CORRECTION: Annual Results

RNS Number : 5666R

Civitas Social Housing PLC

30 June 2020

CIVITAS SOCIAL HOUSING PLC

("Civitas" or the "Company")

ANNUAL FINANCIAL REPORT

YEAR TO 31 MARCH 2020

CORRECTION

This is an amended version of the Annual Financial Report Year to 31 March 2020 announcement, issued earlier today. In the Performance Highlights table below, the row previously titled "EPRA earnings per share^{1, 2} (p)" has been corrected to "IFRS Earnings per share (diluted)¹ (p)". The figures remain unchanged. No other changes have been made to the announcement.

Civitas Social Housing PLC ("CSH", "Civitas" or the "Company"), a leading care-based housing and healthcare REIT, presents its full year results for the year ended 31 March 2020.

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

Performance Highlights

Property Valuation and Performance	Mar 20	Mar 19	Change
Investment property (£m)	878.7	826.9	Up 6.3%
IFRS NAV per share (diluted) (p)	107.87	107.08	Up 0.7%
Financial Performance	-	-	-
Rent roll annualised (£m)	48.4	45.7	Up 5.8%
Rental income (£m)	45.9	35.7	Up 28.4%
EPRA earnings¹ (£m)	28.8	22.6	Up 27.5%
Operating Cash Flow (£m)	32.9	23.3	Up 41.0%
IFRS earnings per share (diluted)¹ (p)	6.06	4.22	Up 43.7%
EPRA earnings per share (diluted)^{1, 2} (p)	4.63	3.63	Up 27.5%
Dividends per share (p)	5.30	5.00	Up 6.0%
Total shareholder return³ (%)	20.4	17.5	Up 16.6%
Financing	-	-	-
Loan to value ratio	27	22	Up 24.1%
Weighted average cost of debt (%)	2.46	2.57	-

¹ Mar 19: EPRA Earnings, IFRS EPS, EPRA EPS figures are after adding back finance costs associated with the C shares.

² See Appendix 1 - Alternative Performance Measure to these financial statements for supporting workings.

³ On an Ordinary share held since launch (percentage not annualised).

· Increased investment property portfolio

· Portfolio value up to £878.7 million (IFRS)

· IFRS valuation average net initial yield (NIY) of 5.26% compared to average purchase NIY of 5.6% (5.9% before initial costs)

· IFRS NAV per share (diluted) up 0.7% to 107.87 pence

· Weighted Average Unexpired Lease Term (WAULT) of 23.66 years

· Diversified portfolio of 613 properties providing homes to over 4,000 people

· £31 million of acquisitions made in the year to 31 March 2020 with focus on mid-to-higher acuity care

· Providing accommodation to working age adults with learning disabilities, autism and mental health disorders with an average tenant age of 32 years

· Properties located across half the Local Authorities in England and Wales and leased to 15 Housing Associations, with support provided by 117 Care Providers

· Rent roll, operating cash flow and earnings significantly up

· Annualised rent roll increased to £48.4 million

· Rents continue to be received as normal, unaffected by COVID-19

· Operating cashflow increased to £32.9 million

· EPRA earnings (diluted) increased to £28.8 million

· EPRA earnings per share (diluted) up to 4.63 pence

· Dividend payments and dividend cover

· Dividend of 5.3 pence achieved for the financial year ended 31 March 2020

· Target dividend of 5.4 pence for the year to 31 March 2021

· EPRA run-rate dividend cover of 100% as at 31 March 2020

· EPRA dividend cover of 87.4% on an actual basis over the year to 31 March 2020

· Total NAV Return

· Total NAV return from IPO to 31 March 2020 of 6.8% p.a. (IFRS basis)

Debt Facilities

· Fully drawn debt of £272.5 million reflecting gearing of 26.9% as at 31 March 2020

· Intention to secure additional £80-£120 million facility or private placement

· Fully compliant with terms of existing debt facilities

Housing Associations and Care Providers

· Regular dialogue, rolling monitoring and operational support from Civitas when needed

· Continuing good operational performance during COVID-19 with swift adaptation to lockdown restrictions

· Civitas continues to work proactively to enhance the sector

New Investment Opportunities

· Existing cash resources fully allocated

· Continuing to develop pipeline of high quality mid-to-higher acuity healthcare facilities

· Opening discussions with additional counterparties, e.g., charities and health providers

Operational Highlights

· Alison Hadden appointed as an independent non-executive Director of the Company on 21 November 2019

· During the year to 31 March 2020 the Company bought back a total of 815,000 shares at an average price of 85.8 pence per share. These shares are held in treasury

· Consistent delivery of measurable social impact and increased focus on the performance of the Company's counterparties

· Further strengthening the strategic role that the Company can play in delivering Government policy objectives for more community care

· Establishing ever more strategic relationships as a go to partner for local authorities and major care providers

Post Balance Sheet Highlights

· Delivery of first phase of the new state-of-the-art higher acuity facilities in Wales

· Shareholder consent to broaden counterparties including the NHS and charities

· Board declared a fourth quarterly dividend for the three months to 31 March 2020 of 1.325p per share

· Company announced the intention to target a dividend of 5.4 pence per Ordinary Share for the financial year ending 31 March 2021

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

"The Company is pleased to report a strong set of results that, to date, remains unaffected by COVID-19.

During the quarter to 31 March 2020, the Company recovered more than 99% of the rents expected to be paid and we have continued to enjoy good recoveries since this time.

Having received shareholder consent to broaden our counterparties to include the NHS and charities, we see a significant and compelling addressable market for our services. We have the opportunity to further develop our strategic relationships with care providers and local authorities.

Demographic trends continue to increase the number of vulnerable adults who want and deserve a safe home in the community; and the experience of Covid-19 has increased the urgency of helping people move into communities and away from institutional settings.

Despite the uncertain environment caused by COVID-19, we consider that the prospects for the Company remain positive and we look forward to continuing to support the Government's policy objectives to provide community settings for people with long-term care needs."

For further information, please contact:

Civitas Investment Management Limited

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

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

Panmure Gordon

Sapna Shah Tel: +44 (0)20 7886 2783

Tom Scrivens Tel: +44 (0) 20 7886 2648

Liberum Capital Limited

Gillian Martin Tel: +44 (0) 20 3100 2222

Buchanan

Helen Tarbet / Henry Wilson Tel: +44 (0) 20 7466 5000

Hannah Ratcliff / George Beale 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. So far, CSH has completed more than 120 individual transactions to build the largest portfolio of its kind that has been independently valued at £878 million. CSH provides homes for 4,216 working age adults with long-term care needs, in 613 bespoke properties that are supported by 117 specialist care providers, 15 housing associations over 164 individual local authority areas. Most recently CSH has extended its mandate to be able to work directly with the NHS and other leading care-based organisations.

Chairman's Statement

Dear Shareholder

Introduction

At this time of global crisis, the Board wishes to acknowledge the extraordinary work and commitment

shown by all key workers, particularly those in the health and social care sectors. These courageous individuals care for some of the most vulnerable people in our society, enabling them to live in community settings, many of them in homes owned by Civitas.

To date, our financial performance has not been affected by the COVID-19 pandemic. During the most recent quarter, the Company received more than 99% of the rents expected to be paid.

Results

During the year, the Company invested £31 million, excluding purchase costs, in 22 properties with 144

tenancies and exchanged contracts on a small number of other properties for subsequent completion. We also entered into forward purchase agreements for the delivery on completion of a number of newly developed higher acuity facilities in Wales, valued at £12.1 million. The first of these has now been delivered.

Net rental income increased by 28.4% to £45.9 million and profit before tax grew by 89.9% to £37.7 million. Operating cash flow increased by 41.0% to £32.9 million.

The IFRS NAV per share increased during the year from 107.1p per Ordinary share at 31 March 2019 to 107.9p per Ordinary share at 31 March 2020.

As at 31 March 2020, the Company held cash balances of £49.3 million (net of operating and finance amounts due) of which approximately £14 million was allocated in respect of transactions completing in 2020 - £1.8 million in respect of two properties in Telford and one in Sunderland on which the Company has conditionally exchanged, and £12.1 million in relation to two properties in Wales for which the Company has entered into a conditional sale and purchase agreement. We have allocated £10 million (estimated) relating to a capital payment contingent on certain financial obligations being met at the properties in Wales. The remaining cash balances are being held as a cash contingency in the Company. The Company seeks to maintain a prudent approach to the use of leverage, which stood at 27% at the year end, based on a gross portfolio loan-to-value basis. We have a maximum limit of 40%. As at 31 March 2020, the weighted average debt to maturity was 3.4 years and this reflected the post balance sheet extension of the £60 million Lloyds Bank revolving credit facility to November 2021.

The Investment Adviser continues to see a significant pipeline of investment opportunities from a variety of sources, including larger care providers. With limited uncommitted capital resources, the Company is continuing to evaluate options, including raising equity, to fund further investments to enhance shareholder returns.

The Company's latest Social Impact Report prepared independently by The Good Economy has been published, which confirms that we have continued to meet our important social impact objectives.

Dividends

The Company has paid three interim dividends and declared a fourth interim dividend of 1.325p each, which will bring the total for the year just ended to 5.3p in line with the Board's target. The EPRA dividend cover on an actual basis over the course of the year to 31 March 2020 was 87.4%. The dividend cover was 100% at the year end on an EPRA run-rate basis*.

COVID-19

The Company is the leading provider of care-based housing in the UK for individuals who are working age adults with learning disabilities, mental health and other significant care needs. Our 4,216 tenants have an average age of c.32 years and do not typically fall into the categories of individuals identified by the NHS as being at high risk for COVID-19.

The monitoring that is being undertaken by our Investment Adviser, along with our housing association

and care provider partners, indicates that at the present time the level of incidences of COVID-19 amongst tenants and staff remains low. This may be in part accounted for by the age profiles of the tenants themselves and by the configuration of the Company's portfolio with a focus on self-contained apartments and small housing clusters. This enables a greater degree of control over movement and, therefore, to potential exposure than open plan environments.

However, various changes have been made to the working practices of both housing associations and care providers with the priority of continuing to preserve the health, safety and well-being of tenants and staff. These include the implementation of adapted procedures relating to staff and tenant engagement, enhanced hygiene, social distancing and restricting access to the Company's properties to essential visits. Our Investment Adviser has been able to adapt its working practices, with most staff working from home with the necessary enabling technology. Their safety is also a paramount concern.

On 26 March 2020, as part of the Government's COVID-19 lockdown procedures, the Minister for Local Government and Homelessness wrote to all local authorities identifying the "responsibility to safeguard as many homeless people as we can from COVID-19" and to "bring everyone in". I am pleased to report that we were able, at short notice, to make available 29 self-contained accommodation units for Islington Council, that had just completed a planned refurbishment programme.

Regulation

During the year the Regulator of Social Housing ("RSH") has continued to raise its concerns about risks and issues within the industry and has issued notices to several of our housing association partners where it considers that governance and financial standing require improvement. Whilst the Company is not itself regulated by the RSH, we take these comments seriously. Our Investment Adviser continues to work with housing associations to enhance their performance and standing with the RSH. It has been instrumental in the establishment of a new not-for-profit community interest company - The Social Housing Family CIC ("CIC") - whose objective is to bring greater skills and resource sharing across housing associations. We are pleased to note that the CIC has now brought its first housing association, Auckland Home Solutions, under its structure.

The Company's portfolio continues to evolve to encompass a greater number of higher acuity facilities that are themselves regulated by the Care Quality Commission ("CQC"). In this regard, it is pleasing to note that the CQC, in its latest annual report "State of Care 2018/19", commented in support of the provision of community care stating that: "Too many people with a learning disability or autism are in hospital because of a lack of local, intensive community services".

Our Investment Adviser

Our Investment Adviser has changed its name from Civitas Housing Advisors to Civitas Investment Management ("CIM") to better reflect its expanding activities. This has no material impact on our Company other than that the addition of new clients strengthens its capabilities and enables recruitment of additional skills. The Board acknowledges and greatly appreciates the skill and efforts of the team, particularly at this stressful time.

After more than three years of activity within the sector and over 120 completed transactions, our Investment Adviser is regarded as a leading entity within the healthcare and social housing sectors in the UK. It continues to refine and improve processes for both new transactions and the ongoing management of our portfolio and drive best practice within the industry. We are encouraged both by the level of incoming enquiry and the nature and quality of potential counterparties.

Share Price

The Board was concerned by the share price during the early part of the financial year under review. In addition to our Investment Adviser focusing on delivery of our investment objectives, we have implemented a number of initiatives to improve our message to investors, including the appointment of Liberum and Panmure Gordon as joint brokers and Buchanan as PR adviser. In addition, during the year the Company bought 815,000 shares at an average price of 85.8 pence, which are held in Treasury.

The share price has improved in recent months in both absolute and relative terms compared to the general market and to many other real estate companies and funds. In large part, this is due to recognition of the robust characteristics of our business model and the level of demand for specialist supported housing exceeding supply. In addition, we deliver better personal outcomes and value for money compared with institutional provision.

I would like to thank our shareholders for their continuing support.

Annual General Meeting

The Company's AGM is to held on 8 September 2020 at the offices of Buchanan, 107 Cheapside, London EC2V 6DN at 2.00 pm. The Board looks forward to meeting shareholders. In due course, the notice of AGM will be circulated in accordance with the requirements of the Company's Articles of Association.

Due to the current COVID-19 outbreak, many companies have either postponed their AGMs or made alternative arrangements for conducting these meetings. We hope that by 8 September 2020 the Company will be able to hold its AGM in the usual manner. However, given the uncertain nature of this situation, should the Company need to alter its AGM arrangements, it will communicate these changes

to shareholders through a regulatory announcement. This information will also be made available on the Company's website. Shareholders are advised to check the website to ensure they have the most up-to-date information available regarding the AGM.

Summary and Outlook

Despite the uncertain environment caused by COVID-19, we consider that the prospects for the Company remain positive and we look forward to continuing to be of help to those individuals with long-term care needs.

We have announced a new target dividend of 5.4p per Ordinary share for the current year ending 31 March 2021. This would be an increase of 1.9% and compares to the Consumer Price Index measure of inflation of 1.5% in March 2020.

Michael Wrobel

Chairman

29 June 2020

* Note: the calculation of run-rate dividend cover is based on all properties that have exchanged and completed, on normalised overheads and the further delivery of certain properties to a value of £12.1m. Of this £12.1m, £2.3m completed during June 2020 with the remainder to complete shortly.

Analysis of property portfolio as at 31 March 2020

Geographically Diversified

Region	Properties	% of funds invested	% of rental income
North West	99	10.2%	10.2%
West Midlands	99	11.9%	11.7%
Wales	15	8.2%	8.0%
South West	120	16.4%	16.3%
North East	63	6.9%	6.8%
Yorkshire and the Humber	49	10.5%	10.4%
East Midlands	58	9.3%	9.1%
East of England	20	3.0%	3.0%
London	26	13.0%	14.0%
South East	64	10.6%	10.5%

Market Value by Region¹

Region	Market Value
South West	16.4%
London	13.0%
West Midlands	11.9%
South East	10.6%
Yorkshire	10.5%
North West	10.2%
East Midlands	9.3%
Wales	8.2%
North East	6.9%
East of England	3.0%

Assets by Region¹

Region	Number of Properties
South West	120
North West	99
West Midlands	99
South East	64
North East	63
East Midlands	58
Yorkshire	49
London	26
East of England	20
Wales	15

¹ As at 31 March 2020, including completed properties only.

Diversified by Registered Provider

Rental Income by Registered Provider ¹

Registered Provider	Rental Income
Auckland	24.4%
Falcon	20.4%
BeST	11.0%
Inclusion	8.7%
Westmoreland	6.3%
Encircle	6.1%
Trinity	5.5%
Pivotal	4.0%
Harbour Light	3.8%
Chrysalis	3.5%
New Walk	2.9%
My Space	1.2%
IKE	1.2%
Hilldale	1.0%
Blue Square	0.1%

Assets by Registered Provider ¹

Registered Provider	Number of Properties
Falcon	117
Auckland	103
BeST	72
Inclusion	69
Trinity	43
New Walk	41
Westmoreland	41
Harbour Light	27
Pivotal	27
Chrysalis	23
Encircle	16
Hilldale	15
IKE	10
My Space	8
Blue Square	1

Market Value by Registered Provider ¹

Registered Provider	Market Value
Auckland	24.9%
Falcon	20.9%
BeST	11.3%
Inclusion	8.7%
Westmoreland	6.2%
Trinity	5.4%
Encircle	5.1%
Pivotal	4.0%
Harbour Light	3.8%
Chrysalis	3.5%
New Walk	2.9%
IKE	1.1%
My Space	1.1%
Hilldale	1.0%
Blue Square	0.1%

Tenancies by Registered Provider ¹

Registered Provider	Tenancies
Falcon	858
Auckland	718
BeST	526
Inclusion	455
Trinity	242
Westmoreland	239
Pivotal	238
Harbour Light	214
Encircle	205
New Walk	194
Chrysalis	145
My Space	71
IKE	68
Hilldale	39
Blue Square	4

¹ As at 31 March 2020, including completed properties only.

Investment Adviser's Report

"Today, the Company's investment portfolio offers dual exposure to both the social housing and healthcare sectors in the UK. It provides purpose-built and bespoke properties that support the delivery of mid-to-higher acuity care for working age adults with long-term care needs.

And it delivers this in local community settings supported by government funded care providers and housing managers whose activities are regulated by the Care Quality Commission, the Regulator of Social Housing and overseen by local authority commissioners." Paul Bridge, Chief Executive Officer, Social Housing

Our Thanks and Appreciation

At the start of this report, we would like to take the opportunity to echo the sentiments expressed by the

Chairman on behalf of the Board and to offer our sincere thanks and appreciation to all the staff of our care providers, housing associations and other partners who have continued to work and provide for all the people living in the Company's properties.

Introduction

As we enter our fourth full financial year since IPO, we are pleased to report that considerable progress has been made in positioning the Company's investment portfolio to meet clear long-term needs and shortages in both the social housing and healthcare sectors in the UK.

Our strategy remains the same: to provide high-quality bespoke properties that enable the delivery of mid-to-higher acuity care, that is non-discretionary, that offers better personal outcomes including lower costs and that is funded by the state.

The successful implementation of this strategy has, since IPO, allowed investors to receive stable and progressive dividends that have grown at a rate above inflation. In this regard we are pleased that a new dividend target of 5.4 pence per Ordinary share has been announced for the year to 31 March 2021.

A summary of specific outcomes and targets met in the year to 31 March 2020 is set out below:

· 100%* EPRA run-rate dividend cover achieved

· Dividend of 5.3 pence per Ordinary share paid/declared

· 41% growth in net operating cash flow to £32.9 million

· IFRS NAV increased to 107.87 pence per Ordinary share

· Rents continue to be indexed at CPI and collected as planned

· Total expense ratio of 1.36%

The Investment Portfolio

The investment portfolio comprises 613 individual properties that are the long-term homes for 4,216 people each of whom benefits from an average of 45/50 hours (and sometimes much more) of care a week delivered by 117 specialist care providers. The properties are located across 164 local authorities and receive property services from 15 housing associations.

From a financial perspective the Company's portfolio was independently valued at 31 March 2020 on the basis of an IFRS Red Book valuation at £878.7 million, an increase of £89.6 million (11.3%) over the funds invested of £789.1 million, excluding initial purchase costs. The Valuation is subject to the now standard "Material Valuation Uncertainty due to Novel Coronavirus (COVID-19)" clause that professional valuation firms, including JLL, are adopting across the world in respect of valuations at this time. On 28 May 2020, RICS published an update and concluded that the inclusion of MUCs was no longer appropriate for this asset class.

Valuations within the portfolio vary on an individual property-by-property basis with the lowest yields (c.5%) currently applying to some of those properties that have the benefit of back-to-back care provider leases.

The most recent transactions undertaken by the Company in March 2020 for £17.8 million are majority supported by back-to-back care provider leases.

As the Company undertakes further investments in the future, it remains the objective to increase the proportion of the portfolio that benefits from such back-to-back leases and to drive up the typical level of acuity of care delivered in the properties.

In this way the Company offers investors the opportunity of exposure to both social housing and specialist healthcare both of which are typically composed of local, granular assets.

When we commenced our investment activities in late 2016, we already identified some of the opportunities that we thought would be available in the future from working closely with specialist care providers, the NHS and leading charities as well as with housing associations directly.

We also noted the potential to engage directly with specialist developers and to take a hands-on role in being involved from the outset in the design and specification of new buildings, particularly those suited for higher acuity care, that would then be acquired on completion without forward financing.

Today, with more than 120 individual transactions completed, we have the benefit of being a leading presence in both the social housing and healthcare sectors and the Company has in 2018 and 2019 won the leading healthcare industry Laing Buisson award for Healthcare Investor of the Year.

In reflection of this, in May 2020, the Company sought and received overwhelming approval from shareholders for the proposal to modify the Company's investment policy to allow transactions to be undertaken directly with other not-for-profit organisations including the NHS as well as other entities in receipt of government funding.

Rental Income and Trading Update

The Company enjoyed strong growth in net rental income with an annualised rent roll of £48.4 million and an actual net rental income of £45.9 million for the year to 31 March 2020.

This compares to actual net rental income of £35.7 million in the year to 31 March 2019 with rental growth being accounted for by properties previously acquired contributing a full year of income and a number of additional acquisitions.

Not included in the results to 31 March 2020 is the rental income associated with the new developments,

particularly the higher acuity facilities in Wales on which the Company has exchanged contracts and where the first properties have now completed.

At the same time, the Company has continued to enjoy strong rental receipts in line with expectations and unaffected at this time by COVID-19.

It was noted at the time of release of the Company's NAV and Trading Update on 11 May 2020 that the Company had received more than 99% of the rents due to be paid to it during the quarter to 31 March 2020. Since this time the Company has continued to receive rents as expected and unaffected by COVID-19.

Net cash generated from operations has also shown a significant increase of 41% from £23.3 million as at 31 March 2019 to £32.9 million, reflecting good cost control during the year.

IFRS NAV increased from 107.08p per Ordinary share at 31 March 2019 to 107.87p as at 31 March 2020, a modest increase of 0.7% reflecting the indexation of leases less the costs of capital expenditure that the Company chose to undertake for the long-term benefit of the portfolio.

In addition, as at 31 March 2020, the Company owned freehold properties with a value of £212 million that were entirely unencumbered and available as security for additional borrowings in due course.

Asset Management

The active management of the Company's portfolio remains an important component of our day-to-day

activities with over 600 individual buildings.

Under the Company's leases, the obligation to undertake regular maintenance rests with the lessees, however, the Company does make careful capital investments where we believe that would lead to long-term enhancement and where this is of assistance to our housing association partners. As we know, a property that is well adapted and well maintained will be a positive contributing asset to the Company and to our housing association partners.

Most recently, with this in mind, we augmented our asset management capabilities with the appointment of Tom Falconer as a Director, Asset Management. Tom began his career as a local authority commissioner and has worked within the care sector for more than 10 years most recently as Group Property Manager for Lifeways Group, a leading specialist care provider.

Tom has a particular focus within the team in his engagement with local authority commissioners and care providers to assist our housing association partners to achieve their lettings and to address any void properties.

We will also be joined shortly by another senior individual in the asset management team who has an established surveying background and who will be focused on the physical enhancement and betterment of properties within the portfolio. Again this will be of assistance to our housing association partners.

During the year, as part of our active management of the portfolio we undertook the reallocation of certain leases between housing association partners with a view to enhancing portfolio diversification and ensuring that the most relevant housing association is in possession of the Company's leases. We expect to continue to remain active in this regard in the future.

Market Update

The Company operates across the social housing and healthcare sectors in the UK.

Today there is a structural shortage of properties that are capable of hosting mid-to-higher acuity care within local community settings. Such properties are not always available and so are typically highly regarded by both care providers and local authority health commissioners.

The drivers of demand for the Company's portfolio are very much settled within the healthcare sector in the UK and result from long standing government policy to seek closure of remote hospitals in favour of community provision.

The trend for community provision has become established in the UK over the past 25 years and reflects much broader societal change in the manner that care is delivered for people of working age with lifelong care needs.

What has developed more recently over the past 10 to 15 years has been the emergence of specialist housing associations that deliver the augmented property services and who, in turn, enter into leases to secure available properties for their underlying tenants without any form of public funding.

Whilst this is an important development, and one that has been much commented upon by ourselves and others we have taken the view, as noted earlier, that the time is now right to broaden the nature of the Company's lease counterparties to include entities such as the NHS and other care providers that are in receipt of government funding as well as leading charities and other not-for-profit entities such as community interest companies. Shareholder permission for this was secured at the recent General Meeting on 28 May 2020.

This initiative is likely, over time, to better reflect the increasingly mid-to-higher acuity focus of the Company's property portfolio and also move the dialogue forward with greater focus on the underlying care. It will also offer alternatives to entering into leases with housing associations where that is felt appropriate or it is required.

In the same way that housing associations are regulated by the Regulator of Social Housing ("RSH"), health and social care in England is independently regulated by the Care Quality Commission ("CQC"). This includes all care providers, the NHS and other healthcare providers, facilities of which the Company owns an increasing number to deliver mid-to-higher acuity care.

In its most recent report "State of Health 2018/19", the CQC stated that "Most of the care that we see across England is good quality and, overall, the quality is improving slightly".

They also commented that "Too many people with a learning disability or autism are in hospital because of a lack of local, intensive community services". It is exactly this gap that the Company is seeking to fill.

Our new properties in Wales have both a dedicated rehabilitation facility and an aquatic centre designed for people with care needs. They are amongst the most advanced facilities of their kind in the region.

Considering the comments from the CQC and the range of research that we have commented on previously, there seems little doubt that there exists long-term structural demand for the properties that the Company provides and that there is today significant shortages that are unlikely to be filled any time soon.

It is also apparent that, in the UK, the government is committed to delivering and paying for these services

that are typically developed by the private sector and made available for public use without any form of public subsidy.

At the same time, the RSH has become more vocal in commenting on the need for improvement in the

performance of a number of housing associations within the sector and on the lease-based model itself.

As we have noted previously, the Company has used its leading position to bring about a number of enhancements that are now becoming standard features in its new leases including:

· initiating the use of a force majeure clause that offers protection to housing associations should government policy reduce their income on a permanent basis; and

· adopting "caps" and "collars" typically set at "0" and "4" per cent. that mitigate against rapid increases in inflation.

More broadly, we have led initiatives such as establishing The Social Housing Family Community Interest Company that is designed to offer additional support, guidance and management skills to its member housing associations. Whilst there is no compulsion to join, we do expect to see the CIC expand its membership over the next year.

We continue to engage with the RSH and to work with them to explore how we can enhance the standing of the sector and the model. For our part, we seek to promote good and sustainable practice in all the transactions that we undertake with a view to increasing the robustness and reliability of our housing association partners and the sector itself.

Our quarterly seminars for all housing association partners have continued to be well supported throughout the year as they seek to share best practice and tackle issues relevant to the market. Since lockdown, these have been substituted by regular one-to-one contact, including with our leading care provider partners.

COVID-19

Turning to the issue of COVID-19, we have sought to keep closely in touch with the Company's counterparties to ascertain the ongoing level of impact within the sector and the Company's portfolio.

As noted previously, we have not seen any impact from a financial perspective and the sector and the Company's portfolio has only seen very modest levels of coronavirus cases that are much lower than within the elderly care sector. In many of our properties, there have to date been no reported instances of COVID-19 and, where they have occurred, these have been isolated.

Working across our counterparties we have undertaken detailed engagement and made detailed notes of the responses received. For information, whilst preserving personal data, some of the comments received are set out below:

Care Providers:

· "Care providers are presently reporting very few cases of the virus"

· "Due to the client group we are caring for whose average age is under 30 we are finding very few cases of the virus"

· "Care provider staff are self isolating to ensure as their colleagues come off shift a bank of staff is available to provide much needed care"

Housing Associations:

· "We have many phone calls from Local Authority Commissioners asking if we have more homes available. This has increased since the pandemic"

· "Our staff sickness levels have actually dropped during the pandemic as it is clear that increased recognition for care is benefitting morale"

Irrespective of the positive responses received to date and the sense that the market is fully functioning at present, we remain as vigilant as possible and are offering our assistance to our counterparties where we can be of help.

In this regard, as part of the Company's direct response to COVID-19, we were pleased to be able to assist Islington Council in the provision of 29 self-contained accommodation units to help bring in people off the streets who were homeless.

As part of this effort, we worked closely with the council, with the care provider and the housing association attached to the property to coordinate a response that met the urgent timetable required.

In response to our efforts, the Head of Private Housing Partnerships at Islington Council commented that: "Working together with Civitas Housing, we were able to deliver 29 self-contained units of accommodation for our most entrenched rough sleepers, ensuring that they are no longer on the streets and exposed to the virus. We appreciate the assistance and support provided by Civitas Housing during this period, they have shown that the spirit of community still exists as to actively sort to provide us options to solve our housing needs".

Debt Facilities

The debt facilities available to the Company are set out in the table below together with the relevant covenants and associated ratios.

The weighted average debt to maturity is 3.4 years and this reflects the 12-month extension of the £60 million Lloyds Bank revolving credit facility that has been extended, as at the date of signing, in the normal course to November 2021. It is anticipated that this will be refinanced prior to that time.

	Loan Notes		RCF
Lender	NatWest	Scottish Widows	Lloyds	HSBC
Security	Assets	Assets	Assets	Assets
Facility Size	£60m	£52.5m	£60m	£100m
Drawn	£60m	£52.5m	£60m	£100m
Term	5 years + 1 + 1	10 years	3 years + 1	3 years + 1 + 1
Cost	2.60% fixed (2.00% margin, 0.60% swap)	2.99% fixed	1.50% margin	1.70% fixed

	31 March 2020	31 December 2019
Average cost of debt (%)	2.46	2.57
Loan to value (%)	26.9	23.3
Weighted average interest cover (times)¹	4.5	4.6
Weighted average debt to maturity (years)²	3.4	3.7
Total debt drawn down (£m)	272.5	228.4
Unencumbered assets (£m)	212.0	193.9

¹ Weighted average interest cover is based on secured assets only.

² Weighted average debt to maturity excluding unexercised extensions under respective facility agreements.

In terms of new facilities, the Company, as noted above, has £212 million of assets that are presently unencumbered and are available as security for additional lending.

Prior to the lockdown, discussions were commenced with certain existing and new potential lenders in respect of the provision of additional facilities. Whilst these discussions have been held over for a period of time due to the pandemic, these will be picked up and reported on in due course.

Social Impact

We are pleased to note that the latest version of the independent social impact report was published with the Annual Report and Accounts.

This report sets out the performance of the Company in this important area of our work and challenges us against the targets that have been set.

At the same time, we have committed to developing our activities further, particularly with regard to the

implementation of ESG policies and activities.

In May 2020, we were invited to become a founder member of a "Reference Group" brought together by the social impact consultancy, The Good Economy, and the social impact investor, Big Society Capital, for a new project "Towards a best practice, sector standard approach for the management and reporting of impact in social housing".

As the project develops, we expect to provide regular updates as well as continuing to actively enhance the social impact and ESG delivery within the investment portfolio managed by CIM.

Pipeline and Outlook

The past year has been characterised by the Company being invited to engage in an ever more strategic manner within the specialist health care sector.

As we move forward there exists already a significant pipeline of new potential investment opportunities and we expect this to continue to grow over coming months.

The ability to enter into agreements with a wider range of counterparties, not just housing associations but the NHS directly, with local NHS Trusts and leading charities and care providers will broaden significantly the base of the Company.

We look forward to the coming year with confidence. There are challenges, not least from COVID-19, but we believe that the Company has a business model that is sufficiently robust and diversified to manage those issues well.

In closing this report we would like to thank the Board for the diligence and guidance we have received during the year and also our colleagues who have continued to work hard to deliver the very best outcomes that we can for our residents, shareholders and other stakeholders.

Civitas Investment Management Limited

Investment Adviser

29 June 2020

Corporate Social Responsibility Report

Sustainability

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

Environment

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

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

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

Diversity

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

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

Corporate Governance Statement in the full Annual Report.

The Board comprises three male and two female non-executive Directors. During the year, the Board appointed Alison Hadden as a Director. In line with the Company's diversity policy, this appointment was made on the basis of merit as the Board believes that Alison's skills, background and experience will complement those of the other Board members. Alison's appointment also ensured that the Company complied with the Hampton-Alexander Review's target of a minimum 33% representation of women on FTSE 350 boards.

The boards of directors of the Company's subsidiaries, which are non-operational, each comprise up to four male and no female directors.

Human Rights

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

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

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

Community and Employees

The Company's properties enable the provision of care to some of the most vulnerable people in the community, ensuring safe and secure accommodation, tailored to meet individual care needs. The Company has increased the provision of care-based housing, bringing new supply to the sector and providing homes to over 4,200 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.

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 4,200 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 its Portfolio. In the unlikely event that a part of the Portfolio is disposed of, the Directors intend to reinvest proceeds from such disposals in assets in accordance with the Company's investment policy.

Investment restrictions

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

· the Company only invests in Social Homes located in 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 on a Portfolio NAV basis;

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

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

· the Company is not engaged in short selling.

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

Gearing limit

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

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

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

Use of derivatives

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

Cash management

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

REIT status

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

Section 172 Statement and Stakeholder Engagement

Overview

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

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

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

Stakeholders

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

During the period under review, the Board discussed which parties should be considered as stakeholders of the Company. Following a comprehensive review, it was concluded that, as the Company is an externally managed investment company with no employees, its key stakeholders comprise those set out in the table below. 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 their decision making.

Our stakeholders

Key areas of interest

How we engage

Shareholders

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

· Current and future financial performance

· Strategy and business model

· Corporate governance

· ESG performance and sustainability

· 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 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.

Publications - The Annual Report and Half-Year Results are made available on the Company's website and the Annual Report is circulated to shareholders. 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 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 corporate governance matters raised by shareholders. In the event shareholders wish to raise issues or concerns with the Board or the Investment Adviser, they are welcome to write to the Company at the registered office address set out in the full Annual Report. Other members of the Board are also available to shareholders if they have concerns that have not been addressed through the normal channels.

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. During the year, several investor update meetings were held between the shareholders and one or more of the Chairman, the Investment Adviser and the Brokers. 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 within the full Annual Report are details of substantial shareholdings in the Company.

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

Investment Adviser

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

· Current and future financial performance

· Shared commercial objectives with the Company

· Operational excellence

· Long-term development of its business and resources

· ESG performance and sustainability

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

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

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

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

· recognising that the interests of the shareholders and the Investment Adviser are for the most part well aligned, adopting a tone of constructive challenge, balanced with robust negotiation of the Investment Adviser's terms of engagement if those interests should not be fully congruent;

· 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 an investment trust 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 service provider.

Housing Associations/ Registered Providers

· Current and future performance

· Sustainability

· Compliance and property management

· Welfare of tenants

· Lease obligations

The Company's Housing Association 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 Housing Associations.

The Investment Adviser works closely with the Company's Housing Association 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 Housing Association partners, liaising monthly on compliance, health and safety, maintenance and future-proofing schemes, as well as hosting quarterly seminars to discuss current themes/trends affecting the sector, to troubleshoot and it serves as an opportunity to build relationships and share best practice.

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 ratings and the nature of the SLA agreement covering voids between the care provider and the Housing Association.

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 Housing Association and care provider partners to see first hand the nature of the housing and care provision that is being delivered. This is supported by the regular Housing Association seminars at which the wellbeing of tenants is discussed in detail.

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

Regulator of Social

Housing

· 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 deputy CEO of the RSH was recently invited to attend the Company's Board meeting to share thoughts on the sector and the ways in which the Company could further evolve in order to assist the work of the RSH. This meeting was regarded by both parties as being very useful and constructive.

Over the past 18 months, the Investment Adviser has arranged and hosted a number of one-on-one meetings between the Company's shareholders and the RSH. This has enabled shareholders to gain a better understanding of the approach to regulation taken by the RSH.

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

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.

This year, the Company welcomed the results of the review of the Company's Annual Report and Accounts for the year ended 31 March 2019, undertaken by the Conduct Committee of the Financial Reporting Council ("FRC")*. The FRC had not raised any questions or queries but did make a number of recommendations for improvements to the existing disclosures where they believed this would benefit the users of the financial statements. The Directors welcomed the feedback, and wherever appropriate, the disclosures in this report have been enhanced, incorporating the FRC's suggestions. Specifically, the Company has taken on board the comments related to Alternative Performance Measures and expanded the definitions where relevant, and removed reference to EPRA Net Initial Yield. Note 14 "Dividends" has been updated to include the amount of proposed dividend in addition to the amount per share to comply with the requirements of IAS 1 para 137.

*The FRC's review was based solely on the Company's 2019 Annual Report and Accounts and did not benefit from detailed knowledge of the Company's business or an understanding of the underlying transactions entered into. The FRC provides no assurance that the Company's 2019 Annual Report and Accounts were correct in all material respects as the FRC's role is not to verify information provided but to consider compliance with reporting requirements.

Local authorities

· Provision of safe and secure quality properties

· Sustainability for long-term placements

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

The Company will engage with the local authority commissioner either directly, or through specialist consultants, Housing Association 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.

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 Housing Associations operate policies to ensure positive relationships with neighbours and surrounding dwellings. The activities within the Company's properties create employment within the local community for both housing and care workers.

Charity partners

· Delivering needed support to vulnerable adults

· Improved well-being of vulnerable adults

· ESG performance and sustainability

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

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

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

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

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.

The Board strives to ensure that its culture is in line with the Company's purpose, values and strategy. As detailed in the Corporate Governance Statement in the full Annual Report, 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 Corporate Governance Statement in the full Annual Report.)

Key Performance Indicators ("KPIs")

Measure	Explanation	Result
Increase in IFRS NAV per share	Target to achieve capital appreciation whilst maintaining a low risk strategy from enhancing the quality of cash flows from investments, by physical improvement of properties and by creating a significantly diversified, high-quality portfolio.	IFRS NAV increase of 9.9p per share or 10.1% from IPO.
Dividend per share	Targeting 5.4p per share per annum for the coming year growing broadly in line with inflation.	Dividends of 5.3p per share declared for the year to 31 March 2020.
Number of Local Authorities, Housing Associations 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 Housing Association and no more than 20% exposure to any single geographical area, once the capital of the Company is fully invested.	As at 31 March 2020: • 164 Local Authorities • 15 Housing Associations • 117 Care Providers The Company's largest single exposure is to Auckland Housing Association and currently stands at 24%. The largest geographical concentration is in the South West, being 14.1%.
Loan to Gross Assets	Assets Target debt drawn of 35% of gross assets.	Leverage as at 31 March 2020 of 26.9% of gross assets.

Alternative Performance Measures

Adjusted Performance Measure	Definition	Performance Measure	31 March 2020	31 March 2019
Portfolio NAV	IFRS NAV adjusted to reflect investment property valued on a portfolio basis rather than on an individual asset basis.	Portfolio NAV	£735,704,000	£741,170,000
Portfolio NAV		Portfolio NAV per share	118.35p	119.07p
Company Adjusted Earnings	Company Specific Earnings Measure which adds back the finance costs associated with the C share financial liability.	Adjusted Earnings	£28,814,000	£22,612,000
Company Adjusted Earnings		Adjusted Earnings per share	4.63p	3.63p

For a reconciliation of the Portfolio NAV to the IFRS results please see note 6 to Appendix 1 below. For detailed workings reconciling the Company Adjusted Earnings to the IFRS results, please see Appendix 1 to these financial statements below.

EPRA

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

EPRA Performance Measure	Definition	EPRA Performance Measure	31 March 2020	31 March 2019
Earnings	Earnings from operational activities .	EPRA Earnings	£28,814,000	£16,212,000
		EPRA Earnings per share (basic)	4.63p	3.81p
		EPRA Earnings per share (diluted)	4.63p	3.63p

EPRA NAV	Net Asset Value adjusted to include properties and other investment interest at fair value and to exclude certain items not expected to crystallise in a long-term investment property business model.	EPRA Net Asset Value	£671,042,000	£666,508,000
EPRA NAV		EPRA NAV per share (diluted)	107.95p	107.08p
EPRA NNNAV	EPRA NAV adjusted to include the fair values of (i) financial instruments, (ii) debt and (iii) deferred taxes.	EPRA NNNAV	£667,560,000	£665,858,000
EPRA NNNAV		EPRA NNNAV per share (diluted)	107.39p	106.97p

EPRA Vacancy Rate	Estimated Market Rental Value ("ERV") of vacancy space divided by ERV of the whole portfolio.	EPRA Vacancy Rate	0%	0%
EPRA Costs Ratio	Administrative and operating costs (including and excluding costs of direct vacancy) divided by gross rental income.	EPRA Costs Ratio	21.48%	26.95%
EPRA Costs Ratio		EPRA Costs Ratio (excluding direct vacancy costs)	21.48%	26.98%

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

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 34 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 2020, and that processes are in place to continue this assessment. Further details of risk management processes that are in place can be found in the Corporate Governance Statement in the full Annual 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 principal risks and management of those risks are described below:

Principal risks and uncertainties

1. 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.

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 to be robust.

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

Impact: Very High

Probability:

Unlikely

2. 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.

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.

Impact: High

Probability:

Unlikely

3. Investment

management risk

Impact

How managed/mitigated

Tenant defaulting under the terms of a lease.

Loss of rental income in the short term.

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

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

Impact:

Medium

Probability: Likely

4. 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, general market pricing of similar

investments, share prices and discount.

The valuation of the Company's assets would fall, decreasing the Net Asset Value 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, such as the current COVID-19 pandemic.

Impact:

High

Probability:

Unlikely

5. 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.

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 Registered Providers and care providers involved in each property to ensure that the purchase price is robust.

The Board considers the due diligence undertaken when approving acquisitions.

Impact:

High

Probability:

Unlikely

6. Investment management risk

Impact

How managed/mitigated

Loss of key staff at the Investment Adviser.

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.

Impact:

High

Probability:

Unlikely

7. Investment management risks

Impact

How managed/mitigated

Failure to monitor that contingent activities are completed by the Registered Providers or other parties.

Deterioration in the underlying quality, and therefore value of the Company's property.

Contingent actions are regularly monitored and followed up.

The Board is kept apprised of any breach of lease obligations.

Impact:

Medium

Probability:

Unlikely

8. Investment management risks

Impact

How managed/mitigated

Lack of availability of debt financing or other capital.

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

The Company has strong links with a number of banks and other capital sources.

The Board closely considers any new loan facility proposed and receives regular updates on debt and capital markets for consideration.

Impact:

Medium

Probability:

Unlikely

9. Operational risks, including cyber crime

Impact

How managed/mitigated

Counterparty failure (custodian, Registered Providers, lenders)

Loss of operational capabilities, potential loss of rental income.

Registered Providers are themselves regulated by the RSH and are required to meet those and other regulatory and legal requirements. In addition, the Company's leases include the obligation to report levels of compliance with regard to health and safety.

The Company operates policies that ensure the portfolio is diversified in terms of counterparty risk.

Other service providers operate procedures that seek to mitigate risk and the Company seeks to work with parties that have a positive reputation and can demonstrate that they have implemented appropriate risk control over their activities.

Details regarding the extent of impact of COVID-19 on the Company's counterparties are set out above.

Impact:

Medium

Probability:

Unlikely

10. Operational risks, including cyber crime

Impact

How managed/mitigated

Disruption to, or failure, of the systems or general operations of third party providers could prevent accurate reporting and monitoring of the Company's financial position. This includes the risk of cyber crime and potential threat to security, business continuity and reputation.

Loss of operational capabilities, potential regulator actions.

Alternative service providers would need to be identified and activities transferred.

The Board monitors the services provided by the Investment Adviser and other service providers and the key elements which are designed to provide effective internal control. All service providers are required to have robust IT security and disaster recovery contingency plans in place.

Impact:

Medium

Probability:

Unlikely

Going Concern and Viability Statement

Going Concern

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

The Company acquires high-quality property with a particular focus on property providing care for the long term. The properties acquired are on long-term full repairing and insuring leases in a sector of the market with very high levels of need. The cost base of the Company is proportionately low compared to revenue and there is a high level of certainty over cost to be incurred. On this basis, the Company is expected to be viable well beyond the five-year term considered in the Company's testing below.

As at 31 March 2020, the Company held cash balances of £49.3 million (net of operating and financing amounts due) of which approximately £14 million was allocated in respect of transactions completing in 2020 - £1.8 million in respect of two properties in Telford and one in Sunderland which the Company has conditionally exchanged on, and £12.1 million in relation to two properties in Wales for which the Company has entered into a conditional sale and purchase agreement. We have allocated £10 million

(estimated) relating to a capital payment contingent on certain financial obligations being met at the properties in Wales. The remaining cash balances are being held as a cash contingency that the Company retains as a matter of financial prudence. The Board has evaluated the financial position of the Company and is confident in the ability to raise debt and/or equity capital in order to fund the Company's investments for the next 12 months and to facilitate the payment of dividends to shareholders at the targeted rate. Based on this, the Board believes that the Company is in a position to manage its financial risks.

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

Viability Statement

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 2025. The prospects were assessed over a five-year period, acknowledging that the Company will have its first continuation vote in 2022, for the following reasons:

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

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

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

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

The Board of Directors has carried out a robust assessment of the principal and emerging risks facing

the Company, including those that would threaten its business model, future performance, solvency and liquidity. Where appropriate, the Company's forecasts are subject to sensitivity analysis, which involves applying severe conditions and flexing a number of assumptions simultaneously. The sensitivities performed were designed to provide the Directors with an understanding of the Company's performance in the event of severe but plausible scenarios, taking full account of mitigating actions that could be taken to avoid or reduce the impact or occurrence of the underlying risks outlined below:

· reduction in availability of suitable assets for acquisition;

· tenant defaulting under a lease;

· lack of availability for debt financing or other capital; and

· deterioration in economic outlook, such as any negative impact due to Brexit, impact of COVID-19, or change in government housing policy which could impact the fundamentals of the social housing sector, including a negative impact on valuations and rental uplifts.

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

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

Michael Wrobel

Chairman

29 June 2020

Board of Directors

Michael Wrobel (Chairman)

Alastair Moss (Director)

Alison Hadden (Director)

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

Peter Baxter (Senior Independent Director)

Extracts from the Report of the Directors

Results and Dividends

The results for the year are shown below.

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

First dividend	1.325p per share paid on 7 June 2019
Second dividend	1.325p per share paid on 6 September 2019
Third dividend	1.325p per share paid on 29 November 2019
Fourth dividend	1.325p per share paid on 28 February 2020

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

Quarterly dividend

1.325p per share paid on 12 June 2020

No final dividend is being recommended on the Ordinary shares.

Capital Structure

Issue of shares

At the AGM held on 5 September 2019, the Directors were authorised to issue equity securities up to an aggregate nominal amount of £622,461 (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 £622,461

(being approximately 10% of the issued Ordinary share capital).

No Ordinary shares were issued under these authorities during the year. Ordinary shares would be issued at a price of not less than the net asset value per share at the time of issue.

Proposals for the renewal of the Directors' authority to issue shares will be set out in the Notice of AGM.

Purchase of own shares

At the AGM held on 5 September 2019, the Directors were granted the authority to buy back up to 93,306,960 Ordinary shares, being 14.99% of the Ordinary shares in issue at the time of the passing of the resolution.

During the year, the Company purchased in the stock market 815,000 shares (with a nominal value of £8,150) to be held in treasury, at a cost of £699,000. This represented 0.13% of the issued share capital at 31 March 2019. During the year, no shares were bought back for cancellation.

The share purchases were made with a view to reducing discount volatility and maintaining the middle market price at which the shares traded close to the net asset value.

The remaining authority to buy back up to 92,491,960 shares will expire at the conclusion of the forthcoming AGM, when a resolution for its renewal will be proposed. Further information will be contained in the Notice of AGM, which will be circulated to shareholders in due course.

Current share capital

As at 31 March 2020, and as at the date of this report, there were 622,461,380 Ordinary shares in issue, of which 815,000 shares were held in treasury. The total voting rights of the Company as at 31 March 2020 and 29 June 2020, the date of signing this report, were 621,646,380.

Statement of Directors' Responsibilities

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

Company law requires the Directors to prepare financial statements for each financial year. Under that law, the Directors have prepared the Group financial statements in accordance with International Financial Reporting Standards ("IFRSs") as adopted by the European Union and the Company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 101 "Reduced Disclosure Framework", and applicable law). Under company law, the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Company and of the profit or loss of the Group and Company for that period. In preparing the financial statements, the Directors are required to:

· select suitable accounting policies and then apply them consistently;

· state whether applicable IFRSs as adopted by the European Union have been followed for the Group financial statements and United Kingdom Accounting Standards, comprising FRS 101, have been followed for the Company financial statements, subject to any material departures disclosed and explained in the financial statements;

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

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

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

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

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

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

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

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

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

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

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

Michael Wrobel

Chairman

29 June 2020

NON-STATUTORY ACCOUNTS

The financial information set out below does not constitute the Company's statutory accounts for the year ended 31 March 2020 or the year ended 31 March 2019 but is derived from those accounts. Statutory accounts for the period ended 31 March 2019 have been delivered to the Registrar of Companies and those for the year ended 31 March 2020 will be delivered in due course. The Auditor has reported on those accounts; their report was (i) unqualified, (ii) did not include a reference to any matters to which the Auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006. The text of the Auditor's report can be found in the Company's full Annual Report and financial statements at www.civitassocialhousing.com.

Consolidated Statement of Comprehensive Income
For the year ended 31 March 2020

	Note	For the year ended 31 March 2020 £'000	For the year ended 31 March 2019 £'000

Revenue
Rental income	5	46,165	35,738
Less direct property expenses	5	(259)	-

Net rental income		45,906	35,738

Directors' remuneration	6	(176)	(163)
Investment advisory fees	8	(6,183)	(6,457)
General and administrative expenses	9	(3,501)	(3,022)

Total expenses		(9,860)	(9,642)

Change in fair value of investment properties	15	9,389	3,652

Operating profit		45,435	29,748
Finance income	10	110	491
Finance expense - relating to bank borrowings	11	(7,342)	(3,975)
Finance expense - C shares amortisation	11	-	(6,400)
Change in fair value of interest rate derivatives	21	(478)

Profit before tax		37,725	19,864
Taxation	12	-	-

Profit being total comprehensive income for the year		37,725	19,864

Earnings per share - basic	13	6.06p	4.67p

Earnings per share - diluted	13	6.06p	4.22p

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

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

Consolidated Statement of Financial Position

As at 31 March 2020

	Note	31 March 2020 £'000	31 March 2019 £'000
Assets
Non-current assets
Investment property	15	867,988	820,094
Other receivables	17	10,755	6,824
		878,743	826,918
Current assets
Trade and other receivables	17	10,838	5,723
Cash and cash equivalents	18	58,374	54,347
		69,212	60,070
Total assets		947,955	886,988

Liabilities
Current liabilities
Trade and other payables	19	(7,743)	(15,324)
Cash and cash equivalents	20	(59,730)	-
		(67,473)	(15,324)
Non-current liabilities
Bank and loan borrowings	20	(209,440)	(205,156)
Interest rate derivatives	21	(478)	-
Total liabilities		(277,391)	(220,480)

Total net assets		670,564	666,508

Equity
Share capital	23	6,225	6,225
Share premium reserve	24	292,405	292,405
Capital reduction reserve	25	330,926	331,625
Retained earnings	26	41,008	36,253

Total equity		670,564	666,508

Net assets per share - basic and diluted

107.87p

107.08p

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

Michael Wrobel

Chairman and Independent Non-Executive Director

29 June 2020

Company No: 10402528

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

Consolidated Statement of Changes in Equity

For the year ended 31 March 2020

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

Balance at 1 April 2018		3,500	-	331,625	34,270	369,395

Profit and total comprehensive income for the year		-	-	-	19,864	19,864

Issue of Ordinary shares
Issue of share capital	23	2,725	292,461	-	-	295,186
Share issue costs	24	-	(56)	-	-	(56)
Dividends paid
Total interim dividends for the year ended 31 March 2019 (5.00p)	14	-	-	-	(17,881)	(17,881)
Balance at 31 March 2019		6,225	292,405	331,625	36,253	666,508


Profit and total comprehensive income for the year		-	-	-	37,725	37,725

Issue of Ordinary shares
Shares bought back into treasury	25	-	-	(699)	-	(699)
Dividends paid
Total interim dividends for the year ended 31 March 2020 (5.30p)	14	-	-	-	(32,970)	(32,970)
Balance at 31 March 2020		6,225	292,405	330,926	41,008	670,564

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

Consolidated Statement of Cash Flows

For the year ended 31 March 2020

	Note	For the year ended 31 March 2020 £'000	For the year ended 31 March 2019 £'000
Cash flows from operating activities
Profit for the year before taxation		37,725	19,864
- Change in fair value of investment properties		(9,389)	(3,652)
- Change in fair value of interest rate derivatives		478	-
- Rent and incentive straight line adjustments		(87)	(314)
Finance income		(110)	(491)
Finance expense		7,342	10,375
Increase in trade and other receivables		(3,290)	(2,789)
Increase/(decrease) in trade and other payables		126	(149)
Cash generated from operations		32,795	22,844
Interest received		110	491
Net cash flow generated from operating activities		32,905	23,335
Investing activities
Purchase of investment properties		(17,986)	(267,908)
Acquisition costs		(9,737)	(9,421)
Purchase of subsidiary company		(19,829)	(25,470)
Sale proceeds on sale of subsidiary company		2,221	4,336
Lease incentives paid		(6,844)	(3,178)
Restricted cash held as retention money		(9,726)	(936)
Net cash flow used in investing activities		(61,901)	(302,577)
Financing activities
Share issue costs paid	24	-	(56)
Cost of shares bought into treasury	25	(699)	-
Dividends paid to equity shareholders		(32,889)	(17,591)
Dividends paid to C shareholders	22	-	(9,966)
Bank borrowings advanced	20	64,053	115,990
Bank borrowing issue costs paid	20	(1,364)	(2,374)
Loan interest paid		(5,804)	(2,958)
Net cash flow generated from financing activities		23,297	83,045

Net decrease in cash and cash equivalents		(5,699)	(196,197)
Unrestricted cash and cash equivalents at the start of the year	18	47,128	243,325
Unrestricted cash and cash equivalents at the end of the year	18	41,429	47,128

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

Notes to the Consolidated Financial Statements

For the year ended 31 March 2020

1. Corporate information

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

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

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

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

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

2. Basis of preparation

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

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

The Group has chosen to adopt EPRA best practice guidelines for calculating key metrics such as net asset value and earnings per share. These are disclosed below with supporting calculations in Appendix 1 below.

2.1 Functional and presentation currency

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

2.2 Going concern

The Group benefits from a secure income stream from long leases with the Housing Associations, which are not overly reliant on any one tenant and present a well-diversified risk. The Group's cash balance as at 31 March 2020 were £58.4 million, of which £16.9 million is held as restricted cash. Details of this can be found in Note 18.

To date, the Company's financial performance has not been negatively impacted by COVID-19. The Company and its Investment Adviser, Civitas Investment Management Limited ("CIM") are working 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.

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

2.3 New standards, amendments and interpretations

The following new standards are now effective and have been adopted for the year ended 31 March 2020.

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

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

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

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

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

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

· Amendments to IAS 1 'Presentation of Financial Statements' and IAS 8 'Accounting Policies, Changes in Accounting Estimates and Errors': (effective for annual periods beginning on or after 1 January 2020) - make amendments to clarify the definition of 'material'. The amendments make IFRSs more consistent but are not expected to have a significant impact on the preparation of the financial statements.

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

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

2.5 Segmental information

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

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

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

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

2.6 Prior year adjustment

An adjustment has been made to the Group accounts to reflect the reallocation of historic dividends at a Company level to the distributable Capital Reduction Reserve. This is an accounting adjustment to correct an historic misallocation at a Company level and has no other effect (including no cash effect) in the Group financial statements.

Comparative figures have been restated.

3. Significant accounting judgements, estimates and assumptions

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

3.1 Significant estimate - valuation of investment property

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

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

The Valuer has included a material valuation uncertainty clause within their valuation report.

Material Valuation Uncertainty due to Novel Coronavirus (COVID-19)

The outbreak of the Novel Coronavirus (COVID-19), declared by the World Health Organisation as a "Global Pandemic" on 11 March 2020, has impacted global financial markets. Travel restrictions have been implemented by many countries. Market activity is being impacted in many sectors. As at the valuation date, we consider that we can attach less weight to previous market evidence for comparison purposes, to inform opinions of value. Indeed, the current response to COVID-19 means that we are faced with an unprecedented set of circumstances on which to base a judgement.

The valuation is therefore reported on the basis of "material valuation uncertainty" as per VPS 3 and VPGA 10 of the RICS Red Book Global. Consequently, less certainty - and a higher degree of caution - should be attached to our valuation than would normally be the case. Given the unknown future impact that COVID-19 might have on the real estate market, we recommend that you keep the valuation of these properties under frequent review. For the avoidance of doubt, the inclusion of the 'material valuation uncertainty' declaration above does not mean that the valuation cannot be relied upon. Rather, the phrase is used in order to be clear and transparent with all parties, in a professional manner that - in the current extraordinary circumstances - less certainty can be attached to the valuation than would otherwise be the case.

On 28 May 2020, RICS published an update and concluded that the inclusion of MUCs was no longer appropriate for (inter alia):

specialist supported housing of all types, designated either C2 or C3 use class, let to Registered Providers on FRI leases, and usually with a third-party care provider involved in providing care and support to residents, valued on the basis of Market Value

This advice was supported by JLL because of a continuation of activity in the specialist supported housing market and they will be following this guidance in future valuation reports. Details of this clause are disclosed in note 15.

With respect to the Group's consolidated financial statements, investment properties are valued at their fair value at each balance sheet date in accordance with IFRS 13 which recognises a variety of fair value inputs depending upon the nature of the investment. Specifically:

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

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

· Level 3 - External inputs are "unobservable". Value is the Directors' best estimate, based on advice from relevant knowledgeable experts, use of recognised valuation techniques and a determination of which assumptions should be applied in valuing such assets and with particular focus on the specific attributes of the investments themselves.

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

3.2. Significant judgement - business combinations

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

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

With the exception of one acquisition detailed below, all other corporate acquisitions during the year have been treated as asset purchases rather than business combinations because no integrated set of activities was acquired.

During the year, the Group entered into a transaction to acquire the freehold properties operated by New Directions Flexible Social Care Solutions Ltd and Vision MH Ltd. Upon the acquisition of the companies, investment properties were transferred into other Group companies and the companies, along with their associated operations, were sold to TLC Care Homes Limited. Further details are shown in note 16 to the financial statements.

During the comparative year, the Group entered into a purchase of TLC Care Homes Limited which carried out operational activities. Upon acquisition, investment properties were transferred into another Group company and the company was sold. Further details are shown in note 16 to the financial statements.

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

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

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

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

4. Summary of significant accounting policies

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

4.1. Basis of consolidation

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

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

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

4.3. Leases

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

The Company has determined that it retains all the significant risks and rewards of ownership of the properties and accounts for the contracts as operating leases as discussed in note 3.

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

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

4.4. Financial Assets

Classification

From 1 April 2018, the Group classifies its financial assets in the following measurement categories:

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

· those to be measured at amortised cost.

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

Trade and other receivables

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

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

Impairment

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

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

The expected loss rates are based on the payment profiles of sales over a period of up to 36 months before 31 March 2020 or 1 April 2019, respectively, and the corresponding historical credit losses experienced within this period. The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors affecting the liability of the tenants to settle the receivable. Such forward-looking information would include: changes in economic, regulatory, technological and environmental factors (such as industry outlook, GDP, employment and politics); external market indicators; and tenant base.

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

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

Cash and cash equivalents

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

Within cash and cash equivalents is restricted cash which represents amounts held for specific commitments 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.

Currently that amount of cash is held in escrow.

4.5. Financial liabilities

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

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

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

Trade and other payables

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

Bank and other borrowings

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

C share financial liability

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

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 gain or loss at each fair value remeasurement date is recognised in the Group's Consolidated Statement of Comprehensive Income.

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

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 2020	31 March 2019
	£'000	£'000
Proceeds from the issue of Ordinary shares and retained earnings thereon	670,564	666,508
Bank and loan borrowings	269,170	205,156
	939,734	871,664

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

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

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

4.9. Dividends payable to shareholders

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

4.10. Rental income

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

Service charges and other similar receipts 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 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 over the period of the loan.

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

4.13. Expenses

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

4.14. Investment advisory fees

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

4.15. Share issue costs

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

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 is deducted from equity and the costs are shown in the Consolidated Statement of Changes in Equity. Consideration received, net of transaction costs, for the resale of these shares is also included in equity. Whilst the Company holds shares in treasury, the calculations for net asset value and earnings per share are adjusted to exclude these shares.

5. Rental income

	For the year ended 31 March 2020 £'000	For the year ended 31 March 2019 £'000
Rental income from investment property	45,819	35,424
Rent straight line adjustments	361	459
Lease incentive adjustments	(274)	(145)
Rechargeable costs received	259	-
Rental income	46,165	35,738
Less direct property expenses	(259)	-
Net rental income	45,906	35,738

Rechargeable costs received represent insurance costs paid by the Group and recharged to the Registered Providers.

As per the lease agreement with the Group and Registered Providers, the Registered 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. Directors' remuneration

	For the year ended 31 March 2020 £'000	For the year ended 31 March 2019 £'000

Directors' fees	162	150
Employer's National Insurance Contributions	14	13
Total	176	163

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

7. Particulars of employees

The Group had no employees during the period (31 March 2019: nil) other than the Directors.

8. Investment advisory fees

	For the year ended 31 March 2020 £'000	For the year ended 31 March 2019 £'000
Advisory fee	6,131	6,457
Disbursements	52	-
Total	6,183	6,457

On 7 May 2020, Civitas Housing Advisors Limited changed its name to Civitas Investment Management Limited. CIM is the appointed Investment Adviser of the Company. Under the current Investment Management Agreement, the Advisory Fee shall be an amount calculated in respect of each Quarter, in each case based upon the Net Asset Value most recently announced to the market at the relevant time (as adjusted for issues or repurchases of shares in the period between the date of such announcement and the date of the relevant calculation), on the following basis:

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

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

c) on that part of the Net Asset Value over £500 million and up to and including £1,000 million, 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 million, an amount equal to 0.7% of such part of the Net Asset Value.

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

During the year, the expiry date period was extended from 30 November 2021 to 30 May 2024.

Prior to 26 April 2019, the Advisory Fee calculation was based upon the higher Portfolio NAV which is defined in Appendix 1 below.

9. General and administrative expenses

	For the year ended 31 March 2020 £'000	For the year ended 31 March 2019 £'000
Legal and professional fees	1,081	1,049
Administration fees	1,070	717
Consultancy fees	148	176
Audit fees	246	211
Abortive costs	303	18
Bad debts	-	421
Valuation fees	96	96
Depositary fees	71	60
Grants and donations	88	28
Insurance	49	65
Marketing	269	101
Regulatory fees	14	19
Sundry expenses	65	61
Directors' expenses	1	-
Total	3,501	3,022

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

Services provided by the Company's auditors and their associates

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

	For the year ended 31 March 2020 £'000	For the year ended 31 March 2019 £'000

Audit of the financial statements	195	180
Review of the half year financial statements	51	31
Corporate services relating to the C share conversion	-	10
Total	246	221

10. Finance income

	For the year ended 31 March 2020 £'000	For the year ended 31 March 2019 £'000

Interest and dividends received on liquidity funds	81	486
Bank interest received	29	5
Total	110	491

11. Finance expense

	For the year ended 31 March 2020 £'000	For the year ended 31 March 2019 £'000

Bank charges	2	2
Interest paid and payable on bank borrowings	5,795	3,048
Bank borrowing commitment fees	220	207
Amortisation of loan arrangement fees	1,325	718
Finance expenses associated with bank borrowings	7,342	3,975
Amortisation of C share liability	-	6,400
Total	7,342	10,375

12. Taxation

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

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

For the

year ended

31 March 2020

£'000

For the

year ended

31 March 2019

£'000

Corporation tax charge/(credit) for the period

Total

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

	For the year ended 31 March 2020 £'000	For the year ended 31 March 2019 £'000
Group
Profit before taxation	37,725	19,864

UK corporation tax rate	19.00%	19.00%
Theoretical tax at UK corporation tax rate	7,168	3,774
Effects of:
Change in value of exempt investment properties	(1,784)	(694)
Exempt REIT income	(6,136)	(4,702)
Amounts not deductible for tax purposes	175	1,296
Unutilised residual current period tax losses	577	326
Total	-	-

The standard rate of corporation tax is currently 19%. The Government has announced that the corporation tax standard rate is to be kept at to 19% for the foreseeable future.

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. IFRS Earnings per share

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

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

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

	For the year ended 31 March 2020	For the year ended 31 March 2019
Calculation of Basic Earnings per share
Net profit attributable to Ordinary shareholders (£'000)	37,725	19,864
Weighted average number of Ordinary shares	622,103,798	425,393,423
Earnings per share - basic	6.06p	4.67p

Calculation of Diluted Earnings per share
Net profit attributable to Ordinary shareholders (£'000)	37,725	19,864
Add back finance costs associated with the C share liability (£'000)	-	6,400
Total (£'000)	37,725	26,264


Weighted average number of Ordinary shares	622,103,798	425,393,423
Effects of dilution from C shares	-	197,067,957
	622,103,798	622,461,380
Earnings per share - diluted	6.06p	4.22p

14. Dividends

	For the year ended 31 March 2020 £'000	For the year ended 31 March 2019 £'000
Dividend of 1.325p for the 3 months to 31 March 2019 (1.25p 3 months to 31 March 2018)	8,248	4,375
Dividend of 1.325p for the 3 months to 30 June 2019 (1.25p 3 months to 30 June 2018)	8,248	4,375
Dividend of 1.325p for the 3 months to 30 September 2019 (1.25p 3 months to 30 September 2018)	8,238	4,375
Dividend of 1.325p for the 3 months to 31 December 2019 (1.25p 3 months to 31 December 2018)	8,236	4,756
Total	32,970	17,881

On 8 May 2019, the Company announced a dividend of 1.325 pence per share in respect of the period 1 January 2019 to 31 March 2019. The dividend payment was made on 7 June 2019 to shareholders on the register as at 17 May 2019.

On 6 August 2019, the Company announced a dividend of 1.325 pence per share in respect of the period 1 April 2019 to 30 June 2019. The dividend payment was made on 6 September 2019 to shareholders on the register as at 16 August 2019.

On 7 November 2019, the Company announced a dividend of 1.325 pence per share in respect of the period 1 July 2019 to 30 September 2019. The dividend payment was made on 29 November 2019 to shareholders on the register as at 15 November 2019.

On 29 January 2019, the Company announced a dividend of 1.325 pence per share in respect of the period 1 October 2019 to 31 December 2019. The dividend payment was made on 28 February 2020 to shareholders on the register as at 7 February 2020.

On 11 May 2020, the Company announced a dividend of 1.325 pence per share in respect of the period 1 January 2020 to 31 March 2020 totalling £8,236,000. The dividend payment was made on 12 June 2020 to shareholders on the register as at 22 May 2020. The financial statements do not reflect this dividend.

15. Investment property

	For the year ended 31 March 2020 £'000	For the year ended 31 March 2019 £'000

Balance at beginning of year	826,918	516,554
Property acquisitions	33,194	289,304
Acquisition costs	5,311	10,916
Change in fair value during the year	13,320	10,144
Value advised by the property valuers	878,743	826,918
Adjustments for lease incentive assets and rent straight line assets recognised	(10,755)	(6,824)
Total	867,988	820,094

Change in fair value of investment properties:	For the year ended 31 March 2020 £'000	For the year ended 31 March 2019 £'000

Change in valuation during the year	13,320	10,144
Adjustment for lease incentives and rent straight line adjustments recognised in assets as:
Start of the year	6,824	332
End of the year	(10,755)	(6,824)
	9,389	3,652

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.

As mentioned in note 3.1, the valuer included the following material valuation uncertainty clause within its valuation report.

Material Valuation Uncertainty due to Novel Coronavirus (COVID-19)

Market activity is being impacted in many sectors. As at the valuation date, we consider that we can attach less weight to previous market evidence for comparison purposes, to inform opinions of value. Indeed, the current response to COVID-19 means that we are faced with an unprecedented set of circumstances on which to base a judgement.

For the avoidance of doubt, the inclusion of the 'material valuation uncertainty' declaration above does not mean that the valuation cannot be relied upon. Rather, the phrase is used in order to be clear and transparent with all parties, in a professional manner that - in the current extraordinary circumstances - less certainty can be attached to the valuation than would otherwise be the case.

Valuation

JLL valued the Civitas Social Housing PLC property portfolio on the basis of each individual property and the theoretical sale of the properties without the benefit of any corporate wrapper at £878,743,000 as at 31 March 2020 (2019: £826,918,000).

JLL has provided valuation services to the Company with regards to the properties during the year. In relation to the year ended 31 March 2020, 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, all corporate acquisitions during the year have been treated as asset purchases rather than business combinations because they are considered to be acquisitions of properties rather than businesses.

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

	Total £'000	Quoted prices in active markets (Level 1) £'000	Significant observable inputs (Level 2) £'000	Significant unobservable inputs (Level 3) £'000
Investment properties measured at fair value:

31 March 2020	867,988	-	-	867,998
31 March 2019	820,094	-	-	820,094

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 external inputs are "unobservable" and value is the Directors' best estimate, based upon advice from relevant knowledgeable experts.

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

These include:

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

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

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

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

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

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

Valuation techniques: market value method

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

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

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

ii) The discount rate applied to the rental flows.

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

As at the balance sheet date, the lease lengths within the Group's portfolio ranged from an effective 25 years to 35 years with a weighted average unexpired lease term of 23.7 years (2019: 24.4). The greater the length then, all other metrics being equal, the greater the value of the property.

Sensitivities of measurement of significant unobservable inputs

As set out within significant accounting estimates and judgements at 3.1 above, the Group's property investment valuation is open to judgements and is inherently subjective by nature. As a result, the following sensitivity analysis has been prepared:

Average discount rate and range

The average discount rate used in the Group's property Portfolio Valuation is 5.3% (2019: 5.3%).

The range of discount rates used in the Group's property Portfolio Valuation is from 4.9% to 10.7% (2019: 4.9% to 6.0%).

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

	-0.5% in discount rate £'000	+0.5% in discount rate £'000	+0.25% in CPI £'000	-0.25% in CPI £'000
Increase/(decrease) in the IFRS fair value of investment properties at:
31 March 2020	34,733	(32,245)	26,918	(25,846)
31 March 2019	33,203	(30,788)	25,651	(24,711)

16. Subsidiary resale

	For the year ended 31 March 2020 £'000	For the year ended 31 March 2019 £'000
Balance at the beginning of the year	-	-
Acquisition	19,829	25,470
Transfer to investment property	(17,608)	(21,134)
Sale proceeds	(2,221)	(4,336)
	-	-

On 11 March 2020, the Group entered into a transaction to acquire the freehold properties operated by New Directions Flexible Social Care Solutions Ltd and Vision MH Ltd. Upon the acquisition of the companies for £19,829,000, investment properties were transferred into other Group companies and the companies, along with their associated operations, were sold to TLC Care Homes Limited for £2,221,000.

On 7 December 2018, the Group acquired a subsidiary, TLC Care Homes Limited, for £25,470,000 consisting of investment property and a care home business with the exclusive intent to sell the subsidiary business. At acquisition, the fair value of the investment property was £21,134,000 and the fair value of the assets and liabilities less selling costs of the care home business was £4,336,000. The care home business was sold immediately following acquisition for £4,336,000.

17. Trade and other receivables

Amounts falling due in less than one year	31 March 2020 £'000	31 March 2019 £'000

Rent receivable	4,307	2,954
Less provision for impairment	-	(421)

Net rent receivable	4,307	2,533
Accrued income	4,267	2,778
Prepayments and other receivables	2,264	412
Total	10,838	5,723

Prepayments and other receivable amounts include prepaid legal and professional fees of £469,000 (2019: £343,000) that have been incurred in connection with acquisitions yet to be completed and £1,695,000 (2019: £nil) in respect of uncompleted works on the property portfolio.

The increase in accrued income relates mainly to rent accrued for the period but not yet demanded. This is due to a number of tenants who are invoiced in arrears.

	31 March 2020	31 March 2019
	£'000	£'000
Amounts falling due after more than one year
Debtor arising from straight line adjustments	1,152	791
Lease incentives	9,603	6,033
	10,755	6,824

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

	31 March 2020 £'000	31 March 2019 £'000
Current	1,594	991
< 30 days	657	353
30-60 days	319	499
> 60 days	1,737	1,111
	4,307	2,954
Less provision for impairment	-	(421)
Total	4,307	2,533

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

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

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

18. Cash and cash equivalents

	31 March 2020 £'000	31 March 2019 £'000
Cash held by solicitors	3,325	17,031
Liquidity funds	10,475	13,394
Cash held at bank	27,629	16,703

Unrestricted cash and cash equivalents	41,429	47,128
Restricted cash	16,945	7,219
Total	58,374	54,347

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

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

Restricted cash represents amounts held for specific commitments 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. Currently, that amount of cash is held in escrow.

19. Trade and other payables

	31 March 2020 £'000	31 March 2019 £'000
Deferred income	245	14
Acquisition costs accrued	5,068	10,074
Lease incentives payable	-	3,000
Finance costs	1,014	798
Dividends payable	798	717
Accruals	618	616
Income tax and corporation tax payable*	-	105
Total	7,743	15,324

Acquisition costs accrued includes the balance of retention monies of £4,819,000 (2019: £7,219,000) and acquisition costs.

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

20. Bank and loan borrowings

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

	For the year ended 31 March 2020 £'000	For the year ended 31 March 2019 £'000
Balance at start of year	208,447	92,457
Bank borrowings drawn	64,053	115,990
Bank borrowings drawn at end of year	272,500	208,447
Balance at start of year	(3,291)	(1,635)
Less: loan issue costs incurred	(1,364)	(2,374)
Add: loan issue costs amortised	1,325	718
Unamortised costs at end of year	(3,330)	(3,291)
At end of year	269,170	205,156

	Loan Balance* 31 March 2020 £'000	Loan Principle 31 March 2020 £'000	Low Principal 31 March 2019 £'000
	Loan Balance* 31 March 2020 £'000	Loan Principle 31 March 2020 £'000	Low Principal 31 March 2019 £'000
Maturity of bank borrowings:
Repayable within 1 year	59,730	60,000	-
Repayable between 1 to 2 years	99,004	100,000	55,947
Repayable between 2 to 5 years	58,840	60,000	100,000
Repayable after 5 years	51,596	52,500	52,500
Total	269,170	272,500	208,447

*Loan balance net of unamortised costs.

As disclosed in note 36, after the year end the Lloyds Bank plc £60 million Revolving Credit Facility, which the table shows as repayable within 1 year, was extended in the normal course of business to November 2021.

The Group is party to the following loan facility agreements:

A 10-year Sterling Term Facility Agreement dated 2 November 2017 for up to £52,500,000 with Scottish Widows Limited. Interest is fixed at a total of 2.9936% per annum.

The borrowings include amounts secured on investment property to the value of £170,599,000 (2019: £169,999,000).

A 3-year Sterling Revolving Facility Agreement dated 15 November 2017 for up to £40,000,000 with Lloyds Bank plc. Interest is charged at LIBOR +1.50% margin. During the comparative year, a £20,000,000 increase of this facility was agreed. This facility was due for renewal in November 2020 but, as at the signing date, the loan has been extended in the normal course to November 2021.

The borrowings include amounts secured on investment property to the value of £147,475,000 (2019: £144,166,000).

A 3-year Revolving Credit Facility Agreement dated 28 November 2018 for up to £100,000,000 with HSBC Bank PLC. Interest is charged at LIBOR +1.70% margin.

The borrowings include amounts secured on investment property to the value of £216,026,000 (2019: £208,953,000).

A 5-year loan facility with National Westminster Bank Plc, dated 15 August 2019, for up to £60,000,000. Interest is charged at LIBOR +2.00% margin and has been fixed by way of a 5-year swap. The swap fixes interest on £20 million at 0.7105% and £40,000,000 at 0.5475%. The loan can be extended for an additional 2 years and there is the option of a further £40 million accordion.

The borrowings include amounts secured on investment property to the value of £129,933,000 (2019: £nil).

A number of covenants are in place under the four agreements. Under the Scottish Widows Limited 10-year facility, historical and projected interest cover must be at least 325% and the loan to value ratio must not exceed 40%. Under the Lloyds Bank plc 3-year revolving credit facility, historical and projected interest cover must be at least 250% and the loan to value ratio must not exceed 55%. Under the HSBC Bank PLC 3-year facility, historical and projected interest cover must be at least 250% and the loan to value ratio must not exceed 60%. Under the National Westminster Bank Plc 5-year facility, historical and projected interest cover must be at least 250% and the loan to value ratio must not exceed 50%. At 31 March 2020, the Group is in compliance with all covenants.

21. 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 £60,000,000 is currently drawn.

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

	For the year ended 31 March 2020 £'000	For the year ended 31 March 2019 £'000
At start of year	-	-
Change in fair value during the year	(478)	-
At end of the year	(478)	-

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 2020

(478)

31 March 2019

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

22. C shares

	For the year ended 31 March 2020 £'000	For the year ended 31 March 2019 £'000
At beginning of year	-	298,752
Dividends paid to C shareholders	-	(9,966)
Amortisation of C share liability	-	6,400
Conversion to Ordinary shares	-	(295,186)
At end of year	-	-

On 10 November 2017, the Company announced the issue of 302,000,000 C shares, issued at £1 per share. The C shares are convertible preference shares. The shares were listed on the London Stock Exchange and dealing commenced on 14 November 2017.

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

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

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

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

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

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

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

23. 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 2020 £'000	For the year ended 31 March 2019 £'000
Share capital
At beginning of year	6,225	3,500
Shares issued	-	2,725

At end of year	6,225	6,225

Number of shares issued and fully paid Ordinary shares of £0.01 each
At beginning of year	622,461,380	350,000,000
Shares issued	-	272,461,380
At end of year	622,461,380	622,461,380

On 21 December 2018, the Company issued 272,461,380 Ordinary shares in respect of the conversion of 302,000,000 C shares. The fair value of assets representing the C share pool at that date was £295,186,000.

The Company holds 815,000 Ordinary shares in treasury. The number of Ordinary shares used to calculate the net asset value is 621,646,380.

24. 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 2020 £'000	For the year ended 31 March 2019 £'000
At beginning of year	292,405	-
Premium arising on shares issued	-	292,461
Share issue costs	-	(56)

At end of year	292,405	292,405

25. Capital reduction reserve

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

	For the year ended 31 March 2020 £'000	For the year ended 31 March 2019 £'000

Balance at beginning of the year	331,625	331,625
Shares bought back into treasury	(699)	-
At end of year	330,926	331,625

During the year, the Company purchased 815,000 Shares for a total cost of £699,000 to be held in treasury. The shares will continue to be held in treasury until either re-issued or cancelled.

26. Retained earnings

This reserve represents the profits and losses of the Group.

	For the year ended 31 March 2020 £'000	For the year ended 31 March 2019 £'000
Balance at beginning of the year	36,253	34,270
Profit for the year	37,725	19,864
Dividends paid in the year (as per note 14)	(32,970)	(17,881)
At end of year	41,008	36,253

27. 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 2020	31 March 2019

Net assets (£'000)	670,564	666,508
Number of Ordinary shares in issue at end of year	622,461,380	622,461,380
Number of Ordinary shares held in treasury	(815,000)	-
Number of Ordinary shares excluding treasury shares held by the Company	621,646,380	622,461,380
NAV - basic and diluted	107.87p	107.08p

28. Reconciliation of liabilities to cash flows from financing

			For the
	C share	Bank	year ended
	liability	borrowings	31 March 2020
	£'000	£'000	£'000

Balance at the beginning of the year	-	205,156	205,156
Cash flows from financing activities
Loan draw down	-	64,053	64,053
Loan arrangement costs paid	-	(1,364)	(1,364)

Non cash movements
Amortisation of loan arrangement costs	-	1,325	1,325
	-	269,170	269,170

			For the
	C share	Bank	year ended
	liability	borrowings	31 March 2019
	£'000	£'000	£'000

Balance at the beginning of the year	298,752	90,822	389,574
Cash flows from financing activities
Loan draw down	-	115,990	115,990
Loan arrangement costs paid	-	(2,374)	(2,374)
Dividends paid to C shareholders in the year	(9,966)	-	(9,966)

Non cash movements
Amortisation of loan arrangement costs	-	718	718
Amortisation of C shares liability	6,400	-	6,400
C share conversion	(295,186)	-	(295,186)
	-	205,156	205,156

Summary of non-cash transactions

29. Operating leases

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

	31 March 2020 £'000	31 March 2019 £'000
Amounts receivable
< 1 year	48,416	45,685
1-2 years	48,451	45,720
2-5 years	145,545	137,356
> 5 years	886,677	882,407
At end of year	1,129,089	1,111,168

Leases are direct-let agreements with Registered Providers for a term between 15 to 25 years with indexed linked annual rent reviews. All current leases are full repairing and insuring leases; the tenants are therefore obliged to repair, maintain and renew the properties back to the original conditions.

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

	31 March 2020	31 March 2019
	%	%
Auckland Home Solutions*	22.73	11.26
Falcon Housing Association CIC	20.43	20.89
Bespoke Supportive Tenancies	11.05	11.37
Inclusion Housing CIC	8.74	8.34
Westmoreland Supported Housing Limited	7.97	19.66
Encircle Housing Limited	6.11	6.33
Trinity Housing Association Limited	5.50	5.74
Pivotal Housing Association	3.96	4.09
Harbour Light Assisted Living CIC	3.76	2.42
Chrysalis Supported Association Limited	3.49	3.41
New Walk Property Management CIC	2.87	2.95
My Space Housing Solutions	1.19	1.24
IKE Supported Housing Limited	1.15	1.20
Hilldale Housing Association Limited	0.98	1.03
Blue Square Limited	0.07	0.07
Total	100.0	100.00

* Includes properties reassigned from Westmoreland Supported Housing Limited.

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.

30. Controlling parties

As at 31 March 2020, there is no ultimate controlling party.

31. Related party disclosures

The Directors are remunerated for their services at such rate as the Directors shall from time to time determine. The aggregate remuneration and benefits in kind of the Directors of the Company (in each case, solely in their capacity as such) in respect of the year ended 31 March 2020 payable out of the assets of the Company is not expected to exceed £200,000.

Fees of £162,000 (2019: £150,000) were incurred and paid to the Directors.

As at 31 March 2020, the Directors held the following number of shares:

		31 March 2020	31 March 2019
Director		Ordinary shares	Ordinary shares

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

Remuneration

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

32. Transactions with the Investment Adviser

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

Fees of £6,131,000 (2019: £6,457,000) were incurred and paid to CIM. In addition, disbursements of £52,000 were also paid in the year.

As at 31 March 2020, no amounts (2019: £nil) were due to/from CIM.

At 31 March 2020, CIM held 50,000 Ordinary shares in the Company.

33. Consolidated entities

The Company has provided a guarantee under s479C of the Companies Act 2006 in respect of the financial year ended 31 March 2020 for a number of its subsidiary companies (as indicated in the table on the following pages). The guarantee is over all outstanding liabilities to which the subsidiary companies are subject at 31 March 2020 until they are satisfied in full.

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

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	Ownership %
Civitas Social Housing Finance Company 1 Limited	‡	10997707	Finance company	England & Wales	100.00%
Civitas Social Housing Jersey 1 Limited		124129	Holding company	Jersey	100.00%
Civitas SPV1 Limited	‡	10518729	Property investment	England & Wales	100.00%
Civitas SPV2 Limited	‡	10114251	Property investment	England & Wales	100.00%
Civitas SPV11 Limited	‡	10546749	Property investment	England & Wales	100.00%
Civitas SPV15 Limited	‡	09777380	Property investment	England & Wales	100.00%
Civitas SPV25 Limited	‡	10791473	Property investment	England & Wales	100.00%
Civitas SPV27 Limited	‡	10883112	Property investment	England & Wales	100.00%
Civitas SPV33 Limited	‡	10546407	Property investment	England & Wales	100.00%
Civitas SPV35 Limited	‡	10588530	Property investment	England & Wales	100.00%
Civitas SPV38 Limited	‡	10738318	Property investment	England & Wales	100.00%
Civitas SPV39 Limited	‡	10547333	Property investment	England & Wales	100.00%
Civitas SPV40 Limited	‡	10738510	Property investment	England & Wales	100.00%
Civitas SPV41 Limited	‡	10738542	Property investment	England & Wales	100.00%
Civitas SPV50 Limited	‡	10775419	Property investment	England & Wales	100.00%
Civitas Social Housing Finance Company 2 Limited	‡	10997698	Finance company	England & Wales	100.00%
Civitas Social Housing Jersey 2 Limited		124876	Holding company	Jersey	100.00%
Civitas SPV3 Limited	‡	10156529	Property investment	England & Wales	100.00%
Civitas SPV4 Limited	‡	10433744	Property investment	England & Wales	100.00%
Civitas SPV5 Limited	‡	10479104	Property investment	England & Wales	100.00%
Civitas SPV6 Limited	‡	10674493	Property investment	England & Wales	100.00%
Civitas SPV9 Limited	‡	10536388	Property investment	England & Wales	100.00%
Civitas SPV10 Limited	‡	10535243	Property investment	England & Wales	100.00%
Civitas SPV12 Limited	‡	10546753	Property investment	England & Wales	100.00%
Civitas SPV17 Limited	‡	10479036	Property investment	England & Wales	100.00%
Civitas SPV18 Limited	‡	10546651	Property investment	England & Wales	100.00%
Civitas SPV19 Limited	‡	10548932	Property investment	England & Wales	100.00%
Civitas SPV20 Limited	‡	10588735	Property investment	England & Wales	100.00%
Civitas SPV22 Limited	‡	10743958	Property investment	England & Wales	100.00%
Civitas SPV24 Limited	‡	10751512	Property investment	England & Wales	100.00%
Civitas SPV26 Limited	‡	10864336	Property investment	England & Wales	100.00%
Civitas SPV29 Limited	‡	10911565	Property investment	England & Wales	100.00%
Civitas SPV30 Limited	‡	10956025	Property investment	England & Wales	100.00%
Civitas SPV31 Limited	‡	10974889	Property investment	England & Wales	100.00%
Civitas SPV32 Limited	‡	11007173	Property investment	England & Wales	100.00%
Civitas SPV34 Limited	‡	10738381	Property investment	England & Wales	100.00%
Civitas SPV36 Limited	‡	10588792	Property investment	England & Wales	100.00%
Civitas SPV42 Limited	‡	10738556	Property investment	England & Wales	100.00%
Civitas SPV43 Limited	‡	10534877	Property investment	England & Wales	100.00%
Civitas SPV45 Limited	‡	10871854	Property investment	England & Wales	100.00%
Civitas SPV46 Limited	‡	10871910	Property investment	England & Wales	100.00%
Civitas SPV47 Limited	‡	10873270	Property investment	England & Wales	100.00%
Civitas SPV48 Limited	‡	10873295	Property investment	England & Wales	100.00%
Civitas SPV51 Limited	‡	10826693	Property investment	England & Wales	100.00%
Civitas SPV52 Limited	‡	10827006	Property investment	England & Wales	100.00%
Civitas SPV63 Limited	‡	10937805	Property investment	England & Wales	100.00%
Civitas SPV64 Limited	‡	10938411	Property investment	England & Wales	100.00%
Civitas SPV70 Limited	‡	10770201	Property investment	England & Wales	100.00%
Civitas SPV71 Limited	‡	10888639	Property investment	England & Wales	100.00%
Civitas SPV72 Limited	‡	10938022	Property investment	England & Wales	100.00%
Civitas SPV74 Limited	‡	11001855	Property investment	England & Wales	100.00%
Civitas SPV75 Limited	‡	11001834	Property investment	England & Wales	100.00%
Civitas SPV80 Limited	‡	11001998	Property investment	England & Wales	100.00%
Civitas Social Housing Finance Company 3 Limited	‡	10997714	Finance Company	England & Wales	100.00%
Civitas SPV8 Limited	‡	10536157	Property investment	England & Wales	100.00%
Civitas SPV28 Limited	‡	10895228	Property investment	England & Wales	100.00%
Civitas SPV53 Limited	‡	11021625	Property investment	England & Wales	100.00%
Civitas SPV55 Limited	‡	11056455	Property investment	England & Wales	100.00%
Civitas SPV57 Limited	‡	11091444	Property investment	England & Wales	100.00%
Civitas SPV60 Limited	‡	11111908	Property investment	England & Wales	100.00%
Civitas SPV61 Limited	‡	10937662	Property investment	England & Wales	100.00%
Civitas SPV66 Limited	‡	10937898	Property investment	England & Wales	100.00%
Civitas SPV77 Limited	‡	11166491	Property investment	England & Wales	100.00%
Civitas SPV78 Limited	‡	11170099	Property investment	England & Wales	100.00%
Civitas SPV79 Limited	‡	11236544	Property investment	England & Wales	100.00%
Civitas SPV81 Limited	‡	11192811	Property investment	England & Wales	100.00%
Civitas SPV82 Limited	‡	11380796	Property investment	England & Wales	100.00%
Civitas SPV83 Limited	‡	11371128	Property investment	England & Wales	100.00%
Civitas SPV85 Limited	‡	11300749	Property investment	England & Wales	100.00%
Civitas SPV95 Limited	‡	11208184	Property investment	England & Wales	100.00%
Civitas SPV97 Limited	‡	11463890	Property investment	England & Wales	100.00%
Civitas SPV103 Limited	‡	11500596	Property investment	England & Wales	100.00%
Civitas SPV105 Limited	‡	11532177	Property investment	England & Wales	100.00%
Civitas SPV106 Limited	‡	11532179	Property investment	England & Wales	100.00%
Civitas SPV107 Limited	‡	11532182	Property investment	England & Wales	100.00%
Civitas SPV116 Limited	‡	11504399	Property investment	England & Wales	100.00%
Civitas SPV117 Limited	‡	11504445	Property investment	England & Wales	100.00%
Civitas Social Housing Jersey 3 Ltd		124877	Holding company	Jersey	100.00%
Civitas SPV7 Limited	‡	10536368	Property investment	England & Wales	100.00%
Civitas SPV13 Limited	‡	9517692	Property investment	England & Wales	100.00%
Civitas SPV14 Limited	‡	10479041	Property investment	England & Wales	100.00%
Civitas SPV16 Limited	‡	09917557	Property investment	England & Wales	100.00%
Civitas SPV21 Limited	‡	10631541	Property investment	England & Wales	100.00%
Civitas SPV37 Limited	‡	10738450	Property investment	England & Wales	100.00%
Civitas SPV44 Limited	‡	10588783	Property investment	England & Wales	100.00%
Civitas SPV49 Limited	‡	11031349	Property investment	England & Wales	100.00%
Civitas Social Housing Finance Company 4 Limited	‡	11906660	Finance Company	England & Wales	100.00%
Civitas SPV23 Limited	‡	10746881	Property investment	England & Wales	100.00%
Civitas SPV54 Limited	‡	11039750	Property investment	England & Wales	100.00%
Civitas SPV59 Limited	‡	11111912	Property investment	England & Wales	100.00%
Civitas SPV69 Limited	‡	11142372	Property investment	England & Wales	100.00%
Civitas SPV73 Limited	‡	10939075	Property investment	England & Wales	100.00%
Civitas SPV84 Limited	‡	11381455	Property investment	England & Wales	100.00%
Civitas SPV86 Limited	‡	11418432	Property investment	England & Wales	100.00%
Civitas SPV87 Limited	‡	10888903	Property investment	England & Wales	100.00%
Civitas SPV88 Limited	‡	10939044	Property investment	England & Wales	100.00%
Civitas SPV90 Limited	‡	10939131	Property investment	England & Wales	100.00%
Civitas SPV91 Limited	‡	10941377	Property investment	England & Wales	100.00%
Civitas SPV92 Limited	‡	11449913	Property investment	England & Wales	100.00%
Civitas SPV93 Limited	‡	11043111	Property investment	England & Wales	100.00%
Civitas SPV94 Limited	‡	11208105	Property investment	England & Wales	100.00%
Civitas SPV96 Limited	‡	11270786	Property investment	England & Wales	100.00%
Civitas SPV100 Limited	‡	11069703	Property investment	England & Wales	100.00%
Civitas SPV101 Limited	‡	09978282	Property investment	England & Wales	100.00%
Civitas SPV102 Limited	‡	11521555	Property investment	England & Wales	100.00%
Civitas SPV109 Limited	‡	11532120	Property investment	England & Wales	100.00%
Civitas SPV112 Limited	‡	11579750	Property investment	England & Wales	100.00%
Civitas SPV114 Limited	‡	11579733	Property investment	England & Wales	100.00%
Civitas SPV115 Limited	‡	11522178	Property investment	England & Wales	100.00%
Civitas SPV118 Limited	‡	11411498	Property investment	England & Wales	100.00%
Civitas SPV121 Limited	‡	11099917	Property investment	England & Wales	100.00%
Civitas SPV122 Limited	‡	11482646	Property investment	England & Wales	100.00%
Civitas SPV127 Limited	‡	10941401	Property investment	England & Wales	100.00%
Civitas SPV129 Limited	‡	11664994	Property investment	England & Wales	100.00%
Civitas SPV130 Limited	‡	11705074	Property investment	England & Wales	100.00%
Civitas SPV131 Limited	‡	11675132	Property investment	England & Wales	100.00%
Civitas SPV132 Limited	‡	11473735	Property investment	England & Wales	100.00%
Civitas SPV145 Limited	‡	11842306	Holding company	England & Wales	100.00%
Fieldbay Limited	‡	05219012	Property investment	England & Wales	100.00%
Civitas SPV148 Limited	‡	11632633	Property investment	England & Wales	100.00%
Civitas SPV149 Limited	‡	11462691	Property investment	England & Wales	100.00%
Civitas SPV150 Limited	‡	11462555	Property investment	England & Wales	100.00%
FPI CO 324 Ltd	‡	11633019	Property investment	England & Wales	100.00%
Civitas SPV56 Limited	‡	11056465	Property investment	England & Wales	100.00%
Civitas SPV62 Limited	‡	10937528	Property investment	England & Wales	100.00%
Civitas SPV65 Limited	‡	10938467	Property investment	England & Wales	100.00%
Civitas SPV67 Limited	‡	10937929	Property investment	England & Wales	100.00%
Civitas SPV68 Limited	‡	10938269	Property investment	England & Wales	100.00%
Civitas SPV98 Limited	‡	11478695	Holding Company	England & Wales	100.00%
Snapco Limited		008603V	Property investment	Isle of Man	100.00%
Snapco 2 Limited		009143V	Property investment	Isle of Man	100.00%
Snapco 3 Limited		009144V	Property investment	Isle of Man	100.00%
Snapco 4 Limited		011660V	Property investment	Isle of Man	100.00%
Snapco 5 Limited		012111V	Property investment	Isle of Man	100.00%
Civitas SPV99 Limited	‡	11478707	Holding Company	England & Wales	100.00%
Snapco 6 Limited		012112V	Property investment	Isle of Man	100.00%
Civitas SPV104 Limited	‡	11532174	Property investment	England & Wales	100.00%
Civitas SPV108 Limited	‡	11532135	Dormant	England & Wales	100.00%
Civitas SPV113 Limited	‡	11580068	Property investment	England & Wales	100.00%
Civitas SPV119 Limited	* ‡	11751515	Dormant	England & Wales	100.00%
Civitas SPV120 Limited	* ‡	11801922	Dormant	England & Wales	100.00%
Civitas SPV123 Limited		8253452	Property investment	England & Wales	100.00%
Civitas SPV135 Limited		11579880	Property investment	England & Wales	100.00%
Civitas SPV143 Limited		11546808	Property investment	England & Wales	100.00%
Civitas SPV144 Limited		11546696	Property investment	England & Wales	100.00%
Civitas SPV146 Limited	‡	11861500	Dormant	England & Wales	100.00%
Civitas SPV147 Limited	‡	11861974	Dormant	England & Wales	100.00%
Civitas SPV151 Limited	* ‡	11913037	Dormant	England & Wales	100.00%
Bedford SPV1 Limited (previously Pitsea SPV1 Limited)		12315518	Property investment	England & Wales	100.00%
Civitas SPV133 Limited (previously Carislease 6 Limited)		11698972	Property investment	England & Wales	100.00%
Civitas SPV134 Limited (previously Carislease 3 Limited)		11689461	Property investment	England & Wales	100.00%
Civitas SPV136 Limited (previously NCG PB SPV Limited)		11579760	Property investment	England & Wales	100.00%
Civitas SPV152 Limited		11955719	Property investment	England & Wales	100.00%
Civitas SPV155 Limited		12044281	Property investment	England & Wales	100.00%
Civitas SPV156 Limited		12081093	Property investment	England & Wales	100.00%
Civitas SPV157 Limited		12188610	Property investment	England & Wales	100.00%
Civitas SPV158 Limited		12202674	Property investment	England & Wales	100.00%
Civitas SPV159 Limited		12258313	Property investment	England & Wales	100.00%
Civitas SPV160 Limited		12272906	Property investment	England & Wales	100.00%
Civitas SPV161 Limited	*	12289935	Dormant	England & Wales	100.00%
Civitas SPV162 Limited	*	12289907	Dormant	England & Wales	100.00%
FPI Co 294 Ltd	‡	11519226	Property investment	England & Wales	100.00%
Bridge Property Herts Limited		12435985	Property investment	England & Wales	100.00%
Bridge Propco Limited		12445439	Property investment	England & Wales	100.00%

‡ 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 prior to 31 March 2020.

* These entities have applied to the Registrar of Companies to be struck off.

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

• England & Wales entities: Beaufort House, 51 New North Road, Exeter, United Kingdom, EX4 4EP

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

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

34. Financial risk management

34.1. 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 and 21.

Financial assets are classified as loans and receivables and 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 2020 £'000	Fair value 31 March 2020 £'000	Book value 31 March 2019 £'000	Fair value 31 March 2019 £'000
Financial assets
Trade and other receivables¹	8,595	8,595	5,353	5,353
Cash and cash equivalents	58,374	58,374	54,347	54,347

Financial liabilities
Trade and other payables²	7,498	7,498	15,205	15,205
Bank borrowings	269,170	269,174	205,156	205,806
Interest rate derivatives	478	478	-	-

¹ Excludes prepayments and debtors arising on rent smoothing.

² Excludes deferred income and tax liabilities.

The Group has four bank loans: a 10-year fixed rate loan of £52.5 million provided by Scottish Widows Limited; a 3-year revolving credit facility variable rate loan of £60 million provided by Lloyds Bank plc; a 3-year revolving credit facility variable rate loan of £100 million provided by HSBC Bank PLC; and a 5-year revolving credit facility variable rate loan of £60 million provided by National Westminster Bank Plc. 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 periods. The Board of Directors oversees the management of these risks. The Board of Directors reviews and agrees policies for managing each of these risks that are summarised below.

34.2. 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.

34.3. Interest rate risk

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

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

At 31 March 2020, 41% (2019: 25%) of the Group's borrowings are subject to a fixed rate of interest.

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

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

As at 31 March 2020, if interest rates had been 200 basis points higher/(lower) with all other variables held constant the impact on profits after taxation for the year would be as follows:

	31 March 2020 £'000	31 March 2019 £'000
(Decrease)/increase in profits due to interest rates
200 basis points higher	(8,830)	(2,032)
200 basis points lower	3,662	1,271

The average effective interest rates of financial instruments at 31 March 2020 were as follows:

	31 March 2020 %	31 March 2019 %
Bank borrowings - fixed rate	2.31950	2.99360
Bank borrowings - variable rate	2.80046	2.50180
Cash and cash equivalents	0.11048	0.16795

34.4. Credit risk

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

Debtors and accrued income represent rent due or accrued, these amounts due are diversified between a number of different Housing Associations of differing financial strength, see note 29 for details of the different counterparties. None of the Housing Associations have listed debt and as such do not have a credit rating, however, the diversified nature of this asset supports the credit quality.

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

For details of provisions for impairment please refer to note 17.

Credit risk related to financial instruments and cash deposits

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

34.5. 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 2020
Trade and other payables	7,498	-	-	-	7,498
Bank borrowings	-	66,896	174,785	55,002	296,683
	7,498	66,896	174,785	55,002	304,181

31 March 2019
Trade and other payables	15,205	-	-	-	15,205
Bank borrowings	-	5,473	168,877	56,573	230,923
	15,205	5,473	168,877	56,573	246,128

The profile above shows the maturity profile at 31 March 2020 and included within the contracted payments is £24,183,000 (2019: £22,476,000) of loan interest payable up to the point of maturity. As disclosed in note 36, after the year end, the revolving credit facility of £60,000,000 was extended for one year and now matures in November 2021.

35. Capital commitments

At 31 March 2020, the Company had funds committed totalling £22,100,000 (2019: £12,000,000). £12,100,000 relates to two properties (currently under development) for which the Company has entered into a conditional sale and purchase agreement contingent on the completion of development. £10,000,000 (estimated) relates to a capital payment for the same properties contingent on the operators achieving certain financial obligations.

Amounts totalling £850,000 have been allocated for capital works expenditure on properties, subject to future proofing activities to ensure the longevity of occupation by residents.

In addition to the above, as at 31 March 2020, the Company had conditionally exchanged on two properties in Telford and one in Sunderland totalling £1,800,000. One of these properties completed in April 2020 with the remaining two expected to complete over the coming months.

36. Post balance sheet events

Acquisitions

On 20 April 2020, a property in Telford was acquired for £0.6m. On 11 June 2020, the Company completed on the forward purchase agreement of a development in Wales for £2.3m.

Dividends

On 11 May 2020, the Board declared a quarterly dividend in respect of the Ordinary shares for the three months to 31 March 2020 of 1.325 pence per Ordinary share totalling £8,236,000. The dividend was paid on 12 June 2020 to holders of Ordinary shares on the register as at 22 May 2020. The dividend was paid as a REIT property income distribution ("PID").

Other announcements

The Lloyds Bank plc £60m Revolving Credit Facility has been extended in the normal course of business to November 2021.

Company Statement of Financial Position

As at 31 March 2020

	Note	31 March 2020 £'000	31 March 2019 (restated) £'000
Assets
Non-current assets
Investment in subsidiaries	8	706,920	676,496


Current assets
Trade and other receivables	9	4,727	371
Cash and cash equivalents	10	29,011	45,905
		33,738	46,276
Total assets		740,658	722,772

Liabilities
Current liabilities
Trade and other payables	11	(191,942)	(131,277)
		(191,942)	(131,277)

Total liabilities		(191,942)	(131,277)
Total net assets		548,716	591,495

Equity
Share capital	12	6,225	6,225
Share premium reserve		292,405	292,405
Capital reduction reserve		330,926	331,625
Retained earnings/(accumulated losses)	13	(80,840)	(38,760)
Total equity		548,716	591,495

The Company has taken advantage of the provisions of Companies Act 2006 s408 and does not disclose the Company's individual profit and loss account. Losses for the year were £9,110,000 (2019: loss of £14,937,000).

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

Michael Wrobel

Chairman and Independent Non-Executive Director

29 June 2020

Company No: 10402528

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

Company Statement of Changes in Equity

For the year ended 31 March 2020

				Retained
		Share	Capital	earnings/
	Share	premium	reduction	(accumulated	Total
	Capital	reserve	reserve	losses)*	equity
	£'000	£'000	£'000	£'000	£'000
Balance at 1 April 2018	3,500	-	331,625	85,479	420,604
Prior year adjustment (note 3)				(91,421)	(91,421)
Balance at 1 April 2018 (as restated)	3,500	-	331,625	(5,942)	329,183
Loss and total comprehensive expense for the year	-	-	-	(14,937)	(14,937)
Issue of Ordinary shares
Issue of share capital	2,725	292,461	-	-	295,186
Share issue costs	-	(56)	-	-	(56)
Dividends paid
Total interim dividends for the year ended 31 March 2019 (5.00p)	-	-	-	(17,881)	(17,881)
Balance at 31 March 2019	6,225	292,405	331,625	(38,760)	591,495

Loss and total comprehensive expense for the year	-	-	-	(9,110)	(9,110)
Issue of Ordinary shares
Share bought back into treasury	-	-	(699)	-	(699)
Dividends paid
Total interim dividends for the year ended 31 March 2020 (5.30p)	-	-	-	(32,970)	(32,970)
Balance at 31 March 2020	6,225	292,405	330,926	(80,840)	548,716

* The Company's distributable reserves comprise retained earnings and capital reduction reserve. These in aggregate had sufficient realised distributable reserves to support the dividends paid.

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

Notes to the Company Financial Statements

For the year ended 31 March 2020

1. Corporate information

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

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

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

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

2. Basis of preparation

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

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

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

Therefore, these financial statements do not include:

• certain comparative information as otherwise required by EU endorsed IFRS;

• certain disclosures regarding the Company's capital;

• a statement of cash flows;

• the effect of future accounting standards not yet adopted;

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

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

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

• share based payments;

• financial instruments; and

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

In addition, the Company is taking advantage of the exemption of presenting a third balance sheet as a result of the prior year adjustment.

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

The following new standards are now effective and have been adopted for the year ended 31 March 2020.

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

The Directors have assessed that the adoption of this does not have a material impact on the Company's financial

statements as the Company does not hold any material operating leases as lessee.

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

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 and to date performance has not been negatively impacted by COVID-19.

The Company accounts show an accumulated loss, however this is due to a time-lag on profits from subsidiary companies being moved up the structure in the form of dividends.

The Company has a net current liability position of £158,204,000 (2019: £85,372,000). This balance arises due to the intercompany balances totalling £187,911,000 (2019: £125,232,000) 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 the next 12 months.

After review of these items, the Directors believe there are currently no material uncertainties in relation to the Company's ability to continue for a period of at least 12 months from the date of the Company's financial statements. And therefore it is appropriate that the financial statements have been prepared on a going concern basis.

Significant judgements and sources of estimation uncertainty

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

As disclosed in note 3.1 to the Group financial statements above, the underlying assets of the Company have been valued by an external valuer. The Valuation is subject to the now standard "Material Valuation Uncertainty due to Novel Coronavirus (COVID-19)" clause that professional valuation firms, including JLL, are adopting across the world in respect of valuations at this time. On the 28 May 2020, RICS published an update and concluded that the inclusion of MUCs was no longer appropriate for this asset class.

There is currently no indication of impairment in the assets of the Company.

3. Prior year adjustment

A prior year adjustment has been made in the Company accounts relating to the year ended 31 March 2018, specifically, dividends amounting to £91.4m, a return of capital, which was incorrectly treated as equity and has now been adjusted by way of a reduction in investments in subsidiaries. The effect of this correction is to reduce the retained earnings reserve by £91.4m with a corresponding reduction of investments in subsidiaries of the same amount. This adjustment has no effect (including no cash effect) in the Group financial statements and does not affect in any way the treatment of dividends paid to shareholders of the Group, all of which have been paid correctly and with the appropriate tax treatment nor does it have any implications at all for the payment of future dividends.

Following the correction of this historic accounting mistreatment, there are no further adjustments that are required in the future.

Comparative figures have been restated.

4. 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.

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 8 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 8.

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.

5. Dividends

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

6. Employee information

Details of Directors' remuneration are included in note 6 of the consolidated financial statements. The Company had no further employees during the year (2019: nil) other than the Directors.

7. Audit fees

Audit fees in relation to the Company's financial statements total £195,000 (31 March 2019: £180,000). For further details, please refer to note 9 of the Group financial statements.

8. Investments in subsidiaries

	Shares in subsidiaries £'000	Loans to subsidiaries £'000	For the year ended 31 March 2020 £'000
Balance at the beginning of the year (as restated)	590,208	86,288	676,496
Increase in investments	4,015	28,232	32,247
Loans transferred	84,024	(84,024)	-
Additions due to internal group restructure	93,289	-	93,289
Disposals due to internal group restructure	(93,289)	(1,823)	(95,112)
At the end of the year	678,247	28,673	706,920

	Shares in subsidiaries £'000	Loans to subsidiaries £'000	For the year ended 31 March 2019 £'000
Balance at the beginning of the year (as previously stated)	446,954	32,180	479,134
Prior year adjustment (note 3)	(91,421)	-	(91,421)
Balance at the beginning of the year (as restated)	355,533	32,180	387,713
Increase in investments	31,576	257,207	288,783
Loans transferred	198,245	(198,245)	-
Additions due to internal group restructure	186,294	-	186,294
Disposals due to internal group restructure	(181,440)	(4,854)	(186,294)
At the end of the year (as restated)	590,208	86,288	676,496

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

9. Trade and other receivables

	31 March 2020 £'000	31 March 2019 £'000

Prepayments and other receivables	3,357	371
Accrued income	1,370	-
Total	4,727	371

10. Cash and cash equivalents

	31 March 2020 £'000	31 March 2019 £'000

Cash held by solicitors	3,419	17,031
Liquidity funds	10,475	13,394
Cash held at bank	338	10,931
Cash and cash equivalents	14,232	41,356
Restricted cash	14,779	4,549
Total cash held at bank	29,011	45,905

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

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

11. Trade and other payables

	31 March 2020 £'000	31 March 2019 £'000
Acquisition costs accrued	-	303
Retentions	2,653	4,489
Accruals	580	536
Dividends payable	798	717
Amounts due to subsidiary companies	187,911	125,232

Total	191,942	131,277

12. 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 2020 £'000	For the year ended 31 March 2019 £'000
Share capital
At beginning of year	6,225	3,500
Shares issued	-	2,725
At end of year	6,225	6,225

Number of shares issued and fully paid


	For the year ended 31 March 2020	For the year ended 31 March 2019
Ordinary shares of £0.01 each
At beginning of year	622,461,380	350,000,000
Shares issued	-	272,461,380
At end of year	622,461,380	622,461,380

The Company holds 815,000 Ordinary shares in treasury. The number of Ordinary shares used to calculate the net asset value is 621,646,380.

13. Retained earnings/(accumulated losses)

This reserve represents the profits and losses of the Company

	For the year ended 31 March 2020 £'000	For the year ended 31 March 2019 £'000

Balance at the beginning of the year (as previously stated)	-	85,479
Prior year adjustment (note 3)	-	(91,421)
Balance at the beginning of the year (as restated)	(38,760)	(5,942)
Loss for the year	(9,110)	(14,937)
Dividends paid in the year	(32,970)	(17,881)
At end of year	(80,840)	(38,760)

14. Controlling parties

As at 31 March 2020, there is no ultimate controlling party.

15. Related party transactions

For all related party transactions and transactions with the Investment Adviser please make reference to notes 31 and 32 of the Group's consolidated financial statements.

Glossary

ALMO means an arm's length management organisation, a not-for-profit company that provides housing services

on behalf of a Local Authority.

Approved Provider means Housing Associations, 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.

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

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

EPRA means the European Public Real Estate Association.

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

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

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

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

Group means the Company and its subsidiaries.

Housing Association or HA means an independent society, body of trustees or company established for the purpose of providing low-cost social housing for people in housing need generally on a non-profit making basis. Any trading surplus is typically used to maintain existing homes and to help finance new ones. Housing Associations are regulated by the Homes and Communities Agency.

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

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 of 326 authorities (including 32 London boroughs).

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

MUC means material uncertainty clause

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.

Portfolio means the Group's portfolio of assets.

Portfolio Net Asset Value or Portfolio NAV means the net asset value of the Company, as at the relevant date, calculated on the basis of an independent Portfolio Valuation. See note 6 to Appendix 1 for a reconciliation to IFRS NAV.

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.

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

RICS means Royal Institution of Chartered Surveyors.

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.

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

Appendix 1 (unaudited)

Notes to the calculation of EPRA and other alternative performance measures

1. EPRA Earnings

	For the year ended 31 March 2020	For the year ended 31 March 2019
Earnings from operational activities
Profit after taxation (£'000)	37,725	19,864
Change in fair value of derivative financial instruments (£'000)	478	-
Changes in value of investment properties (£'000)	(9,389)	(3,652)
EPRA Earnings (£'000)	28,814	16,212
Finance costs associated with the C share financial liability (£'000)	-	6,400
Diluted EPRA earnings (£'000)	28,814	22,612
Weighted average number of shares in issue (adjusted for shares held in treasury)	622,103,798	425,393,423
Dilutive elements	-	197,067,957
Adjusted weighted average number of shares in issue (adjusted for shares held in treasury)	622,103,798	622,461,380
EPRA Earnings per share (EPS) - basic	4.63p	3.81p
EPRA Earnings per share (EPS) - diluted	4.63p	3.63p

2. EPRA NAV

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

	31 March 2020	31 March 2019
Net assets (£'000)	670,564	666,508
Fair value of derivative financial instruments (£'000)	478	-
EPRA Net assets (£'000)	671,042	666,508
Number of Ordinary shares in issue (adjusted for shares held in treasury)	621,646,380	622,461,380
EPRA Net Assets per share	107.95p	107.08p

3. EPRA NNNAV

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

	31 March 2020	31 March 2019
EPRA Net Assets (per above) (£'000)	671,042	666,508
Fair value of derivative financial instruments (£'000)	(478)	-
Adjustment to value bank borrowings at fair value (£'000)	(3,004)	(650)
EPRA NNNAV (£'000)	667,560	665,858
Number of Ordinary shares in issue (adjusted for shares held in treasury)	621,646,380	622,461,380
EPRA NNNAV per share	107.39p	106.97p

4. EPRA Vacancy Rate

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

	31 March 2020	31 March 2019
Estimated Market Rental Value (ERV) of vacant spaces (£'000)	-	-
Estimated Market Rental Value (ERV) of whole portfolio (£'000)	48,416	45,685
EPRA Vacancy Rate	0%	0%

5. EPRA Costs Ratio

Administrative and operating costs divided by gross rental income.

	For the year ended 31 March 2020	For the year ended 31 March 2019
Total administrative and operating costs (£'000)	9,860	9,642
Gross rental income (£'000)	45,906	35,738
EPRA cost ratio	21.48%	26.98%

6. Portfolio NAV

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

	31 March 2020	31 March 2019
Net assets (£'000)	670,564	666,508
Adjustment for change to property valuation (£'000)	65,140	74,662
Portfolio net assets (£'000)	735,704	741,170
Number of Ordinary shares in issue (adjusted for shares held in treasury)	621,646,380	622,461,380
Portfolio Net Assets per share	118.35p	119.07p

7. Company Adjusted Earnings

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

	For the year ended 31 March 2020	For the year ended 31 March 2019
Profit after taxation (£'000)	37,725	19,864
Changes in fair value in derivative financial instruments (£'000)	478	-
Changes in value of investment properties (£'000)	(9,389)	(3,652)
EPRA Earnings (£'000)	28,814	16,212
Finance costs associated with the C share financial liability (£'000)	-	6,400
Company Adjusted Earnings (£'000)	28,814	22,612
Weighted average number of shares in issue (adjusted for shares held in treasury)	621,646,380	622,461,380
Company Adjusted Earnings per share (EPS) - basic	4.63p	3.63p

8. IRR

The Internal Rate of Return ("IRR") for the period from launch to 31 March 2020 based on IFRS NAV and portfolio NAV is calculated using dividend cash flows data as follows:

		IFRS NAV basis	Portfolio NAV basis
		pence per share	pence per share

18 November 2016	Investment (net of issue costs)	98.00	98.00
31 May 2017	Interim dividend	0.75	0.75
31 August 2017	Interim dividend	0.75	0.75
30 November 2017	Interim dividend	0.75	0.75
9 March 2018	Interim dividend	0.75	0.75
8 June 2018	Interim dividend	1.25	1.25
7 September 2018	Interim dividend	1.25	1.25
30 November 2018	Interim dividend	1.25	1.25
11 January 2019	Interim dividend	1.11	1.11
28 February 2019	Interim dividend	0.14	0.14
7 June 2019	Interim dividend	1.33	1.33
6 September 2019	Interim dividend	1.33	1.33
29 November 2019	Interim dividend	1.33	1.33
28 February 2020	Interim dividend	1.33	1.33
31 March 2020	NAV	107.87	118.35


IRR		6.82%	9.58%

ANNUAL GENERAL MEETING

The AGM of the Company will be held at 2.00 p.m. on 8 September 2020 at the offices of Buchanan, 107 Cheapside, London EC2V 6DN. The Notice of AGM will be circulated to shareholders in due course.

NATIONAL STORAGE MECHANISM

A copy of the Annual Report and Financial Statements will be submitted shortly to the National Storage Mechanism ("NSM") and will be available for inspection at the NSM, which is situated at https://data.fca.org.uk/#/nsm/nationalstoragemechanism.

LEI: 213800PGBG84J8GM6F95

ENDS

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

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

END

FR KZGFVZGNGGZM

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