Civitas Full Year Results

Civitas Social Housing PLC

29 June 2023

CIVITAS SOCIAL HOUSING PLC

ANNUAL FINANCIAL REPORT

YEAR TO 31 MARCH 2023

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 2023.

Performance Highlights

Property Valuation and Performance	Mar 23	Mar 22	Change
Investment property (£m)	978.1	968.8	1.0%
NAV per share (diluted) (p)	109.16	110.30	(1.03)%
Financial Performance
Annualised contracted rent roll (£m)	56.3	53.2	5.83%
Net rental income (£m)	52.7	50.7	3.94%
EPRA earnings (£m)	26.9	29.8
Operating Cash Flow (£m)	39.5	39.1	1.02%
IFRS earnings per share (diluted) (p)	4.19	7.23
EPRA earnings per share (diluted) (p)	4.43	4.82
Dividends per share (p)	5.70	5.55	2.70%
NAV Total return since IPO (%)	41.8	37.2	+4.6 pts
Financing
Loan to value ratio (%)	35.6	34.4
Weighted average interest cost of debt (%)	3.4	2.5	+0.9 pts

Full Year Highlights

· Annualised contracted rent roll increased by c.6% to £56.3million

· Portfolio value increased to £978.1million from £968.8million (IFRS)

· NAV decreased slightly to 109.16 pence per share as at 31 March 2023 (2022: 110.30 pence per share)

· IFRS valuation average net initial yield (NIY) of 5.55%

· EPRA earnings per share (basic and diluted) 4.43 pence per share (2022: 4.82 pence per share)

· Dividends of 5.70 pence per share to 31 March 2023 (2022: 5.55p) fully paid in four dividend distributions

· In December 2022 the Company signed a new five-year £70.8 million facility with a European bank lender

· Maintained a high quality investment credit rating from Fitch Ratings of "A-" (stable) and "A" Secured

· Continuation of share buybacks, with the Company acquiring 6,050,000 shares at an average of 76.89 pence per share for a total investment of £4.65 million, enhancing the NAV by 0.30%

Operational Highlights

· Diversified portfolio of 697 properties providing homes to 4,594 residents

· Providing lifelong homes to mostly working age adults with disabilities and complex care needs

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

· Phase two of the Company's work with E.ON continues across identified properties, targeting a 25% reduction in carbon emissions

· CIM continues to engage actively with the Company's Approved Provider partners and care providers, offering advice and shared learning

· CIM continues to closely and proactively asset manage the largest portfolio of specialist care based housing in the UK

Post Year End Highlights

· On 9 May 2023 the Board announced a recommended offer for the Company at 80p in cash, from Wellness Unity Limited, a subsidiary of CK Asset Holdings Limited (CKA)

· On 22 May 2023 the Offer Document was made available. It is intended that Civitas Investment Management ("CIM") is maintained as the Investment Adviser to Civitas so that the day-to-day management of the Civitas portfolio will continue uninterrupted, and Civitas be re‑registered as a private limited company as soon as practicable following the cancellation of the listing and trading of Civitas shares

· On 23 June 2023 the Offer became unconditional

Please find the full 2023 Annual Report on the Civitas Social Housing plc website.

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 listed REIT to raise long-term, sustainable, institutional capital to invest in care-based social homes and healthcare facilities across the UK. CSH's portfolio has been independently valued at £978.1 million (31 March 2023). CSH now provides homes for 4,594 working age adults with long-term care needs, in 697 bespoke properties that are supported by 131 specialist care providers, 19 approved providers and working with over 178 individual local authority partners.

Chairman's Statement

From the Chairman:

"Since November 2016, Civitas Social Housing PLC has provided vital homes and healthcare facilities across the UK, for those working age adults with significant and typically life-long care needs.

I am pleased to report that, despite a difficult economic backdrop in the UK, our portfolio has continued to

perform strongly."

This is our sixth Annual Report, covering the year to 31 March 2023. I am pleased to report that, despite a difficult economic backdrop in the UK, our portfolio has continued to perform strongly, delivering on average a 5% increase in rental income derived from our inflation adjusted leases.

Our Investment Adviser, Civitas Investment Management Limited ("CIM"), has continued to work closely with our Approved Providers to enhance further the quality of the portfolio and to assist where needed in the process of ensuring our rental income is received on a timely basis. The net asset value of the Company at 31 March 2023 was 109.16 pence, a small decrease of 1.03% from 110.30 pence per share as at 31 March 2022.

The Board declared a final dividend of 1.425p, bringing the full year dividend to 5.70p, in line with the minimum stated intention.

A difficult challenge during the year was the sharp increase in interest rates. I am pleased that in February 2023 the Company entered into a new debt facility for £70.9m, which was partly used to repay the loan facility with Lloyds. In addition, we also fixed our interest rate exposure to provide greater certainty. However, the overall re-financing was achieved at a material increase in ongoing interest costs. Full details are included in the Investment Adviser's Report.

Our share price has been disappointing over the year under review, reflecting in part the broad derating of real estate investments, higher interest rates and investor concern about our sector. The Board has been reviewing a number of possible actions to address this position. The Company has continued to buy back shares - over the past 12 months it has acquired 6,050,000 shares at an average of 76.89 pence per share for a total investment of £4.65 million. This has enhanced the NAV by 0.30% and benefited the EPRA earnings.

Continuation Vote

At the annual general meeting on 15 September 2022, 98.85% of those shareholders who voted have voted in favour of the continuation of the Company.

Offer for the Company

Following the year end, on 9 May 2023 the Board announced a recommended offer for the Company at 80p per share in cash, from a subsidiary of CK Asset Holdings Limited (CKA).

Whilst the Board believes that the Offer undervalues the long-term prospects of Civitas as expressed by net asset value, we also recognise that Civitas, and its sector as a whole, faces a number of challenges in sentiment which the public markets are unlikely to overcome in the short to medium term.

The Offer provides liquidity to shareholders with the opportunity to exit in full and in cash at a significant premium to the current share price, in a time of macroeconomic uncertainty.

Moreover, CKA, as a current investor in the social housing sector, has a detailed understanding of the attractive fundamentals of the real estate and the expertise of the management team. CKA does not expect there to be any disruption to tenants as a result of the Offer and will be focused on the continuation of relationships with Approved Providers, care providers and the Regulator of Social Housing following the completion of the Offer. The Board therefore considers the terms of the Offer to be fair and reasonable and we have recommended it to our shareholders.

Outlook

Demand for the type of properties within the Company's portfolio remains strong with independent forecasts predicting that there will be continued growth for many years to come in the need for additional units of adapted accommodation. The Board remains confident in the strength of the portfolio and its potential revenue generation.

Michael Wrobel

Chairman

28 June 2023

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

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 2023

Region	Properties	Funds invested (percentage)	Annualised rent roll (percentage)
South West	120	15.5	14.3
London	26	12.8	13.8
West Midlands	101	11.3	11.6
Yorkshire and the Humber	96	10.8	10.7
Wales	34	11.0	10.6
North West	101	10.1	10.1
South East	65	10.1	9.8
East Midlands	58	8.6	8.8
North East	64	5.8	6.4
East of England	32	4.0	3.9
Total	697

Market Value (%)

Region	Market Value
South West	14.3%
London	13.3%
West Midlands	11.7%
Wales	11.3%
Yorkshire and the Humber	10.7%
North West	9.9%
South East	9.8%
East Midlands	8.8%
North East	6.3%
East of England	3.9%
Total	£978.1m

Tenancies

Region	Tenancies
South West	759
Yorkshire and the Humber	610
North West	607
West Midlands	502
North East	462
South East	417
East Midlands	374
Wales	364
London	338
East of England	161
Total	4,594

Our Portfolio

By Approved Provider as at 31 March 2023

Annualised Contracted Rent Roll (%)

Approved Provider	Annualised Contracted Rent Roll (%)
Falcon	19.1%
Auckland¹	16.5%
BeST	12.6%
Inclusion	9.4%
Qualitas Housing¹	8.4%
Westmoreland	5.6%
Trinity	5.2%
Encircle	5.2%
Pivotal	4.0%
Chrysalis	3.7%
New Walk	2.6%
Harbour Light	2.3%
My Space	1.3%
Other	1.1%
IKE	1.0%
Hilldale	1.0%
Windrush	0.7%
Lily Rose	0.2%
Blue Square	0.1%
Total	£56.3m

Properties

Approved Provider	Properties
Falcon	116
Auckland¹	101
Inclusion	81
BeST	74
Qualitas Housing¹	54
Trinity	42
Westmoreland	41
New Walk	41
Chrysalis	28
Pivotal	27
Harbour Light	26
Encircle	16
Hilldale	15
Windrush	13
IKE	10
My Space	9
Blue Square	1
Lily Rose	1
Other	1
Total	697

Tenancies

Approved Provider	Tenancies
Falcon	850
BeST	591
Auckland¹	547
Inclusion	507
Qualitas Housing¹	370
Trinity	242
Westmoreland	239
Pivotal	238
Encircle	205
New Walk	194
Harbour	182
Chrysalis	151
My Space	71
IKE	68
Windrush	51
Hilldale	39
Other	32
Lily Rose	13
Blue Square	4
Total	4,594

Market Value (%)

Approved Provider	Market Value (%)
Falcon	19.1%
Auckland¹	16.4%
BeST	13.2%
Inclusion	9.1%
Qualitas Housing¹	8.6%
Westmoreland	5.7%
Trinity	5.1%
Encircle	4.9%
Pivotal	3.9%
Chrysalis	3.8%
New Walk	2.6%
Harbour Light	2.3%
My Space	1.1%
Other	1.1%
IKE	1.1%
Hilldale	1.0%
Windrush	0.8%
Blue Square	0.1%
Lily Rose	0.1%
Total	£978.1m

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

Consistent Performance

In the year to March 2023, CIM continued to work closely with the Board to manage a high-performing portfolio.

Portfolio

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

· High acuity portfolio

· Provide homes to those who need long-term quality accommodation

· Largest portfolio of SSH in England & Wales

· Premium Fitch rating retained at "A" secured and "A-" unsecured

· Average rental growth of c.5%

Social Impact

· 4,594 high quality bed spaces

· £127.0 million savings to the public purse¹

· 5 charitable relationships

Phase two work with E.ON

· Continued work across identified properties

· Targeting 25% reduction in carbon emissions

· Continued access to government grant funding sources

· Targeting minimum EPC "A-C" by 2030

Highly Experienced Team

The asset management team set up to work with and assist our Approved Providers have

specialisms from:

· Local authority commissioning of specialist supported housing

· Senior level rents and housing benefit advisers

· Housing management and compliance

· Property asset management

· Commissioning of care

1. Source: The Good Economy, Civitas Social Housing PLC, Annual Impact Report 2021, June 2021.

"For over six years CIM has been working with the CSH Board to invest in high-quality assets to deliver long-term affordable homes for life for the most vulnerable in society.

We have developed in-depth knowledge of the sector along with extensive relationships with Approved Providers, care providers and local authorities, which has directly led to improvements in the sector."

Paul Bridge - CEO, Social Housing - Civitas Investment Management Limited

Introduction

Civitas Investment Management Limited ("CIM") is the Investment Adviser to Civitas Social Housing PLC ("CSH") and is the leading provider of care-based housing in the UK. CIM comprises a team of 39 individuals with a range of expertise in specialist supported housing, real estate management and complex care needs CIM has the capacity and specialist knowledge to manage the CSH portfolio at a granular level and has cultivated strong professional relationships across the sector over the last decade.

Overview of Results

In the UK prior to the launch of the Company, equity and private capital played a very small part in the social housing sector. Over time, UK demographics changed and the number of adults with long-term, complex care needs has been steadily increasing.

This is reflected in a number of institutional investors including aspects of social housing within their

investment strategies.

Results Highlights

· Six years of consistent rental growth and progressive dividend payments that have increased from an initial 3.00p per share to 5.70p per share for the year ended 31 March 2023.

· A retained high-quality investment credit rating from Fitch Ratings of A secured and A- unsecured since March 2021, which CSH was the first to secure in this sector.

· An actively managed portfolio of operational real estate 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.

· Targeting investments and homes which enable the delivery of higher end care as this is where the greatest need exists and where the applicability of exempt rents is clearly demonstrated.

· An active and continuing 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.

· Sector leading partnerships with national and local charities delivering real change and continuing to enhance CSH's reputation as the most experienced investor in social infrastructure in the UK.

· CIM has a highly experienced asset management team which has overseen some £25 million of physical improvements to the portfolio since inception largely paid for by the vendors of the properties.

Sector Leading Social Outcomes

ESG

Our ESG Policy is located at www.civitassocialhousing.com. 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

CIM engages with the leading ESG rating providers to set out the activities that are undertaken by CSH and to ensure these are profiled and evaluated correctly. Notably, active participation in the 2022 GRESB Public Disclosure Assessment has resulted in CSH retaining an A score previously attained in 2021, whilst the peer group average score has moved up to B. CSH is up to second position within its Comparison Group (UK Residential). Meanwhile, the Risk Rating Score for CSH by Sustainalytics remains at 14.9 (Low Risk) as was reported in February 2023.

The latest independent report by The Good Economy on CSH was published in November 2022 and notes

CSH's continued progress in delivering measurable social impact. Social value analysis by The Good Economy, carried out in March 2021, found that, overall, the portfolio generated £127 million of social value per year, including fiscal savings to public budgets of £75.9 million per year.

Of particular note with respect to the portfolio:

· 41% of CSH's 697 properties have been brought into the specialist housing sector for the first time

· CSH continues regular engagement with its Approved Providers to monitor the quality of its stock

· Improvement works have enhanced the energy efficiency of homes

· 87% of respondents to the survey of residents carried out by CIM in March 2021 reported that they were satisfied with the quality of their home

· CSH Approved Provider partners have reported 99% statutory compliance - considerably better than the wider affordable housing sector

Environmental: Carbon Reduction/ Energy Cost Savings

CIM continues to work with E.ON (a leading UK energy and solutions company) under a national framework agreement in partnership with CSH tenants, to improve the environmental performance of the portfolio. 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 within the portfolio. The installation of these energy efficient measures, utilising available government grants and other funding sources, will optimise value for the Company, our counterparties and our shareholders. The collaboration with E.ON is delivering significant environmental enhancements without any cost to our Approved Providers.

The Phase 2 retrofit surveys will help to refine the implementation programme and identify the best method for reducing the total carbon dioxide emissions (and fuel costs) associated with individual properties over the medium or long term. The overall energy performance of the portfolio, as identified on Environmental Performance Certificates ("EPC") reports data has improved over the last 12 months. The proportion of properties with EPC Rating A-C is currently c.55% and the carbon footprint (estimated from property characteristics) has reduced by 2% per Civitas tenancy (from 2.65 tonnes of CO²/tenancy in March 2022 to 2.61 tonnes of CO²/tenancy). The whole social housing sector, and indeed the whole housing sector, continues to require significant public investment if it is to meet the current government guidelines on achieving net zero carbon emissions by 2050.

Government Policy and Regulation

Reforming the Mental Health Act

Current mental health legislation results in many people with mental health issues or learning disability needs being detained in large institutions that are often inappropriate for the individuals. It is estimated by NHS Digital that there was a rise in annual mental health detentions from 45,864 in 2016/2017 to over 53,239 in 2020/2021.

Once people are sectioned into an institution it becomes very difficult and costly to move them into a supported living community setting.

As a result of these concerns, the Government commissioned an independent body chaired by Professor Sir Simon Wessley in 2017. Currently in draft form in the Houses of Parliament, the Mental Health Reform Act seeks to raise the threshold for detaining people with a learning disability and/or autism unless they have a coexisting psychiatric disorder.

We believe that this Act will drive even more demand for community housing and care settings which are already in short supply, further securing the value and importance of the CSH portfolio.

The CSH portfolio will further benefit from the following broader market dynamics:

Social Housing Regulation Bill 2023

The overall regulation of social housing is under review with the main objective of delivering transformational change for social housing residents and fulfilling the Government's 2019 manifesto pledge to "empower residents, provide greater redress, better regulation and improve the quality of social housing".

The implication of this review for CSH's portfolio is expected to be positive as it aims to bring landlords closer to their tenants and more focused on addressing their needs quickly. Our Approved Providers are very close to their residents' needs and work in partnership with care providers to ensure good quality service outcomes, all supported by the granular asset management provided by CIM every day.

Supported Housing (Regulatory Oversight) Bill

This bill, which is under review, seeks to improve the regulation and outcomes of supported exempt accommodation. This follows reported cases, particularly of temporary housing, that should not qualify as

exempt accommodation.

Financial Review

As at 31 March 2023 the Net Asset Value of the Company was £661.9 million, being 109.16 pence per share, a 1.03% decrease on the 110.30 pence per share at 31 March 2022. A net fair value gain on investment properties of £2.6 million (2022: £12.3 million) was recorded in the year.

Operational cash flows increased moderately to £39.5 million (2022: £39.1 million). Ongoing rental collections throughout the year supported the Company's healthy operating cash flows despite further increases to the cost of debt as all facilities were put onto a fixed basis.

Rental Growth and Dividend

The portfolio generated rental income (excluding any insurance and service charge rechargeables) of £53.1

million, representing c.5% increase over the corresponding period last year.

The contracted rent roll now increases through indexation only as no new equity has been raised and therefore no new investments have been made in the period.

During the year, the Company declared and paid four dividend distributions including one dividend of 1.3875p and three instalments of 1.4250p.

Debt Fixing and Reducing Risk

CIM arranged the following debt facilities which fixes debt on the portfolio at an average rate of 3.92% until August 2024 as is prudent in the current interest rate environment.

Lenders	Facility	Remaining Term at 31 Mar 23 (years)	Loan Principal £'000	All in rate
Scottish Widows	Fixed	4.59	52,500	2.99%
Deutsche Bank AG, London Branch	Fixed	4.85	70,875	5.69%
HSBC	Fixed by Interest rate cap	2.67	100,000	4.60%
NatWest	Fixed by Interest rate swap	1.38	60,000	2.60%
M&G	Fixed	4.91	84,550	3.14%
		3.67	367,925	3.92%

We have received terms from lenders to refinance the NatWest facility which is due to expire in August 2024.

Governance

CIM continues to engage actively with the Company's Approved Provider partners and care providers, offering advice and shared learning.

The Board, comprised of five independent non-executive Directors, carries out an annual Board performance evaluation exercise and hosts periodic strategy sessions in addition to regular planned Board meetings.

Summary

CIM continues to closely and proactively asset manage the largest portfolio of specialist care-based housing in the UK.

There is demonstrable demand in excess of supply and significant further legislation that is likely to

continue to increase demand for the properties in the Company's portfolio.

We continue to undertake our work with a view to both enhancing the value of the portfolio and protecting the interest of our underlying tenants.

Civitas Investment Management Limited

Investment Adviser

28 June 2023

Asset Management Initiatives

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 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 contracted rent roll and a commensurate increase in capital values.

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

The Asset Management Team understand the value of a good home. With nearly 100 years' experience between them working in the housing field, there is a lot of knowledge we can share.

As part of our active asset management of the CSH portfolio, we work with and support our partners tackling issues and finding solutions to help sustain the tenancies of the most vulnerable people living in our homes.

A recent example of this was with Cole Street and Hampden Road. These properties are managed by Trinity Housing Association and are popular properties with long standing residents. However, Trinity had struggled to meet its housing benefit potential. Officers from the team worked closely with Trinity and supported them to put the information and evidence together for tribunal. Trinity won the tribunal and the matter was resolved with a full backdate and rent agreed. This was a great result for the team and for the tenants at the schemes.

Case Study

York Mews, Clacton-on-Sea

A detached two storey block of seven self-contained flats constructed around the 1950's. Some external works were identified as being required and a review was undertaken at the asset. Assessment reports obtained suggested that replacing the heaters within the flats and other minor works would improve the energy efficiency and, in most cases, improve the EPC ratings at the same time. We therefore tendered a programme of works over two phases - the first phase just before the previous Winter period to replace the existing heaters with high heat retention storage heaters - the second phase during the following Spring/Summer period was to undertake the external works to remove the existing render, replace and

decorate to improve the exterior of the building.

	Before	After
Flat 1	D	D
Flat 2	D	C
Flat 3	D	C
Flat 4	D	D
Flat 5	D	C
Flat 6	D	C
Flat 7	E	D

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 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. The Company has an Environment, Social and Governance Policy which can be found on the Company's website. This goes into further detail about the Company's ESG approach and how it integrates with investment strategy. Further details on the Company's ESG approach can also be found in the full Annual Report.

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 as set out in the full Annual 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. This includes Director appointments to the Audit and Management Engagement Committee and Nomination and Remuneration Committee. See Corporate Governance Statement in the full Annual 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 as set out in the full Annual 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 Employee
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 at the Company's expense. 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 below. 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 below, provides that the Board considers 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 Annual Report.

Stakeholders
A company's stakeholders are normally considered to comprise its shareholders, its employees, its customers and 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 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 on both a NAV and share price basis

· 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. The Board was pleased to note that all resolutions proposed at the Company's AGM on 15 September 2022 were approved by shareholders.

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.

In line with increasing shareholder focus on Environmental, Social and Governance ("ESG") matters, the Board requests regular updates from the Investment Adviser. The Board retains overall responsibility for ESG issues and the Company's operational performance. Implementation of ESG matters are undertaken by the Investment Adviser on behalf of the Board.

Furthermore, ESG reporting has been disclosed in the full Annual Report and the Board is open to discussion with shareholders on this topic if requested.

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.

Following the year end, the Board recommended an offer to shareholders of 80 pence for each share held in the Company from Wellness Unity Limited (a wholly owned subsidiary of CK Asset Holdings Limited). During the Takeover process, the Board engaged with shareholders and received their views on the Takeover. which it took into account during its discussions. Further information on the Board's decision in relation to the Takeover Offer can be found in the full Annual Report.

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 asset 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 addition, the Company undertakes resident case studies and surveys 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. This serves as an opportunity to build relationships and share best practice.

The Investment Adviser is supported by 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 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 asset management initiatives.

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.

During the year, the Board considered and closed a five year term debt facility with Deutsche Bank AG. Further information can be found in the full Annual Report.

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 wellbeing 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.

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 enables 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.

The new lease clause has, following detailed negotiation including legal input, received approval from the board's of two initial housing associations with whom it had been discussed. The Company had previously sought and obtained formal written confirmation from its valuers that the inclusion of a clause of this type 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.

Takeover Offer

As announced on 9 May 2023, the Board made the decision to recommend to shareholders an all-cash offer of 80 pence for each share of the Company by Wellness Unity Limited (a wholly owned subsidiary of CK Asset Holdings Limited).

Although the Board believes the offer undervalues the long-term prospects of the Company, the Board

recognises that the Company and the sector in which it operates faces a number of challenges in light of the current macro environment and outlook. This includes the considerable negative sentiment in the public markets towards the Company and the social housing sector which the Board believes are unlikely to be overcome in the short to medium term and will continue to have a material impact on the Company's share price prospects. In addition, despite delivering on revenue, NAV and dividend growth since IPO, the Company's shares have traded for some time at an entrenched discount to NAV.

On 23 June 2023, the Offer became unconditional.

Updates to Debt Arrangements

During the year, the Board considered and closed a new five year term debt facility of c.£71 million with a major European bank lender.

The facility was deployed in full to redeem the Company's existing facility with Lloyds Bank of

£60 million as well as providing additional liquidity. As a result, all of the Company's debt facilities are at 100% fixed or capped rates.

Buyback Programme

During the year, the Board monitored the decline in the Company's share price and in response, the Board agreed the implementation of a share buyback programme under certain parameters, which is being operated by the Company's Joint Brokers.

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

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.

¹The 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 35.61% (2002: 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

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 in the full Annual 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 above.

Key Performance Indicators ("KPIs")

Measure	Explanation	Result
Increase in 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 11.2p per share 11.4% from IPO (2022:12.3p per share 12.6% from IPO).
Dividends per share	For the year ended 31 March 2023, the Company targeted a dividend of 5.70p per share.	Total dividend of 5.70p per share declared for the year to 31 March 2023 (2022:5.55p).
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 2023: • 178 Local Authority partners (2022:178 local authority partners) • 19 Approved Providers (2022: 18 Approved Providers) • 131 Care Providers (2022:130 Care Providers) The Company's largest single exposure is to Falcon Housing Association CIC and currently stands at 19% (2022: 19%). The largest geographical concentration is in the South West, being 14% (2022: 16%).
Loan to Gross Assets (Leverage)	Targeted total debt drawn no more than 40% of gross assets.	Leverage as at 31 March 2023 of 35.61% of gross assets (2022: 34.43%).

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 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 £ 2023:26,929,000 2022:29,810,000 2021:30,630,000	EPRA NRV £ 2023:653,780,000 2022:673,416,000 2021:674,042,000	EPRA NTA £ 2023:653,780,000 2022:673,416,000 2021:674,042,000	EPRA NDV £ 2023:673,645,000 2022:678,191,000 2021:671,476,000
	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
	2023:4.43 2022:4.82 2021:4.93	2023:107.82 2022:109.96 2021:108.38	2023:107.82 2022:109.96 2021:108.38	2023:111.09 2022:110.74 2021:107.97

Definition

EPRA Net Initial

Yield ("NIY")

EPRA Topped-up Net

Initial Yield ("NIY")

EPRA Costs Ratio

EPRA LTV

EPRA Vacancy Rate

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.

Debt (including net payables but net of cash balances) divided by the market value of property (including net receivables).

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 key (shareholder gearing) metric to determine the percentage of debt comparing to the appraised value of the properties.

A 'pure' (%) measure of investment property space that is vacant, based on ERV.

Performance

EPRA NIY

EPRA Topped-up NIY

EPRA Costs Ratio¹

EPRA LTV

EPRA Vacancy Rate

2023:5.55

2022:5.28

2021:5.24

2023:5.55

2022:5.28

2021:5.24

2022:23.07

2021:20.20

2020:20.33

2023:33.91

2022:31.24

2021:27.20

2023:0.02

2022:0

2021:0

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 2023, 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 as 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 acknowledges that the Takeover by Wellness Unity Limited may result in increased risk both during the transition and subsequently. Specifically, the Directors have not had detailed visibility of the offeror's post completion funding for the group or the detailed plans behind the intentions statements included within the announcement. Oversight and monitoring during this period will take on critical importance. The Board has identified one new principal risk during the year (as set out in the list of principal risks and uncertainties). The risk associated with a disruption to share price due to negative sentiment in the social housing sector was identified as having the highest impact and likelihood. The risk associated with promoting the Company to generate investor demand was removed as a principal risk by the Board during the year as the Takeover Offer by Wellness Unity Limited has reduced the need for the Company to generate additional investor demand. 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 negative sentiment towards the social housing sector following a targeted attack by a short seller and pollution from other events in the sector.

This risk remained at the same level as the year ended 31 March 2022

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 2022.

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 2022.

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 2022.

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 risk remained at the same level as the year ended 31 March 2022

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

The current macroeconomic environment has increased the level of risk around the Company's financing arrangements regarding borrowing terms and covenants.

This was identified as a new risk during the year.

Less favourable borrowing terms increase the financing costs reducing returns to shareholders.

The Investment Adviser, AIFM and Depositary monitor covenants in place with debt providers and present to the Board on a quarterly basis.

The Investment Adviser leverages the relationships it already has in the market to form long term partnerships with debt providers at rates it already has achieved on similar projects within the same macro market.

The Investment Advisers reports to the Board on discussions with banks which will highlight at the earliest opportunity if this risk has increased.

Impact:

Medium

Probability:

Possible

7. 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 2022.

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

8. 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 2022.

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

9. 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 risk remained at the same level as the year ended 31 March 2022.

Decrease in the value of the Company's asset 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

10. Operational, including cyber crime

Impact

How managed/mitigated

Serious accident or poor

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

This risk remained at the same level as the year ended 31 March 2022

Reputational damage for the Company.

Reporting from Approved Providers and monitoring of Approved Providers by the investment Adviser.

Impact: High

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:

· 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. The Board uses the updates from the Investment Adviser as they relate to the performance of the company and the impact of long-term climate change to help manage/mitigate this risk.

· Cyber Security - the impact of a cyber security breach within the Company or its service providers. The Audit and Management Engagement Committee reviews and monitors the cyber security controls of the Company's service providers on a regular basis to manage/mitigate this risk.

Please see the Company's ESG Report in the full Annual Report for further details.

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.

As at 31 March 2023, the Company held cash balances of £35.6 million (net of operating and financing amounts due). The Board has evaluated the financial position of the Company which has maintained its premium investment grade rating from Fitch Ratings Ltd - a well established rating agency with a strong familiarity with 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 passing rent. As at 31 March 2023, the passing rent would have to drop by approximately 11% before any of the Company's interest cover covenants are breached. The property values would need to fall by around 13% before breaching the loan to value covenant.

The Company's performance in the event of severe but plausible downside scenarios used for viability are equally applicable for going concern. At the date of approval of this report, the Company has sufficient 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 Gross Asset Value.

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). On 15 September 2022, at the Annual General Meeting, shareholders representing 298,478,435 voted in favour of the continuation of the Company being 98.85% of those who voted.

On 9 May 2023 an announcement was made to the market for an all-cash offer of the Company from Wellness Unity Limited, a wholly owned indirect subsidiary of CK Asset Holdings Limited (CKA). On 23 June 2023, when the offer became unconditional, CKA subsequently became the ultimate controlling party of the Company, and a related party under IAS 24. The Group's existing committed debt facilities contain a standard change of control clause which has now been triggered due to the offer becoming unconditional. This could result in the existing committed debt facilities being withdrawn. The Group does not have visibility of the post completion funding for the Group at this time. Therefore, this could create some uncertainty as to the Group's going concern position. The Directors note the detailed intentions statement included within the announcement on 9 May 2023 which states that CKA does not envisage making any changes to the management team nor any disruption to any counterparties or to the underlying tenants. The conditions outlined above indicate a material uncertainty which may cast significant doubt upon the Group and the Company's ability to continue as a going concern. The financial statements do not include the adjustments that would result if the Group and the Company were unable to continue as a going concern.

Having considered all of the above, the Board is 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 2028.

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 beviable well beyond the five-year term considered in the Company's testing below.

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 the current macroeconomic environment, which has increased the level of risk around the Company's financing arrangements regarding borrowing terms and covenants. The risk associated with a disruption to share price due to negative sentiment in the social housing sector being identified as having the highest impact and likelihood. 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 as set out in the full Annual Report and include direct review and challenge of the Company's documented risks, risk ratings and controls, and review of performance and compliance reports prepared by the Company's key suppliers 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 (but plausible) 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 downside 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 18% per annum and reduces cash by £20 million. However, the Board remains comfortable that dividends could be paid and any liabilities could be settled as there is still a sufficient level of cash in the business. Therefore the business remains viable over the five year period; and

· deterioration in economic outlook, or a 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 (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 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, notwithstanding the material uncertainty arising from the offer from CKA, 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.

Michael Wrobel

Chairman

28 June 2023

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

Fourth Quarterly dividend	1.3875p per share paid on 28 June 2022
First Quarterly dividend	1.425p per share paid on 9 September 2022
Second Quarterly dividend	1.425p per share paid on 9 December 2022
Third Quarterly dividend	1.425p per share paid on 10 March 2023

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

Fourth Quarterly dividend

1.425p per share paid on 9 June 2023

No final dividend is being recommended on the Ordinary shares.

Capital Structure

Issue of shares
At the AGM held on 15 September 2022, the Directors were authorised to issue equity securities up to an aggregate nominal amount of £610,736 (being approximately 10% 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 £610,736 (being approximately 10% of the issued Ordinary share capital).

Purchase of Own Shares
At the AGM held on 15 September 2022, the Directors were granted the authority to buy back up to 91,549,383 Ordinary shares, being 14.99% of the Ordinary shares in issue at the time of the passing of the resolution.

During the year, the Board maintained the Company's share buyback programme, under which a total of

6,050,000 shares have been purchased into treasury for aggregate amount of £4,624,947.50 (nominal value £60,500, representing 0.97%) as at 31 March 2023.

The authority to buy back up to 91,549,383 shares will expire at the conclusion of the next AGM of the Company or on 30 September 2023, whichever is earlier 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 2023, there were 622,461,380 Ordinary shares in issue, of which 16,075,000 shares were held in treasury, representing 2.6% of the Company's total issued share capital. The total voting rights of the Company as at 31 March 2023 was 606,386,380.

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

28 June 2023

Non-statutory accounts

The financial information set out below does not constitute the Company's statutory accounts for the year ended 31 March 2023 or the year ended 31 March 2022 but is derived from those accounts. Statutory accounts for the period ended 31 March 2022 have been delivered to the Registrar of Companies and those for the year ended 31 March 2023 will be delivered in due course. The Auditor has reported on those accounts; their report was (i) unqualified, (ii) included one reference to a matter to which the Auditor drew attention 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 2023

	Note	For the year ended 31 March 2023 £'000	For the year ended 31 March 2022 £'000

Revenue
Rental income	5.0	54,607	51,636
Less direct property expenses	5.0	(1,941)	(978)
Net rental income		52,666	50,658

Directors' remuneration	6.0	(211)	(206)
Investment advisory fees	8.0	(6,217)	(6,132)
General and administrative expenses	9.0	(5,393)	(3,909)
Total expenses		(11,821)	(10,247)

Change in fair value of investment properties	15.0	2,640	12,269

Operating profit		43,485	52,680
Finance income	10.0	148	7
Finance expense	11.0	(15,335)	(10,608)
Change in fair value of interest rate derivatives	21.0	(2,826)	2,675

Profit before tax		25,472	44,754
Taxation	12.0	-	-
Profit being total comprehensive income for the year		25,472	44,754

Earnings per share - basic and diluted

13.0

4.19p

7.23p

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

Consolidated Statement of Financial Position

As at 31 March 2023

	Note	31 March 2023 £'000	31 March 2022 £'000
Assets
Non-current assets
Investment property	15.0	953,364	945,237
Other receivables	17.0	24,783	23,519
Interest rate derivatives	21.0	8,129	2,131
		986,276	970,887
Current assets
Trade and other receivables	17.0	11,260	12,865
Cash and cash equivalents	18.0	35,588	53,337
		46,848	66,202
Total assets		1,033,124	1,037,089

Liabilities
Current liabilities
Trade and other payables	19.0	(9,300)	(9,492)

Non-current liabilities
Bank and loan borrowings	20.0	(361,915)	(352,050)
Total liabilities		(371,215)	(361,542)
Total net assets		661,909	675,547

Equity
Share capital	22.0	6,225	6,225
Share premium reserve	23.0	292,626	292,626
Capital reduction reserve	24.0	317,714	322,365
Retained earnings	25.0	45,344	54,331

Total equity		661,909	675,547

Net assets per share - basic and diluted

26.0

109.16p

110.30p

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

28 June 2023

Company No: 10402528

Consolidated Statement of Changes in Equity

For the year ended 31 March 2023

			Share	Capital
		Share	premium	reduction	Retained	Total
		capital	reserve	reserve	earnings	equity
	Note	£'000	£'000	£'000	£'000	£'000
Balance at 1 April 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	23.0	-	163	484	-	647
Shares bought back into treasury	24.0	-	-	(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

Profit and total comprehensive income for the year		-	-	-	25,472	25,472
Shares reissued from treasury	23.0	-	-	-	-	-
Shares bought back into treasury	24.0	-	-	(4,651)	-	(4,651)
Dividends paid	14.0	-	-	-	(34,459)	(34,459)
Balance at 31 March 2023		6,225	292,626	317,714	45,344	661,909

Consolidated Statement of Cash Flows

For the year ended 31 March 2023

	Note	For the year ended 31 March 2023 £'000	For the year ended 31 March 2022 *Restated £'000
Cash flows from operating activities
Profit for the year before taxation		25,472	44,754
- Change in fair value of investment properties		(2,640)	(12,269)
- Change in fair value of interest rate derivatives		2,826	(2,675)
- Rent and incentive straight line adjustments		436	397
- Bad debt expense/(credit)	5.0	429	(17)
Finance income		(148)	(7)
Finance expense		15,335	10,608
Increase in lease incentive receivable		(1,700)	(2,011)
Decrease/(increase) in trade and other receivables		1,044	(236)
(Decrease)/increase in trade and other payables		(1,725)	551
Cash generated from operations		39,329	39,095
Interest received		148	7
Net cash flow generated from operating activities		39,477	39,102
Investing activities
Improvements and purchases of investment properties		(4,679)	(27,695)
Acquisition costs		(211)	(1,640)
Purchase of subsidiary - including property		-	(13,559)
Sale proceeds on sale of subsidiary - excluding property		-	2,695
Net cash flow used in investing activities		(4,890)	(40,199)

Financing activities
Cost of shares bought into treasury	24.0	(4,651)	(9,259)
Proceeds from shares reissued from treasury	24.0	-	919
Dividends paid to equity shareholders		(34,576)	(33,928)
Interest rate derivative premium paid	21.0	(8,841)	-
Proceeds from the disposal of interest rate derivatives	21.0	17	-
Bank borrowings advanced	20.0	70,875	-
Bank borrowings repaid	20.0	(60,000)	-
Bank borrowing issue costs paid		(3,148)	(1,805)
Interest and security fees paid on bank borrowings and derivatives		(12,012)	(8,590)
Net cash flow used in financing activities		(52,336)	(52,663)

Net decrease in cash and cash equivalents		(17,749)	(53,760)
Cash and cash equivalents at the start of the year	18.0	53,337	107,097
Cash and cash equivalents at the end of the year	18.0	35,588	53,337

* Cash and cash equivalents and monies held in restricted accounts and deposits have been restated as at 31 March 2022 following clarification by IFRIC on classification of funds with externally imposed restrictions. Please refer to details in note 2.4.

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 2023

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 6^th Floor, 65 Gresham Street, London EC2V 7NQ. 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

The financial statements have been prepared in accordance with UK-adopted international accounting standards and with the requirements of the Companies Act 2006 as applicable to companies reporting under those standards.

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.

2.1 Functional and presentation currency

The financial information is presented in Pounds Sterling which is also the functional currency of the Group, 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. The Group's cash balances as at 31 March 2023 were £35,588,000, of which £2,949,000 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.

On 17 November 2022, an extension was granted for the facility with HSBC Bank plc, which now expires on 28 November 2025.

On 13 February 2023, the Company closed a new five year term debt facility of £70,875,000 with Deutsche Bank AG. The facility has been deployed to redeem the Company's revolving credit facility with Lloyds Bank plc of £60,000,000 as well as providing additional liquidity. As a result, now all debt facilities have fixed or capped rates.

On 1 December 2022, the Company signed a facility with an institutional lender. Subsequent to this, on 21 June 2023, the Company received credit approved terms for an additional £61.0 million fixed facility based on a 3-year SONIA rate at the date of draw down +195bps margin with a maturity date of 3 August 2026. The eventual drawdown on the facility is subject to certain standard closing conditions.

Cash flow forecasts based on severe but plausible downside scenarios have been run, in particular the financial performance of tenants and a reduction in contracted rent. As at 31 March 2023, the rent would have to drop by approximately 10% before any of its loan covenants are breached. At the date of approval of this report, the Company has sufficient headroom within its financial loan covenants. The Company also benefits from a secure income stream from leases with long weighted 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 vote was passed in September 2022 so the Company will continue its business as presently constituted and will propose the same resolution at the AGM in September 2027 and every fifth annual general meeting thereafter.

On 9 May 2023, an announcement was made to the market for an all-cash offer of Civitas Social Housing PLC (CSH) from Wellness Unity Limited, a wholly owned indirect subsidiary of CK Assets Holdings Limited (CKA). The offer became unconditional on 23 June 2023. The Group's existing committed debt facilities contain a standard change of control clause which has now been triggered due to the offer becoming unconditional. This could result in the existing committed debt facilities being withdrawn. Furthermore, the Directors do not have visibility of the post completion funding for the Group and Company at this time. The Directors note the detailed intentions statement included within the announcement on 9 May 2023 which states that CKA does not envisage making any changes to the management team nor any disruption to any counterparties or to the underlying tenants. However, the conditions outlined above indicate a material uncertainty which may cast significant doubt upon the Group's and Company's ability to continue as a going concern. The Independent Auditors' Report included within the Annual Report and Accounts for the year ended 31 March 2023 also highlights this material uncertainty. Therefore, notwithstanding the material uncertainty arising from the offer from CKA, the Directors are satisfied that the going concern basis remains appropriate for the preparation of the financial statements. The financial statements do not include the adjustments that would result if the Group and the Company were unable to continue as a going concern.

2.3 New standards, amendments and interpretations

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

2023.

· IFRIC Agenda Item: Following clarification by IFRIC on the classification of monies held in restricted accounts, monies that are restricted by use only are classified at 31 March 2023 as "Cash and cash equivalents". As detailed in note 2.4, the comparative balances have been restated where applicable to reflect this change in classification.

· IFRIC Agenda Item: In October 2022, the IFRIC issued an agenda decision in respect of 'Lessor forgiveness of lease payments (IFRS 9 and IFRS 16)' ('the IFRIC Decision on Concessions'). This concluded that losses incurred on granting retrospective rent concessions should be charged to the income statement on the date that the legal rights to income are conceded (i.e. immediate recognition in full rather than smoothed over the life of the lease). The clarification has not had a material impact on 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 have not had 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 have not had 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 have not had a significant impact on the preparation of the financial statements.

2.4 Restatement

IFRIC Agenda Decision - Recognition of restricted cash as "Cash and cash equivalents"

In March 2022, the IFRS Interpretations Committee ("IFRIC") finalised a decision on the classification of monies held in restricted accounts, such that monies that are restricted by use only, are classified at 31 March 2023 as "Cash and cash equivalents".

The Group holds restricted cash for tenant deposits and retention monies 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.

As a result of the IFRIC decision, the Group has revisited its policy and includes these monies within the classification "cash and cash equivalents". The adjustment has no impact on the classification of the net assets of the Group on the Statement of Financial Position, however the movements on these balances are now reported in the Statement of Cashflows and comparative figures have been restated.

Comparative figures for 'cash and cash equivalents' have increased by £4,362,000 (31 March 2021: £3,278,000). This has resulted in an increase to the comparative figure for cash generated from operations by £1,613,000 concerning movements on deposit balances and an increase to the net cash flow used in investing activities of £529,000 concerning movements on retention monies.

The Group has not presented revised balance sheets as at 1 April 2021 within the financial statements, in accordance with IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors.

The following table shows the impact of these adjustments in the prior year:

	31 March 2022 £'000	Restatement £'000	31 March 2022 Restated £'000
Group cash flow statement (extract)
Net cash flow generated from operating activities	37,489	1,613	39,102
Net cash flow used in investing activities	(39,670)	(529)	(40,199)

Cash and cash equivalents at the start of the year	103,819	3,278	107,097
Cash and cash equivalents at the end of the year	48,975	4,362	53,337
Net decrease in cash and cash equivalents	(54,844)	1,084	(53,760)

2.5 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 12 'Income Taxes' (effective for periods beginning on or after 1 January 2023) - clarify how companies account for deferred tax on transactions such as leases and decommissioning obligations. 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.

· Amendments to IAS 1 'Presentation of Financial Statements' (effective for periods beginning on or after 1 January 2024) - clarify 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.

2.6 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 contracted rent roll pertaining to these counterparties as if they were considered to be a "single customer" can be found in note 28.0 and in the full Annual Report.

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 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 a well recognised professional firm 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 estimate - valuation of interest rate derivatives

3.3 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.

There were no corporate acquisitions made in the year.

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.

3.4. 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.

3.5. 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.

Following the completion of the offer, there is a level of uncertainty that the Group will remain in the REIT regime.

4.0 Summary of significant accounting policies

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

4.1. Basis of consolidation

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

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

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

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

4.2. Investment property

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

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

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

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

4.3. Leases

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

The Company has determined that it retains all the significant risks and rewards of ownership of the properties and accounts for the contracts as operating leases as discussed in note 3.4.

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 2022, 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 £459,000 (2022: £239,000) 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.

Derivative financial instruments are derecognised when the rights to receive cash flows from the agreement have expired or have been transferred, and the Group has transferred substantially all the risks and rewards of ownership. The difference between the carrying amount and consideration received is recognised as a gain or loss 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.

Borrowings are removed from the consolidated statement of financial position when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished and the consideration paid is recognised in profit or loss as a finance cost.

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 2023	31 March 2022
	£'000	£'000
Proceeds from the issue of Ordinary shares and retained earnings	661,909	675,547
Bank and loan borrowings	361,915	352,050
Total	1,023,824	1,027,597

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. Losses incurred on granting retrospective rent concessions are charged to the income statement on the date that the legal rights to income are conceded (i.e. immediate recognition in full rather than smoothed over the life of the lease).

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 Exceptional items

Exceptional items relate to amounts which do not normally occur in the normal course of business.

Exceptional professional costs for two major projects have been disclosed separately. These relate to costs associated with the offer for the purchase of the entire share capital of the Company by a subsidiary of CK Asset Holdings Limited (CKA) and costs associated with a planned bond issue which was postponed.

4.16 Share held in treasury

The costs, including directly attributable transactions costs, of purchasing the Company's own shares to be held in treasury are 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 2023 £'000	For the year ended 31 March 2022 £'000
Rental income from investment property	53,531	51,038
Rent straight line adjustments	586	529
Lease incentive amortisation	(1,022)	(926)
Rechargeable costs received	1,512	995
Rental income	54,607	51,636

Less direct property expenses
Insurance and service charge costs	(1,512)	(995)
Bad debt	(429)	17
Direct property expenses	(1,941)	(978)
Net rental income	52,666	50,658

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'.

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 2023 £'000	For the year ended 31 March 2022 £'000

Directors' fees	194	190
Employer's National Insurance Contributions	17	16
Total	211	206

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 (2022: nil) other than the Directors.

8.0 Investment advisory fees

	For the year ended 31 March 2023 £'000	For the year ended 31 March 2022 £'000
Advisory fee	6,206	6,132
Disbursements	11	-
Total	6,217	6,132

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 £250,000,000, an amount equal to 1% of such part of the Net Asset Value;

b) on that part of the Net Asset Value over £250,000,000 and up to and including £500,000,000, an amount equal to 0.9% of such part of the Net Asset Value;

c) on that part of the Net Asset Value over £500,000,000 and up to and including £1,000,000, an amount equal to 0.8% of such part of the Net Asset Value;

d) on that part of the Net Asset Value over £1,000,0000, 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 2025.

9.0 General and administrative expenses

	For the year ended 31 March 2023 £'000	For the year ended 31 March 2022 £'000
Legal and professional fees	1,250	1,459
Exceptional professional costs	1,816	-
Administration fees	1,044	1,037
Consultancy fees	143	136
Audit fees	441	340
Abortive costs	48	196
Valuation fees	96	100
Depositary fees	71	71
Grants and donations	65	26
Insurance	97	84
Marketing	225	343
Regulatory fees	21	25
Sundry expenses	76	92
Total	5,393	3,909

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.

General and administrative expenses for the current year contain exceptional professional costs of £1,816,000 (2022: £Nil). These costs pertain to two strategic projects the Company has been evaluating and comprise of £1,294,000 (2022: £nil) associated with the offer for the purchase of the entire share capital of the Company by a subsidiary of CK Asset Holdings Limited (CKA) and £522,000 (2022: £Nil) associated planned bond issue which was postponed.

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 2023 £'000	For the year ended 31 March 2022 £'000
Fees payable to the Group's auditor and its associates for auditing financial statements:
Audit of the Group's financial statements¹	358	296
Total fees payable for audit services:	358	296

Fees payable to the Group's auditor and its associates for other services:
Audit related services - review of the half year financial statements	83	44
Other services²	-	62
Total fees payable to the Group's auditors and their associates	441	402

¹ Includes £64,000 (2022: £18,000) cost in relation to the previous year audit.

² This amount was recognised within exceptional legal and professional costs in the year ended 31 March 2022.

10.0 Finance income

	For the year ended 31 March 2023 £'000	For the year ended 31 March 2022 £'000

Interest and dividends received on liquidity funds	148	4
Bank interest received	-	3
Total	148	7

11.0 Finance expense

	For the year ended 31 March 2023 £'000	For the year ended 31 March 2022 £'000

Bank charges	8	6
Interest paid and payable on bank borrowings and derivatives	12,151	8,907
Amortisation of loan arrangement fees	1,869	1,653
Costs of early repayment of debt	1,271	-
Loan security fees	36	42
Total	15,335	10,608

During the year the Lloyds Bank plc £60,000,000 revolving credit facility was repaid. Costs of early repayment of debt include break costs and the write off of the remaining unamortised loan issue costs.

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 2023, 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.

Deferred tax has not been recognised on temporary differences relating to the property rental business. No deferred tax asset has been recognised in respect of the unutilised residual current year losses as it is not anticipated that sufficient residual profits will be generated in the future. In the event that Civitas' property portfolio was to be sold at valuation, any gains realised on such disposals may be subject to taxation in the UK. Generally, disposals by a REIT of assets held for the purpose of a property rental business should be exempt from UK corporation tax. The Directors do not believe that any properties within the Civitas property portfolio meet the conditions for assets held as part of the property rental business being subject to corporation tax on disposal. Accordingly, if the Civitas property portfolio was to be sold at valuation, the Directors estimate that no corporation tax liability would arise on that sale.

Following the completion of the offer, there is a level of uncertainty that the Group will remain in the REIT regime.

For the

year ended

31 March 2023

£'000

For the

year ended

31 March 2022

£'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 2023 £'000	For the year ended 31 March 2022 £'000
Group
Profit before taxation	25,472	44,754

UK corporation tax rate	19%	19%
Theoretical tax at UK corporation tax rate	4,840	8,503
Effects of:
Change in value of exempt investment properties	(502)	(2,331)
Exempt REIT income	(6,019)	(6,598)
Amounts not deductible for tax purposes	1,081	(230)
Unutilised residual current period tax losses	600	656
Total	-	-

A deferred tax asset of £2,877,000 (2022: £1,268,000), calculated using the forthcoming tax rate of 25%, 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%. The standard rate of corporation tax increased to 25% with effect from 1 April 2023.

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 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 2023 £'000	For the year ended 31 March 2022 £'000
Calculation of earnings per share
Net profit attributable to Ordinary shareholders (£'000)	25,472	44,754
Weighted average number of Ordinary shares (excluding shares held in treasury)	608,552,681	618,797,942
Earnings per share - basic and diluted	4.19p	7.23p

14.0 Dividends

	For the year ended 31 March 2023 £'000	For the year ended 31 March 2022 £'000
Dividend of 1.3875p for the 3 months to 31 March 2022 (1.3500p 3 months to 31 March 2021)	8,474	8,403
Dividend of 1.4250p for the 3 months to 30 June 2022 (1.3875p 3 months to 30 June 2021)	8,703	8,637
Dividend of 1.4250p for the 3 months to 30 September 2022 (1.3875p 3 months to 30 September 2021)	8,641	8,555
Dividend of 1.4250p for the 3 months to 31 December 2022 (1.3875p 3 months to 31 December 2021)	8,641	8,498
Total	34,459	34,093

On 9 May 2023, the Company announced a dividend of 1.425 pence per share in respect of the period 1 January 2023 to 31 March 2023 totalling £8,641,000. The dividend payment was made on 9 June 2023 to shareholders on the register as at 19 May 2023. 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 2023 £'000	For the year ended 31 March 2022 £'000

Balance at beginning of year	968,756	915,589
Property acquisitions	543	33,466
Improvements to investment properties	4,944	5,818
Lease incentives and rent straight line adjustments recognised	1,264	1,614
Change in fair value	2,640	12,269
Value advised by the property valuers	978,147	968,756
Less lease incentive assets and rent straight line assets	(24,783)	(23,519)
Total	953,364	945,237

Improvements to investment properties includes capital expenditure incurred of £128,000 (2022: £12,000) in respect of climate change initiatives.

During the previous 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 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.

Valuation

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

JLL valued the Civitas Social Housing PLC property portfolio on the basis of each individual property and the theoretical sale of the properties without the benefit of any corporate wrapper at £978,147,000 as at 31 March 2023 (2022: £968,756,000).

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 by the Company during the year. 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 2023, 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 3.3).

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 2023

953,364

31 March 2022

945,237

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 indexed 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 14 years to 35 years (2022:a 15 years to 36 years) with a weighted average unexpired lease term of 21.5 years (2022: 22.1). 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. Management has re-considered the sensitivity ranges and widened them for the current year as a result of macroeconomic uncertainty. 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 6.38% (2022: 5.5%). In setting the discount rates adopted in the valuation, the valuers have considered market standard and anticipated returns to set a benchmark for the portfolio as a whole. They have then considered the various characteristics of the individual properties in order to adjust those rates for each property. JLL will keep yields, and therefore discount rates, under regular review.

The range of discount rates used by the valuer in the Group's property Portfolio Valuation is from 4.6% to 11.7% (2022: 4.6% to 11.5%). In assessing the range of discounts, the valuer considers the likely net initial yield which would be sought by the investment market and builds 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:

	-1.0% in discount rate £'000	+1.0% in discount rate £'000	+0.5% in CPI £'000	-0.5% in CPI £'000
Increase/(decrease) in the IFRS fair value of investment properties at:
31 March 2023	71,929	(62,507)	56,676	(52,583)
31 March 2022	73,955	(64,020)	58,150	(53,815)

16.0 Subsidiary resale

	For the year ended 31 March 2023 £'000	For the year ended 31 March 2022 £'000
Acquisition of subsidiary companies (including intercompany loan)	-	13,559
Acquisition costs	-	765
Transfer to investment property	-	(11,629)
Sale proceeds	-	(2,695)
Total	-	-

During the previous year, 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 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 2023 £'000	31 March 2022 £'000

Trade receivables	6,676	4,960
Less provision for impairment of trade receivables	(459)	(239)
Accrued income	3,313	4,982
Prepayments and other receivables	1,730	3,162
Total	11,260	12,865

Prepayments and other receivable amounts include prepaid legal and professional fees of £Nil (2022: £34,000) that have been incurred in connection with acquisitions yet to be completed and £286,000 (2022: £1,046,000) 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 2023	31 March 2022
	£'000	£'000
Amounts falling due after more than one year
Straight line adjustments	2,639	2,053
Lease incentives	22,144	21,466
Total	24,783	23,519

The aged analysis of trade receivables was as follows:

	31 March 2023 £'000	31 March 2022 £'000
Debtors past due
Current	2,518	1,777
< 30 days	862	355
30-60 days	275	105
> 60 days	3,021	2,723
	6,676	4,960
Debtors past due
Less provision for impairment	(459)	(239)
Total	6,217	4,721

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 2023 £'000	31 March 2022 £'000
Balance at beginning of year	239	256
Impairment provision made	306	109
Amounts recovered	(67)	(126)
Amounts written off	(19)	-
Balance at end of year	459	239

18.0 Cash and cash equivalents

	31 March 2023 £'000	31 March 2022 £'000
Cash held by solicitors	64	376
Liquidity funds	15,636	10,489
Cash held at bank	16,939	38,110
Unrestricted cash and cash equivalents	32,639	48,975
Restricted cash	2,949	4,362
Total	35,588	53,337

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 2023 £'000	31 March 2022 (Restated*) £'000
Deferred income	761	860
Acquisition costs accrued	600	960
Finance costs	3,688	1,840
Dividends withholding tax payable	940	1,057
Accruals and other creditors	773	2,202
Tenant deposits	2,538	2,573
Total	9,300	9,492

Acquisition costs accrued also include monies retained at the point of acquisition to be paid at a later date totalling £383,000 (2022: £262,000).

* Comparatives have been restated to correct the analysis of £1,896,000 of tenant deposits which had previously been included in acquisition costs accrued.

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 2023 £'000	For the year ended 31 March 2022 £'000
Bank borrowings drawn at start of year	357,050	357,050
Bank borrowings advanced	70,875	-
Bank borrowings repaid	(60,000)	-
Bank borrowings drawn at end of year	367,925	357,050
Unamortised costs at start of year	(5,000)	(4,930)
Less: loan issue costs incurred	(3,544)	(1,723)
Add: loan issue costs amortised upon repayment of bank loan	665	-
Add: loan issue costs amortisation	1,869	1,653
Unamortised costs at end of year	(6,010)	(5,000)
At end of year	361,915	352,050

	Loan Balance¹ 31 March 2023 £'000	Loan Balance 31 March 2022 £'000	Loan Principle¹ 31 March 2023 £'000	Loan Principle 31 March 2022 £'000
	Loan Balance¹ 31 March 2023 £'000	Loan Balance 31 March 2022 £'000	Loan Principle¹ 31 March 2023 £'000	Loan Principle 31 March 2022 £'000
Maturity of bank borrowings:
Repayable within 1 year	-	-	-	-
Repayable between 1 to 2 years	59,600	158,746	60,000	160,000
Repayable between 2 to 5 years	302,315	59,365	307,925	60,000
Repayable after 5 years	-	133,939	-	137,050
Total	361,915	352,050	367,925	357,050

1 Loan balance net of unamortised costs.

The Group has been party to the following loan facility agreements in the year:

	Facility	Loan Principal £'000	Expiry Date	Interest rate
Summary of Borrowings
Scottish Widows Limited 10-year facility	Term loan	52,500	02/11/2027	2.9936% fixed
Lloyds Bank plc	Revolving credit facility	-	-	SONIA + 1.67%¹
Deutsche Bank AG	Loan Notes	70,875	03/02/2028	5.69% fixed
HSBC Bank plc	Revolving credit facility	100,000	28/11/2025	SONIA + 2.15%¹
National Westminster Bank Plc 5-year facility	Revolving credit facility	60,000	14/08/2024	SONIA + 2.00%²
M&G Investment Management Limited 7-year facility	Term loan	84,550	24/02/2028	3.137% fixed
		367,925

Borrowings are secured on investment properties to the value:

	31 March 2023 £'000	31 March 2022 £'000
Scottish Widows Limited 10-year facility principal £52,500,000	173,510	173,777
Deutsche Bank AG Loan Notes principal £70,875,000	168,610	-
HSBC Bank plc facility principal £100,000,000	231,116	222,745
National Westminster Bank Plc 5-year facility principal £60,000,000	137,827	135,330
M&G Investment Management Limited 7-year facility principal £84,550,000	230,279	230,487

At 31 March 2023, 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%
Deutsche Bank AG Loan Notes	At least 175%	Must not exceed 50%
HSBC Bank PLC facility	At least 250%	Must not exceed 50%
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%

1 Interest rate caps have been purchased to cap interest costs on this facility as per details in notes 21.0 and 31.3.

2 Fixed by way of an interest rate swap as detailed in note 21.0.

21.0 Interest rate derivatives

The Group has entered into an interest rate swap 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 million is currently drawn. The swap has a notional value of £60,000,000 and fixes interest at 2.60% (including the 2% margin on the bank loan).

During the year, the Group has entered into three new interest rate cap arrangements for a total cost of £8,841,000:

An interest rate cap that capped the £60,000,000 Lloyds Bank plc facility at 3.92% (including the 1.67% margin on the loan facility) for the period from 16 September 2022 to 20 February 2023. This arrangement was sold upon the repayment of the loan with proceeds of £17,000.

An interest rate cap that capped the SONIA interest rate on the £100,000,000 HSBC Bank plc facility at 2.60% for the period from 21 September 2022 to 17 April 2023.

An interest rate cap transaction to mitigate the risk of the SONIA interest rate exceeding 2.45% p.a. on the principal of £100,000,000 HSBC Bank plc facility for the period 17 April 2023 to 28 November 2025. This instrument covers the remaining term of the revolving credit facility with HSBC Bank plc and its extension to November 2025.

	For the year ended 31 March 2023 £'000	For the year ended 31 March 2022 £'000
Interest rate derivative assets/(liabilities)
At start of year	2,131	(544)
Interest rate cap premiums paid	8,841	-
Disposal proceeds	(17)	-
Realised loss on disposal	(187)	-
Change in fair value during the year	(2,639)	2,675
At end of the year	8,129	2,131

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 2023

8,129

31 March 2022

2,131

The fair value of Group's interest rate derivatives is recorded in the Group Statement of Financial Position and is determined by the respective counterparties. The counterparties use a number of assumptions in determining the fair values, including estimations over future interest rates and future cash flows using observable yield curves. The fair value represents the net present value of the difference between the cash flows produced by the contracted rate and the valuation rate. This valuation technique falls within Level 2 of the fair value hierarchy as defined by IFRS 13.

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

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 2023 £'000	For the year ended 31 March 2022 £'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 purchased 6,050,000 Ordinary shares to be held in treasury at a cost of £4,651,000 (31 March 2022: 10,025,000 Ordinary shares for £9,259,000).

During the previous year, the Company reissued 565,000 Ordinary shares held in treasury for £647,000. The cost of purchasing these shares into treasury of £484,000 has been credited to the capital reduction reserve with the gain credited to the Share premium reserve.

At 31 March 2023, the Company held 16,075,000 (31 March 2022: 10,025,000) Ordinary shares in treasury. The shares will continue to be held in treasury until either reissued or cancelled.

At 31 March 2023, the number of Ordinary shares used to calculate the net asset value per share is 606,386,380 (31 March 2022: 612,436,380) 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 2023 £'000	For the year ended 31 March 2022 £'000
At beginning of year	292,626	292,463
Premium arising on shares reissued from treasury	-	163
At end of year	292,626	292,626

For movements in the year, please see details in note 22.0.

24.0 Capital reduction reserve

The capital reduction reserve is a distributable reserve to which the value of the cancelled share premium was 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 and payment of dividends.

	For the year ended 31 March 2023 £'000	For the year ended 31 March 2022 £'000

At beginning of year	322,365	331,140
Shares reissued from treasury	-	484
Shares bought back into treasury	(4,651)	(9,259)
At end of year	317,714	322,365

For movements in the year, please see details in note 22.0.

25.0 Retained earnings

This reserve represents the profits and losses of the Group.

	For the year ended 31 March 2023 £'000	For the year ended 31 March 2022 £'000
At beginning of year	54,331	43,670
Profit for the year	25,472	44,754
Dividends paid	(34,459)	(34,093)
At end of year	45,344	54,331

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 2023	31 March 2022

Net assets (£'000)	661,909	675,547
Number of Ordinary shares in issue at end of year	622,461,380	622,461,380
Number of Ordinary shares held in treasury	(16,075,000)	(10,025,000)
Number of Ordinary shares excluding treasury shares held by the Company	606,386,380	612,436,380
NAV per share - basic and diluted	109.16p	110.30p

27.0 Analysis of financial liabilities and assets arising from financing activities

			For the
	Interest rate	Bank	year ended
	derivatives	borrowings	31 March 2023
	£'000	£'000	£'000

At beginning of year	(2,131)	352,050	349,919
Cash flows from financing activities
Loan issue costs paid	-	(3,148)	(3,148)
Interest rate derivative premiums paid	(8,841)	-	(8,841)
Proceeds from the sale of Interest rate derivatives	17	-	17
Bank borrowings advanced	-	70,875	70,875
Bank borrowings repaid	-	(60,000)	(60,000)

Non cash movements
Loan issue fees accrued	-	(396)	(396)
Amortisation of loan arrangement costs	-	1,869	1,869
Unamortised loan arrangement fees written off	-	665	665
Change in fair value of interest rate derivatives	2,826	-	2,826
At end of year	(8,129)	361,915	353,786

			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 draw down	-	(1,805)	(1,805)

Non cash movements
Loan issue fees payable	-	82	82
Amortisation of loan issue 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

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 2023 £'000	31 March 2022 £'000
Amounts receivable
< 1 year	57,262	53,821
1-2 years	57,352	53,879
2-5 years	172,536	161,940
> 5 years	958,286	928,210
At end of year	1,245,436	1,197,850

Leases are direct-let agreements with Approved Providers for a term between 20-40 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 2023	31 March 2022
	%	%
Auckland Home Solutions and Qualitas Housing	24.9	24.4
Falcon Housing Association CIC	19.1	18.7
Bespoke Supportive Tenancies	12.5	12.6
Inclusion Housing CIC	9.4	9.3
Westmoreland Supported Housing Limited	5.6	5.9
Encircle Housing Limited	5.2	5.9
Trinity Housing Association Limited	5.2	5.1
Pivotal Housing Association	4.0	3.8
Chrysalis Supported Association Limited	3.7	3.6
New Walk Property Management CIC	2.7	2.8
Harbour Light Assisted Living CIC	2.3	3.6
My Space Housing Solutions	1.3	1.3
Elysium Healthcare Limited	1.1	-
IKE Supported Housing Limited	1.0	1.1
Hilldale Housing Association Limited	1.0	1.0
Windrush Alliance UK CIC	0.7	0.7
Lilly Rose Supported Housing	0.2	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 CIC 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 16.5% and 8.4% (2022: 16.3% and 8.1%) respectively. The annual rent at 31 March 2023 for Auckland Home Solutions and Qualitas Housing was £9,266,000 and £4,730,000 (2022: £8,679,000 and £4,334,000) 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 2023, there is no ultimate controlling party.

30.0 Related party disclosures

A list of all subsidiary undertakings including the address of the registered office is detailed in note 8.0 to the Company accounts below.

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 2023 payable out of the assets of the Company is not expected to exceed £250,000.

Fees of £194,000 (2022: £190,000) were incurred and paid to the Directors.

As at 31 March 2023 and 2022, the Directors held the following number of shares:

		31 March 2023	31 March 2022
Director		Ordinary shares	Ordinary shares

Michael Wrobel	Chairman	200,000	120,598
Alastair Moss	Director	11,766	11,766
Alison Hadden	Director	31,937	-
Caroline Gulliver	Audit and Management Engagement Committee Chair	58,832	58,832
Peter Baxter	Director	82,065	82,065

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. Its address is shown below.

Fees of £6,206,000 (2022: £6,132,000) were incurred and paid to CIM. In addition £11,000 (2022: £nil) disbursements were paid in the year.

The Investment Adviser agreed to contribute £nil (2022: £100,000) towards legal and professional fees incurred. This amount was offset against legal and professional fees in note 9.0.

As at 31 March 2023, a net amount of £48,000 (2022: £151,000) was due from CIM, which has since been received.

As at 31 March 2023, CIM held 167,664 (2022: 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 2023 £'000	Fair value 31 March 2023 £'000	Book value 31 March 2022 £'000	Fair value 31 March 2022 £'000
Financial assets
Interest rate derivatives	8,129	8,129	2,131	2,131
Trade and other receivables¹	34,949	34,949	34,580	34,580
Cash and cash equivalents	35,588	35,588	53,337	53,337

Financial liabilities
Trade and other payables²	7,599	7,599	8,632	8,632
Bank borrowings	361,915	350,179	352,050	349,406

¹ Excludes prepayments

² Excludes deferred income and dividend withholding tax payable

The Group has five bank loans as detailed in note 20.0. 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.

At 31 March 2023 all long-term borrowings are either at fixed rate or have an interest rate cap or interest rate swap in place which has mitigated the risk of rising interest rate. Interest rate derivative instruments are in place to the loan maturity date on the variable rate loans.

The table below shows the bank loans, derivative instruments and interest rates:

Summary of Borrowings	Loan Principal £'000	Expiry Date	Interest rate	Derivative instrument in place	Maximum interest rate payable
Scottish Widows Limited 10-year facility	52,500	02/11/2027	2.9936% fixed		2.99%
Deutsche Bank AG	70,875	03/02/2028	5.69% fixed		5.69%
HSBC Bank plc	100,000	28/11/2025	SONIA + 2.15%	Interest rate cap¹	4.75%
National Westminster Bank Plc 5-year facility	60,000	14/08/2024	SONIA + 2.00%	Interest rate swap	2.60%
M&G Investment Management Limited 7-year facility	84,550	24/02/2028	3.137% fixed		3.14%
	367,925

¹ Maximum interest rate reduces to 4.6% from 18 April 2023.

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 2023, 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 2023 £'000	31 March 2022 £'000
Increase/(decrease) in profits due to interest rates
100 basis points higher	256	(1,066)
100 basis points lower	(210)	1,572

The average effective interest rates of financial instruments at 31 March 2023 and 2022 were as follows:

	31 March 2023 %	31 March 2022 %
Bank borrowings - fixed rate	2.65	2.94
Bank borrowings - variable rate¹	6.07	2.23
Cash and cash equivalents	0.82	0.05

¹ Variable rate borrowings are subject to a maximum interest rate of 4.75% due to an interest rate cap. The maximum interest rate reduces to 4.6% from 18 April 2023.

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 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.

No balances are held with Deutsche Bank AG.

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 2023
Trade and other payables	7,599	-	-	-	7,599
Bank borrowings	-	14,482	407,770	-	422,252
	7,599	14,482	407,770	-	429,851

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

The profile above shows the maturity profile at 31 March 2023 and included within the contracted payments is £54,327,000 (2022: £42,862,000) of loan interest payable up to the point of maturity.

32.0 Capital Commitments

At 31 March 2023, the Company had funds committed totalling £Nil (2022: £92,000 concerning capital expenditure for a property in Surrey).

33.0 Post balance sheet events

Dividends

Financing

Recommended cash offer for the Group

On 9 May 2023 an announcement was made to the market for an all-cash offer of Civitas Social Housing PLC (Civitas) from Wellness Unity Limited, a wholly owned indirect subsidiary of CK Asset Holdings Limited (CKA). The offer of 80 pence per share received values the entire issued share capital (excluding treasury shares) of CSH at approximately £485 million. This represents a 44.4% premium to the share price of 55.4 pence per share on 5 May 2023 (the last trading day prior to announcement of the offer), and 26.7% discount to 31 March 2023 NAV of 109.16p. This provides shareholders the opportunity to exit in full and in cash at a significant premium to the current share price. The offer will be implemented by way of a takeover offer within the meaning of Part 28 of the Companies Act.

On 22 May 2023, the Offer Document was made available. The offer became unconditional on 23 June 2023. Payment of consideration due to shareholders who have submitted valid acceptances will be made no later than 14 calendar days after the date the Offer becomes or is declared unconditional, or, in relation to valid acceptances received after such date, within 14 calendar days of receipt of that acceptance. According to the Offer Document, it is intended that Civitas Investment Management Limited ("CIM") is maintained as the Investment Adviser to Civitas so that the day-to-day management of the Civitas portfolio will continue uninterrupted, and Civitas be re-registered as a private limited company as soon as practicable following the cancellation of the listing and trading of Civitas shares. At the balance sheet date, CKA, as an indirect investor in CIM, was not a related party to the Group as per IAS 24. On 23 June 2023, when the offer became unconditional, CKA subsequently became the ultimate controlling party of the Company, and a related party under IAS 24.

Company Statement of Financial Position

As at 31 March 2023

	Note	31 March 2023 £'000	31 March 2022 £'000
Assets
Fixed assets
Investment in subsidiaries	7.0	794,733	793,284

Current assets
Trade and other receivables	9.0	2,599	4,310
Cash and cash equivalents	10.0	26,193	23,438
		28,792	27,748
Total assets		823,525	821,032

Liabilities
Creditors - amounts falling due within one year
Trade and other payables	11.0	(318,414)	(274,020)
		(318,414)	(274,020)

Total liabilities		(318,414)	(274,020)
Total net assets		505,111	547,012

Equity
Share capital	12.0	6,225	6,225
Share premium reserve	13.0	292,626	292,626
Capital reduction reserve	14.0	317,714	322,365
Accumulated losses	15.0	(111,454)	(74,204)
Total equity		505,111	547,012

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. Loss for the year was £2,791,000 (2022: profit £21,362,000).

The Company 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

28 June 2023

Company No: 10402528

Company Statement of Changes in Equity

For the year ended 31 March 2023


			Share	Capital
		Share	premium	reduction	Accumulated	Total
		Capital	reserve	reserve	losses	equity
	Note	£'000	£'000	£'000	£'000	£'000
Balance at 1 April 2021		6,225	292,462	331,140	(61,473)	568,354
Profit and total comprehensive income for the year		-	-	-	21,362	21,362
Shares reissued from treasury	13.0	-	164	484	-	648
Shares bought back into treasury	14.0	-	-	(9,259)	-	(9,259)
Dividends paid	15.0	-	-	-	(34,093)	(34,093)
Balance at 31 March 2022		6,225	292,626	322,365	(74,204)	547,012

Loss and total comprehensive loss for the year		-	-	-	(2,791)	(2,791)
Shares reissued from treasury	13.0		-	-	-	-
Shares bought back into treasury	14.0	-	-	(4,651)	-	(4,651)
Dividends paid	15.0	-	-	-	(34,459)	(34,459)
Balance at 31 March 2023		6,225	292,626	317,714	(111,454)	505,111

The Company's distributable reserves comprise retained earnings/(accumulated losses) and the capital reduction reserve. These in aggregate had sufficient realised distributable reserves to support dividends paid to date.

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

Notes to the Company Financial Statements

As at 31 March 2023

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 6th Floor, 65 Gresham Street, London EC2V 7NQ. 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 management;

· 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:

· 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 financial statements for the year ended 31 March 2023.

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 net current liabilities of £289,622,000 (2022: £246,272,000). This balance arises due to the intercompany balances totalling £316,128,000 (2022: £271,632,000) with the Company's subsidiary companies. The amounts principally relate to bank loans drawn in the Company's subsidiary companies in order to finance the purchase of new acquisitions in accordance with the Group's business model. The directors of the subsidiary companies have provided a letter of comfort that they will not seek repayment of these balances within 12 months from the date of approval of the Company's financial statements.

The Company's articles of association include a requirement for the Board to propose an ordinary resolution at the annual general meeting following the fifth anniversary from the initial public offering of the Company for the Company to continue in its current form (the Continuation Resolution). This vote was passed in September 2022 so the Company will continue its business as presently constituted and will propose the same resolution at the AGM in September 2027 and every fifth annual general meeting thereafter.

On 9 May 2023, an announcement was made to the market for an all-cash offer of Civitas Social Housing PLC (CSH) from Wellness Unity Limited, a wholly owned indirect subsidiary of CK Assets Holdings Limited (CKA). The offer became unconditional on 23 June 2023. The Group's existing committed debt facilities contain a standard change of control clause has now been triggered due to the offer becoming unconditional. This could result in the existing committed debt facilities being withdrawn. Furthermore, the Directors do not have visibility of the post completion funding for the Group and Company at this time. The Directors note the detailed intentions statement included within the announcement on 9 May 2023, which states that CKA does not envisage making any changes to the management team nor any disruption to any counterparties or to the underlying tenants. However, the conditions outlined above indicate a material uncertainty which may cast significant doubt upon the Group's and Company's ability to continue as a going concern. The Independent Auditors' Report included within the Annual Report and Accounts for the year ended 31 March 2023 also highlights this material uncertainty. Therefore, notwithstanding the material uncertainty arising from the offer from CKA, the Directors are satisfied that the going concern basis remains appropriate for the preparation of the financial statements. The financial statements do not include the adjustments that would result if the Group and the Company were unable to continue as a going concern.

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. 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. 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 (2022: nil).

6.0 Audit fees

Audit fees in relation to the Company's financial statements total £358,000 (2022: £296,000). For further details, please refer to note 9.0 of the Group financial statements.

7.0 Investments in subsidiaries

Year ended 31 March 2023	Shares in subsidiaries £'000	Loans to subsidiaries £'000	For the year ended 31 March 2023 £'000
Balance at the beginning of the year	768,075	25,209	793,284
Increase in investments	1,090	600	1,690
Loans transferred	7,727	(7,727)	-
Impairment	(241)	-	(241)
At the end of the year	776,651	18,082	794,733

Year ended 31 March 2022	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

Following a review comparing cost of investments to the underlying net assets of subsidiary companies, an impairment provision has been made of £241,000 (2022: £359,000).

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 2023 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 2023 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 SPV163 Limited*	14527873	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 2023.

The registered addresses for the subsidiaries are consistent based on their country of incorporation and are as follows:

• England & Wales entities: Link Company Matters Limited, 6th Floor, 65 Gresham Street, London EC2V 7NQ

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

9.0 Trade and other receivables

	31 March 2023 £'000	31 March 2022 £'000

Trade receivables	1,544	1,150
Prepayments and other receivables	420	1,902
Accrued income	635	1,258
Total	2,599	4,310

10.0 Cash and cash equivalents

	31 March 2023 £'000	31 March 2022 £'000

Cash held by solicitors	64	376
Liquidity funds	15,636	10,489
Cash held at bank	10,239	12,258
Cash and cash equivalents	25,939	23,123
Restricted cash	254	315
Total cash held at bank	26,193	23,438

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 2023 £'000	31 March 2022 Restated £'000
Retentions*	20	60
Accruals	745	685
Dividends withholding tax payable	940	1,057
Deferred income	374	358
Amounts due to subsidiary companies	316,128	271,632
Tenant deposits held*	207	228
Total	318,414	274,020

* Comparatives have been re-analysed to correct the analysis of £228,000 of tenant deposits which had previously been included in retentions.

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 2023

£'000

For the

year ended

31 March 2022

£'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 2023

For the

year ended

31 March 2022

Ordinary shares of £0.01 each

At beginning and end of year

622,461,380

During the year, the Company purchased 6,050,000 Ordinary shares to be held in treasury at a cost of £4,651,000 (31 March 2022: 10,025,000 Ordinary shares for £9,259,000).

At 31 March 2023, the Company held 16,075,000 (31 March 2022: 10,025,000) Ordinary shares in treasury. The shares will continue to be held in treasury until either reissued or cancelled.

At 31 March 2023, the number of Ordinary shares used to calculate the net asset value per share is 606,386,380 (31 March 2022: 612,436,380) which excludes the shares held in treasury.

13.0 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 2023 £'000	For the year ended 31 March 2022 £'000
At the beginning of the year	292,626	292,462
Premium arising on shares reissued from treasury	-	164
At end of year	292,626	292,626

For movements in the year, please see details in note 12.0.

14.0 Capital reduction reserve

	For the year ended 31 March 2023 £'000	For the year ended 31 March 2022 £'000
At the beginning of year	322,365	331,140
Shares reissued from treasury	-	484
Shares bought back into treasury	(4,651)	(9,259)
At end of year	317,714	322,365

For movements in the year, please see details in note 12.0.

15.0 Accumulated losses

This reserve represents the profits and losses of the Company.

	For the year ended 31 March 2023 £'000	For the year ended 31 March 2022 £'000
At the beginning of year	(74,204)	(61,473)
(Loss)/profit for the year	(2,791)	21,362
Dividends paid	(34,459)	(34,093)
At end of year	(111,454)	(74,204)

16.0 Controlling parties

As at 31 March 2023, there is no ultimate controlling party.

17.0 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 11.0 above.

18.0 Post balance sheet events

Please refer to note 33.0 of the Group Consolidated financial statements above in relation to the cash offer for the Group.

Since the year end, Civitas Social Housing Jersey 1 Limited and Civitas Social Housing Jersey 2 Limited have issued dividends to the Company totalling £10,246,000.

Appendix 1 (unaudited): Notes to the calculation of EPRA and other alternative performance measures

The Group has chosen to adopt EPRA best practice guidelines for calculating key alternative performance measures. Notes 1.0 to 7.0 support the EPRA metrics disclosed where the definition and purpose of each metric are outlined.

1.0 EPRA Earnings	For the year ended 31 March 2023	For the year ended 31 March 2022
Earnings from operational activities
Profit after taxation (£'000)	25,472	44,754
Change in fair value of derivative financial instruments (£'000)	2,826	(2,675)
Changes in value of investment properties (£'000)	(2,640)	(12,269)
Costs of early repayment of debt (£'000)	1,271	-
EPRA Earnings (£'000)	26,929	29,810
Weighted average number of shares in issue (adjusted for shares held in treasury)	608,552,681	618,797,942
EPRA Earnings per share (EPS) - basic & diluted	4.43p	4.82p

2.0 EPRA NAV Metrics

	EPRA Net Reinstatement Value	EPRA Net Tangible Assets	EPRA Net Disposal Value
31 March 2023
Net assets (£'000)	661,909	661,909	661,909
Fair value of derivative financial instruments (£'000)	(8,129)	(8,129)	-
Adjustment to fair value for bank borrowings (£'000)	-	-	11,736
NAV (£'000)	653,780	653,780	673,645
Number of shares in issue (adjusted for shared held in treasury)	606,386,380	606,386,380	606,386,380
NAV per share	107.82p	107.82p	111.09p

	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)	-
Adjustment to fair value for bank borrowings (£'000)	-	-	2,644
NAV (£'000)	673,416	673,416	678,191
Number of shares in issue (adjusted for shares held in treasury)	612,436,380	612,436,380	612,436,380
NAV per share	109.96p	109.96p	110.74p

3.0 EPRA Net Initial Yield

	For the year ended 31 March 2023	For the year ended 31 March 2022
Investment property (£'000)	978,147	968,756
Allowance for estimated purchasers' costs (£'000)	59,973	56,412
Gross up completed property portfolio (£'000)	1,038,120	1,025,168
Annualised net rents (£'000)	57,654	54,091
Add: notional rent expiration of rent free periods or other lease incentives (£'000)	-	-
Topped-up net annualised rent (£'000)	57,654	54,091
EPRA NIY	5.55%	5.28%
EPRA Topped-up NIY	5.55%	5.28%

4.0 EPRA Vacancy Rate

	For the year ended 31 March 2023	For the year ended 31 March 2022
Estimated Market Rental Value (ERV) of vacant spaces (£'000)	10	-
Estimated Market Rental Value (ERV) of whole portfolio (£'000)	57,654	54,091
EPRA Vacancy Rate	0.02%	0.00%

5.0 EPRA Costs Ratio

	For the year ended 31 March 2023	For the year ended 31 March 2022
Total administrative and operating expenses	11,821	10,247
Direct property expenses	1,941	978
Less property expenses recovered through rents	(1,512)	(995)
EPRA Costs (including direct vacancy costs)	12,250	10,230
Direct vacancy costs	-	-
EPRA Costs (excluding direct vacancy costs)	12,250	10,230

Rental income	54,607	51,636
Less rechargeable costs received	(1,512)	(995)
Gross rental income	53,095	50,641

EPRA Cost Ratio (including direct vacancy costs)	23.07%	20.20%
EPRA Cost Ratio (excluding direct vacancy costs)	23.07%	20.20%

The Group has not incurred any direct vacancy costs.

6.0 EPRA LTV

	For the year ended 31 March 2023 £'000	For the year ended 31 March 2022 £'000
Net Debt
Borrowings from financial institutions (£'000)	367,925	357,050
Cash and cash equivalents (£'000)	(35,588)	(53,337)
	332,337	303,713

	For the year ended 31 March 2023 £'000	For the year ended 31 March 2022 £'000
Total Property Value
Investment properties at fair value (£'000)	953,364	945,237
Net receivables (£'000)	26,743	26,892
	980,107	972,129
EPRA LTV	33.91%	31.24%

	For the year ended 31 March 2023 £'000	For the year ended 31 March 2022 £'000
Net receivables comprises
Other receivables	24,783	23,519
Trade and other receivables	11,260	12,865
Less trade and other payables	(9,300)	(9,492)
Total	26,743	26,892

	For the year ended 31 March 2023 £'000	For the year ended 31 March 2022 £'000
Components of Net Assets used in EPRA LTV calculation
Investment properties at fair value	953,364	945,237
Net receivables	26,743	26,892
Cash and cash equivalents	35,588	53,337
Less borrowings from financial institutions	(367,925)	(357,050)
Net assets used in the EPRA LTV calculation	647,770	668,416
Less amounts excluded from the calculation
Interest rate derivatives	8,129	2,131
Unamortised loan issue costs	6,010	5,000
Net assets	661,909	675,547

7.0 EPRA Table of Capital Expenditure

	For the year ended 31 March 2023 £'000	For the year ended 31 March 2022 £'000
Acquisitions including incidental costs of purchase	543	33,466
Development	-	-
Investment properties
Incremental lettable space	-	-
Enhancing lettable space	4,944	5,818
Tenant incentives	1,700	1,614
Other material non-allocated types of expenditure	-	-
Capitalised interest	-	-
Total Capital Expenditure	7,187	40,898
Conversion from accruals to cash basis	(597)	1,312
Total Capital Expenditure on a cash basis	6,590	42,210

The Group has not capitalised any overhead or operating expenses.

The Group has no Joint Ventures so there is no joint venture property to disclose in the above table.

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 2023	31 March 2022
NAV per share		109.1600p	110.3000p
31 May 2017	Interim dividend	0.7500p	0.7500p
31 August 2017	Interim dividend	0.7500p	0.7500p
30 November 2017	Interim dividend	0.7500p	0.7500p
9 March 2018	Interim dividend	0.7500p	0.7500p
8 June 2018	Interim dividend	1.2500p	1.2500p
7 September 2018	Interim dividend	1.2500p	1.2500p
30 November 2018	Interim dividend	1.2500p	1.2500p
11 January 2019	Interim dividend	1.1100p	1.1100p
28 February 2019	Interim dividend	0.1400p	0.1400p
7 June 2019	Interim dividend	1.3250p	1.3250p
6 September 2019	Interim dividend	1.3250p	1.3250p
29 November 2019	Interim dividend	1.3250p	1.3250p
28 February 2020	Interim dividend	1.3250p	1.3250p
12 June 2020	Interim dividend	1.3250p	1.3250p
7 September 2020	Interim dividend	1.3500p	1.3500p
4 December 2020	Interim dividend	1.3500p	1.3500p
1 March 2021	Interim dividend	1.3500p	1.3500p
11 June 2021	Interim dividend	1.3500p	1.3500p
10 September 2021	Interim dividend	1.3875p	1.3875p
13 December 2021	Interim dividend	1.3875p	1.3875p
11 March 2022	Interim dividend	1.3875p	1.3875p
28 June 2022	Interim dividend	1.3875p	-
9 September 2022	Interim dividend	1.4250p	-
9 December 2022	Interim dividend	1.4250p	-
11 March 2023	Interim dividend	1.4250p	-
		139.0100p	134.4875p
NAV per share at launch		98.0000p	98.0000p
Levered IRR		6.29%	6.63%

Five Year Financial Results

Group Statement of Comprehensive Income

Revenue	For the year ended 31 March 2023 £'000		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
Rental income		54,607	51,636	49,020	46,165	35,738
Less direct property expenses		(1,941)	(978)	(1,175)	(259)	-
Net rental income		52,666	50,658	47,845	45,906	35,738
Directors' remuneration		(211)	(206)	(198)	(176)	(163)
Investment advisory fees		(6,217)	(6,132)	(6,117)	(6,183)	(6,457)
General and administrative expenses		(5,393)	(3,909)	(3,183)	(3,501)	(3,022)
Total expenses		(11,821)	(10,247)	(9,498)	(9,860)	(9,642)
Change in fair value of investment properties		2,640	12,269	5,511	9,389	3,652
Operating Profit		43,485	52,680	43,858	45,435	29,748
Finance income		148	7	20	110	491
Finance expenses - relating to bank borrowings		(15,335)	(10,608)	(7,737)	(7,342)	(3,975)
Finance expenses - relating to C share amortisation		-	-	-	-	(6,400)
Change in fair value of interest rate derivatives		(2,826)	2,675	(66)	(478)	-
Profit before tax		25,472	44,754	36,075	37,725	19,864
Taxation		-	-	-	-	-
Profit being total comprehensive income		25,472	44,754	36,075	37,725	19,864
Earnings per share - basic		4.19p	7.23p	5.80p	6.06p	4.67p
Earnings per share - diluted		4.19p	7.23p	5.80p	6.06p	4.22p
Dividend declared (per share)		5.70p	5.55p	5.40p	5.30p	5.00p

Group Statement of Financial Position

	31 March 2023 £'000	31 March 2022 £'000	31 March 2021 £'000	31 March 2020 £'000	31 March 2019 £'000
Assets Non-current assets
Investment property	953,364	945,237	893,684	867,988	820,094
Other receivables	24,783	23,519	21,905	10,755	6,824
Interest rate derivatives	8,129	2,131	-	-	-
	986,276	970,887	915,589	878,743	826,918
Non-current assets
Trade and other receivables	11,260	12,865	12,821	10,838	5,723
Cash and cash equivalents	35,588	53,337	107,097	58,374	54,347
	46,848	66,202	119,918	69,212	60,070
Total assets	1,033,124	1,037,089	1,035,507	947,955	886,988
Liabilities
Current liabilities
Trade and other payables	(9,300)	(9,492)	(9,345)	(7,743)	(15,324)
Bank and loan borrowings	-	-	(59,937)	(59,730)	-
	(9,300)	(9,492)	(69,282)	(67,473)	(15,324)
Non-current liabilities
Bank and loan borrowings	(361,915)	(352,050)	(292,183)	(209,440)	(205,156)
Interest rate derivatives	-	-	(544)	(478)	-
	(361,915)	(352,050)	(292,727)	(209,918)	(205,156)
Total liabilities	(371,215)	(361,542)	(362,009)	(277,391)	(220,480)

Total net assets	661,909	675,547	673,498	670,564	666,508
Assets
Share capital	6,225	6,225	6,225	6,225	6,225
Share premium reserve	292,626	292,626	292,463	292,405	292,405
Capital reduction reserve	317,714	322,365	331,140	330,926	331,625
Retained earnings	45,344	54,331	43,670	41,008	36,253
Total equity	661,909	675,547	673,498	670,564	666,508
Net assets per share - basic	109.16p	110.30p	108.30p	107.87p	107.08p
Net assets per share - diluted	109.16p	110.30p	108.30p	107.87p	107.08p
Share price	53.70p	87.40p	107.80p	96.40p	96.00p
Total shareholder return (on a NAV basis	41.84%	37.23%	29.56%	23.64%	17.45%
Leverage	35.61%	34.43%	34.48%	26.90%	22.00%

Shareholder 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, Central Square, 29 Wellington Street, Leeds LS1 4DL

Key Dates

June

Annual results announced

Payment of fourth interim 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.

Annual contracted rent roll means the annual contractual rental income currently receivable on a

property as at the Balance Sheet date.

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 declared for the financial year 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 LTV is the EPRA loan to value ratio calculated as debt net of cash balances divided by the market value of property (including net receivables) as defined in the EPRA Best Practice Guidelines.

EPRA Net Initial Yield ("EPRA NIY") is calculated as the annualised rental income based on the cash rents passing at the balance sheet date less non-recoverable property operating expenses, divided by the gross market value of the property.

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.

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.

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 Asset Value or NAV means the net asset value of the Group on the relevant date, prepared in accordance with IFRS accounting principles.

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 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 NAV over the relevant period plus dividend paid.

Total Shareholder Return means 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 annual contracted 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 annual contracted 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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