Final Results Part 1
Assura Group Limited
('Assura' or 'the Group' or 'the Company')
Audited results for the fifteen months ended 31 March 2008
25 June 2008: Assura is one of the leading health care companies in the UK, partnering with GPs to deliver high quality patient care in the community, innovative property solutions and consumer responsive pharmacy services.
Significant progress has been made during the last 15 months in the transformation of the Group from a medical property investor and developer to a property-backed operator of pharmacy and medical services. The Company is now very strongly positioned to take advantage of NHS funded service provision being opened up to the market place through partnerships with GPs (GPCos).
This report is in respect of the 15 month period to 31 March 2008 following the change in the Company's year end from December to March in order to be consistent with the NHS year end and its GPCos.
Highlights
Operating Highlights1
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15 GPCos formed covering a population of 1.8m patients with a pipeline of 3.5m patients in aggregate
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15 medical services across the first 10 GPCos now underway, 68 in the pipeline
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33 pharmacies trading (31 December 2006: 8), with seven further pharmacy licences granted
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Recently launched a direct to consumer pharmacy offering
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133 investment commitments2 (£324m)
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Investment portfolio valued at 31 March at a net equivalent yield of 5.7%
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8 developments on site and 243 land bank sites (£58m) with committed pipeline of 28 sites (£202m)
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Circa 15% of NHS LIFT market across six LIFTCos
Roadmap to Success
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Targeting principal supplier relationships with in excess of 30 PCTs through Assura GPCos by 2013
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Providing a wide range of primary, intermediate and social care services to each PCT community
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45 pharmacies trading by end of the current financial year and target of 150 pharmacies by 2013
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Nationwide roll-out of direct to consumer pharmacy offering
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Aiming to raise additional equity finance during 2008 to accelerate future growth
Financial Highlights4
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Group revenues of £40.7m (2006: £16.1m)
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Operating profit £11.4m (2006: £13.2m), reflecting planned investments in medical and pharmacy businesses
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Final dividend of 4.67p5 making a total of 8.75p for the 15 month period (2006: 6.00p)
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Net assets of £265m, equivalent to 118.1p per Share compared to 114.7p at 31 December 2006
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Net debt of £168m at 31 March 2008 out of total facilities of £270m
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Basic Earnings per Share of 6.22p (2006: 9.68p)
Commenting on today's announcement, Richard Burrell, CEO of Assura said: 'The Company is evolving very rapidly into a primary and community care provider organisation. The NHS is committed to improving choice and providing better medical services to patients and it is clear that open competition and a free market around the provision of health care services will have a vital role to play, irrespective of which political party is in power. Assura's integrated business model, working with GPs to provide local, high quality, out-patient, diagnostic and pharmacy services, is ideally positioned for this very significant opportunity. The current financial year has started well and we look forward with optimism to the continuing roll-out of our services in the UK health care market.'
Enquiries:
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Assura Group Limited |
020 7107 3800 |
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Richard Burrell, CEO |
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Louise Bathersby, Marketing & Investor Relations Director |
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FD |
020 7831 3113 |
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David Yates |
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Emma Thompson |
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1 As at 1 June 2008.
2 Includes 12 properties in solicitors' hands.
3 Includes three sites in solicitors' hands
4 The comparative 2006 figures relate to the 12 month period ended 31 December 2006 whilst the figures for the period relate to the 15 month period to 31 March 2008.
5 Ex-dividend date 2 July 2008, record date 4 July 2008, payment date 14 August 2008.
Chairman's Statement
In my first period as your Chairman I am delighted to introduce this report in respect of the 15 months to 31 March 2008 due to the Company having changed its year end from December to March to be consistent with the year end of the National Health Service (NHS) and our GPCos.
The NHS is going through a period of profound change. It is clear that the Department of Health (DH) is committed to open competition and a free market around the provision of health care services. Furthermore, we continue to believe that this commitment is irrespective of which political party is in power. The impact of this change is that decision making within the NHS is now being increasingly devolved to the 152 Primary Care Trusts (PCTs).
These trends are allowing independent providers to enter the market and PCTs are themselves separating their procurement and provider functions in response to these changes. Overall, these factors provide Assura with a very significant opportunity. To capture this opportunity, the Company has continued its transformation from being a property investment and development business into an asset-backed operating business in pharmacy and medical services.
The Group's strategy to adopt a collaborative approach with GPs has been well received by the GP community and has been further ratified as the best-case scenario in a recent Kings Fund report1 on the provision of integrated care. We continue to execute on this strategy by developing community based, integrated services, outside of hospitals; to provide consumer responsive pharmacy services to patients in and around health locations; and to develop modern health facilities aligned to our operating activities.
The executive team has done an excellent job in laying solid foundations to achieve the Group's objective to become one of the major providers of health care services to the NHS and to its patients.
Good governance remains a key priority. I believe we have a board with the right combination of skills to continue to support and challenge the executive team. Managing the expansion and delivery of services at the rate we are experiencing is a major challenge for all management and staff. We have a strong and dynamic team in place to achieve this.
As at 1 June 2008, the Group employed 452 (31 December 2006: 148) people. During this 15 month period most of the increase in staff numbers has arisen in the pharmacy and medical divisions.
I would like to take this opportunity to thank all management and staff for their continued efforts to develop our business and look forward to meeting you at our AGM.
Rodney Baker-Bates
Non-Executive Chairman
24 June 2008
1 'Under One Roof - Will polyclinics deliver integrated care?', The King's Fund, June 2008.
Chief Executive's Statement
I am pleased to report that we have made very good progress during the 15 month period as we have continued to transform the Company from being a pure investor and developer of medical property to becoming a property-backed operator of pharmacy and medical services in collaboration with GPs.
Before commencing my review of the period, I believe it is worth re-emphasising the significance of the Group's transformational strategy. Demographic, technological and cost pressures in the UK are forcing fundamental change in the way that the NHS is run and delivers its services to patients. Five years ago we began to position ourselves to take advantage of the likely changes that we saw - a shift from secondary to primary care in the community, an opening of markets to private operators and a move by the NHS itself from being a monopoly provider of services to being a commissioner and procurer of those services from a range of potential providers. These trends now provide the bedrock of NHS reform, supported by all political parties, and which we believe will gradually open up the £123bn NHS annual budget to private companies as more and more medical services are made available for third parties to provide.
Our strategy has moved away from being a pure property investor and developer to one where we seek to form joint venture partnerships with GPs to enable the provision of medical services to patients. Where possible we assist them in setting up these partnerships in our wholly owned medical properties. We have also grown our own pharmacy operating business and now operate from 33 locations.
We believe that our transformation over the last few years has positioned us with a first mover advantage to penetrate this opportunity. What sets us apart from any other health care services company trying to enter this space is our:
- Collaborative model of working with GPs
- Competitive advantage in the pharmacy market
- Business model built on a strong asset backed portfolio of property
- Relationships with individuals from all levels of the NHS value chain and particularly within Primary Care Trusts (PCTs)
Further details on the scale of the overall opportunity are expected are expected to be published in Lord Darzi's NHS Next Stage Review, due shortly.
To expedite our strategy, the Company has been holding discussions with existing and potential investors about raising additional equity finance and these discussions are expected to continue over the coming months.
Reviewing the last 15 months, total revenue amounted to £40.7m (2006: £16.1m1) producing a Group operating profit of £11.4m (2006: £13.2m1). The resultant profit for the period before taxation was £12.6m (2006: £18.8m1). Net asset value as at 31 March 2008 was £265.4m (31 December 2006: £267.5m), equivalent to 118.1p per Ordinary Share on a fully diluted basis compared to 114.7p at 31 December 2006.
Whilst Group revenues are growing strongly quarter on quarter, especially in the Group's pharmacy division, the decline in Group profits over the period is due to the continued investment in staff and resources to achieve the planned growth in the Group's medical and pharmacy businesses. The anticipated losses in the Group's two operating businesses have been more than offset by profits generated by the Group's property investment and development activities. Further losses are expected this year in order to support the expansion of the medical and pharmacy businesses.
On a segmental basis, the medical division generated a loss for the period of £9.0m (2006: loss of £2.3m1) and the pharmacy division generated a loss for the period of £4.2m (2006: loss of £3.4m1). Over the same period, the property investment activities generated a profit for the period of £15.3m (2006: £22.1m1) and property development activities generated a profit for the period of £7.7m (2006: loss of £4.6m1). Central functions contributed a profit for the period of £3.8m (2006: £6.5m1) but this included an exceptional profit of £5.9m relating to a compensation payment which arose in connection with the completion of the Westbury/Stobart merger and the termination of an investment management agreement with Assura. The Company retains circa 6m Stobart Group shares2.
When the Company floated in November 2003, it committed to a progressive dividend policy for five years. The Board, having given due regard to the profitability of the Company, has recommended a final dividend of 4.67p (2006: 4p) per Ordinary Share making a total of 8.75p per Ordinary Share for the 15 month period. The Company intends to offer its shareholders the alternative of a scrip dividend and will seek approval for this at the AGM when approval of the dividend is to be proposed. Subject to that, the Company expects to pay or satisfy dividend entitlements shortly after the AGM approves the dividend and the scrip dividend arrangements.
The new financial period has started well and we look forward with optimism to the rest of this financial year.
Operating review
The Company is evolving very rapidly into a primary and community care provider organisation. With strong asset backing from its property division, it is able to offer modern integrated facilities to its GP partners, PCTs, pharmacists and patients, which are suited to the evolving NHS and are capable of undertaking many medical services which have hitherto been carried out in hospitals such as out-patient and diagnostic procedures. The Company's investment in its joint ventures with GPs, its provision of associated property infrastructure and the development of its pharmacy operating business will all take time to mature but encouraging progress is being made across a number of geographical locations.
The Company believes that by having a modern portfolio of property assets capable of housing GPs and other health providers, locating its own pharmacies within these facilities and by entering into collaborative joint ventures with GPs to provide out-patient and related medical services, it will build a strong and effective group capable of becoming one of the leading providers of NHS services to patients.
It is clear that the NHS is undergoing significant change. We are seeing greater involvement of the private sector in the provision of health care services in order to increase efficiency and standards of care for patients. The Department of Health is committed to this involvement and the principle of open competition and a free market allowing private and NHS providers to be on a level playing field. We are confident that this will continue and that there are no fundamental policy differences between the political parties. Along with the increasing devolvement of decision making to PCTs we believe these factors have created an opportunity for the Company to embed itself on a local level with the PCTs, our GP joint venture partners and other NHS providers to become a significant provider of high quality medical services to health communities.
Medical division
Revenues during the 15 months to 31 March 2008 were minimal and the division incurred an anticipated pre-tax loss of £9.0m (2006: loss of £2.3m1). Revenues are expected to grow significantly this year but, given the ongoing investment in associated staff and medical services, further losses are anticipated.
At the heart of the Company's medical division business are joint venture GPCos with GPs and locality groups that provide out-patient and diagnostic services to patients in primary care and community settings. As at 1 June 2008, the Company had formed 15 GPCos serving circa 1.8m patients; including the visible pipeline of GPs the joint ventures will serve over 3.5m patients.
With each GPCo, the Company forms a 50% owned Limited Liability Partnership with a number of GP practices across a geographical area. The GPs' core practices and partnerships remain unaltered. A key component of Assura's competitive differentiation is the provision of a range of support elements to each joint venture. These include providing start-up and working capital, IT and informatics support, procurement experience and clinical service development expertise. The Group's other two divisions can provide property solutions and integrated pharmacy services whenever possible. Efficiencies in the operation of these GPCo medical services aim to provide more cost effective health care supply to the PCTs as well as future profits which can be shared between Assura and the participating GP practices. Whilst it is very early days, this new business is proving attractive to large numbers of GPs and practice partnerships throughout the UK.
Considerable investment has been made in the development of medical services, redesigning of care pathways and clinical governance frameworks to underpin the provision of services by the Group's GPCos. With these foundations now in place to support a range of clinical services, the Company is very deliberately concentrating significant resources on building its portfolio of GPCos covering a growing number of potential patients. By giving its joint venture partners the tools required to become highly effective providers of medical services in the community, the Company aims to have a powerful business model for future NHS-based service provision. These businesses directly address the Government requirement for more tariff-based community-based services, not reliant upon fixed volume contracts.
Medical services provided by our GPCos aim to give choice to patients, often outside normal working hours, and have strict quality assurance mechanisms in place which have been commended by the PCTs working with those GPCos. The Company is proud of the good relationships that its GPCos have formed with PCTs and other NHS organisations in these areas which demonstrates how public and private organisations can work together to provide excellent services for patients.
We are finding that good progress is being made within PCTs to implement the 'Any Willing Provider'3 guidance as well as secure fixed volume contracts effectively. We continue to work with the PCTs and Acute Trusts in order to enable efficient implementation of locally procured medical services. By engaging as a 'willing provider' the Company is not reliant upon centrally procured contracts with guaranteed volumes and tariffs which may subsequently be revoked, such as those awarded to the Independent Sector Treatment Centres (ISTCs).
As at 1 June 2008, across the first 10 GPCos, 15 out-patient services had commenced and there were a further 68 medical services in the pipeline. As more GPCos are created, we foresee a further roll-out of a significant number of new medical services. Services already generating revenues include dermatology, urology, a joint and soft tissue service, nerve conduction studies, a flexible sigmoidoscopy (diagnostic) service and various minor surgery services.
The initial services have established the GPCos as credible providers within their areas. The Company is confident that this will place them in a strong position to expand their offering and win future PCT contracts for other medical services such as out of hours, dentistry, urgent care, long term conditions and prison health.
During the period, the Company formed Assura Diagnostics and simultaneously acquired two small medical equipment businesses, Cystoscope Hire Limited and Urosonics Limited. This business was set up to provide high quality diagnostic and equipment solutions on a sessional basis to support the development of GPCo services. In addition to its internal GPCo clients, Assura Diagnostics is also working on a number of external projects with third parties.
Going forward, our goal is to have at least 30 GPCos operational by 2013 and fulfill the role of principal supplier to over 30 of the 152 PCTs (circa 20% market share). In the short term, we plan to have coverage of over 5m patients by March 2010 with a comprehensive service portfolio to include primary, intermediate and social care. Our target EBITDA margin for our GPCos is 15%, of which the medical division would recognise 50%.
Pharmacy division
During the 15 month period to 31 March 2008 the pharmacy division generated a turnover of £17.9m (2006: £2.8m1) and generated an average gross margin of 26%. On a full cost basis, the division made a loss for the period of £4.2m (2006: loss of £3.4m1). Despite the Category 'M' pricing regime which has affected the entire pharmacy industry, the Company is encouraged by its average gross margin figure achieved and sees this as a solid platform to deliver a gross margin in excess of 28% by the end of 2009. This is supported by our integrated pharmacy model where additional service income is assisting gross margin performance.
The provision of pharmacy services in health centre locations, as opposed to high street locations, is key to providing a community-based primary care service and capturing a greater proportion of primary health care expenditure.
As at 1 June 2008, the Company's pharmacy division had 33 pharmacies trading (31 December 2006: 81) and has a further seven licences granted for new pharmacies to open. The Company continues to seek new pharmacy licences for its own property developments and new developments undertaken by third parties. It also acquires existing pharmacies close to property development sites as well as existing pharmacies in locations where future health locations may be possible.
The Company is confident its integrated pharmacy model puts it in a strong position to take advantage of opportunities laid out in the recently published Government White Paper 'Pharmacy in England - Building on strengths - delivering the future'. The White Paper supports the continuing shift in policy for pharmacists to play a greater role in the provision of primary health care services. It is the Company's view that this change will be best effected within integrated health centre facilities.
During 2008, the Company intends to continue its roll out of pharmacies and has targeted to have 45 pharmacies trading by March 2009. In addition the Company will further expand its direct to consumer channel for the pharmacy business, providing a convenient and efficient service for patients to take delivery of their medicines at their home or place of work in addition to physical branch locations. This concept is planned to be piloted across a number of regions working closely with GPs and patient groups prior to rolling it out. These developments will transform the Company's pharmacy business into a multi-channel operation offering patients a range of options as to how services can be provided.
Property investment
As at 31 March 2008, the Company's property division had 98 investment properties which in aggregate were valued by Savills at £289.9m, representing an average net equivalent yield of 5.78%. Further acquisitions, including 12 in solicitors' hands take total investment commitments to £324m as at 1 June 2008.
Whilst the wider commercial property market has experienced declines since the summer of 2007, we continue to believe that our overall valuation yield remains appropriate at the current time. Assura's properties are generally let on long leases where rent is predominantly reimbursed out of the NHS annual budget.
The Company settled rent reviews on 35 properties during the 15 month period to 31 March 2008 resulting in an aggregate annualised increase of 4.9% per annum on the passing rent relating to those properties. As at 31 March 2008, the portfolio had an average rent of £154 per square metre on GMS space and an average weighted income unexpired term of 18.35 years.
Property development
As at 1 June 2008, the Group had work-in-progress including 12 development sites and eight new developments totaling £58m. In addition, the Group has a development pipeline of £202m covering 28 sites and is on track to have over £750m in property invested or committed by the end of 2009.
The shift in medical services from secondary care (hospitals) towards primary and community care mandated by the Government continues to require large, modern, purpose-built premises. The Company's development team and pipeline continues to grow in response to this and there are a growing number of schemes at an advanced stage of negotiation.
The property development business operates through three teams: North; South; and LIFT (Local Improvement Finance Trust). The Company's LIFT team is involved in the management of six LIFTCos having achieved financial close in respect of two LIFTCos, South West Hampshire and South East Essex, during the 15 month period. Development surpluses in the Company's LIFTCos resulted in a net share of development profits amounting to some £4.9m during the 15 month period.
Industry trends and outlook
The Department of Health is committed to the private sector playing a role in the improvement of primary care services and has recently published guidance to allow private and NHS providers to compete or collaborate on a level playing field. We are encouraged by the multitude of opportunities for locally procured private sector provision in the NHS and the emphasis on patients' rights to have personalised care closer to home. We believe that our integrated business model will ensure that we become one of the UK's leading health care provider organisations giving patients a choice of local, high quality, out-patient, diagnostic and pharmacy services.
We are also encouraged by plans for the reform of the NHS and the objective to create 'World Class Commissioning' setting higher standards for commissioning and procurement particularly amongst PCTs. We expect Lord Darzi's NHS Next Stage Review to endorse our national strategy to support and increase the provision of out-patient and diagnostic services close to patients' homes through investment in GP support services and facilities thereby enabling our joint venture GPCos to become highly effective provider organisations.
We remain confident that the current industry trends and pace of NHS reform present a significant opportunity for the Company to achieve earnings growth. We believe our GPCos are on the cusp of a substantial increase in the number of medical services being provided, the pharmacy business has a competitive advantage through co-location with GPs and the high quality property portfolio underpins these businesses and provides the scale, financial muscle and presence to be a strong partner for the NHS. We have invested significantly to date in the necessary infrastructure and resources required to realise this opportunity and continue to focus on converting this into long-term sustainable revenues for the Group.
Richard Burrell
Chief Executive Officer
24 June 2008
1 The comparative 2006 figures relate to the 12 month period ended 31 December 2006 whilst the figures for the period relate to the 15 month period to 31 March 2008.
2 Refer to note 12 in the Annual Report and Financial Statements.
3 'Any Willing Provider' guidance stipulates that PCTs should allow any provider that can meet the necessary quality standards to deliver NHS reimbursed services to patients at tariff. Tendering should only be required where monopolies are to be created, the guiding principle being that the rules of open contestability and patient choice should prevail. Source: 'The NHS in England: The operating framework for 2008/9 Annex D - Principles and rules for cooperation and competition', Department of Health.
Chief Financial Officer's Statement
Results
This financial report covers the 15 month accounting period from 1 January 2007 to 31 March 2008 following the Company's change of year end to accord with that of the NHS and our GPCo joint venture partners.
The Group is engaged in four business segments being medical and pharmacy service provision and primary care premises investment and development. In the prior year we had allocated the results between three business segments only, with primary care premises investment and development combined. However we now regard and manage these as two distinct business segments with very different characteristics. The prior year segmental results have been restated in note 19 to ensure comparability, but there is no change to the consolidated results for the prior year.
Group revenues amounted to £40.7m (2006: £16.1m1) including £18.2m (2006: £10.7m1) of rental income and £17.9m (2006: £2.8m1) of pharmacy revenue. The profit before taxation was £12.6m (2006: £18.8m1), including a profit of £5.9m (2006: £nil1) on termination of The Westbury Property Fund Limited management contract and £3.7m (2006: £5.7m1) profit on revaluation of derivative financial instruments. If these latter profits are excluded, the 'normalised' profit before taxation was £3.0m (2006: £13.1m1).
During the period, we have continued to benefit from strong growth and profits in our property investment business, although only modest revaluation surpluses of £1.2m (2006: £15.5m1) following a slight increase in investment yields to an average equivalent yield at 31 March 2008 of 5.78% (2006: 5.65%). With a weighted average unexpired lease length of 18.35 years and rent which is 85% directly reimbursed by PCTs, we are comfortable that the Group's property portfolio is fairly stated, notwithstanding current property market conditions. A 0.5% shift of yield would cause the property portfolio held at the period end to move by circa £22.5m.
Our property development division, including our activity in LIFT, has benefited from strong revaluation gains representing development profits achieved on those developments which were completed in the period. Unrealised property development surpluses amounted to £7.7m (2006: £1.5m1) in the 15 month period and, in addition, the Group's share of property development surpluses in our LIFT investments amounted to £4.9m (2006: £nil1) in the period. Furthermore, £3.0m (2006: £1.5m1) of revaluation gains, principally on recently completed developments, has been credited direct to reserves being gains on the Group's own pharmacy premises.
Profits in our property investment and development businesses have been offset by planned losses in our pharmacy and medical services businesses where we continue to expense the bulk of business development costs incurred in establishing these two businesses.
Full details of the segmental results are given in note 19 to these financial statements.
As at 31 March 2008, the Group had gross assets, net of working capital, amounting to £455m (2006: £314m) and net debt of £170m (2006: £29m), maintaining a strong and efficient balance sheet with modest gearing.
Financing
At the period end, the Group had net debt of £168m. In addition the Company had three bank facilities in place totalling £270m:
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£250m utilising the National Australia Bank (NAB) sponsored securitisation conduit available for five years from March 2008 on which the Company pays a margin of 0.45% over the Asset Backed Commercial Paper rate. This market has suffered volatility in recent months and a premium has been paid over LIBOR of around 0.6%, in addition to the margin. The lender has a 364 day £255m liquidity facility from NAB for use when Commercial Paper cannot be issued by the conduit. The latter facility is subject to a margin of 0.7% over LIBOR for periods of up to one month, 1.1% otherwise.
- £8.25m term loan for five years from March 2008 from Royal Bank of Scotland secured on one property with a margin of 1.2%.
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Long-term loan of just under £12m from General Practice Finance Corporation (GPFC) secured on one property at a fixed rate of 6.45%. Discussions are currently ongoing with a view to this loan being increased to £22m.
The Group's excellent property portfolio, characterised by both geographical and lot size diversity, in addition to the strong tenant covenant and long average lease length, is attractive to banks, notwithstanding the current banking climate.
The Company is protected from interest rate movements by an interest rate swap which amounts to £200m fixed until 31 December 2027 at a rate of 4.59%. The swap was revalued at 31 March 2008 to £5.9m (31 December 2006: £2.2m).
Net asset value
Including the investment property and swap revaluations, and after payment of dividends, the fully diluted net asset value per Ordinary Share is 118.1p (31 December 2006: 114.7p). This of course excludes the substantial value of our pharmacy licences which are held at cost and in most cases to date have been granted at nil cost rather than having been acquired by the Group.
On 29 June 2007 and following approval of the Royal Court of Guernsey, the Company transferred £227m from share premium to distributable reserves.
Taxation status
At an Extraordinary General Meeting held on 3 April 2008, shareholders approved the change in status of the Company from Chapter 15 (investment) to Chapter 6 (trading) and the Group's management and control was moved to the UK immediately thereafter to reflect the change in nature of business of the Group.
As a result, the Group's trading profits are now subject to taxation in the UK although corporation tax will only be paid in respect of property gains when these are actually realised. All property was transferred from an offshore subsidiary in Guernsey to new UK property investment companies based on independent valuations undertaken at the time of the transfers last year. This, along with trading losses in the pharmacy and medical services businesses, will protect the Group from UK corporation taxation for a reasonable period.
Nigel Rawlings
Chief Financial Officer
24 June 2008
1 The comparative 2006 figures relate to the 12 month period ended 31 December 2006 whilst the figures for the period relate to the 15 month period to 31 March 2008.
Assura Group Limited
Consolidated Income Statement
For the period from 1 January 2007 to 31 March 2008
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15 months ended 31 March 2008 |
12 months ended 31 December 2006 |
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Notes |
£'000 |
£'000 |
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Revenue |
5 |
40,748 |
16,123 |
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Cost of sales |
6 |
(16,234) |
(3,625) |
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Gross profit |
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24,514 |
12,498 |
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|
|
|
|
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Administrative expenses |
7 |
29,336 |
13,512 |
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Other expenses |
8 |
1,704 |
1,279 |
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|
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31,040 |
14,791 |
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|
|
|
|
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Group trading losses |
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(6,526) |
(2,293) |
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|
|
|
|
|
Unrealised surplus on revaluation of investment property |
21 |
8,880 |
17,041 |
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Other operating costs |
9 |
(1,453) |
- |
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Associates and joint ventures |
10 |
4,536 |
(1,454) |
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Exceptional pharmacy establishment cost |
11 |
- |
(1,105) |
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Movement in performance fee provision |
4 |
- |
1,010 |
|
Termination of investment management services |
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|
|
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Fees received |
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19,985 |
- |
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Payment to sub-advisers and other expenses |
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(6,141) |
- |
|
Goodwill impairment |
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(7,914) |
- |
|
|
12 |
5,930 |
- |
|
|
|
|
|
|
Operating profit |
|
11,367 |
13,199 |
|
|
|
|
|
|
Finance revenue |
13 |
4,876 |
6,707 |
|
Finance costs |
14 |
(3,604) |
(1,106) |
|
|
|
1,272 |
5,601 |
|
|
|
|
|
|
Profit before taxation |
|
12,639 |
18,800 |
|
Taxation |
15 |
1,005 |
(40) |
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Profit for the period from continuing operations |
|
13,644 |
18,760 |
|
|
|
|
|
|
Discontinued operations |
|
|
|
|
Profit/(loss) for the period from discontinued operations |
16 |
155 |
(331) |
|
|
|
|
|
|
Profit for the period |
|
13,799 |
18,429 |
|
|
|
|
|
|
Profit for the period attributable to: |
|
|
|
|
Equity holders of the parent |
|
14,071 |
18,900 |
|
Minority interest |
|
(272) |
(471) |
|
|
|
|
|
|
|
|
13,799 |
18,429 |
|
|
|
|
|
|
Earnings per share (pence) |
|
|
|
|
Basic earnings per share from continuing operations |
17 |
6.15p |
9.85p |
|
Diluted earnings per share from continuing operations |
17 |
6.08p |
9.60p |
|
Basic earnings per share on profit for the period |
17 |
6.22p |
9.68p |
|
Diluted earnings per share on profit for the period |
17 |
6.15p |
9.44p |
|
|
|
|
|
All items in the above statement are derived from continuing operations. The accompanying notes form an integral part of the financial statements.
Assura Group Limited
Consolidated Balance Sheet
as at 31 March 2008
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|
|
31/03/2008 |
31/12/2006 |
|
|
Notes |
£'000 |
£'000 |
|
Non-current assets |
|
|
|
|
Investment property |
21 |
282,511 |
213,132 |
|
Development property |
22 |
57,268 |
35,231 |
|
Investments in associates |
23 |
8,744 |
1,070 |
|
Investments in joint ventures |
23 |
8,619 |
869 |
|
Intangible assets |
24 |
37,887 |
36,998 |
|
Property, plant and equipment |
25 |
23,867 |
5,973 |
|
Other investments |
26 |
9,047 |
250 |
|
Derivative financial instruments at fair value |
13 |
5,862 |
2,202 |
|
Deferred tax asset |
40 |
193 |
- |
|
|
|
433,998 |
295,725 |
|
Current assets |
|
|
|
|
Cash and cash equivalents |
27 |
20,460 |
18,842 |
|
Debtors |
28 |
14,268 |
9,892 |
|
Pharmacy inventories |
|
1,343 |
567 |
|
Property work in progress |
|
1,023 |
3,239 |
|
|
|
37,094 |
32,540 |
|
Total assets |
|
471,092 |
328,265 |
|
Current liabilities |
|
|
|
|
Bank overdraft |
29 |
- |
2,135 |
|
Creditors |
30 |
16,118 |
12,392 |
|
|
|
16,118 |
14,527 |
|
Non-current liabilities |
|
|
|
|
Long-term loan |
31 |
188,419 |
44,949 |
|
Payments due under finance leases |
30 |
1,172 |
1,289 |
|
|
|
189,591 |
46,238 |
|
Total Liabilities |
|
205,709 |
60,765 |
|
Net assets |
|
265,383 |
267,500 |
|
Represented by: |
|
|
|
|
Capital and reserves |
|
|
|
|
Share capital |
32 |
23,522 |
23,400 |
|
Own shares held |
32 |
(4,561) |
(807) |
|
Share premium |
33 |
2,073 |
226,678 |
|
Distributable reserve |
34 |
224,116 |
15,564 |
|
Retained earnings |
35 |
17,201 |
1,852 |
|
Revaluation reserve |
36 |
3,089 |
106 |
|
Deferred consideration reserve |
37 |
- |
790 |
|
|
|
265,440 |
267,583 |
|
Minority interests |
|
(57) |
(83) |
|
Total equity |
|
265,383 |
267,500 |
|
|
|
|
|
|
Basic net asset value per Ordinary Share |
38 |
116.83p |
118.40p |
|
Diluted net asset value per Ordinary Share |
38 |
116.08p |
114.32p |
|
Adjusted basic net asset value per Ordinary Share |
38 |
118.84p |
118.76p |
|
Adjusted diluted net asset value per Ordinary Share |
38 |
118.07p |
114.66p |
The financial statements were approved at a meeting of the Board of Directors held on 24 June 2008 and signed on its behalf by:
Richard Burrell, Executive Director
Nigel Rawlings, Executive Director
The accompanying notes form an integral part of the financial statements.
Assura Group Limited
Consolidated Statement of Changes in Equity
For the period from 1 January 2007 to 31 March 2008
|
|
Share Capital |
Own Shares Held |
Share Premium |
Distributable Reserve |
Retained Earnings |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
1 January 2007 |
23,400 |
(807) |
226,678 |
15,564 |
1,852 |
|
Revaluation of land & buildings |
- |
- |
- |
- |
- |
|
Profit/(loss) attributable to equity holders and minority interest |
- |
- |
- |
- |
14,070 |
|
Total income and expense for the period |
- |
- |
- |
- |
14,070 |
|
Transfer from share premium¹ |
- |
- |
(226,678) |
226,678 |
- |
|
Dividends on Ordinary Shares |
- |
- |
- |
(18,126) |
- |
|
Cost of employee share-based incentives |
- |
- |
- |
- |
1,578 |
|
Issue of Ordinary Shares |
122 |
- |
2,073 |
- |
- |
|
Own shares held |
- |
(3,754) |
- |
- |
- |
|
Deferred share-based consideration |
- |
- |
- |
- |
- |
|
Minority interest acquired in period |
- |
- |
- |
- |
- |
|
Minority interest disposed of in period |
- |
- |
- |
- |
(299) |
|
31 March 2008 |
23,522 |
(4,561) |
2,073 |
224,116 |
17,201 |
|
|
|
|
|
|
|
|
|
Share Capital |
Own Shares Held |
Share Premium |
Distributable Reserve |
Retained Earnings |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
1 January 2006 |
14,240 |
- |
122,240 |
- |
(18,327) |
|
Revaluation of land & buildings |
- |
- |
- |
- |
- |
|
Profit/(loss) attributable to equity holders and minority interest |
- |
- |
- |
- |
18,900 |
|
Total income and expense for the period |
- |
- |
- |
- |
18,900 |
|
Transfer from share premium¹ |
- |
- |
(25,000) |
25,000 |
- |
|
Dividends on Ordinary Shares |
- |
- |
- |
(9,436) |
- |
|
Cost of employee share-based incentives |
- |
- |
- |
- |
1,279 |
|
Issue of Ordinary Shares |
9,160 |
- |
133,644 |
- |
- |
|
Minority interest acquired in year |
- |
- |
- |
- |
- |
|
Issue costs on issuance of Ordinary Shares |
- |
- |
(4,206) |
- |
- |
|
Own shares held |
- |
(807) |
- |
- |
- |
|
Deferred share-based consideration |
- |
- |
- |
- |
- |
|
31 December 2006 |
23,400 |
(807) |
226,678 |
15,564 |
1,852 |
|
|
Revaluation Reserve |
Deferred Consideration Reserve |
Total |
Minority Interest |
Total Equity |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
1 January 2007 |
106 |
790 |
267,583 |
(83) |
267,500 |
|
Revaluation of land & buildings |
2,983 |
- |
2,983 |
- |
2,983 |
|
Profit/(loss) attributable to equity holders and minority interest |
- |
- |
14,070 |
(272) |
13,798 |
|
Total income and expense for the period |
2,983 |
- |
17,053 |
(272) |
16,781 |
|
Transfer from share premium¹ |
- |
- |
- |
- |
- |
|
Dividends on Ordinary Shares |
- |
- |
(18,126) |
- |
(18,126) |
|
Cost of employee share-based incentives |
- |
- |
1,578 |
- |
1,578 |
|
Issue of Ordinary Shares |
- |
- |
2,195 |
- |
2,195 |
|
Own shares held |
- |
- |
(3,754) |
- |
(3,754) |
|
Deferred share-based consideration |
- |
(790) |
(790) |
- |
(790) |
|
Minority interest acquired in period |
- |
- |
- |
(1) |
(1) |
|
Minority interest disposed of in period |
- |
- |
(299) |
299 |
- |
|
31 March 2008 |
3,089 |
- |
265,440 |
(57) |
265,383 |
|
|
|
|
|
|
|
|
|
Revaluation Reserve |
Deferred Consideration Reserve |
Total |
Minority Interest |
Total |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
1 January 2006 |
- |
- |
118,153 |
(222) |
117,931 |
|
Revaluation of land & buildings |
106 |
- |
106 |
- |
106 |
|
Profit/(loss) attributable to equity holders and minority interest |
- |
- |
18,900 |
(471) |
18,429 |
|
Total income and expense for the period |
106 |
- |
19,006 |
(471) |
18,535 |
|
Transfer from share premium¹ |
- |
- |
- |
- |
- |
|
Dividends on Ordinary Shares |
- |
- |
(9,436) |
- |
(9,436) |
|
Cost of employee share-based incentives |
- |
- |
1,279 |
- |
1,279 |
|
Issue of Ordinary Shares |
- |
- |
142,804 |
- |
142,804 |
|
Minority interest acquired in year |
- |
- |
- |
610 |
610 |
|
Issue costs on issuance of Ordinary Shares |
- |
- |
(4,206) |
- |
(4,206) |
|
Own shares held |
- |
- |
(807) |
- |
(807) |
|
Deferred share-based consideration |
- |
790 |
790 |
- |
790 |
|
31 December 2006 |
106 |
790 |
267,583 |
(83) |
267,500 |
1. Following applications to the Royal Court of Guernsey, £25,000,000 was transferred from Share Premium account to Distributable Reserves on 2 June 2006 and £226,678,000 was similarly transferred on 29 June 2007.
The accompanying notes form an integral part of the financial statements.
Assura Group Limited
Consolidated Cash Flow Statement
For the period from 1 January 2007 to 31 March 2008
|
|
|
15 months ended 31 March 2008 |
12 months ended 31 December 2006 |
|
|
Note |
£'000 |
£'000 |
|
Operating Activities |
|
|
|
|
Rent received |
|
19,467 |
9,254 |
|
Revenue from pharmacies |
|
17,866 |
2,792 |
|
Fees received |
|
4,652 |
2,594 |
|
Dividend received |
|
172 |
- |
|
Payment received on termination of investment management services |
|
10,698 |
- |
|
Termination payment to sub-advisers |
|
(5,902) |
- |
|
Bank and other interest received |
|
3,340 |
1,032 |
|
Expenses paid |
|
(34,799) |
(11,869) |
|
Purchases by pharmacies |
|
(13,236) |
(2,099) |
|
Interest paid and similar charges |
|
(8,680) |
(1,555) |
|
Net cash (outflow)/inflow from operating activities |
39 |
(6,422) |
149 |
|
|
|
|
|
|
Investing Activities |
|
|
|
|
Purchase of development and investment property |
|
(92,844) |
(68,399) |
|
Purchase of investments in associated companies |
23 |
(13) |
- |
|
Purchase of other investments |
|
(500) |
(250) |
|
Purchase of own shares |
32 |
(3,754) |
- |
|
Purchase of property, plant and equipment |
|
(2,671) |
(3,498) |
|
Costs associated with registration of pharmacy licenses |
|
(2,571) |
(248) |
|
Debt sold with subsidiary |
16 |
4,265 |
- |
|
Cash paid on acquisition of subsidiaries |
24 |
(4,002) |
(14,269) |
|
Costs incurred on acquisition of subsidiaries |
|
- |
(1,377) |
|
Acquisition of subsidiaries - cash acquired |
|
- |
3,433 |
|
Cost of development work in progress |
|
(3,675) |
(2,694) |
|
Loans advanced to associated companies |
|
(2,575) |
(1,119) |
|
Loans advanced to joint ventures |
|
(8,301) |
(906) |
|
Net cash outflow from investing activities |
|
(116,641) |
(89,327) |
|
|
|
|
|
|
Financing Activities |
|
|
|
|
Issue of Ordinary Shares |
|
- |
110,039 |
|
Issue costs paid on issuance of Ordinary Shares |
|
- |
(4,206) |
|
Dividends paid |
|
(18,126) |
(9,436) |
|
Repayment of long-term loan |
31 |
(154,258) |
(64,000) |
|
Drawdown of long-term loan |
31 |
298,420 |
72,000 |
|
Loan issue costs |
|
(1,355) |
(123) |
|
Net cash inflow from financing activities |
|
124,681 |
104,274 |
|
|
|
|
|
|
Increase in cash and cash equivalents |
|
1,618 |
15,096 |
|
|
|
|
|
|
Opening cash and cash equivalents |
|
18,842 |
3,746 |
|
|
|
|
|
|
Closing cash and cash equivalents |
27 |
20,460 |
18,842 |
|
|
|
|
|
The accompanying notes form an integral part of the financial statement.
Assura Group Limited
Notes to the Consolidated Financial Statements
For the period from 1 January 2007 to 31 March 2008
1. Preliminary announcement basis of preparation, corporation information and operations
Preliminary announcement basis of preparation
The financial information in this preliminary announcement does not constitute the group's statutory financial statements for the period ended 31 March 2008 but has been extracted from the group's 31 March 2008 financial statements which were approved by the board on 24 June 2008. The accounting policies are consistent with those disclosed in the 31 December 2006 financial statements except for the changes in accounting policies disclosed below. Statutory financial statements for this period will be filed following the Annual General Meeting. The auditors have issued an unqualified report on the financial statements for the year ended 31 December 2006 and the period ended 31 March 2008.
Corporate information and operations
Assura Group Limited was originally incorporated in Guernsey as a closed-ended investment company with its investment objective to achieve capital growth and rising rental income from the ownership and development of a diversified portfolio of primary health care properties.
Subsequent to its incorporation, the activities have been broadened to include the provision of pharmacy and medical services. As a result of this increasing pharmacy and medical services activity, the Company was reclassified by the FTSE Industry Classification Committee from Property to Healthcare Equipment and Services on 24 September 2007. Furthermore, until 3 April 2008 the Company has been managed and controlled from Guernsey, however, at an Extraordinary General Meeting on 3 April 2008, shareholders approved the reclassification of the Company to a trading company and, immediately after, the Board agreed to move the Company's central management and control to the UK given that this is the location of its expanding trading operations.
The Company's Ordinary Shares are traded on the London Stock Exchange.
2. Principal accounting policies
Basis of preparation
The financial statements of the Group and Company have been prepared in conformity with International Financial Reporting Standards (IFRS) as adopted by the European Union and in accordance with the Companies (Guernsey) Law 1994, and reflect the following policies.
The consolidated financial statements have been prepared on a historical cost basis, except for investment properties, land and buildings, derivative financial instruments and available-for-sale investments that have been measured at fair value.
This financial report covers the 15 month accounting period from 1 January 2007 to 31 March 2008 following the change of year end to accord with that of the NHS and our joint venture partners in our GP joint venture companies, and the 12 month accounting period from 1 January 2006 to 31 December 2006. As a consequence the comparatives for the Income Statement, Balance Sheet, Statement of Changes in Equity, Cash Flow Statement and disclosures are not entirely comparable.
The Financial Statements are presented in pounds sterling to the nearest thousand.
Consolidation
The Group financial statements consolidate the financial statements of Assura Group Limited and its subsidiary undertakings drawn up to 31 March 2008.
All intra-Group balances, transactions, income and expenses and profits and losses resulting from intra-Group transactions that are recognised in assets, are eliminated in full.
Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. Control comprises the power to govern the financial and operating policies of the investee so as to obtain benefit from its activities and is achieved through direct or indirect ownership of voting rights, currently exercisable or convertible potential voting rights, or by way of contractual agreement. The financial statements of subsidiaries used in the preparation of the Consolidated Financial Statements are prepared for the same reporting period as the parent company and are based on consistent accounting policies.
Minority interests represent the portion of profit or loss and net assets not held by the Group and are presented in the income statement, and within equity in the Consolidated Balance Sheet, separately from parent shareholders' equity. Acquisitions of minority interests are accounted for using the parent entity extension method whereby the difference between the consideration and the book value of the share of the net assets acquired is recognised as goodwill.
Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received, excluding discounts, rebates, and sales taxes or duty. The following specific recognition criteria must also be met before revenue is recognised:
Pharmacy sales - revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer, on the date of sale.
Interest income - revenue is recognised as interest accrues using the effective interest method. The effective interest method is the rate that exactly discounts estimated future cash receipts through the expected life of the financial instrument to the net carrying amount of the financial asset.
Dividends - revenue is recognised when the Company's right to receive the payment is established.
Rental revenue - rental income arising from operating leases on investment properties is accounted for on a straight line basis over the lease term and is shown net of VAT.
Property management fees - income is accounted for on an accruals basis.
Performance fee revenue - performance fee revenue is recognised once the probability of receiving such revenue can be estimated reliably and it is likely to be received by the Company.
Expenses
All expenses are accounted for on the accruals basis.
Dividends payable
In accordance with IAS 10 Events after the Balance Sheet Date, dividends payable on Ordinary Shares declared and paid after period end are not accrued.
Revenue is recognised when the Group's right to receive payment is established.
Exceptional items
The Group presents as exceptional items on the face of the income statement those material items of income and expense which, because of the nature and expected infrequency of the events giving rise to them, merit separate presentation to allow shareholders to understand better the elements of financial performance in the year, so as to facilitate comparison with prior periods and to better assess trends in financial performance.
Share issue costs
The placing expenses incurred in relation to the Ordinary shares issued in the prior year amounted to £4,206,000 and were then written off in full against the share premium account.
Business combinations and goodwill
Business combinations are accounted for using the purchase method. This involves recognising identifiable assets (including previously unrecognised intangible assets) and liabilities (including contingent liabilities and excluding future restructuring) of the acquired business at fair value.
Goodwill acquired in a business combination is initially measured at cost being the excess of the cost of the business combination over the Group's interest in the net fair value of the acquirees' identifiable assets, liabilities and contingent liabilities. Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group's cash generating units, or groups of cash generating units, that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the Group are assigned to those units or groups of units. Each unit or group of units to which the goodwill is allocated:
-
represents the lowest level within the Group at which the goodwill is monitored for internal management purposes; and
-
is not larger than a segment based on either the Group's primary or the Group's secondary reporting format determined in accordance with IAS 14 Segment Reporting.
Intangible assets
Intangible assets including Pharmacy Licenses acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses.
The useful lives of intangible assets are assessed to be either finite or indefinite, and the costs are expensed over the life of the asset.
Third party costs incurred on the registration of pharmacy licenses are recognised as intangible assets when it is probable that the licence will be granted and its costs can be measured reliably. Other development expenditures that do not meet these criteria are recognised as an expense as incurred. Development costs previously recognised as an expense are not recognised as an asset in a subsequent period. Costs and time incurred by the Group's own staff in registering pharmacy licenses are fully expensed by the Group.
Intangible assets with indefinite useful lives are tested for impairment annually either individually or at the cash generating unit level. Such intangibles are not amortised. The useful life of an intangible asset with an indefinite life is reviewed annually to determine whether indefinite life assessment continues to be supportable. If not, the change in the useful life assessment from indefinite to finite is made on a prospective basis.
Both goodwill and capitalised development costs in respect of pharmacy licenses and pharmacy licenses themselves have indefinite useful lives and are tested for impairment annually as of 31 March 2008 either individually or at the cash generating unit level, as appropriate.
Goodwill is allocated to cash generating units for the purpose of impairment testing. This allocation is made to those cash generating units that are expected to benefit from the business combination in which the goodwill arose. The recoverable amount of a cash generating unit is determined based on value-in-use calculations. These calculations use cash flow projections based on detailed financial models prepared by management, with all anticipated future cash flows discounted to current day values using a discount rate of 8.5%.
Impairment of non-financial assets
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists the Group makes an estimate of the asset's recoverable amount being the higher of an asset's or cash-generating unit's fair value less costs to sell, and its value in use, and is determined for an individual asset. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, an appropriate valuation model is used. These calculations are corroborated by valuation multiples.
Impairment losses of continuing operations are recognised in the income statement in those expense categories consistent with the function of the impaired asset, except for property previously revalued where the revaluation was taken to equity. In this case the impairment is recognised in equity up to the amount of any previous revaluation.
Impairment losses recognised in relation to goodwill are not reversed for subsequent increases in its recoverable amount for assets including goodwill. For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group makes an estimate of recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset's recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the income statement unless the asset is carried at revalued amount, in which case the reversal is treated as a revaluation increase.
Investments in subsidiary companies
Investments in subsidiary companies are initially recognised and subsequently carried at cost in the Company Financial Statements, less any provisions for diminution in value.
Investments in associates
The Group's investments in associates are accounted for under the equity method of accounting. An associate is an entity in which the Group has significant influence and which is neither a subsidiary nor a joint venture.
Under the equity method, investments in associates are carried in the balance sheet at cost plus post-acquisition changes in the Group's share of net assets of the associates. After application of the equity method, the Group determines whether it is necessary to recognise any additional impairment loss with respect to the Group's net investment in the associates. The Consolidated Income Statement reflects the share of the results of operations of the associates after tax. Where there has been a change recognised directly in the equity of the associates, the Group recognises its share of any changes and discloses this, when applicable, in the Statement of Changes in Equity.
Any goodwill arising on the acquisition of an associate, representing the excess of the cost of the investment compared to the Group's share of the net fair value of the associate's identifiable assets, liabilities and contingent liabilities, is included in the carrying amount of the associate and is not amortised.
The financial statements of the associates are prepared for the same reporting period as the Group or with a maximum difference of no more than three months wherever possible, using consistent accounting policies.
Investments in joint ventures
The Group has interests in joint ventures which are jointly controlled entities. A joint venture is a contractual arrangement whereby two or more parties undertake an economic activity that is subject to joint control, and a jointly controlled entity is a joint venture that involves the establishment of a separate entity in which each venturer has an interest. The Group recognises its interest in joint ventures using equity accounting. The equity accounting method is described in the 'investments in associates' accounting policy above.
The financial statements of joint ventures are prepared for the same reporting period as the Group or with a maximum difference of no more than three months wherever possible using consistent accounting policies.
Financial assets
Financial assets are recognised when the Group becomes party to the contracts that give rise to them and are classified as financial assets at fair value through profit or loss; loans and receivables; held-to-maturity investments; or as available-for-sale financial assets, as appropriate. The Group determines the classification of its financial assets at initial recognition and, where allowed and appropriate, re-evaluates this designation at each financial year end.
(a) Loans and receivables
Loans and receivables are non-derivative financial assets that are not quoted in an active market. Such assets are initially measured at fair value and are subsequently carried at amortised cost using the effective interest method less any allowance for impairment. Amortised cost is calculated taking into account any discount or premium on acquisition and includes fees that are an integral part of the effective interest rate and transaction costs. Gains and losses are recognised in the Income Statement when the loans and receivables are derecognised or impaired, as well as through the amortisation process. Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.
(b) Derivative financial instruments and hedging activities
The Group uses derivative financial instruments, in the form of interest rate swaps, to hedge its risks associated with interest rate fluctuations. The group has classified its derivative instruments as financial assets at fair value through profit or loss. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured at their fair value.
Derivatives are carried as assets when the fair value is positive and as liabilities when the fair value is negative.
The fair value of hedging derivatives are classified as a non-current asset or liability if the remaining maturity of the hedged item is more than 12 months, and as a current asset or liability if the remaining maturity of the hedged item is less than 12 months.
The fair value of interest rate swap contracts is determined by reference to market values for similar instruments. The swap is valued on each valuation date by discounting future cash flows back to the valuation date against mid market forward rates and an associated discount factor.
(c) Available-for-sale financial assets
Available-for-sale financial assets are those non-derivative financial assets that are designated as such or are not classified in any of the preceding categories. After initial recognition, available-for-sale financial assets are measured at fair value with gains or losses being recognised as a separate component of equity until the investment is derecognised or until the investment is determined to be impaired at which time the cumulative gain or loss previously reported in equity is included in the income statement.
(d) Fair values
The fair value of quoted investments is determined by reference to bid prices at the close of business on the balance sheet date. Where there is no active market, fair value is determined using valuation techniques. These include using recent arm's length market transactions; reference to the current market value of another instrument which is substantially the same; discounted cash flow analysis and pricing models. Otherwise assets will be carried at cost.
Investment property - freehold
Freehold properties are initially recognised at cost, being the fair value of consideration given, including transaction costs associated with the property.
After initial recognition, freehold investment properties are measured at fair value, with unrealised gains and losses recognised in the Consolidated Income Statement. Fair value is based upon the open market valuations of the properties as provided by a firm of independent chartered surveyors as at the balance sheet date.
Investment property - long leasehold
Long leasehold properties are initially recognised as both an asset and lease creditor at the present value of the ground rents payable over the term of the lease. Long leasehold properties are subsequently revalued in accordance with IAS 40 up to the fair value as advised by the independent valuer as noted above for freehold properties. The lease creditor is amortised over the term of the lease using the effective interest method.
The lease payments are apportioned between the reduction of the lease liability and finance charges in the income statement.
Investment property transfers
Transfers are made to investment property when there is a change in use, evidenced by the end of the Group's occupation, commencement of an operating lease to another party or completion of construction or development. Transfers are made from work in progress to development property upon completion of the purchase of the land and upon commencement of the development or construction. Transfers are made from investment property when there is a change in use, evidenced by commencement of the Group's occupation or commencement of development with a view to sale.
For a transfer from investment property to owner occupied property, the deemed cost of property for subsequent accounting is its fair value at the date of change in use. If the property occupied by the Group as an owner occupied property becomes an investment property, the Group accounts for such property in accordance with the policy stated under property, plant and equipment up to the date of change in use. For a transfer from development to investment property, any difference between the fair value of the property at that date and its previous carrying amount is recognised in the income statement. When the Group completes the construction or development of a self developed investment property, any difference between the fair value of the property at that date and its previous carrying amount is recognised in the income statement.
Development property
Development property which comprises land and buildings under construction includes capitalised interest where applicable and is carried at cost or, if lower, carried at cost less accumulated impairment. Cost includes all directly attributable third party expenditure incurred.
Property, plant and equipment
Land and buildings are measured at fair value less depreciation on buildings and impairment charged subsequent to the date of the revaluation. Fair value is based on independent values of the property apportioned between that element used for the business of the Group and that element rented to third parties.
Plant and equipment is stated at cost, excluding the costs of day to day servicing, less accumulated depreciation and accumulated impairment in value.
Depreciation is provided on a straight line basis at rates calculated to write off the cost less estimated residual value of each asset over its useful life, as follows:
|
Building work and long leasehold improvements |
25 years |
|
Fixtures and fittings |
4 years |
|
Office and computer equipment |
3 years |
|
Medical equipment |
Between 3 and 10 years depending on the nature of the equipment |
Valuations are performed frequently to ensure that the fair value of a revalued asset does not differ materially from its carrying amount. Any revaluation surplus is credited to the asset revaluation reserve included in the equity section of the balance sheet, except to the extent that it reverses a revaluation decrease of the same asset previously recognised in profit or loss, in which case the increase is recognised in profit or loss. A revaluation deficit is recognised in profit or loss, except that a deficit directly offsetting a previous surplus on the same asset is directly offset against the surplus in the asset revaluation reserve.
An annual transfer from the asset revaluation reserve to retained earnings is made for the difference between depreciation based on the revalued carrying amount of the assets and depreciation based on the asset's original cost. Additionally, accumulated depreciation as at the revaluation date is eliminated against the gross carrying amount of the asset and the net amount is restated to the revalued amount of the asset. Upon disposal, any revaluation reserve relating to the particular asset being sold is transferred to retained earnings.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement in the year the asset is derecognised.
The assets' residual values, useful lives and methods of depreciation are reviewed, and adjusted if appropriate, at each financial year end.
Loans to subsidiary companies
The unsecured subordinated loan to Assura Property Limited and other loans to subsidiary companies have been accounted for on an amortised cost basis with inter-company interest being recognised under the effective interest rate method. The loans are reviewed regularly for impairment.
Capitalisation of interest
Finance costs which are directly attributable to the development of investment property are capitalised as part of the cost of the investment property. The commencement of capitalisation begins when both finance costs and expenditure for the property are being incurred and activities that are necessary to prepare the asset ready for use are in progress. Capitalisation ceases when all the activities that are necessary to prepare the asset for use are complete.
Pharmacy inventories
Pharmacy inventories are valued at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale. Cost is defined as average purchase price.
Property pre-acquisition costs
Property work in progress comprises costs incurred on property pre-acquisition and investment opportunities including bid costs which are capitalised when the transaction is virtually certain. Costs are written off to the income statement only if the project becomes abortive. Costs are transferred to investment property if the opportunity results in the purchase of an income generating property. Costs are transferred to development property on acquisition of the land or development site.
Cash and cash equivalents
Cash and cash equivalents are defined as cash in hand, demand deposits, and highly liquid investments readily convertible to known amounts of cash and subject to insignificant risk of changes in value. For the purposes of the Consolidated Cash Flow Statement, cash and cash equivalents consist of cash in hand and deposits in banks.
Bank loans and borrowings
All bank loans and borrowings are initially recognised at fair value of the consideration received, less issue costs where applicable. After initial recognition, all interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method. Amortised cost is calculated by taking into account any discount or premium on settlement.
Leases
Group as a lessee
Assets held under finance leases, which transfer to the Group substantially all the risks and benefits incidental to ownership of the leased item, are capitalised at the inception of the lease, with a corresponding liability being recognised for the lower of the fair value of the leased asset and the present value of the minimum lease payments. Lease payments are apportioned between the reduction of the lease liability and finance charges in the income statement so as to achieve a constant rate of interest on the remaining balance of the liability. Assets held under finance leases are depreciated over the shorter of the estimated useful life of the asset and the lease term.
Leases where the lessor retains a significant portion of the risks and benefits of ownership of the asset are classified as operating leases and rentals payable are charged in the income statement on a straight line basis over the lease term.
Group as a lessor
Assets leased out under operating leases are included in property, plant and equipment and depreciated over their estimated useful lives. Rental income, including the effect of lease incentives, is recognised on a straight line basis over the lease term.
Where the Group transfers substantially all the risks and benefits of ownership of the asset, the arrangement is classified as a finance lease and a receivable is recognised for the initial direct costs of the lease and the present value of the minimum lease payments. As payments fall due, finance income is recognised in the income statement so as to achieve a constant rate of return on the remaining net investment in the lease.
Provisions
A provision is recognised when the Group has a legal or constructive obligation as a result of a past event. It is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. If the effect is material, expected future cash flows are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability.
Where the Group expects some or all of a provision to be reimbursed, for example under an insurance policy, the reimbursement is recognised as a separate asset but only when recovery is virtually certain. The expense relating to any provision is presented in the income statement net of any reimbursement. Where discounting is used, the increase in the provision due to unwinding the discount is recognised as a finance cost.
Income taxes
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities, based on tax rates and laws that are enacted or substantively enacted by the balance sheet date.
Deferred income tax is recognised on all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements, with the following exceptions:
-
where the temporary difference arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss;
-
in respect of taxable temporary differences associated with investments in subsidiaries, associates and joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future; and
-
deferred income tax assets are recognised only to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, carried forward tax credits or tax losses can be utilised.
Deferred income tax assets and liabilities are measured on an undiscounted basis at the tax rates that are expected to apply when the related asset is realised or liability is settled, based on tax rates and laws enacted or substantively enacted at the balance sheet date.
The carrying amount of deferred income tax assets is reviewed at each balance sheet date. Deferred income tax assets and liabilities are offset, only if a legally enforcement right exists to set off current tax assets against current tax liabilities, the deferred income taxes relate to the same taxation authority and that authority permits the group to make a single net payment.
Income tax is charged or credited directly to equity if it relates to items that are credited or charged to equity. Otherwise income tax is recognised in the income statement.
Share-based payment transactions
Employees (including senior executives) of the Group receive remuneration in the form of share-based payment transactions, whereby employees render services as consideration for equity instruments ('equity settled transactions').
In situations where some or all of the goods or services received by the entity as consideration for equity instruments cannot be specifically identified, they are measured as the difference between the fair value of the share-based payment and the fair value of any identifiable goods or services received at the grant date. For cash-settled transactions, the liability is measured at each reporting date until settlement.
Equity-settled transactions
The cost of equity-settled transactions with employees, for awards granted, is measured by reference to the fair value at the date on which they are granted. The fair value is determined by reference to market price on the date of grant.
In valuing equity-settled transactions, no account is taken of any vesting conditions, other than conditions linked to the price of the shares of the company (market conditions).
The cost of equity-settled transactions is recognised by a change in the income statement, together with a corresponding credit in retained earnings, over the period in which the performance and/or service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award ('the vesting date'). The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group's best estimate of the number of equity instruments that will ultimately vest. The income statement charge or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that period.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon market conditions, which are treated as vesting irrespective of whether or not the market conditions are satisfied, provided that all other performance conditions are satisfied.
Where the terms of an equity-settled award are modified, the minimum expense recognised is the expense if the terms had not been modified. An additional expense is recognised for any modification, which increases the total fair value of the share-based payment arrangement, or is otherwise beneficial to the employee as measured at the date of modification.
Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any cost not yet recognised in the income statement for the award is expensed immediately. Any compensation paid up to the fair value of the award at the cancellation or settlement date is deducted from equity, with any excess over fair value being treated as an expense in the income statement.
Cash-settled transactions
The cost of cash-settled transactions is measured initially at fair value at the grant date using a binomial model. This fair value is expensed over the period until vesting with recognition of a corresponding liability.
Own shares held
Assura Group shares held by the Company and the Group are classified in shareholders' equity as 'own shares held' and are recognised at cost. Consideration received for the sale of such shares is also recognised in equity, with any difference between the proceeds from sale and the original cost being taken to retained earnings. No gain or loss is recognised in the income statement on the purchase, sale, issue or cancellation of equity shares.
Changes in accounting policy and disclosures
(a) New standards, amendments to published standards and interpretations to existing standards adopted by the Group:
- IFRS 7, Financial Instruments: disclosures and a complementary amendment to IAS 1, Presentation of Financial Statements - capital disclosures. IFRS 7 introduces new requirements aimed at improving the disclosure of information about financial instruments. Comparative information has been revised where needed.
The amendment to IAS 1 introduces disclosures about the level and management of an entity's capital. IFRS 7 and the amendments to IAS 1 have had no impact on the financial position or results.
- IFRIC 8, Scope of IFRS 2. IFRIC 8 requires consideration of transactions involving issuance of equity instruments to establish whether or not they fall within the scope of IFRS 2. It applies to the situations where the identifiable consideration received is or appears to be less than the fair value of the equity instruments issued. There was no impact on the Group's accounts from its adoption.
- IFRIC 10, Interim Financial Reporting and Impairment. IFRIC 10 prohibits impairment losses recognised in an interim period on goodwill and investments in equity instruments and on financial assets carried at cost to be reversed at a subsequent balance sheet date. There was no impact on the Group's accounts from its adoption.
(b) Standards, amendments and interpretations to published standards not yet effective
Certain new standards, amendments and interpretations to existing standards have been published that are mandatory for the Group's accounting periods beginning on or after 1 April 2008 or later periods and which the Group has decided not to adopt early. These are:
- IFRS 2, Share-based Payments - Vesting Conditions and Cancellations. This amendment to IFRS 2 was published in January 2008 and becomes effective for financial years beginning on or after 1 January 2009. The standard restricts the definition of 'vesting condition' to a condition that includes an explicit or implicit requirement to provide services. Any other conditions are non-vesting conditions, which have to be taken into account to determine the fair value of the equity instruments granted. In the case that the award does not vest as the result of a failure to meet a non-vesting condition that is within the control of either the entity or the counterparty, this must be accounted for as a cancellation. The Group has not entered into share-based payment schemes with non-vesting conditions attached and, therefore, does not expect significant implications on its accounting for share-based payments.
- IFRS 3R, Business Combinations and IAS 27R Consolidated and Separate Financial Statements. The revised standards were issued in January 2008 and became effective for financial years beginning on or after 1 July 2009. IFRS 3R introduces a number of changes in the accounting for business combinations that will impact the amount of goodwill recognised, the reported results in the period that an acquisition occurs, and future reported results. IAS 27R requires that a change in the ownership interest of a subsidiary is accounted for as an equity transaction. Therefore, such a change will have no impact on goodwill, nor will it give rise to a gain or loss. Furthermore, the amended standard changes the accounting for losses incurred by the subsidiary as well as the loss of control of a subsidiary. The changes introduced by IFRS 3R and IAS 27R must be applied prospectively and will affect future acquisitions and transactions with minority interests.
- IFRS 8, Operating Segments (effective for accounting periods beginning on or after 1 January 2009). This standard sets out requirements for disclosure of information about an entity's operating segments and also about the entity's products and services, the geographical areas in which it operates, and its major customers. It replaces IAS 14, Segmental Reporting. As this is a disclosure standard it will not have any impact on the results or net assets of the Group.
- IAS 1, Revised Presentation of Financial Statements. The revised IAS 1 was issued in September 2007 and becomes effective for financial years beginning on or after 1 January 2009. The standard separates owner and non-owner changes in equity. The statement of changes in equity will include only details of transactions with owners, with all non-owner changes in equity presented as a single line. In addition, the standard introduces the statement of comprehensive income: it presents all items of income and expense recognised in profit or loss, together with all other items of recognised income and expense, either in one single statement, or in two linked statements. The Group is still evaluating whether it will have one or two statements.
- IAS 23 Borrowing Costs (revised) (effective for accounting periods beginning on or after 1 January 2009). The main change from the previous version is the removal of the option of immediately recognising as an expense borrowing costs that relate to assets that take a substantial period of time to get ready for use or sale. The Group is currently assessing its impact on the financial statements.
- Amendments to IAS 32 and IAS 1 Puttable Financial Instruments. Amendments to IAS 32 and IAS 1 were issued in February 2008 and became effective for annual periods beginning on or after 1 January 2009. The amendment to IAS 32 requires certain puttable financial instruments and obligations arising on liquidation to be classified as equity if certain criteria are met. The amendment to IAS 1 requires disclosure of certain information relating to puttable instruments classified as equity. The Group does not expect these amendments to impact the financial statements of the Group.
- IFRIC 11 and IFRS 2, Group and Treasury Share Transactions (effective for accounting periods beginning on or after 1 March 2007). IFRIC 11 requires share-based payment transactions in which an entity receives services as consideration for its own equity instruments to be accounted for as equity-settled. This applies regardless of whether the entity chooses or is required to buy those equity instruments from another party to satisfy its obligations to its employees under the share-based payment arrangement. The Group is currently assessing the impact of IFRIC 11 on the accounts.
- IFRIC 14 and IAS 19, The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction (effective for accounting periods beginning on or after 1 January 2008). As the Group does not operate defined benefit pension arrangements this IFRIC will not impact the Group.
Improvements to IFRSs
In May 2008 the IASB issued 'Improvements to IFRSs', a standard setting out amendments to existing standards, which is effective for accounting periods beginning on or after 1 January 2009. One amendment will require property under construction or development to be classified as investment properties. Currently these are disclosed as development properties which will result in a presentational change on the balance sheet when the standard is adopted. Where fair values can not be determined during construction or development, but it is expected that fair value can be determined upon completion, the asset will be recorded at cost until such time that as fair value can be determined or construction is complete. This is consistent with current group policy. The group does not expect the other amendments to have a material impact on the financial statements.
Summary of significant accounting judgements, estimates and assumptions
The Group makes estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based on historical experience and other factors including reasonable future expectations. Those estimates and assumptions which could have a material impact on the carrying value of assets and liabilities within the next financial year are discussed below.
Judgements, estimates and assumptions
(a) Valuation of investment property
All investment properties are stated at fair values, which have been determined based on valuations undertaken by independent valuers on the basis of open market value. See note 21.
(b) Impairment of goodwill and intangible assets
The Group tests annually whether goodwill may have suffered impairment utilising value in use calculations whereby future cash flows are estimated and discounted, using an appropriate discount rate, to their net present value. See note 24.
(c) Useful lives of property, plant and equipment
Property, plant and equipment are depreciated over their useful lives based on directors' estimates of the period that the assets will generate revenue. Changes to estimates can vary. See note 25.
(d) Financial assets
The Group classifies certain financial assets as available-for-sale and recognises movements in their fair value in equity. When the fair value declines, management makes assumptions about the decline in value to determine whether it is an impairment that should be recognised in profit or loss.
(e) Derivative financial instruments
The fair value of interest rate swap contracts is determined by reference to market values for similar instruments. See note 13.
(f) Deferred tax asset
Management judgement to determine the amount of deferred tax assets that can be recognised based upon the unlikely timing and level of future taxable profits together with assessment of the effect of future tax planning. See note 40.
(g) Share-based payments
The Group has an equity settled share-based remuneration scheme for employees the notional cost of which is estimated based on the fair value of the shares granted to employees at various dates in accordance with the scheme rules.
The estimation of the fair value is based on reasonable assumptions but these can vary from time to time. See note 32.
3. Material Agreements
(a) Under the terms of an appointment made by the Board on 18 November 2003, Assura Administration Limited (formerly Berrington Fund Management Limited) (BFML) was appointed as investment manager to the Company. With effect from 21 November 2003 the investment manager was paid an aggregate annual management fee of 2.0% of the net asset value of the Company payable monthly in arrears. In addition, BFML was entitled to receive a performance fee in respect of the period from Admission to 31 December 2008 of 18% of the amount by which the market value per share exceeds on 31 December 2008 the Placing Price (compounded annually at 12% per annum) and, thereafter, 18% of the amount by which the market value per share exceeds the higher of (1) the Placing Price (compounded annually at 12% per annum) or (2) the highest previous market value per share as stated in the Prospectus dated 18 November 2003. (See also note 4).
The Investment Management Agreement ceased following the acquisition of BFML by Assura Group Limited on 15 May 2006.
The investment manager had delegated the bulk of its fund management to Assura Fund Management LLP (formerly Berrington Fund Management LLP) which was acquired by Assura Property Limited on 15 May 2006.
Assura Fund Management LLP was the fund manager for Stobart Group Limited (formerly The Westbury Property Fund Limited) from which fees were earned amounting to 1.2% of the gross assets of that Company. Part of this work was sub contracted to third parties. The fund management agreement was terminated in September 2007.
The investment manager had delegated the management of the investment properties owned by Assura Property Limited to Barlows Asset Management Limited. This contract was terminated on 7 August 2006 when the property management staff and systems utilised by Barlows Asset Management Limited were transferred to Assura Property Limited.
(b) Under the terms of an Administration Agreement dated 18 November 2003, the Company appointed Guernsey International Fund Managers Limited (GIFM) as administrator, secretary and registrar of the Company. This agreement was terminated with effect from 27 April 2004.
The Company then entered into an Administration Agreement dated 26 April 2004 with Mourant Guernsey Limited (Mourant) under which Mourant agreed to provide services to the Company as administrator and secretary to the Company. Mourant was entitled to an annual fee of £85,000 per annum, such fees being invoiced monthly in arrears.
On 11 September 2006 that agreement was terminated and since that date administration and Company secretarial services had been managed internally by Assura Administration Limited from the Company's head office in Guernsey. Assura Administration Limited was sold to its management on 1 April 2008 and has changed its name to Morgan Sharpe Administration Limited.
(c) Under the terms of a letter of appointment dated 17 November 2003, Dr Mark Jackson, former non-executive Chairman of the Company, was entitled to an incentive fee in respect of the period from 21 November 2003 to 31 December 2008, provided he was then still employed by the Company, of 2% of the amount by which the market value per share exceeded, on 31 December 2008, £1 compounded annually at 12% per annum and, thereafter, 2% of the amount by which the market value per share exceeds the higher of (1) £1 compounded annually at 12% or (2) the higher previous market value per share.
Following recommendations from the Remuneration Committee to the Board of the Company and in order to bring the incentive and remuneration structure of Dr Mark Jackson in line with other members of the senior Assura team:
(i) his existing bonus arrangement was cancelled on 29 December 2006 for a cash payment of £500,000; and
(ii) he was awarded 500,000 units pursuant to the Assura Executive Equity Incentive Plan (EEIP), under which he will become entitled on 31 December 2010 to a number of shares held in the Company EBT determined by the extent to which the total shareholder return performance conditions are satisfied (see note 32).
4. Movement in performance fee provision
Following the acquisition of the former fund manager by the Company on 15 May 2006, the performance fee provision was revalued and a credit of £1,010,000 arose in the year ended 31 December 2006. The performance fee liabilities of the Company ceased in April 2006.
|
5. Revenue |
|
15 months ended 31 March |
12 months ended 31 December 2006 |
|
|
|
£'000 |
£'000 |
|
Rent receivable |
|
18,230 |
10,738 |
|
Revenue from pharmacies |
|
17,866 |
2,792 |
|
Fund management and other fees receivable |
|
4,652 |
2,593 |
|
|
|
40,748 |
16,123 |
|
6. Cost of Sales |
|
15 months ended 31 March |
12 months ended 31 December 2006 |
|
|
|
£'000 |
£'000 |
|
Property management expenses |
|
2,277 |
832 |
|
Purchases by pharmacies |
|
13,237 |
2,099 |
|
Fund management direct costs |
|
720 |
694 |
|
|
|
16,234 |
3,625 |
|
7. Administrative expenses |
|
15 months ended 31 March |
12 months ended 31 December 2006 |
|
|
|
£'000 |
£'000 |
|
Salaries and other staff costs |
(a) |
16,784 |
6,950 |
|
Auditors' remuneration |
(b) |
526 |
304 |
|
Directors' fees |
(c) |
430 |
273 |
|
Other admin expenses |
|
10,476 |
5,683 |
|
Depreciation |
|
1,120 |
302 |
|
|
|
29,336 |
13,512 |
|
(a) Salaries and other staff costs |
|
15 months ended 31 March |
12 months ended 31 December 2006 |
|
|
|
£'000 |
£'000 |
|
Wages and salaries |
|
14,246 |
5,678 |
|
Social security costs |
|
1,430 |
643 |
|
Recruitment costs |
|
588 |
392 |
|
Training costs |
|
275 |
160 |
|
Health care costs |
|
103 |
39 |
|
Temporary staff |
|
67 |
24 |
|
Pension costs |
|
5 |
8 |
|
Uniforms |
|
13 |
6 |
|
Other staff benefits |
|
57 |
- |
|
|
|
16,784 |
6,950 |
The average monthly number of employees during the year was made up as follows:
|
|
|
15 months ended 31 March |
12 months ended 31 December 2006 |
|
|
|
|
|
|
Medical |
|
45 |
13 |
|
Pharmacy |
|
142 |
33 |
|
Property investment |
|
15 |
12 |
|
Property development |
|
54 |
25 |
|
|
|
256 |
83 |
|
Key management staff |
|
15 months ended 31 March |
12 months ended 31 December 2006 |
|
|
|
£'000 |
£'000 |
|
Salaries |
|
1,292 |
1,103 |
|
Cost of employee share-based incentives |
|
297 |
218 |
|
Social security costs |
|
146 |
133 |
|
|
|
1,735 |
1,454 |
|
(b) Auditors' remuneration |
|
15 months ended 31 March |
12 months ended 31 December 2006 |
|
|
|
£'000 |
£'000 |
|
Group audit |
|
129 |
176 |
|
Statutory audit |
|
231 |
66 |
|
Total audit fees |
|
360 |
242 |
|
Audit related fees - two interim reviews |
|
40 |
- |
|
Tax services - compliance |
|
126 |
62 |
|
Total |
|
526 |
304 |
Statutory audit 2008 includes £85,000 in respect of 2006 audits.
|
(c) Directors' fees |
|
15 months ended 31 March |
12 months ended 31 December 2006 |
|
During the year each of the Directors received the following fees: |
|
||
|
|
|
£'000 |
£'000 |
|
|
|
|
|
|
Dr Mark Jackson (former Chairman) |
|
129 |
100 |
|
Dr John Curran (Deputy Chairman) |
|
84 |
48 |
|
Mr Graham Chase |
|
51 |
27 |
|
Mr Peter Pichler |
|
74 |
27 |
|
Mr Fred Porter |
|
46 |
27 |
|
Ms Serena Tremlett |
|
- |
17 |
|
Mr Colin Vibert |
|
46 |
27 |
|
|
|
430 |
273 |
See also Dr Mark Jackson's interest referred to in note 3.
In the year ended 31 December 2006, Dr John Curran, Messrs Pichler and Vibert and Ms Tremlett were paid an additional £10,000 each for consultancy work, the costs of which were capitalised as part of the acquisition costs of Assura Administration Limited and related parties.
|
8. Other Expenses |
|
15 months ended 31 March |
12 months ended 31 December 2006 |
|
|
|
£'000 |
£'000 |
|
Cost of employee share-based incentives |
|
1,704 |
1,279 |
|
9. Other Operating Costs |
|
15 months ended 31 March |
12 months ended 31 December 2006 |
|
|
|
£'000 |
£'000 |
|
Unrealised deficit on revaluation of property, plant and equipment |
|
464 |
- |
|
Unrealised deficit on revaluation of other investments |
|
989 |
- |
|
|
|
1,453 |
- |
|
10. Share of post tax profits/(losses) of associates and joint ventures accounted for using the equity method |
|
15 months ended 31 March |
12 months ended December 2006 |
|
|
|
£'000 |
£'000 |
|
|
|
|
|
|
Share of profit/(loss) of associated companies |
|
5,087 |
(1,417) |
|
Share of losses of joint ventures |
|
(551) |
(37) |
|
|
|
4,536 |
(1,454) |
|
|
|
|
|
The above share of profits/(losses) include £4,854,000 (2006: £nil) in respect of developed investment property revalued for the first time since practical completion.
This information is provided by RNS
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