Share Name Share Symbol Market Type Share ISIN Share Description
Civitas Social Housing Plc LSE:CSH London Ordinary Share GB00BD8HBD32 ORD 1P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  -0.20 -0.23% 86.50 86.70 86.90 87.20 86.70 87.20 1,404,772 16:35:20
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Real Estate Investment Trusts 35.7 19.9 4.7 18.5 538

Civitas Social Housing PLC Annual Results

24/06/2019 7:00am

UK Regulatory (RNS & others)


Civitas Social Housing (LSE:CSH)
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RNS Number : 0913D

Civitas Social Housing PLC

24 June 2019

24 June 2019

CIVITAS SOCIAL HOUSING PLC

("Civitas" or the "Company")

ANNUAL FINANCIAL REPORT

YEAR TO 31 MARCH 2019

Civitas Social Housing PLC ("Civitas" or the "Company"), a leading supported living and social housing REIT, presents its full year results for the year ended 31 March 2019.

The full Annual Report and Financial Statements can be accessed via the Company's website at www.civitassocialhousing.com or by contacting the Company Secretary by telephone on 01392 477500.

Performance Highlights

 
 Property Valuation and Performance    March 2019   March 2018   Change 
 Investment property (GBPm)            826.9        516.6        Up 60% 
                                      -----------  -----------  -------- 
 IFRS NAV per share (diluted) 
  (p)                                  107.08       105.54       Up 1.5% 
                                      -----------  -----------  -------- 
 Financial Performance                 March 2019   March 2018   Change 
                                      -----------  -----------  -------- 
 Rent roll annualised (GBPm)           45.7         28.4         Up 61% 
                                      -----------  -----------  -------- 
 Net rental income (GBPm)              35.7         18.6         Up 92% 
                                      -----------  -----------  -------- 
 EPRA earning per share (p)            3.81         1.8          Up 112% 
                                      -----------  -----------  -------- 
 EPRA earning per share (diluted) 
  (p)                                  3.63         1.44         Up 152% 
                                      -----------  -----------  -------- 
 Dividend per share (p)                5.0          3.0          Up 67% 
                                      -----------  -----------  -------- 
 Financing                             March 2019   March 2018   Change 
                                      -----------  -----------  -------- 
 Loan to value ratio                   22%          12%          - 
                                      -----------  -----------  -------- 
 Weighted average cost of debt         2.57%        2.60%        - 
                                      -----------  -----------  -------- 
 
   --      Increased investment property portfolio 
   --      Portfolio value up 60% to GBP826.9 million (IFRS) 

-- Valuation net initial yield of 5.27% compared to an average net initial yield on purchase of 5.67% (5.90% before costs)

   --      IFRS NAV per share (diluted) up 1.5% to 107.08 pence 
   --      WAULT of 24.4 years 
   --      All equity proceeds and GBP208m of borrowings successfully deployed 
   --      Diversified portfolio of 591 properties providing homes to over 4,000 people 
   --      177 properties acquired during the year 

-- Providing accommodation to tenants with learning disabilities, autism, mental health disorders and also for women's refuge with an average age of 32 years

-- Properties located across half the Local Authorities in England and Wales and leased to 15 Housing Associations, with support provided by 133 Care Providers

   --      Rent roll and earnings up significantly 
   --      Annualised rent roll up 61% to GBP45.7 million 
   --      EPRA earnings (diluted) up 157% to GBP22.6 million 
   --      EPRA earnings per share (diluted) up 152% to 3.63 pence 
   --      Growth combined with attractive shareholder returns 

-- Final dividend proposed of 1.325p per Ordinary Share - an increase of 6% over the equivalent quarter and ahead of the inflationary increase originally envisaged

   --      Total declared dividends of 5.075 pence per Ordinary Share 
   --      Target dividend of 5.3 pence for the financial year ended 31 March 2020 
   --      The total NAV return from IPO to 31 March 2019 is 7.23% p.a. (on an IFRS basis) 
   --      Conservative funding structure and significant interest cover 
   --      LTV of 22% of gross assets 
   --      In discussions regarding new debt funding 
   --      Making a positive social contribution 

-- Civitas' portfolio has produced GBP114 million of social value - including GBP59 million each year of direct savings to the taxpayer

-- Cost advantage enjoyed by Local Authorities and the improved well-being of tenants and their families, compared to institutional care

   --      Working with third party consultants to provide independent verification 
   --      Investment Adviser team strengthened with senior industry experts 
   --      Including two former specialist care industry CEOs 

Evolving the Business Model and Sector

   --      Growing demand from tenants, backed by local and central government 

-- In August 2018 the Government affirmed clear long-term support to retain the existing system of funding for supported housing from Housing Benefit, part of the Welfare Budget

   --      Over 20 years of unbroken commitment across various political administrations 

-- Decisive move away from institutionalisation and towards community living, which is vastly preferred by tenants and their families

   --      Support from local authority commissioners for each Civitas property acquired 
   --      Leading various initiatives designed to help the sector mature and professionalise 
   --      Supporting Housing Association Boards in appointing experienced, skilled individuals 

-- Private seminars for Housing Association partners to help enhance best practice and professional standards

   --      Greater interaction with care providers 
   --      Regular, positive and productive discussions with the Regulator of Social Housing (RSH) 
   --      RSH recognises that this is an evolving sector 
   --      RSH is supportive of our initiatives to help the sector grow and mature 
   --      Lease adaptations proposed for Housing Associations 

-- That both preserve value and introduce mitigation via "force majeure" clauses and cap and collar arrangements

   --      Lease length and other general lease terms remain constant 

Michael Wrobel, Chairman, said:

"The Company has made considerable progress through the year. We have deployed all the equity proceeds and GBP204.8 million of borrowings. At the end of the year, the Company's property portfolio was valued at GBP820.1 million. This is generating annualised rental income of GBP45.7 million together with measurable positive social impact.

"The UK has a chronic shortage of supported housing, with demand expected to increase further due to a range of factors including medical advances at birth and a growing and ageing population. The Government sponsored Personal Social Services Research Unit projects a 55% growth in supported housing needs for working age adults with learning disabilities between 2015 and 2030."

"This demand-supply imbalance along with continued government commitment to fund supported accommodation provides strong fundamentals for continued investment into the supported housing sector."

"The Company will continue to build on the successful and disciplined deployment to date and to seek opportunities to further enhance the portfolio within our capital resources. The Investment Adviser has a pipeline of properties under negotiation and in various stages of due diligence. Our confidence is reflected in our intention to target a dividend of 5.3p for the current financial year to March 2020."

For further information, please contact:

Civitas Housing Advisors Limited

   Paul Bridge                                                       Tel: +44 (0)20 3058 4844 
   Andrew Dawber                                                  Tel: +44 (0)20 3058 4846 

Cenkos Securities PLC

   Sapna Shah                                                      Tel: +44 (0)20 7397 1922 
   Tom Scrivens                                                    Tel: +44 (0)20 7397 1915 

Buchanan

   Helen Tarbet / Henry Harrison-Topham                Tel: +44 (0) 20 7466 5000 
   Henry Wilson / Hannah Ratcliff                           civitas@buchanan.uk.com 

Notes to Editors:

Civitas Social Housing PLC is the first Real Estate Investment Trust specialising in supported living and social housing for adults with complex care needs. Civitas enables people to live in communities with the right care to suit their needs, rather than in institutions. Its portfolio of properties houses 4,072 people across England and Wales.

Civitas works with some of the largest care providers in the UK as well as leading specialist housing providers. For the year ended 31 March 2019 Civitas reported a portfolio value of GBP826.9 million with EPRA NAV per share (diluted) up 1.5% to 107.08 pence and WAULT of 24.4 years.

Civitas is advised by Civitas Housing Advisors Limited, who are authorised and regulated by the Financial Conduct Authority under Firms Reference Number 815699. The Company is listed on the premium listing segment of the Official List of the Financial Conduct Authority and was admitted to trading on the main market for listed securities of the London Stock Exchange in November 2016. The company has an approximate market capitalisation of GBP480m.

Strategic Report

Chairman's Statement

I am pleased to present the Company's second annual shareholder report, including the audited consolidated financial statements for the year ended 31 March 2019.

The Company has made considerable progress through the year. We have deployed all the equity proceeds and GBP208.4 million of borrowings, the latter representing an LTV of 22% of gross assets. At the end of the year, the Company's property portfolio was valued at GBP820.1 million, having increased from GBP516.2 million and including a revaluation gain of GBP3.7 million. The valuation represents a net initial yield of 5.27% compared to an average net initial yield on purchase of 5.67% (after initial purchase costs).

The Company's IFRS NAV has increased by 1.5% to 107.08p per share. The total return from IPO to 31 March 2019 is 7.23% p.a. (on an IFRS basis) and 11.93% p.a. (on a Portfolio Valuation basis), incorporating profit for the period of GBP19.9 million.

During the period the annualised rent roll increased by 61% to GBP45.7 million, resulting in EPRA earnings of GBP22.6 million and EPRA diluted earnings per share of 3.63p. For the financial year ended 31 March 2019, the Company's ongoing charges were 1.36%.

The Company has declared total dividends of 5.075p per Ordinary share for the year ended 31 March 2019, comprised of three quarterly dividends on the Ordinary shares of 1.25p (in line with the target in the launch IPO Prospectus) and a final dividend of 1.325p per Ordinary share, an increase of 6% over the equivalent quarter and ahead of the inflationary increase originally envisaged. The Company intends to target a dividend of 5.3p per Ordinary share for the financial year ending 31 March 2020.

The Board is grateful for the support and encouragement of the Company's shareholders and the hard work of our advisers and service providers. The Company along with its Investment Adviser is delivering positive financial and social outcomes which are providing direct savings to tax payers.

Portfolio

During the year, a total of 177 properties were acquired, having met the Company's stringent due diligence requirements. At the year end the overall portfolio comprised 591 properties located across half the Local Authorities in England and Wales and leased to 15 Housing Associations, with support provided by 113 care providers. As well as representing the largest and most diversified portfolio of supported housing, the Company's reputation as a knowledgeable and reliable counterparty has materially enhanced the levels of incoming investment enquiry.

The Company now provides homes to over 4,000 tenants with learning disabilities, autism, mental health disorders and also for women's refuge.

Following the events at First Priority Housing Association, where in May 2018 we assigned all our leases on the same terms to Falcon Housing Association, we have increased the extent of our interaction with the care providers who provide primary care services to the tenants in our properties and who support payment against voids. We have also used specialist consultants to speak directly with all Local Authority commissioners on an individual basis to confirm their full support for each property acquired.

Civitas's Social Impact and Continuing Political Commitment to the Sector

The Company's provision of supported housing continues to make a significant positive social impact. This is driven by the cost advantage enjoyed by Local Authorities and the improved well-being of tenants and their families, compared to institutional care. This is based on independent verification, using HM Treasury Green Book metrics and reports from The Social Profit Calculator and The Good Economy Partnership. Further information is available on the Company's website (http://civitassocialhousing.com/investor-relations/reports-ans-publications/).

These benefits are also contributing to increasing long-term demand. It is most likely that this growth will need to be financed by the private sector. In this regard Laing Buisson(1) reports that none of the political parties seeks to pose any ideological threat to the independent social care sector and that, driven by lower costs and better value for money, over 93% of publicly paid adult specialist care services are now outsourced to the independent sector.

Against this background, in 2018 the government announced that it will continue to fund all supported housing rents through the welfare system (Housing Benefit) and will not subject rents to mainstream Local Housing Allowance caps.

This confirmation of the government's long-term commitment to supported housing has been reflected by the Company's experience on the ground, in direct interaction with Local Authorities, namely that properly commissioned properties will achieve long-term Local Authority commissioner support for the appropriate rent levels required to support the Company's leases.

Regulation and Improving Industry Standards

Given the specialist sector's growth, the Regulator of Social Housing ("RSH") has begun to review many of the Housing Associations with whom we work, for the first time. The RSH has also published a report on the risks facing the industry and the consequent need for risk mitigation plans. During a panel discussion at the Social Housing Finance Conference in London, the RSH referred to the industry's "growing pains" and areas that require improvement, whilst noting that there were no inherent problems with the industry model. We are aligned with this approach and our Investment Adviser offers its team's considerable social housing expertise to assist our counterparties, for example, on governance structures and adding operational skills.

The structure of the industry and inherent risks are accounted for by Jones Lang LaSalle, when undertaking the independent valuation of our properties. There have been no material impacts on our ability to collect the rental income due from our leases.

Share Price and Rating

The Board notes the recent share price performance of the Company and its peer group and the resultant move from a premium to a discount to the Net Asset Value. The Board regularly monitors the share rating and reviews options by which we can seek to improve the position. All options considered will take into account the interests of shareholders as a whole and be balanced against protecting the Company's long-term standing in the sector and its relationships with important counterparties with whom the Company is negotiating asset purchases.

AGM and AGM Resolutions

The third Annual General Meeting ("AGM") of the Company will be held at 2.00 p.m. on Thursday, 5 September 2019 at 3 More London Riverside, London, SE1 2AQ. There will be a presentation from the Investment Adviser, Civitas Housing Advisors Limited. The full AGM notice has been posted to all shareholders and also can be found on the Company's website (http://civitassocialhousing.com/investor-relations/reports-and-publications/).

Within the AGM notice, the Company has included a shareholder resolution asking for approval to amend the Company's investment policy to allow investments to be made Scotland and Wales. Both these parts of the UK have a welfare benefit system that is similar to that in England and Wales with policies that are regarded as at least as supportive of the provision of social housing as those in England and Wales. The Company's core focus will remain England and Wales.

Scotland and Northern Ireland have experienced issues of shortage in respect of affordable housing and the Company wishes to be in a position to consider investments in these parts of the UK, should any meet its criteria for investment.

In addition, the Company is also seeking shareholder approval to increase the maximum aggregate annual remuneration payable to Directors from GBP200,000 to GBP250,000 as set out in the Company's Articles of Association. The Board is currently in the process of seeking to appoint at least one additional Director to broaden the skills and diversity of the Board, and therefore this proposed change will provide headroom for future appointments and future increases in remuneration. As set out in the Directors' Remuneration Report for the year ended 31 March 2019, no increase in the current level of Directors' fees is being proposed.

Outlook

The UK has a chronic shortage of supported housing, with demand expected to increase further due to a range of factors including medical advances at birth and a growing and ageing population. The Government sponsored Personal Social Services Research Unit projects a 55% growth in supported housing needs for working age adults with learning disabilities between 2015 and 2030.

This demand-supply imbalance along with continued government commitment to fund supported accommodation provides strong fundamentals for continued investment into the supported housing sector.

The Company will continue to build on the successful and disciplined deployment to date and to seek opportunities to further enhance the portfolio within our capital resources. The Investment Adviser has a pipeline of properties under negotiation and in various stages of due diligence. Our confidence is reflected in our intention to target a dividend of 5.3p for the current financial year to 31 March 2020.

Michael Wrobel

Chairman

21 June 2019

(1) Laing Buisson Adult Specialist Care Third Edition 2019.

Analysis of property portfolio as at 31 March 2019

Geographically Diversified

 
 Region             Properties   % of funds invested   % of rental income 
 North West             95              10.1%                10.1% 
                   -----------  --------------------  ------------------- 
 West Midlands          94              11.9%                11.9% 
                   -----------  --------------------  ------------------- 
 Wales                  15              8.3%                  8.3% 
                   -----------  --------------------  ------------------- 
 South West            112              14.7%                14.5% 
                   -----------  --------------------  ------------------- 
 North East             63              7.0%                  7.0% 
                   -----------  --------------------  ------------------- 
 Yorkshire              49              10.9%                10.7% 
                   -----------  --------------------  ------------------- 
 East Midlands          58              9.6%                  9.5% 
                   -----------  --------------------  ------------------- 
 East of England        18              2.8%                  2.7% 
                   -----------  --------------------  ------------------- 
 London                 26              14.1%                14.5% 
                   -----------  --------------------  ------------------- 
 South East             61              10.6%                10.8% 
                   -----------  --------------------  ------------------- 
 

Market Value by Region(1)

 
 Region             Market Value 
 South West            14.7% 
                   ------------- 
 London                14.1% 
                   ------------- 
 West Midlands         11.9% 
                   ------------- 
 Yorkshire             10.9% 
                   ------------- 
 South East            10.6% 
                   ------------- 
 North West            10.1% 
                   ------------- 
 East Midlands          9.6% 
                   ------------- 
 Wales                  8.3% 
                   ------------- 
 North East             7.0% 
                   ------------- 
 East of England        2.8% 
                   ------------- 
 

Assets by Region (1)

 
 Region             Assets 
 South West          112 
                   ------- 
 North West           95 
                   ------- 
 West Midlands        94 
                   ------- 
 North East           63 
                   ------- 
 South East           61 
                   ------- 
 East Midlands        58 
                   ------- 
 Yorkshire            49 
                   ------- 
 London               26 
                   ------- 
 East of England      18 
                   ------- 
 Wales                15 
                   ------- 
 

(1) As at 31 March 2019, including completed properties only.

Diversified by Registered Provider

Rental Income by Registered Provider(1)

 
 Registered Provider    Rental Income 
 Falcon                     20.9% 
                       -------------- 
 Westmoreland               19.7% 
                       -------------- 
 BeST                       11.4% 
                       -------------- 
 Auckland                   11.3% 
                       -------------- 
 Inclusion                  8.3% 
                       -------------- 
 Encircle                   6.3% 
                       -------------- 
 Trinity                    5.7% 
                       -------------- 
 Pivotal                    4.1% 
                       -------------- 
 Chrysalis                  3.4% 
                       -------------- 
 New Walk                   3.0% 
                       -------------- 
 Harbour Light              2.4% 
                       -------------- 
 My Space                   1.2% 
                       -------------- 
 IKE                        1.2% 
                       -------------- 
 Hilldale                   1.0% 
                       -------------- 
 Blue Square                0.1% 
                       -------------- 
 

Assets by Registered Provider(1)

 
 Registered Provider    Number of Properties 
 Falcon                         115 
                       --------------------- 
 Westmoreland                   108 
                       --------------------- 
 BeST                            71 
                       --------------------- 
 Inclusion                       60 
                       --------------------- 
 Trinity                         43 
                       --------------------- 
 New Walk                        41 
                       --------------------- 
 Auckland                        30 
                       --------------------- 
 Pivotal                         27 
                       --------------------- 
 Harbour Light                   26 
                       --------------------- 
 Chrysalis                       20 
                       --------------------- 
 Encircle                        16 
                       --------------------- 
 Hilldale                        15 
                       --------------------- 
 IKE                             10 
                       --------------------- 
 My Space                        8 
                       --------------------- 
 Blue Square                     1 
                       --------------------- 
 

Market Value by Registered Provider(1)

 
 Registered Provider    Market Value 
 Falcon                    21.2% 
                       ------------- 
 Westmoreland              19.6% 
                       ------------- 
 BeST                      11.5% 
                       ------------- 
 Auckland                  11.4% 
                       ------------- 
 Inclusion                  8.3% 
                       ------------- 
 Encircle                   5.9% 
                       ------------- 
 Trinity                    5.7% 
                       ------------- 
 Pivotal                    4.1% 
                       ------------- 
 Chrysalis                  3.4% 
                       ------------- 
 New Walk                   3.0% 
                       ------------- 
 Harbour Light              2.4% 
                       ------------- 
 IKE                        1.2% 
                       ------------- 
 My Space                   1.2% 
                       ------------- 
 Hilldale                   1.0% 
                       ------------- 
 Blue Square                0.1% 
                       ------------- 
 

Tenancies by Registered Provider(1)

 
 Registered Provider    Tenancies 
 Falcon                    848 
                       ---------- 
 Westmoreland              612 
                       ---------- 
 BeST                      516 
                       ---------- 
 Inclusion                 421 
                       ---------- 
 Auckland                  296 
                       ---------- 
 Trinity                   242 
                       ---------- 
 Pivotal                   238 
                       ---------- 
 Encirle                   205 
                       ---------- 
 New Walk                  194 
                       ---------- 
 Harbour Light             182 
                       ---------- 
 Chrysalis                 136 
                       ---------- 
 My Space                  71 
                       ---------- 
 IKE                       68 
                       ---------- 
 Hilldale                  39 
                       ---------- 
 Blue Square                4 
                       ---------- 
 

(1) As at 31 March 2019, including completed properties only.

Investment Adviser's Report

"Civitas Housing Advisors Limited ("CHA"), the Investment Adviser to the Company, is pleased to report on the second period of operation for the Company for the period from 1 April 2018 to 31 March 2019." Paul Bridge, Chief Executive Officer, Civitas Housing Advisors Limited

Introduction

Civitas is a leading supported living and social housing property investor which is pursuing a clear growth strategy whilst spearheading the maturation and professionalisation of the sector in which it operates.

We made considerable progress through the year, firstly in implementing our strategy, and secondly in working with all stakeholders to drive the development of supported living provision in England and Wales.

Rental Income

The Company's rental income has grown substantially during the year as additional properties were acquired and existing properties enjoyed annual indexation of rents.

As at 31 March 2019, the run rate level of rental income was GBP45.7 million (2018: GBP28.4 million) and this is anticipated to grow further as additional bank finance is secured and invested into supported housing properties to achieve the target average 35% leverage based on gross assets.

The run rate rental income is supported by a broadly-based portfolio and as at 31 March 2019 the key statistics of the portfolio are set out below.

Key Statistics as at 31 March 2019

 
 Period                  31 March   30 June   30 September   31 December   31 March 
                             2018      2018           2018          2018       2019 
 Investment 
  (GBPm)                      472       508            619           674        755 
                        ---------  --------  -------------  ------------  --------- 
 Properties                   414       440            521           557        591 
                        ---------  --------  -------------  ------------  --------- 
 Tenancies                  2,621     2,845          3,440         3,746      4,072 
                        ---------  --------  -------------  ------------  --------- 
 Local Authorities            109       123            140           144        157 
                        ---------  --------  -------------  ------------  --------- 
 Housing Associations          11        12             15            15         15 
                        ---------  --------  -------------  ------------  --------- 
 Care Providers                64        71             93            98        113 
                        ---------  --------  -------------  ------------  --------- 
 WAULT (years)               24.1      25.4           25.1          24.7       24.4 
                        ---------  --------  -------------  ------------  --------- 
 

Investment Strategy

The Company has continued to pursue the strategy to build a high-quality and diversified portfolio of social housing with a majority focus on housing for individuals with long-term care needs.

As at 31 March 2019, the Company has built one of the largest and most diversified such portfolios in England and Wales providing long-term stable accommodation for over 4,000 underlying tenants.

The portfolio has been structured to date with the intention of achieving the following objectives:

   --      Steady income for shareholders and capital growth 

-- Properties to be within the social/government/local authority sponsored sectors in England and Wales where the requirement to provide accommodation is supported by government legislation

-- Achieve diversification from working with a wide range of Local Authorities, Housing Associations and care providers

-- Provide accommodation for individuals with a range of long-term care-based needs and support other local authority accommodation requirements including homelessness, addiction, domestic violence and NHS step down in addition to general needs social housing

-- Rental income to be met wholly or substantially from state funds. In the case of care-based Specialist Supported Housing (almost 100% of the portfolio today), this is expected to be 100% state funded

-- Long-term leases signed with Registered Providers (Housing Associations and Local Authorities) to enable them to offer accommodation on a long-term basis to individuals often with life-long care needs

   --      Leases to benefit from indexation and typically to be repairing and insuring 

-- Properties whose rental income, valuation and demand profile has a low correlation to the general economy, residential or commercial property sectors

-- Measurable social impact that promotes the well-being of tenants and offers value for money for the state.

Strengthening the Team

During the year we have continued to strengthen the Investment Advisory team and to widen its skills base with expertise in social housing and social care.

Much has been written recently of the growing importance of Local Authority and individual preference for supported housing as a means of delivering high-quality care in the community that also offers value for money.

An understanding of both healthcare delivery and social housing need is firmly built into our eight-step due diligence process that governs how we assess and due diligence potential acquisitions of supported housing.

To complement our expertise in social housing we have added senior resource from the care industry both at a corporate and an operational level, including the recruitment of two former specialist care industry CEOs.

Reflecting the growing scale of the portfolio, we have also appointed a new director of asset management with 30 years' experience gained from working at a senior level in some of the largest Housing Associations in the UK and managing large portfolios of social homes and care homes.

Market Update

The supported housing sector continues to experience strong growth, and this is predicted to increase significantly into the future. The sector has recently enjoyed the most significant growth in investment (CAGR 7.8%) of all parts of adult specialist care in the UK(1.)

Investors of various types have responded to the strong demand for the provision of long-term supported housing and have been encouraged in this by the clear statements of support made by the Government. In August 2018, the Government made the following announcement:

"Ministers recognise that supported housing is a vital service for some of the most vulnerable people in our communities, and last year consulted on possible alternative funding options. Having listened to views from providers, stakeholders and councils, the Government has decided housing benefit will remain in place to fund this accommodation"

Whilst there was no suggestion that state funding would not be available to meet both care and accommodation costs of vulnerable adults, the fact that the current system of provision from central Government, in the form of Housing Benefit, has been reaffirmed, was taken very positively by the sector. It is also worth noting that no political party dissented from this view and there does not appear to be any difference of opinion amongst the mainstream political parties on the principle that vulnerable people who cannot work should receive full state support for their care and accommodation.

Against this positive macro background, smaller specialist Housing Associations ("RPs") are becoming further engaged in the sector as registered providers and lessees, with a number passing the 1,000-unit milestone that brings about increased scrutiny from the Regulator of Social Housing ("RSH").

We welcome this scrutiny as evidence of the increasingly important role our sector plays in housing provision in England and Wales. We interact very regularly with the RSH and are pleased to report that we have a highly positive and productive working relationship with them. We know the RSH is actively working through the various issues that it has raised, and we are contributing via our Housing Association partners to that work where that is appropriate. We believe that the RSH is supportive of the initiatives we are undertaking to strengthen and professionalise the sector in which we operate.

During a panel discussion at the Social Housing Finance Conference in London, which Civitas co-hosted, the RSH acknowledged the industry's "growing pains" and areas for improvement, whilst noting that there was "nothing inherently wrong" with the industry model. We are actively involved in working with all our RP counterparties to help them grow and improve, providing, for example, advice on governance structures and adding operational skills.

The initiatives we are undertaking include a series of unique private seminars for all our 15 Housing Association partners (RPs).

During 2018/19, these on-going seminars have focused on the following subjects with a view to enhancing quality, best practice and professionalism:

   --      March 2018 - Governance and Regulatory Health Checks 
   --      June 2018 - Manchester Chartered Institute of Housing Conference/Dealing with Growth 
   --      October 2018 - Understanding the Civitas Eight-Step Due Diligence Protocol 
   --      April 2019 - The Civitas Social Value Project 
   --      May 2019 - Sector Perceptions and Increasing Understanding of Value Add 

In addition to this ongoing activity (which complements and supports our more formal due diligence and monitoring activities), at our recent Capital Markets Day (http://civitassocialhousing.com/capital-markets-day-presentation/) we set out some of the other practical ways in which we have lent our support to our RP partners.

In summary the activities we have undertaken in 2018/19 include the following:

   --      Engagement with asset management reviews 
   --      Recommendation of new independent board members with leading sector experience 
   --      Review of health and safety procedures and audits 

-- Comment on the structure and delivery of risk appraisals and business plans including for presentation to the RSH

   --      Supporting staff recruitment 
   --      Assistance in the review of group and operational structures 

We would anticipate that as the RPs continue to mature and improve, this will be acknowledged and reflected in the RSH's commentary on the sector.

Leases

The Company has typically entered into long-term inflation adjusted leases for periods in excess of 20 years with RPs, where management and maintenance are provided by the RPs. The Company's portfolio currently has a WAULT of 24.4 years.

In approximately a third of the Company's portfolio, the leases with the RPs are supported by agreements of the same 20-year-plus length with the underlying care provider. Through these agreements, the care provider is in effect taking responsibility for broader lease obligations around rent and occupancy. The remainder of the portfolio benefits from more standard underlying service level agreements with the care provider which would be expected to be rolled into a new service level agreement at the end of the initial period.

Where the counterparty is a Local Authority, or where we believe it is in the Company's interest, the Company may (as noted at the time of IPO) consider unexpired leases of not less than 10 years. This would reflect common constraints on Local Authorities from entering into longer-term arrangements.

As part of our assessment of the supported housing sector we have also given active consideration to the structure of leases that are entered into with RPs by the Company and other landlords. We have used our long-standing experience of different mainstream and "alternative" real estate sectors and economic and social infrastructure investment markets to provide a form of benchmarking.

This has led to discussions with a number of our larger housing association partners, with JLL, with our lenders and also directly with the RSH who are seeking to promote better contingency planning as opposed to commenting formally on lease-length or constitution.

The principal objectives of this review have been two-fold. Firstly, to set out more formally the steps we would take in the very unlikely event that the formal action of government or local authorities reduces directly the ability of the RPs to meet their obligations under the leases with the Company even when all forms of mitigation are taken into account. This has commonly been referred to as a "Force Majeure Clause". Secondly, to ensure that where it is deemed appropriate, there should be a form of "collar" and "cap" on the growth of indexation under the leases.

Both of these are common features that are seen regularly in other real estate sectors, do not affect valuations and are acceptable to stakeholders.

From our discussions we expect that changes such as these will be appreciated both by the RPs and by the RSH.

Working with Care Providers

The provision of care within the properties owned by the Company is a fundamental driver of both the demand for supported housing and the ability of properties to be defined as exempt Specialist Supported Housing. This in turn affects the rent and service charge levels that can be achieved and sustained.

Understanding the extent and nature of the care delivery is therefore an essential part of the overall due diligence process. We have placed considerable focus during the year on our relationships with care providers, as they are a key driver of the success of our strategy.

During the year, where we have been offered properties in which the extent of the care provision (typically measured by care hours per person per week) is in our view limited or marginal, we have declined those properties on the basis that their status as exempt Specialist Supported Housing could be open to challenge in the future.

The provision of specialist care is a fragmented sector with many small, local providers and a limited number of larger national providers. The Company has sought to focus as far as possible on the larger providers which have depth of experience and a wide network.

The Company does not enter into any agreements directly with care providers (these are between the care provider and the Local Authority, Housing Association and the tenant) and has no legal or other responsibility for the delivery or quality of care. That said, we take an active interest in the quality and amount of care that is being provided as part of our asset selection, due diligence and monitoring activities.

For-profit care providers within the top 25(1) (measured by number of beds) in the UK (as at December 2018) out of approximately 20,000 care providers are responsible for the delivery of care into 34% of the Company's portfolio. By comparison, those same care providers are responsible (as at December 2018) for 11% of the beds within the overall adult specialist healthcare sector in the UK.

This is a result of our strategy of seeking to work with these larger, more mature care providers whilst not ignoring the merits of the best of breed local organisations.

In addition, the Company also works with five out of the top 10 care providers who represent 20% of the Company's portfolio.

1. Priory Group

2. Voyage Care

3. CareTech,

4. Lifeways Group

5. Exemplar

= 20%* (of Civitas Portfolio)

* This does not include National Care Group who provide care services to approximately 12% of the Civitas properties, but who operate via a number of individual care providers that are separately represented in league tables but if taken together would likely be in the top 10.

The benefits of building long-term strategic relationships with care providers are clear:

   i)          They assist with the eight-step due diligence programme and with our ongoing monitoring 

ii) They have also become a catalyst for the origination of high-quality properties both built and to be acquired on completion

   iii)         Most importantly, they provide a high standard of care for our tenants. 

Social Impact Investing

The Investment Adviser with its Head of Impact Investment has, since IPO, established embedded processes that evaluate the social impact that is delivered from its investment activities and portfolio, with a particular focus on helping tenants achieve improved outcomes in their lives, providing value for money, cost saving for the public purse and increasing the quality and availability of social housing.

Specialist social impact consultants, The Good Economy, have recently published an independent Annual Impact report which confirms that Civitas is "an authentic impact investor according to the IFC Principles for Impact Management".

This report has been based on extensive research undertaken by The Good Economy incorporating site visits, meetings with tenants and their families and discussions with local authority commissioners, RPs, care providers and the RSH.

This report formed the backbone for a further independent study by the Manchester-based consultants, the Social Profit Calculator, with the aim of attaching a monetary value to the social impact and value for money that are driven from the Company's portfolio. The study is based upon government metrics utilising HM Treasury's Green Book data.

The study considered a wide range of tenants in detail and measured the monetary value from improved health and wellbeing, reduced isolation and improved relationships, the benefits of independent living and in certain instances the enhanced opportunity for employment and attaining qualifications.

They reported that Civitas' portfolio has produced GBP114 million of social value - including GBP59 million each year of direct savings to the taxpayer, and when projected over the course of our leases it equates to more than GBP1 billion in potential savings to the taxpayer. This reflects the fact that enabling disabled people to live in the community is not only much better for their wellbeing, but also significantly cheaper for the taxpayer than other forms of accommodation such as institutions.

The Social Profit Calculator and The Good Economy Partnership calculated that GBP3.50 is created in social value for every GBP1 which Civitas has invested.

Further information on the social value created by the Civitas portfolio can be found in the Good Economy's latest Impact Report, available on the Company's Website (http://civitassocialhousing.com/investor-relations/reports-and-publications/)

Looking Ahead: The Investment Pipeline

The Investment Adviser has been successful in establishing strategic relationships with a wide range of property vendors including national care providers, regional and local developers, RPs and Local Authorities.

Having led the completion of over 100 transactions, the Company enjoys a leading reputation in the markets in which it operates and has demonstrated a proven ability to design and structure transactions that have led to successful acquisitions for the Company.

As we mention at the start of the report, the Investment Adviser's team has been expanded so that it now includes senior professionals with both operational care and social housing experience in addition to skills in real estate, investment funds and corporate finance.

This combination has been noted by asset owners, sector professionals and advisers and has resulted in an increase in the range and depth of projects to which we are introduced, often being the first or only party to be approached. The sources of potential property purchases, both built and in construction to be acquired on completion, is today being obtained from four main sources:

   --      National and Regional Care Providers 
   --      Housing Associations and Local Authorities 
   --      Regional and Local Specialist Developers 
   --      National and Regional Charities 
   --      Other Private Sector owners of Assets 

As a result of the Company's strategic relationships in the sector, the investment pipeline continues to build and today stands at GBP210 million of potential transactions in various stages of due diligence. These transactions, which are subject to the successful completion of the Company's due diligence process, reflect non-legally binding commitments and are representative of the Company's reputation in the sector. The first of these transactions are likely to be able to complete in the next couple of months.

As part of the Company's plans to seek further diversification within the specialist areas of the regulated social housing sector, we anticipate that, in due course, pipeline transactions will include not just homes for tenants with care needs based around learning disability and autism, but also dependency, homelessness, key worker and the desire to release hospital beds through the use of "step down" accommodation associated with the NHS. In each case, the Company intends to operate the same or similar model with a Housing Association entering into a long-term arrangement with the Company and providing on the ground property services.

We are also exploring opportunities in both Scotland and Northern Ireland.

We look forward to continued progress over the forthcoming months as we continue to implement our strategy and grow and diversify our portfolio.

Civitas Housing Advisors Limited

Investment Adviser

21 June 2019

(1) Laing Buisson Adult Specialist Care Third Edition 2019.

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. The property of the Company is tailored to meet the future needs of the tenants and where required is 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 partnering with specialist developers and vendors, the high standards the Company expects from each investment in the supported housing sector is adopted by other companies in the sector.

Once within the portfolio, the properties of the Company are actively asset managed, with opportunities to improve environmental efficiencies factoring heavily in addition to other asset management initiatives.

The Board has considered the requirements to disclose the annual quantity of emissions; further detail on this is included in the Report of the Directors in the full Annual Report.

Diversity

The Company does not have any employees or office space, as such the Company does not operate a diversity policy with regards to any administrative, management and supervisory 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 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.

The Board comprises three male and one female non-executive Directors.

The boards of directors of the Company's subsidiaries each comprise up to four male and no female directors.

Human Rights

The Company is not within the scope of the Modern Slavery Act 2015 because it has not exceeded the turnover threshold and is therefore not obliged to make a slavery and human trafficking statement.

The Board is satisfied that, to the best of its knowledge, the Company's principal advisers, which are listed in the Company Information section of the full Annual Report, comply with the provisions of the UK Modern Slavery Act 2015.

The Company's business is solely in the UK and therefore is considered to be low risk with regards to human rights abuses.

Community and Employees

The Company's properties enable the provision of care to some of the most vulnerable people in the community, ensuring safe and secure accommodation, tailored to meet individual care needs. The Company has increased the provision of Specialist Supported Housing, bringing new supply to the sector and providing homes to over 4,000 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.

Investment Objective and Policy

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 Registered Providers and to deliver, on a fully invested and geared basis, a targeted dividend yield of 5% per annum, which the Company expects to increase broadly in line with inflation.

Investment Policy

The Company's investment policy is to invest in a diversified portfolio of social homes throughout England and Wales. The Company intends to meet the Company's investment objective by acquiring, typically indirectly via Special Purpose Vehicles ("SPVs"), 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 Registered Providers, where all management and maintenance obligations will be serviced by the Registered Providers. The Company will not undertake any development activity or assume any development or construction risk. However, the Company may engage in renovating or customising existing homes, as necessary.

The Company may make prudent use of leverage to finance the acquisition of social homes and to preserve capital on a real basis.

The Company is focused on delivering capital growth and expects to hold its Portfolio over the long term and therefore it is unlikely that the Company will dispose of any part of its Portfolio. In the unlikely event that a part of the Portfolio is disposed of, the Directors intend to reinvest proceeds from such disposals in assets in accordance with the Company's investment policy.

Investment restrictions

The Company invests and manages the Portfolio with the objective of delivering a high quality, diversified Portfolio through the following investment restrictions:

   --      the Company only invests in social homes located in England and Wales; 

-- the Company only invests in social homes where the counterparty to the lease or occupancy agreement is a Housing Association or Local Authority;

-- 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 Local Authority or single Housing Association is 25% of the Gross Asset Value, once the capital of the Company is fully invested;

-- no investment by the Company in any single geographical area, in relation to which the houses and/or apartment blocks owned by the Company are located on a contiguous or largely contiguous basis, exceeds 20% of the Gross Asset Value of the Company;

-- the Company only acquires completed social homes and will not forward finance any development of new social homes;

-- the Company does not invest in other alternative investment funds or closed-end investment companies; and

   --      the Company is not engaged in short selling. 

The investment limits detailed above apply at the time of the acquisition of the relevant investment in the Portfolio once fully invested. The Company would not be required to dispose of any investment or to rebalance the Portfolio as a result of a change in the respective valuations of its assets.

Gearing limit

The Directors seek to use gearing to enhance equity returns. The level of borrowing is set on a prudent basis for the asset class and seeks to achieve a low cost of funds, whilst maintaining the flexibility in the underlying security requirements and the structure of both the Portfolio and the Company.

The Company may, following a decision of the Board, raise debt from banks and/or the capital markets and the aggregate borrowings of the Company is always subject to an absolute maximum, calculated at the time of drawdown, of 40% of the Gross Asset Value.

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 CTA 2010 (and the regulations made thereunder).

Key Performance Indicators ("KPIs")

 
 Measure                 Explanation                        Result 
 Capital deployed        Target of deploying the            The C share proceeds were 
                          C share proceeds by 31             materially deployed by 
                          December 2018 or earlier.          31 December 2018. Total 
                                                             of GBP754.8 million invested 
                                                             to 31 March 2019, representing 
                                                             Ordinary and C share equity 
                                                             and debt. 
                        ---------------------------------  -------------------------------- 
 Increase in IFRS        Target to achieve capital          IFRS NAV increase of 9.1p 
  and Portfolio           appreciation whilst maintaining    per share or 9.3% from 
  NAV per share           a low risk strategy from           IPO. Portfolio NAV increase 
                          enhancing the quality of           of 21.1p per share or 21.5% 
                          cash flows from investments,       from IPO. 
                          by physical 
                          improvement of properties 
                          and by creating a significantly 
                          diversified, high-quality 
                          portfolio. 
                        ---------------------------------  -------------------------------- 
 Dividend per share      Targeting 5p per share             Dividends of 5p per share 
                          per annum for the second           declared for the calendar 
                          year growing broadly in            year to 31 December 2018. 
                          line with inflation. 
                        ---------------------------------  -------------------------------- 
 Number of Local         Target risk mitigation             As at 31 March 2019: 
  Authorities, Housing    through a diversified portfolio 
  Associations and        (once fully invested) with         -- 157 Local Authorities 
  care providers          no more than 25% exposure          -- 15 Housing Associations 
                          to any one Local Authority         -- 113 care providers 
                          or single Housing Association 
                          and no more than 20% exposure      The Company's largest single 
                          to any single geographical         exposure is to Falcon Housing 
                          area, once the capital             Association and currently 
                          of the Company is fully            stands at 21%. The largest 
                          invested.                          geographical concentration 
                                                             is in the South West, being 
                                                             14.7%. 
                        ---------------------------------  -------------------------------- 
 Loan to Gross           Target debt drawn of 35%           Leverage as at 31 March 
  Assets                  of gross assets.                   2019 of 22% of gross assets 
                                                             with facilities in negotiation 
                                                             to achieve the target in 
                                                             due course. 
                        ---------------------------------  -------------------------------- 
 

Alternative Performance Measures

EPRA

The Company is a member of the European Public Real Estate Association ("EPRA"). EPRA has developed and defined the following performance measures to give transparency, comparability and relevant financial reporting across entities which may use different accounting standards. The Company is pleased to disclose the following measures which are calculated in accordance with EPRA guidance:

 
 EPRA 
  Performance                                       EPRA Performance              31 March         31 March 
  Measure            Definition                      Measure                          2019             2018 
------------------  -----------------------------  ----------------------  ---------------  --------------- 
 
 Earnings            Earnings from operational      EPRA Earnings            GBP16,212,000     GBP6,293,000 
                      activities. 
   EPRA Earnings 
    per share (basic)                                                                3.81p            1.80p 
   EPRA Earnings 
    per share (diluted)                                                              3.63p            1.44p 
 
 
 EPRA NAV                Net Asset Value adjusted   EPRA Net Asset          GBP666,508,000   GBP668,147,000 
                            to include properties    Value 
                             and other investment 
                           interest at fair value 
                           and to exclude certain 
                               items not expected 
                                to crystallise in 
                           a long-term investment 
                                property business 
                                           model. 
------------------  ----------------------------- 
   EPRA NAV per 
    share (diluted)                                                                107.08p          105.54p 
  -----------------------------------------------------------------------  ---------------  --------------- 
 
 EPRA NNNAV          EPRA NAV adjusted              EPRA NNNAV              GBP665,858,000   GBP667,435,000 
                      to include the fair 
                      values of (i) financial 
                      instruments, (ii) 
                      debt and (iii) deferred 
                      taxes. 
   EPRA NNNAV per 
    share (diluted)                                                                106.97p          105.43p 
 
 
                     Annualised rental 
                      income based on the 
                      cash rents passing 
                      at the balance sheet 
                      date, less non-recoverable 
                      property operating 
                      expenses, divided 
                      by the market value 
 EPRA Net             of the property with 
  Initial             (estimated) purchasers'       EPRA Net Initial 
  Yield               costs.                         Yield                           5.27%            5.27% 
------------------  -----------------------------  ----------------------  ---------------  --------------- 
 
                        This measure incorporates 
                             an adjustment to the 
                              EPRA NIY in respect 
                                of the expiration 
                             of rent-free-periods 
                              (or other unexpired 
                            lease incentives such 
                               as discounted rent 
 EPRA 'Topped-up'             periods and stepped   EPRA 'Topped-up' 
  NIY                                     rents).    Net Initial Yield               5.27%            5.27% 
------------------  -----------------------------  ----------------------  ---------------  --------------- 
 
                          Estimated Market Rental 
                         Value ("ERV") of vacancy 
 EPRA Vacancy                space divided by ERV   EPRA Vacancy 
  Rate                    of the whole portfolio.    Rate                               0%               0% 
------------------  -----------------------------  ----------------------  ---------------  --------------- 
 
                     Administrative & operating 
                      costs (including & 
                      excluding costs of 
 EPRA Costs           direct vacancy) divided 
  Ratio               by gross rental income.       EPRA Costs Ratio                26.95%           47.80% 
------------------  ----------------------------- 
   EPRA Costs Ratio 
    (excluding direct 
    vacancy costs)                                                                  26.98%           47.80% 
  -----------------------------------------------------------------------  ---------------  --------------- 
 

For detailed workings reconciling the above measures to the IFRS results please see Appendix 1 to these financial statements.

 
 Adjusted 
  Performance                              Performance                31 March         31 March 
  Measure        Definition                 Measure                       2019             2018 
--------------  ------------------------  -------------------  ---------------  --------------- 
 
 Portfolio          IFRS NAV adjusted      Portfolio NAV        GBP741,170,000   GBP398,505,000 
  NAV             to reflect investment 
                     property valued 
                      on a portfolio 
                    basis rather than 
                     on an individual 
                       asset basis 
--------------  ------------------------  ------------------- 
   Portfolio NAV 
    per share                                                          119.07p          113.86p 
  -----------------------------------------------------------  ---------------  --------------- 
 Company         Company Specific          Adjusted Earnings     GBP22,612,000     GBP9,085,000 
  Adjusted        Earnings Measure 
  Earnings        which adds back 
                  the finance costs 
                  associated with 
                  the C share financial 
                  liability 
--------------  ------------------------ 
   Adjusted Earnings 
    per share                                                            3.63p            2.60p 
  -----------------------------------------------------------  ---------------  --------------- 
 

For detailed workings reconciling the Portfolio NAV to the IFRS results please see note 16 to these financial statements. For detailed workings reconciling the Company Adjusted Earnings to the IFRS results please see Appendix 1 to these financial statements.

Principal Risks and Risk Management

The Board considers that the risks detailed below are the principal risks facing the Group currently, along with the risks detailed in note 33 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 2019, and that processes are in place to continue this assessment. Further detail of risk management processes that are in place can be found in the Corporate Governance Statement in the full Annual Report. The principal risks and uncertainties relating to the Group are regularly reviewed by the Board along with the internal controls and risk management processes that are used to mitigate these risks. The principal risks and management of those risks are described below:

Principal risks and uncertainties

 
 1. Strategy and             Impact                         How managed/mitigated 
  competitiveness 
  risks 
--------------------------  -----------------------------  -----------------------------  --------------- 
 The Company and             Any change in the              The Company focuses            Impact: 
  its operations              laws, regulations              on niche real estate           Very High 
  are subject to              and/or government              sectors where it 
  laws and regulations        policy affecting               believes the regulatory        Probability: 
  enacted by national         the Company and its            framework to be robust.        Unlikely 
  and local governments       operations may have 
  and government              a material adverse             The Board obtains 
  policy.                     effect on the ability          regular updates from 
                              of the Company to              professional advisers 
                              successfully pursue            to monitor developments 
                              its investment policy          in regulation and 
                              and meet its investment        legislation. 
                              objective and on 
                              the value of the 
                              Company and the shares. 
--------------------------  -----------------------------  -----------------------------  --------------- 
 2. Strategy and             Impact                         How managed/mitigated 
  competitiveness 
  risks 
--------------------------  -----------------------------  -----------------------------  --------------- 
 As a result of              The rate of capital            The Company has strong         Impact: 
  competition from            deployment would               links with vendors             High 
  other purchasers            drop, decreasing               and a robust pipeline 
  of social housing           returns to shareholders.       of future acquisitions.        Probability: 
  properties the                                                                            Unlikely 
  Company's ability                                          The Board regularly 
  to deploy capital                                          reviews the pipeline 
  effectively within                                         of potential acquisitions. 
  a reasonable timeframe 
  may be restricted 
  or the net initial 
  yields at which 
  the Company can 
  acquire properties 
  may decline such 
  that target returns 
  cannot be met. 
--------------------------  -----------------------------  -----------------------------  --------------- 
 3. Investment               Impact                         How managed/mitigated 
  management risk 
--------------------------  -----------------------------  -----------------------------  --------------- 
 Tenant defaulting           Loss of rental income          The portfolio is               Impact: 
  under the terms             in the short term.             diversified to reduce          Medium 
  of a lease.                                                the impact of default. 
                                                             Extensive diligence            Probability: 
                                                             is undertaken on               Likely 
                                                             all assets, which 
                                                             is reviewed and challenged 
                                                             by the Board. 
 
                                                             The Board is provided 
                                                             with regular updates 
                                                             on the tenants with 
                                                             any concerns raised 
                                                             for discussion. 
--------------------------  -----------------------------  -----------------------------  --------------- 
 4. Investment management    Impact                         How managed/mitigated 
  risk 
--------------------------  -----------------------------  -----------------------------  --------------- 
 The value of the            The valuation of               The Company invests            Impact: 
  investments made            the Company's assets           in projects with               High 
  by the Company              would fall decreasing          stable predetermined, 
  may change from             the Net Asset Value            long-term leases               Probability: 
  time to time according      of the Company.                in place with CPI              Unlikely 
  to a variety of                                            or CPI plus 1% indexation 
  factors, including                                         and its strategy 
  movements in interest                                      is not focused on 
  rates and in inflation                                     sale of properties. 
  and general market 
  pricing of similar                                         The Board receives 
  investments.                                               regular updates on 
                                                             factors that might 
                                                             impact investment 
                                                             valuations. 
--------------------------  -----------------------------  -----------------------------  --------------- 
 5. Investment management    Impact                         How managed/mitigated 
  risk 
--------------------------  -----------------------------  -----------------------------  --------------- 
 Due diligence may           The Company would              The Company undertakes         Impact: 
  not reveal all              over pay for assets            detailed due diligence         High 
  facts and circumstances     impairing shareholder          on the properties, 
  that may be relevant        value, reducing rental         their condition,               Probability: 
  in connection with          income and therefore           the proposed rental            Unlikely 
  an investment and           returns.                       levels - benchmarking 
  may not prevent                                            against comparable 
  an acquisition                                             schemes using both 
  being materially                                           external consultants 
  overvalued or rental                                       where required and 
  streams being at                                           its own proprietary 
  risk.                                                      database - and on 
                                                             the Registered Providers 
                                                             and care providers 
                                                             involved in each 
                                                             property to ensure 
                                                             that the purchase 
                                                             price is robust. 
 
                                                             The Board considers 
                                                             the due diligence 
                                                             undertaken when approving 
                                                             acquisitions. 
--------------------------  -----------------------------  -----------------------------  --------------- 
 6. Investment management    Impact                         How managed/mitigated 
  risk 
--------------------------  -----------------------------  -----------------------------  --------------- 
 Loss of key staff           Negative investor              The Board considers            Impact: 
  at the Investment           sentiment leading              the risk of the Investment     High 
  Adviser.                    to a reduction in              Adviser losing key 
                              share price. Reduction         staff and the succession       Probability: 
                              in ability to source           plans the Investment           Unlikely 
                              off market and favourable      Adviser has in place. 
                              deals. 
--------------------------  -----------------------------  -----------------------------  --------------- 
 7. Investment management    Impact                         How managed/mitigated 
  risks 
--------------------------  -----------------------------  -----------------------------  --------------- 
 Failure to monitor          Deterioration in               Contingent actions             Impact: 
  that contingent             the underlying quality,        are regularly monitored        Medium 
  activities are              and therefore value            and followed up. 
  completed by the            of the Company's               The Board is kept              Probability: 
  RPs or other parties.       property.                      appraised of any               Unlikely 
                                                             breach of lease obligations 
--------------------------  -----------------------------  -----------------------------  --------------- 
 8. Investment management    Impact                         How managed/mitigated 
  risks 
--------------------------  -----------------------------  -----------------------------  --------------- 
 Lack of availability        The rate of capital            The Company has strong         Impact: 
  for debt financing          deployment would               links with a number            Medium 
  or other capital.           drop decreasing returns        of banks and other 
                              to shareholders.               capital sources.               Probability: 
                                                                                            Unlikely 
                                                             The Board closely 
                                                             considers any new 
                                                             loan facility proposed 
                                                             and receives regular 
                                                             updates on debt and 
                                                             capital markets for 
                                                             consideration. 
--------------------------  -----------------------------  -----------------------------  --------------- 
 9. Accounting,              Impact                         How managed/mitigated 
  legal and regulatory 
  risks 
--------------------------  -----------------------------  -----------------------------  --------------- 
 If the Company              Any change in the              The Company has been           Impact: 
  fails to remain             tax status of the              structured to be               High 
  qualified as a              Company or any of              REIT compliant and 
  REIT, its rental            its underlying investments     continuously monitors          Probability: 
  income and gains            or in tax legislation          the tax status using           Very unlikely 
  will be subject             or practice (including         professional taxation 
  to UK corporation           in relation to taxation        advisers. The Board 
  tax.                        rates and allowances)          has ultimate responsibility 
                              or in accounting               for ensuing adherence 
                              standards could adversely      to the UK REIT regime 
                              affect the investment          and monitors the 
                              return of the Company.         compliance reports 
                                                             provided by the Investment 
                                                             Adviser and other 
                                                             third party providers. 
--------------------------  -----------------------------  -----------------------------  --------------- 
 10. Operational             Impact                         How managed/mitigated 
  risks, including 
  cyber crime 
--------------------------  -----------------------------  -----------------------------  --------------- 
 Disruption to,              Loss of operational            The Board monitors             Impact: 
  or failure of the           capabilities, potential        the services provided          Medium 
  systems or general          regulator actions.             by the Investment 
  operations of third                                        Adviser and other              Probability: 
  party providers             Alternative service            service providers              Unlikely 
  could prevent accurate      providers would need           and the key elements 
  reporting and monitoring    to be identified               which are designed 
  of the Company's            and activities transferred.    to provide effective 
  financial position.                                        internal control. 
  This includes the                                          All service providers 
  risk of cyber crime                                        are required to have 
  and potential threat                                       robust IT security 
  to security, business                                      and disaster recovery 
  continuity and                                             contingency plans 
  reputation.                                                in place. 
--------------------------  -----------------------------  -----------------------------  --------------- 
 

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 in Board 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 terms considered in the Company's testing below.

The cash balance of the Company at the period end was GBP47 million that was readily available for use. As stated in the Strategic Report, the Investment Adviser has identified a pipeline of GBP210 million of attractive investment opportunities for acquisition over the next twelve months. The Board has evaluated the financial position of the Company and is confident in the ability to raise debt and/or equity capital in order to fund the Company's investments for the next 12 months and to facilitate the payment of dividends to shareholders at the targeted rate. Based on this, the Board believes that the Company is in a position to manage its financial risks.

The Directors believe that there are currently no material uncertainties in relation to the Company's ability to continue in operation for a period of at least 12 months from the date of approval of the Company's financial statements and therefore have adopted the going concern basis in the preparation of the financial statements.

Viability Statement

In accordance with the UK Corporate Governance Code (2016) ("Code"), 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 2024. The prospects were assessed over a five year period, acknowledging that the Company will have its first continuation vote in 2022, for the following reasons:

   (i)         the Company's long-term forecast covers a five year period; 

(ii) the length of service level agreements between Housing Associations and care providers is typically five years; and

(iii) the Company's leases are typically 25 years on fully repairing and insuring leases enabling reasonable certainty of income over the next five years.

The Company's five year forecast incorporates assumptions related to the Company's investment strategy and principal risks from which performance results, cash flows and key performance indicators are forecast. The principal risks are set out above. Of these risks, those which are expected to have a higher impact on the Company's longer-term prospects are those related to future government housing policies. The Company has considered its strategy over a longer term and, in light of the inherent demand for the Company's properties and the vulnerable nature of the ultimate tenant, the risk of change in future housing policy is considered to be limited. The principal risks are mitigated by the Company's risk management and internal control processes which function on an ongoing basis. The Board, via delegation to the Audit and Management Engagement Committee, monitors the effectiveness of the Company's risk management and internal control processes on an ongoing basis. The monitoring activities are described in the Report of the Audit and Management Engagement Committee in the full Annual Report and include direct review and challenge of the Company's documented risks, risk ratings and controls and review of performance and compliance reports prepared by the Company's advisers and the independent external auditors.

In accordance with the Code, the Board of Directors has carried out a robust assessment of the principal 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:

   --      Reduction in availability of suitable assets for acquisition 
   --      Tenant defaulting under a lease 
   --      Lack of availability for debt financing or other capital 

-- Deterioration in economic outlook, such as any negative impact due to Brexit, or change in government housing policy which could impact the fundamentals of the social housing sector, including a negative impact on valuations and rental uplifts.

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

21 June 2019

Board of Directors

Michael Wrobel (Chairman)

Caroline Gulliver (Director and Chairman of the Audit and Management Engagement Committee)

Peter Baxter (Senior Independent Director)

Alastair Moss (Director)

Extracts from the Report of the Directors

Results and Dividends

The results for the year are shown below.

The following dividends were paid on the Ordinary shares during the year:

 
 First dividend on the Ordinary    1.25p paid on 8 June 2018 
  shares 
--------------------------------  ------------------------------- 
 Second dividend on the Ordinary   1.25p paid on 7 September 2018 
  shares 
--------------------------------  ------------------------------- 
 Third dividend on the Ordinary    1.25p paid on 30 November 2018 
  shares 
--------------------------------  ------------------------------- 
 Fourth dividend on the Ordinary   1.11p paid on 11 January 2019 
  shares 
--------------------------------  ------------------------------- 
 Fifth dividend on the Ordinary    0.14p paid on 28 February 2019 
  shares 
--------------------------------  ------------------------------- 
 

The following dividends were paid on the C shares during the year:

 
 First dividend on the C shares   1.13p paid on 8 June 2018 
-------------------------------  ------------------------------- 
 Second dividend on the C         0.75p paid on 7 September 2018 
  shares 
-------------------------------  ------------------------------- 
 Third dividend on the C shares   0.75p paid on 30 November 2018 
-------------------------------  ------------------------------- 
 Fourth dividend on the C         0.67p paid on 11 January 2019 
  shares 
-------------------------------  ------------------------------- 
 

Since the year end, the Company has declared the following dividend:

 
 Quarterly dividend on the   1.325p paid on 7 June 2019 
  Ordinary shares 
--------------------------  --------------------------- 
 

No final dividend is being recommended on the Ordinary shares.

Capital Structure

Changes to share capital

On 21 December 2018, the 302,000,000 C shares in issue were converted into Ordinary shares at the ratio of 0.902190 new ordinary shares for every C share. As a result, 272,461,380 Ordinary shares were issued.

Following the conversion, and as at 31 March 2019, the Company had 622,461,380 Ordinary shares in issue, none of which were held in treasury.

Statement of Directors' Responsibilities

The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulation.

Company law requires the Directors to prepare financial statements for each financial period. Under that law, the Directors have prepared the Group financial statements in accordance with International Financial Reporting Standards ("IFRSs") as adopted by the European Union 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, the 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 and Company 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 IFRSs as adopted by the European Union have been followed for the Group financial statements and United Kingdom Accounting Standards, comprising FRS 101, have been followed for the Company financial statements, subject to any material departures disclosed and explained in the financial statements;

   --           make judgements and accounting estimates that are reasonable and prudent; and 

-- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group and Company's transactions and disclose with reasonable accuracy at any time the financial position of the Group and Company and enable them to ensure that the financial statements and the Directors' Remuneration Report comply with the Companies Act 2006 and, as regards the Group financial statements, Article 4 of the IAS Regulation.

The Directors are also responsible for safeguarding the assets of the Group and Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

The Directors consider that the Annual Report and financial statements, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group and Company's position and performance, business model and strategy.

Each of the Directors, whose names and functions are listed above, confirm that, to the best of their knowledge:

-- the Company financial statements, which have been prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 101 "Reduced Disclosure Framework", and applicable law), give a true and fair view of the assets, liabilities, financial position and profit of the Company;

-- the Group financial statements, which have been prepared in accordance with IFRSs as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit of the Group; and

-- the Strategic Report includes a fair review of the development and performance of the business and the position of the Group, 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

21 June 2019

NON-STATUTORY ACCOUNTS

The financial information set out below does not constitute the Company's statutory accounts for the year ended 31 March 2019 or the period ended 31 March 2018 but is derived from those accounts. Statutory accounts for the period ended 31 March 2018 have been delivered to the Registrar of Companies and those for the year ended 31 March 2019 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 2019

 
                                                                              From 
                                                                       18 November 
                                                            For the           2016 
                                                         year ended    to 31 March 
                                                      31 March 2019           2018 
                                              Note          GBP'000        GBP'000 
                                                    ---------------  ------------- 
 
 Revenue 
 Rental income                                5              35,738         18,606 
                                                    ---------------  ------------- 
 
 Net rental income                                           35,738         18,606 
 
 Directors' remuneration                      6               (163)          (205) 
 Investment advisory fees                     8             (6,457)        (5,773) 
 General and administrative expenses          9             (3,022)        (2,915) 
                                                    ---------------  ------------- 
 
 Total expenses                                             (9,642)        (8,893) 
 
 Change in fair value of investment 
  properties                                  15              3,652         30,633 
                                                    ---------------  ------------- 
 
 Operating profit                                            29,748         40,346 
 Finance income                               10                491            413 
 Finance expense - relating to 
  bank borrowings                             11            (3,975)        (1,041) 
 Finance expense - C shares amortisation      11            (6,400)        (2,792) 
                                                    ---------------  ------------- 
 
 Profit before tax                                           19,864         36,926 
 Taxation                                     12                  -              - 
                                                    ---------------  ------------- 
 
 Profit being total comprehensive income 
  for the period                                             19,864         36,926 
                                                    ---------------  ------------- 
 
 
 
 Earnings per share - basic      13   4.67p   10.55p 
 
 Earnings per share - diluted    13   4.22p    6.27p 
                                     ------  ------- 
 

All amounts reported in the Consolidated Statement of Comprehensive Income above arise from continuing operations.

The notes below are an integral part of these consolidated financial statements.

Consolidated Statement of Financial Position

As at 31 March 2019

 
                                         31 March 2019   31 March 2018 
                                  Note         GBP'000         GBP'000 
                                        --------------  -------------- 
 Assets 
 Non-current assets 
 Investment property              15           820,094         516,222 
 Other receivables                17             6,824               - 
                                        --------------  -------------- 
 
                                               826,918         516,222 
 Current assets 
 Trade and other receivables      17             5,723           3,315 
 Cash and cash equivalents        18            54,347         249,608 
                                        --------------  -------------- 
 
                                                60,070         252,923 
 
 
 Total assets                                  886,988         769,145 
                                        --------------  -------------- 
 
 Liabilities 
 Current liabilities 
 Trade and other payables         19          (15,324)        (10,176) 
 C shares                         21                 -       (298,752) 
                                        --------------  -------------- 
 
                                              (15,324)       (308,928) 
 Non-current liabilities 
 Bank and loan borrowings         20         (205,156)        (90,822) 
                                        --------------  -------------- 
 
 Total liabilities                           (220,480)       (399,750) 
                                        --------------  -------------- 
 
 Total net assets                              666,508         369,395 
                                        --------------  -------------- 
 
 Equity 
 Share capital                    22             6,225           3,500 
 Share premium reserve            23           292,405               - 
 Capital reduction reserve        24           331,625         331,625 
 Retained earnings                25            36,253          34,270 
                                        --------------  -------------- 
 
 Total equity                                  666,508         369,395 
                                        --------------  -------------- 
 
 
 
 Net assets per share - basic      26   107.08p   105.54p 
 
 Net assets per share - diluted    26   107.08p   105.54p 
                                       --------  -------- 
 

These consolidated financial statements were approved by the Board of Directors of Civitas Social Housing PLC and authorised for issue on 21 June 2019 and signed on its behalf by:

Michael Wrobel

Chairman and Independent Non-Executive Director

21 June 2019

Company No: 10402528

The notes below are an integral part of these consolidated financial statements.

Consolidated Statement of Changes in Equity

For the year ended 31 March 2019

 
                                                                      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 18 November 2016                                  -           -           -       (31)       (31) 
 
 Profit and total comprehensive income for 
  the period                                                  -           -           -     36,926     36,926 
 
 Issue of Ordinary shares 
 Issue of share capital                           22      3,500     346,500           -          -    350,000 
 Share issue costs                                23          -     (7,000)           -          -    (7,000) 
 Cancellation of share premium reserve            23          -   (339,500)     339,500          -          - 
 
 Dividends paid 
 Total interim dividends for the period ended 
  31 March 2018 (3.00p)                           14          -           -     (7,875)    (2,625)   (10,500) 
                                                       --------  ----------  ----------  ---------  --------- 
 
 Balance at 31 March 2018                                 3,500           -     331,625     34,270    369,395 
                                                       --------  ----------  ----------  ---------  --------- 
 
 
 Profit and total comprehensive income for 
  the period                                                  -           -           -     19,864     19,864 
 
 Issue of Ordinary shares 
 Issue of share capital                           22      2,725     292,461           -          -    295,186 
 Share issue costs                                23          -        (56)           -          -       (56) 
 
 Dividends paid 
 Total interim dividends for the period ended 
  31 March 2019 (5.00p)                           14          -           -           -   (17,881)   (17,881) 
                                                       --------  ----------  ----------  ---------  --------- 
 
 Balance at 31 March 2019                                 6,225     292,405     331,625     36,253    666,508 
                                                       --------  ----------  ----------  ---------  --------- 
 
 

The notes below are an integral part of these consolidated financial statements.

Consolidated Statement of Cash Flows

For the year ended 31 March 2019

 
                                                            For the                From 
                                                         year ended    18 November 2016 
                                                      31 March 2019    to 31 March 2018 
                                              Note          GBP'000             GBP'000 
                                                    ---------------  ------------------ 
 Cash flows from operating activities 
 Profit for the period before 
  taxation                                                   19,864              36,926 
 - Change in fair value of investment 
  properties                                                (3,652)            (30,633) 
 - Rent and incentive straight 
  line adjustments                                            (314)               (332) 
 Finance income                                               (491)               (413) 
 Finance expense                                             10,375               3,833 
 Increase in trade and other receivables                    (2,789)             (2,540) 
 (Decrease)/increase in trade 
  and other payables                                          (149)                 803 
                                                    ---------------  ------------------ 
 
 Cash generated from operations                              22,844               7,644 
 Interest received                                              491                 413 
                                                    ---------------  ------------------ 
 
 Net cash flow generated from 
  operating activities                                       23,335               8,057 
                                                    ---------------  ------------------ 
 
 Investing activities 
 Purchase of investment properties                        (267,098)           (458,564) 
 Acquisition costs                                          (9,421)            (19,051) 
 Purchase of subsidiary company                            (25,470)                   - 
 Sale proceeds on sale of subsidiary                          4,336                   - 
  company 
 Lease incentives paid                                      (3,178)                   - 
 Restricted cash held as retention 
  money                                                       (936)             (6,283) 
                                                    ---------------  ------------------ 
 
 Net cash flow used in investing 
  activities                                              (302,577)           (483,898) 
                                                    ---------------  ------------------ 
 
 Financing activities 
 Proceeds from the issue of Ordinary 
  share capital                               22                  -             350,000 
 Share issue costs paid                       23               (56)             (7,000) 
 Dividends paid to equity shareholders                     (17,591)            (10,073) 
 Proceeds from the issue of C 
  shares                                      21                  -             302,000 
 C share issue costs paid                     21                  -             (6,040) 
 Dividends paid to C shareholders             21            (9,966)                   - 
 Bank borrowings advanced                     20            115,990              92,457 
 Bank borrowing issue costs paid              20            (2,374)             (1,761) 
 Loan interest paid                                         (2,958)               (417) 
                                                    ---------------  ------------------ 
 
 Net cash flow generated from 
  financing activities                        27             83,045             719,166 
                                                    ---------------  ------------------ 
 
 Net (decrease)/increase in cash 
  and cash equivalents                                    (196,197)             243,325 
 Unrestricted cash and cash equivalents 
  at the start of the period                  18            243,325                   - 
                                                    ---------------  ------------------ 
 
 Unrestricted cash and cash equivalents 
  at the end of the period                    18             47,128             243,325 
                                                    ---------------  ------------------ 
 
 

The notes below are an integral part of these consolidated financial statements.

Notes to the Consolidated Financial Statements

For the year ended 31 March 2019

   1.   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 is to act as the ultimate parent company of Civitas Social Housing PLC and its subsidiaries (the "Group"), whose principal activity is to provide shareholders with an attractive level of income, together with the potential for capital growth from investing in a portfolio of social homes.

   2.   Basis of preparation 

The Group's consolidated financial statements have been prepared on a going concern basis in accordance with the Disclosure Guidance and Transparency Rules of the FCA and with International Financial Reporting Standards ("IFRS") and IFRS Interpretation Committee ("IFRS IC") interpretations as issued by the IASB and as adopted by the European Union ("EU"), and in accordance with Article 4 of the IAS Regulation and the Companies Act 2006 as applicable to companies using IFRS.

The comparative information disclosed in the consolidated financial statements relates to the period from 18 November 2016 to 31 March 2018. The period covered by the comparative information varies in length and the level of activities and therefore is not comparable to the current period.

The Group's consolidated financial statements have been prepared on a historical cost basis, as modified for the Group's investment properties at fair value through profit or loss.

The Group has chosen to adopt EPRA best practice guidelines for calculating key metrics such as net asset value and earnings per share. These are disclosed 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 Housing Associations, which are not overly reliant on any one tenant and present a well-diversified risk. The Group's cash balances as at 31 March 2019 were GBP54.3 million, of which GBP47.1 million was readily available and it had bank borrowings of GBP208.4 million.

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 Directors believe that there are currently no material uncertainties in relation to the Group's ability to continue for the period of at least 12 months from the date of the Group's consolidated financial statements. The Board is, therefore, of the opinion that the going concern basis adopted in the preparation of the consolidated financial statements is appropriate.

2.3 New standards, amendments and interpretations

The following new standards are now effective and have been adopted for the year ended 31 March 2019.

-- Adoption of IFRS 9 Financial Instruments: The standard replaced IAS 39 Financial Instruments and contains two primary measurement categories for financial assets.

Management have reviewed the requirements of IFRS 9. The adoption of IFRS 9 from 1 April 2018 resulted in no adjustments to the amounts recognised in the financial statements. In accordance with the transitional provisions, comparative figures have not been restated. The Group's principal financial assets comprise trade receivables, which will continue to be measured at amortised cost. The following changes have been identified.

Under IFRS 9 the Group now applies an expected credit loss model when calculating impairment losses on its trade and other receivables and considers the probability of default occurring over the contractual life of its trade receivables and contracts. The specific situation of each tenant has been evaluated using a provision matrix as allowed under IFRS 9. This did not result in a material change in the loss allowance recognised under IFRS 9 compared to the previous impairment provision held under IAS39.

-- Adoption of IFRS 15 Revenue from Contracts: The standard replaced IAS 11 Construction Contracts, IAS 18 Revenue. The standard introduces a new revenue recognition model that recognises revenue either at a point in time or over time.

As all of the Group's revenue derives from leases which are outside the scope of IFRS 15 there is no change to accounting policies arising from the adoption of IFRS 15.

-- Adoption of Amendment to IAS 40, Investment Property: The amendment to IAS 40 Investment Property, clarifies when assets are transferred to, or from, investment properties.

Management have assessed the impact of the amendment to IAS 40 on the classification of existing property at 1 April 2018 and has concluded that no reclassifications are required on adoption of the amendment.

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:

-- IFRS 16 Leases: Introduction of a single, on-balance sheet accounting model (effective for annual periods beginning on or after 1 January 2019).

The Directors have assessed that the adoption of this will not have a material impact on the Group's financial statements as the Group does not hold any material operating leases as lessee.

-- IFRIC 23 Uncertainty over Income Tax Treatments: Clarifies the application of recognition and measurement requirements in IAS 12 Income Taxes, when there is uncertainty over income tax treatments (effective for annual periods beginning on or after 1 January 2019).

The Directors have assessed that the adoption of this new interpretation will not have a material impact on the Group's financial statements.

-- Amendments to IFRS 3 Business Combinations: Clarifies the definition of a business. A significant change in the amendment is the option for an entity to assess whether substantially all of the fair value of the gross assets acquired is concentrated in a single asset or group of similar assets. If such a concentration exists, the transaction is not viewed as an acquisition of a business and no further assessment of the business combination guidance is required. This will be relevant where the value of the acquired entity is concentrated in one property, or a group of similar properties (effective for periods beginning on or after 1 January 2020 with earlier application permitted).

There will be no impact on transition since the amendments are effective for business combinations for which the acquisition date is on or after the transition date.

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 these individual properties have been aggregated into a single operating segment. In the view of the Directors there is accordingly one reportable segment under the provisions of IFRS 8.

All of the Group's properties are based in the UK. Geographical information is provided to ensure compliance with the diversification requirements of the Company, other than this no geographical grouping is contained in any of the internal financial reports provided to the Investment Adviser's Executive Team and, therefore no geographical segmental analysis is required by IFRS 8.

3. Significant accounting judgements, estimates and assumptions

In the application of the Group's accounting policies, which are described in note 4, the Directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are outlined below:

3.1 Significant estimate - Valuation of investment property

The Group uses the valuation carried out by its independent valuers as the fair value of its property portfolio. The valuation is based upon assumptions including future rental income and the appropriate discount rate. The valuers also make reference to market evidence of transaction prices for similar properties. Further information is provided in note 15.

The Group's properties have been independently valued by Jones Lang LaSalle Ltd. ("JLL" or the "Valuer") according to the definitions published by the Royal Institute of Chartered Surveyors' ("RICS") Valuation - Professional Standards, July 2017, Global and UK Editions (commonly known as the "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 which recognises a variety of fair value inputs depending upon the nature of the investment. Specifically:

Level 1 - Unadjusted, quoted prices for identical assets and liabilities in active (typically quoted) markets.

Level 2 - Quoted prices for similar assets and liabilities in active markets.

Level 3 - External inputs are "unobservable". Value is the director's 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.

With the exception of one acquisition detailed below, all other corporate acquisitions 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 purchase of TLC Care Homes Limited which carried out operational activities. Upon acquisition, investment properties were transferred into another Group company and the company was sold. Further details are shown in note 15.1 to the financial statements.

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 Registered 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.

4. Summary of significant accounting policies

The principal accounting policies applied in the preparation of the consolidated financial statements are set out below. The policies have been consistently applied to all periods presented, unless otherwise stated.

4.1. Basis of consolidation

The consolidated financial statements comprise the financial information of the Group as at the period end date.

Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. All intra-group transactions, balances, income and expenses are eliminated on consolidation. The financial information of the subsidiaries is included in the consolidated financial statements from the date that control commences until the date that control ceases.

If an equity interest in a subsidiary is transferred but a controlling interest continues to be held after the transfer then the change in ownership interest is accounted for as an equity transaction.

Accounting policies of the subsidiaries are consistent with the policies adopted by the Company.

4.2. Investment property

Investment property, which is property held to earn rentals and/or for capital appreciation, is initially measured at cost, being the fair value of the consideration given, including expenditure that is directly attributable to the acquisition of the investment property. After initial recognition, investment property is stated at its fair value at the balance sheet date. Gains and losses arising from changes in the fair value of investment property are included in profit or loss for the period in which they arise in the Consolidated Statement of Comprehensive Income.

Subsequent expenditure is capitalised only when it is probable that future economic benefits are associated with the expenditure. Ongoing repairs and maintenance are expensed as incurred.

An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from the disposal. Any gain or loss arising on derecognition of the property (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is incurred in profit or loss in the period in which the property is derecognised.

Significant accounting judgements, estimates and assumptions made for the valuation of investment properties are discussed in note 3.

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.

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.

4.4. Financial Assets

Classification

From 1 April 2018, 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 sales over a period of up to 36 months before 31 March 2019 or 1 April 2018, 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.

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.

Cash held by lawyers is money held in escrow for expenses expected to be incurred in relation to investment properties pending completion. These funds are available immediately on demand.

4.5. Financial liabilities

The Group recognises a financial liability when it first becomes a party to the contractual rights and obligations in the contract.

All financial liabilities are initially recognised at fair value, minus (in the case of a financial liability that is not at fair value through profit or loss) transaction costs that are directly attributable to issuing the financial liability. Financial liabilities are subsequently measured at amortised cost, unless the Group opted to measure a liability at fair value through profit or loss.

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.

Trade and other payables

Trade and other payables are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade and other payables are recognised initially at their fair value and subsequently measured at amortised cost until settled. The fair value of a non-interest bearing liability is its discounted repayment amount. If the due date of the liability is less than one year, discounting is omitted.

Bank and other borrowings

All bank and other borrowings are initially recognised at fair value less directly attributable transaction costs. After initial recognition, all bank and other borrowings are measured at amortised cost, using the effective interest method. Any attributable transaction costs relating to the issue of the bank borrowings are amortised through the Group's Statement of Comprehensive Income over the life of the debt instrument on a straight-line basis.

C share financial liability

C shares are convertible preference shares and under IAS 32 Financial Instruments: Presentation, meet the definition of a financial liability. C shares are recognised on issue at fair value less directly attributable transaction costs. After initial recognition, C shares are subsequently measured at amortised cost using the effective interest rate method. Amortisation is credited to or charged to finance income or finance costs in the Consolidated Statement of Comprehensive Income. Transaction costs are deducted from proceeds at the time of issue.

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 2019   31 March 2018 
                                                     GBP'000         GBP'000 
                                              --------------  -------------- 
 
 Proceeds from the issue of Ordinary shares 
  and retained earnings thereon                      666,508         369,395 
 Proceeds from the issue of C shares and 
  retained earnings thereon                                -         298,752 
 Bank and loan borrowings                            205,156          90,822 
                                              --------------  -------------- 
 
                                                     871,664         758,969 
                                              --------------  -------------- 
 

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 40% of the Gross Asset Value on a fully invested basis.

4.9. Dividends payable to shareholders

Dividends to the Company's shareholders are recognised as a liability in the Group's consolidated financial statements in the period in which the dividends are approved. In the UK, interim dividends are recognised when 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.

4.11. Finance income

Finance income is recognised as interest accrues on cash and cash equivalent balances held by the Group.

4.12. Finance costs

Finance costs consist of interest and other costs that the Group incurs in connection with bank and other borrowings. Bank interest and bank charges are recognised on an accruals basis. Borrowing transaction costs are amortised over the period of the loan.

After initial recognition, C shares are subsequently measured at amortised cost using the effective interest rate method. Amortisation is credited or charged to finance income or finance costs. Transaction costs are amortised to the earliest conversion period.

4.13. Expenses

All expenses are recognised in the Consolidated Statement of Comprehensive Income on an accruals basis.

4.14. Investment advisory fees

Investment advisory fees are recognised in the Consolidated Statement of Comprehensive Income on an accruals basis.

4.15. 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.

5. Rental income

 
                                                                      From 
                                                  For the      18 November 
                                               year ended          2016 to 
                                            31 March 2019    31 March 2018 
                                                  GBP'000          GBP'000 
                                          ---------------  --------------- 
 
 Rental income from investment property            35,424           18,274 
 Rent straight line adjustments                       459              332 
 Lease incentive adjustments                        (145)                - 
                                          ---------------  --------------- 
 
 Total                                             35,738           18,606 
                                          ---------------  --------------- 
 

As per the lease agreements between the Group and the Registered Providers, the Registered Providers are responsible for the settlement of all present and future rates, taxes, costs and other impositions payable in respect of the property. As a result, no direct property expenses were incurred.

6. Directors' remuneration

 
                                                                           From 
                                                       For the      18 November 
                                                    year ended          2016 to 
                                                 31 March 2019    31 March 2018 
                                                       GBP'000          GBP'000 
                                               ---------------  --------------- 
 
 Directors' fees                                           150              190 
 Employer's National Insurance Contributions                13               15 
                                               ---------------  --------------- 
 
 Total                                                     163              205 
                                               ---------------  --------------- 
 
 

The Directors are remunerated for their services at such rate as the Directors shall from time to time determine.

At IPO, the Chairman was entitled to a fee of GBP35,000 per annum, and the other Directors of the Board to a fee of GBP30,000 per annum (with the exception of the Chairman of the Audit and Management Engagement Committee who was entitled to an additional fee of GBP2,500 per annum).

At a Board meeting on 26 July 2017, a resolution was passed authorising an increase to the fees of the Chairman to GBP50,000 per annum, the Chairman of the Audit and Management Engagement Committee and the other Directors to GBP36,000 per annum and GBP32,000 per annum respectively effective from 1 August 2017.

7. Particulars of employees

The Group had no employees during the period (31 March 2018 period: nil) other than the Directors.

8. Investment advisory fees

 
                                            From 
                        For the      18 November 
                     year ended          2016 to 
                  31 March 2019    31 March 2018 
                        GBP'000          GBP'000 
                ---------------  --------------- 
 
 Advisory fee             6,457            5,773 
                ---------------  --------------- 
 
 Total                    6,457            5,773 
                ---------------  --------------- 
 
 

Civitas Housing Advisors Limited ("CHA") is appointed as the 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 Portfolio Net Asset Value (further explained in note 16) 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 Portfolio Net Asset Value up to and including GBP250 million, an amount equal to 1% of such part of the Portfolio Net Asset Value;

b) on that part of the Portfolio Net Asset Value over GBP250 million and up to and including GBP500 million, an amount equal to 0.9% of such part of the Portfolio Net Asset Value;

c) on that part of the Portfolio Net Asset Value over GBP500 million and up to and including GBP1,000 million, an amount equal to 0.8% of such part of the Portfolio Net Asset Value;

d) on that part of the Portfolio Net Asset Value over GBP1,000 million, an amount equal to 0.7% of such part of the Portfolio 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 November 2021.

Changes to the Investment Advisory fee and changes to the appointment period effective from 26 April 2019 are detailed in note 35.

9. General and administrative expenses

 
                                                           From 
                                       For the      18 November 
                                    year ended          2016 to 
                                 31 March 2019    31 March 2018 
                                       GBP'000          GBP'000 
                               ---------------  --------------- 
 
 Legal and professional fees             1,049            1,136 
 Administration fees                       717              581 
 Consultancy fees                          176              274 
 Audit fees                                211              308 
 Abortive costs                             18              168 
 Bad debts                                 421                - 
 Valuation fees                             96               96 
 Depositary fees                            60               83 
 Grants and donations                       28               79 
 Insurance                                  65               32 
 Marketing                                 101               71 
 Regulatory fees                            19               29 
 Sundry expenses                            61               57 
 Directors' expenses                         -                1 
                               ---------------  --------------- 
 
 Total                                   3,022            2,915 
                               ---------------  --------------- 
 
 

Abortive costs represent legal and professional fees incurred in relation to acquisition of investment properties 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 Company's auditors and their associates:

 
                                                                  From 
                                              For the      18 November 
                                           year ended          2016 to 
                                        31 March 2019    31 March 2018 
                                              GBP'000          GBP'000 
                                      ---------------  --------------- 
 
 Audit of the financial statements                180              273 
 Review of the half year financial 
  statements                                       31               35 
 Corporate services relating to the 
  C share conversion                               10                - 
 Corporate services relating to the 
  initial launch                                    -               55 
 Corporate services relating to the 
  C share fund raise                                -              200 
                                      ---------------  --------------- 
 
 Total                                            221              563 
                                      ---------------  --------------- 
 
 

10. Finance income

 
                                                                  From 
                                              For the      18 November 
                                           year ended          2016 to 
                                        31 March 2019    31 March 2018 
                                              GBP'000          GBP'000 
                                      ---------------  --------------- 
 
 Interest and dividends received on 
  liquidity funds                                 486              413 
 Bank interest received                             5                - 
                                      ---------------  --------------- 
 
 Total                                            491              413 
                                      ---------------  --------------- 
 
 

11. Finance expense

 
                                                                     From 
                                                 For the      18 November 
                                              year ended          2016 to 
                                           31 March 2019    31 March 2018 
                                                 GBP'000          GBP'000 
                                         ---------------  --------------- 
 
 Bank charges                                          2                4 
 Interest paid and payable on bank 
  borrowings                                       3,048              902 
 Bank borrowing commitment fees                      207                9 
 Amortisation of loan arrangement fees               718              126 
                                         ---------------  --------------- 
 
 Finance expenses associated with bank 
  borrowings                                       3,975            1,041 
 Amortisation of C share liability                 6,400            2,792 
                                         ---------------  --------------- 
 
 Total                                            10,375            3,833 
                                         ---------------  --------------- 
 
 

12. Taxation

As a UK REIT, the Group is exempt from corporation tax on the profits and gains from its property investment business, provided it meets certain conditions as set out in the UK REIT regulations. For the current period ended 31 March 2019, the Group did not have any non-qualifying profits and accordingly there is no tax charge in the period. If there were any non-qualifying profits and gains, these would be subject to corporation tax.

It is assumed that the Group will continue to be a group UK REIT for the foreseeable future, such that deferred tax has not been recognised on temporary differences relating to the property rental business. No deferred tax asset has been recognised in respect of the unutilised residual current period losses as it is not anticipated that sufficient residual profits will be generated in the future.

 
                                                                  From 
                                              For the      18 November 
                                           year ended          2016 to 
                                        31 March 2019    31 March 2018 
                                              GBP'000          GBP'000 
                                      ---------------  --------------- 
 
 Corporation tax charge/(credit) for 
  the period                                        -                - 
                                      ---------------  --------------- 
 
 Total                                              -                - 
                                      ---------------  --------------- 
 
 

The tax charge for the period is less than the standard rate of corporation tax in the UK of 19%. The differences are explained below.

 
                                             For the             From 
                                          year ended      18 November 
                                            31 March          2016 to 
                                                2019    31 March 2018 
                                             GBP'000          GBP'000 
                                        ------------  --------------- 
 Group 
 Profit/(loss) before taxation                19,864           36,926 
                                        ------------  --------------- 
 
 UK corporation tax rate                      19.00%           19.27% 
 Theoretical tax at UK corporation 
  tax rate                                     3,774            7,116 
 Effects of: 
 Change in value of exempt investment 
  properties                                   (694)          (5,903) 
 Exempt REIT income                          (4,702)          (2,352) 
 Amounts not deductible for tax 
  purposes                                     1,296              691 
 Unutilised residual current period 
  tax losses                                     326              448 
                                        ------------  --------------- 
 
 Total                                             -                - 
                                        ------------  --------------- 
 
 

The standard rate of corporation tax was reduced from 20% to 19% from 1 April 2017. The Government has announced that the corporation tax standard rate is to be reduced to 17% with effective date from 1 April 2020.

REIT exempt income includes property rental income that is exempt from UK corporation tax in accordance with Part 12 of CTA 2010.

13. IFRS Earnings per share

Earnings per share ("EPS") amounts are calculated by dividing profit for the period attributable to ordinary equity holders of the Company by the weighted average number of Ordinary shares in issue during the period.

Diluted EPS is calculated by adjusting earnings and the number of shares for the effects of dilutive options and other dilutive potential Ordinary shares (i.e. the C shares).

The calculation of basic and diluted earnings per share is based on the following:

 
                                                                     From 
                                                              18 November 
                                               For the               2016 
                                              year ended      to 31 March 
                                             31 March 2019           2018 
                                           ---------------  ------------- 
 Calculation of Basic Earnings per share 
 Net profit attributable to Ordinary 
  shareholders (GBP'000)                            19,864         36,926 
 Weighted average number of Ordinary 
  shares                                       425,393,423    350,000,000 
 Earnings per share - basic                          4.67p         10.55p 
                                           ---------------  ------------- 
 
 Calculation of Diluted Earnings per 
  share 
 Net profit attributable to Ordinary 
  shareholders (GBP'000)                            19,864         36,926 
 Add back finance costs associated with 
  the C share liability (GBP'000)                    6,400          2,792 
                                           ---------------  ------------- 
 
 Total (GBP'000)                                    26,264         39,718 
                                           ---------------  ------------- 
 
 
 Weighted average number of Ordinary 
  shares                                       425,393,423    350,000,000 
 Effects of dilution from C shares             197,067,957    283,065,815 
                                           ---------------  ------------- 
 
                                               622,461,380    633,065,815 
                                           ---------------  ------------- 
 
 Earnings per share - diluted                        4.22p          6.27p 
                                           ---------------  ------------- 
 
 

14. Dividends

 
                                                                    From 
                                                             18 November 
                                                  For the           2016 
                                               year ended    to 31 March 
                                            31 March 2019           2018 
                                                  GBP'000        GBP'000 
                                          ---------------  ------------- 
 
 Dividend of 1.25p for the 3 months 
  to 31 March 2018 
  (0.75p 3 months to 31 March 2017)                 4,375          2,625 
 Dividend of 1.25p for the 3 months 
  to 30 June 2018 
  (0.75p 3 months to 30 June 2017)                  4,375          2,625 
 Dividend of 1.25p for the 3 months 
  to 30 September 2018 
  (0.75p 3 months to 30 September 2017)             4,375          2,625 
 Dividend of 1.25p for the 3 months 
  to 31 December 2018 
  (0.75p 3 months to 31 December 2017)              4,756          2,625 
                                          ---------------  ------------- 
 
 Total                                             17,881         10,500 
                                          ---------------  ------------- 
 
 

On 10 May 2018 the Company announced a dividend of 1.25 pence per share in respect of the period 1 January 2018 to 31 March 2018. The dividend payment was made on 8 June 2018 to shareholders on the register as at 18 May 2018.

On 3 August 2018 the Company announced a dividend of 1.25 pence per share in respect of the period 1 April 2018 to 30 June 2018. The dividend payment was made on 7 September 2018 to shareholders on the register as at 17 August 2018.

On 1 November 2018 the Company announced a dividend of 1.25 pence per share in respect of the period 1 July 2018 to 30 September 2018. The dividend payment was made on 30 November 2018 to shareholders on the register as at 8 November 2018.

On 29 November 2018 the Company announced a dividend of 1.11 pence per share in respect of the period 1 October 2018 to 21 December 2018. The dividend payment was made on 11 January 2019 to shareholders on the register as at 7 December 2018.

On 31 January 2019 the Company announced a dividend of 0.14 pence per share in respect of the period 22 December 2018 to 31 December 2018. The dividend payment was made on 28 February 2019 to shareholders on the register as at 8 February 2019.

On 8 May 2019 the Company announced a dividend of 1.325 pence per share in respect of the period 1 January 2019 to 31 March 2019. The dividend payment was made on 7 June 2019 to shareholders on the register as at 17 May 2019. The financial statements do not reflect this dividend.

15. Investment property

 
                                                     For the                From 
                                                  year ended    18 November 2016 
                                               31 March 2019    to 31 March 2018 
                                                     GBP'000             GBP'000 
                                             ---------------  ------------------ 
 
 Balance at beginning of period                      516,554                   - 
 Property acquisitions                               289,304             465,522 
 Acquisition costs                                    10,916              20,067 
 Change in fair value during the period               10,144              30,965 
                                             ---------------  ------------------ 
 
 Value advised by the property valuers               826,918             516,554 
 Adjustments for lease incentive assets 
  and rent straight line assets recognised           (6,824)               (332) 
                                             ---------------  ------------------ 
 
 Total                                               820,094             516,222 
                                             ---------------  ------------------ 
 
 
 
 
 
                                                 For the                From 
                                              year ended    18 November 2016 
   Change in fair value of investment      31 March 2019    to 31 March 2018 
   properties:                                   GBP'000             GBP'000 
                                         ---------------  ------------------ 
 
 Change in valuation during the period            10,144              30,965 
 Adjustment for lease incentives and 
  rent straight line 
  adjustments recognised in assets as: 
 Start of the period                                 332                   - 
 End of the period                               (6,824)               (332) 
                                         ---------------  ------------------ 
 
                                                   3,652              30,633 
                                         ---------------  ------------------ 
 

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.

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 GBP826,918,000 as at 31 March 2019 (31 Match 2018: GBP516,554,000).

JLL has provided valuation services to the Company with regards to the properties during the period. In relation to the period ended 31 March 2019, 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.

All corporate acquisitions during the period have been treated as asset purchases rather than business combinations because they are considered to be acquisitions of properties rather than businesses.

The following table provides the fair value measurement hierarchy for investment property:

 
 
                                            Quoted prices   Significant     Significant 
                                                       in    observable    unobservable 
                                           active markets        inputs          inputs 
                                 Total          (Level 1)     (Level 2)       (Level 3) 
                               GBP'000            GBP'000       GBP'000         GBP'000 
                            ----------  -----------------  ------------  -------------- 
 Investment properties 
  measured at fair value: 
 
 31 March 2019                 820,094                  -             -         820,094 
                            ----------  -----------------  ------------  -------------- 
 
 31 March 2018                 516,222                  -             -         516,222 
                            ----------  -----------------  ------------  -------------- 
 
 

There have been no transfers between Level 1 and Level 2 during any of the periods, nor have there been any transfers between Level 2 and Level 3 during any of the periods.

The valuations have been prepared in accordance with the RICS Valuation - Professional Standards (incorporating the International Valuation Standards) by JLL, one of the leading professional firms engaged in the social housing sector.

As noted previously all of the Group's investments are reported as Level 3 in accordance with IFRS 13 where external inputs are "unobservable" and value is the Directors' best estimate, based upon advice from relevant knowledgeable experts.

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) underlying rents for each property in comparison to the market rent, with consideration given as whether a property is over rented; and

v) a full repairing and insuring lease with annual indexation based on CPI or CPI+1% and effectively 25 years outstanding in most cases with a Housing Association itself regulated by the Homes and Communities Agency.

The following descriptions and definitions relating to valuation techniques and key unobservable inputs made in determining fair values are as follows:

Valuation techniques: market value method

The estimated amount for which a property should exchange between a willing buyer and a willing seller in an arm's length transaction after proper marketing wherein the parties had acted knowledgeably, prudently and without compulsion. Such marketing to be structured such that the sale is undertaken in such a manner and in a specific market with a view to maximising the value achieved.

There are two main unobservable inputs that determine the fair value of the Group's investment property:

i) The rate of inflation as measured by CPI; it should be noted that all leases benefit from either CPI or CPI+1 indexation.

ii) The discount rate applied to the rental flows.

Key factors in determining the discount rates applied include the regulated social housing sector and demand for each SSH property owned by the Group, costs of acquisition and refurbishment of each property, the anticipated future underlying cash flows for each property, benchmarking of each underlying rent for each property (passing rent), and the fact that all of the properties within the Group's portfolio have the benefit of full repairing and insuring leases entered into by a Housing Association.

As at the balance sheet date the lease lengths within the Group's portfolio ranged from an effective 22 years to 25 years with a weighted average unexpired lease term of 24.4 years (2018: 24.1). The greater the length 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 and judgements at 3.1 above, the Group's property investment valuation is open to judgements and is inherently subjective by nature. As a result the following sensitivity analysis has been prepared:

Average discount rate and range

The average discount rate used in the Group's property Portfolio Valuation is 5.3% (2018: 6.5%).

The range of discount rates used in the Group's property Portfolio Valuation is from 4.9% to 6.0% (2018: 5.6% to 9.1%).

The table below illustrates the change to the value of investment properties if the discount rate and CPI used for the portfolio valuation calculations are changed:

 
                                    -0.5% in    +0.5% in 
                                    discount    discount   +0.25% in   -0.25% in 
                                        rate        rate         CPI         CPI 
                                     GBP'000     GBP'000     GBP'000     GBP'000 
                                  ----------  ----------  ----------  ---------- 
 Increase/(decrease) in the 
  IFRS fair value of investment 
  properties at: 
 31 March 2019                        33,203    (30,788)      25,651    (24,711) 
                                  ----------  ----------  ----------  ---------- 
 
 31 March 2018                        20,634    (19,158)      16,062    (15,412) 
                                  ----------  ----------  ----------  ---------- 
 
 

15.1 Subsidiary resale

 
                                                For the               From 
                                             year ended   18 November 2016 
                                          31 March 2019   to 31 March 2018 
                                                GBP'000            GBP'000 
                                         --------------  ----------------- 
 
 Balance at the beginning of the period               -                  - 
 Acquisition                                     25,470                  - 
 Transfer to investment property               (21,134)                  - 
 Sale proceeds                                  (4,336)                  - 
                                         --------------  ----------------- 
 
                                                      -                  - 
                                         --------------  ----------------- 
 

The table above shows the transactions concerning the purchase and sale of TLC Care Homes Limited. On 7 December 2018, the Group acquired a subsidiary, TLC Care Homes Limited, for GBP25,470,000 consisting of investment property and a care home business with the exclusive intent to sell the subsidiary business. At acquisition, the fair value of the investment property was GBP21,134,000 and the fair value of the assets and liabilities less selling costs of the care home business was GBP4,336,000. The care home business was sold immediately following acquisition for GBP4,336,000.

16. Portfolio Net Asset Value

The objective of the Portfolio Net Asset Value ("Portfolio NAV") measure is to highlight the fair value of the net assets on an ongoing, long-term basis, which aligns with the Group's business strategy as an ongoing REIT with a long-term investment outlook. This Portfolio NAV is made available on a quarterly basis on the Company's website and announced via RNS.

For the period from 14 November 2017 to 21 December 2018 the Company had 302,000,000 C shares in issue. During that period the results, assets and liabilities attributable to the C shares were accounted for in a separate pool to those of the Ordinary shares and thus the Company announced a quarterly Portfolio NAV for both share classes.

Under IFRS accounting rules, the C shares are recognised in the financial statements as a liability valued at amortised cost which represents the value of the assets and liabilities attributable to the C share pool (see note 21). Thus, the net assets of the Company disclosed in the financial statements are equal to the net assets attributable to the Ordinary shareholders.

On 21 December 2018 the C shares were converted to Ordinary shares as detailed in note 21.

In order to arrive at Portfolio Net Asset Value for each share class, adjustments are made to the IFRS Net Asset Value ("IFRS NAV") reported in the consolidated financial statements such that;

i) The C share liability, equivalent to the net assets attributable to the C shareholders is added back to net assets, because under IFRS accounting rules the C shares are recognised as a liability. (Please refer to note 21 for more details).

ii) The hypothetical sale of properties will take place on the basis of a sale of a corporate vehicle rather than a sale of underlying property assets. This assumption reflects the basis upon which the Company's assets have been assembled within specific SPVs.

   iii)         The hypothetical sale will take place in the form of a single portfolio disposal. 
 
                                            31 March 2019   31 March 2018 
                                                  GBP'000         GBP'000 
                                           --------------  -------------- 
 
 Net asset value per the consolidated 
  financial statements                            666,508         369,395 
 Add back C share liability                             -         298,752 
                                           --------------  -------------- 
 
 Value of asset pools                             666,508         668,147 
 
 Effects of the adoption to the assumed, 
  hypothetical sale of properties as 
  a portfolio and on the basis of sale 
  of a corporate vehicle                           74,662          33,124 
                                           --------------  -------------- 
 
 Portfolio Net Asset Value                        741,170         701,271 
                                           --------------  -------------- 
 
 

After reflecting these amendments, the movement in net assets since inception is as follows:

 
                                               For the          From 
                                                         18 November 
                                            year ended          2016 
                                                         to 31 March 
                                         31 March 2019          2018 
                                               GBP'000       GBP'000 
                                        --------------  ------------ 
 
 Opening reserves at start of period           701,271          (31) 
 Net issue (costs)/proceeds                       (56)       638,960 
 Operating profits (excluding capital 
  appreciation)                                 26,096         9,713 
 Capital appreciation                           45,190        63,757 
 Finance income                                    491           413 
 Finance costs                                 (3,975)       (1,041) 
 Dividends paid to Ordinary and C 
  shareholders                                (27,847)      (10,500) 
                                        --------------  ------------ 
 
 Portfolio Net Assets at 31 March 
  2019                                         741,170       701,271 
                                        --------------  ------------ 
 

Value is represented by:

 
                                            31 March 2019   31 March 2018 
                                                  GBP'000         GBP'000 
                                           --------------  -------------- 
 
 Investment property using the portfolio 
  valuation method                                901,580         549,346 
 Net current assets                                44,746         242,747 
 Bank borrowings                                (205,156)        (90,822) 
                                           --------------  -------------- 
 
 Portfolio Net Assets                             741,170         701,271 
                                           --------------  -------------- 
 
 Shares in issue                              622,461,380       See below 
                                           --------------  -------------- 
 
 Portfolio Net Asset Value per share              119.07p       See below 
                                           --------------  -------------- 
 

The table below shows the figures at 31 March 2018 split between the asset pools.

Value is represented by:

 
                                               Ordinary 
                                                  share       C share 
                                                   pool          pool       Total 
                                                GBP'000       GBP'000     GBP'000 
                                           ------------  ------------  ---------- 
 
 Investment property using the portfolio 
  valuation method                              471,525        77,821     549,346 
 Net current assets                              17,802       224,945     242,747 
 Bank borrowings                               (90,822)             -    (90,822) 
                                           ------------  ------------  ---------- 
 
 Portfolio Net Assets                           398,505       302,766     701,271 
                                           ------------  ------------  ---------- 
 
 Shares in issue                            350,000,000   302,000,000 
                                           ------------  ------------ 
 
 Portfolio Net Asset Value per share            113.86p       100.25p 
                                           ------------  ------------ 
 
 

17. Trade and other receivables

 
 
   Amounts falling due in less than one    31 March 2019   31 March 2018 
   year                                          GBP'000         GBP'000 
                                          --------------  -------------- 
 
 Rent receivable                                   2,954             175 
 Less provision for impairment                     (421)               - 
                                          --------------  -------------- 
 
 Net rent receivable                               2,533             175 
 Accrued income                                    2,778           2,398 
 Debtor arising from rent straight line 
  adjustments                                          -             332 
 Prepayments and other receivables                   412             410 
                                          --------------  -------------- 
 
 Total                                             5,723           3,315 
                                          --------------  -------------- 
 
 

Prepayments and other receivables amount above includes prepaid legal and professional fees of GBP343,000 (2018: GBP393,000) that have been incurred in connection with the acquisitions yet to be completed.

 
                                                 31 March 2019   31 March 2018 
                                                       GBP'000         GBP'000 
                                                --------------  -------------- 
 Amounts falling due after more than one 
  year 
 Debtor arising from straight line adjustments             791               - 
 Lease incentives                                        6,033               - 
                                                --------------  -------------- 
 
                                                         6,824               - 
                                                --------------  -------------- 
 
 

The aged analysis of trade receivables that are past due but not impaired was as follows:

 
                                  31 March 2019   31 March 2018 
                                        GBP'000         GBP'000 
                                 --------------  -------------- 
 
 Current                                    991               - 
 < 30 days                                  353             175 
 30-60 days                                 499               - 
 > 60 days                                1,111               - 
                                 --------------  -------------- 
 
                                          2,954             175 
 Less provision for impairment            (421)               - 
                                 --------------  -------------- 
 
 Total                                    2,533             175 
                                 --------------  -------------- 
 

The Directors consider the fair value of receivables equals their carrying amount.

The table above shows the aged analysis of trade receivables included in the table above which are past due. The provision for impairment principally relates to First Priority Housing Association ("First Priority").

Other categories within trade and other receivables do not include impaired assets.

18. Cash and cash equivalents

 
                                           31 March 2019   31 March 2018 
                                                 GBP'000         GBP'000 
                                          --------------  -------------- 
 
 Cash held by solicitors                          17,031          12,262 
 Liquidity funds                                  13,394         210,969 
 Cash held at bank                                16,703          20,094 
                                          --------------  -------------- 
 
 Unrestricted cash and cash equivalents           47,128         243,325 
 Restricted cash                                   7,219           6,283 
                                          --------------  -------------- 
 
 Total                                            54,347         249,608 
                                          --------------  -------------- 
 
 

Liquidity funds refer to money placed in money market funds. These are highly liquid funds with accessibility within 24 hours and subject to insignificant risk of changes in value.

Cash held by lawyers is money held in escrow for expenses expected to be incurred in relation to investment properties pending completion. These funds are available immediately on demand.

Restricted cash represents 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. Currently that amount of cash is held in escrow.

19. Trade and other payables

 
                                            31 March 2019   31 March 2018 
                                                  GBP'000         GBP'000 
                                           --------------  -------------- 
 
 Deferred income                                       14             225 
 Acquisition costs accrued                         10,074           8,366 
 Lease incentives payable                           3,000               - 
 Finance costs                                        798             498 
 Dividends payable                                    717             427 
 Accruals                                             616             660 
 Income tax and corporation tax payable*              105               - 
                                           --------------  -------------- 
 
 Total                                             15,324          10,176 
                                           --------------  -------------- 
 
 

Acquisition costs accrued includes the balance of retention monies (as represented by GBP7,219,000 (2018: 6,283,000), restricted cash as per note 18) and acquisition costs capitalised.

* Represents tax liabilities incurred by subsidiary companies prior to acquisition by the Group.

20. Bank and loan borrowings

Bank borrowings are secured by charges over individual investment properties held by certain asset-holding subsidiaries. The banks also hold charges over the shares of certain subsidiaries and any intermediary holding companies of those subsidiaries. Any associated fees in arranging the bank borrowings unamortised as at the period end are offset against amounts drawn on the facilities as shown in the table below:

 
                                                                       From 
                                                   For the      18 November 
                                                year ended          2016 to 
                                             31 March 2019    31 March 2018 
                                                   GBP'000          GBP'000 
                                          ----------------  --------------- 
 
 Balance at start of period                         92,457                - 
 Bank borrowings drawn                             115,990           92,457 
                                          ----------------  --------------- 
 
 Bank borrowings drawn at end of period            208,447           92,457 
 Balance at start of period                        (1,635)                - 
 Less: loan issue costs incurred                   (2,374)          (1,761) 
 Add: loan issue costs amortised                       718              126 
                                          ----------------  --------------- 
 
 Unamortised costs at end of period                (3,291)          (1,635) 
                                          ----------------  --------------- 
 
 At end of period                                  205,156           90,822 
                                          ----------------  --------------- 
 
 
                                   31 March 2019   31 March 2018 
                                         GBP'000         GBP'000 
                                  --------------  -------------- 
 Maturity of bank borrowings: 
 Repayable within 1 year                       -               - 
 Repayable between 1 to 2 years           55,947               - 
 Repayable between 2 to 5 years          100,000          39,957 
 Repayable after 5 years                  52,500          52,500 
                                  --------------  -------------- 
 
 Total                                   208,447          92,457 
                                  --------------  -------------- 
 
 

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 GBP169,999,000 (2018: GBP163,812,000).

A 3-year Sterling Revolving Facility Agreement dated 15 November 2017 for up to GBP40,000,000 with Lloyds Bank plc. Interest is charged at LIBOR +1.50% margin. During the year a GBP20,000,000 increase of this facility was agreed.

The borrowings include amounts secured on investment property to the value of GBP144,166,000 (2018: GBP97,400,000).

A 3-year Revolving Credit Facility Agreement dated 28 November 2018 for up to GBP100,000,000 with HSBC Bank PLC. Interest charged at LIBOR +1.70% margin.

The borrowings include amounts secured on investment property to the value of GBP208,953,000.

A number of covenants are in place under the three agreements. Under the 10-year facility, historical and projected interest cover must be at least 325% and the loan to value ratio must not exceed 40%. Under the Lloyds Bank plc 3-year revolving credit facility, historical and projected interest cover must be at least 250% and the loan to value ratio must not exceed 55%. Under the HSBC Bank PLC 3-year facility, historical and projected interest cover must be at least 250% and the loan to value ratio must not exceed 60%.

21. C shares

 
                                                                From 
                                                         18 November 
                                              For the           2016 
                                           year ended    to 31 March 
                                        31 March 2019           2018 
                                              GBP'000        GBP'000 
                                     ----------------  ------------- 
 
 At beginning of period                       298,752              - 
 Proceeds from issue of C shares                    -        302,000 
 C share issue costs                                -        (6,040) 
 Dividends paid to C shareholders             (9,966)              - 
 Amortisation of C share liability              6,400          2,792 
 Conversion to Ordinary shares              (295,186)              - 
                                     ----------------  ------------- 
 
 At end of period                                   -        298,752 
                                     ----------------  ------------- 
 
 

On 10 November 2017 the Company announced the issue of 302,000,000 C shares, issued at GBP1 per share. The C shares are convertible preference shares. The shares were listed on the London Stock Exchange and dealing commenced on 14 November 2017.

Holders of C shares are not entitled to receive notice of, attend, speak or vote at general meetings of the Company.

Under IAS 32 Financial Instruments: Presentation, the C shares meet the definition of a financial liability rather than equity and are presented in the financial statements as a liability of the Company carried at amortised cost.

The funds were raised in order to finance a number of property acquisitions and C shares were issued rather than Ordinary shares so that the issue costs associated with the fund raise and the costs associated with the property acquisitions did not dilute the Ordinary share NAV.

In order to calculate the net assets attributable to each share class, the results, assets and liabilities attributable to the C shares are identified in a separate pool to the results, assets and liabilities of the Ordinary shares. A share of fund level expenses for the period is allocated to the C shares based on the net assets of each share class pool.

It should be noted that these financial statements include all results, assets and liabilities of both share class pools, however, as the C shares are classified as a liability, net assets are reduced by the value of the C shares liability which is also equivalent to the net assets of the C share pool.

On 21 December 2018 the C shares were converted to Ordinary shares in the ratio 0.902190 new Ordinary shares for every 1 C share held. The conversion ratio was calculated with reference to the respective portfolio net asset values of the C shares and Ordinary shares at close of business on the calculation date.

Accordingly, 272,461,380 Ordinary shares were issued.

22. Share capital

Share capital represents the nominal value of consideration received by the Company for the issue of Ordinary shares.

 
                                                                From 
                                                         18 November 
                                              For the           2016 
                                           year ended    to 31 March 
                                        31 March 2019           2018 
                                              GBP'000        GBP'000 
                                     ----------------  ------------- 
 Share capital 
 At beginning of period                         3,500              - 
 Shares issued                                  2,725          3,500 
                                     ----------------  ------------- 
 
 At end of period                               6,225          3,500 
                                     ----------------  ------------- 
 
 Number of shares issued and fully 
  paid 
  Ordinary shares of GBP0.01 each 
 At beginning of period                   350,000,000            100 
 Shares issued                            272,461,380    349,999,900 
                                     ----------------  ------------- 
 
 At end of period                         622,461,380    350,000,000 
                                     ----------------  ------------- 
 
 

The Company's Ordinary shares were admitted to the premium listing segment of the Official List of the FCA and to trading on the London Stock Exchange on 18 November 2016, raising GBP350 million. As a result of the IPO, on 18 November 2016, 349,999,900 shares at GBP0.01 per share were issued, fully paid.

On 21 December 2018 the Company issued 272,461,380 Ordinary shares in respect of the conversion of 302,000,000 C shares. The fair value of assets representing the C share pool at that date was GBP295,186,000.

23. 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                From 
                                               year ended    18 November 2016 
                                            31 March 2019    to 31 March 2018 
                                                  GBP'000             GBP'000 
                                         ----------------  ------------------ 
 
 At beginning of period                                 -                   - 
 Premium arising on shares issued                 292,461             346,500 
 Share issue costs                                   (56)             (7,000) 
 Transfer to capital reduction reserve                  -           (339,500) 
                                         ----------------  ------------------ 
 
 At end of period                                 292,405                   - 
                                         ----------------  ------------------ 
 
 

At a Board meeting on 15 November 2016, a resolution was passed authorising the cancellation of the share premium account and it was conditional upon the three following terms:

-- admission of the Ordinary shares to listing on the UK Listing Authority's Official List;

-- trading on London Stock Exchange's Main Market for listed securities; and

-- approval of the Court for the reduction of share capital.

In order to cancel the share premium account the Company needed to obtain a court order, which was received on 1 February 2017. An SH19 form was sent to Companies House with a copy of the court order on 1 February 2017 and the certificate of cancellation was issued by Companies House on 13 February 2017.

Upon cancellation of the share premium account, the funds were transferred to the capital reduction reserve and these funds are classified as amounts available for distribution.

24. Capital reduction reserve

The capital reduction reserve is a distributable reserve to which the value of the cancelled share premium has been transferred. Dividends can be paid from this reserve.

 
 
                                                    For the                From 
                                                 year ended    18 November 2016 
                                              31 March 2019    to 31 March 2018 
                                                    GBP'000             GBP'000 
                                           ----------------  ------------------ 
 
 At beginning of period                             331,625                   - 
 Transfer from the share premium reserve                  -             339,500 
 Dividends paid in the period (as per 
  note 14)                                                -             (7,875) 
                                           ----------------  ------------------ 
 
 At end of period                                   331,625             331,625 
                                           ----------------  ------------------ 
 
 

25. Retained earnings

This reserve represents the profits and losses of the Group.

 
                                                               From 
                                                        18 November 
                                             For the           2016 
                                          year ended    to 31 March 
                                       31 March 2019           2018 
                                             GBP'000        GBP'000 
                                    ----------------  ------------- 
 
 At beginning of period                       34,270           (31) 
 Profit for the period                        19,864         36,926 
 Dividends paid in the period (as 
  per note 14)                              (17,881)        (2,625) 
                                    ----------------  ------------- 
 
 At end of period                             36,253         34,270 
                                    ----------------  ------------- 
 
 

26. 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 period.

Diluted NAV per share is calculated by adjusting net assets for the conversion of the C shares.

Net asset values have been calculated as follows:

 
                                             31 March 2019   31 March 2018 
                                            --------------  -------------- 
 
 Net assets (GBP'000)                              666,508         369,395 
 
 Number of Ordinary shares in issue 
  at end of period                             622,461,380     350,000,000 
 
 NAV - basic                                       107.08p         105.54p 
                                            --------------  -------------- 
 
 Net assets (GBP'000)                              666,508         369,395 
 Adjust for the effect of the C shares 
  converting (GBP'000)                                   -         298,752 
                                            --------------  -------------- 
 
 Adjusted net assets (GBP'000)                     666,508         668,147 
                                            --------------  -------------- 
 
 
 Number of Ordinary shares in issue 
  at end of period                             622,461,380     350,000,000 
 Number of Ordinary shares that would 
  be issued on the conversion of C shares                -     283,065,815 
                                            --------------  -------------- 
 
 Total                                         622,461,380     633,065,815 
                                            --------------  -------------- 
 
 NAV - diluted                                     107.08p         105.54p 
                                            --------------  -------------- 
 
 

27. Reconciliation of liabilities to cash flows from financing

 
                                                                        For the 
                                           C share         Bank      year ended 
                                         liability   borrowings   31 March 2019 
                                           GBP'000      GBP'000         GBP'000 
                                        ----------  -----------  -------------- 
 
 Balance at the beginning of 
  the period                               298,752       90,822         389,574 
 
 Cash flows from financing activities 
 Loan draw down                                  -      115,990         115,990 
 Loan arrangement costs paid                     -      (2,374)         (2,374) 
 Dividends paid to C shareholders 
  in the period                            (9,966)            -         (9,966) 
 
 Non cash movements 
 Amortisation of loan arrangement 
  costs                                          -          718             718 
 Amortisation of C shares liability          6,400            -           6,400 
 C share conversion                      (295,186)            -       (295,186) 
                                        ----------  -----------  -------------- 
 
                                                 -      205,156         205,156 
                                        ----------  -----------  -------------- 
 
 

Summary of non-cash transactions

On 21 December 2018 the C shares were converted to Ordinary shares in the ratio 0.902190 new Ordinary shares for every 1 C share held. The conversion ratio was calculated with reference to the respective portfolio net asset values of the C shares and Ordinary shares at close of business on the calculation date. The fair value of assets represented by the C share pool, being the deemed consideration, was GBP295,186,000.

28. Operating leases

The Group is party to a number of operating leases on its investment properties with Registered Providers. The future minimum lease payments under non-cancellable operating leases receivable by the Group are as follows:

 
                       31 March 2019   31 March 2018 
                             GBP'000         GBP'000 
                      --------------  -------------- 
 Amounts receivable 
 < 1 year                     45,685          28,203 
 1-2 years                    45,720          28,801 
 2-5 years                   137,356          86,399 
 > 5 years                   882,407         554,050 
                      --------------  -------------- 
 
 At end of period          1,111,168         697,453 
                      --------------  -------------- 
 
 

Leases are direct-let agreements with Registered Providers for a term between 15 to 25 years with indexed linked annual rent reviews. All current leases are full repairing and insuring ("FRI") 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 Registered Provider:

 
                                            31 March 2019   31 March 2018 
                                                        %               % 
                                           --------------  -------------- 
 
 Westmoreland Supported Housing Limited             19.66           35.02 
 Falcon Housing Association CIC                     20.89           14.44 
 First Priority Housing Association*                    -           10.66 
 Bespoke Supportive Tenancies                       11.37               - 
 Auckland Home Solutions                            11.26               - 
 Inclusion Housing CIC                               8.34            8.70 
 Encircle Housing Limited                            6.33               - 
 Trinity Housing Association Limited                 5.74            9.04 
 PAS Housing Association                             4.09            6.04 
 Chrysalis Supported Association Limited             3.41            4.43 
 New Walk Property Management CIC                    2.95            4.59 
 Harbour Light Assisted Living CIC                   2.42            3.76 
 My Space Housing Solutions                          1.24               - 
 IKE Supported Housing Limited                       1.20            1.89 
 Hilldale Housing Association Limited                1.03            1.43 
 Blue Square Limited                                 0.07               - 
                                           --------------  -------------- 
 
 Total                                             100.00          100.00 
                                           --------------  -------------- 
 
 

* Leases transferred to Falcon Housing Association CIC in the year.

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. Controlling parties

As at 31 March 2019 there is no ultimate controlling party.

30. Related party disclosures

The Directors are remunerated for their services at such rate as the Directors shall from time to time determine. The aggregate remuneration and benefits in kind of the Directors of the Company (in each case, solely in their capacity as such) in respect of the period ended 31 March 2019 payable out of the assets of the Company is not expected to exceed GBP200,000. At IPO, the Chairman was entitled to a Director's fee of GBP35,000 per annum, and the other Directors of the Board to a fee of GBP30,000 per annum (with the exception of the chairman of the Audit and Management Engagement Committee who was entitled to an additional fee of GBP2,500 per annum).

At the Board meeting on 26 July 2017, a resolution was passed authorising an increase to the fees of the Chairman to GBP50,000 per annum, the Chairman of the Audit and Management Engagement Committee and the other Directors to GBP36,000 per annum and GBP32,000 per annum respectively effective from 1 August 2017.

Fees of GBP150,000 (period 31 March 2018: GBP190,000) were incurred and paid to the Directors.

As at 31 March 2019, the Directors held the following number of shares:

 
                                                 31 March 2019                  31 March 2018 
 Director                                      Ordinary shares   Ordinary shares   C shares 
                                              ----------------  ----------------  --------- 
 
 Michael Wrobel       Chairman                         100,598            30,000     45,000 
 Peter Baxter         Director                          47,065            20,000     30,000 
                      Audit and Management 
                       Engagement Committee 
 Caroline Gulliver     Chair                            58,382            25,000     37,500 
 Alastair Moss        Director                          11,766             5,000      7,500 
                                              ----------------  ----------------  --------- 
 

The Company and CHA (collectively the "Members") entered into a limited liability partnership agreement with Civitas Social Housing UK LLP ("LLP") on 1 November 2016 to govern the mutual rights and duties of the LLP and the Members of the LLP. Under the terms of the Limited Liability Partnership Agreement, the Investment Adviser was entitled to an amount of GBP980,000 as Priority Profit Share from the date of the IPO to 31 March 2017, which is included in the Investment Advisory fees of GBP5,773,000 mentioned in note 8. There was no consideration paid or due from the Members of the LLP. The limited liability partnership agreement and the original Investment Advisory Agreement were terminated on 1 April 2017 and were replaced by the current Investment Management Agreement.

Remuneration

The Investment Manager 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 Manager as a whole and not linked to any one AIF in particular. The AIFM and its staff receive no remuneration through profit share, carried interest, co-investment or other schemes related to the Company's performance.

31. Transactions with the Investment Adviser

On 1 November 2016 Civitas Housing Advisors Limited was appointed as the Investment Adviser of the Company.

Fees of GBP6,457,000 (period to 31 March 2018: GBP5,773,000) were incurred and paid to CHA.

As at 31 March 2019, no amounts (31 March 2018: GBPnil) were due to/from CHA.

At 31 March 2019, CHA held 50,000 Ordinary shares in the Company.

32. Consolidated entities

The Company has provided a guarantee under s479C of the Companies Act 2006 in respect of the financial year ended 31 March 2019 for a number of its subsidiary companies (as indicated in the table on the following pages). The guarantee is over all outstanding liabilities to which the subsidiary companies are subject at 31 March 2019 until they are satisfied in full.

The Group consists of a parent company, Civitas Social Housing PLC, incorporated in England and Wales and a number of subsidiaries held directly by Civitas Social Housing PLC, which operate and are incorporated in the UK and 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.

 
 
                                             Registered     Principal       Country of   Ownership 
 Name                                            number     activity     incorporation           % 
------------------------------------  ----  -----------  ------------  ---------------  ---------- 
 Civitas Social Housing Finance                           Finance            England & 
  Company 1 Limited                    ++      10997707    company               Wales     100.00% 
 Civitas Social Housing Jersey                            Holding 
  1 Limited                                      124129    company              Jersey     100.00% 
                                                          Property           England & 
  Civitas SPV1 Limited                 ++      10518729    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV2 Limited                 ++      10114251    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV11 Limited                ++      10546749    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV15 Limited                ++      09777380    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV25 Limited                ++      10791473    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV27 Limited                ++      10883112    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV33 Limited                ++      10546407    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV35 Limited                ++      10588530    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV38 Limited                ++      10738318    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV39 Limited                ++      10547333    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV40 Limited                ++      10738510    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV41 Limited                ++      10738542    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV50 Limited                ++      10775419    investment            Wales     100.00% 
 Civitas Social Housing Finance                           Finance            England & 
  Company 2 Limited                    ++      10997698    company               Wales     100.00% 
 Civitas Social Housing Jersey                            Holding 
  2 Limited                                      124876    company              Jersey     100.00% 
                                                          Property           England & 
  Civitas SPV3 Limited                 ++      10156529    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV4 Limited                 ++      10433744    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV5 Limited                 ++      10479104    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV6 Limited                 ++      10674493    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV9 Limited                 ++      10536388    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV10 Limited                ++      10535243    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV12 Limited                ++      10546753    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV17 Limited                ++      10479036    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV18 Limited                ++      10546651    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV19 Limited                ++      10548932    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV20 Limited                ++      10588735    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV22 Limited                ++      10743958    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV24 Limited                ++      10751512    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV26 Limited                ++      10864336    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV29 Limited                ++      10911565    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV30 Limited                ++      10956025    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV31 Limited                ++      10974889    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV32 Limited                ++      11007173    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV34 Limited                ++      10738381    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV36 Limited                ++      10588792    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV42 Limited                ++      10738556    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV43 Limited                ++      10534877    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV45 Limited                ++      10871854    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV46 Limited                ++      10871910    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV47 Limited                ++      10873270    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV48 Limited                ++      10873295    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV51 Limited                ++      10826693    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV52 Limited                ++      10827006    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV63 Limited                ++      10937805    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV64 Limited                ++      10938411    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV70 Limited                ++      10770201    investment            Wales     100.00% 
  Civitas SPV71 Limited (previously                       Property           England & 
   FPI CO 151 Ltd)                     ++      10888639    investment            Wales     100.00% 
  Civitas SPV72 Limited (previously                       Property           England & 
   FPI CO 171 Ltd)                     ++      10938022    investment            Wales     100.00% 
  Civitas SPV74 Limited (previously                       Property           England & 
   FPI CO 192 Ltd)                     ++      11001855    investment            Wales     100.00% 
  Civitas SPV75 Limited (previously                       Property           England & 
   FPI CO 193 Ltd)                     ++      11001834    investment            Wales     100.00% 
  Civitas SPV80 Limited (previously                       Property           England & 
   FPI CO 195 Ltd)                     ++      11001998    investment            Wales     100.00% 
 Civitas Social Housing Finance                           Finance            England & 
  Company 3 Limited                    ++      10997714    Company               Wales     100.00% 
                                                          Property           England & 
  Civitas SPV8 Limited                 ++      10536157    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV28 Limited                ++      10895228    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV53 Limited                ++      11021625    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV55 Limited                ++      11056455    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV57 Limited                ++      11091444    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV60 Limited                ++      11111908    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV61 Limited                ++      10937662    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV66 Limited                ++      10937898    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV77 Limited                ++      11166491    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV78 Limited                ++      11170099    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV79 Limited                ++      11236544    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV81 Limited                ++      11192811    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV82 Limited                ++      11380796    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV83 Limited                ++      11371128    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV85 Limited                ++      11300749    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV95 Limited                ++      11208184    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV97 Limited                ++      11463890    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV103 Limited               ++      11500596    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV105 Limited               ++      11532177    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV106 Limited               ++      11532179    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV107 Limited               ++      11532182    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV116 Limited               ++      11504399    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV117 Limited               ++      11504445    investment            Wales     100.00% 
 Civitas Social Housing Jersey                            Holding 
  3 Ltd                                          124877    company              Jersey     100.00% 
                                                          Property           England & 
  Civitas SPV7 Limited                 ++      10536368    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV13 Limited                ++      09517692    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV14 Limited                ++      10479041    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV16 Limited                ++      09917557    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV21 Limited                ++      10631541    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV23 Limited                ++      10746881    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV37 Limited                ++      10738450    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV44 Limited                ++      10588783    investment            Wales     100.00% 
                                                          Property           England & 
  Civitas SPV49 Limited                ++      11031349    investment            Wales     100.00% 
                                                          Property           England & 
 Civitas SPV54 Limited                 ++      11039750    investment            Wales     100.00% 
                                                          Property           England & 
 Civitas SPV56 Limited                 ++      11056465    investment            Wales     100.00% 
                                                          Property           England & 
 Civitas SPV59 Limited                 ++      11111912    investment            Wales     100.00% 
                                                          Property           England & 
 Civitas SPV62 Limited                 ++      10937528    investment            Wales     100.00% 
                                                          Property           England & 
 Civitas SPV65 Limited                 ++      10938467    investment            Wales     100.00% 
                                                          Property           England & 
 Civitas SPV67 Limited                 ++      10937929    investment            Wales     100.00% 
                                                          Property           England & 
 Civitas SPV68 Limited                 ++      10938269    investment            Wales     100.00% 
                                                          Property           England & 
 Civitas SPV69 Limited                 ++      11142372    investment            Wales     100.00% 
 Civitas SPV73 Limited (previously                        Property           England & 
  FPI CO 177 Ltd)                      ++      10939075    investment            Wales     100.00% 
                                                          Property           England & 
 Civitas SPV84 Limited                 ++      11381455    investment            Wales     100.00% 
                                                          Property           England & 
 Civitas SPV86 Limited                 ++      11418432    investment            Wales     100.00% 
 Civitas SPV87 Limited (previously                        Property           England & 
  FPI CO 157 Ltd)                      ++      10888903    investment            Wales     100.00% 
 Civitas SPV88 Limited (previously                        Property           England & 
  FPI CO 176 Ltd)                      ++      10939044    investment            Wales     100.00% 
 Civitas SPV90 Limited (previously                        Property           England & 
  FPI CO 178 Ltd)                      ++      10939131    investment            Wales     100.00% 
 Civitas SPV91 Limited (previously                        Property           England & 
  FPI CO 184 Ltd)                      ++      10941377    investment            Wales     100.00% 
                                                          Property           England & 
 Civitas SPV92 Limited                 ++      11449913    investment            Wales     100.00% 
                                                          Property           England & 
 Civitas SPV93 Limited                 ++      11043111    investment            Wales     100.00% 
                                                          Property           England & 
 Civitas SPV94 Limited                 ++      11208105    investment            Wales     100.00% 
                                                          Property           England & 
 Civitas SPV96 Limited                 ++      11270786    investment            Wales     100.00% 
                                                          Holding            England & 
 Civitas SPV98 Limited                 ++      11478695    company               Wales     100.00% 
                                                          Property 
  Snapco Limited                                008603V    investment      Isle of Man     100.00% 
                                                          Property 
  Snapco 2 Limited                              009143V    investment      Isle of Man     100.00% 
                                                          Property 
  Snapco 3 Limited                              009144V    investment      Isle of Man     100.00% 
                                                          Property 
  Snapco 4 Limited                              011660V    investment      Isle of Man     100.00% 
                                                          Property 
  Snapco 5 Limited                              012111V    investment      Isle of Man     100.00% 
                                                          Holding            England & 
 Civitas SPV99 Limited                 ++      11478707    company               Wales     100.00% 
                                                          Property 
  Snapco 6 Limited                              012112V    investment      Isle of Man     100.00% 
                                                          Property           England & 
 Civitas SPV100 Limited                ++      11069703    investment            Wales     100.00% 
                                                          Property           England & 
 Civitas SPV101 Limited                ++      09978282    investment            Wales     100.00% 
                                                          Property           England & 
 Civitas SPV102 Limited                ++      11521555    investment            Wales     100.00% 
                                                          Property           England & 
 Civitas SPV104 Limited                ++      11532174    investment            Wales     100.00% 
                                                                             England & 
 Civitas SPV108 Limited                ++      11532135   Dormant                Wales     100.00% 
                                                          Property           England & 
 Civitas SPV109 Limited                ++      11532120    investment            Wales     100.00% 
                                                          Property           England & 
 Civitas SPV112 Limited                ++      11579750    investment            Wales     100.00% 
                                                          Property           England & 
 Civitas SPV113 Limited                ++      11580068    investment            Wales     100.00% 
                                                          Property           England & 
 Civitas SPV114 Limited                ++      11579733    investment            Wales     100.00% 
                                                          Property           England & 
 Civitas SPV115 Limited                ++      11522178    investment            Wales     100.00% 
                                                          Property           England & 
 Civitas SPV118 Limited                ++      11411498    investment            Wales     100.00% 
                                                                             England & 
 Civitas SPV119 Limited                        11751515   Dormant                Wales     100.00% 
                                                                             England & 
 Civitas SPV120 Limited                        11801922   Dormant                Wales     100.00% 
                                                          Property           England & 
 Civitas SPV121 Limited                ++      11099917    investment            Wales     100.00% 
                                                          Property           England & 
 Civitas SPV122 Limited                ++      11482646    investment            Wales     100.00% 
                                                          Property           England & 
 Civitas SPV123 Limited                ++      08253452    investment            Wales     100.00% 
                                                          Property           England & 
 Civitas SPV126 Limited                ++      11459821    investment            Wales     100.00% 
                                                          Property           England & 
 Civitas SPV127 Limited                        10941401    investment            Wales     100.00% 
                                                          Property           England & 
 Civitas SPV129 Limited                        11664994    investment            Wales     100.00% 
                                                          Property           England & 
 Civitas SPV130 Limited                        11705074    investment            Wales     100.00% 
                                                          Property           England & 
 Civitas SPV131 Limited                        11675132    investment            Wales     100.00% 
                                                          Property           England & 
 Civitas SPV132 Limited                ++      11473735    investment            Wales     100.00% 
                                                          Property           England & 
 Civitas SPV135 Limited                ++      11579880    investment            Wales     100.00% 
                                                          Property           England & 
 Civitas SPV143 Limited                ++      11546808    investment            Wales     100.00% 
                                                          Property           England & 
 Civitas SPV144 Limited                ++      11546696    investment            Wales     100.00% 
                                                          Holding            England & 
 Civitas SPV145 Limited                        11842306    company               Wales     100.00% 
                                                          Property           England & 
  Fieldbay Limited                     ++      05219012    investment            Wales     100.00% 
                                                                             England & 
 Civitas SPV146 Limited                        11861500   Dormant                Wales     100.00% 
                                                                             England & 
 Civitas SPV147 Limited                        11861974   Dormant                Wales     100.00% 
                                                          Property           England & 
 Civitas SPV148 Limited                        11632633    investment            Wales     100.00% 
                                                          Property           England & 
 Civitas SPV149 Limited                ++      11462691    investment            Wales     100.00% 
                                                          Property           England & 
 Civitas SPV150 Limited                ++      11462555    investment            Wales     100.00% 
                                                          Property           England & 
 Civitas SPV151 Limited                        11913037    investment            Wales     100.00% 
                                                          Property           England & 
 FPI CO 324 Ltd                                11633019    investment            Wales     100.00% 
 Civitas Social Housing Finance                                              England & 
  Company 4 Limited                            11906660   Dormant                Wales     100.00% 
 
 

++ These entities are exempt from the requirements of the Companies Act 2006 relating to the audit of individual accounts by virtue of Section 479A of that Act. These are all entities that have a year end prior to 31 March 2020.

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, United Kingdom, EX4 4EP

-- Jersey entities: 12 Castle Street, St Helier, Jersey, JE2 3RT

-- Isle of Man entities: Knox House, 16-18 Finch Road, Douglas IM1 2PT

33. Financial risk management

33.1. Financial instruments

The Group's principal financial assets and liabilities are those that arise directly from its operations: trade and other receivables, trade and other payables and cash and cash equivalents. The Group's other principal financial liabilities are bank borrowings, the main purpose of which is to finance the acquisition and development of the Group's investment property portfolio. The C share financial liability is also considered to be a financial instrument, the main purposes of which is to finance new acquisitions.

Financial assets are classified as loans and receivables and all financial liabilities are measured at amortised cost. All financial instruments were designated in their current categories upon initial recognition.

Set out below is a comparison by class of the carrying amounts and fair value of the Group's financial instruments that are carried in the financial statements:

 
                                   Book value                    Book value   Fair value 
                                     31 March       Fair value     31 March     31 March 
                                         2019    31 March 2019         2018         2018 
                                      GBP'000          GBP'000      GBP'000      GBP'000 
                                  -----------  ---------------  -----------  ----------- 
 Financial assets 
 Trade and other receivables(1)         5,353            5,353        2,573        2,573 
 Cash and cash equivalents             54,347           54,347      249,608      249,608 
                                  -----------  ---------------  -----------  ----------- 
 
 Financial liabilities 
 Trade and other payables(2)           15,205           15,205        9,951        9,951 
 Bank borrowings                      205,156          205,806       90,822       92,350 
 C share liability                          -                -      298,752      294,148 
                                  -----------  ---------------  -----------  ----------- 
 

(1) Excludes prepayments and debtors arising on rent smoothing.

(2) Excludes deferred income and tax liabilities.

The Group has three bank loans. One is a 10-year fixed rate loan of GBP52.5 million, provided by Scottish Widows Limited and there is also a 3-year revolving credit facility variable rate loan of GBP60 million provided by Lloyds Bank plc and a 3-year revolving credit facility variable rate loan of GBP100 million provided by HSBC Bank PLC. The fair value of the fixed rate loan is determined by comparing the discounted future cash flows.

The C share liability fair value comparative is based on the quoted bid-market price at 31 March 2018 multiplied by the number of C shares in issue.

Financial risk management

The Group is exposed to market risk, interest rate risk, credit risk and liquidity risk in the current and future periods. The Board of Directors oversees the management of these risks. The Board of Directors reviews and agrees policies for managing each of these risks that are summarised below.

33.2. Market risk

The Group's activities will expose it primarily to the market risks associated with changes in property values and changes in interest rates.

Risk relating to investment in property

Investment in property is subject to varying degrees of risk. Some factors that affect the value of the investment in property include:

-- changes in the general economic climate;

-- competition for available properties;

-- obsolescence; and

-- Government regulations, including planning, environmental and tax laws.

Variations in the above factors can affect the valuation of assets held by the Group and as a result can influence the financial performance of the Group.

Risk relating to liquidity funds classified as cash and cash equivalents

The Group holds positions in two AAA rated liquidity funds that invest in a diversified range of government and non-government money market securities, which are subject to varying degrees of risk. Some factors that affect the value of the liquidity funds include:

-- the performance of the underlying government and non-government money market securities; and

-- interest rates.

Variations in the above factors can affect the valuation of assets held by the Group and as a result can influence the financial performance of the Group.

33.3. Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

The Group's interest rate risk principally arises from long-term borrowings. To manage this, the Group has entered into a fixed rate bank loan and two variable rate bank loans. At 31 March 2019, 25% (2018: 57%) of the Group's borrowings are at 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 2019, if interest rates had been 200 basis points higher/(lower) with all other variables held constant the impact on profits after taxation for the period would be as follows:

 
                                          31 March 2019   31 March 2018 
                                                GBP'000         GBP'000 
                                         --------------  -------------- 
 (Decrease)/increase in profits due to 
  interest rates 
 200 basis points higher                        (2,032)         (3,429) 
 200 basis points lower                           1,271               7 
                                         --------------  -------------- 
 
 

The average effective interest rates of financial instruments at 31 March 2019 were as follows:

 
                                    31 March 2019   31 March 2018 
                                                %               % 
                                   --------------  -------------- 
 
 Bank borrowings - fixed rate             2.99360         2.99360 
 Bank borrowings - variable rate          2.50180         2.02125 
 Cash and cash equivalents                0.16795         0.38205 
                                   --------------  -------------- 
 
 

33.4. Credit risk

Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Group is exposed to credit risks from both its leasing activities and financing activities, including deposits with banks and financial institutions.

Debtors and accrued income represent rent due or accrued, these amounts due are diversified between a number of different Housing Associations of differing financial strength, see note 28 for details of the different counterparties. None of the Housing Associations 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.

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.

33.5. Liquidity risk

The Group manages its liquidity and funding risks by considering cash flow forecasts and ensuring sufficient cash balances are held within the Group to meet future needs. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of financing through appropriate and adequate credit lines, and the ability of customers to settle obligations within normal terms of credit. The Group ensures, through forecasting of capital requirements, that adequate cash is available.

The following table details the Group's maturity profile in respect of its financial instrument liabilities based on contractual undiscounted payments:

 
                      On demand    <1 year   1-5 years   > 5 years      Total 
                        GBP'000    GBP'000     GBP'000     GBP'000    GBP'000 
                     ----------  ---------  ----------  ----------  --------- 
 31 March 2019 
 Trade and other 
  payables               15,205          -           -           -     15,205 
 Bank borrowings              -      5,473     168,877      56,573    230,923 
 
                         15,205      5,473     168,877      56,573    246,128 
                     ----------  ---------  ----------  ----------  --------- 
 
 31 March 2018 
 Trade and other 
  payables                9,951          -           -           -      9,951 
 Bank borrowings              -      2,371      49,483      58,145    109,999 
 C share liability            -          -           -           -          - 
                     ----------  ---------  ----------  ----------  --------- 
 
                          9,951      2,371      49,483      58,145    119,950 
                     ----------  ---------  ----------  ----------  --------- 
 
 

The profile above assumes that the revolving credit facility loan will be rolled over and held to term. Included within the contracted payments is GBP22,476,000 (31 March 2018: GBP17,971,000) of loan interest payable up to the point of maturity.

The C share liability and any interest accruing to the C shareholders at 31 March 2018 was settled by the issue of Ordinary shares.

34. Capital commitments

At 31 March 2019, the Company had funds committed totalling GBP12,000,000 (2018: GBP4,902,000) concerning two properties (currently under development) for which the Company has entered into a conditional sale and purchase agreement conditional on the completion of development.

35. Post balance sheet events

Acquisitions

On 23 April 2019 two properties in Lancashire were acquired for a GBP1.7 million and GBP0.34 million respectively.

Dividends

On 8 May 2019 the Board declared a quarterly dividend in respect of the Ordinary shares for the three months to 31 March 2019 of 1.325 pence per Ordinary share. The dividend was paid on 7 June 2019 to holders of Ordinary shares on the register as at 17 May 2019. The dividend was paid as a REIT property income distribution ("PID").

Other announcements

On 29 April 2019, the Company announced a change to the calculation of Investment Advisory fees paid so that they are based on IFRS NAV instead of Portfolio NAV, to take effect from 26 April 2019.

The Board also agreed with the Investment Adviser to extend the initial notice period term within the Investment Management Agreement from 30 November 2021 to 30 May 2024.

Company Statement of Financial Position

As at 31 March 2019

 
                                          31 March 2019   31 March 2018 
                                   Note         GBP'000         GBP'000 
                                         --------------  -------------- 
 Assets 
 Non-current assets 
 Investment in subsidiaries        7            767,917         479,134 
                                         --------------  -------------- 
 
 
 Current assets 
 Trade and other receivables       8                371           2,380 
 Cash and cash equivalents         9             45,905         241,924 
                                         --------------  -------------- 
 
                                                 46,276         244,304 
                                         --------------  -------------- 
 
 Total assets                                   814,193         723,438 
                                         --------------  -------------- 
 
 Liabilities 
 Current liabilities 
 Trade and other payables          10         (131,277)         (4,082) 
 C shares financial liability                         -       (298,752) 
                                         --------------  -------------- 
 
                                              (131,277)       (302,834) 
                                         --------------  -------------- 
 
 Total liabilities                            (131,277)       (302,834) 
                                         --------------  -------------- 
 
 Total net assets                               682,916         420,604 
                                         --------------  -------------- 
 
 Equity 
 Share capital                     11             6,225           3,500 
 Share premium reserve                          292,405               - 
 Capital reduction reserve                      331,625         331,625 
 Retained earnings                 12            52,661          85,479 
 
 Total equity                                   682,916         420,604 
                                         --------------  -------------- 
 
 

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. Losses for the year were GBP14,937,000 (period 31 March 2018: profit GBP88,135,000).

The Company financial statements were approved by the Board of Directors of Civitas Social Housing PLC and authorised for issue on 21 June 2019 and signed on its behalf by:

Michael Wrobel

Chairman and Independent Non-Executive Director

21 June 2019

Company No: 10402528

The notes below are an integral part of these financial statements.

Company Statement of Changes in Equity

For the year ended 31 March 2019

 
                                                                         Retained 
                                                 Share     Capital      earnings/ 
                                     Share     premium   reduction   (accumulated      Total 
                                   capital     reserve     reserve        losses)     equity 
                                   GBP'000     GBP'000     GBP'000        GBP'000    GBP'000 
                                  --------  ----------  ----------  -------------  --------- 
 Balance at 
  18 November 2016                       -           -           -           (31)       (31) 
 Profit and total comprehensive 
  income for the period                  -           -           -         88,135     88,135 
 Issue of Ordinary 
  shares 
 Issue of share capital              3,500     346,500           -              -    350,000 
 Share issue costs                       -     (7,000)           -              -    (7,000) 
 Cancellation of share 
  premium reserve                        -   (339,500)     339,500              -          - 
 Dividends paid 
 Total interim dividends 
  for the period ended 
  31 March 2018 (3.00p)                  -           -     (7,875)        (2,625)   (10,500) 
                                  --------  ----------  ----------  -------------  --------- 
 
 Balance at 31 March 
  2018                               3,500           -     331,625         85,479    420,604 
                                  --------  ----------  ----------  -------------  --------- 
 
 Loss and total comprehensive 
  expense for the period                 -           -           -       (14,937)   (14,937) 
 Issue of Ordinary 
  shares 
 Issue of share capital              2,725     292,461           -              -    295,186 
 Share issue costs                       -        (56)           -              -       (56) 
 Dividends paid 
 Total interim dividends 
  for the period ended 
  31 March 2019 (5.00p)                  -           -           -       (17,881)   (17,881) 
                                  --------  ----------  ----------  -------------  --------- 
 
 Balance at 31 March 
  2019                               6,225     292,405     331,625         52,661    682,916 
                                  --------  ----------  ----------  -------------  --------- 
 
 

Distributable reserves total GBP384,286,000 (31 March 2018: GBP417,104,000)

The notes below are an integral part of these financial statements.

Notes to the Company Financial Statements

For the year ended 31 March 2019

   1.   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 is to act as the ultimate parent company of Civitas Social Housing PLC and its subsidiaries (the "Group"), whose principal activity is to provide shareholders with an attractive level of income, together with the potential for capital growth from investing in a portfolio of social homes.

   2.   Basis of preparation 

The financial statements have been prepared on a historical cost basis and in accordance with Financial Reporting Standard 100 Application of Financial Reporting Requirements ("FRS 100"), Financial Reporting Standard 101 Reduced Disclosure Framework ("FRS 101") and the Companies Act 2006 as applicable to companies using FRS 101.

In preparing these financial statements, the Company applies the recognition, measurement and disclosure requirements of International Financial Reporting Standards as adopted by the EU ("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 EU endorsed IFRS;

-- certain disclosures regarding the Company's capital;

-- 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 comparative information disclosed in the financial statements relates to the period from 18 November 2016 to 31 March 2018. The period covered by the comparative information varies in length and the level of activities and therefore is not entirely comparable to the current period.

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.

Going concern

The financial statements have been prepared on a going concern basis.

Significant judgements and sources of estimation uncertainty

The key source of estimation uncertainty relates to the Company's investments in subsidiaries and joint ventures. In estimating the requirement for impairment of these investments, management make assumptions and judgements on the value of these investments using inherently subjective underlying asset valuations, supported by independent valuers.

   3.   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.

Loans to subsidiaries

Loans made to subsidiary companies are initially recognised at fair value and subsequently are measured at amortised cost.

   4.   Dividends 

Details of dividends paid and proposed are included in note 14 of the Group's consolidated financial statements.

   5.   Employee information 

Details of Directors' remuneration are included in note 6 of the consolidated financial statements. The Company had no employees during the period (31 March 2018 period: nil) other than the Directors.

   6.   Audit fees 

Audit fees in relation to the Company's financial statements total GBP180,000 (31 March 2018 period: GBP273,000)

   7.   Investments in subsidiaries 
 
 
                                                                     For the                From 
                                                                  year ended         18 November 
                                   Shares in         Loans to       31 March    2016 to 31 March 
                                subsidiaries     subsidiaries           2019                2018 
                                     GBP'000          GBP'000        GBP'000             GBP'000 
                             ---------------  ---------------  -------------  ------------------ 
 
 At the beginning of 
  the period                         446,954           32,180        479,134                   - 
 Increase in investments              31,576          257,207        288,783             479,134 
 Loans transferred                   198,245        (198,245)              -                   - 
 Additions due to internal 
  group restructure                  186,294                -        186,294             296,115 
 Disposals due to internal 
  group restructure                (181,440)          (4,854)      (186,294)           (296,115) 
                             ---------------  ---------------  -------------  ------------------ 
 
 At the end of the period            681,629           86,288        767,917             479,134 
                             ---------------  ---------------  -------------  ------------------ 
 
 

Internal group restructures have taken place in the year in order to facilitate borrowings. As part of the restructures, a number of subsidiary companies where there assets are used as security for bank loans, are now directly held by other Group companies.

8. Trade and other receivables

 
                                          31 March 2019   31 March 2018 
                                                GBP'000         GBP'000 
                                         --------------  -------------- 
 
 Prepayments and other receivables                  371             393 
 Amounts due from subsidiary companies                -           1,987 
                                         --------------  -------------- 
 
 Total                                              371           2,380 
                                         --------------  -------------- 
 
 

Prepayments and other receivables amount above includes prepaid legal and professional fees of GBP343,000 (2018: GBP366,000) that have been incurred in connection with the acquisitions yet to be completed.

9. Cash and cash equivalents

 
                              31 March 2019   31 March 2018 
                                    GBP'000         GBP'000 
                             --------------  -------------- 
 
 Cash held by solicitors             17,031          12,262 
 Liquidity funds                     13,394         210,969 
 Cash held at bank                   10,931          12,410 
                             --------------  -------------- 
 
 Cash and cash equivalents           41,356         235,641 
 Restricted cash                      4,549           6,283 
                             --------------  -------------- 
 
 Total cash held at bank             45,905         241,924 
                             --------------  -------------- 
 
 

10. Trade and other payables

 
                                        31 March 2019   31 March 2018 
                                              GBP'000         GBP'000 
                                       --------------  -------------- 
 
 Acquisition costs accrued                        303             309 
 Retentions                                     4,489           2,806 
 Accruals                                         536             540 
 Dividends payable                                717             427 
 Amounts due to subsidiary companies          125,232               - 
                                       --------------  -------------- 
 
 Total                                        131,277           4,082 
                                       --------------  -------------- 
 
 

11. Share capital

Share capital represents the nominal value of consideration received by the Company for the issue of Ordinary shares.

 
                                                    From 
                                             18 November 
                                  For the           2016 
                               year ended    to 31 March 
                            31 March 2019           2018 
                                  GBP'000        GBP'000 
                          ---------------  ------------- 
 Share capital 
 At beginning of period             3,500              - 
 Shares issued                      2,725          3,500 
                          ---------------  ------------- 
 
 At end of period                   6,225          3,500 
                          ---------------  ------------- 
 

Number of shares issued and fully paid

 
 
                                                              From 
                                                       18 November 
                                            For the           2016 
                                         year ended    to 31 March 
                                      31 March 2019           2018 
                                             Number         Number 
                                    ---------------  ------------- 
 Ordinary shares of GBP0.01 each 
 At beginning of period                 350,000,000            100 
 Shares issued                          272,461,380    349,999,900 
                                    ---------------  ------------- 
 
 At end of period                       622,461,380    350,000,000 
                                    ---------------  ------------- 
 
 

The Company's Ordinary shares were admitted to the premium listing segment of the Official List of the FCA and to trading on the London Stock Exchange on 18 November 2016, raising GBP350 million. As a result of the IPO, on 18 November 2016, 349,999,900 shares at GBP0.01 per share were issued, fully paid.

On 21 December 2018, the Company issued 272,461,380 Ordinary shares in respect of the conversion of 302,000,000 C shares. The fair value of assets representing the C share pool at the date of conversion was GBP295,186,000.

12. Retained earnings

This reserve represents the profits and losses of the Company

 
                                                          From 
                                                   18 November 
                                        For the           2016 
                                     year ended    to 31 March 
                                  31 March 2019           2018 
                                        GBP'000        GBP'000 
                                ---------------  ------------- 
 
 At beginning of period                  85,479           (31) 
 (Loss)/profit for the period          (14,937)         88,135 
 Dividends paid in the period          (17,881)        (2,625) 
                                ---------------  ------------- 
 
 At end of period                        52,661         85,479 
                                ---------------  ------------- 
 
 

13. Controlling parties

As at 31 March 2019 there is no ultimate controlling party.

14. Related party transactions

For all related party transactions and transactions with the Investment Adviser please make reference to notes 30-32 of the Group's consolidated financial statements.

Glossary

Average Net Yield means the average yield on an investment or a portfolio that results from adding all interest, dividends or other income generated from the investment, divided by the average of the investments for the period.

GAGR means Compound Annual Growth Rate

Care Provider means a provider of care services to the occupants of Specialist Supported Housing, registered with the Care Quality Commission.

CHA means Civitas Housing Advisors Limited, the Investment Adviser to the Company.

Company means Civitas Social Housing PLC, a company incorporated in England and Wales with company number 10402528.

Company Adjusted Earnings means EPRA earnings adjusted to add back the finance cost associated with the C share financial liability.

CMA Order means the Statutory Audit Services Order 2014, issued by the Competition and Markets Authority.

EPRA means European Public Real Estate Association.

EPRA EPS is the EPRA earnings divided by the weighted average number of shares in issue in the period.

EPRA net asset value (EPRA NAV) is the IFRS net assets excluding the mark-to-market on derivatives and related debt adjustments, the mark-to-market on the convertible bonds as well as deferred taxation on property and derivative valuations. A reconciliation between IFRS net assets and EPRA NAV is included in Appendix 1.

EPRA NNNAV is the EPRA NAV adjusted to reflect the fair value of debt and derivatives and to include deferred taxation on revaluations.

Gross Asset Value means total assets plus the portfolio premium derived from the portfolio valuation.

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 Homes and Communities Agency.

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.

IFRS Net Initial Yield means the ratio of net rental income and gross purchase price of a property.

IFRS Valuation means an independent valuation of the Portfolio by Jones Lang LaSalle or such other property adviser as the Directors may select from time to time, prepared in accordance with RICS "Red Book" guidelines and based upon a valuation of each underlying investment property rather than the value ascribed to the portfolio and on the assumption of a theoretical sale of each property rather than the corporate entities in which all of the Company's investment properties are held.

Investment Adviser means Civitas Housing Advisors Limited, a company incorporated in England and Wales with company number 10278444, in its capacity as investment adviser to the Company.

IPO means Initial Public Offering.

IRR means internal rate of return.

Levered IRR means the internal rate of return including the impact of debt.

Local Authority or LA means the administrative bodies for the local government in England comprising of 326 authorities (including 32 London boroughs).

Portfolio Net Asset Value or Portfolio NAV means the net asset value of the Company, as at the relevant date, calculated on the basis of an independent Portfolio Valuation. See note 16 for a reconciliation to IFRS NAV.

Portfolio Valuation means an independent valuation of the Portfolio by Jones Lang LaSalle or such other property adviser as the Directors may select from time to time, 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.

Registered Providers or RP means Housing Associations, Local Authorities and arm's length management organisations, a not-for-profit company that provides housing services on behalf of a Local Authority.

RICS means Royal Institution of Chartered Surveyors.

RNS means the London Stock Exchange Regulatory News Service.

RSH means the Regulator of Social Housing.

Social homes or social housing means homes which are social rented, affordable rented, other homes managed by Registered Providers or Low Cost Home Ownership homes.

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.

WAULT means weighted average unexpired lease term.

Appendix 1 (unaudited)

Notes to the calculation of EPRA and other alternative performance measures

   1.   EPRA Earnings 
 
                                                                        From 
                                                                 18 November 
                                                      For the           2016 
                                                   year ended    to 31 March 
                                                31 March 2019           2018 
                                              ---------------  ------------- 
 Earnings from operational activities 
 Profit after taxation (GBP'000)                       19,864         36,926 
 Changes in value of investment properties 
  (GBP'000)                                           (3,652)       (30,633) 
 
 EPRA Earnings (GBP'000)                               16,212          6,293 
 Finance costs associated with the C share 
  financial liability (GBP'000)                         6,400          2,792 
                                              ---------------  ------------- 
 
 Diluted EPRA earnings (GBP'000)                       22,612          9,085 
                                              ---------------  ------------- 
 
 
 Weighted average number of shares in issue       425,393,423    350,000,000 
 Dilutive elements                                197,067,957    281,065,815 
                                              ---------------  ------------- 
 
 Adjusted weighted average number of shares 
  in issue                                        622,461,380    633,065,815 
                                              ---------------  ------------- 
 
 EPRA Earnings per share (EPS) - basic                  3.81p          1.80p 
 
 EPRA Earnings per share (EPS) - diluted                3.63p          1.44p 
                                              ---------------  ------------- 
 
 
   2.   EPRA NAV 

Net Asset Value adjusted to include properties and other investment interest at fair value and to exclude certain items not expected to crystallise in a long-term investment property business model.

 
                                                 31 March 2019   31 March 2018 
                                                --------------  -------------- 
 
 Net assets (GBP'000)                                  666,508         369,395 
 Effect of the exercise of C shares (GBP'000)                -         298,752 
                                                --------------  -------------- 
 
 Diluted net assets (GBP'000)                          666,508         668,147 
 Other adjustments (GBP'000)                                 -               - 
                                                --------------  -------------- 
 
 EPRA Net Assets (GBP'000)                             666,508         668,147 
                                                --------------  -------------- 
 
 
 Number of Ordinary shares in issue                622,461,380     350,000,000 
 Number of Ordinary shares that would be 
  issued on the conversion of C shares                       -     283,065,815 
                                                --------------  -------------- 
 
 Adjusted number of shares to calculated 
  diluted NAV                                      622,461,380     633,065,815 
                                                --------------  -------------- 
 
 EPRA Net Assets per share                             107.08p         105.54p 
                                                --------------  -------------- 
 
 
   3.   EPRA NNNAV 

EPRA NAV adjusted to include the fair values of (i) financial instruments, (ii) debt and (iii) deferred taxes.

 
                                            31 March 2019   31 March 2018 
                                           --------------  -------------- 
 
 EPRA Net Assets (per above) (GBP'000)            666,508         668,147 
 Adjustment to value bank borrowings at 
  fair value (GBP'000)                              (650)           (712) 
                                           --------------  -------------- 
 
 EPRA NNNAV (GBP'000)                             665,858         667,435 
                                           --------------  -------------- 
 
 
 Number of Ordinary shares in issue           622,461,380     350,000,000 
 Number of Ordinary shares that would be 
  issued on the conversion of C shares                  -     283,065,815 
                                           --------------  -------------- 
 
 Adjusted number of shares to calculated 
  diluted NAV                                 622,461,380     633,065,815 
                                           --------------  -------------- 
 
 EPRA NNNAV per share                             106.97p         105.43p 
                                           --------------  -------------- 
 
 
   4.    EPRA Vacancy Rate 

Estimated Market Rental Value ("ERV") of vacancy space divided by ERV of the whole portfolio.

 
                                           31 March 2019   31 March 2018 
                                          --------------  -------------- 
 
 Estimated Market Rental Value (ERV) of 
  vacant spaces                                        -               - 
 
 Estimated Market Rental Value (ERV) of 
  whole portfolio                                 45,685          28,543 
                                          --------------  -------------- 
 
 EPRA Vacancy Rate                                    0%              0% 
                                          --------------  -------------- 
 
 
   5.    EPRA Costs Ratio 

Administrative and operating costs divided by gross rental income.

 
                                                    For the                From 
                                                 year ended    18 November 2016 
                                              31 March 2019    To 31 March 2018 
                                            ---------------  ------------------ 
 
 Total administrative and operating costs             9,642               8,893 
 Gross rental income                                 35,738              18,606 
                                            ---------------  ------------------ 
 
 EPRA cost ratio                                     26.98%              47.80% 
                                            ---------------  ------------------ 
 
   6.   Portfolio NAV 

IFRS NAV adjusted to reflect investment property valued on a portfolio basis rather than individual asset basis.

 
                                                31 March 2019    31 March 2018 
                                               --------------  --------------- 
 
 Net assets (GBP'000)                                 666,508          369,395 
 Adjustment for change to property valuation 
  (GBP'000)                                            74,662           29,110 
                                               --------------  --------------- 
 
 Portfolio net assets (GBP'000)                       741,170          398,505 
                                               --------------  --------------- 
 
 Number of Ordinary shares in issue               622,461,380      350,000,000 
                                               --------------  --------------- 
 
 EPRA Net Assets per share                            119.07p          113.86p 
                                               --------------  --------------- 
 
 
   7.   Company Adjusted Earnings 

Company specific earnings measure which adds back finance costs associated with the C share financial liability.

 
                                                     For the                From 
                                                  year ended    18 November 2016 
                                               31 March 2019    to 31 March 2018 
                                             ---------------  ------------------ 
 
 Profit after taxation (GBP'000)                      19,864              36,926 
 Changes in value of investment properties 
  (GBP'000)                                          (3,652)            (30,633) 
                                             ---------------  ------------------ 
 
 EPRA Earnings (GBP'000)                              16,212               6,293 
 Finance costs associated with the C 
  share financial liability (GBP'000)                  6,400               2,792 
                                             ---------------  ------------------ 
 
 Company Adjusted Earnings (GBP'000)                  22,612               9,085 
                                             ---------------  ------------------ 
 
 Weighted average number of shares in 
  issue                                          622,461,380         350,000,000 
                                             ---------------  ------------------ 
 
 EPRA Adjusted Earnings per share (EPS) 
  - basic                                              3.63p               2.60p 
                                             ---------------  ------------------ 
 
 
   8.   IRR 

The Internal Rate of Return ("IRR") for the period from launch to 31 March 2019 based on IFRS NAV and portfolio NAV is calculated using dividend cash flows data as follows:

 
                                                  IFRS NAV   Portfolio NAV 
                                                     basis           basis 
                                                       pps             pps 
                                                 ---------  -------------- 
 
 
 18/11/2016    Investment (net of issue costs)       98.00           98.00 
 31/05/2017    Interim dividend                       0.75            0.75 
 31/08/2017    Interim dividend                       0.75            0.75 
 30/11/2017    Interim dividend                       0.75            0.75 
 09/03/2018    Interim dividend                       0.75            0.75 
 08/06/2018    Interim dividend                       1.25            1.25 
 07/09/2018    Interim dividend                       1.25            1.25 
 30/11/2018    Interim dividend                       1.25            1.25 
 11/01/2019    Interim dividend                       1.11            1.11 
 28/02/2019    Interim dividend                       0.14            0.14 
 31/03/2019    NAV                                  107.10          119.10 
                                                 ---------  -------------- 
 
 
 IRR                                                 7.23%          11.93% 
                                                 ---------  -------------- 
 
 
 

ANNUAL GENERAL MEETING

The Annual General Meeting of the Company will be held at 2.00 p.m. on Thursday, 5 September 2019 at 3 More London Riverside, London SE1 2AQ.

NATIONAL STORAGE MECHANISM

A copy of the Annual Report and Financial Statements and Notice of Annual General Meeting will be submitted shortly to the National Storage Mechanism ("NSM") and will be available for inspection at the NSM, which is situated at www.morningstar.co.uk/uk/NSM.

LEI: 213800PGBG84J8GM6F95

ENDS

Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the website (or any website) is incorporated into, or forms part of, this announcement.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

FR LLFVERVILFIA

(END) Dow Jones Newswires

June 24, 2019 02:00 ET (06:00 GMT)

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