TIDMCSH
RNS Number : 0404R
Civitas Social Housing PLC
12 June 2018
12 June 2018
Civitas Social Housing PLC
("Civitas" or the "Company")
Annual Results
Period from 18 November 2016 to 31 March 2018
Civitas Social housing PLC (Lon: CSH), the first London listed
Real Estate Investment Trust ("REIT") dedicated to investing into
regulated social housing in England and Wales, is pleased to
announce its results for the period since IPO in 18 November 2016
to 31 March 2018.
The full annual report and financial statements can be accessed
via the Company's website at www.civitassocialhousing.com or by
contacting the Company Secretary by telephone on 01392 477500.
Financial Highlights
31 March 2018
---------------------------------- -----------------
Profit before tax GBP36.9 million
Earnings per share 10.6p
IFRS NAV GBP369.4 million
IFRS NAV per share 105.5p
IFRS NAV increase since IPO 7.7%
Portfolio NAV GBP398.5 million
Portfolio NAV per share 113.9p
Portfolio NAV increase since IPO 16.2%
IFRS property valuation GBP516.6 million
Annualised rent roll GBP28.4 million
Ordinary share equity raised GBP350 million
C share capital raised GBP302 million
Dividends declared 3p per share
Total shareholder return 10.7%
Operational Highlights
-- 414 properties acquired in the period, across 109 Local
Authorities, based on long-term leases signed with 11 Housing
Associations, providing dependable accommodation for 2,621 tenants
supported by 64 care providers
-- Independent Social Impact Report noted encouraging evidence
that Civitas can deliver on its social objective: increasing the
provision of high quality social homes, improving the quality of
life for low income and vulnerable people in social need while
achieving financial returns for investors
Funding
-- Scottish Widows GBP52.5 million loan note with an agreed term
of ten years with an all-in fixed rate of 2.99% Lloyds GBP40
million three year floating rate revolving credit facility
-- Oversubscribed GBP350 million IPO with proceeds fully invested by December 2017
-- Total bank borrowings of GBP92.5 million equating to 12% of gross assets
-- GBP302m of capital raised through a C share issue in November 2017
Post Balance Sheet Highlights
-- 19 properties acquired post the period end, totalling GBP30.5 million
-- Lloyds RCF extended by a further GBP20 million
-- Transfer of all First Priority leases to Falcon
Michael Wrobel, Chairman of Civitas, commented:
"Civitas has made a strong start. It has succeeded in assembling
a market leading portfolio of high quality social housing,
providing long-term stable, affordable accommodation for some of
the most vulnerable in society.
It has successfully deployed the proceeds of the IPO and is
making good progress in deploying the C share proceeds. The
Investment Adviser has identified a further pipeline of
opportunities and is engaged presently in conducting detailed due
diligence on those that are near term and evaluating further those
for purchase later in 2018 and beyond. As part of this work, the
Investment Adviser continues to build relationships with potential
vendors, particularly care providers who today form a growing
element of the pipeline overall in addition to housing associations
and other private vendors.
The objective remains to acquire high-quality properties
off-market and to seek to ensure that Civitas benefits from the
widest possible choice and range of potential properties that offer
diversity of underlying tenants and mid to upper level care
acuity.
There remains a significant unmet need for high quality
accommodation, which is underpinned by legislation and growing
demand. We look forward to the future with confidence."
For further information, please contact:
Civitas Housing Advisors Limited
Paul Bridge Tel: +44 (0)20 3058 4844
Andrew Dawber Tel: +44 (0)20 3058 4846
Cenkos Securities PLC
Sapna Shah Tel: +44 (0)20 7397 1922
Tom Scrivens Tel: +44 (0)20 7397 1915
Pagefield
Philip Dennis Tel: +44 (0)7947 868206
David Leslie Tel: +44 (0)7584 070274
Notes:
Civitas Social Housing PLC is the first Real Estate Investment
Trust offering pure play exposure to social housing in England and
Wales. The Company is managed by Civitas Housing Advisors Limited.
The Company's ordinary shares are listed on the premium listing
segment of the Official List of the Financial Conduct Authority and
were admitted to trading on the main market for listed securities
of the London Stock Exchange in November 2016.
Chairman's Statement
Introduction
I am pleased to provide the Company's first shareholder report,
including the audited consolidated financial statements for the
period from its listing on 18 November 2016 to 31 March 2018.
The Company has succeeded in assembling a market leading
portfolio of top quality social housing, focused on properties that
are specially adapted to enable the provision of care in the
community. The leases are with Housing Associations, which in turn
are funded by Local Authorities. The leases are long-term, usually
25 years and rents linked to inflation. This investment strategy
provides shareholders with an attractive level of income and a
measure of inflation protection, together with the potential for
capital growth. Our Company also has a significant positive social
impact.
The Company launched via an oversubscribed Initial Public
Offering ("IPO"), with gross proceeds of GBP350 million in November
2016, followed by a further capital raise in the form of a C share
issuance in November 2017 of GBP302 million. Being the first REIT
to be listed on the London Stock Exchange that offers a focused
exposure to built social housing, the Company has been able to
establish a substantial network of relationships and partners that
provide the Company with opportunities to acquire suitable
properties off market.
As at 31 March 2018, the Company's portfolio was valued at
GBP516.6 million on an IFRS basis, consisting of 414 properties
housing 2,621 tenants, leased to 11 Registered Providers, involving
109 Local Authorities and 64 care providers with a focus on
Specialist supported housing. The Company enhances existing
properties to its exacting standards, or works with its development
partners to bring new properties into the sector, while never
exposing our shareholders to development risk.
Deployment
As a reflection of the significant demand for specialist social
housing and the strength of the Company's network, the net proceeds
of the IPO and most of the planned associated debt were fully
deployed by December 2017. In light of the pipeline of further
potential transactions, an additional GBP302 million of capital was
raised by way of a C share issue in November 2017. The Company has
made good progress in deploying the funds from the C share issue
acquiring refurbished, repositioned or new Specialist supported
housing. As at 31 March 2018, an overall total of GBP471.6 million
(total transactions completed and exchanged, before purchase costs)
has been deployed into high quality Specialist supported
housing.
The majority of the acquisitions made by the Company have been
through relationships fostered over many years by the team at our
Investment adviser, Civitas Housing Advisors, as well as more
recent introductions. The Company has benefitted from acquiring
many properties off-market in large part due to the strong
reputation of the Company in the market. Hence, acquisition prices
achieved have been very competitive, resulting in capital
appreciation of GBP30.6 million in this first reporting period.
Dividends
On 4 May 2017, the Company declared its maiden interim dividend
of 0.75p per Ordinary share, followed by a further three quarterly
dividends of 0.75p, as outlined in the launch Prospectus on IPO.
Since the period end a further dividend of 1.25p per Ordinary share
has been declared for the period to 31 March 2018, the increase
matching the Company's original intention to target a 5p dividend
for the calendar year to 31 December 2018. The Company's C shares
are due to pay a 3% cumulative dividend up to the point of
conversion to Ordinary shares. A first dividend for the C shares of
1.13p was declared on 10 May 2018.
Financial performance
Rental income of GBP18.6 million was generated in the period,
with acquisitions made steadily during that time, at the period end
the rent roll stood at GBP28.4 million. Total comprehensive income
for the period was GBP36.9 million reflecting earnings per share
for the period of 10.6p.
As at 31 March 2018, the IFRS net asset value of the Company was
105.5p representing an increase of 7.7% since the IPO price of 98p
per Ordinary share, giving a total return of 10.7% (including
dividends paid of 3p per share in the period).
C share Issue
As a result of the Company's success in delivering its original
objectives, the Company received strong demand for new C shares in
November 2017, raising GBP302 million of new capital, of which
GBP72.4 million has been deployed in the first 4 months.
Loan financing
On 3 November 2017, the Company agreed a GBP52.5 million term
loan facility with Scottish Widows Limited, with a term of 10
years, and an interest rate of 2.99%.
On 16 November 2017, the Company further agreed a GBP40 million
revolving credit facility with Lloyds Bank plc, available for a
term of three years, at a floating rate above 3-month LIBOR.
Following the period end the revolving credit facility was extended
by a further GBP20 million on the same terms as the original
facility, to help fund the Company's pipeline alongside the C share
proceeds.
The Company will continue to consider additional financing as
and when it is necessary to facilitate the momentum of deployment,
and the Board deems the terms of the facilities fair and
reasonable.
As stated at the outset, the Company expects to put in place an
average gearing of approximately 30% of the Company's gross asset
value. At the period end the Company had gearing of 12% of gross
assets, excluding the C share liability.
Outlook
There remains a chronic shortage of all forms of social housing
in the UK, including Specialist supported housing. The Company will
look to continue to build on the successful deployment to date and
further enhance the portfolio. The Investment Adviser has
identified a pipeline of social homes that may be acquired by the
Company over the next 12 months, of which approximately GBP100
million is expected to be available in the near term. The
Investment Adviser will continue to implement a disciplined policy
focused on quality opportunities, whilst rejecting others on the
grounds of quality, location and value for money in addition to a
number of other factors.
The Board is grateful for the support and encouragement of the
Company's shareholders and the hard work of the team at our
Investment Adviser and our other advisers. We look forward to long
and successful relationships with our various counter parties and
making a positive contribution to the social housing sector.
Michael Wrobel
Chairman
11 June 2018
Analysis of property portfolio
As at 31 March 2018 the Company's Portfolio is spread across
England and Wales, reflecting the Company's objective of creating a
coherent yet diversified portfolio.
KEY REGION COUNTY PROPERTIES TENANCIES
1 North East Durham 58 365
-------------- ---------------- ---------- ---------
2 York & Humber South Yorkshire 11 81
-------------- ---------------- ---------- ---------
3 York & Humber West Yorkshire 8 118
-------------- ---------------- ---------- ---------
4 North West Cheshire 1 13
-------------- ---------------- ---------- ---------
5 North West Lancashire 26 85
-------------- ---------------- ---------- ---------
6 North West Merseyside 26 183
-------------- ---------------- ---------- ---------
7 East Midlands Derbyshire 3 10
-------------- ---------------- ---------- ---------
8 East Midlands Leicestershire 17 106
-------------- ---------------- ---------- ---------
9 East Midlands Lincolnshire 4 39
-------------- ---------------- ---------- ---------
10 East Midlands Northamptonshire 4 13
-------------- ---------------- ---------- ---------
11 East Midlands Nottinghamshire 12 97
-------------- ---------------- ---------- ---------
12 West Midlands Staffordshire 11 71
-------------- ---------------- ---------- ---------
13 West Midlands Warwickshire 10 38
-------------- ---------------- ---------- ---------
14 West Midlands West Midlands 43 121
-------------- ---------------- ---------- ---------
15 West Midlands Worcestershire 10 44
-------------- ---------------- ---------- ---------
16 East Bedfordshire 2 25
-------------- ---------------- ---------- ---------
17 East Cambridgeshire 9 25
-------------- ---------------- ---------- ---------
18 East Essex 2 8
-------------- ---------------- ---------- ---------
19 East Hertfordshire 1 13
-------------- ---------------- ---------- ---------
20 Greater London Greater London 24 326
-------------- ---------------- ---------- ---------
21 South East Berkshire 4 29
-------------- ---------------- ---------- ---------
22 South East Buckinghamshire 1 1
-------------- ---------------- ---------- ---------
23 South East East Sussex 2 8
-------------- ---------------- ---------- ---------
24 South East Hampshire 12 66
-------------- ---------------- ---------- ---------
25 South East Kent 8 90
-------------- ---------------- ---------- ---------
26 South East Oxfordshire 4 19
-------------- ---------------- ---------- ---------
27 South East Surrey 8 53
-------------- ---------------- ---------- ---------
28 South West Cornwall 14 110
-------------- ---------------- ---------- ---------
29 South West Devon 5 19
-------------- ---------------- ---------- ---------
30 South West Dorset 37 250
-------------- ---------------- ---------- ---------
31 South West Gloucestershire 27 126
-------------- ---------------- ---------- ---------
32 South West Somerset 5 41
-------------- ---------------- ---------- ---------
33 South West Wiltshire 1 3
-------------- ---------------- ---------- ---------
34 Wales Gwent 2 10
-------------- ---------------- ---------- ---------
35 Wales West Glamorgan 2 15
=== ============== ================ ========== =========
Total 414 2,621
---------- ---------
Investment Adviser's report
Civitas Housing Advisors Limited ("CHA"), the Investment Adviser
to the Company, is pleased to report on the first period of
operation for the Company for the period from IPO in November 2016
to 31 March 2018.
Market update
The need for increased levels of housing of all types and
tenures continues to be a prominent issue for all political
parties. The government has recently set a new target to provide
300,000 new homes each year and is investigating various
initiatives to achieve this, with current supply being well behind
this target.
The current shortfall in housing provision is felt acutely
within the specialist areas of care, with the result that good
quality properties that are established to provide healthcare in
the community are today in significant and growing demand and
likely to remain so for many years to come.
Against this background the market to acquire Specialist
supported housing remains robust with a range of both private and
public buyers seeking to purchase properties and with an element of
upward pressure on pricing as a result. Despite this, the Company
utilises its relationships, existing agreements and buying power to
acquire good quality properties at competitive prices that remain
within the yield range set out at the time of IPO in 2016.
In addition, properties and counterparties continue to be
turned-down (in excess of GBP300 million declined since IPO) as a
result of the due diligence and acquisition requirements set by the
Company. The issues identified earlier in the year by First
Priority Housing Association have emphasised further the importance
of ensuring that counterparty, transaction and lease structures are
robust and sustainable.
The Company itself continues to enhance its own due diligence
procedures with the development of its best practice investment
Protocol including procedures to further secure rental income and
deposits resting with housing association partners.
On 9 May 2018 the Company announced that all leases held with
First Priority had been successfully assigned to Falcon Housing
Association.
Investment strategy
The Company's aim is to improve the standard and availability of
Specialist supported housing, while providing value for money to
the public purse.
In many instances the alternative accommodation available to
individuals in need of Specialist supported housing is an NHS
institution or care home. Despite the efforts of staff, placement
in an NHS institution or care home may not, however, provide the
most optimal outcome for the individual, reducing their wellbeing
at the same time as carrying a significant cost.
During the period the Company has assembled a high quality
portfolio of 414 properties, roughly half of these properties were
existing residential properties that have been modified and
enhanced to enable long term care to be provided within the
community. The other half of the portfolio represents properties
that have been repurposed from an alternative use such as offices,
or newly built properties designed to provide long term care.
Key to the establishment of the Company's portfolio are the
strong relationships it has built in the sector, for example
working with a number of specialised healthcare partners to obtain
high quality properties at competitive prices. In instances where
new properties are developed or converted the Company will commit
to acquire the property once completed, subject to all necessary
standards being met. By contracting to acquire a property once
complete the developer is the only party exposed to the development
or forward funding risk and the Company has an income generating
property from day one.
As the first REIT to be listed on the London Stock Exchange to
offer a focused exposure to social housing in England and Wales the
Company has benefitted from a first mover advantage. The Company
has built on this advantage to establish the pre-eminent position
and a strong reputation in the market. The Company's position, its
partnerships and the experience and networks of the Investment
Adviser team have resulted in incoming investment opportunities and
enabled the Company to acquire materially all properties off-market
to date, delivering capital appreciation from day one. During the
period GBP471.6 million of property was acquired, with revaluation
gains of GBP30.6 million realised.
Earlier in the year one of the Company's tenants First Priority
Housing Association reported itself to the Regulator, stating cash
flow concerns. In the interests of ensuring stability for the
Company's tenants discussions took place with several alternative
Housing Associations to assign the Company's properties then leased
to First Priority. On 9 May 2018 the Company announced that all
leases held with First Priority had been successfully assigned to
Falcon Housing Association without any loss of future rent,
demonstrating the quality of the portfolio and the due diligence
undertaken by the Company. At the same time this experience
emphasised further the importance of ensuring that counterparty,
transaction and lease structures are robust and sustainable and
this has led to various enhancements to the due diligence process.
Properties and counterparties continue to be turned-down as a
result of the due diligence and acquisition requirements set by the
Company.
During this period we have acquired 414 properties, leased to 11
Registered Providers and housing 2,621 tenants across 109 Local
Authorities, with care support provided by 64 care providers, fully
deploying the GBP350 million equity raised at IPO, the GBP92.5
million of debt subsequently drawn, and GBP72.4 million of the
GBP302 million of C share capital raised in November 2017.
At the time of IPO the Company stated that it would invest at
least 75% in Specialist supported housing, at the date of this
report almost the entire portfolio is invested in Specialist
supported housing.
Specialist Supported Housing
The Company actively acquires Specialist supported housing,
which includes housing for some of the most vulnerable people in
society. Typically, government funding for each tenant under this
categorisation represents 100% of the cost. This includes housing
(rent and property maintenance) as well as the cost for care (paid
to the Care Provider and usually representing the largest element
of the overall funding). Costs are paid from the Department for
Communities and Local Government and the Department of Work and
Pensions to the relevant Local Authority, which then passes funds
on to the Registered Provider and Care Provider.
Due to the relationships the Company has fostered in the market
acquisition yields achieved in the Specialist supported housing
sector are typically in the region of 5.5% to 6.5%. Larger
portfolios have been seen to date at significantly lower yields.
Many of the tenants in the Company's portfolio are of an age that
would mean that they could be in residence for the length of the
lease and beyond, as such the leases are typically 25 years in
length or longer and subject to annual CPI uplifts.
The Local Authority is responsible for paying the care provider
directly for its provision of services to the tenant. The Company
does not undertake responsibility for the operations of the care
provider or care for the individual tenants. The Registered
Provider typically enters into a service level agreement with the
care provider. The care provider itself comes under the regulation
of the Care Quality Commission.
Long-term leases and occupancy agreements
The Company has typically entered into long-term inflation
adjusted leases for periods in excess of 20 years with Housing
Associations, where all management and maintenance obligations are
serviced by the Housing Associations. The Company's portfolio
currently has a WAULT of 24.1 years.
The nature of the lease arrangements with the Housing
Associations are that the Housing Association, and not the Company,
is the landlord under applicable landlord and tenancy
legislation.
Where the counterparty is a Local Authority, or where we believe
it is in the Company's interest, the Company may consider unexpired
leases of not less than 10 years. This may be due to the
constraints on Local Authorities from entering into longer terms
arrangements.
The investment pipeline
The investment pipeline has identified a number of new assets
which meet the Investment Objective and Investment Strategy,
including off-market portfolios identified through our contacts and
relationships in the sector.
The assets identified for acquisition come from an increasingly
broad range of sources reflecting the enhanced profile of the
Company and the Investment Adviser within the social housing
sector.
The Investment Adviser has identified further pipeline of
opportunities and is engaged presently in conducting detailed due
diligence, on those that are near term and evaluating further those
for purchase later in 2018 and beyond. As part of this work the
Investment Adviser continues to build relationships with potential
vendors, particularly care providers who today form a growing
element of the pipeline overall in addition to Housing Associations
and other private vendors.
As part of the Company's plans to seek further diversification
within the specialist areas of the regulated social housing sector,
we anticipate that pipeline transactions will include not just
homes for tenants with care needs based around learning disability
and autism but also dependency, homelessness and the desire to
release hospital beds through the use of "step down" accommodation
associated with the NHS. In each case the Company intends to
operate the same model with a Housing Association entering into a
long-term arrangement with the Company and providing on the ground
property services.
We look forward to continued progress over the forthcoming
months and to deploying further capital to improve the quality and
availability of social housing across England and Wales.
Civitas Housing Advisors Limited
Investment Adviser
11 June 2018
Corporate Social Responsibility Report
Sustainability
The business model of the Company is to provide long-term
suitable homes for individuals with care needs; acting in a
sustainable manner is key to achieving this aim. The property of
the Company is tailored to meet the future needs of the tenants and
where required is actively asset managed to provide long term
functionality and value to the wider community.
Environment
During the investment due diligence the Company looks closely at
the environmental impact of each potential acquisition, and
encourages a sustainable approach for maintenance and upgrading
properties. Through partnering with specialist developers and
vendors, the high standards the Company expects from each
investment in the Supported housing sector is adopted by other
companies in the sector.
Once within the portfolio the properties of the Company are
actively asset managed, with opportunities to improve environmental
efficiencies factoring heavily in addition to other asset
management initiatives.
The Board has considered the requirements to disclose the annual
quantity of emissions, further detail on this is included in the
Report of the Directors in the full Annual Report.
Diversity
The Company does not have any employees or office space, as such
the Company does not operate a diversity policy with regards to any
administrative, management and supervisory functions.
Whilst recognising the importance of diversity in the boardroom,
the Company does not consider it to be in the interest of the Group
and its shareholders to set prescriptive diversity criteria or
targets. The Board will continue to monitor diversity, taking such
steps as it considers appropriate to maintain its position as a
meritocratic and diverse business.
The Board's objective is to maintain effective decision-making,
including the impact of succession planning. All Board appointments
will be made on merit and have regard to diversity regarding
factors such as gender, ethnicity, skills, background and
experience.
The Board comprises three male and one female non-executive
Directors.
Human rights
The Company is not within the scope of the Modern Slavery Act
2015 because it has not exceeded the turnover threshold and is
therefore not obliged to make a slavery and human trafficking
statement.
The Board is satisfied that, to the best of its knowledge, the
Company's principal advisers, which are listed in the Company
Information section, comply with the provisions of the UK Modern
Slavery Act 2015.
The Company's business is solely in the UK and therefore is
considered to be low risk with regards to human rights abuses.
Community and Employees
The Company's properties enable the provision of care to some of
the most vulnerable people in the community, ensuring safe and
secure accommodation, tailored to meet individual care needs. The
Company has increased the provision of Specialist supported
housing, bringing new supply to the sector and providing homes to
over 2,500 people. All of the Company's properties enable the
provision of high levels of care, generating local jobs and helping
to support local economies.
The Company has no employees and accordingly no requirement to
separately report on this area.
The Investment Adviser is an equal opportunities employer who
respects and seeks to empower each individual and the diverse
cultures, perspectives, skills and experiences within its
workforce.
Investment objective and policy
Investment objective
The Company's investment objective is to provide Shareholders
with an attractive level of income, together with the potential for
capital growth from investing in a portfolio of social homes, which
benefits from inflation adjusted long-term leases or occupancy
agreements with Registered Providers and to deliver, on a fully
invested and geared basis, a targeted dividend yield of 5% per
annum, which the Company expects to increase broadly in line with
inflation.
Investment policy
The Company's investment policy is to invest in a diversified
portfolio of social homes throughout England and Wales. The Company
intends to meet the Company's investment objective by acquiring,
typically indirectly via the SPVs, portfolios of social homes and
entering into long-term inflation adjusted leases or occupancy
agreements for terms primarily ranging from 10 years to 40 years
with Registered Providers, where all management and maintenance
obligations will be serviced by the Registered Providers. The
Company will not undertake any development activity or assume any
development or construction risk. However, the Company may engage
in renovating or customising existing homes, as necessary.
The Company may make prudent use of leverage to finance the
acquisition of social homes and to preserve capital on a real
basis.
The Company is focused on delivering capital growth and expects
to hold the Portfolio over the long term and therefore it is
unlikely that the Company will dispose of any part of its
Portfolio. In the unlikely event that a part of the Portfolio is
disposed of, the Directors intend to reinvest proceeds from such
disposals in assets in accordance with the Company's investment
policy.
Investment restrictions
The Company invests and manages the Portfolio with the objective
of delivering a high quality, diversified Portfolio through the
following investment restrictions:
-- the Company only invests in social homes located in England and Wales;
-- the Company only invests in social homes where the
counterparty to the lease or occupancy agreement is a Housing
Association or Local Authority;
-- no lease or occupancy agreement shall be for an unexpired
period of less than 10 years, unless the shorter leases or
occupancy agreements represent part of an acquisition of a
portfolio which the Investment Adviser intends to reorganise such
that the average term of lease or occupancy agreement is increased
to 15 years or above;
-- the aggregate maximum exposure to any single Local Authority
or single Housing Association is 25% of the Gross Asset Value, once
the capital of the Company is fully invested;
-- no investment by the Company in any single geographical area,
in relation to which the houses and/or apartment blocks owned by
the Company are located on a contiguous or largely contiguous
basis, exceeds 20 per cent of the Gross Asset Value of the
Company;
-- the Company only acquires completed social homes and will not
forward finance any development of new social homes;
-- the Company does not invest in other alternative investment
funds or closed-end investment companies; and
-- the Company is not engaged in short selling.
The investment limits detailed above apply at the time of the
acquisition of the relevant investment in the Portfolio. The
Company would not be required to dispose of any investment or to
rebalance the Portfolio as a result of a change in the respective
valuations of its assets.
Gearing limit
The Directors seek to use gearing to enhance equity returns. The
level of borrowing is set on a prudent basis for the asset class
and seeks to achieve a low cost of funds, whilst maintaining the
flexibility in the underlying security requirements and the
structure of both the Portfolio and the Company.
The Company may, following a decision of the Board, raise debt
from banks and/or the capital markets and the aggregate borrowings
of the Company is always subject to an absolute maximum, calculated
at the time of drawdown, of 40 per cent of the Gross Asset
Value.
Debt is secured at asset level, whether over a particular
property or a holding entity for a particular series of properties,
without recourse to the Company and also potentially at Company
level with or without a charge over the Portfolio (but not against
particular assets), depending on the optimal structure for the
Company and having consideration to key metrics including lender
diversity, cost of debt, debt type and maturity profiles. Otherwise
there will be no cross-financing between investments in the
Portfolio and the Company will not operate as a common treasury
function between the Company and its investments.
Use of derivatives
The Company may choose to utilise derivatives for efficient
portfolio management. In particular, the Directors may engage in
full or partial interest rate hedging or otherwise seek to mitigate
the risk of interest rate increases on borrowings incurred in
accordance with the gearing limits as part of the management of the
Portfolio.
Cash management
Until the Company is fully invested, and pending re-investment
or distribution of cash receipts, the Company invests in cash, cash
equivalents, near cash instruments and money market
instruments.
REIT status
The Directors conduct the affairs of the Company so as to enable
it to remain qualified as a REIT for the purposes of Part 12 of the
CTA 2010 (and the regulations made thereunder).
Key Performance Indicators (KPIs)
Measure Explanation Result
Capital deployed Target of deploying the IPO All of the IPO proceeds
proceeds by 31 December 2017 plus debt invested by
and the C share proceeds December 2017. GBP72.4
by 31 December 2018 or earlier million of the C share
proceeds deployed in
the first four months
since raise. Total of
GBP471.6 million deployed
to date.
--------------------------------- -----------------------------
Increase in IFRS Target to achieve capital IFRS NAV, increase of
and Portfolio NAV appreciation whilst maintaining 7.5p per share or 7.7%
per share a low risk strategy from from IPO.
enhancing the quality of
cash flows from investments, Portfolio NAV, increase
by physical of 15.9p per share or
improvement of properties 16.2% from IPO.
and by creating a significantly
diversified, high-quality
portfolio
--------------------------------- -----------------------------
Dividend per share Targeting 3p per share in Dividends of 3p per share
the period from IPO to 31 declared for the period
December 2017; 5p per share from IPO to 31 December
per annum from the second 2017. Dividend of 5p
year onwards growing broadly per share targeted for
in line with inflation the calendar year to
31 December 2018.
--------------------------------- -----------------------------
Number of Local Authorities, Target risk mitigation through As at 31 March 2018:
Housing Associations a diversified portfolio (once
and care providers fully invested) with no more - 109 Local Authorities
than 25% exposure to any - 11 Housing Associations
one Local Authority or single - 64 care providers
Housing Association and no
more than 20% exposure to Westmoreland Housing
any single geographical area, Association currently
once the capital of the Company represents 35% of the
is fully invested Company's rental income,
this exposure will decrease
below 20% as the portfolio
is fully deployed.
--------------------------------- -----------------------------
Loan to Gross Assets Target debt drawn of 30% Loan to gross assets
of gross assets. of 12%.
--------------------------------- -----------------------------
Alternative performance measures
EPRA
The Company is a member of the European Public Real Estate
Association ("EPRA"). EPRA has developed and defined the following
performance measures to give transparency, comparability and
relevant financial reporting across entities which may use
different accounting standards. The Company is pleased to disclose
the following measures which are calculated in accordance with EPRA
guidance. Comparatives have not been disclosed as the Company did
not own any property investments in the comparative period.
EPRA Performance 31 March
Measure Definition EPRA Performance Measure 2018
EPRA Earnings Earnings from operational EPRA Earnings GBP6,293,000
activities.
EPRA Earnings per share 1.80p
(basic)
EPRA Earnings per share 1.44p
(diluted)
-------------------------------- ------------------------------- ---------------
EPRA NAV Net Asset Value adjusted EPRA Net Asset Value GBP668,147,000
to include properties
and other investment
interest at fair value
and to exclude certain
items not expected to
crystallise in a long-term
investment property
business model.
EPRA NAV per share (diluted) 105.54p
-------------------------------- ------------------------------- ---------------
EPRA NNNAV EPRA NAV adjusted to EPRA NNNAV GBP667,435,000
include the fair values
of (i) financial instruments,
(ii) debt and (iii)
deferred taxes.
EPRA NNNAV per share 105.43p
(diluted)
-------------------------------- ------------------------------- ---------------
Estimated Market Rental
Value ("ERV") of vacancy
EPRA VACANCY space divided by ERV
RATE of the whole portfolio EPRA Vacancy Rate 0%
-------------------------------- ------------------------------- ---------------
For detailed workings reconciling the above measures to the IFRS
results please see Appendix 1 to these financial statements.
Adjusted
Performance 31 March
Measure Definition Performance Measure 2018
IFRS NAV adjusted to
reflect investment
property valued on
a portfolio basis rather
Portfolio than on an individual
NAV asset basis. Portfolio NAV 113.86p
------------------------------- ------------------------ -------------
Company Adjusted Company Specific Earnings Adjusted Earnings GBP9,085,000
Earnings Measure which adds
back the finance costs
associated with the
C share financial liability.
Adjusted Earnings per 2.60p
share (basic)
--------------------------------------------------------------------------- -------------
For detailed workings reconciling the Portfolio NAV to the IFRS
results please see note 16 to these financial statements. For
detailed workings reconciling the Company Adjusted Earnings to the
IFRS results please see Appendix 1 to these financial
statements.
Principal risks and risk management
The Board considers that the risks detailed below are the
principal risks facing the Group currently, along with the risks
detailed in note 32 to the financial statements. These are the
risks that could affect the ability of the Company to deliver its
strategy. The Board can confirm that the Principal Risks of the
Company, including those which would threaten its future
performance, solvency or liquidity, have been robustly assessed
throughout the period ended 31 March 2018, and that processes are
in place to continue this assessment. Further detail of Risk
Management processes that are in place can be found in the Report
of the Audit and Management Engagement Committee in the full Annual
Report. The principal risks and uncertainties relating to the Group
are regularly reviewed by the Board along with the internal
controls and risk management processes that are used to mitigate
these risks. The principal risks and management of those risks are
described below:
Principal risks and uncertainties
Strategy and competitiveness Impact How managed/mitigated
risks
The Company and its operations Any change in the laws, The Company focuses
are subject to laws and regulations and/or on niche real estate
regulations enacted by government policy affecting sectors where it believes
national and local governments the Company and its the regulatory framework
and government policy. operations may have to be robust.
a material adverse
effect on the ability The Board obtains regular
of the Company to successfully updates from professional
pursue its investment advisers to monitor
policy and meet its developments in regulation
investment objective and legislation.
and on the value of
the Company and the
Probability: Unlikely shares.
Impact: High
-------------------------------- -------------------------------
As a result of competition The rate of capital The Company has strong
from other purchasers deployment would drop links with vendors
of social housing properties decreasing returns and a robust pipeline
the Company's ability to shareholders. of future acquisitions.
to deploy capital effectively
within a reasonable timeframe The Board regularly
may be restricted or the reviews the pipeline
net initial yields at of potential acquisitions.
which the Company can
acquire properties may
decline such that target
returns cannot be met. Impact: Medium
Probability: Possible
-------------------------------- -------------------------------
Investment management Impact How managed/mitigated
risks
-------------------------------- -------------------------------
Due diligence may not The Company would over The Company undertakes
reveal all facts and circumstances pay for assets impairing detailed due diligence
that may be relevant in shareholder value, on the properties,
connection with an investment reducing rental income their condition, the
and may not prevent an and therefore returns. proposed rental levels
acquisition being materially - benchmarking against
overvalued or rental streams comparable schemes
being at risk. using both external
consultants where required
and its own proprietary
database - and on the
Registered Providers
and care providers
involved in each property
to ensure that the
purchase price is robust.
The Board considers
Impact: Medium the due diligence undertaken
Probability: Unlikely when approving acquisitions.
-------------------------------- -------------------------------
The value of the investments The valuation of the The Company invests
made by the Company may Company's assets would in projects with stable
change from time to time fall decreasing the predetermined, long
according to a variety Net Asset Value of term leases in place
of factors, including the Company. with CPI or CPI plus
movements in interest 1% indexation and its
rates and in inflation strategy is not focused
and general market pricing on sale of properties.
of similar investments.
The Board receives
regular updates on
factors that might
Impact: Medium impact investment valuations.
Probability: Possible
-------------------------------- -------------------------------
Loss of key staff at the Negative investor sentiment The Board considers
Investment Adviser. leading to a reduction the Investment Advisers'
in share price. Reduction key man risk and succession
in ability to source plans.
off market and favourable
deals.
Probability: Unlikely
Impact: High
-------------------------------- -------------------------------
Tenant defaulting under Loss of rental income The portfolio is diversified
the terms of a lease. in the short term. to reduce the impact
of default. Extensive
diligence is undertaken
on all assets, which
is reviewed and challenged
by the Board. The Board
is provided with regular
updates on the tenants
with any concerns raised
Probability: Possible Impact: Low for discussion.
-------------------------------- -------------------------------
Lack of availability for The rate of capital The Company has strong
debt financing or other deployment would drop links with a number
capital. decreasing returns of banks and other
to shareholders. capital sources.
The Board closely considers
any new loan facility
proposed and receives
regular updates on
debt and capital markets
for consideration.
Probability: Unlikely Impact: Medium
-------------------------------- -------------------------------
Accounting, legal and Impact How managed/mitigated
regulatory risks
-------------------------------- -------------------------------
If the Company fails to Any change in the tax The Company has been
remain qualified as a status of the Company structured to be REIT
REIT, its rental income or any of its underlying compliant and continuously
and gains will be subject investments or in tax monitors the tax status
to UK corporation tax. legislation or practice using professional
(including in relation taxation advisers.
to taxation rates and
allowances) or in accounting The Board has ultimate
standards could adversely responsibility for
affect the investment ensuring adherence
return of the Company. to the UK REIT regime
and monitors the compliance
reports provided by
the Investment Adviser
and other third party
Probability: Unlikely Impact: High providers.
-------------------------------- -------------------------------
Operational risks, including Impact How managed/mitigated
cyber crime
-------------------------------- -------------------------------
Disruption to, or failure Loss of operational The Board monitors
of the systems of third capabilities, potential the services provided
party providers could regulator actions. by the Investment Adviser
prevent accurate reporting and other service providers
and monitoring of the and the key elements
Company's financial position. which are designed
This includes the risk to provide effective
of cyber crime and potential internal control. All
threat to security, business service providers are
continuity and reputation. required to have robust
IT security and disaster
Impact: Medium recovery contingency
plans in place.
Probability: Possible
-------------------------------- -------------------------------
Going concern and viability statement
Going concern
The Board regularly reviews the position of the Company and its
ability to continue as a going concern in Board meetings. The
financial statements set out the current financial position of the
Company.
The Company acquires high quality property with a particular
focus on property providing care for the long term. The properties
acquired are on long term full repairing and insuring leases in a
sector of the market with very high levels of need. The cost base
of the Company is proportionately low compared to revenue and there
is a high level of certainty over cost to be incurred. On this
basis the Company is expected to be viable well beyond the five
year terms considered in the Company's testing below.
The cash balance of the Company at the period end was GBP250
million that was readily available for use. As stated in the
Strategic Report, the Investment Adviser has identified a pipeline
of GBP500 million of attractive investment opportunities for
acquisition over the next twelve months. The Board has evaluated
the financial position of the Company and is confident in the
ability to raise debt and/or equity capital in order to fund the
Company's investments for the next 12 months and to facilitate the
payment of dividends to shareholders at the targeted rate. Based on
this, the Board believes that the Company is in a position to
manage its financial risks.
The Board believes that there are currently no material
uncertainties in relation to the Company's ability to continue in
operation for a period of at least 12 months from the date of
approval of the Company's financial statements and therefore have
adopted the going concern basis in the preparation of the financial
statements.
Viability statement
In accordance with the UK Corporate Governance Code (2016)
("Code"), the Directors present the Company's viability statement
which summarises the results of their assessment of the Company's
current position, its principal risks and prospects over a period
of five years to 31 March 2023. The prospects were assessed over a
five year period for the following reasons:
(i) the Company's long term forecast covers a five year period;
(ii) the length of service level agreements between Housing
Associations and care providers is typically five years.
(iii) the Company's leases are typically 25 years on fully
repairing and insuring leases enabling reasonable certainty of
income over the next five years.
The Company's five year forecast incorporates assumptions
related to the Company's investment strategy and principal risks
from which performance results, cash flows and key performance
indicators are forecast. The principal risks are set out above. Of
these risks, those which are expected to have a higher impact on
the Company's longer term prospects are those related to future
government housing policies. The principal risks are mitigated by
the Company's risk management and internal control processes which
function on an ongoing basis. The Board, via delegation to the
Audit and Management Engagement Committee, monitors the
effectiveness of the Company's risk management and internal control
processes on an ongoing basis. The monitoring activities are
described in the Report of the Audit and Management Engagement
Committee in the full Annual Report and include direct review and
challenge of the Company's documented risks, risk ratings and
controls and review of performance and compliance reports prepared
by the Company's advisers and the independent external
auditors.
In accordance with the Code, the Board of Directors has carried
out a robust assessment of the principal risks facing the Company,
including those that would threaten its business model, future
performance, solvency and liquidity.
Where appropriate, the Company's forecasts are subject to
sensitivity analysis which involves applying severe conditions and
flexing a number of assumptions simultaneously. The sensitivities
performed were designed to provide the Directors with an
understanding of the Company's performance in the event of severe
but plausible scenarios, taking full account of mitigating actions
that could be taken to avoid or reduce the impact or occurrence of
the underlying risks outlined below:
-- Reduction in availability of suitable assets for acquisition
-- Tenant defaulting under a lease
-- Lack of availability for debt financing or other capital
-- Deterioration in economic outlook or change in government
housing policy which could impact the fundamentals of the social
housing sector, including a negative impact on valuations and
rental uplifts
The remaining principal risks and uncertainties, whilst having
an impact on the Company's business, are not considered by the
Directors to have a reasonable likelihood of impacting the
Company's viability over the five year period.
Based on the results of their assessment, the Directors have a
reasonable expectation that the Company will be able to continue in
operation and meet its liabilities as they fall due over the five
year period of their assessment.
Approval of Strategic Report
The Group Strategic Report was approved by the Board and signed
on its behalf by:
Michael Wrobel
Chairman
11 June 2018
Board of Directors
Michael Wrobel (Chairman)
Caroline Gulliver (Director and Chairman of the Audit and
Management Engagement Committee)
Peter Baxter (Senior Independent Director)
Alastair Moss (Director)
Extracts from the Report of the Directors
Results and dividends
The results for the period are shown below. The following
dividends were paid on the Ordinary shares during the period:
First quarterly dividend 0.75p paid on 31 May 2017
Second quarterly dividend 0.75p paid on 31 August 2017
-------------------------------
Third quarterly dividend 0.75p paid on 30 November 2017
-------------------------------
Fourth quarterly dividend 0.75p paid on 9 March 2018
-------------------------------
Since the period end, the Company has declared the following
dividends:
First quarterly dividend 1.25p paid on 8 June 2018
on the Ordinary shares
First dividend on the C shares 1.13p paid on 8 June 2018
--------------------------
No final dividends are being recommended on the Ordinary or C
shares.
Capital Structure
350 million Ordinary shares of 1p each (with an aggregate
nominal value of GBP3,500,000) were issued under the IPO on 18
November 2016 at a price of 100p per share. This was followed by
the issue of 302 million C shares of 1p each (with an aggregate
nominal value of GBP3,020,000) at 100p per C share on 14 November
2017 under a fully pre-emptive Open Offer, Placing, Offer for
Subscription and Intermediaries Offer.
50,000 redeemable preference shares had been issued to CHA on 26
October 2016 in consideration for an irrevocable undertaking by CHA
to pay up one quarter of the nominal value in order to allow the
Company to obtain a trading certificate pursuant to section 761 of
the Companies Act 2006. These shares were redeemed on 28 November
2016, following the admission to trading of the Ordinary
shares.
As at 31 March 2018, the Company had 350 million Ordinary shares
and 302 million C shares in issue, none of which were held in
treasury. The total voting rights as at 31 March 2018 and the date
of this report were 350 million.
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law and
regulation.
Company law requires the Directors to prepare financial
statements for each financial period. Under that law, the Directors
have prepared the Group financial statements in accordance with
International Financial Reporting Standards ("IFRSs") as adopted by
the European Union and the Company financial statements in
accordance with United Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting Standards, comprising FRS 101
"Reduced Disclosure Framework", and applicable law). Under company
law, the Directors must not approve the financial statements unless
they are satisfied that they give a true and fair view of the state
of affairs of the Group and Company and of the profit or loss of
the Group and Company for that period. In preparing the financial
statements, the Directors are required to:
-- select suitable accounting policies and then apply them consistently;
-- state whether applicable IFRSs as adopted by the European
Union have been followed for the Group financial statements and
United Kingdom Accounting Standards, comprising FRS 101, have been
followed for the Company financial statements, subject to any
material departures disclosed and explained in the financial
statements;
-- make judgements and accounting estimates that are reasonable and prudent; and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group and Company
will continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group and
Company's transactions and disclose with reasonable accuracy at any
time the financial position of the Group and Company and enable
them to ensure that the financial statements and the Directors'
Remuneration Report comply with the Companies Act 2006 and, as
regards the Group financial statements, Article 4 of the IAS
Regulation.
The Directors are also responsible for safeguarding the assets
of the Group and Company and hence for taking reasonable steps for
the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity
of the Company's website. Legislation in the United Kingdom
governing the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
The Directors consider that the Annual Report and financial
statements, taken as a whole, is fair, balanced and understandable
and provides the information necessary for shareholders to assess
the Group and Company's position and performance, business model
and strategy.
Each of the Directors, whose names and functions are listed
above confirm that, to the best of their knowledge:
-- the Company financial statements, which have been prepared in
accordance with United Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting Standards, comprising FRS 101
"Reduced Disclosure Framework", and applicable law), give a true
and fair view of the assets, liabilities, financial position and
profit of the Company;
-- the Group financial statements, which have been prepared in
accordance with IFRSs as adopted by the European Union, give a true
and fair view of the assets, liabilities, financial position and
profit of the Group; and
-- the Strategic Report includes a fair review of the
development and performance of the business and the position of the
Group, together with a description of the principal risks and
uncertainties that it faces.
Approval
This Statement of Directors' Responsibilities statement was
approved by the Board and signed on its behalf by:
Michael Wrobel
Chairman
11 June 2018
FINANCIAL INFORMATION
The financial information set out below does not constitute the
Company's statutory accounts for the period ended 31 March 2018 or
the period ended 17 November 2016 but is derived from those
accounts. Statutory accounts for the period ended 17 November 2016
have been delivered to the Registrar of Companies and those for the
period ended 31 March 2018 will be delivered in due course. The
Auditor has reported on those accounts; their report was (i)
unqualified, (ii) did not include a reference to any matters to
which the Auditor drew attention by way of emphasis without
qualifying their report and (iii) did not contain a statement under
Section 498 (2) or (3) of the Companies Act 2006. The text of the
Auditor's report can be found in the Company's full annual report
and financial statements at www.civitassocialhousing.com.
Consolidated Statement of Comprehensive Income
For the period from 18 November 2016 to 31 March 2018
From From
18 November 29 September
2016 to 2016 to
31 March 17 November
2018 2016
Note GBP'000 GBP'000
Revenue
Rental income 5 18,606 -
Net rental income 18,606 -
Directors' remuneration 6 (205) (9)
Investment advisory fees 8 (5,773) -
General and administrative expenses 9 (2,915) (22)
Total expenses (8,893) (31)
Change in fair value of investment
properties 15 30,633 -
Operating profit/(loss) 40,346 (31)
Finance income 10 413 -
Finance expense - relating to
bank borrowings 11 (1,041) -
Finance expense - C shares amortisation 11 (2,792) -
Profit/(loss) before tax 36,926 (31)
Taxation 12 - -
Profit/(loss) being total comprehensive
income/(loss) for the period 36,926 (31)
All amounts reported in the Consolidated Statement of
Comprehensive Income above arise from continuing operations.
Earnings/(losses) per share -
basic 13 10.55p (68,261.00)p
Earnings/(losses) per share -
diluted 13 6.27p (68,261.00)p
The notes below are an integral part of these consolidated
financial statements.
Consolidated Statement of Financial Position
As at 31 March 2018
31 March 17 November
2018 2016
Note GBP'000 GBP'000
Assets
Non-current assets
Investment property 15 516,222 -
516,222 -
Current assets
Trade and other receivables 17 3,315 50
Cash and cash equivalents 18 249,608 -
252,923 50
Total assets 769,145 50
Liabilities
Current liabilities
Trade and other payables 19 (10,176) (81)
C shares 21 (298,752) -
(308,928) (81)
Non-current liabilities
Bank and loan borrowings 20 (90,822) -
-
Total liabilities (399,750) (81)
Total net assets/(liabilities) 369,395 (31)
Equity
Share capital 22 3,500 -
Share premium reserve 23 - -
Capital reduction reserve 24 331,625 -
Retained earnings/(accumulated
losses) 25 34,270 (31)
Total equity 369,395 (31)
Net assets per share - basic 26 105.54p (31,339.00)p
Net assets per share - diluted 26 105.54p (31,339.00)p
These consolidated group financial statements were approved by
the Board of Directors of Civitas Social Housing PLC and authorised
for issue on 11 June 2018 and signed on its behalf by:
Michael Wrobel,
Chairman and Independent Non-Executive Director
11 June 2018
Company No: 10402528
The notes below are an integral part of these consolidated
financial statements.
Consolidated Statement of Changes in Equity
For the period from 18 November 2016 to 31 March 2018
Retained
Share premium Capital earnings/
Share reserve reduction (accumulated
Note capital GBP'000 reserve losses) Total equity
GBP'000 GBP'000 GBP'000 GBP'000
Balance at 29 September - - - - -
2016
Loss and total comprehensive
loss for the period - - - (31) (31)
Issue of Ordinary shares
Issue of share 22 - - - - -
capital
Balance at 17 November
2016 - - - (31) (31)
Profit and total comprehensive
income for the period - - - 36,926 36,926
Issue of Ordinary shares
Issue of share
capital 22 3,500 346,500 - - 350,000
Share issue costs 23 - (7,000) - - (7,000)
Cancellation of
share premium
reserve 23 - (339,500) 339,500 - -
Dividends paid
Total interim
dividends for
the period ended
31 March 2018
(3.00p) 14 - - (7,875) (2,625) (10,500)
Balance at 31 March
2018 3,500 - 331,625 34,270 369,395
The notes below are an integral part of these consolidated
financial statements.
Consolidated Statement of Cash Flows
For the period from 18 November 2016 to 31 March 2018
From From
18 November 29 September
2016 to 2016 to
31 March 17 November
2018 2016
Note GBP'000 GBP'000
Cash flows from operating activities
Profit/(loss) for the period
before taxation 36,926 (31)
- Change in fair value of investment (30,633) -
properties
- Rent straight line adjustments (332) -
Finance income (413) -
Finance expense 3,833 -
Increase in trade and other
receivables (2,540) (50)
Increase in trade and other
payables 803 81
Cash generated from operations 7,644 -
Interest received 413 -
Net cash flow generated from operating 8,057 -
activities
Investing activities
Purchase of investment properties (458,564) -
Acquisition costs (19,051) -
Restricted cash held as retention (6,283) -
money
Net cash flow used in investing (483,898) -
activities
Financing activities
Proceeds from the issue of Ordinary
share capital 22 350,000 -
Share issue costs paid 23 (7,000) -
Dividends paid to equity shareholders (10,073) -
Proceeds from the issue of C
shares 21 302,000 -
C share issue costs
paid 21 (6,040) -
Bank borrowings advanced 20 92,457 -
Bank borrowing issue
costs paid 20 (1,761) -
Loan interest paid (417) -
Net cash flow generated from financing 719,166 -
activities
Net increase in cash and cash 243,325 -
equivalents
Unrestricted cash and cash equivalents
at the start of the period 18 - -
Unrestricted cash and cash equivalents
at the end of the period 18 243,325 -
The notes below are an integral part of these consolidated
financial statements.
Notes to the Consolidated Financial Statements
For the period from 18 November 2016 to 31 March 2018
1. Corporate Information
The Group's consolidated financial statements for the period
from 18 November 2016 to 31 March 2018 comprise the results of the
Company and its subsidiaries and were approved by the Board and
authorised for issue on 11 June 2018.
Civitas Social Housing PLC ("the Company") was incorporated in
England and Wales under the Companies Act 2006 as a public company
limited by shares on 29 September 2016 with company number 10402528
under the name Civitas REIT PLC which was subsequently changed to
the existing name on 3 October 2016.
The address of the registered office is Beaufort House, 51 New
North Road, Exeter, EX4 4EP. The Company is registered as an
investment company under section 833 of the Companies Act 2006 and
is domiciled in the United Kingdom.
The Company did not begin trading until 18 November 2016 when
the shares were admitted to trading on the LSE.
The Company's Ordinary shares are admitted to the Official List
of the UK Listing Authority ("UKLA"), a division of the Financial
Conduct Authority ("FCA"), and traded on the London Stock Exchange
("LSE").
The principal activity of the Company is to act as the ultimate
parent company of Civitas Social Housing PLC and its subsidiaries
(the "Group"), whose principal activity is to provide shareholders
with an attractive level of income, together with the potential for
capital growth from investing in a portfolio of social homes.
2. Basis of preparation
The Group's consolidated financial statements have been prepared
on a going concern basis in accordance with the Disclosure Guidance
and Transparency Rules of the FCA and with International Financial
Reporting Standards ("IFRS") and IFRS Interpretation Committee
("IFRIC") as issued by the IASB and as adopted by the European
Union ("EU"), and in accordance with Article 4 of the IAS
Regulation and the Companies Act 2006 as applicable to companies
using IFRS.
The comparative information disclosed in the consolidated
financial statements relates to the period from 29 September 2016
to 17 November 2016. The period covered by the comparative
information varies in length and the level of activities and
therefore is not comparable to the current period.
The Group's consolidated financial statements have been prepared
on a historical cost basis, as modified for the Group's investment
properties at fair value through profit or loss.
The Group has chosen to adopt EPRA best practice guidelines for
calculating key metrics such as net asset value and earnings per
share.
2.1 Functional and presentation currency
The financial information is presented in Pounds Sterling which
is also the functional currency of the Company, and all values are
rounded to the nearest thousand (GBP'000s) pound, except where
otherwise indicated.
2.2 Going concern
The Group benefits from a secure income stream from long leases
with the Housing Associations, which are not overly reliant on any
one tenant and present a well-diversified risk. The Group's cash
balances as at 31 March 2018 were GBP249.6 million, of which
GBP243.3 million was readily available and it had bank borrowings
of GBP92.5million.
As a result, the Directors believe that the Group is well placed
to manage its financing and other business risks and that the Group
will remain viable, continuing to operate and meets its liabilities
as they fall due.
The Directors believe that there are currently no material
uncertainties in relation to the Group's ability to continue for
the period of at least 12 months from the date of the Group's
consolidated financial statements. The Board is, therefore, of the
opinion that the going concern basis adopted in the preparation of
the consolidated financial statements is appropriate.
2.3 New standards, amendments and interpretations
No new standards, amendments to standards and interpretations
came into effect for accounting periods starting on or after 18
November 2016.
2.4 New standards, amendments and interpretations effective for
future accounting periods
The following are new standards, interpretations and amendments,
which are not yet effective and have not been early adopted in this
financial information, that will or may have an effect on the
Company's future financial statements:
-- Amendments to IAS 7 Statement of Cash Flows, is effective for
annual periods beginning on or after 1 January 2017. The amendments
require the disclosure of cash and non-cash changes in liabilities
arising from financing activities.
-- IFRS 9 Financial Instruments. The standard will replace IAS
39 Financial Instruments and contains two primary measurement
categories for financial assets (effective for annual periods
beginning on or after 1 January 2018).
The Group will need to apply an expected credit loss model when
calculating impairment losses on its trade and other receivables.
This may result in increased impairment provisions and greater
judgement due to the need to factor in forward looking information.
It will need to consider the probability of default occurring over
the contractual life of its trade receivables and contracts. As the
Company has tenants with strong covenants and generally tenant
receipts are received in advance or on the due date, the Directors
do not consider there will be a material impact on the Group
financial statements.
-- IFRS 15 Revenue from Contracts. The standard replaces IAS 11
Construction Contracts, IAS 18 Revenue. The standard introduces a
new revenue recognition model that recognises revenue either at a
point in time or over time (effective for annual periods beginning
on or after 1 January 2018)
The Group does not believe that the standard will have a
material impact on the financial statements as rental income is
outside the scope of the standard. The adoption of the standard may
result in changes to presentation and disclosure.
-- IFRS 16 Leases. Introduction of a single, on-balance sheet
accounting model (effective for annual periods beginning on or
after 1 January 2019).
The Directors are currently assessing the impact on the
financial statements of this standard; however at present they do
not anticipate that the adoption of this will have a material
impact on the Group's financial statements as the Group does not
hold any material operating leases as lessee.
3. Significant accounting judgements, estimates and
assumptions
In the application of the Group's accounting policies, which are
described in note 4, the Directors are required to make judgements,
estimates and assumptions about the carrying amounts of assets and
liabilities that are not readily apparent from other sources. The
estimates and associated assumptions that have a significant risk
of causing a material adjustment to the carrying amounts of assets
and liabilities within the next financial year are outlined
below:
3.1 Valuation of investment property
The Group uses the valuation carried out by its independent
valuers as the fair value of its property portfolio. The valuation
is based upon assumptions including future rental income and the
appropriate discount rate. The valuers also make reference to
market evidence of transaction prices for similar properties.
Further information is provided in note 15.
The Group's properties have been independently valued by Jones
Lang LaSalle Ltd. ("JLL" or the "Valuer") according to the
definitions published by the Royal Institute of Chartered
Surveyors' ("RICS") Valuation - Professional Standards, July 2017,
Global and UK Editions (commonly known as the "Red Book"). JLL is
one of the most recognised professional firms within social housing
valuation and has sufficient current local and national knowledge
of both social housing generally and Specialist supported housing
("SSH") and has the skills and understanding to undertake the
valuations competently.
With respect to the Group's consolidated financial statements,
investment properties are valued at their fair value at each
balance sheet date in accordance with IFRS 13 which recognises a
variety of fair value inputs depending upon the nature of the
investment. Specifically:
Level 1 - Unadjusted, quoted prices for identical assets and
liabilities in active (typically quoted) markets.
Level 2 - Quoted prices for similar assets and liabilities in
active markets.
Level 3 - External inputs are "unobservable". Value is the
director's best estimate, based on advice from relevant
knowledgeable experts, use of recognised valuation techniques and a
determination of which assumptions should be applied in valuing
such assets and with particular focus on the specific attributes of
the investments themselves.
Given the bespoke nature of each of the Group's investments, the
particular requirements of due diligence and financial contribution
obtained from the vendors together with the recent emergence of
Specialist supported housing, all of the Group's investment
properties are included in Level 3.
3.2. Business combinations
The Group acquires subsidiaries that own investment properties.
At the time of acquisition, the Group considers whether each
acquisition represents the acquisition of a business or the
acquisition of an asset. Management considers the substance of the
assets and activities of the acquired entity in determining whether
the acquisition represents the acquisition of a business.
The Group accounts for an acquisition as a business combination
where an integrated set of activities is acquired in addition to
the property. Where such acquisitions are not judged to be the
acquisition of a business, they are not treated as business
combinations. Rather, the cost to acquire the corporate entity is
allocated between the identifiable assets and liabilities of the
entity based upon their relative fair values at the acquisition
date. Accordingly, no goodwill or additional deferred tax
arises.
All corporate acquisitions during the period have been treated
as asset purchases rather than business combinations because no
integrated set of activities were acquired.
3.3. Operating lease contracts - the Group as lessor
The Group has acquired investment properties that are subject to
commercial property leases with Registered Providers. The Group has
determined, based on an evaluation of the terms and conditions of
the arrangements, particularly the duration of the lease terms and
minimum lease payments, that it retains all the significant risks
and rewards of ownership of these properties and so accounts for
the leases as operating leases.
4. Summary of significant accounting policies
The principal accounting policies applied in the preparation of
the consolidated financial statements are set out below. The
policies have been consistently applied to all periods presented,
unless otherwise stated.
4.1. Basis of consolidation
The consolidated financial statements comprise the financial
information of the Group as at the period end date.
Subsidiaries are all entities over which the Group has control.
The Group controls an entity when the group is exposed to, or has
rights to, variable returns from its involvement with the entity
and has the ability to affect those returns through its power to
direct the activities of the entity. All intra-group transactions,
balances, income and expenses are eliminated on consolidation. The
financial information of the subsidiaries is included in the
consolidated financial statements from the date that control
commences until the date that control ceases.
If an equity interest in a subsidiary is transferred but a
controlling interest continues to be held after the transfer then
the change in ownership interest is accounted for as an equity
transaction.
Accounting policies of the subsidiaries are consistent with the
policies adopted by the Company.
4.2. Investment property
Investment property, which is property held to earn rentals
and/or for capital appreciation, is initially measured at cost,
being the fair value of the consideration given, including
expenditure that is directly attributable to the acquisition of the
investment property. After initial recognition, investment property
is stated at its fair value at the balance sheet date. Gains and
losses arising from changes in the fair value of investment
property are included in profit or loss for the period in which
they arise in the Consolidated Statement of Comprehensive
Income.
Subsequent expenditure is capitalised only when it is probable
that future economic benefits are associated with the expenditure.
Ongoing repairs and maintenance are expensed as incurred.
An investment property is derecognised upon disposal or when the
investment property is permanently withdrawn from use and no future
economic benefits are expected from the disposal. Any gain or loss
arising on derecognition of the property (calculated as the
difference between the net disposal proceeds and the carrying
amount of the asset) is incurred in profit or loss in the period in
which the property is derecognised.
Significant accounting judgements, estimates and assumptions
made for the valuation of investment properties are discussed in
note 3.
4.3. Leases
Leases are classified as finance leases whenever the terms of
the lease transfer substantially all the risks and rewards of
ownership to the lessee. All other leases are classified as
operating leases.
The Company has determined that it retains all the significant
risks and rewards of ownership of the properties and accounts for
the contracts as operating leases as discussed in note 3.
Properties leased out under operating leases are included in
investment property in the Consolidated Statement of Financial
Position. Rental income from operating leases is recognised on a
straight line basis over the term of the relevant leases.
4.4. Trade and other receivables
Trade and other receivables are amounts due in the ordinary
course of business. If collection is expected in one year or less,
they are classified as current assets. If not, they are presented
as non-current assets.
Trade and other receivables are initially recognised at fair
value, and subsequently where necessary re-measured at amortised
cost less provision for impairment. A provision for impairment of
trade receivables is established when there is objective evidence
the Group will not be able to collect all amounts due according to
the original terms of the receivables.
4.5. Cash and cash equivalents
Cash and cash equivalents include cash in hand, cash held by
lawyers and liquidity funds with a term of no more than three
months that are readily convertible to a known amount of cash and
which are subject to an insignificant risk of changes in value.
Cash held by lawyers is money held in escrow for expenses
expected to be incurred in relation to investment properties
pending completion. These funds are available immediately on
demand.
4.6. Provisions
Provisions are recognised when the Group has a present
obligation (legal or constructive) as a result of a past event, it
is probable that the Group will be required to settle that
obligation and a reliable estimate can be made of the amount of the
obligation.
The amount recognised as a provision is the best estimate of the
consideration required to settle the present obligation at the
balance sheet date, taking into account the risks and uncertainties
surrounding the obligation.
4.7. Trade and other payables
Trade and other payables are classified as current liabilities
if payment is due within one year or less. If not, they are
presented as non-current liabilities. Trade and other payables are
recognised initially at their fair value and subsequently measured
at amortised cost until settled.
4.8. Bank and other borrowings
All bank and other borrowings are initially recognised at cost
net of attributable transaction costs. After initial recognition,
all bank and other borrowings are measured at amortised cost, using
the effective interest method. Any attributable transaction costs
relating to the issue of the bank borrowings are amortised through
the Group's Statement of Comprehensive Income over the life of the
debt instrument on a straight-line basis.
4.9. C share financial liability
C shares are convertible preference shares and under IAS 32
Financial Instruments: Presentation, meet the definition of a
financial liability. C shares are recognised on issue at fair value
less directly attributable transaction costs. After initial
recognition, C shares are subsequently measured at amortised cost
using the effective interest rate method. Amortisation is credited
to or charged to finance income or finance costs in the
Consolidated Statement of Comprehensive Income. Transaction costs
are deducted from proceeds at the time of issue.
4.10. Taxation
Taxation on the profit or loss for the period not exempt under
UK REIT regulations is comprised of current and deferred tax. Tax
is recognised in the Consolidated Statement of Comprehensive Income
except to the extent that it relates to items recognised as a
direct movement in equity, in which case it is recognised as a
direct movement in equity. Current tax is expected tax payable on
any non REIT taxable income for the period, using tax rates enacted
or substantively enacted at the balance sheet date, and any
adjustment to tax payable in respect of previous periods.
Deferred tax is provided on temporary differences between the
carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes. The amount of
deferred tax that is provided is based on the expected manner of
realisation or settlement of the carrying amount of assets and
liabilities, using tax rates enacted or substantively enacted at
the balance sheet date.
4.11. Capital management
The Group's objectives when managing capital are to safeguard
the Group's ability to continue as a going concern in order to
provide returns for shareholders and to maintain an optimal capital
structure to reduce the cost of capital.
The Group considers proceeds from equity share issuance and
retained earnings as capital.
Until the Group is fully invested and pending re-investment or
distribution of cash receipts, the Group will invest in cash, cash
equivalents, near cash instruments and money market
instruments.
The Directors may use gearing to enhance equity returns. The
level of borrowing will be on a prudent basis for the asset class
and will seek to achieve a low cost of funds, whilst maintaining
the flexibility in the underlying security requirements and the
structure of the Group.
The Group may, following a decision of the Board, raise debt
from banks and/or the capital markets and the aggregate borrowings
of the Group will always be subject to an absolute maximum,
calculated at the time of drawdown, of 40% of the Gross Asset Value
on a fully invested basis.
4.12. Dividends payable to shareholders
Dividends to the Company's shareholders are recognised as a
liability in the Group's consolidated financial statements in the
period in which the dividends are approved. In the UK, interim
dividends are recognised when paid.
4.13. Rental income
Rental income from investment property is recognised on a
straight-line basis over the term of ongoing leases and is shown
gross of any UK income tax. Lease incentives are spread evenly over
the lease term.
4.14. Finance income
Finance income is recognised as interest accrues on cash and
cash equivalent balances held by the Group.
4.15. Finance costs
Finance costs consist of interest and other costs that the Group
incurs in connection with bank and other borrowings. Bank interest
and bank charges are recognised on an accruals basis. Borrowing
transaction costs are amortised over the period of the loan.
After initial recognition, C shares are subsequently measured at
amortised cost using the effective interest rate method.
Amortisation is credited or charged to finance income or finance
costs. Transaction costs are amortised to the earliest conversion
period.
4.16. Expenses
All expenses are recognised in the Consolidated Statement of
Comprehensive Income on an accruals basis.
4.17. Investment advisory fees
Investment advisory fees are recognised in the Consolidated
Statement of Comprehensive Income on an accruals basis.
4.18. Share issue costs
The costs of issuing or reacquiring equity instruments (other
than in a business combination) are accounted for as a deduction
from equity.
4.19. Impairment of financial assets
A financial asset not carried at fair value through profit or
loss is assessed at each reporting date to determine whether there
is evidence that it is impaired. A financial asset is impaired if
objective evidence indicates that a loss event has occurred after
the initial recognition of the asset, and that the loss event had a
negative effect on the estimated future cash flows of that asset
and can be estimated reliably.
5. Rental income
From From
18 November 29 September
2016 to 2016 to
31 March 17 November
2018 2016
GBP'000 GBP'000
Rental income from investment property 18,274 -
Rent straight line adjustments 332 -
Direct property expenses - -
Total 18,606 -
As per the lease agreements between the Group and the Registered
Providers, the Registered Providers are responsible for the
settlement of all present and future rates, taxes, costs and other
impositions payable in respect of the Property. As a result, no
direct property expenses were incurred.
6. Directors' Remuneration
From From
18 November 29 September
2016 to 2016 to
31 March 17 November
2018 2016
GBP'000 GBP'000
Directors' fees 190 9
Employer's National Insurance Contributions 15 -
Total 205 9
The Directors are remunerated for their services at such rate as
the Directors shall from time to time determine.
At IPO the Chairman was entitled to a fee of GBP35,000 per
annum, and the other Directors of the Board to a fee of GBP30,000
per annum (with the exception of the Chairman of the Audit and
Management Engagement Committee who was entitled to an additional
fee of GBP2,500 per annum).
During the Board meeting on 26 July 2017, a resolution was
passed authorising an increase to the fees of the Chairman to
GBP50,000 per annum, the Chairman of the Audit and Management
Engagement Committee and the other Directors to GBP36,000 per annum
and GBP32,000 per annum respectively effective from 1 August
2017.
7. Particulars of employees
The Group had no employees during the period (17 November 2016
period: nil) other than the Directors.
8. Investment advisory fees
From From
18 November 29 September
2016 to 2016 to
31 March 17 November
2018 2016
GBP'000 GBP'000
Advisory fee 5,773 -
Total 5,773 -
Civitas Housing Advisors Limited ("CHA") is appointed as the
Investment Adviser of the Company. Under the current Investment
Management Agreement, the Advisory Fee shall be an amount
calculated in respect of each Quarter, in each case based upon the
Portfolio Net Asset Value (further explained in note 16) most
recently announced to the market at the relevant time (as adjusted
for issues or repurchases of shares in the period between the date
of such announcement and the date of the relevant calculation), on
the following basis:
a) on that part of the Portfolio Net Asset Value up to and
including GBP250 million, an amount equal to 1% of such part of the
Portfolio Net Asset Value;
b) on that part of the Portfolio Net Asset Value over GBP250
million and up to and including GBP500 million, an amount equal to
0.9% of such part of the Portfolio Net Asset Value;
c) on that part of the Portfolio Net Asset Value over GBP500
million and up to and including GBP1,000 million, an amount equal
to 0.8% of such part of the Portfolio Net Asset Value;
d) on that part of the Portfolio Net Asset Value over GBP1,000
million, an amount equal to 0.7% of such part of the Portfolio Net
Asset Value.
The appointment of the Investment Adviser shall continue in
force unless and until terminated by either party giving to the
other not less than 12 months' written notice, such notice not to
expire earlier than 30 November 2021.
9. General and administrative expenses
From From
18 November 29 September
2016 to 2016 to
31 March 17 November
2018 2016
GBP'000 GBP'000
Legal and professional fees 1,136 -
Administration fees 581 11
Consultancy fees 274 -
Audit fees 308 11
Abortive costs 168 -
Valuation fees 96 -
Depositary fees 83 -
Grants and donations 79 -
Insurance 32 -
Marketing 71 -
Regulatory fees 29 -
Sundry expenses 57 -
Directors' expenses 1 -
Total 2,915 22
Abortive costs represent legal and professional fees incurred in
relation to acquisition of investment properties that were
considered but subsequently aborted.
Services provided by the Company's auditor and its
associates
The Group has obtained the following services from the Company's
auditor and its associates:
From From
18 November 29 September
2016 to 2016 to
31 March 17 November
2018 2016
GBP'000 GBP'000
Audit of the financial statements 273 11
Review of the half year financial 35 -
statements
Corporate services relating to the 55 -
initial launch
Corporate services relating to the 200 -
C share fund raise
Total 563 11
10. Finance income
From From
18 November 29 September
2016 to 2016 to
31 March 17 November
2018 2016
GBP'000 GBP'000
Interest and dividends received on 413 -
liquidity funds
Bank interest received - -
Total 413 -
11. Finance expense
From From
18 November 29 September
2016 to 2016 to
31 March 17 November
2018 2016
GBP'000 GBP'000
Bank charges 4 -
Interest paid and payable on bank 902 -
borrowings
Bank borrowing commitment fees 9 -
Amortisation of loan arrangement fees 126 -
Finance expenses associated with bank 1,041 -
borrowings
Amortisation of C share liability 2,792 -
Total 3,833 -
12. Taxation
As a UK REIT, the Group is exempt from corporation tax on the
profits and gains from its property investment business, provided
it meets certain conditions as set out in the UK REIT regulations.
For the current period ended 31 March 2018, the Group did not have
any non-qualifying profits and accordingly there is no tax charge
in the period. If there were any non-qualifying profits and gains,
these would be subject to corporation tax.
It is assumed that the Group will continue to be a group UK REIT
for the foreseeable future, such that deferred tax has not been
recognised on temporary differences relating to the property rental
business. No deferred tax asset has been recognised in respect of
the unutilised residual current period losses as it is not
anticipated that sufficient residual profits will be generated in
the future.
From From
18 November 29 September
2016 to 2016 to
31 March 17 November
2018 2016
GBP'000 GBP'000
Corporation tax charge/(credit) for - -
the period
Total - -
The tax charge for the period is less than the standard rate of
corporation tax in the UK of 19%. The differences are explained
below.
Group
Profit/(loss) before taxation 36,926 (31)
UK Corporation tax rate 19.27% 20%
Theoretical tax at UK Corporation
tax rate 7,116 (6)
Effects of:
Change in value of exempt investment (5,903) -
properties
Exempt REIT income (2,352) -
Amounts not deductible for tax purposes 691 -
Unutilised residual current period
tax losses 448 6
Total - -
The standard rate of corporation tax was reduced from 20% to 19%
from 1 April 2017. The Government has announced that the
corporation tax standard rate is to be reduced to 17% with
effective date from 1 April 2020.
REIT exempt income includes property rental income that is
exempt from UK Corporation Tax in accordance with Part 12 of CTA
2010.
13. IFRS Earnings per share
Earnings per share ("EPS") amounts are calculated by dividing
profit for the period attributable to ordinary equity holders of
the Company by the weighted average number of Ordinary shares in
issue during the period.
Diluted EPS is calculated by adjusting earnings and the number
of shares for the effects of dilutive options and other dilutive
potential Ordinary shares (i.e. the C shares).
The calculation of basic and diluted earnings per share is based
on the following:
From From
18 November 29 September
2016 to 2016 to
31 March 17 November
2018 2016
Calculation of Basic Earnings per
share
Net profit/(loss) attributable to
Ordinary shareholders (GBP'000) 36,926 (31)
Weighted average number of Ordinary
shares 350,000,000 46
Earnings/(losses) per share
- basic 10.55p (68,261.00)p
Calculation of Diluted Earnings per
share
Net profit/(loss) attributable to
Ordinary shareholders
(GBP'000's) 36,926 (31)
Add back finance costs associated
with the C share liability (GBP'000's) 2,792 -
Total (GBP'000's) 39,718 (31)
Weighted average number of Ordinary
shares 350,000,000 46
Effects of dilution from C shares 283,065,815 -
633,065,815 46
Earnings/(losses) per share
-diluted 6.27p (68,261.00)p
14. Dividends
From From
18 November 29 September
2016 to 2016 to
31 March 17 November
2018 2016
GBP'000 GBP'000
Dividend of 0.75p for the 3 months 2,625 -
to 31 March 2017
Dividend of 0.75p for the 3 months 2,625 -
to 30 June 2017
Dividend of 0.75p for the 3 months 2,625 -
to 30 September 2017
Dividend of 0.75p for the 3 months 2,625 -
to 31 December 2017
Total 10,500 -
On 4 May 2017 the Company announced a dividend of 0.75 pence per
share in respect of the period 1 January 2017 to 31 March 2017. The
dividend payment was made on 31 May 2017 to shareholders on the
register as at 12 May 2017.
On 24 July 2017 the Company announced a dividend of 0.75 pence
per share in respect of the period 1 April 2017 to 30 June 2017.
The dividend payment was made on 31 August 2017 to shareholders on
the register as at 4 August 2017.
On 31 October 2017 the Company announced a dividend of 0.75
pence per share in respect of the period 1 July 2017 to 30
September 2017. The dividend payment was made on 30 November 2017
to shareholders on the register as at 10 November 2017.
On 9 February 2018 the Company announced a dividend of 0.75
pence per share in respect of the period 1 October 2017 to 31
December 2017. The dividend payment was made on 9 March 2018 to
shareholders on the register as at 23 February 2018.
On 10 May 2018 the Company announced a dividend of 1.25 pence
per share in respect of the period 1 January 2018 to 31 March 2018.
The dividend will be paid on 8 June 2018 to shareholders on the
register as at 18 May 2018. The financial statements do not reflect
this dividend.
15. Investment property
31 March 17 November
2018 2016
GBP'000 GBP'000
Balance at beginning of period - -
Property acquisitions 465,522 -
Acquisition costs 20,067 -
Change in fair value during the period 30,965 -
Value advised by the property 516,554 -
valuers
Adjustments for lease incentive
assets and rent straight line (332) -
assets recognised
Total 516,222 -
In accordance with "IAS 40: Investment Property", the investment
property has been independently valued at fair value by JLL, an
accredited external valuer with recognised and relevant
professional qualifications and recent experience of the location
and category of the investment property being valued, however the
valuations are the ultimate responsibility of the Directors.
JLL valued the Civitas Social Housing PLC property portfolio on
the basis of each individual property and the theoretical sale of
the properties without the benefit of any corporate wrapper at
GBP516.2 million as at 31 March 2018.
JLL has provided valuations services to the Company with regards
to the properties during the period. In relation to the period
ended 31 March 2018, the proportion of the total fees payable by
the Company to JLL's total fee income was less than 5% and is
therefore minimal. Additionally, JLL has a rotation policy in place
whereby the signatories on the valuations rotate after seven
years.
All corporate acquisitions during the period have been treated
as asset purchases rather than business combinations because they
are considered to be acquisitions of properties rather than
businesses.
The following table provides the fair value measurement
hierarchy for investment property:
Significant Significant
Quoted prices observable unobservable
in active inputs inputs
Total markets (level 2) (level 3)
Investment properties GBP'000 (level 1) GBP'000 GBP'000
measured at fair value: GBP'000
31 March 2018 516,222 - - 516,222
17 November 2016 - - - -
There have been no transfers between Level 1 and Level 2 during
any of the periods, nor have there been any transfers between Level
2 and Level 3 during any of the periods.
The valuations have been prepared in accordance with the RICS
Valuation - Professional Standards (incorporating the International
Valuation Standards) by JLL, one of the leading professional firms
engaged in the social housing sector.
As noted previously all of the Group's investments are reported
as Level 3 in accordance with IFRS 13 where external inputs are
"unobservable" and value is the Directors' best estimate, based
upon advice from relevant knowledgeable experts.
In this instance, the determination of the fair value of
investment property requires an examination of the specific merits
of each property that are in turn considered pertinent to the
valuation.
These include:
i) the regulated social housing sector and demand for the
facilities offered by each Specialist supported housing property
owned by the Group;
ii) the particular structure of the Group's transactions where
vendors, at their own expense, meet the majority of the
refurbishment costs of each property and certain purchase
costs;
iii) detailed financial analysis with discount rates supporting
the carrying value of each property;
iv) underlying rents for each property in comparison to the
market rent, with consideration given as whether a property is over
rented; and
v) a full repairing and insuring lease with annual indexation
based on CPI or CPI+1% and effectively 25 years outstanding in most
cases with a Housing Association itself regulated by the Homes and
Communities Agency.
The following descriptions and definitions relating to valuation
techniques and key unobservable inputs made in determining fair
values are as follows:
Valuation techniques: market value method
The estimated amount for which a property should exchange
between a willing buyer and a willing seller in an arm's length
transaction after proper marketing wherein the parties had acted
knowledgeably, prudently and without compulsion. Such marketing to
be structured such that the sale is undertaken in such a manner and
in a specific market with a view to maximising the value
achieved.
There are two main unobservable inputs that determine the fair
value of the Group's investment property:
1) The rate of inflation as measured by CPI; it should be noted
that all leases benefit from either CPI or CPI+1 indexation.
2) The discount rate applied to the rental flows.
Key factors in determining the discount rates applied include
the regulated social housing sector and demand for each SSH
property owned by the Group, costs of acquisition and refurbishment
of each property, the anticipated future underlying cash flows for
each property, benchmarking of each underlying rent for each
property (passing rent), and the fact that all of the properties
within the Group's Portfolio have the benefit of full repairing and
insuring leases entered into by a Housing Association.
As at the balance sheet date the lease lengths within the
Group's Portfolio ranged from an effective 22 years to 25 years
with a weighted average unexpired lease term of 24.1 years. The
greater the length then, all other metrics being equal, the greater
the value of the property.
Sensitivities of measurement of significant unobservable
inputs
As set out within significant accounting estimates and
judgements at 3.1 above, the Group's property investment valuation
is open to judgements and is inherently subjective by nature. As a
result the following sensitivity analysis has been prepared:
Average discount rate and range
The average discount rate used in the Group's property Portfolio
Valuation is 6.5%.
The range of discount rates used in the Group's property
Portfolio Valuation is from 5.6% to 9.1%.
The table below illustrates the change to the value of
investment properties if the discount rate and CPI used for the
portfolio valuation calculations are changed:
-0.5% in +0.5% in +0.25% in -0.25% in
Increase/(decrease) in discount discount CPI (2%) CPI (2%)
the IFRS fair value of rate rate GBP'000 GBP'000
investment properties GBP'000 GBP'000
at:
31 March 2018 20,634 (19,158) 16,062 (15,412)
17 November 2016 n/a n/a n/a n/a
16. Portfolio Net Asset Value
The objective of the Portfolio Net Asset Value ("Portfolio NAV")
measure is to highlight the fair value of the net assets on an
ongoing, long-term basis, which aligns with the Group's business
strategy as an ongoing REIT with a long-term investment outlook.
This Portfolio NAV is made available on a quarterly basis on the
Company's website and announced via a RIS.
On 14 November 2017 the Company issued 302,000,000 C shares. The
results, assets and liabilities attributable to the C shares are
accounted for in a separate pool to those of the Ordinary shares
and thus the Company announces a quarterly Portfolio NAV for both
share classes.
Under IFRS accounting rules, the C shares are recognised in the
financial statements as a liability valued at amortised cost which
represents the value of the assets and liabilities attributable to
the C share pool (see note 21). Thus, the net assets of the Company
disclosed in the financial statements are equal to the net assets
attributable to the Ordinary shareholders.
In order to arrive at Portfolio Net Asset Value for each share
class, adjustments are made to the IFRS Net Asset Value ("IFRS
NAV") reported in the consolidated financial statements such
that;
i) The C share liability, equivalent to the net assets
attributable to the C shareholders is added back to net assets,
because under IFRS accounting rules the C shares are recognised as
a liability. (Please refer to note 21 for more details).
ii) The hypothetical sale of properties will take place on the
basis of a sale of a corporate vehicle rather than a sale of
underlying property assets. This assumption reflects the basis upon
which the Company's assets have been assembled within specific
SPVs.
iii) The hypothetical sale will take place in the form of a single portfolio disposal.
Ordinary
share C share
pool pool Total
GBP'000 GBP'000 GBP'000
Net asset value per the consolidated
financial statements 369,395 - 369,395
Add back C share liability - 298,752 298,752
Value of Asset pools 369,395 298,752 668,147
Effects of the adoption to
the assumed, hypothetical
sale of properties as a portfolio
and on the basis of sale
of a corporate vehicle 29,110 4,014 33,124
Portfolio Net Asset Value 398,505 302,766 701,271
After reflecting these amendments, the movement in net assets
since inception is as follows:
Ordinary
share C share
pool pool Total
GBP'000 GBP'000 GBP'000
Opening reserves at 18 November
2016 (31) - (31)
Net issue proceeds 343,000 295,960 638,960
Operating profits/(losses) 10,470 (757) 9,713
Capital appreciation 56,393 7,364 63,757
Finance income 214 199 413
Finance costs (1,041) - (1,041)
Dividends paid (10,500) - (10,500)
Portfolio Net Assets at 31
March 2018 398,505 302,766 701,271
Value is represented by:
Ordinary
share C share
pool pool Total
GBP'000 GBP'000 GBP'000
Investment property using
the portfolio valuation method 471,525 77,821 549,346
Net current assets 17,802 224,945 242,747
Bank borrowings (90,822) - (90,822)
Portfolio Net Assets 398,505 302,766 701,271
Shares in issue 350,000,000 302,000,000
Portfolio Net Asset Value
per share 113.86p 100.25p
Stated below is the Consolidated Statement of Comprehensive
Income for the period from 18 November 2016 to 31 March 2018,
reflecting the application of the above two assumptions.
Summary Consolidated Statement of Comprehensive Income -
Portfolio NAV Basis
For the period from 18 November 2016 to 31 March 2018
Ordinary
share C share
pool pool Total
GBP'000 GBP'000 GBP'000
Net rental income 17,840 766 18,606
Expenses (7,370) (1,523) (8,893)
Fair value gains on investment
properties 56,393 7,364 63,757
Finance income 214 199 413
Finance costs (1,041) - (1,041)
Value of each pool 66,036 6,806 72,842
Shares in issue 350,000,000 302,000,000
Adjusted Earnings/(losses)
per share - basic 18.87p 2.25p
17. Trade and other receivables
31 March 17 November
2018 2016
GBP'000 GBP'000
Rent receivable 175 -
Less provision for impairment - -
Net rent receivable 175 -
Accrued income 2,398 -
Debtor arising from rent straight 332 -
line adjustments
Prepayments and other receivables 410 -
Amounts due from shareholders - 50
Total 3,315 50
Prepayments and other receivables amount above includes prepaid
legal and professional fees of GBP393,000 that have been incurred
in connection with the acquisitions yet to be completed.
The aged analysis of trade receivables that are past due but not
impaired was as follows:
From From
18 November 29 September
2016 to 2016 to
31 March 17 November
2018 2016
GBP'000 GBP'000
Current - -
< 30 days 175 -
30-60 days - -
> 60 days - -
175 -
Less provision for impairment - -
Total 175 -
The Directors consider the fair value of receivables equals
their carrying amount.
The table above shows the aged analysis of trade receivables
included in the table above which are past due but not impaired.
These principally relate to First Priority Housing Association
("First Priority"). Please see the Investment Advisers' report for
more details.
Other categories within trade and other receivables do not
include impaired assets.
18. Cash and cash equivalents
31 March 17 November
2018 2016
GBP'000 GBP'000
Cash held by solicitors 12,262 -
Liquidity funds 210,969 -
Cash held at bank 20,094 -
Unrestricted cash and cash equivalents 243,325
Restricted cash 6,283 -
Total 249,608 -
Liquidity funds refer to money placed in money market funds.
These are highly liquid funds with accessibility within 24 hours
and subject to insignificant risk of changes in value.
Cash held by lawyers is money held in escrow for expenses
expected to be incurred in relation to investment properties
pending completion. These funds are available immediately on
demand.
Restricted cash represents retention money held by lawyers in
relation to deferred payments subject to achievement of certain
conditions, other retentions and cash segregated to fund repair,
maintenance and improvement works to bring the properties up to
satisfactory standards for the Group and the tenants. Currently
that amount of cash is held in escrow.
19. Trade and other payables
31 March 17 November
2018 2016
GBP'000 GBP'000
Deferred income 225 -
Acquisition costs accrued 8,366 -
Finance costs 498 -
Dividends payable 427 -
Accruals 660 -
Amounts due to shareholders - 81
Total 10,176 81
Acquisition costs accrued includes the balance of retention
monies (as represented by GBP6,283,000 restricted cash as per note
18) and acquisition costs capitalised.
20. Bank and loan borrowings
Bank borrowings are secured by charges over individual
investment properties held by certain asset-holding subsidiaries.
The banks also hold charges over the shares of certain subsidiaries
and any intermediary holding companies of those subsidiaries. Any
associated fees in arranging the bank borrowings unamortised as at
the period end are offset against amounts drawn on the facilities
as shown in the table below:
From From
18 November 29 September
2016 to 2016 to
31 March 17 November
2018 2016
GBP'000 GBP'000
Bank borrowings drawn 92,457 -
Bank borrowings drawn at end of period 92,457 -
Less: loan issue costs incurred (1,761) -
Add: loan issue costs amortised 126 -
Unamortised costs at end of period (1,635) -
At end of period 90,822 -
Maturity of bank borrowings:
Repayable within 1 year - -
Repayable between 1 to 2 years - -
Repayable between 2 to 5 years 39,957 -
Repayable after 5 years 52,500 -
Total 92,457 -
The Group entered into the following loan facility agreements
during the period:
A 10 year Sterling Term Facility Agreement dated 2 November 2017
for up to GBP52,500,000 with Scottish Widows Limited. Interest is
fixed at a total of 2.9936% per annum.
The borrowings include amounts secured on investment property to
the value of GBP163,812,000 (17 November 2016: GBPnil).
A 3 year Sterling Revolving Facility Agreement dated 15 November
2017 for up to GBP40,000,000 with Lloyds Bank plc. Interest is
charged at LIBOR + 1.50% margin.
The borrowings include amounts secured on investment property to
the value of GBP97,400,000 (17 November 2016: GBPnil).
A number of covenants are in place under the two agreements.
Under the 10 year facility, historical and projected interest cover
must be at least 325% and the loan to value ratio must not exceed
40%. Under the 3 year revolving credit facility, historical and
projected interest cover must be at least 250% and the loan to
value ratio must not exceed 55%.
21. C shares
From From
18 November 29 September
2016 to 2016 to
31 March 17 November
2018 2016
GBP'000 GBP'000
At beginning of period - -
Proceeds from issue of C shares 302,000 -
C share issue costs (6,040) -
Amortisation of C share liability 2,792 -
At end of period 298,752 -
On 10 November 2017 the Company announced the issue of
302,000,000 C shares, issued at GBP1 per share. The C shares are
convertible preference shares. The shares are listed on the London
Stock Exchange and dealing commenced on 14 November 2017.
Holders of C shares are not entitled to receive notice of,
attend, speak or vote at general meetings of the Company.
Under ISA 32 Financial Instruments: Presentation, the C shares
meet the definition of a financial liability rather than equity and
are presented in the financial statements as a liability of the
Company carried at amortised cost.
The funds were raised in order to finance a number of property
acquisitions and C shares were issued rather than Ordinary shares
so that the issue costs associated with the fund raise and the
costs associated with the property acquisitions did not dilute the
Ordinary share NAV.
The C shares will be converted to Ordinary shares later in the
year once most of the funds have been utilised for property
acquisitions. The conversion ratio will be based on the ratio of
the value of the net assets attributable to each share class.
In order to calculate the net assets attributable to each share
class, the results, assets and liabilities attributable to the C
shares are identified in a separate pool to the results, assets and
liabilities of the Ordinary shares. A share of fund level expenses
for the period is allocated to the C shares based on the net assets
of each share class pool.
It should be noted that these financial statements include all
results, assets and liabilities of both share class pools however
as the C shares are classified as a liability, net assets are
reduced by the value of the C shares liability which is also
equivalent to the net assets of the C share pool.
The value of the C shares liability at 31 March 2018 is
GBP298,752,000 representing 98.92p per share.
The table below gives a summary of the movement in net assets of
the C share pool and Group results for the period from 18 November
2016 to 31 March 2018
C share
pool Group
GBP'000 GBP'000
Opening reserves - (31)
Proceeds from issue of shares 302,000 652,000
Share issue costs (6,040) (13,040)
Net rental income 766 18,606
Expenses (1,523) (8,893)
Fair value gains on investment
properties 3,350 30,633
Finance income 199 413
Finance costs - (1,041)
Dividends paid - (10,500)
298,752 668,147
Less C share liability - (298,752)
Net assets 298,752 389,395
Net assets are represented by:
C share
pool Group
GBP'000 GBP'000
Investment property 73,807 516,222
Trade and other receivables 625 3,315
Cash at bank 227,231 249,608
Trade and other payables (2,911) (10,176)
Bank borrowings - (90,822)
298,752 668,147
Less C share liability - (298,752)
Net assets 298,752 389,395
22. Share capital
Share capital represents the nominal value of consideration
received by the Company for the issue of Ordinary shares.
From From
18 November 29 September
2016 to 2016 to
31 March 17 November
2018 2016
GBP'000 GBP'000
Share capital
At beginning of period - -
Shares issued 3,500 -
At end of period 3,500 -
Number of shares issued and fully
paid
Ordinary shares of GBP0.01 each
At beginning of period 100 -
Shares issued 349,999,900 100
At end of period 350,000,000 100
The Company achieved admission to the premium listing segment of
the Official List of the UK Listing Authority on 18 November 2016,
raising GBP350 million. As a result of the IPO, at 18 November
2016, 349,999,900 shares at GBP0.01 per share have been issued and
fully paid.
23. Share premium reserve
The share premium reserve represents the amounts subscribed for
Ordinary share capital in excess of nominal value less associated
issue costs of the subscriptions.
From From
18 November 29 September
2016 to 2016 to
31 March 17 November
2018 2016
GBP'000 GBP'000
At beginning of period - -
Premium arising on shares issued 346,500 -
Share issue costs (7,000) -
Transfer to capital reduction reserve (339,500) -
At end of period - -
During the Board meeting on 15 November 2016, a resolution was
passed authorising the cancellation of the share premium account
and it was conditional upon the three following terms:
-- admission of the Ordinary shares to listing on the UK Listing
Authority's Official List;
-- trading on London Stock Exchange's Main Market for listed
securities; and
-- approval of the Court for the reduction of share capital.
In order to cancel the share premium account the Company needed
to obtain a court order, which was received on 1 February 2017. An
SH19 form was sent to Companies House with a copy of the court
order on 1 February 2017 and the certificate of cancellation was
issued by Companies House on 13 February 2017.
Upon cancellation of the share premium account, the funds were
transferred to the capital reduction reserve and these funds are
classified as amounts available for distribution.
24. Capital reduction reserve
The capital reduction reserve is a distributable reserve to
which the value of the share premium has been transferred.
Dividends can be paid from this reserve.
From From
18 November 29 September
2016 to 2016 to
31 March 17 November
2018 2016
GBP'000 GBP'000
At beginning of period - -
Transfer from the share premium reserve 339,500 -
Dividends paid in the period (as per (7,875) -
note 14)
At end of period 331,625 -
25. Retained earnings/ (accumulated losses)
This reserve represents the profits and losses of the Group
From From
18 November 29 September
2016 to 2016 to
31 March 17 November
2018 2016
GBP'000 GBP'000
At beginning of period (31) -
Profit/(loss) for the period 36,926 (31)
Dividends paid in the period (as per (2,625) -
note 14)
At end of period 34,270 (31)
26. Net asset value
Basic NAV per share is calculated by dividing net assets in the
Consolidated Statement of Financial Position attributable to
ordinary equity holders of the parent by the number of Ordinary
shares outstanding at the end of the period.
Diluted NAV per share is calculated by adjusting net assets for
the conversion of the C shares.
Net asset values have been calculated as follows:
31 March 17 November
2018 2016
Net assets (GBP'000) 369,395 (31)
Number of Ordinary shares in issue
at end of period 350,000,000 100
NAV - basic 105.54p (31,399.00)p
Net assets (GBP'000) 369,395 (31)
Adjust for the effect of the C shares 298,752 -
converting (GBP'000)
Adjusted net assets (GBP'000) 668,147 (31)
Number of Ordinary shares in issue
at end of period 350,000,000 100
Number of Ordinary shares that would
be issued on the conversion of C shares 283,065,815 -
Total 633,065,815 100
NAV - diluted 105.54p (31,399.00)p
27. Operating Leases
The Group is party to a number of operating leases on its
investment properties with Registered Providers. The future minimum
lease payments under non-cancellable operating leases receivable by
the Group are as follows:
31 March 17 November
2018 2016
GBP'000 GBP'000
Amounts receivable
< 1 year 28,203 -
1-2 years 28,801 -
2-5 years 86,399 -
> 5 years 554,050 -
At end of period 697,453 -
Leases are direct-let agreements with Registered Providers for a
term between 15 to 25 years with indexed linked annual rent
reviews. All current leases are full repairing and insuring ("FRI")
leases, the tenants are therefore obliged to repair, maintain and
renew the properties back to the original conditions.
The following table gives details of percentage of annual rental
income per Registered Provider:
% of total
annual rent
Westmoreland Supported Housing Limited 35.02
Falcon Housing Association CIC 14.44
First Priority Housing Association 10.66
Trinity Housing Association Limited 9.04
Inclusion Housing CIC 8.70
PAS Housing Association 6.04
New Walk Property Management CIC 4.59
Chrysalis Supported Association Limited 4.43
Harbour Light Assisted Living CIC 3.76
IKE Supported Housing Limited 1.89
Hilldale Housing Association Limited 1.43
Total 100.00
The Group is also party to a number of operating leases on its
long leasehold properties. The ground rent payment commitments
under these operating leases are negligible so the future minimum
lease payments under these leases have not been disclosed in these
financial statements.
28. Controlling parties
As at 31 March 2018 there is no ultimate controlling party.
29. Related party disclosures
The Directors are remunerated for their services at such rate as
the Directors shall from time to time determine. The aggregate
remuneration and benefits in kind of the Directors of the Company
(in each case, solely in their capacity as such) in respect of the
period ended 31 March 2018 payable out of the assets of the Company
is not expected to exceed GBP200,000. At IPO the Chairman was
entitled to a Director's fee of GBP35,000 per annum, and the other
Directors of the Board to a fee of GBP30,000 per annum (with the
exception of the chairman of the Audit and Management Engagement
Committee who will was entitled to an additional fee of GBP2,500
per annum).
During the Board meeting on 26 July 2017, a resolution was
passed authorising an increase to the fees of the Chairman to
GBP50,000 per annum, the Chairman of the Audit and Management
Engagement Committee and the other Directors to GBP36,000 per annum
and GBP32,000 per annum respectively effective from 1 August
2017.
For the period from 18 November 2016 to 31 March 2018, fees of
GBP190,000 were incurred and paid to the Directors.
The Directors held the following number of shares:
Director Ordinary shares C shares
Michael Wrobel Chairman 30,000 45,000
Peter Baxter Director 20,000 30,000
Audit and Management
Engagement Committee
Caroline Gulliver Chair 25,000 37,500
Alastair Moss Director 5,000 7,500
The Company and CHA (collectively the "Members") entered into a
limited liability partnership agreement with Civitas Social Housing
UK LLP ("LLP") on 1 November 2016 to govern the mutual rights and
duties of the LLP and the Members of the LLP. Under the terms of
the Limited Liability Partnership Agreement, the Investment Adviser
was entitled to an amount of GBP980,000 as Priority Profit Share
from the date of the IPO to 31 March 2017, which is included in the
Investment Advisory fees of GBP5,773,000 mentioned in note 8. There
was no consideration paid or due from the Members of the LLP. The
limited liability partnership agreement and the original Investment
Advisory Agreement were terminated on 1 April 2017 and were
replaced by the current Investment Management Agreement.
30. Transactions with the Investment Adviser
On 1 November 2016 Civitas Housing Advisors Limited was
appointed as the Investment Adviser of the Company.
For the period from 18 November 2016 to 31 March 2018, fees of
GBP5,773,000 were incurred and paid to CHA.
As at 31 March 2018, no amounts (17 November 2016: GBP50,000)
were due to/from CHA.
Following the admission of the Company's shares to the premium
segment of the London Stock Exchange on 18 November 2016, CHA
purchased 50,000 Ordinary shares in the Company.
31. Consolidated entities
The Group consists of a parent company, Civitas Social Housing
PLC, incorporated in England and Wales and a number of subsidiaries
held directly by Civitas Social Housing PLC, which operate and are
incorporated in the UK, and Jersey.
The Group owns 100% equity shares of all subsidiaries listed
below and has the power to appoint and remove the majority of the
board of directors of those subsidiaries. The relevant activities
of the below subsidiaries are determined by the board of directors
based on the purpose of each company.
Therefore the Directors concluded that the Group has control
over all these entities and all these entities have been
consolidated within the consolidated financial statements.
A list of all subsidiary companies included within these
consolidated financial statements are noted below. Indirectly held
subsidiary companies are marked by an indentation in the table
below.
Registered Country Ownership
Number Principal of incorporation %
Name Activity
Civitas Social Housing UK England
LLP* OC414370 Holding company & Wales 100%
Civitas Social Housing Finance England
Company 1 Limited ++ 10997707 Finance company & Wales 100%
Civitas Social Housing Jersey
1 Limited 124129 Holding company Jersey 100%
England
Civitas SPV1 Limited ++ 10518729 Property investment & Wales 100%
England
Civitas SPV2 Limited ++ 10114251 Property investment & Wales 100%
England
Civitas SPV11 Limited ++ 10546749 Property investment & Wales 100%
England
Civitas SPV15 Limited ++ 09777380 Property investment & Wales 100%
England
Civitas SPV33 Limited ++ 10546407 Property investment & Wales 100%
England
Civitas SPV35 Limited ++ 10588530 Property investment & Wales 100%
England
Civitas SPV25 Limited ++ 10791473 Property investment & Wales 100%
England
Civitas SPV27 Limited ++ 10883112 Property investment & Wales 100%
England
Civitas SPV38 Limited ++ 10738318 Property investment & Wales 100%
England
Civitas SPV39 Limited ++ 10547333 Property investment & Wales 100%
England
Civitas SPV40 Limited ++ 10738510 Property investment & Wales 100%
England
Civitas SPV41 Limited ++ 10738542 Property investment & Wales 100%
England
Civitas SPV50 Limited ++ 10775419 Property investment & Wales 100%
Civitas Social Housing Finance England
Company 2 Limited ++ 10997698 Finance company & Wales 100%
Civitas Social Housing Jersey
2 Limited 124876 Holding company Jersey 100%
England
Civitas SPV3 Limited ++ 10156529 Property investment & Wales 100%
England
Civitas SPV4 Limited ++ 10433744 Property investment & Wales 100%
England
Civitas SPV5 Limited ++ 10479104 Property investment & Wales 100%
England
Civitas SPV9 Limited ++ 10536388 Property investment & Wales 100%
England
Civitas SPV10 Limited ++ 10535243 Property investment & Wales 100%
England
Civitas SPV12 Limited ++ 10546753 Property investment & Wales 100%
England
Civitas SPV17 Limited ++ 10479036 Property investment & Wales 100%
England
Civitas SPV18 Limited ++ 10546651 Property investment & Wales 100%
England
Civitas SPV19 Limited ++ 10548932 Property investment & Wales 100%
England
Civitas SPV20 Limited ++ 10588735 Property investment & Wales 100%
England
Civitas SPV22 Limited ++ 10743958 Property investment & Wales 100%
England
Civitas SPV24 Limited ++ 10751512 Property investment & Wales 100%
England
Civitas SPV29 Limited ++ 10911565 Property investment & Wales 100%
England
Civitas SPV34 Limited ++ 10738381 Property investment & Wales 100%
England
Civitas SPV36 Limited ++ 10588792 Property investment & Wales 100%
England
Civitas SPV42 Limited ++ 10738556 Property investment & Wales 100%
England
Civitas SPV43 Limited ++ 10534877 Property investment & Wales 100%
England
Civitas SPV51 Limited ++ 10826693 Property investment & Wales 100%
England
Civitas SPV52 Limited ++ 10827006 Property investment & Wales 100%
Civitas Social Housing Finance England
Company 3 Limited ++ 10997714 Dormant & Wales 100%
Civitas Social Housing Jersey
3 Limited 124877 Holding company Jersey 100%
England
Civitas SPV6 Limited ++ 10674493 Property investment & Wales 100%
England
Civitas SPV7 Limited ++ 10536368 Property investment & Wales 100%
England
Civitas SPV8 Limited ++ 10536157 Property investment & Wales 100%
England
Civitas SPV13 Limited ++ 09517692 Property investment & Wales 100%
England
Civitas SPV14 Limited ++ 10479041 Property investment & Wales 100%
England
Civitas SPV16 Limited ++ 09917557 Property investment & Wales 100%
England
Civitas SPV21 Limited ++ 10631541 Property investment & Wales 100%
England
Civitas SPV23 Limited ++ 10746881 Property investment & Wales 100%
England
Civitas SPV28 Limited ++ 10895228 Property investment & Wales 100%
England
Civitas SPV37 Limited ++ 10738450 Property investment & Wales 100%
England
Civitas SPV44 Limited ++ 10588783 Property investment & Wales 100%
England
Civitas SPV26 Limited ++ 10864336 Property investment & Wales 100%
England
Civitas SPV30 Limited ++ 10956025 Property investment & Wales 100%
England
Civitas SPV31 Limited ++ 10974889 Property investment & Wales 100%
England
Civitas SPV32 Limited 11007173 Property investment & Wales 100%
England
Civitas SPV45 Limited ++ 10871854 Property investment & Wales 100%
England
Civitas SPV46 Limited ++ 10871910 Property investment & Wales 100%
England
Civitas SPV47 Limited ++ 10873270 Property investment & Wales 100%
England
Civitas SPV48 Limited ++ 10873295 Property investment & Wales 100%
England
Civitas SPV49 Limited 11031349 Property investment & Wales 100%
England
Civitas SPV53 Limited 11021625 Property investment & Wales 100%
England
Civitas SPV54 Limited 11039750 Property investment & Wales 100%
England
Civitas SPV55 Limited 11056455 Property investment & Wales 100%
England
Civitas SPV56 Limited 11056465 Property investment & Wales 100%
England
Civitas SPV57 Limited 11091444 Property investment & Wales 100%
England
Civitas SPV59 Limited 11111912 Property investment & Wales 100%
England
Civitas SPV60 Limited 11111908 Property investment & Wales 100%
England
Civitas SPV61 Limited ++ 10937662 Property investment & Wales 100%
England
Civitas SPV62 Limited ++ 10937528 Property investment & Wales 100%
England
Civitas SPV63 Limited ++ 10937805 Property investment & Wales 100%
England
Civitas SPV64 Limited ++ 10938411 Property investment & Wales 100%
England
Civitas SPV65 Limited ++ 10938467 Property investment & Wales 100%
England
Civitas SPV66 Limited ++ 10937898 Property investment & Wales 100%
England
Civitas SPV67 Limited ++ 10937929 Property investment & Wales 100%
England
Civitas SPV68 Limited ++ 10938269 Property investment & Wales 100%
England
Civitas SPV69 Limited 11142372 Property investment & Wales 100%
England
Civitas SPV70 Limited ++ 10770201 Property investment & Wales 100%
England
Civitas SPV79 Limited 11236544 Property investment & Wales 100%
England
Civitas SPV81 Limited 11192811 Property investment & Wales 100%
England
CSH SPV77 Limited 11166491 Property investment & Wales 100%
England
CSH SPV78 Limited ++ 11170099 Property investment & Wales 100%
England
FPI CO 151 Ltd ++ 10888639 Property investment & Wales 100%
England
FPI CO 157 Ltd** ++ 10888903 Property investment & Wales 100%
England
FPI CO 171 Ltd ++ 10938022 Property investment & Wales 100%
England
FPI CO 176 Ltd** ++ 10939044 Property investment & Wales 100%
England
FPI CO 177 Ltd ++ 10939075 Property investment & Wales 100%
England
FPI CO 178 Ltd** ++ 10939131 Property investment & Wales 100%
England
FPI CO 184 Ltd** ++ 10941377 Property investment & Wales 100%
England
FPI CO 192 Ltd ++ 11001855 Property investment & Wales 100%
England
FPI CO 193 Ltd ++ 11001834 Property investment & Wales 100%
England
FPI CO 195 Ltd ++ 11001998 Property investment & Wales 100%
* Dissolved 23 January 2018
** Registered address: 5 Old Bailey, London EC4M 7BA
Other than the four entities noted above by **, the registered
addresses for the subsidiaries are consistent based on their
country of incorporation and are as follows:
England & Wales entities: Beaufort House, 51 New North Road,
Exeter, United Kingdom, EX4 4EP
Jersey entities: 12 Castle Street, St Helier, Jersey, JE2
3RT
++ These entities are exempt from the requirements of the
Companies Act 2006 relating to the audit of individual accounts by
virtue of Section 479A of that Act. These are all entities that
have a year end prior to 31 March 2019.
32. Financial risk management
32.1. Financial instruments
The Group's principal financial assets and liabilities are those
that arise directly from its operations: trade and other
receivables, trade and other payables and cash and cash
equivalents. The Group's other principal financial liabilities are
bank borrowings, the main purpose of which is to finance the
acquisition and development of the Group's investment property
portfolio. The C share financial liability is also considered to be
a financial instrument, the main purposes of which is to finance
new acquisitions.
Financial assets are classified as loans and receivables and all
financial liabilities are measured at amortised cost. All financial
instruments were designated in their current categories upon
initial recognition.
Set out below is a comparison by class of the carrying amounts
and fair value of the Group's financial instruments that are
carried in the financial statements:
Book value Fair value Book value Book value
31 March 31 March 17 November 17 November
2018 2018 2016 2016
GBP'000 GBP'000 GBP'000 GBP'000
Financial assets
Trade and other receivables(1) 2,573 2,573 50 50
Cash and cash equivalents 249,608 249,608 - -
Financial liabilities
Trade and other payables(2) 9,951 9,951 81 81
Bank borrowings 90,822 92,350 - -
C share liability 298,752 294,148 - -
(1 Excludes prepayments and debtors arising on rent
smoothing)
(2 Excludes deferred income and tax liabilities)
The Group has two bank loans. One is a 10 year fixed rate loan
of GBP52.5 million, provided by Scottish Widows and the other is a
3 year revolving credit facility variable rate loan of GBP40
million provided by Lloyds Bank. The fair value of the fixed rate
loan is determined by comparing the discounted future cash
flows.
The C share liability fair value is based on the quoted
bid-market price at 31 March 2018 multiplied by the number of C
shares in issue.
Financial risk management
The Group is exposed to market risk, interest rate risk, credit
risk and liquidity risk in the current and future periods. The
Board of Directors oversees the management of these risks. The
Board of Directors reviews and agrees policies for managing each of
these risks that are summarised below.
32.2. Market risk
The Group's activities will expose it primarily to the market
risks associated with changes in property values and changes in
interest rates.
Risk relating to investment in property
Investment in property is subject to varying degrees of risk.
Some factors that affect the value of the investment in property
include:
-- changes in the general economic climate;
-- competition from available properties;
-- obsolescence; and
-- Government regulations, including planning, environmental and
tax laws.
Variations in the above factors can affect the valuation of
assets held by the Group and as a result can influence the
financial performance of the Group.
Risk relating to liquidity funds classified as cash and cash
equivalents
The Group holds positions in two AAA rated liquidity funds that
invest in a diversified range of government and non-government
money market securities, which are subject to varying degrees of
risk. Some factors that affect the value of the liquidity funds
include:
-- the performance of the underlying government and
non-government money market securities; and
-- interest rates.
Variations in the above factors can affect the valuation of
assets held by the Group and as a result can influence the
financial performance of the Group.
31.3. Interest rate risk
Interest rate risk is the risk that the fair value or future
cash flows of a financial instrument will fluctuate because of
changes in market interest rates.
The Group's interest rate risk principally arises from long-term
borrowings. To manage this, the Group has entered into a fixed rate
bank loan and a variable rate bank loan. At 31 March 2018 57% of
the Group's borrowings are at a fixed rate of interest.
The exposure of the Group to variable rates of interest is
considered upon drawing of any new loan facilities, to ensure that
the Group's exposure to interest rate fluctuations is within
acceptable levels.
The Investment Adviser monitors the Group's exposure to any
changes in interest rate on an ongoing basis, with the Board
updated on a quarterly basis of the current exposure of the Group's
loan facilities
As at 31 March 2018 if interest rates had been 200 basis points
higher/(lower) with all other variables held constant the impact on
profits after taxation for the period would be as follows:
31 March 17 November
2018 2016
GBP'000 GBP'000
Increase/(decrease) in profits due
to interest rates
200 basis points higher 3,429 -
200 basis points lower (7) -
The average effective interest rates of financial instruments at
31 March 2018 were as follows:
31 March 17 November
2016
2018 %
%
Bank borrowings - fixed rate 2.99360 -
Bank borrowings - variable rate 2.02125 -
Cash and cash equivalents 0.38205 -
32.4. Credit risk
Credit risk is the risk that counterparty will not meet its
obligations under a financial instrument or customer contract,
leading to a financial loss. The Group is exposed to credit risks
from both its leasing activities and financing activities,
including deposits with banks and financial institutions.
Debtors and accrued income represent rent due or accrued, these
amounts due are diversified between a number of different Housing
Associations of differing financial strength, see note 27 for
details of the different counterparties. None of the Housing
Associations have listed debt and as such do not have a credit
rating however the diversified nature of this asset supports the
credit quality.
The Group has policies in place to ensure that rental contracts
are entered into only with lessees with an appropriate credit and
operational history, and limits exposure to any one tenant. The
credit risk is considered to be further reduced as the source of
the rents received by the Group is ultimately provided by the
government, by way of housing benefit and care provision, via a
diverse range of Local Authorities.
For details of provisions for impairment please refer to note
17.
Credit risk related to financial instruments and cash
deposits
One of the principal credit risks of the Group will arise with
the banks and financial institutions. The Board of Directors
believes that the credit risk on short-term deposits and current
account cash balances is limited because the counterparties are
banks considered to be of good credit quality. In the case of cash
deposits held with lawyers, the credit risk is limited because the
cash is held by the lawyers within client accounts at banks with
high credit quality.
32.5. Liquidity risk
The Group manages its liquidity and funding risks by considering
cash flow forecasts and ensuring sufficient cash balances are held
within the Group to meet future needs. Prudent liquidity risk
management implies maintaining sufficient cash and marketable
securities, the availability of financing through appropriate and
adequate credit lines, and the ability of customers to settle
obligations within normal terms of credit. The Group ensures,
through forecasting of capital requirements, that adequate cash is
available.
The following table details the Group's maturity profile in
respect of its financial instrument liabilities based on
contractual undiscounted payments:
On demand <1 year 1-5 years > 5 years Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
31 March 2018
Trade and other
payables 9,951 - - - 9,951
Bank borrowings - 2,371 49,483 58,145 109,999
C share liability - - - - -
9,951 2,371 49,483 58,145 119,950
On demand <1 year 1-5 years > 5 years Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
17 November 2016
Trade and other
payables 81 - - - 81
81 - - - 81
The profile above assumes that the revolving credit facility
loan will be rolled over and held to term. Included within the
contracted payments is GBP17,971,000 (17 November 2016: GBPnil) of
loan interest payable up to the point of maturity.
The C share liability and any interest accruing to the C
shareholders will be settled by the issue of Ordinary shares.
33. Capital commitments
At 31 March 2018 the Company had funds committed totalling
GBP4,902,000 concerning the acquisition of a group of four
properties where the exchange of contracts has taken place but the
purchases have not yet completed.
34. Post balance sheet events
Acquisitions
On 5 April 2018 a portfolio of four properties in Yorkshire,
Lancashire and Somerset was acquired for GBP2.1 million.
On 6 April 2018 a property in Worcestershire was acquired for
GBP0.5 million
On 20 April 2018 a portfolio of two properties in Stockport was
acquired for GBP4.8 million
On 26 April 2018 a property in Dorset was acquired for GBP1.6
million
On 27 April 2018 a property in Yorkshire was acquired for GBP3.9
million
On 30 April 2018 a property in Cheshire was acquired for GBP0.4
million.
On 31 May 2018 contracts were exchanged for the purchase of a
portfolio of 4 properties in the West Midlands for a consideration
of GBP8.2 million.
On 31 May 2018 a property in Birmingham was acquired for GBP0.7
million.
On 7 June 2018 a portfolio of three properties in Kent and
Durham was acquired for GBP4.8 million.
On 8 June 2018 a property in Essex was acquired for GBP3.5
million.
Dividends
On 10 May 2018 the Board declared a quarterly dividend in
respect of the Ordinary shares for the three months to 31 March
2018 of 1.25 pence per Ordinary share. The dividend was paid on 8
June 2018 to holders of Ordinary shares on the register as at 18
May 2018. The dividend was paid as a REIT property income
distribution ("PID").
On 10 May 2018 the Board declared a first dividend in respect of
the C shares for the period since issue on 14 November 2017 to 31
March 2018 of 1.13 pence per C share. The dividend was paid on 8
June 2018 to holders of C shares on the register as at 18 May 2018.
The dividend will be paid as an ordinary UK dividend.
Restructure and extension of borrowings
On 24 May 2018 the Company transferred property assets held
indirectly through 17 specialist purpose vehicles to Civitas Social
Housing Jersey 2 Limited. Subsequently the GBP40 million Revolving
Loan Facility with Lloyds Bank was increased by GBP20 million.
Additional security is provided by the property assets above.
Other Announcements
On 9 May 2018 the Company announced that all Civitas leases
previously with First Priority had been assigned, on the same terms
to Falcon Housing Association CIC ("Falcon"), an existing Civitas
Housing Association partner. In addition, Civitas has acquired an
option to increase the length of the leases to 40 years from their
respective start dates, exercisable at Civitas' discretion. Post
this assignment, the Company has a total of 86 properties leased to
Falcon, which represents 12.7% of 31 December 2017 Gross Asset
Value.
Company Statement of Financial Position
As at 31 March 2018
31 March 17 November 29 September
2018 2016 2016
Note GBP'000 GBP'000 GBP'000
Assets
Non-current assets
Investment in subsidiaries 7 479,134 - -
- -
Current assets
Trade and other receivables 8 2,380 50 -
Cash and cash equivalents 9 241,924 - -
244,304 50 -
Total assets 723,438 50 -
Liabilities
Current liabilities
Trade and other payables 10 (4,082) (81) -
C shares financial liability (298,752) - -
(302,834) (81) -
Total liabilities (302,834) (81) -
Total net assets/(liabilities) 420,604 (31) -
Equity
Share capital 11 3,500 - -
Capital reduction reserve 331,625 - -
Retained earnings/(accumulated
losses) 12 85,479 (31) -
Total equity 420,604 (31) -
These financial statements were approved by the Board of
Directors of Civitas Social Housing PLC and authorised for issue on
11 June 2018 and signed on its behalf by:
Michael Wrobel,
Chairman and Independent Non-Executive Director
11 June 2018
Company No: 10402528
The notes below are an integral part of these financial
statements.
Company Statement of Changes in Equity
For the period from 18 November 2016 to 31 March 2018
Retained
Share premium Capital earnings/
Share reserve reduction (accumulated Total
capital GBP'000 reserve losses) equity
GBP'000 GBP'000 GBP'000 GBP'000
Balance at 29 September - - - - -
2016
Loss and total comprehensive
loss for the period - - - (31) (31)
Issue of Ordinary shares
Issue of share - - - - -
capital
Balance at 17 November
2016 - - - (31) (31)
Profit and total comprehensive
income for the period - - - 88,135 88,135
Issue of Ordinary shares
Issue of share
capital 3,500 346,500 - - 350,000
Share issue costs - (7,000) - - (7,000)
Cancellation of
share premium
reserve - (339,500) 339,500 - -
Dividends paid
Total interim
dividends for
the period ended
31 March 2018
(3.00p) - - (7,875) (2,625) (10,500)
Balance at 31 March
2018 3,500 - 331,625 85,479 420,604
Distributable reserves total GBP417,104,000 (17 November 2016:
GBPnil)
The notes below are an integral part of these financial
statements.
Notes to the Company Financial Statements
For the period from 18 November 2016 to 31 March 2018
1. Corporate information
These financial statements for the period from 18 November 2016
to 31 March 2018 comprise the results of the Company and were
approved by the Board and authorised for issue on 11 June 2018.
Civitas Social Housing PLC ("the Company") was incorporated in
England and Wales under the Companies Act 2006 as a public company
limited by shares on 29 September 2016 with company number 10402528
under the name Civitas REIT PLC which was subsequently changed to
the existing name on 3 October 2016.
The address of the registered office is Beaufort House, 51 New
North Road, Exeter, EX4 4EP. The Company is registered as an
investment company under section 833 of the Companies Act 2006 and
is domiciled in the United Kingdom.
The Company did not begin trading until 18 November 2016 when
the shares were admitted to trading on the LSE.
The Company's Ordinary shares are admitted to the Official List
of the UK Listing Authority ("UKLA"), a division of the Financial
Conduct Authority ("FCA"), and traded on the London Stock Exchange
("LSE").
The principal activity of the Company is to act as the ultimate
parent company of Civitas Social Housing PLC and its subsidiaries
(the "Group"), whose principal activity is to provide shareholders
with an attractive level of income, together with the potential for
capital growth from investing in a portfolio of social homes.
2. Basis of preparation
The financial statements have been prepared on a historical cost
basis and in accordance with Financial Reporting Standard 100
Application of Financial Reporting Requirements ("FRS 100"),
Financial Reporting Standard 101 Reduced Disclosure Framework ("FRS
101") and the Companies Act 2006 as applicable to companies using
FRS 101.
In preparing these financial statements, the Company applies the
recognition, measurement and disclosure requirements of
International Financial Reporting Standards as adopted by the EU
("Adopted IFRSs"), but makes amendments where necessary in order to
comply with the Companies Act 2006 and has set out below where
advantage of the FRS 101 disclosure exemptions has been taken.
In preparing these financial statements the Company has taken
advantage of all disclosure exemptions conferred by FRS 101.
Therefore these financial statements do not include:
-- certain comparative information as otherwise required by EU
endorsed IFRS;
-- certain disclosures regarding the Company's capital;
-- a statement of cash flows;
-- the effect of future accounting standards not yet
adopted;
-- the disclosure of the remuneration of key management
personnel; and
-- disclosure of related party transactions with other wholly
owned members of Civitas Social Housing PLC.
In addition, and in accordance with FRS 101 further disclosure
exemptions have been adopted because equivalent disclosures are
included in the Company's consolidated financial statements. These
financial statements do not include certain disclosures in respect
of:
-- share based payments;
-- financial instruments; and
-- fair value measurement other than certain disclosures
required as a result of recording financial instruments at fair
value.
In the current period the Company has adopted FRS 100 and FRS
101. In the previous period the financial statements were prepared
in accordance with IFRS.
This change in the basis of preparation has not materially
altered the recognition and measurement requirements previously
applied in accordance with IFRS and there are no changes to
reported shareholder funds at 29 September 2016 or 17 November 2016
nor total comprehensive income for the period ended 17 November
2016 arising from the adoption of FRS 100 and FRS 101 for the first
time.
The comparative information disclosed in the financial
statements relates to the period from 29 September 2016 to 17
November 2016. The period covered by the comparative information
varies in length and the level of activities and therefore is not
entirely comparable to the current period.
The Company has taken advantage of the exemption in section 408
of the Companies Act 2006 not to present its own income statement
or statement of comprehensive income.
Going concern
The financial statements have been prepared on a going concern
basis.
Significant judgements and sources of estimation uncertainty
The key source of estimation uncertainty relates to the
Company's investments in subsidiaries and joint ventures. In
estimating the requirement for impairment of these investments,
management make assumptions and judgements on the value of these
investments using inherently subjective underlying asset
valuations, supported by independent valuers.
3. Accounting policies
The financial statements of the Company follow the accounting
policies laid out in the Group's consolidated financial statements
along with the following accounting policies:
Investments in subsidiaries
The investments in subsidiary companies are included in the
Company's Statement of Financial Position at cost less provision
for impairment.
Loans to subsidiaries
Loans made to subsidiary companies are initially recognised at
fair value and subsequently are measured at amortised cost.
4. Dividends
Details of dividends paid and proposed are included in note 14
of the Group's consolidated financial statements.
5. Employee information
Details of Directors' remuneration are included in note 6 of the
consolidated financial statements. The Company had no employees
during the period (17 November 2016 period: nil) other than the
Directors.
6. Audit fees
Audit fees in relation to the Company's financial statements
total GBP273,000 (17 November 2016 period: GBP11,000)
7. Investments in subsidiaries
From From
18 November 29 September
2016 to 2016 to
Shares in Loans to subsidiaries 31 March 17 November
subsidiaries GBP'000 2018 2016
GBP'000 GBP'000 GBP'000
At the beginning - - - -
of the period
Increase in investments 65,522 413,612 479,134 -
Loans cancelled 122,900 (122,900) -
Additions due
to internal group
restructure 296,115 - 296,115 -
Disposals due
to internal group
restructure (37,583) (258,532) (296,115) -
At the end of
the period 446,954 32,180 479,134 -
8. Trade and other receivables
31 March 17 November
2018 2016
GBP'000 GBP'000
Prepayments and other receivables 393 -
Amounts due from subsidiary companies 1,987 -
Amounts due from shareholders - 50
Total 2,380 50
Prepayments and other receivables amount above includes prepaid
legal and professional fees of GBP366,000 that have been incurred
in connection with the acquisitions yet to be completed.
9. Cash and cash equivalents
31 March 17 November
2018 2016
GBP'000 GBP'000
Cash held by solicitors 12,262 -
Liquidity funds 210,969 -
Cash held at bank 12,410 -
Cash and cash equivalents 235,641 -
Restricted cash 6,283 -
Total cash held at bank 241,924 -
10. Trade and other payables
31 March 17 November
2018 2016
GBP'000 GBP'000
Acquisition costs accrued 309 -
Retentions 2,806 -
Accruals 540 -
Dividends payable 427 -
Amounts due to shareholders - 81
Total 4,082 81
11. Share capital
Share capital represents the nominal value of consideration
received by the Company for the issue of Ordinary shares.
From From
18 November 29 September
2016 to 2016 to
31 March 17 November
2018 2016
GBP'000 GBP'000
Share capital
At beginning of period - -
Shares issued 3,500 -
At end of period 3,500 -
Number of shares issued and fully Number Number
paid
Ordinary shares of GBP0.01 each
At beginning of period 100 -
Shares issued 349,999,900 100
At end of period 350,000,000 100
The Company achieved admission to the premium listing segment of
the Official List of the London Stock Exchange on 18 November 2016,
raising GBP350 million. As a result of the IPO, at 18 November
2016, 349,999,900 shares at GBP0.01 per share have been issued and
fully paid.
12. Retained earnings/(accumulated losses)
This reserve represents the profits and losses of the
Company
From From
18 November 29 September
2016 to 2016 to
31 March 17 November
2018 2016
GBP'000 GBP'000
At beginning of period (31) -
Profit/(loss) for the period 88,135 (31)
Dividends paid in the period (2,625) -
At end of period 85,479 (31)
13. Controlling parties
As at 31 March 2018 there is no ultimate controlling party.
14. Related party transactions
For all related party transactions please make reference to
notes 29-31 of the Group's consolidated financial statements.
Appendix 1
Notes to the calculation of EPRA and other alternative
performance measures
1. EPRA Earnings
Earnings from operational activities.
31 March
2018
Profit after taxation (GBP'000) 36,926
Changes in value of investment properties
(GBP'000) (30,633)
EPRA Earnings (GBP'000) 6,293
Finance costs associated with the C share
financial liability (GBP'000) 2,792
Diluted EPRA earnings (GBP'000) 9,085
Weighted average number of shares in issue 350,000,000
Dilutive elements 281,065,815
Adjusted weighted average number of shares
in issue 633,065,815
EPRA Earnings per share (EPS) - basic 1.80p
EPRA Earnings per share (EPS) - diluted 1.44p
2. EPRA NAV
Net Asset Value adjusted to include properties and other
investment interest at fair value and to exclude certain items not
expected to crystallise in a long-term investment property business
model.
31 March
2018
Net assets (GBP'000) 369,395
Effect of the exercise of C shares (GBP'000) 298,752
Diluted net assets (GBP'000) 668,147
Other adjustments (GBP'000) -
EPRA Net assets (GBP'000) 668,147
Number of ordinary shares in issue 350,000,000
Number of ordinary shares that would be
issued on the conversion of C shares 283,065,815
Adjusted number of shares to calculated
diluted NAV 633,065,815
EPRA Net assets per share 105.54p
3. EPRA NNNAV
EPRA NAV adjusted to include the fair values of (i) financial
instruments, (ii) debt and (iii) deferred taxes.
31 March
2018
EPRA Net assets (per above) (GBP'000) 668,147
Adjustment to value bank borrowings at
fair value (GBP'000) (712)
EPRA NNNAV (GBP'000) 667,435
Number of ordinary shares in issue 350,000,000
Number of ordinary shares that would be
issued on the conversion of C shares 283,065,815
Adjusted number of shares to calculated
diluted NAV 633,065,815
EPRA NNNAV per share 105.43p
4. EPRA Vacancy Rate
Estimated Market Rental Value (ERV) of vacancy space divided by
ERV of the whole portfolio.
31 March
2018
GBP'000
Estimated Market Rental Value (ERV) of -
vacant spaces
Estimated Market Rental Value (ERV) of
whole portfolio 28,543
EPRA Vacancy Rate 0%
5. Portfolio NAV
IFRS NAV adjusted to reflect investment property valued on a
portfolio basis rather than individual asset basis.
31 March
2018
Net assets (GBP'000) 369,395
Adjustment for change to property valuation
(GBP'000) 2,911
Portfolio net assets (GBP'000) 398,505
Number of Ordinary shares in issue 350,000,000
EPRA Net assets per share 113.86p
6. Company Adjusted Earnings
Company Specific Earnings Measure which adds back finance costs
associated with the C share financial liability.
31 March
2018
Profit after taxation (GBP'000) 36,926
Changes in value of investment properties
(GBP'000) (30,633)
EPRA Earnings (GBP'000) 6,293
Finance costs associated with the C share
financial liability (GBP'000) 2,792
Company Adjusted Earnings (GBP'000) 9,085
Weighted average number of shares in issue 350,000,000
EPRA Earnings per share (EPS) - basic 2.60p
NATIONAL STORAGE MECHANISM
A copy of the Annual Report and Financial Statements will be
submitted shortly to the National Storage Mechanism ("NSM") and
will be available for inspection at the NSM, which is situated at
www.morningstar.co.uk/uk/NSM.
LEI: 213800PGBG84J8GM6F95
ENDS
Neither the contents of the Company's website nor the contents
of any website accessible from hyperlinks on the website (or any
website) is incorporated into, or forms part of, this
announcement.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR DGGDLGSBBGIB
(END) Dow Jones Newswires
June 12, 2018 02:00 ET (06:00 GMT)
Civitas Social Housing (LSE:CSH)
Historical Stock Chart
From Apr 2024 to May 2024
Civitas Social Housing (LSE:CSH)
Historical Stock Chart
From May 2023 to May 2024