The information contained in this announcement is restricted and is not for publication, release or distribution in the United States of America, any member state of the European Economic Area (other than the Republic of Ireland or the Netherlands), Canada, Australia, Japan or the Republic of South Africa.

This Announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014. Upon the publication of this Announcement, this inside information is now considered to be in the public domain.

8 September 2021

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 2021

ANOTHER PERIOD OF STRONG PERFORMANCE AND A PORTFOLIO THAT CONTINUES TO PROVIDE RESILIENT INCOME AND GROWTH

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 its half year results for the six months ended 30 June 2021.

Rupert Barclay, Chairman of Impact Healthcare REIT PLC, commented:

"The past 18 months have demonstrated how resilient our business is. There will be further - and different - challenges ahead, but we believe the Group will be well positioned to deal with them.

The key tests of how resilient the Group is in practice were whether our tenants were able to continue to provide good quality care during an exceptionally challenging period; and whether we continued to collect 100% of the rent due, without putting undue stress on our tenants. We are pleased with how well the Group, and its tenants, rose to these two tests, but we will seek to avoid complacency and ensure that where lessons have been learned they are embedded into the Group's future strategy.

The Company's business model remains robust and resilient as demonstrated by the Group's continued 100% rent receipt. We appreciate the support of new and existing shareholders in our May equity placing, 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.

We welcome the major reform of adult social care announced by the Prime Minister on 7 September 2021 and will study with care its implications for our business in the days ahead. When implemented, these reforms will not just increase funding for elderly care, but will also make it easier for all participants in the sector to plan for the longer term. We will remain a long-term business and the Company's sustainable healthcare portfolio will continue to provide crucial care-based infrastructure supporting vulnerable elderly people across the UK."

Financial highlights

Operational highlights

·      The Group demonstrated 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 has zero voids.

·      Acquired one property and exchanged contracts on another, in total adding 137 beds for a total net consideration of £15.4 million.

·      Committed to forward fund a further property with 80 beds. On completion, this will bring our total properties to 111 with 6,141 beds.

·      Added one new tenant, giving the Group 13 tenants ⁴ at the period end. All leases continue to be inflation-linked with upwards only rent reviews.

·      Weighted average unexpired lease term ("WAULT") of 19.5 years at 30 June 2021 (30 June 2020: 19.5 years).

·      81 properties had rent reviews during the period adding £405k to the contracted rent, representing a 2.0% increase on the associated portfolio.

·      Grew the contracted rent roll by 14.5% to £33.8 million (30 June 2020: £29.5 million).

·      New £26 million NatWest facility with an accordion agreement to extend up to £50 million; Metro facility was reduced from £50 million to £40 million.

·      £35 million of gross proceeds from placing of new ordinary shares, admitted onto the main market of the London Stock Exchange on 6 May 2021.

Enhancing the social environment of our homes and their energy efficiency is fundamental to long-term value creation.

Our homes provide an important service in their communities, looking after and supporting a vulnerable segment of society. 

We work closely with our tenants to ensure they can provide an enjoyable, safe and caring environment that can enhance the wellbeing of their residents. In the period we have:

·      published our EPRA sustainability report for 2020;

·      progressed the identified opportunities to improve energy efficiency and EPC ratings; and

·      engaged with tenants and their colleagues to understand better how they have cared for their residents and supported each other through the pandemic.

Notes

1 Adjusted earnings per share reflects underlying cash earnings per share in the period. The adjustments made to EPS in arriving at EPRA and Adjusted EPS are set out in note 7 of the Interim Financial Statements.

2 As at 30 June 2021, 30 June 2020 and 31 December 2020 respectively.

3 The removal of amortisation of loan arrangement fees was a change made in the year ended 31 December 2020 and the adjusted earnings figure for the period to 30 June 2020 has been restated to reflect this.

4 Minster and Croftwood (both subsidiaries of Minster Care Group), Careport, Prestige, Renaissance, Welford, Maria Mallaband Countrywide Group, NHS Cumbria, Optima, Holmes Care, Silverline, Electus Healthcare and Carlton Hall.

FOR FURTHER INFORMATION, PLEASE CONTACT:

The Company's LEI is 213800AX3FHPMJL4IJ53.

Further information on Impact Healthcare REIT is available at 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 2021 is 6.41 pence per share*, a 1.91% increase over the 6.29 pence in dividends paid per ordinary share for the year ended 31 December 2020.

The Group's Ordinary Shares were admitted to trading on the main market of the London Stock Exchange, premium segment, on 8 February 2019. 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.

Results presentation

The Company presentation for investors and analysts will take place at 9.00am (UK) today via a webcast and conference call.

To access the live webcast, please register in advance here:

https://www.investis-live.com/impact-reit/60f954b62527a916007d20cf/eo44

To access the live conference call, please contact Maitland/AMO at:

[email protected] or by telephone on +44 (0) 20 7379 5151.

The recording of the webcast presentation and slides will also be made available later in the day via the Company website: 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;

·      the quality of the cash flows we generate; and

·      maintaining a healthy balance sheet.

Our Investment Manager

Impact Health Partners LLP is our Investment Manager. It sources investments, carries out approved transactions, monitors the progress of our homes and provides portfolio management services to the Group. It also develops and recommends the asset management strategy for approval and then implements it.

CHAIRMAN'S STATEMENT

Our principal strategic aim is to deliver a resilient and robust business model over the long-term in partnership with our tenants.

A second wave of COVID-19, which peaked in January 2021, made the start of the year a dark period for the whole country. However, some light also began to appear at the end of the COVID-19 tunnel, created mainly by the success of the vaccine roll-out and growing evidence that vaccines are effective at protecting the most vulnerable from serious illness and death. The past 18 months have demonstrated how resilient our business is. There will be further - and different - challenges ahead, but we believe the Group will be well positioned to deal with them.

The impact of COVID-19 on the care sector and the Group's tenants is discussed at length further on in this report.

In January 2021, we reviewed with the Investment Manager how the resilience buffers we had built into the Group's strategy had performed during the first phases of the pandemic and what we could do, if possible, to strengthen them for future challenges. These buffers included: a focus on careful tenant selection; negotiating lease terms which are sustainable as they were based on solid levels of initial rent cover; and maintaining a conservative balance sheet with low levels of debt. All the buffers are underpinned by the fact our tenants provide an essential service, demand for which is not directly correlated with the strength or weakness of the economy.

The key tests of how resilient the Group is in practice were whether our tenants were able to continue to provide good quality care during an exceptionally challenging period; and whether we continued to collect 100% of the rent due, without putting undue stress on our tenants. We are pleased with how well the Group, and its tenants, rose to these two tests, but will seek to avoid complacency and ensure that where lessons have been learned they are embedded into the Group's future strategy.

Operational performance

From March to September 2020, we paused all new investment activity due to the uncertainty created by COVID-19, and we felt it better to focus the Group's resources on its existing portfolio. We cautiously began to re-engage with potential acquisitions in late 2020. In the first half of 2021, we committed to acquire two homes and committed to forward fund the construction of a new home in Norwich. These transactions added a new tenant, taking our total number of tenants to 13¹.

Despite the pause in new investments last year, the Group has delivered substantial growth. Our investment portfolio was independently valued at £432 million as at 30 June 2021, up from £346 million on 30 June 2020, a 25% increase. We own 111 properties which offer 6,141 beds². In the whole of the United Kingdom there are an estimated 465,000 beds for elderly care, so we now own 1.3% 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 reduce risk through further diversification.

Asset management is one of our key value creation tools and is starting to bear fruit. During the period, we began work on Fairview House and Fairview Court, two units we own in Bristol. Once completed, this project will be a good demonstration of the potential benefits of effective asset management, and the value it creates for home residents, staff, the tenant and for the Group as landlord.

Work is progressing well on the development of a new 94-bed care home in Hartlepool in partnership with Prestige, an existing tenant of the Group, with practical completion due in October 2021.

Our tenants

We have continued to diversify the Group's tenant base. Having started the period with 12 tenants¹, we added one during the half year, Carlton Hall. The new tenant has an interesting approach to providing a combination of care in a nursing home with delivering less acute care to residents living independently in bungalows, all on one site.

This tenant diversification is an important part of our growth strategy, enabling us to expand the business while spreading risk. We choose tenants who prioritise a positive environment for their residents and share our vision of continued asset improvement. The Board cares deeply about maintaining the Group's assets to a high standard and pays close attention to our tenants' programmes of repair and maintenance.

Financial performance

The unaudited NAV at 30 June 2021 was £388.0 million or 110.7p per share (30 June 2020 NAV: £341.8 million or 107.2p per share).

Unaudited earnings per share (EPS) for the period was 4.41p (basic and diluted), up from 3.46p in the same period in 2020. EPRA EPS was 4.10p (2019: 3.62p) and Adjusted EPS was 3.26p (2019: 2.86p)³.

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.

Dividends and total return

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. The Board set a target total dividend for the year ending 31 December 2021 of 6.41p per share, a 1.91% increase over the 6.29p per share paid for the year ending 31 December 2020.

So far in 2021 we have declared two dividends in relation to the first two quarters of the year of 1.6025p each, delivering on our target. This dividend continues to be well covered by our EPRA EPS in the period of 4.10p and is also covered by our Adjusted EPS of 3.26p.

The NAV total return for the period was 3.9%.

Financing

The Group had an active first half. We raised £35 million in equity in May 2021 and used the proceeds to pay down debt. In June, we put in place an additional revolving credit facility with NatWest. It makes available a further £26 million on attractive terms at a margin of 190 basis points over SONIA, with an accordion arrangement to expand the facility to £50 million over time. In parallel, we reduced our more expensive Metro facility from £50 million to £40 million.

The Group now has £141 million of committed debt facilities. Our drawn debt at 30 June 2021 was £62.4 million, giving us a gross LTV of 13.7%. Our cash position on 30 June 2021 was £17.7 million.

Corporate governance

The Company has a strong and independent board, comprising the chairman and five other non-executive directors. Chris Santer joined the board in May 2021. He has over 25 years of real estate investment and development experience in both listed and private funds, which managed real estate investments totalling over £5 billion. The Group will benefit from his experience.

Investment Manager

Impact Health Partners LLP is our Investment Manager. The Investment Manager is working rigorously on the Group's behalf to source and provide diligently researched acquisitions and development opportunities to the Board, which continue to further the Group's diversification strategy.

The Investment Manager continues to provide comprehensive and granular analysis of the Group's tenants, demonstrating the high degree of oversight and rapport with tenants to allow these consistent information flows. Throughout this trying period, the Investment Manager's close relationship with our tenants enabled us to navigate the challenging ongoing environment of a pandemic while endeavouring to ensure we kept the welfare of all our stakeholders at the forefront of our actions.

Outlook and summary

We remain a long-term business and the Company's sustainable healthcare portfolio continues to provide crucial care-based infrastructure supporting vulnerable elderly people across the UK. The major reforms of adult social care announced by the Prime Minister on 7 September 2021 will help to reinforce the resilience of our business and that of our tenants.

The Company's business model remains robust and resilient as demonstrated by the Group's continued 100% rent receipt. We appreciate the support of new and existing shareholders in our May equity placing, 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.

Rupert Barclay

Chairman

08 September 2021

1 Including Croftwood and Minster, which are both part of the Minster Care Group.

2 Including exchanged assets and forward-funded developments.

3 The removal of amortisation of loan arrangement fees was a change made in the year ended 31 December 2020 and the adjusted earnings figure for the period to 30 June 2020 has been restated to reflect this.

INVESTMENT MANAGER'S REPORT

In good times resilience is just a word. In bad times it makes the difference between being able to continue to deliver sustainable returns over the longer term, or not.

The second wave of COVID-19 as a whole, which peaked in early 2021, resulted in a higher number of deaths across the United Kingdom than the first wave, but had less of an impact on care homes (see page 11 of our Interim Report). Notwithstanding these challenges during the first part of the year, the Group continued to receive 100% of its rent due and to deliver on its dividend target, demonstrating its high level of resilience.

This strength is built on a number of pillars: investing in a sector which provides an essential service, demand for which is not correlated to broader economic activity and with an interesting demand/supply dynamic; effective, long-term lease structures with a high level of inflation protection; a strong balance sheet with low levels of debt; and, above all, careful tenant selection reinforced by an active partnership between the Group and its tenant after leases have been signed.

Tenant performance

We are full of admiration for how our 13 tenants¹ have met, and then overcome, the numerous challenges thrown at them over the past 18 months. It has not been easy for them.

The most challenging period was between April and June 2020, when our tenants' average occupancy fell from just under 90%, to just over 80%. It was then stable for the rest of 2020, before falling to a low of 79% during the second wave in late January 2021. By August, it had recovered to 83%³, and a slow, but steady, recovery to more normal occupancy levels has continued since then.

Despite this fall in tenant occupancy, the Group had no voids and its rent cover improved, from a low of 1.68 times in the second quarter of 2020, to 1.88 times in the second quarter of 2021.

Three factors underpin this solid level of rent cover. First, is the care taken 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. Second, the support from government aimed at improving infection control measures. And, third, strong increases in the fees our tenants charge for the care they provide. The average weekly fee charged by our tenants in the first quarter of 2021 was £869, up 12% on the fees they charged a year earlier.

Investment activity

We stopped investment activity between March and September 2020, as a result of the high level of uncertainty created by the first wave of the pandemic and lockdowns, which made it impossible to carry out the detailed inspection of potential acquisitions we always carry out. On a very selective basis, we began to re-engage with potential acquisition targets in the fourth quarter of 2020.

During the first half of the year, the Group committed to acquire two care homes and committed to forward fund the development of a new home. These transactions added a new tenant, taking the Group's total number of tenants to 131. At 30 June 2021, the Group owned 111 properties with 6,141 beds, up from 108 and 5,924 respectively at 31 December 2020².

These investments, combined with rent increases received during the period, helped to grow our contracted rent roll from £30.9 million on 31 December 2020, to £33.8 million on 30 June 2021, a 9.3% increase.

Asset management

Well delivered asset management has the potential to create value for our shareholders and tenants, while also offering a high-quality environment for new residents at our homes. In all our asset management opportunities we are adding beds and improving existing homes. We already own the land and our tenants have central services (kitchens, laundry, staff offices) on site so the marginal cost of adding beds is lower than with a new build and the risks easier to assess.

In the first half of the year we began work on a major project at Fairview House and Court, two units we acquired in 2018 on the eastern outskirts of Bristol. Once completed, these works will turn the two units into one operationally, with 17 new beds in the link building with modern kitchens and laundry in its basement improving the work environment for staff. At the same time, we will reduce the number of beds in Fairview House from 20 to 14, all of an equally high standard, and have committed additional funding to ensure the new Fairview has an EPC rating of A.

In addition to this capital investment aimed at increasing capacity and repositioning homes, under the terms of the leases our tenants are fully responsible for keeping the Group's buildings in good repair through regular repair and maintenance programmes. We monitor these programmes carefully, to ensure they are being effectively implemented.

Forward-funded development

In 2020, we committed to forward fund a new, 94-bed care home in Hartlepool at a total cost of £6.1 million. The home is being built and will be operated by Prestige, one of the Group's existing tenants, and will deliver a yield of 7.8% on completion. Construction work was interrupted during the pandemic, but has since made good progress and practical completion is expected this autumn. During the first half of 2021, we also committed £10.5 million to forward-fund the development of a new care home in Norwich, which will be operated by our latest tenant, Carlton Hall. The forecast yield on this new home will be 7.1%.

As we emerge from the pandemic the Investment Manager is exploring further forward-funded development and asset management options with a view to enhancing shareholder returns.

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 2021, the portfolio was valued at £432.4 million, an increase of £13.6 million from the valuation of £418.8 million at 31 December 2020. The components of this valuation increase were as follows:

·      Acquisitions completed: £ 7.7 million;

·      Acquisition costs capitalised: £0.5 million;

·      Capital improvements: £1.2 million; and

·      valuation uplift: £4.2 million.

The valuation uplift was largely driven by rent increases received during the period.

Financial results

Total net rental income recognised for the period was £17.8 million (H1 2020: £14.8 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 was £14.6 million (H1 2020: £11.6 million).

Administrative and other expenses totalled £2.8 million (H1 2020: £2.4 million), contributing to a total expense ratio of 1.50% for the period, up slightly on H1 2020 (1.42%), but down on the full year average for 2020 of 1.53%.  The EPRA cost ratio for the period was 15.5%, down from 16.4% in H1 2020 and 17.1% for the full year 2020. Net finance costs were £1.6 million (H1 2020: £0.9 million). The change in fair value of investment properties was £1.0 million (H1 2020: -£0.4 million), contributing to profit before tax of £14.5 million (H1 2020: £11.1 million).

Earnings per share ("EPS") for the period was 4.41p (H1 2020: 3.46p) and EPRA EPS was 4.10p (H1 2020: 3.62p). Adjusted EPS, which strips out the non-cash items and one-off costs, was 3.26p (H1 2020: 2.86p).

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 on page 32 of our Interim Report.

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 1.6025p each in respect of the period. Both dividends were Property Income Distributions. The details of these dividends were as follows:

Dividends declared for the period were 128% covered by EPRA EPS and 102% covered by Adjusted EPS.

Financing

We continued to put in place the building blocks to allow the Group's continued development. On 30 April 2021, we completed a placing of 31.7 million new ordinary shares at 111.5p per share, which raised gross proceeds of £35 million for the Company. The net proceeds from the placing were used to pay down debt.

On 28 June 2021 we announced a new £26 million revolving credit facility signed with NatWest at a margin of 190 basis points over SONIA. The facility has a fully documented accordion agreement to increase it to £50 million, subject to lender approval. At the same time the size of the Group's facility with Metro was reduced from £50 million, to £40 million.

We continue to take a conservative approach to managing the Group's balance sheet. At 30 June 2021, the Group had four debt facilities totalling £141 million, of which £62.4 million was drawn (31 December 2020: £76.4 million), giving a gross LTV of 13.7% (31 December 2021 17.8%). As at 30 June 2021 the weighted average term of debt facilities (excluding options to extend) was 2.2 years.

At 30 June 2021, we had £78.6 million of undrawn debt facilities and £17.7 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.

Outlook

On 7 September 2021 the Prime Minister announced major structural reforms of adult social care in England. A 1.25% increase in National Insurance and dividend tax hypothecated to fund health and adult social care is expected to raise £36 billion over the next three years. We will analyse the implications of these reforms with care, but on first reflection expect them to be a step change in repositioning care homes as critical social infrastructure.

The Investment Manager remains confident that it will 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

08 September 2021

1 Including Croftwood and Minster, which are both part of the Minster Care Group.

2 Including exchanged assets and forward-funded developments.

3 Excludes three turn around homes.

THE IMPACT OF COVID-19 ON CARE HOMES

A second wave of the pandemic hit the United Kingdom immediately after Christmas 2020. In the first eight weeks of 2021, 50,161 deaths were linked to COVID-19 in England and Wales, according to ONS data. This was 8% more COVID-19 deaths than the 46,457 which occurred in the peak of the first wave over the 10 weeks beginning on 28 March 2020.

Care homes, however, were less severely affected during the second wave compared to the first. Between weeks 12 and 24 of 2020, there were 26,805 excess deaths from all causes (ie, including COVID-19) in care homes above the five-year average. In the first seven weeks of 2021 during the peak of the second wave, there were 4,201 excess deaths in care homes, a decline of 84% from the first wave. Between weeks eight and 32 of 2021, deaths in care homes were 6,662 below their five-year average.

This reduced impact of the second wave - and minimal impact from the third wave - on care homes reflects a number of factors. Tragically, the first is the number of the most vulnerable elderly people who had already died in the first wave. More positively, it also reflects the success of the vaccination programme in shielding the most vulnerable and care homes' great efforts to improve infection control.

By mid-February 2021, 100% of the residents at care homes owned by the Group had received their first dose of a vaccine, with second doses largely completed before the end of the quarter. The majority of staff had been fully vaccinated by mid-year, and the government has made it mandatory for all care workers to be vaccinated from 11 November 2021.

Over the past 18 months care homes operators have been working intensively to improve infection control measures and have received substantial support from government to support these efforts. Between May 2020 and June 2021, the Adult Social Care Infection Control Fund provided
£1.35 billion ring-fenced funding for infection prevention and control, and a further £288 million for rapid testing in care settings. 70% of this funding was dedicated to care homes for the elderly. This fund has now been extended to September 2021 with an additional £251 million of funding.

One of the major side effects of the pandemic, and the lockdowns which it caused, has been an interruption in normal medical care. During the first wave in 2020, GPs were advised to stop referring patients for dementia assessments. These assessments did resume after the first wave, but in the six months to April 2021, GPs carried out 50% fewer dementia assessments and made 33% fewer referrals to dementia clinics than in the same period in 2019/20. As a result, the number of recorded dementia diagnoses in England declined from 472,890 in December 2019, to a low of 427,021 in February 2021.

With lockdowns coming to an end and life starting to return to normal, the number of dementia diagnoses is likely to increase, which is one factor pointing to potential pent-up demand for a level of care which can only be provided in a care home.

TENANTS' RESILIENCE

Going the extra mile

The past 18 months have been very challenging for all in the care sector, and particularly for those close to the front line. Our tenants' care and support teams have worked in sometimes very difficult circumstances and we were keen to find a way to give some recognition to how they had tried to go the extra mile. Working in partnership with our tenants, our Investment Manager launched a competition aimed at giving recognition to some of these efforts.

The aim was to seek out individuals or teams working within our homes who have been innovative in their battle against the pandemic, or just deserve recognition for their continued hard work, perseverance and spirit. We have given cash prizes to the most inspiring staff teams, to be spent at their discretion on home improvements to enhance staff welfare and staff wellbeing.

There were some amazing entries, and all were deserving of recognition. Staff members expressed themselves in a number of ways from poems to photos. Their initiative, commitment and perseverance has been outstanding.

We have summarised here some of the themes which came out of the entries.

All about teamwork

"During the pandemic the staff really put the T in team work. The home came together as a family. The virus, horrific as it was, actually strengthened relationships and made the home a stronger team. We started to get to know each other better and had more respect for each other, we cried together had a lot of laughter together and built a Covid army."

"Working in a residential home is not just about day-to-day routines caring for older people, it's about having fun! And bringing smiles to faces. There's not a day gone by this past year where we as a team haven't smiled, laughed and felt fulfilled."

Adapting the building

"We soon realised that the visiting restrictions were going to be with us for quite some time. Our maintenance man single-handedly designed and built a visiting pod, making sure it was comfortable whilst mitigating any potential risk of transmission. This is the kind of feedback we got from visitors:

'It was wonderful to be able to visit an old friend - at the moment, I am the only one who can - in the brand new pod. I was not particularly looking forward to meeting through glass, especially as the two of us had enjoyed sitting in the gazebo outside on lucky autumn days when the sun shone and geese and hens provided amusement. The pod, however, has been thoughtfully designed, with great craftsmanship. It was well arranged with two comfortable armchairs and side tables either side of an impressive wall-to-wall and ceiling-to-ceiling piece of plate glass, which enables you to see the person you are visiting as if you were in the same room. It was good, as a visitor, not to have to wear a mask in the pod and to be able to take my coat off and relax. The speaker system was excellent and we had no difficulty in hearing each other."

Adapting home life

"During lockdown not only did we do video calls to families, our activities co-ordinator also did our own church services as religion is very important to our residents. Residents benefited greatly because we became extremely close, more like a family instead of a team."

"The Staff worked hard to keep our residents upbeat, and our families connected. We entered a national competition called 'Active Seniors Care Home Olympics'. This entailed a set weekly Olympic Activity including butterfly kicks, curls, walking and movement. Our staff, residents and their families all joined in. Families took photos of themselves doing the activity and posted them on our private Facebook page."

"When our care home had to stop all but essential visitors, our residents missed their families and friends greatly. Helen and her imagination got to work. She asked the residents, 'If you had the chance to go anywhere, where would you go?' In their imaginations, with help from Helen, our residents travelled to London and had afternoon tea with the Queen, flew to America and met with President Trump. They got dressed up in their finery and had a day at the races at Royal Ascot. Helen really wanted a horse that day, so with her talents a horse did appear much to the delight of our residents. Helen was the front of the horse, but due to 2m social distancing rules we couldn't put anyone else as the back of the horse, so again Helen improvised. Everyone saw a horse, but no one noticed that the back of our horse had four legs courtesy of a nearby table."

KEY PERFORMANCE INDICATORS

The Group uses the following measures to assess its strategic progress.

1. Net Asset Total Return ("NATR")

3.88% for the period to 30 June 2021 (19% on 2020)

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

3.21p per share for the period to 30 June 2021 (2% on 2020)

Definition: Dividends declared in relation to the period.

3. EPRA earnings per share

4.10p per share for the period to 30 June 2021 (13% on 2020)

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")

6.75% at 30 June 2021 (0% on 2020)

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

110.66p per share at 30 June 2021 (3% on 2020)

Definition: Net asset value based on the properties and other investment interests at fair value.

6. Gross Loan to Value ("LTV")

13.72% per share as at 30 June 2021 (-24% on 2020)

Definition: The proportion of our gross asset value that is funded by borrowings.

7. Weighted Average Unexpired Lease Term ("WAULT")

19.5yrs as at 30 June 2021 (0% on 2020)

Definition: The average unexpired lease term of the property portfolio, weighted by annual passing rents.

8. Total Expense Ratio ("TER")

1.50% as at 30 June 2021 (5% on 2020)

Definition: Total recurring administration costs as a percentage of average net asset value throughout the period. EPRA cost ratio was 15.5% (down from 16.4% in H1'20).

PORTFOLIO

At 30 June 2021, the Group owned the homes listed in the table below:

1 May 2017 unless stated

2 Number of registered beds

3 Capital improvement bed additions under development

4 Treated as two properties

* Minster and Croftwood are both part of Minster Care Group

† Date of exchange

PORTFOLIO MANAGEMENT

Our aim is to continue carefully building a portfolio of attractive UK healthcare assets, principally residential care properties, with an appropriate balance of high-quality core assets that generate attractive, secure, long-term income; and value add assets with potential to create further value for shareholders and our wider stakeholders. We continuously assess the overall balance of our portfolio, identify the right asset management and capital recycling opportunities.

We categorise each of our assets as follows:

SUSTAINABILITY

Working with our tenants we are implementing asset management activities that will improve the environmental performance of our homes.

We achieved EPRA sBPR Gold status with our 2019 submission. We have recently submitted our EPRA sustainability report for 2020 and extracts from this are summarised below.

Importantly our overall portfolio EPC ratings have improved year on year reflecting some of the enhancements made and the higher energy efficiency of our acquisitions. We expect this to continue to improve as we implement our asset management work plan and develop our sustainability strategy.

Similarly, our like for like greenhouse gas emissions have reduced year on year from 2.57 to 2.41 tonnes per bed per year, from 2018 to 2020.

Our asset management activities include:

·      Working with our tenants to ensure repair and maintenance spend not only maintains the homes but improves the energy performance where possible. In addition our new leases have been improved to target at least 25% of the obligated spend to be used for environmental improvements.

·      Upfront acquisition due diligence that identifies opportunities for environmental improvements at the homes. Part of the £2.8 million of capital improvements on the five homes we acquired at the end of 2020 was focused on energy improvements.

·      Enhanced redevelopment works. A major focus in any large-scale development or extension is to ensure improved energy performance. This was highlighted in our extension at Fairview where we are targeting an improvement from an EPC rating of C to A across the home. Work on the Fairview extension started in the period.

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 34-39 of our 2020 Annual report dated 26 March 2021 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 (including the effects of Brexit)

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 - On 7 September 2021 the government announced structural reforms of the adult social care sector in England. The announced changes are positive for the sector, but we will need to understand the detail more fully to be able to assess their impact on our business.

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 - The performance of our homes while managing the environment and restrictions from COVID-19 is included in the Investment Manager's report on pages 8-10. The majority of the adult population in the UK has now been vaccinated and there appears to be a weakening correlation between identified cases, hospitalisations and deaths. Nonetheless, the risk of further outbreaks and corresponding risks to care home operations remain.

General economic conditions

Adverse general economic conditions are expected to heighten as the government implements measures to reduce the unprecedented levels of debt that has been required to manage the immediate economic implications of the pandemic.

Interim update - There is continued uncertainty about the scale and duration of the economic downturn caused by the pandemic and the measures that could be imposed by the government to aid recovery. Care for older people remains an important and increasing focus, and the market remains relatively uncorrelated to broader economic conditions. The board is also mindful of the increasing levels of inflation in recent months. While our lease rent increases are protected, typically with a floor of 2% and a cap of 4%, the Group will pay close attention to this in the implementation of its business model.

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.

Interim update - Since the publication of our Annual report, we have continued to receive 100% of rent due with no lease variations, our average tenant rent cover has improved and tenants' occupancy has stabilised. The risk and uncertainty caused by the pandemic is reducing but remains high, with further outbreaks possible and restrictions on care home operations. These factors can all have an effect on our tenants' income, staff availability and costs.

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.

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.

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.

Rupert Barclay

Chairman

08 September 2021

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 on pages 10-12 includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8 of the Disclosure 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 2020 Annual report as disclosed in note 21.

A list of the directors is shown on page 40.

Shareholder information is as disclosed on the Impact Healthcare REIT plc website.

For and on behalf of the board

Rupert Barclay

Chairman

08 September 2021

Condensed consolidated statement of comprehensive income

The results are derived from continuing operations during the period/year.

Condensed consolidated statement of financial position

Condensed consolidated statement of cash flows

Condensed consolidated statement of changes in equity

Six months ended 30 June 2021 (unaudited)

Six months ended 30 June 2020 (unaudited)

For the year ended 31 December 2020 (audited)

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 2021, are prepared in accordance with International Financial Reporting Standards ("IFRS") in conformity with the requirements of the Companies Act of 2006 which comprise standards and interpretations issued by the International Accounting Standards Board ("IASB") and IAS34 "Interim Financial Reporting" and International Accounting Standards and Interpretations approved by the International Financial Reporting Interpretation Committee ("IFRIC"), including the comparative information for the six months period ended 30 June 2020 and for the year ended 31 December 2020.

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. 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 2021 does 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 2020 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

At 31 August 2021 the Group had cash of £18.0 million. Of this, £15.5 million is held in the parent company current and deposit accounts. There are £78.6 million of undrawn debt facilities which are drawable immediately.

At 30 June 2021 £28.2 million is committed to acquisitions and asset management and a further £9.0 million to financial performance based deferred payments, all of which are expected to deliver incremental rental returns.

As part of the directors' consideration of the appropriateness of adopting the going concern basis in preparing the interim report and financial statements, we have modelled downside scenarios for a period of 18 months including single and multiple tenant defaults or rent payment holidays for periods of up to 12 months. Interest cover and LTV covenants are in place on all of the Group's banking facilities. Analysis of the impact of tenants not paying rent on banking covenants indicates potential breaches of interest cover covenants. Latest PRA guidance to banks is that waivers should be provided in these COVID-19 related circumstances, however, we have also considered the scenario where banks do not provide these waivers. Mitigating actions which could be taken at the Group's discretion include use of central funds to reduce debt in particular charging pools, to avoid covenant breaches and reduction or suspension of dividends. We have assumed no significant structural changes to the business will be needed in any of the scenarios modelled.

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 2020 and are expected to be consistently applied during the year ended 31 December 2021.

4.   New standards issued

4.1. New standards issued with effect from 1 January 2020

The following new accounting amendments have been applied in preparing the Consolidated financial statements:

IAS 1 "Presentation of financial statements" and IAS 8 "Accounting policies, changes in accounting estimates and error" on definition of material

These amendments to IAS 1, IAS 8 and consequential amendments to other IFRSs:

-    use a consistent definition of materiality throughout IFRSs and the Conceptual Framework for Financial Reporting;

-    clarify the explanation of the definition of material; and

-    incorporate some of the guidance in IAS 1 about immateriality information.

IFRS 3 "Business Combinations"

On 22 October 2018, the IASB issued 'Definition of a Business (Amendments to IFRS 3)' aimed at resolving the difficulties that arise when an entity determines whether it has acquired a business or a group of assets.

The amendments are effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after 1 January 2020. As a result of this amendment business combinations is no longer believed to be a significant judgment for the acquisitions made in the year.

4.2. New standards issued but not yet effective

At the date of authorisation of these financial statements, the Group has not applied the following new and revised IFRSs that have been issued but are not yet effective:

-    -         Amendments to IAS 1 - Classification of liabilities as current or non-current

-    -         Annual improvements to IFRS standards 2018-2020

A number of new standards and amendments to standards and interpretations are effective for annual periods beginning on or after 1 January 2021, but are not yet applicable to the Group and have not been applied in preparing these consolidated financial statements. None of these are expected to have a significant effect on the consolidated financial statements of the Group.

5.   Property income

1 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 2021 and year ended 31 December 2020, the Group did not have any non-qualifying profits except interest income on bank deposits.

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.

¹ There is no difference between basic and diluted earnings per share

² The removal of amortisation of loan arrangement fees was a change made in the year ended 31 December 2020 and the adjusted earnings figure for the period to 30 June 2020 has been restated to reflect this.

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 and interest rate derivatives.

Adjusted Earnings:

EPRA earnings have been adjusted to exclude the effect of straight-lining of rental income and one-off costs. These have been adjusted to enable to board to consider the level of ongoing cash earnings. The board uses the adjusted earnings alongside the available distributable reserves in its consideration and approval of dividends.

8.   Dividends

¹ 0.7862 pence of this was a non-Property Income Distribution dividend, the remaining 0.7863 pence was a Property Income Distribution dividend. All other dividends recorded above are Property Income Distribution dividends.

On 29 January 2021, the Company declared an interim dividend of 1.5725 pence per share for the period from 1 October 2020 to 31 December 2020 which was paid in February 2021.

On 13 May 2021, the Company declared an interim dividend of 1.6025 pence per ordinary share for the period from 1 January 2021 to 31 March 2021 which was paid in June 2021.

On 29 July 2021, the Company declared an interim dividend of 1.6025 pence per share for the period from 1 April 2021 to 30 June 2021 which was paid in August 2021.

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 IFRS13. 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.

1           Investment properties include freehold and long leasehold properties

2          In the year ended 31 December 2020 the carrying value of disposals was £733,000, this combined with the profit on disposal of £153,000 makes up the total net proceeds shown in the Consolidated statement of cash flows.

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.

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:

10. Bank borrowings

A summary of the bank borrowings drawn in the period are shown below:

On 25 June 2021, the Group agreed a new revolving credit facility of £26 million (the "NatWest Facility") with National Westminster Bank Plc ("NatWest"). The Group drew down £260,000 from the NatWest Facility in the period.

The three-year NatWest Facility has a margin of 190 basis points per annum over SONIA.

The Group drew down £31 million and repaid £45 million under its existing loan facilities with Metro Bank PLC, HSBC UK Bank PLC and Clydesdale Bank PLC.

The Group repaid £10 million of the term loan with the release of certain properties from Metro Bank PLC's security pool which have been used as security under the new NatWest Facility. The amount repaid is not able to be redrawn.

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:

11. Interest rate derivatives

To mitigate the interest rate risk that arises as a result of entering into variable rate loans, the Group entered into an interest rate cap with the notional value of £25 million and a strike rate of 1% effective from 21 June 2018 with a termination date of 15 June 2023. The fair value of the interest rate cap is based on a floating reference of one month LIBOR.

The fair value of the derivative interest rate cap contract is estimated by discounting expected future cash flows using market interest rates.

12. Share capital

On 6 May 2021, the Company issued a further 31,690,327 ordinary shares at a price of 111.5 pence per ordinary share raising gross proceeds of £35,334,715 million. This increased the total number of ordinary shares in the Company in issue to 350,644,188.

13. Share premium

Share premium comprises share capital subscribed for in excess of nominal value less costs directly attributed to share issuances.

14. Transactions with related parties

Investment Manager

The fees calculated and paid for the period to the Investment Manager were as follows:

For the six month period ended 30 June 2021 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 3.14%, 0.35% and 0.02% 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 0.17% 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. 49% of the Group's rental income was received from MCGL or its subsidiaries during the period. A deferred payment agreement has been entered into with MCGL on one property that is contingent upon enhanced trading performance. The maximum amount of this deferred payment is £2 million which is payable in return for incremental rent that is accretive to the Group. 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 £347,869; Andrew Cowley £34,416 and David Yaldron £2,647.

Directors' interests

Paul Craig is a director of the Company. He is also the portfolio manager at Quilter Investors (formerly Old Mutual Global Investors), which has an interest in 56,808,553 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 £5,819; Rosemary Boot £953, and Philip Hall £953. In addition, funds managed by Paul Craig received dividends from the Company of £1,760,666.

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:

16. Capital commitments

At 30 June 2021 the Group had committed capital expenditure on two forward-funded developments of new properties and on capital improvements to ten existing properties, this amounted to £19.4 million.

The Group has committed to deferred payment agreements on three acquisitions in return for increased rent based on trading performance. As at 30 June 2021 the total capital commitment for these deferred payments was estimated at £9.0 million.

The Group had a further £8.8 million committed to the acquisition of a property which was exchanged during the period and expected to complete after the balance sheet date.

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 £4.9 million (31 December 2020: £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

No other significant events have occurred between the statement of financial position date and the date when the financial statements have been authorised by the directors, which would require adjustments to, or disclosure in the financial statements.

Corporate information

Directors

Amanda Aldridge non‑executive director

Rupert Barclay non-executive Chairman

Rosemary Boot senior independent non-executive director

Paul Craig non-executive director

Philip Hall non-executive director

Chris Santer non-executive director (appointed 13 May 2021)

Registered office

The Scalpel

18th Floor

52 Lime Street

London

EC3M 7AF

Telephone: +44 (0)207 409 0181

Investment Manager and AIFM

Impact Health Partners LLP

149-151 Regent Street

London

W1B 4JD

Independent Auditor

BDO LLP

55 Baker Street

London

W1U 7EU

Administrator and Secretary

JTC (UK) Limited

The Scalpel

18th 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

Winterflood Securities Limited

The Atrium Building

Cannon Bridge

25 Dowgate Hill

London

EC4R 2GA

Communications Advisers

Maitland/AMO

3 Pancras Square

London

N1C 4AG

Company Registration Number

10464966