Interim Results 2019

RNS Number : 0392T

Assura PLC

12 November 2019

 

12 November 2019

Assura's strong performance enhanced by growing development and asset enhancement pipelines

Assura remains a key partner to the NHS

 Assura plc ("Assura"), the leading primary care property investor and developer, today announces its interim results for the 6 months to 30 September 2019.

Jonathan Murphy, CEO, said: "Assura has today delivered another strong performance, driven by new developments and carefully selected acquisitions. We have again made good progress with our key operational metrics, reporting 10% growth in net rental income, maintaining our focus on asset enhancement, selective strategic acquisitions and disposals. Our pipeline is the strongest it has been in 10 years, enhanced by the acquisition of GPI, which has created fresh opportunities for Assura. 

"The UK's primary care infrastructure continues to be in immediate need of modernisation which will ease the significant strain on NHS services. We remain well-positioned to be the NHS's partner of choice, bringing a long-term approach to both investing and developing with an unrivalled team, capital strength and quality of service."

A growing portfolio driving performance

·      Net rental income up 10% to £50.6 million, rent roll growth of 2% to £104.4 million,

·      148 rent reviews settled in six months

·      2.04% of rental growth secured through settled rent reviews, 1.15% relating to open market reviews

·      EPRA cost ratio at 12.8%, one of the lowest in the real estate sector

·      EPRA EPS up 8% to 1.4p reflecting contribution from completed developments and acquisitions

·      Dividend paid in period rise of 8% to 1.4p per share

·      Profit before tax down 3% to £36.4 million, due to lower revaluation gains

·      Portfolio value up 3% to £2,039 million driven by acquisitions and developments, EPRA NAV increased 0.2p to 53.5p

·      Portfolio NIY now 4.72% and WAULT of 11.6 years demonstrates attractiveness of sector and Assura as a business

Strongest on-site and pipeline position in 10 years, bolstered by GPI acquisition

·      £43 million of additions to completed property in the period; purchase of nine high quality properties and completion of two state-of-the-art developments

·      14 developments currently on-site and immediate pipeline of 15 further schemes

·      Pipeline of properties on site or in legal hands at £206 million, up from £142 million at year end

·      Immediate and extended development pipeline boosted by acquisition of pipeline and team of primary care developer GPI, announced in May

·      15 disposals for total proceeds of £18 million, above book value

Strong balance sheet ensures a platform for growth

·      LTV of 36% provides good headroom to create value and build portfolio, weighted average interest rate of 3.16%

·      Completed private placement of £107 million notes in August

·      Undrawn committed facilities at £310 million

·      A- (stable outlook) rating from Fitch providing us with a broadened access to debt capital markets and lenders

Committed to delivering a positive social impact in the communities we operate in

·      Sustainability a core priority for all new developments

·      Focus on supporting climate change targets, sustainable investor returns and customer running costs

·      Signing up to be a member of the UK Green Building Council

·      Awarded Bronze Award for compliance with EPRA Sustainability Best Practice Recommendations

Maintaining focus on being the NHS partner of choice

·      Best-placed to support NHS given people, capital strength, quality of service, long-term relationships and market understanding

·      Long-term approach to investing with collaboration across investment, development and portfolio teams

·      Primary care remains an integral part of reducing pressure on the NHS's services

·      Assura's buildings sit at the heart of communities across the UK, supporting 5.6 million patients: 8.5% of the UK population

·      Strong pipeline of properties in legal hands at £206 million reinforces Assura's position as partner of choice

Summary Results

Financial performance	Sep 2019	Sep 2018	Change
EPRA earnings per share	1.4p	1.3p	7.7%
Profit before tax	£36.4m	£37.4m	(2.7)%
Net rental income	£50.6m	£46.2m	9.5%
Dividend per share	1.4p	1.3p	7.7%
Property valuation and performance	Sep 2019	March 2019	Change
Investment property	£2,039m	£1,979m	3.0%
Diluted EPRA NAV per share	53.5p	53.3p	-
Contracted annual rent roll	£104.4m	£102.7m	1.7%
Financing	Sep 2019	March 2019	Change
Loan to value ratio	36%	34%	2ppts
Undrawn committed facilities	£310m	£270m	14.8%
Weighted average cost of debt	3.16%	3.24%	8bps

Alternative Performance Measures ("APMs")

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

For further information, please contact:

Assura plc: Jayne Cottam - CFO Orla Ball - Company Secretary David Purcell - Head of Financial Reporting	Tel: [phone]
Finsbury: Gordon Simpson James Thompson	Tel: [phone]

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

Presentation and webcast:

A presentation will be held for analysts and investors on 12 November 2019 at 10.30am London time, with a webcast available from our website or via the following link:

https://webcasting.brrmedia.co.uk/broadcast/5d3577b448a6d52f84f6a945

Notes to Editors

Assura plc, a constituent of the FTSE 250 and the EPRA* indices, is a UK REIT and long-term investor in and developer of primary care property. The company, headquartered in Warrington, works with GPs, health professionals and the NHS to create outstanding spaces for health services in our communities. At 30 September 2019, Assura's property portfolio was valued at £2,039 million.

Further information is available at www.assuraplc.com

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

CEO's statement

The first half of this year has been another period of strong progress for Assura, driven by new developments and carefully selected acquisitions. Our on-site and pipeline status is the strongest it has been in 10 years, boosted by the acquisition of the GPI development pipeline.

We have seen further improvements in our key operational metrics, including impressive rental income growth following a close focus on asset enhancement and strategic acquisitions.

We have consolidated our leading position as an investor and developer of choice for primary care medical centres. We remain well placed as the largest developer in our sector to deliver new buildings that are crucial to the provision of high-quality health services in the communities they serve. 

Enhanced portfolio

The value of our portfolio has increased by £60 million to £2.0 billion, reflecting mainly acquisitions which added £34 million and £21 million spend on developments. Overall, our investment property stands at 560 medical centres and we have a strong pipeline of opportunities for further growth.

The level of development opportunities has also continued to grow, and the acquisition of primary care developer GPI has further strengthened our team and pipeline. In addition to the two development completions in the first half, we have 14 schemes on site (total end cost £69 million), an immediate pipeline of 15 schemes (£72 million) which we hope to commence within 12 months and an extended pipeline, where we are the appointed development partner but the scheme is not yet approved, of 32 schemes (£168 million).

The growth of the development pipeline over the last two years has accelerated as more schemes are clearing the NHS approval process.

The market for primary care medical centres remains competitive, but our acquisition pipeline remains strong at £65 million.

The renewed focus on improving our existing assets has seen us achieve increased levels of lease regears and new tenants in the period. We are concentrating on growing our contracted rental income, and we have developed a good pipeline of lease events that are in legal hands.

Our current LTV is 36%, which we expect to increase in the short term as we fund further growth of the portfolio through both acquisitions and developments. We have a good level of headroom on our banking facilities to fund further growth.

Financial highlights

The growth in our portfolio has continued to be reflected in our financial results. Net rental income increased 10% to £50.6 million, while EPRA earnings increased 4% to £32.9 million, or 1.4 pence per share. IFRS profit before tax was £36.4 million and diluted EPRA net asset value grew to 53.5 pence per share at the period end.

As previously stated, we intend to announce proposed dividends annually at the time of our full year results rather than with the interim results as is currently the case. The quarterly dividend will be increased by 1.8% to 0.697 pence per share with effect from the January 2020 and any further changes will be announced alongside the full year results in May 2020. 

Strong market opportunity

Assura maintains an open dialogue with the key stakeholders within the NHS and Government. We continue to demonstrate our excellent track record and ability to deliver state of the art primary care premises within the heart of the community. We remain at the forefront to deliver value for money for the NHS and for the taxpayer as a third party developer ("3PD"). The ability to deliver these developments presents limited development risk for Assura with pre-let arrangements as well as the opportunity for future rental growth.

The NHS is planning the allocation of its additional funding with a renewed focus on illness prevention. This focus leans to investment in primary care, partnership working with community healthcare services and social prescribing. Further detail for NHS capital investment will come next year, but with private finance initiatives ("PFI") ruled out by the Chancellor, good value public private partnership options for investment in community healthcare buildings, such as third party development, will continue to play an important role.

We have continued to both source and complete acquisition prospects during the period utilising our proprietary database. Our extended development pipeline is the strongest it has been for the past 10 years and has been further improved by the addition of the GPI pipeline. Assura's market share remains modest and there are many opportunities for further growth in a highly fragmented and specialist market.

Board changes

David Richardson retired as Senior Independent Director at the conclusion of the AGM on 2 July, having served for seven years. I would like to thank him personally and on behalf of the Board for his valued contribution over this growth period.

Jonathan Davies, who has been a Non-Executive Director since June 2018, has taken over as Senior Independent Director. We continued to strengthen the Board with the appointment of Louise Fowler as a Non-Executive Director in June. Both have brought a wealth of business and financial experience as well as fresh perspectives to the Board and I look forward to working with them as we continue to develop our business and strategy to add value for our shareholders.

Outlook

Assura remains well-positioned to become the NHS's partner of choice in primary care property in a highly fragmented market characterised by significant under-investment in infrastructure. Our portfolio of 560 medical centres compares with a total UK market of approximately 9,000, highlighting Assura's strong prospects for further growth.

The strength of our balance sheet has seen us receive continued support from our existing lenders, raising £107 million in the period. We retain headroom for further investment with an LTV of 36%, average weighted interest rate of 3.16% and available facilities of £310 million.

We also have a strong pipeline of £65 million of targeted acquisitions and £72 million of development opportunities currently in legal hands.

The open market rent review mechanism in our sector provides income growth whilst recent land and construction cost inflation provides the potential for future rental growth. We have seen trends in cost inflation flowing through to open market rent reviews.

Looking ahead, Assura will continue its work to provide outstanding spaces for health services in our communities whilst also providing stable long-term returns, reflected in the proposed increase in quarterly dividend from January 2020.

Jonathan Murphy

CEO

11 November 2019

CFO review

For the six months ended 30 September 2019

Portfolio as at 30 September 2019: £2,038.7 million (31 March 2019: £1,978.8 million)

Our business is based on our investment portfolio of 560 properties. This has a rent roll (current contracted annual rent) of £104.4 million (March 2019: £102.7 million), 85% of which is underpinned by the NHS. The Weighted Average Unexpired Lease Term ("WAULT") is 11.6 years and we have total contracted rental income of £1.35 billion.

At 30 September 2019, our portfolio of completed investment properties was valued at £1,994.1 million, including investment properties held for sale of £0.9 million (March 2019: £1,960.5 million and £17.2 million respectively), which produced a net initial yield ("NIY") of 4.72% (March 2019: 4.74%). Taking account of potential lettings of unoccupied space and any uplift to current market rents on review, our valuers assess the net equivalent yield to be 4.94% (March 2019: 4.77%). Adjusting this Royal Institution of Chartered Surveyors ("RICS") standard measure to reflect the advanced payment of rents, the true equivalent yield is 4.96% (March 2019: 4.91%).

Our EPRA NIY, based on our passing rent roll and latest annual direct property costs, was 4.66% (March 2019: 4.73%).
 

	Six months ended 30 September 2019 £m	Six months ended 30 September 2018 £m
Net rental income	50.6	46.2
Valuation movement	1.9	5.7
Total Property Return	52.5	51.9

Expressed as a percentage of opening investment property plus additions, Total Property Return for the six months was 2.6% compared with 2.8% in 2018.

The net valuation gain in the six months of £1.9 million represents a modest 0.1% uplift on a like-for-like basis net of movements relating to properties acquired in the period. The valuation gain is lower than the gain recognised in recent years, reflecting yield shift (whilst still tightening) to a lesser degree. We continue to see competition for assets in our sector.

The NIY on our assets continues to represent a substantial premium over the 15-year UK gilt which traded at 0.716% at 30 September 2019, having reduced significantly from 1.337% at 31 March 2019 and 1.718% at 30 September 2018.

Portfolio analysis by capital value

	Number of properties	Total value £m	Total value %
>£10m	39	608.7	31
£5-10m	71	458.5	23
£1-5m	348	863.5	43
<£1m	102	63.4	3
	560	1,994.1	100

Portfolio analysis by region

	Number of properties	Total value £m	Total value %
North	178	761.7	38
South	217	689.3	35
Midlands	85	354.8	17
Scotland	23	55.0	3
Wales	57	133.3	7
	560	1,994.1	100

 

Portfolio analysis by tenant covenant

	Total rent roll £m	Total rent roll %
GPs	70.3	68
NHS body	18.1	17
Pharmacy	8.4	8
Other	7.6	7
	104.4	100

Investment and development activity

We have continued to invest during the period, with this expenditure split between investments in completed properties, developments, forward funding projects, extensions and fit-out costs enabling vacant space to be let as follows:

Spend during the period	Six months ended 30 September 2019 £m
Acquisition of completed medical centres	33.9
Developments/forward funding arrangements	21.0
Like-for-like portfolio (improvements)	0.5
Total capital expenditure	55.4

We have added 11 completed properties to our portfolio in the first half. This comprised nine acquisitions (cost £34.3 million) and two completed developments (cost £8.4 million). These were at a combined total cost of £43 million with a combined passing rent of £2.0 million (yield on cost of 4.8%) and a WAULT of 13.6 years.

We continue to source properties that meet our investment criteria for future acquisition. As at the half year, the acquisition pipeline stands at £65 million, being opportunities that are currently in solicitors' hands and which we would hope to complete within three to six months, subject to satisfactory due diligence.

Live developments and forward funding arrangements

	Estimated completion date	Development costs	Costs to date	Size
Bournville	Q4 20	£4.3m	£1.3m	2,380 sq.m
Canterbury	Q3 20	£3.7m	£1.1m	1,053 sq.m
Cinderford	Q2 20	£5.5m	£2.4m	1,491 sq.m
Great Barr	Q3 20	£4.6m	£1.6m	1,170 sq.m
Hereford	Q3 20	£9.2m	£3.9m	2,247 sq.m
Knebworth	Q1 20	£3.0m	£1.1m	859 sq.m
Launceston	Q4 20	£4.0m	£2.3m	1,267 sq.m
Netherfield	Q2 20	£4.7m	£2.2m	1,247 sq.m
Newtown	Q3 20	£4.7m	£1.7m	1,317 sq.m
St Leonards	Q4 20	£8.2m	£1.8m	2,010 sq.m
Stafford	Q1 20	£7.1m	£3.0m	2,800 sq.m
Stow-on-the-Wold	Q4 19	£3.1m	£3.0m	742 sq.m
Timperley	Q2 20	£2.1m	£0.2m	424 sq.m
Tonbridge	Q2 20	£5.6m	£2.4m	1,405 sq.m
Total		£69.8m	£28.0m

Of the 11 developments that were on site at March 2019, Darley Dale and South Woodham Ferrers have completed in the first half of the year, and a further three are expected to complete in the second half of the year.

The development team has continued to have success in converting schemes from the pipeline to live schemes, with five schemes moving on site in the first half, meaning 14 are on site at September 2019. This includes a scheme at Launceston, which is the first scheme from the pipeline we acquired from GPI back in May. The GPI team has integrated into the business well and further schemes from the pipeline are expected to become live in the second half of the year.

Of the 14 developments on site at 30 September 2019, seven are in-house developments and seven are under forward funding agreements. These have a combined development cost of £69.8 million of which £28.0 million had been spent at the half year date.

In addition to the 14 developments currently on site, we have an immediate pipeline of 15 properties (estimated cost £72 million) which we would hope to be on site within 12 months. This takes the total immediate development pipeline to £141 million, which includes an increasing proportion that is directly sourced and developed by our
in-house team, as opposed to forward funded.

During the first six months of the year, we recorded a revaluation gain of £0.4 million in respect of investment property under construction (September 2018: £0.5 million).

Portfolio management

We have continued to deliver rental growth and have successfully concluded 148 rent reviews during the six months to generate a weighted average annual rent increase of 2.04% (year to March 2019: 2.18%) on those properties. Our portfolio benefits from a 30% weighting in fixed, Retail Price Index ("RPI") and other uplifts which generated an average uplift of 2.56% during the period. The majority of our portfolio is subject to open market reviews and these have generated an average uplift of 1.15% during the period.

Our renewed focus on asset enhancement has resulted in us increasing the number of successfully concluded lease events in the period and developing a strong pipeline of asset enhancement opportunities.

We completed 13 lease regears (rent £0.9 million) in the six months, compared with six in the year to March 2019, and have a further 20 (rent £1.9 million) in legal hands. We also added 10 new tenants with annual rent of £0.2 million and have a pipeline with annual rent of circa £0.3 million.

In total, our newly formed, dedicated asset enhancement team is working on 23 schemes requiring capital expenditure of circa £16 million over the next two years, either to improve or fit out existing space, or extend buildings. These schemes will allow the practices to meet the additional demand for services from within the communities they serve as well as adding to the contracted rental income for that property.

During the period, we disposed of 15 properties where we believed there was no further growth, generating proceeds of £18.5 million and recording a net gain of £1.6 million compared with the book value.

Our EPRA Vacancy Rate was 1.6% (March 2019: 1.5%).

Our current contracted annual rent roll is £104.4 million and, on a proforma basis, would increase to in excess of £120 million once the pipelines for acquisitions, developments, rent reviews and asset enhancements are completed.

Administrative expenses

The Group analyses cost performance by reference to our EPRA Cost Ratios (including and excluding direct vacancy costs) which were 12.8% and 11.6% respectively (2018: 11.9% and 10.7% respectively).

The EPRA Cost Ratio for the six months is 11.3%, excluding direct development team costs. All direct development team costs are taken to the income statement as opposed to being capitalised within the cost of investment property under construction.

We also measure our operating efficiency as the proportion of administrative costs (as per the income statement) to the average gross investment property value (average of opening and closing balance sheet amounts). This ratio during the period was 0.24% (2018: 0.23%) and administrative costs stood at £4.9 million (2018: £4.2 million). 

Financing

As we continue to grow through both acquisitions and developments, we have obtained additional lending during the period on an unsecured basis, in line with our financing strategy.

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

Financing statistics	30 September 2019	31 March 2019
Net debt (Note 9)	£730.0m	£667.8m
Weighted average debt maturity	6.9 yrs	7.3 yrs
Weighted average interest rate	3.16%	3.24%
% of debt at fixed/capped rates	93%	96%
EBITDA to net interest cover	3.6x	3.8x
Net debt to EBITDA	8.0x	7.7x
LTV (Note 9)	36%	34%

Our LTV ratio currently stands at 36% and will increase in the short term as we draw down on debt facilities to fund the pipeline of acquisitions, development and asset enhancement opportunities. Our policy allows us to reach the range of 40%-50% should the need arise.

As at 30 September 2019, 93% of our debt facilities are at fixed interest rates, although this will change as we draw on the revolving credit facility which is at a variable rate. The weighted average debt maturity is 6.9 years.

As at 30 September 2019, we had undrawn facilities and cash totalling £277 million, before receipt of the second tranche of funding (£60 million) from the privately placed notes due in October. Details of the outstanding facilities and their covenants are set out in Note 11.

Net finance costs presented through EPRA earnings in the year amounted to £12.7 million (2018: £10.2 million).

Alternative Performance Measures ("APMs")

The financial performance for the period is reported including a number of APMs (financial measures not defined under IFRS). We believe that including these alongside IFRS measures provides additional information to help understand the financial performance for the period, in particular in respect of EPRA performance measures which are designed to aid compatibility across real estate companies. Calculations with reconciliation back to reported IFRS measures are included where possible.

IFRS profit before tax

IFRS profit before tax for the period was £36.4 million (2018: £37.4 million). As can be seen below, EPRA earnings have increased compared with the prior year and the decrease in profit before tax is a function of the revaluation gain recorded being lower due to yield shift being to a lesser extent.

EPRA earnings

	Six months ended 30 September 2019 £m	Six months ended 30 September 2018 £m
Net rental income	50.6	46.2
Administrative expenses	(4.9)	(4.2)
Net finance costs	(12.7)	(10.2)
Share-based payments and taxation	(0.1)	(0.1)
EPRA earnings	32.9	31.7

The movement in EPRA earnings can be summarised as follows:

	£m
Six months ended 30 September 2018	31.7
Net rental income	4.4
Administrative expenses	(0.7)
Net finance costs	(2.5)
Share-based payments and taxation	-
Six months ended 30 September 2019	32.9

EPRA earnings has grown 3.8% to £32.9 million in the six months to 30 September 2019, reflecting the property acquisitions and developments completed as well as the impact of our asset management activity with rent reviews and new lettings. This has been offset by increases in administrative expenses and financing costs.

Earnings per share

The basic earnings per share ("EPS") on profit for the period was 1.5 pence (2018: 1.6 pence).

EPRA EPS, which excludes the net impact of valuation movements and gains on disposal, was 1.4 pence (2018: 1.3 pence).

Based on calculations completed in accordance with IAS 33, share-based payment schemes are currently expected to be dilutive to EPS, with 1.1 million new shares expected to be issued. The dilution has no impact on the presented figures, as illustrated in the table below:

EPS measure	Basic	Diluted
Profit for six months	1.5p	1.5p
EPRA	1.4p	1.4p

Dividends

Total dividends settled in the six months to 30 September 2019 were £32.8 million or 1.4 pence per share (2018: 1.3 pence per share). £4.5 million of this was satisfied through the issuance of shares via scrip.

As a REIT with requirement to distribute 90% of taxable profits (Property Income Distribution, "PID"), the Group expects to pay out as dividends at least 90% of recurring cash profits. Both dividends paid in the first half of the year were normal dividends (non-PID), as a result of brought forward tax losses and available capital allowances.

The October 2019 dividend has subsequently been paid as a PID and future dividends will be a mix of PID and normal dividends as required.

The table below illustrates our cash flows over the period:

	Six months ended 30 September 2019 £m	Six months ended 30 September 2018 £m
Opening cash	18.3	28.7
Net cash flow from operations	24.2	32.8
Dividends paid	(28.4)	(26.1)
Investment:
Property acquisitions	(45.4)	(96.6)
Development expenditure	(27.5)	(6.8)
Sale of properties	18.5	0.1
Financing:
Net borrowings movement	66.9	165.8
Closing cash	26.6	97.9

Net cash flow from operations differs from EPRA earnings due to movements in working capital balances. The Group has restricted cash of £0.3 million (March 2019: £1.8 million) representing tenant deposits.

Diluted EPRA NAV movement

	£m	Pence per share
Diluted EPRA NAV at 31 March 2019	1,279.4	53.3
EPRA earnings	32.9	1.4
Capital (revaluations and capital gains)	3.5	0.1
Dividends	(32.8)	(1.4)
Other	4.3	0.1
Diluted EPRA NAV at 30 September 2019	1,287.3	53.5

Our Total Accounting Return per share (dividends plus movement in EPRA net assets as a proportion of opening EPRA net assets) for the six months ended 30 September 2019 is 2.9% of which 1.4 pence per share (2.6%) has been distributed to shareholders and 0.2 pence per share (0.3%) is the movement on EPRA NAV.

Jayne Cottam

CFO

11 November 2019

 

Interim condensed consolidated income statement

For the six months ended 30 September 2019

		Six months ended 30 September 2019 Unaudited				Six months ended 30 September 2018 Unaudited*
	Note	EPRA £m	Capital and other £m	Total £m		EPRA £m	Capital and other £m	Total £m
Gross rental and related income		52.7	2.0	54.7		47.9	1.5	49.4
Property operating expenses		(2.1)	(2.0)	(4.1)		(1.7)	(1.5)	(3.2)
Net rental income		50.6	-	50.6		46.2	-	46.2
Administrative expenses		(4.9)	-	(4.9)		(4.2)	-	(4.2)
Revaluation gains	9	-	1.9	1.9		-	5.7	5.7
Share-based payment charge		(0.1)	-	(0.1)		(0.1)	-	(0.1)
Gain on sale of property		-	1.6	1.6		-	-	-
Finance revenue		-	-	-		0.1	-	0.1
Finance costs	5	(12.7)	-	(12.7)		(10.3)	-	(10.3)
Profit before taxation		32.9	3.5	36.4		31.7	5.7	37.4
Taxation	6	-	-	-		-	-	-
Profit for the period attributable to equity holders of the parent		32.9	3.5	36.4		31.7	5.7	37.4
EPS                 - basic & diluted	7			1.5p				1.6p
EPRA EPS       - basic & diluted	7	1.4p				1.3p

There were no items of other comprehensive income or expense and therefore the profit for the period also represents the Group's total comprehensive income. All income derives from continuing operations.

* 2018 restated to include comparative IFRS 15 disclosures (see Note 3), with no impact on net rental income or profit for the year.

 

Interim condensed consolidated balance sheet

As at 30 September 2019

	Note	30 September 2019 Unaudited £m	31 March   2019 Audited £m
Non-current assets
Investment property	9	2,038.7	1,978.8
Property, plant and equipment		0.2	0.2
Property work in progress	3	10.7	-
Deferred tax asset		0.5	0.5
		2,050.1	1,979.5
Current assets
Cash, cash equivalents and restricted cash		26.6	18.3
Trade and other receivables		15.6	14.7
Property assets held for sale	9	1.3	17.6
		43.5	50.6
Total assets		2,093.6	2,030.1
Current liabilities
Trade and other payables		22.8	37.5
Borrowings	11	11.0	11.0
Deferred revenue	10	21.4	21.3
		55.2	69.8
Non-current liabilities
Borrowings	11	739.9	672.3
Head lease obligations		5.6	2.8
Deferred revenue	10	5.0	5.3
		750.5	680.4
Total liabilities		805.7	750.2
Net assets		1,287.9	1,279.9
Capital and reserves
Share capital	12	240.6	239.8
Share premium		591.1	587.4
Merger reserve		231.2	231.2
Reserves		225.0	221.5
Total equity		1,287.9	1,279.9
NAV per Ordinary Share - basic & diluted	8	53.5p	53.4p
EPRA NAV per Ordinary Share   - basic & diluted	8	53.5p	53.3p

The Interim Condensed Consolidated Financial Statements were approved at a meeting of the Board of Directors held on 11 November 2019 and signed on its behalf by:

Jonathan Murphy                               Jayne Cottam

CEO                                                   CFO

 

Interim condensed consolidated statement of changes in equity

For the six months ended 30 September 2019

	Note	Share capital £m	Share premium £m	Merger reserve £m	Reserves £m	Total equity £m
1 April 2018		238.3	580.4	231.2	200.5	1,250.4
Profit attributable to equity holders		-	-	-	37.4	37.4
Total comprehensive income		-	-	-	37.4	37.4
Dividend	12, 14	0.9	4.2	-	(31.2)	(26.1)
Employee share-based incentives		-	-	-	0.1	0.1
30 September 2018 (Unaudited)		239.2	584.6	231.2	206.8	1,261.8
Profit attributable to equity holders		-	-	-	46.6	46.6
Total comprehensive income		-	-	-	46.6	46.6
Issue of Ordinary Shares	12	-	0.2	-	-	0.2
Dividend	12, 14	0.6	2.6	-	(32.1)	(28.9)
Employee share-based incentives		-	-	-	0.2	0.2
31 March 2019 (Audited)		239.8	587.4	231.2	221.5	1,279.9
Profit attributable to equity holders		-	-	-	36.4	36.4
Total comprehensive income		-	-	-	36.4	36.4
Dividend	12, 14	0.8	3.7	-	(32.8)	(28.3)
Employee share-based incentives		-	-	-	(0.1)	(0.1)
30 September 2019 (Unaudited)		240.6	591.1	231.2	225.0	1,287.9

 

Interim condensed consolidated statement of cash flow

For the six months ended 30 September 2019

	Six months ended 30 September 2019 Unaudited £m	Six months ended 30 September 2018 Unaudited £m
Operating activities
Rent received	50.8	48.8
Interest paid and similar charges	(16.7)	(8.2)
Fees received	0.4	0.4
Interest received	-	0.1
Cash paid to suppliers and employees	(10.3)	(8.3)
Net cash inflow from operating activities	24.2	32.8
Investing activities
Purchase of investment property	(45.4)	(96.6)
Development spend	(27.5)	(6.8)
Proceeds from sale of property	18.5	0.1
Net cash outflow from investing activities	(54.4)	(103.3)
Financing activities
Dividends paid	(28.4)	(26.1)
Repayment of loan/borrowings	(30.0)	(130.0)
Long-term loans drawn down	97.0	298.3
Loan issue costs	(0.1)	(2.5)
Net cash inflow from financing activities	38.5	139.7
Increase in cash, cash equivalents and restricted cash	8.3	69.2
Opening cash, cash equivalents and restricted cash	18.3	28.7
Closing cash, cash equivalents and restricted cash	26.6	97.9

 

Notes to the interim condensed consolidated financial statements

For the six months ended 30 September 2019

1. Corporate information

The Interim Condensed Consolidated Financial Statements of the Group for the six months ended 30 September 2019 were authorised for issue in accordance with a resolution of the Directors on 11 November 2019.

Assura plc ("Assura") is a public limited company, limited by shares, incorporated and domiciled in England and Wales, and the Company's Ordinary Shares are publicly traded on the main market of the London Stock Exchange.

With effect from 1 April 2013, the Group has elected to be treated as a UK REIT. See Note 6 for further details.

Copies of this statement are available from the website at www.assuraplc.com.

2. Basis of preparation

The Interim Condensed Consolidated Financial Statements for the six months ended 30 September 2019 have been prepared in accordance with IAS 34 Interim Financial Reporting. These accounts cover the six-month accounting period from 1 April 2019 to 30 September 2019 with comparatives for the six-month accounting period from 1 April 2018 to 30 September 2018, or 31 March 2019 for balance sheet amounts.

The Interim Condensed Consolidated Financial Statements do not include all the information and disclosures required in the Annual Report, and should be read in conjunction with those in the Group's Annual Report as at 31 March 2019 which are prepared in accordance with IFRSs as adopted by the European Union ("EU").

The accounts are prepared on a going concern basis (see page 19 for further narrative) and presented in pounds sterling rounded to the nearest 0.1 million unless specified otherwise.

3. Accounts

The results for the six months to 30 September 2019 and to 30 September 2018 are unaudited. The interim accounts do not constitute statutory accounts. The financial information for the year ended 31 March 2019 does not constitute the Company's statutory accounts for that year, but is derived from those accounts. Statutory accounts have been delivered to the Registrar of Companies. The auditor reported on those accounts: their report was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under section 498(2) or (3) of the Companies Act 2006.

With the increase in value of the acquisition, development and asset enhancement pipelines, the Group has deemed it appropriate to present property work in progress (held at cost) as a separate line item on the face of the balance sheet. Given the immaterial nature of these balances previously, the comparative at March 2019 (£1.0 million) was presented in trade and other receivables and the balance sheet at March 2019 has not been restated.

At the time of preparing our September 2018 interim financial statements, we had not yet concluded our analysis of whether reimbursements of property-related service charge expenses should be reported gross or net. As the amounts are relatively small, and they have no impact on our results, we concluded that the impact would be immaterial either way. We have now concluded that the amounts should be reported gross. Accordingly, even though the figures for 2018 are immaterial, we have restated to show them gross as we believe this will be helpful to users.

4. New standards, interpretations and amendments thereof, adopted by the Group

The accounting policies adopted in the preparation of the Interim Condensed Consolidated Financial Statements are consistent with those followed in the preparation of the Group's Annual Report for the year ended 31 March 2019, except for the adoption of IFRS 16, which has not resulted in a material impact to the accounts.

IFRS 16 is applicable for the Company from 1 April 2019 as described in the March 2019 Annual Report. For operating leases in excess of 12 months, this standard requires lessees to recognise a right-of-use asset (shown within investment property) and a related lease liability (shown as head lease obligations) representing the obligation to make lease payments. The right-of-use asset is assessed for impairment annually and is amortised on a straight-line basis. The lease liability is amortised using the effective interest method. Lessor accounting is substantially unchanged from current accounting. The asset and liability were equal and opposite upon adoption, with a value at September 2019 of £2.8 million. The impact on the income statement is negligible. Prior year comparatives have not been restated, as permitted under the standard.

The Group is not expecting any other new and proposed changes in accounting standards endorsed by the EU to have a material impact on reported numbers in future periods.

5. Finance costs

	Six months ended 30 September 2019 £m	Six months ended 30 September 2018 £m
Interest payable	12.4	9.9
Interest capitalised on developments	(0.3)	(0.2)
Amortisation of loan issue costs	0.6	0.6
Total finance costs	12.7	10.3

6. Taxation on profit on ordinary activities

The Group elected to be treated as a UK REIT with effect from 1 April 2013. The UK REIT rules exempt the profits of the Group's property rental business from corporation tax. Gains on properties are also exempt from tax, provided the properties are not held for trading or sold in the three years post completion of development. The Group will otherwise be subject to corporation tax at 19% in 2019/20 (2018/19: 19%).

Group tax charges relate to its non-property income. As the Group has sufficient brought forward losses, no tax is due in relation to the current or prior period.

As a REIT, the Group is required to pay Property Income Distributions ("PIDs") equal to at least 90% of the Group's rental profit calculated by reference to tax rules rather than accounting standards. To remain as a UK REIT there are a number of conditions to be met in respect of the principal company of the Group, the Group's qualifying activities and the balance of business. The Group remains compliant at 30 September 2019.

7. Earnings per Ordinary Share

	Earnings 2019 £m	EPRA earnings 2019 £m	Earnings 2018 £m	EPRA earnings  2018 £m
Profit for the period from continuing operations	36.4	36.4	37.4	37.4
Revaluation gains		(1.9)		(5.7)
Profit on sale of property		(1.6)		-
EPRA earnings		32.9		31.7
Weighted average number of shares in issue - basic	2,402,405,484	2,402,405,484	2,387,909,796	2,387,909,796
Potential dilutive impact of share options	1,058,252	1,058,252	380,915	380,915
Weighted average number of shares in issue - diluted	2,403,463,736	2,403,463,736	2,388,290,711	2,388,290,711
EPS/EPRA EPS - basic & diluted	1.5p	1.4p	1.6p	1.3p

The current estimated number of shares over which nil-cost options may be issued to participants is 1.1 million.

 

8. NAV per Ordinary Share

	NAV 30 September 2019 £m	EPRA NAV 30 September 2019 £m	NAV 31 March 2019 £m	EPRA NAV 31 March 2019 £m
Net assets	1,287.8	1,287.8	1,279.9	1,279.9
Deferred tax		(0.5)		(0.5)
EPRA NAV		1,287.3		1,279.4
Number of shares in issue	2,406,068,056	2,406,068,056	2,398,371,795	2,398,371,795
Potential dilutive impact of share options (Note 7)	1,058,252	1,058,252	560,853	560,853
Diluted number of shares in issue	2,407,126,308	2,407,126,308	2,398,932,648	2,398,932,648
NAV per Ordinary Share - basic & diluted	53.5p	53.5p	53.4p	53.3p

	EPRA NNNAV 30 September 2019 £m		EPRA NNNAV 31 March 2019 £m
EPRA NAV	1,287.3		1,279.4
Net mark to market of fixed rate debt	(52.8)		(19.2)
EPRA NNNAV	1,234.5		1,260.2
EPRA NNNAV per Ordinary Share - basic	51.3p		52.5p

The EPRA measures set out above are in accordance with the Best Practices Recommendations of the European Public Real Estate Association dated November 2016.

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

9. Property assets

Investment properties are stated at fair value, which has been determined for the Group by Savills Commercial Limited and Jones Lang LaSalle as at 30 September 2019. The properties have been valued individually and on the basis of open market value in accordance with RICS Valuation - Professional Standards 2017 ("the Red Book").

The fair value measurement hierarchy for all investment property and IPUC as at 30 September 2019 was Level 3 - significant unobservable inputs (March 2019: Level 3). There were no transfers between Level 1, 2 or 3 during the half year.

The key unobservable inputs in the property valuation are the equivalent yield and the ERV. A decrease in the equivalent yield applied to a property would increase the market value. An increase in the ERV of a property would increase the market value.

	Investment property 30 September 2019 £m	IPUC 30 September 2019 £m	Total 30 September 2019 £m	Investment property 31 March 2019 £m	IPUC 31 March 2019 £m	Total 31 March 2019 £m
Opening fair value	1,952.9	23.1	1,976.0	1,707.7	22.2	1,729.9
Additions:
- acquisitions	33.9	-	33.9	218.3	-	218.3
- improvements	0.5	-	0.5	2.2	-	2.2
	34.4	-	34.4	220.5	-	220.5
Development costs	-	21.0	21.0	-	21.1	21.1
Transfers	8.8	(8.8)	-	22.0	(22.0)	-
Transfer from/(to) assets held for sale	1.4	-	1.4	(9.3)	0.2	(9.1)
Capitalised interest	-	0.4	0.4	-	0.5	0.5
Disposals	(2.0)	-	(2.0)	(7.1)	-	(7.1)
Unrealised surplus on revaluation	1.5	0.4	1.9	19.1	1.1	20.2
Closing market value	1,997.0	36.1	2,033.1	1,952.9	23.1	1,976.0
Add head lease obligations recognised separately	5.6	-	5.6	2.8	-	2.8
Closing fair value of investment property	2,002.6	36.1	2,038.7	1,955.7	23.1	1,978.8

	30 September 2019 £m	31 March 2019 £m
Market value of investment property as estimated by valuer	1,993.2	1,943.3
Add IPUC	36.1	23.1
Add pharmacy lease premiums/rent adjustments	3.8	9.6
Add head lease obligations recognised separately (see Note 4)	5.6	2.8
Fair value for financial reporting purposes	2,038.7	1,978.8
Completed investment property held for sale	0.9	17.2
Land held for sale	0.4	0.4
Total property assets	2,040.0	1,996.4

As at 30 September 2019, four assets are held as available for sale (31 March 2019: 19 assets).

The total value of investment property is £1,994.1 million, which is completed investment property of £1,993.2 million plus £0.9 million of investment property held for sale. Disposals during the period of £16.9 million include properties that were classified as held for sale at March 2019.

The LTV of 36% is the ratio of net debt to total property assets above. Net debt represents total borrowings (per Note 11) plus head lease obligations net of cash.

10. Deferred revenue

	30 September 2019 £m	31 March 2019 £m
Arising from rental received in advance	20.9	20.9
Arising from pharmacy lease premiums received in advance	5.5	5.7
	26.4	26.6
Current	21.4	21.3
Non-current	5.0	5.3
	26.4	26.6

11. Borrowings

	30 September 2019 £m	31 March 2019 £m
At 1 April	683.3	486.3
Amount issued or drawn down in period/year	97.0	298.4
Amount repaid in period/year	(30.0)	(100.0)
Loan issue costs	(0.1)	(2.5)
Amortisation of loan issue costs	0.7	1.1
At the end of the period/year	750.9	683.3
Due within one year	11.0	11.0
Due after more than one year	739.9	672.3
At the end of the period/year	750.9	683.3

The Group has the following bank facilities:

1. 10-year senior secured bond for £110 million at a fixed interest rate of 4.75% maturing in December 2021. The secured bond carries a LTV covenant of 75% (70% at the point of substitution of an investment property or cash) and an interest cover requirement of 1.15 times (1.5 times at the point of substitution). In addition, the bond is subject to a WAULT test of 10 years which, if not met, gives the bondholder the option to request repayment of £5.5 million every six months. The WAULT of the charged properties is below 10 years at 30 September and £11.0 million has therefore been shown as due within one year, at the option of the bondholder. At the date of this report, the option has not been taken up.

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

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

4. £150 million of privately placed notes in two tranches with maturities of eight and 10 years drawn in October 2017. The weighted average coupon is 3.04%. The facility is subject to a historical cost interest cover requirement of at least 175%, maximum LTV of 60% and weighted average lease length of seven years.

5. 10-year senior unsecured bond of £300 million at a fixed interest rate of 3.00% maturing July 2028. The facility is subject to an interest cover requirement of at least 150%, maximum LTV of 65% and priority debt not exceeding 0.25:1. In accordance with pricing convention in the bond market, the coupon and quantum of the facility are set to round figures with the proceeds adjusted based on market rates on the day of pricing.

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

12. Share capital


	Number of shares 30 September 2019	Share capital 30 September 2019 £m	Number of shares 31 March 2019	Share capital 31 March 2019 £m
Ordinary Shares of 10 pence each issued and fully paid
At 1 April	2,398,371,795	239.8	2,383,122,112	238.3
Issued 18 April 2018 - scrip	-	-	2,355,911	0.2
Issued 19 July 2018 - scrip	-	-	6,467,532	0.7
Issued 17 October 2018 - scrip	-	-	1,945,311	0.2
Issued 16 January 2019 - scrip	-	-	4,195,055	0.4
Issued 14 February 2019	-	-	285,874	-
Issued 17 April 2019 - scrip	3,707,485	0.4	-	-
Issued 17 July 2019 - scrip	3,664,995	0.4	-	-
Issued 12 August 2019	323,781	-	-	-
Total at 30 September/31 March	2,406,068,056	240.6	2,398,371,795	239.8
Own shares held	-	-	-	-
Total share capital	2,406,068,056	240.6	2,398,371,795	239.8

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

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

In August 2019, 323,781 Ordinary Shares were issued following employees exercising nil-cost options awarded under the 2016 Performance Share Plan.

13. Commitments

At the period end the Group had 14 committed developments on site (31 March 2019: 11) with a contracted total expenditure of £69.8 million (31 March 2019: £48.7 million) of which £28.0 million (31 March 2019: £13.9 million) had been expended.

14. Dividends paid on Ordinary Shares

Payment date	Pence per share	Number of Ordinary Shares	Six months ended 30 September 2019 £m	Six months ended 30 September 2018 £m
18 April 2018	0.655	2,383,122,112	-	15.6
18 July 2018	0.655	2,385,478,023	-	15.6
17 April 2019	0.685	2,398,371,795	16.4	-
17 July 2019	0.685	2,402,079,280	16.4	-
			32.8	31.2

A dividend of 0.685 pence per share was paid to shareholders on 16 October 2019. 

Additional statements

Principal risks and uncertainties

The factors identified by the Board as having the potential to affect the Group's operating results, financial control and/or the trading price of its shares were set out in detail in the Annual Report for the year ended 31 March 2019. These risks include strategic items outside the control of the Group (such as political risk or new entrants to the market), financial risks (relating to financing available to the Group) and operational risks (relating to internal matters and how assets are managed).

The Directors have reconsidered the principal risks and uncertainties facing the Group. Accordingly, the Directors do not consider that the principal risks and uncertainties have changed significantly since the publication of the Annual Report for the year ended 31 March 2019.

With respect to Brexit, the Board continues to monitor the situation but as disclosed in the Annual Report, does not consider Brexit, in itself, to constitute a significant risk to the business.

Going concern

The Directors continue to adopt the going concern basis of accounting in preparing the financial statements. The Group's properties are substantially let with the majority of rent paid or reimbursed by the NHS and they benefit from a weighted average lease length on the portfolio of 11.6 years. The Group has facilities from a variety of lenders, in addition to the secured and unsecured bonds, and has remained in compliance with all covenants throughout the period. In making the assessment, and having considered the continuing economic uncertainty, the Directors have reviewed the Group's financial forecasts which cover a period of 18 months beyond the balance sheet date, showing that borrowing facilities are adequate and the business can operate within these facilities and meet its obligations when they fall due for the foreseeable future. There have been no material changes in assumptions in the forecast from the basis adopted in making the assessment at the previous year end.

Directors' responsibilities statement

The Board confirms to the best of their knowledge:

·      that the Interim Condensed Consolidated Financial Statements for the six months to 30 September 2019 have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union;

·      that the Interim Report comprising the CFO review and the principal risks and uncertainties includes a fair review of the information required by 4.2.7R of the Disclosure and Transparency Rules ("DTR", indication of important events and their impact during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and

·      the Interim Report includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties' transactions and changes therein).

The above Directors' responsibilities statement was approved by the Board on 11 November 2019.

Jonathan Murphy                   Jayne Cottam

CEO                                       CFO

11 November 2019

 

Independent review report to Assura plc

For the six months ended 30 September 2019

Introduction

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2019 which comprise the Interim Condensed Consolidated Income Statement, the Interim Condensed Consolidated Balance Sheet, the Interim Condensed Consolidated Statement of Changes in Equity, the Interim Condensed Consolidated Statement of Cash Flow and the related Notes 1 to 14. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the Company in accordance with guidance contained in International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the Company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our work, for this report, or for the conclusions we have formed.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

As disclosed in Note 2, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Financial Reporting Council for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2019 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Deloitte LLP - Statutory Auditor

Manchester, UK

11 November 2019

 

Glossary

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

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

Company is Assura plc.

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

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

EBITDA is EPRA earnings before tax and net finance costs.

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

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

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

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

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

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

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

Gross Rental Income is the gross accounting rent receivable.

Group is Assura plc and its subsidiaries.

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

Interest Cover is the number of times net interest payable is covered by EPRA earnings before net interest.

KPI is a Key Performance Indicator.

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

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

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

NAV is Net Asset Value.

Net debt is total borrowings plus head lease obligations less cash.

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

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

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

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

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

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

Rent Roll is the passing rent being the total of all the contracted rents reserved under the leases, on an annual basis.

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

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

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

Total Accounting Return is the overall return generated by the Group including the impact of debt. It is calculated as the movement on EPRA NAV for the year plus the dividends paid, divided by the opening EPRA NAV.

Total contracted rent roll is the total amount of rent to be received over the remaining term of leases currently contracted.

Total Property Return is the overall return generated by properties on a debt-free basis. It is calculated as the net rental income generated by the portfolio plus the change in market values, divided by opening property assets plus additions.

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

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

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

 

END

 

 

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