Trading Statement

RNS Number : 7558P

Assura Group Limited

31 March 2009

 



For immediate release

31 March 2009

Assura Group Limited ('Assura' or the 'Company')

Pre-Close Trading Update

Assura Group Limited (LSE: AGR), a UK healthcare company, partnering with GPs to deliver high quality patient care in the community, today provides an update on trading for the year ended 31 March 2009, prior to entering its close period. The Company expects to announce its final results in late June 2009. 

Financial Results

The Company previously announced that it expected to incur a trading loss of between £4m and £6m for the year ending 31 March 2009. The Board now expects the trading loss to be closer to £4m than £6m.

As reported in the third quarter Interim Management Statement on 17 February 2009, the Company's GP Provider Companies ('GPCos') continue to make good progress and strong revenue growth year-on-year is expected over the coming months as new contracted services are launched.  The Company's GPCos currently cover a population in excess of three million patients with 52 services commissioned and a further 13 services awaiting final Primary Care Trust sign-off during April. Ten GPCos have now signed contracts or been appointed the Preferred Bidder for Equitable Access schemes, with the first three of these schemes going live on 1 April 2009. The Company's pharmacy division continues to trade broadly in line with budget and recent rental growth in the property portfolio has held up well.

New Bank Facility

Given the difficulties in the commercial paper market, the Board decided that it would be preferable to replace the Securitisation and back-up 364 day Liquidity Facility and has signed a new four year bank facility with National Australia Bank ('NAB'). This facility amounts to £190m, which reduces to £160m after 12 months and £130m after 24 months. This is in-line with the Company's strategy to spread its borrowings between NAB and Norwich Union Commercial Finance ('NUCF') (part of the Aviva Group) as well as to reduce its overall level of borrowings following the sale of certain non-core assets. The new NAB facility replaces the £250m Securitisation Facility entered into in March 2008 and has an improved loan-to-value covenant of 80%, annual valuations (rather than six monthly) and an allowance to include up to 10% of non-income producing assets within the security pool. 

The facility has a margin of 2.25% over LIBOR, which reduces to 1.95% over LIBOR when less than £130m is drawn. The Company's interest rate swap over three month LIBOR means that the total cost of borrowings on the NAB facility will be less than 5.5% per annum for the next three years.

Together with the Company's new facilities arranged with NUCF, of which £45m is currently in legal hands, total available facilities will amount to some £284m. £213m was drawn as at 28 February 2009.  

Property Valuation

The Company is working to finalise its property valuation as at 31 March 2009. However, in connection with valuation work carried out for the new NAB loan facility, Savills, the Company's independent valuer, has indicated that the net initial yield on the property portfolio will be 6.28% as at 31 March 2009. This compares to a net initial yield of 5.65% as at the previous property valuation on 30 September 2008 and is in line with other recent sector valuations. Whilst the improved bank facilities necessitate a loan repayment of £4.5m (which will be paid from existing cash resources), they also enable future headroom to be created of approximately £23m (once additional assets are sold or transferred to NUCF).

Interest Rate Swap

In common with many other companies, the mark to market valuation of the Company's £200m interest rate swap is significantly negative and fluctuating widely at the present time notwithstanding the attractive fixed swap rates (pre-margin) from which the Company now benefits (2.99% in 2009, 3.29% in 2010 and 2011 and 4.59% thereafter for a further 17 years with a mutual option to extend the fixed rate for a further 10 years beyond that).

Ends

Enquiries:

Assura Group  Richard Burrell/Nigel Rawlings/Louise Bathersby	Tel: [phone]
Financial Dynamics  Ben Atwell/Emma Thompson	Tel: [phone]

 

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