TIDMAGR
RNS Number : 2232G
Assura PLC
19 November 2015
Assura plc
Interim Condensed Consolidated Accounts for the 6 months ended
30 September 2015
Another period of significant growth
19 November 2015
Highlights
Another period of significant growth
-- GBP100 million increase in investment property to GBP1,025.0
million (March 2015: GBP925.3 million)
-- Completed the acquisition of 36 properties for GBP65 million
-- 7.2% increase in total rent roll to GBP59.6 million (March 2015: GBP55.6 million)
Increase in net asset value and underlying profit
-- 5.5% increase in diluted EPRA NAV(1) per share to 46.4 pence (March 2015: 44.0 pence)
-- 26.6% increase in net rental income for the six months to
GBP28.1 million (2014: GBP22.2 million)
-- 79.4% increase in underlying profit from continuing
operations to GBP11.3 million for the six months (2014: GBP6.3
million)
-- 115% increase in profit before tax to GBP35.4 million (2014: GBP16.5 million)
Transformational equity raise since the period end, raising
GBP300 million to:
-- Fund the near term pipeline of acquisitions and developments,
with a cost of approximately GBP126 million
-- Repay GBP181 million of long-term fixed rate debt, allowing
the Group flexibility for further growth
Assura is now the sector leader in a market that is in critical
need of investment
-- An ageing population and growing pressures on the existing
health infrastructure provide immediate need
for increased primary care facilities
-- The UK has cross-party support to shift more health provision
from expensive hospitals into primary care
-- The NHS announced last year an investment of GBP1 billion
over five years to fund improvements in primary care premises
Assura is well positioned to continue outperforming in a
fragmented market
-- 301 practices throughout the country
-- Good pipeline of acquisitions to consolidate fragmented market
-- Strongest balance sheet in the sector
-- Group has a long-term track record; strong relationships with the NHS and GPs
Further increase in dividend indicative of management confidence
in the Group's future
-- 10% increase in quarterly dividend to 0.55 pence per share,
equivalent to 2.2 pence per share on an annual basis
1 Net Asset Value - Note 7
Graham Roberts, Chief Executive, said:
"The need for increased investment in high quality GP space is
immediate: There has been years of underinvestment in the primary
care market, and in a recent survey 40% of GPs considered their
premises to be inadequate for their services. The need for
increased investment is also growing fast: in 25 years' time the
population of those over 75 years old is set to have increased by
90%, and GPs will play a critical role in managing the health needs
of this ageing population. Assura, as the leader in the sector, is
well placed to help meet this demand."
For further information, please contact:
Assura plc: Tel: 01925 420660
Graham Roberts
Jonathan Murphy
Carolyn Jones
Finsbury: Tel: 0207 251 3801
Gordon Simpson
Presentation and webcast:
A presentation will be held for analysts and investors on 19
November 2015 at 11am London time, with a webcast available from
our website or via the following link:
http://webcasting.brrmedia.co.uk/broadcast/562a50c3b6c073d9055f5d8b
Alternatively to listen to the audio of the presentation live,
dial:
+44 (0) 20 3003 2666 - Standard International Access
0808 109 0700 - UK Toll Free
Access Pin: 9788936#
Password: Assura
Chief Executive's report
I am pleased to report a period of significant growth for
Assura, where our successful acquisitions programme has seen the
value of our investment property pass GBP1 billion. In the period
under review we have completed GBP65 million of property additions,
which were the largest contributor to the GBP100 million increase
in the value of our investment property in the six months to 30
September 2015.
Since the period end we have completed an equity raise of GBP300
million, net of expenses, that now gives us the strongest balance
sheet in the sector. We believe that a stronger balance sheet is
attractive to both our potential property partners amongst GPs and
the NHS and our equity and debt funders. As a result, we have
reduced our medium-term gearing target to between 40% and 50%.
In line with this we have, in the past month, redeemed GBP181
million of long-term fixed rate loans and our net debt has reduced
to GBP281 million and our loan to value now stands at 27%.
This strengthened balance sheet together with the longevity and
security of our property cash flows will underpin our progressive
dividend policy and leaves us well placed to take advantage of
further investment opportunities.
We have continued to deliver growth, achieving a 79% increase in
underlying profits to GBP11.3 million and 5.5% growth in diluted
EPRA net asset value to 46.4 pence per share at the period end. The
growth in underlying profits reflects the successful integration of
our acquisitions, and those from the prior year, by our property
management team and our ability to convert this greater scale into
increased underlying profits.
This robust financial performance has enabled us to announce an
increase of 10% in our dividend, to 0.55 pence per share on a
quarterly basis, from January 2016.
Market opportunity
There remains considerable underinvestment in primary care
infrastructure in the UK. The recently announced population
forecasts from the ONS are predicting a 79% increase in the over
70s population in the next 25 years. This age group is one of the
largest users of GP services and so the demands on GP premises are
likely to increase significantly.
The NHS announced last year an investment of GBP1 billion over
five years to fund improvements in primary care premises. There
remains some uncertainty over the details of this plan and new
guidelines have now been published as to its implementation. We are
monitoring the impact of these changes and it is too soon to assess
how this will affect investment in the short term. We already have
18 schemes approved for improvements to existing buildings which we
continue to progress.
Our leadership position in providing state of the art primary
care premises, adapted to each local community in which they
operate, means we are ideally placed to serve these changing needs.
The recent announcements by the NHS and the Government on the need
for the greater provision of care in the community give us
increased confidence that the process for approving new schemes
will be unblocked, although the timing remains uncertain. Once
approvals commence there will be the usual time lag between
approval and delivery.
Outlook
The recent fund raise has greatly strengthened the Company's
financial position and enhanced its 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 Assura believes its brand, expertise and scale position
it well to capitalise on this.
Graham Roberts
Chief Executive
18 November 2015
Business review
For the six months ended 30 September 2015
Portfolio as at 30 September 2015 GBP999.8 million (31 March
2015: GBP908.3 million)
Our business is based on our investment portfolio of 301
properties. This has a passing rent roll of GBP59.6 million (March
2015: GBP55.6 million), 87% of which is underpinned by the NHS. The
WAULT is 14.1 years and 90% of the rent roll will still be
contracted in 2025.
At 30 September 2015 our portfolio of completed investment
properties was valued at a total of GBP999.8 million (see Note 8,
March 2015: GBP908.3 million), which produced a net initial yield
("NIY") of 5.42% (March 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 5.60%
(March 2015: 5.77%). Adjusting this Royal Institute of Chartered
Surveyors standard measure to reflect the advanced payment of
rents, the true equivalent yield is 5.81% (March 2015: 5.98%).
Six months Six months
ended ended
30 September 30 September
2015 2014
GBPm GBPm
----------------------- -------------- --------------
Net rental income 28.1 22.2
Valuation movement 25.7 10.4
----------------------- -------------- --------------
Total Property Return 53.8 32.6
----------------------- -------------- --------------
Expressed as a percentage of opening investment property plus
additions, Total Property Return for the six months was 5.4%
compared with 4.2% in 2014.
Our annualised Total Return over the five years to 31 December
2014 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 six months of GBP25.7 million
represents a 3.2% uplift on a like-for-like basis and movements
relating to properties acquired in the period. The uplift has
arisen due to 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 2.1% at
30 September 2015.
Investment and development activity
Despite the recent hiatus in NHS development approvals, we have
invested substantially during the period.
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We recorded an unrealised revaluation surplus of GBP0.5 million
during the period in respect of investment property under
construction (2014: deficit of GBP0.8 million).
Despite the reduction in developments being approved we have one
(end value c. GBP5 million) currently on site and five (end value
c. GBP23 million) which we would hope to be on site within 12
months.
The bulk of the growth in our investment portfolio has come from
the acquisition of 36 properties at a cost of GBP65 million.
In addition we have a pipeline of c. 40 acquisitions and forward
funding purchases (end value c. GBP103 million) currently in legal
hands.
Portfolio management
We have continued to deliver rental growth and have successfully
concluded on 62 rent reviews during the six months to generate a
weighted average annual rent increase of 1.42% (year to March 2015:
1.27%) on those properties. Our portfolio benefits from a 25%
weighting in fixed, Retail Price Index ("RPI") and other uplifts
which generated an average uplift of 1.96% during the period. The
majority of our portfolio is subject to open market reviews and
these have generated an average uplift of 0.80% during the
period.
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 achieving a continuous improvement in the results of
these surveys.
During the period we have successfully secured six new tenancies
with an annual rent roll of GBP0.3 million covering 3,462 square
metres. In addition we have significantly extended the lease on
four properties.
Our EPRA Vacancy Rate was 2.8% (March 2015: 3.2%) which has
started to decrease with this being a current area of focus for our
team.
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 period was 0.31% (2014: 0.38%) and
administrative costs stood at GBP3.0 million (2014: GBP2.8
million).
We also analyse cost performance by reference to our EPRA Cost
Ratios (including and excluding direct vacancy costs) which were
19.2% and 18.2% respectively (2014: 18.4% and 16.7%). The increase
in the period is due to the national insurance costs associated
with the VCP shares issued and we would expect the ratios to reduce
going forward as we grow the portfolio.
Financing
In August 2015, we secured an increase in our available
revolving credit facility from GBP60 million to GBP120 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 potential funders 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 30 September 2015, we had undrawn
facilities and cash of GBP110.7 million.
Financing statistics 30/09/2015 31/03/2015
-------------------------------- ---------- ----------
Net debt GBP520.8m GBP450.0m
Weighted average debt maturity 11.0 years 11.9 years
Weighted average interest rate 5.09% 5.28%
% of debt at fixed/capped rates 94% 100%
Interest cover(1) 182% 160%
Loan to value 51% 48%
-------------------------------- ---------- ----------
(1) Interest cover is the number of times net interest payable
is covered by underlying profit before net interest.
At 30 September 2015 our loan to value ratio stands at 51%. 94%
of the debt facilities are fixed with a weighted average debt
maturity of 11.0 years and a weighted average interest rate of
5.09%. On 11 November 2015, following the successful equity raise
which reduced LTV initially to c. 27%, GBP181 million of long-term
fixed rate debt was repaid in full along with the associated early
repayment costs of GBP34 million.
Details of the facilities and their covenants are set out in
Note 11 to the accounts.
Net finance costs in the six-month period amounted to GBP13.8
million (2014: GBP13.1 million).
Underlying profit
Six months Six months
ended ended
30 September 30 September
2015 2014
GBPm GBPm
------------------------ ------------- -------------
Net rental income 28.1 22.2
Administrative expenses (3.0) (2.8)
Net finance costs (13.8) (13.1)
------------------------ ------------- -------------
Underlying profit 11.3 6.3
------------------------ ------------- -------------
The movement in underlying profit can be summarised as
follows:
GBPm
----------------------------------- -----
Six months ended 30 September 2014 6.3
Net rental income 5.9
Administrative expenses (0.2)
Net finance costs (0.7)
----------------------------------- -----
Six months ended 30 September 2015 11.3
----------------------------------- -----
Underlying profit has grown 79% to GBP11.3 million in the six
months to 30 September 2015 reflecting the property acquisitions
completed.
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 period
was 3.5 pence (2014: 2.9 pence).
EPRA EPS, which excludes the net impact of valuation movements
and gains on disposal, was 0.9 pence (2014: 1.0 pence), the
decrease reflecting national insurance costs associated with the
VCP shares issued.
Underlying profit per share omits accounting adjustments and
certain exceptional items as referenced earlier and has remained at
1.1 pence (2014: 1.1 pence).
Based on calculations completed in accordance with IAS 33,
share-based payment schemes are currently expected to be dilutive
to EPS, with 11.7 million new shares expected to be issued. The
dilution is not material as illustrated by the table below:
EPS measure Basic Diluted
---------------------- ----- -------
Profit for six months 3.5p 3.4p
EPRA 0.9p 0.9p
Underlying 1.1p 1.1p
---------------------- ----- -------
Dividends
Total dividends paid in the six months to 30 September 2015 were
GBP10.0 million or 1.0 pence per share (2014: 0.9 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.
The table below illustrates our cash flows over the period:
Six months ended
Six months ended 30 September
30 September 2015 2014
GBPm GBPm
----------------------------------- ------------------ ----------------
Opening cash 66.5 38.6
Net cash flow from operations 9.5 9.2
Dividends paid (10.0) (5.0)
Investment:
Property and business acquisitions (63.1) (15.9)
Development expenditure (7.5) (8.5)
Sale of properties 0.6 2.5
Financing:
Share issue costs - (0.2)
Net borrowings movement 29.7 (3.7)
----------------------------------- ------------------ ----------------
Closing cash 25.7 17.0
----------------------------------- ------------------ ----------------
Net cash flow from operations differs from underlying profit due
to movements in working capital balances.
Property additions during the period were GBP65.0 million,
although the cash outflow was only GBP63.1 million after taking
into account shares issued as consideration (GBP2.5 million) and
net working capital assumed (GBP0.6 million).
Net assets
Diluted EPRA NAV movement
Pence
per share
GBPm - diluted
---------------------------------- ------ ----------
EPRA NAV at 31 March 2015 452.4 44.0
Underlying profit 11.3 1.1
Capital (revaluations and capital
gains) 25.7 2.5
Dividends (10.0) (1.0)
Other (3.4) (0.2)
---------------------------------- ------ ----------
EPRA NAV at 30 September 2015 476.0 46.4
---------------------------------- ------ ----------
Our Total Accounting Return per share for the six months ended
30 September 2015 is 5.7% of which 1.0 pence per share (2.2%) has
been distributed to shareholders and 1.6 pence per share (3.5%) is
the movement on EPRA NAV.
Post balance sheet events
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On 14 October 2015, the Company issued 618,000,000 Ordinary
Shares at a price of 50 pence per share by way of a Firm Placing,
Placing and Open Offer and Offer for Subscription. Gross proceeds
of the issue were GBP309.0 million before expenses, being raised to
make further investments into primary care properties and reduce
the overall level of borrowings.
On 11 November 2015, GBP181 million of long-term fixed rate debt
was repaid in full along with the associated early repayment cost
of GBP34 million.
Portfolio analysis by capital value
Total value
Number of properties GBPm Total value%
----------------------- ----------- ------------
>GBP10m 15 221.3 22
GBP5-10m 38 264.9 26
GBP1-5m 188 474.3 48
<GBP1m 60 39.3 4
---------------- ----- ----------- ------------
301 999.8 100
---------------- ----- ----------- ------------
Portfolio analysis by region
Total value
Number of properties GBPm Total value%
----------------------- ----------- ------------
North 119 429.0 43
South 85 271.9 27
Midlands 61 213.3 21
Scotland 18 33.0 3
Wales 18 52.6 6
---------------- ----- ----------- ------------
301 999.8 100
---------------- ----- ----------- ------------
Portfolio analysis by tenant covenant
Total rent
roll Total rent roll
GBPm %
--------- ---------- ---------------
GPs 41.0 69
NHS body 10.9 18
Pharmacy 4.5 8
Other 3.2 5
--------- ---------- ---------------
59.6 100
--------- ---------- ---------------
EPRA performance measures
The European Public Real Estate Association ("EPRA") has
published Best Practices Recommendations with the aim of improving
the transparency, comparability and relevance of financial
reporting with the real estate sector across Europe.
This section details the rationale for each performance measure
as well as our performance against each measure.
Summary table
Six months Six months
ended ended
30 September 30 September
2015 2014
--------------------------- ------------- -------------
EPRA EPS (p) 0.9 1.0
EPRA Cost Ratio (including
direct vacancy costs) (%) 19.2 18.4
EPRA Cost Ratio (excluding
direct vacancy costs) (%) 18.2 16.7
--------------------------- ------------- -------------
30/09/2015 31/03/2015
------------------------- ---------- ----------
EPRA NAV (p) 46.9 44.9
EPRA NNNAV (p) 38.2 35.9
EPRA NIY (%) 5.34 5.43
EPRA "topped-up" NIY (%) 5.34 5.43
EPRA Vacancy Rate (%) 2.8 3.2
------------------------- ---------- ----------
EPRA EPS
Six months Six months
ended ended
30 September 30 September
2015 2014
--------------------- ------------- -------------
EPRA EPS (p) 0.9 1.0
Diluted EPRA EPS (p) 0.9 1.0
--------------------- ------------- -------------
Definition Earnings from operational activities.
---------- -------------------------------------------
Purpose A key measure of a company's underlying
operating results and an indication of the
extent to which current dividend payments
are supported by earnings.
---------- -------------------------------------------
The calculation of EPRA EPS and diluted EPRA EPS are shown in
Note 6 to the accounts.
EPRA NAV
30/09/2015 31/03/2015
--------------------- ---------- ----------
EPRA NAV (p) 46.9 44.9
Diluted EPRA NAV (p) 46.4 44.0
--------------------- ---------- ----------
Definition NAV adjusted to include properties and other
investment interests at fair value and to
exclude certain items not expected to crystallise
in a long-term investment property business.
---------- --------------------------------------------------
Purpose Makes adjustments to IFRS NAV to provide
stakeholders with the most relevant information
on the fair value of the assets and liabilities
with a true real estate investment company
with a long-term investment strategy.
---------- --------------------------------------------------
The calculation of EPRA NAV is shown in Note 7 to the
accounts.
EPRA NNNAV
30/09/2015 31/03/2015
--------------- ---------- ----------
EPRA NNNAV (p) 38.2 35.9
--------------- ---------- ----------
Definition EPRA NAV adjusted to include the fair values
of (i) financial instruments, (ii) debt
and (iii) deferred taxes.
---------- ------------------------------------------------
Purpose Makes adjustments to EPRA NAV to provide
stakeholders with the most relevant information
on the current fair value of all the assets
and liabilities within a real estate company.
---------- ------------------------------------------------
The calculation of EPRA NNNAV is shown in Note 7 to the
accounts.
EPRA NIY and EPRA "topped-up" NIY
30/09/2015 31/03/2015
------------------------- ---------- ----------
EPRA NIY (%) 5.34 5.43
EPRA "topped-up" NIY (%) 5.34 5.43
------------------------- ---------- ----------
Definition Annualised rental income based on the
- cash rents passing at the balance sheet
EPRA NIY date, less non-recoverable property operating
expenses, divided by the market value
of the property, increased with (estimated)
purchasers' costs.
----------------- -----------------------------------------------
Definition This measure incorporates an adjustment
- to the EPRA NIY in respect of the expiration
EPRA "topped-up" of rent-free periods (or other unexpired
NIY lease incentives such as discounted rent
periods and step rents).
----------------- -----------------------------------------------
Purpose A comparable measure for portfolio valuations,
this measure should make it easier for
investors to judge for themselves how
the valuation compares with that of portfolios
in other listed companies.
----------------- -----------------------------------------------
30/09/2015 31/03/2015
GBPm GBPm
------------------------------------ ---------- ----------
Investment property 1,025.0 925.3
Less developments (15.1) (6.7)
------------------------------------ ---------- ----------
Completed investment property
portfolio 1,009.9 918.6
Allowance for estimated purchasers'
costs 58.1 52.7
------------------------------------ ---------- ----------
Gross up completed investment
property - B 1,068.0 971.3
------------------------------------ ---------- ----------
Annualised cash passing rental
income 59.6 55.6
Property outgoings (2.6) (2.9)
------------------------------------ ---------- ----------
Annualised net rents - A 57.0 52.7
Notional rent expiration of
rent-free periods or other
incentives - -
------------------------------------ ---------- ----------
Topped-up annualised rent -
C 57.0 52.7
------------------------------------ ---------- ----------
EPRA NIY - A/B (%) 5.34 5.43
EPRA "topped-up" NIY - C/B
(%) 5.34 5.43
------------------------------------ ---------- ----------
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EPRA Vacancy Rate
30/09/2015 31/03/2015
---------------------- ---------- ----------
EPRA Vacancy Rate (%) 2.8 3.2
---------------------- ---------- ----------
Definition Estimated rental value ("ERV") of vacant
space divided by ERV of the whole portfolio.
---------- ---------------------------------------------
Purpose A "pure" (%) measure of investment property
space that is vacant, based on ERV.
---------- ---------------------------------------------
30/09/2015 31/03/2015
------------------------------------ ---------- ----------
ERV of vacant space (GBPm) 1.8 1.9
ERV of completed property portfolio
(GBPm) 61.9 57.9
EPRA Vacancy Rate (%) 2.8 3.2
------------------------------------ ---------- ----------
EPRA Cost Ratios
Six months Six months
ended ended
30 September 30 September
2015 2014
----------------------------- ------------- -------------
EPRA Costs (including direct
vacancy costs) (%) 19.2 18.4
EPRA Costs (excluding direct
vacancy costs) (%) 18.2 16.7
----------------------------- ------------- -------------
Definition Administrative and operating costs (including
and excluding direct vacancy costs) divided
by gross rental income.
---------- ----------------------------------------------
Purpose A key measure to enable meaningful measurement
of
the changes in a company's operating
costs.
---------- ----------------------------------------------
Six months Six months
ended ended
30 September 30 September
2015 2014
GBPm GBPm
-------------------------------- ------------- -------------
Direct property costs 1.3 1.4
Administrative expenses 3.0 2.8
Share-based payment costs 1.6 0.4
Net service charge costs/fees (0.1) (0.1)
Exclude:
Ground rent costs (0.2) (0.2)
-------------------------------- ------------- -------------
EPRA Costs (including direct
vacancy costs) - A 5.6 4.3
Direct vacancy costs (0.3) (0.4)
-------------------------------- ------------- -------------
EPRA Costs (excluding direct
vacancy costs) - B 5.3 3.9
-------------------------------- ------------- -------------
Gross rental income less ground
rent costs (per IFRS) 29.2 23.4
-------------------------------- ------------- -------------
Gross rental income - C 29.2 23.4
-------------------------------- ------------- -------------
EPRA Cost Ratio (including
direct vacancy costs) - A/C 19.2 18.4
EPRA Cost Ratio (excluding
direct vacancy costs) - B/C 18.2 16.7
-------------------------------- ------------- -------------
Interim Condensed Consolidated Income Statement
For the six months ended 30 September 2015
Six months ended Six months ended
30 September 2015 30 September 2014
Unaudited Unaudited
------------ ---- --------------------------- ---------------------------
Capital Capital
and and
Underlying other Total Underlying other Total
Note GBPm GBPm GBPm GBPm GBPm GBPm
------------------------- ---- ---------- ------- ------ ---------- ------- ------
Gross rental and related
income 29.4 - 29.4 23.6 - 23.6
Property operating
expenses (1.3) - (1.3) (1.4) - (1.4)
------------------------- ---- ---------- ------- ------ ---------- ------- ------
Net rental income 28.1 - 28.1 22.2 - 22.2
Administrative
expenses (3.0) - (3.0) (2.8) - (2.8)
Revaluation gains 8 - 25.7 25.7 - 10.4 10.4
Loss on sale of
property - - - - (0.1) (0.1)
Share-based payment
charge - (1.6) (1.6) - (0.4) (0.4)
Finance revenue 0.1 - 0.1 0.1 - 0.1
Finance costs (13.9) - (13.9) (13.2) - (13.2)
Revaluation of
derivative financial
instruments - - - - 0.3 0.3
------------------------- ---- ---------- ------- ------ ---------- ------- ------
Profit before
taxation 11.3 24.1 35.4 6.3 10.2 16.5
------------------------- ---- ---------- ------- ------ ---------- ------- ------
Taxation 5 (0.2) (0.2)
------------------------- ---- ---------- ------- ------ ---------- ------- ------
Profit for the period
attributable
to equity holders
of the parent 35.2 16.3
------------------------------- ---------- ------- ------ ---------- ------- ------
Earnings per share
from underlying
profit - basic 6 1.1p 1.1p
on profit
for year - basic 6 3.5p 2.9p
- diluted 6 3.4p 2.9p
------------------------ ---- ---------- ------- ------ ---------- ------- ------
There were no items of other comprehensive income or expense and
therefore the profit for the period also represents the Group's
total comprehensive income. All income derives from continuing
operations.
Interim Condensed Consolidated Balance Sheet
As at 30 September 2015
30 September 31 March
2015 2015
Unaudited Audited
Note GBPm GBPm
------------------------------------------ ---- ------------ --------
Non-current assets
Investment property 8 1,025.0 925.3
Investments 0.4 0.4
Property, plant and equipment - 0.1
Deferred tax asset 1.1 1.3
------------------------------------------ ---- ------------ --------
1,026.5 927.1
------------------------------------------ ---- ------------ --------
Current assets
Cash, cash equivalents and restricted
cash 9 25.7 66.5
Trade and other receivables 7.6 8.3
Property assets held for sale 8 4.6 5.4
------------------------------------------ ---- ------------ --------
37.9 80.2
------------------------------------------ ---- ------------ --------
Total assets 1,064.4 1,007.3
------------------------------------------ ---- ------------ --------
Current liabilities
Trade and other payables 20.5 18.9
Borrowings 11 8.4 8.0
Deferred revenue 10 13.7 12.7
Provisions 0.1 0.1
------------------------------------------ ---- ------------ --------
42.7 39.7
------------------------------------------ ---- ------------ --------
Non-current liabilities
Borrowings 11 535.1 505.5
Obligations due under finance
leases 3.0 3.0
Deferred revenue 10 6.7 6.9
Provisions 0.2 0.3
------------------------------------------ ---- ------------ --------
545.0 515.7
------------------------------------------ ---- ------------ --------
Total liabilities 587.7 555.4
------------------------------------------ ---- ------------ --------
Net assets 476.7 451.9
------------------------------------------ ---- ------------ --------
Capital and reserves
Share capital 12 101.5 100.7
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Own shares held (0.4) (1.8)
Share premium 3.6 -
Merger reserve 231.2 231.2
Reserves 140.8 121.8
------------------------------------------ ---- ------------ --------
Total equity 476.7 451.9
------------------------------------------ ---- ------------ --------
Net asset value
per Ordinary Share - basic 7 47.0p 44.9p
- diluted 7 46.4p 44.0p
Adjusted (EPRA) net asset
value per Ordinary Share - basic 7 46.9p 44.9p
- diluted 7 46.4p 44.0p
------------------------------ ---------- ---- ------------ --------
The interim condensed consolidated financial statements were
approved at a meeting of the Board of Directors held on 18 November
2015 and signed on its behalf by:
Graham Roberts, Chief Executive Jonathan Murphy, Finance Director
Interim Condensed Consolidated Statement of Changes in
Equity
For the six months ended 30 September 2015
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 - - - - 16.3 16.3
-------- ------- -------- -------- -------- -------
Total comprehensive
income - - - - 16.3 16.3
Dividend 14 - - - - (5.0) (5.0)
Issue of Ordinary
Shares 12 4.4 - 14.5 - - 18.9
Issue costs - - (0.2) - - (0.2)
Employee share-based
incentives - - - - 0.4 0.4
------------------------ ---- -------- ------- -------- -------- -------- -------
30 September 2014
(Unaudited) 57.4 (1.9) 91.4 - 110.1 257.0
------------------------ ---- -------- ------- -------- -------- -------- -------
Profit attributable
to equity holders - - - - 20.9 20.9
-------- ------- -------- -------- -------- -------
Total comprehensive
income - - - - 20.9 20.9
Dividend 14 - - - - (9.4) (9.4)
Issue of Ordinary
Shares 12 43.3 - 146.3 - - 189.6
Issue costs - - (6.5) - - (6.5)
Scheme of arrangement - - (231.2) 231.2 - -
Own shares held - 0.1 - - (0.1) -
Employee share-based
incentives - - - - 0.3 0.3
------------------------ ---- -------- ------- -------- -------- -------- -------
31 March 2015 (Audited) 100.7 (1.8) - 231.2 121.8 451.9
------------------------ ---- -------- ------- -------- -------- -------- -------
Profit attributable
to equity holders - - - - 35.2 35.2
-------- ------- -------- -------- -------- -------
Total comprehensive
income - - - - 35.2 35.2
Dividend 14 - - - - (10.0) (10.0)
Issue of Ordinary
Shares 12 0.4 - 2.1 - - 2.5
Employee share-based
incentives 0.4 1.4 1.5 - (6.2) (2.9)
------------------------ ---- -------- ------- -------- -------- -------- -------
30 September 2015
(Unaudited) 101.5 (0.4) 3.6 231.2 140.8 476.7
------------------------ ---- -------- ------- -------- -------- -------- -------
Interim Condensed Consolidated Statement of Cash Flow
For the six months ended 30 September 2015
Six months Six months
ended ended
30 September 30 September
2015 2014
Unaudited Unaudited
GBPm GBPm
------------------------------------------- ------------- -------------
Operating activities
Rent received 30.5 25.3
Interest paid and similar charges (13.8) (13.0)
Fees received 0.4 0.5
Interest received 0.1 0.1
Cash paid to suppliers and employees (7.7) (3.7)
------------------------------------------- ------------- -------------
Net cash inflow from operating activities 9.5 9.2
------------------------------------------- ------------- -------------
Investing activities
Purchase of investment property (63.1) (15.9)
Development spend (7.5) (8.5)
Proceeds from sale of property 0.6 2.5
------------------------------------------- ------------- -------------
Net cash outflow from investing activities (70.0) (21.9)
------------------------------------------- ------------- -------------
Financing activities
Issue costs paid on issuance of Ordinary
Shares - (0.2)
Dividends paid (10.0) (5.0)
Repayment of loan (3.9) (3.2)
Long-term loans drawn down 35.0 -
Loan issue costs (1.4) (0.5)
------------------------------------------- ------------- -------------
Net cash inflow from financing activities 19.7 (8.9)
------------------------------------------- ------------- -------------
Decrease in cash and cash equivalents (40.8) (21.6)
------------------------------------------- ------------- -------------
Opening cash and cash equivalents 66.5 38.6
------------------------------------------- ------------- -------------
Closing cash and cash equivalents 25.7 17.0
------------------------------------------- ------------- -------------
Notes to the Interim Condensed Consolidated Accounts
For the six months ended 30 September 2015
1. Corporate information
The Interim Condensed Consolidated Accounts of the Group for the
six months ended 30 September 2015 were authorised for issue in
accordance with a resolution of the Directors on 18 November
2015.
Assura plc ("Assura") is incorporated in England and Wales and
the Company's Ordinary Shares are listed on the London Stock
Exchange.
As of 1 April 2013, the Group has elected to be treated as a UK
REIT. See Note 5 for further details.
Copies of this statement are available from the website at
www.assuraplc.com.
2. Basis of preparation
The Interim Condensed Consolidated Accounts for the six months
ended 30 September 2015 have been prepared in accordance with IAS
34 Interim Financial Reporting. These accounts cover the six-month
accounting period from 1 April 2015 to 30 September 2015 with
comparatives for the six-month accounting period from 1 April 2014
to 30 September 2014, or 31 March 2015 for balance sheet
amounts.
The Interim Condensed Consolidated Accounts do not include all
the information and disclosures required in the Annual Report, and
should be read in conjunction with the Group's Annual Report as at
31 March 2015 which are prepared in accordance with IFRSs as
adopted by the European Union.
The accounts are presented in pounds sterling rounded to the
nearest 0.1 million unless specified otherwise.
The accounts are prepared on a going concern basis.
3. Accounts
The results for the six months to 30 September 2015 and to 30
September 2014 are unaudited. The interim accounts do not
constitute statutory accounts. The balance sheet as at 31 March
2015 has been extracted from the Group's 2015 Annual Report, on
which the auditor has reported and the report was unqualified.
4. New standards, interpretations and amendments thereof,
adopted by the Group
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The accounting policies adopted in the preparation of the
Interim Condensed Consolidated Accounts are consistent with those
followed in the preparation of the Group's Annual Report for the
year ended 31 March 2015, except for the adoption of new standards
and interpretations as of 1 April 2015, noted below, none of which
have a material impact on the financial position or performance of
the Group:
-- Defined Benefit Plans: Employee Contributions (Amendments to IAS 19)
-- IFRIC 21 Levies
5. Taxation on profit on ordinary activities
Six months
Six months ended ended
30 September 30 September
2015 2014
GBPm GBPm
-------------------------- ---------------- -------------
Tax charged in the income
statement
Deferred tax:
Origination and reversal
of temporary differences 0.2 0.2
-------------------------- ---------------- -------------
Total tax charge 0.2 0.2
-------------------------- ---------------- -------------
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%.
The Group tax charge relates to its non-property income. As the
Group has sufficient brought forward losses no tax is due and so
the charge represents the movement in deferred tax.
As a REIT, the Group is required to pay Property Income
Distributions equal to at least 90% of the Group's exempted net
income. 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.
6. 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 35.2 35.2 16.3 16.3
------------------------------ ------------- ------------- ----------- -----------
Revaluation gains (25.7) (10.4)
Revaluation of derivative
financial instruments - (0.3)
Loss on sale of property - 0.1
------------------------------ ------------- ------------- ----------- -----------
Adjusted (EPRA) earnings 9.5 5.7
------------------------------ ------------- ------------- ----------- -----------
Weighted average number
of shares in issue - basic 1,008,829,551 1,008,829,551 556,155,818 556,155,818
Potential dilutive impact
of VCP 11,709,952 11,709,952 - -
------------------------------ ------------- ------------- ----------- -----------
Weighted average number
of shares in issue - diluted 1,020,539,503 1,020,539,503 556,155,818 556,155,818
------------------------------ ------------- ------------- ----------- -----------
Earnings per Ordinary Share
- basic 3.5p 0.9p 2.9p 1.0p
------------------------------ ------------- ------------- ----------- -----------
Earnings per Ordinary Share
- diluted 3.4p 0.9p 2.9p 1.0p
------------------------------ ------------- ------------- ----------- -----------
Underlying profit per share of 1.1 pence (2014: 1.1 pence) has
been calculated as underlying profit for the year as presented on
the income statement of GBP11.3 million (2014: GBP6.3 million)
divided by the weighted average number of shares in issue of
1,008,829,551 (2014: 556,155,818). Based on the diluted weighted
average shares, underlying profit per share is 1.1 pence (2014: 1.1
pence).
The current estimated number of shares over which nil-cost
options may be issued to participants is 12.5 million. After
allowing for shares held by the Employee Benefit Trust, this would
amount to a potential issuance of a further 11.7 million shares
over the course of the next two years.
7. Net asset value per Ordinary Share
Adjusted Adjusted
(EPRA) (EPRA)
Net asset net asset Net asset net asset
value value value value
30/09/2015 30/09/2015 31/03/2015 31/03/2015
GBPm GBPm GBPm GBPm
------------------------- ------------- ------------- ------------- -------------
Net assets 476.7 476.7 451.9 451.9
------------------------- ------------- ------------- ------------- -------------
Own shares held 0.4 1.8
Deferred tax (1.1) (1.3)
------------------------- ------------- ------------- ------------- -------------
NAV in accordance with
EPRA 476.0 452.4
------------------------- ------------- ------------- ------------- -------------
Number of shares in
issue 1,014,989,571 1,014,989,571 1,006,900,141 1,006,900,141
Potential dilutive
impact of VCP (Note
6) 11,709,952 11,709,952 20,723,772 20,723,772
------------------------- ------------- ------------- ------------- -------------
Diluted number of shares
in issue 1,026,699,523 1,026,699,523 1,027,623,913 1,027,623,913
------------------------- ------------- ------------- ------------- -------------
NAV per Ordinary Share
- basic 47.0p 46.9p 44.9p 44.9p
------------------------- ------------- ------------- ------------- -------------
NAV per Ordinary Share
- diluted 46.4p 46.4p 44.0p 44.0p
------------------------- ------------- ------------- ------------- -------------
Adjusted Adjusted
net asset net asset
value value
30/09/2015 31/03/2015
GBPm GBPm
---------------------------------- ----------- -----------
EPRA NAV 476.0 452.4
Mark to market of fixed rate debt (87.8) (90.7)
---------------------------------- ----------- -----------
EPRA NNNAV 388.2 361.7
---------------------------------- ----------- -----------
EPRA NNNAV per Ordinary Share 38.2p 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 third party
valuers or the counterparty as appropriate.
8. Property assets
Investment property and investment property under construction
("IPUC")
Investment properties are stated at fair value, as determined
for the Company by Savills Commercial Limited and Jones Lang
LaSalle as at 30 September 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 4.85% to 5.25% (March 2015:
5.25% and 5.60%) 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.
Investment IPUC Total Investment IPUC Total
30/09/15 30/09/15 30/09/15 31/03/15 31/03/15 31/03/15
GBPm GBPm GBPm GBPm GBPm GBPm
----------------------------- ---------- --------- --------- ---------- --------- ---------
Opening fair
value 915.6 6.7 922.3 638.8 14.8 653.6
Additions:
---------- --------- --------- ---------- --------- ---------
- acquisitions 65.0 - 65.0 229.8 0.5 230.3
- improvements 1.1 - 1.1 0.7 - 0.7
---------- --------- --------- ---------- --------- ---------
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66.1 - 66.1 230.5 0.5 231.0
Development
costs - 7.5 7.5 - 14.0 14.0
Transfers - - - 24.5 (24.5) -
Transfer from
assets held
for sale 0.6 0.2 0.8 1.5 4.7 6.2
Capitalised
interest - 0.2 0.2 - 0.4 0.4
Disposals (0.6) - (0.6) (2.0) (2.3) (4.3)
Unrealised surplus/(deficit)
on revaluation 25.2 0.5 25.7 22.3 (0.9) 21.4
----------------------------- ---------- --------- --------- ---------- --------- ---------
Closing market
value 1,006.9 15.1 1,022.0 915.6 6.7 922.3
Add finance
lease obligations
recognised separately 3.0 - 3.0 3.0 - 3.0
----------------------------- ---------- --------- --------- ---------- --------- ---------
Closing fair
value of investment
property 1,009.9 15.1 1,025.0 918.6 6.7 925.3
----------------------------- ---------- --------- --------- ---------- --------- ---------
30/09/2015 31/03/2015
GBPm GBPm
-------------------------------------------- ---------- ----------
Market value of investment property
as estimated by valuer 999.8 908.3
Add IPUC 15.1 6.7
Add pharmacy lease premiums 7.1 7.3
Add finance lease obligations recognised
separately 3.0 3.0
-------------------------------------------- ---------- ----------
Fair value for financial reporting purposes 1,025.0 925.3
-------------------------------------------- ---------- ----------
Vacant property held for sale - 0.6
Land held for sale 4.6 4.8
-------------------------------------------- ---------- ----------
Total property assets held for sale 4.6 5.4
-------------------------------------------- ---------- ----------
Total property assets 1,029.6 930.7
-------------------------------------------- ---------- ----------
Seven land sites are held as available for sale (31 March 2015:
three property investments and eight land sites).
9. Cash, cash equivalents and restricted cash
30/09/15 31/03/15
GBPm GBPm
----------------------------- -------- --------
Cash held in current account 24.4 65.3
Restricted cash 1.3 1.2
----------------------------- -------- --------
25.7 66.5
----------------------------- -------- --------
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.
10. Deferred revenue
30/09/15 31/03/15
GBPm GBPm
---------------------------------------- -------- --------
Arising from rental received in advance 13.3 12.3
Arising from pharmacy lease premiums
received in advance 7.1 7.3
---------------------------------------- -------- --------
20.4 19.6
---------------------------------------- -------- --------
Current 13.7 12.7
Non-current 6.7 6.9
---------------------------------------- -------- --------
20.4 19.6
---------------------------------------- -------- --------
11. Borrowings
30/09/15 31/03/15
Secured bank loans GBPm GBPm
----------------------------------------------------- -------- --------
At 1 April 513.5 450.3
Amount issued or drawn down in period/year 35.0 -
Amount repaid in period/year (3.9) (64.1)
Acquired with acquisition of properties/subsidiaries - 135.3
Amortisation of loan fair value adjustments - (0.3)
Cash settlement of loan fair value adjustment - (7.8)
Loan issue costs (1.4) (0.5)
Amortisation of loan issue costs 0.3 0.6
----------------------------------------------------- -------- --------
At the end of the period/year 543.5 513.5
----------------------------------------------------- -------- --------
Due within one year 8.4 8.0
Due after more than one year 535.1 505.5
----------------------------------------------------- -------- --------
At the end of the period/year 543.5 513.5
----------------------------------------------------- -------- --------
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 with an aggregate balance of GBP402.6
million at 30 September 2015 (31 March 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 2021 and 2041 with a weighted average term of 12.9 years to
maturity, GBP8.4 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 have a weighted average of
5.43%. The loans carry a debt service cover covenant of 1.05 times,
calculated across all loans and secured properties.
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. As at 30 September
2015, GBP35 million of this facility was drawn.
The Group has been in compliance with all financial covenants on
all of the above loans as applicable throughout the period.
12. Share capital
Share Share
Number capital Number capital
of shares 30/09/2015 of shares 31/03/2015
30/09/2015 GBPm 31/03/2015 GBPm
------------------------- ------------- ----------- ------------- -----------
Ordinary Shares of 10
pence each 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 22 July 2015 4,545,455 0.4 - -
Issued 25 September 2015 3,543,975 0.4 - -
------------------------- ------------- ----------- ------------- -----------
Total at 30 September/31
March 1,014,989,571 101.5 1,006,900,141 100.7
Own shares held (790,048) (0.4) (3,911,551) (1.8)
------------------------- ------------- ----------- ------------- -----------
Total share capital 1,014,199,523 101.1 1,002,988,590 98.9
------------------------- ------------- ----------- ------------- -----------
On 22 July 2015, 4,545,455 Ordinary Shares were issued as part
consideration for the acquisition of Pentagon HS Limited. Based on
the closing share price on 20 July 2015 of 55.25 pence per Ordinary
Share the shares were valued at GBP2.5 million and this has been
allocated accordingly between share capital (GBP0.4 million) and
share premium (GBP2.1 million).
On 25 September 2015, 3,543,975 Ordinary Shares were issued to
participants of the Value Creation Plan ("VCP") following the
completion of the first measurement period. In addition, 3,121,503
Ordinary Shares were transferred from the Employee Benefit Trust to
participants. The VCP has two remaining measurement periods in 2016
and 2017.
13. Commitments
At the period end the Group had five developments or forward
funding purchases on site (31 March 2015: five developments) with a
contracted total expenditure of GBP25.7 million (31 March 2015:
GBP22.2 million) of which GBP13.4 million (31 March 2015: GBP6.1
million) had been expended.
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