TIDMAGR
RNS Number : 8495N
Assura PLC
21 May 2015
Assura plc
A transformational year
21 May 2015
Assura plc ("Assura"), the leading primary care property
investor and developer, announces its preliminary results for the
year ended 31 March 2015.
Strong financial performance driven by acquisitions
-- 27.5% increase in net rental income to GBP48.2 million (2014: GBP37.8 million)
-- 45.9% increase in underlying profit from continuing
operations to GBP15.9 million (2014: GBP10.9 million)
-- 51.2% increase in profit before tax to GBP36.6 million (2014: GBP24.2 million)
-- Fully covered dividend, current quarterly dividend 0.5 pence,
2.0 pence per share on an annualised basis
Significant growth in investment portfolio
-- 40.9% increase in investment property to GBP925 million (2014: GBP657 million)
-- 33.0% increase in total rent roll to GBP55.6 million (2014: GBP41.8 million)
-- Completed acquisitions totalling GBP230 million
-- Completed four developments at a cost of GBP19.6 million with
a margin over the revaluation yield in excess of 100 basis points,
with a lease length of 20 years
Strong balance sheet
-- GBP175m equity raise in October 2014, net of expenses
-- 97.0% increase in adjusted (EPRA) net assets and 3.4%
increase in adjusted EPRA NAV per share to 44.9 pence (2014: 43.4
pence)
-- GBP57 million borrowings redeemed and GBP177 million
restructured with reduced interest rate, LTV now 48%
-- New GBP60 million RCF at 170bps initial margin
Efficient, internally managed operating model
-- 57 properties acquired and fully integrated
-- EPRA Cost Ratio reduced to 18% (2014: 20%)
-- New UK plc holding company and inclusion in the EPRA/NAREIT index
Positive sector outlook
-- Ever increasing demands on health service from an ageing
population, rising public expectation and medical advances
-- Government has recently committed funding to back new premises development
-- Low volatility of property returns with low default risk and a link with cost inflation
Assura is well positioned to continue outperforming the
market
-- Deep understanding of primary care real estate with proven
inhouse skills in medical investment and development
-- Established brand with GPs
-- Strong development and acquisitions pipeline
-- Re-capitalised business has lower gearing, greater financial
flexibility and capacity for future growth
Graham Roberts, Chief Executive, said:
"Our business is driven by the continuing and growing need for
community based health and social care in the UK. We are at a point
in time when this need is growing as never before. The challenge
has been recognised by the NHS and Government and resources for
primary care infrastructure are being prioritised. Following our
substantial increase in scale and financial resources this year, we
are well placed to contribute with both skills and capital to this
important endeavour."
For further information, please contact:
Assura plc: Tel: 01925
Graham Roberts 420660
Jonathan Murphy
Carolyn Jones
Finsbury: Tel: 0207
Gordon Simpson 251 3801
Presentation and webcast:
A presentation will be held for analysts and investors on 21 May
2015 at 11am London time, with a webcast available from our website
or via the following link:
http://webcasting.brrmedia.co.uk/broadcast/138514/?popup=true
Alternatively to listen to the audio of the presentation live,
dial:
0808 109 0700, +44 (0) 20 3003 2666
Password: Assura
Chairman's Statement
DEAR SHAREHOLDER
It has been another busy and successful year for Assura. We have
added significantly to our property portfolio through both
acquisition and new developments. Thanks to the support of our
shareholders, we were able to raise GBP175 million, net of
expenses, in a fund raise during the year. We had a clear plan of
how to use these proceeds and are now well advanced in executing
that plan. Since the fund raise, we have made property additions of
GBP105 million and we have a pipeline of further property
acquisitions and developments of GBP100 million. Our gearing is now
at 48%, well within our target range.
Uniquely in our sector we provide all of the elements of the
property service for GPs, which enables us to offer a long-term
partner approach throughout the lifecycle of a medical centre. This
ability to "develop, invest and manage" gives us a crucial
advantage in securing new development opportunities and other asset
management initiatives. Our internally managed structure provides a
highly scalable model that means as we grow, the benefits of scale
accrue to shareholders and drive our progressive dividend
policy.
The efficiency of this model has been a key contributor to the
results delivered this year. We have increased our rent roll by 33%
to GBP55.6 million while reducing our European Public Real Estate
Association ("EPRA") Cost Ratio from 20% to 18%. This has enabled
us to deliver a growth in underlying profit of 46% to GBP15.9
million.
In November 2014 we increased our quarterly dividend by 11% to
0.5 pence per share and we retain our policy to pay fully covered
dividends, which will grow broadly in line with the geared
underlying rental growth. Since we resumed dividend payments three
years ago, we have grown the quarterly dividend per share by
75%.
The results delivered this year have contributed to a Total
Shareholder Return of 50%. Over the past three years our strategy
of refocusing the business on the primary care sector has delivered
a Total Shareholder Return of 118%.
Market developments
We have been engaging widely with the NHS and Government during
the year to make the case for further investment in primary care
infrastructure, primarily through the British Property Federation's
Healthcare Committee. It is very encouraging that recent
announcements in the form of the NHS's Five Year Forward View, the
creation of the Primary Care Infrastructure Fund and the Better
Health for London report all recognise the key role investment in
primary care property can play in improving efficiencies and health
outcomes for the NHS. The current Government is committed to
increased funding for the NHS and an increased role for primary
care service provision.
The provision of a broader range of services from a modern
facility with a larger number of GPs to facilitate extended hours
without the need to refer patients to the more costly secondary
care sector is an achievable aim in all of our new premises. We
remain ready to provide the expertise and the capital to support
this essential investment in our primary care infrastructure and to
do so at competitive rental levels. It is a highly efficient and
cost effective model for the private sector funding of state
infrastructure.
Shareholders
We are committed to the highest standards of financial
transparency and believe a significant investment in investor
relations activity is a key responsibility for any company. We have
held 114 meetings with investors during the year and I am delighted
to welcome seven new shareholders into our 20 largest investors. We
are very grateful to our shareholders for the level of support
demonstrated during the year which enabled us to increase our
equity base by 90%. In addition the increasing profile of the
business has led to an improved level of liquidity in our shares.
We successfully met the criteria for inclusion in the EPRA/NAREIT
index in March 2015 and this provides further exposure for the
Group to this group of specialist real estate focused
investors.
Our people and the Board
We have 30 people in Assura and I would like to thank each and
every one for their hard work and contribution to the success of
the business. There have been no changes to the Board during the
year.
New corporate structure
During the year we undertook a scheme of arrangement to insert a
new UK plc as our ultimate holding company. This replaced a
Guernsey registered holding company and aligned the Group with its
UK tax jurisdiction and should enable it to develop even better
commercial relationships with the NHS and GPs, which are the
Group's principal customers.
The future
Over the past three years we have made substantial progress in
deploying capital in this highly attractive sector. We have strong
brand recognition with GPs and proactively engage with the NHS to
make the case for further investment in modern primary care
facilities, with a unique offering as developer, landlord and asset
manager.
The overwhelming need for replacement and upgrade of GP
surgeries is rising up the priorities of the NHS. We remain well
placed to meet this substantial investment in our nation's primary
care infrastructure.
Simon Laffin
Chairman
20 May 2015
Chief Executive's strategic review
I am pleased to report a period of significant growth for
Assura, where we have delivered on our long-held ambition to
increase significantly the scale of the business. In the year we
have completed GBP245 million of property additions, which was the
largest contributor to the GBP269 million increase in investment
property in the year. This growth in our portfolio has enabled us
to increase our rent roll by 33% to GBP55.6 million. We have
successfully converted this increased investment into growth in
underlying profit of 46% to GBP15.9 million and increased the
quarterly dividend by 11% to 0.5 pence per share which remains
fully covered.
Included in the property additions during the year were two
significant portfolio acquisitions completed through off market
transactions for an aggregate consideration of GBP170 million. The
portfolios represented 39 medical centres with a total rent roll of
GBP9.4 million and a weighted average unexpired lease length in
excess of 16 years. In addition we were able to secure four future
sites with an estimated value of GBP21 million under a forward
funding agreement with the same vendors. The assets have been
rapidly integrated and the team has reviewed for asset management
opportunities which has already generated a significant letting at
one of the sites of more than 2,100 square metres.
The equity fund raise of GBP175 million, net of expenses, in
October 2014 was key to delivering this substantial investment. We
are grateful to our shareholders for their support and the level of
demand enabled us to secure an increase in our equity base of 90%.
Our increased equity base has reduced our loan to value ratio to
48%. We believe a range of 45% to 55% provides us with the
financial flexibility to take advantage of future acquisition and
development opportunities and we will look to maintain this level
over the medium term.
The longevity and security of our cash flows and the
inflation-tracking characteristics of our income stream underpins
our future dividend growth.
We continue to see excellent risk adjusted returns in primary
care real estate and there are positive signs of investment in new
developments returning to our sector.
Since the fund raise we have been focused on the twin objectives
of making further additions to our property portfolio and reducing
our borrowings. Since October we have secured further property
additions of GBP105 million at a yield on cost of 5.2% and a
weighted average unexpired lease term of 16.7 years. This
represents 25 properties with a wide geographic spread. The
attractiveness of our sector is becoming increasingly understood
and so this has been achieved against a backdrop of an increasingly
competitive market. Our strong brand recognition, long experience
in the sector and our reputation amongst the GP community have all
been factors in successfully securing this pipeline of
opportunities.
In addition to the completed transactions we also have a further
pipeline of development opportunities and acquisitions of more than
GBP100 million. We remain focused on further growth through
acquisition and our dedicated team of property professionals are
active in sourcing new opportunities across the country.
We are also committed to strengthening our balance sheet and
have redeemed borrowings of GBP57 million and restructured
facilities of GBP177 million, reducing our ongoing interest cost.
Our current borrowings have a weighted maturity of 11.9 years and a
weighted average cost of 5.28%.
Property returns
The enlarged property portfolio has delivered a Total Property
Return of 7.8%. Assura is a constituent of the IPD Healthcare Index
and since its inception in 2007 we have delivered a return of 7.6%
against the index of 5.9%. This level of consistent outperformance
over a long period is a testament to the skills and dedication of
our property team and to the specialist knowledge we have in our
sector.
The IPD Index also captures the performance of the primary care
property sector as a whole and since the launch of the index it has
delivered a very consistent level of return. The relatively low
volatility results in an excellent risk adjusted return when
compared with other sectors as indicated in the chart below:
The key driver of our property return is the income from our
long-term leases and in the year we have delivered rental growth of
1.3% from settled rent reviews which is ahead of inflation. The
majority of our rent reviews are on an open market basis set by
reference to rental awards agreed with the District Valuer on new
schemes. The basis of these reviews effectively means that they are
influenced by land and construction cost inflation over the medium
term. Over the last 12 months this inflation has picked up. This
increased cost is not currently reflected in our passing rents as
rents are set by reference to new developments and there has been a
slowdown in the approval of new schemes.
Our portfolio is well placed to capture this rental growth once
new developments recommence and this gives us confidence for the
medium term prospects for rental growth in our sector.
The balance of the return is generated from our capital growth,
which has seen a like for like valuation growth of 5.2% in the past
year. This increase has primarily come from a movement in our
yields with our equivalent yield moving by 30 basis points in the
past year. This relatively moderate repricing over the past year
still leaves our yields maintaining a premium over fixed return
gilts in excess of 360 basis points.
We also add value through our development activities. We have
completed four developments during the year with a total
development cost of GBP19.6 million. This has added GBP1.4 million
to our annual rent roll and generated a margin over the revaluation
yield in excess of 100 basis points. The level of development
expenditure in the year is significantly below the levels we would
normally expect. This reflects the delays in the approval of new
schemes following the introduction in 2013 of the reforms to the
NHS in the Health and Social Care Act 2012.
Our in-house development capability gives us the opportunity to
source new premises at levels significantly cheaper than we could
achieve through purchasing completed properties from developers. On
a typical scheme we are able to source a development at a 1% higher
yield on cost than for an equivalent property acquired in the
investment market by taking on the risk of development. This
provides an incremental return to our shareholders. In addition, by
being involved as a developer, long-term landlord and asset manager
we are able to build effective long-term relationships with our GPs
and this provides us with a unique positioning and market insight
in our sector.
Operational efficiency
The GBP245 million of property additions have been integrated
seamlessly without any increase in headcount. This was facilitated
by the restructuring of our in-house property management team
during the year to create a team with the sole focus of client
interaction and management. By understanding the evolving needs and
demands of our GPs we can position ourselves to be at the forefront
of the significant investment required in improving premises in the
future.
We have created a separate team of investment managers who have
responsibility for identifying value enhancing asset management
opportunities such as lease extensions and redevelopments within
our existing estate as well as new acquisition opportunities. This
revised focus is already starting to result in an increased
pipeline of potential acquisitions and a number of asset management
opportunities. This highlights the advantages of our scalable
internal management model. We can integrate acquisitions without
significant additional costs and we have the skills in-house to
maximise the value of the portfolio.
This structure enables us to ensure that we can maximise the
efficiency with which we can translate increased rental income into
underlying profit and hence dividends. In the year we have
delivered 46% growth in underlying profit to GBP15.9 million. This
has been achieved from 41% growth in our investment property value
and a reduction in our EPRA Cost Ratio from 20% to 18%.
The overall impact of all of these factors is reflected in a 51%
increase in our profit before tax to GBP36.6 million and our
dividends increasing from GBP7.2 million to GBP14.4 million.
Market outlook
The primary care sector displays very strong real estate
fundamentals: excellent occupier covenants, minimal development
risk, restricted supply with no speculative development and long
leases without breaks. In addition the underlying open market rent
review mechanism most common in the sector has provided inflation
tracking returns over the medium term.
A secure and predictable income stream with an underpinning of
inflation linkage is a highly attractive proposition to the
investor in all economic conditions. In addition the sector is
experiencing increasing demand at a time when supply has been
heavily restricted by the approval processes of the NHS. There are
increasing signs that this situation is improving and the
unblocking of the significant investment required in primary care
property is becoming more likely.
Increasing demand
Assura as a developer and investor in primary care property
provides bespoke, purpose built premises that meet the evolving
needs of GPs as they look to meet the increasing health
requirements of the UK population.
GPs are the cornerstone of the UK health model and provide
consultations with over 1.3 million patients every day(1) . Many of
these consultations take place in outdated and unsuitable premises
that are not able to provide the broad range of additional services
that are available in our modern purpose built premises. In the
2014 BMA Survey of GP practices 40% of GPs stated that their
premises were not fit for purpose(2) .
The demands on our health service are increasing. An ageing
population places greater demands on our GPs. There are 4.2 million
people aged over 75 in England and this age group has twice as many
GP consultations as the average person. Population forecasts
predict a 30% increase in this demographic over the next ten years
and this will have a corresponding increase in the demands on
GPs.
In addition to an ageing population the number of people with
long-term conditions is also increasing and the number of people
living with more than one long-term condition is forecast to
increase from 1.9 million in 2008 to 2.9 million in 2018.
These increasing demands on primary care will be in the context
of wider demands on the NHS in the decades to come. The NHS budget
has increased from GBP80 billion to GBP120 billion in the last
decade. This rate of growth is not sustainable and efficiencies
need to be found to support the funding of the NHS.
The migration of services out of the acute, secondary sector and
into the community, primary care sector is both a clinical and
financial imperative to meet the increasing health needs of the
population within reasonable budgetary constraints. A study from
management consultants Deloitte LLP, commissioned by the Royal
College of GPs, says that increasing the GP budget would save GBP5
for every GBP1 put in(3) .
The increasing role of the primary care sector and the
importance of greater service provision in the community is
highlighted in the NHS England Five Year Forward View. This
document sets out the strategic priorities for the NHS and commits
to invest more in primary care in order to generate overall savings
in the NHS budget. This commitment has been continued with the
announcement in December of the GBP1 billion Primary Care
Infrastructure Fund, which provides capital for GP premises to
support the greater provision of services, extended opening hours
and new ways of working.
A further development is the increasing coordination of health
and social care and the greater involvement of GPs in this service
provision, as evidenced by the recent announcement of the devolved
healthcare budget for Greater Manchester. This provides a unified
funding model for primary care, secondary care and social care and
is likely to be a model employed elsewhere in the country. A GP led
model of integrated primary and social care in the community would
be attractive to the NHS and enable these services to be delivered
in an integrated and cost effective manner.
Restricted supply
The reorganisation of the NHS that was implemented in April 2013
led to a reduction in the number of approvals of new developments
as the new organisational structures took time to be bedded in.
Recent announcements by the NHS point to the approval process being
at last resolved and we have recently received our first approval
under the new process.
We are hopeful that approvals for new schemes will be
forthcoming in the near future and we remain ready to provide the
expertise and the capital to support this essential investment in
the infrastructure of the NHS.
People
One of our core strategic priorities is Culture and we are
committed to the development and training of our people. We have a
small head office team of 30 people and crucial to our success is
enhancing the skills of our teams. We have six people currently
undergoing formal training. As a small team we outsource a number
of functions and this is something that we constantly review. We
have recently decided to recruit an experienced solicitor to join
our senior leadership team as Head of Legal and we continue to
monitor our resource requirements to make appropriate investment
where necessary.
Outlook
We enter the new financial year with a strengthened financial
position that has enhanced our ability to take advantage of a
fragmented market place and the significant opportunity to support
the NHS in its future plans for the increased provision of care in
the primary care setting. Primary care continues to provide strong
property fundamentals with good prospects for capital and income
growth and the Board believes Assura's brand, expertise and scale
position it well to capitalise on this.
Graham Roberts
Chief Executive
20 May 2015
(1) RCGP, January 2015
(2) BMA, July 2014
(3) Deloitte LLP, November 2014
Business Review
Portfolio as at 31 March 2015 GBP908.3 million (2014: GBP631.6
million)
Our business is based on our investment portfolio of 265
properties. This has a passing rent roll of GBP55.6 million (2014:
GBP41.8 million), 87% of which is underpinned by the NHS. The WAULT
is 14.4 years and 93% of the rent roll will still be contracted in
2025.
At 31 March 2015 our portfolio of completed investment
properties was valued at a total of GBP908.3 million (2014:
GBP631.6 million), which produced a net initial yield ("NIY") of
5.56% (2014: 5.98%). Taking account of potential lettings of
unoccupied space and any uplift to current market rents on review,
our valuers assess the net equivalent yield to be 5.77% (2014:
6.07%). Adjusting this Royal Institute of Chartered Surveyors
standard measure to reflect the advanced payment of rents, the true
equivalent yield is 5.98% (2014: 6.31%).
Our EPRA NIY, based on our passing rent roll and latest annual
direct property costs, was 5.43% (2014: 5.85%).
2015 2014
GBPm GBPm
--------------- ----- -----
Net rental
income 48.2 37.8
--------------- ----- -----
Valuation
movement 21.4 12.4
--------------- ----- -----
Total Property
Return 69.6 50.2
--------------- ----- -----
Expressed as a percentage of opening investment property plus
additions, Total Property Return was 7.8% compared with 7.9% in
2014.
Our annualised Total Return over the last five years as
calculated by IPD was 9.1% compared with the IPD All Healthcare
Benchmark of 7.2% over the same period.
The valuation gain in the year of GBP21.4 million represents a
5.2% uplift on a like-for-like basis, as well as movements relating
to properties acquired in the year, and has arisen as a result of
the downward pressure on yields with increased competition for
acquiring assets in the sector. Despite the downward pressure, the
NIY on our assets continues to represent a substantial premium over
the 15 year gilt which traded at 1.96% at 31 March 2015.
Investment and development activity
Despite the recent hiatus in NHS development approvals, we have
invested substantially during the year.
Although this growth has primarily been through numerous
acquisitions of completed investment properties, we have still
completed four developments during the year with a total
development cost of GBP19.4 million. This has added GBP1.4 million
to our annual rent roll and generated a 7.2% yield on cost.
We recorded an unrealised revaluation deficit of GBP0.9 million
during the year in respect of investment property under
construction (2014: surplus of GBP1.3 million). Excluding the
GBP3.3 million revaluation deficit in respect of the land at
Scarborough, we recorded a gain of GBP2.4 million.
Despite the reduction in developments being approved we were
able to source a number of properties through forward funding
agreements. As at 31 March 2015, we had five developments on site
under such agreements, with a total committed investment value of
GBP22.2 million, and a further two which we would hope to be on
site shortly (estimated cost of GBP9.5 million).
The bulk of the growth in our investment portfolio has come from
the acquisition of two portfolios and a number of standing
investments. The table below highlights the main transactions:
Property
cost
Date Portfolio/property GBPm
------- ------------------- --------
MP Realty
Jun-14 (28 properties) 107.0
------- ------------------- --------
Metro (11
Nov-14 properties) 63.1
------- ------------------- --------
One Life
Building,
Jul-14 Middlesbrough 12.3
------- ------------------- --------
Dec-14 South Kirkby 10.1
------- ------------------- --------
Other (16
properties) 37.8
--------------------------- --------
Total 230.3
--------------------------- --------
Portfolio management
We have continued to deliver rental growth and have successfully
concluded on 137 rent reviews during the year to generate a
weighted average annual rent increase of 1.27% (2014: 1.89%) on
those properties. Our portfolio benefits from a 21% weighting in
fixed and Retail Price Index ("RPI") uplifts which generated an
average uplift of 3.06% during the year. The majority of our
portfolio is subject to open market reviews and these have
generated an average uplift of 0.38% during the year.
We work very hard at developing and maintaining customer
relationships. This approach is carried across the range of
services we provide both during development and after completion,
as a portfolio manager. We have a dedicated team of asset managers
who are in regular communication with our customers and we monitor
progress through regular customer satisfaction surveys. All asset
managers are appraised on their success in a continuous improvement
on tenant interaction.
During the year we have successfully secured six new tenancies
with an annual rent roll of GBP0.1 million covering 550 square
metres. In addition we have significantly extended the lease on
four properties.
Our EPRA Vacancy Rate was 3.2% (2014: 1.8%) which has increased
during the year due to the level of expansion space included in
portfolios acquired during the year. One of our focuses for the
coming year is to reduce the vacancy rate.
Administrative expenses
The Group measures its operating efficiency as the proportion of
administrative costs to the average gross investment property
value. This ratio during the year was 0.72% (2014: 0.82%) and
administrative costs stood at GBP5.7 million (2014: GBP5.0
million).
We also analyse cost performance by reference to our EPRA Cost
Ratios (including and excluding direct vacancy costs) which were
17.7% and 16.3% respectively (2014: 20.2% and 18.4%). This is now
our key KPI as reported on page 28 of our Annual Report 2015.
Financing
From a financing perspective, the highlight of the year was the
successful equity issuance in October 2014, which raised proceeds
of GBP175 million, net of costs.
Our focus since then has been on investing the proceeds in
primary care property but we have also made some adjustments to our
lending arrangements to increase flexibility and take advantage of
long-term interest rates which remain at historically low
levels.
We have repaid our debt with Santander along with the associated
interest rate swap, which was due for refinancing in November 2016,
creating a large pool of unsecured assets. When debt has been
assumed alongside acquired properties we have negotiated an
allowance from the vendor to reflect the cost of assumed debt.
These allowances have been utilised in full during the year to
secure reduced interest rates on these facilities.
Further to this, we announce today that we have secured an
increase in our available revolving credit facility from GBP30
million to GBP60 million for an initial five year term, with
interest variable at 170 basis points above LIBOR further
diversifying our available funding sources.
We continue to hold discussions with lenders to broaden our base
of lenders, who have maintained their appetite to lend into our
sector, and to ensure facilities are in place to support future
acquisitions. At 31 March 2015, we had undrawn facilities and cash
of GBP96.5 million.
Financing
statistics 2015 2014
----------------- --------- ---------
Net debt GBP450.0m GBP414.8m
----------------- --------- ---------
Weighted
average 11.9 10.9
debt maturity years years
----------------- --------- ---------
Weighted
average
interest
rate 5.28% 5.28%
----------------- --------- ---------
% of debt
at fixed/capped
rates 100% 98%
----------------- --------- ---------
Interest
cover(1) 160% 150%
----------------- --------- ---------
Loan to
value 48% 62%
----------------- --------- ---------
(1) Interest cover is the number of times net interest payable
is covered by underlying profit before net interest.
Our loan to value ratio currently stands at 48%, which is a
level that the quality of our cash flows can comfortably support.
100% of the debt facilities are fixed with a weighted average debt
maturity of 11.9 years compared with a WAULT of 14.4 years, which
highlights the security of the cash flows of the business however,
our new RCF give us access to variable rate funding.
Details of the facilities and their covenants are set out in
Note 12 to this announcement.
Net finance costs in the year amounted to GBP26.6 million (2014:
GBP21.9 million).
Underlying profit
2015 2014
GBPm GBPm
--------------- ------ ------
Net rental
income 48.2 37.8
--------------- ------ ------
Administrative
expenses (5.7) (5.0)
--------------- ------ ------
Net finance
costs (26.6) (21.9)
--------------- ------ ------
Underlying
profit 15.9 10.9
--------------- ------ ------
The movement in underlying profit can be summarised as
follows:
GBPm
------------------ -----
Year ended 31
March 2014 10.9
------------------ -----
Net rental income 10.4
------------------ -----
Administrative
expenses (0.7)
------------------ -----
Net finance
costs (4.7)
------------------ -----
Year ended 31
March 2015 15.9
------------------ -----
Underlying profit has grown 45.9% to GBP15.9 million in the year
to 31 March 2015 following the property acquisitions completed
during the year.
Underlying profit differs from EPRA earnings as it excludes
accounting adjustments such as IFRS 2 charges for share-based
payments and one-off expenses that we consider to be exceptional
and not reflective of continuing underlying performance.
Earnings per share
The basic earnings per share ("EPS") from continuing operations
for the year was 4.9 pence (2014: 4.5 pence) and on profit for the
year was 4.9 pence (2014: 6.6 pence).
EPRA EPS, which excludes the net impact of valuation movements
and gains on disposal, was 2.1 pence (2014: 1.7 pence).
Underlying profit per share omits accounting adjustments and
certain exceptional items and has remained at 2.1 pence (2014: 2.1
pence) as the investment proceeds are still in the process of being
deployed.
Based on calculations completed in accordance with IAS 34,
share-based payment schemes are currently expected to be dilutive
to EPS, with 20.7 million new shares expected to be issued based on
the average share price for the three months to 31 March 2015. The
following illustration is an extraction. Further details are
provided in Note 5 to this announcement.
EPS measure Basic Diluted
------------ ----- -------
Continuing
operations 4.9p 4.7p
------------ ----- -------
Profit for
year 4.9p 4.7p
------------ ----- -------
EPRA 2.1p 2.0p
------------ ----- -------
Underlying 2.1p 2.0p
------------ ----- -------
Dividends
Total dividends paid in the year to 31 March 2015 were GBP14.4
million or 1.85 pence per share (2014: 1.36 pence per share).
As a result of brought forward tax losses all dividends paid
during the year were normal dividends (non-PID) with an associated
tax credit.
We remain committed to maintaining a covered dividend that is
progressive broadly in line with underlying rental growth.
The table below illustrates how our cash flows support the
dividend we pay:
2015 2014
GBPm GBPm
--------------- ------ ------
Opening
cash 38.6 35.7
--------------- ------ ------
Net cash
flow from
operations 16.9 7.9
--------------- ------ ------
Dividends
paid (14.4) (7.2)
--------------- ------ ------
Investment:
--------------- ------ ------
Property
and business
acquisitions (64.3) (9.1)
--------------- ------ ------
Development
expenditure (14.0) (23.5)
--------------- ------ ------
Sale of
properties 4.2 3.3
--------------- ------ ------
Sale of
discontinued
operations - 27.4
--------------- ------ ------
Other 0.1 -
--------------- ------ ------
Financing:
--------------- ------ ------
Proceeds
from equity
issuance 173.5 -
--------------- ------ ------
Net borrowings
movement (74.1) 4.1
--------------- ------ ------
Closing
cash 66.5 38.6
--------------- ------ ------
Property additions during the year were GBP230.3 million,
although the cash outflow was only GBP64.3 million after taking
into account shares issued as consideration (GBP28.3 million),
associated debt (GBP135.3 million) and net working capital assumed
(GBP2.4 million).
Net assets
EPRA NAV movement
Pence
per
GBPm share
---------------- ------ ------
EPRA NAV
at 31 March
2014 229.6 43.4
---------------- ------ ------
Underlying
profit 15.9 2.1
---------------- ------ ------
Capital
(revaluations
and capital
gains) 21.3 2.8
---------------- ------ ------
Dividends (14.4) (1.9)
---------------- ------ ------
Equity issuance 201.8 (1.4)
---------------- ------ ------
Other (1.8) (0.1)
---------------- ------ ------
EPRA NAV
at 31 March
2015 452.4 44.9
---------------- ------ ------
Our Total Accounting Return per share for the year ended 31
March 2015 is 7.7% of which 1.85 pence per share (4.3%) has been
distributed to shareholders and 1.5 pence per share (3.4%) is the
movement on EPRA NAV including an element of dilution associated
with the equity issuance in October 2014.
The equity issuance saw the Company raise proceeds of GBP175
million net of issuance costs. In addition, the Company issued
44,264,196 shares to the vendors of the MP Realty portfolio in June
2014 and a further 18,834,148 shares to the vendors of the Metro
portfolio in November 2014. These shares issued as part
consideration were priced based on the market value of the Company
shares at the time of completion.
In January 2015, Assura plc replaced Assura Group Limited as the
top company in the Group. This was completed through a scheme of
arrangement, sanctioned by the Royal Court of Guernsey, which saw
shares exchanged on a one-for-one basis. There was no change in the
number of issued shares. The change was completed to align the
Group's corporate structure with its tax jurisdiction and should
enable it to develop even better commercial relationships with GPs
and the NHS, which are the Group's principal customers.
Portfolio analysis by capital value
Total Total
Number value value
of properties GBPm %
--------- -------------- ------ ------
<GBP1m 37 25.2 3
--------- -------------- ------ ------
GBP1-5m 180 451.6 50
--------- -------------- ------ ------
GBP5-10m 36 253.3 27
--------- -------------- ------ ------
>GBP10m 12 178.2 20
--------- -------------- ------ ------
265 908.3 100
--------- -------------- ------ ------
Portfolio analysis by region
Total Total
Number value value
of properties GBPm %
--------- -------------- ------ ------
North 109 411.2 45
--------- -------------- ------ ------
South 74 221.4 24
--------- -------------- ------ ------
Midlands 55 201.2 22
--------- -------------- ------ ------
Scotland 9 23.9 3
--------- -------------- ------ ------
Wales 18 50.6 6
--------- -------------- ------ ------
265 908.3 100
--------- -------------- ------ ------
Portfolio analysis by tenant covenant
Total Total
rent rent
roll roll
GBPm %
--------- ----- -----
GPs 38.1 69
--------- ----- -----
NHS body 10.2 18
--------- ----- -----
Pharmacy 4.3 8
--------- ----- -----
Other 3.0 5
--------- ----- -----
55.6 100
--------- ----- -----
Consolidated income statement
For the year ended 31 March 2015
2015 2014
Capital Capital
Underlying and other Total Underlying and other Total
Note GBPm GBPm GBPm GBPm GBPm GBPm
======================================== ============= ========== ========== ====== ========== ========== ======
Continuing operations
Gross rental and
related income 2 51.1 - 51.1 39.9 - 39.9
Property operating
expenses (2.9) - (2.9) (2.1) - (2.1)
======================================== ============= ========== ========== ====== ========== ========== ======
Net rental income 48.2 - 48.2 37.8 - 37.8
Administrative
expenses (5.7) - (5.7) (5.0) - (5.0)
Revaluation gains 7 - 21.4 21.4 - 12.4 12.4
(Loss)/gain on
sale of property - (0.1) (0.1) - 0.2 0.2
Share-based payment
charge - (0.7) (0.7) - (0.7) (0.7)
Exceptional items - - - - (0.4) (0.4)
Finance revenue 0.4 - 0.4 0.3 - 0.3
Finance costs 3 (27.0) - (27.0) (22.2) - (22.2)
Gain on derivative
financial instruments 3 - 0.1 0.1 - 1.8 1.8
Profit before
taxation 15.9 20.7 36.6 10.9 13.3 24.2
======================================== ============= ========== ========== ====== ========== ========== ======
Taxation 4 0.6 (0.4)
======================================== ============= ========== ========== ====== ========== ========== ======
Profit for the
year from continuing
operations 37.2 23.8
Discontinued operations
Profit for the year
and gain on disposal
from discontinued
operations - 11.2
====================================================== ========== ========== ====== ========== ========== ======
Profit for the
year attributable
to equity holders
of the parent 37.2 35.0
======================================== ============= ========== ========== ====== ========== ========== ======
Earnings per share
from underlying
profit - basic 5 2.1p 2.1p
from continuing
operations - basic 5 4.9p 4.5p
- diluted 5 4.7p 4.5p
on profit for year
- basic 5 4.9p 6.6p
- diluted 5 4.7p 6.6p
====================================================== ========== ========== ====== ========== ========== ======
There were no items of other comprehensive income or expense and
therefore the profit for the year also reflects the Group's total
comprehensive income.
Consolidated balance sheet
As at 31 March 2015
2015 2014
Note GBPm GBPm
================================================================================ ==== ======= =====
Non-current assets
Investment property 7 925.3 656.7
Investments 0.4 0.5
Property, plant and equipment 0.1 0.1
Deferred tax asset 1.3 0.7
================================================================================ ==== ======= =====
927.1 658.0
================================================================================ ==== ======= =====
Current assets
Cash, cash equivalents and restricted
cash 8 66.5 38.6
Trade and other receivables 9 8.3 5.5
Property assets held for sale 7 5.4 11.6
================================================================================ ==== ======= =====
80.2 55.7
================================================================================ ==== ======= =====
Total assets 1,007.3 713.7
================================================================================ ==== ======= =====
Current liabilities
Trade and other payables 10 18.9 14.8
Borrowings 12 8.0 5.9
Deferred revenue 11 12.7 9.9
Provisions 0.1 0.1
================================================================================ ==== ======= =====
39.7 30.7
================================================================================ ==== ======= =====
Non-current liabilities
Borrowings 12 505.5 444.4
Obligations due under finance
leases 10 3.0 3.0
Derivative financial instruments
at fair value - 1.8
Deferred revenue 11 6.9 6.8
Provisions 0.3 0.4
-------------------------------------------------------------------------------- ---- ------- -----
515.7 456.4
================================================================================ ==== ======= =====
Total liabilities 555.4 487.1
================================================================================ ==== ======= =====
Net assets 451.9 226.6
================================================================================ ==== ======= =====
Capital and reserves
Share capital 13 100.7 53.0
Own shares held 13 (1.8) (1.9)
Share premium - 77.1
Merger reserve 231.2 -
Reserves 121.8 98.4
================================================================================ ==== ======= =====
Total equity 451.9 226.6
================================================================================ ==== ======= =====
Net asset value per Ordinary Share
- basic 6 44.9p 42.8p
- diluted 6 44.0p 42.8p
Adjusted (EPRA) net asset value
per Ordinary Share - basic 6 44.9p 43.4p
- diluted 6 44.0p 43.4p
================================================================================ ==== ======= =====
The financial statements were approved at a meeting of the Board
of Directors held on 20 May 2015 and signed on its behalf by:
Graham Roberts, Chief Executive Jonathan Murphy, Finance Director
Consolidated statement of changes in equity
For the year ended 31 March 2015
Own
Share shares Share Merger Total
capital held premium reserve Reserves equity
Note GBPm GBPm GBPm GBPm GBPm GBPm
====================================== ======== ======= ======== ======== ============= =======
1 April 2013 53.0 (1.9) 77.1 - 69.9 198.1
======= ======== ======== ===== ====== =======
Profit attributable to equity holders - - - - 35.0 35.0
======= ======== ======== ===== ====== =======
Total comprehensive income - - - - 35.0 35.0
Dividends 14 - - - - (7.2) (7.2)
Employee share-based incentives - - - - 0.7 0.7
======================================= ======== ======= ======== ======== ===== ====== =======
31 March 2014 53.0 (1.9) 77.1 - 98.4 226.6
======================================= ======== ======= ======== ======== ===== ====== =======
Profit attributable to equity holders - - - - 37.2 37.2
======= ======== ======== ===== ====== =======
Total comprehensive income - - - - 37.2 37.2
Issue of Ordinary Shares 13 47.7 - 160.8 - - 208.5
Issue costs - - (6.7) - - (6.7)
Scheme of arrangement 13 - - (231.2) 231.2 - -
Dividends 14 - - - - (14.4) (14.4)
Own shares held - 0.1 - - (0.1) -
Employee share-based incentives - - - - 0.7 0.7
======================================= ======== ======= ======== ======== ===== ====== =======
31 March 2015 100.7 (1.8) - 231.2 121.8 451.9
======================================= ======== ======= ======== ======== ===== ====== =======
Consolidated cash flow statement
For the year ended 31 March 2015
2015 2014
Note GBPm GBPm
======================================= ==== ====== ======
Operating activities
Rent received 50.8 39.3
Interest paid and similar charges (26.9) (22.3)
Fees received 1.0 0.9
Interest received 0.4 0.8
Cash paid to suppliers and employees (8.4) (10.8)
======================================= ==== ====== ======
Net cash inflow from operating
activities 16.9 7.9
======================================= ==== ====== ======
Investing activities
Purchase of investment property (64.3) (2.5)
Development spend (14.0) (23.5)
Proceeds from sale of property 4.2 3.3
Proceeds from sale of LIFT investments - 21.7
Proceeds from sale of businesses - 6.0
Net loans received from/(advanced
to) associated companies 0.1 (0.3)
Subsidiaries acquired - (6.6)
======================================= ==== ====== ======
Net cash outflow from investing
activities (74.0) (1.9)
======================================= ==== ====== ======
Financing activities
Issue of Ordinary Shares 180.2 -
Issue costs paid on issuance of
Ordinary Shares (6.7) -
Dividends paid 14 (14.4) (7.2)
Repayment of loans 12 (64.1) (5.1)
Long-term loans drawdown 12 - 9.2
Cash settlement of loan fair value
adjustments (7.8) -
Swap cash settlement (1.7) -
Loan issue costs (0.5) -
======================================= ==== ====== ======
Net cash inflow/(outflow) from
financing activities 85.0 (3.1)
======================================= ==== ====== ======
Increase in cash and cash equivalents 27.9 2.9
======================================= ==== ====== ======
Opening cash and cash equivalents 38.6 35.7
======================================= ==== ====== ======
Closing cash and cash equivalents 8 66.5 38.6
======================================= ==== ====== ======
Notes to the preliminary results
for the year ended 31 March 2015
1. Significant accounting policies
Basis of preparation
The financial information set out in this preliminary
announcement is derived from but does not constitute the Group's
statutory accounts for the year ended 31 March 2015 and 31 March
2014, and as such, does not contain all information required to be
disclosed in the financial statements prepared in accordance with
International Financial Reporting Standards ("IFRSs"). The
financial information has been extracted from the Group's audited
consolidated statutory accounts upon which the auditor has issued
has unqualified opinion.
The Annual Report will be posted to Shareholders on or before 31
July 2015.
The Preliminary Announcement was approved by the Board of
Directors on 20 May 2015.
The Announcement can also be accessed on the internet at
www.assuraplc.com.
Standards affecting the financial statements
The following standards and amendments became effective for the
Company in the year ended 31 March 2015. The pronouncements either
had no material impact on the financial statements or resulted in
changes in presentation and disclosure only:
-- IFRS 10 Consolidated Financial Statements
-- IFRS 11 Joint Arrangements
-- IFRS 12 Disclosure of Interests in Other Entities
-- IAS 27 Separate Financial Statements (2011)
-- IAS 28 Investments in Associates and Joint Ventures
(2011)
-- Amendments to IAS 32 Financial Instruments: Presentation -
Offsetting Financial Assets and Financial Liabilities
-- Amendments to IAS 36 Impairment of Assets - Recoverable
Amount Disclosures for Non-Financial Assets
-- Amendments to IAS 39 Financial Instruments: Recognition and
Measurement - Novation of Derivatives and Continuation of Hedge
Accounting
Standards in issue not yet effective
The following standards and amendments are in issue as at the
date of the approval of these financial statements, but are not yet
effective for the Company. The Directors do not expect that the
adoption of the standards listed below will have a material impact
on the financial statements of the Company in future periods but
are continuing to assess the potential impact (effective for
periods beginning on or after the date in brackets):
- IFRS 9 Financial Instruments (1 January 2018)
- IFRS 15 Revenue from Contracts with Customers (1 January
2018)
- Amendments to IAS 1 Disclosure Initiatives (1 January
2017)
The financial statements are prepared on a going concern basis
as explained in the Directors' report on page 73 of the Annual
Report 2015 and are presented in sterling.
The accounting policies have been applied consistently to the
results, other gains and losses, liabilities and cash flows of
entities included in the consolidated financial statements. All
intragroup balances, transactions, income and expenses are
eliminated on consolidation.
Significant judgements and key estimates
The preparation of the financial statements requires management
to make judgements, estimates and assumptions that may affect the
application of accounting policies and the reported amounts of
assets, liabilities, income and expenses.
Property valuations
The key source of estimation and uncertainty relates to the
valuation of the property portfolio, where a valuation is obtained
twice a year from professionally qualified external valuers. The
evidence to support these valuations is based primarily on recent,
comparable market transactions on an arm's length basis. However,
the assumptions applied are inherently subjective and so are
subject to a degree of uncertainty. Property valuations are one of
the principal uncertainties of the Group.
Accounting for acquisitions and disposals
A degree of judgement is required in relation to acquisitions to
determine whether they should be accounted for as business
combinations under IFRS 3 or as asset purchases. Consideration is
taken of all the facts concerning the transaction in making the
appropriate judgement. In addition, the fair value of assets and
liabilities acquired as part of the transaction must be determined,
which is based on external market evidence where available.
Basis of consolidation
Subsidiaries
Subsidiaries are fully consolidated from the date of
acquisition, being the date on which the Group obtains control, and
continue to be consolidated until the date that such control
ceases. Control comprises the power to govern the financial and
operating policies of the investee so as to obtain benefit from its
activities.
In the Company financial statements, investments in subsidiaries
are held at cost less any provision for impairment.
Where properties are acquired through the purchase of a
corporate entity but the transaction does not meet the definition
of a business combination under IFRS 3, the purchase is treated as
an asset acquisition. Where the acquisition is considered a
business combination, the excess of the consideration transferred
over the fair value of assets and liabilities acquired is held as
goodwill, initially recognised at cost with subsequent impairment
assessments completed at least annually. Where the initial
calculation of goodwill arising is negative, this is recognised
immediately in the income statement.
Property portfolio
Properties are externally valued on an open market basis as at
the balance sheet date and are recorded at valuation.
Any surplus or deficit arising on revaluing investment
properties and investment property under construction ("IPUC") is
recognised in the income statement.
All costs associated with the purchase and construction of IPUC
are capitalised including attributable interest. Interest is
calculated on the expenditure by reference to specific borrowings
where relevant and otherwise on the average rate applicable to
short-term loans. When IPUC are completed, they are classified as
investment properties.
In determining whether leases and related properties represent
operating or finance leases, consideration is given to whether the
tenant or landlord bears the risks and rewards of ownership.
Leasehold properties that are leased out to tenants under
operating leases are classified as investment properties or
development properties, as appropriate, and included in the balance
sheet at fair value.
Where an investment property is held under a head lease it is
initially recognised as an asset as the sum of the premium paid on
acquisition and the present value of minimum ground rent payments.
The corresponding rent liability to the head leaseholder is
included in the balance sheet as a finance lease obligation.
The market value of investment property as estimated by an
external valuer is increased for the unamortised pharmacy lease
premium held at the balance sheet date.
Net rental income
Rental income is recognised on an accruals basis and recognised
on a straight line basis over the lease term. A rent adjustment
based on open market estimated rental value is recognised from the
rent review date in relation to unsettled rent reviews. Pharmacy
lease premiums received from tenants are spread over the lease
term, even if the receipts are not received on such a basis. The
lease term is the non-cancellable period of the lease.
Property operating expenses are expensed as incurred and
property operating expenditure not recovered from tenants through
service charges is charged to the income statement.
Gains on sale of properties
Gains on sale of properties are recognised on the completion of
contract, and are calculated by reference to the carrying value at
the end of the previous reporting period, adjusted for subsequent
capital expenditure.
Financial assets and liabilities
Trade receivables and payables are initially recognised at fair
value and subsequently measured at amortised cost and discounted as
appropriate.
Other investments are shown at amortised cost and held as loans
and receivables. Loans and receivables are measured at amortised
cost using the effective interest method, less any impairment.
Interest income is recognised by applying the effective interest
rate.
Debt instruments are stated at their net proceeds on issue.
Finance charges including premiums payable on settlement or
redemption and direct issue costs are spread over the period to
redemption at a constant rate on the carrying amount of the
liability.
Financial instruments
Where the Group uses derivative financial instruments, in the
form of interest rate swaps, to hedge its risks associated with
interest rate fluctuations they are initially recognised at fair
value on the date a derivative contract is entered into and are
subsequently
re-measured at their fair value by reference to market values
for similar instruments. The resulting gains or losses are
recognised through the income statement.
Cash equivalents are limited to instruments with a maturity of
less than three months.
Tax
Current tax is based on taxable profit for the year and is
calculated using tax rates that have been enacted or substantively
enacted. Taxable profit differs from net profit as reported in the
income statement because it excludes items of income or expense
that are not taxable (or tax deductible).
Deferred tax is provided on items that may become taxable at a
later date, on the difference between the balance sheet value and
tax base value, on an undiscounted basis.
Income statement definitions
Underlying profit represents adjusted earnings, with further
Company adjustments to exclude items such as property revaluations,
exceptional items and share-based payment charges. These
adjustments have been made on the basis they are non-cash fair
value adjustments, which are not reflective of the underlying
performance of the business.
Capital and other represents all other statutory income
statement items that are not considered underlying, including
exceptional items.
Employee costs
Defined contribution pension plans
Obligations for contributions to defined contribution pension
plans are charged to the income statement as incurred.
Share-based employee remuneration
Share-based employee remuneration is determined with reference
to the fair value of the equity instruments at the date at which
they are granted and charged to the income statement over the
vesting period on a straight line basis. The fair value of share
options is calculated using the Black Scholes option pricing model
or the Monte Carlo Model and is dependent on factors including the
exercise price, expected volatility, option life and risk-free
interest rate. IFRS 2 Share-based Payment has been applied to share
options granted.
Segmental information
In previous periods, the Group ran more than one operating
segment. Following the sale of the majority of assets in the
Non-Core segment, the Group is now run as one business and as such
no segmental analysis is presented for the current or prior year
results.
2. Revenue
2015 2014
GBPm GBPm
==================================== ===== =====
Rental revenue 50.1 39.0
Other related income 1.0 0.9
==================================== ===== =====
Gross rental and related income 51.1 39.9
==================================== ===== =====
LIFT interest (through discontinued
operations) - 0.6
Bank and other interest 0.4 0.3
==================================== ===== =====
0.4 0.9
==================================== ===== =====
Total revenue 51.5 40.8
==================================== ===== =====
3. Finance costs
2015 2014
GBPm GBPm
============================================ ===== =====
Interest payable 27.1 22.4
Interest capitalised on developments (0.4) (0.6)
Amortisation of loan issue costs 0.6 0.5
Amortisation of loan fair value adjustments (0.3) (0.1)
============================================ ===== =====
27.0 22.2
Change in fair value of interest rate
swaps (0.1) (1.8)
============================================ ===== =====
26.9 20.4
============================================ ===== =====
Interest was capitalised on property developments at 5% (2014:
5%).
4. Taxation
2015 2014
Consolidated income tax GBPm GBPm
===================================== ===== =====
Deferred tax
Relating to origination and reversal
of temporary differences (0.6) 0.4
===================================== ===== =====
Income tax (credit)/charge reported
in consolidated income statement (0.6) 0.4
===================================== ===== =====
The differences from the standard rate of tax applied to the
profit before tax may be analysed as follows:
2015 2014
GBPm GBPm
========================================== ===== =====
Profit from continuing operations before
taxation 36.6 24.2
Profit from discontinued operations
before taxation - 11.2
========================================== ===== =====
Net profit before taxation 36.6 35.4
========================================== ===== =====
UK income tax at rate of 21% (2014:
23%) 7.7 8.1
Effects of:
Non-taxable income (including REIT exempt
income) (8.9) (7.8)
Expenses not deductible for tax purposes 2.2 0.5
Movement in unrecognised deferred tax (1.6) (0.4)
========================================== ===== =====
(0.6) 0.4
========================================== ===== =====
The Group elected to be treated as a UK REIT with effect from 1
April 2013. The UK REIT rules exempt the profits of the Group's
property rental business from corporation tax. Gains on properties
are also exempt from tax, provided they are not held for trading or
sold in the three years post completion of development. The Group
will otherwise be subject to corporation tax at 20% (2015:
21%).
The Group tax (credit)/charge relates to its non-property
income. As the Group has sufficient brought forward tax losses, no
tax is due and so the amount represents the movement in deferred
tax.
As a REIT, the Group is required to pay Property Income
Distributions ("PIDs") equal to at least 90% of the Group's rental
profit calculated by reference to tax rules rather than accounting
standards. In the year to 31 March 2015 the taxable rental profit
of the Group was GBPnil as a result of capital allowances
available, and consequently no PID was required.
To remain as a UK REIT there are a number of conditions to be
met in respect of the principal company of the Group, the Group's
qualifying activities and the balance of business. The Group
remains compliant at 31 March 2015.
A further reduction in the main rate of corporation tax has been
substantively enacted; the rate reduced to 20% from 1 April 2015.
This change has been reflected in the calculation of deferred
tax.
5. Earnings per Ordinary Share
Adjusted Adjusted
(EPRA) (EPRA)
Earnings earnings Earnings earnings
2015 2015 2014 2014
GBPm GBPm GBPm GBPm
================================ =========== =========== =========== ===========
Profit for the year from
continuing operations 37.2 37.2 23.8 23.8
================================ =========== =========== =========== ===========
Acquisition costs and negative
goodwill - (0.2)
Revaluation gains (21.4) (12.4)
Revaluation of derivative
financial instruments (0.1) (1.8)
Loss/(gain) on sale of property 0.1 (0.2)
================================ =========== =========== =========== ===========
Adjusted (EPRA) earnings 15.8 9.2
================================ =========== =========== =========== ===========
Weighted average number
of shares in issue - basic 763,163,756 763,163,756 529,548,924 529,548,924
Potential dilutive impact
of VCP 20,723,772 20,723,772 - -
-------------------------------- ----------- ----------- ----------- -----------
Weighted average number
of shares in issue - diluted 783,887,528 783,887,528 529,548,924 529,548,924
================================ =========== =========== =========== ===========
Earnings per Ordinary Share
from continuing operations 4.9p 2.1p 4.5p 1.7p
Earnings per Ordinary Share
from discontinued operations - - 2.1p 2.1p
================================ =========== =========== =========== ===========
Earnings per Ordinary Share
- basic 4.9p 2.1p 6.6p 3.8p
================================ =========== =========== =========== ===========
Earnings per Ordinary Share
from continuing operations 4.7p 2.0p 4.5p 1.7p
Earnings per Ordinary Share
from discontinued operations - - 2.1p 2.1p
================================ =========== =========== =========== ===========
Earnings per Ordinary Share
- diluted 4.7p 2.0p 6.6p 3.8p
================================ =========== =========== =========== ===========
Underlying profit per share of 2.1 pence (2014: 2.1 pence) has
been calculated as underlying profit for the year as presented on
the income statement of GBP15.9 million (2014: GBP10.9 million)
divided by the weighted average number of shares in issue of
763,163,756 (2014: 529,548,924). Based on the diluted weighted
average shares, underlying profit per share is 2.0 pence (2014: 2.1
pence).
As set out on page 66 of the Annual Report 2015, the current
estimated number of shares over which nil-cost options may be
issued to participants is 24.6 million. After allowing for shares
held by the Employee Benefit Trust, this would amount to a
potential issuance of a further 20.7 million shares over the course
of the next three years.
6. Net asset value per Ordinary Share
Adjusted Adjusted
(EPRA) (EPRA)
net net
Net asset asset Net asset asset
value value value value
2015 2015 2014 2014
GBPm GBPm GBPm GBPm
================================= ============= ============= =========== ===========
Net assets 451.9 451.9 226.6 226.6
================================= ============= ============= =========== ===========
Own shares held 1.8 1.9
Derivative financial instruments - 1.8
Deferred tax (1.3) (0.7)
================================= ============= ============= =========== ===========
NAV in accordance with EPRA 452.4 229.6
================================= ============= ============= =========== ===========
Number of shares in issue 1,006,900,141 1,006,900,141 529,548,924 529,548,924
Potential dilutive impact
of VCP (Note 5) 20,723,772 20,723,772 - -
--------------------------------- ------------- ------------- ----------- -----------
Diluted number of shares
in issue 1,027,623,913 1,027,623,913 529,548,924 529,548,924
================================= ============= ============= =========== ===========
NAV per Ordinary Share -
basic 44.9p 44.9p 42.8p 43.4p
NAV per Ordinary Share -
diluted 44.0p 44.0p 42.8p 43.4p
================================= ============= ============= =========== ===========
Adjusted Adjusted
net asset net asset
value value
2015 2014
GBPm GBPm
============================== ========== ==========
EPRA NAV 452.4 229.6
Mark to market of derivative
financial instruments - (1.8)
Mark to market of fixed rate
debt (90.7) (5.5)
=============================== ========== ==========
EPRA NNNAV 361.7 222.3
=============================== ========== ==========
EPRA NNNAV per Ordinary Share 35.9p 42.0p
=============================== ========== ==========
The EPRA measures set out above are in accordance with the Best
Practices Recommendations of the European Property Real Estate
Association dated December 2014.
Mark to market adjustments have been provided by third party
valuers in the case of fixed rate debt or the counterparty in the
case of derivative financial instruments.
7. Property assets
Investment property and investment property under construction
("IPUC")
Properties are stated at fair value, which has been determined
for the Group by Savills Commercial Limited and Jones Lang LaSalle
as at 31 March 2015. The properties have been valued individually
and on the basis of open market value in accordance with RICS
valuation - Professional Standards 2014 ("the Red Book").
Initial yields mainly range from 5.25% to 5.50% (2014: 5.60% to
5.80%) for prime units. For properties with weaker tenants, poorer
units or held under short leaseholds, the yields range between
6.25% and 22.40% (2014: 6.50% and 18.30%).
A 0.25% shift of valuation yield would have approximately a
GBP42.8 million (2014: GBP27.7 million) impact on the investment
property valuation.
Investment IPUC Total Investment IPUC Total
2015 2015 2015 2014 2014 2014
GBPm GBPm GBPm GBPm GBPm GBPm
============================= ========== ====== ====== ========== ====== =====
Opening fair
value 638.8 14.8 653.6 539.9 14.3 554.2
Additions:
========== ====== ====== ========== ====== =====
- acquisitions 229.8 0.5 230.3 63.5 - 63.5
- improvements 0.7 - 0.7 1.9 - 1.9
========== ====== ====== ========== ====== =====
230.5 0.5 231.0 65.4 - 65.4
Development costs - 14.0 14.0 - 23.7 23.7
Transfers 24.5 (24.5) - 24.8 (24.8) -
Transfer from
assets held for
sale 1.5 4.7 6.2 0.2 0.2 0.4
Capitalised interest - 0.4 0.4 - 0.6 0.6
Disposals (2.0) (2.3) (4.3) (2.6) (0.5) (3.1)
Unrealised surplus/(deficit)
on revaluation 22.3 (0.9) 21.4 11.1 1.3 12.4
============================= ========== ====== ====== ========== ====== =====
Closing market
value 915.6 6.7 922.3 638.8 14.8 653.6
Add finance lease
obligations recognised
separately 3.0 - 3.0 3.1 - 3.1
============================= ========== ====== ====== ========== ====== =====
Closing fair
value of investment
property 918.6 6.7 925.3 641.9 14.8 656.7
============================= ========== ====== ====== ========== ====== =====
2015 2014
GBPm GBPm
============================================ ===== =====
Market value of investment property
as estimated by valuer 908.3 631.6
Add IPUC 6.7 14.8
Add pharmacy lease premiums 7.3 7.2
Add finance lease obligations recognised
separately 3.0 3.1
============================================ ===== =====
Fair value for financial reporting purposes 925.3 656.7
============================================ ===== =====
Investment property held for sale - 2.0
Vacant property held for sale 0.6 0.1
Land held for sale 4.8 9.5
============================================ ===== =====
Total property assets held for sale 5.4 11.6
============================================ ===== =====
Total property assets 930.7 668.3
============================================ ===== =====
Three property investments and eight land sites are held as
available for sale (2014: two property investments and 10 land
sites).
Fair value hierarchy
The fair value measurement hierarchy for all investment property
and investment property under construction as at 31 March 2015 was
Level 3 - Significant unobservable inputs (2014: Level 3). There
were no transfers between Levels 1, 2 or 3 during the year.
Descriptions and definitions relating to valuation techniques
and key unobservable inputs made in determining fair values are as
follows:
Valuation techniques: market comparable method
Under the market comparable method (or market comparable
approach), a property's fair value is estimated based on comparable
transactions.
Unobservable inputs
These include: estimated rental value ("ERV") based on market
conditions prevailing at the valuation date; estimated average
increase in rent based on both market estimations and contractual
situations; equivalent yield (defined as the weighted average of
the net initial yield and reversionary yield); and the physical
condition of the property determined by inspections on a rotational
basis.
8. Cash, cash equivalents and restricted cash
2015 2014
GBPm GBPm
============================= ===== =====
Cash held in current account 65.3 27.6
Restricted cash 1.2 11.0
============================= ===== =====
66.5 38.6
============================= ===== =====
Restricted cash arises where there are interest payment
guarantees, cash is ring-fenced for committed property development
expenditure, which is released to pay contractors' invoices
directly, or under the terms of security arrangements under the
Group's banking facilities or its bond.
9. Trade and other receivables
2015 2014
GBPm GBPm
=============================== ===== =====
Trade receivables 5.6 3.4
Prepayments and accrued income 1.1 1.4
Other debtors 1.6 0.7
=============================== ===== =====
8.3 5.5
=============================== ===== =====
Trade and other receivables disclosed above are classified as
loans and receivables and are therefore measured at amortised
cost.
The Group's principal customers are invoiced and pay quarterly
in advance, usually on the English quarter days. Other debtors are
generally on 30-60 days' terms. No bad debt provision was required
during the year (2014: GBPnil).
As at 31 March 2015 and 31 March 2014, the analysis of trade
debtors that were past due but not impaired is as follows:
Past due but not impaired
===============================
Neither
past
due
nor >30 >60 >90 >120
Total impaired days days days days
GBPm GBPm GBPm GBPm GBPm GBPm
===== ===== ========= ======= ====== ====== ======
2015 5.6 5.0 0.4 - 0.2 -
2014 3.4 2.8 0.1 - 0.1 0.4
===== ===== ========= ======= ====== ====== ======
The bulk of the Group's income derives from the NHS or is
reimbursed by the NHS, hence the risk of default is minimal.
The amount due over 120 days related to one property for which
there was a legal dispute to clarify the terms of the lease.
10. Trade and other payables
2015 2014
GBPm GBPm
================================== ===== =====
Trade creditors 2.5 1.6
Other creditors and accruals 13.5 11.7
VAT creditor 2.9 1.4
Payments due under finance leases - 0.1
================================== ===== =====
18.9 14.8
================================== ===== =====
Finance lease arrangements are in respect of investment property
held by the Group on leasehold property. The amounts due after more
than one year, which total GBP3.0 million (2014: GBP3.0 million),
have been disclosed in non-current liabilities on the consolidated
balance sheet.
The fair value of the Group's lease obligations is approximately
equal to their carrying value.
11. Deferred revenue
2015 2014
GBPm GBPm
============================================== ===== =====
Arising from rental received in advance 12.3 9.5
Arising from pharmacy lease premiums received
in advance 7.3 7.2
============================================== ===== =====
19.6 16.7
============================================== ===== =====
Current 12.7 9.9
Non-current 6.9 6.8
============================================== ===== =====
19.6 16.7
============================================== ===== =====
12. Borrowings
2015 2014
GBPm GBPm
==================================================== ====== =====
At 1 April 450.3 392.1
Amount issued or drawn down in year - 9.2
Amount repaid in year (64.1) (5.1)
Assumed with acquisition of properties/subsidiaries 135.3 53.7
Amortisation of loan fair value adjustments (0.3) (0.1)
Cash settlement of loan fair value adjustments (7.8) -
Loan issue costs (0.5) -
Amortisation of loan issue costs 0.6 0.5
==================================================== ====== =====
At 31 March 513.5 450.3
==================================================== ====== =====
Due within one year 8.0 5.9
Due after more than one year 505.5 444.4
==================================================== ====== =====
At 31 March 513.5 450.3
==================================================== ====== =====
The Group has the following bank facilities:
1. 10-year senior secured bond for GBP110 million at a fixed
interest rate of 4.75% maturing in December 2021. The secured bond
carries a loan to value covenant of 75% (70% at the point of
substitution of an investment property or cash) and an interest
cover requirement of 1.15 times (1.5 times at the point of
substitution).
2. Loans from Aviva with an aggregate balance of GBP406.6
million at 31 March 2015 (2014: GBP284.5 million), including
GBP127.6 million of loans following the various acquisitions during
the year. The Aviva loans are partially amortised by way of
quarterly instalments and partially repaid by way of bullet
repayments falling due between 2021 and 2044 with a weighted
average term of 13 years to maturity; GBP8.0 million is due within
a year. These loans are secured by way of charges over specific
medical centre investment properties with cross-collateralisation
between the loans and security. The loans are subject to fixed
all-in interest rates ranging between 4.11% and 6.66%, and a
weighted average of 5.43% and do not have loan to value covenants.
The loans carry a debt service cover covenant of 1.05 times,
calculated across all loans and secured properties.
The principal amount of the debt assumed with the various
acquisitions during the year was GBP128.8 million. The debt has
been recorded on the balance sheet at GBP135.3 million, which
represents the fair value as determined by the Group at the point
of acquisition. In December 2014, an amount equal to the
unamortised fair value provision of GBP7.8 million was paid to
Aviva to reset the interest rate on all mortgages assumed with the
acquisitions completed in the 2014 and 2015 financial years. The
interest rate on loans with principal outstanding of GBP177.5
million was reset, with the weighted average rate on these loans
reducing from 5.54% to 5.12%.
3. Five-year club revolving credit facility with RBS and
Barclays for GBP30.0 million at an initial margin of 1.85% above
LIBOR, expiry in May 2019. The facility reduces to GBP27.5 million
and GBP25.0 million in years four and five respectively, with the
loan to value covenant also reducing from 65% to 60% in these
years. The facility is also subject to a historical interest cover
requirement of at least 1.75% and a weighted average lease length
of nine years. The margin increases to 2.2% where amounts are drawn
and the loan to value ratio is in excess of 60%. The facility
attracts a non-utilisation fee equal to 40% of the applicable
margin. The facility was undrawn at 31 March 2015.
As at 31 March 2014, the Group had drawn GBP57.4 million under
an investment facility from Santander. This loan had an interest
rate of 1.95% above LIBOR, with an interest rate swap taken out on
GBP50.0 million at 2.575% to hedge against investments in LIBOR.
The debt was repaid in full on 4 November 2014 along with the
associated swap liability.
The Group has been in compliance with all financial covenants on
all of the above loans as applicable throughout the year.
13. Share capital
Share Share
Number capital Number capital
of shares 2015 of shares 2014
2015 GBPm 2014 GBPm
======================= ============= ======== =========== ========
Ordinary Shares issued
and fully paid
======================= ============= ======== =========== ========
At 1 April 529,548,924 53.0 529,548,924 53.0
Issued 13 June 2014 44,264,196 4.4 - -
Issued 15 October 2014 414,252,873 41.4 - -
Issued 6 November 2014 18,834,148 1.9 - -
======================= ============= ======== =========== ========
At 31 March 1,006,900,141 100.7 529,548,924 53.0
Own shares held (3,911,551) (1.8) (4,064,885) (1.9)
======================= ============= ======== =========== ========
Total share capital 1,002,988,590 98.9 525,484,039 51.1
======================= ============= ======== =========== ========
On 13 June 2014, 44,264,196 Ordinary Shares were issued as part
consideration for the acquisition of the MP Realty portfolio. Based
on the closing share price on 12 June 2014 of 42.75 pence per
Ordinary Share the shares were valued at GBP18.9 million and this
has been allocated accordingly between share capital (GBP4.4
million) and share premium (GBP14.5 million). Issue costs totalling
GBP0.2 million were incurred and have been allocated against share
premium.
On 15 October 2014, 414,252,873 Ordinary Shares were issued by
way of a Firm Placing, Placing and Open Offer and Offer for
Subscription at a price of 43.5 pence per Ordinary Share. Gross
proceeds to the Company were GBP180.2 million, which has been
allocated accordingly between share capital (GBP41.4 million) and
share premium (GBP138.8 million). Issue costs totalling GBP5.8
million were incurred and have been allocated against share
premium.
On 6 November 2014, 18,834,148 Ordinary Shares were issued as
part consideration for the acquisition of the Metro portfolio.
Based on a closing share price on 5 November 2014 of 50 pence per
Ordinary Share the shares were valued at GBP9.4 million and this
has been allocated accordingly between share capital (GBP1.9
million) and share premium (GBP7.5 million). No issue costs were
incurred.
On 28 January 2015, a scheme of arrangement proposed by the
Group under Part VIII of the Companies (Guernsey) Law, 2008, as
sanctioned by the Royal Court of Guernsey became effective
resulting in Assura plc replacing Assura Group Limited as the top
company in the Group. The scheme was implemented through all
shareholders at 27 January 2015 exchanging shares on a one-for-one
basis. The newly issued shares in Assura plc were admitted to
trading on the London Stock Exchange at 8.00am on 28 January 2015.
The share capital of Assura plc is 1,006,900,141. The accounting
for group reorganisations is not within the scope of IFRS 3 and
accordingly, as required under IAS 8, the Company has referred to
current UK GAAP for suitable guidance. This capital restructuring
has been accounted for under merger accounting principles meaning
the consolidated accounts are presented as if the Group had always
been constructed this way.
Movements in the above table prior to 28 January 2015 relate to
Assura Group Limited, with all subsequent movements relating to
Assura plc.
Assura plc was incorporated on 10 December 2014 with total share
capital of GBP50,000, being two Ordinary Shares of 10 pence and
499,998 redeemable preference shares of 10 pence. These shares were
redeemed and cancelled following the scheme of arrangement.
Own shares held comprise shares held by the Employee Benefit
Trust.
14. Dividends paid on Ordinary Shares
Number
Pence of Ordinary 2015 2014
Payment date per share Shares GBPm GBPm
---------------- ---------- ------------- ----- -----
21 January 2015 0.5 1,006,900,141 5.0 -
5 November 2014 0.45 988,065,993 4.4 -
23 July 2014 0.45 573,813,120 2.6 -
23 April 2014 0.45 529,548,924 2.4 -
22 January 2014 0.45 529,548,924 - 2.4
23 October 2013 0.3025 529,548,924 - 1.6
24 July 2013 0.3025 529,548,924 - 1.6
24 April 2013 0.3025 529,548,924 - 1.6
================ ========== ============= ===== =====
14.4 7.2
================ ========== ============= ===== =====
A dividend of 0.5 pence per share was paid to shareholders on 30
April 2015.
A quarterly dividend for 2015/16 of 0.5 pence per share is
currently planned to be paid on 22 July 2015 to shareholders on the
share register at 10 July 2015.
The dividends paid do not include any PIDs as defined under the
REIT regime.
All dividends up to and including 21 January 2015 were paid by
Assura Group Limited. Following the scheme of arrangement, all
dividends from 30 April 2015 will be paid by Assura plc.
15. Commitments
At the year end the Group had five (2014: five) developments
on-site with a contracted total expenditure of GBP22.2 million
(2014: GBP21.5 million) of which GBP6.1 million (2014: GBP12.5
million) had been expended.
16. Post balance sheet events
Subsequent to the year end, a subsidiary of the Group has
extended the existing revolving credit facility from GBP30 million
to GBP60 million with the potential to extend further to GBP90
million.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR MMGZKRGDGKZM
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