maintained
its premium investment grade rating from Fitch Ratings Ltd - a
well-established rating agency with a strong familiarity to the
alternative healthcare real estate space, which gives the
Company confidence in the ability to raise future debt and/or
equity capital in order to fund the Company's investments for the
long-term and to facilitate the payment of dividends to
shareholders. Based on these, the Board believes that the Company
is in a position to manage its financial risks.
Various forms of sensitivity analysis have been performed, in
particular the financial performance of tenants and a reduction in
rent. As at 31 March 2022, the rent would have to drop by
approximately 29% before its loan covenant is breached. At the date
of approval of this report, the Company has substantial headroom
within its financial loan covenants. The Company also benefits from
a secure income stream from leases with long average unexpired term
leases.
Leverage is prudently maintained at a level of less than 40% of
GAV.
The Company's articles of association include a requirement for
the Board to propose an ordinary
resolution at the annual general meeting following the fifth
anniversary from the initial public offering of the Company for the
Company to continue in its current form (the Continuation
Resolution). This is the first continuation vote since the Company
was set up.
If the Continuation Resolution is passed, the Company will
continue its business as presently constituted and propose the same
resolution at every fifth annual general meeting thereafter. If the
Continuation Resolution is not passed, the Directors will be
required, within six months after the date of this annual general
meeting, to formulate proposals for consideration by the
shareholders for the voluntary liquidation, unitisation,
reorganisation, or reconstruction of the Company. After making
appropriate enquiries of the Company's brokers and Investment
Adviser, pursuant to their recent discussions with a number of the
Company's shareholders, the Directors are of the view that the
Continuation Resolution will be passed at the forthcoming annual
general meeting. This reflects the strength and nature of the
Company's portfolio, and specifically the provision of long-term
accommodation for more than 4,000 vulnerable individuals.
Accordingly, the Directors expect that if the Continuation
Resolution is not passed, an event which the Directors consider to
be highly remote, formulating and implementing any such proposals
would
require the Company to continue operations for a period of at
least 12 months from the date of approval of the Company's
financial statements.
The Board is, therefore, of the opinion that the going concern
basis adopted in the preparation of the consolidated financial
statements is appropriate.
Viability Statement
The Directors present the Company's viability statement which
summarises the results of their assessment of the Company's current
position, its principal risks and prospects over a period to 31
March 2027.
The assumptions underpinning the forecast cashflows and covenant
compliance forecasts were sensitised to explore the resilience of
the Company to the potential impact of the Company's principal
risks and uncertainties.
The prospects were assessed over a five-year period for the
following reasons:
i) the Company's long-term forecast covers a five-year period;
ii) the length of service level agreements between Approved
Providers and care providers is typically five years; and
iii) the Company's leases are typically 25 years on fully
repairing and insuring leases, enabling reasonable certainty of
income over the next five years.
The Company's five-year forecast incorporates assumptions
related to the Company's investment strategy and principal risks
from which performance results, cash flows and key performance
indicators are forecast. The principal risks are set out above. Of
these risks, those which are expected to have a higher impact on
the Company's longer-term prospects are those related to future
government housing policies. The Company has considered its
strategy over a longer term and, in light of the inherent demand
for the Company's properties and the vulnerable nature of the
ultimate tenant, the risk of change in future housing policy is
considered to be limited. The principal risks are mitigated by the
Company's risk management and internal control processes, which
function on an ongoing basis.
The Board, via delegation to the Audit and Management Engagement
Committee, monitors the effectiveness of the Company's risk
management and internal control processes on an ongoing basis. The
monitoring activities are described in the Report of the Audit and
Management Engagement Committee set out in the full report and
include direct review and challenge of the Company's documented
risks, risk ratings and controls, and review of performance and
compliance reports prepared by the Company's advisers and the
independent external auditors.
The Board of Directors has carried out a robust assessment of
the principal and emerging risks facing the Company, including
those that would threaten its business model, future performance,
solvency and liquidity. Where appropriate, the Company's forecasts
are subject to sensitivity analysis, which involves applying severe
conditions and flexing a number of assumptions simultaneously.
The sensitivities performed were designed to provide the
Directors with an understanding of the Company's performance in the
event of severe but plausible scenarios, taking full account of
mitigating actions that could be taken to avoid or reduce the
impact or occurrence of the underlying risks outlined below:
-- 10% of tenants defaulting under a lease. The outcome of this
scenario reduces profits on average over the five year forecast by
15% per annum and reduces cash by GBP20 million. However, the Board
is still comfortable that dividends could be paid as there is still
sufficient level of cash in the business; and
-- deterioration in economic outlook, change in government
housing policy which could impact the fundamentals of the social
housing sector, including a negative impact on valuations and a 5%
reduction in annual rents. The outcome of the 'severe downside
scenario' was that the Company's covenant headroom on existing debt
(i.e the level at which the investment property values would have
to fall before a financial breach occurs) reduces by 13%, prior to
any mitigating actions such as asset sales, which indicates that
covenants on existing facilities would not be breached.
The Board has noted that the Company is due to hold its first
continuation vote at the AGM in September 2022. This would be an
ordinary resolution requiring approval from 50% of the shareholders
voting. Further details as to how the Company has considered the
impact of the continuation vote can be found in the Going Concern
section above.
The remaining principal risks and uncertainties, whilst having
an impact on the Company's business, are not considered by the
Directors to have a reasonable likelihood of impacting the
Company's viability over the five-year period, therefore the
scenarios outlined above are the only ones that have been
specifically tested. Based on the results of their assessment, the
Directors have a reasonable expectation that the Company will be
able to continue in operation and meet its liabilities as they fall
due over the five-year period of their assessment.
Approval of Strategic Report
The Group Strategic Report was approved by the Board and signed
on its behalf by:
Michael Wrobel
Chairman
29 June 2022
Further details on the Environmental, Social & Governance
framework of the Company and the Social Impact report are set out
in the full Report.
Board of Directors
Michael Wrobel (Chairman)
Peter Baxter (Senior Independent Director and Chair of
Nomination and Remuneration Committee)
Caroline Gulliver (Chair of the Audit and Management Engagement
Committee)
Alison Hadden (Director)
Alastair Moss (Director)
Extracts from the Report of the Directors
Results and Dividends
The results for the year are shown below.
The following dividends were paid on the Ordinary shares during
the year:
Fourth Quarterly dividend 1.35p per share paid on 11 June 2021
-------------------------- --------------------------------------------
First Quarterly dividend 1.3875p per share paid on 10 September 2021
-------------------------- --------------------------------------------
Second Quarterly dividend 1.3875p per share paid on 13 December 2021
-------------------------- --------------------------------------------
Third Quarterly dividend 1.3875p per share paid on 11 March 2022
-------------------------- --------------------------------------------
Since the year end, the Company has declared the following
dividend:
Fourth Quarterly dividend 1.3875p per share paid on 28 June 2022
-------------------------- ---------------------------------------
No final dividend is being recommended on the Ordinary
shares.
Capital Structure
Issue of shares
At the AGM held on 22 September 2021, the Directors were
authorised to issue equity securities up to an aggregate nominal
amount of GBP1,244,922 (being approximately 20% of the issued
Ordinary share capital).
The Company was also authorised to disapply pre-emption rights
in respect of equity securities and to issue equity securities for
cash up to an aggregate nominal amount equal to GBP622,461 (being
approximately 10% of the issued Ordinary share capital).
During the year, 565,000 Ordinary shares were issued from
Treasury under these authorities. These shares were issued at a
price of not less than the net asset value per share at the time of
issue plus an amount to cover the cost. Following these
transactions, the Company held no shares in treasury.
The equity issuance was made with a view to balancing the
premium to NAV and satisfying market demand for additional shares
in the Company.
At the AGM held on 22 September 2021, the Company sought
approval for a resolution to disapply pre-emption rights on an
additional 10% of the Company's issued Ordinary share capital. This
resolution failed as votes representing 27.11% of the total votes
cast were received against it.
Following the AGM, the Company, via its corporate brokers
engaged with its largest shareholders who had voted against this
resolution. The Board understands that these shareholders followed
PIRC's or their own internal recommendation to vote against this
resolution as when combined with the standard 10% pre-emption
disapplication resolution it would have resulted in the Company
having authority to issue up to 20% of its own shares
pre-emptively.
At the AGM in 2022 the Board proposes to seek shareholder
approval for a standard 10% pre-emption disapplication
resolution.
The authority to issue shares will expire at the conclusion of
the forthcoming AGM. Proposals for the renewal of the Directors'
authority to issue shares will be set out in the Notice of AGM for
2022, which will be circulated to shareholders in due course.
Purchase of own shares
At the AGM held on 22 September 2021, the Directors were granted
the authority to buy back up to 93,306,960 Ordinary shares, being
14.99% of the Ordinary shares in issue at the time of the passing
of the resolution.
During the year, as the Company's share price fell below Net
Asset Value per share, the Board instigated a share buyback
programme, under which a total of 10,025,000 shares have been
purchased into treasury as at 31 March 2022.
The authority to buy back up to 93,306,960 shares will expire at
the conclusion of the forthcoming AGM, when a resolution for its
renewal will be proposed. Further information will be contained in
the Notice of AGM, which will be circulated to shareholders in due
course.
Current share capital
As at 31 March 2022, there were 622,461,380 Ordinary shares in
issue, of which 10,025,000 shares were held in treasury. The total
voting rights of the Company as at 31 March 2022 was
612,436,380.
Statement of Directors' Responsibilities
The directors are responsible for preparing the annual report
and financial statements in accordance with applicable law and
regulation.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
have prepared the Group financial statements in accordance with
UK-adopted international accounting standards and the Company
financial statements in accordance with United Kingdom Generally
Accepted Accounting Practice (United Kingdom Accounting Standards,
comprising FRS 101 "Reduced Disclosure Framework", and applicable
law).
Under Company law, Directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Group and Company and of the
profit or loss of the Group for that period. In preparing the
financial statements, the Directors are required to:
-- select suitable accounting policies and then apply them consistently;
-- state whether applicable UK-adopted international accounting
standards have been followed for the Group financial statements and
United Kingdom Accounting Standards, comprising FRS 101 have been
followed for the Company financial statements, subject to any
material departures disclosed and explained in the financial
statements;
-- make judgements and accounting estimates that are reasonable and prudent; and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group and Company
will continue in business.
The Directors are responsible for safeguarding the assets of the
Group and Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The Directors are also responsible for keeping adequate
accounting records that are sufficient to show and explain the
Group's and Company's transactions and disclose with reasonable
accuracy at any time the financial position of the Group and
Company and enable them to ensure that the financial statements and
the Directors' Remuneration Report comply with the Companies Act
2006.
The Directors are responsible for the maintenance and integrity
of the Company's financial statements published on the ultimate
parent Company's website. Legislation in the United Kingdom
governing the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
Directors' confirmations
The directors consider that the annual report and accounts,
taken as a whole, is fair, balanced and understandable and provides
the information necessary for shareholders to assess the Group's
and Company's position and performance, business model and
strategy.
Each of the directors, whose names and functions are listed in
the Board of Directors confirm that, to the best of their
knowledge:
-- the Group financial statements, which have been prepared in
accordance with UK-adopted international accounting standards, give
a true and fair view of the assets, liabilities, financial position
and profit of the Group;
-- the Company financial statements, which have been prepared in
accordance with United Kingdom Accounting Standards, comprising FRS
101, give a true and fair view of the assets, liabilities,
financial position and profit of the Company; and
-- the Group Strategic Report includes a fair review of the
development and performance of the business and the position of the
Group and Company, together with a description of the principal
risks and uncertainties that it faces.
Approval
This Statement of Directors' Responsibilities was approved by
the Board and signed on its behalf by:
Michael Wrobel
Chairman
29 June 2022
NON-STATUTORY ACCOUNTS
The financial information set out below does not constitute the
Company's statutory accounts for the year ended 31 March 2022 or
the year ended 31 March 2021 but is derived from those accounts.
Statutory accounts for the period ended 31 March 2021 have been
delivered to the Registrar of Companies and those for the year
ended 31 March 2022 will be delivered in due course. The Auditor
has reported on those accounts; their report was (i) unqualified,
(ii) did not include a reference to any matters to which the
Auditor drew attention by way of emphasis without qualifying their
report and (iii) did not contain a statement under Section 498 (2)
or (3) of the Companies Act 2006.The text of the Auditor's report
can be found in the Company's full Annual Report and financial
statements at www.civitassocialhousing.com .
Consolidated Statement of Comprehensive Income
For the year ended 31 March 2022
For the For the
year ended year ended
31 March 2022 31 March 2021
Note GBP'000 GBP'000
--------------- ---------------
Revenue
Rental income 5.0 51,636 49,020
Less direct property expenses 5.0 (978) (1,175)
------------------------------------- ------- --------------- ---------------
Net rental income 50,658 47,845
Directors' remuneration 6.0 (206) (198)
Investment advisory fees 8.0 (6,132) (6,117)
General and administrative expenses 9.0 (3,909) (3,183)
------------------------------------- ------- --------------- ---------------
Total expenses (10,247) (9,498)
Change in fair value of investment
properties 15.0 12,269 5,511
------------------------------------- ------- --------------- ---------------
Operating profit 52,680 43,858
Finance income 10.0 7 20
Finance expense 11.0 (10,608) (7,737)
Change in fair value of interest
rate derivatives 21.0 2,675 (66)
------------------------------------- ------- --------------- ---------------
Profit before tax 44,754 36,075
Taxation 12.0 - -
------------------------------------- ------- --------------- ---------------
Profit being total comprehensive
income for the year 44,754 36,075
---------------------------------------------- --------------- ---------------
Earnings per share - basic and
diluted 13.0 7.23p 5.80p
-------------------------------- ----- ------ ------
All amounts reported in the Consolidated Statement of
Comprehensive Income above arise from continuing operations.
Consolidated Statement of Financial Position
As at 31 March 2022
31 March 2022 31 March 2021
Note GBP'000 GBP'000
----------------------------- ------- -------------------- --------------
Assets
Non-current assets
Investment property 15.0 945,237 893,684
Other receivables 17.0 23,519 21,905
Interest rate derivatives 21.0 2,131 -
----------------------------- ------- -------------------- --------------
970,887 915,589
Current assets
Trade and other receivables 17.0 12,865 12,821
Cash and cash equivalents 18.0 53,337 107,097
----------------------------- ------- -------------------- --------------
66,202 119,918
----------------------------- ------- -------------------- --------------
Total assets 1,037,089 1,035,507
----------------------------- ------- -------------------- --------------
Liabilities
Current liabilities
Trade and other payables 19.0 (9,492) (9,345)
Bank and loan borrowings 20.0 - (59,937)
----------------------------- ------- -------------------- --------------
(9,492) (69,282)
Non-current liabilities
Bank and loan borrowings 20.0 (352,050) (292,183)
Interest rate derivatives 21.0 - (544)
----------------------------- ------- -------------------- --------------
(352,050) (292,727)
----------------------------- ------- -------------------- --------------
Total liabilities (361,542) (362,009)
----------------------------- ------- -------------------- --------------
Total net assets 675,547 673,498
----------------------------- ------- -------------------- --------------
Equity
Share capital 22.0 6,225 6,225
Share premium reserve 23.0 292,626 292,463
Capital reduction reserve 24.0 322,365 331,140
Retained earnings 25.0 54,331 43,670
----------------------------- ------- -------------------- --------------
Total equity 675,547 673,498
----------------------------- ------- -------------------- --------------
Net assets per share -
basic and diluted 26.0 110.30p 108.30p
------------------------ ----- -------- --------
These 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 and Independent Non-Executive
Director)
29 June 2022
Company No: 10402528
Consolidated Statement of Changes in Equity
For the year ended 31 March 2022
Share Capital
Share premium reduction Retained Total
capital reserve reserve earnings equity
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------- ----- -------- -------- ---------- --------- ---------
Balance at 1 April 2020 6,225 292,405 330,926 41,008 670,564
Profit and total comprehensive income
for the year - - - 36,075 36,075
Shares reissued from treasury - 58 214 - 272
Dividends paid 14.0 - - - (33,413) (33,413)
--------------------------------------- -----
Balance at 31 March 2021 6,225 292,463 331,140 43,670 673,498
--------------------------------------- ----- -------- -------- ---------- --------- ---------
Profit and total comprehensive income
for the year - - - 44,754 44,754
Shares reissued from treasury - 163 484 - 647
Shares bought back into treasury - - (9,259) - (9,259)
Dividends paid 14.0 - - - (34,093) (34,093)
Balance at 31 March 2022 6,225 292,626 322,365 54,331 675,547
--------------------------------------- ----- -------- -------- ---------- --------- ---------
The notes set out below are an integral part of these
consolidated financial statements
Consolidated Statement of Cash Flows
For the year ended 31 March 2022
For the For the
year ended year ended
31 March 31 March 2021
2022 GBP'000
Note GBP'000
--------------------------------------- ------- ------------ ---------------
Cash flows from operating
activities
Profit for the year before
taxation 44,754 36,075
- Change in fair value of
investment properties (12,269) (5,511)
- Change in fair value of
interest rate derivatives (2,675) 66
- Rent and incentive straight
line adjustments 397 68
- Bad debt (credit)/expense 5.0 (17) 289
Finance income (7) (20)
Finance expense 10,608 7,737
Increase in lease incentive
receivable (2,011) (11,217)
Increase in trade and other
receivables (236) (3,150)
(Decrease)/increase in trade
and other payables (1,062) 1,762
--------------------------------------- ------- ------------ ---------------
Cash generated from operations 37,482 26,099
Interest received 7 20
--------------------------------------- ------- ------------ ---------------
Net cash flow generated from
operating activities 37,489 26,119
--------------------------------------- ------- ------------ ---------------
Investing activities
Purchase of investment properties (27,695) (19,462)
Acquisition costs (1,640) (938)
Purchase of subsidiary company (13,559) -
- including property
Sale proceeds on sale of subsidiary 2,695 -
company - excluding property
Utilisation of restricted
cash held for investing activities 529 14,232
--------------------------------------- ------- ------------ ---------------
Net cash flow used in investing
activities (39,670) (6,168)
--------------------------------------- ------- ------------ ---------------
Financing activities
Cost of shares bought into
treasury 24.0 (9,259) -
Proceeds from shares reissued
from treasury 24.0 919 -
Dividends paid to equity shareholders (33,928) (33,319)
Bank borrowings advanced 20.0 - 84,550
Bank borrowing issue costs
paid (1,805) (2,811)
Interest and security fees
paid on bank borrowings and
derivatives (8,590) (5,981)
--------------------------------------- ------- ------------ ---------------
Net cash flow (used in)/generated
from financing activities (52,663) 42,439
--------------------------------------- ------- ------------ ---------------
Net (decrease)/increase in
cash and cash equivalents (54,844) 62,390
Unrestricted cash and cash
equivalents at the start of
the year 18.0 103,819 41,429
--------------------------------------- ------- ------------ ---------------
Unrestricted cash and cash
equivalents at the end of
the year 18.0 48,975 103,819
--------------------------------------- ------- ------------ ---------------
The notes set out below are an integral part of these
consolidated financial statements
Notes to the Consolidated Financial Statements For the year
ended 31 March 2022
1.0 Corporate information
Civitas Social Housing PLC (the "Company") was incorporated in
England and Wales under the Companies Act 2006 as a public company
limited by shares on 29 September 2016 with company number 10402528
under the name Civitas REIT PLC, which was subsequently changed to
the existing name on 3 October 2016.
The address of the registered office is Beaufort House, 51 New
North Road, Exeter, EX4 4EP. The Company is registered as an
investment company under section 833 of the Companies Act 2006 and
is domiciled in the United Kingdom.
The Company did not begin trading until 18 November 2016 when
the shares were admitted to trading on the London Stock Exchange
("LSE").
The Company's Ordinary shares are admitted to the Official List
of the Financial Conduct Authority ("FCA") and traded on the
LSE.
The principal activity of the Company and its subsidiaries (the
"Group") is to provide shareholders with an attractive level of
income, together with the potential for capital growth from
investing in a portfolio of social homes.
2.0 Basis of preparation
On 31 December 2020 EU-adopted International Financial Reporting
Standards 'IFRS' was brought into UK law and became UK-adopted
International Accounting Standards, with future changes to IFRS
being subject to endorsement by the UK Endorsement Board. The
consolidated financial statements have transitioned to UK-adopted
International Accounting Standards for the year ended 31 March
2022. This change constitutes a change in accounting framework.
However, there is no impact on recognition, measurement or
disclosure in the year reported as a result of the change in
framework.
The financial statements are prepared in accordance with
UK-adopted International Accounting Standards and the applicable
legal requirements of the Companies Act 2006.
The Group's consolidated financial statements have been prepared
on a historical cost basis, as modified for the Group's investment
properties and derivative financial instruments at fair value
through profit or loss.
The Group has chosen to adopt EPRA best practice guidelines for
calculating key alternative performance measures. These are
disclosed above with supporting calculations in Appendix 1
below.
2.1 Functional and presentation currency
The financial information is presented in Pounds Sterling which
is also the functional currency of the Company, and all values are
rounded to the nearest thousand pounds (GBP'000s), except where
otherwise indicated.
2.2 Going concern
The Group benefits from a secure income stream from long leases
with the Approved Providers and present a well-diversified risk.
The Group's cash balances as at 31 March 2022 were GBP53,337,000,
of which GBP4,362,000 was held as restricted cash. Details of this
can be found in note 18.0.
The Company and its Investment Adviser, Civitas Investment
Management Limited ("CIM") continue to work closely with the
Company's major counterparties to monitor the position on the
ground and should it be needed, to offer assistance and guidance
where possible. The Board of Directors believes that the Company
operates a robust and defensive business model and that social
housing and specialist healthcare are proving to be some of the
more resilient sectors within the market, given that they are based
on non-discretionary public sector expenditure and that demand
exceeds supply.
In November 2021 the facility with HSBC Bank plc was extended to
November 2023. In May 2022 the facility with Lloyds Bank plc was
extended to July 2024.
Cash flow forecasts based on severe but plausible downside
scenarios have been run, in particular the financial performance of
tenants and a reduction in rent. As at 31 March 2022, the rent
would have to drop by approximately 29% before its loan covenant is
breached. At the date of approval of this report, the Company has
substantial headroom within its financial loan covenants. The
Company also benefits from a secure income stream from leases with
long average unexpired term leases. As a result, 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 Company's articles of association include a requirement for
the Board to propose an ordinary resolution at the annual general
meeting following the fifth anniversary from the initial public
offering of the Company for the Company to continue in its current
form (the Continuation Resolution). This is the first continuation
vote since the Company was set up.
If the Continuation Resolution is passed, the Company will
continue its business as presently constituted and propose the same
resolution at every fifth annual general meeting thereafter. If the
Continuation Resolution is not passed, the Directors will be
required, within six months after the date of this annual general
meeting, to formulate proposals for consideration by the
shareholders for the voluntary liquidation, unitisation,
reorganisation, or reconstruction of the Company.
After making appropriate enquiries of the Company's brokers and
Investment Adviser, pursuant to their recent discussions with a
number of the Company's shareholders, the Directors are of the view
that the Continuation Resolution will be passed at the forthcoming
annual general meeting. This reflects the strength and nature of
the Company's portfolio, and specifically the provision of
long-term accommodation for more than 4,000 vulnerable individuals.
Accordingly, the Directors expect that if the Continuation
Resolution is not passed, an event which the Directors consider to
be highly remote, formulating and implementing any such proposals
would require the Company to continue operations for(1) a period of
at least 12 months from the date of approval of the Company's
financial statements.
The Board is, therefore, of the opinion that the going concern
basis adopted in the preparation of the consolidated financial
statements is appropriate.
2.3 New standards, amendments and interpretations
The following new standards are now effective and have been
adopted for the year ended 31 March
2022.
-- 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
have transitioned from the London Interbank Offer Rate (LIBOR)
benchmark to the Sterling Overnight Index Average (SONIA)
benchmark. The transition has not led to a material change in
overall borrowing costs.
2.4 New standards, amendments and interpretations effective for
future accounting periods
The following are new standards, interpretations and amendments,
which are not yet effective and have not been early adopted in this
financial information, that will or may have an effect on the
Group's future financial statements:
-- 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.
-- Amendments to IAS 37 'Provisions, Contingent Liabilities and
Contingent Assets' (effective for periods beginning on or after 1
January 2022) - gives clarification on costs to include in
estimating the cost of fulfilling a contract for the purpose of
assessing whether that contract is onerous. The amendments are not
expected to have a significant impact on the preparation of the
financial statements.
-- Amendments to IFRS 9 'Financial Instruments' (effective for
periods beginning on or after 1 January 2022) - gives clarification
on the fees an entity includes when assessing whether the terms of
a new or modified financial liability are substantially different
from the terms of the original liability. The amendments are not
expected to have a significant impact on the preparation of the
financial statements.
-- Amendments to IAS 1 'Presentation of Financial Statements'
(effective for periods beginning on or after 1 January 2023) - are
intended to help entities in deciding which accounting policies to
disclose in their financial statements. The amendments are not
expected to have a significant impact on the preparation of the
financial statements.
-- Amendments to IAS 8 'Accounting Policies, Changes in
Accounting Estimates and Errors' (effective for periods beginning
on or after 1 January 2023) - introduce the definition of an
accounting estimate and include other amendments to help entities
distinguish changes in accounting estimates from changes in
accounting policies. The amendments are not expected to have a
significant impact on the preparation of the financial
statements.
2.5 Segmental information
IFRS 8 Operating Segments requires operating segments to be
identified on the basis of internal financial reports about
components of the Group that are regularly reviewed by the Chief
Operating Decision Maker, which in the Group's case is delegated to
the Investment Adviser, who has formed an Executive Team, in order
to allocate resources to the segments and to assess their
performance.
The internal financial reports received by the Investment
Adviser's Executive Team contain financial information at a Group
level as a whole and there are no reconciling items between the
results contained in these reports and the amounts reported in the
consolidated financial statements.
The Directors consider the Group's property portfolio represents
a coherent and diversified portfolio with similar economic
characteristics and as a result, the whole portfolio of properties
represents a single operating segment. In the view of the Directors
there is accordingly one reportable segment under the provisions of
IFRS 8.
All of the Group's properties are based in the UK. Geographical
information is provided to ensure compliance with the
diversification requirements of the Company, other than this no
geographical grouping is contained in any of the internal financial
reports provided to the Investment Adviser's Executive Team and,
therefore no geographical segmental analysis is required by IFRS
8.
The Directors note the requirements in IFRS 8 Paragraph 34
pertaining to entities under common control and confirm that both
Auckland Home Solutions and Qualitas Housing (as lessees of the
Company's investment real estate) are under common control of The
Social Housing Family CIC ("TSHF"). The percentage and sum total of
the Company's annual rent roll pertaining to these counterparties
as if they were considered to be a 'single customer' can be found
in note 28.0 and as set out above.
3.0 Significant accounting judgements, estimates and
assumptions
In the application of the Group's accounting policies, which are
described in note 4.0, the Directors are required to make
judgements, estimates and assumptions about the carrying amounts of
assets and liabilities that are not readily apparent from other
sources. The judgements, estimates and associated assumptions that
have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next
financial year are outlined below:
3.1 Significant estimate - valuation of investment property The
Group uses the valuation carried out by its independent valuer as
the fair value of its property portfolio. The valuation is based
upon assumptions including future rental income and the appropriate
discount rate. The valuers also make reference to market evidence
of transaction prices for similar properties. Further information
is provided in note 15.0.
The Group's properties have been independently valued by Jones
Lang LaSalle Limited ("JLL" or the "Valuer") in accordance with the
current Royal Institution of Chartered Surveyors' Valuation -
Global Standards, incorporating the IVS, and the RICS Valuation -
Global Standards 2017 UK national supplement (the RICS "Red Book").
JLL is one of the most recognised professional firms within social
housing valuation and has sufficient current local and national
knowledge of both social housing generally and Specialist Supported
Housing ("SSH") and has the skills and understanding to undertake
the valuations competently.
With respect to the Group's consolidated financial statements,
investment properties are valued at their fair value at each
balance sheet date in accordance with IFRS 13. Fair value
measurements should be presented and classified using a fair value
hierarchy that reflects the significance of the inputs used in the
measurements, according to the following levels:
Level 1 Unadjusted, quoted prices for identical assets and
liabilities in active (typically quoted) markets.
Level 2 Inputs other than quoted prices included within Level 1
that are observable for the asset or liability, either directly
(that is, as prices) or indirectly (that is, derived from
prices)
Level 3 Inputs for the asset or liability that are not based on
observable market data (unobservable inputs). Value is the
Directors' best estimate, based on advice from relevant
knowledgeable experts, use of recognised valuation techniques and a
determination of which assumptions should be applied in valuing
such assets and with particular focus on the specific attributes of
the investments themselves.
Given the bespoke nature of each of the Group's investments, the
particular requirements of due diligence and financial contribution
obtained from the vendors together with the recent emergence of
SSH, all of the Group's investment properties are included in Level
3.
3.2 Significant judgement - business combinations
The Group acquires subsidiaries that own investment properties.
At the time of acquisition, the Group considers whether each
acquisition represents the acquisition of a business or the
acquisition of an asset. Management considers the substance of the
assets and activities of the acquired entity in determining whether
the acquisition represents the acquisition of a business.
The Group accounts for an acquisition as a business combination
where an integrated set of activities is acquired in addition to
the property. Where such acquisitions are not judged to be the
acquisition of a business, they are not treated as business
combinations. Rather, the cost to acquire the corporate entity is
allocated between the identifiable assets and liabilities of the
entity based upon their relative fair values at the acquisition
date. Accordingly, no goodwill or additional deferred tax
arises.
All corporate acquisitions made during the year have been
treated as asset purchases rather than business combinations
because no integrated set of activities was acquired.
During the year, the Group entered into a transaction to acquire
the freehold properties operated by CPI Care Limited. Upon the
acquisition of the company; the properties were transferred into
other group companies and the company acquired, along with its
associated operations, was sold to Envivo Corundum Bidco Limited.
Further details are shown in note 16.0 to the financial
statements.
The acquired companies met the definition of a business under
IFRS 3, and the transaction was therefore recorded as a business
combination.
Because the Group acquired the company with the intent to sell
the business, management applied the short-cut method under IFRS 5
- Subsidiaries acquired with a view to resale. Under this method,
the subsidiary is recorded at fair value less costs to sell, and
there is no requirement to fair value the subsidiary's individual
assets and liabilities.
3.3. Significant judgement - operating lease contracts - the
Group as lessor
The Group has acquired investment properties that are subject to
commercial property leases with Approved Providers. The Group has
determined, based on an evaluation of the terms and conditions of
the arrangements, particularly the duration of the lease terms and
minimum lease payments, that it retains all the significant risks
and rewards of ownership of these properties and so accounts for
the leases as operating leases.
3.4. Significant judgement - REIT Status
Civitas Social Housing Plc. is a Real Estate Investment Trust
(REIT). The UK REIT regime applies when entities meet certain
conditions with the effect that the income profits and capital
gains of the qualifying property rental business are exempt from
tax. Within these conditions at least 90% of the Group's property
income must be distributed as dividends to Shareholders and the
Group must ensure that the property rental business represents more
than 75% of total profits and assets. It is management's judgement
that the Group will continue as a REIT for the foreseeable
future.
4.0 Summary of significant accounting policies
The principal accounting policies applied in the preparation of
the financial statements are set below. The policies have been
consistently applied to all periods presented, unless otherwise
stated.
4.1. Basis of consolidation
The consolidated financial statements comprise the financial
information of the Group as at the year end date.
Subsidiaries are all entities over which the Group has control.
The Group controls an entity when the Group is exposed to, or has
rights to, variable returns from its involvement with the entity
and has the ability to affect those returns through its power to
direct the activities of the entity. All intra-group transactions,
balances, income and expenses are eliminated on consolidation. The
financial information of the subsidiaries is included in the
consolidated financial statements from the date that control
commences until the date that control ceases.
If an equity interest in a subsidiary is transferred but a
controlling interest continues to be held after the transfer then
the change in ownership interest is accounted for as an equity
transaction.
Accounting policies of the subsidiaries are consistent with the
policies adopted by the Company.
4.2. Investment property
Investment property, which is property held to earn rentals
and/or for capital appreciation, is initially measured at cost,
being the fair value of the consideration given, including
expenditure that is directly attributable to the acquisition of the
investment property. After initial recognition, investment property
is stated at its fair value at the balance sheet date. Gains and
losses arising from changes in the fair value of investment
property are included in profit or loss for the period in which
they arise in the Consolidated Statement of Comprehensive
Income.
Subsequent expenditure is capitalised only when it is probable
that future economic benefits are associated with the expenditure.
Ongoing repairs and maintenance are expensed as incurred. Overheads
and operating expenses are not capitalised.
An investment property is derecognised upon disposal or when the
investment property is permanently withdrawn from use and no future
economic benefits are expected from the disposal. Any gain or loss
arising on derecognition of the property (calculated as the
difference between the net disposal proceeds and the carrying
amount of the asset) is incurred in profit or loss in the period in
which the property is derecognised.
Significant accounting judgements, estimates and assumptions
made for the valuation of investment properties are discussed in
note 3.1.
4.3. Leases
Leases are classified as finance leases whenever the terms of
the lease transfer substantially all the risks and rewards of
ownership to the lessee. All other leases are classified as
operating leases.
The Company has determined that it retains all the significant
risks and rewards of ownership of the properties and accounts for
the contracts as operating leases as discussed in note 3.3.
Properties leased out under operating leases are included in
investment property in the Consolidated Statement of Financial
Position. Rental income from operating leases is recognised on a
straight line basis over the term of the relevant leases.
Lease incentive costs are recognised as an asset and amortised
over the life of the lease.
4.4. Financial Assets
Classification
The Group classifies its financial assets in the following
measurement categories:
-- those to be measured subsequently at fair value (either
through other comprehensive income or through profit or loss);
and
-- those to be measured at amortised cost.
The classification depends on the entity's business model for
managing the financial assets and the contractual terms of the cash
flows. For assets measured at fair value, gains and losses will
either be recorded in profit or loss or other comprehensive
income.
Trade and other receivables
Trade and other receivables are amounts due in the ordinary
course of business. If collection is expected in one year or less,
they are classified as current assets. If not, they are presented
as non-current assets.
Trade receivables are recognised initially at fair value and
subsequently are measured at amortised cost using the effective
interest method, less impairment provision. The Group holds the
trade receivables with the objective to collect the contractual
cash flows.
Impairment
The Group's financial assets are subject to the expected credit
loss model.
For trade receivables, the Group applies the simplified approach
permitted by IFRS 9, which requires expected lifetime losses to be
recognised from initial recognition of the receivables.
The expected loss rates are based on the payment profiles of
lease income over a period of up to 12 months before 31 March 2022
or 1 April 2021, respectively, and the corresponding historical
credit losses experienced within this period. The historical loss
rates are adjusted to reflect current and forward-looking
information on macroeconomic factors affecting the liability of the
tenants to settle the receivable. Such forward-looking information
would include: changes in economic, regulatory, technological and
environmental factors (such as industry outlook, GDP, employment
and politics); external market indicators; and tenant base.
Based on the assessment and the specific work that is underway
around collection of aged arrears, a provision of GBP239,000 (2021:
GBP256,400) has been reflected in the annual results.
Trade receivables are written off when there is no reasonable
expectation of recovery.
Indicators that there is no reasonable expectation of recovery
include, among others, the probability of insolvency or significant
financial difficulties of the debtor. Impaired debts are
derecognised when they are assessed as uncollectible.
Cash and cash equivalents
Cash and cash equivalents include cash in hand, cash held by
lawyers and liquidity funds with a term of no more than three
months that are readily convertible to a known amount of cash and
which are subject to an insignificant risk of changes in value.
Restricted cash represents amounts held for specific
commitments, tenant deposits and retention money held by lawyers in
relation to deferred payments subject to achievement of certain
conditions, other retentions and cash segregated to fund repair,
maintenance and improvement works to bring the properties up to
satisfactory standards for the Group and the tenants.
Derivative financial instruments
Derivative financial instruments, which comprise interest rate
swaps for hedging purposes, are initially recognised at fair value
at acquisition and are subsequently measured at fair value, being
the estimated amount that the Group would receive or pay to sell or
transfer the agreement at the period end date, taking into account
current interest rate expectations and the current credit rating of
the lender and its counterparties. The instrument may be an asset
or a liability. The gain or loss at each fair value remeasurement
date is recognised in the Group's Consolidated Statement of
Comprehensive Income.
The Group uses valuation techniques that are appropriate in the
circumstances and for which sufficient data is available to measure
fair value, maximising the use of relevant observable inputs and
minimising the use of unobservable inputs significant to the fair
value measurement as a whole.
Other than derivative financial instruments which are not
designated as hedging instruments, the Group does not have any
assets held for trading nor does it voluntarily classify any
financial assets as being at fair value through profit or loss.
4.5. Financial liabilities
The Group recognises a financial liability when it first becomes
a party to the contractual rights and obligations in the
contract.
All financial liabilities are initially recognised at fair
value, minus (in the case of a financial liability that is not at
fair value through profit or loss) transaction costs that are
directly attributable to issuing the financial liability. Financial
liabilities are subsequently measured at amortised cost, unless the
Group opted to measure a liability at fair value through profit or
loss.
A financial liability is derecognised when the obligation under
the liability is discharged, cancelled or expires.
Trade and other payables
Trade and other payables are classified as current liabilities
if payment is due within one year or less. If not, they are
presented as non-current liabilities. Trade and other payables are
recognised initially at their fair value and subsequently measured
at amortised cost until settled. The fair value of a non-interest
bearing liability is its discounted repayment amount. If the due
date of the liability is less than one year, discounting is
omitted.
Bank and other borrowings
All bank and other borrowings are initially recognised at fair
value less directly attributable transaction costs. After initial
recognition, all bank and other borrowings are measured at
amortised cost, using the effective interest method. Any
attributable transaction costs relating to the issue of the bank
borrowings are amortised through the Group's Statement of
Comprehensive Income over the life of the debt instrument on a
straight-line basis.
Derivative financial instruments
Derivative financial instruments may be a financial asset or a
financial liability. Please refer to the accounting policy in note
4.4 for details.
4.6. Provisions
Provisions are recognised when the Group has a present
obligation (legal or constructive) as a result of a past event, it
is probable that the Group will be required to settle that
obligation and a reliable estimate can be made of the amount of the
obligation.
The amount recognised as a provision is the best estimate of the
consideration required to settle the present obligation at the
balance sheet date, taking into account the risks and uncertainties
surrounding the obligation.
4.7. Taxation
Taxation on the profit or loss for the period not exempt under
UK REIT regulations is comprised of current and deferred tax. Tax
is recognised in the Consolidated Statement of Comprehensive Income
except to the extent that it relates to items recognised as a
direct movement in equity, in which case it is recognised as a
direct movement in equity. Current tax is expected tax payable on
any non-REIT taxable income for the period, using tax rates enacted
or substantively enacted at the balance sheet date, and any
adjustment to tax payable in respect of previous periods.
The current tax charge is calculated on profits arising in the
period and in accordance with legislation which has been enacted or
substantially enacted at the balance sheet date.
Deferred tax is provided on temporary differences between the
carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes. The amount of
deferred tax that is provided is based on the expected manner of
realisation or settlement of the carrying amount of assets and
liabilities, using tax rates enacted or substantively enacted at
the balance sheet date.
4.8. Capital management
The Group's objectives when managing capital are to safeguard
the Group's ability to continue as a going concern in order to
provide returns for shareholders and to maintain an optimal capital
structure to reduce the cost of capital.
Capital assets comprise the following:
31 March 31 March
2022 2021
GBP'000 GBP'000
---------- ----------
Proceeds from the issue of Ordinary shares
and retained earnings 675,547 673,498
Bank and loan borrowings 352,050 352,120
---------- ----------
Total 1,027,597 1,025,618
---------- ----------
Until the Group is fully invested and pending re-investment or
distribution of cash receipts, the Group will invest in cash, cash
equivalents, near cash instruments and money market
instruments.
The Directors may use gearing to enhance equity returns. The
level of borrowing will be on a prudent basis for the asset class
and will seek to achieve a low cost of funds, whilst maintaining
the flexibility in the underlying security requirements and the
structure of the Group.
The Group may, following a decision of the Board, raise debt
from banks and/or the capital markets and the aggregate borrowings
of the Group will always be subject to an absolute maximum,
calculated at the time of drawdown, of below 40% of the Gross Asset
Value on a fully invested basis.
4.9. Dividends payable to shareholders
Dividends are included in the financial statements in the year
in which they are paid.
4.10. Rental income
Rental income from investment property is recognised on a
straight-line basis over the term of ongoing leases and is shown
gross of any UK income tax. Lease incentives are spread evenly over
the lease term.
Insurance recharges and other similar receipts are recognised
under IFRS 15 'Revenue from contracts with customers', and are
included in net rental and property income gross of the related
costs as the Directors consider the Group acts as principal in this
respect
4.11. Finance income
Finance income is recognised as interest, and is accrued on cash
and cash equivalent balances held by the Group.
4.12. Finance costs
Finance costs consist of interest and other costs that the Group
incurs in connection with bank and other borrowings. Bank interest
and bank charges are recognised on an accruals basis. Borrowing
transaction costs are amortised using the effective interest
rate.
4.13. Expenses
All expenses, including investment advisory fees, are recognised
in the Consolidated Statement of Comprehensive Income on an
accruals basis.
4.14. Share issue costs
The costs of issuing or reacquiring equity instruments (other
than in a business combination) are accounted for as a deduction
from equity.
4.15 Share held in treasury
The costs, including directly attributable transactions costs,
of purchasing the Company's own shares to be held in treasury is
deducted from equity and the costs are shown in the Consolidated
Statement of Changes in Equity. Consideration received, net of
transaction costs, for the resale of these shares is also included
in equity. Whilst the Company holds shares in treasury, the
calculations for net asset value and earnings per share are
adjusted to exclude these shares.
5.0 Rental income
For the
year ended For the
31 March year ended
2022 31 March 2021
GBP'000 GBP'000
---------------------------------------- ------------ ------------------------
Rental income from investment property 51,038 48,201
Rent straight line adjustments 529 372
Lease incentive amortisation (926) (439)
Rechargeable costs received 995 886
----------------------------------------
Rental income 51,636 49,020
Less direct property expenses (978) (1,175)
----------------------------------------
Net rental income 50,658 47,845
---------------------------------------- ------------ ------------------------
Rechargeable costs received represent insurance and service
charge costs paid by the Group and recharged to the Approved
Providers and are accounted for under IFRS 15 'Revenue from
contracts with customers'.
Direct property expenses represent insurance and service charge
costs of GBP995,000 (2021: GBP886,000) and bad debt credit of
GBP17,000 (2021: GBP289,000 expense).
As per the lease agreements with the Group and Approved
Providers, the Approved Providers are responsible for the
settlement of all present and future rates, taxes and other
impositions payable in respect of the property. As a result, no
further direct property expenses were incurred.
6.0 Directors' remuneration
For the
year ended For the
31 March year ended
2022 31 March 2021
GBP'000 GBP'000
--------------------------------------------- ------------ ---------------
Directors' fees 190 182
Employer's National Insurance Contributions 16 16
--------------------------------------------- ------------
Total 206 198
--------------------------------------------- ------------ ---------------
The Directors are remunerated for their services in accordance
with the Remuneration Policy which sets parameters within which
Directors' remuneration may be set. The Remuneration Policy is
approved by shareholders.
Disclosures required by the Companies Act 2006 on Directors'
remuneration, including salaries, share options, pension
contributions and pension entitlement and those specified by the
Listing Rules of the Financial Conduct Authority are included in
the Remuneration Report set out in the full Annual Report and form
part of these Financial Statements.
7.0 Particulars of employees
The Group had no employees during the period (2021: nil) other
than the Directors.
8.0 Investment advisory fees
For the For the
year ended year ended
31 March 2022 31 March 2021
GBP'000 GBP'000
-------------- --------------- ---------------
Advisory fee 6,132 6,117
-------------- ---------------
Total 6,132 6,117
-------------- --------------- ---------------
Civitas Investment Management Limited ("CIM") is the appointed
Investment Adviser of the Company. Under the current Investment
Management Agreement, the Advisory Fee shall be an amount
calculated in respect of each Quarter, in each case based upon the
Net Asset Value most recently announced to the market at the
relevant time (as adjusted for issues or repurchases of shares in
the period between the date of such announcement and the date of
the relevant calculation), on the following basis:
a) on that part of the Net Asset Value up to and including
GBP250 million, an amount equal to 1% of such part of the Net Asset
Value;
b) on that part of the Net Asset Value over GBP250 million and
up to and including GBP500 million, an amount equal to 0.9% of such
part of the Net Asset Value;
c) on that part of the Net Asset Value over GBP500 million and
up to and including GBP1 billion, an amount equal to 0.8% of such
part of the Net Asset Value;
d) on that part of the Net Asset Value over GBP1 billion, an
amount equal to 0.7% of such part of the Net Asset Value.
The appointment of the Investment Adviser shall continue in
force unless and until terminated by either party giving to the
other not less than 12 months' written notice, such notice not to
expire earlier than 30 May 2024.
9.0 General and administrative expenses
For the For the
year ended year ended
31 March 2022 31 March 2021
GBP'000 GBP'000
----------------------------- --------------- ---------------
Legal and professional fees 1,459 1,044
Administration fees 1,037 983
Consultancy fees 136 116
Audit fees 340 361
Abortive costs 196 174
Valuation fees 100 96
Depositary fees 71 71
Grants and donations 26 19
Insurance 84 65
Marketing 343 179
Regulatory fees 25 19
Sundry expenses 92 56
----------------------------- ---------------
Total 3,909 3,183
----------------------------- --------------- ---------------
Abortive costs represent legal and professional fees incurred in
relation to the acquisition of investment properties and proposed
share issues that were considered but subsequently aborted.
Services provided by the Company's auditors and their
associates
The Group has obtained the following services from the Group's
auditors and their associates:
For the For the
year ended year ended
31 March 2022 31 March 2021
GBP'000 GBP'000
----------------------------------------- --------------- ---------------
Fees payable to the group's auditor
and its associates for auditing
financial statements:
Audit of the Group's financial
statements(1) 296 272
Audit of the subsidiary companies(2) - 32
----------------------------------------- --------------- ---------------
Total fees payable for audit services: 296 304
Fees payable to the group's auditor
and its associates for other services:
Audit related services - review
of the half year financial statements 44 57
Other services(3) 62 -
----------------------------------------- --------------- ---------------
Total 402 361
----------------------------------------- --------------- ---------------
1 Includes GBP18,000 (2021: GBP50,000) cost in relation to the
prior year audit.
2 Most subsidiary companies are exempt from audit as detailed
below
3 This amount is included within prepayments and other
receivables at 31 March 2022.
10.0 Finance income
For the
year ended For the
31 March year ended
2022 31 March 2021
GBP'000 GBP'000
------------------------------------ ------------ ---------------
Interest and dividends received on
liquidity funds 4 11
Bank interest received 3 9
------------------------------------ ------------ ---------------
Total 7 20
------------------------------------ ------------ ---------------
11.0 Finance expense
For the For the
year ended year ended
31 March 2022 31 March 2021
GBP'000 GBP'000
---------------------------------- --------------- ---------------
Bank charges 6 3
Interest paid and payable on
bank borrowings and derivatives 8,907 6,416
Amortisation of loan arrangement
fees 1,653 1,293
Loan security fees 42 -
Other interest - 25
---------------------------------- --------------- ---------------
Total 10,608 7,737
---------------------------------- --------------- ---------------
12.0 Taxation
As a UK REIT, the Group is exempt from corporation tax on the
profits and gains from its property investment business, provided
it meets certain conditions as set out in the UK REIT regulations.
For the current year ended 31 March 2022, the Group did not have
any non-qualifying profits and accordingly there is no tax charge
in the year. If there were any non-qualifying profits and gains,
these would be subject to corporation tax.
It is assumed that the Group will continue to be a UK REIT for
the foreseeable future, such that deferred tax has not been
recognised on temporary differences relating to the property rental
business.
For the
For the year ended
year ended 31 March
31 March 2022 2021
GBP'000 GBP'000
------------------------------- --------------- ------------
Corporation tax charge for the
year - -
------------------------------- --------------- ------------
Total - -
------------------------------- --------------- ------------
The tax charge for the period is less than the standard rate of
corporation tax in the UK of 19%. The differences are explained
below.
For the For the
year ended year ended
31 March 2022 31 March 2021
GBP'000 GBP'000
-------------------------------------- --------------- ---------------
Group
Profit before taxation 44,754 36,075
-------------------------------------- --------------- ---------------
UK corporation tax rate 19.00% 19.00%
Theoretical tax at UK corporation
tax rate 8,503 6,854
Effects of:
Change in value of exempt investment
properties (2,331) (1,047)
Exempt REIT income (6,598) (6,511)
Amounts not deductible for
tax purposes (230) 171
Unutilised residual current
period tax losses 656 533
-------------------------------------- --------------- ---------------
Total - -
-------------------------------------- --------------- ---------------
A deferred tax asset of GBP1,268,000 (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.
The standard rate of corporation tax is currently 19%. In the
Spring Budget 2021, the UK Government announced that from 1 April
2023 the corporation tax rate will increase to 25% (rather than
remaining at 19%, as previously enacted). This new law was
substantively enacted on 24 May 2021.
REIT exempt income includes property rental income that is
exempt from UK Corporation Tax in accordance with Part 12 of
Corporation Tax Act 2010.
13.0 IFRS Earnings per share
Earnings per share ("EPS") amounts are calculated by dividing
profit for the year attributable to ordinary equity holders of the
Company by the weighted average number of Ordinary shares in issue
during the year.
The calculation of basic and diluted earnings per share is based
on the following:
For the For the
year ended year ended
31 March 2022 31 March 2021
---------------------------------------- --------------- ---------------
Calculation of Basic Earnings per
share
Net profit attributable to Ordinary
shareholders (GBP'000) 44,754 36,075
Weighted average number of Ordinary
shares (excluding shares held in
treasury) 618,797,942 621,651,859
Earnings per share - basic and diluted 7.23p 5.80p
---------------------------------------- --------------- ---------------
14.0 Dividends
For the For the
year ended year ended
31 March 2022 31 March 2021
GBP'000 GBP'000
---------------------------------------- --------------- ---------------
Dividend of 1.3500p for the 3 months
to 31 March 2021
(1.325p 3 months to 31 March 2020) 8,403 8,237
Dividend of 1.3875p for the 3 months
to 30 June 2021
(1.350p 3 months to 30 June 2020) 8,637 8,392
Dividend of 1.3875p for the 3 months
to 30 September 2021 (1.350p 3 months
to 30 September 2020) 8,555 8,392
Dividend of 1.3875p for the 3 months
to 31 December 2021 (1.350p 3 months
to 31 December 2021) 8,498 8,392
---------------------------------------- --------------- ---------------
Total 34,093 33,413
---------------------------------------- --------------- ---------------
On 11 May 2022, the Company announced a dividend of 1.3875 pence
per share in respect of the period 1 January 2022 to 31 March 2022
totalling GBP8,474,000. The dividend payment was made on 28 June
2022 to shareholders on the register as at 20 May 2022. The
financial statements do not reflect this dividend. The dividend was
paid as a REIT property income distribution ("PID").
15.0 Investment property
For the For the
year ended year ended
31 March 2022 31 March 2021
GBP'000 GBP'000
--------------------------------------- --------------- ---------------
Balance at beginning of year 915,589 878,743
Property acquisitions 37,198 19,129
Acquisition costs 2,086 1,056
Lease incentives and rent straight
line adjustments recognised 1,614 11,150
Change in fair value 12,269 5,511
--------------------------------------- --------------- ---------------
Value advised by the property valuers 968,756 915,589
Less lease incentive assets and rent
straight line assets (23,519) (21,905)
--------------------------------------- --------------- ---------------
Total 945,237 893,684
--------------------------------------- --------------- ---------------
Acquisitions include capital expenditure to enhance lettable
space of GBP5,818,000 (2021: GBP4,077,000).
During the year the Group acquired a property holding company
from Herleva Properties Limited which held assets totalling
GBP8,611,000. 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 each
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 JLL, an
accredited external valuer with recognised and relevant
professional qualifications and recent experience of the location
and category of the investment property being valued, however, the
valuations are the ultimate responsibility of the Directors.
Valuation
JLL valued the Civitas Social Housing PLC property portfolio on
the basis of each individual property and the theoretical sale of
the properties without the benefit of any corporate wrapper at
GBP968,756,000 as at 31 March 2022 (2021: GBP915,589,000).
JLL has provided valuation services to the Company with regards
to the properties during the year. JLL has provided additional
valuation services on the acquisition of investment property to the
Company during the period. The Directors have ensured that JLL has
appropriate procedures in place to ensure there are no independence
conflicts with the services provided to the Company. In relation to
the year ended 31 March 2022, 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 acquisition detailed in note 16.0, all
corporate acquisitions during the year and the comparative year
have been treated as asset purchases rather than business
combinations because following review of the IFRS 3 concentration
test, they are considered to be acquisitions of properties rather
than businesses (note 3.2).
The following table provides the fair value measurement
hierarchy for investment property:
Quoted prices Significant Significant
in active observable unobservable
markets inputs inputs
Investment properties Total (Level 1) (Level 2) (Level 3)
measured at fair value GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- ---------- ---------------- ------------ --------------
31 March 2022 945,237 - - 945,237
-------------------------- ---------- ---------------- ------------ --------------
31 March 2021 893,684 - - 893,684
-------------------------- ---------- ---------------- ------------ --------------
There have been no transfers between Level 1 and Level 2 during
any of the years, nor have there been any transfers between Level 2
and Level 3 during any of the years.
The valuations have been prepared in accordance with the RICS
Valuation - Professional Standards (incorporating the International
Valuation Standards) by JLL, one of the leading professional firms
engaged in the social housing sector.
As noted previously all of the Group's investments are reported
as Level 3 in accordance with IFRS 13 where inputs are not based on
observable market data and the value is based upon advice from
relevant knowledgeable experts.
In this instance, the determination of the fair value of
investment property requires an examination of the specific merits
of each property that are in turn considered pertinent to the
valuation.
These include:
i. the regulated social housing sector and demand for the
facilities offered by each SSH property owned by the Group;
ii. the particular structure of the Group's transactions where
vendors, at their own expense, meet the majority of the
refurbishment costs of each property and certain purchase
costs;
iii. detailed financial analysis with discount rates supporting
the carrying value of each property;
iv. a full repairing and insuring lease with annual indexation based on CPI or CPI+1%.
The following descriptions and definitions relating to valuation
techniques and key unobservable inputs made in determining fair
values are as follows:
Valuation techniques: income approach
Fair value is defined as the price that would be received to
sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date
(i.e. an exit price).
The valuation methodology used by the valuers follows the income
approach. This approach considers the rental income currently
payable; the next uplift due on that income on review; the
likelihood of a continuation of that rental income - with growth in
accordance with the leases - over the remaining terms; and then a
long-term reversion which considers the likely ability of the
properties to continue to generate rent through supported housing
occupation, as distinct from a reversion to vacant possession
value.
Risks are involved in both assessing the value of the rental
income over the remaining terms of the leases and in also
predicting that income will continue beyond the end of the existing
leases. This is a balanced judgment, which can properly be
reflected in the exit yield applied to the final year's income and
in the overall return to a purchaser.
Appropriate taxation calculations are adopted for every property
based on its value and on the assumption of the sale of the
property assets directly as opposed to shares of a subsidiary
company holding the property and have considered the individual
characteristics of the properties.
There are two main unobservable inputs that determine the fair
value of the Group's investment property:
i) The rate of 2% per annum has been used for CPI over the term
of the subject properties' leases in line with the Bank of
England's long-term inflation targets for CPI. It should be noted
that all leases benefit from either CPI or CPI+1 indexation.
ii) The discount rate applied to the rental flows.
Key factors in determining the discount rates applied include
the regulated social housing sector and demand for each SSH
property owned by the Group, costs of acquisition and refurbishment
of each property, the anticipated future underlying cash flows for
each property, benchmarking of each underlying rent for each
property (passing rent), impact of climate change, and the fact
that all of the properties within the Group's portfolio have the
benefit of full repairing and insuring leases entered into by an
Approved Provider.
As at the balance sheet date, the lease lengths within the
Group's portfolio ranged from an effective 15 years to 36 years
with a weighted average unexpired lease term of 22.1 years (2021:
22.6). The greater the length of the lease, then, all other metrics
being equal, the greater the value of the property.
Sensitivities of measurement of significant unobservable
inputs
As set out within significant accounting estimates at 3.1 above,
the Group's property investment valuation is open to inherent
uncertainties in the inputs that determine fair value. As a result,
the following sensitivity analysis has been prepared:
Average discount rate and range
The average discount rate used by the valuer in the Group's
property Portfolio Valuation is 5.5% (2021: 6.0%).
The range of discount rates used by the valuer in the Group's
property Portfolio Valuation is from 4.6% to 11.5% (2021: 4.7% to
10.7%).
The range of discount rates used by the valuer in the Group's
property Portfolio Valuation is from 4.6% to 11.5% (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 +0.5% in -0.25%
discount discount +0.25% in
rate rate in CPI CPI
GBP'000 GBP'000 GBP'000 GBP'000
------------------------- ---------- ---------- --------- ---------
Increase/(decrease) in
the IFRS fair value of
investment properties
at:
31 March 2022 35,620 (33,142) 28,509 (27,426)
31 March 2021 34,131 (31,776) 27,211 (26,175)
------------------------- ---------- ---------- --------- ---------
16.0 Subsidiary resale
For the For the
year ended year ended
31 March 2022 31 March 2021
GBP'000 GBP'000
------------------------- --------------- ---------------
Balance at the beginning 13,559 -
of the year
Acquisition 765 -
Transfer to investment (11,629) -
property
Sale proceeds (2,695) -
------------------------- --------------- ---------------
- -
------------------------- --------------- ---------------
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 each
14.99% shareholders in SHO. They are not directors of SHO, and have
no operational role. SHO does not meet the definition of a related
party under IAS 24.
17.0 Trade and other receivables
31 March
Amounts falling due in less than one 2022 31 March 2021
year GBP'000 GBP'000
---------------------------------------- --------- --------------
Trade receivables 4,960 4,869
Less provision for impairment of trade
receivables (239) (256)
Accrued income 4,982 5,264
Prepayments and other receivables 3,162 2,944
---------------------------------------- --------- --------------
Total 12,865 12,821
---------------------------------------- --------- --------------
Prepayments and other receivable amounts include prepaid legal
and professional fees of GBP34,000 (2021: GBP200,000) that have
been incurred in connection with acquisitions yet to be completed
and GBP1,046,000 (2021: GBP817,000) in respect of ongoing works on
the property portfolio.
Accrued income relates mainly to rent accrued for the year but
not yet demanded.
31 March
2022 31 March 2021
GBP'000 GBP'000
----------------------------------------------- --------- --------------
Amounts falling due after more than
one year
Debtor arising from straight line adjustments 2,053 1,524
Lease incentives 21,466 20,381
----------------------------------------------- --------- --------------
Total 23,519 21,905
----------------------------------------------- --------- --------------
The aged analysis of trade receivables was as follows:
31 March
2022 31 March 2021
GBP'000 GBP'000
------------------------------- ---------
Current 1,777 2,128
< 30 days 355 817
30-60 days 105 322
> 60 days 2,723 1,602
------------------------------- --------- --------------
4,960 4,869
------------------------------- --------- --------------
Debtors past due
Less provision for impairment (239) (256)
------------------------------- --------- --------------
Total 4,721 4,613
------------------------------- --------- --------------
The Directors consider the fair value of receivables equals
their carrying amount.
Other categories within trade and other receivables do not
include impaired assets
The provision for impairment movement was as follows:
31 March 2022 31 March 2021
GBP'000 GBP'000
------------------------ -------------- --------------
Balance at beginning
of year 256 -
Impairment provision
made 109 289
Amounts recovered (126) -
Amounts written off - (33)
------------------------ -------------- --------------
Balance at end of year 239 256
------------------------ -------------- --------------
18.0 Cash and cash equivalents
31 March 2022 31 March 2021
GBP'000 GBP'000
---------------------------------------- -------------- --------------
Cash held by solicitors 376 721
Liquidity funds 10,489 10,485
Cash held at bank 38,110 92,613
---------------------------------------- -------------- --------------
Unrestricted cash and cash equivalents 48,975 103,819
Restricted cash 4,362 3,278
---------------------------------------- -------------- --------------
Total 53,337 107,097
---------------------------------------- -------------- --------------
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.
19.0 Trade and other payables
31 March 2022 31 March 2021
GBP'000 GBP'000
----------------------------------- -------------- --------------
Deferred income 860 646
Acquisition costs accrued 2,856 3,706
Finance costs 1,840 1,557
Dividends withholding tax payable 1,057 892
Accruals and other creditors 2,202 1,979
Tenant deposits 677 565
----------------------------------- --------------
Total 9,492 9,345
----------------------------------- -------------- --------------
Acquisition costs accrued also include monies retained at the
point of acquisition to be paid at a later date totalling
GBP2,158,000 (2021: GBP2,508,000).
20.0 Bank and loan borrowings
Bank borrowings are secured by charges over individual
investment properties held by certain asset-holding subsidiaries.
The banks also hold charges over the shares of certain subsidiaries
and any intermediary holding companies of those subsidiaries. Any
associated fees in arranging the bank borrowings unamortised as at
the year end are offset against amounts drawn on the facilities as
shown in the table below:
For the For the
year ended year ended
31 March 2022 31 March 2021
GBP'000 GBP'000
-------------------------------------- ---------------- ---------------
Bank borrowings drawn at start of
year 357,050 272,500
Bank borrowings drawn - 84,550
-------------------------------------- ---------------- ---------------
Bank borrowings drawn at end of year 357,050 357,050
-------------------------------------- ---------------- ---------------
Unamortised costs at start of year (4,930) (3,330)
Less: loan issue costs incurred (1,723) (2,893)
Add: loan issue costs amortised 1,653 1,293
-------------------------------------- ---------------- ---------------
Unamortised costs at end of year (5,000) (4,930)
-------------------------------------- ----------------
At end of year 352,050 352,120
-------------------------------------- ---------------- ---------------
Loan Balance(1) Loan Balance Loan Principle(1) Loan Principle
31 March 31 March 31 March 31 March
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
------------------- ----------------- ------------- ------------------- ---------------
Maturity of bank
borrowings:
Repayable within
1 year - 59,937 - 60,000
Repayable between
1 to 2 years 158,746 99,256 160,000 100,000
Repayable between
2 to 5 years 59,365 59,102 60,000 60,000
Repayable after
5 years 133,939 133,825 137,050 137,050
------------------- -----------------
Total 352,050 352,120 357,050 357,050
------------------- ----------------- ------------- ------------------- ---------------
(1) Loan balance net of unamortised costs.
The Group is party to the following loan facility
agreements:
A 10-year Sterling Term Facility Agreement dated 2 November 2017
for up to GBP52,500,000 with Scottish Widows Limited. Interest is
fixed at a total of 2.9936% per annum.
The borrowings include amounts secured on investment property to
the value of GBP173,777,000 (2021: 170,831,000).
A Sterling Revolving Facility Agreement for GBP60,000,000 with
Lloyds Bank plc. The facility has been extended to 15 July 2024,
interest is charged at SONIA + 1.67% margin.
The borrowings include amounts secured on investment property to
the value of GBP153,340,000 (2021: GBP149,728,000).
A Revolving Credit Facility Agreement for up to GBP100,000,000
with HSBC Bank PLC. Interest is charged at SONIA + 2.02% margin.
The facility maturity has been extended to November 2023.
The borrowings include amounts secured on investment property to
the value of GBP222,745,000 (2021: GBP219,606,000).
A 5-year loan facility with National Westminster Bank Plc, dated
15 August 2019, for up to GBP60,000,000. Interest is charged at
SONIA +2.00% margin and has been fixed by way of a 5-year swap. The
swap fixes interest on GBP20,000,000 at 2.7105% and GBP40,000,000
at 2.5475%. The loan can be extended for an additional 2 years and
there is the option of a further GBP40,000,000 accordion.
The borrowings include amount is secured on investment property
to the value of GBP135,330,000 (2021: GBP131,283,000).
A 7-year loan facility with M&G Investment Management
Limited, dated 22 January 2021, for up to GBP84,550,000. Interest
is fixed at a total of 3.137% per annum.
The borrowings include amounts secured on investment property to
the value of GBP230,487,000 (2021: GBP225,221,000).
At 31 March 2022, 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 Must not exceed
facility At least 325% 40%
Lloyds Bank plc revolving credit Must not exceed
facility At least 550% 52.5%
Must not exceed
HSBC Bank PLC facility At least 250% 55%
National Westminster Bank Plc 5-year Must not exceed
facility At least 250% 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 have transitioned from the London
Interbank Offer Rate (LIBOR) benchmark to Sterling Overnight Index
Average (SONIA) benchmark during the year. There was negligible
cost involved in the borrowing facility transition and the
respective hedge instrument amendments.
21.0 Interest rate derivatives
The Group has entered into interest rate swap agreements with
NatWest Markets in order to mitigate the risk of changes in
interest rates on its loan with National Westminster Bank Plc under
which GBP60,000,000 is currently drawn.
The swaps have a notional value of GBP60,000,000 and fix
interest at 2.60% (including the 2% margin rate on the bank
loan).
For the
year ended For the
31 March year ended
2022 31 March 2021
GBP'000 GBP'000
-------------------------------------- ------------- ---------------
At start of year (544) (478)
Change in fair value during the year 2,675 (66)
-------------------------------------- ------------- ---------------
At end of the year 2,131 (544)
-------------------------------------- ------------- ---------------
The table below shows the fair value measurement hierarchy for
interest derivatives:
Quote prices Significant Significant
In active Observable unobservable
Markets Inputs Inputs
(Level 1) (Level 2) (Level 3)
GBP'000 GBP'000 GBP'000
-------------- ------------- ------------ --------------
31 March 2022 - 2,131 -
31 March 2021 - (544) -
-------------- ------------- ------------ --------------
There have been no transfers between Level 1 and Level 2 during
the year nor have there been any transfers between Level 2 and
Level 3 during the year.
22.0 Share capital
Share capital represents the nominal value of consideration
received by the Company for the issue of Ordinary shares.
For the For the
year ended year ended
31 March 2022 31 March 2021
GBP'000 GBP'000
------------------------------ ---------------- ---------------
Share capital
At beginning and end of year 6,225 6,225
------------------------------ ---------------- ---------------
Number of shares issued and
fully paid
Ordinary shares of GBP0.01
each
At beginning and end of year 622,461,380 622,461,380
------------------------------ ----------------
During the year, the Company reissued the 565,000 (2001:
250,000) Ordinary shares held in treasury at 31 March 2021 for
GBP647,000 (2021: GBP272,000).
Later in the year the Company purchased 10,025,000 Ordinary
shares to be held in treasury at a cost of GBP9,259,000. Further
purchases were made after the year end as detailed in note
23.0.
At 31 March 2022 the Company holds 10,025,000 (2021: 565,000)
Ordinary shares in treasury. The shares will continue to be held in
treasury until either reissued or cancelled.
The number of Ordinary shares used to calculate the net asset
value per share is 612,436,380 (2021: 621,896,380) which excludes
the shares held in treasury.
23.0 Share premium reserve
The share premium reserve represents the amounts subscribed for
Ordinary share capital in excess of nominal value less associated
issue costs of the subscriptions.
For the For the
year ended year ended
31 March 2022 31 March 2021
GBP'000 GBP'000
------------------------------------ ---------------- ---------------
At beginning of year 292,463 292,405
Premium arising on shares reissued
from treasury 163 58
------------------------------------ ----------------
At end of year 292,626 292,463
------------------------------------ ---------------- ---------------
During the year, the Company reissued 565,000 (2021: 250,000)
Ordinary shares held in treasury for GBP647,000 (2021: GBP272,000)
a gain of GBP163,000 (2021: GBP58,000) arose which is recognised in
the share premium reserve.
24.0 Capital reduction reserve
The capital reduction reserve is a distributable reserve to
which the value of the cancelled share premium has been
transferred. Pursuant to Article 3 of The Companies (Reduction of
Share Capital) Order 2008, the balance held in the capital
reduction reserve is to be treated for the purposes of Part 23 of
the Companies Act 2006 as a realised profit and therefore available
for distribution in accordance with section 830 of the Companies
Act. The Company has used this reserve for the costs of buying back
shares to be held in treasury.
For the For the
year ended year ended
31 March 2022 31 March 2021
GBP'000 GBP'000
------------------------------- ---------------- ---------------
At beginning of year 331,140 330,926
Shares reissued from treasury 484 214
Shares bought back into
treasury (9,259) -
------------------------------- ----------------
At end of year 322,365 331,140
------------------------------- ---------------- ---------------
During the year, the Company reissued 565,000 (2021: 250,000)
Ordinary shares held in treasury for GBP647,000 (2021: GBP272,000).
The cost of purchasing these shares into treasury of GBP484,000
(2021: GBP214,000 has credited the capital reduction reserve with
the gain crediting the Share premium reserve.
Later in the year the Company purchased 10,025,000 Ordinary
shares to be held in treasury at a cost of GBP9,259,000. Further
purchases were made after the year end as detailed in note
23.0.
At 31 March 2022 the Company holds 10,025,000 (2021: 565,000)
Ordinary shares in treasury.
25.0 Retained earnings
This reserve represents the profits and losses of the Group.
For the For the
year ended year ended
31 March 2022 31 March 2021
GBP'000 GBP'000
-------------------------------- ---------------- ---------------
At beginning of year 43,670 41,008
Profit for the year 44,754 36,075
Dividends paid in the year (as
per note 14.0) (34,093) (33,413)
-------------------------------- ---------------- ---------------
At end of year 54,331 43,670
-------------------------------- ---------------- ---------------
26.0 Net asset value
Basic NAV per share is calculated by dividing net assets in the
Consolidated Statement of Financial Position attributable to
ordinary equity holders of the parent by the number of Ordinary
shares outstanding at the end of the year.
Net asset values have been calculated as follows:
31 March 2022 31 March 2021
-------------------------------------- -------------- --------------
Net assets (GBP'000) 675,547 673,498
Number of Ordinary shares in
issue at end of year 622,461,380 622,461,380
Number of Ordinary shares held
in treasury (10,025,000) (565,000)
-------------------------------------- -------------- --------------
Number of Ordinary shares excluding
treasury shares held by the Company 612,436,380 621,896,380
-------------------------------------- -------------- --------------
NAV - basic and diluted 110.30p 108.30p
-------------------------------------- -------------- --------------
27.0 Analysis of financial liabilities and assets arising from
financing activities
For the
Interest rate Bank year ended
31 March
derivatives borrowings 2022
GBP'000 GBP'000 GBP'000
---------------------------------- -------------- ----------- -----------
At beginning of year 544 352,120 352,664
Cash flows from financing
activities
Loan arrangement costs
paid - (1,805) (1,805)
Non cash movements
Loan arrangement fees payable - 82 82
Amortisation of loan arrangement
costs - 1,653 1,653
Change in fair value of
interest rate derivatives (2,675) - (2,675)
---------------------------------- -------------- ----------- -----------
At end of year (2,131) 352,050 349,919
---------------------------------- -------------- ----------- -----------
For the
Interest rate Bank year ended
derivatives borrowings 31 March 2021
GBP'000 GBP'000 GBP'000
---------------------------------- -------------- ----------- --------------
At beginning of year 478 269,170 269,648
Cash flows from financing
activities
Loan draw down - 84,550 84,550
Loan arrangement costs
paid - (2,811) (2,811)
Non cash movements
Loan arrangement fees payable (82) (82)
Amortisation of loan arrangement
costs - 1,293 1,293
Change in fair value of
interest rate derivatives 66 - 66
---------------------------------- --------------
At end of year 544 352,120 352,664
---------------------------------- -------------- ----------- --------------
28.0 Operating leases
The Group is party to a number of operating leases on its
investment properties with Approved Providers. The future minimum
lease payments under non-cancellable operating leases receivable by
the Group are as follows:
31 March
2022 31 March 2021
GBP'000 GBP'000
-------------------- ---------- --------------
Amounts receivable
< 1 year 53,821 50,367
1-2 years 53,879 50,410
2-5 years 161,940 151,511
> 5 years 928,210 873,826
-------------------- ----------
At end of year 1,197,850 1,126,114
-------------------- ---------- --------------
Leases are direct-let agreements with Approved Providers for a
term between 15-36 years with indexed linked annual rent reviews.
All current leases are full repairing and insuring leases; the
tenants are therefore obliged to repair, maintain and renew the
properties back to the original conditions.
The following table gives details of percentage of annual rental
income per Approved Provider:
31 March 2022 31 March 2021
% %
----------------------------------------- -------------- --------------
Auckland Home Solutions and Qualitas
Housing 24.4 23.9
Falcon Housing Association CIC 18.7 19.7
Bespoke Supportive Tenancies 12.6 13.2
Inclusion Housing CIC 9.3 8.7
Westmoreland Supported Housing Limited 5.9 6.1
Encircle Housing Limited 5.9 6.0
Trinity Housing Association Limited 5.1 5.3
Pivotal Housing Association 3.8 3.9
Harbour Light Assisted Living CIC 3.6 3.7
Chrysalis Supported Association Limited 3.6 3.4
New Walk Property Management CIC 2.8 2.8
My Space Housing Solutions 1.3 1.2
IKE Supported Housing Limited 1.1 1.1
Hilldale Housing Association Limited 1.0 0.9
Windrush Alliance UK CIC 0.7 -
Lily Rose Supported Housing 0.1 -
Blue Square Residential Ltd 0.1 0.1
----------------------------------------- --------------
Total 100.0 100.0
----------------------------------------- -------------- --------------
Auckland Home Solutions and Qualitas Housing are both members of
the Social Housing Family C.I.C. and subject to common control.
Their annual rent figures have therefore been aggregated in the
table above. The percentage relating to Auckland Home Solutions and
Qualitas Housing was 16.28% and 8.13% (2021: 23.88% and 0.02%)
respectively. The annual rent at 31 March 2022 for Auckland Home
Solutions and Qualitas Housing was GBP8,679,000 and GBP4,334,000
(2021: GBP12,028,000 and GBP8,000) respectively.
The Group is also party to a number of operating leases on its
long leasehold properties. The ground rent payment commitments
under these operating leases are negligible so the future minimum
lease payments under these leases have not been disclosed in these
financial statements.
29.0 Controlling parties
As at 31 March 2022, there is no ultimate controlling party.
30.0 Related party disclosures
30.1 Transactions with 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 ended 31 March 2022 payable out of the assets of the Company
is not expected to exceed GBP250,000.
Fees of GBP190,000 (2021: GBP182,000) were incurred and paid to
the Directors.
As at 31 March 2022 and 2021, the Directors held the following
number of shares:
31 March 31 March 2021
2022
Director Ordinary
shares Ordinary shares
---------------- --------------------------------- --------- ----------------
Michael Wrobel Chairman 120,598 100,598
Alastair
Moss Director 11,766 11,766
Alison Hadden Director - -
Caroline Audit and Management Engagement
Gulliver Committee Chair 58,832 58,832
Peter Baxter Director 82,065 47,065
---------------- --------------------------------- --------- ----------------
Remuneration
The Investment Adviser has reviewed its remuneration policies
and procedures to ensure incentives are aligned with the
requirements of AIFMD. It includes measures to avoid conflicts of
interest such as providing staff with a fixed monthly salary and
determining discretionary payments by the performance of the
Investment Adviser as a whole and not linked to any one AIF in
particular. The Investment Adviser and its staff receive no
remuneration through profit share, carried interest, co-investment
or other schemes related to the Company's performance.
30.2 Transactions with the Investment Adviser
On 1 November 2016, Civitas Investment Management Limited
("CIM") was appointed as the Investment Adviser of the Company.
Fees of GBP6,132,000 (2021: GBP6,117,000) were incurred and paid
to CIM. In addition GBPnil (2021: GBPnil) disbursements were paid
in the year.
The Investment Adviser has agreed to contribute GBP100,000
(2021: GBPnil) towards legal and professional fees incurred in the
year. This amount has been offset against legal and professional
fees in note 9.0. This amount is outstanding at the end of the
year.
As at 31 March 2022, a net amount of GBP151,000 (2021:
GBP13,000) was due from CIM, which has since been received.
As at 31 March 2022, CIM held 50,000 (2021: 50,000) Ordinary
shares in the Company.
31.0 Financial risk management
31.1 Financial instruments
The Group's principal financial assets and liabilities are those
that arise directly from its operations: trade and other
receivables, trade and other payables and cash and cash
equivalents. The Group's other principal financial liabilities are
bank borrowings, the main purpose of which is to finance the
acquisition and development of the Group's investment property
portfolio, and interest rate derivatives as detailed in notes 20.0
and 21.0.
All financial liabilities are measured at amortised cost, except
interest rate derivatives, which are measured at fair value. All
financial instruments were designated in their current categories
upon initial recognition.
Set out below is a comparison by class of the carrying amounts
and fair value of the Group's financial instruments that are
carried in the financial statements
Book value Fair value Book value Fair value
31 March 31 March 31 March 31 March
2022 2022 2021 2021 GBP'000
GBP'000 GBP'000 GBP'000
-------------------------------- ----------- ----------- ----------- --------------
Financial assets
Interest rate derivatives 2,131 2,131 - -
Trade and other receivables(1) 34,580 34,580 33,572 33,572
Cash and cash equivalents 53,337 53,337 107,097 107,097
-------------------------------- ----------- ----------- ----------- --------------
Financial liabilities
Trade and other payables(2) 8,632 8,632 8,699 8,699
Bank borrowings 352,050 349,406 352,120 354,142
Interest rate derivatives - - 544 544
-------------------------------- ----------- ----------- ----------- --------------
(1) Excludes prepayments
(2) Excludes deferred income
The Group has five bank loans: a 10-year fixed rate loan of
GBP52,500,000 provided by Scottish Widows Limited; a 3-year
revolving credit facility variable rate loan of GBP60,000,000
provided by Lloyds Bank plc; a 3-year revolving credit facility
variable rate loan of GBP100,000,000 provided by HSBC Bank PLC; a
5-year revolving credit facility variable rate loan of
GBP60,000,000 provided by National Westminster Bank Plc; and a
7-year fixed rate loan of GBP84,550,000 with M&G Investment
Management Limited. The fair value of the fixed rate loan is
determined by comparing the discounted future cash flows.
Financial risk management
The Group is exposed to market risk, interest rate risk, credit
risk and liquidity risk in the current and future years. The Board
of Directors oversees the management of these risks. The Board of
Directors reviews and agrees policies for managing each of these
risks that are summarised below.
31.2 Market risk
The Group's activities will expose it primarily to the market
risks associated with changes in property values and changes in
interest rates.
Risk relating to investment in property
Investment in property is subject to varying degrees of risk.
Some factors that affect the value of the investment in property
include:
-- changes in the general economic climate;
-- competition for available properties;
-- obsolescence; and
-- government regulations, including planning, environmental and tax laws.
Variations in the above factors can affect the valuation of
assets held by the Group and as a result can influence the
financial performance of the Group.
Risk relating to liquidity funds classified as cash and cash
equivalents
The Group holds positions in two AAA rated liquidity funds that
invest in a diversified range of government and non-government
money market securities, which are subject to varying degrees of
risk. Some factors that affect the value of the liquidity funds
include:
-- the performance of the underlying government and non-government money market securities; and
-- interest rates.
Variations in the above factors can affect the valuation of
assets held by the Group and as a result can influence the
financial performance of the Group.
31.3 Interest rate risk
Interest rate risk is the risk that the fair value or future
cash flows of a financial instrument will fluctuate because of
changes in market interest rates.
The Group's interest rate risk principally arises from long-term
borrowings. To manage this, the Group has entered into a fixed rate
bank loan and three variable rate bank loans. The Group has entered
into an interest rate swap on the 5-year loan facility with
National Westminster Bank Plc in order to mitigate the risk of
rising interest rates.
At 31 March 2022, 55% (2021: 55%) of the Group's borrowings are
subject to a fixed rate of interest.
The exposure of the Group to variable rates of interest is
considered upon drawing of any new loan facilities, to ensure that
the Group's exposure to interest rate fluctuations is within
acceptable levels.
The Investment Adviser monitors the Group's exposure to any
changes in interest rate on an ongoing basis, with the Board
updated on a quarterly basis of the current exposure of the Group's
loan facilities.
As at 31 March 2022, if interest rates had been 100 basis points
higher/(lower) with all other variables held constant the impact on
profits after taxation for the year would be as below. The
Investment Adviser anticipates these levels are reasonably possible
based on the observation of current market conditions that interest
rates would not fluctuate more than 1%.
31 March 2022 31 March 2021
GBP'000 GBP'000
-------------------------------- -------------- --------------
(Decrease)/increase in profits
due to interest rates
100 basis points higher (1,066) (529)
100 basis points lower 1,572 1,600
-------------------------------- -------------- --------------
The average effective interest rates of financial instruments at
31 March 2022 were as follows:
31 March 2022 31 March 2021
% %
--------------------------------- --------------- --------------
Bank borrowings - fixed rate 2.94 2.94
Bank borrowings - variable rate 2.23 1.76
Cash and cash equivalents 0.05 -
--------------------------------- --------------- --------------
The Group's borrowings with Lloyds Bank plc, HSBC Bank PLC and
National Westminster Bank Plc will be transitioning from the London
Interbank Offer Rate (LIBOR) benchmark to Sterling Overnight Index
Average (SONIA) benchmark in due course. There is expected to be
negligible cost involved in the borrowing facility transition and
the respective hedge instrument amendments.
31.4. Credit risk
Credit risk is the risk that a counterparty will not meet its
obligations under a financial instrument or customer contract,
leading to a financial loss. The Group is exposed to credit risks
from both its leasing activities and financing activities,
including deposits with banks and financial institutions.
Debtors and accrued income represent rent due or accrued, these
amounts due are diversified between a number of different Approved
Providers of differing financial strength, see note 28.0 for
details of the different counterparties. None of the Approved
Providers have listed debt and as such do not have a credit rating,
however, the diversified nature of this asset supports the credit
quality.
The Group has policies in place to ensure that rental contracts
are entered into only with lessees with an appropriate credit and
operational history, and limits exposure to any one tenant. The
credit risk is considered to be further reduced as the source of
the rents received by the Group is ultimately provided by the
Government, by way of housing benefit and care provision, via a
diverse range of Local Authorities.
For details of provisions for impairment please refer to note
17.0.
Credit risk related to financial instruments and cash
deposits
One of the principal credit risks of the Group will arise with
the banks and financial institutions. The Board of Directors
believes that the credit risk on short-term deposits and current
account cash balances is limited because the counterparties are
banks considered to be of good credit quality. In the case of cash
deposits held with lawyers, the credit risk is limited because the
cash is held by the lawyers within client accounts at banks with
high credit quality.
The credit ratings for banks where balances are held by the
Group are as follows:
Lloyds Bank plc A+/F1
HSBC Bank plc AA-/F1+
RBS International Limited A/FI
National Westminster Bank plc A/F1
Ratings advised by Fitch.
31.5. Liquidity risk
The Group manages its liquidity and funding risks by considering
cash flow forecasts and ensuring sufficient cash balances are held
within the Group to meet future needs. Prudent liquidity risk
management implies maintaining sufficient cash and marketable
securities, the availability of financing through appropriate and
adequate credit lines, and the ability of customers to settle
obligations within normal terms of credit. The Group ensures,
through forecasting of capital requirements, that adequate cash is
available.
The following table details the Group's maturity profile in
respect of its financial instrument liabilities based on
contractual undiscounted payments:
On demand <1 year 1-5 years > 5 years Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------- ---------- --------- ---------- ---------- ---------
31 March 2022
Trade and other
payables 8,632 - - - 8,632
Bank borrowings - 9,336 245,974 144,602 399,912
----------------- ----------
8,632 9,336 245,974 144,602 408,544
----------------- ---------- --------- ---------- ---------- ---------
31 March 2021
Trade and other
payables 8,699 - - - 8,699
Bank borrowings - 67,909 181,048 144,602 393,559
----------------- ----------
8,699 67,909 181,048 144,602 402,258
----------------- ---------- --------- ---------- ---------- ---------
The profile above shows the maturity profile at 31 March 2022
and included within the contracted payments is GBP42,862,000 (2021:
GBP36,509,000) of loan interest payable up to the point of
maturity.
32.0 Capital Commitments
At 31 March 2022, the Company had funds committed totalling
GBP92,000 (2021: GBPnil) concerning capital expenditure for a
property in Surrey.
33.0 Post balance sheet events
Acquisitions
On 13 May 2022, the Company completed an acquisition at North
End, Wisbech for GBP600,000.
Dividends
On 11 May 2022, the Company announced a dividend of 1.3875 pence
per share in respect of the period 1 January 2022 to 31 March 2022
totalling GBP8,474,000. The dividend payment was made on 28 June
2022 to shareholders on the register as at 20 May 2022. The
financial statements do not reflect this dividend. The dividend was
paid as a REIT property income distribution ("PID").
Remuneration
From 1 April 2022, the remuneration of the Directors, Audit and
Management Engagement Committee Chairman and Chairman's annual fee
will increase. The Chairman's annual fee increased by 1.9% to
GBP53,000; the Director's annual fee increased by 2.2% to
GBP34,000; however the additional fee for the Audit and Management
Engagement Committee Chair remains at GBP5,000.
Financing
On 18 May 2022, an extension was granted for the facility with
Lloyds Bank plc, which now expires in July 2024.
Treasury shares
Since 31 March 2022, the Company has made purchases of 1,700,000
Ordinary shares into treasury at an average price of 87.8p per
Ordinary share. The total cost to the Company including commission
and stamp duty is GBP1,492,000 and following these transactions, at
23 June 2022 the Company held 11,725,000 Ordinary shares in
treasury.
Company Statement of Financial Position
As at 31 March 2022
31 March 2022 31 March 2021
Note GBP'000 GBP'000
----------------------------- ------- -------------- --------------
Assets
Non-current assets
Investment in subsidiaries 7.0 793,284 720,918
----------------------------- ------- -------------- --------------
Current assets
Trade and other receivables 9.0 4,310 3,644
Cash and cash equivalents 10.0 23,438 15,447
----------------------------- ------- -------------- --------------
27,748 19,091
----------------------------- ------- -------------- --------------
Total assets 821,032 740,009
----------------------------- ------- -------------- --------------
Liabilities
Creditors - amounts falling
due within one year
Trade and other payables 11.0 (274,020) (171,655)
----------------------------- ------- -------------- --------------
(274,020) (171,655)
----------------------------- ------- -------------- --------------
Total liabilities (274,020) (171,655)
----------------------------- ------- -------------- --------------
Total net assets 547,012 568,354
----------------------------- ------- -------------- --------------
Equity
Share capital 12.0 6,225 6,225
Share premium reserve 292,626 292,462
Capital reduction reserve 322,365 331,140
Accumulated losses 13.0 (74,204) (61,473)
----------------------------- ------- -------------- --------------
Total equity 547,012 568,354
----------------------------- ------- -------------- --------------
The Company has taken advantage of the provisions of Companies
Act 2006 s408 and does not disclose the Company's individual profit
and loss account. Profit for the year was GBP21,362,000 (2021:
GBP52,780,000).
The Company financial statements as set out below were approved
by the Board of Directors of Civitas Social Housing PLC and
authorised for issue and signed on its behalf by:
Michael Wrobel
Chairman and Independent Non-Executive Director
29 June 2022
Company No: 10402528
The notes set out below are an integral part of these financial
statements
Company Statement of Changes in Equity For the year ended 31
March 2022
Share Capital
Share premium reduction Accumulated Total
Capital reserve reserve losses equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------- -------- -------- ---------- ------------ ---------
Balance at 1 April 2020 6,225 292,405 330,926 (80,840) 548,716
Profit and total comprehensive income
for the year - - - 52,780 52,780
Issue of Ordinary shares
Share reissued from treasury - 57 214 - 271
Dividends paid
Total interim dividends for the year
ended 31 March 2021 (5.375p) - - - (33,413) (33,413)
--------------------------------------- -------- -------- ---------- ------------ ---------
Balance at 31 March 2021 6,225 292,462 331,140 (61,473) 568,354
Profit and total comprehensive income
for the year - - - 21,362 21,362
Issue of Ordinary shares
Share reissued from treasury - 164 484 - 648
Shares bought back into treasury - - (9,259) - (9,259)
Dividends paid
Total interim dividends for the year
ended 31 March 2022 (5.5125p) - - - (34,093) (34,093)
--------------------------------------- --------
Balance at 31 March 2022 6,225 292,626 322,365 (74,204) 547,012
--------------------------------------- -------- -------- ---------- ------------ ---------
Notes to the Company Financial Statements
For the year ended 31 March 2022
1.0 Corporate information
Civitas Social Housing PLC ("the Company") was incorporated in
England and Wales under the Companies Act 2006 as a public company
limited by shares on 29 September 2016 with company number 10402528
under the name Civitas REIT PLC, which was subsequently changed to
the existing name on 3 October 2016.
The address of the registered office is Beaufort House, 51 New
North Road, Exeter, Devon EX4 4EP. The Company is registered as an
investment company under section 833 of the Companies Act 2006 in
England and Wales and is domiciled in the United Kingdom.
The Company did not begin trading until 18 November 2016 when
the shares were admitted to trading on the London Stock Exchange
("LSE").
The Company's Ordinary shares have been admitted to the Official
List of the Financial Conduct Authority ("FCA"), and are traded on
the LSE.
The principal activity of the Company is to act as the ultimate
parent company of its subsidiaries (the "Group") and to provide
shareholders with an attractive level of income, together with the
potential for capital growth from investing in a portfolio of
social homes.
2.0 Basis of preparation
The financial statements have been prepared on a historical cost
basis and in accordance with Financial Reporting Standard 101
Reduced Disclosure Framework ("FRS 101") and the Companies Act 2006
as applicable to companies using FRS 101.
In preparing these financial statements, the Company applies the
recognition, measurement and disclosure requirements of
International Financial Reporting Standards ("Adopted IFRSs"), but
makes amendments where necessary in order to comply with the
Companies Act 2006 and has set out below where advantage of the FRS
101 disclosure exemptions has been taken.
In preparing these financial statements the Company has taken
advantage of all disclosure exemptions conferred by FRS 101.
Therefore, these financial statements do not include:
-- certain comparative information as otherwise required by IFRS;
-- certain disclosures regarding the Company's capital;
-- certain disclosures in relation to IFRS 15 Revenue Contracts with Customers;
-- a statement of cash flows;
-- the effect of future accounting standards not yet adopted;
-- the disclosure of the remuneration of key management personnel; and
-- disclosure of related party transactions with other wholly
owned members of Civitas Social Housing PLC.
In addition, and in accordance with FRS 101, further disclosure
exemptions have been adopted because equivalent disclosures are
included in the Company's consolidated financial statements. These
financial statements do not include certain disclosures in respect
of:
-- share based payments;
-- financial instruments; and
-- fair value measurement other than certain disclosures
required as a result of recording financial instruments at fair
value.
The Company has taken advantage of the exemption in section 408
of the Companies Act 2006 not to present its own income statement
or statement of comprehensive income.
New standards, amendments and interpretations
After a review of new accounting standards which are now
effective, none are relevant to be adopted in the preparation of
the Company's accounts for the year ended 31 March 2022.
Going concern
The financial statements have been prepared on a going concern
basis.
As discussed in the Group financial statements above, the
underlying assets of the Company benefit from a secure income
stream.
The Company financial statements show an accumulated loss,
however this is due to a time-lag on profits from subsidiary
companies being moved up the structure in the form of
dividends.
The Company has a net current liability position of
GBP246,272,000 (2021: GBP152,564,000). This balance arises due to
the intercompany balances totalling GBP271,632,000 (2021:
GBP169,465,000) with the Company's subsidiary companies. The
amounts principally relate to bank loans drawn in the Company's
subsidiary companies in order to finance the purchase of new
acquisitions in accordance with the Group's business model. The
directors of the subsidiary companies have provided a letter of
comfort that they will not seek repayment of these balances within
12 months from the date of approval of the Company's financial
statements.
The Company's articles of association include a requirement for
the Board to propose an ordinary resolution at the annual general
meeting following the fifth anniversary from the initial public
offering of the Company for the Company to continue in its current
form (the Continuation Resolution). This is the first continuation
vote since the Company was set up.
If the Continuation Resolution is passed, the Company will
continue its business as presently constituted and propose the same
resolution at every fifth annual general meeting thereafter. If the
Continuation Resolution is not passed, the Directors will be
required, within six months after the date of this annual general
meeting, to formulate proposals for consideration by the
shareholders for the voluntary liquidation, unitisation,
reorganisation, or reconstruction of the Company. After making
appropriate enquiries of the Company's brokers and Investment
Adviser, pursuant to their recent discussions with a number of the
Company's shareholders, the Directors are of the view that the
Continuation Resolution will be passed at the forthcoming annual
general meeting. This reflects the strength and nature of the
Company's portfolio, and specifically the provision of long-term
accommodation for more than 4,000 vulnerable individuals.
Accordingly, the Directors expect that if the Continuation
Resolution is not passed, an event which the Directors consider to
be highly remote, formulating and implementing any such proposals
would require the Company to continue operations for a period of at
least 12 months from the date of approval of the Company's
financial statements.
The Board is, therefore, of the opinion that the going concern
basis adopted in the preparation of the consolidated financial
statements is appropriate.
Significant judgements and sources of estimation uncertainty
The key source of estimation uncertainty relates to the
Company's investment in Group companies, and is stated in the
Company's separate financial statements at cost less impairment
losses, if any. Impairment losses are determined with reference to
the investment's fair value less estimated costs of disposal. Fair
value is derived from the subsidiaries', and their subsidiaries',
net assets at the balance sheet date. Investment properties held by
the subsidiary companies are supported by independent valuation.
Judgements and assumptions associated with the property values of
the investments held by the subsidiary companies are detailed in
the Group financial statements.
3.0 Accounting Policies
The financial statements of the Company follow the accounting
policies laid out in the Group's consolidated financial statements
along with the following accounting policies which have been
consistently applied:
Investments in subsidiaries
The investments in subsidiary companies are included in the
Company's Statement of Financial Position at cost less provision
for impairment. Impairment losses are determined with reference to
the investment's fair value less estimated selling costs. Fair
value is derived from the subsidiaries', and their subsidiaries',
net assets at the balance sheet date. On disposal, the difference
between the net disposal proceeds and its carrying amount is
included in the income statement.
The investment in a subsidiary company may include both the
purchase of shares and an intercompany loan which is subsequently
capitalised in return for shares in the subsidiary company. The
intercompany loan capitalised is disclosed in note 7.0 as a
transfer between the shares and loan columns.
Loans to subsidiaries
Loans made to subsidiary companies which arise as part of the
transactions for the acquisition of investments and are
subsequently capitalised by the issue of shares are recognised as
investment in subsidiaries at cost. At the point the loan is
capitalised, this transaction is recognised as a transfer within
the table in note 7.0.
Amounts due to subsidiary companies
Balances arising with subsidiary companies of a temporary nature
are initially recognised at fair value and subsequently measured at
amortised cost.
4.0 Dividends
Dividends are included in the financial statements in the year
in which they are paid. Details of dividends paid and proposed are
included in note 14.0 of the Group's consolidated financial
statements.
5.0 Employee information
Details of Directors' remuneration are included in note 6.0 of
the consolidated financial statements. The Company had no employees
during the year (2021: nil).
6.0 Audit fees
Audit fees in relation to the Company's financial statements
total GBP296,000 (31 March 2021: GBP272,000). For further details,
please refer to note 9.0 of the Group financial statements.
7.0 Investments in subsidiaries
For the
Shares year ended
in Loans to 31 March
subsidiaries subsidiaries 2022
GBP'000 GBP'000 GBP'000
----------------------------- -------------- --------------- -------------
Balance at the beginning of
the year 703,435 17,483 720,918
Increase in investments 41,712 31,013 72,725
Loans transferred 23,287 (23,287) -
Impairment (359) - (359)
----------------------------- --------------
At the end of the year 768,075 25,209 793,284
----------------------------- -------------- --------------- -------------
For the
Shares in Loans to year ended
subsidiaries subsidiaries 31 March 202
GBP'000 GBP'000 GBP'000
--------------------------------- --------------- --------------- ---------------
Balance at the beginning of the
year 678,247 28,673 706,920
Increase in investments 928 14,383 15,311
Loans transferred 25,573 (25,573) -
Impairment (1,313) - (1,313)
--------------------------------- ---------------
At the end of the year 703,435 17,483 720,918
--------------------------------- --------------- --------------- ---------------
Following a review comparing cost of investments to the
underlying net assets of subsidiary companies, an impairment
provision has been made of GBP359,000 (2021: GBP1,313,000).
8.0 Subsidiary entities
The Company has provided a guarantee under s479C of the
Companies Act 2006 in respect of the financial year ended 31 March
2022 for a number of its subsidiary companies (as indicated in the
table below). The guarantee is over all outstanding liabilities to
which the subsidiary companies are subject at 31 March 2022 until
they are satisfied in full.
The Group consists of a parent company, Civitas Social Housing
PLC, incorporated in England and Wales (company number 10402528)
and a number of subsidiaries held directly by Civitas Social
Housing PLC, which operate and are incorporated in England and
Wales or Jersey.
The Group owns 100% equity shares of all subsidiaries listed
below and has the power to appoint and remove the majority of the
board of directors of those subsidiaries. The relevant activities
of the below subsidiaries are determined by the Board of Directors
based on the purpose of each company.
Therefore, the Directors concluded that the Group has control
over all these entities and all these entities have been
consolidated within the consolidated financial statements.
A list of all related undertakings included within these
consolidated financial statements are noted below. Indirectly held
subsidiary companies are marked by an indentation in the table
below:
Name Registered number Principal activity Country of incorporation
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas Social Housing Finance Company 1 10997707 Finance company England & Wales
Limited *
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas Social Housing Jersey 1 Limited 124129 Holding company Jersey
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV1 Limited* 10518729 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV2 Limited* 10114251 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV11 Limited* 10546749 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV15 Limited* 09777380 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV25 Limited* 10791473 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV27 Limited* 10883112 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV33 Limited* 10546407 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV35 Limited* 10588530 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV38 Limited* 10738318 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV39 Limited* 10547333 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV40 Limited* 10738510 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV41 Limited* 10738542 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV50 Limited* 10775419 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas Social Housing Finance Company 2 10997698 Finance company England & Wales
Limited*
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas Social Housing Jersey 2 Limited 124876 Holding company Jersey
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV3 Limited* 10156529 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV4 Limited* 10433744 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV5 Limited* 10479104 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV6 Limited* 10674493 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV9 Limited* 10536388 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV10 Limited* 10535243 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV12 Limited* 10546753 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV17 Limited* 10479036 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV18 Limited* 10546651 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV19 Limited* 10548932 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV20 Limited* 10588735 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV22 Limited* 10743958 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV24 Limited* 10751512 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV26 Limited* 10864336 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV29 Limited* 10911565 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV30 Limited* 10956025 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV31 Limited* 10974889 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV32 Limited* 11007173 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV34 Limited* 10738381 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV36 Limited* 10588792 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV42 Limited* 10738556 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV43 Limited* 10534877 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV45 Limited* 10871854 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV46 Limited* 10871910 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV47 Limited* 10873270 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV48 Limited* 10873295 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV51 Limited* 10826693 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV52 Limited* 10827006 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV63 Limited* 10937805 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV64 Limited* 10938411 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV70 Limited* 10770201 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV71 Limited * 10888639 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV72 Limited* 10938022 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV74 Limited* 11001855 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV75 Limited* 11001834 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV80 Limited* 11001998 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas Social Housing Finance Company 3 10997714 Finance Company England & Wales
Limited*
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV8 Limited* 10536157 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV28 Limited* 10895228 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV53 Limited* 11021625 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV55 Limited* 11056455 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV57 Limited* 11091444 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV60 Limited* 11111908 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV61 Limited* 10937662 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV66 Limited* 10937898 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV77 Limited* 11166491 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV78 Limited* 11170099 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV79 Limited* 11236544 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV81 Limited* 11192811 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV82 Limited* 11380796 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV83 Limited* 11371128 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV85 Limited* 11300749 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV95 Limited* 11208184 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV97 Limited* 11463890 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV103 Limited* 11500596 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV105 Limited* 11532177 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV106 Limited* 11532179 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV107 Limited* 11532182 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV116 Limited* 11504399 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV117 Limited* 11504445 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas Social Housing Finance Company 4 11906660 Finance Company England & Wales
Limited*
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV23 Limited* 10746881 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV54 Limited* 11039750 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV59 Limited* 11111912 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV69 Limited* 11142372 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV73 Limited* 10939075 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV84 Limited* 11381455 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV86 Limited* 11418432 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV87 Limited* 10888903 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV88 Limited* 10939044 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV90 Limited* 10939131 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV91 Limited * 10941377 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV92 Limited* 11449913 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV93 Limited* 11043111 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV94 Limited* 11208105 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV96 Limited* 11270786 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV100 Limited* 11069703 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV101 Limited* 09978282 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV102 Limited* 11521555 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV109 Limited* 11532120 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV112 Limited* 11579750 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV114 Limited* 11579733 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV115 Limited* 11522178 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV118 Limited* 11411498 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV121 Limited* 11099917 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV122 Limited* 11482646 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV126 Limited* 11459821 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV127 Limited* 10941401 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV129 Limited* 11664994 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV130 Limited* 11705074 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV131 Limited* 11675132 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV132 Limited* 11473735 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV145 Limited* 11842306 Holding company England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
SPV153 Limited (previously 5219012 Property investment England & Wales
Fieldbay Limited) *
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV148 Limited* 11632633 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV149 Limited* 11462691 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV150 Limited* 11462555 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
FPI CO 324 Ltd* 11633019 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas Social Housing Finance Company 5 13083077 Finance Company England & Wales
Limited*
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV7 Limited* 10536368 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV13 Limited* 09517692 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV37 Limited* 10738450 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV44 Limited* 10588783 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV49 Limited* 11031349 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV56 Limited* 11056465 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV62 Limited* 10937528 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV65 Limited* 10938467 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV67 Limited* 10937929 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV68 Limited* 10938269 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV98 Limited* 11478695 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV99 Limited* 11478707 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV104 Limited* 11532174 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV108 Limited* 11532135 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV113 Limited* 11580068 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV123 Limited* 08253452 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV133 Limited* 11698972 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV134 Limited* 11689461 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV135 Limited* 11579880 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV136 Limited* 11579760 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV143 Limited* 11546808 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV144 Limited* 11546696 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV146 Limited* 11861500 Holding Company England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Bryn Eithin (2019) Limited * 11844898 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV147 Limited* 11861974 Holding Company England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Mynydd Mawr (2019) Limited * 11844917 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV152 Limited* 11955719 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV155 Limited* 12044281 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV156 Limited* 12081093 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV157 Limited* 12188610 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV158 Limited* 12202674 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV160 Limited* 12272906 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Bedford SPV1 Limited* 12315518 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Bridge Property Herts Limited* 12435985 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Bridge Propco Limited* 12445439 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
FPI Co 294 Ltd* 11519226 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV14 Limited* 10479041 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV HP Ltd* 12784895 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV16 Limited* 09917557 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV21 Limited* 10631541 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas SPV159 Limited* 12258313 Property investment England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
Civitas Financing PLC* 13546154 Holding Company England & Wales
----------------------------------------------- ------------------ -------------------- -------------------------
* These entities are exempt from the requirements of the
Companies Act 2006 relating to the audit of individual financial
statements by virtue of Section 479A of that Act. These are all
entities that have a year end of 31 March 2022.
The registered addresses for the subsidiaries are consistent
based on their country of incorporation and are as follows:
-- England & Wales entities: Beaufort House, 51 New North
Road, Exeter, Devon, EX4 4EP
-- Jersey entities: 12 Castle Street, St Helier, Jersey, JE2
3RT
9.0 Trade and other receivables
31 March
31 March 2022 2021
GBP'000 GBP'000
----------------------------------- -------------- ---------
Trade receivables 1,150 722
Prepayments and other receivables 1,902 1,433
Accrued income 1,258 1,489
----------------------------------- -------------- ---------
Total 4,310 3,644
----------------------------------- -------------- ---------
Prepayments and other receivable amounts include prepaid legal
and professional fees of GBP34,000 (2021: GBP200,000) that have
been incurred in connection with acquisitions yet to be completed
and GBP1,046,000 (2021: GBP817,000) in respect of uncompleted works
on the property portfolio.
10.0 Cash and cash equivalents
31 March
31 March 2022 2021
GBP'000 GBP'000
--------------------------- -------------- ---------
Cash held by solicitors 376 720
Liquidity funds 10,489 10,485
Cash held at bank 12,258 3,381
--------------------------- -------------- ---------
Cash and cash equivalents 23,123 14,586
Restricted cash 315 861
--------------------------- -------------- ---------
Total cash held at bank 23,438 15,447
--------------------------- -------------- ---------
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 by lawyers in
relation to deferred payments subject to achievement of certain
conditions, other retentions and cash segregated to fund repair,
maintenance and improvement works to bring the properties up to
satisfactory standards for the Group and the tenants.
11.0 Trade and other payables
31 March
31 March 2022 2021
GBP'000 GBP'000
------------------------------------- -------------- ---------
Retentions 288 490
Accruals 685 450
Dividends withholding tax payable 1,057 892
Deferred income 358 358
Amounts due to subsidiary companies 271,632 169,465
Total 274,020 171,655
------------------------------------- -------------- ---------
12.0 Share capital
Share capital represents the nominal value of consideration
received by the Company for the issue of Ordinary shares.
For the
For the year ended
year ended 31 March
31 March 2022 2021
GBP'000 GBP'000
------------------------------ --------------- ------------
Share capital
At beginning and end of year 6,225 6,225
------------------------------ --------------- ------------
Number of shares authorised, issued and fully paid
For the For the
year ended year ended
31 March 2022 31 March 2021
--------------------------------- --------------- ---------------
Ordinary shares of GBP0.01 each
At beginning and end of year 622,461,380 622,461,380
--------------------------------- --------------- ---------------
The Company holds 10,025,000 (2021: 565,000) Ordinary shares in
treasury. The number of Ordinary shares used to calculate the net
asset value is 612,896,380 (2021: 621,896,380).
13.0 Accumulated losses
This reserve represents the profits and losses of the
Company
For the For the
year ended year ended
31 March 2022 31 March 2021
GBP'000 GBP'000
--------------------------------- --------------- ---------------
Balance at the beginning of the
year (61,473) (80,840)
Profit for the year 21,362 52,780
Dividends paid in the year (34,093) (33,413)
--------------------------------- --------------- ---------------
At end of year (74,204) (61,473)
--------------------------------- --------------- ---------------
14.0 Controlling parties
As at 31 March 2022, there is no ultimate controlling party.
15.0 Related party transactions
For all related party transactions and transactions with the
Investment Adviser please make reference to notes 30.1 and 30.2 of
the Group's consolidated financial statements and amounts due to
subsidiary companies in note 17.0 above.
16.0 Post balance sheet events
Please refer to note 33.0 of the Group Consolidated financial
statements above.
Appendix 1 (unaudited): Notes to the calculation of EPRA and
other alternative performance measures
For the For the
1.0 EPRA Earnings year ended year ended
31 March 2022 31 March 2021
------------------------------------------ --------------- ---------------
Earnings from operational activities
Profit after taxation (GBP'000) 44,754 36,075
Change in fair value of derivative
financial instruments (GBP'000) (2,675) 66
Changes in value of investment properties
(GBP'000) (12,269) (5,511)
EPRA Earnings (GBP'000) 29,810 30,630
Weighted average number of shares
in issue
(adjusted for shares held in treasury) 618,797,942 621,651,859
EPRA Earnings per share (EPS) - basic
& diluted 4.82p 4.93p
2.0 EPRA NAV Metrics
EPRA Net EPRA Net
EPRA Net Reinstatement Tangible Disposal
Value Assets Value
31 March 2022
Net assets (GBP'000) 675,547 675,547 675,547
Fair value of derivative financial
instruments (GBP'000) (2,131) (2,131) -
Fair value of bank borrowings (GBP'000) - - 2,644
NAV (GBP'000) 673,416 673,416 678,191
Number of shares in issue (adjusted
for shared held in treasury) 612,436,380 612,436,380 612,436,380
NAV per share 109.96p 109.96p 110.74p
EPRA Net EPRA Net
EPRA Net Reinstatement Tangible Disposal
Value Assets Value
31 March 2021
Net assets (GBP'000) 673,498 673,498 673,498
Fair value of derivative financial
instruments (GBP'000) 544 544 -
Fair value of bank borrowings (GBP'000) - - (2,022)
NAV (GBP'000) 674,042 674,042 671,476
Number of shares in issue (adjusted
for shares held in treasury) 621,896,380 621,896,380 621,896,380
NAV per share GBP'000 108.38p 108.38p 107.97p
3.0 EPRA Net Initial Yield
For the year For the year ended
ended 31 March 31 March
2022 2021
Investment property (GBP'000) 968,756 915,589
Allowance for estimated purchasers'
costs (GBP'000) 56,412 53,753
Gross up completed property portfolio
(GBP'000) 1,025,168 969,342
Annualised net rents (GBP'000) 54,091 50,780
Add: notional rent expiration of rent
free periods or other lease incentives
(GBP'000) - -
Topped-up net annualised rent (GBP'000) 54,091 50,780
EPRA NIY 5.28% 5.24%
EPRA Topped-up NIY 5.28% 5.24%
4.0 EPRA Vacancy Rate
For the year For the year
ended 31 March ended
2022 31 March 2021
Estimated Market Rental Value (ERV)
of vacant spaces (GBP'000) - -
Estimated Market Rental Value (ERV)
of whole portfolio (GBP'000) 54,091 50,380
EPRA Vacancy Rate 0% 0%
5.0 EPRA Costs Ratio
For the year For the year
ended 31 March ended
2022 31 March 2021
Total administrative and operating
expenses 10,247 9,498
Direct property expenses 978 1,175
Less property expenses recovered
through rents (995) (886)
EPRA Costs(including direct vacancy
costs) 10,230 9,787
Direct vacancy costs - -
EPRA Costs (excluding direct vacancy
costs) 10,230 9,787
Rental income 51,636 49,020
Less rechargeable costs received (995) (886)
Gross rental income 50,641 48,134
EPRA Cost Ratio (including direct
vacancy costs) 20.20% 20.33%
EPRA Cost Ratio (excluding direct
vacancy costs) 20.20% 20.33%
The Group has not incurred any direct vacancy costs.
6.0 EPRA Table of Capital Expenditure
For the For the
year ended year ended
31 March 31 March 2021
2022 GBP'000
GBP'000
Acquisitions including incidental
costs of purchase 33,466 16,108
Development - -
Investment properties
Incremental lettable space - -
Enhancing lettable space 5,818 4,077
Tenant incentives 1,614 11,217
Other material non-allocated types - -
of expenditure
Capitalised interest - -
Total Capital Expenditure 40,898 31,402
Conversion from accruals to cash basis 1,312 215
Total Capital Expenditure on a cash
basis 42,210 31,617
7.0 Portfolio NAV
IFRS NAV adjusted to reflect investment property valued on a
portfolio basis rather than individual asset basis.
31 March 31 March
2022 2021
Net assets (GBP'000) 675,547 673,498
Adjustment for change to property valuation
(GBP'000) 76,784 63,270
Portfolio net assets (GBP'000) 752,331 736,768
Number of Ordinary shares in issue
(adjusted for shares held in treasury) 612,436,380 621,896,380
Portfolio Net Assets per share 122.84p 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.
31 March 31 March
2022 2021
IFRS NAV per share 110.300p 108.300p
31 May 2017 Interim dividend 0.7500p 0.7500p
31 August 2017 Interim dividend 0.7500p 0.7500p
30 November 2017 Interim dividend 0.7500p 0.7500p
9 March 2018 Interim dividend 0.7500p 0.7500p
8 June 2018 Interim dividend 1.2500p 1.2500p
7 September 2018 Interim dividend 1.2500p 1.2500p
30 November 2018 Interim dividend 1.2500p 1.2500p
11 January 2019 Interim dividend 1.1100p 1.1100p
28 February 2019 Interim dividend 0.1400p 0.1400p
7 June 2019 Interim dividend 1.3250p 1.3250p
6 September 2019 Interim dividend 1.3250p 1.3250p
29 November 2019 Interim dividend 1.3250p 1.3250p
28 February 2020 Interim dividend 1.3250p 1.3250p
12 June 2020 Interim dividend 1.3250p 1.3250p
7 September 2020 Interim dividend 1.3500p 1.3500p
4 December 2020 Interim dividend 1.3500p 1.3500p
1 March 2021 Interim dividend 1.3500p 1.3500p
11 June 2021 Interim dividend 1.3500p -
10 September 2021 Interim dividend 1.3875p -
13 December 2021 Interim dividend 1.3875p -
11 March 2022 Interim dividend 1.3875p -
134.4875p 126.9750p
IFRS NAV per share at launch 98.0000p 98.0000p
Levered IRR 6.63% 6.54%
Five Year Financial Results
Group Statement of Comprehensive Income
For the
year
ended For the period
31 March For the year ended For the year ended For the year ended from 18 November
2022 31 March 2021 31 March 2020 31 March 2019 2016 to 31 March
Revenue GBP'000 GBP'000 GBP'000 GBP'000 2018 GBP'000
Rental income 51,636 49,020 46,165 35,738 18,606
Less direct property
expenses (978) (1,175) (259) - -
Net rental income 50,658 47, 845 45,906 35,738 18,606
Directors'
remuneration (206) (198) (176) (163) (205)
Investment advisory
fees (6,132) (6,117) (6,183) (6,457) (5,773)
General and
administrative
expenses (3,909) (3,183) (3,501) (3,022) (2,915)
Total expenses (10,247) (9,498) (9,860) (9,642) (8,893)
Change in fair value
of investment
properties 12,269 5,511 9,389 3,652 30,633
Operating Profit 52,680 43,858 45,435 29,748 40,346
Finance income 7 20 110 491 413
Finance expenses
- relating to bank
borrowings (10,608) (7,737) (7,342) (3,975) (1,041)
Finance expenses
- relating to C share
amortisation - - - (6,400) (2,792)
Change in fair value
of interest rate
derivatives 2,675 (66) (478) - -
Profit before tax 44,754 36,075 37,725 19,864 36,926
Taxation - - - - -
Profit being total
comprehensive income 44,754 36,075 37,725 19,864 36,926
Earnings per share
- basic 7.23p 5.80p 6.06p 4.67p 10.55p
Earnings per share
- diluted 7.23p 5.80p 6.06p 4.22p 6.27p
Dividend declared 5.55p 5.40p 5.30p 5.00p 3.00p
Group Statement of Financial Position
31 March 2022 31 March 2021 31 March 2020 31 March 2019 31 March 2018
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Assets
Non-current assets
Investment property 945,237 893,684 867,988 820,094 516,222
Other receivables 23,519 21,905 10,755 6,824 -
Interest rate derivatives 2,131 - - - -
970,887 915,589 878,743 826,918 516,222
Non-current assets
Trade and other receivables 12,865 12,821 10,838 5,723 3,315
Cash and cash equivalents 53,337 107,097 58,374 54,347 249,608
66,202 119,918 69,212 60,070 252,923
Total assets 1,037,089 1,035,507 947,955 886,988 769,145
Liabilities
Current liabilities
Trade and other payables (9,492) (9,345) (7,743) (15,324) (10,176)
Bank and loan borrowings - (59,937) (59,730) - -
C shares - - - - (298,752)
(9,492) (69,282) (67,473) (15,324) (308,928)
Non-current liabilities
Bank and loan borrowings (352,050) (292,183) (209,440) (205,156) (90,822)
Interest rate derivatives - (544) (478) - -
(352,050) (292,727) (209,918) (205,156) (90,822)
Total liabilities (361,542) (362,009) (277,391) (220,480) (399,750)
Total net assets 675,547 673,498 670,564 666,508 369,395
Assets
Share capital 6,225 6,225 6,225 6,225 3,500
Share premium reserve 292,626 292,463 292,405 292,405 -
Capital reduction reserve 322,365 331,140 330,926 331,625 331,625
Retained earnings 54,331 43,670 41,008 36,253 34,270
Total equity 675,547 673,498 670,564 666,508 369,395
Net assets per share - basic 110.30p 108.30p 107.87p 107.08p 105.54p
Net assets per share - diluted 110.30p 108.30p 107.87p 107.08p 105.54p
Portfolio NAV 122.84p 118.47p 118.35p 119.07p 113.86p
Share price 87.40p 107.80p 96.40p 96.00p 97.40p
Total shareholder return (on a NAV basis 37.23% 29.57% 23.64% 17.43% 10.76%
Leverage 34.43% 34.48% 26.90% 22.00% 12.00%
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 London Stock Exchange (LSE).
SEDOL number BD8HBD3
ISIN GB00BD8HBD32
Ticker/TIDM CSH
LEI 213800PGBG84J8GM6F95
Frequency of NAV Publication
The Company's NAV is released to the LSE on a quarterly basis
and published on the Company's website:
www.civitassocialhousing.com.
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 and/or address must be notified in writing to
the Registrar: Link Group, 10th Floor, Central Square, 29
Wellington Street, Leeds LS1 4DL
Key Dates
June
Annual results announced
Payment of fourth final dividend
September
Company's half-year end
Annual General Meeting
Payment of first interim dividend
December
Half yearly results announced
Payment of second interim dividend
February
Payment of third interim dividend
March
Company's year end
Association of Investment Companies
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
AIFM means the Alternative Investment Fund Manager.
AIFMD means the Alternative Investment Fund Managers Regulations
2013 (as amended by The Alternative Investment Fund Managers
(Amendment etc.) (EU Exit) Regulations 2019) and the Investment
Funds Sourcebook forming part of the FCA Handbook.
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 financial performance, financial position, or
cash flows, other than a financial measure defined or specified in
the applicable financial reporting framework.
Annualised rent roll means the total rental income due over the
first year from the date of valuation, including an estimated
rental uplift based on a long-term inflation rate.
Approved Provider means Approved Providers, Local Authorities,
ALMOs, Community Interest Companies, Registered Charities and other
regulated organisations directly or indirectly in receipt of
payment from local or central government including the NHS.
Care Provider means a provider of care services to the occupants
of Specialist Supported Housing, registered with the Care Quality
Commission.
CIM means Civitas Investment Management Limited or CIM (formerly
known as Civitas Housing Advisors Limited until its change of name
on 7 May 2020).
Community Interest Company or CIC means a company approved by
the Office of the Regulator of Community Interest Companies as a
community interest company and registered as such with Companies
House.
Company means Civitas Social Housing PLC, a company incorporated
in England and Wales with company number 10402528.
CMA Order means the Statutory Audit Services Order 2014, issued
by the Competition and Markets Authority.
Current Leverage means the percentage taken as total bank
borrowings drawn over total assets.
Dividend Yield means the ratio of the total annual dividend
payments over market price per share.
EPRA means the European Public Real Estate Association.
EPRA EPS is the EPRA earnings divided by the weighted average
number of shares in issue in the period.
EPRA Net Reinstatement Value ("EPRA NRV") is an 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 an 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 an EPRA NAV metric which
represents the shareholders' value under a disposal scenario, where
deferred tax, financial instruments and certain other adjustments
are calculated to the full extent of their liability, net of any
resulting tax.
EPRA Run Rate means the ratio of a company's earnings (excluding
fair value gains/losses) over dividends paid to shareholders.
Gross Asset Value means total assets.
Group means the Company and its subsidiaries.
Housing Association or HA means an independent society, body of
trustees or company established for the purpose of providing
low-cost social housing for people in housing need generally on a
non-profit making basis. Any trading surplus is typically used to
maintain existing homes and to help finance new ones. Housing
Associations are regulated by the Regulator of Social Housing.
IFRS Net Asset Value or IFRS NAV means the net asset value of
the Group on the relevant date, prepared in accordance with IFRS
accounting principles.
Investment Adviser means Civitas Investment Management Limited
("CIM"), a company incorporated in England and Wales with company
number 10278444, in its capacity as investment adviser to the
Company.
IPO means Initial Public Offering.
IRR means internal rate of return.
Levered IRR means the internal rate of return including the
impact of debt.
Local Authority or LA means the administrative bodies for the
local government in England comprising 326 authorities (including
32 London boroughs).
Net Initial Yield means the ratio of net rental income and gross
purchase price of a property.
NHS means the publicly funded healthcare system of the United
Kingdom comprising The National Health Service in England, NHS
Scotland, NHS Wales and Health and Social Care in Northern Ireland,
including, for the avoidance of doubt, NHS Trusts.
NHS Trust means a legal entity, set up by order of the Secretary
of State under section 25 of, and Schedule 4 to, the National
Health Service Act 2006, to provide goods and services for the
purposes of the health service.
Ongoing Charges ( previously Total Expense Ratios or TERs) means
the figure published annually by the Company which shows the drag
on performance caused by operational expenses. More specifically,
it is the annual percentage reduction in shareholder returns as a
result of recurring operational expenses assuming markets remain
static and the portfolio is not traded. Although the Ongoing
Charges figure is based on historical information, it provides
shareholders with an indication of the likely level of costs that
will be incurred in managing the Company in the future.
Portfolio means the Group's portfolio of assets.
Portfolio Net Asset Value or Portfolio NAV means the net asset
value of the Company, with assets aggregated rather than valued on
an asset by asset basis, as at the relevant date, calculated on the
basis of an independent Portfolio Valuation. See note 7.0 to
Appendix 1 for a reconciliation to IFRS NAV.
Portfolio Basis means the Portfolio NAV (as defined above)
Portfolio Valuation means an independent valuation of the
Portfolio by Jones Lang LaSalle Limited or such other property
adviser as the Directors may select from time to time, based upon
the Portfolio being held, directly or indirectly, within a
corporate vehicle or equivalent entity which is a wholly owned
subsidiary of the Company and otherwise prepared in accordance with
RICS "Red Book" guidelines.
REIT means a qualifying real estate investment trust in
accordance with the UK REIT Regime introduced by the UK Finance Act
2006 and subsequently re-written into Part 12 of the Corporation
Tax Act 2010.
RICS means Royal Institution of Chartered Surveyors.
RSH means the Regulator of Social Housing, the executive
non-departmental public body, sponsored by the Ministry of Housing,
Communities and Local Government, which is the regulator for Social
Homes providers in England and Wales.
Social homes or social housing means social rented homes and
other accommodation that are offered at rents subsidised below
market level or are constituents of other appropriate rent regimes
such as exempt rents or are subject to bespoke agreement with
entities such as NHS Trusts and are provided by Approved
Providers.
Specialist Supported Housing or SSH means social housing which
incorporates some form of care or other ancillary service on the
premises.
SPV means special purpose vehicle, a corporate vehicle in which
the Group's properties are held.
Target Return means the target return on investment.
Total Return means Net Total Return, being the change in IFRS
NAV over the relevant period plus dividend paid.
Total Shareholder Return m eans a measure of the return based
upon share price movement over the period plus dividend paid.
Valuation means an independent valuation of the Portfolio by
Jones Lang LaSalle Limited or such other property adviser as the
Directors may select from time to time, 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.
WAULT or "Weighted Average Unexpired Lease Term" is the product
of annualised rent roll at period end and the time in years to when
the lease expires for each given lease, summed across leases, and
then divided by the total annualised rent roll of the portfolio.
The result is expressed in years. WAULT is a key measure of the
quality of the Company's portfolio. Long lease terms underpin the
security of the Company's income stream.
Company Information
Michael Wrobel, Chairman
Peter Baxter, Senior Independent Director and Chairman 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
5th Floor
54 Fenchurch Street
London EC3M 3JY
Registrar
Link Group
10th Floor
Central Square
29 Wellington Street
Leeds LS1 4DL
Independent Auditors and Reporting Accountants
PricewaterhouseCoopers LLP
7 More London Riverside
London SE1 2RT
Legal and Tax Adviser
Cadwalader, Wickersham & Taft LLP
Dashwood House
69 Old Broad Street
London EC2M 1QS
Public Relations Adviser
Buchanan
107 Cheapside
London EC2V 6DN
Tax Adviser
BDO LLP
55 Baker Street
London W1U 7EU
[1] On a comparable basis
[2] See Appendix 1 - Notes to the calculation of EPRA and other
alternative performance measures in these financial statements for
supporting workings
[3] On an Ordinary Share held since launch (percentage not
annualised)
[4] On an Ordinary Share held since launch (percentage not
annualised)
[5] The target dividend is a target only and not a profit
forecast. There can be no assurance that the target will be
achieved and it should not be taken as indication of the Company's
expected or actual future results
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END
FR BKLLLLQLEBBE
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June 30, 2022 02:00 ET (06:00 GMT)
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