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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Impact Healthcare Reit Plc | LSE:IHR | London | Ordinary Share | GB00BYXVMJ03 | 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% | 85.40 | 85.60 | 86.00 | 86.10 | 85.60 | 85.90 | 286,511 | 16:35:07 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Real Estate Investment Trust | 42.95M | 16.89M | 0.0408 | 21.05 | 355.94M |
From May 2019 to May 2024
TIDMIHR
RNS Number : 2700X
Impact Healthcare REIT PLC
09 August 2018
9 August 2018
Impact Healthcare REIT plc
("Impact" or the "Company" or, together with its subsidiaries, the "Group")
INTERIM RESULTS FOR THE PERIOD TO 30 JUNE 2018
The Board of Impact Healthcare REIT plc (ticker: IHR), the real estate investment trust which gives investors exposure to a diversified portfolio of UK healthcare real estate assets, in particular care homes, today announced the Company's half year results for the six months ended 30 June 2018.
This is the Group's first full six month period to 30 June. Our period to 30 June 2017 related to trading from IPO on 7 March 2017. As a result, we are not comparing trading performance against the prior interim period in these highlights.
Financial highlights
-- 3.0p dividend paid or declared for the first half of the year.
-- Paid and declared dividends 79.0% covered by adjusted earnings per share of 2.37p for the first half of the year. EPRA earnings per share were 3.23p.
o This 79% dividend cover reflects the fact that rent received from new investments was not received for the full period. We are confident that once we have deployed the GBP24.6 million of additional capital, which has been committed but not yet invested, the Group's dividends will be covered by adjusted earnings.
-- Net asset value ("NAV") of 102.03p per share as at 30 June 2018, an increase of 1.38p per share or 1.4% since 31 December 2017.
-- Portfolio independently valued at GBP184.3 million as at 30 June 2018, representing an uplift on 31 December 2017 valuation of 2.56% on a like-for-like basis.
o After stripping out property additions and capital improvements, the underlying revaluation movement in the period was GBP4.0 million. This movement was driven by rent increases received during the period and asset management initiatives, rather than relying on yield compression.
-- Contracted annual rent of GBP14.49 million as at 30 June 2018, an increase of GBP2.63 million or 22.1% since 31 December 2017.
-- Profit before taxation in the period to 30 June 2018 was GBP8.48 million, 4.41p per share.
-- The Group signed its first debt facility, a new GBP50 million five year loan facility with Metro Bank PLC.
-- The Group had GBP25.0 million of debt drawn as at 30 June 2018 representing a gross loan to value ("LTV") of 11.2% of total assets.
o The Group has a conservative gearing policy. Borrowings as a percentage of our gross assets may not exceed 35% LTV at the time of drawdown.
-- EPRA NAV total return annualised for the period to 30 June 2018 was 8.84% compared to 1.92% for the FTSE EPRA/NAREIT UK REITs Index.
-- The remaining proceeds from the second equity raise secured in November 2017 of GBP32.6 million have been fully invested or committed.
-- GBP198.0 million market capitalisation as at 29 June 2018.
Operational highlights
-- In the period ended 30 June 2018, we acquired six care homes, with 367 beds (a 14.5% increase on the beds as at 31 December 2017), taking our portfolio to 63 homes, adding two additional tenants. We have also exchanged to buy a further home with 77 beds but not yet completed.
-- We committed to GBP5.2 million of capital improvement programmes, which will add a further 58 beds, and to a deferred consideration agreement on a newly acquired home adding a further 38 beds. These will take the total new beds through asset management to 188 since IPO, representing7% of the seed portfolio. 63 of these beds are now operational with a further 21 beds due to be operational in Q3 2018.
-- At 30 June 2018, the Group had a contracted rent roll of GBP14.49 million. The portfolio market value, together with committed capital expenditure at 30 June 2018, was GBP191.5 million, delivering an investor contracted yield of 7.57% (compared to an EPRA Net Initial Yield of 7.09%).
-- We benefit from long leases, with a weighted average unexpired lease term ("WAULT") of 19.2 years as at 30 June 2018.
-- GBP0.46 million increase in rent arose from rent reviews in the period, a 3.95% increase on the associated portfolio.
Post balance sheet highlights
-- On 3 August 2018 the Group exchanged contracts to acquire a portfolio of five care homes comprising 218 beds for a total consideration of GBP12.15 million (including costs). The homes will be managed by Careport Advisory Services, the Group's fourth tenant group.
-- With the additional funding secured from our first debt facility raised in the period, we remain positive about our strong investment pipeline including a number of exciting opportunities which we continue to progress with our Investment Adviser.
Rupert Barclay, non-executive Chairman of Impact Healthcare REIT plc, commented:
"We believe our current portfolio gives us stable and secure cash flows that support our dividend policy.
In the second half of 2018, we will continue to develop our asset management projects and pursue acquisition opportunities that will add complementary operators and locations to the portfolio.
The fundamentals of our market are strong, with growing demand for beds and limited supply. Care is an essential service and the government is looking at measures to relieve the pressure on adult social care and hospitals. Residential care homes will be an important part of the solution over the coming years and we see good prospects for the Group.
Our strategy is also to identify new properties and tenants who will diversify our investment base and continue to deliver strong economies of scale, with efficient operations alongside a good quality of care. We remain confident we will identify investments that, under our ownership, will provide value for money to our tenants' customers and residents, while delivering attractive and stable returns to our investors."
FOR FURTHER INFORMATION, PLEASE CONTACT:
Impact Health Partners LLP via Newgate Communications Mahesh Patel Andrew Cowley Winterflood Securities Limited Tel: 020 3100 0000 Joe Winkley Neil Langford Newgate Communications (PR Adviser) Tel: 020 7680 6550 James Benjamin Email: impact@newgatecomms.com Anna Geffert Patrick Hanrahan
The Company's LEI is 213800AX3FHPMJL4IJ53.
Further information on Impact Healthcare REIT is available at www.impactreit.uk.
NOTES:
Impact Healthcare REIT plc is a real estate investment trust ("REIT") which aims to provide shareholders with an attractive return, principally in the form of quarterly income distributions and with the potential for capital and income growth, through exposure to a diversified portfolio of healthcare real estate opportunities, in particular residential care homes. The Group's investment policy is to acquire, renovate, extend and redevelop high quality healthcare real estate assets in the UK and lease those assets primarily to healthcare operators providing residential healthcare services under full repairing and insuring leases.
The Group has paid an aggregate dividend of 6.0 pence per share for the first 12 months from Admission, which equates to a yield of 6 per cent. per annum on the IPO Issue Price, payable in quarterly instalments.
The Group's Ordinary Shares were admitted to trading on the main market of the London Stock Exchange, Specialist Fund Segment, on 7 March 2017.
A Company presentation to analysts and will be held at 11:00am today at:
Newgate
Sky Light City Tower
50 Basinghall Street
London, EC2V 5DE
The presentation will also be accessible via a live conference call and on-demand via the Company website: http://www.impactreit.uk/documents
Those wishing to attend the presentation or access the live conference call are kindly asked to contact Newgate at impact@newgatecomms.com or by telephone on +44 (0) 20 7680 6550.
In addition, a recorded webcast of this meeting and the presentation will also be available to download from the Company's website: www.impactreit.uk.
CHAIRMAN'S STATEMENT
The Group had a positive first half of 2018 delivering on its commitment to secure attractive acquisitions that can deliver long term stable income to investors.
I am pleased to report another busy period for the Company with the addition of a further six homes in the period adding 367 beds and two new tenants, with a further home with 77 beds committed. The portfolio is now delivering a contracted yield of 7.57% with an annualised contracted rent roll of GBP14.5 million (up from GBP11.6 million in June 2017). Our portfolio which was independently valued at GBP184.3 million as at 30 June 2018 delivered like-for-like valuation uplift in the six month period of 2.56%. Dividend cover has fallen in the period to 79% as it has taken time to deploy the additional equity raised in November 2017, which is now fully committed.
Consistent with our approach and focus on encouraging asset management and enhancement on our existing portfolio, I am pleased we have committed a further GBP5.2 million in the half year on the standing portfolio. This will be invested in a portfolio of eight homes on a variety of refurbishment, enhancement and extension projects.
GBP4.5 million has been committed on four properties that will add a further 58 beds, while a further GBP0.7 million has been committed on another four homes in refurbishment and enhancement projects that will improve both the quality of service to residents and the returns to investors. In addition, we have committed to a deferred consideration agreement with one of our new tenants to deliver 38 beds.
With the additional funding secured from our first debt facility raised in the period we remain positive about our strong investment pipeline including a number of exciting opportunities which we continue to progress with our Investment Adviser.
Financial performance
At 30 June 2018, the unaudited Net Asset Value (NAV) was GBP196.1 million (or 102.03p per share). The NAV benefited from our right to receive the rent due from these assets as if they had been acquired on the day our shares were admitted to trading on the London Stock Exchange (7 March 2017).
Unaudited earnings per share (EPS) was 4.41p (basic diluted) and adjusted EPS was 2.37p, which is supported by cash receipts. Our focus during the period has been on bedding down the portfolio and advancing our asset management and acquisition plans. Looking forward, our priorities will include being as efficient as possible as an important part of generating enhanced returns for shareholders.
More information about our financial performance in the period can be found in the Investment Adviser's report below.
Dividends
For the 12 months following admission, we paid a dividend of 6.0p per share, equating to a yield of 6% on the 100p issue price, on an ungeared basis. Our current focus is on ensuring our annual dividends at the 6.0p level are covered by adjusted earnings and we have a strategy in place to deliver this. Once this is achieved we will review our longer term dividend policy.
Financing
The Group secured its first debt facility in the half year with terms agreed for a five year GBP50 million facility with Metro Bank at a rate of 2.65% above base rate. GBP30 million of this was secured in June with a GBP25 million term facility and a GBP5 million RCF, with a further GBP20 million RCF to follow. Consistent with the Group's hedging policy, a cap was put in place at 1% on one month LIBOR for the GBP25 million term facility for the duration of the loan. The GBP25 million term element was drawn at the half year, taking our gross LTV to 11.2%.
The Group continues to engage with a number of finance providers, to maximise our financing options.
Working with our tenants
As part of our acquisition strategy we have added two new tenants and six new homes and we continue to negotiate with a number more in our future pipeline. Choosing tenants that prioritise delivering a positive environment for residents and support a joint vision for continued asset improvement remains our focus and we are delighted and encouraged with the progress we are making.
We continue to focus on and prioritise further investment in our standing portfolio and the additional approvals in the quarter take our total commitment to over GBP13 million which will deliver enhanced assets and another 150 beds to our portfolio. With a deferred consideration agreement with one of our new tenants for 38 beds, we have a total of 188 beds to add to our portfolio.
David Brooks
It is with great sadness that we report the death of David Brooks our fellow director and Chairman of the Audit Committee. First and foremost our thoughts are with David's family. I would like to record our appreciation for all David contributed to help shape the Company in its critical formative stages.
Going forward we will seek to appoint an additional member to the Board and will announce this in due course. In the interim Rosemary Boot has agreed to step in as Acting Chair of the Audit Committee.
The Investment Adviser
The board recognises the efforts of our Investment Adviser in delivering the achievements within the first half of 2018 and the strong pipeline of investment opportunities for the future. It has been a busy period with the preparation of our first full financial accounts, the acquisitions as reported, and the securing of new debt facilities.
Carne Global AIFM Solutions (C.I.) Limited is the Company's Alternative Investment Fund Manager.
Outlook
We believe our current portfolio gives us stable and secure cash flows that support our dividend policy.
In the second half of 2018, we will continue to develop our asset management projects and pursue acquisition opportunities that will add complementary operators and locations to the portfolio.
It is impossible to predict the outcome of Brexit. We will continue to monitor its potential impact on our business.
Looking further ahead, the fundamentals of our market are strong, with growing demand for beds and limited supply. Care is an essential service and the government needs to relieve the pressure on adult social care and hospitals. Residential care homes will be an important part of the solution over the coming years and we see good prospects for the Group.
Our strategy is also to identify new properties and tenants who will diversify our investment base and continue to deliver strong economies of scale, with efficient operations alongside a good quality of care. We remain confident we will identify investments that, under our ownership, will provide value for money to our tenants' customers and residents, while delivering attractive and stable returns to our investors.
Rupert Barclay Chairman
9 August 2018
MARKET DRIVERS
Since our IPO in March 2017, we have successfully implemented the Group's investment policy, bedding down a good quality portfolio with a strong tenant group, who provide a high standard of care. This has enabled us to deliver on our target of paying a dividend of 6.0p per share over the Group's first four quarters. The market fundamentals continue to be attractive and we believe the Group is well positioned to continue to add to its existing portfolio, both through further acquisitions and through capital enhancements to existing properties, with the aim of generating attractive and stable returns for shareholders.
A number of drivers influence the demand for, and provision of, care for the elderly making it a potentially attractive market for well-capitalised asset owners working in close partnership with well-managed operators who are committed to providing high standards of care. In particular:
1. People are living longer
The number of people more than 85 years old in the UK is forecast to double by 2040, rising from 1.6 million in 2018 to 3.2 million by 2040. In 2018, 14.7% of people aged over 85 required the kind of care which can only be provided in a residential setting, either a care home or long-stay hospital bed.
2. Capacity has shrunk from its peak
The number of available beds rose rapidly in the 1970s and 1980s, reaching a peak of 563,000 in 1996. It has declined 17% from that level, to 466,000 in 2018. Over that period, there has been a shift from a market dominated by government-provided beds, to beds provided by independent operators.
In the years ending March 2016 and March 2017, the number of available beds fell by 1,700 and 4,300 respectively. However, in the year to March 2018 there was a small net increase of 900 beds.
3. Severe pressure on the NHS
Since the government combined health and social care under one department earlier this year, there appears to have been some encouraging successes in tackling the problem of bed-blocking in the NHS. In the 12 months to March 2018, the NHS in England lost 1,979,260 bed days through delayed transfers, down from 2,254,821 bed days in the 12 months to March 2017. However, pressure on the NHS continues to be intense with Simon Stevens, the CEO of NHS England, stating in June 2018 that 350,000 patients who currently stay in hospital for more than three weeks, most of them elderly, occupy one in five hospital beds, or the equivalent of 36 hospitals.
4. The growing importance of private pay
Approximately equal numbers of residents are now paid for either purely privately, or by a combination of local authorities and the NHS. A growing minority are funded through a combination of funding from local authorities with top-up payments from their families.
5. A growing market
As a result of increasing demand, shrinking supply and a shift from government provision to independent providers, the independent sector has seen sustained and above-inflation growth. Since 2005, the revenues of for-profit independent providers have increased by 4.2% per annum, and for non-profit independent providers by 4.3% per annum. Total revenues of the independent sector grew from GBP8.9 million in 2005, to GBP15.2 billion in 2018.
Given the strength of the underlying market drivers, the Investment Adviser expects this growth to be sustainable going forward.
INVESTMENT ADVISER'S REPORT
We remain confident that we have laid firm foundations for the further development of the Group to deliver attractive and sustainable value to shareholders through 2018 and for the longer term.
Investment policy and objectives
The Group's investment policy is to acquire, renovate, extend and redevelop high-quality healthcare real estate assets in the UK, and to lease those assets, under long- term full repairing and insuring leases to operators who are committed to providing high-quality care to their customers. The Group fully complied with this policy during the period and met all its investment objectives, as set out in its IPO prospectus dated January 2017.
Following approval from our board in the first half of 2018, we have added two additional policies to our list of investment policies: the Group aims for dividends to be covered by adjusted earnings; and the Group aims to minimise cash drag. Our progress towards delivering on all our investment policies is discussed opposite.
The Group has not generated any income from non-rental revenue (except interest received on cash balances) or sought alternative investments as permitted by the investment policy set out in the prospectus.
Investment activity
On 1 January 2018 the Group owned 57 properties, offering 2,527 beds, and had the proceeds from the secondary equity offering in November 2017 of GBP32.6 million to deploy. We have taken a deliberate and very selective approach to this exercise.
During the first six months of the year the Group completed the acquisition of a further 367 beds, increasing the size of the portfolio by 14.5%, and adding two new, high-quality tenants in the process, Prestige Group and Welford. In the period, the Group invested a total of GBP24.2 million in these acquisitions and made further capital investment into the existing portfolio. In addition, it committed GBP24.6 million to capital improvements and transactions which have either exchanged but not yet completed during the period, or in the case of the Careport acquisition, were exchanged post balance sheet. Therefore, the proceeds of the secondary share issue are fully committed and we are now starting to deploy the Group's new debt facility.
The new acquisitions have been made on terms which are in line with those on which the Group acquired the seed portfolio in 2017, for which it paid a total of GBP153.3 million (including purchaser's costs) and achieved a net initial yield of 7.6% (including purchaser's costs). The average net initial yield on the Prestige, Welford and Careport acquisitions is 7.3%. We have also been consistent in putting in place leases which are based on those for the seed portfolio, with minimum fixed terms of 20 years, no tenant break rights, options to extend and annual rent adjustments at RPI with a floor of 2% and a cap of 4%.
Two of the properties which were acquired entered new leases with Minster. This constitutes a smaller related party transaction as defined in LR 11.1.10. The Board was satisfied that this transaction is fully compliant with the Company's related party policy.
We have a strong pipeline of further investment opportunities.
More information about the portfolio can be found below.
Asset management
While under the terms of the leases, tenants are fully responsible for keeping the Group's buildings in good repair through regular repair and maintenance programmes, which we monitor carefully, we are also keen to work with tenants to find ways to invest in the estate in order to add beds and upgrade buildings.
We have planning permissions in place, or applications at an advanced stage, to add further beds across all existing tenant portfolios: 464 new beds at Minster and Croftwood; eight at Welford; and 38 at Prestige.
In 2017, the Group committed GBP7.9 million to deliver a first phase of 92 new beds across the Minster and Croftwood portfolios. In the six months to 30 June 2018, the Group committed an additional GBP5.2 million to deliver a further 58 beds, giving a total of GBP13.2 million capex at 11 homes committed since IPO. In addition, Prestige agreed to reinvest some of the proceeds from the acquisition in creating 38 new beds at Parkville Care Centre. As at 30 June 2018, 63 of these new beds had become operational (38 at Parkville and 25 at Turnpike).
The additional rooms created by this capex, once they are all operational, are expected to increase rent on the 11 homes by GBP1.1 million from GBP2.8 million to GBP3.9 million.
Balance sheet management
The Group was launched in 2017 with a debt-free balance sheet and with the medium term intention of continuing to have a conservative balance sheet with maximum loan- to-value set at 35%.
We put in place the Group's first debt facility with Metro Bank PLC in June 2018. It is a GBP50 million facility, of which GBP30 million was secured and available at 30 June 2018. The facility has two elements: an interest-only term loan of GBP25 million; and a revolving credit facility of GBP25 million. We have hedged the term element of the facility against rises in the Bank of England base rate above 1.0% through purchasing a five-year cap.
Valuation
Starting from 1 January 2018 the Group decided to move the independent valuation of the Group's assets from a semi-annual to a quarterly exercise. On this basis, Cushman & Wakefield valued the portfolio as at 30 March 2018 and 30 June 2018, in accordance with the RICS Valuation - Professional Standards (the Red Book).
At 30 June 2018 the portfolio's independent valuation was GBP184.3 million, up from GBP156.2 million at 31 December 2017. After stripping out property additions and capital improvements, the underlying revaluation movement in the period was GBP4.0 million. This movement was driven by rent increases received during the period and asset management initiatives, rather than relying on yield compression.
Financial results
Total net rental income recognised for the period was GBP7.9 million. After taking into account administrative expenses and changes in the fair value of investment properties, profit before tax was GBP8.5 million. As a REIT, the Group is exempt from corporation tax on the profits and gains from its property investment business. The small tax charge in the period relates to interest received on the Group's cash position.
This level of profit resulted in EPS for the period of 4.41p, EPRA EPS of 3.23p and adjusted EPS of 2.37p. These are all on a basic and diluted basis.
The board declared two dividends of 1.5p each in the period, the first on 1 February and the second on 27 April, bringing total dividends paid in the Group's first four quarters to 6.0p. On an adjusted earnings basis, dividends paid or declared for in the period were 79% covered. This reflects the fact that rent received from new investments was not received for the full period. We are confident that once the GBP24.6 million of additional capital which has been committed but not yet invested has been deployed the Group's dividends will be covered by adjusted earnings.
David Brooks
It was with great sadness that we heard of the sudden death of David Brooks in July. As a non-executive director and chairman of the audit committee he was very engaged with the Investment Adviser and we valued his wisdom, attention to detail and experience. He will be missed.
Hot Features
Premium
Investment policies Status Performance
Our target dividend Achieved We have paid or declared dividends
is 6.0p per share per of 1.5p per quarter for the
annum, payable quarterly. first five quarters since IPO.
---------- ---------------------------------------
We aim for our dividends Partially Paid and declared dividends
to be covered by adjusted met were 79% covered by adjusted
earnings. earnings per share for the
first half of the year to 30
June 2018.
We have an investment strategy
in place to deliver this.
---------- ---------------------------------------
We have a conservative Achieved The Group's gross loan-to-value
gearing policy. Borrowings was 11.2% as at 30 June 2018.
as a percentage of We continue to engage with
our gross assets may finance providers for debt
not exceed 35% LTV facilities within these gearing
at the time of drawdown. limits and we are seeking to
align this funding with future
acquisitions.
---------- ---------------------------------------
After acquiring the Achieved Our contracted annual rent
Seed Portfolio and at the period end was GBP14.5
some of the optional million, comprising GBP13.8
assets, we targeted million passing rent plus a
annual rent receivable further GBP0.7 million in relation
from our initial tenants to rent commitments from funded
of between GBP11.0 capital improvements.
million and GBP11.6
million.
---------- ---------------------------------------
Minimise cash drag. Partially We invested 95% of our net
met IPO proceeds within two months
of admission, with cash rent
calculated from the admission
date. 98% was invested by June
2017 and we committed the remainder
to fund income-increasing asset
management initiatives. We
raised a further GBP32.6 million
in November 2017, all of which
has now been invested or committed.
---------- ---------------------------------------
We manage risk by owning Achieved The largest single asset is
a diversified portfolio, Freeland House, which was valued
with no single asset at GBP11.6 million at the period
exceeding 15% of the end, equating to 6.3% of our
Group's total gross gross asset value.
asset value.
---------- ---------------------------------------
We also manage risk Achieved The largest single customer
by limiting our exposure paying for care represents
to our tenants' customers. only 8.4% of the aggregate
No single customer revenues of the tenant which
paying for care provided leases the assets.
in our assets can account
for more than 15% of
our tenants' aggregate
revenues.
---------- ---------------------------------------
We grant leases that Achieved The portfolio is leased on
are linked to the Retail minimum 20-year terms, with
Prices Index (RPI), no break clauses and upward-only
have an unexpired term rent increases at RPI, with
of at least 20 years a floor of 2% and a cap of
and are not subject 4%.
to break clauses. We
seek to amend any leases
we acquire to obtain
similar terms.
---------- ---------------------------------------
We will not speculatively Achieved We did not undertake any speculative
develop assets, which development in the period.
means we will not develop
a property which has
not been leased or
pre-leased.
---------- ---------------------------------------
We may invest in forward Achieved The 58 additional beds approved
funding agreements during the period, for development
or forward commitments at existing homes, will enhance
to pre-let developments, our rental income under a forward
where we will own the funding agreement through which
completed asset. we fund the tenant's capital
expenditure in return for an
accretive increase in rent,
both in terms of contractual
rent and portfolio valuation.
In addition, we have agreed
38 additional beds with a new
tenant under a deferred consideration
agreement.
---------- ---------------------------------------
Impact Health Partners LLP Investment Adviser
9 August 2018
WORKING WITH TENANTS TO CREATE VALUE
Littleport Grange
-- The improvement works at Littleport Grange are close to completion with the new extension due to open to residents in August 2018.
-- The new building will add 21 en-suite rooms to the beautiful Cambridgeshire period residence, bringing the total number of operational beds to 75.
-- Set in extensive gardens, the residents of the home benefit from the outdoor space available, which will be further enhanced by the outdoor areas around the new development.
-- Within the stunning exterior, Littleport Grange is a highly rated care home offering exceptional care for residents, including those with physical disabilities and dementia.
Parkville Care Centre
-- Parkville Care Centre is a modern purpose-built care home in Middlesbrough which houses up to 93 residents in en-suite rooms.
-- The home has been recently refurbished to include state-of-the-art specialist dementia care facilities.
-- Multi-sensory rooms equipped with fibre optics, lighting and projectors create an interactive and engaging environment for residents.
-- Research shows that this type of stimulation often results in improved motor performance and cognitive ability in people living with dementia.
-- Parkville is now able to offer a service more acutely tailored to the needs of its residents.
-- The home is rated Good by CQC which attests to the high quality of care provided by its staff.
THE PORTFOLIO
At 30 June 2018, the Group owned the assets listed in the table below:
Name of County Address Acquisition Net purchase Beds % of
home date(1) price portfolio
GBPm income
Minster
Care 107.28 1,603 57.57
------------- ------ -----------
Dragon Square,
Abbeywell Staffordshire Chesterton 4.95 45 2.78
------------------ --------------------------------------- ------------- ------ -----------
The Crescent,
Amberley Cornwall Truro 0.68 21 0.43
------------------ --------------------------------------- ------------- ------ -----------
North Sea Lane,
Ashgrove Lincolnshire Cleethorpes 2.15 56 1.29
------------------ --------------------------------------- ------------- ------ -----------
Attlee Street,
Attlee West Yorkshire Normanton 3.11 68 1.81
------------------ --------------------------------------- ------------- ------ -----------
Broadgate Nottinghamshire Broadgate, Beeston 3.45 40 1.94
------------------ --------------------------------------- ------------- ------ -----------
Glasgow, 40 Paddock Street,
Carnbroe Scotland Coatbridge May-18 4.26 74 2.10
------------------ ------------------------ ------------- ------------- ------ -----------
Glasgow, Croftcroighn
Craigend Scotland Road, Ruchazie 1.33 48 0.32
------------------ --------------------------------------- ------------- ------ -----------
Bewcastle Grove,
Diamond Leicestershire Leicester 2.69 44 1.51
------------------ --------------------------------------- ------------- ------ -----------
Duncote
Hall Northamptonshire Towcester 3.37 38 1.89
------------------ --------------------------------------- ------------- ------ -----------
Duncote
The Lakes Northamptonshire Towcester 5.46 45 2.80
------------------ --------------------------------------- ------------- ------ -----------
Emmanuel Humberside Southfield, Hessle 1.40 37 0.75
------------------ --------------------------------------- ------------- ------ -----------
Bodafon Road,
Eryl Fryn Conwy, Wales Craigside 1.54 29 0.86
------------------ --------------------------------------- ------------- ------ -----------
Middle Street,
Falcon House Nottinghamshire Beeston 4.37 46 2.37
------------------ --------------------------------------- ------------- ------ -----------
Freeland Wroslyn Road,
House Oxfordshire Freeland 11.18 62 5.18
------------------ --------------------------------------- ------------- ------ -----------
Church Street,
Grays Court Essex Grays 5.77 87 3.02
------------------ --------------------------------------- ------------- ------ -----------
Horsbeck Way,
Grenville Norfolk Horsford, Norwich May-18 3.74 64 2.31
------------------ ------------------------ ------------- ------------- ------ -----------
Hamshaw Wellsted Street,
Court Humberside Hull 1.48 45 0.86
------------------ --------------------------------------- ------------- ------ -----------
Knowsley Drive,
Ideal Shropshire Bicton Heath 1.97 42 1.18
------------------ --------------------------------------- ------------- ------ -----------
Mallin Street,
Karam Court West Midlands Smethwick 3.71 47 1.94
------------------ --------------------------------------- ------------- ------ -----------
Littleport Grange Lane,
Grange Cambridgeshire Littleport 5.77 59 3.02
------------------ --------------------------------------- ------------- ------ -----------
Meadows Brybank Road,
& Haywain Suffolk Hanchett Village 4.95 65 2.59
------------------ --------------------------------------- ------------- ------ -----------
Victoria Road,
Mowbray Worcestershire Malvern 3.32 37 1.94
------------------ --------------------------------------- ------------- ------ -----------
Mulberry Wortley Avenue,
Manor South Yorkshire Swinton 1.80 49 1.08
------------------ --------------------------------------- ------------- ------ -----------
Rydal Durham Rydal Road, Darlington 2.69 57 1.51
------------------ --------------------------------------- ------------- ------ -----------
High Street,
Saffron Leicestershire Barwell Jun-17 3.40 48 1.98
------------------ ------------------------ ------------- ------------- ------ -----------
Shrubbery Avenue,
Shrubbery Worcestershire Worcester 0.72 31 0.43
------------------ --------------------------------------- ------------- ------ -----------
Chelmarsh, Daimler
Sovereign West Midlands Green 3.30 60 1.73
------------------ --------------------------------------- ------------- ------ -----------
Stansty Stansty Road,
House Clwyd, Wales Wrexham 3.35 74 1.75
------------------ --------------------------------------- ------------- ------ -----------
Station Road,
Three Elms Lancashire Penketh 3.02 57 1.76
------------------ --------------------------------------- ------------- ------ -----------
Leigh Sinton,
Waterside Worcestershire Malvern 4.07 47 2.04
------------------ --------------------------------------- ------------- ------ -----------
Greater
Woodlands Manchester Ash Lane, Aspull 1.98 40 1.11
------------------ --------------------------------------- ------------- ------ -----------
Mill Street,
Brierley Hill,
Wordsley West Midlands Wordsley 2.30 41 1.29
------------------ --------------------------------------- ------------- ------ -----------
Croftwood
Care 52.87 1,077 34.36
------------- ------ -----------
Greater Warrington Road,
Ancliffe Manchester Wigan 1.83 40 1.24
------------------ --------------------------------------- ------------- ------ -----------
Astbury Randle Meadow,
Lodge Cheshire Great Sutton 1.59 41 1.08
------------------ --------------------------------------- ------------- ------ -----------
Whitchurch Way,
Croftwood Cheshire Runcorn 1.58 44 0.95
------------------ --------------------------------------- ------------- ------ -----------
Station Road,
Lostock Gralam,
Crossways Cheshire Northwich 1.02 39 0.73
------------------ --------------------------------------- ------------- ------ -----------
Pillory Street,
Elm House Cheshire Nantwich 2.61 39 1.73
------------------ --------------------------------------- ------------- ------ -----------
Florence Shelley Road,
Grogan Cheshire Blacon, Chester 1.52 40 1.03
------------------ --------------------------------------- ------------- ------ -----------
Greater Wentworth Road,
Garswood Manchester Wigan 1.65 40 1.12
------------------ --------------------------------------- ------------- ------ -----------
Farm Road, Weaverham,
Gleavewood Cheshire Northwich 1.01 30 0.69
------------------ --------------------------------------- ------------- ------ -----------
Golborne
House Cheshire Derby Road, Golborne 1.67 40 1.14
------------------ --------------------------------------- ------------- ------ -----------
Greater
Greenacres Manchester Green Lane, Standish 1.59 40 1.08
------------------ --------------------------------------- ------------- ------ -----------
Greater Myrtle Avenue,
Hourigan Manchester Leigh 1.89 40 1.29
------------------ --------------------------------------- ------------- ------ -----------
Ingersley Lowther Court,
Court Cheshire Bollington 1.88 33 1.24
------------------ --------------------------------------- ------------- ------ -----------
Greater Grizedale Drive,
Lakelands Manchester Higher Ince 1.89 40 1.29
------------------ --------------------------------------- ------------- ------ -----------
Leycester Edenfield Road,
House Cheshire Mobberley, Knutsford 2.53 40 1.73
------------------ --------------------------------------- ------------- ------ -----------
Lower Robin Hood
Loxley Hall Cheshire Lane, Helsby 2.56 36 1.49
------------------ --------------------------------------- ------------- ------ -----------
Greater College Street,
Lyndhurst Manchester Leigh 1.44 40 0.98
------------------ --------------------------------------- ------------- ------ -----------
New Milton Station Road,
House Staffordshire Alsager 1.79 39 1.22
------------------ --------------------------------------- ------------- ------ -----------
Poynton Civic
Centre, Park
Parklands Cheshire Lane, 1.64 40 1.18
------------------ --------------------------------------- ------------- ------ -----------
Brookfield Drive,
The Cedars Cheshire Holmes Chapel 0.88 27 0.56
------------------ --------------------------------------- ------------- ------ -----------
The Elms Cheshire Elm Drive, Crewe 2.08 41 1.42
------------------ --------------------------------------- ------------- ------ -----------
Hawthorne Street,
The Hawthorns Cheshire Wilmslow 1.95 39 1.29
------------------ --------------------------------------- ------------- ------ -----------
Walnut Drive,
The Laurels Cheshire Winsford 1.22 40 0.81
------------------ --------------------------------------- ------------- ------ -----------
Greater Hazelmere Gardens,
Thorley Manchester Hindley 1.96 40 1.34
------------------ --------------------------------------- ------------- ------ -----------
Turnpike Middlewich Road,
Court Cheshire Elworth, Sandbach 2.69 53 1.73
------------------ --------------------------------------- ------------- ------ -----------
Wealstone Lane,
Wealstone Cheshire Upton 3.09 42 2.11
------------------ --------------------------------------- ------------- ------ -----------
Queen's Road,
Westhaven Merseyside Wirral 5.36 52 2.59
------------------ --------------------------------------- ------------- ------ -----------
Whetstone Old Chester Road,
Hey Cheshire Great Sutton 1.95 42 1.29
------------------ --------------------------------------- ------------- ------ -----------
Prestige
Group 10.20 158 5.48
------------- ------ -----------
Walpole Street,
Parkville North Yorkshire Middlesborough Mar-18 3.00 55 1.60
------------------ ------------------------ ------------- ------------- ------ -----------
Blair Avenue,
Roseville North Yorkshire Ingleby Barwick Mar-18 7.20 103 3.88
------------------ ------------------------ ------------- ------------- ------ -----------
Welford 4.75 71 2.59
------------- ------ -----------
Fairview 42 Hill Street,
Court/House(2) Bristol Kingswood Mar-18 4.75 71 2.59
------------------ ------------------------ ------------- ------------- ------ -----------
Total 175.10 2,909 100.00
------------- ------ -----------
Total market
value 184.35
------------- ------ -----------
(1) May 2017 unless stated
(2) Treated as two properties
KEY PERFORMANCE INDICATORS
The Group uses the following measures to assess its strategic progress
KPI and definition Performance
1. EPRA Net Asset Total Return 8.84%
(NATR) for the period to 30 June 2018
The change in the EPRA net asset annualised
value over the period plus dividends (period to 31 December 2017
paid. annualised: 7.19%)
---------------------------------
2. Dividend 3.0p/share
Dividends paid to shareholders for the period to 30 June 2018
and declared in relation to (period to 31 December 2017:
the period. 4.5p)
---------------------------------
3. Gross loan-to-value 11.2%
The proportion of our gross as at 30 June 2018
asset value that is funded by (as at 31 December 2017: 0.0%)
borrowings.
---------------------------------
4. Adjusted earnings per share 2.37p/share
Reflects the sustainable earnings for the period to 30 June 2018
per share achievable by the (period to 31 December 2017:
Company, including rent paid 4.39p)
but adjusts for all other rental
income not supported by cash
flows.
---------------------------------
5. Total expense ratio (TER) 1.71%
The ratio of total administration for the period to 30 June 2018
costs expressed as a annualised
percentage of average net asset (period to 31 December 2017
value throughout the period. annualised: 1.74%)
---------------------------------
6. Diversified portfolio 6.30%
Largest single asset as a percentage as at 30 June 2018
of the most recent valuation (as at 31 December 2017: 7.49%)
for the property portfolio.
---------------------------------
7. Diversified customer base 8.4%
Revenue from our tenants' largest for the period to 30 June 2018
single customer as a percentage (period to 31 December 2017:
of the total tenant revenue. 8.20%)
---------------------------------
8. Weighted average unexpired 19.2 years
lease term (WAULT) as at 30 June 2018
The average unexpired lease (as at 31 December 2017: 19.2
term of the property portfolio, years)
weighted by annual passing rents.
---------------------------------
EPRA PERFORMANCE MEASURES
We provide these measures to aid comparison with other European real estate businesses
KPI and definition Purpose Performance
1. EPRA Earnings per A key measure of a GBP6.21m/
share company's underlying 3.23p per share
Earnings from operational operating results for the period to
activities. and an indication 30 June 2018
of the extent to which (period to 31 December
current dividend payments 2017: 4.35p)
are supported by earnings.
---------------------------- ------------------------
2. EPRA NAV per share Makes adjustments GBP196.18m/
Net asset value adjusted to IFRS NAV to provide 102.06p per share
to include properties stakeholders with as at 30 June 2018
and other investment the most relevant (as at 31 December
interests at fair information on the 2017: 100.65p)
value and to exclude fair value of the
certain items not assets and liabilities
expected to crystallise within a true real
in a long term investment estate investment
property business. company with a long
term investment strategy.
---------------------------- ------------------------
3. EPRA Triple Net Makes adjustments GBP195.16m/
Asset Value (NNNAV) to EPRA NAV to provide 101.54p per share
EPRA NAV adjusted stakeholders with as at 30 June 2018
to include the fair the most relevant (as at 31 December
values of: information on the 2017: 100.65p)
(i) financial instruments; current fair value
(ii) debt; and of all the assets
(iii) deferred taxes. and liabilities within
a real estate company.
---------------------------- ------------------------
4.1 EPRA Net Initial This measure should 7.09%
Yield (NIY) make it easier for as at 30 June 2018
Annualised rental investors to judge (as at 31 December
income based on the for themselves how 2017: 7.02%)
cash rents passing the valuation of one
at the balance sheet portfolio compares
date, less non-recoverable with another portfolio
property operating
expenses, divided
by the market value
of the property, increased
with (estimated) purchasers'
costs.
---------------------------- ------------------------
4.2 EPRA 'Topped-Up' This measure should 7.09%
NIY make it easier for as at 30 June 2018
This measure adjusts investors to judge (as at 31 December
the EPRA NIY in respect for themselves how 2017: 7.02%)
of the expiration the valuation of one
of rent-free periods portfolio compares
(or other unexpired with another portfolio.
lease incentives,
such as discounted
rent periods and step
rents).
---------------------------- ------------------------
5. EPRA vacancy rate A "pure" (%) measure 0.00%
Estimated market rental of investment property as at 30 June 2018
value (ERV) of vacant space that is vacant, (as at 31 December
space divided by the based on ERV. 2017: 0.00%)
ERV of the whole portfolio.
---------------------------- ------------------------
6. EPRA cost ratio A key measure, to 20.91%
Administrative and enable meaningful for the period to
operating costs (including measurement of the 30 June 2018
and excluding costs changes in a company's (period to 31 December
of direct vacancy) operating costs. 2017: 24.68%)
divided by gross rental
income.
---------------------------- ------------------------
PRINCIPAL RISKS
The board considers the principal risks and uncertainties for the business are presented on pages 22 to 24 of our 2017 annual report and are unchanged during the period. However, the board has considered the recent addition of bank debt and updated the principal risks within financial risks to reflect this.
Property market risks
Investments in property are relatively illiquid. This may affect our ability to vary, dispose of or liquidate part of our portfolio in a timely fashion and at satisfactory prices, in response to changes in economic, real estate market or other conditions. This could have an adverse effect on our financial condition and results of operations, by reducing the profits and proceeds we realise.
Market conditions
Our investment objective allows us to invest in further assets, which may not be available on the terms required to generate our target returns (including the target dividend), or at all. Market conditions may also restrict the availability of investments and reduce our ability to identify and acquire suitable assets that would generate acceptable returns. Any delay in making investments will reduce our returns.
Several factors may affect our cash flows. These include:
-- adverse market conditions in the healthcare sector; -- our tenants' local authority clients insisting on more generous payment terms; and -- increased regulatory responsibility and associated costs to tenants.
These may all materially affect our tenants' covenant strength and their ability to pay rent, resulting in a higher risk of default.
Financial risks
An element of our debt facilities is floating rate debt which remains uncapped, and will expose the business to underlying interest rate movements.
Our debt is secured over a security pool of properties and will rank ahead of shareholders' entitlements. This means that if the Group were wound up, shareholders might not recover their initial investment.
If debt or equity are not available on acceptable terms, we may be unable to progress investment opportunities as they arise or continue to grow in line with our strategy.
Corporate risk
As an externally managed company, we rely on the Investment Adviser's services and reputation to execute our strategy and support our day-to-day relationships. As a result, our performance will depend to some extent on the Investment Adviser's ability and the retention of its key staff.
Taxation risk
If we breach any of the REIT regulations, we could lose our REIT status and become subject to UK corporation tax.
Political and economic risk
The vote to leave the EU in June 2016 has resulted in continuing political and economic uncertainty, which could have a negative effect on our performance.
A potential impact of Brexit relates to the recruitment of staff within our tenants' operations and we continue to monitor and discuss this with our tenants.
DIRECTORS' RESPONSIBILITIES
The directors confirm that to the best of their knowledge, this condensed set of financial statements has been prepared in accordance with IAS 34 as adopted by the European Union and that the operating and financial review includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8 of the Disclosure and Transparency rules of the United Kingdom's Financial Conduct Authority, namely:
-- an indication of important events that have occurred during the first period of the financial year and their impact on the condensed financial statements and a description of the principal risks and uncertainties for the remaining six months of the financial year; and
-- material related party transactions in the first period of the financial year and any material changes in the related party transactions disclosed in the 2017 Annual Report as disclosed in note 14.
A list of the directors is shown below.
Shareholder information is as disclosed on the Impact Healthcare REIT plc website.
For and on behalf of the board
Rupert Barclay Chairman
9 August 2018
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 30 June 2018
Period from
Period from 7 November
Six months 7 November 2016 to
ended 30 2016 to 31 December
June 2018 30 June 2017 2017
(unaudited) (unaudited) (audited)
Total Total Total
Notes GBP'000 GBP'000 GBP'000
------------------------------- ------ ------------- ----------------------- -----------------------
Gross Rental Income 5 7,864 2,247 9,392
------------------------------- ------ ------------- ----------------------- -----------------------
Insurance/service charge
income 5 155 57 57
------------------------------- ------ ------------- ----------------------- -----------------------
Insurance/service charge
expense 5 (155) (57) (57)
------------------------------- ------ ------------- ----------------------- -----------------------
Net rental Income 7,864 2,247 9,392
Administrative and
other expenses (1,644) (736) (2,318)
------------------------------- ------ ------------- ----------------------- -----------------------
Operating profit before
changes in fair value
of investment properties 6,220 1,511 7,074
Changes in fair value
of interest rate derivatives 13 (76) - -
Changes in fair value
of investment properties 9 2,339 1,471 2,378
------------------------------- ------ ------------- ----------------------- -----------------------
Operating profit 8,483 2,982 9,452
Net finance (expense)/income (7) - 6
------------------------------- ------ ------------- ----------------------- -----------------------
Profit before tax 8,476 2,982 9,458
Tax charge on profit
for the period 6 (8) - (1)
------------------------------- ------ ------------- ----------------------- -----------------------
Profit and comprehensive
income (attributable
to shareholders) 8,468 2,982 9,457
------------------------------- ------ ------------- ----------------------- -----------------------
Earnings per share
- basic and diluted
(pence) 7 4.41p 1.95p 5.82p
No operations were discontinued in the period.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2018
As at As at As at
30 June 30 June 31 December
2018 2017 2017
(unaudited) (unaudited) (audited)
Notes GBP'000 GBP'000 GBP'000
------------------------------- ------ ------------ -------------------- --------------------------
Non-current assets
Investment property 9 182,754 154,767 156,226
Interest rate derivatives 13 506 - -
Trade and other receivables 3,259 - 1,651
------------------------------- ------ ------------ -------------------- --------------------------
Total non-current assets 186,519 154,767 157,877
Current assets
Trade and other receivables 195 17 119
Cash and cash equivalents 36,160 7,154 38,387
Total current assets 36,355 7,171 38,506
------------------------------- ------ ------------ -------------------- --------------------------
Total assets 222,874 161,938 196,383
------------------------------- ------ ------------ -------------------- --------------------------
Current liabilities
Trade and other payables (1,044) (1,725) (1,221)
------------------------------- ------ ------------ -------------------- --------------------------
Total current liabilities (1,044) (1,725) (1,221)
------------------------------- ------ ------------ -------------------- --------------------------
Non-current liabilities Bank borrowings 10 (24,063) - - Trade and other payables (1,668) - (1,712) ------------------------------- ------ ------------ -------------------- -------------------------- Total non-current liabilities (25,731) - (1,712) Total liabilities (26,775) (1,725) (2,933) ------------------------------- ------ ------------ -------------------- -------------------------- Total net assets 196,099 160,213 193,450 ------------------------------- ------ ------------ -------------------- -------------------------- Equity Share capital 11 1,922 1,602 1,922 Share premium reserve 12 140,452 108,777 140,505 Capital reduction reserve 35,800 46,852 41,566 Retained earnings 17,925 2,982 9,457 ------------------------------- ------ ------------ -------------------- -------------------------- Total equity 196,099 160,213 193,450 ------------------------------- ------ ------------ -------------------- -------------------------- Net Asset Value per Ordinary Share (pence) 15 102.03p 100.03p 100.65p
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Period
Period from from 7
Six months 7 November November
ended 2016 to 2016 to
30 June 30 June 31 December
2018 2017 2017
(unaudited) (unaudited) (audited)
Notes GBP'000 GBP'000 GBP'000
------------------------------- ------ ------------ ----------------------- -----------------------
Cash flows from operating
activities
Profit for the period
(attributable to equity
shareholders) 8,468 2,982 9,457
Finance expense / (income)
- net 7 - (6)
Less changes in fair value
of investment properties 9 (2,339) (1,471) (2,378)
Add: changes in fair value
of interest rate derivatives 13 76 - -
Increase in trade and
other receivables (1,683) (17) (1,770)
Increase in trade and
other payables (221) 1,725 2,933
------------------------------- ------ ------------ ----------------------- -----------------------
Net cash flow from operating
activities 4,308 3,219 8,236
------------------------------- ------ ------------ ----------------------- -----------------------
Investing activities
Purchase of investment
properties 9 (22,810) (153,296) (152,154)
Acquisition costs capitalised 9 (604) - (1,184)
Capital improvements 9 (775) - (510)
Interest received 20 - 6
------------------------------- ------ ------------ ----------------------- -----------------------
Net cash flow from investing
activities (24,169) (153,296) (153,842)
------------------------------- ------ ------------ ----------------------- -----------------------
Financing activities
Proceeds from issue of
Ordinary Share capital 11 - 160,172 192,767
Issue costs of ordinary
Share Capital 12 (53) (2,941) (3,488)
Bank borrowings drawn 10 25,000 - -
Loan arrangement fees (943)
paid - -
Interest rate cap premium
paid 13 (582) - -
Interest paid bank borrowings (22) - -
Dividends paid to equity
holders 8 (5,766) - (5,286)
------------------------------- ------ ------------ ----------------------- -----------------------
Net cash flow from financing
activities 17,634 157,231 183,993
------------------------------- ------ ------------ ----------------------- -----------------------
Net (decrease) / increase
in cash and cash equivalents
for the period (2,227) 7,154 38,387
Cash and cash equivalents
at the start of the period 38,387 - -
------------------------------- ------ ------------ ----------------------- -----------------------
Cash and cash equivalents
at the end of the period 36,160 7,154 38,387
------------------------------- ------ ------------ ----------------------- -----------------------
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Six months ended 30 June 2018 (unaudited)
Capital
Share Share reduction Retained
capital premium reserve earnings Total
(unaudited)GBP'000 (unaudited)GBP'000 (unaudited) (unaudited) (unaudited)
Notes GBP'000 GBP'000 GBP'000
--------------- ------- -------------------- -------------------- ------------ ---------------- -------------
1 January 2018 1,922 140,505 41,566 9,457 193,450
--------------- ------- -------------------- -------------------- ------------ ---------------- -------------
Total
comprehensive
income - - - 8,468 8,468
--------------- ------- -------------------- -------------------- ------------ ---------------- -------------
Transactions
with owners
Dividends paid 8 - - (5,766) - (5,766)
Share issue
costs 12 - (53) - - (53)
--------------- ------- -------------------- -------------------- ------------ ---------------- -------------
30 June 2018 1,922 140,452 35,800 17,925 196,099
--------------- ------- -------------------- -------------------- ------------ ---------------- -------------
From 7 November 2016 to 30 June 2017 (unaudited)
Capital
Share Share reduction Retained
capital premium reserve earnings Total
Notes (unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- ------ ------------ ---------------- ------------------ ------------------- -----------------
7 November
2016 - - - - -
--------------- ------ ------------ ---------------- ------------------ ------------------- -----------------
Total
comprehensive
income - - - 2,982 2 ,982
--------------- ------ ------------ ---------------- ------------------ ------------------- -----------------
Transactions
with owners
Issue of
management
shares 11 50 - - - 50
Cancellation
of management
shares 11 (50) - - - (50)
Issue of
Ordinary
Shares 11 1,602 158,570 - - 160,172 Share issue costs 12 - (2,941) - - (2,941) Transfer to capital reduction reserve 12 - (46,852) 46,852 - - 30 June 2017 1,602 108,777 46,852 2,982 160,213 --------------- ------ ------------ ---------------- ------------------ ------------------- -----------------
From 7 November 2016 to 31 December 2017 (audited)
Capital
Share Share reduction Retained
capital premium reserve earnings Total
Notes (audited) (audited) (audited) (audited) (audited)
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- ------ ----------------- ---------------- ------------------ ------------------- -----------------
7 November
2016 - - - - -
--------------- ------ ----------------- ---------------- ------------------ ------------------- -----------------
Total
comprehensive
income - - - 9,457 9,457
--------------- ------ ----------------- ---------------- ------------------ ------------------- -----------------
Transactions
with owners
Issue of
management
shares 11 50 - - - 50
Cancellation
of management
shares 11 (50) - - - (50)
Issue of
Ordinary
Shares 11 1,922 190,845 - - 192,767
Share issue
costs 12 - (3,488) - - (3,488)
Transfer to
capital
reduction
reserve 12 - (46,852) 46,852 - -
Dividends paid 8 - - (5,286) - (5,286)
31 December
2017 1,922 140,505 41,566 9,457 193,450
--------------- ------ ----------------- ---------------- ------------------ ------------------- -----------------
Notes to the condensed consolidated financial statements
1. Basis of Preparation
General information
These unaudited condensed consolidated financial statements for the six month period ended 30 June 2018, are prepared in accordance with International Financial Reporting Standards ("IFRS") and interpretations issued by the International Accounting Standards Board ("IASB") and IAS34 "Interim Financial Reporting" as adopted by the European Union, including the comparative information for the period from incorporation on 7 November 2016 to 30 June 2017 and for the period from incorporation on 7 November 2016 to 31 December 2017.
The condensed consolidated financial statements have been prepared on a historical cost basis, except for investment properties and derivative financial instruments which have been measured at fair value.
The Company is a public listed company incorporated and domiciled in England and Wales. The Company's Ordinary Shares are listed on the main market of the London Stock Exchange, in the Specialist Fund Segment. The registered address of the Company is disclosed in the Corporate Information.
The condensed consolidated financial statements presented herein for the year to 31 December 2017 does not constitute full statutory accounts within the meaning of Section 434 of the Companies Act 2006.The Group's annual report and accounts for the year to 31 December 2017 have been delivered to the Registrar of Companies. The Group's independent auditor's report on those accounts was unqualified, did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their report and did not contain a statement under section 498(2) or 498(3) of the Companies Act 2016.
Convention
The consolidated condensed financial statements are presented in Sterling and all values are rounded to the nearest thousand (GBP'000), except when otherwise indicated.
Going concern
The directors have considered the Group's financial position as well as the principal risks of the Group. These risks are set out below. During the period the Group entered into an agreement to obtain a loan facility of GBP50 million of which GBP30 million is secured and available. GBP25 million is drawn and held in cash deposits and GBP5 million of this remains undrawn at 30 June 2018. Refer to note 10 for further details.
All of the Group's property assets are let to tenants on long leases with annual rent reviews linked to RPI with a 2% floor and a 4% cap, providing a stable and long term income stream. This coupled with a visible and relatively stable cost base provide additional security when assessing the Group's financial position.
The directors have also considered the capital commitments of the Group and the post balance sheet investments.
The directors believe that there are currently no material uncertainties in relation to the Company's ability to continue for a period of at least 12 months from the date of the Company's financial statements. The board is, therefore, of the opinion that the going concern basis adopted in the preparation of the Interim Report is appropriate.
2. Significant accounting judgements, estimates and assumptions
The preparation of the Group's financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts recognised in the financial statements and disclosures. However, uncertainty about these assumptions and estimates could result in outcomes that could require material adjustment to the carrying amount of the assets or liabilities in future periods.
Judgements
Information about significant areas of estimation, uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amount recognised in the financial statements are disclosed below.
Fair valuation of investment property
The value of investment property is determined by independent real estate valuation experts, to be the estimated amount for which a property should exchange on the date of the valuation in an arm's length transaction. Each property has been valued on an individual basis. The valuation experts use recognised valuation techniques in accordance with those recommended by the International Valuation Standard Committee and are compliant with IFRS 13.
The valuations have been prepared in accordance with the RICS Valuation - Global Standards 2017 incorporating the IVSC International Valuation Standards ("the Red Book"). Factors reflected include current market conditions, annual rentals, lease lengths, and location.
Gains or losses arising from changes in the fair values are included in the consolidated statement of comprehensive income in the period in which they arise. In order to avoid double accounting, the assessed fair value may be increased or reduced by the carrying amount of any accrued income resulting from the spreading of lease incentives and/or lease income straight-lining assets or liabilities to the statement of comprehensive income.
Operating lease contracts - the Group as lessor
The Group has acquired investment properties that are subject to commercial property leases with tenants. 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.
The leases when signed, are for between 20 and 25 years with a tenant only option to extend for one or two periods of 10 years. It has been assumed at this stage that the tenants do not exercise the option to extend.
Business combinations
The Group acquires subsidiaries that own property. At the time of acquisition, the Group considers whether each acquisition represents the acquisition of a business or the acquisition of an asset. 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 deferred tax arises.
All acquisitions in the period have been judged not to be acquisitions of a business.
3. Summary of significant accounting policies
The accounting policies adopted in this report are consistent with those applied in the Group's statutory accounts for the period ended 31 December 2017 and are expected to be consistently applied during the year ended 31 December 2018.
In addition, the following accounting policies will apply for the year ended 31 December 2018 and therefore the current six month period ended 30 June 2018:
Borrowings:
All bank borrowings are initially recognised at fair value net of attributable transaction costs. After initial recognition, all bank borrowings are measured at amortised cost, using the effective interest method. The effective interest rate is calculated to include all associated transaction costs.
Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. The fee is capitalised as a pre-payment for liquidity services and amortised over the period of the facility to which it relates within finance costs in the consolidated statement of comprehensive income.
Interest rate derivatives:
Derivative financial instruments, comprising interest rate caps for hedging purposes, are initially recognised at fair value and are subsequently measured at fair value, being the estimated amount that the Group would receive or pay to terminate the agreement at the period end date, taking into account current interest rate expectations and the current credit rating of the Group and its counterparties. Premiums payable under such arrangements are initially capitalised into the Condensed Group Statement of Financial Position.
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data is available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs significant to the fair value measurement as a whole. Changes in fair value of interest rate derivatives are recognised within the Condensed Group Statement of Comprehensive Income in the period in which they occur.
The Company does not apply hedge accounting in accordance with IFRS 9.
IFRS 9 'Financial Instruments'
The IFRS 9 'Financial Instruments' standard which is effective for annual periods beginning on or after 1 January 2018 represents a change from the previous requirements under IAS 39 'Financial Instruments: Recognition and Measurement' in respect of financial assets. The standard contains two primary measurement categories for financial assets: amortised cost and fair value. A financial asset is measured at amortised cost if it is held within a business model whose objective is to hold assets in order to collect contractual cash flows, and the asset's contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal outstanding. All other financial assets are measured at fair value. The standard eliminates the existing IAS 39 categories of held-to-maturity, available-for-sale and loans and receivables.
The Group's financial assets and liabilities comprise of derivatives (which are classified and measured at fair value), as well as trade and other receivables, cash and cash equivalents, borrowings and trade and other payables.
Under IFRS 9 financial instruments, trade and other receivables, trade and other payables and borrowings would be classified and measured at amortised cost. This is in line with the existing accounting policies already adopted for these financial instruments as IFRS 9 largely carries forward without substantive amendment the guidance on classification and measurement from IAS 39.
Accordingly, no adjustments have been made with regards to the measurement and classification of these financial instruments.
The Group's assessment in applying the new impairment approach to financial assets at amortised cost as required under IFRS 9 for expected credit losses has not resulted in any material changes given the Group's requirement for tenants to pay rental payments in advance. Therefore there is no restatement in the current period after the standard was adopted and becomes effective.
IFRS 15 'Revenue from Contracts with Customers'
IFRS 15 is based on the principle that revenue is recognised when control passes to a customer. The majority of the Group's income is from tenant leases and is outside the scope of the new standard except for related insurance or service charges which are recovered from the tenants. The main impact of IFRS 15 has been to show service charge income and the related service charge expenses gross within rental income. The comparatives have not been restated as the transitional provisions within the standard have been used to retrospectively apply the standard with the cumulative effect before initial application of the standard being recognised at the date of initial application. This cumulative effect is GBPnil.
4. Standards issued but not yet effective
IFRS 16: Leases (effective 1 January 2019).
An analysis on the impact of this standard has been included in the Group's statutory accounts for the period ended 31 December 2017.
The Group is still assessing the full impact of the new guidance under IFRS 16 on variable lease payments (including rental uplifts), lease modifications (including renewal options and breaks) and lease incentives. It is not anticipated that this standard will result in restatement in the current period once the standard is adopted and becomes effective.
5. Net rental income
Rental income arising from recognising guaranteed rent uplifts and initial lease rental payment includes the adjustments to rental receipts for the period to reflect the total minimum income recognised over the expected lease terms on a straight line basis. During the prior period ended 31 December 2017, the Group benefited from an upfront premium to reflect a rent calculation from the date of admission. For accounting purposes, this premium is being reflected over the term of the lease. In addition, the Group benefits from a minimum annual rental uplift of 2% on all leases. For accounting purposes these uplifts are also incorporated to recognise income on a straight line basis.
The elements are reported in the table below.
Period from Period from
7 November 7 November
Six months 2016 to 2016 to
ended 30 June 31 December
30 June 2018 2017 2017
(unaudited) (unaudited) (audited)
Total Total Total
GBP'000 GBP'000 GBP'000
------------------------------- -------------- ------------ -------------
Rental income cash received
in the period 6,212 3,605 9,453
-------------------------------- -------------- ------------ -------------
Rent received in advance
of recognition(1) 44 (1,756) (1,712)
Rent recognised in advance
of receipt(2) 1,608 398 1,651
-------------------------------- -------------- ------------ -------------
Rental income arising from
recognising guaranteed rent
uplifts and initial lease
rental payment in the period 1,652 (1,358) (61)
-------------------------------- -------------- ------------ -------------
Gross rental income 7,864 2,247 9,392
-------------------------------- -------------- ------------ -------------
Insurance/service charge
income 155 57 57
Insurance/service charge
expense (155) (57) (57)
-------------------------------- -------------- ------------ -------------
Net rental income 7,864 2,247 9,392
1 Rent received in relation to the period from admission to
acquisition, deemed to be a premium over the term of the leases
of the seed acquisition portfolio
2 Rent recognised in the period to reflect the minimum 2% uplift
in rents over the term of the lease on a straight line basis
6. Taxation
As a REIT, the Group is exempt from corporation tax on the profits and gains from its property investment business, provided it continues to meet certain conditions as per REIT regulations. For the period ending 30 June 2018 and 30 June 2017, the Group did not have any non-qualifying profits except interest income on bank deposits.
7. 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 time weighted average number of Ordinary Shares outstanding during the period. As there are no dilutive instruments outstanding, basic and diluted earnings per share are identical.
Period from Period from
7 November 7 November
Six months 2016 to 2016 to
ended 30 June 31 December
30 June 2018 2017 2017
(unaudited) (unaudited) (audited)
Total Total Total
GBP'000 GBP'000 GBP'000
--------------------------------- -------------- -------------------------- -----------------------
Net attributable to ordinary
shareholders
Total comprehensive income 8,468 2,982 9,457
Adjusted for:
Change in fair value of
investment property during
the period (3,991) (113) (2,317) Rental income arising from recognising guaranteed rent uplifts and initial lease rental payment 1,652 (1,358) (61) Change in fair value of interest rate derivative 76 - - --------------------------------- -------------- -------------------------- ----------------------- EPRA earnings 6,205 1,511 7,079 Adjusted for: Rental income arising from recognising guaranteed rent uplifts and initial lease rental payment (1,652) 1,358 61 ---------------------------------- -------------- -------------------------- ----------------------- Adjusted earnings 4,553 2,869 7,140 ---------------------------------- -------------- -------------------------- ----------------------- Average number of Ordinary Shares 192,206,831 152,989,751 162,552,476 ---------------------------------- -------------- -------------------------- ----------------------- Earnings per share (pence)(1) 4.41p 1.95p 5.82p EPRA basic and diluted earnings per share (pence)(1) 3.23p 0.99p 4.35p Adjusted basic and diluted earnings per share (pence)(1) 2.37p 1.88p 4.39p ---------------------------------- -------------- -------------------------- ----------------------- 1 There is no difference between basic and diluted earnings per share
The European Public Real Estate Association ("EPRA") publishes guidelines for calculating adjusted earnings designed to represent core operational activities.
The EPRA earnings are arrived at by adjusting for the revaluation movements on investment properties and interest rate derivatives.
EPRA earnings have been adjusted to exclude the effect of straight lining of rental income in order for the board to consider the level of cash covered dividend.
8. Dividends
Period Period
from 7 from 7
Dividend Six months November November
rate ended 2016 to 2016 to
(pence 30 June 30 June 31 December
share 2018 2017 2017
per (unaudited) (unaudited) (audited)
share GBP'000 GBP'000 GBP'000
-------------------------------- --------- ------------ ------------ -------------
First interim dividend
for the period ended
31 December 2017 (ex-dividend
- 10 August 2017) 1.5p - - 2,403
Second interim dividend
for the period ended
31 December 2017 (ex-dividend
- 16 November 2017) 1.5p - - 2,883
Third interim dividend
for the period ended
31 December 2017 (ex-dividend
- 8 February 2018) 1.5p 2,883 - -
First interim dividend
for the period ended
31 December 2018 (ex-dividend
- 3 May 2018) 1.5p 2,883 - -
Total dividends paid 5,766 - 5,286
-------------------------------- --------- ------------ ------------ -------------
Total dividends paid
in respect of the period 1.5p - 3.0p
Total dividends unpaid
but declared in respect
of the period 1.5p 1.5p 1.5p
-------------------------------- --------- ------------ ------------ -------------
Total dividends declared
in respect of the period
- per share 3.0p 1.5p 4.5p
-------------------------------- --------- ------------ ------------ -------------
No dividends were declared and paid as distribution to equity shareholders during the period from 7 November to 30 June 2017.
On 1 February 2018, the Company declared an interim dividend of 1.50 pence per Ordinary Share for the period from 30 September 2017 to 31 December 2017 and was paid in February 2018.
On 27 April 2018, the Company declared an interim dividend of 1.50 pence per Ordinary Share for the period from 31 December 2017 to 31 March 2018 and was paid in May 2018.
On 9 August 2018, the Company declared an interim dividend of 1.5 pence per share for the period from 1 April 2018 to 30 June 2018 payable in September 2018.
9. Investment property
In accordance with IAS 40: Investment Property, the properties have been independently fair valued by Cushman & Wakefield, an accredited independent valuer with a recognised and relevant professional qualification and with recent experience in the locations and categories of the investment property being valued. The valuations have been prepared in accordance with the RICS Valuation - Global Standards 2017 incorporating the IVSC International Valuation Standards ("the Red Book"). The valuers have sufficient current local and national knowledge of the particular property markets involved, and have the skills and understanding to undertake the valuations competently.
The valuation models prepared in accordance with those recommended by the International Valuation Standards Committee have been applied and are consistent with the principles in IFRS 13.
The valuations are the ultimate responsibility of the Directors. Accordingly, the critical assumptions used in establishing the independent valuation are reviewed by the Board.
All corporate acquisitions during the year have been treated as asset purchases rather than business combinations because they are considered to be acquisitions of properties rather than businesses.
As at As at As at
30 June 30 June 31 December
2018 2017 2017
(unaudited) (unaudited) (audited)
Total Total Total
GBP'000 GBP'000 GBP'000
---------------------------------- --------------------- ----------------------- --------------------------
Opening value 156,165 - -
Property additions 22,810 152,154 152,154
Acquisition costs capitalised 604 1,142 1,184
Capital improvements 775 - 510
Revaluation movement 3,991 113 2,317
----------------------------------- --------------------- ----------------------- --------------------------
Closing value per independent
valuation report 184,345 153,409 156,165
Guaranteed rent reviews
and initial lease rental
payment net (debtor) / creditor (1,591) 1,358 61
----------------------------------- --------------------- ----------------------- --------------------------
Closing fair value per condensed
consolidation statement
of financial position 182,754 154,767 156,226
----------------------------------- --------------------- ----------------------- --------------------------
1 Investment properties include freehold and long leasehold
properties
Change in fair value of investment properties
The following elements are included in the change in fair value of investment properties reported in the condensed consolidated statements:
Period from Period from
7 November 7 November
Six months 2016 to 2016 to 31
ended 30 30 June December
June 2018 2017 2017
(unaudited) (unaudited) (audited)
Total Total Total
GBP'000 GBP'000 GBP'000
------------------------------- ------------- ------------- ------------
Revaluation movement 3,991 113 2,317
Rental income arising from
recognising guaranteed rent
uplifts and initial lease
rental payment in the period (1,652) 1,358 61
-------------------------------- ------------- ------------- ------------
Change in fair value of
investment properties 2,339 1,471 2,378 -------------------------------- ------------- ------------- ------------ 10. Bank borrowings
A summary of the bank borrowings drawn in the period are shown below:
As at As at As at
30 June 30 June 31 December
2018 2017 2017
(unaudited) (unaudited) (audited)
Total Total Total
GBP'000 GBP'000 GBP'000
---------------------------- ------------ ------------ -------------
At the beginning of the
period - - -
New bank borrowings agreed
and drawn in the period 25,000 - -
Total bank borrowings drawn 25,000 - -
---------------------------- ------------ ------------ -------------
During the period, the Group signed a GBP50 million five year loan facility with Metro Bank PLC (the "Loan Facility") of which GBP30 million is secured and available at 30 June 2018. The Loan Facility has two elements: an interest only term loan of GBP25 million (the "Term Loan") which was fully drawn at 30 June 2018, and a revolving credit facility of GBP25 million (the "RCF"), GBP5 million of which was secured and available at 30 June 2018. This is the Group's first debt facility.
The Loan Facility has a margin of 265 basis points over Metro Bank PLC's published Base Lending Rate. The five year Term Loan is repayable without penalty after two years, and with a 1% penalty if prepaid within the first two years. Amounts drawn under the RCF can be repaid at any time without penalty. GBP25 million of the Term Loan and GBP5 million of the RCF are secured over a portfolio of 30 care homes held in a wholly-owned Group company.
The Group drew down GBP25 million of the Term Loan facility on 21 June 2018.
As at 30 June 2018, the Group remains within its maximum loan to value ("LTV") which is 35% of gross asset value of the Group as a whole.
Any fees associated with arranging the bank borrowings unamortised as at the period end are offset against amounts drawn on the facilities as shown in the table below:
As at As at As at
30 June 30 June 31 December
2018 2017 2017
(unaudited) (unaudited) (audited)
Total Total Total
GBP'000 GBP'000 GBP'000
------------------------------- ------------ ------------ -------------
Bank borrowings drawn: due
after more than one year 25,000 - -
------------------------------- ------------ ------------ -------------
Total bank borrowings 25,000 - -
Less: unamortised costs (937) - -
------------------------------- ------------ ------------ -------------
Total bank borrowings per
the Condensed Group Statement
of Financial Position 24,063 - -
------------------------------- ------------ ------------ -------------
Included in the condensed consolidated statement of comprehensive income is loan finance costs of GBP27,375 which includes loan arrangement fees of GBP5,800.
11. Share capital
Period from Period from
7 November 7 November
Six months 2016 to 2016 to
ended 30 June 31 December
30 June 2018 2017 2017
(unaudited) (unaudited) (audited)
Total Total Total
Shares in
issue GBP'000 GBP'000 GBP'000
--------------- ----------------- --------------------------- ----------------------- -------------------
At the
beginning
of the period - 1,922 - -
Issue of
management
shares 50,002 - 50 50
Cancellation
of management
shares (50,000) - (50) (50)
Shares issued
7 March 2017 146,172,358 - 1,462 1,462
Shares issued
5 May 2017 14,000,000 - 140 140
Shares issued
13 November
2017 32,034,471 - - 320
---------------- ----------------- --------------------------- ----------------------- -------------------
192,206,831 1,922 1,602 1,922
--------------- ----------------- --------------------------- ----------------------- -------------------
The Company had 192,206,831 shares of nominal value of 1 pence each in issue at the end of the period (30 June 2017: 160,172,360, 31 December 2017: 192,206,831).
There were no shares issued during the six month period ended 30 June 2018.
12. Share premium
Share premium comprises share capital subscribed for in excess of nominal value less costs directly attributed to share issuances.
Period from Period from
7 November 7 November
Six months 2016 to 2016 to
ended 30 June 31 December
30 June 2018 2017 2017
(unaudited) (unaudited) (audited)
Total Total Total
GBP'000 GBP'000 GBP'000
------------------------------- -------------- ---------------- -----------------------------
At the beginning of the
period 140,505 - -
Shares issued 7 March 2017 - 144,710 144,710
Shares issued 5 May 2017 - 13,860 13,860
Shares issued 13 November
2017 - - 32,275
Share issue costs (53) (2,941) (3,488)
Transfer to capital reduction
reserve - (46,852) (46,852)
-------------------------------- -------------- ---------------- -----------------------------
140,452 108,777 140,505
------------------------------- -------------- ---------------- -----------------------------
Share issue costs in the six months ended 30 June 2018 includes incremental costs invoiced in the period in relation to the shares issued in November 2017. These costs had not been accrued at 31 December 2017.
13. Interest rate derivatives
As at As at As at
30 June 30 June 31 December
2018 2017 2017
(unaudited) (unaudited) (audited)
Total Total Total
GBP'000 GBP'000 GBP'000
--------------------------- ------------ ------------ -------------
At the beginning of the
period - - -
Interest cap costs paid 582 - -
Changes in fair value of
interest rate derivatives (76) - -
--------------------------- ------------ ------------ -------------
506 - -
--------------------------- ------------ ------------ -------------
To mitigate the interest rate risk that arises as a result of entering into variable rate linked loans, the Group entered into an interest rate cap with the notional value of GBP25 million and a strike rate of 1% effective from 21 June 2018 with a termination date of 15 June 2023. The fair value of the interest rate cap is based on a floating reference of 1 month LIBOR.
The total premium payable in the year towards securing the interest rate cap was GBP570,000, plus associated costs at GBP12,000.
14. Transactions with related parties
Investment Adviser
The fees calculated and paid for the period to the Investment adviser were as follows:
Period from Period from
7 November 7 November
Six months 2016 to 2016 to
ended 30 June 31 December
30 June 2018 2017 2017
(unaudited) (unaudited) (audited)
Total Total Total
GBP'000 GBP'000 GBP'000
---------------------------- -------------- ------------ -------------
Impact Health Partners LLP 1,173 547 1,609
----------------------------- -------------- ------------ -------------
For the six month period ended 30 June 2018 the principals and finance director of Impact Health Partners LLP, the Investment Adviser, are considered key management personnel. Mr Patel and Mr Cowley are the principals and Mr Yaldron is the finance director of Impact Health Partners LLP and they own 5.20%, 0.33% and 0.02% respectively (either directly or through a wholly-owned company) of the total issued Ordinary Share capital of Impact Healthcare REIT plc. Mr Patel also (directly and indirectly) holds a majority 72.5% stake in Minster Care Group Limited (MCGL). Mr Cowley also holds a 20% interest in MCGL. 96% of the Group's rental income in the six months ended 30 June 2018 was received from MCGL or its subsidiaries. There were no trade receivables or payables outstanding at the period end.
Directors' interests
Paul Craig is a director of the Company. He is also the portfolio manager at Quilter Investors (formerly Old Mutual Global Investors), which has an interest in 39,617,784 Ordinary Shares of the Company through funds under management. The remaining directors are shareholders in the Company but do not hold significant interests in the Ordinary Share capital of the Company.
During the period the directors received dividends from the Company of GBP5,700. In addition, funds managed by Paul Craig received dividends from the Company of GBP1,188,534.
Acquisition of new leases
The Company complies with the relevant provisions of the Listing Rules ("LR") and has adopted a related party policy consistent with LR 11. Minister is considered a related party under this policy and entering into new leases for Carnbroe and Grenville, two of the properties acquired by the Group in the six months ended 30 June 2018. This constitutes a smaller related party transaction as defined in LR 11.1.10. The Board is satisfied that this transaction is fully compliant with the Company's related party policy.
15. Net Asset Value (NAV) per share
Basic NAV per share is calculated by dividing net assets in the 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. As there are no dilutive instruments outstanding, basic and diluted NAV per share are identical.
EPRA has issued guidelines aimed at providing a measure of net asset value on the basis of long term fair values. There are no material adjustments between basic and EPRA NAV.
As at As at As at
30 June 30 June 31 December
2018 2017 2017
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
------------------------------- ------------ ------------ -------------
Net assets per condensed
consolidated statement of
financial position 196,099 160,213 193,450
Mark to Market adjustment
of derivatives 76 - -
EPRA NAV 196,175 160,213 193,450
-------------------------------- ------------ ------------ -------------
Issued share capital (number) 192,206,831 160,172,360 192,206,831
-------------------------------- ------------ ------------ -------------
Basic NAV per share 102.03p 100.03p 100.65p
-------------------------------- ------------ ------------ -------------
EPRA NAV per share 102.06p 100.03p 100.65p
-------------------------------- ------------ ------------ -------------
16. Capital commitments
The Group has entered into License for Alterations and Deeds of Variation contracts for 10 of its properties by 30 June 2018. The Group has committed to fund up to a maximum of GBP8.3 million in relation to the cost of improvements on these properties of which GBP1.2 million was funded by 30 June 2018.
The Group has also committed to a further property acquisition and a deferred payment agreement for 115 beds. These are within the Prestige portfolio acquisition announced in January 2018. Total commitments under these contracts are GBP8.5 million.
17. Contingent liabilities
Full relief for Stamp Duty Land Tax (SDLT) has been granted in relation to the transfer of properties between companies which are members of the Group. Should there be a change in control of the Company within 3 years of completion, or a single shareholder acquires a substantial stake in the Company a liability in the subsidiary companies could arise. This is equal to approximately 5% of the aggregate value of the properties and is estimated at GBP8.4 million on the net purchase price of assets acquired since incorporation.
18. Controlling parties
The Company is not aware of any person who, directly or indirectly owns or controls the Company. The Company is not aware of any arrangements the operations of which may give rise to a change in control of the Company.
19. Subsequent events
Acquisitions
On 3 August 2018, the board of directors announced that the Group had exchanged contracts to acquire five care homes comprising 218 beds for a total consideration of GBP12.15 million (including costs). All of the homes were built between 1999 and 2007 and have undergone a refurbishment programme between February 2016 and December 2017 of GBP1.39 million (GBP6,380 per bed).
The homes are currently managed by Careport Advisory Services ("Careport") under their Mariposa and Papillon brands. Careport, who have a long track record of turning around and stabilising care homes, will become the new tenant under new 25-year term leases with no break clauses and an option to extend to 35 years at the end of year 10. The leases are subject to annual RPI uplifts with a floor of 2%p.a. and a cap of 4%p.a. Four of the homes are rated Good by CQC and one is rated Requires Improvement.
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
IR SSUEEAFASEDA
(END) Dow Jones Newswires
August 09, 2018 02:01 ET (06:01 GMT)
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