Assura Full Year Results

RNS Number : 5452N

Assura PLC

21 May 2020

 

21 May 2020

Assura plc

Creating outstanding spaces for health services in our communities

Assura plc ("Assura"), the leading primary care property investor and developer, today announces its results for the 12 months to 31 March 2020.

Jonathan Murphy, CEO, said:

"With the outbreak of COVID-19, the importance of the NHS to our society has never been more apparent. Assura has worked closely with the NHS and our GP partners since the onset of the crisis, to make sure we can best support the health service while also focusing on the safety and wellbeing of our colleagues, occupiers and their patients.

"Assura has always been focused on fulfilling our purpose of creating outstanding spaces that best support the health services in all of our communities. Over the last financial year, we have assessed our strategy to see where we can make a greater contribution to society. Following this evaluation, we are placing our social performance at the heart of our strategy and launching a plan to make Assura the UK's leading listed property business for long-term social impact. The intention is both exciting and ambitious and we look forward to updating on progress against our targets.

"As an initial step in achieving this objective, we were delighted to announce in April of this year the launch of the Assura Community Fund, with an initial funding of £2.5 million from our recent successful equity raise. This will work to support the charities, voluntary organisations and community groups working across the UK around Assura's healthcare buildings, to support healthier communities for the public benefit.

"Assura has delivered another strong year, reflecting our predictable business model. Assura's financial strength and market-leading capabilities position it well to continue its support of the NHS as primary care becomes increasingly integral to reducing pressure on Britain's health service."

Placing social impact at the heart of Assura's strategy

· Our priority remains the safety and wellbeing of our colleagues, tenants and patients during the pandemic.

· We continue to work closely with the NHS and our GP tenants to support the service through the crisis, including utilising vacant space for the NHS and supporting occupiers' needs with our premises.

· We are today launching our sixbysix ambition - that by 2026 six million people will have benefitted from improvements to and through our healthcare buildings, maximising our contribution to society and minimising our impact on the environment - as part of our plan to become the UK's leading listed property business for long-term social impact.  

· As an initial step, the Assura Community Fund has been launched with an initial contribution of £2.5 million to support health-improving projects in the communities around our buildings, furthering our support for charity partners in place before COVID-19.

Predictable business model demonstrates resilience in uncertain times  

· Strong portfolio of 576 properties with passing rent roll up 6% to £108.9 million (2019: £102.7 million) and WAULT of 11.7 years (2019: 12.0 years).

· EPRA earnings have increased by 6% to £67.5 million, EPRA EPS has grown 4% to 2.8 pence per share (2019: £63.8 million, 2.7 pence per share)

· Profit before tax at £78.9 million, reflecting higher net rental income following additions to the portfolio and lower positive valuation movement than prior year (2019: £84.0 million).

· As at 31 March 2020, portfolio value is up 8% to £2,139.0 million (2019: £1,978.8 million).

· Portfolio Net Initial Yield ("NIY") at 4.68% (2019: 4.74%).

· Continued strong progress with developments, bolstered by the acquisition of GPI: four schemes completed, a further 15 on site at a total cost of £81 million.

· Continued track record of investment: 28 high-quality acquisitions for consideration of £119 million, 19 disposals with proceeds of £20.1 million.

· 32 lease re-gears completed in respect of £2.9 million of existing rent roll, extending those leases by a weighted average of 10.5 years

· Dividend increased to 0.71 pence per share with effect from the July 2020 payment.

Well-funded for future growth

· Renewed focus on development and asset enhancement: immediate development pipeline totalling £77 million; acquisitions pipeline at £67 million in legal hands; asset enhancement capital projects of £17 million.

· 38 lease re-gears agreed and currently in legal hands covering £4.6 million of existing rent roll.

· As at 31 March 2020 gross debt stood at £847 million with undrawn facilities of £220 million.

· Equity raise successfully completed on 7 April 2020 generating gross proceeds of £185 million.

· LTV of 38% at 31 March 2020 (30% proforma following equity placing) provides continued headroom to build portfolio.

· Today we announce the extension of our revolving credit facility to November 2024.

Summary results

Financial performance	March 2020	March 2019	Change
EPRA earnings per share	2.8p	2.7p	3.7%
Profit before tax	£78.9m	£84.0m	(6.1)%
Net rental income	£103.7m	£95.2m	8.9%
Dividend per share	2.75p	2.65p	3.8%
Property valuation and performance	March 2020	March 2019	Change
Investment property	£2,139m	£1,979m	8.1%
Diluted EPRA NAV per share	53.9p	53.3p	1.1%
Rent roll	£108.9m	£102.7m	6.4%
Financing	March 2020	March 2019	Change
Loan to Value ("LTV") ratio	38%	34%	4ppts
Undrawn facilities and cash	£238m	£287m	(17.1)%
Weighted average cost of debt	3.03%	3.24%	(21)bps

Alternative Performance Measures ("APMs")

The highlights page and summary results table above include a number of financial measures to describe the financial performance of the Group, some of which are considered APMs as they are not defined under IFRS. Further details are provided in the CFO Review, notes to the accounts and Glossary.   

 

For further information, please contact:

Assura plc: Jayne Cottam, CFO David Purcell, Head of Financial Reporting	Tel: [phone] Email: [e-mail]
Finsbury: Gordon Simpson James Thompson	Tel: [phone] Email: [e-mail]

A presentation followed by live Q&A will be streamed at the link below at 10.00am BST.

Webcast link: https://webcasting.brrmedia.co.uk/broadcast/5eafe78331da814c9fc6d528

This announcement contains inside information as defined in Article 7 of the EU Market Abuse Regulation No 596/2014 and has been announced in accordance with the Company's obligations under Article 17 of that Regulation.

Notes to Editors

Assura plc, a constituent of the FTSE 250 and the EPRA* indices, is a UK REIT and long-term investor in and developer of primary care property. The company, headquartered in Warrington, works with GPs, health professionals and the NHS to create outstanding spaces for health services in our communities. At 31 March 2020, Assura's property portfolio was valued at £2,139 million.

Further information is available at www.assuraplc.com

*EPRA is a registered trademark of the European Public Real Estate Association.

 

Chairman's statement

Dear shareholder,

In a year which began amidst Brexit turmoil then saw the keys to Number 10 being passed on, a general election and our formal departure from the European Union, the challenges for the NHS - both emerging and constant - were never far from the front pages. In our buildings across the country, primary care and NHS staff continued delivering care day in, day out. Millions of patients flowed through the doors to access GP appointments, diagnostic tests, physiotherapy, minor surgery, kidney dialysis, IVF and a myriad of other primary care services.

And then the virus hit. The final few weeks of the financial year, in which those using our sites rose to the challenge of the biggest global crisis since the second world war, brought into sharp focus the very best of this business, its purpose and its people.

2019-20 had seen Assura bring 32 primary care buildings into the portfolio, progress 15 brand new medical centres for the NHS and launch improvement works to create more pleasant environments for patients and better workplaces for primary care teams. Our purpose - to create outstanding spaces for health services in our communities - was well and truly embedded in the way we had continued to grow our work and our partnerships with the health service. Our research and development activities, to shape the future for medical centre design as primary care embeds digital technology, were launching some very different conversations about the health spaces we will need in the years to come. And when COVID-19 became the single most important issue facing our occupiers, the team stepped up in ways we could not have imagined.

Whether it was bringing vacant space into use to help with respiratory care and testing, overspill parking for NHS staff or supporting occupiers' evolving premises needs, the team was there to support. They liaised with colleagues across the health service to offer support in the emergency response and planning to build capacity for the months ahead. Through remote working, Assura's full service remained for all urgent building issues, for temporary reconfigurations and to make sure essential works and inspections could still go ahead to ensure primary care buildings could run effectively. Contractors donated PPE to practices in our buildings and helped create temporary drive-in stations. Assura supported existing charity partners with additional funding and helped local grant recipients to shift focus onto COVID-related health needs.

As the efforts continue and the world begins to look ahead and plan for how we will all do our bit to help our country kick-start its economy once again, our approach to governance and our corporate purpose underpin those conversations within Assura. Values-based leadership has been Assura's 'North Star' throughout the crisis. The diversity of skills on our board, clear committee structures and priorities have been the foundation, overlaid by a flexible approach to listen, understand and facilitate speedy action. We continue to hold true to our focus on collaboration with the health services, our customers and our communities. Assura's continued solid progress, financial strength, strong pipeline of investment in NHS infrastructure and the quality of service to the primary care and NHS Trust teams using our buildings are the hallmarks of this approach.

The team's response to COVID-19 makes it particularly timely for us to be launching Assura's social impact strategy this year. It builds on the social and community drivers which have long been innate to this business and its purpose, and you can read more in the CEO statement.

This is an incredibly challenging time, and we all share the acute sense that the actions we take right now to support our occupiers and the wider NHS are how we will be judged by both you as our investors, and by the wider world. As a board, we are proud to see Assura's commitment and strategy to exceed those expectations.

Ed Smith CBE
Non-Executive Chairman

 

CEO statement

With the outbreak of COVID-19, the importance of the NHS to our society has never been more apparent. Assura has worked closely with the NHS and our GP partners since the onset of the crisis, to make sure we can best support the health service while also focusing on the safety and wellbeing of our colleagues, occupiers and their patients.

Assura has always been focused on fulfilling our purpose of creating outstanding spaces that best support the health services in all of our communities, and we are proud of what we have achieved over the years. Over the course of the last financial year we have been reflecting on this purpose, and have assessed our strategy to see where we can make a greater contribution to society. Following this evaluation, we are placing our social performance at the heart of our strategy, and launching a plan to make Assura the UK's leading listed property business for long-term social impact. Our sixbysix ambition - that by 2026 six million people will have benefitted from improvements to and through our healthcare buildings - aims to maximise our contribution to society whilst minimising our impact on the environment. The plan takes into account the many different elements of our business: our buildings, our people, our operations, our investors, and our communities.

As an initial step in achieving this objective, we were delighted to announce this year the launch of the Assura Community Fund, with an initial funding of £2.5 million from our recent successful equity raise. This will work to support the charities, voluntary organisations and community groups working across the UK around Assura's healthcare buildings, to support healthier communities for the public benefit.

The intention to become the UK's leading listed property business for long-term social impact is both exciting and ambitious. It builds on the already strong foundations of the wider business and the impact our buildings can have on our communities. The current pandemic has only reemphasised to us the importance and clear relevance of our ambitions. I look forward to updating you on our progress.

Financial and operational performance

Assura's business and our ability to continue to deliver on our purpose to create outstanding spaces for health services in our communities is built on the reliability and resilience of our cash flows. Our resilience is built on the strong foundations of our long-term, secure cash flows - even in these most challenging of circumstances we have retained our normal patterns of cash collection -  supported by a weighted average unexpired lease term of 11.7 years and a strong financial position (demonstrated by our A- credit rating from Fitch Ratings Ltd).

While remaining resilient, Assura has consistently demonstrated an ability to identify and secure new opportunities for growth, building on our market leading capabilities to manage, invest and develop outstanding spaces for health services in our communities.

We have continued our strong track record of investing in new properties, completing 28 acquisitions for a total consideration of £119 million. Our investment team continues to leverage the relationships we have with existing tenants to identify new opportunities, as well as analysing our bespoke database which contains details on all the medical centres in the UK.

The design of modern fit-for-purpose GP surgeries has always been a cornerstone of our development activities and we have delivered over £400 million of new developments and improvements to existing properties over 17 years, with circa £100 million of that provided in the last three years. Our development capability was further strengthened in May 2019 when we completed acquisition of the development pipeline and team of GPI, one of the leading developers in primary care for the last 25 years. Their experienced team and strong pipeline were a welcome addition to the Assura proposition, helping us achieve one of the most successful years in our history, with four schemes completed in the year and a further 15 on site at the year-end.

Assura has a high-quality portfolio of 576 properties, which has been meticulously assembled over the course of our 17-year history. This is an essential part of our growth strategy as we carefully review every asset for opportunities to enhance its lifetime cash flows and impact on the community. Reflecting the importance of this activity, we have now set total contracted rental income as a key strategic KPI. This metric is a combination of our passing rent roll and lease length, and is an effective measure of our ability to both grow and extend our cash flows for the long-term. It captures the crucial value-enhancing activity of our portfolio management teams as they agree rent reviews, complete lease re-gears, let vacant space and undertake physical extensions. This year, the team completed 296 rent reviews, 32 lease re-gears and 15 new tenancies for our vacant space. This has enabled us to increase our total contracted rental income to £1.4 billion and, for the second half of the year, increase our weighted average unexpired lease term which stands at 11.7 years.

The combination of these elements has enabled us to continue our strong track record of growth year-on-year. Our portfolio value has increased by 8% to £2.1 billion and our passing rent roll is up 6% to £109 million. Our EPRA earnings have increased by 6% to £67.5 million and on a per share basis, this translates to a 4% growth in EPRA EPS to 2.8 pence per share. Taking into account valuation movements, our net profit is £78.9 million or 3.3 pence per share.

Finally, we announced last year that we would review our dividend level annually, in line with our annual results. Today we announce a 1.9% increase in the quarterly dividend payment to 0.71 pence with effect from the July 2020 payment.

Assura outlook

Assura's success, and its future strategy, is built on our complementary offer of investment, development and management of premises to our clients. This multi-faceted approach enables us to better understand the requirements of our customers and anticipate their future needs. This year we have demonstrated the effectiveness of this model, and the resilience of our business to extreme economic shocks. However, the real test will be our ability to sustain and support this growth for the long-term.

We enter the new financial year with a strong immediate pipeline. In development, we are on site at 15 sites with a gross development spend of £81 million, an immediate pipeline of £77 million of development opportunities that are expected to commence within the next 12 months, and an extended pipeline of £199 million of further opportunities where Assura is the exclusive partner. Acquisition opportunities in legal hands total £67 million and we have £17 million of asset enhancement capital projects in the immediate pipeline.

We continue to use our market knowledge and long-established relationships to source new opportunities across both investment and development, while also continually reviewing our existing portfolio for value enhancement initiatives. This gives us continued confidence in our future growth plans, although constructing new medical centres and improving those we already own through modified working approaches means the inevitable delays to some projects as a result of COVID-19.

In order to fund our future growth plans and to support our strong financial position, we completed an equity raise on 7 April 2020 to raise gross proceeds of £185 million. In addition, inMay 2020 we have renewed our current revolving credit facility with a consortium of four banks for maturity in November 2024. This financial strength further underpins our future growth prospects.

Market outlook

Healthcare provision in the UK has been transformed in recent weeks, as the NHS has responded to the requirements of dealing with a pandemic. The short-term focus on acute care has resulted in a dramatic drop-off in A&E attendance and most primary care provision is currently being delivered remotely. This is not sustainable in the long-term, and the backlog in non-COVID-19 treatments will clearly need to be addressed.

In addition, it is likely that the adoption of technology will accelerate and there will be a greater openness to new ways of working and cooperation between primary and acute care, as providers look to shift more services away from hospitals. These emerging trends will only further highlight the urgent need for investment in primary care infrastructure.

As we emerge from this crisis, the NHS and its funding needs will be at the forefront of high-level discussions in Westminster and beyond. It is possible that healthcare funding will increase again in the near future, and ensuring that there is sufficient capacity to support this will likely become a key priority for the NHS.

However, the nature of its buildings in terms of design, sustainability, built-in technology, and flexibility will all need to be enhanced. Assura has a proud track record of innovation in primary care building design. This year, we have developed the UK's first medical centre built on cognitive supportive design principles, with a plan to adopt these principles across our estate in the future. We have continued to develop innovative approaches to the sustainability of our buildings, and we recently launched our 2030 health and wellbeing concept.

As the scale and nature of these evolving requirements become clearer, we are ideally placed to support the needs of the NHS. Assura has the financial strength, innovative wherewithal and necessary skills to meet these challenges. Despite the unprecedented level of uncertainty at the current time, we will continue to look forward to the future with confidence in Assura's prospects.

Jonathan Murphy
CEO

20 May 2020

CFO Review

A robust business model

I would like to start by saying that our business has stayed resilient in these challenging times. Rent receipts for the March - June 2020 rent quarter have been received as expected and we have worked with a small number of our non-NHS occupiers to agree payment plans where necessary. Post year end we have completed a £185 million equity placing to invest in our pipeline of acquisition and development opportunities and extended our revolving credit facility until November 2024.

Alternative Performance Measures ("APMs")

The financial performance for the period is reported including a number of APMs (financial measures not defined under IFRS). We believe that including these alongside IFRS measures provides additional information to help understand the financial performance for the period, in particular in respect of EPRA measures which are designed to aid comparability across real estate companies. Explanations to define why the APM is used and calculations of the measures, with reconciliations back to reported IFRS measures normally in the Glossary, are included where possible.

Portfolio as at 31 March 2020 £2,139.0 million (2019: £1,978.8 million)

Our business is based on our investment portfolio of 576 properties. This has a passing rent roll of £108.9 million (2019: £102.7 million), 85% of which is underpinned by the NHS. The WAULT is 11.7 years and 64% of the rent roll will still be contracted in 2030.

At 31 March 2020 our portfolio of completed investment properties was valued at a total of £2,093.6 million, including investment properties held for sale of £20.3 million (2019: £1,960.5 million and £17.2 million), which produced a net initial yield ("NIY") of 4.68% (2019: 4.74%). 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 4.94% (2019: 4.77%). Adjusting this Royal Institution of Chartered Surveyors ("RICS") standard measure to reflect the advanced payment of rents, the true equivalent yield is 4.96% (2019: 4.91%).

Our EPRA NIY, based on our passing rent roll and latest annual direct property costs, was 4.69% (2019: 4.73%).

	2020 £m	2019 £m
Net rental income	103.7	95.2
Valuation movement	9.7	20.2
Total Property Return	113.4	115.4

Expressed as a percentage of opening investment property plus additions, Total Property Return for the year was 5.3% (2019: 5.9%). This can be split as 4.9% from net rental income (2019: 4.8%) and 0.4% from valuation movement (2019: 1.1%).

Our annualised Total Return over the five years to 31 December 2019 as calculated by MSCI was 9.0% compared with the MSCI All Healthcare Benchmark of 8.7% over the same period.

The net valuation gain in the year of £9.7 million comprises a 0.93% uplift on a like-for-like basis net of movements relating to properties acquired in the period. Whilst yield shift in the sector has been to a lesser extent than prior years, the positive valuation increase reflects the benefit of our asset enhancement activity during the year, with rent reviews and lease re-gears flowing through to the property valuations. The NIY on our assets continues to represent a substantial premium over UK gilts at 31 March 2020; the 15-year gilt being at 0.59% and the 10-year at 0.35%.

Investment and development activity

We have invested substantially during the period, 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:

	2020 £m
Acquisition of completed medical centres	119.4
Developments/forward funding arrangements	47.3
Like-for-like portfolio (improvements)	1.7
Total capital expenditure	168.4

The majority of the growth in our investment portfolio has come from the acquisition of 28 properties for £119 million during the period in addition to our four completed developments (value £15 million).

These additions were at a combined total cost of £134 million with a combined passing rent of £6.1 million (yield on cost of 4.6%) and a WAULT of 18.3 years.

We continue to source properties that meet our investment criteria for future acquisition. The acquisition pipeline stands at £67 million, being opportunities that are currently in solicitors' hands and which we would hope to complete within three to six months, subject to satisfactory due diligence. During the current COVID-19 situation, we have seen transactions continue in our market, completing acquisitions and disposals post year-end in the ordinary course of business.

During the year, we disposed of 19 properties which we considered to have lower growth prospects than the remainder of our portfolio, generating proceeds of £20 million at a premium over book value of £1.7 million. In addition at the year end we had exchanged contracts for the disposal of a further 20 properties for total consideration of £17 million. This sale completed in May and the assets were classified as held for sale at the balance sheet date.

We are continually reviewing our portfolio for any indication that properties no longer meet our investment criteria.

Our development team has had a successful year both taking schemes through to completion and converting schemes from our pipeline to on site, as well as replenishing the pipeline. This delivery has been boosted by the acquisition of the pipeline and team of primary care developer GPI.

The acquisition of GPI added four experienced development surveyors to our team and an initial £92 million to our immediate and extended pipelines. Since acquisition, the team has integrated well with our existing team, and several schemes have moved on site (Launceston, and Ware by year end, and Colney in April) with the remainder of the pipeline progressing well.

Of the 15 developments on site at 31 March 2020, seven are under forward funding agreements and eight are in-house developments. These have a combined development cost of £81 million of which we had spent £50.3 million as at the year end.

In addition to the 15 developments currently on site, we have an immediate pipeline of 18 properties (estimated cost £77 million) which we would hope to be on site within 12 months notwithstanding any potential delays due to COVID-19. This takes the total immediate development pipeline to £158 million, which includes an increasing proportion that are directly sourced and developed by our in-house team (as opposed to being forward funded).

We recorded a revaluation gain of £1.3 million in respect of investment property under construction (2019: £1.1 million).

Live developments and forward funding arrangements

	Estimated completion date	Development costs	Costs to date	Size
Bournville	May-21	£4.4m	£2.7m	2,380 sq.m
Broadway	Jul-21	£3.6m	£0.5m	1,027 sq.m
Canterbury	Mar-21	£3.7m	£2.0m	1,053 sq.m
Cinderford	Sep-20	£5.5m	£4.9m	1,491 sq.m
Great Barr	Oct-20	£4.6m	£3.4m	1,170 sq.m
Hereford	Dec-20	£9.2m	£7.0m	2,247 sq.m
Launceston	Jan-21	£4.0m	£2.4m	1,267 sq.m
Netherfield	Sep-20	£4.7m	£4.2m	1,247 sq.m
Newtown	Nov-20	£4.9m	£3.1m	1,317 sq.m
St Leonards	Oct-20	£8.6m	£4.1m	2,010 sq.m
Stafford	Apr-20	£7.2m	£6.9m	2,800 sq.m
Stourbridge	Dec-20	£7.2m	£2.7m	1,346 sq.m
Timperley	Nov-20	£2.1m	£0.2m	424 sq.m
Tonbridge	Oct-20	£5.6m	£4.3m	1,405 sq.m
Ware	Jul-21	£5.2m	£1.9m	1,191 sq.m

Portfolio management

Our rent roll grew by £6.2 million during the year to £108.9 million. £1.3 million of this growth was from rent reviews. We successfully concluded 296 rent reviews during the year (2019: 178 reviews) to generate a weighted average annual rent increase of 1.79% (2019: 2.18%) on those properties, which is a figure that includes 49 reviews we chose not to instigate in the year. These 296 reviews covered £29.9 million or 29% of our rent roll at the start of the year and the absolute increase of £1.3 million is a 4.5% increase on this rent. Our portfolio benefits from a 30% weighting in fixed, RPI and other uplifts which generated an average uplift of 2.58% during the period. The majority of our portfolio is subject to open market reviews and these have generated an average uplift of 1.18% (2019: 1.10%) during the period.

Our total contracted rental income, which is a function of current rent roll and unexpired lease term on the existing portfolio and on-site developments, has increased from £1.35 billion at March 2019 to £1.43 billion at March 2020. We grow our total contracted rental income through additions to the portfolio and getting developments on site, but increasingly our focus has been extending the unexpired term on the leases on our existing portfolio ("re-gears").

The team has had success in delivering 32 re-gears in the period, covering £2.9 million of rent roll and adding 10.5 years to the WAULT for those particular leases. We also have terms agreed on a pipeline of 38 regears covering a further £4.7 million of rent roll and these are currently in legal hands.

We have secured 15 new tenancies with an annual rent roll of £0.4 million and a pipeline in legal hands of five new tenancies (rent £0.2 million). Our EPRA Vacancy Rate at March 2020 is 1.6% (2019: 1.5%).

We completed four asset enhancement capital projects during the year and are currently finalising plans to start two more early in the new financial year. In total we have a pipeline of 22 asset enhancement capital projects we hope to complete in the next two years. These have an estimated capital spend of £17 million, additional rent of £1.3 million and improve the WAULT on those properties.

Our current rent roll is £108.9 million and, on a proforma basis, would increase to approximately £135 million once the acquisition pipeline and extended development pipeline are completed plus anticipated rent reviews and asset enhancements identified.

Administrative expenses

The Group analyses cost performance by reference to our EPRA Cost Ratios (including and excluding direct vacancy costs) which were 12.6% and 11.5% respectively (2019: 12.5% and 11.4%).

We also measure our operating efficiency as the ratio of administrative costs to the average gross investment property value. This ratio during the period equated to 0.48% (2019: 0.47%) and administrative costs stood at £9.9 million (2019: £8.7 million).

The increase in the ratios during the period reflects the investment in additional team members, in particular to enhance our capabilities to deliver our growing development and asset enhancement pipelines.

Financing

As we continue to grow through both acquisitions and developments, we have obtained additional lending during the period on an unsecured basis, in line with our financing strategy. Fitch have also reiterated our investment grade rating of A-, being unchanged from initiation.

In August 2019, we raised £107 million of unsecured debt via the issue of privately placed notes with existing lenders. The notes were drawn in two tranches, £47 million drawn in August and £60 million drawn in October 2019, with maturities of 10 and 15 years respectively, and a fixed weighted average interest rate of 2.30%.

Financing statistics	2020	2019
Net debt (Note 11)	£828.6m	£667.8m
Weighted average debt maturity	6.8 yrs	7.3 yrs
Weighted average interest rate	3.03%	3.24%
% of debt at fixed/capped rates	91%	96%
EBITDA to net interest cover	3.6x	3.8x
Net debt to EBITDA	8.9x	7.7x
LTV (Note 11)	38%	34%

Subsequent to the year end we were pleased to obtain the support of our equity investors in completing a share placing generating gross proceeds of £185 million to fund our pipeline of development and acquisition opportunities. On a proforma basis, this would reduce our LTV from 38% at year end to 30% which will then increase as we invest in our pipeline. Our LTV policy allows us to reach the range of 40% to 50% should the need arise.

At 31 March 2020, 91% of our facilities are at fixed interest rates, although this will change as we draw on the RCF which is at a variable rate. The weighted average debt maturity is 6.8 years.

As at 31 March 2020, we had undrawn facilities and cash totalling £238.5 million. Details of the outstanding facilities and their covenants are set out in Note 8.

Net finance costs presented through EPRA earnings in the year amounted to £26.1 million (2019: £22.4 million), having increased due to our additional borrowings funding the growth in our portfolio.

Profit before tax

Profit before tax for the period was £78.9 million (2019: £84.0 million). This reduction reflects the increase in net rental income reflected in EPRA earnings (as highlighted by the table below), offset by a lower positive valuation movement compared with the prior year.

EPRA earnings

	2020 £m	2019 £m
Net rental income	103.7	95.2
Administrative expenses	(9.9)	(8.7)
Net finance costs	(26.1)	(22.4)
Share-based payments and taxation	(0.2)	(0.3)
EPRA earnings	67.5	63.8

The movement in EPRA earnings can be summarised as follows:

	£m
Year ended 31 March 2019	63.8
Net rental income	8.5
Administrative expenses	(1.2)
Net finance costs	(3.7)
Share-based payments	0.1
Year ended 31 March 2019	67.5

EPRA earnings has grown 5.8% to £67.5 million in the year to 31 March 2020 reflecting the property acquisitions and developments completed as well as the impact of our asset management activity with rent reviews and new lettings. This has been offset by increases in administrative expenses and financing costs.

Earnings per share

The basic earnings per share ("EPS") on profit for the period was 3.3 pence (2019: 3.5 pence).

EPRA EPS, which excludes the net impact of valuation movements, was 2.8 pence (2019: 2.7 pence).

Based on calculations completed in accordance with IAS 33, share-based payment schemes are currently expected to be dilutive to EPS, with 2.5 million new shares expected to be issued. The dilution is not material as illustrated in the following table:

EPS measure	Basic	Diluted
Profit for year	3.3	3.3
EPRA	2.8	2.8

Dividends

Total dividends settled in the year to 31 March 2020 were £66.2 million or 2.76 pence per share (2019: 2.65 pence per share). £9.6 million of this was satisfied through the issuance of shares via scrip.

As a REIT with requirement to distribute 90% of taxable profits (Property Income Distribution, "PID"), the Group expects to pay out as dividends at least 90% of recurring cash profits. Three of the four dividends paid during the year were normal dividends (non-PID), as a result of brought forward tax losses and available capital allowances. The October 2019 dividend was paid as a PID and future dividends will be a mix of PID and normal dividends as required.

The table below illustrates our cash flows over the period:

	2020 £m	2019 £m
Opening cash	18.3	28.7
Net cash flow from operations	66.3	72.9
Dividends paid	(56.6)	(55.0)
Investment:
Property acquisitions	(132.6)	(210.1)
Development expenditure	(53.7)	(21.2)
Sale of properties	20.1	7.1
Financing:
Net borrowings movement	156.7	195.9
Closing cash	18.5	18.3

Net cash flow from operations differs from EPRA earnings due to movements in working capital balances.

Diluted EPRA NAV movement

	£m	Pence per share
Diluted EPRA NAV at 31 March 2019	1,279.4	53.3
EPRA earnings	67.5	2.8
Capital (revaluations and capital losses)	11.4	0.5
Dividends	(66.2)	(2.8)
Other	9.8	0.1
Diluted EPRA NAV at 31 March 2020	1,301.9	53.9

Our Total Accounting Return per share for the year ended 31 March 2020 is 6.3% of which 2.75 pence per share (5.2%) has been distributed to shareholders and 0.9 pence per share (1.1%) is the movement on EPRA NAV.

Jayne Cottam

CFO
20 May 2020

EPRA performance measures

The calculations below are in accordance with the November 2016 EPRA recommendations.

	2020	2019
EPRA EPS (p)	2.8	2.7
EPRA Cost Ratio (including direct vacancy costs) (%)	12.6	12.5
EPRA Cost Ratio (excluding direct vacancy costs) (%)	11.5	11.4

	2020	2019
EPRA NAV (p)	53.9	53.3
EPRA NNNAV (p)	52.7	52.5
EPRA NIY (%)	4.69	4.73
EPRA "topped-up" NIY (%)	4.73	4.78
EPRA Vacancy Rate (%)	1.6	1.5

Consolidated income statement

For the year ended 31 March 2020

		Note	EPRA  m	2020 Capital and non-EPRA  m	Total  m	EPRA  m	2019 Capital and non-EPRA  m	Total  m
Gross rental and related income			107.8	3.7	111.5	99.3	3.1	102.4
Property operating expenses			(4.1)	(3.7)	(7.8)	(4.1)	(3.1)	(7.2)
Net rental income		2	103.7	-	103.7	95.2	-	95.2
Administrative expenses			(9.9)	-	(9.9)	(8.7)	-	(8.7)
Revaluation gains		6	-	9.7	9.7	-	20.2	20.2
Gain on sale of property		6	-	1.7	1.7	-	-	-
Share-based payment charge			(0.2)	-	(0.2)	(0.3)	-	(0.3)
Finance revenue			-	-	-	0.1	-	0.1
Finance costs		3	(26.1)	-	(26.1)	(22.5)	-	(22.5)
Profit before taxation			67.5	11.4	78.9	63.8	20.2	84.0
Taxation			-	-	-	-	-	-
Profit for the year attributable to equity holders of the parent			67.5	11.4	78.9	63.8	20.2	84.0
EPS	- basic & diluted	4			3.3p			3.5p
EPRA EPS	- basic & diluted	4	2.8p			2.7p

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. All income arises from continuing operations in the UK.

 Consolidated balance sheet

As at 31 March 2020

	Note	2020 £m	2019 £m
Non-current assets
Investment property	6	2,139.0	1,978.8
Property work in progress		11.1	-
Property, plant and equipment		0.2	0.2
Investments		0.2	-
Deferred tax asset		0.5	0.5
		2,151.0	1,979.5
Current assets
Cash, cash equivalents and restricted cash		18.5	18.3
Trade and other receivables		19.1	14.7
Property assets held for sale	6	20.7	17.6
		58.3	50.6
Total assets		2,209.3	2,030.1
Current liabilities
Trade and other payables		32.2	37.5
Borrowings	8	11.0	11.0
Head lease liabilities		0.1	-
Deferred revenue	7	22.8	21.3
		66.1	69.8
Non-current liabilities
Borrowings	8	830.5	672.3
Head lease liabilities		5.5	2.8
Deferred revenue	7	4.8	5.3
		840.8	680.4
Total liabilities		906.9	750.2
Net assets		1,302.4	1,279.9
Capital and reserves
Share capital	9	241.3	239.8
Share premium		595.5	587.4
Merger reserve	9	231.2	231.2
Retained earnings		234.4	221.5
Total equity		1,302.4	1,279.9
NAV per Ordinary Share   - basic	5	54.0p	53.4p
- diluted	5	53.9p	53.4p
EPRA NAV per Ordinary Share   - basic	5	54.0p	53.3p
- diluted	5	53.9p	53.3p

The financial statements were approved at a meeting of the Board of Directors held on 20 May 2020 and signed on its behalf by:

Jonathan Murphy  Jayne Cottam

CEO    CFO

Consolidated statement of changes in equity

For the year ended 31 March 2020

	Note	Share capital £m	Share premium £m	Merger reserve £m	Retained earnings £m	Total equity £m
1 April 2018		238.3	580.4	231.2	200.5	1,250.4
Profit attributable to equity holders		-	-	-	84.0	84.0
Total comprehensive income		-	-	-	84.0	84.0
Issue of Ordinary Shares	9	-	0.2	-	-	0.2
Dividends	10	1.5	6.8	-	(63.3)	(55.0)
Employee share-based incentives		-	-	-	0.3	0.3
31 March 2019		239.8	587.4	231.2	221.5	1,279.9
Profit attributable to equity holders		-	-	-	78.9	78.9
Total comprehensive income		-	-	-	78.9	78.9
Dividends	10	1.5	8.1	-	(66.2)	(56.6)
Employee share-based incentives		-	-	-	0.2	0.2
31 March 2020		241.3	595.5	231.2	234.4	1,302.4

Consolidated statement of changes in equity

For the year ended 31 March 2020

	Note	2020 £m	2019 £m
Operating activities
Rent received		104.6	100.8
Interest paid and similar charges		(23.7)	(16.7)
Fees received		0.9	0.9
Interest received		-	0.1
Cash paid to suppliers and employees		(15.5)	(12.2)
Net cash inflow from operating activities		66.3	72.9
Investing activities
Purchase of investment property		(132.4)	(210.1)
Development expenditure		(53.7)	(21.2)
Proceeds from sale of property		20.1	7.1
Other investments		(0.2)	-
Net cash outflow from investing activities		(166.2)	(224.2)
Financing activities
Dividends paid		(56.6)	(55.0)
Repayment of loans/borrowings	8	-	(100.0)
Long-term loans draw down	8	157.0	298.4
Interest on head lease liabilities		(0.1)	-
Loan issue costs	8	(0.2)	(2.5)
Net cash inflow from financing activities		100.1	140.9
Increase/(decrease) in cash and cash equivalents		0.2	(10.4)
Opening cash and cash equivalents		18.3	28.7
Closing cash and cash equivalents		18.5	18.3

 

Notes to the accounts

For the year ended 31 March 2020

1. Corporate information and operations

The Company is a public limited company, limited by shares, incorporated and domiciled in England and Wales, whose shares are publicly traded on the main market of the London Stock Exchange.

With effect from 1 April 2013, the Group has elected to be treated as a UK REIT.

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 years ended 31 March 2020 and 31 March 2019, 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. The auditor has reported on those accounts: their reports were unqualified, did not draw attention to any matters by way of emphasis, and did not contain statements under s498(2) or (3) of the Companies Act 2006. 

The Directors consider that the Group has, at the time of approving the Group financial statements, adequate resources to continue in operational existence for the foreseeable future and have therefore continued to adopt the going concern basis in preparing the preliminary consolidated financial information. In reaching this conclusion, the Directors have considered the specific impact in respect of Brexit and COVID-19, neither or which, in themselves, are considered significant risks to the business based on the current position.  

The Annual Report will be posted to Shareholders on or before 31 July 2020.

The Preliminary Announcement was approved by the Board of Directors on 20 May 2020.

The Announcement and Annual Report can also be accessed on the internet at www.assuraplc.com.

2. Net rental income

	2020 £m	2019 £m
Rental revenue	106.9	98.4
Service charge income	3.7	3.1
Other related income	0.9	0.9
Gross rental and related income	111.5	102.4

	2020 £m	2019 £m
Gross rental and related income	111.5	102.4
Direct property expenses	(4.1)	(4.1)
Service charge expenses	(3.7)	(3.1)
Net rental income	103.7	95.2

3. Finance costs

	2020 £m	2019 £m
Interest payable	25.6	21.8
Interest capitalised on developments	(1.0)	(0.5)
Amortisation of loan issue costs	1.4	1.2
Interest on head lease liability	0.1	-
Total finance costs	26.1	22.5

Interest was capitalised on property developments at the appropriate cost of finance at commencement. During the year this ranged from 4% to 5% (2019: 4% to 5%).

4. Earnings per Ordinary Share

	Earnings 2020 £m	EPRA  earnings  2020 £m	Earnings  2019  m	EPRA  earnings 2019 £m
Profit for the year	78.9	78.9	84.0	84.0
Revaluation gains		(9.7)		(20.2)
Gain on sale of property		(1.7)		-
EPRA earnings		67.5		63.8
Weighted average number of shares in issue - basic	2,407,359,922	2,407,359,922	2,391,704,889	2,391,704,889
Potential dilutive impact of share options	2,506,034	2,506,034	560,853	560,853
Weighted average number of shares in issue - diluted	2,409,865,956	2,409,865,956	2,392,265,742	2,392,265,742
Earnings per Ordinary Share - basic & diluted	3.3p	2.8p	3.5p	2.7p

The current estimated number of shares over which nil-cost options may be issued to participants is 2.5 million.

5. NAV per Ordinary Share

	NAV  2020  m	EPRA  NAV  2020 £m	NAV 2019  m	EPRA NAV 2019 £m
Net assets	1,302.4	1,302.4	1,279.9	1,279.9
Deferred tax		(0.5)		(0.5)
EPRA NAV		1,301.9		1,279.4
Number of shares in issue	2,413,241,827	2,413,241,827	2,398,371,795	2,398,371,795
Potential dilutive impact of PSP	2,506,034	2,506,034	560,853	560,853
Diluted number of shares in issue	2,415,747,861	2,415,747,861	2,398,932,648	2,398,932,648
NAV per Ordinary Share - basic	54.0p	54.0p	53.4p	53.3p
- diluted	53.9p	53.9p	53.4p	53.3p

		EPRA NNNAV 2020 £m		EPRA NNNAV 2019 £m
EPRA NAV		1,301.9		1,279.4
Mark to market of fixed rate debt		(30.9)		(19.2)
EPRA NNNAV		1,271.0		1,260.2
EPRA NNNAV per Ordinary Share - basic		52.7p		52.5p

The EPRA measures set out above are in accordance with the Best Practices Recommendations of the European Public Real Estate Association dated November 2016. In October 2019, EPRA published three new measures to replace EPRA NAV and EPRA NNNAV with requirements for these to be reported from 31 March 2021 for Assura.

Mark to market adjustments have been provided by the counterparty or by reference to the quoted fair value of financial instruments.

6. 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 2020. The properties have been valued individually and on the basis of open market value (which the Directors consider to be the fair value) in accordance with RICS Valuation - Professional Standards 2020 ("the Red Book"). Valuers are paid on the basis of a fixed fee arrangement, subject to the number of properties valued.

	Investment 2020 £m	IPUC 2020 £m	Total 2020 £m	Investment 2019  m	IPUC  2019 £m	Total 2019  m
Opening market value	1,952.9	23.0	1,975.9	1,707.7	22.2	1,729.9
Additions:
- acquisitions	119.4	-	119.4	218.3	-	218.3
- improvements	1.7	-	1.7	2.2	-	2.2
	121.1	-	121.1	220.5	-	220.5
Development costs	-	47.3	47.3	-	21.1	21.1
Transfers	15.1	(15.1)	-	22.0	(22.0)	-
Transfer (to)/from assets held for sale	(18.9)	-	(18.9)	(9.3)	0.2	(9.1)
Capitalised interest	-	1.0	1.0	-	0.5	0.5
Disposals	(2.7)	-	(2.7)	(7.1)	-	(7.1)
Unrealised surplus on revaluation	8.4	1.3	9.7	19.1	1.1	20.2
Closing market value	2,075.9	57.5	2,133.4	1,952.9	23.1	1,976.0
Add head lease liabilities recognised separately	5.6	-	5.6	2.8	-	2.8
Closing fair value of investment property	2,081.5	57.5	2,139.0	1,955.7	23.1	1,978.8

	2020 £m	2019 £m
Market value of investment property as estimated by valuer	2,073.3	1,943.3
Add IPUC	57.5	23.1
Add capitalised lease premiums and rental payments	2.6	9.6
Add head lease obligations recognised separately	5.6	2.8
Fair value for financial reporting purposes	2,139.0	1,978.8
Completed investment property held for sale	20.3	17.2
Land held for sale	0.4	0.4
Total property assets	2,159.7	1,996.4

The total value of investment property is £2,093.6 million, which is completed investment property of £2,073.3 million plus £20.3 million of investment properties held for sale.

 

	2020 £m
Assets held for sale at 1 April 2019	17.6
Disposals during the year	(15.8)
Net transfers from investment property	18.9
Assets held for sale at 31 March 2020	20.7

At March 2020, 24 assets are held as available for sale (2019: 19 assets). These properties are either being activity marketed for sale or have a negotiated sale agreed which is currently in legal hands.

Fair value hierarchy

The fair value measurement hierarchy for all investment property and IPUC as at 31 March 2020 was Level 3 - Significant unobservable inputs (2019: 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 used to derive Level 3 fair values

The valuations have been prepared on the basis of fair market value which is defined in the Red Book as "the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arms-length transaction after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion".

Unobservable inputs

The key unobservable inputs in the property valuation are the equivalent yield and the ERV, which are explained in more detail below. It is also worth noting that the properties are subject to physical inspection by the valuers on a rotational basis (at least once every three years).

The equivalent yield ranges from 3.9% to 8.3% (2019: 4.00% to 8.00%), in respect of 96% of the portfolio by value. A decrease in the equivalent yield applied to a property would increase the market value. Factors that affect the equivalent yield applied to a property include the weighted average unexpired lease term, the estimated future increases in rent, the strength of the occupier covenant and the physical condition of the property. Lower yields generally represent properties with index-linked reviews, 100% NHS tenancies and longer unexpired lease terms, ranging from 3.90% to 4.65%. Higher yields (range 5.6% to 8.0%) are applied for a weaker occupier mix and leases approaching expiry. Our properties have a range of occupier mixes, rent review basis and unexpired terms. A 0.25% shift of equivalent yield would have approximately a £111.8 million (2019: £108.5 million) impact on the investment property valuation.

The ERV ranges from £100 to £427 per sq.m (2019: £100 to £425 per sq.m), in respect of 98% of the portfolio by value. An increase in the ERV of a property would increase the market value. A 1% increase in the ERV would have approximately a £21.0 million (2019: £19.6 million) increase in the investment property valuation. The nature of the sector we operate in, with long unexpired lease terms, low void rates, low occupier turnover and upward only rent review clauses, means that a significant fall in the ERV is considered unlikely.

COVID-19

As a result of the COVID-19 outbreak and the consequential impact upon global financial markets, the Group's external Valuers have taken into account latest guidelines from RICS and reported the Group's investment property valuations on the basis of 'material valuation uncertainty' as per VPS 3 and VPGA 10 of the RICS Red Book Global. The Directors have evaluated the basis, and meaning, of such preparation. Although uncertainty is present within the wider real estate sector, with varying impacts being observed, the Directors consider the sector in which the Group operates to be less impacted by adverse events seen across sectors. In addition, market evidence relating to completed transactions and those in progress within our sector do not indicate a lack of evidence or impact upon the valuations determined as at the balance sheet date. The basis of preparation primarily highlights future uncertainty and a higher degree of caution. The Directors have considered this also in respect of key sources of estimation uncertainty and have concluded based upon the sector and market trends observed, relative to the wider real estate, that the events of COVID-19 do not give rise to new course of key estimation uncertainty, nor do they impact the potential sensitivity level of a reasonable and possible change that may occur within the next 12 months.

7. Deferred revenue

	2020 £m	2019 £m
Arising from rental received in advance	22.3	20.9
Arising from pharmacy lease premiums received in advance	5.3	5.7
	27.6	26.6
Current	22.8	21.3
Non-current	4.8	5.3
	27.6	26.6

8. Borrowings

	2020 £m	2019 £m
At 1 April	683.3	486.3
Amount drawn down in year	157.0	298.4
Amount repaid in year	-	(100.0)
Loan issue costs	(0.2)	(2.5)
Amortisation of loan issue costs	1.4	1.1
At 31 March	841.5	683.3

Due within one year	11.0	11.0
Due after more than one year	830.5	672.3
At 31 March	841.5	683.3

The Group has the following bank facilities:

1. 10-year senior secured bond for £110 million at a fixed interest rate of 4.75% maturing in December 2021. The secured bond carries a loan to value ("LTV") 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). In addition, the bond is subject to a WAULT test of ten years which, if not met, gives the bondholder the option to request repayment of £5.5 million every six months. The WAULT of the charged properties is below ten years at 31 March 2020 and £11.0 million has therefore been shown as due within one year, at the option of the bondholder. At the date of this report, the option has not been taken up.

2. Five-year club revolving credit facility with Lloyds, HSBC, Santander and Barclays for £300 million on an unsecured basis at an initial margin of 1.50% above LIBOR, expiring in May 2021. The margin increases based on the LTV of the subsidiaries to which the facility relates, up to 2.0% where the LTV is in excess of 50%. The facility is subject to a historical interest cover requirement of at least 175%, maximum LTV of 60% and a weighted average lease length of seven years. As at 31 March 2020, £80 million of the facility was drawn (2019: £30 million drawn).

3. 10-year notes in the US private placement market for a total of £100 million. The notes are unsecured, have a fixed interest rate of 2.65% and were drawn on 13 October 2016. During the year, an additional £107 million of notes were issued in two series, £47 million in August 2019 and £60 million in October 2019, with maturities of ten and 15 years respectively and a weighted average fixed interest rate of 2.30%. The facilities are subject to a historical interest cover requirement of at least 175%, maximum LTV of 60% and a weighted average lease length of seven years.

4. £150 million of unsecured privately placed notes in two tranches with maturities of eight and ten years drawn on 20 October 2017. The weighted average coupon is 3.04%. The facility is subject to a historical cost interest cover requirement of at least 175%, maximum LTV of 60% and a weighted average lease length of seven years.

5. 10-year senior unsecured bond of £300 million at a fixed rate of 3% maturing July 2028. The facility is subject to an interest cover requirement of at least 150%, maximum LTV of 65% and priority debt not exceeding 0.25:1. In accordance with pricing convention on the bond market, the coupon and quantum of the facility are set to round figures with the proceeds adjusted based on market rates on the day of pricing.

The Group has been in compliance with all financial covenants on all of the above loans as applicable throughout the year.

9. Share capital

	Number of shares 2020	Share  capital  2020 £m	Number  of shares  2019	Share capital 2019 £m
Ordinary Shares issued and fully paid
At 1 April	2,398,371,795	239.8	2,383,122,112	238.3
Issued 18 April 2018 - scrip	-	-	2,355,911	0.2
Issued 18 July 2018 - scrip	-	-	6,467,532	0.7
Issued 17 October 2018 - scrip	-	-	1,945,311	0.2
Issued 16 January 2019 - scrip	-	-	4,195,055	0.4
Issued 14 February 2019	-	-	285,874	-
Issued 17 April 2019 - scrip	3,707,485	0.4	-	-
Issued 17 July 2019 - scrip	3,664,995	0.4	-	-
Issued 9 August 2019	323,781	-	-	-
Issued 16 October 2019 - scrip	4,478,732	0.4	-	-
Issued 15 January 2020 - scrip	2,695,039	0.3	-	-
At 31 March	2,413,241,827	241.3	2,398,371,795	239.8
Own shares held	-	-	-	-
Total share capital	2,413,241,827	241.3	2,398,371,795	239.8

There is no difference between the number of Ordinary Shares issued and authorised. At the AGM each year, approval is sought from shareholders giving the Directors the ability to issue Ordinary Shares, up to 10% of the Ordinary Shares in issue at the time of the AGM.

The Ordinary Shares issued in April 2018, July 2018, October 2018, January 2019, April 2019, July 2019, October 2019 and January 2020 were issued to shareholders who elected to receive Ordinary Shares in lieu of a cash dividend under the Company scrip dividend alternative.

On 14 February 2019, 285,874 Ordinary Shares were issued as part consideration for the acquisition of a medical centre.

In August 2019, 323,781 Ordinary Shares were issued following employees exercising nil-cost options awarded under the 2016 Performance Share Plan. Full details of amounts paid can be found in the Directors' Remuneration Report.

The merger reserve relates to the capital restructuring in January 2015 whereby Assura plc replaced Assura Group Limited as the top company in the Group and was accounted for under merger accounting principles.

10. Dividends paid on Ordinary Shares

Payment date	Pence per share	Number of Ordinary Shares	2020 £m	2019 £m
18 April 2018	0.655	2,383,122,112	-	15.6
18 July 2018	0.655	2,385,478,023	-	15.6
17 October 2018	0.655	2,391,945,555	-	15.7
16 January 2019	0.685	2,393,890,866	-	16.4
17 April 2019	0.685	2,398,371,795	16.4	-
17 July 2019	0.685	2,402,079,280	16.5	-
16 October 2019	0.685	2,406,068,056	16.5	-
15 January 2020	0.697	2,410,546,788	16.8	-
			66.3	63.3

The April dividend for 2020/21 of 0.697 pence per share was paid on 15 April 2020 and the July dividend for 2020/21 of 0.71 pence per share is currently planned to be paid on 15 July 2020 with a record date of 12 June 2020.

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 9.

The October 2018, October 2019 and April 2020 dividends were PIDs as defined under the REIT regime. Future dividends will be a mix of PID and normal dividends as required.

11. LTV

	2020 £m	2019 £m
Investment property	2,081.5	1,955.7
Investment property under construction	57.5	23.1
Held for sale	20.7	17.6
Total property	2,159.7	1,996.4

	2020 £m	2019 £m
Loans	841.5	683.3
Head lease liabilities	5.6	2.8
Cash	(18.5)	(18.3)
Net debt	828.6	667.8

LTV

38%

34%

12. Commitments

At the year end the Group had 15 (2019: 11) committed developments which were all on site with a contracted total expenditure of £80.5 million (2019: £48.7 million) of which £50.3 million (2019: £15.3 million) had been expended.

The Group is committed to invest up to £5 million in PropTech investor PI Labs III LP. £0.2 million had been invested as at 31 March 2020. The first £3 million can be drawn on demand to cover investments the fund makes in qualifying, selected PropTech businesses. The remaining £2 million may only be drawn in tranches of £1 million when total investment in the fund exceeds £40 million and £50 million respectively.

Glossary

AGM is the Annual General Meeting.

Average Debt Maturity is each tranche of Group debt multiplied by the remaining period to its maturity and the result divided by total Group debt in issue at the year end.

Average Interest Rate is the Group loan interest and derivative costs per annum at the year end, divided by total Group debt in issue at the year end.

British Property Federation ("BPF") is the membership organisation, the voice, of the real estate industry.

Building Research Establishment Environmental Assessment Method ("BREEAM") assess the sustainability of buildings against a range of criteria.

Clinical Commissioning Groups ("CCGs") are the groups of GPs and other healthcare professionals responsible for commissioning primary and secondary healthcare services in their locality.

Code or New Code is the UK Corporate Governance Code 2018, a full copy of which can be found on the website of the Financial Reporting Council.

Company is Assura plc.

Direct Property Costs comprise cost of repairs and maintenance, void costs, other direct irrecoverable property expenses and rent review fees.

District Valuer ("DV") is the commercial arm of the Valuation Office Agency. It provides professional property advice across the public sector and in respect of primary healthcare represents NHS bodies on matters of valuations, rent reviews and initial rents on new developments.

Earnings per Ordinary Share from Continuing Operations ("EPS") is the profit attributable to equity holders of the parent divided by the weighted average number of shares in issue during the period.

EBITDA is EPRA earnings before tax and net finance costs. In the current year this is £93.6 million, calculated as net rental income (£103.7 million) less administrative expenses (£9.9 million) and share-based payment charge (£0.2 million).

European Public Real Estate Association ("EPRA") is the industry body for European REITs. EPRA is a registered trademark of the European Public Real Estate Association.

EPRA earnings is a measure of profit calculated in accordance with EPRA guidelines, designed to give an indication of the operating performance of the business, excluding one off or non-cash items such as revaluation movements and profit or loss on disposal. See Note 4.

EPRA EPS is EPRA earnings, calculated on a per share basis. See Note 4.

EPRA Net Asset Value ("EPRA NAV") is the balance sheet net assets excluding own shares held, mark to market derivative financial instruments (including associates) and deferred taxation. See Note 5.

EPRA NNNAV is the EPRA NAV adjusted to reflect the fair value of debt and derivatives. See Note 5.

Equivalent Yield is a weighted average of the Net Initial Yield and Reversionary Yield and represents the return a property will produce based upon the timing of the income received. The true equivalent yield assumes rents are received quarterly in advance. The nominal equivalent assumes rents are received annually in arrears.

Estimated Rental Value ("ERV") is the external valuers' opinion as to the open market rent which, on the date of valuation, could reasonably be expected to be obtained on a new letting or rent review of a property.

GMS is General Medical Services.

Gross Rental Income is the gross accounting rent receivable.

Group is Assura plc and its subsidiaries.

IFRS is International Financial Reporting Standards as adopted by the European Union.

Interest Cover is the number of times net interest payable is covered by EBITDA. In the current year net interest payable is £26.1 million, EBITDA is £93.6 million, giving interest cover of 3.6 times.

KPI is a Key Performance Indicator.

Like-for-like represents amounts calculated based on properties owned at the previous year end.

Loan to Value ("LTV") is the ratio of net debt to the total value of property assets. See Note 11.

Mark to Market is the difference between the book value of an asset or liability and its market value.

MSCI is an organisation that provides performance analysis for most types of real estate and produces an independent benchmark of property returns. The MSCI All Healthcare Index refers to the MSCI UK Annual Healthcare Property Index, incorporating all properties reported to MSCI for the 12 months to December that meet the definition of healthcare.

NAV is Net Asset Value.

Net debt is total borrowings plus head lease liabilities less cash. See Note 11.

Net Initial Yield ("NIY") is the annualised rents generated by an asset, after the deduction of an estimate of annual recurring irrecoverable property outgoings, expressed as a percentage of the asset valuation (after notional purchasers' costs). Development properties are not included.

Net Rental Income is the rental income receivable in the period after payment of direct property costs. Net rental income is quoted on an accounting basis.

Operating efficiency is the ratio of administrative costs to the average gross investment property value. This ratio during the period equated to 0.48%. This is calculated as administrative expense of £9.9 million divided by the average property balance of £2,059 million (opening £1,979 million plus closing £2,139 million, divided by two).

Primary Care Property is the property occupied by health services providers who act as the principal point of consultation for patients such as GP practices, dental practices, community pharmacies and high street optometrists.

Property Income Distribution ("PID") is the required distribution of income as dividends under the REIT regime. It is calculated as 90% of exempted net income.

PSP is Performance Share Plan.

Real Estate Investment Trust ("REIT") is a listed property company which qualifies for and has elected into a tax regime which exempts qualifying UK profits, arising from property rental income and gains on investment property disposals, from corporation tax, but requires the distribution of a PID.

Rent Reviews take place at intervals agreed in the lease (typically every three years) and their purpose is usually to adjust the rent to the current market level at the review date.

Rent Roll is the passing rent (i.e. at a point in time) being the total of all the contracted rents reserved under the leases, on an annual basis. At March 2020 the rent roll was £108.9 million (2019: £102.7 million) and the growth in the 12 months was £6.2 million.

Retail Price Index ("RPI") is an official measure of the general level of inflation as reflected in the retail price of a basket of goods and services such as energy, food, petrol, housing, household goods, travelling fares, etc. RPI is commonly computed on a monthly and annual basis.

Reversionary Yield is the anticipated yield which the initial yield will rise to once the rent reaches the ERV and when the property is fully let. It is calculated by dividing the ERV by the valuation.

RPI Linked Leases are those leases which have rent reviews which are linked to changes in the RPI.

Total Accounting Return is the overall return generated by the Group including the impact of debt. It is calculated as the movement on EPRA NAV (see glossary definition and Note 4) for the year plus the dividends paid, divided by the opening EPRA NAV. Opening EPRA NAV (i.e. at 31 March 2019) was 53.3 pence per share, closing EPRA NAV was 53.9 pence per share, and dividends paid total 2.75 pence per share.

Total Contracted Rent Roll or Total Contracted Rental Income is the total amount of rent to be received over the remaining term of leases currently contracted. For example, a lease with rent of £100 and a remaining lease term of ten years would have total contracted rental income of £1,000. At March 2020, the total contracted rental income was £1.43 billion (2019: £1.35 billion) and the growth in the 12 months was £74 million.

Total Property Return is the overall return generated by properties on a debt-free basis. It is calculated as the net rental income generated by the portfolio plus the change in market values, divided by opening property assets plus additions. In the year to March 2020, the calculation is net rental income of £103.7 million plus revaluation of £9.7 million giving a return of £113.4 million, divided by £2,134.8 million (opening investment property £1,943.3 million and IPUC £23.1 million plus additions of £121.1 million and development costs of £47.3 million).

Total Shareholder Return ("TSR") is the combination of dividends paid to shareholders and the net movement in the share price during the year, divided by the opening share price. The share price at 31 March 2019 was 57.4 pence, at 31 March 2020 it was 83.5 pence, and dividends paid during the year were 2.75 pence per share.

UK GBC is the UK Green Building Council.

Weighted Average Unexpired Lease Term ("WAULT") is the average lease term remaining to first break, or expiry, across the portfolio weighted by contracted rental income.

Yield on cost is the estimated annual rent of a completed development divided by the total cost of development including site value and finance costs expressed as a percentage return.

Yield shift is a movement (usually expressed in basis points) in the yield of a property asset or like-for-like portfolio over a given period.

Yield compression is a commonly used term for a reduction in yields.

 

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