REG - Impact Healthcare - Half Year Results and Dividend
16/08/2022 07:00
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RNS Number : 0956W Impact Healthcare REIT PLC 16 August 2022
16 August 2022
Impact Healthcare REIT plc
("Impact" or the "Company" or, together with its subsidiaries, the "Group")
Half year results for the six months ended 30 June 2022
Dividend declaration
CONTINUING STRONG AND RESILIENT PERFORMANCE
The Board of Directors of Impact Healthcare REIT plc (ticker: IHR), the real
estate investment trust which gives investors exposure to a diversified
portfolio of UK healthcare real estate assets, in particular care homes, today
announces the Company's half year results for the six months ended 30 June
2022 and declares the Company's second quarter interim dividend of 1.635 pence
per ordinary share.
This dividend is for the period from 1 April 2022 to 30 June 2022 and is
payable on 9 September 2022 to shareholders on the register on 26 August 2022.
The ex-dividend date will be 25 August 2022. This dividend will be a property
income distribution dividend ("PID"). This dividend is in line with the
aggregate total dividend target of 6.54 pence per share(1) for the year ending
31 December 2022.
Rupert Barclay, Chairman of Impact Healthcare REIT plc, commented:
"We are a responsible long-term owner of a diversified and resilient portfolio
of well run and financially stable care homes that have established care
quality and financial track records. We lease them on long-term leases to
tenants who we partner with to ensure high ongoing operational standards and
care.
Against a challenging and uncertain backdrop, our business continues to
demonstrate its high level of in-built resilience, underpinned by a sector
that is largely uncorrelated with the wider economy. This is demonstrated by
our 100% collection of rent since our IPO in March 2017, with no lease
variations, and a healthy rolling 12-month rent cover of 1.85x(2). This
underlines our tenants' ability to manage the inflationary challenges in the
current economic environment.
This has helped us to deliver a strong set of results for the first half of
2022, with our NAV per share up 3.3% and NAV up 13.7% since 31 December 2021,
profit before tax up 88% on the same period in 2021, and progressive
inflation-linked dividends declared for the period well covered by earnings.
We delivered a total accounting return for the six-month period of 6.2%, and
we are well placed to deliver our 9% per annum medium-term total accounting
return target(1).
These robust results are primarily driven by the market value uplifts received
on our portfolio, underpinned by our inflation-linked rent reviews, stable
operator performance and our maintenance of a conservatively managed balance
sheet.
The Group is well positioned to continue to deliver attractive sustainable
returns to shareholders through its covered progressive dividend, further
strong capital growth potential and value creation capabilities of our
resilient portfolio for the benefit of all our stakeholders."
Financial highlights
At At Change to H1'22 Year ended Change to FY21
30 June 2022 30 June 2021 31 December 2021
(unaudited) (unaudited) (audited)
Dividends declared per share 3.27p 3.21p +2.0% 6.41p
Profit before tax £27.30m £14.51m +88.2% £31.97m
Earnings per share ("EPS") 7.26p 4.41p +64.6% 9.41p
EPRA EPS 4.22p 4.10p +2.9% 8.05p
Adjusted earnings per share 3.66p 3.26p +12.3% 6.68p
Adjusted earnings dividend cover 112% 102% 104%
Contracted annual rent roll(3) £42.0m £33.8m £38.0m +10.7%
Property Investments(4) £568.9m £432.4m £496.9m +14.5%
Net asset value ("NAV") per share 116.18p 110.66p 112.43p +3.3%
Loan to value ("LTV") ratio 23.1% 13.7% 22.3%
Total accounting return 6.21% 3.88% 8.42%
Cash £22.0m £17.7m £13.3m
· The unaudited NAV at 30 June 2022 was £448.1 million (+13.7%) or
116.18 pence per share (+3.3% increase) (31 December 2021: NAV: £394.2
million; 112.43 pence per share). This increase is primarily driven by the
market value uplifts received on the property portfolio, underpinned by the
inflation-linked rent reviews and stable operator performance.
· Total accounting return for the six months to 30 June 2022 was
6.21%, comprising dividends paid in the period of 3.24 pence and NAV growth of
3.75 pence per share (+3.3%) in the period. As a result, we are well placed to
deliver against our 9% per annum medium-term total accounting return
target(1).
· Our property investments were independently valued at £568.9
million(4) as at 30 June 2022, a 14.5% increase from £496.9 million on 31
December 2021. On a like-for-like basis the portfolio increased by 4.9%
(£22.6 million) between 31 December 2021 and 30 June 2022, driven mainly by
the inflationary rental uplifts and capital value improvements from our asset
management activities.
· The market value uplift of investment properties was £13.4
million (H1 2021: £5.0 million), contributing to profit before tax increasing
by 88.2% to £27.3 million (H1 2021: £14.5 million).
· The Company declared two quarterly dividends of 1.635 pence for
the period, in line with the Company's annual dividend target of 6.54 pence
per share for the year to 31 December 2022(1), an increase of 2.0% on the
dividend paid in 2021 of 6.41 pence per share.
o Dividends declared for the period were 129% covered by EPRA earnings per
share and 112% by adjusted earnings per share.
· EPS increase of 64.6% to 7.26 pence per share (H1 2021: 4.41
pence per share) (basic and diluted) owing to a 24.2% increase in contracted
annual rent on H1 2021 and a 2.9% uplift in the investment portfolio's value
during the period, following the inflation-linked rent increases and asset
management activities in the first half of 2022.
· Adjusted EPS rise of 12.3% to 3.66 pence per share (H1 2021: 3.26
pence per share), a result of increased cash revenue from rent reviews and the
use of moderate leverage to further scale property investments.
· Grew our annual contracted rent roll(3) by 10.7% to £42.0
million (31 December 2021: £38.0 million); this consisted of:
o Acquisition of five new properties and exchange of contracts to acquire a
further three properties, contributing £3.0 million to the contracted annual
rent.
o 79 properties had rent reviews during the period adding £872k to the
contracted annual rent, representing a 4.0% increase on the associated
portfolio over the six months to 30 June 2022.
o New capex commitments during the period adding a further £68k to
contracted annual rent.
· Drew down the second tranche of long-term institutional debt
amounting to £38 million, maturing in June 2035 at an attractive fixed coupon
of 3.0%.
· The Group now has £206.0 million of committed debt facilities.
Our drawn debt as at 30 June 2022 was £137.6 million, giving us a gross LTV
of 23.1%, with significant headroom to our borrowing policy cap of 35%. £75.0
million of this is long-term fixed-rate debt with a weighted average coupon of
2.967% and maturing in 2035. As at 30 June 2022, the weighted average term of
debt facilities (excluding options to extend) was 6.1 years.
o 48% of our debt facilities are currently hedged against rising interest
rate costs (73% of drawn debt as at 30 June 2022). 36% through long-term
fixed-rate facilities and 12% through an interest rate cap at 1% which expires
in June 2023.
· £40.0 million of gross proceeds from placing of new ordinary
shares, admitted onto the main market of the London Stock Exchange on 21
February 2022. A further £22.3 million of gross proceeds was raised from a
placing of new ordinary shares following the period end. These shares were
admitted onto the main market of the London Stock Exchange on 8 July 2022.
· Following the post-period equity raise, the Company has over
£110 million in available funds for existing capital commitments and to fund
further pipeline investment opportunities.
Operational highlights
At 30 June 2022 At 30 June 2021 Change At 31 December 2021
Topped-up net initial yield 6.69% 6.75% -6 bps 6.71%
Average NIY on acquisitions to date 7.4% 7.5% -12 bps 7.4%
Rents containing inflation-linked uplifts 100% 100% - 100%
WAULT to first break 19.9 years 19.5 years +0.4 years 19.2 years
Portfolio let 100% 100% - 100%
Last 12 months' rent cover 1.85 1.83 +1% 1.91
Properties(4) 131 111 +18% 124
Beds(4) 7,161 6,141 +17% 6,720
Tenants(5) 13 13 - 13
· The Group continued to demonstrate the resilience of its business
model, collecting 100% of rent due for the period, with no changes to any
lease terms or payment schedules, and the portfolio continues to have zero
voids.
· Throughout the period our tenants have continued to perform well
with average rent cover for the 12 months to 30 June 2022 at 1.85x.
· Occupancy continued to climb across the Group's homes to 85.4%(6)
by the period end, up 2.3% on the year (31 December 2021: 83.1%), and the
highest it has been since early 2020.
· Acquired seven properties and exchanged contracts on a portfolio
of three properties, in total adding 596 beds for a total net consideration of
£55.2 million.
· At 30 June 2022, the Group had invested in 131 properties with
7,161 beds, up from 124 and 6,720, respectively, at 31 December 2021(4).
o The Group also exchanged contracts to acquire a further three homes in the
period, which once completed will bring the total portfolio investments to 134
properties, which offer 7,316 beds(4).
o Our portfolio represents approximately 1.5% of a highly fragmented UK
market (with an estimated 465,000 beds for elderly care in total). We remain
confident that we can continue to grow while being very selective in looking
for acquisitions which will be accretive and will further increase
diversification.
· All leases continue to be inflation-linked with upward-only rent
reviews. We also cap the rental uplifts to avoid putting undue strain on our
tenants, which helps to create sustainable long-term income.
· Weighted average unexpired lease term ("WAULT") of 19.9 years at
30 June 2022 (30 June 2021: 19.5 years).
· EPRA 'topped up' net initial yield of 6.69% as at 30 June 2021
(30 June 2021: 6.75%). The average net initial yield of our acquisitions to
date was 7.4%.
· Asset management remains a key focus of our business, enhancing
the quality, sustainability and value creation capabilities of our portfolio,
working in partnership with our tenants to ensure high ongoing operational
standards in our homes for the benefit of all our stakeholders.
o In the period, we completed the internal refurbishment of Belmont House in
Harrogate and the upgrade of three care homes operated by our tenant, Electus
Healthcare, in Northern Ireland.
o Good progress has been made on site in Carlisle at Riverwell Beck,
formerly known as Blackwell Vale, whereby we have undertaken a comprehensive
refurbishment and extension of the existing care home, enhancing the common
areas, facilities and services, and increasing operational capacity from 51 to
57 beds, adding six en-suite bedrooms and a further three en-suite wet rooms
to existing bedrooms.
· Looking ahead, in Bristol, phase one of the new link building at
Fairview House and Fairview Court is targeting completion next month. Phase
two will then commence, which involves an extensive refurbishment of Fairview
House and the introduction of further sustainability improvement measures to
improve the EPC rating of the property to an overall EPC rating of A.
· We have a number of future capital projects in either the
planning or tender phase, which we will look to commit to over the next
six-month period; the average yield on cost is expected to be 8%.
· Our forward-funded development in Hartlepool has achieved
practical completion. The 94-bedroom home will be operated by Prestige, one of
the Group's existing tenants, and will offer a modern and well-designed
environment for residents. The Group funded development costs of £6.1
million, the project will deliver an initial yield on development costs of
7.8%, and in the period has received a valuation uplift of £1.9 million.
Enhancing the social environment of our homes and their environmental
performance is fundamental to long-term value creation
Our homes provide an important service in their communities, providing
accommodation and associated support for a vulnerable segment of society. We
work closely with our tenants to ensure they can provide an enjoyable, safe,
caring and energy efficient environment that can enhance the wellbeing of
their residents. In the period we have:
· Published our EPRA sustainability report for 2021;
· Progressed identified opportunities to improve energy efficiency
and EPC ratings;
· Commenced work on assessing the greenhouse gas emissions from our
portfolio in advance of developing a net zero carbon strategy;
· Progressed work to assess our transitional and physical climate
risk and opportunity in order to report under TCFD this year; and
· Commenced work on how we can understand and measure the clear
inherent social value embedded in our portfolio.
Notes
1 This is a target only and not a profit forecast. There can be no
assurance that the target will be met and it should not be taken as an
indicator of the Company's expected or actual results.
2 Includes the benefit of grant income, which largely ended in March 2022
and is beginning to unwind.
3 Contracted rent includes all post-tax income from investment in
properties, whether generated from rental income or post-tax interest income.
4 This relates to the property portfolio along with property portfolios
that have been invested in via loans to operators with an option for the Group
to acquire.
5 Including Croftwood and Minster, which are both part of the Minster
Care Group.
6 Excludes three turn-around assets that have not reached maturity.
FOR FURTHER INFORMATION, PLEASE CONTACT:
Impact Health Partners LLP Via Maitland/amo
Andrew Cowley
Mahesh Patel
David Yaldron
Jefferies International Limited +44 20 7029 8000
Tom Yeadon tyeadon@jefferies.com (mailto:tyeadon@jefferies.com)
Neil Winward nwinward@jefferies.com (mailto:nwinward@jefferies.com)
Ollie Nott onott@jefferies.com (mailto:onott@jefferies.com)
Winterflood Securities Limited +44 20 3100 0000
Neil Langford neil.langford@winterflood.com (mailto:neil.langford@winterflood.com)
Joe Winkley joe.winkley@winterflood.com (mailto:joe.winkley@winterflood.com)
Maitland/amo (Communications adviser) +44 7747 113 930
James Benjamin impacthealth-maitland@maitland.co.uk
(mailto:impacthealth-maitland@maitland.co.uk)
Alistair de Kare-Silver
The Company's LEI is 213800AX3FHPMJL4IJ53.
Further information on Impact Healthcare REIT plc is available at
www.impactreit.uk (http://www.impactreit.uk/) .
NOTES:
Impact Healthcare REIT plc acquires, renovates, extends and redevelops
high-quality healthcare real estate assets in the UK and lets these assets on
long-term full repairing and insuring leases to high-quality established
healthcare operators which offer good quality care, under leases which
provide the Company with attractive levels of rent cover.
The Company aims to provide shareholders with an attractive sustainable
return, principally in the form of quarterly income distributions and with the
potential for capital and income growth, through exposure to a diversified and
resilient portfolio of UK healthcare real estate assets, in particular care
homes for the elderly.
The Company has a progressive dividend policy with a target to grow its annual
aggregate dividend in line with the inflation-linked rental uplifts received
by the Group under the terms of the rent review provisions contained in the
Group's leases in the prior financial year.
On this basis, the target total dividend for the year ending 31 December 2022
is 6.54 pence per share*, a 2.0% increase over the 6.41 pence in dividends
paid per ordinary share for the year ended 31 December 2021.
The Group's Ordinary Shares trade on the main market of the London Stock
Exchange, premium segment. The Company is a constituent of the FTSE
EPRA/NAREIT index.
* This is a target only and not a profit forecast. There can be no
assurance that the target will be met and it should not be taken as an
indicator of the Company's expected or actual results.
Half year results presentation
The Company presentation for investors and analysts will take place at 8.30am
(UK) today via a live webcast and conference call.
To access the live webcast, please register in advance here:
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To access the live conference call, please register to receive unique dial-in
details here:
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The recording of the results presentation will be available later in the day
via the Company's London Stock Exchange profile page:
https://www.lsegissuerservices.com/spark/ImpactHealthcareREIT/events/59df34ab-a55f-4f99-bc23-963fc7d1ee0b
(https://urldefense.com/v3/__https:/www.lsegissuerservices.com/spark/ImpactHealthcareREIT/events/59df34ab-a55f-4f99-bc23-963fc7d1ee0b__;!!IHJ3XrWN4X8!LwgyMLsI_2R4g7APpfTExU3szO5H8329pJ-qm7ma9OmukuCIIojdWeGv7e93BUl5icmCU5zVN4nZEBPpeI8FK6Zu-z3lzhq-K3tReA$)
and from the Company website:
https://www.impactreit.uk/investors/reporting-centre/presentations/
(https://www.impactreit.uk/investors/reporting-centre/presentations/)
Our purpose
To form long-term partnerships with our tenants, through which we own and
invest in the buildings they lease from us in return for a predictable and
sustainable rent, enabling our tenants to concentrate on providing excellent
care to their residents.
Our values
Our core values are to:
· focus on the long-term sustainability of our business;
· always to act openly and transparently with all our stakeholders;
· be practical, combining entrepreneurial nimbleness with the
strength of a listed company; and
· be efficient.
Our business model
Successfully implementing each element of our business model ensures we
maintain a high‑quality business, with a rigorous focus on:
· the quality of the buildings we own;
· the quality of care our tenants deliver; and
· the quality of the cash flows we generate, helping us to maintain
a healthy balance sheet and provide shareholders with attractive, sustainable
returns.
CHAIRMAN'S STATEMENT
We are a responsible long-term owner of a diversified and resilient portfolio
of well run and financially stable care homes that have established care
quality and financial track records. We lease them on long-term leases to
tenants who we partner with to ensure high ongoing operational standards and
care.
Against a challenging and uncertain macroeconomic and geopolitical backdrop,
our business continues to demonstrate its high level of in-built resilience,
underpinned by a defensive sector that is largely uncorrelated with the wider
economy.
Three of the main pillars of our business leave the Group well-positioned to
continue providing vital social infrastructure whilst delivering attractive,
secure returns to shareholders. These pillars are:
· careful selection of tenants who provide essential social care;
· putting in place inflation-linked leases with those tenants with
rents set at sustainable levels for the life of the leases; and
· maintaining a conservatively managed balance sheet.
While increasing inflation presents an issue for many businesses, our
inflation-linked leases allow the Group's revenues to follow this trend over
the long term, although we also cap the rental uplifts to avoid putting undue
strain on our tenants, which helps to create sustainable long-term income and
value to all our stakeholders.
Our operator base has continued to show stability in a time of rising costs
with the 12-month average rent cover to 30 June 2022 standing at a healthy
1.85x, evidencing their ability to manage inflationary change in the current
economic environment. The strength of our tenants' operations underpins our
100% track record of receiving the rent due with no lease variations, allowing
us to provide shareholders with an attractive, fully covered and
inflation-linked progressive dividend.
Delivering material growth and positive strategic progress
In the first half of 2022, we completed the acquisition of seven homes and
exchanged contracts to acquire a further three, all with existing tenants.
These transactions add a further 596 beds to the Group's portfolio for a total
consideration of £55.2 million.
Our property investments were independently valued at £568.9 million(1) as at
30 June 2022, a 14.5% increase from £496.9 million on 31 December 2021. On a
like-for-like basis the portfolio value increased by 4.9% (£22.6 million)
between 31 December 2021 and 30 June 2022 driven mainly by the inflationary
rental uplifts.
To date, we have invested in 131 properties, which offer 7,161 beds(1). In the
whole of the United Kingdom, there are an estimated 465,000 beds for elderly
care, so we now own 1.5% of a highly fragmented market. That gives us
confidence that we can continue to grow while being very selective in looking
for acquisitions which will be accretive and will further increase
diversification.
Asset management remains core to our business and continues to be a key driver
of enhancing the quality, growth and value creation capabilities of our
portfolio for the benefit of all our stakeholders.
We have had an active start to the year, having completed the internal
refurbishment of Belmont House in Harrogate and the upgrade of three care
homes operated by our tenant, Electus Healthcare, in Northern Ireland. Good
progress has been made on site in Carlisle at Riverwell Beck, formerly known
as Blackwell Vale, where we are undertaking a comprehensive refurbishment of
the existing care home including a small extension. These combined works,
which include energy performance improvements will deliver: reconfigured and
extended day space for residents; extended and enhanced kitchen and laundry
facilities; six additional bedrooms increasing the operational capacity from
51 to 57 beds including nine additional en-suites; and improving the EPC
performance of the home from a C to a B rating. These works will enhance the
environment for the residents and staff while ensuring the home is fit for
purpose for the duration of the lease.
Looking ahead, in Bristol phase one of the new link building will complete at
Fairview House and Fairview Court next month. Phase two will then commence,
which involves an extensive refurbishment of Fairview House and the
introduction of further sustainability improvement measures to improve the
overall EPC rating of the property to an overall EPC rating of A.
We have a number of future capital projects in either the planning or tender
phase, which we will look to commit to over the next six months; the average
yield on cost is expected to be 8%.
Our forward-funded development in Hartlepool has achieved practical
completion, funded at a total development cost of £6.1 million. This project
has achieved a £1.9 million increase in value in the period (a 30% profit on
development cost) and will deliver an initial yield on development costs of
7.8%. We are delighted with the resulting 94-bedroom future-proofed home and
look forward to our tenant, Prestige, welcoming in the new residents.
Increasing tenant diversification and continued financial resilience
The Group's tenant base is made up of 13(2) high-quality operators with
established care quality and financial track records, who invest, sometimes
alongside the Company, in ensuring high ongoing operational standards in their
homes. In the period, the acquisitions have been with our smaller tenants
which improves the diversification by tenant of our portfolio.
Throughout the period our tenants have continued to perform well overall, with
average rent cover for the 12 months to 30 June 2022 at 1.85x and occupancy
continuing to climb across the Group's homes to 85.4%(3) by the period end (31
December 2021: 83.1%).
The Group continues to source potential new tenants through its selective
screening process to diversify further our operator base and accretively
expand our business, which remains a key part of our growth strategy. We
choose tenants who prioritise high-quality care, a positive environment for
their residents and share our vision of continued asset improvement. The Board
and Investment Manager are very focused on maintaining and improving the
Group's assets to a high standard and pay close attention to our tenants'
programmes of repair and maintenance.
Robust and resilient financial performance
The unaudited NAV at 30 June 2022 was £448.1 million (+13.7% increase) or
116.18 pence per share (+3.3% increase) (31 December 2021: NAV: £394.2
million; 112.43 pence per share). This increase is primarily driven by the
market value uplifts received on the property portfolio, underpinned by the
inflation-linked rent reviews and stable operator performance.
Unaudited earnings per share (EPS) for the period was 7.26 pence per share
(basic and diluted), up 64.6% from 4.41 pence per share in the same period in
2021. EPRA EPS was 4.22 pence per share (H1 2021: 4.10 pence per share) and
Adjusted EPS was 3.66 pence per share (H1 2021: 3.26 pence per share).
Adjusted earnings dividend cover for the period increased to 112% (H1 2021:
102%).
Looking forward, our priorities continue to be to take a disciplined approach
to allocating capital as we grow the business, while being as efficient as
possible in the way we manage the business.
More information about our financial performance in the period can be found in
the Investment Manager's report.
Secure, attractive, inflation-linked long-term income and returns
In 2019 the Company introduced a progressive dividend policy. It seeks to grow
its target dividend in line with the inflation-linked rental uplifts received
by the Group under the terms of the rent review provisions contained in the
Group's leases in the prior financial year. 100% of the Group's leases are
inflation-linked with floors and caps typically between 2% and 4%.
The Board set a target total dividend for the year ending 31 December 2022 of
6.54 pence per share(4), a 2.0% increase over the 6.41 pence per share paid
for the year ended 31 December 2021.
So far in 2022, we have declared two dividends in relation to the first two
quarters of the year of 1.635 pence each, delivering on our target. This
dividend continues to be well covered by our EPRA EPS in the period of 4.22
pence per share and is also covered by our Adjusted EPS of 3.66 pence per
share.
Our medium-term total accounting return target is an average of 9.0% per
annum(4), and we delivered a total accounting return for the six months to 30
June 2022 of 6.21% (not annualised).
Strong and conservative balance sheet
The Group had an active first half to 2022. We raised £40 million in equity
in February 2022 and used the proceeds to pay down debt and subsequently fund
acquisitions occurring in the period. In June, we drew down the second tranche
of long-term institutional debt amounting to £38 million at an attractive
fixed coupon of 3.0% per annum. This second tranche matures in June 2035 and
provides long-term, fixed-rate financing aligned to the Group's long-term
income profile. In parallel, we reduced our more expensive Metro facility from
£40 million to £30 million.
In July 2022, following the period end, a further £22.3 million in equity was
raised with the proceeds being used to pay down debt and allow the Company to
progress its acquisition pipeline as well as allowing further scope to invest
into additional accretive asset management initiatives, thereby modernising,
extending and improving homes in the portfolio for the benefit of
shareholders, tenants and their underlying residents.
The Group now has £206 million of committed debt facilities. Our drawn debt
as at 30 June 2022 was £137.6 million, giving us a gross LTV of 23.1%. Our
cash position on 30 June 2022 was £22.0 million. 48% of our debt facilities
are currently hedged against rising interest rate costs (73% of drawn debt as
at 30 June 2022). 36% through long-term fixed-rate facilities and 12%
through an interest rate cap at 1% which expires in June 2023.
Enhancing sustainability
The Group has continued to build on its energy efficiency and EPC improvements
plan to achieve the necessary EPC ratings ahead of the MEES regulatory dates.
Further work is taking place to determine the best route to decarbonise the
portfolio and move towards formulating a science-based net zero carbon
strategy and setting a target date to achieve it. The Group has also laid
building blocks in defining how best to measure the social value our
investment creates. Both of these pieces of work should be substantially
completed this year.
Strong governance
The Company has a strong and independent board, comprising the Chairman and
five other non-executive directors.
Specialist, experienced and disciplined Investment Manager
Impact Health Partners LLP is our Investment Manager. Our Investment Manager
is working rigorously on the Group's behalf to source and provide diligently
researched acquisition and development opportunities, which continue to
further the Group's diversification strategy and grow our inflation-linked
long leased REIT for the benefit of all stakeholders. We are pleased to see
the continued growth of the Investment Manager's team and capability in the
past 12 months.
Our Investment Manager continues to provide comprehensive and granular
analysis of the Group's tenants, demonstrating its high degree of oversight
and rapport with tenants to allow these consistent information flows. Its
close relationship with our tenants enables us to navigate the challenging
ongoing environment of a pandemic and more recently energy prices and
inflation while endeavouring to ensure we continue to keep the welfare of all
our stakeholders at the forefront of our actions.
Well-positioned to deliver further attractive sustainable value
We are a long-term business and the Group's resilient and defensive healthcare
portfolio continues to provide crucial care-based infrastructure supporting
vulnerable elderly people across the UK.
The Company's business model remains robust and resilient as demonstrated by
the Group's continued 100% rent receipt and healthy rent cover. We appreciate
the support of new and existing shareholders in our February and July
fundraises, the proceeds of which, along with additional financing secured in
the period, allow the Group to pursue further accretive acquisitions whilst
remaining well capitalised, with a strong balance sheet, and significant
liquidity and headroom.
The Group is well positioned to continue to deliver attractive sustainable
returns to shareholders through its covered progressive dividend, further
strong capital growth potential and value creation capabilities of our
portfolio for the benefit of all our stakeholders.
Rupert Barclay
Chairman
16 August 2022
1 This relates to the property portfolio along with property portfolios that
have been invested in via loans to operators with an option for the Group to
acquire.
2 Including Croftwood and Minster, which are both part of the Minster Care
Group.
3 Excludes three turn-around assets that have not reached maturity.
4 This is a target only and not a profit forecast. There can be no assurance
that the target will be met and it should not be taken as an indicator of the
Company's expected or actual results.
INVESTMENT MANAGER'S REPORT
We are pleased to publish a strong set of results for the first half of 2022,
with profit before tax up 88% on the same period in 2021; NAV per share at 30
June 2022 up 3.3% on 31 December 2021; and the dividends declared for the
period of 3.27 pence per share 129% covered by EPRA earnings per share and
112% by adjusted earnings per share.
Completion of our first forward-funded development at Hartlepool delivered a
£1.9 million valuation uplift in the period, which alongside inflation-linked
rent increases received during the first half of 2022 were the main drivers of
a 2.9%, or £13.4 million, uplift in the investment portfolio's value during
the period.
This robust performance has been delivered against a challenging backdrop. It
might have been tempting to ask in 2020 and 2021, during the peak of the
COVID-19 pandemic when our tenants found themselves in the eye of the storm,
what could be more challenging? We are still full of admiration for how they
rose to that challenge. The pandemic is not yet over, and it seems living with
COVID-19 might mean managing successive spikes in infection rates as new
variants emerge. However, the success of the vaccines and the experience of
managing enhanced infection control measures at care homes gained over the
past two years means it is now possible to have an effective strategy to live
with COVID-19.
Now, as the pandemic recedes, all businesses face a new challenge: a spike in
inflation which has taken it to levels which we have not seen in G7 economies
for four decades. Since founding the business five years ago, we have always
applied two principles. First, the Group's leases must be inflation-linked and
today 100% of its leases are inflation-linked. Second, rent needs to be
sustainable over the long fixed term of the Group's leases. This requires
careful tenant selection, setting the initial rent at a prudent level and
putting in place floors and caps on rent increases in most of our leases to
give our tenants some level of protection against a spike in inflation such as
we are now experiencing, while in periods of low inflation providing the Group
with progressive rental uplifts.
Our tenants provide an essential service and the sector in which they operate
has demonstrated over long time periods the ability to pass on inflationary
cost increases. Over the past two decades, while RPI averaged 2.8% per annum,
the annual increases in nursing and residential care fees rose by 3.8% and
3.6% per annum respectively. How they are faring during this spike in
inflation is discussed in more detail below, but the key points are that they
continue to pay 100% of the rent due, while maintaining solid levels of rent
cover, demonstrating once again the resilience of our business model.
Strong and resilient tenant performance
One key driver of tenant performance is their level of occupancy. The first
wave of the pandemic in 2020 reduced average occupancy across the Group's
portfolio from just over 90% in March 2020, to a low point of 79% in January
2021. The effective roll-out of the vaccinations seen in 2021 and subsequent
booster programme helped our tenants to stabilise and then start to rebuild
occupancy to more normal levels. However, this recovery stalled during the
first quarter of 2022, when infections caused by the first Omicron variant
were very widespread. While vaccinations continued to be effective in
protecting most people against severe illness, during the first quarter of
this year public guidance was that a care home should close to new admissions
for 28 days if more than two people in the home tested positive for COVID-19.
During the second quarter of 2022, our tenants have been steadily rebuilding
occupancy. As at 30 June 2022, occupancy reached 85.4%(1) (up 2.3% on December
2021), the highest it has been since early 2020.
Despite lower than normal levels of occupancy, the Group continues to have no
voids and to receive 100% of rent due with no alterations to leases. Tenants'
rent cover remains healthy, at an average of 1.85x times for the 12 months
ended 30 June 2022, making it higher than it was pre-pandemic.
Three factors underpin this solid level of rent cover. Firstly, the care we
take in setting initial rents when agreeing new leases with tenants to ensure
the building is not structurally over-rented and the inflation-linked rent is
likely to be received through the life of a long-term lease; secondly; the
support from government through to March 2022, which was focused on improving
infection control measures, during the pandemic; and, thirdly, strong
increases in the fees our tenants charge for the care they provide.
Investing for accretive growth
During the first half of the year, the Group acquired seven care homes and
exchanged contracts to acquire a portfolio of three homes in Scotland. As at
30 June 2022, the Group had invested in 131 properties with 7,161 beds, up
from 124 and 6,720 respectively at 31 December 2021(2).
These investments, combined with rent increases received during the period,
helped to grow our contracted rent roll(3) from £38.0 million on 31 December
2021, to £42.0 million on 30 June 2022, a 10.7% increase.
Value-enhancing asset management
Well-delivered asset management has the potential to create value for
shareholders and tenants, while offering a high-quality environment for the
homes' residents. In the first half of the year, in partnership with our
tenants MMCG and Electus Healthcare, we completed work on the refurbishment of
Belmont House in Harrogate and three care homes in Northern Ireland,
respectively. These capital projects have focused on enhancing the care homes'
premises.
Good momentum has been made over the last six months on site at Riverwell
Beck, formerly known as Blackwell Vale, with our tenant, Careport Group. The
capital project will be completed in August 2023, comprising an extensive
refurbishment of ancillary accommodation, day space and residents' bedrooms
within the existing care home, with a further small extension to add six new
bedrooms. We have committed further capital to improve the EPC rating of the
premises, improving the rating from a C to a B rating, further future-proofing
the building, and it is expected to deliver potential value enhancement.
Looking forward, phase one of the new link building, connecting Fairview House
and Fairview Court in Bristol, is expected to be completed in Q3 2022.
Following occupation of phase one, work will commence on phase two, which
involves a comprehensive refurbishment of Fairview House, adding en-suites to
existing bedrooms and improving residents' day spaces. Additional
sustainability improvement measures have been incorporated into the scheme to
ensure the new combined Fairview building has an EPC rating of A.
The Group has committed total capital of £21.8 million to these projects,
which will be rentalised at an average yield of 8%.
In addition to the capital investment under the terms of the leases, tenants
are fully responsible for maintaining the Group's building in a good state of
repair through regular repair and maintenance programmes. We monitor each
tenant's expenditure on repair and maintenance and support our tenants in its
implementation through regular physical inspections and on-site progress
meetings with the operators.
Value-enhancing forward-funded development
We are pleased that our forward-funded development in Hartlepool has achieved
practical completion. The 94-bedroom home will be operated by Prestige, one of
the Group's existing tenants, and will offer a modern and well-designed
environment for residents. The Group funded development costs of £6.1 million
and the project will deliver a yield on development cost of 7.8%. The
completion value of the asset includes a £1.9 million increase in value in
the period or a 30% profit on cost. We look forward to working closely with
Prestige over the build-up phase as residents move in.
Work continues on our £10.5 million forward-funding commitment for a new care
home development in Norwich, to be developed and operated by our latest
tenant, Carlton Hall. The project is currently in the planning system for
approval and is pending resolution of wider nutrient neutrality matters for
the local area. Once completed, we are confident that the 80-bedroom home will
be the best of its type in the Norwich area. We anticipate that the project
will deliver a yield on cost of approximately 7%, which will be further
assessed once the building contract has been tendered.
We consider that asset management and development opportunities will produce
further opportunities to deliver projects accretive to earnings and help us to
deliver on our sustainability objectives by delivering energy efficient
buildings that are future-proofed for the benefit of all our
stakeholders. Looking forward, we are also actively considering the principle
of refurbishing and recycling existing buildings in addition to funding new
build development opportunities as part of our recognition of the complexities
of achieving net zero.
Further increasing our portfolio valuation
The portfolio is independently valued by Cushman & Wakefield each quarter,
in accordance with the RICS Valuation - Professional Standard (the "Red
Book").
As at 30 June 2022, the portfolio was valued at £530.2 million, a 15.4%
increase of £70.8 million from the valuation of £459.4 million at 31
December 2021. The components of this valuation increase were as follows:
· Acquisitions completed: £47.4 million (67% of valuation increase
in the period);
· Acquisition costs capitalised: £1.2 million (2% of valuation
increase in the period);
· Capital improvements: £8.8 million (12% of valuation increase in
the period); and
· Valuation uplift: £13.4 million (19% of valuation increase in
the period).
The valuation uplift was largely driven by rent increases, with c.60% of the
Group's properties subject to rent reviews during the period. Furthermore,
£1.9 million relates to the valuation uplift received on practical completion
of the forward-funded development of a 94-bed care home in Hartlepool.
Responsible and sustainable business
We remain committed to investing responsibly, with a long-term outlook for
both environmental and social considerations.
We have completed our initial review of the energy efficiency performance of
our portfolio by updating EPC certifications and modelling the capex required
to achieve the levels required for future MEES compliance, ahead of the
expected regulatory requirement dates of C by 2027 and B by 2030. We continue
to carefully assess additions to our portfolio to identify how they can
achieve a minimum EPC band B where they do not already achieve that. Further,
we have commissioned expert consultants to review the carbon emissions arising
from our portfolio so that we can identify the optimum approach to
decarbonisation which will form our proposed net zero carbon strategy.
Reducing energy demand from our homes will ensure compliance with regulatory
requirements and deliver a lower cost in use for our tenants.
We have also commenced work on scenario planning for transitional and physical
risk and opportunity from climate change and this will be an increasing area
of focus for us in the future.
The homes within our portfolio play an essential role in the UK's social
infrastructure, where care is provided for some of the nation's most
vulnerable people, many of whom fall within the state funded sector. During
2022 we are working on defining and measuring the social value that our
investment creates and safeguards.
Strong and resilient financial results
Total net rental income recognised for the period increased 10.2% to £19.6
million (H1 2021: £17.8 million). Under IFRS, the Group must recognise some
rent in advance of receipt, reflecting the minimum uplift in rents over the
term of the leases, on a straight-line basis. Cash rental income received in
the period increased 15.6% to £16.9 million (H1 2021: £14.6 million).
Administrative and other expenses totalled £3.2 million (H1 2021: £2.8
million), contributing to a total expense ratio of 1.51% for the period (H1
2021: 1.50%), lower than the full year average for 2021 of 1.55%. The EPRA
cost ratio for the period was 16.2%, up from 15.5% in H1 2021 and 15.8% for
the full year 2021. This increase is driven by the income received on loans to
operators for the purchase of property portfolios where the Group has an
option to acquire, not being included in the revenue line, adjusting to
include this income gives an adjusted cost ratio of 14.8%. Finance costs were
£2.2 million (H1 2021: £1.6 million). Interest income was £1.8 million (H1
2021: £0.0 million), reflecting property investments made via a loan to an
operator. The change in fair value of investment properties was £10.6 million
(H1 2021: £1.0 million), contributing to profit before tax increasing 88.2%
to £27.3 million (H1 2021: £14.5 million).
Earnings per share ("EPS") for the period was 7.26 pence per share (H1 2021:
4.41 pence per share) and EPRA EPS was 4.22 pence per share (H1 2021: 4.10
pence per share). Adjusted EPS, which strips out the non-cash items and
one-off costs, was 3.66 pence per share (H1 2021: 3.26 pence per share).
All the EPS figures listed above are on both a basic and diluted basis. More
information on the calculation of EPS can be found in note 7 to the financial
statements.
Attractive fully covered progressive dividends
To ensure the Company benefits from the full exemption from tax on rental
income afforded by the UK REIT regime, it must distribute at least 90% of the
qualifying profits each year from the Group's qualifying rental business.
The Company has declared two quarterly dividends of 1.635 pence each in
respect of the period. Both dividends were Property Income Distributions. The
details of these dividends were as follows:
Quarter to Declared Paid Cash cost £m
31 March 2022 25 April 2022 20 May 2022 6.3
30 June 2022 16 August 2022 9 September 2022 6.6
Total 12.9
Dividends declared for the period were 129% covered by EPRA EPS and 112%
covered by Adjusted EPS.
Strong and conservative balance sheet
We continue to source financing to allow the Group's ongoing development and
to take advantage of its attractive pipeline of acquisitions. On 21 February
2022, we completed a placing of 35.1 million new ordinary shares at 114.0
pence per share, which raised gross proceeds of £40.0 million for the
Company. Following the period end, a further £22.3 million was raised through
the placing of 19.0 million new ordinary shares at 117.0 pence per share. The
net proceeds from the placing were used to pay down debt and will be used to
fund pipeline acquisitions.
We continue to take a conservative approach to managing the Group's balance
sheet. At 30 June 2022, the Group had five facilities totalling £206.0
million, of which £137.6 million was drawn (31 December 2021: £114.5
million), giving a gross LTV of 23.1% (31 December 2021: 22.3%). As at 30 June
2022, the weighted average term of debt facilities (excluding options to
extend) was 6.1 years. 48% of our debt facilities our hedged against interest
rate rises (73% of drawn debt as at 30 June 2022); 36% as a result of putting
in place long-term fixed-rate debt and 12% from a 1% interest rate cap which
expires in June 2023.
As at 30 June 2022, we had £68.4 million of undrawn debt facilities and
£22.0 million cash, leaving headroom to finance all committed contingent
liabilities for deferred payments and capital expenditure, as well as to
pursue a selected number of acquisition opportunities.
Remain confident in the outlook for the business
The Investment Manager will continue, as usual, to monitor tenants'
performance at a granular level during this high inflationary period and to
work with tenants to develop further plans to enhance the buildings they
operate for the Group for the benefit of all our stakeholders. We remain
confident that we will continue to be able to identify acquisitions which will
be accretive for the Group; will help to reduce risk through further
diversification; and some of which will have potential for further value
creation through active asset management.
Impact Health Partners LLP
Investment Manager
16 August 2022
1 Excludes three turn-around assets that have not reached maturity.
2 This relates to the property portfolio along with property portfolios that
have been invested in via loans to operators with an option for the Group to
acquire.
3 Contracted rent includes all post-tax income from investment in properties,
whether generated from rental income or post-tax interest income.
KEY PERFORMANCE INDICATORS
The Group uses the following measures to assess its strategic progress.
1. Total Accounting Return ("TAR")
6.21% for the period to 30 June 2022 (+60% on H1 2021)
Definition: The change in the net asset value ("NAV") over the period, plus
dividends paid in the period, as a percentage of NAV at the start of the
period.
2. Dividends
3.27p per share for the period to 30 June 2022 (+2% on H1 2021)
Definition: Dividends declared in relation to the period.
3. EPRA earnings per share
4.22p per share for the period to 30 June 2022 (+3% on H1 2021)
Definition: Earnings from operational activities. The EPRA calculation removes
revaluation movements in the investment portfolio and interest rate
derivatives but includes rent smoothing.
4. EPRA 'topped-up' Net Initial Yield ("NIY")
6.69% at 30 June 2022 (-6 bps on H1 2021)
Definition: Annualised rental income based on the cash rents passing on the
balance sheet date, less non-recoverable property operating expenses, divided
by the market value of the property portfolio, increased by 6.3% to reflect a
buyer's costs and adjusted for the expiration of rent-free periods or other
unexpired lease incentives.
5. NAV per share
116.18p per share at 30 June 2022 (+5% on H1 2021)
Definition: Net asset value based on the properties and other investment
interests at fair value.
6. Gross Loan to Value ("LTV")
23.13% per share as at 30 June 2022 (+86 bps on H1 2021)
Definition: The proportion of our gross asset value that is funded by
borrowings.
7. Weighted Average Unexpired Lease Term ("WAULT")
19.9 years as at 30 June 2022 (+0.4 years on H1 2021)
Definition: The average unexpired lease term of the property portfolio,
weighted by annual passing rents.
8. Total Expense Ratio ("TER")
1.51% as at 30 June 2022 (+1 bps on H1 2021)
Definition: Total recurring administration costs as a percentage of average
net asset value throughout the period. EPRA cost ratio was 16.2%, adjusted to
include the income on loans to operators for the purchase of property
portfolios where the Group has an option to acquire, gives an adjusted cost
ratio of 14.8%. (H1 2021: 15.5%).
PRINCIPAL RISKS AND UNCERTAINTIES
The board has been regularly evaluating the performance of and risks to the
business arising from the ongoing effects of the COVID-19 pandemic and the
wider operating environment. While vaccines are proving significant in the
fight against COVID-19, the pandemic is not over and significant uncertainties
remain. The principal risks and uncertainties continue to be those outlined on
pages 44-49 of our 2021 Annual report dated 28 March 2022 and the board
considers that these will remain valid for the remainder of the year.
The principal risks are summarised below and include updates since the annual
report from our evaluation in the period.
Changes to government social care policy - Care for older people is at the
heart of our business. The government may change policy or introduce
legislation that affects the sector.
Interim update - With the resignation of the Prime Minister there is increased
uncertainty in the direction of future government legislation. At the time of
reporting, the final candidates for the future leader of the Conservative
Party have been selected. There is a proposal to reverse the increase in
National Insurance contributions, which places at risk the increased funding
for the NHS and elderly care. While there was no clarity as to how this
increased funding would have flowed through to care homes, if this change is
implemented, it would be a step backwards on the funding of adult social care
and for the NHS.
Infectious diseases - Significant outbreaks of infectious diseases, in
particular pandemics such as COVID-19, can have long-lasting and far-reaching
effects across all businesses.
Interim update - While COVID-19 remains prevalent within the UK population and
globally, the number of people becoming seriously ill appears to be reducing
with the current variants, and our experience is that its impact on care homes
and their residents is reducing. However, the risk of impact from new variants
remains.
General economic conditions - Adverse general economic conditions are expected
to heighten as the government implements measures to reduce the unprecedented
levels of debt that have been required to manage the immediate economic
implications of the pandemic.
Interim update - There is continued uncertainty about the scale and duration
of the current economic and inflationary environment which has been
exacerbated by the war in Ukraine and supply chain and resourcing issues.
For our tenants, their underlying cost base is increasing with rising staff,
food and utility costs. Our tenants remain confident that these costs can be
passed on, however there is expected to be a time lag in achieving this.
Weakening financial performance of our tenants and/or rising interest rates
may also result in weakening valuation yields across our portfolio.
The inflation rate caps we have in place with the majority of our tenants will
help to ensure the rent remains affordable and does not compound the
challenges of rising costs.
Interest rates continue to increase and the Group is well placed to manage its
financing obligations as discussed below.
The increased risk assessment at the year end remains in place at the half
year.
Weakening care market - Several factors may affect the market for care for
older people, including: changing service user requirements in the healthcare
sector, local authority funding partners amending their payment terms, and
increased regulatory responsibility and associated costs for our tenants.
Default of one or more tenants - The default of one or more tenants, or
failing to act quickly and decisively when confronted with a failing tenant,
would affect the value of our homes and both our ability to pay dividends to
our shareholders and to meet our financing obligations.
Underinvestment in care homes - The attractiveness of our portfolio is based
on the quality of the tenants' operations, measured by their regulatory and
financial performance, and our properties' ability to provide effective space
in which our tenants can operate. This does not require our homes to be new,
but it does require them to be well maintained and fit for purpose.
Environmental regulation and impact of climate change - Tightening
environmental regulations may increase the need for investment or
redevelopment of our portfolio.
Interim update -The board has increased its assessment of the risk to the
business from the impact of climate change and the probability of changes to
climate-related legislation
Ability to meet our financing obligations - If we are unable to operate within
our debt covenants, this could lead to a default and our debt funding being
recalled.
Interim update - The Group remains well placed to manage its debt facilities
with good interest cover and low overall LTV levels. 48% of the group's
current debt facilities are hedged against interest rate increases. Our
overall low leverage levels also mean that the group is well placed with
strong interest cover ratios within each security pool.
Reliance on the Investment Manager - As an externally managed company, we rely
on the Investment Manager's services and reputation to execute our strategy
and support our day-to-day relationships.
The approach to risk taken by the board is rigorous and thorough. It ensures
that the assessment of risk remains appropriate and relevant.
As regards the six months to 31 December 2021, the course of the pandemic may
cause further changes to the probability and impact of our principal risks.
These risks have all been considered as part of our going concern assessment
which is reported on page 28 of our 2021 annual report dated 28 March 2022.
DIRECTORS' RESPONSIBILITIES
The directors confirm that to the best of their knowledge, this condensed set
of financial statements has been prepared in accordance with IAS 34 in
conformity with the requirements of the Companies Act 2006 and that the
operating and financial review contained within the Investment Manager's
report includes a fair review of the information required by DTR 4.2.7 and DTR
4.2.8 of the Disclosure Guidance and Transparency rules of the United
Kingdom's Financial Conduct Authority, namely:
· an indication of important events that have occurred during the
first period of the financial year and their impact on the condensed financial
statements and a description of the principal risks and uncertainties for the
remaining six months of the financial year; and
· material related party transactions in the first period of the
financial year and any material changes in the related party transactions
disclosed in the 2021 annual report as disclosed in note 21.
A list of the directors is shown on page 68-69 in the 2021 annual report.
Shareholder information is as disclosed on the Impact Healthcare REIT plc
website.
For and on behalf of the board
Rupert Barclay
Chairman
16 August 2022
Condensed consolidated statement of comprehensive income
Six months ended Six months ended
30 June 2022 30 June 2021 Year ended
(unaudited) (unaudited) 31 December 2021
(audited)
Notes £'000 £'000 £'000
Gross rental income 5 19,648 17,829 36,398
Insurance/service charge income 5 387 236 496
Insurance/service charge expense 5 (387) (236) (496)
Net rental Income 19,648 17,829 36,398
Administrative and other expenses (3,181) (2,752) (5,766)
Profit on disposal of investment properties - - 308
Operating profit before changes in fair value 16,467 15,077 30,940
Changes in fair value of call option 11 527 - -
Changes in fair value of investment properties 10,646 1,038 4,220
9
Operating profit 27,640 16,115 35,160
Finance income 1,831 1 72
Finance expense (2,176) (1,609) (3,264)
Profit before tax 27,295 14,507 31,968
Tax charge on profit for the period/year 6 - - -
Profit and comprehensive income (attributable to shareholders) 27,295 14,507 31,968
Earnings per share - basic and diluted (pence) 7 7.26p 4.41p 9.41p
The results are derived from continuing operations during the period/year.
Condensed consolidated statement of financial position
As at As at As at
30 June 2022 30 June 2021 31 December 2021
(unaudited) (unaudited) (audited)
Notes £'000 £'000 £'000
Non-current assets
Investment property 9 505,667 415,332 437,635
Call option 11 527 - -
Interest rate derivatives 11 342 11 94
Trade and other receivables 11 64,594 19,774 61,948
Total non-current assets 571,130 435,117 499,677
Current assets
Trade and other receivables 1,817 1,902 1,557
Cash and cash equivalents 22,050 17,731 13,261
Total current assets 23,867 19,633 14,818
Total assets 594,997 454,750 514,495
Current liabilities
Trade and other payables (10,074) (4,112) (6,703)
Total current liabilities (10,074) (4,112) (6,703)
Non-current liabilities
Bank borrowings 10 (134,223) (59,905) (110,907)
Trade and other payables (2,570) (2,713) (2,641)
Total non-current liabilities (136,793) (62,618) (113,548)
Total liabilities (146,867) (66,730) (120,251)
Total net assets 448,130 388,020 394,244
Equity
Share capital 12 3,857 3,506 3,506
Share premium reserve 13 344,400 305,672 305,672
Capital reduction reserve 24,077 24,077 24,077
Retained earnings 75,796 54,765 60,989
Total equity 448,130 388,020 394,244
Net Asset Value per ordinary share (pence) 15 116.18p 110.66p 112.43p
Condensed consolidated statement of cash flows
Six months ended Six months ended Year ended
30 June 2022 30 June 2021 31 December 2021
(unaudited) (unaudited) (audited)
Notes £'000 £'000 £'000
Cash flows from operating activities
Profit for the period/year (attributable to equity shareholders) 27,295 14,507 31,968
Finance income (1,831) (1) (72)
Finance expense 2,176 1,609 3,264
Profit on disposal of investment properties - - (308)
Change in fair value of call option (527) - -
Changes in fair value of investment properties 9 (10,646) (1,038) (4,220)
Net cash flow before working capital changes 16,467 15,077 30,632
Working capital changes
Increase in trade and other receivables (2,830) (5,672) (9,183)
(Decrease)/increase in trade and other payables (948) 980 2,133
Net cash flow from operating activities 12,689 10,385 23,582
Investing activities
Purchase of investment properties 9 (47,367) (7,610) (26,900)
Proceeds on sale of investment property - - 1,676
Acquisition costs paid in period 9 (431) (483) (1,230)
Capital improvements paid in period 9 (4,702) (544) (1,050)
Loan advanced to operator for portfolio acquisition - - (37,500)
Loan associated costs paid in period (466) - (93)
Interest received 1,715 1 2
Net cash flow from investing activities (51,251) (8,636) (65,095)
Financing activities
Proceeds from issue of ordinary share capital 12,13 40,000 35,334 35,334
Issue costs of ordinary Share capital 13 (921) (707) (707)
Bank borrowings drawn 10 68,070 30,529 92,685
Bank borrowings repaid 10 (45,000) (44,508) (54,507)
Loan arrangement fees paid (736) (754) (1,844)
Loan commitment fees paid (290) (164) (430)
Interest paid on bank borrowings (1,284) (1,092) (1,864)
Dividends paid to equity holders 8 (12,488) (10,635) (21,872)
Net cash flow from financing activities 47,351 8,003 46,795
Net increase in cash and cash equivalents for the period 8,789 9,752 5,282
Cash and cash equivalents at the start of the period 13,261 7,979 7,979
Cash and cash equivalents at the end of the period 22,050 17,731 13,261
Condensed consolidated statement of changes in equity
Six months ended 30 June 2022 (unaudited)
Notes Share capital Share premium Capital reduction reserve Retained earnings Total
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
£'000 £'000 £'000 £'000 £'000
1 January 2022 3,506 305,672 24,077 60,989 394,244
Total comprehensive income - - - 27,295 27,295
Transactions with owners
Share issues 12, 13 351 39,649 - - 40,000
Dividends paid 8 - - - (12,488) (12,488)
Share issue costs 13 - (921) - - (921)
30 June 2022 3,857 344,400 24,077 75,796 448,130
Six months ended 30 June 2021 (unaudited)
Notes Share capital Share premium Capital reduction reserve Retained earnings Total
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
£'000 £'000 £'000 £'000 £'000
1 January 2021 3,189 271,362 24,077 50,893 349,521
Total comprehensive income - - - 14,507 14,507
Transactions with owners 12, 13 317 35,017 - - 35,334
Share issues
Dividends paid 8 - - - (10,635) (10,635)
Share issue costs 13 - (707) - - (707)
30 June 2021 3,506 305,672 24,077 54,765 388,020
For the year ended 31 December 2021 (audited)
Notes Share capital Share premium Capital reduction reserve Retained earnings Total
£'000 £'000 £'000 £'000 £'000
1 January 2021 3,189 271,362 24,077 50,893 349,521
Total comprehensive income - - - 31,968 31,968
Transactions with owners
Dividends paid 8 - - - (21,872) (21,872)
Share issue 12, 13 317 35,017 - - 35,334
Share issue costs 13 - (707) - - (707)
31 December 2021 3,506 305,672 24,077 60,989 394,244
Notes to the condensed consolidated financial statements
1. Basis of preparation
General information
These unaudited condensed consolidated financial statements for the six-month
period ended 30 June 2022, are prepared in accordance with UK adopted
accounting standards and IAS 34 "Interim Financial Reporting", including the
comparative information for the six-month period ended 30 June 2021 and for
the year ended 31 December 2021. They do not include all of the information
required for full annual financial statements and should be read in
conjunction with the 2021 annual report and accounts, which were prepared in
accordance with UK adopted international accounting standards.
The condensed consolidated financial statements have been prepared on a
historical cost basis, except for investment properties and derivative
financial instruments which have been measured at fair value.
The Group has chosen to adopt EPRA best practice guidelines for calculating
key metrics such as earnings per share.
The Company is a public listed company incorporated and domiciled in England
and Wales. The Company's ordinary shares are listed on the Premium Listing
Segment of the Official List and trade on the premium segment of the main
market of the London Stock Exchange. The registered address of the Company is
disclosed in the corporate information.
The condensed consolidated financial statements presented herein for the six
months to 30 June 2022 do not constitute full statutory accounts within the
meaning of section 434 of the Companies Act 2006. The Group's annual report
and accounts for the year to 31 December 2021 have been delivered to the
Registrar of Companies. The Group's Independent Auditor's report on those
accounts was unqualified, did not include references to any matters to which
the auditors drew attention by way of emphasis without qualifying their report
and did not contain a statement under section 498(2) or 498(3) of the
Companies Act 2016.
Convention
The condensed consolidated financial statements are presented in Sterling,
which is also the Group's functional currency, and all values are rounded to
the nearest thousand (£'000), except when otherwise indicated.
Going concern
After making enquiries and bearing in mind the nature of the Company's
business and assets, the directors consider that the Company has adequate
resources to continue in operational existence for the next 12 months from the
date of approval of these financial statements. For this reason, they continue
to adopt the going concern basis in preparing the financial statements.
The effects of the COVID‑19 pandemic and inflationary environment have been
considered by the directors. The directors have reviewed the forecasts for the
Group taking into account the impact of COVID‑19 and inflation on trading
over the 12 months from the date of signing this report. The forecasts have
been assessed against a range of possible downside outcomes; the Group and the
Company have adequate cash resources to continue to operate in all of these
scenarios.
The directors believe that there are currently no material uncertainties in
relation to the Company's and Group's ability to continue for a period of at
least 12 months from the date of approval of the Company and Group interim
statements. The board is, therefore, of the opinion that the going concern
basis adopted in the preparation of the interim report is appropriate.
2. Significant accounting judgements, estimates and assumptions
The preparation of the Group's financial statements requires management to
make judgements, estimates and assumptions that affect the reported amounts
recognised in the financial statements and disclosures. However, uncertainty
about these assumptions and estimates could result in outcomes that could
require material adjustment to the carrying amount of the assets or
liabilities in future periods.
Information about significant areas of estimation, uncertainty and critical
judgements in applying accounting policies that have the most significant
effect on the amount recognised in the financial statements are disclosed
below:
2.1 Judgements
Operating lease contracts - the Group as lessor
The Group has acquired investment properties that are subject to commercial
property leases with tenants. The Group has determined, based on an evaluation
of the terms and conditions of the arrangements, particularly the duration of
the lease terms and minimum lease payments, that it retains all the
significant risks and rewards of ownership of these properties and so accounts
for the leases as operating leases.
The leases, when signed, are for between 20 and 35 years with a tenant-only
option to extend for one or two periods of 10 years. At the inception of the
lease, the directors do not judge any extension of the leases to be reasonably
certain and, as such, do not factor any lease extensions into their
considerations of lease incentives and their treatment.
2.2 Estimates
Fair valuation of investment property
The valuations have been prepared in accordance with the RICS Valuation -
current edition of the global and UK standards as at the valuation date or the
RICS 'Red Book' as it has become widely known.
The basis of value adopted is that of fair value being "the price that would
be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date" in accordance
with IFRS 13. The concept of fair value is considered to be consistent with
that of market value.
The significant methods and assumptions used by the valuers in estimating the
fair value of the investment properties are set out in note 9.
Gains or losses arising from changes in the fair values are included in the
Condensed consolidated statement of comprehensive income in the period in
which they arise. In order to avoid double counting, the assessed fair value
may be increased or reduced by the carrying amount of any accrued income
resulting from the spreading of lease incentives and/or guaranteed minimum
rent uplifts at the inception of the lease.
3. Summary of significant accounting policies
The accounting policies adopted in this report are consistent with those
applied in the Group's statutory accounts for the year ended 31 December 2021
and are expected to be consistently applied during the year ending 31 December
2022.
4. New standards issued
4.1 New standards issued with effect from 1 January 2022
No new standards have been applied that have had a material effect on the
financial position or performance of the Group.
4.2 New standards issued but not yet effective
There are no new standards issued but not yet effective that are expected to
have a material effect on the Group.
5. Property income
Six months ended Six months ended Year ended
30 June 2022 30 June 2021 31 December 2021
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Rental income cash received in the period/year 16,931 14,649 30,472
Rent received in advance of recognition(1) 71 71 143
Rent recognised in advance of receipt(2) 2,716 3,156 5,873
Rental lease incentive amortisation(3) (70) (47) (90)
Gross rental income 19,648 17,829 36,398
Insurance/service charge income 387 236 496
Insurance/service charge expense (387) (236) (496)
Net rental income 19,648 17,829 36,398
1 This relates to movement in rent premiums received in prior periods as well
as any rent premiums received during the period/year, deemed to be a premium
over the term of the leases.
2 Relates to both rent-free periods being recognised on a straight-line basis
over the term of the lease and rent recognised in the period to reflect the
minimum uplifts in rents over the term of the lease on a straight-line basis.
3 Lease incentives relate to the amortisation of payments made to tenants that
are not part of any acquisition contractual obligations. These payments are
made in return for an increase in rent.
6. Taxation
As a REIT, the Group is exempt from corporation tax on the profits and gains
from its property investment business, provided it continues to meet certain
conditions as per REIT regulations. For the period ended 30 June 2022 and year
ended 31 December 2021, the Group did not have any non-qualifying profits
except interest income on bank deposits and loans.
7. Earnings per share
Earnings per share (EPS) amounts are calculated by dividing profit for the
period attributable to ordinary equity holders of the Company by the
time-weighted average number of ordinary shares outstanding during the period.
As there are no dilutive instruments outstanding, basic and diluted earnings
per share are identical.
Six months ended Six months ended Year ended 31 December 2021
30 June 2022 30 June 2021
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Total comprehensive income (attributable to shareholders) 27,295 14,507 31,968
Adjusted for:
- Revaluation movement (13,363) (4,968) (12,896)
- Movement in lease incentive debtor (70) 703 2,660
2,787 3,227 6,016
- Rental income arising from recognising rental premiums and future guaranteed
rent uplifts
Change in fair value of investment properties (10,646) (1,038) (4,220)
Profit on disposal of investment property - - (308)
Change in fair value of interest rate derivative (248) (4) (87)
Change in fair value of call option (527) - -
EPRA earnings 15,874 13,465 27,353
Adjusted for:
(2,787) (3,227) (6,016)
- Rental income arising from recognising rental premiums and
future guaranteed rent uplifts
- Profit on disposal of investment property - - 308
- Amortisation of lease incentive(1) 70 47 90
- Amortisation of loan arrangement fees 593 425 960
Adjusted earnings 13,750 10,710 22,695
375,845,314 328,758,604 339,705,743
Average number of ordinary shares
Earnings per share (pence)(2) 7.26p 4.41p 9.41p
EPRA basic and diluted earnings per share (pence)(2) 4.22p 4.10p 8.05p
Adjusted basic and diluted earnings per share (pence)(2) 3.66p 3.26p 6.68p
1 Lease incentives relate to the amortisation of payments made to tenants that
are not part of any acquisition contractual obligations. These payments are
made in return for an increase in rent.
2 There is no difference between basic and diluted earnings per share.
The European Public Real Estate Association ("EPRA") publishes guidelines for
calculating adjusted earnings designed to represent core operational
activities.
The EPRA earnings are arrived at by adjusting for the changes in fair value of
on investment properties, options to acquire investment properties and
interest rate derivatives, and removal of profit or loss on disposal of
investment properties.
Adjusted Earnings:
Adjusted earnings is used by the board to help assess the Group's ability to
deliver a cash covered dividend from net income. The metric reduces EPRA
earnings by other non‑cash items credited or charged to the Group statement
of comprehensive income including the effect of straight‑lining of rental
income from fixed rental uplift adjustments and amortisation of lease
incentives and loan arrangement fees. The metric also adjusts for any
one‑off items that are not expected to be recurring.
Fixed rental uplift adjustments relate to adjustments to net rental income on
leases with minimum uplifts embedded within their review profiles. The total
minimum income recognised over the lease term is recognised on a
straight‑line basis and therefore not supported by cash flows during the
early term of the lease, but this reverses towards the end of the lease.
No one‑off costs were incurred in the current or prior year/period.
The board uses the adjusted earnings alongside the available distributable
reserves in its consideration and approval of dividends.
8. Dividends
Dividend rate Six months ended Six months ended 31 December 2021
30 June 2022 30 June 2021
per share (unaudited) (unaudited) (audited)
pence £'000 £'000 £'000
Fourth interim dividend for the period ended 31 December 2020 (ex-dividend - 1.5725p - 5,016 5,015
11 February 2021)
First interim dividend for the period ended 31 December 2021 (ex-dividend - 27 1.6025p - 5,619 5,619
May 2021)
Second interim dividend for the period ended 31 December 2021 (ex‑dividend - 1.6025p - - 5,619
5 August 2021)
Third interim dividend for the period ended 31 December 2021 (ex‑dividend - 1.6025p - - 5,619
28 October 2021)
Fourth interim dividend for the period ended 31 December 2021 (ex-dividend - 1.6025p 6,181 - -
24 February 2022)
First interim dividend for the period ended 31 December 2022 (ex-dividend - 5 1.6350p 6,307 - -
May 2022)
Total dividends paid 12,488 10,635 21,872
Total dividends paid in respect of the period/year 1.6350p 1.6025p 4.8075p
Total dividends unpaid but declared in respect of the period/year 1.6350p 1.6025p 1.6025p
Total dividends declared in respect of the period/year - per share 3.270p 3.205p 6.410p
On 4 February 2022 the Company declared an interim dividend of 1.6025 pence
per share for the period from 1 October 2021 to 31 December 2021 and was paid
in March 2022.
On 25 April 2022 the Company declared an interim dividend of 1.635 pence per
ordinary share for the period from 1 January 2022 to 31 March 2022 and was
paid in May 2022.
On 16 August 2022, the Company declared an interim dividend of 1.635 pence per
share for the period from 1 April 2022 to 30 June 2022 payable in September
2022.
9. Investment property
In accordance with the RICS 'Red Book' the properties have been independently
valued on the basis of fair value by Cushman & Wakefield, an accredited
independent valuer with a recognised professional qualification. They have
recent and relevant experience in the locations and categories of investment
property being valued and skills and understanding to undertake the valuations
competently. The properties have been valued on an individual basis and their
values aggregated rather than the portfolio valued as a single entity. The
valuers have used recognised valuation techniques in accordance with those
recommended by the International Valuation Standards Committee and are
compliant with IFRS 13. Factors reflected include current market conditions,
annual rentals, lease lengths, property condition including improvements
affected during the period, rent coverage, location and comparable evidence.
The valuations are the ultimate responsibility of the directors. Accordingly,
the critical assumptions used in establishing the independent valuation are
reviewed by the board.
All corporate acquisitions during the year/period have been treated as asset
purchases rather than business combinations because they are considered to be
acquisitions of properties rather than businesses.
As at As at As at
30 June 2022 30 June 2021 31 December 2021
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Opening value 459,442 418,788 418,788
Property additions 47,367 7,610 26,900
Property disposals(2) - - (1,368)
Acquisition costs capitalised 1,177 493 1,311
Capital improvements 8,842 534 915
Revaluation movement 13,363 4,968 12,896
Closing value per independent valuation report 530,191 432,393 459,442
Lease incentive (debtor)/creditor (2,590) (703) (2,660)
Guaranteed rent reviews and initial lease rental payment net (debtor)/creditor (21,934) (16,358) (19,147)
Closing fair value per Condensed consolidation statement of financial position 505,667 415,332 437,635
1 Investment properties include freehold and long leasehold properties.
2 In the year ended 31 December 2021 the carrying value of disposals was
£1,368,000, this combined with the profit on disposal of £308,000 makes up
the total net proceeds shown in the Condensed consolidated statement of cash
flows.
Change in fair value of investment properties
The following elements are included in the change in fair value of investment
properties reported in the condensed consolidated statements:
Six months ended Six months ended 31 December 2021
30 June 2022 30 June 2021
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Revaluation movement 13,363 4,968 12,896
Movement in lease incentive debtor(1) 70 (703) (2,660)
Rental income arising from recognising rental premiums and future guaranteed (2,787) (3,227) (6,016)
rent uplifts
Change in fair value of investment properties 10,646 1,038 4,220
1 Lease incentives relate to the amortisation of payments made to tenants that
are not part of any acquisition contractual obligations. These payments are
made in return for an increase in rent.
10. Bank borrowings
A summary of the bank borrowings drawn in the period are shown below:
As at As at As at
30 June 2022 30 June 2021 31 December 2021
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
At the beginning of the period/year 114,548 76,370 76,370
Bank borrowings drawn in the period/year 68,070 30,529 92,685
Bank borrowings repaid in the period/year (45,000) (44,508) (54,507)
Total bank borrowings drawn 137,618 62,391 114,548
Total bank borrowings undrawn 68,382 78,609 53,452
Total bank borrowings available 206,000 141,000 168,000
The Group drew down £68 million and repaid £45 million under its existing
loan facilities with Metro Bank PLC, HSBC UK Bank Plc, Clydesdale Bank Plc and
National Westminster Bank Plc.
The second tranche of the £75 million long-term debt financing in the form of
senior secured notes with two large institutional investors was drawn
comprising of £38 million of senior secured notes at a fixed coupon of
3.002%. These notes were issued on 21 June 2022 and matures in June 2035. The
debt has been guaranteed by Impact Healthcare REIT plc.
Any fees associated with arranging the bank borrowings unamortised as at the
period end are offset against amounts drawn on the facilities as shown in the
table below:
As at As at As at
30 June 2022 30 June 2021 31 December 2021
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Bank borrowings drawn: due after more than one year 137,618 62,391 114,548
Arrangements fees - carried forward (3,641) (2,157) (2,157)
Arrangement fees paid during the period/year (347) (754) (2,444)
Amortisation of loan arrangement fees 593 425 960
Non-current liabilities: Bank borrowings 134,223 59,905 110,907
11. Other non-current assets
As at As at As at
30 June 2022 30 June 2021 31 December 2021
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Rent recognised in advance of receipt 24,504 19,071 21,788
Rental lease incentive(1) 2,590 703 2,660
Loan receivable 37,500 - 37,500
Trade and other receivables 64,594 19,774 61,948
Interest rate derivative 342 11 94
Call option 527 - -
65,463 19,785 62,042
1 Lease incentives relate to the amortisation of payments made to tenants that
are not part of any acquisition contractual obligations. These payments are
made in return for an increase in rent.
On 23 December 2021, the Group entered into a loan agreement with the Holmes
Care Group, in which the Group provided a term loan facility of £37,500,000
which bears interest at 8.57% per annum. The funds were lent to Holmes Care
Group to acquire a portfolio of properties.
On the same date, a call option agreement was entered into between entities
owned by Holmes Care Group and Impact Property 6 Limited which, upon certain
conditions being met, gives the Group the right to acquire the company holding
the portfolio of properties from Holmes Care Group. The fair value of this
option, recognised in the Condensed consolidated statement of financial
position as at 30 June 2022, was £527,000.
No impairment losses have been recognised during the period/year.
12. Share capital
Six months ended Six months ended Six months ended Year ended 31 December 2021
30 June 2022 30 June 2022 30 June 2021
(unaudited) (unaudited) (audited)
Number of shares £'000 £'000 £'000
At the beginning of the period/year 350,644,188 3,506 3,189 3,189
Shares issued - 6 May 2021 - - 317 317
Shares issued - 21 February 2022 35,087,720 351 - -
385,731,908 3,857 3,506 3,506
On 21 February 2022, the Company issued 35,087,720 ordinary shares at a price
of 114 pence per ordinary share raising gross proceeds of £40 million. This
increased the total number of ordinary shares in the Company in issue to
385,731,908.
Following the period end, a further £22.3 million in gross proceeds was
raised; see note 19 for further detail.
13. Share premium
Share premium comprises share capital subscribed for in excess of nominal
value less costs directly attributed to share issuances.
Six months ended Six months ended Year ended
30 June 2022 30 June 2021 31 December 2021
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
At the beginning of the year/period 305,672 271,362 271,362
Surplus of net proceeds on shares issued above their par value 39,649 35,017 35,017
Share issue costs (921) (707) (707)
344,400 305,672 305,672
14. Transactions with related parties
Investment Manager
The fees calculated and paid for the period to the Investment Manager were as
follows:
Six months ended Six months ended Year ended
30 June 2022 30 June 2021 31 December 2021
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Impact Health Partners LLP 2,233 1,862 3,858
For the six-month period ended 30 June 2022 the principals and finance
director of Impact Health Partners LLP, the Investment Manager, are considered
key management personnel. Mr Patel and Mr Cowley are the principals and Mr
Yaldron is the finance director of Impact Health Partners LLP and they own
2.82%, 0.23% and 0.03% respectively (either directly or through a wholly-owned
company) of the total issued ordinary share capital of Impact Healthcare REIT
plc. In addition, Impact Health Partners LLP held 0.26% directly. Mr Patel
also (directly and/or indirectly) holds a majority 72.5% stake in Minster Care
Group Limited "MCGL". Mr Cowley also holds a 20% interest in MCGL. 47% of the
Group's rental income was received from MCGL or its subsidiaries during the
period. There were no trade receivables or payables outstanding at the period
end.
During the year the key management of Impact Health Partners LLP received the
following dividends from Impact Healthcare REIT plc: Mahesh Patel £350,995;
Andrew Cowley £35,096 and David Yaldron £3,504.
Directors' interests
Paul Craig is a director of the Company. He is also the portfolio manager at
Quilter Investors, which has an interest in 63,876,452 ordinary shares of the
Company through funds under management. The remaining directors who are
shareholders in the Company do not hold significant interest in the ordinary
share capital of the Company.
During the period the directors, who are considered key management personnel,
received the following dividends from the Company: Rupert Barclay £5,934;
Rosemary Boot £971; Philip Hall £971; and Christopher Santer £227. In
addition, funds managed by Paul Craig received dividends from the Company of
£2,068,712.
These transactions were fully compliant with the Company's related party
policy.
15. Net Asset Value (NAV) per share
Basic NAV per share is calculated by dividing net assets in the consolidated
statement of financial position attributable to ordinary equity holders of the
Company by the number of ordinary shares outstanding at the end of the year.
As there are no dilutive instruments outstanding, basic and diluted NAV per
share are identical.
EPRA updated their guidance on NAV measures in October 2019, giving three new
NAV measures to report, effective for periods commencing on or after 1 January
2020. The Group has chosen to adopt EPRA net tangible assets ("NTA") as its
primary EPRA NAV measure as it most closely aligns with the business practices
of the Group. The adjustments between NAV and NTA are reflected in the
following table:
As at As at As at
30 June 30 June 31 December 2021
2022 2021
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Net assets per Condensed consolidated statement of financial position 448,130 388,020 394,244
Fair value of derivatives (342) (11) (94)
EPRA NTA 447,788 388,009 394,150
Issued share capital (number) 385,731,908 350,644,188 350,644,188
Basic NAV per share 116.18p 110.66p 112.43p
EPRA NTA per share 116.09p 110.66p 112.41p
16. Capital commitments
At 30 June 2022 the Group had committed capital expenditure on one
forward-funded development of a new property and on capital improvements to
five existing properties, this amounted to £11.8 million. The Group has
committed to deferred payment agreements on one acquisition in return for
increased rent based on trading performance. As at 30 June 2022 the total
capital commitment for these deferred payments is estimated at £4.0 million.
17. Contingent liabilities
Full relief for Stamp Duty Land Tax (SDLT) has been granted in relation to the
transfer of properties between companies which are members of the Group.
Should there be a change in control of the Company within three years of
completion, or a single shareholder acquires a substantial stake in the
Company a liability in the subsidiary companies could arise. This is equal to
approximately 5% of the aggregate value of the properties and is estimated as
£1.1 million (31 December 2021: £5.0 million) on the net purchase price of
the assets acquired in corporate acquisitions over the preceding three years.
18. Controlling parties
The Company is not aware of any person who, directly or indirectly owns or
controls the Company. The Company is not aware of any arrangements the
operations of which may give rise to a change in control of the Company.
19. Subsequent events
In July 2022, the Company issued 19,032,420 new ordinary shares at an issue
price of 117 pence per share, raising gross proceeds of £22.3 million.
On 1 August 2022, the Group completed the acquisitions of three care homes
comprising 155 all en-suite beds, for gross consideration of £8.1 million at
a gross initial yield 7.75%. The Group exchanged contracts to purchase these
homes during the period.
Corporate information
Directors
Rupert Barclay - non-executive Chairman
Amanda Aldridge non‑executive
director
Rosemary Boot - senior independent non-executive director
Paul Craig - non-executive director
Philip Hall - non-executive director
Christopher Santer - non-executive director
Registered office
The Scalpel
18(th) Floor
52 Lime Street
London
EC3M 7AF
Telephone: +44 (0)207 409 0181
Investment Manager
Impact Health Partners LLP
149-151 Regent Street
London
W1B 4JD
Independent Auditor
BDO LLP
55 Baker Street
London
W1U 7EU
Administrator & Secretary
JTC (UK) Limited
The Scalpel
18(th) Floor
52 Lime Street
London
EC3M 7AF
Depositary
Indos Financial Limited
54 Fenchurch Street
London
EC3M 3JY
Registrar
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol
BS99 6ZZ
Legal Advisers
Travers Smith LLP
10 Snow Hill
London EC1A 2AL
Joint Financial Adviser and Corporate Broker Jefferies International
Limited
100 Bishopsgate
London
EC2N 4JL
Joint Financial Adviser and Corporate Broker Winterflood Securities
Limited
The Atrium Building
Cannon Bridge
25 Dowgate Hill
London EC4R 2GA
Communications Adviser
Maitland/AMO
3 Pancras Square
London N1C 4AG
Company Registration
Number 10464966
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