Civitas Full Year Results

RNS Number : 7280Q

Civitas Social Housing PLC

30 June 2022

CIVITAS SOCIAL HOUSING PLC

ANNUAL FINANCIAL REPORT

YEAR TO 31 MARCH 2022

Strong Financial Performance; NAV Increase; Dividend Target Raised

New Draft Lease Clause to Address Perceived Risk

Civitas Social Housing PLC ("Civitas" or the "Company"), the UK's leading care-based and healthcare REIT, presents its full year results for the year ended 31 March 2022, reporting valuation growth, financial performance in line with expectations, a raised dividend target and ongoing positive social impact.

The results deliver on the Company's objective to deliver returns broadly in line with inflation over the long-term, derived from the largest portfolio of specialist supported housing in the UK with inflation adjusted long-term tenancies.

Performance Highlights

Property Valuation and Performance	Mar 22	Mar 21	Change
Investment property (£m)	968.8	915.6	+5.8%
IFRS NAV per share (diluted) (p)	110.30	108.30	+1.9%
Financial Performance
Rent roll annualised (£m)	54.1	50.8	+6.5%
Net rental income (£m)	50.7	47.8	+6.1%
EPRA earnings (£m)	29.8	30.6	-2.6%
Operating Cash Flow^[1] (£m)	37.5	36.1	+3.8%
IFRS earnings per share (diluted) (p)	7.23	5.80	+24.7%
EPRA earnings per share (diluted)^[2] (p)	4.82	4.93	-2.2%
Dividends per share (p)	5.55	5.40	+2.8%
IFRS NAV Total return since IPO^[3] (%)	37.2	29.6
Total shareholder return since IPO^[4] (%)	11.6	26.5
Financing
Loan to value ratio (%)	34.4	34.5
Weighted average cost of debt (%)	2.5	2.4

· Ongoing strong financial performance delivering high social impact

· New regulatory clause proposed to help counterparties become better able to achieve regulatory compliance

· 77 properties acquired during the year: 29 properties for £21.9 million providing homes for vulnerable adults, 47 properties for c.£8.1m to deliver asylum accommodation and 1 property in Lancashire for £1.4 million providing a home for 13 individuals with learning disabilities and mental health care needs

Investment Property Portfolio Enhanced

· Portfolio value increased to £968.8m from £915.6 million (IFRS)

· IFRS valuation average net initial yield (NIY) of 5.28%

· IFRS NAV increased to 110.3 pence per share reflecting ongoing demand for investment in the asset class as well as the effect of indexation of inflation adjusted leases

Rent Roll Up Benefiting from Indexation

· Annualised rent roll increased by 6.5% to £54.1 million

· Rents received as expected

· EPRA earnings per share (basic and diluted) 4.82 pence per share (2021: 4.93 pence per share)

Diversified Portfolio of 696 Properties Providing Homes to 4,592 Residents

· Providing lifelong homes to working age adults with disabilities and complex care needs with an average tenant age of c. 32 years

· High acuity care being provided, with 40% of residents living in Civitas properties receiving over 50 hours of care per week

· Properties located across 178 Local Authority partners in England and Wales and leased to 18 approved providers, with support provided by 130 Care Providers

· Over one third of the portfolio on back-to-back 25-year leases, with leading Care Providers

Dividend Target Raised

· Dividend target raised to at least 5.70 pence per share^[5] for the YE 31 March 2023 continuing unbroken record of dividend increases since IPO in 2016

· Dividends of 5.55 pence per share to 31 March 2022 fully paid in quarterly distributions

· EPRA run-rate dividend cover of 97% (actual 87%) as at 31 March 2022

Debt Facilities and Credit Rating

· Maintained a high quality investment credit rating from Fitch Ratings of "A-" (stable) and "A" Secured, enabling access to broader long-term funding markets

· Extended maturity of £100m loan facility with HSBC Bank plc to November 2023 at SONIA plus 2.02% margin

· Post year end the £60m facility with Lloyds Bank plc has also been extended to July 2024 at SONIA plus 1.67% margin

· Leverage maintained at 34.43%, comfortably within the Company's cap of 40% GAV

Focus on Attaining Best in Class Social and Environmental Impact

· Continuing focus on delivering best in class impact delivery and reporting including in this financial year

· Phase two of the Company's work with E.ON across 120 properties, targeting reduction in carbon emissions

· New independent social impact report as at 31 March 2022 published on the Company's website

· Publication of book, 'A Place for Me', in which 50 Civitas residents tell their own stories in their own words

· Clean Energy Strategy to achieve minimum EPC "A-C" by 2030 and further reduction thereafter with a target of net-zero

Post Year End Highlights and Opportunities

· Acquisition of a supported living and care facility at North End, Wisbech for a total consideration of £0.6 million on 13 May 2022

Michael Wrobel, Non-Executive Chairman of the Company, commented:

"I am pleased to report that the Company has achieved another year of strong financial and operational performance.

Our Investment Adviser, Civitas Investment Management Limited ("CIM"), has exceptional knowledge of the industry and continues to add to its team to enhance our portfolio. CIM has been working on an initiative to introduce a variation to our leases, that will not impact revenues or asset values, but which aims to strengthen the industry by addressing concerns expressed by the Regulator for Social Housing.

The sector in which the Company invests offers many positive attributes, in an increasingly uncertain world. We benefit from high levels of intrinsic underlying demand for our properties. All of our leases benefit from CPI uplift on rents, some of which are subject to a 4% cap. Together with our partners, we enable the delivery of high quality, value for money care services for our tenants. Our initiatives on new lease clauses and further projects with E.ON to reduce our carbon footprint, will deliver further benefit to our stakeholders. We look to the future with confidence."

For further information, please contact:

Civitas Investment Management Limited
Andrew Dawber	Tel: +44 (0) 20 3058 4846
Paul Bridge	Tel: +44 (0) 20 3058 4844


Panmure Gordon
Sapna Shah	Tel: +44 (0) 20 7886 2783
Tom Scrivens	Tel: +44 (0) 20 7886 2648


Liberum Capital Limited
Chris Clarke / Darren Vickers / Owen Matthews	Tel: +44 (0) 20 3100 2000


Buchanan
Helen Tarbet / Henry Wilson	Tel: +44 (0) 20 7466 5000
Hannah Ratcliff / Verity Parker	civitas@buchanan.uk.com

Notes:

Civitas Social Housing PLC (CSH) was created in 2016 by Civitas Investment Management Limited as the first dedicated London Stock Exchange listed social care REIT, to raise long-term, sustainable, institutional capital to invest in care-based community homes and healthcare facilities across the UK. CSH has completed more than 120 individual transactions to build the largest portfolio of its kind that has been independently valued at 968.8 million (31 March 2022). CSH now provides homes for 4,592 working age adults with long-term care needs, in 696 bespoke properties that are supported by 130 specialist care providers, 18 approved providers and working with over 178 individual local authority partners

Chairman's Statement

Introduction
I am pleased to report that the Company has achieved another year of strong financial and operational performance. Our positive social impact is detailed in a report from the independent specialist consultancy The Good Economy ("TGE").

The year presented many challenges. The pressures of the COVID-19 pandemic on our tenants and their carers highlights the benefits of providing community-based care housing for vulnerable adults of working age. During the year, the Company came under attack from a small number of investors short-selling the Company's shares, one of whom published a series of criticisms that the Board refuted in a very detailed response. The share price, having traded at a premium to NAV early in the financial year, dropped sharply to a discount at the year end. One of the Board responses has been to initiate a share buy-back programme which enhances the Net Asset Value of the Company and confirms the Board's confidence in the robust nature of the Company's cashflows and asset values.

Financial Performance

During the year under review our portfolio generated rental income of £51.6 million, representing a 5.3% increase over the corresponding period. This reflects the indexation of lease rents (during a period of mostly very low inflation) together with new rents from a small number of properties purchased during the year.

Cash generated from operations was £37.5 million, an increase of 3.83% over the prior year (on a comparable basis).

IFRS net asset value of the Company increased from 108.30 pence per Ordinary share as at 31 March 2021 to 110.30 pence per share as at 31 March 2022.

The Company has met the Board's stated dividend target of 5.55 pence per share for the year to 31 March 2022 and the Board has set a new dividend target of at least 5.701 pence per share for the year to 31 March 2023.

Board Governance

The Board is currently looking to recruit a new independent director, having regard to succession, our breadth of skills and diversity.

The Board and the Investment Adviser continue an open dialogue with our shareholders to further demonstrate our commitment to provide full transparency at all times.

Continuation Vote

The Company's articles of association require the Board to propose a continuation vote as an ordinary resolution at the annual general meeting following the fifth anniversary from the initial public offering of the Company and at every fifth AGM thereafter. This is referred to later in more detail within the Report of the Directors. Following discussions with a number of shareholders and given the strength and nature of the Company's portfolio and long-term tenants, the Directors are of the opinion that the continuation resolution at the forthcoming AGM will be passed and encourage all shareholders to vote in favour.

Outlook

Our initiatives on new lease clauses and further projects with E.ON to reduce our carbon footprint, will deliver further benefit to our stakeholders. We look to the future with confidence.

Michael Wrobel

Chairman

29 June 2022

¹ Thi s is a target and not a formal dividend forecast or a profit forecast

Growth

Growing base of global investors

Civitas invests on behalf of a wide range of global, national and local investors seeking exposure to sustainable long-term income together with measurable social impact and high levels of ESG delivery.

Four Continents… …over 60 Locations

1. Amsterdam	13. Denver	25. Helsinki	37. Montreal	49. Seattle
2. Austin	14. Dublin	26. Hong Kong	38. Munich	50. Singapore
3. Baltimore	15. Edinburgh	27. Illinois	39. New Jersey	51. Surrey
4. Beijing	16. Espoo	28. Japan	40. New York	52. Smithfield
5. Birmingham	17. Exeter	29. Jersey	41. New Zealand	53. Sydney
6. Boston	18. Fort Lauderdale	30. Jersey City	42. Oslo	54. Tokyo
7. Bradford	19. Frankfurt	31. Leeds	43. Paris	55. Toronto
8. Bristol	20. Geneva	32. London	44. Philadelphia	56. The Hague
9. Brisbane	21. Glasgow	33. Los Angeles	45. Rotterdam	57. Tunbridge Wells
10. Brussels	22. Guernsey	34. Luxembourg	46. Richmond	58. Vancouver
11. Chicago	23. Halifax	35. Manchester	47. Sacramento	59. Windsor
12. Columbus	24. Heerlen	36. Melbourne	48. San Francisco	60. Zurich

Our Strategy for Growth

Demand for the accommodation provided by Civitas is strong and expected to remain so over the long-term. The pandemic has further evidenced the need for safe and secure homes for the most vulnerable people in society.

Civitas is a go-to partner for an increasing range of major vendors and counterparties.

Civitas is the market leader with the largest portfolio and deeply ingrained relationships with care providers, local authorities, Approved Providers and charities across the UK.

Civitas continues to take delivery of new build higher acuity properties with more opportunities being offered and expands into significant markets across the UK, now including Scotland and Northern Ireland.

The Company continues to work closely with The Social Housing Family CIC to enable it to expand and play a broader role in the sector, and becoming part of critical local authority pathways, leading to many opportunities in specialist supported living and advanced homelessness.

Civitas now works with a broader range of counterparties including charities and other not-for-profit organisations, to expand into significant markets across the UK, now including Scotland and Northern Ireland.

Our Portfolio By UK Region as at 31 March 2022

Our portfolio

By UK Region

Region	Properties	Funds invested (percentage)	Annualised rent roll (percentage)
North East	64	5.8	7.0
North West	101	10.1	9.8
Yorkshire and the Humber	96	10.8	10.5
East Midlands	58	8.6	8.5
West Midlands	101	11.3	11.2
East of England	32	4.0	3.9
South East	64	10.1	9.9
South West	120	15.5	15.5
Wales	34	11.0	10.5
London	26	12.8	13.2
Total	696

Market Value (%)

Region	Market Value
South West	15.7%
London	12.1%
West Midlands	11.3%
Wales	10.9%
Yorkshire and the Humber	10.6%
South East	10.1%
North West	9.8%
East Midlands	8.6%
North East	7.0%
East of England	3.9%

Tenancies

Region	Tenancies
South West	759
Yorkshire and the Humber	610
North West	607
West Midlands	502
North East	462
South East	415
Wales	364
London	338
East Midlands	374
East of England	161
Total	4,592

By Approved Provider as at 31 March 2022

Annualised rent roll (%)

Approved Provider	Annualised rent roll (%)
Falcon	18.6%
Auckland¹	16.2%
BeST	12.2%
Inclusion	10.0%
Qualitas Housing¹	8.1%
Westmoreland	5.9%
Encircle	5.9%
Trinity	5.2%
Pivotal	3.8%
Chrysalis	3.6%
Harbour Light	3.6%
New Walk	2.7%
My Space	1.1%
IKE	1.1%
Hilldale	0.9%
Windrush	0.8%
Lily Rose	0.2%
Blue Square	0.1%

Properties

Approved Provider	Properties
Falcon	116
Auckland¹	100
Inclusion	82
BeST	74
Qualitas Housing¹	54
Trinity	43
Westmoreland	41
New Walk	41
Pivotal	27
Chrysalis	27
Harbour Light	27
Encircle	16
Hilldale	15
Windrush	13
IKE	10
My Space	8
Blue Square	1
Lily Rose	1
Total	696

Tenancies

Approved Provider	Tenancies
Falcon	850
BeST	591
Auckland¹	547
Inclusion	507
Qualitas Housing¹	370
Trinity	242
Westmoreland	239
Pivotal	238
Harbour Light	214
Encircle	205
New Walk	194
Chrysalis	149
My Space	71
IKE	68
Windrush	51
Hilldale	39
Lily Rose	13
Blue Square	4
Total	4,592

Market Value (%)

Approved Provider	Market Value (%)
Falcon	18.9%
Auckland¹	16.4%
BeST	12.5%
Inclusion	9.7%
Qualitas Housing¹	8.4%
Westmoreland	6.2%
Trinity	5.2%
Encircle	4.8%
Pivotal	3.8%
Chrysalis	3.7%
Harbour Light	3.6%
New Walk	2.7%
My Space	1.1%
IKE	1.1%
Hilldale	0.9%
Windrush	0.8%
Blue Square	0.1%
Lily Rose	0.1%

¹ Auckland and Qualitas Housing are both members of the Social Housing Family C.I.C and subject to common control.

Investment Adviser's Report

Continuous Improvement

In the year to March 2022 CIM, working with the CSH Board, has led the development of a range of key initiatives to strengthen and position CSH and the portfolio for the future.

Proposed New Regulatory Clause

· Counterparties better able to achieve regulatory compliance

· Enhanced information and step in rights (having regard to tenant welfare) in addition to existing lease transfer and assignment rights

· Unchanged lease and property values supported by strong underlying demand

· Improved Governance

"A Place for Me"

· Stories of 50 residents who live in Civitas properties

· Fully independently compiled and written

· Extensive number of interviews with residents, their families, friends and their carers

Phase two work with E.ON

· Continued to work across 120 properties

· Targeting 25% reduction in carbon emissions

· Continued access to Government grant funding sources

· Clean Energy Strategy to achieve minimum EPC "A-C" by 2030

A growing team of specialists

· Asset Management

· Finance and operations

· Transaction sourcing and execution

· Housing Benefit

"Civitas Social Housing PLC (CSH), is the market leader in the delivery of ethical, care-based residential housing, delivering sustainable returns for shareholders and outstanding community-based homes for residents, while offering value for money to society. This transforms lives."

Paul Bridge

CEO, Social Housing

Civitas Investment Management Limited

Introduction

Civitas Investment Management Limited (CIM), the Investment Adviser to CSH, advises on a range of ethically based social and healthcare real estate funds with committed capital of c.£3bn. CIM advises these funds on behalf of various global investors together with a wide range of local authority pension funds and dedicated impact investors.

The increased scale of its operations has enabled CIM to create a large team of dedicated professionals in the specialist healthcare sector and to make this expertise available to each of the advised funds, including CSH.

On behalf of the Investment Adviser and CSH, we would like to offer our thanks to all of our partners who have continued to provide high-quality care, support, and housing, and to our investors who enable the provision of over 4,500 quality homes for some of the most vulnerable people in society.

Overview of Results

CSH is the market leader in the delivery of much-needed long-term housing with care in the UK and leading the charge for ethical investment in the sector. These full year results show a number of key achievements and themes:

· Approaching six years of consistent rental growth and progressive dividend payments that have increased from an initial 3p per share to 5.55p per share reflecting dividend growth ahead of inflation.

· Rents indexed in-line with the Consumer Price Index as Approved Providers are able to claim inflation adjustment payments from local authorities, and with no disruption from COVID-19.

· A high-quality investment credit rating from Fitch Ratings of A secured and A- unsecured, that has been maintained over time.

· Design, negotiation and announcement of a new market leading regulatory clause, to be implemented over time on a retrospective basis, assisting Approved Providers in regulatory discussions with no diminution to lease or asset values.

· An actively managed portfolio with a sector-leading team of professionals assisting and enabling high quality and longevity of homes and income.

· Professional support to enable Approved Providers to enhance the quality of their delivery and demonstrate long-term financial and operational independence.

· Ownership of properties that facilitates the delivery of high levels of care with 40% of residents receiving over 50 hours of care per week.

· An active programme working with E.ON to permanently reduce carbon emissions across the portfolio leading to lower energy costs for residents and a more carbon neutral portfolio.

Market Commentary

As outlined in the Chairman's Statement, CIM is pleased to note that the sector has continued to see progress in terms of the better delivery of the Specialist Supported Housing (SSH) model with quality commissioning at the heart of projects. This is essential to ensure that each property is suitable for the needs of individuals and to meet the objectives set by the relevant local authority.

Having dedicated considerable CIM resource to working closely with the Company's Approved Providers we have seen continued progress in the quality of their performance which has translated into greatly improved financial results and governance.

Several Approved Providers who had previously stopped taking on new properties to focus on strengthening their own teams and systems have now begun to consider new opportunities in a disciplined manner, consistent with the objective of further performance enhancement.

At the same time it is fair to say that Approved Providers have moved at different paces and while some have seen rapid success, others still need to make further operational and financial improvements. CIM is supportive of these ambitions and having seen material improvements in the sector, remains focused on offering its assistance to drive forward standards for the Company's partners.

What is clear is that demand for quality community-based housing remains strong and most commentators believe that providing vulnerable people with an opportunity to live in their own home or in smaller facilities near to family is the best solution for them.

While working closely with Approved Providers and specialist care providers, CIM has continued to focus on the core fundamentals of ensuring that the portfolio operates at its very best, for instance ensuring compliance for all key property metrics and collecting rental income that is due.

The year saw modest additions to the portfolio of around £32 million in new properties including the provision of a number of properties for those seeking asylum. The properties are backed by long-term government contracts with counterparties that have strong covenants.

At the same time, the Company continues to develop and implement high standards of social impact, which is independently measured, as well as forging leading relationships with key charities and other sector bodies. The commitment to tackle the challenge of decarbonisation continues with the further implementation of the property retrofit programme.

Background

The sector in which the Company operates is substantially funded by the State as part of the long-standing commitment to provide support for vulnerable adults.

The UK is not alone in this approach and indeed the United Nations developed polices that have been adopted by the UK, the European Union and 183 States in total that provide a framework for the provision of this support. The "Convention on the Rights of Persons with Disabilities" was signed by the then UK Government in 2007 and enacted into law in 2008.

The Convention sets out broad rights for those considered disabled in Article 1:

"To promote, protect and ensure full and equal enjoyment of all human rights and fundamental freedoms by all persons with disabilities and to promote respect for their inherent dignity."

Article 19 specifically covers housing, including the rights to live independently and be included in the community, Article 20 refers to personal mobility, Article 26 to habilitation and rehabilitation, and Articles 29 and 30 to the right to participate in political and public life, cultural life, recreation and sports.

Specialist Supported Housing of the type provided by the Company is designed to fulfill these objectives and predates the implementation of the UN Convention. The requirement to provide support for vulnerable people was further enshrined into UK law by the Care Act 2014 which confirms the responsibility of authorities to provide appropriate support and care. There is telling testimony in the publication 'A Place for Me' (Sponsored by CSH and the National Care Group), highlighted later in this report, on the transformational effect SSH has upon people's lives.

In terms of current legislation, the Health and Care Bill, was granted Royal Assent in April 2022, further consolidates the trends of joining up NHS healthcare services with social care through the formation of Integrated Care Systems (ICSs). This is supportive of the forms of care and community housing delivered by the Company.

Government Policy

The newly combined Government Department for Levelling Up, Housing and Communities, is a demonstration of how vital the Government believes decent housing is to its central levelling up agenda. Indeed, the Levelling Up white paper, published in February 2022, makes clear that the provision of high quality, affordable housing is a major Government priority.

Civitas was founded in the belief that private capital, thoughtfully and responsibly invested, is a key element to this provision, especially in the area of the Specialist Supported Housing Sector in which CIM specialises. This is because the large Housing Associations consider themselves poorly suited to delivering these bespoke and adapted properties, which are often located on brownfield land within communities, whereas the larger Housing Associations tend to focus on multi-unit, uniform new developments. Civitas, therefore, fulfils a need for which there is a clear market gap and a huge and growing demand.

In addition, the last few years have seen a renewed focus from the RSH on the requirement to listen carefully to residents' voices and take their views and needs into account. This is something in which Civitas already excels: CIM has close and proactive relationships with our Approved Provider and Care partners, and, through them, with the residents themselves. Evidence for this can be seen in the high levels of satisfaction amongst our residents; the high levels of health and safety compliance and rent collection; and the low levels of COVID-19 throughout the pandemic.

Demand for Social Housing

In September 2020 the National Housing Federation estimated that there were 8 million people in some form of housing need, that 1.6 million households were on official waiting lists and there were at least 129,000 children living in temporary accommodation.

Supply for new affordable housing is very low and significantly lower than demand. In addition, supply is further constrained by the demands placed upon existing large developing housing providers in meeting the costs generated by fire safety measures post Grenfell, remediation of cladding, the cost of reducing carbon emissions and additional consumer regulation proposed

in the White Paper on social housing "A charter for social housing residents".

When it comes to Specialist Supported Housing, the long-standing and ongoing rise in working age adults with complex physical, mental and social care needs, requiring supported housing with care, means that the demand for high quality SSH of the sort provided by Civitas is expected to continue to grow.

Summary & Outlook

Civitas is the leading independent operator in a sector in which there is enormous and growing demand and, due to the highly specialised nature of the work being carried out, high barriers to entry. Civitas is acknowledged to be committed to providing safe, high quality homes with care for its residents, with active and granular day to day portfolio management being carried out by its large team of sector specialists. In addition, we are working with the relevant counterparties to introduce new contractual provisions which we believe will better position our Approved Provider partners to achieve compliance under the RSH's Governance and Financial Viability Standard.

We are continuing to evaluate further portfolio acquisitions, not only in our core competency but also in areas such as high quality housing with care for asylum seekers and those affected by homelessness.

We remain committed to generating growth and enhancing shareholder value through socially impactful ethical investing. We are passionately committed to this for the long-term.

Specialist Housing

All leading independent commentators agree that demand continues to rise for community-based housing (Mencap Annual Report 2021). This is driven by the general rise in the population, better birth outcomes and improved life expectancy, in turn stimulated by more community-based housing of the type the Company provides. Trends in mental health also contribute to demand. According to the Royal College of Psychiatrists referrals to mental health services have risen to an all-time high of 4.3 million people during 2021.

LaingBuisson, a large healthcare consultancy, in its Adult Specialist Care report of 5th edition published in January 2022 estimates that in the learning disability market for care in the community, over 90% of providers come from the independent sector. For specific mental health services this rises to 97% and reflects the fact that over the past 30 years almost all specialist care has come to be provided by the private sector and paid for by the State, whereas it was previously provided by the NHS.

What is also clear is that the principal of community-based housing is being extended to groups with other care needs, beyond mental health issues. This trend was reinforced by the Homelessness Reduction Act of 2017 which placed a statutory duty upon local authorities to find homes for those at risk of serious harm caused by homelessness.

Prior to the pandemic, the leading homeless charity and campaign group Crisis estimated the cost of street homelessness to the State was over £20,000 per person per year, not including social losses and losses to the state in tax revenue.

At the start of the pandemic, the 'Everyone In' campaign ensured over 37,000 people sleeping rough were housed in temporary accommodation, mostly hotels. The challenge that now remains is how to ensure those people are permanently housed with the support required to overcome often complex needs. This is the purpose of Barnet's Homelessness Scheme supported by CSH which will ensure a secure and stable home with extensive support.

The clear advantages are the same as housing for disabled groups: better social outcomes within a community setting and reduced costs to the taxpayer.

Financial Review

As at 31 March 2022 the IFRS net asset value of the Company was £675.5 million, being 110.30 pence per share, a 1.85% increase on the 108.30 pence per share at 31 March 2021. A net fair value gain on investment properties of £12.3 million (2021: £5.5 million) was recorded in the year. Operational cash flows increased to £37.5 million were an increase on the prior year.

The portfolio was independently valued on an individual IFRS asset basis by JLL at £968.8 million as at 31 March 2022 (2021: £915.6 million) reflecting a net initial yield of 5.28%. This compares to an average purchase yield of 5.9% (prior to purchase costs) and reflects the ability of the Company to use its scale and market position to buy well, often off-market, and generally avoid taking part in auctions.

Net rental income of £50.7 million was generated in the period, a 6.1% increase over the corresponding period (31 March 2021: £47.8 million). This increase has been generated as a result of on-track indexation of rents, the effect of rental income on properties purchased in the prior period, being included for the full twelve months and a small number of new investments in the period. Strong ongoing rental collections throughout the year supported the Company's healthy operating cash flows.

During the reporting period, the Company paid four dividend distributions including one dividend of 1.350p and three instalments of 1.3875p each during the period, fully in line with the distribution target of 5.55p announced for the year to 31 March 2022.

The Company also extended the maturity of its £100m loan facility with HSBC Bank plc to November 2023 at SONIA plus 2.02% margin. Since the year end, the £60m facility with Lloyds Bank plc has also been extended to July 2024, at SONIA plus 1.67% margin. Together, these financings continue to underpin the strong liquidity position of the Company. The Company has also maintained leverage at 34.43%, comfortably within the Company's self-imposed cap of 40% of total assets. Finally of note, the Company retained its premium Fitch rating from the prior year at "A" secured and "A-" unsecured.

The CSH Investment Portfolio - Overview

The Civitas portfolio is one of the largest SSH portfolios in the UK and is diverse geographically, in property size, type of care and with multiple counterparties. The overall objective is to have a high-quality portfolio providing long-term accommodation and stable returns. All CIM's work with care providers and Approved Providers is collaborative, and part of CIM's commitment to improve the sector and assist its partners in becoming more independent.

Portfolio

Largest private portfolio in the country.

· High acuity with 40% of residents living in Civitas properties receive over 50 hours of care per week

· 130 care providers

· 18 approved providers

· 178 local authority partners

Team

Established team of specialists across the country.

· Senior staff from the care industry

· Housing Benefit

· Social Housing

· ESG

· Legal/Financial

Activities
Key activities comprise of future proofing, optimising quality for care providers, ensuring Approved Providers benefit from economies of scale, and introduction of the new Regulatory clause.

· Ensuring buildings are meeting the needs of care providers

· Ensuring rents at appropriate level and efficiently collected

· Future proofing properties

· Sounding board on governance and sharing best practice

· E.ON partnership

Outcomes

Benefits derived from the combination of portfolio, team and activities.

· High Occupancy

· Rents collected and indexation secured

· Property enhancements, change of use and improvements in quality

· Progress made by independent Approved Providers in management, governance and financial performance

· Reducing carbon emissions whilst utilising public funds and minimising the financial impact on the Company

Each year a small number of buildings require future proofing where the Company and CIM identify adaptions are required or in a few instances a change of use that will ensure longevity of occupation and optimal resident satisfaction is maintained.

The Portfolio - Rent Roll

The annualised rent roll as at 31 March 2022 increased to £54.1 million from £50.8 million in March 2021 and this is expected to increase further as additional indexation is applied.

Rental income is generated from leases with 18 Approved Providers.

Typically, properties are located close to local community-based facilities to support tenants, families and staff with minimal travel requirements.

Portfolio Characteristics

The key features of the CSH portfolio can be summarised as follows:

· Properties are fully converted and specially adapted for care use

· High acuity with 40% residents living in Civitas properties receiving over 50 hours of care per week

· Median rents tested/compared against market equivalent

· Properties always well located within the community and with commissioner support

· Over one third of the portfolio on back-to-back 25-year leases with care providers mirroring the obligations in the lease to Approved Providers

· An 'own front door' policy

· Over one third of properties bought when new, without development or forward funding risk

The high quality of CSH portfolio reflects the Company's ability of the Company to source to off-market transactions through its extensive network of care provider relationships, with the aim of achieving value growth over time.

Regulation
In October 2021 the Regulator of Social Housing published its annual sector risk profile, which seeks to set out its view on the sources of risk to providers' ongoing compliance with regulatory standards. The key areas it highlights for the whole sector are:

· Increased scrutiny as set out in the Social Housing White Paper

· Increased costs associated with fire remediation post Grenfell Tower and meeting the demands of the Fire Safety Act 2021

· The cost of meeting the zero-carbon agenda

· Increased debt required to subsidise improvements to existing stock

CSH always welcomes the engagement of the RSH with our Approved Provider counterparties and we support the work the RSH has undertaken in making recommendations for improvements in the sector over the past five years. The RSH continues to engage with all Approved Providers including those with which Civitas works.

Since the last report, the RSH is now engaging with nine of the Company's approved providers, set out below:

Approved Provider	Grading	Type of publication	Route
Auckland Home Solutions	N/A	Regulatory Judgement	Reactive engagement
Bespoke Supportive Tenancies	N/A	Regulatory Judgement	Reactive engagement
Encircle Housing	N/A	Regulatory Judgement	Reactive engagement
Falcon Housing Association	N/A	Regulatory Judgement	Reactive engagement
Hilldale Housing Association	N/A	Regulatory Judgement	Reactive engagement
Inclusion Housing	G3/V3	Regulatory Judgement	IDA and Reactive engagement
My Space Housing Solutions	G3/V3	Regulatory Judgement	Reactive engagement
Pivotal Housing Association	N/A	Regulatory Judgement	Reactive engagement
Trinity Housing Association	G3/V3	Regulatory Judgement	Reactive engagement
Westmoreland Supported Housing	G4/V3	Regulatory Judgement	Reactive engagement

It is clear that the RSH will, rightly, publish information as to the improvements it wishes to see and whenever this occurs CSH will provide support to its partners as appropriate.

Through CIM, CSH has been at the forefront of addressing the RSH's concerns about the long-term risk planning of Approved Providers by pioneering the implementation of the force majeure clause and caps and collars on the indexation of rents of between 1% and 4%. We will continue to work with the Company's counterparties and the RSH to ensure that the Company fulfills its intentions as one of the largest owners of SSH in the country to enable the sector to evolve and to maintain the improvements already made.

New Regulatory Clause

During 2021 and 2022, the Company's Investment Adviser has engaged with relevant counterparties, including several shareholders of CSH, lending banks, valuers and the RSH and undertaken detailed negotiations with several Housing Association partners, to explore how the Company can assist those organisations to be better positioned to achieve regulatory compliance under the RSH's Governance and Financial Viability Standard (the "Standard").

The consensus result of these discussions and negotiations is the development of an approach with a new draft regulatory lease clause whose principal objectives are to enable Housing Associations to:

· achieve greater alignment between income receipts and lease liabilities

· set achievable capital solvency requirements against lease obligations

· demonstrate a further degree of risk sharing

Each with the objective of seeking to demonstrate compliance with the Standard (expressed as gradings V1 - V4 and G1 - G4).

Meanwhile, the draft regulatory clause will provide the Company with:

· counterparties better able to achieve regulatory compliance

· enhanced information and step in rights (having regard to tenant welfare) in addition to existing lease transfer and assignment rights

· unchanged lease and property values supported by strong underlying demand

The draft clause once enacted will operate on a property-by-property basis to provide for a temporary pass through of lease rent in certain limited circumstances when the Housing Association is not in receipt of full payment whilst at the same time ensuring that the Company does not become responsible for obligations that are rightly owed by others such as void cover by care providers. Furthermore, this applies only after an initial period of time during which all rents remain the responsibility of the Vendor/Housing Association and then only if paying the rent in full would cause the Housing Association to fail to meet the Regulator's standards.

The draft clause also contains provision for the reimbursement of rental income if that is subsequently recovered by the Housing Association. Implementation of the clause will codify much of the general asset management work and the Company's approach to sector collaboration that already takes place on a day-to-day basis and is reflected in the Company's existing rent roll but which has to date not been included within the terms of the Company's leases and so have not received formal recognition. It is anticipated that the clause will only be relevant to a small number of properties at any time and will not have any material impact on the Company's rent roll.

The Company has sought and obtained formal written confirmation from valuers that the inclusion of the clause within the Company's new and existing leases will not of itself cause a diminution in the value of those leases or in the underlying assets. Indeed, the Company considers that enhanced regulatory alignment would be consistent with asset appreciation over the medium term.

At the present time the clause is in draft form and is subject to further discussion and refinement with several Housing Association boards assisted by leading sector lawyers together with other relevant approvals.

It is intended that the clause will be incorporated initially into a limited number of existing leases on a retrospective basis commencing with properties that are unencumbered.

On the assumption that it is well received by relevant parties within the sector and has the potential to achieve the objectives set out above it will be further rolled out in a controlled manner over time to other Approved Providers and in respect of new and existing leases on a retrospective basis. The Company will provide further updates in due course once the final form of the clause has been settled.

Social Impact and Social Value

The Company's latest independent report from The Good Economy was published in June 2022 and provides details of CSH's portfolio and the continued success in delivering measurable social impact. Findings include:

· 77 properties, housing up to 297 people, have been added to the CSH portfolio within the period

· 41% of CSH's 696 properties have been brought into the social housing sector for the first time

· CSH's regular engagement with its Approved Providers (RPs) to monitor the quality of its stock continued through the COVID-19 pandemic

· Improvement works have enhanced the energy efficiency of homes, with 99.92% of homes having an EPC rating of at least E+

· CSH homes continue to serve vulnerable individuals and play a significant role in improving resident wellbeing, particularly when individuals are coming out of higher acuity facilities

· Social value analysis (March 2021) revealed that, overall, the portfolio generates £127 million of social value per year, including fiscal savings to public budgets of £75.9 million per year

· 87% of respondents to the resident survey in March 2021 reported that they were satisfied with the quality of their home, 8% reported that they were neither satisfied nor dissatisfied

· 99% statutory compliance rate by housing provider partners is better than the wider affordable housing sector

Environmental, Social and Governance (ESG)

The ESG Policy is located on the Company's website. It provides an overview of the Company's investment procedures and sets out the Board's commitment to a continuous improvement process in its approach to ESG integration.

ESG Rating Providers

As part of this commitment, CIM engages with ESG rating providers to set out the activities that are undertaken by CSH and to ensure this is profiled correctly. This includes increased disclosure by CIM in respect of various policies that have been promoted on the CIM website. Notably, active participation in the 2021 GRESB Public Disclosure Assessment has resulted in CSH achieving an A score which is an improvement from a B score in 2020, whilst the peer group average score remains at C. GRESB is an investor-driven global ESG framework. Meanwhile, the ESG Risk Rating Score for CSH by Sustainalytics of 16.6 (Low Risk) is marginally lower than was reported in March 2021. Sustainalytics measures how well companies manage ESG issues that are most material to their business.

Environmental: Carbon Reduction/Energy Cost Savings

CIM has been leading the sector in improving the environmental performance of the portfolio and is working with E.ON (a leading UK energy and solutions company) under a national framework agreement in partnership with CSH tenants. The 'fabric first' approach to reducing the portfolio's carbon footprint includes the installation of cavity wall insulation, loft insulation, external wall insulation, air source heat pumps and solar PV and battery storage to identified properties. The installation of these energy efficient measures, utilising available Government grants and other funding sources, maximise value for the Company and for our counterparties. The collaboration with E.ON is delivering significant environmental enhancements without any cost to our Approved Providers.

As a result of active asset management and property improvements works, renovations and scheduled post completion works, the overall energy performance of the portfolio, as identified on Environmental Performance Certificates (EPC) reports data has improved over the last twelve months. The proportion of properties with EPC Rating A-C has remained at c.52% (52% in March 2021) and carbon footprint (estimated from property characteristics) has reduced by 3% per Civitas tenancy (from 2.73 tonnes of CO2/tenancy to 2.65 tonnes of CO2/tenancy). The static year-on-year proportion of homes rated A-C was due to the acquisition of a significant number of properties which were acquired with D rating. These homes are subject to improvement works which should improve their energy performance in coming months.

Charities

The Company has supported and worked with the following Charities since IPO.

Crisis

Civitas has supported Britain's biggest homelessness charity over the past five years and the two organisations regularly collaborate on the emerging knowledge required to undertake advanced homelessness schemes. These are vital to enable people who have been at risk of or experienced homelessness to rebuild their lives but who require considerable care and support in addition to a safe home in the community.

Choir With No Name

Civitas is proud to support this charity that runs five choirs across the country for people who are homeless or marginalised. Rehearsals have been moved back indoors following the pandemic lockdown, and members, volunteers and staff are reported to be over the moon! Alongside the choirs, the charity runs a free online workshop to members, the wider homeless sector and anyone who wants to attend. The charity has also provided team-building events for the CIM team.

Impact Highlights 2021-22

· Big increase in average weekly attendance since return to indoor meetings post COVID-19

· New Cardiff Choir launched in November 2021

· Steady progress with establishment of new community choirs in Watford and Coventry

House of St Barnabas

A social enterprise and charity that works to support people affected by homelessness back into long-term employment. Its vision is of a future where lasting good work, a secure home and supportive network are a reality for those affected by homelessness. Civitas specifically supports the relationship-based mentoring programme focused on developing interpersonal skills and communication. This helps to underpin its mission of 'Good Work, Good Home' for all its graduates. The Employment Academy staff at House of St Barnabas work with victims of homelessness who have successfully completed the employment preparation programme into work and helps them to progress in work.

Impact Highlights 2021-22

Employment Preparation Programme:

· 17 participants successfully graduated from EPP 18 and EPP 19

· 100% of graduates were successfully matched with a mentor.

Employment and Progression:

· 33% of working graduates are earning London Living Wage

· 23% of working graduates are in good work and a good home

· 70% of mentor relationships with graduates last for at least 6 months

· HOSB has supported a total of 93 people over the year.

Women in Social Housing (WISH)

WISH promotes the benefits of being part of a networking community and equips its members to succeed, advance and flourish in the UK housing sector. Civitas support contributes to the championing of positive outcomes for women working in the sector.

Care Workers Charity

CWC recognises that care workers face everyday challenges such as loss of income, inconsistent hours, and lack of adequate resources. It helps care workers in the UK (c.2 million workforce) through crisis using financial support and support centres. CWC provides support through one-off crisis grants, COVID-19 Emergency Fund and a Mental Health Support Programme.

Little Sprouts

L ittle Sprouts promotes the health and wellbeing of communities through delivery of targeted cooking and food education workshops, surplus food collection, and other activities. The charity places a particular focus on supporting deprived communities where the socio-economic position - housing, employment, or education - has had a massive contributory effect on well-being and health. It has also provided meals for those with mental health issues affected by the pandemic.

'A Place For Me'

The Company has from its inception been very keen to understand how residents living and moving into homes owned by Civitas benefit from their environment, the quality of care they received what benefits they and their family derive and how society and the taxpayer benefits.

We have rigorously challenged ourselves to ensure the social impact of the Company is maximised and measured independently through the Good Economy and Social Profit Calculator.

We worked with a journalist and photographer who published a book 'A Place For Me' which tells the stories of 50 residents who live in Civitas properties. The interviews were carried out on site and in person and have also involved families, care workers and other stakeholders. The book was published in December 2021, and we believe it is the largest independent project ever carried out into the lives of those with learning disabilities and mental health issues. The book is co-sponsored by a major care provider.

Governance

CIM continues to engage actively with the Company's Approved Provider partners and care providers, providing advice and shared learning. This has helped to facilitate continued high level operational performance on occupancy rates, property compliance matters, and health and safety.

The Board carries out an annual Board performance evaluation exercise. All of the Company's policies and procedures have been reviewed and, where appropriate, updated.

The Board has five independent non-executive Directors and has commenced a recruitment programme to recruit a sixth director with asset management skills to reflect the scale of the portfolio, the growth of expertise within the Investment Adviser and to assist with succession planning in the future. Both skills and diversity will be important considerations with this recruitment.

Summary

Care for the vulnerable being delivered in homes or small residential settings in the community to promote independent living and better social outcomes is clearly the long-term focus of Government policy in this sector with considerable cross-party support. In this objective, the private sector, both in terms of service delivery and investment, has a pivotal and essential role to play. Civitas is at the forefront of this investment and brings the skills and experience required to further expand the delivery of this critical service and to be influential in enhancing the development of sector counterparties.

We remain committed to generating growth and enhancing shareholder value through socially impactful ethical investing. We are passionately committed to ensuring this is maintained for the long-term.

Civitas Investment Management Limited
Investment Adviser

29 June 2022

Civitas Investment Management - A growing team of specialists

Throughout the pandemic, CIM has continued an active recruitment programme aimed at increasing the levels of resource and expertise within the team. Of particular focus has been the dedicated Asset Management team who are charged with maintaining the quality of the CSH portfolio and working closely with Approved Providers and other sector entities including care providers.

During the year to March 2022 a number of senior recruits have joined the team. The Asset Management team is led by Tom Falconer, a former local authority SSH commissioning officer. This has been part of a broader recruitment programme. Selected profiles are set out below:

Asset Management

MATTHEW FILKIN

Investment Advisory Director
Previously COO at Almacantar (Property investment and development company)

Matt has over 20 years of real estate experience covering investment, development, finance and corporate matters. At CIM, he has an active day-to-day involvement in the operations of the existing investment strategies working closely with the asset management team to provide a broad real estate overview. He is also engaged with a number of specific asset management projects.

TOM FALCONER

Head of Asset Management

Previously Group Property Manager at Lifeways (leading UK specialist care provider)

Tom is a former local authority commissioner with over 12 years' experience in asset management, specialist housing delivery, health and social care integration across the UK. At CIM, Tom leads the asset management team, working closely with local authorities and housing associations supporting them in their requirement to meet the demand for SSH accommodation.

SEAN CORNEY

Director, Asset Management

Previously an executive within Savills' Asset Management Team

Sean is a specialist in the delivery of asset management with over 20 years' experience within the property industry, including supported living and care environments. He is an Associate of the Royal Institute of Chartered Surveyors (RICS) and a member of the Institution of Residential Property Management (IRPM). At CIM as part of the asset management team he is responsible for the oversight of capital works that supports the enhancement of the Company's portfolio.

Portfolio Management

CONNELL GROGAN

Senior Portfolio Manager

Previously Senior Portfolio Manager at Resonance Ltd (leading specialist impact investor)

Connell is a Chartered Surveyor and experienced senior portfolio manager with over 20 years' experience in real estate. He has worked previously with a leading impact fund manager with a focus on homelessness and specialist supported housing. At CIM, Connell works within the asset management team focusing on delivering enhancements to the property portfolios.

CHARLES REID

Senior Portfolio Manager

Previously Lead Housing Benefit Officer at London Borough of Southwark Council

Charles is a housing benefit specialist with a 30-year track record in assessing housing benefit claims and appeals across many of the largest London local authorities. At CIM, he works within the asset management team to assist property due diligence and to support the work of Approved Provider partners in determining housing benefit claims and setting appropriate rent levels.

DARYL QUARRY

S enior Portfolio Manager

Previously Head of Change & Transformation at Falcon Housing Association C.I.C.

Daryl has worked within the social housing sector for over 16 years in business development and change management. Daryl works collaboratively with the asset management team to support Approved Providers in implementing software and developing internal processes to contribute to achieving optimal performance as part of increased independence.

Finance and Operations

DIPESH DEVCHAND
Group CFO

Previously Managing Director, Head of Fund Finance & Operations for ICG plc (FTSE 100 listed alternative asset manager)

Dipesh has over 20 years' experience in finance at a senior strategic level within a financial services and investment management environment. At CIM Dipesh leads the finance function, working closely with CIM's founders and shareholder partners to deliver the strategic mission of the group. He brings a wealth of experience covering financing, regulatory reporting, taxation and operational matters.

SIU-WAI NG
Commercial Director
Previously Partner, Global Head of Product Development at BlueBay Asset Management

Siu-Wai has over 20 years of experience in the investment management industry, bringing products to market and building business platforms in both public and private asset classes. At CIM, she is the Commercial Director with her remit encompassing all aspects relating to the implementing and administering of new fund launches, assisting in the design of new commercial strategies.

NAZLIN NAZRI
Associate Director
Previously Head of Financing Reporting at Tritax Group

Nazlin has over fifteen years of experience in real estate finance, including financial reporting under various GAAPs, financial management, group consolidation and fund accounting. At CIM, she works within the finance team as an associate director on Civitas Social Housing PLC.

Asset Management Case Studies

As part of the ongoing active management of the CSH portfolio, CIM has developed an extensive asset management resource that covers all the key disciplines that are apparent within specialist supported housing and the residential care sectors.

Capital works are undertaken on a rolling basis with much of the work being undertaken around the time of initial acquisition and paid for by the original vendors as part of the purchase agreement. This ensures that appropriate adaptations are made to deliver a bespoke property that is suitable for the user's needs over the long-term. Capital works are also undertaken, from time to time, during the life of the property, with some or all of the costs being borne by CSH, where it is deemed appropriate to undertake improvement works or repositioning of the asset. In some cases this also leads to an immediate uplift in rent roll and a commensurate increase in capital values.

Set out below are a number of examples of projects that have been undertaken.

Mill Lane, Weeley Heath, Clacton-On-Sea (5 beds)

Successful transformation project to support house tenants with challenging behaviours. The property required enhancements relating to energy efficiency, improved security, carefully constructed wet rooms, specialist furniture and redesigned layouts to assist the care provider in supporting the new tenants. This asset was acquired as part of a wider portfolio; plans were already in place with the care provider and local authority commissioner to undertake minor configuration works with some notable enhancements given that it was a much needed service in the local authority area. The care provider contributed to the overall cost of the works to demonstrate the long-term commitment to the service.

Enhancements within the asset are highlighted below and notably the energy performance improved from an E rating to a B rating for the purpose in which it is used for C2 requirements.

· New wet rooms and a specialist spa bath

· New suitable furniture throughout

· EPC rating from an E to a B

· New stud walls and insulation

· New boiler and heating system

· Staff and security office

· Communal lounge

· New kitchens

· New flooring and decoration throughout

· Communal dining area and sensory room

Delrose House, Southampton (9 beds)

The care provider approached CSH seeking permission to undertake a refurbishment program within specific areas of the property. Its plan was to move tenants from one type of care service to another for long-term full occupancy.

The works were approved by CSH and paid for in full by the care provider. These included general redecoration and replacement flooring to enhance appearance, works to the lift to permit disabled access, refurbishment of wet rooms and replacement kitchens to be suitable for use by the tenants.

· Redecoration

· New flooring in the majority of the rooms and communal space

· Communal bathroom refurbishment

· New kitchen, repairs to subfloor, new flooring

· Repairing and replacing subfloors in certain bathrooms

Heathfield Apartments, Swansea (15 beds)

The property is situated close to the centre of Swansea, overlooking the city centre towards the harbour. Given the close proximity to the city centre it provides easy access for staff, tenants and family members.

Following the acquisition of this asset in 2019 an overhaul of the exterior was planned to enhance the external appearance and make some minor repairs, including the rendering and decoration. The initial stages of works were covered by the vendor, with the care provider enhancing some of the internal parts of the building as part of a planned internal refurbishment.

CIM on behalf of CSH completed a review of the works and undertook some further enhancements to key areas of the higher elevations of the building with the aim of futureproofing areas of the roof, rendering, windows and decoration. This should prevent disruption at the property in the upcoming years. CSH provided some additional investment into the asset as part of the wider scope of works to allow the additional enhancements to happen and deliver an asset of a higher standard to the care provider and tenants. This is a prime example of positive collaborative working to achieve a desired outcome.

· External overhaul and refurbishment

· New windows and doors installed

· Rendering replaced and redecorated

· Roof upgraded whilst scaffolding in place

· New ramp fitted externally for an additional fire escape route

· Redecoration to internal areas affected by propping equipment

Corporate Social Responsibility Report

Sustainability

The business model of the Company is to provide long--term suitable homes for individuals with care needs; acting in a sustainable manner is key to achieving this aim. Properties that are owned by the Company are tailored to meet the future needs of the tenants and, where required, are actively asset managed to provide long-term functionality and value to the wider community.

Environment

During the investment due diligence phase, the Company looks closely at the environmental impact of each potential acquisition, and encourages a sustainable approach for maintenance and upgrading properties. Through collaborating with specialist developers and vendors, the high standards the Company expects from each investment in the care-based housing sector is adopted by other companies in the sector.

Once within the portfolio, the properties of the Company are actively asset managed, and the Investment Adviser assesses whether there are opportunities to improve the environmental efficiency of the properties, in addition to other asset management initiatives factoring heavily in addition to other asset management initiatives. Further details can be found on below.

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

Diversity

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

Whilst recognising the importance of diversity in the boardroom, the Company does not consider it to be in the interest of the Group and its shareholders to set prescriptive diversity criteria or targets. The Board has adopted a diversity policy in respect of appointments to be made to the Board and will continue to monitor diversity, taking such steps as it considers appropriate to maintain its position as a meritocratic and diverse business. The Board's objective is to maintain effective decision-making, including the impact of succession planning. All Board appointments will be made on merit and have regard to diversity regarding factors such as gender, ethnicity, skills, background and experience. See Corporate Governance Statement for more information as set out in the full report.

The Board comprises three male and two female non-executive Directors. Throughout the year, the Company complied with the Hampton-Alexander Review's target of a minimum 33% representation of women on FTSE 350 boards.

The Board is aware of the recommendations of the Parker Review, which will be taken into consideration as part of the Board's succession planning. See Corporate Governance Statement for more information as set out in the full report.

The Board of Directors of the Company's subsidiaries, which are non-operational, each comprise one female and up to four male directors.

Human Rights

Given the Company's turnover for the year under review, it now falls within the scope of the Modern Slavery Act 2015. The Company published its modern slavery statement on 22 September 2021.

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

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

Community and Employees

The Company's properties enable the provision of care to some of the most vulnerable people in the community, ensuring safe and secure accommodation, tailored to meet individual care needs. The Company has increased the provision of care-based housing, bringing new supply to the sector and providing homes to over 4,500 people. All of the Company's properties enable the provision of high levels of care, generating local jobs and helping to support local economies.

The Company has no employees and accordingly no requirement to separately report on this area.

The Investment Adviser is an equal opportunities employer who respects and seeks to empower each individual and the diverse cultures, perspectives, skills and experiences within its workforce.

Section 172(1) Statement and stakeholder engagement

Overview

The Directors' overarching duty is to act in good faith and in a way that is most likely to promote the success of the Company as set out in section 172 of the Companies Act 2006. In doing so, Directors must take into consideration the interests of the various stakeholders of the Company, the impact the Company has on the community and the environment, take a long-term view on consequences of the decisions they make, as well as aim to maintain a reputation for high standards of business conduct and fair treatment between the members of the Company.

Fulfilling this duty naturally supports the Company in achieving its investment objective and helps to ensure that all decisions are made in a responsible and sustainable way. In accordance with the requirements of the Companies (Miscellaneous Reporting) Regulations 2018, the Company explains how the Directors have discharged their duties under section 172 below.

To ensure that the Directors are aware of, and understand, their duties, they are provided with the pertinent information when they first join the Board as well as receiving regular and ongoing updates and training on the relevant matters. Induction and access to training is provided for new Directors. They also have continued access to the advice and services of the Company Secretary, and when deemed necessary, the Directors can seek independent professional advice. The Schedule of Matters Reserved for the Board, as well as the Terms of Reference of its committees, are reviewed regularly and further describe Directors' responsibilities and obligations and include any statutory and regulatory duties. The Audit and Management Engagement Committee has the responsibility for the ongoing review of the Company's risk management systems and internal controls and, to the extent that they are applicable, risks related to the matters set out in section 172 are included in the Company's risk register and are subject to periodic and regular reviews and monitoring.

Long-term Success

The strategy of the Company can be found above. Any deviation from, or amendment to, that strategy is subject to Board and, if necessary, shareholder approval. The Company's business model which can be found above, provides that the Board consider the long-term consequences of its investment decisions.

The Company grants long-term leases, generally 20 years in length, to its tenants. The Company seeks to maintain lasting relationships with its tenants and supports its tenants in adapting properties to meet their needs, particularly improving and enhancing properties. Further details can be found in the full report.

Stakeholders

A company's stakeholders are normally considered to comprise its shareholders, its employees, its customers, its suppliers as well as the wider community in which the company operates and impacts. The Company is different in that as an investment trust it has no employees and, in terms of suppliers, the Company receives professional services from a number of different providers, principal among them being the Investment Adviser.

Through regular engagement with its stakeholders, the Board aims to gain a rounded and balanced understanding of the impact of its decisions. Feedback from stakeholders is gathered by the the Investment Adviser in the first instance and communicated to the Board in its regular quarterly meetings and otherwise as required.

The importance of stakeholders is taken into account at every Board meeting, with discussions involving careful consideration of the longer-term consequences of any decisions and their implications for stakeholders. The following section explains why these stakeholders are considered of importance to the Company and the actions taken to ensure that their interests are taken into account by the Board as part of its decision making

Our stakeholders

Key areas of interest

How we engage

Shareholders

Continued shareholder support and engagement are critical to the existence of the business and the delivery of the long-term strategy of the business.

· Current and future financial performance

· Strategy and business model

· Corporate governance

· ESG performance and sustainability

· Climate Change

· Dividend

The Board welcomes shareholders' views and places great importance on communication with the shareholders of the Company. The Board is responsible for the content of communication regarding corporate issues and for communicating its views to shareholders. The Board aims to ensure that shareholders are provided with sufficient information to understand the risk/reward balance to which they are exposed by the holding of shares in the Company. Active engagement with shareholders is carried out throughout the year and regular communication is undertaken to ensure that they understand the performance of the business. The Board is committed to maintaining open channels of communication and to engaging with shareholders in a manner which they find most meaningful, in order to gain an understanding of the views of shareholders. These channels include:

Annual General Meeting - The Company welcomes and encourages attendance, voting and participation from shareholders at the AGM, at which shareholders have the opportunity to meet the Directors and Investment Adviser and to address questions to them directly. The Investment Adviser attends the AGM and provides a presentation on the Group's performance and its future outlook. The Company values any feedback and questions it may receive from shareholders ahead of and during the AGM and takes action, as appropriate.

At the Company's AGM on 22 September 2021, the Company received votes representing 27.11% against Resolution 13, the additional 10% pre-emption resolution. In compliance with the AIC Code of Corporate Governance, the Board released an announcement on 16 March 2022 outlining how it, via the Company's Brokers, had engaged with those shareholders who had voted against the resolution. It understood that these shareholders followed PIRC's or their own internal recommendation to vote against this resolution as when combined with the standard 10% pre-emption disapplication resolution it would have resulted in the Company having authority to issue up to 20% pre-emptively.

For the 2022 AGM, which will be held on 15 September 2022, the Board hopes that shareholders will be able to attend in person. Arrangements for the AGM will be released in August 2022 and will take account of the latest Government guidance and advice at the time of publication of the Notice.

Publications - The Annual Report and Half-Year Results are made available on the Company's website. These reports provide shareholders with a clear understanding of the Group's portfolio and financial position. In addition to the Annual and Half-Year Reports, regularly updated information is available on the Company website, including quarterly factsheets, key policies, the investor relations policy and details of the investment property portfolio. Feedback and/ or questions the Company receives from the shareholders help the Company evolve its reporting aiming to render the reports and updates transparent and understandable.

Shareholder meetings - Shareholders are able to meet with the Investment Adviser and the Company's Joint Brokers throughout the year and the Investment Adviser provides information on the Company on the Company's website. Feedback from all shareholder meetings with the Investment Adviser and/or the Joint Brokers, and shareholders' views, are shared with the Board on a regular basis. The Chairman and other members of the Board, including the Senior Independent Director and Chair of the Audit and Management Committee, are available to meet with shareholders to understand their views on governance and the Company's performance where they wish to do so.

Shareholder concerns - The Board gives due consideration to any matters raised by shareholders. In the event shareholders wish to raise issues or concerns with the Board or the Investment Adviser, they are welcome to write to the Company at the registered office address set out in the full Annual Report. Other members of the Board are also available to shareholders if they have concerns that have not been addressed through the normal channels.

During the year it was noted that several activist shareholders had taken a short position in the Company's shares. In response to this, the Board sought to engage with shareholders directly as well as through the Company's Brokers and Investment Adviser. Following this, the Board published a paper providing detailed responses to the questions raised by activist shareholders, as well as specific responses to the allegations made by the short sellers.

Investor relations updates - The Board regularly monitors the shareholder profile of the Company. With the majority of shareholders being a combination of institutional investors and private client brokers, the Board receives regular updates on investors' views and attitudes from the Company's Brokers and the Investment Adviser. The results of these meetings were reported to the Board as part of the formal reporting undertaken by both the Investment Adviser and the Brokers.

Included in the Report of the Directors in the full report are details of substantial shareholdings in the Company.

On a regular basis (sometimes weekly) and at Board meetings, the Directors receive updates from the Company's Brokers on the share trading activity, share price performance and any shareholders' feedback, as well as an update from the Company's Investor Relations adviser, Buchanan, and the Investment Adviser on any publications or comments by the press. To gain a deeper understanding of the views of its shareholders and potential investors, the Investment Adviser maintains regular contact with them and also undertakes investor roadshows. Any relevant feedback is taken into account when Directors discuss any possible fundraising or the future dividend policy.

Investment Adviser

Holding the Company's shares offers investors an investment vehicle through which they can obtain exposure to the Company's portfolio of properties. The Investment Adviser's performance is critical for the Company to successfully deliver its investment strategy and meet its objective to provide shareholders with an attractive level of income, together with the potential for capital growth.

· Current and future financial performance

· Shared commercial objectives with the Company

· Operational excellence

· Long-term development of its business and resources

· ESG performance and sustainability

The management of the Company's portfolio is delegated to the Investment Adviser, which manages the assets in accordance with the Company's objectives and policies. At each Board meeting, representatives from the Investment Adviser are in attendance to present reports to the Directors covering the Company's current and future activities, portfolio of assets and its investment performance over the preceding period.

Maintaining a close and constructive working relationship with the Investment Adviser is crucial as the Board and the Investment Adviser both aim to continue to achieve consistent long-term returns in line with the Company's investment objective. Important components in the collaboration with the Investment Adviser, representative of the Company's culture are:

· operating in a fully supportive, co-operative and open environment and maintaining ongoing communication with the Board between formal meetings;

· encouraging open discussion with the Investment Adviser, allowing time and space for original and innovative thinking;

· recognising that the interests of stakeholders and the Investment Adviser are for the most part well aligned, adopting a tone of constructive challenge;

· drawing on Board members' individual experience and knowledge to support the Investment Adviser in its monitoring of and engagement with other stakeholders; and

· willingness to make the Board members' experience available to support the Investment Adviser in the sound long-term development of its business and resources, recognising that the long-term health of the Investment Adviser is in the interests of shareholders in the Company.

Other service providers

In order to function as a REIT with a premium listing on the London Stock Exchange, the Company relies on a diverse range of reputable advisers for support in meeting all

relevant obligations.

· Current and future financial performance

· Shared commercial objectives with the Company

· Operational excellence

· Long-term development of the service providers' businesses

· Sustainability

The Company's main functions are delegated to a number of service providers, including the Administrator, the Company Secretary, the AIFM, the Registrar, the Corporate Brokers and the Depositary, each engaged under separate contracts. The Board maintains regular contact with its key external providers and receives regular reporting from them, both through the Board and Committee meetings, as well as outside of the regular meeting cycle. Their advice, as well as their needs and views, are routinely taken into account. Through its Audit and Management Engagement Committee, the Board formally assesses their performance, fees and continuing appointment at least annually to ensure that the key service providers continue to function at an acceptable level and are appropriately remunerated to deliver the expected level of service. The Audit and Management Engagement Committee also reviews and evaluates the control environment in place at each key service provider.

Care providers

· Current and future performance

· Welfare of tenants

· Lease obligations

· Void management

At the outset, it is important to note that the Company does not have any legal or operational responsibility for the delivery of care in the properties within the portfolio. However, the Board and the Investment Adviser have taken the view that they wish to have a detailed understanding of the delivery of care and the interaction with the major care providers who deliver this care. Accordingly, the Investment Adviser maintains an active dialogue with many of the care providers to build constructive and informed relationships.

At the same time, as part of transaction due diligence at the time of acquisition of properties, the Investment Adviser undertakes due diligence with respect to the operational and financial performance of all care providers who are proposed to deliver care into the particular properties. This includes the financial standing of the care provider, its CQC rating and the nature of the SLA agreement covering voids between the care provider and the Approved Provider.

The Investment Adviser is noted as having demonstrated considerable expertise and understanding of the care taking place within its properties.

Tenants

· Greater independence

· Maintaining high level of care

· Improved personal outcome

The Company's properties are adapted for the use of individuals with long-term care needs within a community setting with the specific aim of achieving better personal outcomes and independence for the individuals.

The sector in which the Company operates is regarded as having achieved significant success in delivering these positive outcomes compared to long-term older style remote institutional care.

On a regular basis, members of the Investment Adviser visit properties accompanied by Approved Provider and care provider partners to see first hand the nature of the housing and care provision that is being delivered. Whilst this process has slowed as a result of the pandemic, the Investment Advisor has continued to engage with its tenants. This is supported by the regular Approved Provider seminars at which the wellbeing of tenants is discussed in detail.

In March 2022, the Board undertook a site visit to a number of the Company's properties. The Board found this visit beneficial as it enabled it to engage with the Company's tenants and to see first hand the impact the Company has had on their wellbeing.

In addition, the Company undertakes resident case studies through careful and considered interaction via the care provider to assess the positive impact our properties and associated specialised care have had on the individual and their wellbeing.

Approved Providers

· Current and future performance

· Sustainability

· Compliance and property management

· Welfare of tenants

· Lease obligations

The Company's Approved Provider partners are an important part of the investment model as the responsibility for collection of housing benefit and subsequent payment of rent, the maintenance of the properties under the full repairing and insuring leases and, most importantly, the safeguarding of the underlying tenants through the above means, lies with the Approved Providers.

The Investment Adviser works closely with the Company's Approved Provider partners to improve standards and governance and to introduce practices and procedures that make the Company's investment processes ever more robust.

The Investment Adviser has a constant open dialogue with the Approved Provider partners, liaising monthly on compliance, health and safety, maintenance and future-proofing schemes, as well as hosting quarterly seminars to discuss current themes/trends affecting the sector, to troubleshoot and this serves as an opportunity to build relationships and share best practice.

The Investment Adviser has continued its regular and extensive dialogue with Approved Providers which since the start of the pandemic includes detailed reports on pandemic responsiveness. These reports have shown a high degree of resilience to the pandemic with few serious cases of COVID-19 reported due to the quality of the buildings people live in, the attention and dedication of the one-to-one care they receive and the age profile of the residents.

The Investment Adviser supported the establishment of The Social Housing Family CIC, a not-for-profit community interest company operated independently of the Company whose stated aim is to enable Approved Providers holding the Company's leases to increase skills and experience and to provide funding to promote enhanced performance. Membership is open to any Approved Provider that holds Civitas leases and the effect of membership is to transfer ownership of the Approved Provider to the social housing family. Auckland Homes Solutions was the first Approved Provider to join and has now recruited a very experienced and senior executive team and board of management. Qualitas community benefit society has also now joined the CIC.

Regulator of Social

Housing (RSH)

· Financial and operational viability

· Governance

· Compliance with health and safety, and regulatory standards

· Safety and wellbeing of underlying tenants

The Company is not itself regulated by the RSH, but it is important to maintain open and regular dialogue to ensure that the Company and the RSH are working together to improve the sector.

The Investment Adviser has a regular and ongoing dialogue with the RSH and with the Housing Association partners regulated by the RSH.

The Company also publishes responses to the regulatory judgements of the RSH regarding the Approved Providers with the Company as part of the RSH's general review of Approved Providers engaged in the provision of property services for vulnerable people as announced in May 2018. This demonstrates the Company's desire to maintain aa dialogue with the RSH and its desire to see that the positions improve where needed.

Other regulatory authorities

The Company can only operate with the approval of its regulators who have a legitimate interest in how the Company operates in the market and treats its shareholders.

· Compliance with statutory and regulatory requirements

· Governance based on best practice guidance

· Better reporting to shareholders and other stakeholders

The Company regularly considers how it meets various regulatory and statutory obligations and follows voluntary and best practice guidance, and how any governance decisions it makes can have an impact on its shareholders and wider stakeholders, both in the shorter and in the longer term.

The Board receives quarterly regulatory compliance monitoring updates from the Investment Adviser.

The Board receives quarterly compliance updates from the AIFM regarding the Company's compliance with its investment policy and the Investment Adviser's compliance with the Investment Management Agreement.

The Board also has access to the advice of the Company Secretary who provides updates and advice on regulatory, statutory and governance matters for consideration by the Board at its quarterly meetings and as and when required.

Local authorities

· Provision of safe and secure properties of a high quality

· Sustainability for long-term placements

It is important for the Company to build and maintain relationships with local authorities as they have an important role in identifying areas of high demand, agreeing rents and referrals to the Company's schemes.

The Company will engage with the local authority commissioner either directly, or through specialist consultants, Approved Provider and care provider partners as part of the Company's due diligence to ensure that each property being acquired has been commissioned by the relevant local authority and that rent levels have been discussed and agreed.

Lenders

Availability of funding and liquidity are crucial to the Company's ability to take advantage of investment opportunities as they arise.

· Current and future financial performance of the business

· Openness and Transparency

· Proactive approach to communication

· Operational excellence

The Company has arranged debt facilities from a wide range of lenders and engages with these on a regular basis through regular meetings and presentations to ensure they are informed on all relevant areas of the business. The continual dialogue helps to support the credit relationships.

The Company has reaffirmed its Investment Grade High Credit Quality Rating from Fitch Ratings Limited of "A" (senior secured) and a Long-Term IDR (Issuer Default Rating) of A- with a Stable Outlook.

This will enable the Company to pursue its strategy in relation to debt funding, in addition to continuing to work with the Company's existing lenders, with whom the Company has built strong relationships.

Communities

The Company's assets rely on a strong, positive connection with the local communities in which its business operates.

· Acceptance of care in the community

· Availability of local facilities for tenants

A key component of the Company's portfolio is that the properties within it are set within community environments so that individuals are able as part of their care plan to interact with the local community rather than being isolated.

This is achieved in consultation with local authorities in determining that the initial settings are appropriately diversified within the respective community and are not clustered in a way that would lead to isolation.

This assists the individuals and also ensures appropriate integration within the community. On a day-to-day basis, care providers and Approved Providers operate policies to ensure positive relationships with neighbours and surrounding dwellings. The activities within the Company's properties create employment within the local community for both housing and care workers.

Charity Partners

· Delivering needed support to vulnerable adults

· Improved well-being of vulnerable adults

· ESG performance and sustainability

The Company supports a number of organisations whose objectives are to provide improved outcomes for vulnerable adults affected by homelessness and other care needs.

The Company commits targeted financial support to fund specific programmes which help those affected by homelessness by teaching them skills and offering support to prevent them from being in that position again.

The Company ensures regular calls and meetings with our charity partners to update on progress and projects being undertaken, as well as attending events in support of their work.

In 2020, the Company amended its investment objective and investment policy to enable it to enter into long-term leases with the NHS and with registered charities operating within areas of investment interest to the Company. The amendments will allow the Company access to a wider range of pipeline opportunities and will assist in providing the currently unmet demand in these areas.

The above mechanisms for engaging with stakeholders are kept under review by the Directors and will be discussed on a regular basis at Board meetings to ensure that they remain effective.

Principal Decisions

Principal decisions have been defined as those that have a material impact to the Group and its key stakeholders.

In taking these decisions, the Directors considered their duties under section 172 of the Act. Principal decisions made during the year were as follows:

New Regulatory Clause Initiative

In 2022, the Board considered and agreed a new approach to the Company's lease model with the goal of supporting additional regulatory compliance and addressing perceptions of risk. The new regulatory clause will enable Approved Providers to achieve greater alignment between income receipts and lease liabilities, set achievable capital solvency requirements against lease obligations and demonstrate a further degree of risk sharing. This will assist the Company's counterparties to demonstrate compliance with the Regulator of Social Housing's Governance and Financial Viability Standard.

The new regulatory clause would operate on a property by property basis and provide for a temporary pass through of lease rent in certain limited circumstances when an Approved Provider is not in receipt of full payment and would ensure that the Company does not become responsible for obligations that are rightly owed by others such as void cover by care providers. The new regulatory clause will provide the Company with counterparties which are better able to achieve regulatory compliance, enhanced information, step in rights and unchanged lease and property values.

Publication of Market Update

In response to the unfounded comments by an activist short-seller who took up a position in the Company's shares, the Board took the decision to publish a Market Update paper on 11 October 2021 to provide a detailed response and also address principal areas of discussion that had been brought out in conversations with shareholders.

The Company and CIM have continued to make themselves available to speak and meet with both new and existing shareholders following the release of the detailed market update. Both the Board and representatives of the Investment Adviser continue to be available to engage with shareholders.

Buyback Programme

During the year, the Board monitored the decline in the Company's share price which, in its view, was associated with activity from an activist short seller and subsequent press coverage, the content of which the Board continues to believe to be baseless, incorrect and/or misleading. In response to the decline in the share price, the Board agreed the implementation of a share buyback programme under certain parameters, which is being operated by the Company's joint brokers. The impact of share buybacks continue to enhance IFRS NAV per share by 0.26p at 31 March 2022.

Further information on the Company's buyback programme can be found in the full report.

Agreement with E.ON to reduce carbon footprint

In June 2021, the Company entered into a national framework agreement with energy provider E.ON to undertake environmental enhancements that would help to reduce the carbon footprint of the Company's portfolio. The agreement was focused on those properties with lower EPC ratings and formed part of the Company's objective to reach carbon neutrality. The agreement built on successful pilot projects already undertaken by the Company and E.ON. It benefits the Company's Approved Provider and other non-for-profit partners by reducing maintenance cost and energy bills without any costs being incurred by them and enabling them to contribute to a reduced carbon footprint. The project draws on the ECO3 funding scheme, and the maintenance costs benefited from the Domestic Renewable Heat Incentive.

Strategic Overview
Purpose of the Company
The Company was established in 2016 with the purpose of delivering long-term responsible, stable returns to investors and achieving positive measurable social impact and ESG benefits on a large scale. It should achieve this as a result of introducing long-term equity capital into the social housing sector with a particular focus on care-based community housing. By doing so, this would form a bridge between equity investors and the social housing sector and bring together aspects of healthcare with social housing.

The Company has since developed the largest portfolio of care-based community housing in the UK that provides long-term homes for more than 4,500 individuals across half the local authorities in England and Wales.

As a result of this success, the Company has recently extended its mandate to be able to enter into transactions directly with the NHS and with leading charities with an interest in the provision of specialist housing that has a strong care or support element, is consistent with public policy and whose costs are met by the public purse for which it offers value for money.

Investment Objective

The Company's investment objective is to provide shareholders with an attractive level of income, together with the potential for capital growth from investing in a portfolio of Social Homes, which benefits from inflation adjusted long-term leases or occupancy agreements with Approved Providers and to deliver, on a fully invested and geared basis, a targeted dividend yield of 5% per annum1, which the Company expects to increase broadly in line with inflation.

¹ The dividend yield is based on the original IPO price of 100 pence per Ordinary share. The target dividends are targets only and do not represent a profit forecast.

There can be no assurance that the targets can or will be met and should not be taken as an indication of the Company's expected or actual future results.

Accordingly, potential investors should not place any reliance on these targets in deciding whether or not to invest in the Company or assume that the Company will make any distributions at all, and should decide for themselves whether or not the target dividend yields are reasonable or achievable.

Investment Policy

The Company's investment policy is to invest in a diversified portfolio of Social Homes throughout the United Kingdom. The Company intends to meet the Company's investment objective by acquiring, typically indirectly via Special Purpose Vehicles, portfolios of Social Homes and entering into long-term inflation adjusted leases or occupancy agreements for terms primarily ranging from 10 years to 40 years with Approved Providers, where all management and maintenance obligations will be serviced by the Approved Providers. The Company will not undertake any development activity or assume any development or construction risk. However, the Company may engage in renovating or customising existing homes, as necessary.

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

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

Investment Restrictions

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

· The Company only invests in Social Homes located in the United Kingdom;

· The Company only invests in Social Homes where the counterparty to the lease or occupancy agreement is an Approved Provider;

· No lease or occupancy agreement shall be for an unexpired period of less than 10 years, unless the shorter leases or occupancy agreements represent part of an acquisition of a portfolio which the Investment Adviser intends to reorganise such that the average term of lease or occupancy agreement is increased to 15 years or above;

· The aggregate maximum exposure to any single Approved Provider is 25% of the Gross Asset Value, once the capital of the Company is fully invested;

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

· The Company only acquires completed Social Homes and will not forward finance any development of new Social Homes;

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

· The Company is not engaged in short selling.

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

Gearing Limit

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

The Company may, following a decision of the Board, raise debt from banks and/or the capital markets and the aggregate borrowings of the Company is always subject to an absolute maximum of 40% of Gross Asset Value calculated at the time of drawdown. Current gearing is 34.43%.

Debt is secured at asset level, whether over a particular property or a holding entity for a particular series of properties, without recourse to the Company and also potentially at Company level with or without a charge over the Portfolio (but not against particular assets), depending on the optimal structure for the Company and having consideration to key metrics including lender diversity, cost of debt, debt type and maturity profiles. Otherwise there will be no cross-financing between investments in the Portfolio and the Company will not operate as a common treasury function between the Company and its investments.

Use of Derivatives

The Company may choose to utilise derivatives for efficient portfolio management. In particular, the Directors may engage in full or partial interest rate hedging or otherwise seek to mitigate the risk of interest rate increases on borrowings incurred in accordance with the gearing limits as part of the management of the Portfolio.

Cash Management

Until the Company is fully invested, and pending re-investment or distribution of cash receipts, the Company invests in cash, cash equivalents, near cash instruments and money market instruments.

REIT Status

The Directors conduct the affairs of the Company so as to enable it to remain qualified as a REIT for the purposes of Part 12 of the Corporation Tax Act 2010 (and the regulations made thereunder).

Culture
The Directors agree that establishing and maintaining a healthy corporate culture among the Board and in its interaction with the Investment Adviser, shareholders and other stakeholders will support the delivery of its purpose, values and strategy. The Board seeks to promote a culture of openness, debate and integrity through ongoing dialogue and engagement with its service providers, principally the Investment Adviser.

As detailed in the Corporate Governance Statement, the Company has a number of policies and procedures in place to assist with maintaining a culture of good governance, including those relating to diversity and Directors' conflicts of interest. The Board assesses and monitors compliance with these policies as well as the general culture of the Board through Board meetings and, in particular, during the annual evaluation process which is undertaken by each Director (for more information, see the performance evaluation section as set out in the full report.

The Board's culture itself is one of openness, collaboration and constructive debate to ensure the effective contribution of all Directors, particularly in respect of the Board's decision making. Consideration of our Stakeholders is embedded in the Board's decision making process. Please see our section 172 Statement set out above.

Key Performance Indicators ("KPIs")

Measure	Explanation	Result
Increase in IFRS NAV per share	Target to achieve capital appreciation whilst maintaining a low risk strategy from enhancing the quality of cash flows from investments, by physical improvement of properties and by creating a significantly diversified, high-quality portfolio.	IFRS NAV increase of 12.3p per share or 12.60% from IPO (2021:10.3p per share 10.56% from IPO).
Dividends per share	For the year ended 31 March 2022, the Company targeted a dividend of 5.55p per share.	Total dividend of 5.55p per share declared for the year to 31 March 2022 (2021:5.40p).
Number of Local Authorities, Approved Providers and care providers	Target risk mitigation through a diversified portfolio (once fully invested) with no more than 25% exposure to any one Local Authority or single Approved Provider and no more than 20% exposure to any single geographical area, once the capital of the Company is fully invested.	As at 31 March 2022: • 178 Local Authority partners (2021:164 Local Authority partners) • 18 Approved Providers (2021: 16 Approved Providers) • 130 Care Providers (2021:118 Care Providers) The Company's largest single exposure is to Auckland Home Solutions CIC and currently stands at 16% (2021:24%). The largest geographical concentration is in the South West, being 16% (2021:16%).
Loan to Gross Assets (Leverage)	Targeted total debt drawn no more than 40% of gross assets.	Leverage as at 31 March 2022 of 34.3% of gross assets (2021: 34.48%).

EPRA

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

Definition	EPRA Earnings		EPRA Net Reinstatement Value ("NRV")	EPRA Net Tangible Assets ("NTA")	EPRA Net Disposal Value ("NDV")
Definition	Earnings from operational activities.		EPRA NAV metric which assumes that entities never sell assets and aims to represent the value required to rebuild the entity.	EPRA NAV metric which assumes that entities buy and sell assets, thereby crystallising certain levels of unavoidable deferred tax.	EPRA NAV metric which represents the shareholders' value under a disposal scenario, where deferred tax, financial instruments and certain other adjustments are calculated to the full extent of their liability, net of any resulting tax.
Purpose	A key measure of a company's underlying operating results and an indication of the extent to which current dividend payments are supported by earnings.		The EPRA NAV set of metrics make adjustments to the NAV per the IFRS financial statements to provide stakeholders with the most relevant information on the fair value of the assets and liabilities of a real estate investment company, under different scenarios.
Performance	EPRA Earnings £ 2022: 29,810,000 2021:30,630,000 2020:28,814,000		EPRA NAV £ 2022:673,416,000 2021:674,042,000 2020:671,042,000	EPRA NTA £ 2022:673,416,000 2021:674,042,000 2020:671,042,000	EPRA NDV £ 2022:678,191,000 2021:671,476,000 2020:667,560,000
	EPRA Earnings per share (Basic and diluted) pence		EPRA NRV per share (diluted) pence	EPRA NTA per share (diluted) pence	EPRA NDV per share (diluted) pence
	2022:4.82 2021:4.93 2020:4.63		2022:109.96 2021:108.38 2020:107.95	2022:109.96 2021:108.38 2020:107.95	2022:110.74 2021:107.97 2020:107.39
Definition	EPRA Net Initial Yield ("NIY")		EPRA Topped-up Net Initial Yield ("NIY")	EPRA Costs Ratio	EPRA Vacancy Rate
Definition	Annualised rental income based on the cash rents passing at the balance sheet date, less nonrecoverable property operating expenses, divided by the market value of the property with (estimated) purchasers' costs.		This measure incorporates an adjustment to the EPRA NIY in respect of the expiration of rent-free periods (or other unexpired lease incentives such as discounted rent periods and stepped rents).	Administrative and operating costs (including and excluding costs of direct vacancy) divided by gross rental income.	Estimated Market Rental Value ("ERV") of vacant space divided by ERV of the whole portfolio.
Purpose	A comparable measure for portfolio valuations. These measures should make it easier for investors to judge themselves, how the valuation of portfolio X compares with portfolio Y.			A key measure to enable meaningful measurement of the changes in a company's operating costs.	A 'pure' (%) measure of investment property space that is vacant, based on ERV.
Performance	EPRA NIY % 2022:5.28 2021:5.24 2020:5.26	EPRA Topped-up NIY % 2022:5.28 2021:5.24 2020:5.26		EPRA Costs Ratio¹ % 2022:20.20 2021:20.33 2020:21.48	EPRA Vacancy Rate % 2022:0 2021:0 2020:0
Past performance is not a reliable indicator of future performance. For detailed workings reconciling the above measures to the IFRS results, please see Appendix 1 to these financial statements below. ¹ The ratios inclusive of vacancy costs are the same as the ratio exclusive of vacancy costs for 2022,2021 and 2020.

Principal Risks and Risk Management

The Board considers that the risks detailed below are the principal risks facing the Group currently, along with the risks detailed in note 31.0 to the financial statements. These are the risks that could affect the ability of the Company to deliver its strategy. The Board confirms that the principal risks of the Company, including those which would threaten its future performance, solvency or liquidity, have been robustly assessed throughout the year ended 31 March 2022, taking into account the emerging risks such as the evolving Ukraine-Russia conflict risk, climate change risk, cyber security risk and recruitment of staff at counterparties risk, and that processes are in place to continue this assessment.

The Audit and Management Engagement Committee has divided the Company's risks into the following risk type categories:

· Strategy and Competitiveness;

· Operational, including Cyber Crime;

· Investment Management; and

· Accounting, Legal and Regulatory.

Each risk contained in each category is reviewed for its impact and probability by the Audit and Management Engagement Committee at least twice during the year.

The Audit and Management Engagement Committee takes responsibility for overseeing the effectiveness of risk management and internal control systems on behalf of the Board and advises the Board on the principal risks facing the business.

Further details of risk management processes that are in place can be found in the Corporate Governance Statement set out in the full report. The principal and emerging risks and uncertainties relating to the Group are regularly reviewed by the Board along with the internal controls and risk management processes that are used to mitigate these risks. The Board has identified four new principal risks during the year (as set out in the list of principal risks and uncertainties), with the risk associated with share price disruption due to an activist shareholder being identified as having the highest impact and likelihood. The risk associated with the failure to monitor and ensure that contingent activities are being completed by Approved Providers was removed as a principal risk by the Board during the year. Further details on this and the other principal risks and the management of those risks are described below:

Principal risks and uncertainties

1. Strategy and Competitiveness risk

Impact

How managed/mitigated

The Company's share price is disrupted due to an activist shareholder.

This risk was newly identified during the year.

The Company is targeted by a short seller or activist shareholder leading to a fall in the Company's share price and a widening of the

discount to NAV.

Significant numbers of shares may need to be repurchased leading to a fall in the size of the company and liquidity implications.

The Board is committed to maintaining open channels of communication with shareholders and engaging in ways shareholders find most meaningful, in order to gain understanding of shareholder views. Further information on the Board's engagement with shareholders can be found above.

The Board seeks to provide full disclosure on the counterparties and the structure of transactions so that all stakeholders are kept reliably informed on the Company's business dealings.

The Board regularly reviews the Company's buyback policy to ensure this is in alignment with the interests of the Company and shareholders. The Board is also mindful of the possibility to issue shares and regularly reviews its policy in this area to ensure that it is consistent with the Company's strategy. It receives regular updates from the Company's brokers to help inform its decisions in this regard.

Impact: High

Probability: Likely

2. Strategy and

competitiveness risks

Impact

How managed/mitigated

The Company and its operations are subject to laws and regulations enacted by national and local governments and government policy.

This risk remained at the same level as the year ended 31 March 2021.

Any change in the laws, regulations and/or government policy affecting the Company and its operations may have a material adverse effect on the ability of the Company to successfully pursue its investment policy and meet its investment objective and on the value of the Company and the shares.

The Company focuses on niche real estate sectors where it believes the regulatory framework and underlying demand dynamics to be robust.

The Investment Adviser has strong industry contacts and has good knowledge on policy opinion and direction.

The Board obtains regular updates from professional advisers to monitor developments in regulation and legislation.

Impact: Very High

Probability:

Unlikely

3. Strategy and

competitiveness risks

Impact

How managed/mitigated

As a result of competition from other purchasers of social housing properties, the Company's ability to deploy capital effectively within a reasonable timeframe may be restricted or the net initial yields at which the Company can acquire properties may decline such that target returns cannot be met.

This risk remained at the same level as the year ended 31 March 2021.

The rate of capital deployment would drop, decreasing returns to shareholders.

The Company has strong links with vendors and a robust pipeline of future acquisitions.

The Board regularly reviews the pipeline of potential acquisitions and monitors the market landscape.

The Board is aware of the current competitive social housing market and recognises the impact this may have on the Company's ability to deploy capital effectively.

Impact: High

Probability:

Unlikely

4. Investment

management risk

Impact

How managed/mitigated

Tenant defaulting under the terms of a lease.

This risk remained at the same level as the year ended 31 March 2021.

Loss of rental income in the short term.

The portfolio is highly diversified to reduce the impact of default. Extensive diligence is undertaken on all assets, which is reviewed and challenged by the Board.

The Investment Adviser works proactively with Approved Providers to address any potential concerns.

The Board is provided with regular updates on the tenants with any concerns raised for discussion.

The Board has noted that the Company's historic level of defaults has been immaterial.

Impact:

Medium

Probability: Likely

5. Investment management risk

Impact

How managed/mitigated

The value of the investments made by the Company may change from time to time according to a variety

of factors, including movements in interest rates, inflation and general market pricing of similar investments.

This was identified as a heightened risk during the year.

The valuation of the Company's assets would fall, decreasing the NAV and yields of the Company.

The Company invests in projects with stable, predetermined, long-term leases in place with CPI or CPI plus 1% indexation and its strategy is not focused on sale of properties.

The Board receives regular updates on factors that might impact investment valuations.

Impact:

High

Probability:

Possible

6. Investment management risk

Impact

How managed/mitigated

Due diligence may not reveal all facts and circumstances that may be relevant in connection with an investment and may not prevent an acquisition being materially overvalued or rental streams being at risk.

This risk remained at the same level as the year ended 31 March 2021.

The Company would overpay for assets impairing shareholder value, reducing rental income and therefore returns.

The Company undertakes detailed due diligence on the properties, their condition, the proposed rental levels - benchmarking against comparable schemes using both external consultants where required and its own proprietary database - and on the Approved Providers and care providers involved in each property to ensure that the purchase price is robust.

The Board considers the due diligence undertaken when approving acquisitions.

Impact:

High

Probability:

Unlikely

7. Investment management risk

Impact

How managed/mitigated

Loss of key staff at the Investment Adviser.

This risk remained at the same level as the year ended 31 March 2021.

Negative investor sentiment leading to a reduction in share price. Reduction in ability to source off market and favourable deals.

The Board considers the risk of the Investment Adviser losing key staff and the succession plans the Investment Adviser has in place.

The Board has noted the ongoing expansion of the Investment Adviser's support team.

Impact:

High

Probability:

Unlikely

8. Strategy and competitiveness

Impact

How managed/mitigated

The Company fails to respond to issues related to climate change, either directly as enhancements

to properties or indirectly via its climate change reporting.

This was a newly identified risk during the year.

Decrease in the value of the Company's assets and a negative impact on the Company's share price.

Regular review and consideration by the Board including the input of climate change specialists at the

Investment Adviser.

Advice received from external professional advisers.

Impact:

High

Probability:

Unlikely

9. Operational, including cyber crime

Impact

How managed/mitigated

Serious accident or poor

management amongst Approved Providers due to staff shortages, loss of competence and vaccination uptake.

This was identified as a heightened risk during the year.

Reputational damage for the

Company.

Reporting from Approved Providers and monitoring of

Approved Providers by the Investment Adviser.

Impact: High

Probability: Unlikely

10. Strategy and competitiveness

Impact

How managed/mitigated

The Company is not promoted in a way which generates investor demand, especially with regard to ESG focus.

This was identified as a heightened risk during the year.

A reduction in the Company's share price and a widening of the discount to NAV.

The Board monitors the marketing and distribution activity undertaken by the Investment Adviser and the Corporate Brokers at each meeting as well as

receiving regular reports from its PR adviser Buchanan.

The Board utilises discount control mechanisms to support promotional activities.

The Board engages The Good Economy and Social Profit Calculator and reports findings to shareholders.

The Board considers ESG reporting in the Annual Report and Accounts carefully.

Impact: Medium

Probability: Unlikely

Emerging risks

Emerging risks are considered during the regular risk review, and would be specifically discussed and evaluated as they arise during the year. Input from the Investment Adviser on emerging risks is considered by the Audit and Management Engagement Committee. Key emerging risks identified and considered during the year include:

· Ukraine-Russia Conflict - the impact of Ukraine- Russia conflict. Although the Company has no direct exposure to Russia or eastern European territories, the Board continues to closely monitor this.

· Long-term Climate Change - the impact of climate change, over the longer-term on the business. The Company is committed to understanding ESG risk, including the particular impact of climate change on the business. Climate change poses an indirect risk to the Company's operations, the environment and society, and the Board is aware that appropriate action is required to reduce its impact.

· Cyber Security - the impact of a cyber security breach within the Company or its service providers. During the year, the Board was made aware of a minor data breach within the Depository. The breach has had no impact on the Company's operations and no personal data was compromised. The Board is satisfied that the Depository has taken appropriate immediate remedial action and has adequate safeguards in place.

The Listing Rules require premium-listed commercial companies to disclose in their annual report whether they have reported on how climate change affects their business in a manner consistent with the recommendations of the Task Force on Climate-related Financial Disclosures ('TCFD'), and to provide an explanation and other information if they are unable to do so. In addition, the UK Government intends to introduce mandatory climate-related disclosures to supplement the requirements under the Listing Rules. The Board has chosen not to adopt the requirements early and expects these to be applicable to the Company in the financial year 2024.

Going Concern and Viability Statement

Going Concern

The Board regularly reviews the position of the Company and its ability to continue as a going concern at its meetings. The financial statements set out the current financial position of the Company.

The Company acquires high-quality property with a particular focus on property providing care for the long-term. The properties acquired are on long-term full repairing and insuring leases in a sector of the market with very high levels of need. The cost base of the Company is proportionately low compared to revenue and there is a high level of certainty over cost to be

incurred. On this basis, the Company is expected to be viable well beyond the five-year term considered in the Company's testing below.

As at 31 March 2022, the Company held cash balances of £53.3 million (net of operating and financing amounts due). The Board has evaluated the financial position of the Company and has maintained its premium investment grade rating from Fitch Ratings Ltd - a well-established rating agency with a strong familiarity to the alternative healthcare real estate space, which gives the

Company confidence in the ability to raise future debt and/or equity capital in order to fund the Company's investments for the long-term and to facilitate the payment of dividends to shareholders. Based on these, the Board believes that the Company is in a position to manage its financial risks.

Various forms of sensitivity analysis have been performed, in particular the financial performance of tenants and a reduction in rent. As at 31 March 2022, the rent would have to drop by approximately 29% before its loan covenant is breached. At the date of approval of this report, the Company has substantial headroom within its financial loan covenants. The Company also benefits from a secure income stream from leases with long average unexpired term leases.

Leverage is prudently maintained at a level of less than 40% of GAV.

The Company's articles of association include a requirement for the Board to propose an ordinary

resolution at the annual general meeting following the fifth anniversary from the initial public offering of the Company for the Company to continue in its current form (the Continuation Resolution). This is the first continuation vote since the Company was set up.

If the Continuation Resolution is passed, the Company will continue its business as presently constituted and propose the same resolution at every fifth annual general meeting thereafter. If the Continuation Resolution is not passed, the Directors will be required, within six months after the date of this annual general meeting, to formulate proposals for consideration by the shareholders for the voluntary liquidation, unitisation, reorganisation, or reconstruction of the Company. After making appropriate enquiries of the Company's brokers and Investment Adviser, pursuant to their recent discussions with a number of the Company's shareholders, the Directors are of the view that the Continuation Resolution will be passed at the forthcoming annual general meeting. This reflects the strength and nature of the Company's portfolio, and specifically the provision of long-term accommodation for more than 4,000 vulnerable individuals. Accordingly, the Directors expect that if the Continuation Resolution is not passed, an event which the Directors consider to be highly remote, formulating and implementing any such proposals would

require the Company to continue operations for a period of at least 12 months from the date of approval of the Company's financial statements.

The Board is, therefore, of the opinion that the going concern basis adopted in the preparation of the consolidated financial statements is appropriate.

Viability Statement

The Directors present the Company's viability statement which summarises the results of their assessment of the Company's current position, its principal risks and prospects over a period to 31 March 2027.

The assumptions underpinning the forecast cashflows and covenant compliance forecasts were sensitised to explore the resilience of the Company to the potential impact of the Company's principal risks and uncertainties.

The prospects were assessed over a five-year period for the following reasons:

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

ii) the length of service level agreements between Approved Providers and care providers is typically five years; and

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

The Company's five-year forecast incorporates assumptions related to the Company's investment strategy and principal risks from which performance results, cash flows and key performance indicators are forecast. The principal risks are set out above. Of these risks, those which are expected to have a higher impact on the Company's longer-term prospects are those related to future government housing policies. The Company has considered its strategy over a longer term and, in light of the inherent demand for the Company's properties and the vulnerable nature of the ultimate tenant, the risk of change in future housing policy is considered to be limited. The principal risks are mitigated by the Company's risk management and internal control processes, which function on an ongoing basis.

The Board, via delegation to the Audit and Management Engagement Committee, monitors the effectiveness of the Company's risk management and internal control processes on an ongoing basis. The monitoring activities are described in the Report of the Audit and Management Engagement Committee set out in the full report and include direct review and challenge of the Company's documented risks, risk ratings and controls, and review of performance and compliance reports prepared by the Company's advisers and the independent external auditors.

The Board of Directors has carried out a robust assessment of the principal and emerging risks facing the Company, including those that would threaten its business model, future performance, solvency and liquidity. Where appropriate, the Company's forecasts are subject to sensitivity analysis, which involves applying severe conditions and flexing a number of assumptions simultaneously.

The sensitivities performed were designed to provide the Directors with an understanding of the Company's performance in the event of severe but plausible scenarios, taking full account of mitigating actions that could be taken to avoid or reduce the impact or occurrence of the underlying risks outlined below:

· 10% of tenants defaulting under a lease. The outcome of this scenario reduces profits on average over the five year forecast by 15% per annum and reduces cash by £20 million. However, the Board is still comfortable that dividends could be paid as there is still sufficient level of cash in the business; and

· deterioration in economic outlook, change in government housing policy which could impact the fundamentals of the social housing sector, including a negative impact on valuations and a 5% reduction in annual rents. The outcome of the 'severe downside scenario' was that the Company's covenant headroom on existing debt (i.e the level at which the investment property values would have to fall before a financial breach occurs) reduces by 13%, prior to any mitigating actions such as asset sales, which indicates that covenants on existing facilities would not be breached.

The Board has noted that the Company is due to hold its first continuation vote at the AGM in September 2022. This would be an ordinary resolution requiring approval from 50% of the shareholders voting. Further details as to how the Company has considered the impact of the continuation vote can be found in the Going Concern section above.

The remaining principal risks and uncertainties, whilst having an impact on the Company's business, are not considered by the Directors to have a reasonable likelihood of impacting the Company's viability over the five-year period, therefore the scenarios outlined above are the only ones that have been specifically tested. Based on the results of their assessment, the Directors have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the five-year period of their assessment.

Approval of Strategic Report

The Group Strategic Report was approved by the Board and signed on its behalf by:

Michael Wrobel

Chairman

29 June 2022

Further details on the Environmental, Social & Governance framework of the Company and the Social Impact report are set out in the full Report.

Board of Directors

Michael Wrobel (Chairman)

Peter Baxter (Senior Independent Director and Chair of Nomination and Remuneration Committee)

Caroline Gulliver (Chair of the Audit and Management Engagement Committee)

Alison Hadden (Director)

Alastair Moss (Director)

Extracts from the Report of the Directors

Results and Dividends

The results for the year are shown below.

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

Fourth Quarterly dividend	1.35p per share paid on 11 June 2021
First Quarterly dividend	1.3875p per share paid on 10 September 2021
Second Quarterly dividend	1.3875p per share paid on 13 December 2021
Third Quarterly dividend	1.3875p per share paid on 11 March 2022

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

Fourth Quarterly dividend

1.3875p per share paid on 28 June 2022

No final dividend is being recommended on the Ordinary shares.

Capital Structure

Issue of shares

At the AGM held on 22 September 2021, the Directors were authorised to issue equity securities up to an aggregate nominal amount of £1,244,922 (being approximately 20% of the issued Ordinary share capital).

The Company was also authorised to disapply pre-emption rights in respect of equity securities and to issue equity securities for cash up to an aggregate nominal amount equal to £622,461 (being approximately 10% of the issued Ordinary share capital).

During the year, 565,000 Ordinary shares were issued from Treasury under these authorities. These shares were issued at a price of not less than the net asset value per share at the time of issue plus an amount to cover the cost. Following these transactions, the Company held no shares in treasury.

The equity issuance was made with a view to balancing the premium to NAV and satisfying market demand for additional shares in the Company.

At the AGM held on 22 September 2021, the Company sought approval for a resolution to disapply pre-emption rights on an additional 10% of the Company's issued Ordinary share capital. This resolution failed as votes representing 27.11% of the total votes cast were received against it.

Following the AGM, the Company, via its corporate brokers engaged with its largest shareholders who had voted against this resolution. The Board understands that these shareholders followed PIRC's or their own internal recommendation to vote against this resolution as when combined with the standard 10% pre-emption disapplication resolution it would have resulted in the Company having authority to issue up to 20% of its own shares pre-emptively.

At the AGM in 2022 the Board proposes to seek shareholder approval for a standard 10% pre-emption disapplication resolution.

The authority to issue shares will expire at the conclusion of the forthcoming AGM. Proposals for the renewal of the Directors' authority to issue shares will be set out in the Notice of AGM for 2022, which will be circulated to shareholders in due course.

Purchase of own shares
At the AGM held on 22 September 2021, the Directors were granted the authority to buy back up to 93,306,960 Ordinary shares, being 14.99% of the Ordinary shares in issue at the time of the passing of the resolution.

During the year, as the Company's share price fell below Net Asset Value per share, the Board instigated a share buyback programme, under which a total of 10,025,000 shares have been purchased into treasury as at 31 March 2022.

The authority to buy back up to 93,306,960 shares will expire at the conclusion of the forthcoming AGM, when a resolution for its renewal will be proposed. Further information will be contained in the Notice of AGM, which will be circulated to shareholders in due course.

Current share capital
As at 31 March 2022, there were 622,461,380 Ordinary shares in issue, of which 10,025,000 shares were held in treasury. The total voting rights of the Company as at 31 March 2022 was 612,436,380.

Statement of Directors' Responsibilities

The directors are responsible for preparing the annual report and financial statements in accordance with applicable law and regulation.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have prepared the Group financial statements in accordance with UK-adopted international accounting standards and the Company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 101 "Reduced Disclosure Framework", and applicable law).

Under Company law, Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Company and of the profit or loss of the Group for that period. In preparing the financial statements, the Directors are required to:

· select suitable accounting policies and then apply them consistently;

· state whether applicable UK-adopted international accounting standards have been followed for the Group financial statements and United Kingdom Accounting Standards, comprising FRS 101 have been followed for the Company financial statements, subject to any material departures disclosed and explained in the financial statements;

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

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

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

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

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

Directors' confirmations

The directors consider that the annual report and accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group's and Company's position and performance, business model and strategy.

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

· the Group financial statements, which have been prepared in accordance with UK-adopted international accounting standards, give a true and fair view of the assets, liabilities, financial position and profit of the Group;

· the Company financial statements, which have been prepared in accordance with United Kingdom Accounting Standards, comprising FRS 101, give a true and fair view of the assets, liabilities, financial position and profit of the Company; and

· the Group Strategic Report includes a fair review of the development and performance of the business and the position of the Group and Company, together with a description of the principal risks and uncertainties that it faces.

Approval

This Statement of Directors' Responsibilities was approved by the Board and signed on its behalf by:

Michael Wrobel

Chairman

29 June 2022

NON-STATUTORY ACCOUNTS

The financial information set out below does not constitute the Company's statutory accounts for the year ended 31 March 2022 or the year ended 31 March 2021 but is derived from those accounts. Statutory accounts for the period ended 31 March 2021 have been delivered to the Registrar of Companies and those for the year ended 31 March 2022 will be delivered in due course. The Auditor has reported on those accounts;their report was (i) unqualified, (ii) did not include a reference to any matters to which the Auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006.The text of the Auditor's report can be found in the Company's full Annual Report and financial statements at www.civitassocialhousing.com .

Consolidated Statement of Comprehensive Income

For the year ended 31 March 2022

	Note	For the year ended 31 March 2022 £'000	For the year ended 31 March 2021 £'000

Revenue
Rental income	5.0	51,636	49,020
Less direct property expenses	5.0	(978)	(1,175)

Net rental income		50,658	47,845

Directors' remuneration	6.0	(206)	(198)
Investment advisory fees	8.0	(6,132)	(6,117)
General and administrative expenses	9.0	(3,909)	(3,183)

Total expenses		(10,247)	(9,498)

Change in fair value of investment properties	15.0	12,269	5,511

Operating profit		52,680	43,858
Finance income	10.0	7	20
Finance expense	11.0	(10,608)	(7,737)
Change in fair value of interest rate derivatives	21.0	2,675	(66)

Profit before tax		44,754	36,075
Taxation	12.0	-	-

Profit being total comprehensive income for the year		44,754	36,075

Earnings per share - basic and diluted

13.0

7.23p

5.80p

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

Consolidated Statement of Financial Position

As at 31 March 2022

	Note	31 March 2022 £'000	31 March 2021 £'000
Assets
Non-current assets
Investment property	15.0	945,237	893,684
Other receivables	17.0	23,519	21,905
Interest rate derivatives	21.0	2,131	-
		970,887	915,589
Current assets
Trade and other receivables	17.0	12,865	12,821
Cash and cash equivalents	18.0	53,337	107,097
		66,202	119,918
Total assets		1,037,089	1,035,507

Liabilities
Current liabilities
Trade and other payables	19.0	(9,492)	(9,345)
Bank and loan borrowings	20.0	-	(59,937)
		(9,492)	(69,282)
Non-current liabilities
Bank and loan borrowings	20.0	(352,050)	(292,183)
Interest rate derivatives	21.0	-	(544)
		(352,050)	(292,727)
Total liabilities		(361,542)	(362,009)
Total net assets		675,547	673,498

Equity
Share capital	22.0	6,225	6,225
Share premium reserve	23.0	292,626	292,463
Capital reduction reserve	24.0	322,365	331,140
Retained earnings	25.0	54,331	43,670

Total equity		675,547	673,498

Net assets per share - basic and diluted

26.0

110.30p

108.30p

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

Michael Wrobel (Chairman and Independent Non-Executive Director)

29 June 2022

Company No: 10402528

Consolidated Statement of Changes in Equity

For the year ended 31 March 2022

			Share	Capital
		Share	premium	reduction	Retained	Total
		capital	reserve	reserve	earnings	equity
	Note	£'000	£'000	£'000	£'000	£'000

Balance at 1 April 2020		6,225	292,405	330,926	41,008	670,564
Profit and total comprehensive income for the year		-	-	-	36,075	36,075
Shares reissued from treasury		-	58	214	-	272
Dividends paid	14.0	-	-	-	(33,413)	(33,413)
Balance at 31 March 2021		6,225	292,463	331,140	43,670	673,498


Profit and total comprehensive income for the year		-	-	-	44,754	44,754
Shares reissued from treasury		-	163	484	-	647
Shares bought back into treasury		-	-	(9,259)	-	(9,259)
Dividends paid	14.0	-	-	-	(34,093)	(34,093)
Balance at 31 March 2022		6,225	292,626	322,365	54,331	675,547

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

Consolidated Statement of Cash Flows

For the year ended 31 March 2022

	Note	For the year ended 31 March 2022 £'000	For the year ended 31 March 2021 £'000
Cash flows from operating activities
Profit for the year before taxation		44,754	36,075
- Change in fair value of investment properties		(12,269)	(5,511)
- Change in fair value of interest rate derivatives		(2,675)	66
- Rent and incentive straight line adjustments		397	68
- Bad debt (credit)/expense	5.0	(17)	289
Finance income		(7)	(20)
Finance expense		10,608	7,737
Increase in lease incentive receivable		(2,011)	(11,217)
Increase in trade and other receivables		(236)	(3,150)
(Decrease)/increase in trade and other payables		(1,062)	1,762
Cash generated from operations		37,482	26,099
Interest received		7	20
Net cash flow generated from operating activities		37,489	26,119
Investing activities
Purchase of investment properties		(27,695)	(19,462)
Acquisition costs		(1,640)	(938)
Purchase of subsidiary company - including property		(13,559)	-
Sale proceeds on sale of subsidiary company - excluding property		2,695	-
Utilisation of restricted cash held for investing activities		529	14,232
Net cash flow used in investing activities		(39,670)	(6,168)
Financing activities
Cost of shares bought into treasury	24.0	(9,259)	-
Proceeds from shares reissued from treasury	24.0	919	-
Dividends paid to equity shareholders		(33,928)	(33,319)
Bank borrowings advanced	20.0	-	84,550
Bank borrowing issue costs paid		(1,805)	(2,811)
Interest and security fees paid on bank borrowings and derivatives		(8,590)	(5,981)
Net cash flow (used in)/generated from financing activities		(52,663)	42,439

Net (decrease)/increase in cash and cash equivalents		(54,844)	62,390
Unrestricted cash and cash equivalents at the start of the year	18.0	103,819	41,429
Unrestricted cash and cash equivalents at the end of the year	18.0	48,975	103,819

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

Notes to the Consolidated Financial Statements For the year ended 31 March 2022

1.0 Corporate information

Civitas Social Housing PLC (the "Company") was incorporated in England and Wales under the Companies Act 2006 as a public company limited by shares on 29 September 2016 with company number 10402528 under the name Civitas REIT PLC, which was subsequently changed to the existing name on 3 October 2016.

The address of the registered office is Beaufort House, 51 New North Road, Exeter, EX4 4EP. The Company is registered as an investment company under section 833 of the Companies Act 2006 and is domiciled in the United Kingdom.

The Company did not begin trading until 18 November 2016 when the shares were admitted to trading on the London Stock Exchange ("LSE").

The Company's Ordinary shares are admitted to the Official List of the Financial Conduct Authority ("FCA") and traded on the LSE.

The principal activity of the Company and its subsidiaries (the "Group") is to provide shareholders with an attractive level of income, together with the potential for capital growth from investing in a portfolio of social homes.

2.0 Basis of preparation

On 31 December 2020 EU-adopted International Financial Reporting Standards 'IFRS' was brought into UK law and became UK-adopted International Accounting Standards, with future changes to IFRS being subject to endorsement by the UK Endorsement Board. The consolidated financial statements have transitioned to UK-adopted International Accounting Standards for the year ended 31 March 2022. This change constitutes a change in accounting framework. However, there is no impact on recognition, measurement or disclosure in the year reported as a result of the change in framework.

The financial statements are prepared in accordance with UK-adopted International Accounting Standards and the applicable legal requirements of the Companies Act 2006.

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

The Group has chosen to adopt EPRA best practice guidelines for calculating key alternative performance measures. These are disclosed above with supporting calculations in Appendix 1 below.

2.1 Functional and presentation currency

The financial information is presented in Pounds Sterling which is also the functional currency of the Company, and all values are rounded to the nearest thousand pounds (£'000s), except where otherwise indicated.

2.2 Going concern

The Group benefits from a secure income stream from long leases with the Approved Providers and present a well-diversified risk. The Group's cash balances as at 31 March 2022 were £53,337,000, of which £4,362,000 was held as restricted cash. Details of this can be found in note 18.0.

The Company and its Investment Adviser, Civitas Investment Management Limited ("CIM") continue to work closely with the Company's major counterparties to monitor the position on the ground and should it be needed, to offer assistance and guidance where possible. The Board of Directors believes that the Company operates a robust and defensive business model and that social housing and specialist healthcare are proving to be some of the more resilient sectors within the market, given that they are based on non-discretionary public sector expenditure and that demand exceeds supply.

In November 2021 the facility with HSBC Bank plc was extended to November 2023. In May 2022 the facility with Lloyds Bank plc was extended to July 2024.

Cash flow forecasts based on severe but plausible downside scenarios have been run, in particular the financial performance of tenants and a reduction in rent. As at 31 March 2022, the rent would have to drop by approximately 29% before its loan covenant is breached. At the date of approval of this report, the Company has substantial headroom within its financial loan covenants. The Company also benefits from a secure income stream from leases with long average unexpired term leases. As a result, the Directors believe that the Group is well placed to manage its financing and other business risks and that the Group will remain viable, continuing to operate and meet its liabilities as they fall due.

The Company's articles of association include a requirement for the Board to propose an ordinary resolution at the annual general meeting following the fifth anniversary from the initial public offering of the Company for the Company to continue in its current form (the Continuation Resolution). This is the first continuation vote since the Company was set up.

After making appropriate enquiries of the Company's brokers and Investment Adviser, pursuant to their recent discussions with a number of the Company's shareholders, the Directors are of the view that the Continuation Resolution will be passed at the forthcoming annual general meeting. This reflects the strength and nature of the Company's portfolio, and specifically the provision of long-term accommodation for more than 4,000 vulnerable individuals. Accordingly, the Directors expect that if the Continuation Resolution is not passed, an event which the Directors consider to be highly remote, formulating and implementing any such proposals would require the Company to continue operations for¹ a period of at least 12 months from the date of approval of the Company's financial statements.

The Board is, therefore, of the opinion that the going concern basis adopted in the preparation of the consolidated financial statements is appropriate.

2.3 New standards, amendments and interpretations

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

2022.

· Interest Rate Benchmark Reform - Phase 2: Amendments to IFRS 9 'Financial Instruments', IAS 39 'Financial Instruments; Recognition and Measurement', IFRS 7 'Financial Instruments: Disclosures', IFRS 4 'Insurance Contracts' and IFRS 16 'Leases' (effective for periods beginning on or after 1 January 2021). These amendments address issues that might affect financial reporting when an existing interest rate benchmark is replaced with an alternative benchmark interest rate. The Group's borrowings with Lloyds Bank plc and HSBC Bank PLC and National Westminster Bank Plc have transitioned from the London Interbank Offer Rate (LIBOR) benchmark to the Sterling Overnight Index Average (SONIA) benchmark. The transition has not led to a material change in overall borrowing costs.

2.4 New standards, amendments and interpretations effective for future accounting periods

The following are new standards, interpretations and amendments, which are not yet effective and have not been early adopted in this financial information, that will or may have an effect on the Group's future financial statements:

· Amendments to IAS 1 'Presentation of Financial Statements (effective for periods beginning on or after 1 January 2022) - clarifies that liabilities are classified as either current or non-current, depending on the rights that exist at the end of the reporting period and not expectations of or actual events after the reporting date. The amendments also give clarification to the definition of settlement of a liability. The amendments are not expected to have a significant impact on the preparation of the financial statements.

· Amendments to IFRS 3 'Business Combinations' (effective for periods beginning on or after 1 January 2022) - gives clarification on the recognition of contingent liabilities at acquisition and clarifies that contingent assets should not be recognised at the acquisition date. The amendments are not expected to have a significant impact on the preparation of the financial statements.

· Amendments to IAS 37 'Provisions, Contingent Liabilities and Contingent Assets' (effective for periods beginning on or after 1 January 2022) - gives clarification on costs to include in estimating the cost of fulfilling a contract for the purpose of assessing whether that contract is onerous. The amendments are not expected to have a significant impact on the preparation of the financial statements.

· Amendments to IFRS 9 'Financial Instruments' (effective for periods beginning on or after 1 January 2022) - gives clarification on the fees an entity includes when assessing whether the terms of a new or modified financial liability are substantially different from the terms of the original liability. The amendments are not expected to have a significant impact on the preparation of the financial statements.

· Amendments to IAS 1 'Presentation of Financial Statements' (effective for periods beginning on or after 1 January 2023) - are intended to help entities in deciding which accounting policies to disclose in their financial statements. The amendments are not expected to have a significant impact on the preparation of the financial statements.

· Amendments to IAS 8 'Accounting Policies, Changes in Accounting Estimates and Errors' (effective for periods beginning on or after 1 January 2023) - introduce the definition of an accounting estimate and include other amendments to help entities distinguish changes in accounting estimates from changes in accounting policies. The amendments are not expected to have a significant impact on the preparation of the financial statements.

2.5 Segmental information

IFRS 8 Operating Segments requires operating segments to be identified on the basis of internal financial reports about components of the Group that are regularly reviewed by the Chief Operating Decision Maker, which in the Group's case is delegated to the Investment Adviser, who has formed an Executive Team, in order to allocate resources to the segments and to assess their performance.

The internal financial reports received by the Investment Adviser's Executive Team contain financial information at a Group level as a whole and there are no reconciling items between the results contained in these reports and the amounts reported in the consolidated financial statements.

The Directors consider the Group's property portfolio represents a coherent and diversified portfolio with similar economic characteristics and as a result, the whole portfolio of properties represents a single operating segment. In the view of the Directors there is accordingly one reportable segment under the provisions of IFRS 8.

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

The Directors note the requirements in IFRS 8 Paragraph 34 pertaining to entities under common control and confirm that both Auckland Home Solutions and Qualitas Housing (as lessees of the Company's investment real estate) are under common control of The Social Housing Family CIC ("TSHF"). The percentage and sum total of the Company's annual rent roll pertaining to these counterparties as if they were considered to be a 'single customer' can be found in note 28.0 and as set out above.

3.0 Significant accounting judgements, estimates and assumptions

In the application of the Group's accounting policies, which are described in note 4.0, the Directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The judgements, estimates and associated assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are outlined below:

3.1 Significant estimate - valuation of investment property The Group uses the valuation carried out by its independent valuer as the fair value of its property portfolio. The valuation is based upon assumptions including future rental income and the appropriate discount rate. The valuers also make reference to market evidence of transaction prices for similar properties. Further information is provided in note 15.0.

The Group's properties have been independently valued by Jones Lang LaSalle Limited ("JLL" or the "Valuer") in accordance with the current Royal Institution of Chartered Surveyors' Valuation - Global Standards, incorporating the IVS, and the RICS Valuation - Global Standards 2017 UK national supplement (the RICS "Red Book"). JLL is one of the most recognised professional firms within social housing valuation and has sufficient current local and national knowledge of both social housing generally and Specialist Supported Housing ("SSH") and has the skills and understanding to undertake the valuations competently.

With respect to the Group's consolidated financial statements, investment properties are valued at their fair value at each balance sheet date in accordance with IFRS 13. Fair value measurements should be presented and classified using a fair value hierarchy that reflects the significance of the inputs used in the measurements, according to the following levels:

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

Level 2 Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices)

Level 3 Inputs for the asset or liability that are not based on observable market data (unobservable inputs). Value is the Directors' best estimate, based on advice from relevant knowledgeable experts, use of recognised valuation techniques and a determination of which assumptions should be applied in valuing such assets and with particular focus on the specific attributes of the investments themselves.

Given the bespoke nature of each of the Group's investments, the particular requirements of due diligence and financial contribution obtained from the vendors together with the recent emergence of SSH, all of the Group's investment properties are included in Level 3.

3.2 Significant judgement - business combinations

The Group acquires subsidiaries that own investment properties. At the time of acquisition, the Group considers whether each acquisition represents the acquisition of a business or the acquisition of an asset. Management considers the substance of the assets and activities of the acquired entity in determining whether the acquisition represents the acquisition of a business.

The Group accounts for an acquisition as a business combination where an integrated set of activities is acquired in addition to the property. Where such acquisitions are not judged to be the acquisition of a business, they are not treated as business combinations. Rather, the cost to acquire the corporate entity is allocated between the identifiable assets and liabilities of the entity based upon their relative fair values at the acquisition date. Accordingly, no goodwill or additional deferred tax arises.

All corporate acquisitions made during the year have been treated as asset purchases rather than business combinations because no integrated set of activities was acquired.

During the year, the Group entered into a transaction to acquire the freehold properties operated by CPI Care Limited. Upon the acquisition of the company; the properties were transferred into other group companies and the company acquired, along with its associated operations, was sold to Envivo Corundum Bidco Limited. Further details are shown in note 16.0 to the financial statements.

The acquired companies met the definition of a business under IFRS 3, and the transaction was therefore recorded as a business combination.

Because the Group acquired the company with the intent to sell the business, management applied the short-cut method under IFRS 5 - Subsidiaries acquired with a view to resale. Under this method, the subsidiary is recorded at fair value less costs to sell, and there is no requirement to fair value the subsidiary's individual assets and liabilities.

3.3. Significant judgement - operating lease contracts - the Group as lessor

The Group has acquired investment properties that are subject to commercial property leases with Approved Providers. The Group has determined, based on an evaluation of the terms and conditions of the arrangements, particularly the duration of the lease terms and minimum lease payments, that it retains all the significant risks and rewards of ownership of these properties and so accounts for the leases as operating leases.

3.4. Significant judgement - REIT Status

Civitas Social Housing Plc. is a Real Estate Investment Trust (REIT). The UK REIT regime applies when entities meet certain conditions with the effect that the income profits and capital gains of the qualifying property rental business are exempt from tax. Within these conditions at least 90% of the Group's property income must be distributed as dividends to Shareholders and the Group must ensure that the property rental business represents more than 75% of total profits and assets. It is management's judgement that the Group will continue as a REIT for the foreseeable future.

4.0 Summary of significant accounting policies

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

4.1. Basis of consolidation

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

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

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

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

4.2. Investment property

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

Subsequent expenditure is capitalised only when it is probable that future economic benefits are associated with the expenditure. Ongoing repairs and maintenance are expensed as incurred. Overheads and operating expenses are not capitalised.

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

Significant accounting judgements, estimates and assumptions made for the valuation of investment properties are discussed in note 3.1.

4.3. Leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

The Company has determined that it retains all the significant risks and rewards of ownership of the properties and accounts for the contracts as operating leases as discussed in note 3.3.

Properties leased out under operating leases are included in investment property in the Consolidated Statement of Financial Position. Rental income from operating leases is recognised on a straight line basis over the term of the relevant leases.

Lease incentive costs are recognised as an asset and amortised over the life of the lease.

4.4. Financial Assets

Classification

The Group classifies its financial assets in the following measurement categories:

· those to be measured subsequently at fair value (either through other comprehensive income or through profit or loss); and

· those to be measured at amortised cost.

The classification depends on the entity's business model for managing the financial assets and the contractual terms of the cash flows. For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income.

Trade and other receivables

Trade and other receivables are amounts due in the ordinary course of business. If collection is expected in one year or less, they are classified as current assets. If not, they are presented as non-current assets.

Trade receivables are recognised initially at fair value and subsequently are measured at amortised cost using the effective interest method, less impairment provision. The Group holds the trade receivables with the objective to collect the contractual cash flows.

Impairment

The Group's financial assets are subject to the expected credit loss model.

For trade receivables, the Group applies the simplified approach permitted by IFRS 9, which requires expected lifetime losses to be recognised from initial recognition of the receivables.

The expected loss rates are based on the payment profiles of lease income over a period of up to 12 months before 31 March 2022 or 1 April 2021, respectively, and the corresponding historical credit losses experienced within this period. The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors affecting the liability of the tenants to settle the receivable. Such forward-looking information would include: changes in economic, regulatory, technological and environmental factors (such as industry outlook, GDP, employment and politics); external market indicators; and tenant base.

Based on the assessment and the specific work that is underway around collection of aged arrears, a provision of £239,000 (2021: £256,400) has been reflected in the annual results.

Trade receivables are written off when there is no reasonable expectation of recovery.

Indicators that there is no reasonable expectation of recovery include, among others, the probability of insolvency or significant financial difficulties of the debtor. Impaired debts are derecognised when they are assessed as uncollectible.

Cash and cash equivalents

Cash and cash equivalents include cash in hand, cash held by lawyers and liquidity funds with a term of no more than three months that are readily convertible to a known amount of cash and which are subject to an insignificant risk of changes in value.

Restricted cash represents amounts held for specific commitments, tenant deposits and retention money held by lawyers in relation to deferred payments subject to achievement of certain conditions, other retentions and cash segregated to fund repair, maintenance and improvement works to bring the properties up to satisfactory standards for the Group and the tenants.

Derivative financial instruments

Derivative financial instruments, which comprise interest rate swaps for hedging purposes, are initially recognised at fair value at acquisition and are subsequently measured at fair value, being the estimated amount that the Group would receive or pay to sell or transfer the agreement at the period end date, taking into account current interest rate expectations and the current credit rating of the lender and its counterparties. The instrument may be an asset or a liability. The gain or loss at each fair value remeasurement date is recognised in the Group's Consolidated Statement of Comprehensive Income.

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data is available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs significant to the fair value measurement as a whole.

Other than derivative financial instruments which are not designated as hedging instruments, the Group does not have any assets held for trading nor does it voluntarily classify any financial assets as being at fair value through profit or loss.

4.5. Financial liabilities

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

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

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

Trade and other payables

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

Bank and other borrowings

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

Derivative financial instruments

Derivative financial instruments may be a financial asset or a financial liability. Please refer to the accounting policy in note 4.4 for details.

4.6. Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the balance sheet date, taking into account the risks and uncertainties surrounding the obligation.

4.7. Taxation

Taxation on the profit or loss for the period not exempt under UK REIT regulations is comprised of current and deferred tax. Tax is recognised in the Consolidated Statement of Comprehensive Income except to the extent that it relates to items recognised as a direct movement in equity, in which case it is recognised as a direct movement in equity. Current tax is expected tax payable on any non-REIT taxable income for the period, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous periods.

The current tax charge is calculated on profits arising in the period and in accordance with legislation which has been enacted or substantially enacted at the balance sheet date.

Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax that is provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.

4.8. Capital management

The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern in order to provide returns for shareholders and to maintain an optimal capital structure to reduce the cost of capital.

Capital assets comprise the following:

	31 March 2022	31 March 2021
	£'000	£'000
Proceeds from the issue of Ordinary shares and retained earnings	675,547	673,498
Bank and loan borrowings	352,050	352,120
Total	1,027,597	1,025,618

Until the Group is fully invested and pending re-investment or distribution of cash receipts, the Group will invest in cash, cash equivalents, near cash instruments and money market instruments.

The Directors may use gearing to enhance equity returns. The level of borrowing will be on a prudent basis for the asset class and will seek to achieve a low cost of funds, whilst maintaining the flexibility in the underlying security requirements and the structure of the Group.

The Group may, following a decision of the Board, raise debt from banks and/or the capital markets and the aggregate borrowings of the Group will always be subject to an absolute maximum, calculated at the time of drawdown, of below 40% of the Gross Asset Value on a fully invested basis.

4.9. Dividends payable to shareholders

Dividends are included in the financial statements in the year in which they are paid.

4.10. Rental income

Rental income from investment property is recognised on a straight-line basis over the term of ongoing leases and is shown gross of any UK income tax. Lease incentives are spread evenly over the lease term.

Insurance recharges and other similar receipts are recognised under IFRS 15 'Revenue from contracts with customers', and are included in net rental and property income gross of the related costs as the Directors consider the Group acts as principal in this respect

4.11. Finance income

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

4.12. Finance costs

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

4.13. Expenses

All expenses, including investment advisory fees, are recognised in the Consolidated Statement of Comprehensive Income on an accruals basis.

4.14. Share issue costs
The costs of issuing or reacquiring equity instruments (other than in a business combination) are accounted for as a deduction from equity.

4.15 Share held in treasury

The costs, including directly attributable transactions costs, of purchasing the Company's own shares to be held in treasury is deducted from equity and the costs are shown in the Consolidated Statement of Changes in Equity. Consideration received, net of transaction costs, for the resale of these shares is also included in equity. Whilst the Company holds shares in treasury, the calculations for net asset value and earnings per share are adjusted to exclude these shares.

5.0 Rental income

	For the year ended 31 March 2022 £'000	For the year ended 31 March 2021 £'000
Rental income from investment property	51,038	48,201
Rent straight line adjustments	529	372
Lease incentive amortisation	(926)	(439)
Rechargeable costs received	995	886
Rental income	51,636	49,020
Less direct property expenses	(978)	(1,175)
Net rental income	50,658	47,845

Rechargeable costs received represent insurance and service charge costs paid by the Group and recharged to the Approved Providers and are accounted for under IFRS 15 'Revenue from contracts with customers'.

Direct property expenses represent insurance and service charge costs of £995,000 (2021: £886,000) and bad debt credit of £17,000 (2021: £289,000 expense).

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

6.0 Directors' remuneration

	For the year ended 31 March 2022 £'000	For the year ended 31 March 2021 £'000

Directors' fees	190	182
Employer's National Insurance Contributions	16	16
Total	206	198

The Directors are remunerated for their services in accordance with the Remuneration Policy which sets parameters within which Directors' remuneration may be set. The Remuneration Policy is approved by shareholders.

Disclosures required by the Companies Act 2006 on Directors' remuneration, including salaries, share options, pension contributions and pension entitlement and those specified by the Listing Rules of the Financial Conduct Authority are included in the Remuneration Report set out in the full Annual Report and form part of these Financial Statements.

7.0 Particulars of employees

The Group had no employees during the period (2021: nil) other than the Directors.

8.0 Investment advisory fees

For the

year ended

31 March 2022

£'000

For the

year ended

31 March 2021

£'000

Advisory fee

6,132

6,117

Total

6,132

6,117

Civitas Investment Management Limited ("CIM") is the appointed Investment Adviser of the Company. Under the current Investment Management Agreement, the Advisory Fee shall be an amount calculated in respect of each Quarter, in each case based upon the Net Asset Value most recently announced to the market at the relevant time (as adjusted for issues or repurchases of shares in the period between the date of such announcement and the date of the relevant calculation), on the following basis:

a) on that part of the Net Asset Value up to and including £250 million, an amount equal to 1% of such part of the Net Asset Value;

b) on that part of the Net Asset Value over £250 million and up to and including £500 million, an amount equal to 0.9% of such part of the Net Asset Value;

c) on that part of the Net Asset Value over £500 million and up to and including £1 billion, an amount equal to 0.8% of such part of the Net Asset Value;

d) on that part of the Net Asset Value over £1 billion, an amount equal to 0.7% of such part of the Net Asset Value.

The appointment of the Investment Adviser shall continue in force unless and until terminated by either party giving to the other not less than 12 months' written notice, such notice not to expire earlier than 30 May 2024.

9.0 General and administrative expenses

	For the year ended 31 March 2022 £'000	For the year ended 31 March 2021 £'000
Legal and professional fees	1,459	1,044
Administration fees	1,037	983
Consultancy fees	136	116
Audit fees	340	361
Abortive costs	196	174
Valuation fees	100	96
Depositary fees	71	71
Grants and donations	26	19
Insurance	84	65
Marketing	343	179
Regulatory fees	25	19
Sundry expenses	92	56
Total	3,909	3,183

Abortive costs represent legal and professional fees incurred in relation to the acquisition of investment properties and proposed share issues that were considered but subsequently aborted.

Services provided by the Company's auditors and their associates

The Group has obtained the following services from the Group's auditors and their associates:

	For the year ended 31 March 2022 £'000	For the year ended 31 March 2021 £'000
Fees payable to the group's auditor and its associates for auditing financial statements:
Audit of the Group's financial statements¹	296	272
Audit of the subsidiary companies²	-	32
Total fees payable for audit services:	296	304

Fees payable to the group's auditor and its associates for other services:
Audit related services - review of the half year financial statements	44	57
Other services³	62	-
Total	402	361

1 Includes £18,000 (2021: £50,000) cost in relation to the prior year audit.

2 Most subsidiary companies are exempt from audit as detailed below

3 This amount is included within prepayments and other receivables at 31 March 2022.

10.0 Finance income

	For the year ended 31 March 2022 £'000	For the year ended 31 March 2021 £'000

Interest and dividends received on liquidity funds	4	11
Bank interest received	3	9
Total	7	20

11.0 Finance expense

	For the year ended 31 March 2022 £'000	For the year ended 31 March 2021 £'000

Bank charges	6	3
Interest paid and payable on bank borrowings and derivatives	8,907	6,416
Amortisation of loan arrangement fees	1,653	1,293
Loan security fees	42	-
Other interest	-	25
Total	10,608	7,737

12.0 Taxation

As a UK REIT, the Group is exempt from corporation tax on the profits and gains from its property investment business, provided it meets certain conditions as set out in the UK REIT regulations. For the current year ended 31 March 2022, the Group did not have any non-qualifying profits and accordingly there is no tax charge in the year. If there were any non-qualifying profits and gains, these would be subject to corporation tax.

It is assumed that the Group will continue to be a UK REIT for the foreseeable future, such that deferred tax has not been recognised on temporary differences relating to the property rental business.

For the

year ended

31 March 2022

£'000

For the

year ended

31 March 2021

£'000

Corporation tax charge for the year

Total

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

	For the year ended 31 March 2022 £'000	For the year ended 31 March 2021 £'000
Group
Profit before taxation	44,754	36,075

UK corporation tax rate	19.00%	19.00%
Theoretical tax at UK corporation tax rate	8,503	6,854
Effects of:
Change in value of exempt investment properties	(2,331)	(1,047)
Exempt REIT income	(6,598)	(6,511)
Amounts not deductible for tax purposes	(230)	171
Unutilised residual current period tax losses	656	533
Total	-	-

A deferred tax asset of £1,268,000 (2021: £1,508,000) has not been recognised in respect of the unutilised residual current year losses as it is not anticipated that sufficient residual profits will be generated in the future.

The standard rate of corporation tax is currently 19%. In the Spring Budget 2021, the UK Government announced that from 1 April 2023 the corporation tax rate will increase to 25% (rather than remaining at 19%, as previously enacted). This new law was substantively enacted on 24 May 2021.

REIT exempt income includes property rental income that is exempt from UK Corporation Tax in accordance with Part 12 of Corporation Tax Act 2010.

13.0 IFRS Earnings per share

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

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

	For the year ended 31 March 2022	For the year ended 31 March 2021
Calculation of Basic Earnings per share
Net profit attributable to Ordinary shareholders (£'000)	44,754	36,075
Weighted average number of Ordinary shares (excluding shares held in treasury)	618,797,942	621,651,859
Earnings per share - basic and diluted	7.23p	5.80p

14.0 Dividends

	For the year ended 31 March 2022 £'000	For the year ended 31 March 2021 £'000
Dividend of 1.3500p for the 3 months to 31 March 2021 (1.325p 3 months to 31 March 2020)	8,403	8,237
Dividend of 1.3875p for the 3 months to 30 June 2021 (1.350p 3 months to 30 June 2020)	8,637	8,392
Dividend of 1.3875p for the 3 months to 30 September 2021 (1.350p 3 months to 30 September 2020)	8,555	8,392
Dividend of 1.3875p for the 3 months to 31 December 2021 (1.350p 3 months to 31 December 2021)	8,498	8,392
Total	34,093	33,413

On 11 May 2022, the Company announced a dividend of 1.3875 pence per share in respect of the period 1 January 2022 to 31 March 2022 totalling £8,474,000. The dividend payment was made on 28 June 2022 to shareholders on the register as at 20 May 2022. The financial statements do not reflect this dividend. The dividend was paid as a REIT property income distribution ("PID").

15.0 Investment property

	For the year ended 31 March 2022 £'000	For the year ended 31 March 2021 £'000

Balance at beginning of year	915,589	878,743
Property acquisitions	37,198	19,129
Acquisition costs	2,086	1,056
Lease incentives and rent straight line adjustments recognised	1,614	11,150
Change in fair value	12,269	5,511
Value advised by the property valuers	968,756	915,589
Less lease incentive assets and rent straight line assets	(23,519)	(21,905)
Total	945,237	893,684

Acquisitions include capital expenditure to enhance lettable space of £5,818,000 (2021: £4,077,000).

During the year the Group acquired a property holding company from Herleva Properties Limited which held assets totalling £8,611,000. These are included within Property Acquisitions in the note above.

Herleva Properties Limited is a subsidiary of Specialist Healthcare Operations Limited ("SHO"). Andrew Dawber and Tom Pridmore (both directors of the Investment Adviser), are each 14.99% shareholders in SHO. They are not directors of SHO, and have no operational role in that business. SHO does not meet the definition of a related party under IAS 24.

In accordance with "IAS 40: Investment Property", the investment property has been independently valued at fair value by JLL, an accredited external valuer with recognised and relevant professional qualifications and recent experience of the location and category of the investment property being valued, however, the valuations are the ultimate responsibility of the Directors.

Valuation

JLL valued the Civitas Social Housing PLC property portfolio on the basis of each individual property and the theoretical sale of the properties without the benefit of any corporate wrapper at £968,756,000 as at 31 March 2022 (2021: £915,589,000).

JLL has provided valuation services to the Company with regards to the properties during the year. JLL has provided additional valuation services on the acquisition of investment property to the Company during the period. The Directors have ensured that JLL has appropriate procedures in place to ensure there are no independence conflicts with the services provided to the Company. In relation to the year ended 31 March 2022, the proportion of the total fees payable by the Company to JLL's total fee income was less than 5% and is therefore minimal. Additionally, JLL has a rotation policy in place whereby the signatories on the valuations rotate after seven years.

With the exception of the acquisition detailed in note 16.0, all corporate acquisitions during the year and the comparative year have been treated as asset purchases rather than business combinations because following review of the IFRS 3 concentration test, they are considered to be acquisitions of properties rather than businesses (note 3.2).

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

Investment properties measured at fair value

Total

£'000

Quoted prices

in active

markets

(Level 1)

£'000

Significant

observable

inputs

(Level 2)

£'000

Significant

unobservable

inputs

(Level 3)

£'000

31 March 2022

945,237

31 March 2021

893,684

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

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

As noted previously all of the Group's investments are reported as Level 3 in accordance with IFRS 13 where inputs are not based on observable market data and the value is based upon advice from relevant knowledgeable experts.

In this instance, the determination of the fair value of investment property requires an examination of the specific merits of each property that are in turn considered pertinent to the valuation.

These include:

i. the regulated social housing sector and demand for the facilities offered by each SSH property owned by the Group;

ii. the particular structure of the Group's transactions where vendors, at their own expense, meet the majority of the refurbishment costs of each property and certain purchase costs;

iii. detailed financial analysis with discount rates supporting the carrying value of each property;

iv. a full repairing and insuring lease with annual indexation based on CPI or CPI+1%.

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

Valuation techniques: income approach

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e. an exit price).

The valuation methodology used by the valuers follows the income approach. This approach considers the rental income currently payable; the next uplift due on that income on review; the likelihood of a continuation of that rental income - with growth in accordance with the leases - over the remaining terms; and then a long-term reversion which considers the likely ability of the properties to continue to generate rent through supported housing occupation, as distinct from a reversion to vacant possession value.

Risks are involved in both assessing the value of the rental income over the remaining terms of the leases and in also predicting that income will continue beyond the end of the existing leases. This is a balanced judgment, which can properly be reflected in the exit yield applied to the final year's income and in the overall return to a purchaser.

Appropriate taxation calculations are adopted for every property based on its value and on the assumption of the sale of the property assets directly as opposed to shares of a subsidiary company holding the property and have considered the individual characteristics of the properties.

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

i) The rate of 2% per annum has been used for CPI over the term of the subject properties' leases in line with the Bank of England's long-term inflation targets for CPI. It should be noted that all leases benefit from either CPI or CPI+1 indexation.

ii) The discount rate applied to the rental flows.

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

As at the balance sheet date, the lease lengths within the Group's portfolio ranged from an effective 15 years to 36 years with a weighted average unexpired lease term of 22.1 years (2021: 22.6). The greater the length of the lease, then, all other metrics being equal, the greater the value of the property.

Sensitivities of measurement of significant unobservable inputs

As set out within significant accounting estimates at 3.1 above, the Group's property investment valuation is open to inherent uncertainties in the inputs that determine fair value. As a result, the following sensitivity analysis has been prepared:

Average discount rate and range

The average discount rate used by the valuer in the Group's property Portfolio Valuation is 5.5% (2021: 6.0%).

The range of discount rates used by the valuer in the Group's property Portfolio Valuation is from 4.6% to 11.5% (2021: 4.7% to 10.7%).

The range of discount rates used by the valuer in the Group's property Portfolio Valuation is from 4.6% to 11.5% (2021: 4.7% to 10.7%). In assessing the range of discounts, the valuer considers the likely net initial yield which would be sought by the investment market and builds in additional discounts to reflect added risk into the discount rate of the term and, in some cases, the discount rate for the reversion. For example where larger rental growth is allowed during the lease, an additional discount is built into the reversion because of the greater risk of a fall in the rent at the end of the lease.

Similarly additional discounts are considered where properties are in the process of being re-purposed and premiums are considered where residential care assets are funded by back-to-back leases with care providers.

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

	-0.5% in discount rate £'000	+0.5% in discount rate £'000	+0.25% in CPI £'000	-0.25% in CPI £'000
Increase/(decrease) in the IFRS fair value of investment properties at:
31 March 2022	35,620	(33,142)	28,509	(27,426)
31 March 2021	34,131	(31,776)	27,211	(26,175)

16.0 Subsidiary resale

	For the year ended 31 March 2022 £'000	For the year ended 31 March 2021 £'000
Balance at the beginning of the year	13,559	-
Acquisition	765	-
Transfer to investment property	(11,629)	-
Sale proceeds	(2,695)	-
	-	-

On 23 April 2021, the Group entered into a transaction to acquire the freehold properties operated by CPI Care Limited. Upon the acquisition of the companies for £13,559,000 plus transaction costs; the properties were transferred into other group companies and the company acquired, along with its associated operations, was sold to Envivo Corundum Bidco Limited for £2,695,000.

Envivo Corundum Bidco Limited is a subsidiary of Specialist Healthcare Operations Limited ("SHO"). Andrew Dawber and Tom Pridmore (both directors of the Investment Adviser), are each 14.99% shareholders in SHO. They are not directors of SHO, and have no operational role. SHO does not meet the definition of a related party under IAS 24.

17.0 Trade and other receivables

Amounts falling due in less than one year	31 March 2022 £'000	31 March 2021 £'000

Trade receivables	4,960	4,869
Less provision for impairment of trade receivables	(239)	(256)
Accrued income	4,982	5,264
Prepayments and other receivables	3,162	2,944
Total	12,865	12,821

Prepayments and other receivable amounts include prepaid legal and professional fees of £34,000 (2021: £200,000) that have been incurred in connection with acquisitions yet to be completed and £1,046,000 (2021: £817,000) in respect of ongoing works on the property portfolio.

Accrued income relates mainly to rent accrued for the year but not yet demanded.

	31 March 2022	31 March 2021
	£'000	£'000
Amounts falling due after more than one year
Debtor arising from straight line adjustments	2,053	1,524
Lease incentives	21,466	20,381
Total	23,519	21,905

The aged analysis of trade receivables was as follows:

	31 March 2022 £'000	31 March 2021 £'000
Current	1,777	2,128
< 30 days	355	817
30-60 days	105	322
> 60 days	2,723	1,602
	4,960	4,869
Debtors past due
Less provision for impairment	(239)	(256)
Total	4,721	4,613

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

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

The provision for impairment movement was as follows:

	31 March 2022 £'000	31 March 2021 £'000
Balance at beginning of year	256	-
Impairment provision made	109	289
Amounts recovered	(126)	-
Amounts written off	-	(33)
Balance at end of year	239	256

18.0 Cash and cash equivalents

	31 March 2022 £'000	31 March 2021 £'000
Cash held by solicitors	376	721
Liquidity funds	10,489	10,485
Cash held at bank	38,110	92,613

Unrestricted cash and cash equivalents	48,975	103,819
Restricted cash	4,362	3,278
Total	53,337	107,097

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

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

Restricted cash represents amounts held for specific commitments, tenant deposits and retention money held in relation to deferred payments subject to achievement of certain conditions, other retentions and cash segregated to fund repair, maintenance and improvement works to bring the properties up to satisfactory standards for the Group and the tenants.

19.0 Trade and other payables

	31 March 2022 £'000	31 March 2021 £'000
Deferred income	860	646
Acquisition costs accrued	2,856	3,706
Finance costs	1,840	1,557
Dividends withholding tax payable	1,057	892
Accruals and other creditors	2,202	1,979
Tenant deposits	677	565
Total	9,492	9,345

Acquisition costs accrued also include monies retained at the point of acquisition to be paid at a later date totalling £2,158,000 (2021: £2,508,000).

20.0 Bank and loan borrowings

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

	For the year ended 31 March 2022 £'000	For the year ended 31 March 2021 £'000
Bank borrowings drawn at start of year	357,050	272,500
Bank borrowings drawn	-	84,550
Bank borrowings drawn at end of year	357,050	357,050
Unamortised costs at start of year	(4,930)	(3,330)
Less: loan issue costs incurred	(1,723)	(2,893)
Add: loan issue costs amortised	1,653	1,293
Unamortised costs at end of year	(5,000)	(4,930)
At end of year	352,050	352,120

	Loan Balance¹ 31 March 2022 £'000	Loan Balance 31 March 2021 £'000	Loan Principle¹ 31 March 2022 £'000	Loan Principle 31 March 2021 £'000
	Loan Balance¹ 31 March 2022 £'000	Loan Balance 31 March 2021 £'000	Loan Principle¹ 31 March 2022 £'000	Loan Principle 31 March 2021 £'000
Maturity of bank borrowings:
Repayable within 1 year	-	59,937	-	60,000
Repayable between 1 to 2 years	158,746	99,256	160,000	100,000
Repayable between 2 to 5 years	59,365	59,102	60,000	60,000
Repayable after 5 years	133,939	133,825	137,050	137,050
Total	352,050	352,120	357,050	357,050

¹ Loan balance net of unamortised costs.

The Group is party to the following loan facility agreements:

A 10-year Sterling Term Facility Agreement dated 2 November 2017 for up to £52,500,000 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 £173,777,000 (2021: 170,831,000).

A Sterling Revolving Facility Agreement for £60,000,000 with Lloyds Bank plc. The facility has been extended to 15 July 2024, interest is charged at SONIA + 1.67% margin.

The borrowings include amounts secured on investment property to the value of £153,340,000 (2021: £149,728,000).

A Revolving Credit Facility Agreement for up to £100,000,000 with HSBC Bank PLC. Interest is charged at SONIA + 2.02% margin. The facility maturity has been extended to November 2023.

The borrowings include amounts secured on investment property to the value of £222,745,000 (2021: £219,606,000).

A 5-year loan facility with National Westminster Bank Plc, dated 15 August 2019, for up to £60,000,000. Interest is charged at SONIA +2.00% margin and has been fixed by way of a 5-year swap. The swap fixes interest on £20,000,000 at 2.7105% and £40,000,000 at 2.5475%. The loan can be extended for an additional 2 years and there is the option of a further £40,000,000 accordion.

The borrowings include amount is secured on investment property to the value of £135,330,000 (2021: £131,283,000).

A 7-year loan facility with M&G Investment Management Limited, dated 22 January 2021, for up to £84,550,000. Interest is fixed at a total of 3.137% per annum.

The borrowings include amounts secured on investment property to the value of £230,487,000 (2021: £225,221,000).

At 31 March 2022, the Group is in compliance with all covenants.

The covenants in place under the five agreements are summarised in the table below:

Loan	Historical and projected interest cover	Loan to Value Ratio
Scottish Widows Limited 10-year facility	At least 325%	Must not exceed 40%
Lloyds Bank plc revolving credit facility	At least 550%	Must not exceed 52.5%
HSBC Bank PLC facility	At least 250%	Must not exceed 55%
National Westminster Bank Plc 5-year facility	At least 250%	Must not exceed 50%
M&G Investment Management Limited 7-year facility	At least 250%	Must not exceed 55%

The Group's borrowings with Lloyds Bank plc, HSBC Bank PLC and National Westminster Bank Plc have transitioned from the London Interbank Offer Rate (LIBOR) benchmark to Sterling Overnight Index Average (SONIA) benchmark during the year. There was negligible cost involved in the borrowing facility transition and the respective hedge instrument amendments.

21.0 Interest rate derivatives

The Group has entered into interest rate swap agreements with NatWest Markets in order to mitigate the risk of changes in interest rates on its loan with National Westminster Bank Plc under which £60,000,000 is currently drawn.

The swaps have a notional value of £60,000,000 and fix interest at 2.60% (including the 2% margin rate on the bank loan).

	For the year ended 31 March 2022 £'000	For the year ended 31 March 2021 £'000
At start of year	(544)	(478)
Change in fair value during the year	2,675	(66)
At end of the year	2,131	(544)

The table below shows the fair value measurement hierarchy for interest derivatives:

Quote prices

In active

Markets

(Level 1)

£'000

Significant

Observable

Inputs

(Level 2)

£'000

Significant

unobservable

Inputs

(Level 3)

£'000

31 March 2022

2,131

31 March 2021

(544)

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

22.0 Share capital

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

	For the year ended 31 March 2022 £'000	For the year ended 31 March 2021 £'000
Share capital
At beginning and end of year	6,225	6,225

Number of shares issued and fully paid Ordinary shares of £0.01 each
At beginning and end of year	622,461,380	622,461,380

During the year, the Company reissued the 565,000 (2001: 250,000) Ordinary shares held in treasury at 31 March 2021 for £647,000 (2021: £272,000).

Later in the year the Company purchased 10,025,000 Ordinary shares to be held in treasury at a cost of £9,259,000. Further purchases were made after the year end as detailed in note 23.0.

At 31 March 2022 the Company holds 10,025,000 (2021: 565,000) Ordinary shares in treasury. The shares will continue to be held in treasury until either reissued or cancelled.

The number of Ordinary shares used to calculate the net asset value per share is 612,436,380 (2021: 621,896,380) which excludes the shares held in treasury.

23.0 Share premium reserve

The share premium reserve represents the amounts subscribed for Ordinary share capital in excess of nominal value less associated issue costs of the subscriptions.

	For the year ended 31 March 2022 £'000	For the year ended 31 March 2021 £'000
At beginning of year	292,463	292,405
Premium arising on shares reissued from treasury	163	58
At end of year	292,626	292,463

During the year, the Company reissued 565,000 (2021: 250,000) Ordinary shares held in treasury for £647,000 (2021: £272,000) a gain of £163,000 (2021: £58,000) arose which is recognised in the share premium reserve.

24.0 Capital reduction reserve

The capital reduction reserve is a distributable reserve to which the value of the cancelled share premium has been transferred. Pursuant to Article 3 of The Companies (Reduction of Share Capital) Order 2008, the balance held in the capital reduction reserve is to be treated for the purposes of Part 23 of the Companies Act 2006 as a realised profit and therefore available for distribution in accordance with section 830 of the Companies Act. The Company has used this reserve for the costs of buying back shares to be held in treasury.

	For the year ended 31 March 2022 £'000	For the year ended 31 March 2021 £'000

At beginning of year	331,140	330,926
Shares reissued from treasury	484	214
Shares bought back into treasury	(9,259)	-
At end of year	322,365	331,140

During the year, the Company reissued 565,000 (2021: 250,000) Ordinary shares held in treasury for £647,000 (2021: £272,000). The cost of purchasing these shares into treasury of £484,000 (2021: £214,000 has credited the capital reduction reserve with the gain crediting the Share premium reserve.

Later in the year the Company purchased 10,025,000 Ordinary shares to be held in treasury at a cost of £9,259,000. Further purchases were made after the year end as detailed in note 23.0.

At 31 March 2022 the Company holds 10,025,000 (2021: 565,000) Ordinary shares in treasury.

25.0 Retained earnings

This reserve represents the profits and losses of the Group.

	For the year ended 31 March 2022 £'000	For the year ended 31 March 2021 £'000
At beginning of year	43,670	41,008
Profit for the year	44,754	36,075
Dividends paid in the year (as per note 14.0)	(34,093)	(33,413)
At end of year	54,331	43,670

26.0 Net asset value

Basic NAV per share is calculated by dividing net assets in the Consolidated Statement of Financial Position attributable to ordinary equity holders of the parent by the number of Ordinary shares outstanding at the end of the year.

Net asset values have been calculated as follows:

	31 March 2022	31 March 2021

Net assets (£'000)	675,547	673,498
Number of Ordinary shares in issue at end of year	622,461,380	622,461,380
Number of Ordinary shares held in treasury	(10,025,000)	(565,000)
Number of Ordinary shares excluding treasury shares held by the Company	612,436,380	621,896,380
NAV - basic and diluted	110.30p	108.30p

27.0 Analysis of financial liabilities and assets arising from financing activities

			For the
	Interest rate	Bank	year ended
	derivatives	borrowings	31 March 2022
	£'000	£'000	£'000

At beginning of year	544	352,120	352,664
Cash flows from financing activities
Loan arrangement costs paid	-	(1,805)	(1,805)

Non cash movements
Loan arrangement fees payable	-	82	82
Amortisation of loan arrangement costs	-	1,653	1,653
Change in fair value of interest rate derivatives	(2,675)	-	(2,675)
At end of year	(2,131)	352,050	349,919

			For the
	Interest rate	Bank	year ended
	derivatives	borrowings	31 March 2021
	£'000	£'000	£'000

At beginning of year	478	269,170	269,648
Cash flows from financing activities
Loan draw down	-	84,550	84,550
Loan arrangement costs paid	-	(2,811)	(2,811)

Non cash movements Loan arrangement fees payable		(82)	(82)
Amortisation of loan arrangement costs	-	1,293	1,293
Change in fair value of interest rate derivatives	66	-	66
At end of year	544	352,120	352,664

28.0 Operating leases

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

	31 March 2022 £'000	31 March 2021 £'000
Amounts receivable
< 1 year	53,821	50,367
1-2 years	53,879	50,410
2-5 years	161,940	151,511
> 5 years	928,210	873,826
At end of year	1,197,850	1,126,114

Leases are direct-let agreements with Approved Providers for a term between 15-36 years with indexed linked annual rent reviews. All current leases are full repairing and insuring leases; the tenants are therefore obliged to repair, maintain and renew the properties back to the original conditions.

The following table gives details of percentage of annual rental income per Approved Provider:

	31 March 2022	31 March 2021
	%	%
Auckland Home Solutions and Qualitas Housing	24.4	23.9
Falcon Housing Association CIC	18.7	19.7
Bespoke Supportive Tenancies	12.6	13.2
Inclusion Housing CIC	9.3	8.7
Westmoreland Supported Housing Limited	5.9	6.1
Encircle Housing Limited	5.9	6.0
Trinity Housing Association Limited	5.1	5.3
Pivotal Housing Association	3.8	3.9
Harbour Light Assisted Living CIC	3.6	3.7
Chrysalis Supported Association Limited	3.6	3.4
New Walk Property Management CIC	2.8	2.8
My Space Housing Solutions	1.3	1.2
IKE Supported Housing Limited	1.1	1.1
Hilldale Housing Association Limited	1.0	0.9
Windrush Alliance UK CIC	0.7	-
Lily Rose Supported Housing	0.1	-
Blue Square Residential Ltd	0.1	0.1
Total	100.0	100.0

Auckland Home Solutions and Qualitas Housing are both members of the Social Housing Family C.I.C. and subject to common control. Their annual rent figures have therefore been aggregated in the table above. The percentage relating to Auckland Home Solutions and Qualitas Housing was 16.28% and 8.13% (2021: 23.88% and 0.02%) respectively. The annual rent at 31 March 2022 for Auckland Home Solutions and Qualitas Housing was £8,679,000 and £4,334,000 (2021: £12,028,000 and £8,000) respectively.

The Group is also party to a number of operating leases on its long leasehold properties. The ground rent payment commitments under these operating leases are negligible so the future minimum lease payments under these leases have not been disclosed in these financial statements.

29.0 Controlling parties

As at 31 March 2022, there is no ultimate controlling party.

30.0 Related party disclosures

30.1 Transactions with directors

The Directors are remunerated for their services at such rate as the Directors shall from time to time determine. The aggregate remuneration and benefits in kind of the Directors of the Company (in each case, solely in their capacity as such) in respect of the year ended 31 March 2022 payable out of the assets of the Company is not expected to exceed £250,000.

Fees of £190,000 (2021: £182,000) were incurred and paid to the Directors.

As at 31 March 2022 and 2021, the Directors held the following number of shares:

		31 March 2022	31 March 2021
Director		Ordinary shares	Ordinary shares

Michael Wrobel	Chairman	120,598	100,598
Alastair Moss	Director	11,766	11,766
Alison Hadden	Director	-	-
Caroline Gulliver	Audit and Management Engagement Committee Chair	58,832	58,832
Peter Baxter	Director	82,065	47,065

Remuneration

The Investment Adviser has reviewed its remuneration policies and procedures to ensure incentives are aligned with the requirements of AIFMD. It includes measures to avoid conflicts of interest such as providing staff with a fixed monthly salary and determining discretionary payments by the performance of the Investment Adviser as a whole and not linked to any one AIF in particular. The Investment Adviser and its staff receive no remuneration through profit share, carried interest, co-investment or other schemes related to the Company's performance.

30.2 Transactions with the Investment Adviser

On 1 November 2016, Civitas Investment Management Limited ("CIM") was appointed as the Investment Adviser of the Company.

Fees of £6,132,000 (2021: £6,117,000) were incurred and paid to CIM. In addition £nil (2021: £nil) disbursements were paid in the year.

The Investment Adviser has agreed to contribute £100,000 (2021: £nil) towards legal and professional fees incurred in the year. This amount has been offset against legal and professional fees in note 9.0. This amount is outstanding at the end of the year.

As at 31 March 2022, a net amount of £151,000 (2021: £13,000) was due from CIM, which has since been received.

As at 31 March 2022, CIM held 50,000 (2021: 50,000) Ordinary shares in the Company.

31.0 Financial risk management

31.1 Financial instruments

The Group's principal financial assets and liabilities are those that arise directly from its operations: trade and other receivables, trade and other payables and cash and cash equivalents. The Group's other principal financial liabilities are bank borrowings, the main purpose of which is to finance the acquisition and development of the Group's investment property portfolio, and interest rate derivatives as detailed in notes 20.0 and 21.0.

All financial liabilities are measured at amortised cost, except interest rate derivatives, which are measured at fair value. All financial instruments were designated in their current categories upon initial recognition.

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

	Book value 31 March 2022 £'000	Fair value 31 March 2022 £'000	Book value 31 March 2021 £'000	Fair value 31 March 2021 £'000
Financial assets
Interest rate derivatives	2,131	2,131	-	-
Trade and other receivables¹	34,580	34,580	33,572	33,572
Cash and cash equivalents	53,337	53,337	107,097	107,097

Financial liabilities
Trade and other payables²	8,632	8,632	8,699	8,699
Bank borrowings	352,050	349,406	352,120	354,142
Interest rate derivatives	-	-	544	544

¹ Excludes prepayments

² Excludes deferred income

The Group has five bank loans: a 10-year fixed rate loan of £52,500,000 provided by Scottish Widows Limited; a 3-year revolving credit facility variable rate loan of £60,000,000 provided by Lloyds Bank plc; a 3-year revolving credit facility variable rate loan of £100,000,000 provided by HSBC Bank PLC; a 5-year revolving credit facility variable rate loan of £60,000,000 provided by National Westminster Bank Plc; and a 7-year fixed rate loan of £84,550,000 with M&G Investment Management Limited. The fair value of the fixed rate loan is determined by comparing the discounted future cash flows.

Financial risk management

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

31.2 Market risk

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

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

· changes in the general economic climate;

· competition for available properties;

· obsolescence; and

· government regulations, including planning, environmental and tax laws.

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

Risk relating to liquidity funds classified as cash and cash equivalents

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

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

· interest rates.

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

31.3 Interest rate risk

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

The Group's interest rate risk principally arises from long-term borrowings. To manage this, the Group has entered into a fixed rate bank loan and three variable rate bank loans. The Group has entered into an interest rate swap on the 5-year loan facility with National Westminster Bank Plc in order to mitigate the risk of rising interest rates.

At 31 March 2022, 55% (2021: 55%) of the Group's borrowings are subject to a fixed rate of interest.

The exposure of the Group to variable rates of interest is considered upon drawing of any new loan facilities, to ensure that the Group's exposure to interest rate fluctuations is within acceptable levels.

The Investment Adviser monitors the Group's exposure to any changes in interest rate on an ongoing basis, with the Board updated on a quarterly basis of the current exposure of the Group's loan facilities.

As at 31 March 2022, if interest rates had been 100 basis points higher/(lower) with all other variables held constant the impact on profits after taxation for the year would be as below. The Investment Adviser anticipates these levels are reasonably possible based on the observation of current market conditions that interest rates would not fluctuate more than 1%.

	31 March 2022 £'000	31 March 2021 £'000
(Decrease)/increase in profits due to interest rates
100 basis points higher	(1,066)	(529)
100 basis points lower	1,572	1,600

The average effective interest rates of financial instruments at 31 March 2022 were as follows:

	31 March 2022 %	31 March 2021 %
Bank borrowings - fixed rate	2.94	2.94
Bank borrowings - variable rate	2.23	1.76
Cash and cash equivalents	0.05	-

The Group's borrowings with Lloyds Bank plc, HSBC Bank PLC and National Westminster Bank Plc will be transitioning from the London Interbank Offer Rate (LIBOR) benchmark to Sterling Overnight Index Average (SONIA) benchmark in due course. There is expected to be negligible cost involved in the borrowing facility transition and the respective hedge instrument amendments.

31.4. Credit risk

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

Debtors and accrued income represent rent due or accrued, these amounts due are diversified between a number of different Approved Providers of differing financial strength, see note 28.0 for details of the different counterparties. None of the Approved Providers have listed debt and as such do not have a credit rating, however, the diversified nature of this asset supports the credit quality.

The Group has policies in place to ensure that rental contracts are entered into only with lessees with an appropriate credit and operational history, and limits exposure to any one tenant. The credit risk is considered to be further reduced as the source of the rents received by the Group is ultimately provided by the Government, by way of housing benefit and care provision, via a diverse range of Local Authorities.

For details of provisions for impairment please refer to note 17.0.

Credit risk related to financial instruments and cash deposits

One of the principal credit risks of the Group will arise with the banks and financial institutions. The Board of Directors believes that the credit risk on short-term deposits and current account cash balances is limited because the counterparties are banks considered to be of good credit quality. In the case of cash deposits held with lawyers, the credit risk is limited because the cash is held by the lawyers within client accounts at banks with high credit quality.

The credit ratings for banks where balances are held by the Group are as follows:

Lloyds Bank plc	A+/F1
HSBC Bank plc	AA-/F1+
RBS International Limited	A/FI
National Westminster Bank plc	A/F1

Ratings advised by Fitch.

31.5. Liquidity risk

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

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

	On demand £'000	<1 year £'000	1-5 years £'000	> 5 years £'000	Total £'000
31 March 2022
Trade and other payables	8,632	-	-	-	8,632
Bank borrowings	-	9,336	245,974	144,602	399,912
	8,632	9,336	245,974	144,602	408,544

31 March 2021
Trade and other payables	8,699	-	-	-	8,699
Bank borrowings	-	67,909	181,048	144,602	393,559
	8,699	67,909	181,048	144,602	402,258

The profile above shows the maturity profile at 31 March 2022 and included within the contracted payments is £42,862,000 (2021: £36,509,000) of loan interest payable up to the point of maturity.

32.0 Capital Commitments

At 31 March 2022, the Company had funds committed totalling £92,000 (2021: £nil) concerning capital expenditure for a property in Surrey.

33.0 Post balance sheet events

Acquisitions
On 13 May 2022, the Company completed an acquisition at North End, Wisbech for £600,000.

Dividends

Remuneration

From 1 April 2022, the remuneration of the Directors, Audit and Management Engagement Committee Chairman and Chairman's annual fee will increase. The Chairman's annual fee increased by 1.9% to £53,000; the Director's annual fee increased by 2.2% to £34,000; however the additional fee for the Audit and Management Engagement Committee Chair remains at £5,000.

Financing

On 18 May 2022, an extension was granted for the facility with Lloyds Bank plc, which now expires in July 2024.

Treasury shares

Since 31 March 2022, the Company has made purchases of 1,700,000 Ordinary shares into treasury at an average price of 87.8p per Ordinary share. The total cost to the Company including commission and stamp duty is £1,492,000 and following these transactions, at 23 June 2022 the Company held 11,725,000 Ordinary shares in treasury.

Company Statement of Financial Position

As at 31 March 2022

	Note	31 March 2022 £'000	31 March 2021 £'000
Assets
Non-current assets
Investment in subsidiaries	7.0	793,284	720,918

Current assets
Trade and other receivables	9.0	4,310	3,644
Cash and cash equivalents	10.0	23,438	15,447
		27,748	19,091
Total assets		821,032	740,009

Liabilities
Creditors - amounts falling due within one year
Trade and other payables	11.0	(274,020)	(171,655)
		(274,020)	(171,655)

Total liabilities		(274,020)	(171,655)
Total net assets		547,012	568,354

Equity
Share capital	12.0	6,225	6,225
Share premium reserve		292,626	292,462
Capital reduction reserve		322,365	331,140
Accumulated losses	13.0	(74,204)	(61,473)
Total equity		547,012	568,354

The Company has taken advantage of the provisions of Companies Act 2006 s408 and does not disclose the Company's individual profit and loss account. Profit for the year was £21,362,000 (2021: £52,780,000).

The Company financial statements as set out below were approved by the Board of Directors of Civitas Social Housing PLC and authorised for issue and signed on its behalf by:

Michael Wrobel

Chairman and Independent Non-Executive Director

29 June 2022

Company No: 10402528

The notes set out below are an integral part of these financial statements

Company Statement of Changes in Equity For the year ended 31 March 2022


		Share	Capital
	Share	premium	reduction	Accumulated	Total
	Capital	reserve	reserve	losses	equity
	£'000	£'000	£'000	£'000	£'000
Balance at 1 April 2020	6,225	292,405	330,926	(80,840)	548,716

Profit and total comprehensive income for the year	-	-	-	52,780	52,780
Issue of Ordinary shares
Share reissued from treasury	-	57	214	-	271
Dividends paid
Total interim dividends for the year ended 31 March 2021 (5.375p)	-	-	-	(33,413)	(33,413)
Balance at 31 March 2021	6,225	292,462	331,140	(61,473)	568,354

Profit and total comprehensive income for the year	-	-	-	21,362	21,362
Issue of Ordinary shares
Share reissued from treasury	-	164	484	-	648
Shares bought back into treasury	-	-	(9,259)	-	(9,259)
Dividends paid
Total interim dividends for the year ended 31 March 2022 (5.5125p)	-	-	-	(34,093)	(34,093)
Balance at 31 March 2022	6,225	292,626	322,365	(74,204)	547,012

Notes to the Company Financial Statements

For the year ended 31 March 2022

1.0 Corporate information

Civitas Social Housing PLC ("the Company") was incorporated in England and Wales under the Companies Act 2006 as a public company limited by shares on 29 September 2016 with company number 10402528 under the name Civitas REIT PLC, which was subsequently changed to the existing name on 3 October 2016.

The address of the registered office is Beaufort House, 51 New North Road, Exeter, Devon EX4 4EP. The Company is registered as an investment company under section 833 of the Companies Act 2006 in England and Wales and is domiciled in the United Kingdom.

The Company did not begin trading until 18 November 2016 when the shares were admitted to trading on the London Stock Exchange ("LSE").

The Company's Ordinary shares have been admitted to the Official List of the Financial Conduct Authority ("FCA"), and are traded on the LSE.

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

2.0 Basis of preparation

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

In preparing these financial statements, the Company applies the recognition, measurement and disclosure requirements of International Financial Reporting Standards ("Adopted IFRSs"), but makes amendments where necessary in order to comply with the Companies Act 2006 and has set out below where advantage of the FRS 101 disclosure exemptions has been taken.

In preparing these financial statements the Company has taken advantage of all disclosure exemptions conferred by FRS 101.

Therefore, these financial statements do not include:

· certain comparative information as otherwise required by IFRS;

· certain disclosures regarding the Company's capital;

· certain disclosures in relation to IFRS 15 Revenue Contracts with Customers;

· a statement of cash flows;

· the effect of future accounting standards not yet adopted;

· the disclosure of the remuneration of key management personnel; and

· disclosure of related party transactions with other wholly owned members of Civitas Social Housing PLC.

In addition, and in accordance with FRS 101, further disclosure exemptions have been adopted because equivalent disclosures are included in the Company's consolidated financial statements. These financial statements do not include certain disclosures in respect of:

· share based payments;

· financial instruments; and

· fair value measurement other than certain disclosures required as a result of recording financial instruments at fair value.

The Company has taken advantage of the exemption in section 408 of the Companies Act 2006 not to present its own income statement or statement of comprehensive income.

New standards, amendments and interpretations

After a review of new accounting standards which are now effective, none are relevant to be adopted in the preparation of the Company's accounts for the year ended 31 March 2022.

Going concern

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

As discussed in the Group financial statements above, the underlying assets of the Company benefit from a secure income stream.

The Company financial statements show an accumulated loss, however this is due to a time-lag on profits from subsidiary companies being moved up the structure in the form of dividends.

The Company has a net current liability position of £246,272,000 (2021: £152,564,000). This balance arises due to the intercompany balances totalling £271,632,000 (2021: £169,465,000) with the Company's subsidiary companies. The amounts principally relate to bank loans drawn in the Company's subsidiary companies in order to finance the purchase of new acquisitions in accordance with the Group's business model. The directors of the subsidiary companies have provided a letter of comfort that they will not seek repayment of these balances within 12 months from the date of approval of the Company's financial statements.

The Board is, therefore, of the opinion that the going concern basis adopted in the preparation of the consolidated financial statements is appropriate.

Significant judgements and sources of estimation uncertainty

The key source of estimation uncertainty relates to the Company's investment in Group companies, and is stated in the Company's separate financial statements at cost less impairment losses, if any. Impairment losses are determined with reference to the investment's fair value less estimated costs of disposal. Fair value is derived from the subsidiaries', and their subsidiaries', net assets at the balance sheet date. Investment properties held by the subsidiary companies are supported by independent valuation. Judgements and assumptions associated with the property values of the investments held by the subsidiary companies are detailed in the Group financial statements.

3.0 Accounting Policies

The financial statements of the Company follow the accounting policies laid out in the Group's consolidated financial statements along with the following accounting policies which have been consistently applied:

Investments in subsidiaries

The investments in subsidiary companies are included in the Company's Statement of Financial Position at cost less provision for impairment. Impairment losses are determined with reference to the investment's fair value less estimated selling costs. Fair value is derived from the subsidiaries', and their subsidiaries', net assets at the balance sheet date. On disposal, the difference between the net disposal proceeds and its carrying amount is included in the income statement.

The investment in a subsidiary company may include both the purchase of shares and an intercompany loan which is subsequently capitalised in return for shares in the subsidiary company. The intercompany loan capitalised is disclosed in note 7.0 as a transfer between the shares and loan columns.

Loans to subsidiaries

Loans made to subsidiary companies which arise as part of the transactions for the acquisition of investments and are subsequently capitalised by the issue of shares are recognised as investment in subsidiaries at cost. At the point the loan is capitalised, this transaction is recognised as a transfer within the table in note 7.0.

Amounts due to subsidiary companies

Balances arising with subsidiary companies of a temporary nature are initially recognised at fair value and subsequently measured at amortised cost.

4.0 Dividends

Dividends are included in the financial statements in the year in which they are paid. Details of dividends paid and proposed are included in note 14.0 of the Group's consolidated financial statements.

5.0 Employee information

Details of Directors' remuneration are included in note 6.0 of the consolidated financial statements. The Company had no employees during the year (2021: nil).

6.0 Audit fees

Audit fees in relation to the Company's financial statements total £296,000 (31 March 2021: £272,000). For further details, please refer to note 9.0 of the Group financial statements.

7.0 Investments in subsidiaries

	Shares in subsidiaries £'000	Loans to subsidiaries £'000	For the year ended 31 March 2022 £'000
Balance at the beginning of the year	703,435	17,483	720,918
Increase in investments	41,712	31,013	72,725
Loans transferred	23,287	(23,287)	-
Impairment	(359)	-	(359)
At the end of the year	768,075	25,209	793,284

	Shares in subsidiaries £'000	Loans to subsidiaries £'000	For the year ended 31 March 202 £'000
Balance at the beginning of the year	678,247	28,673	706,920
Increase in investments	928	14,383	15,311
Loans transferred	25,573	(25,573)	-
Impairment	(1,313)	-	(1,313)
At the end of the year	703,435	17,483	720,918

Following a review comparing cost of investments to the underlying net assets of subsidiary companies, an impairment provision has been made of £359,000 (2021: £1,313,000).

8.0 Subsidiary entities

The Company has provided a guarantee under s479C of the Companies Act 2006 in respect of the financial year ended 31 March 2022 for a number of its subsidiary companies (as indicated in the table below). The guarantee is over all outstanding liabilities to which the subsidiary companies are subject at 31 March 2022 until they are satisfied in full.

The Group consists of a parent company, Civitas Social Housing PLC, incorporated in England and Wales (company number 10402528) and a number of subsidiaries held directly by Civitas Social Housing PLC, which operate and are incorporated in England and Wales or Jersey.

The Group owns 100% equity shares of all subsidiaries listed below and has the power to appoint and remove the majority of the board of directors of those subsidiaries. The relevant activities of the below subsidiaries are determined by the Board of Directors based on the purpose of each company.

Therefore, the Directors concluded that the Group has control over all these entities and all these entities have been consolidated within the consolidated financial statements.

A list of all related undertakings included within these consolidated financial statements are noted below. Indirectly held subsidiary companies are marked by an indentation in the table below:

Name	Registered number	Principal activity	Country of incorporation
Name	Registered number	Principal activity	Country of incorporation
Civitas Social Housing Finance Company 1 Limited *	10997707	Finance company	England & Wales
Civitas Social Housing Jersey 1 Limited	124129	Holding company	Jersey
Civitas SPV1 Limited*	10518729	Property investment	England & Wales
Civitas SPV2 Limited*	10114251	Property investment	England & Wales
Civitas SPV11 Limited*	10546749	Property investment	England & Wales
Civitas SPV15 Limited*	09777380	Property investment	England & Wales
Civitas SPV25 Limited*	10791473	Property investment	England & Wales
Civitas SPV27 Limited*	10883112	Property investment	England & Wales
Civitas SPV33 Limited*	10546407	Property investment	England & Wales
Civitas SPV35 Limited*	10588530	Property investment	England & Wales
Civitas SPV38 Limited*	10738318	Property investment	England & Wales
Civitas SPV39 Limited*	10547333	Property investment	England & Wales
Civitas SPV40 Limited*	10738510	Property investment	England & Wales
Civitas SPV41 Limited*	10738542	Property investment	England & Wales
Civitas SPV50 Limited*	10775419	Property investment	England & Wales
Civitas Social Housing Finance Company 2 Limited*	10997698	Finance company	England & Wales
Civitas Social Housing Jersey 2 Limited	124876	Holding company	Jersey
Civitas SPV3 Limited*	10156529	Property investment	England & Wales
Civitas SPV4 Limited*	10433744	Property investment	England & Wales
Civitas SPV5 Limited*	10479104	Property investment	England & Wales
Civitas SPV6 Limited*	10674493	Property investment	England & Wales
Civitas SPV9 Limited*	10536388	Property investment	England & Wales
Civitas SPV10 Limited*	10535243	Property investment	England & Wales
Civitas SPV12 Limited*	10546753	Property investment	England & Wales
Civitas SPV17 Limited*	10479036	Property investment	England & Wales
Civitas SPV18 Limited*	10546651	Property investment	England & Wales
Civitas SPV19 Limited*	10548932	Property investment	England & Wales
Civitas SPV20 Limited*	10588735	Property investment	England & Wales
Civitas SPV22 Limited*	10743958	Property investment	England & Wales
Civitas SPV24 Limited*	10751512	Property investment	England & Wales
Civitas SPV26 Limited*	10864336	Property investment	England & Wales
Civitas SPV29 Limited*	10911565	Property investment	England & Wales
Civitas SPV30 Limited*	10956025	Property investment	England & Wales
Civitas SPV31 Limited*	10974889	Property investment	England & Wales
Civitas SPV32 Limited*	11007173	Property investment	England & Wales
Civitas SPV34 Limited*	10738381	Property investment	England & Wales
Civitas SPV36 Limited*	10588792	Property investment	England & Wales
Civitas SPV42 Limited*	10738556	Property investment	England & Wales
Civitas SPV43 Limited*	10534877	Property investment	England & Wales
Civitas SPV45 Limited*	10871854	Property investment	England & Wales
Civitas SPV46 Limited*	10871910	Property investment	England & Wales
Civitas SPV47 Limited*	10873270	Property investment	England & Wales
Civitas SPV48 Limited*	10873295	Property investment	England & Wales
Civitas SPV51 Limited*	10826693	Property investment	England & Wales
Civitas SPV52 Limited*	10827006	Property investment	England & Wales
Civitas SPV63 Limited*	10937805	Property investment	England & Wales
Civitas SPV64 Limited*	10938411	Property investment	England & Wales
Civitas SPV70 Limited*	10770201	Property investment	England & Wales
Civitas SPV71 Limited *	10888639	Property investment	England & Wales
Civitas SPV72 Limited*	10938022	Property investment	England & Wales
Civitas SPV74 Limited*	11001855	Property investment	England & Wales
Civitas SPV75 Limited*	11001834	Property investment	England & Wales
Civitas SPV80 Limited*	11001998	Property investment	England & Wales
Civitas Social Housing Finance Company 3 Limited*	10997714	Finance Company	England & Wales
Civitas SPV8 Limited*	10536157	Property investment	England & Wales
Civitas SPV28 Limited*	10895228	Property investment	England & Wales
Civitas SPV53 Limited*	11021625	Property investment	England & Wales
Civitas SPV55 Limited*	11056455	Property investment	England & Wales
Civitas SPV57 Limited*	11091444	Property investment	England & Wales
Civitas SPV60 Limited*	11111908	Property investment	England & Wales
Civitas SPV61 Limited*	10937662	Property investment	England & Wales
Civitas SPV66 Limited*	10937898	Property investment	England & Wales
Civitas SPV77 Limited*	11166491	Property investment	England & Wales
Civitas SPV78 Limited*	11170099	Property investment	England & Wales
Civitas SPV79 Limited*	11236544	Property investment	England & Wales
Civitas SPV81 Limited*	11192811	Property investment	England & Wales
Civitas SPV82 Limited*	11380796	Property investment	England & Wales
Civitas SPV83 Limited*	11371128	Property investment	England & Wales
Civitas SPV85 Limited*	11300749	Property investment	England & Wales
Civitas SPV95 Limited*	11208184	Property investment	England & Wales
Civitas SPV97 Limited*	11463890	Property investment	England & Wales
Civitas SPV103 Limited*	11500596	Property investment	England & Wales
Civitas SPV105 Limited*	11532177	Property investment	England & Wales
Civitas SPV106 Limited*	11532179	Property investment	England & Wales
Civitas SPV107 Limited*	11532182	Property investment	England & Wales
Civitas SPV116 Limited*	11504399	Property investment	England & Wales
Civitas SPV117 Limited*	11504445	Property investment	England & Wales
Civitas Social Housing Finance Company 4 Limited*	11906660	Finance Company	England & Wales
Civitas SPV23 Limited*	10746881	Property investment	England & Wales
Civitas SPV54 Limited*	11039750	Property investment	England & Wales
Civitas SPV59 Limited*	11111912	Property investment	England & Wales
Civitas SPV69 Limited*	11142372	Property investment	England & Wales
Civitas SPV73 Limited*	10939075	Property investment	England & Wales
Civitas SPV84 Limited*	11381455	Property investment	England & Wales
Civitas SPV86 Limited*	11418432	Property investment	England & Wales
Civitas SPV87 Limited*	10888903	Property investment	England & Wales
Civitas SPV88 Limited*	10939044	Property investment	England & Wales
Civitas SPV90 Limited*	10939131	Property investment	England & Wales
Civitas SPV91 Limited *	10941377	Property investment	England & Wales
Civitas SPV92 Limited*	11449913	Property investment	England & Wales
Civitas SPV93 Limited*	11043111	Property investment	England & Wales
Civitas SPV94 Limited*	11208105	Property investment	England & Wales
Civitas SPV96 Limited*	11270786	Property investment	England & Wales
Civitas SPV100 Limited*	11069703	Property investment	England & Wales
Civitas SPV101 Limited*	09978282	Property investment	England & Wales
Civitas SPV102 Limited*	11521555	Property investment	England & Wales
Civitas SPV109 Limited*	11532120	Property investment	England & Wales
Civitas SPV112 Limited*	11579750	Property investment	England & Wales
Civitas SPV114 Limited*	11579733	Property investment	England & Wales
Civitas SPV115 Limited*	11522178	Property investment	England & Wales
Civitas SPV118 Limited*	11411498	Property investment	England & Wales
Civitas SPV121 Limited*	11099917	Property investment	England & Wales
Civitas SPV122 Limited*	11482646	Property investment	England & Wales
Civitas SPV126 Limited*	11459821	Property investment	England & Wales
Civitas SPV127 Limited*	10941401	Property investment	England & Wales
Civitas SPV129 Limited*	11664994	Property investment	England & Wales
Civitas SPV130 Limited*	11705074	Property investment	England & Wales
Civitas SPV131 Limited*	11675132	Property investment	England & Wales
Civitas SPV132 Limited*	11473735	Property investment	England & Wales
Civitas SPV145 Limited*	11842306	Holding company	England & Wales
SPV153 Limited (previously Fieldbay Limited) *	5219012	Property investment	England & Wales
Civitas SPV148 Limited*	11632633	Property investment	England & Wales
Civitas SPV149 Limited*	11462691	Property investment	England & Wales
Civitas SPV150 Limited*	11462555	Property investment	England & Wales
FPI CO 324 Ltd*	11633019	Property investment	England & Wales
Civitas Social Housing Finance Company 5 Limited*	13083077	Finance Company	England & Wales
Civitas SPV7 Limited*	10536368	Property investment	England & Wales
Civitas SPV13 Limited*	09517692	Property investment	England & Wales
Civitas SPV37 Limited*	10738450	Property investment	England & Wales
Civitas SPV44 Limited*	10588783	Property investment	England & Wales
Civitas SPV49 Limited*	11031349	Property investment	England & Wales
Civitas SPV56 Limited*	11056465	Property investment	England & Wales
Civitas SPV62 Limited*	10937528	Property investment	England & Wales
Civitas SPV65 Limited*	10938467	Property investment	England & Wales
Civitas SPV67 Limited*	10937929	Property investment	England & Wales
Civitas SPV68 Limited*	10938269	Property investment	England & Wales
Civitas SPV98 Limited*	11478695	Property investment	England & Wales
Civitas SPV99 Limited*	11478707	Property investment	England & Wales
Civitas SPV104 Limited*	11532174	Property investment	England & Wales
Civitas SPV108 Limited*	11532135	Property investment	England & Wales
Civitas SPV113 Limited*	11580068	Property investment	England & Wales
Civitas SPV123 Limited*	08253452	Property investment	England & Wales
Civitas SPV133 Limited*	11698972	Property investment	England & Wales
Civitas SPV134 Limited*	11689461	Property investment	England & Wales
Civitas SPV135 Limited*	11579880	Property investment	England & Wales
Civitas SPV136 Limited*	11579760	Property investment	England & Wales
Civitas SPV143 Limited*	11546808	Property investment	England & Wales
Civitas SPV144 Limited*	11546696	Property investment	England & Wales
Civitas SPV146 Limited*	11861500	Holding Company	England & Wales
Bryn Eithin (2019) Limited *	11844898	Property investment	England & Wales
Civitas SPV147 Limited*	11861974	Holding Company	England & Wales
Mynydd Mawr (2019) Limited *	11844917	Property investment	England & Wales
Civitas SPV152 Limited*	11955719	Property investment	England & Wales
Civitas SPV155 Limited*	12044281	Property investment	England & Wales
Civitas SPV156 Limited*	12081093	Property investment	England & Wales
Civitas SPV157 Limited*	12188610	Property investment	England & Wales
Civitas SPV158 Limited*	12202674	Property investment	England & Wales
Civitas SPV160 Limited*	12272906	Property investment	England & Wales
Bedford SPV1 Limited*	12315518	Property investment	England & Wales
Bridge Property Herts Limited*	12435985	Property investment	England & Wales
Bridge Propco Limited*	12445439	Property investment	England & Wales
FPI Co 294 Ltd*	11519226	Property investment	England & Wales
Civitas SPV14 Limited*	10479041	Property investment	England & Wales
Civitas SPV HP Ltd*	12784895	Property investment	England & Wales
Civitas SPV16 Limited*	09917557	Property investment	England & Wales
Civitas SPV21 Limited*	10631541	Property investment	England & Wales
Civitas SPV159 Limited*	12258313	Property investment	England & Wales
Civitas Financing PLC*	13546154	Holding Company	England & Wales

* These entities are exempt from the requirements of the Companies Act 2006 relating to the audit of individual financial statements by virtue of Section 479A of that Act. These are all entities that have a year end of 31 March 2022.

The registered addresses for the subsidiaries are consistent based on their country of incorporation and are as follows:

• England & Wales entities: Beaufort House, 51 New North Road, Exeter, Devon, EX4 4EP

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

9.0 Trade and other receivables

	31 March 2022 £'000	31 March 2021 £'000

Trade receivables	1,150	722
Prepayments and other receivables	1,902	1,433
Accrued income	1,258	1,489
Total	4,310	3,644

10.0 Cash and cash equivalents

	31 March 2022 £'000	31 March 2021 £'000

Cash held by solicitors	376	720
Liquidity funds	10,489	10,485
Cash held at bank	12,258	3,381
Cash and cash equivalents	23,123	14,586
Restricted cash	315	861
Total cash held at bank	23,438	15,447

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

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

11.0 Trade and other payables

	31 March 2022 £'000	31 March 2021 £'000
Retentions	288	490
Accruals	685	450
Dividends withholding tax payable	1,057	892
Deferred income	358	358
Amounts due to subsidiary companies	271,632	169,465

Total	274,020	171,655

12.0 Share capital

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

For the

year ended

31 March 2022

£'000

For the

year ended

31 March 2021

£'000

Share capital

At beginning and end of year

6,225

Number of shares authorised, issued and fully paid

For the

year ended

31 March 2022

For the

year ended

31 March 2021

Ordinary shares of £0.01 each

At beginning and end of year

622,461,380

The Company holds 10,025,000 (2021: 565,000) Ordinary shares in treasury. The number of Ordinary shares used to calculate the net asset value is 612,896,380 (2021: 621,896,380).

13.0 Accumulated losses

This reserve represents the profits and losses of the Company

	For the year ended 31 March 2022 £'000	For the year ended 31 March 2021 £'000
Balance at the beginning of the year	(61,473)	(80,840)
Profit for the year	21,362	52,780
Dividends paid in the year	(34,093)	(33,413)
At end of year	(74,204)	(61,473)

14.0 Controlling parties

As at 31 March 2022, there is no ultimate controlling party.

15.0 Related party transactions

For all related party transactions and transactions with the Investment Adviser please make reference to notes 30.1 and 30.2 of the Group's consolidated financial statements and amounts due to subsidiary companies in note 17.0 above.

16.0 Post balance sheet events

Please refer to note 33.0 of the Group Consolidated financial statements above.

Appendix 1 (unaudited): Notes to the calculation of EPRA and other alternative performance measures

1.0 EPRA Earnings	For the year ended 31 March 2022	For the year ended 31 March 2021
Earnings from operational activities
Profit after taxation (£'000)	44,754	36,075
Change in fair value of derivative financial instruments (£'000)	(2,675)	66
Changes in value of investment properties (£'000)	(12,269)	(5,511)
EPRA Earnings (£'000)	29,810	30,630
Weighted average number of shares in issue (adjusted for shares held in treasury)	618,797,942	621,651,859
EPRA Earnings per share (EPS) - basic & diluted	4.82p	4.93p

2.0 EPRA NAV Metrics

	EPRA Net Reinstatement Value	EPRA Net Tangible Assets	EPRA Net Disposal Value
31 March 2022
Net assets (£'000)	675,547	675,547	675,547
Fair value of derivative financial instruments (£'000)	(2,131)	(2,131)	-
Fair value of bank borrowings (£'000)	-	-	2,644
NAV (£'000)	673,416	673,416	678,191
Number of shares in issue (adjusted for shared held in treasury)	612,436,380	612,436,380	612,436,380
NAV per share	109.96p	109.96p	110.74p

	EPRA Net Reinstatement Value	EPRA Net Tangible Assets	EPRA Net Disposal Value
31 March 2021
Net assets (£'000)	673,498	673,498	673,498
Fair value of derivative financial instruments (£'000)	544	544	-
Fair value of bank borrowings (£'000)	-	-	(2,022)
NAV (£'000)	674,042	674,042	671,476
Number of shares in issue (adjusted for shares held in treasury)	621,896,380	621,896,380	621,896,380
NAV per share £'000	108.38p	108.38p	107.97p

3.0 EPRA Net Initial Yield

	For the year ended 31 March 2022	For the year ended 31 March 2021
Investment property (£'000)	968,756	915,589
Allowance for estimated purchasers' costs (£'000)	56,412	53,753
Gross up completed property portfolio (£'000)	1,025,168	969,342
Annualised net rents (£'000)	54,091	50,780
Add: notional rent expiration of rent free periods or other lease incentives (£'000)	-	-
Topped-up net annualised rent (£'000)	54,091	50,780
EPRA NIY	5.28%	5.24%
EPRA Topped-up NIY	5.28%	5.24%

4.0 EPRA Vacancy Rate

	For the year ended 31 March 2022	For the year ended 31 March 2021
Estimated Market Rental Value (ERV) of vacant spaces (£'000)	-	-
Estimated Market Rental Value (ERV) of whole portfolio (£'000)	54,091	50,380
EPRA Vacancy Rate	0%	0%

5.0 EPRA Costs Ratio

	For the year ended 31 March 2022	For the year ended 31 March 2021
Total administrative and operating expenses	10,247	9,498
Direct property expenses	978	1,175
Less property expenses recovered through rents	(995)	(886)
EPRA Costs(including direct vacancy costs)	10,230	9,787
Direct vacancy costs	-	-
EPRA Costs (excluding direct vacancy costs)	10,230	9,787

Rental income	51,636	49,020
Less rechargeable costs received	(995)	(886)
Gross rental income	50,641	48,134

EPRA Cost Ratio (including direct vacancy costs)	20.20%	20.33%
EPRA Cost Ratio (excluding direct vacancy costs)	20.20%	20.33%

The Group has not incurred any direct vacancy costs.

6.0 EPRA Table of Capital Expenditure

	For the year ended 31 March 2022 £'000	For the year ended 31 March 2021 £'000
Acquisitions including incidental costs of purchase	33,466	16,108
Development	-	-
Investment properties
Incremental lettable space	-	-
Enhancing lettable space	5,818	4,077
Tenant incentives	1,614	11,217
Other material non-allocated types of expenditure	-	-
Capitalised interest	-	-
Total Capital Expenditure	40,898	31,402
Conversion from accruals to cash basis	1,312	215
Total Capital Expenditure on a cash basis	42,210	31,617

7.0 Portfolio NAV

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

	31 March 2022	31 March 2021
Net assets (£'000)	675,547	673,498
Adjustment for change to property valuation (£'000)	76,784	63,270
Portfolio net assets (£'000)	752,331	736,768
Number of Ordinary shares in issue (adjusted for shares held in treasury)	612,436,380	621,896,380
Portfolio Net Assets per share	122.84p	118.47p

8.0 Leveraged Internal rate of return (IRR)

This is the annual growth rate, based on growth in net asset value per share since launch and dividends paid to Ordinary shareholders.

		31 March 2022	31 March 2021
IFRS NAV per share		110.300p	108.300p
31 May 2017	Interim dividend	0.7500p	0.7500p
31 August 2017	Interim dividend	0.7500p	0.7500p
30 November 2017	Interim dividend	0.7500p	0.7500p
9 March 2018	Interim dividend	0.7500p	0.7500p
8 June 2018	Interim dividend	1.2500p	1.2500p
7 September 2018	Interim dividend	1.2500p	1.2500p
30 November 2018	Interim dividend	1.2500p	1.2500p
11 January 2019	Interim dividend	1.1100p	1.1100p
28 February 2019	Interim dividend	0.1400p	0.1400p
7 June 2019	Interim dividend	1.3250p	1.3250p
6 September 2019	Interim dividend	1.3250p	1.3250p
29 November 2019	Interim dividend	1.3250p	1.3250p
28 February 2020	Interim dividend	1.3250p	1.3250p
12 June 2020	Interim dividend	1.3250p	1.3250p
7 September 2020	Interim dividend	1.3500p	1.3500p
4 December 2020	Interim dividend	1.3500p	1.3500p
1 March 2021 11 June 2021 10 September 2021 13 December 2021 11 March 2022	Interim dividend Interim dividend Interim dividend Interim dividend Interim dividend	1.3500p 1.3500p 1.3875p 1.3875p 1.3875p	1.3500p - - - -
		134.4875p	126.9750p
IFRS NAV per share at launch		98.0000p	98.0000p
Levered IRR		6.63%	6.54%

Five Year Financial Results

Group Statement of Comprehensive Income

Revenue	For the year ended 31 March 2022 £'000	For the year ended 31 March 2021 £'000	For the year ended 31 March 2020 £'000	For the year ended 31 March 2019 £'000	For the period from 18 November 2016 to 31 March 2018 £'000
Rental income	51,636	49,020	46,165	35,738	18,606
Less direct property expenses	(978)	(1,175)	(259)	-	-
Net rental income	50,658	47, 845	45,906	35,738	18,606
Directors' remuneration	(206)	(198)	(176)	(163)	(205)
Investment advisory fees	(6,132)	(6,117)	(6,183)	(6,457)	(5,773)
General and administrative expenses	(3,909)	(3,183)	(3,501)	(3,022)	(2,915)
Total expenses	(10,247)	(9,498)	(9,860)	(9,642)	(8,893)
Change in fair value of investment properties	12,269	5,511	9,389	3,652	30,633
Operating Profit	52,680	43,858	45,435	29,748	40,346
Finance income	7	20	110	491	413
Finance expenses - relating to bank borrowings	(10,608)	(7,737)	(7,342)	(3,975)	(1,041)
Finance expenses - relating to C share amortisation	-	-	-	(6,400)	(2,792)
Change in fair value of interest rate derivatives	2,675	(66)	(478)	-	-
Profit before tax	44,754	36,075	37,725	19,864	36,926
Taxation	-	-	-	-	-
Profit being total comprehensive income	44,754	36,075	37,725	19,864	36,926
Earnings per share - basic	7.23p	5.80p	6.06p	4.67p	10.55p
Earnings per share - diluted	7.23p	5.80p	6.06p	4.22p	6.27p
Dividend declared	5.55p	5.40p	5.30p	5.00p	3.00p

Group Statement of Financial Position

	31 March 2022 £'000	31 March 2021 £'000	31 March 2020 £'000	31 March 2019 £'000	31 March 2018 £'000
Assets Non-current assets
Investment property	945,237	893,684	867,988	820,094	516,222
Other receivables	23,519	21,905	10,755	6,824	-
Interest rate derivatives	2,131	-	-	-	-
	970,887	915,589	878,743	826,918	516,222
Non-current assets
Trade and other receivables	12,865	12,821	10,838	5,723	3,315
Cash and cash equivalents	53,337	107,097	58,374	54,347	249,608
	66,202	119,918	69,212	60,070	252,923
Total assets	1,037,089	1,035,507	947,955	886,988	769,145
Liabilities
Current liabilities
Trade and other payables	(9,492)	(9,345)	(7,743)	(15,324)	(10,176)
Bank and loan borrowings	-	(59,937)	(59,730)	-	-
C shares	-	-	-	-	(298,752)
	(9,492)	(69,282)	(67,473)	(15,324)	(308,928)
Non-current liabilities
Bank and loan borrowings	(352,050)	(292,183)	(209,440)	(205,156)	(90,822)
Interest rate derivatives	-	(544)	(478)	-	-
	(352,050)	(292,727)	(209,918)	(205,156)	(90,822)
Total liabilities	(361,542)	(362,009)	(277,391)	(220,480)	(399,750)

Total net assets	675,547	673,498	670,564	666,508	369,395
Assets
Share capital	6,225	6,225	6,225	6,225	3,500
Share premium reserve	292,626	292,463	292,405	292,405	-
Capital reduction reserve	322,365	331,140	330,926	331,625	331,625
Retained earnings	54,331	43,670	41,008	36,253	34,270
Total equity	675,547	673,498	670,564	666,508	369,395
Net assets per share - basic	110.30p	108.30p	107.87p	107.08p	105.54p
Net assets per share - diluted	110.30p	108.30p	107.87p	107.08p	105.54p
Portfolio NAV	122.84p	118.47p	118.35p	119.07p	113.86p
Share price	87.40p	107.80p	96.40p	96.00p	97.40p
Total shareholder return (on a NAV basis	37.23%	29.57%	23.64%	17.43%	10.76%
Leverage	34.43%	34.48%	26.90%	22.00%	12.00%

Shareholder Information

Share Information
The Company's Ordinary shares of 1p each are quoted on the Official List of the FCA and traded on the premium segment of the Main Market of the London Stock Exchange (LSE).

SEDOL number BD8HBD3

ISIN GB00BD8HBD32

Ticker/TIDM CSH

LEI 213800PGBG84J8GM6F95

Frequency of NAV Publication
The Company's NAV is released to the LSE on a quarterly basis and published on the Company's website: www.civitassocialhousing.com.

Sources of Further Information
Copies of the Company's Annual and Half-Yearly Reports, Stock Exchange announcements and further information on the Company can be obtained from its website: www.civitassocialhousing.com.

Share Register Enquiries
The register for the Company's Ordinary shares is maintained by Link Group. In the event of queries regarding your holding, please contact the Registrar on 0371 664 0300 (calls are charged at the standard geographic rate and will vary by provider; calls outside the UK will be charged at the applicable international rate). Lines are open between 9.00am and 5.30pm, Monday to Friday, excluding public holidays in England and Wales. You can also email enquiries@linkgroup.co.uk.

Changes of name and/or address must be notified in writing to the Registrar: Link Group, 10th Floor, Central Square, 29 Wellington Street, Leeds LS1 4DL

Key Dates

June

Annual results announced

Payment of fourth final dividend

September

Company's half-year end

Annual General Meeting

Payment of first interim dividend

December

Half yearly results announced

Payment of second interim dividend

February

Payment of third interim dividend

March

Company's year end

Association of Investment Companies

The Company is a member of the AIC, which publishes statistical information in respect of member companies. The AIC can be contacted on 020 7282 5555, enquiries@ theaic.co.uk or visit the website: www.theaic.co.uk .

Electronic Communications from the Company

Shareholders now have the opportunity to be notified by email when the Company's Annual Report, Half Yearly Report and other formal communications are available on the Company's website, instead of receiving printed copies by post. This has environmental benefits in the reduction of paper, printing, energy and water usage, as well as reducing costs to the Company.

If you have not already elected to receive electronic communications from the Company and wish to do so, please contact the Registrar.

Glossary

AIFM means the Alternative Investment Fund Manager.

AIFMD means the Alternative Investment Fund Managers Regulations 2013 (as amended by The Alternative Investment Fund Managers (Amendment etc.) (EU Exit) Regulations 2019) and the Investment Funds Sourcebook forming part of the FCA Handbook.

ALMO means an arm's length management organisation, a not-for-profit company that provides housing services on behalf of a Local Authority.

Alternative Performance Measures (APMs) means a financial measure of historical financial performance, financial position, or cash flows, other than a financial measure defined or specified in the applicable financial reporting framework.

Annualised rent roll means the total rental income due over the first year from the date of valuation, including an estimated rental uplift based on a long-term inflation rate.

Approved Provider means Approved Providers, Local Authorities, ALMOs, Community Interest Companies, Registered Charities and other regulated organisations directly or indirectly in receipt of payment from local or central government including the NHS.

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

CIM means Civitas Investment Management Limited or CIM (formerly known as Civitas Housing Advisors Limited until its change of name on 7 May 2020).

Community Interest Company or CIC means a company approved by the Office of the Regulator of Community Interest Companies as a community interest company and registered as such with Companies House.

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

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

Current Leverage means the percentage taken as total bank borrowings drawn over total assets.

Dividend Yield means the ratio of the total annual dividend payments over market price per share.

EPRA means the European Public Real Estate Association.

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

EPRA Net Reinstatement Value ("EPRA NRV") is an EPRA NAV metric which assumes that entities never sell assets and aims to represent the value required to rebuild the entity.

EPRA Net Tangible Assets ("EPRA NTA") is an EPRA NAV metric which assumes that entities buy and sell assets, thereby crystallising certain levels of unavoidable deferred tax.

EPRA Net Disposal Value ("EPRA NDV") is an EPRA NAV metric which represents the shareholders' value under a disposal scenario, where deferred tax, financial instruments and certain other adjustments are calculated to the full extent of their liability, net of any resulting tax.

EPRA Run Rate means the ratio of a company's earnings (excluding fair value gains/losses) over dividends paid to shareholders.

Gross Asset Value means total assets.

Group means the Company and its subsidiaries.

Housing Association or HA means an independent society, body of trustees or company established for the purpose of providing low-cost social housing for people in housing need generally on a non-profit making basis. Any trading surplus is typically used to maintain existing homes and to help finance new ones. Housing Associations are regulated by the Regulator of Social Housing.

IFRS Net Asset Value or IFRS NAV means the net asset value of the Group on the relevant date, prepared in accordance with IFRS accounting principles.

Investment Adviser means Civitas Investment Management Limited ("CIM"), a company incorporated in England and Wales with company number 10278444, in its capacity as investment adviser to the Company.

IPO means Initial Public Offering.
IRR means internal rate of return.

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

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

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

NHS means the publicly funded healthcare system of the United Kingdom comprising The National Health Service in England, NHS Scotland, NHS Wales and Health and Social Care in Northern Ireland, including, for the avoidance of doubt, NHS Trusts.

NHS Trust means a legal entity, set up by order of the Secretary of State under section 25 of, and Schedule 4 to, the National Health Service Act 2006, to provide goods and services for the purposes of the health service.

Ongoing Charges ( previously Total Expense Ratios or TERs) means the figure published annually by the Company which shows the drag on performance caused by operational expenses. More specifically, it is the annual percentage reduction in shareholder returns as a result of recurring operational expenses assuming markets remain static and the portfolio is not traded. Although the Ongoing Charges figure is based on historical information, it provides shareholders with an indication of the likely level of costs that will be incurred in managing the Company in the future.

Portfolio means the Group's portfolio of assets.

Portfolio Net Asset Value or Portfolio NAV means the net asset value of the Company, with assets aggregated rather than valued on an asset by asset basis, as at the relevant date, calculated on the basis of an independent Portfolio Valuation. See note 7.0 to Appendix 1 for a reconciliation to IFRS NAV.

Portfolio Basis means the Portfolio NAV (as defined above)

Portfolio Valuation means an independent valuation of the Portfolio by Jones Lang LaSalle Limited or such other property adviser as the Directors may select from time to time, based upon the Portfolio being held, directly or indirectly, within a corporate vehicle or equivalent entity which is a wholly owned subsidiary of the Company and otherwise prepared in accordance with RICS "Red Book" guidelines.

REIT means a qualifying real estate investment trust in accordance with the UK REIT Regime introduced by the UK Finance Act 2006 and subsequently re-written into Part 12 of the Corporation Tax Act 2010.

RICS means Royal Institution of Chartered Surveyors.

RSH means the Regulator of Social Housing, the executive non-departmental public body, sponsored by the Ministry of Housing, Communities and Local Government, which is the regulator for Social Homes providers in England and Wales.

Social homes or social housing means social rented homes and other accommodation that are offered at rents subsidised below market level or are constituents of other appropriate rent regimes such as exempt rents or are subject to bespoke agreement with entities such as NHS Trusts and are provided by Approved Providers.

Specialist Supported Housing or SSH means social housing which incorporates some form of care or other ancillary service on the premises.

SPV means special purpose vehicle, a corporate vehicle in which the Group's properties are held.

Target Return means the target return on investment.

Total Return means Net Total Return, being the change in IFRS NAV over the relevant period plus dividend paid.

Total Shareholder Return m eans a measure of the return based upon share price movement over the period plus dividend paid.

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

WAULT or "Weighted Average Unexpired Lease Term" is the product of annualised rent roll at period end and the time in years to when the lease expires for each given lease, summed across leases, and then divided by the total annualised rent roll of the portfolio. The result is expressed in years. WAULT is a key measure of the quality of the Company's portfolio. Long lease terms underpin the security of the Company's income stream.

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Civitas Social Housing (CSH)

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