TIDMAGR
RNS Number : 5312Y
Assura PLC
18 May 2016
Assura plc
Another strong year
18 May 2016
Assura plc ("Assura"), the leading primary care property
investor and developer, announces its preliminary results for the
year ended 31 March 2016
Continued strong growth
-- 78.0% increase in underlying profit before tax to GBP28.3 million (2015: GBP15.9 million)
-- 19.9% growth in investment property, to over GBP1.1 billion (2015: GBP0.9 billion)
-- 3.9% growth in diluted EPRA NAV per share to 45.8 pence (2015: 44.0 pence)
-- 14.7% increase in rent roll to GBP63.8 million (2015: GBP55.6 million)
-- GBP28.8 million profit before tax (2015: GBP36.6 million)
after GBP34.1 million debt early repayment costs
Assura transformed
-- GBP300 million equity raise in October 2015, net of expenses,
to fund acquisitions and lower group gearing
-- GBP134 million pipeline of further acquisitions and
developments following significant conversion of the pipeline into
completed acquisitions
-- LTV of 30% emphasises balance sheet strength, providing scope
to grow portfolio further within the Company's target gearing
range
-- GBP181 million repayment of Aviva loans
-- GBP200 million new unsecured revolving credit facility agreed
Sector leader in a market that is in critical need of
investment
-- Growing consensus that primary care must play a bigger role in health provision
-- Significant historic underinvestment in primary care space,
many GP premises not currently fit for purpose
-- The NHS's "General Practice Forward View", announced in April
2016, further emphasises need for appropriate primary care
infrastructure and premises
Well positioned to help alleviate the pressures on primary care
infrastructure
-- Assura is an established brand and partner of choice to GPs
-- Strong balance sheet and capacity to fund more investment
-- Efficient, internally managed operating model, with in-house development capability
-- Group operates in fragmented market: Portfolio of 321 medical
centres compares to a total UK market of close to 9,000
buildings
Further increase in fully covered dividend
-- 11% increase in dividend per share paid in the year
-- Admitted to FTSE 250
Simon Laffin, Executive Chairman, said:
"The NHS is under great strain at the moment, but there is a
growing consensus that more and better primary care is one of the
answers to this. We need more GPs, to use them more effectively and
with more diagnostic and specialist medical staff around them. We
know that patients prefer being cared for by their local GPs and
that this is much cheaper for the NHS than those patients going
into A&E. Larger, better quality premises are crucial to house
these enhanced services. Fortunately the UK has a unique and
efficient funding model in the primary care property sector that
can deliver substantial additional private capital investment to
support this, whilst allowing the Government to control costs.
Assura has a strong balance sheet, the in-house expertise, and
excellent relationships with both GPs and the wider health service.
We stand ready to help the Government deliver a stronger vibrant
primary care service."
For further information, please contact:
Assura plc: Tel: 01925
Simon Laffin 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 18 May
2016 at 11am London time, with a webcast available from our website
or via the following link:
http://webcasting.brrmedia.co.uk/broadcast/570f990ac95e0de723381aaf
Alternatively to listen to the audio of the presentation live,
dial:
0208 703 5376
Chairman's statement
DEAR SHAREHOLDER
It has been another busy and successful year for Assura, and a
year in which we have continued the Group's strong growth. We have
significantly grown our property portfolio this year both through
acquisitions and new developments. Thanks to the continued support
of our shareholders, we were able to raise GBP300 million, net of
expenses, in an equity raise this year to fund our investment
programme. We are well advanced in implementing our plan to use
these proceeds. Since the fund raise, we have made property
additions of GBP79 million, reduced net debt by GBP193 million and
we have a pipeline of further property acquisitions and
developments of GBP134 million. Our gearing is now at 30%, well
within our reduced target range. We are now the UK's largest
developer and owner-manager of primary healthcare property, and
entered the FTSE 250 in December last year and have a market cap of
GBP950 million.
As we announced in March this year, Graham Roberts, our Chief
Executive since 2012, is currently on a leave of absence, receiving
treatment for cancer and so, for the time being, I have assumed the
role of Executive Chairman. This will ensure that we continue to
exercise our agreed strategy and drive superior risk adjusted
returns for our shareholders.
A key part of this strategy is our unique proposition of
offering all of the elements of the property service for GPs, which
enables us to offer GPs a long-term partner approach throughout the
lifecycle of a medical centre. Our ability to "develop, invest and
manage" gives us a crucial advantage when securing new development
opportunities and other asset management initiatives. Moreover, it
provides a highly scalable model that means as we grow, the
benefits of scale accrue to shareholders, and drive our progressive
dividend policy.
The efficacy of this model has been illustrated in the year as
we have increased our rent roll by 15% to GBP63.8 million, our
underlying profit by 78% to GBP28.3 million and our dividends paid
during the year by 89% to GBP27.2 million.
Market developments
We continued to engage widely with the NHS and the Government
throughout the course of the year to make the case for further
investment in primary care infrastructure, primarily through the
British Property Federation's Healthcare Committee. The recognition
of the importance of this investment by the NHS can be seen in its
recent publication of the "General Practice Forward View", which
announced increased funding for "staff, technology and
premises".
Everyone accepts that the increasing health needs of a growing
and ageing population are putting a strain on the public purse.
There is a shortage of GPs, and secondary health (i.e. hospital)
resources are both expensive and overstretched. According to a
recent report from the think tank Reform, a GP appointment each
costs GBP21. If that patient chooses instead to go to a hospital
A&E department, that visit costs almost six times more, an
average of GBP124. Patients prefer to access health treatment from
their primary practitioner and the primary care treatment costs the
NHS significantly less as well. The Government needs to take a
long-term view of health service provision in the UK. This would
require recruiting more GPs, and funding modern flexible properties
for those GPs to work in. Scarce GP resources can be leveraged by
providing additional co-located services across a wide range of
health and social care professionals, such as diagnostics,
self-help and outpatient services which improve the care pathway.
This will help to reduce the pressures and financial burdens
elsewhere in the NHS and improve the patient experience. The
benefits of this model are explicitly recognised in the General
Practice Forward View report. Replacing some expensive secondary
care with enhanced primary care would save the NHS large sums of
money, and improve the patient experience.
It is clear that excellent primary care requires modern
buildings and fit-out. Doctors need hygienic, warm and sound-proof
facilities, as demanded by the Care Quality Commission. About half
of all GP surgeries cannot provide this in their current premises,
and so require redevelopment. Such redevelopment gives Clinical
Commissioning Groups the opportunity to bring a variety of
community care services under one roof and so offer a more complete
service. Property management is an essential part of the NHS
provision for the future.
The UK has a unique model for primary care property. All new
developments have to be approved by the NHS. Completed properties
are then valued and rents agreed with the District Valuer, an HMRC
employee. The Government therefore can ensure value for money from
any private investment. In turn, the NHS commissioning body offers
developers a long (typically 21 or 25 year) contract, which is set
at a rent that takes account of both the lease length and the
strength of the ultimate Government backstop.
The result is that GPs, and ultimately the NHS, pay a very
competitive rent that is lower than it otherwise would be. The
system enables the NHS to call on private money for new
developments, avoiding any need for Government capital investment.
It is a highly efficient and cost effective model for the private
sector funding of state medical 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 public company.
We have held 119 meetings with investors during the year and I am
delighted to welcome a number of new shareholders onto our
register. 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 60%. We successfully met the criteria for
inclusion in the FTSE 250 index in December 2015 and this provides
further exposure for the Company to an enlarged group of
investors.
Dividends
We are committed to providing our shareholders with superior
risk adjusted returns and a key component of this return is a
growing, covered dividend. In January 2016 we increased our
quarterly dividend payment by 10% to 0.55 pence per share or 2.2
pence per share on an annualised basis. We also took the
opportunity in January to provide our shareholders with the
flexibility of receiving their dividends in shares through a scrip
alternative share scheme. This has been taken up by 13% of our
shareholders, which underlines the value of the scheme.
Our people and the Board
We have 34 people in Assura and, on behalf of the Board, I would
like to thank them all for their hard work, dedication and
contribution to the success of the business over such a busy year
for the Company.
The future
Over the past four years we have invested GBP500 million capital
and GBP3.3 million in the maintenance of the UK's primary care
estate. Thanks to the support of our shareholders, we have built
the strongest balance sheet in the sector and we plan to continue
deploying this capital in UK primary care. Our in-house management
team intends to continue delivering excellent customer service and
operational excellence for the nation's GPs, while maximising the
value of our portfolio through asset management initiatives.
Rent review increases have been relatively low in the last few
years, due to both low general inflation and the scarcity of
comparative new developments. However, yields have strengthened
somewhat over that period, reflecting the long-term attractiveness
of the sector to investors. The Board believes that when the NHS
steps up its approvals for new developments, as surely it must,
rental growth will accelerate. The overwhelming need in this
country for improved primary care premises underpins the future of
Assura.
Simon Laffin
Executive Chairman
17 May 2016
Strategic review
Building scale
Assura continues to grow profitably. In the year we completed
GBP141 million of property additions, which was the largest
contributor to the GBP184 million increase in investment property
in the year. This has enabled our rent roll to grow by 15% to
GBP63.8 million. In turn, this has been passed on to a 78% growth
in underlying profit to GBP28.3 million and 89% growth in dividends
paid in the year to GBP27.2 million.
The attractiveness of our sector is becoming more widely
understood and as such Assura's portfolio expansion has been
achieved against a backdrop of an increasingly competitive market.
Our strong brand recognition, substantial experience in the sector
and our reputation in the GP community have allowed us to
successfully secure these opportunities. The primary care property
market remains highly fragmented. Our portfolio of 321 medical
centres compares with a total UK market of close to 9,000
buildings. A large number of these buildings would not meet our
exacting investment criteria, although there remains a significant
number of potential individual asset acquisition opportunities.
This year, our growth has been achieved predominantly through
single asset purchases and without the benefit of large scale
portfolio acquisitions as in prior years. This has been achieved
through targeted marketing and promotional activities that focused
on those medical centres that represent the key premises in their
local health economy.
Driving investment in primary care property
The equity fund raise of GBP300 million, net of expenses, in
October 2015 was key to delivering this substantial investment. We
are grateful to our shareholders for their support and the level of
investor demand enabled us to secure an increase in our equity base
of 60%.
Since the fund raise we have been focused on the stated twin
objectives of making further additions to our property portfolio
and reducing our borrowings. Since October we have secured further
property additions of GBP79 million at a yield on cost of 5.1% and
a weighted average unexpired lease term of 20.3 years. In addition
to the completed transactions we also have a further pipeline of
individual development opportunities and acquisitions of more than
GBP134 million.
Our second key objective was to reduce our borrowings and we
revised our target loan to value range to between 40% and 50%.
Since we closed the year at 30%, this provides us with the
financial flexibility to take advantage of future acquisition and
development opportunities. We plan to maintain this target range
over the medium term.
In November 2015 we negotiated the redemption of GBP181 million
of long-term, fixed rate loans with Aviva, with an average interest
rate of 5.4%. This was achieved with associated break costs of
GBP34 million, which were significantly below our initial estimated
costs of GBP40 million. At the year end we had borrowings of GBP373
million with an average interest rate of 4.8% and a weighted
maturity of 10.2 years.
One of our stated intentions from the fund raise was to enable
improvements in both terms and pricing for future funding. The
increased scale and balance sheet strength of the business makes us
more attractive to capital markets and to a broader range of both
bank and non-bank funders.
After the year end, we secured a new GBP200 million unsecured
revolving credit facility with a club of four banks. This unsecured
facility replaces our existing GBP120 million facility and will
provide us with the maximum operational flexibility together with a
significant saving on transaction costs in financing properties.
This has been achieved at an initial margin of 150 basis points, at
a rate of 2.09%, significantly below that of the Aviva debt that it
partially replaces.
Delivering long-term outperformance in property returns
The enlarged property portfolio has delivered a Total Property
Return of 8.9%. Assura is a constituent of the IPD All Healthcare
Index and over the last five years we have delivered a return of
8.8% against the index of 6.9%. 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.
Our 321 medical centres have a rent roll of GBP63.8 million with
a geographically diverse portfolio serving in excess of 3 million
patients. Our investment approach is to identify those assets we
believe are best in class in their local catchment areas. By
acquiring those assets that provide a broad range of services to
their local communities, we believe these will provide greater
prospects for lease renewal on expiry and so drive greater property
returns over the long-term.
A good example of this approach can be seen in our acquisition
of Frome Medical Practice. This centre serves 30,000 patients and
contains 61 consulting rooms, an education suite and fully
furnished operating theatre. This infrastructure supports a broad
range of services including pharmacy, opticians and mental health
services in addition to the GP practices.
For key properties, we are not afraid to acquire shorter leases,
and use our property skills to redevelop or enhance the premises,
whilst seeking to regear the lease to a longer period.
Rental income
The key driver of our property return is the income from our
long-term leases, and in the year, rental growth was 1.2% from
settled rent reviews, ahead of CPI inflation at 0.6%. Most of our
rent reviews are on an open market basis, set by reference to
rental awards agreed with the District Valuer on new schemes. This
means that they are influenced by land and construction cost
inflation over the medium-term. Over recent years there has been
significant inflation in these costs, but this increased cost is
not yet fully reflected in our passing rents as the slowdown in new
schemes has reduced the evidence of that inflation.
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.
Capital growth
The balance of the return is generated from capital growth,
which has seen a like-for-like valuation growth of 4.8% in the past
year. This increase has primarily come from a movement in yields
with our net equivalent yield moving by 25 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 330 basis points.
We also add value through developing properties ourselves rather
than relying solely on third party developers and managers. We
completed one development during the year at a total development
cost of GBP3.8 million. This has added GBP0.3 million to our annual
rent roll. 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. 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.
The level of development expenditure in the year is
significantly below the levels we would normally expect. This
reflects the reduced level of developments across the sector,
although we have sourced three new developments under forward
funding agreements bringing the value of completions during the
year to GBP16.4 million. We remain positive that the substantial
requirement for investment in primary care infrastructure will lead
to an increase in developments in the future.
Maximising operational efficiency
The GBP141 million of property additions have been incorporated
by our in-house property management team whilst maintaining our
continued focus on tenant satisfaction. In our annual tenant
satisfaction survey over 90% of our tenants said they would
recommend us as potential landlords to other GPs. Our GPs remain
our greatest source of referrals for new business. We remain
focused on understanding their evolving needs and demands, so we
can be at the forefront of the significant investment required in
improving premises in the future.
Our team of portfolio and investment managers has 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 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 78% growth in underlying profit to GBP28.3 million. This
has been achieved from 20% growth in our investment property value
and a reduction in our EPRA Cost Ratio from 17.7% to 16.5%.
The overall impact of all of these factors has enabled us to
increase our dividends paid by 89% from GBP14.4 million to GBP27.2
million.
Developing our people
One of our core strategic priorities is enhancing our business
culture and we are committed to the development and training of our
people. We have a small head office team of 34 people and crucial
to our success is developing the skills of our team. We have eight
people currently undergoing formal training. We have strengthened
the team in the year through the recruitment of Orla Ball as
Company Secretary and In-House Counsel.
Business review
Portfolio as at 31 March 2016: GBP1,088 million (2015: GBP908
million)
Our business is based on our investment portfolio of 321
properties. This has a passing rent roll of GBP63.8 million (2015:
GBP55.6 million), 87% of which is underpinned by the NHS. The WAULT
is 14 years and 87% of the rent roll will still be contracted in
2026.
At 31 March 2016 our portfolio of completed investment
properties was valued at a total of GBP1,088 million (2015: GBP908
million), which produced a net initial yield ("NIY") of 5.29%
(2015: 5.56%). 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 5.52% (2015: 5.77%).
Adjusting this Royal Institution of Chartered Surveyors standard
measure to reflect the advanced payment of rents, the true
equivalent yield is 5.72% (2015: 5.98%).
Our EPRA NIY, based on our passing rent roll and latest annual
direct property costs, was 5.23% (2015: 5.43%).
2016 2015
GBPm GBPm
Net rental income 58.4 48.2
Valuation movement 36.4 21.4
Total Property Return 94.8 69.6
Expressed as a percentage of opening investment property plus
additions, Total Property Return was 8.9% compared with 7.8% in
2015.
Our annualised Total Return over the last five years as
calculated by the IPD was 8.8% compared with the IPD All Healthcare
Benchmark of 6.9% over the same period.
The valuation gain in the year of GBP36.4 million represents a
4.8% uplift on a like-for-like basis 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 2016.
Investment and development activity
Despite the recent hiatus in NHS development approvals we have
invested substantially during the year, with this expenditure split
between investments in completed properties, developments, forward
funding projects, extensions and fit-out costs enabling vacant
space to be let as follows:
2016
GBPm
Acquisition of completed
medical centres 124.5
Developments/forward funding
arrangements 17.7
Like-for-like portfolio
(improvements) 2.7
Total capital expenditure 144.9
The bulk of the growth in our investment portfolio has come from
the acquisition of 52 properties, seeing us invest GBP124.5 million
during the year. The two largest acquisitions were the Fleetwood
Health & Wellbeing Centre for GBP16.7 million and the Frome
Medical Practice for GBP15.5 million.
Despite the continued delay in NHS approval of new developments,
we have completed four developments during the year (three under
forward funding agreements) with a total development cost of
GBP15.5 million. This has added GBP0.9 million to our annual rent
roll and generated a 5.7% yield on cost.
We recorded an unrealised revaluation surplus of GBP0.7 million
during the year in respect of investment property under
construction (2015: deficit of GBP0.9 million).
As at 31 March 2016, we had two developments on site under
forward funding agreements, with a total committed investment value
of GBP13.5 million, and a further five which we would hope to be on
site shortly (estimated cost of GBP17.1 million).
Live developments
Development Costs
Estimated completion date % NHS costs to date Size
========================= ===== =========== ======== ====
Kidderminster August 16 86% GBP6.6m GBP4.2m 2,203 sqm
============= =========== === ======= ======= =========
Bewdley November 16 90% GBP6.9m GBP4.3m 2,014 sqm
============= =========== === ======= ======= =========
Portfolio management
We have continued to deliver rental growth and have successfully
concluded 133 rent reviews during the year to generate a weighted
average annual rent increase of 1.20% (2015: 1.27%) on those
properties. Our portfolio benefits from a 26% weighting in fixed
and RPI uplifts which generated an average uplift of 1.93% during
the year. The majority of our portfolio is subject to open market
reviews and these have generated an average uplift of 0.69% 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 portfolio
managers who are in regular communication with our customers and we
monitor progress through regular customer satisfaction surveys.
During the year we have successfully secured 13 new tenancies
with an annual rent roll of GBP0.5 million covering 4,430 square
metres. In addition we have significantly extended the lease on
eight properties.
Our EPRA Vacancy Rate was 3.0% (2015: 3.2%) which has decreased
during the year reflecting the team's success with letting
initiatives during the year. Our vacancy rate is extremely low due
to the long nature of our leases and only developing buildings that
are substantially pre-let. All of our vacant space, where not
reserved as potential expansion space for the GP tenants, relates
to areas of buildings for complementary services and letting this
space remains a key focus for the current year.
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 0.60% (2015: 0.72%) and
administrative costs stood at GBP6.1 million (2015: GBP5.7
million).
We also analyse cost performance by reference to our EPRA Cost
Ratios (including and excluding direct vacancy costs) which were
16.5% and 16.0% respectively (2015: 17.7% and 16.3%). This is now
our key KPI.
Financing
From a financing perspective, the highlight of the year was the
successful equity issuance in October 2015, which raised proceeds
of GBP300 million, net of expenses.
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
attractive interest rates which remain at historically low
levels.
In November 2015 we repaid GBP181 million of long-term debt held
by Aviva Commercial Finance along with the associated early
repayment costs of GBP34.1 million.
Further to this we announce today that the Group has signed a
new GBP200 million revolving credit facility on an unsecured basis
to replace the existing facility. The initial margin is 150 basis
points and the facility increases operational flexibility and
reduces transaction costs associated with financing properties.
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 2016, we had undrawn facilities and cash
of GBP118.7 million.
Financing statistics 2016 2015
Net debt GBP327.9m GBP450.0m
Weighted average debt
maturity 10.2 years 11.9 years
Weighted average interest
rate 4.84% 5.28%
% of debt at fixed/capped
rates 88% 100%
Interest cover(1) 218% 160%
Loan to value 30% 48%
(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 30%, which is lower
than our target range of 40%-50% and will increase as we invest in
our pipeline in the short term. 88% of the debt facilities are
fixed with a weighted average debt maturity of 10.2 years compared
with a WAULT of 14.0 years, which highlights the security of the
cash flows of the business.
Details of the facilities and their covenants are set out in
Note 12.
Net finance costs in the year amounted to GBP24.0 million (2015:
GBP26.6 million) before early repayment costs.
Underlying profit
2016 2015)
GBPm GBPm
Net rental income 58.4 48.2)
Administrative expenses (6.1) (5.7)
Net finance costs (24.0) (26.6)
Underlying profit 28.3 15.9)
The movement in underlying profit can be summarised as
follows:
GBPm
Year ended 31 March
2015 15.9
Net rental income 10.2
Administrative expenses (0.4)
Net finance costs 2.6
Year ended 31 March
2016 28.3
Underlying profit has grown 78% to GBP28.3 million in the year
to 31 March 2016 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") on profit for the year was
2.2 pence (2015: 4.9 pence).
EPRA EPS, which excludes the net impact of valuation movements
and gains on disposal, was 2.0 pence (2015: 2.1 pence).
Underlying profit per share omits accounting adjustments and
certain exceptional items and has increased to 2.2 pence (2015: 2.1
pence). The key variable is the cost of the long-term incentive
plan which vested in full during the year, which reflected the
strong performance of the business over the past four years.
Based on calculations completed in accordance with IAS 33,
share-based payment schemes are currently expected to be dilutive
to EPS, with 11.2 million new shares expected to be issued based on
the average share price for the three months to 31 March 2016. The
following illustration is an extraction. Further details to the
accounts are provided in Note 5.
EPS measure Basic Diluted
Profit for year 2.2p 2.1p
EPRA 2.0p 2.0p
Underlying 2.2p 2.2p
Dividends
Total dividends paid in the year to 31 March 2016 were GBP27.2
million or 2.05 pence per share (2015: 1.85 pence per share). In
January 2016 we introduced a scrip dividend alternative for
shareholders, an option that was exercised by 9.9% of shareholders
at the first opportunity and 13.3% for the April 2016 dividend.
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 our cash flows over the period:
2016 2015
GBPm GBPm
Opening cash 66.5 38.6
Net cash flow from operations 22.9 16.9
Dividends paid (26.3) (14.4)
Investment:
Property and business
acquisitions (122.5) (64.3)
Development expenditure (17.7) (14.0)
Sale of properties 1.5 4.2
Other (0.2) 0.1
Financing:
Net proceeds from equity
issuance 299.1 173.5
Net borrowings movement (179.0) (74.1)
Closing cash 44.3 66.5
Net cash flow from operations differs from underlying profit due
to movements in working capital balances.
Property additions during the year were GBP127.2 million,
although the cash outflow was only GBP122.5 million after taking
into account shares issued as consideration (GBP4.2 million), and
net working capital assumed (GBP0.5 million).
Net assets
EPRA NAV movement
GBPm Pence per share
EPRA NAV at 31 March
2015 452.4 44.9
Underlying profit 28.3 2.2
Capital (revaluations
and capital gains) 36.5 2.8
Dividends (27.2) (2.1)
Equity issuance 305.7 0.6
Early repayment costs (34.1) (2.6)
Other (7.1) 0.3
EPRA NAV at 31 March
2016 754.5 46.1
Our Total Accounting Return per share for the year ended 31
March 2016 is 7.2% of which 2.05 pence per share (4.6%) has been
distributed to shareholders and 1.2 pence per share (2.7%) is the
movement on EPRA NAV including an element of dilution associated
with the equity issuance in October 2015.
The equity issuance saw the Company raise proceeds of GBP300
million, net of issuance expenses. In addition, the Company issued
a total of 7,650,749 shares split between three corporate
acquisitions over the course of the year. These shares issued as
part consideration were priced based on the market value of the
Company shares at the time of completion.
Portfolio analysis by capital value
Number of Total value Total value
properties GBPm %
<GBP1m 60 39.7 4
GBP1-5m 204 515.5 47
GBP5-10m 40 281.4 26
>GBP10m 17 251.4 23
321 1,088.0 100
Portfolio analysis by region
Number of Total value Total value
properties GBPm %
North 126 466.0 43
South 95 309.4 29
Midlands 62 220.9 20
Scotland 19 37.2 3
Wales 19 54.5 5
321 1,088.0 100
Portfolio analysis by tenant covenant
Total Total
rent roll rent roll
GBPm %
GPs 44.1 69
NHS body 11.6 18
Pharmacy 4.8 8
Other 3.3 5
63.8 100
Consolidated income statement
For the year ended 31 March 2016
2016 2015
Capital Capital
and and
Underlying other Total Underlying other Total
Note GBPm GBPm GBPm GBPm GBPm GBPm
====================================================== ==== ========== ======== ====== ========== ======== ======
Continuing operations
Gross rental and
related income 2 61.0 - 61.0 51.1 - 51.1
Property operating
expenses (2.6) - (2.6) (2.9) - (2.9)
====================================================== ==== ========== ======== ====== ========== ======== ======
Net rental income 58.4 - 58.4 48.2 - 48.2
Administrative
expenses (6.1) - (6.1) (5.7) - (5.7)
Revaluation gains 7 - 36.4 36.4 - 21.4 21.4
Gain/(loss) on
sale of property - 0.1 0.1 - (0.1) (0.1)
Share-based payment
charge - (1.9) (1.9) - (0.7) (0.7)
Finance revenue 2 0.2 - 0.2 0.4 - 0.4
Finance costs 3 (24.2) - (24.2) (27.0) - (27.0)
Early repayment
costs - (34.1) (34.1) - - -
Gain on derivative
financial instruments - - - - 0.1 0.1
Profit before taxation 28.3 0.5 28.8 15.9 20.7 36.6
====================================================== ==== ========== ======== ====== ========== ======== ======
Taxation 4 (0.9) 0.6
====================================================== ==== ========== ======== ====== ========== ======== ======
Profit for the
year attributable
to equity holders
of the parent 27.9 37.2
====================================================== ==== ========== ======== ====== ========== ======== ======
Earnings per share
from underlying
profit - basic 5 2.2p 2.1p
on profit for year
- basic 5 2.2p 4.9p
- diluted 5 2.1p 4.7p
====================================================== ==== ========== ======== ====== ========== ======== ======
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 2016
2016 2015
Note GBPm GBPm
================================================================================== ==== ======= =======
Non-current assets
Investment property 7 1,109.4 925.3
Investments 0.4 0.4
Property, plant and equipment 0.2 0.1
Deferred tax asset 0.4 1.3
================================================================================== ==== ======= =======
1,110.4 927.1
================================================================================== ==== ======= =======
Current assets
Cash, cash equivalents and restricted
cash 8 44.3 66.5
Trade and other receivables 9 7.5 8.3
Property assets held for sale 7 1.7 5.4
================================================================================== ==== ======= =======
53.5 80.2
================================================================================== ==== ======= =======
Total assets 1,163.9 1,007.3
================================================================================== ==== ======= =======
Current liabilities
Trade and other payables 10 16.5 18.9
Borrowings 12 4.0 8.0
Deferred revenue 11 14.2 12.7
Provisions 0.3 0.1
================================================================================== ==== ======= =======
35.0 39.7
================================================================================== ==== ======= =======
Non-current liabilities
Borrowings 12 365.2 505.5
Obligations due under finance
leases 10 3.0 3.0
Deferred revenue 11 6.4 6.9
Provisions - 0.3
---------------------------------------------------------------------------------- ---- ------- -------
374.6 515.7
================================================================================== ==== ======= =======
Total liabilities 409.6 555.4
================================================================================== ==== ======= =======
Net assets 754.3 451.9
================================================================================== ==== ======= =======
Capital and reserves
Share capital 163.8 100.7
Own shares held (0.6) (1.8)
Share premium 241.9 -
Merger reserve 231.2 231.2
Reserves 118.0 121.8
================================================================================== ==== ======= =======
Total equity 754.3 451.9
================================================================================== ==== ======= =======
Net asset value per Ordinary Share
- basic 6 46.1p 44.9p
- diluted 6 45.7p 44.0p
Adjusted (EPRA) net asset value
per Ordinary Share - basic 6 46.1p 44.9p
- diluted 6 45.8p 44.0p
================================================================================== ==== ======= =======
The financial statements were approved at a meeting of the Board
of Directors held on 17 May 2016 and signed on its behalf by:
simon laffin Jonathan Murphy
Chairman Finance Director
Consolidated statement of changes in equity
For the year ended 31 March 2016
Own
Share shares Share Merger Total
capital held premium reserve Reserves equity
Note GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------------------- ---- -------- ------- -------- -------- -------- -------
1 April 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 47.7 -- 160.8 -- -- 208.5
Issue costs -- -- (6.7) -- -- (6.7)
Scheme of arrangement -- -- (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
====================================== ==== ======== ======= ======== ======== ======== =======
Profit attributable to equity holders -- -- -- -- 27.9 27.9
======== ======= ======== ======== ======== =======
Total comprehensive income -- -- -- -- 27.9 27.9
Issue of Ordinary Shares 62.5 (0.3) 250.7 -- -- 312.9
Issue costs -- -- (9.5) -- -- (9.5)
Dividends 14 0.2 -- 0.7 -- (27.2) (26.3)
Employee share-based incentives 0.4 1.5 -- -- (4.5) (2.6)
====================================== ==== ======== ======= ======== ======== ======== =======
31 March 2016 163.8 (0.6) 241.9 231.2 118.0 754.3
====================================== ==== ======== ======= ======== ======== ======== =======
Consolidated cash flow statement
For the year ended 31 March 2016
2016 2015
Note GBPm GBPm
===================================== ==== ======= ======
Operating activities
Rent received 62.7 50.8
Interest paid and similar charges (25.9) (26.9)
Fees received 0.8 1.0
Interest received 0.2 0.4
Cash paid to suppliers and employees (14.9) (8.4)
===================================== ==== ======= ======
Net cash inflow from operating
activities 22.9 16.9
===================================== ==== ======= ======
Investing activities
Purchase of investment property (122.5) (64.3)
Development expenditure (17.7) (14.0)
Proceeds from sale of property 1.5 4.2
Expenditure on property, plant
and equipment (0.2) -
Net loans received from associated
companies - 0.1
Net cash outflow from investing
activities (138.9) (74.0)
===================================== ==== ======= ======
Financing activities
Issue of Ordinary Shares 308.6 180.2
Issue costs paid on issuance of
Ordinary Shares (9.5) (6.7)
Dividends paid 14 (26.3) (14.4)
Repayment of loans 12 (188.5) (64.1)
Long-term loans drawdown 12 45.0 -
Early repayment costs 12 (34.1) -
Cash settlement of loan fair value
adjustments - (7.8)
Swap cash settlement - (1.7)
Loan issue costs (1.4) (0.5)
===================================== ==== ======= ======
Net cash inflow from financing
activities 93.8 85.0
===================================== ==== ======= ======
(Decrease)/increase in cash and
cash equivalents (22.2) 27.9
===================================== ==== ======= ======
Opening cash and cash equivalents 66.5 38.6
===================================== ==== ======= ======
Closing cash and cash equivalents 8 44.3 66.5
===================================== ==== ======= ======
Notes to the accounts
For the year ended 31 March 2016
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 2016 and 31 March
2015, 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 2016.
The Preliminary Announcement was approved by the Board of
Directors on 17 May 2016.
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 2016. The pronouncements either
had no material impact on the financial statements or resulted in
changes in presentation and disclosure only:
- Annual improvements 2010-2012 cycle
- Annual improvements 2011-2013 cycle
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 (not yet endorsed in the EU)
- IFRS 15 Revenue from Contracts with Customers (not yet
endorsed in the EU)
- IFRS 16 Leases (not yet endorsed in the EU)
- Clarification of Acceptable Methods of Depreciation and
Amortisation - Amendments to IAS 16 and IAS 38 (1 January 2016)
- Equity Method in Separate Financial Statements - Amendments to
IAS 27 (1 January 2016)
- Disclosure Initiative - Amendments to IAS 1 (1 January
2016)
- Annual improvements 2012 - 2014 cycle
The financial statements are prepared on a going concern basis
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
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, including whether business processes or
employees have been assumed, 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 expected tax payable on any non-REIT taxable
income for the period and is calculated using tax rates that have
been enacted or substantively enacted at the balance sheet date.
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-recurring or
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 Payments has been applied to share options granted.
Segmental information
The Group is run as one business and as such no segmental
analysis is presented for the current or prior year results.
2. Revenue
2016 2015
GBPm GBPm
================================ ===== =====
Rental revenue 60.2 50.1
Other related income 0.8 1.0
================================ ===== =====
Gross rental and related income 61.0 51.1
================================ ===== =====
Finance revenue
Bank and other interest 0.2 0.4
================================ ===== =====
0.2 0.4
================================ ===== =====
Total revenue 61.2 51.5
================================ ===== =====
3. Finance costs
2016 2015
GBPm GBPm
============================================ ===== =====
Interest payable 24.1 27.1
Interest capitalised on developments (0.5) (0.4)
Amortisation of loan issue costs 0.6 0.6
Amortisation of loan fair value adjustments - (0.3)
============================================ ===== =====
24.2 27.0
Early repayment costs (note 12) 34.1 -
Change in fair value of interest rate
swaps - (0.1)
============================================ ===== =====
58.3 26.9
============================================ ===== =====
Interest was capitalised on property developments at 5% (2015:
5%).
4. Taxation
2016 2015
Consolidated income tax GBPm GBPm
===================================== ===== =====
Deferred tax
Relating to origination and reversal
of temporary differences 0.9 (0.6)
===================================== ===== =====
Income tax charge/(credit) reported
in consolidated income statement 0.9 (0.6)
===================================== ===== =====
The differences from the standard rate of tax applied to the
profit before tax may be analysed as follows:
2016 2015
GBPm GBPm
========================================== ===== =====
Profit before taxation 28.8 36.6
UK income tax at rate of 20% (2015:
21%) 5.8 7.7
Effects of:
Non-taxable income (including REIT exempt
income) (6.0) (8.9)
Expenses not deductible for tax purposes 0.6 2.2
Movement in unrecognised deferred tax 0.5 (1.6)
========================================== ===== =====
0.9 (0.6)
========================================== ===== =====
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% (2016:
20%).
The Group tax charge/(credit) 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. The movement in part relates to brought forward losses that
have been utilised during the year, with the remainder representing
a change in the estimated losses that will be utilised in the
future.
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 2016 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 2016.
Further reductions in the main rate of corporation tax have been
substantively enacted; the rate will reduce to 19% from 1 April
2017 and 18% from 1 April 2020. These changes have been reflected
in the calculation of deferred tax.
5. Earnings per Ordinary Share
Adjusted Adjusted
(EPRA) (EPRA)
Earnings earnings Earnings earnings
2016 2016 2015 2015
GBPm GBPm GBPm GBPm
================================ ============= ============= =========== ===========
Profit for the year 27.9 27.9 37.2 37.2
================================ ============= ============= =========== ===========
Early repayment costs 34.1 -
Revaluation gains (36.4) (21.4)
Revaluation of derivative
financial instruments - (0.1)
(Gain)/loss on sale of property (0.1) 0.1
================================ ============= ============= =========== ===========
Adjusted (EPRA) earnings 25.5 15.8
================================ ============= ============= =========== ===========
Weighted average number
of shares in issue - basic 1,300,338,908 1,300,338,908 763,163,756 763,163,756
Potential dilutive impact
of VCP 11,243,261 11,243,261 20,723,772 20,723,772
-------------------------------- ------------- ------------- ----------- -----------
Weighted average number
of shares in issue - diluted 1,311,582,169 1,311,582,169 783,887,528 783,887,528
================================ ============= ============= =========== ===========
Earnings per Ordinary Share
- basic 2.2p 2.0p 4.9p 2.1p
Earnings per Ordinary Share
- diluted 2.1p 2.0p 4.7p 2.0p
============================ ==== ==== ==== ====
Underlying profit per share of 2.2 pence (2015: 2.1 pence) has
been calculated as underlying profit for the year as presented on
the income statement of GBP28.3 million (2015: GBP15.9 million)
divided by the weighted average number of shares in issue of
1,300,338,908 (2015: 763,163,756). Based on the diluted weighted
average shares, underlying profit per share is 2.2 pence (2015: 2.0
pence).
The current estimated number of shares over which nil-cost
options may be issued to participants is 12.5 million (2015: 24.6
million). After allowing for shares held by the Employee Benefit
Trust, this would amount to a potential issuance of a further 11.2
million (2015: 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
2016 2016 2015 2015
GBPm GBPm GBPm GBPm
========================================== ============= ============= ============= =============
Net assets 754.3 754.3 451.9 451.9
========================================== ============= ============= ============= =============
Own shares held 0.6 1.8
Deferred tax (0.4) (1.3)
========================================== ============= ============= ============= =============
NAV in accordance with EPRA 754.5 452.4
========================================== ============= ============= ============= =============
Number of shares in issue 1,637,706,738 1,637,706,738 1,006,900,141 1,006,900,141
Potential dilutive impact of VCP (Note 5) 11,243,261 11,243,261 20,723,772 20,723,772
------------------------------------------ ------------- ------------- ------------- -------------
Diluted number of shares in issue 1,648,949,999 1,648,949,999 1,027,623,913 1,027,623,913
========================================== ============= ============= ============= =============
NAV per Ordinary Share - basic 46.1p 46.1p 44.9p 44.9p
NAV per Ordinary Share - diluted 45.7p 45.8p 44.0p 44.0p
========================================== ============= ============= ============= =============
Adjusted Adjusted
net asset value net asset value
2016 2015
GBPm GBPm
======================== ================ ================
EPRA NAV 754.5 452.4
Mark to market of fixed
rate debt (60.2) (90.7)
======================== ================ ================
EPRA NNNAV 694.3 361.7
======================== ================ ================
EPRA NNNAV per Ordinary
Share 42.4p 35.9p
======================== ================ ================
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 the
counterparty or by reference to the quoted fair value of 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 2016. 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"). Valuers
are paid on the basis of a fixed fee arrangement, subject to the
number of properties valued.
Initial yields mainly range from 4.65% to 5.25% (2015: 5.25% to
5.50%) for prime units, increasing up to 6.15% (March 2015: 6.15%)
for older units with shorter unexpired lease terms. For properties
with weaker tenants and poorer units, the yields range from 6.15%
to over 8.0% (March 2015: 6.25% and over 8.0%) and higher for those
very close to lease expiry or those approaching obsolescence.
A 0.25% shift of valuation yield would have approximately a
GBP54.2 million (2015: GBP42.8 million) impact on the investment
property valuation.
Investment IPUC Total Investment IPUC Total
2016 2016 2016 2015 2015 2015
GBPm GBPm GBPm GBPm GBPm GBPm
============================= ========== ====== ======= ========== ====== =====
Opening fair
value 915.6 6.7 922.3 638.8 14.8 653.6
Additions:
========== ====== ======= ========== ====== =====
- acquisitions 124.5 - 124.5 229.8 0.5 230.3
- improvements 2.7 - 2.7 0.7 - 0.7
========== ====== ======= ========== ====== =====
127.2 - 127.2 230.5 0.5 231.0
Development costs - 17.7 17.7 - 14.0 14.0
Transfers 16.4 (16.4) - 24.5 (24.5) -
Transfer from
assets held for
sale 0.6 3.1 3.7 1.5 4.7 6.2
Capitalised interest - 0.5 0.5 - 0.4 0.4
Disposals (0.6) (0.8) (1.4) (2.0) (2.3) (4.3)
Unrealised surplus/(deficit)
on revaluation 35.7 0.7 36.4 22.3 (0.9) 21.4
============================= ========== ====== ======= ========== ====== =====
Closing market
value 1,094.9 11.5 1,106.4 915.6 6.7 922.3
Add finance lease
obligations recognised
separately 3.0 - 3.0 3.0 - 3.0
============================= ========== ====== ======= ========== ====== =====
Closing fair
value of investment
property 1,097.9 11.5 1,109.4 918.6 6.7 925.3
============================= ========== ====== ======= ========== ====== =====
2016 2015
GBPm GBPm
============================================ ======= =====
Market value of investment property
as estimated by valuer 1,088.0 908.3
Add IPUC 11.5 6.7
Add pharmacy lease premiums 6.9 7.3
Add finance lease obligations recognised
separately 3.0 3.0
============================================ ======= =====
Fair value for financial reporting purposes 1,109.4 925.3
============================================ ======= =====
Vacant property held for sale - 0.6
Land held for sale 1.7 4.8
============================================ ======= =====
Total property assets held for sale 1.7 5.4
============================================ ======= =====
Total property assets 1,111.1 930.7
============================================ ======= =====
Three land sites are held as available for sale (2015: three
property investments and eight land sites).
Fair value hierarchy
The fair value measurement hierarchy for all investment property
and IPUC as at 31 March 2016 was Level 3 - Significant unobservable
inputs (2015: 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
2016 2015
GBPm GBPm
============================= ===== =====
Cash held in current account 43.7 65.3
Restricted cash 0.6 1.2
============================= ===== =====
44.3 66.5
============================= ===== =====
Restricted cash arises where there are rent deposits, 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
2016 2015
GBPm GBPm
=============================== ===== =====
Trade receivables 4.2 5.6
Prepayments and accrued income 1.2 1.1
Other debtors 2.1 1.6
=============================== ===== =====
7.5 8.3
=============================== ===== =====
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 (2015: GBPnil).
As at 31 March 2016 and 31 March 2015, the analysis of trade
debtors that were past due but not impaired is as follows:
Past due but not impaired
===================================
Neither
past due >120
Total nor impaired >30 days >60 days >90 days days
GBPm GBPm GBPm GBPm GBPm GBPm
===== ===== ============= ======== ======== ======== =====
2016 4.2 3.8 0.2 0.1 0.1 -
2015 5.6 5.0 0.4 - 0.2 -
===== ===== ============= ======== ======== ======== =====
The bulk of the Group's income derives from the NHS or is
reimbursed by the NHS, hence the risk of default is minimal.
10. Trade and other payables
2016 2015
GBPm GBPm
============================= ===== =====
Trade creditors 2.8 2.5
Other creditors and accruals 11.8 13.5
VAT creditor 1.9 2.9
16.5 18.9
============================= ===== =====
Finance lease arrangements are amounts payable in respect of
leasehold investment property held by the Group. The amounts due
after more than one year, which total GBP3.0 million (2015: 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
2016 2015
GBPm GBPm
======================================== ===== =====
Arising from rental received in advance 13.7 12.3
Arising from pharmacy lease premiums
received in advance 6.9 7.3
======================================== ===== =====
20.6 19.6
======================================== ===== =====
Current 14.2 12.7
Non-current 6.4 6.9
======================================== ===== =====
20.6 19.6
======================================== ===== =====
12. Borrowings
2016 2015
GBPm GBPm
==================================================== ======= ======
At 1 April 513.5 450.3
Amount drawn down in year 45.0 -
Amount repaid in year (188.5) (64.1)
Assumed with acquisition of properties/subsidiaries - 135.3
Amortisation of loan fair value adjustments - (0.3)
Cash settlement of loan fair value adjustments - (7.8)
Loan issue costs (1.4) (0.5)
Amortisation of loan issue costs 0.6 0.6
==================================================== ======= ======
At 31 March 369.2 513.5
==================================================== ======= ======
Due within one year 4.0 8.0
Due after more than one year 365.2 505.5
==================================================== ======= ======
At 31 March 369.2 513.5
==================================================== ======= ======
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 Commercial Finance with an aggregate balance
of GBP217.8 million at 31 March 2016 (2015: GBP406.6 million). The
Aviva loans are partially amortised by way of quarterly instalments
and partially repaid by way of bullet repayments falling due
between 2024 and 2044 with a weighted average term of 13.8 years to
maturity; GBP4.0 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%.
The loans carry a debt service cover covenant of 1.05 times and a
loan to value covenant of 70%, calculated across all loans and
secured properties.
In November 2015, in line with the debt reduction plan announced
in the Prospectus for the October 2015 equity raise, GBP182.0
million of loans were repaid along with associated early repayment
costs of GBP34.1 million.
3. Five-year club revolving credit facility with RBS, HSBC and
Barclays for GBP120 million at an initial margin of 1.70% above
LIBOR, expiring in May 2020. The facility is subject to a
historical interest cover requirement of at least 175% and a
weighted average lease length of nine years. The facility attracts
a non-utilisation fee equal to 40% of the applicable margin. As at
31 March 2016, GBP45.0 million of this facility was drawn (2015:
undrawn). Subsequent to the year end, this facility has been
replaced with a new unsecured revolving credit facility of GBP200
million.
The Group has been in compliance with all financial covenants on
all of the above loans as applicable throughout the year.
13. Share capital
Number Share Number Share
of shares capital of shares capital
2016 2016 2015 2015
GBPm GBPm
========================= ============= ======== ============= ========
Ordinary Shares issued
and fully paid
========================= ============= ======== ============= ========
At 1 April 1,006,900,141 100.7 529,548,924 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
Issued 20 July 2015 4,545,455 0.4 - -
Issued 25 September 2015 3,543,975 0.4 - -
Issued 14 October 2015 618,000,000 61.8 - -
Issued 4 November 2015 2,229,072 0.2 - -
Issued 20 January 2016 1,611,873 0.2 - -
Issued 27 January 2016 876,222 0.1 - -
========================= ============= ======== ============= ========
At 31 March 1,637,706,738 163.8 1,006,900,141 100.7
Own shares held (1,256,714) (0.6) (3,911,551) (1.8)
========================= ============= ======== ============= ========
Total share capital 1,636,450,024 163.2 1,002,988,590 98.9
========================= ============= ======== ============= ========
Ordinary Shares issued on 20 July 2015, 4 November 2015 and 27
January 2016 represent shares issued as part consideration for the
acquisition of investment properties held in corporate vehicles.
The shares were valued based on the closing share price the day
before issuance with this amount appropriately allocated between
share capital and share premium.
On 25 September 2015, 3,543,975 Ordinary Shares were issued
following employees exercising nil-cost options awarded under the
VCP.
On 14 October 2015, 618,000,000 Ordinary Shares were issued by
way of a Firm Placing, Placing and Open Offer and Offer for
Subscription at a price of 50 pence per Ordinary Share. Gross
proceeds to the Company were GBP309.0 million, which has been
allocated appropriately between share capital (GBP61.8 million) and
share premium (GBP247.2 million). Issue costs totalling GBP9.5
million were incurred and have been allocated against share
premium.
On 20 January 2016, 1,611,873 Ordinary Shares were issued to
shareholders who elected to receive Ordinary Shares in lieu of a
cash dividend under the Company scrip dividend alternative. This
represented 9.9% of shareholders.
On 28 January 2015, Assura plc replaced Assura Group Limited as
the top company in the Group following a scheme of arrangement
sanctioned by the Royal Court of Guernsey. This capital
restructuring was accounted for under merger accounting principles
meaning the consolidated accounts have been presented as though 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.
Own shares held comprise shares held by the Employee Benefit
Trust.
14. Dividends paid on Ordinary Shares
Number
Pence of Ordinary 2016 2015
Payment date per share Shares GBPm GBPm
---------------- ---------- ------------- ----- -----
23 April 2014 0.45 529,548,924 - 2.4
23 July 2014 0.45 573,813,120 - 2.6
5 November 2014 0.45 988,065,993 - 4.4
21 January 2015 0.5 1,006,900,141 - 5.0
30 April 2015 0.5 1,006,900,141 5.0 -
22 July 2015 0.5 1,006,900,141 5.0 -
4 November 2015 0.5 1,632,989,571 8.2 -
20 January 2016 0.55 1,635,218,643 9.0 -
================ ========== ============= ===== =====
27.2 14.4
================ ========== ============= ===== =====
A scrip dividend alternative was introduced with effect from the
January 2016 quarterly dividend. Details of shares issued in lieu
of dividend payments can be found in Note 13.
The dividends paid do not include any PIDs as defined under the
REIT regime.
15. Commitments
At the year end the Group had two (2015: five) developments on
site with a contracted total expenditure of GBP13.5 million.
(2015: GBP22.2 million) of which GBP8.5 million (2015: GBP6.1
million) had been expended.
16. Post balance sheet events
Subsequent to the year end, a subsidiary of the Group has
replaced the existing revolving credit facility with a new
unsecured revolving credit facility of GBP200 million with the
potential to extend further to GBP300 million.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR DMGMKNNVGVZM
(END) Dow Jones Newswires
May 18, 2016 02:00 ET (06:00 GMT)
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