Final Results

RNS Number : 8011I

Assura Group Limited

21 June 2011

 



Assura reports strong increase in FY revenues and profits

Transformation to a focused primary healthcare property company completed today with £39.3m disposal of Pharmacy business

21 June 2011, Assura Group Limited ("Assura" or "the Company"), the leading UK listed primary healthcare property company, has substantially improved its financial performance in the financial year ended 31 March 2011, whilst simultaneously creating a platform for further growth by refocusing on, and investing in, its core medical property activity.

Strategic highlights

·      Disposal of the pharmacy division for £39.3m announced separately today

·      Acquisition and successful integration of AH Medical Properties PLC ("AHMP")

·      Substantially improved financial and operational performance over the last 12 months creating a strong platform for growth by refocusing on its core medical property activity.

·      Plans to seek a transfer from the Retail Sector to the Real Estate sector of the London Stock Exchange's Official List as soon as practicable

Financial highlights

·      Dividends reinstated: second interim dividend of 1.25p per share announced on 21 June 2011 making a full year dividend of 2.25p

·      Revenue increased 11.3% to £62.1 million (2010: £55.8 million)

·      Administrative expenses reduced by 14.4% in the last financial year

·      Group operating profit increased 240% to £26.2 million (2010: £7.7 million)

·      Net profit from continuing operations increased 185% to £15.1 million (2010: £5.3 million)

·      Total property assets increased 43.8% to £519.6 million at 31 March 2011 (2010: £361.3 million as restated)

·      Balance sheet strengthened with successful open offer and firm placing of equity which raised £23.4 million in February 2011

Operational highlights

·      Three medical centre developments completed in the year, three completed since the year end, and eight currently on site, with an aggregate value of £67 million

·      Rent roll has risen 38.2% to £31.1 million at 31 March 2011 (from £22.5 million at 31 March 2010)

·      Daresbury head office sub-lease assigned for full term as part of restructuring programme

·      One pharmacy opened in the financial year, two relocated directly into medical centres, and a pipeline of seven new stores secured, two of which have opened post year end

Nigel Rawlings, Chief Executive of Assura, said: "Assura has today completed its transformation to a focused primary healthcare property development and investment company.  We have built a robust property portfolio with assets worth £520 million, with a weighted average lease length of 16.5 years and 87% of rents reimbursed by the NHS. 

"A strong increase in revenues on a much reduced cost base has delivered a quadrupling of profits which has enabled us to resume our dividend.  With a more robust financial position, a leaner, more focused business, and a healthy development pipeline Assura now has the platform and resources to build an increasingly valuable business for its shareholders."

For further information, please contact:

Assura Group Limited

Nigel Rawlings, Chief Executive Officer                           Tel: [phone]

Cenkos Securities

Ian Soanes, Adrian Hargrave                                             Tel: [phone]

Investec Securities

Gary Clarence, Daniel Adams                                            Tel: [phone]

Financial Dynamics

Ben Atwell, Stephanie Cuthbert                                        Tel: [phone]

Chairman's Statement

Since March 2010 Assura Group has successfully refocused on its core medical property activities to return to being a streamlined and profitable business. This strategy has significantly improved financial results, strengthened the Group's balance sheet and allowed the resumption of dividend payments.

In March 2010 the Group divested a majority stake in its complex and cash consuming medical services business to Virgin Healthcare Holdings Limited. On 18 January 2011 Assura announced the acquisition of AHMP for a consideration of £26.2 million. This acquisition added 52 properties and has enhanced the quality of the Group's portfolio of medical centres given the 18.1 year weighted average unexpired lease length of the properties acquired.

In its trading statement published on 5 April 2011, Assura reiterated that it continued to explore opportunities to maximise value from the pharmacy division. I am pleased to report that an agreement has been reached to sell the pharmacy business for a total consideration of £39.3 million to Gorgemead Limited a member of the Cohens Group. This sale reflects the strong progress and results achieved by Assura Pharmacy in the year ended 31 March 2011, which has substantially improved the market value of the business. A separate announcement has been released today giving further detail on this disposal.

As a result of these three transactions, Assura is now a focused medical property business with an extensive and growing portfolio of medical centres which benefit from long term Government backed income.

Operational Overview

The Group's future medical centre development pipeline remains strong despite the uncertainty caused by the proposed abolition of Primary Care Trusts. The general trend of placing greater emphasis on GPs and supporting more treatment in a primary care setting, in medical centres rather than in hospitals, is also encouraging. Assura has recently received written confirmation from the Department of Health that the arrangements for the reimbursement of premises costs payable by GPs will not be altered by the proposed move to the NHS Commissioning Board becoming responsible for primary care contracts.

The Group's total property assets were valued at £519.6 million at 31 March 2011 (2010: £362.3 million) and represent high-quality, secure investments with Government backing and a weighted average lease length across the portfolio of 16.5 years.

Board Composition & Changes

As set out in the Company's trading statement of 5 April, the Board proposes appointing a further non-executive Director with relevant medical property experience to reflect the changed nature of Assura's business.

It was also announced in April that I wished to retire once a suitable successor as Chairman has been identified.  I will step down from the Board at the AGM. The process of identifying a new Chairman and a further non-executive Director is underway and a further announcement will be made in due course. Graham Chase left the Board on 21 July 2010. I would like to thank him for his service to the Group over a number of years. I would also like to highlight the energy and leadership of Nigel Rawlings, appointed Chief Executive in March 2010, in managing costs down and continuing organic growth; successfully completing three complex acquisitions and disposals and repositioning the business as a dividend paying pure medical property business.

Outlook

Assura has made very good strategic, financial and operational progress in the last year, reporting strong increases in revenues and profits and has now returned to being a market leader in the primary care property market.

The outlook for Assura is good. The Board is confident, building on the progress made this year, in the Group's ability to continue to grow and enhance shareholder value through both further medical property investment and development, and portfolio acquisitions. This continued policy of rental growth and tight cost management will support a progressive dividend policy paid out of retained earnings.

Chief Executive's Statement

Introduction

The last financial year has been one of major transformation for Assura Group resulting in the business becoming the UK's leading listed primary healthcare property Group with wholly-owned property assets of £519.6 million at 31 March 2011.

The increased focus on primary care property was reinforced by the acquisition in February 2011, of AHMP. The transaction added £125.6 million of high-quality medical centre assets, benefitting from a weighted average lease length of 18.1 years, to our existing portfolio. The acquisition was immediately earnings enhancing given the termination of the agreement with AHMP's former fund manager. This acquisition has already been fully integrated into the Assura Group.

Unlike a number of our competitors, we manage our portfolio internally and as a result have a reducing and increasingly competitive cost base. This encourages a focus on running the business tightly and ensures that all core operations perform strongly and efficiently, from rent collection and property management to careful property development cost control and excellent pharmacy customer service and compliance. Following the sale of the medical services business to Virgin Healthcare Holdings Limited in March 2010, significant cut backs on central payroll costs were implemented and, more recently, further substantial cost savings and reductions have been made.

As announced today, we have exchanged contracts to sell the pharmacy business to Georgemead Limited, a member of the Cohens Group for consideration of £39.3 million.  The sale is very positive for the Group, reflecting the quality of the portfolio and the strong performance of the pharmacy business, and will give the Group additional capital to invest in further property assets.

Assura has had an excellent financial year and is now solely focused on developing and strengthening its core primary healthcare property business, which will continue to grow through selective corporate and asset acquisitions and via profitable development.

Financial Results

Assura has delivered a strong financial performance at both the top and bottom line despite the substantial changes to the business and continuing macro-economic uncertainty.

All divisions of the business contributed both to increased revenues, up 11.3% to £62.1 million (2010:  £55.8 million), and substantially more to increased net profit up 185% to £15.1 million (2010: £5.3 million from continuing operations).

Net assets (basic and diluted) grew 35.3% to £220.1 million (2010: £162.7 million) equivalent to 54.0p per share (2010: 53.1p). If this is adjusted with the mark to market value of the Group's interest rate derivatives added back, in accordance with European Public Real Estate guidance, then the net asset value per share (basic and diluted) is 59.8p (2010: 61.6p). Either measure is substantially above the Group's current share price of 38.5p at close on 17June 2011. If the Company's shares continue to trade at a discount to net asset value, the Board will consider using its authority to buy back shares to enhance shareholder value.

The Group had cash of £39.0 million at 31 March 2011 (2010: £24.6 million). Included within this total is £12.0 million (2010: £14.6 million) of cash ring fenced for an interest payment guarantee and to complete developments on site at the year end.

The Group paid a resumed interim dividend in November 2010 of 1.0p (2010: Nil) and is proposing a further interim dividend of 1.25p (2010: Nil) making a total dividend of 2.25p for the full year. The second interim dividend will be paid on 26 July 2011 to shareholders on the register at close of business on 01 July 2011. The ex-dividend date will be 29 June 2011.

Property

The Group's business model is to develop and hold medical centres that are let on long term leases to GP Practices and Primary Care Trusts. The strong tenant covenant, long lease length and geographical and lot size diversity of the portfolio provides strong, secure long term income, combined with the possibility of capital growth. The Group has total property assets (including assets held for resale, development property and own premises) with an aggregate value of £519.6 million (2010: £362.3 million), this excludes costs to complete the property developments in progress which will add a further £12.1 million.

Assura's investment portfolio, which includes its own pharmacy premises, was valued at £477.9 million as at 31 March 2011 (2010: £330.8 million) and has an average net initial yield of 6.05% (2010: 6.02%). This growth largely resulted from the acquisition of AHMP (portfolio valued at £125.6 million) and development completions (worth £19.2 million) net of sale of selected ex growth assets.

The investment portfolio benefitted during the year from a strong revaluation gain of £8.5 million (2010: £6.3million). The equivalent yield of the portfolio is 6.22% (2010: 6.46%) due to both inherent rental growth and certain planned voids - comprising mainly expansion space in newly developed medical centres. While the latter in the short term increases our direct property costs it also represents an opportunity for future growth as this space is utilised in due course and should benefit from the drive for more outpatient services to be undertaken in primary care centres.

The weighted average lease length of the portfolio is 16.5 years (2010: 17.1 years) and 87% of rents (2010: 84%) are receivable from GP Practices and/or Primary Care Trusts. 12% of the rental income is linked to the Retail Price Index. During the year 49 rent reviews were settled realising an average annual increase of 5.6%, or 4.3% on a weighted average annual basis (2010: 2.6%).

In every year since the creation of the Investment Property Databank ('IPD') Healthcare Index, Assura's portfolio has outperformed the benchmark pool of assets reviewed by IPD. In the calendar year 2010, IPD computed a total return for our portfolio of 13.1% against a benchmark of 11.0% (calendar year 2009: 10.2% against a benchmark of 8.8%).

During the year we completed three medical centre developments with an end value of £19.2 million. At the year end we also had eight medical centre developments on site with an end value of around £42 million, three of which have reached practical completion since the year end with an end value of £21.1 million.

The Group benefitted from gains on revaluation of development property totalling £5.4 million in the year (2010: restated loss of £2.2million). The 2010 loss had resulted from two historical developments out of the normal course of business. The selective low risk substantially pre-let development, on our own account and in partnership with other developers, remains a cost-effective and profitable means of growing the portfolio to supplement portfolio and specific asset acquisitions.

In addition for the second consecutive year, Assura was named Property Investor of the Year at the Health Investor Awards 2011.

Local Improvement Finance Trusts ('LIFT')

Local Improvement Finance Trusts are companies held by the public and private sector to develop and own medical centres predominantly let on long term index-linked leases to Primary Care Trusts. Assura is a major investor in LIFT with an average of 32% of the equity in six of the 52 LIFT companies nationally.

Assura also provides property development, property management and consultancy services to the LIFT companies and to the Primary Care Trusts operating in our LIFT company locations, employing a team of 23 staff to undertake this from an office base in Birmingham. This business has grown in the year with revenue of £3.7 million (2010: £2.6 million) and operating profit of £0.5 million (2010: £nil). However, in line with our strategy to focus on our core property investment and development activities, the decision was taken to exit non-core consultancy work, and the Company is exploring options that may lead to the sale of the LIFT consultancy business.

Pharmacy

We started the financial year with 34 trading pharmacies, mainly in medical centres, seven of which were held in a joint venture with GPs in the Bristol area which we acquired full control of during the year. During the year we concentrated on providing efficient service to customers combined with good compliance in all stores while at the same time maintaining tight cost control and reducing head office costs. We negotiated more favourable terms with our principal wholesaler which when combined with productivity and other improvements have offset price cuts by the NHS which arose largely as a result of drugs coming off patent and cheaper, generic drugs entering the market.

We also relocated two stores directly into medical centres where there is an increased customer footfall, refurbished two stores to enhance staff circulation and customer service, and opened three new stores two of which opened in June 2011. We have secured a pipeline of five further stores which are due to open in the next fifteen months. The above contributed to like-for-like revenue growth of 3.7% (2010: 7.2%), absolute revenue growth of 9.3% (2010: 16.9%) and a substantial increase in trading profit, before goodwill impairment reversals, to £1.6 million (2010: £0.4 million).

As a result of store growth and tight cost control the pharmacy business is now sustainably profitable. The Group's core strategy is to focus on being an internally-managed, primary care property business and our aim for the pharmacy business this year has been to improve operational performance and seek to realise the value of the business through a trade sale. We are pleased to have announced the sale of the pharmacy business in a separate release today.

Overheads

Total administration expenses including all pharmacy store costs were reduced by 14.4% in the last financial year to £15.4 million (2010: £18.0 million). The gross payroll cost including all pharmacy store staff and the LIFT consultancy team was reduced from £8.5 million in March 2010 to £6.9 million in March 2011. The LIFT and Pharmacy businesses absorb their own overheads in arriving at their profits quoted above.

The Group's London office on Pall Mall was vacated when the Assura Medical staff moved in August 2010 and the first floor accommodation was sub-let in March 2011 although some liability remains for that and the ground floor space which the current sub-tenant vacates next month. The entire lease at our former head office building in Daresbury was assigned in March 2011. The Head Office has since moved to a smaller office in Warrington where the rent is £80,000 per annum for a 28 month lease with nine months' rent free, compared with the £278,000 per annum payable previously.

The central head count was 203 in March 2009, 108 in March 2010 and 65 in March 2011. This includes all LIFT 23 and Pharmacy 13 head office staff, but excludes pharmacy store staff. Since the year end the closure of the London office staff and other efficiencies have reduced central headcount by a further five people.

Debt

Net debt was £322.8 million at the year end (2010: £231.2 million). However, property gearing - that is net debt as a percentage of total property assets - has reduced to 62.1% (2010: 64.0%) notwithstanding the relative high gearing in AHMP at the time of the acquisition.

The Group's largest facilities are with Aviva, amounting to £191.6 million at 31 March 2011, and benefit from long-dated maturities and the absence of any loan-to-value covenants.

Assura's facility from National Australia Bank ('NAB'), reduced by £1.0 million since the year end to £125.0 million, is repayable in March 2013 but will be refinanced well ahead of that date. The Group has received indicative loan offers from certain banks and from Aviva to refinance the NAB loan. In parallel the Group has also undertaken pre-marketing to institutions to test an issue of secured Eurobonds with the aim of accessing more cost effective debt and an enhanced spread of providers and loan maturities. 

Assura has a long-dated interest rate derivative hedging funding of £200.0 million at 3.29% until 31 December 2011 and then 4.59% until 30 September 2038, with a mandatory early termination on 30 September 2028. The Group intends to cancel this swap in due course to benefit from lower medium-term rates. The cost of cancelling the long term portion of the swap was £13.3 million on 31 March 2011 and has increased since then. However, the annual saving that will result from cancelling this swap and locking in to lower medium-term rates should be significant and represent a good return on any cancellation fee. The board is monitoring the rates carefully while not seeking to become exposed by cancelling the entire swap prior to any new loan being arranged.

Summary and Outlook

The decision to focus on our core medical property business has delivered strong results with net profit increasing 185% to £15.1 million and allowing the resumption of dividend payments. The Group's net asset value, including the mark-to-market liability of interest rate derivatives is now 54.0p and well ahead of the current share price.

Following the sale of Assura Pharmacy, the Group will seek reclassification from the Retail sector to the Real Estate sector of the London Stock Exchange's Official List. The Treasury announced its intention to soften the Real Estate Investment Trust ('REIT') legislation in the March 2011 budget and Assura welcomes the possibility of converting to a REIT in due course.

Assura will remain focussed on the core property development and investment activities, deriving benefit from high quality but lower cost internal management and realising further cost savings where possible. The strategy will continue to seek to add to our high quality medical centre property portfolio through selective corporate and asset acquisitions: careful pre-let development on our own account or in partnership with other developers, and through low risk forward funding of other developers' medical centre development projects.

With a strong financial position, a leaner more focused business, with a healthy development pipeline, Assura now has the platform and resources to build an increasingly valuable business for all its shareholders.

Assura Group Limited 

Consolidated Income Statement

For the year from 1 April 2010 to 31 March 2011

		Year ended 31 March 2011	Year ended 31 March 2010 (restated)1
	Notes	£'000	£'000
Revenue		62,119	55,761
Cost of sales		(27,876)	(24,466)
Gross profit		34,243	31,295
Administrative expenses		(15,442)	(17,982)
Group trading profit		18,801	13,313
Gain on revaluation of investment property		8,490	6,316
Gain/(impairment) of investment property under construction		5,368	(2,171)
Gain on sale of investment property		464	394
Loss on revaluation of property, plant & equipment		-	(47)
Share of losses of associates and joint ventures	4	(2,704)	(1,551)
Share based payment credit		264	316
Exceptional items	3	(4,461)	(8,849)
Operating profit		26,222	7,721
Finance revenue	5	1,492	1,006
Finance costs	6	(16,429)	(14,174)
		(14,937)	(13,168)
Profit/(loss) before revaluation of derivative financial instruments and taxation		11,285	(5,447)
Revaluation of derivative financial instruments	6	(37)	8,334
Profit after revaluation of derivative financial instruments and before taxation		11,248	2,887
Taxation	7	3,824	2,376
Profit for the year from continuing operations		15,072	5,263
Discontinued operations
Profit/(loss) for the year from discontinued operations		-	(13,983)
Profit/(loss) for the year		15,072	(8,720)
Profit/(loss) for the year attributable to:
Equity holders of the parent		15,072	(8,682)
Non-controlling interest		-	(38)
		15,072	(8,720)
Earnings per share (pence)
Basic and diluted earnings per share from continuing operations		4.74p	1.72p
Adjusted basic and diluted earnings per share from continuing operations		4.93p	0.20p

________________
1'The Consolidated Income Statement has been restated to include the derivative financial instruments of the LIFT associates which were omitted in error and an adjustment to property valuations (see note 1).

Assura Group Limited 

Consolidated Statement of Comprehensive Income

For the year from 1 April 2010 to 31 March 2011

		Year ended 31 March 2011	Year ended 31 March 2010
	Notes	£'000	£'000
			(restated)2
Profit/(loss) for the year - as reported		15,072	(7,229)
Prior year adjustment (see note 2)		-	(1,491)
Profit/(loss) for the year - as restated		15,072	(8,720)
Revaluation of land and buildings		1,129	202
Other comprehensive profit for the year, net of tax		1,129	202
Total comprehensive profit/(loss) for the period, net of tax		16,201	(8,518)
Attributable to:
Equity holders of the parent		16,201	(8,480)
Non-controlling interests		-	(38)
		16,201	(8,518)

Assura Group Limited

Consolidated Balance Sheet

as at 31 March 2011

		31/03/2011	31/03/2010
			(restated)3
	Notes	£'000	£'000
Non-current assets
Investment property		464,823	315,857
Investment property under construction		35,028	27,690
Investments in associates		9,859	10,286
Investments in joint ventures		-	7,588
Intangible assets		44,585	39,427
Property, plant and equipment		13,220	14,927
Derivative financial instruments at fair value		183	-
Deferred tax asset - net		1,844	1,464
		569,542	417,239
Current assets
Cash and cash equivalents		38,952	24,602
Trade and other receivables		11,751	10,260
Pharmacy inventories		2,206	1,721
Property work in progress		236	53
		53,145	36,636
Non-current assets held for sale and included in disposal groups		9,795	6,700
Total assets		632,482	460,575
Current liabilities
Trade and other payables		30,876	21,805
Financial liabilities		3,102	6,544
Derivative financial instruments at fair value		3,329	-
Provisions		558	854
		37,865	29,203
Non-current liabilities
Interest bearing loans and borrowings		358,668	249,297
Payments due under finance leases		879	979
Derivative financial instruments at fair value		14,165	17,274
Provisions		772	1,140
		374,484	268,690
Total liabilities		412,349	297,893
Net assets		220,133	162,682
Capital and reserves
Share capital		41,187	31,747
Own shares held		(2,018)	(5,093)
Share premium		55,450	23,282
Distributable reserve		210,550	213,614
Retained earnings		(89,017)	(104,217)
Revaluation reserve		3,981	3,349
Total equity		220,133	162,682
Basic net asset value per Ordinary Share		54.02p	53.09p
Diluted net asset value per Ordinary Share		54.02p	53.09p
Adjusted basic net asset value per Ordinary Share		59.80p	61.59p
Adjusted diluted net asset value per Ordinary Share		59.80p	61.59p

___________________________
2 The Consolidated Statement of Comprehensive Income has been restated to include the derivative financials instrument of the LIFT associates which were omitted in error an adjustment to property valuations (see note 1).
3 The Consolidated Balance Sheet has been restated to include the derivative financial instruments of the LIFT associates which were omitted in error and an adjustment to property valuations (see note 1).

Assura Group Limited

Consolidated Statement of Changes in Equity

For the year from 1 April 2010 to 31 March 2011

	Share Capital	Own Shares Held	Share Premium	Distributable Reserve	Retained Earnings	Revaluation Reserve	Total	Non-Controlling Interest	Total Equity
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
1 April 2010 - as reported	31,747	(5,093)	23,282	213,614	(102,726)	3,349	164,173	-	164,173
Prior year adjustment (see note 2)	-	-	-	-	(1,491)	-	(1,491)	-	(1,491)
1 April 2010 - as restated	31,747	(5,093)	23,282	213,614	(104,217)	3,349	162,682	-	162,682
Revaluation of land and buildings	-	-	-	-	-	1,129	1,129	-	1,129
Profit/(loss) for the year	-	-	-	-	15,072	-	15,072	-	15,072
Total comprehensive income	-	-	-	-	15,072	1,129	16,201	-	16,201
Dividends paid	-	-	-	(3,064)	-	-	(3,064)	-	(3,064)
Issue of Ordinary Shares	9,440	-	33,359	-	-	-	42,799	-	42,799
Issue costs	-	-	(1,191)	-	-	-	(1,191)	-	(1,191)
Sale of own shares held	-	3,075	-	-	(105)	-	2,970	-	2,970
Depreciation transfer for land and buildings	-	-	-	-	497	(497)	-	-	-
Cost of employee share-based incentives	-	-	-	-	(264)	-	(264)	-	(264)
31 March 2011	41,187	(2,018)	55,450	210,550	(89,017)	3,981	220,133	-	220,133
	Share Capital	Own Shares Held	Share Premium	Distributable Reserve	Retained Earnings	Revaluation Reserve	Total	Non-Controlling Interest	Total Equity
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
					(restated)		(restated)		(restated)
1 April 2009	31,747	(5,093)	23,212	213,614	(94,921)	3,642	172,201	(178)	172,023
Revaluation of land and buildings	-	-	-	-	-	202	202	-	202
Profit/(loss) for the year	-	-	-	-	(8,682)	-	(8,682)	(38)	(8,720)
Total comprehensive income	-	-	-	-	(8,682)	202	(8,480)	(38)	(8,518)
Depreciation transfer for land and buildings	-	-	-	-	495	(495)	-	-	-
Cost of employee share-based incentives	-	-	-	-	(1,109)	-	(1,109)	-	(1,109)
Acquisition of non-controlling interest	-	-	-	-	-	-	-	216	216
Issue costs	-	-	70	-	-	-	70	-	70
31 March 2010	31,747	(5,093)	23,282	213,614	(104,217)	3,349	162,682	-	162,682

Assura Group Limited

Consolidated Cash Flow Statement

For the year from 1 April 2010 to 31 March 2011

		Year ended 31 March 2011	Year ended 31 March 2010
	Note	£'000	£'000
Operating Activities
Rent received		27,418	22,624
Revenue from pharmacies		34,108	31,207
Fees received		4,228	4,033
Dividend received		-	211
Bank and other interest received		1,207	795
Cash paid to suppliers and employees		(21,263)	(28,888)
Purchases by pharmacies		(23,398)	(21,891)
Acquisition costs		(3,697)	-
Restructuring costs		-	(2,050)
Discontinued operation		-	(3,028)
Interest paid and similar charges		(15,744)	(14,759)
Net cash inflow/(outflow) from operating activities		2,859	(11,746)
Investing Activities
Purchase of development and investment property		(19,747)	(19,263)
Proceeds from sale of development and investment property		11,080	13,907
Purchase of investments in associated companies		(6)	(3,203)
Purchase of investments in joint venture companies		-	(1,036)
Proceeds from sale of other investments		-	6,376
Purchase of property, plant and equipment		(1,474)	(1,558)
Proceeds from sale of fixed assets		667	3,312
Costs associated with securing pharmacy licenses		(186)	(1,049)
Cash acquired/(paid) on acquisition of subsidiaries		1,168	(63)
Cost of development work in progress		(183)	(127)
Loans (advanced to)/repaid by associated companies		(1,758)	(4,454)
Loans repaid by/(advanced to) joint ventures		(119)	1,650
Subsidiaries acquired		(6,913)	-
Net cash outflow from investing activities		(17,472)	(5,508)
Financing Activities
Issue of Ordinary Shares		23,429	-
Issue costs paid on issuance of Ordinary Shares		(1,191)	70
Own shares sold		2,970	-
Dividends paid		(3,064)	-
Repayment of long-term loan		(11,014)	(57,411)
Drawdown of long-term loan		20,177	75,302
Loan issue costs		(238)	(895)
Repayment of convertible loan		(2,105)	-
Net cash inflow from financing activities		28,964	17,066
Increase/(decrease) in cash and cash equivalents		14,351	(188)
Opening cash and cash equivalents		24,602	24,790
Closing cash and cash equivalents		38,952	24,602

Assura Group Limited

Notes to the Consolidated Financial Statements

For the period from 1 April 2010 to 31 March 2011

1. Principal accounting policies

Basis of preparation

The financial information set out in this preliminary announcement is derived from but does not constitute the Group's statutory accounts for the year ended 31 March 2011and period ended 31 March 2010, and as such, does not contain all information required to be disclosed in the financial statements prepared in accordance with the International Financial Report Standards ("IFRS"). The financial information has been extracted from the Group's audited consolidated statutory accounts upon which the auditors have issued an unqualified opinion.

The financial information has been prepared using accounting policies consistent with those set out in the 2010 Annual Report other than as noted below.

Consolidation

The consolidated financial statements have been prepared on a historical cost basis, except for investment properties, investment properties under construction, land and buildings, derivative financial instruments that have been measured at fair value.

The financial statements are presented in pounds sterling to the nearest thousand.

The Group financial statements consolidate the financial statements of Assura Group Limited and its subsidiary undertakings drawn up to 31 March 2011.

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.

Non-controlling interests represent the equity in a subsidiary not attributable, directly and indirectly, to the parent company and is presented separately within equity in the consolidated balance sheet, separately from equity attributable to the parent. Losses within a subsidiary are attributed to the non-controlling interest even if that results in a deficit balance.

Prior period restatements

The 31 March 2010 balance sheet has been restated for the following two reasons:

1. The financial derivative instruments held in the LIFT division were omitted from the balance sheet at 31 March 2010. As a result the 'investment in associates' balance has been decreased by £3,676,000. On the income statement this is reflected as an increase in the 'share of losses of associates and joint ventures' which has been increased by the same amount.

2. An error has been identified in fair value of the investment portfolio under IAS 40 Investment Property reported at 31 March 2010. As a result the fair value of investment property has been increased by £2,185,000 at 31 March 2010. The revaluation gain has been included in 'gains on investment property under construction' in the income statement. By 31 March 2010 these properties had transferred into investment property and therefore the balance sheet impact is in this category.

The following table shows the impact of the above two adjustments:

	Consolidated Income statement				Consolidated Balance Sheet
	Gain on revaluation of investment property	Gain / (impairment) of investment property under construction	Share of losses of associates and joint ventures		Investment property	Investment property under construction	Investment in associates
	£'000	£'000	£'000		£'000	£'000	£'000
At 31 March 2010  - as reported	6,466	(4,506)	2,125		313,672	27,690	13,962
Interest rate swaps in LIFT associates	-	-	(3,676)		-	-	(3,676)
Pharmacy lease premiums	(150)	2,335	-		2,185	-	-
At 31 March 2010 - as restated	6,316	(2,171)	(1,551)		315,857	27,690	10,286

The combined impact on profit for the year was a reduction of £1,491,000.

The combined impact on net assets was a reduction of £1,491,000.

The combined impact on the loss per share was an increase of 0.49p per share.

The impact on 31 March 2009 would have been a reduction in net assets of £2,034,000 which is in relation to the valuation of interest rate swaps in LIFT associates at this date.

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:

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. Pharmacy lease premiums received from tenants are spread over the lease term, even if the receipts are not received on such a basis. The lease term is the non-cancellable period of the lease. The market value of investment property as estimated by an external valuer is increased for the unamortised pharmacy lease premium held at the balance sheet.

Property management fees - income is accounted for on an accruals basis.

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 over the expected life of the financial instrument to the net carrying amount of the financial asset.

Dividends receivable - revenue is recognised when the Company's right to receive the payment is established.

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 the period end are not accrued.

Exceptional items

The Group presents as exceptional items on the face of the Consolidated 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

Placing expenses incurred in relation to the issue of Ordinary shares are written off in full against the share premium account.

Business combinations and goodwill

Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured at acquisition date fair value and the amount of any non-controlling interest in the acquiree. The choice of measurement of non-controlling interest, either at fair value or at the proportionate share of the acquiree's identifiable net assets is determined on a transaction by transaction basis.  Acquisition costs incurred are expensed and included in administrative expenses.

Goodwill is initially measured at cost being the excess of the aggregate of the acquisition-date fair value of the consideration transferred and the amount recognised for the non-controlling interest over the net identifiable amounts of the assets acquired and the liabilities assumed in exchange for the business combination. After 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 the Group's cash generating units that are expected to benefit from the combination. Where goodwill forms part of a cash generating unit and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative values of the operation disposed of and the portion of the cash generating unit retained.

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 for those with finite useful lives 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 supportable, 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 at the balance sheet date either individually or at the cash generating unit level, as appropriate.

Goodwill is allocated to cash generating unit for the purpose of impairment testing. For intangibles arising from business combinations, 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 either fair value less costs to sell or value-in-use calculation. The value-in-use calculation uses cash flow projections based on detailed financial models prepared by management, with all anticipated future cash flows discounted to current day values.

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. 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 are recognised in the Consolidated 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 Consolidated Income Statement.

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 three months wherever possible, using consistent accounting policies.

Service concession arrangements

The Group equity accounts its investments in LIFT companies with service concession arrangements (SCA). In the project company holding the SCA IFRIC 12 'Service Concession Arrangements' has been adopted. The consideration receivable in respect of construction services in the operational phase of the SCA is accounted for as a 'loan or receivable' and measured at amortised cost. 

The method by which the Group equity accounts its investment in each project company holding the SCA has not changed.

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 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 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 with fixed or determinable payments 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 Consolidated Income Statement when the loans and receivables are derecognised or impaired, as well as through the amortisation process.

(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. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured at their fair value. The Group has classified its derivative instruments as financial assets which are stated at fair value and movements are recognised through the Consolidated Income Statement. 

Derivatives are carried as assets when the fair value is positive and as liabilities when the fair value is negative.

The fair values 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.

(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 Consolidated Income Statement.

(d) Quoted investments

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 changes in fair value 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.

For the purposes of these financial statements, in order to avoid 'double accounting', the assessed fair value is increased by the carrying amount of any deferred income resulting from the spreading of pharmacy lease premiums received.

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 Consolidated Income Statement.

For the purposes of these financial statements, in order to avoid 'double accounting', the assessed fair value is increased by the carrying amount of any liability to the superior leaseholder or freeholder that has been recognised in the balance sheet as a finance lease obligation.

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 investment property under construction upon completion of the purchase of the land or 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 previously 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 investment property under construction to investment property, any difference between the fair value of the property at that date and its previous carrying amount is recognised in the Consolidated 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 Consolidated Income Statement.

Investment properties under construction

Investment properties under construction which comprise land and buildings under construction includes capitalised interest where applicable and is carried at fair value.  If fair value cannot be reliably estimated it is carried at cost until construction is complete or fair value can be reliably estimated (whichever is earlier), at which stage it is valued at fair value. Cost includes all directly attributable third party expenditure incurred.

In determining the fair value, the valuer is required to consider the significant risks which are relevant to the development process including, but not limited to, construction and letting risks.

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:

Buildings	50 years
Fixtures, fittings and furniture	Between 4 and 25 years depending on the nature of the asset
Computer, medical and other 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 the Consolidated Income Statement, in which case the increase is recognised in the Consolidated Income Statement. A revaluation deficit is recognised in the Consolidated Income Statement, 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 Consolidated 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.

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 Consolidated 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 investment property under construction on acquisition of the land or development site.

Cash and cash equivalents

Cash and cash equivalents are defined as cash in hand, demand deposits, cash held in deposit accounts 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 Consolidated 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 Consolidated Income Statement on a straight line basis over the lease term.

Group as a lessor

Diagnostic equipment 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 Consolidated Income Statement so as to achieve a constant rate of return on the remaining net investment in the lease.

The Group has entered into commercial property leases on its investment property portfolio. The Group has determined, based on an evaluation of the terms and conditions of the arrangements, that it retains all the significant risks and rewards of ownership of these property and so accounts for the leases as operating leases.

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 Consolidated 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 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 rules and laws enacted or substantively enacted at the balance sheet date.

Deferred 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  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.

The carrying amount of deferred tax assets is reviewed at each balance sheet date. Deferred 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 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 Consolidated 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 charge in the Consolidated 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 Consolidated 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 a market vesting condition or a non-vesting condition, which are treated as vesting irrespective of whether or not the market vesting conditions or non-vesting conditions are satisfied, provided that all other non-market vesting 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 Consolidated 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 Consolidated Income Statement.

An equity-settled award is deemed to be forfeited when an employee is either made redundant or resigns from the Company. In the event of forfeiture the cumulative expense recognised in the Consolidated Income Statement since the date of grant is reversed immediately.

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 Consolidated Income Statement on the purchase, sale, issue or cancellation of equity shares.

The following accounting policies relate to Company financial statements only:

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.

Loans to subsidiary companies

The loans to subsidiary companies are 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.

Changes in accounting policy and disclosures

The accounting policies adopted are consistent with those of the previous financial period except as follows:

(a) New standards, amendments to published accounts and interpretations to existing standards adopted by the Group:

The following new and amended IFRS and IFRIC interpretations are mandatory as of 1 January 2010 unless otherwise stated and the impact is described below.

Amendment to IFRS 2 Group Cash-settled Share-based Payment Arrangements

The amendment clarifies the accounting for group cash-settled share-based payment transactions, where a subsidiary receives goods or services from employees or suppliers but the parent or another entity in the group pays for those goods or services. This amendment did not have any impact on the financial position or performance of the group.

IFRS 3 (revised) Business Combinations

The revised standard has increased the number of transactions to which it must be applied including business combinations of mutual entities and combinations without consideration. IFRS 3 (revised) introduced significant changes in the accounting for business combination such as valuation of non-controlling interest, business combination achieved in stages, the initial recognition and subsequent measurement of a contingent consideration and the accounting for transaction costs. These changes have had a significant impact on profit or loss reported in the period of an acquisition, the amount of goodwill recognised in a business combination and the profit or loss reported in the current and future periods.

IAS 27 (amended) Consolidated and Separate Financial Statements

The amended standard requires that a change in the ownership interest of a subsidiary (without loss of control) is accounted for as a transaction with owners in their capacity as owners and these transactions will no longer give rise to goodwill or gains and losses. The standard also specifies the accounting when control is lost and any retained interest is remeasured to fair value with gains or losses recognised in profit or loss.

Amendment to IAS 39 Financial Instruments: Recognition and Measurement - Eligible hedged items

The amendment clarifies that an entity is permitted to designate a portion of the fair value changes or cash flow variability of a financial instrument as a hedged item. This also covers the designation of inflation as a hedged risk or portion in particular situations. The group has concluded that the amendment did not have any impact on the financial position or performance of the group, as the group has not entered into any such hedges.

IFRIC 15 Agreements for the Construction of Real Estate (endorsed by the EU later than its effective date)

IFRIC 15 clarifies the need for careful analysis of the terms and conditions of real estate agreements which involve construction activities. In certain cases it will separate components, e.g. sale of land and a construction component, to determine the appropriate method of revenue recognition.This interpretation has no impact on the Group as it does not enter into contracts for the construction of real estate.

IFRIC 17 Distribution of Non-cash Assets to Owners

The interpretation provides guidance on accounting for arrangements whereby an entity distributes non-cash assets to shareholders either as a distribution of reserves or as dividends. The adoption of the interpretation did not have an impact on the Group.

IFRIC 18 Transfers of Assets from Customers

The interpretation applies to entities that receive from customers items of property, plant and equipment or cash for the acquisition of construction of such items. These assets are then used to connect customers to a network or to provide ongoing access to a supply of goods or services. As the group does not enter into such transactions this interpretation has no impact on the Group.

Improvements to IFRSs (issued 2009)

In May 2009 the Board issued its second omnibus of amendments to its standards, primarily with a view to removing inconsistencies and clarifying wording. There are separate transitional provisions for each amendment. The adoption of the amendments resulted in changes to accounting policies but did not have any impact on the financial position or performance of the Group.

(b) Standards and interpretations issued but not yet applied*

The following standards and interpretations have an effective date after the date of these financial statements but the group has not early adopted them.

IAS 24 Related Party Disclosures (Amendment) (effective 1 January 2011)

The amended standard clarified the definition of a related party to simplify the identification of such relationships and to eliminate inconsistencies in its application. The revised standard introduces a partial exemption of disclosure requirements for government related entities. The Group does not expect any impact on its financial position or performance.

IAS 32 Financial Instruments: Presentation - Classification of Rights Issues (Amendment) (effective 1 February 2010)

The amendment to IAS 32 amended the definition of a financial liability in order to classify rights issues (and certain options or warrants) as equity instruments in cases where such rights are given pro rata to all of the existing owners of the same class of an entity's non-derivative equity instruments, or to acquire a fixed number of the entity's own equity instruments for a fixed amount in any currency. This amendment will have no impact on the Group after initial application.

IFRS 9 Financial Instruments: Classification and Measurement (effective 1 January 2013)

IFRS 9 as issued reflects the first phase of the IASBs work on the replacement of IAS 39 and applies to classification and measurement of financial assets as defined in IAS 39. The adoption of the first phase of IFRS 9 will have an effect on the classification and measurement of the Group's financial assets.

The Group will quantify the effect in conjunction with the other phases, when issued, to present a comprehensive picture.

IFRIC 14 Prepayments of a minimum funding requirement (Amendment)

The amendment to IFRIC 14 is effective for annual periods beginning on or after 1 January 2011 with retrospective application. The amendment provides guidance on assessing the recoverable amount of a net pension asset. The amendment permits an entity to treat the prepayment of a minimum funding requirement as an asset. The amendment is deemed to have no impact on the financial statements of the Group.

IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments (effective 1 July 2010)

IFRIC 19 clarifies that equity instruments issued to a creditor to extinguish a financial liability qualify as consideration paid. The equity instruments issued are measured at their fair value. In case that this cannot be reliably measured, the instruments are measured at the fair value of the liability extinguished. Any gain or loss is recognised immediately in profit or loss. The adoption of this interpretation will have no effect on the financial statements of the Group.

Improvements to IFRS (issued in May 2010)

The Group expects no impact from the adoption of the amendments on its financial position or performance.

*The effective dates stated above are those given in the original IASB/IFRIC standards and interpretations. As the group prepares its financial statements in accordance with IFRS as adopted by the European Union (EU), the application of new standards and interpretations will be subject to their having been endorsed for use in the EU via the EU endorsement mechanism. In the majority of cases this will result in an effective date consistent with that given in the original standard or interpretation but the need for endorsement restricts the group's discretion to early adopt standards.

The Directors do not anticipate that the adoption of the remaining standards and interpretations will have a material impact on the Group's financial statements.

2. Segmental information

Following the adoption of IFRS 8 and the disposal of the medical services business during the year, the Group's operating segments are internally reported to the chief operating decision maker based on four business segments being primary care premises investment (Property Investment),  primary care premises development (Property Development), pharmacy services and LIFT. All the Group's activities and investments in primary healthcare properties and related activities are situated in the UK and in Guernsey.

The Property Investment segment invests in primary care premises and undertakes property management.

The Property Development segment develops primary care premises.

The Pharmacy services segment operates integrated pharmacies in medical centres.

LIFT companies develop and invest in medical centres in partnership between the public and private sectors. Our LIFT segment invests in LIFT companies and provides services to those companies and the primary care trusts in the areas in which they operate.

The medical services segment was discontinued in the prior year. The segment provided medical services, principally outpatient, walk in, urgent care and other services traditionally undertaken in hospitals but being relocated to GP surgeries, community hospitals and other facilities in the community, in collaboration with GPs.

Unrealised surpluses or deficits on revaluation of investment properties are split between Property Investment and Property Development on the basis that after transfer of the property to investment property, the first revaluation surplus is shown in the Property Development segment.

Transfer prices between business segments are set on an arm's length basis in a manner similar to transactions with third parties. Segment revenue, segment expense and segment result include transfers between business segments. Those transfers are eliminated on consolidation.

Unallocated assets and liabilities are those which relate to Group companies which cannot be allocated to the individual business segments as their activities are either at a Group or head office level. These subsidiary companies include Assura Management Services Limited, Assura Investments Limited, Assura Fund Management LLP (sold on 7 March 2011), Assura Services Limited and Assura Intelligence Limited.

The following table presents revenue, profit and certain assets and liability information regarding the Group's business segments:

Year ended 31 March 2011:

	Property Investment	Property Development	Pharmacy	LIFT	Eliminations and Unallocated items	Continuing	Discontinued Medical Services	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Revenue from external customers	23,809	-	34,145	3,665	500	62,119	-	62,119
Inter-segment sales	902	-	-	-	(902)	-	-	-
Segment revenue	24,711	-	34,145	3,665	(402)	62,119	-	62,119
Operating profit/(loss)	19,981	(1,130)	1,561	450	(2,061)	18,801	-	18,801
Cost of employee share-based incentives	(71)	(71)	105	(32)	333	264	-	264
Share of profits/(losses) of associates and joint ventures	(400)	-	172	102	(2,578)	(2,704)	-	(2,704)
Unrealised surplus on revaluation of investment properties	8,490	-	-	-	-	8,490	-	8,490
Unrealised surplus on revaluation of investment property under construction	-	5,368	-	-	-	5,368	-	5,368
Realised surplus on disposal of assets held for sale	464	-	-	-	-	464	-	464
Costs on sale of business	-	-	-	-	(15)	(15)	-	(15)
Reversal of pharmacy licence impairment	-	-	1,197	-	-	1,197	-	1,197
Impairment of property, plant & equipment	-	-	355	-	-	355	-	355
Impairment of property development goodwill	-	(2,899)	-	-	-	(2,899)	-	(2,899)
Negative goodwill on acquisition of AH Medical Properties plc	-	453	-	-	-	453	-	453
Negative goodwill on acquisition of Assura Pharmacy (South West) Limited	-	-	6	-	-	6	-	6
Profit on acquisition of Assura Pharmacy (South West) Limited	-	-	172	-	-	172	-	172
Premises provision	-	-	(7)	-	285	278	-	278
Restructuring costs	(51)	-	(214)	(46)	-	(311)	-	(311)
Acquisition costs - legal and professional fees	(1,851)	-	-	-	-	(1,851)		(1,851)
AH Medical Properties plc employee termination payments	(336)	-	-	-	-	(336)		(336)
AH Medical Properties plc asset management agreement termination fee	(1,500)	-	-	-	-	(1,500)		(1,500)
Acquisition costs - Assura Pharmacy (South West) Limited	-	-	(10)	-	-	(10)	-	(10)
Segmental result	24,726	1,721	3,337	474	(4,036)	26,222	-	26,222
	Property Investment	Property Development	Pharmacy	LIFT	Eliminations and Unallocated items	Continuing	Discontinued Medical Services	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Net finance revenue/(cost)	(14,658)	-	(712)	433	-	(14,937)	-	(14,937)
Revaluation of derivative financial instruments	-	-	-	-	(37)	(37)	-	(37)
Profit/(loss) before tax	10,068	1,721	2,625	907	(4,073)	11,248	-	11,248
Taxation	3,444	-	380	-	-	3,824	-	3,824
Profit/(loss) for the period	13,512	1,721	3,005	907	(4,073)	15,072	-	15,072
Assets and liabilities
Intangibles	-	17,125	23,742	3,718	-	44,585	-	44,585
Fixed assets	474,273	35,028	3,770	-	183	513,254	-	513,254
Equity accounted investments	-	-	-	6,713	3,146	9,859	-	9,859
Current assets	36,834	6,938	11,220	794	7,154	62,940	-	62,940
Segment assets	511,107	59,091	38,732	11,225	10,483	630,638		630,638
Deferred tax asset						1,844	-	1,844
Total assets						632,482		632,482
Segment liabilities
Current liabilities	(24,308)	-	(7,370)	(840)	(5,347)	(37,865)	-	(37,865)
Derivative financial instruments						(14,165)	-	(14,165)
Non-current liabilities						(360,319)	-	(360,319)
Total liabilities						(412,349)	-	(412,349)
Other segmental information
Capital expenditure:
Property, plant and equipment	347	-	1,204	-	263	1,814	-	1,814
Intangible assets	-	-	6,659	-	-	6,659	-	6,659
Depreciation	261	-	361	-	401	1,023	-	1,023

Year ended 31 March 2010:

	Property Investment	Property Development	Pharmacy	LIFT	Eliminations and Unallocated items	Continuing	Discontinued Medical Services	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
	(restated)	(restated)		(restated)		(restated)		(restated)
Revenue from external customers	21,516	-	31,214	2,405	626	55,761	732	56,493
Inter-segment sales	1,890	-	-	161	(2,051)	-	-	-
Segment revenue	23,406	-	31,214	2,566	(1,425)	55,761	732	56,493
Operating profit/(loss)	16,622	(1,936)	402	24	(1,799)	13,313	(6,064)	7,249
Cost of employee share-based incentives	192	192	(14)	(32)	(22)	316	793	1,109
Share of profits/(losses) of associates and joint ventures	-	-	1,623	(3,049)	(125)	(1,551)	(913)	(2,464)
Unrealised surplus on revaluation of investment properties	6,316	-	-	-	-	6,316	-	6,316
Realised surplus on revaluation of investment property	394	-	-	-	-	394	-	394
Unrealised deficit on revaluation of property, plant and equipment	(47)	-	-	-	-	(47)	-	(47)
Impairment of development properties	-	(2,171)	-	-	-	(2,171)	-	(2,171)
Gain on sale of pharmacy licences	-	-	1,118	-	-	1,118	-	1,118
Impairment of goodwill	-	(4,767)		-	-	(4,767)	(279)	(5,046)
Impairment reversal of pharmacy licences	-	-	1,300	-	-	1,300	-	1,300
Impairment of property, plant and equipment	-	-	(258)	-	-	(258)	-	(258)
Premises provision	-	-	(98)	-	(1,896)	(1,994)	-	(1,994)
Restructuring costs	(2,468)	-	(131)	(61)	(1,997)	(4,657)	(374)	(5,031)
Disposal of division	-	-	-	-	-	-	(7,146)	(7,146)
Segmental result	21,009	(8,682)	3,942	(3,118)	(5,839)	7,312	(13,983)	(6,671)
Gain on disposal of other investments	-	-	-	-	409	409	-	409
	21,009	(8,682)	3,942	(3,118)	(5,430)	7,721	(13,983)	(6,262)
Net finance revenue/(cost)	(12,880)	-	(707)	183	236	(13,168)	-	(13,168)
Revaluation of derivative financial instruments	-	-	-	-	8,334	8,334	-	8,334
Profit/(loss) before tax	8,129	(8,682)	3,235	(2,935)	3,140	2,887	(13,983)	(11,096)
Taxation	-	-	-	-	2,376	2,376	-	2,376
Profit/(loss) for the period	8,129	(8,682)	3,235	(2,935)	5,516	5,263	(13,983)	(8,720)
Assets and liabilities
Intangibles	-	20,024	15,685	3,718	-	39,427	-	39,427
Fixed assets	325,891	28,875	3,127	-	581	358,474	-	358,474
Equity accounted investments	-	-	7,588	4,847	5,439	17,874	-	17,874
Current assets	10,349	18,498	8,426	1,304	4,759	43,336	-	43,336
Segment assets	336,240	67,397	34,826	9,869	10,779	459,111	-	459,111
Other investments						1,464	-	1,464
Total assets						460,575	-	460,575
Segment Liabilities
Current liabilities	(18,472)	-	(4,970)	(954)	(4,807)	(29,203)	-	(29,203)
Derivative financial instruments						(17,274)	-	(17,274)
Non-current liabilities						(251,416)	-	(251,416)
Total liabilities						(297,893)	-	(297,893)
Other segmental information
Capital expenditure:
Property, plant and equipment	802	-	392	-	292	1,486	636	2,122
Intangible assets	-	-	1,050	-	-	1,050	279	1,329
Depreciation	459	-	384	-	1,211	2,054	378	2,432

Included within the above results for the investment property segment are the results for Assura Health & Wellness Centres Limited which ceased to trade on 31 March 2010. The loss for the year ending 31 March 2010 for this company was £1,181,000.

Information about major customers

Annual revenue from one customer amounted to £32,604,000 (2010: £29,334,000) arising from sales reported in the Pharmacy segment.

3. Exceptional items

				Total 2011	Continuing operations	Discontinued operations	Total 2010
				£'000	£'000	£'000	£'000
(Loss)/gain on disposal of pharmacies				(15)	1,118	-	1,118
Reversal of impairment on pharmacy licences				1,198	1,300	-	1,300
Impairment of goodwill				(2,899)	(4,767)	-	(4,767)
Negative goodwill on acquisition of AH Medical Properties plc				453	-	-	-
Acquisition costs - legal and professional fees				(1,851)	-	-	-
AH Medical Properties plc employee termination payments				(336)	-	-	-
AH Medical Properties plc asset management agreement termination fee				(1,500)	-	-	-
Negative goodwill on acquisition of GP Care Pharmacy Limited				6	-	-	-
Assura Pharmacy (South West) Limited revaluation of assets on step acquisition				172	-	-	-
Acquisition costs - Assura Pharmacy (South West) Limited				(10)
Reversal/(impairment) of property, plant and equipment				354	(258)	-	(258)
Gain on disposal of other investments				-	409	-	409
Restructuring costs				(311)	(4,657)	-	(4,657)
Premises provision				278	(1,994)	-	(1,994)
				(4,461)	(8,849)	-	(8,849)

The amounts above in relation to restructuring costs relate to redundancy payments in the current year. In the prior year the cost included redundancy payments, payment in lieu of notice to one director, costs in relation to the closure of Assura Health & Wellness Centres Limited & Assura Diagnostics Limited, fixed asset impairments and professional fees.

4.  Share of post tax (losses)/ profits of associates and joint ventures accounted for using the equity method

					Total 2011	Continuing operations	Discontinued operations	Total 2010
					£'000	£'000	£'000	£'000
						(restated)		(restated)
Share of losses of associated companies - Virgin Healthcare Holdings Limited					(1,747)	(125)	-	(125)
Impairment of investment in Virgin Healthcare Holdings Limited					(831)	-	-	-
Share of profits of associated LIFT companies					667	627	-	627
Unrealised loss on revaluation of derivative financial instrument of associated LIFT companies					(565)	(3,676)	-	(3,676)
Share of post tax losses of associates					(2,476)	(3,174)	-	(3,174)
Share of profits of Assura Pharmacy (South West) Limited					172	44	-	44
Impairment of loan to AH Scarborough Health Park Limited					(400)	-	-	-
Share of losses of Medical LLP joint venture companies					-	-	(913)	(913)
Reversal of licence impairment					-	1,579	-	1,579
Share of (losses)/profits of joint ventures					(228)	1,623	(913)	710
Share of losses of associates and joint ventures					(2,704)	(1,551)	(913)	(2,464)

5.  Finance revenue

						Total 2011	Total 2010
						£'000	£'000
Bank and other interest						1,492	796
Income from investments						-	210
						1,492	1,006

6.  Finance costs

						Total 2011	Total 2010
						£'000	£'000
Long term loan interest payable						10,791	9,724
Interest capitalised on developments						(818)	(1,364)
Swap interest						6,248	5,248
Amortisation of loan issue costs						208	566
						16,429	14,174
Unrealised loss/(profit) on revaluation of derivative financial instrument						37	(8,334)
						16,466	5,840

   Interest was capitalised on property developments at 6% (2010: 6%).

7. Taxation

Consolidated income tax		Year ended 31 March 2011	Year ended 31 March 2010
		£'000	£'000
Current Tax
Current income tax charge		-	-
Deferred Tax
Relating to origination and reversal of temporary differences		(484)	(2,376)
Release of deferred tax on revaluation arising on acquisition		(3,444)	-
Relating to changes in tax rates		104	-
Income tax credit reported in consolidated income statement		(3,824)	(2,376)

The differences from the standard rate of tax applied to the profit before tax may be analysed as follows:
						Year ended 31 March 2011	Year ended 31 March 2010
						£'000	£'000
							(restated)
Profit/(loss) from continuing operations before taxation						11,248	1,657
Loss from discontinued operations before taxation						-	(6,837)
Loss on disposal of discontinued operations						-	(7,146)
Net loss before taxation						11,248	(12,326)
UK income tax at rate of 28% (2010: 28%)						3,149	(3,451)
Effects of:
Capital gains on revaluation of investment properties not taxable						(57)	(447)
Non taxable income						139	(59)
Unrealised surplus/(deficit)not tax deductible on revaluation of other investments						108	(883)
Expenses not deductible for tax purposes						585	334
Arising on acquisition of AH Medical Properties PLC						(3,444)	-
Gain on revaluation of derivative financial instrument not taxable						-	(1,572)
Share-based payments credit not tax deductible						(5)	(311)
Unrealised gains on revaluation of investments in associates						-	22
Unrecognised tax losses						(26)	4,034
Other deferred tax assets not recognised						(4,453)	(365)
Adjustment in respect of prior years						180	322
						(3,824)	(2,376)

With effect from 3 April 2008 the Group's affairs have been conducted such that it is resident in the UK for tax purposes. All profits are therefore subject to Corporation Tax at 28%.

Finance Act  2011

The Budget on 23 March 2011 announced a reduction of the corporation tax rate to 26% from 1 April 2011. Further changes, which are expected to be enacted separately each year, propose to reduce the tax rate by 1% per annum from 26% to 23% by 1 April 2014. These changes had not been substantively enacted at the balance sheet date and, therefore, are not recognised in these financial statements.

Based on the closing deferred tax asset at the balance sheet date, the aggregate impact of the proposed reductions from 26% to 23% would reduce the deferred tax asset by approximately £273,000.

8.  Business combinations

2011

AH Medical Properties PLC

On 18 February 2011, the Group acquired 100% of the Ordinary Share Capital of AH Medical Properties PLC, a public company based in England. The company is involved in property investment & development and the acquisition has enlarged the existing investment & development portfolio of the group. The consideration of £26,184,000 was satisfied by a combination of cash and equity as shown below.

The fair values of identifiable assets and liabilities of AH Medical Properties PLC & its subsidiaries as at the date of acquisition were:

	Fair value
	Property acquisitions
	£'000
Investment properties	125,590
Investment properties under construction	6,127
Receivables	2,432
Cash	645
Payables	(5,812)
Long term loans	(96,796)
Convertible loans	(2,105)
Deferred tax	(3,444)
Total identifiable net assets at fair value	26,637
Negative goodwill arising on acquisition	(453)
Total purchase consideration transferred	26,184
Purchase consideration:
Fair value of shares issued (42,340,319 at £0.4575)	19,371
Cash	6,813
Total purchase consideration	26,184
Analysis of cash flows on acquisition:
Transaction costs of the acquisition (included in cash flows from operating activities)	(3,687)
Cash acquired with the subsidiary (included in cash flows from investing activities)	645
Cash paid as consideration (included within cash flows from investing activities)	(6,813)
Transaction costs attributable to issuance of shares (included in cash flows from financing activities)	(534)
Net cash flow on acquisition	(10,389)

The Group issued 42,340,319 shares as consideration for 74% of the total acquisition price. The terms of the offer were such that the investors of AH Medical Properties PLC could either have 0.85 new Assura Group Limited shares for each AH Medical Properties PLC share or a cash alternative of £0.40 per share. The fair value of the shares is the published price of the shares of the Company at the acquisition date. Therefore the fair value of the consideration given is £19,371,000.

The fair value of the trade receivables amounts to £2,432,000. The gross amount of trade receivables is £2,432,000. None of the trade receivables have been impaired and it is expected that the full contractual amount can be collected.

Total transaction costs of £3,687,000 (£1,500,000 asset management termination fee, £1,851,000 legal and professional fees and £336,000 employee termination payments) have been expensed and are included within exceptional items. The attributable costs of the issuance of equity instruments of £534,000 have been charged directly to equity. Negative goodwill of £453,000 has been taken to the Consolidated Income Statement and is shown within exceptional items (see note 3).

From the date of acquisition to 31 March 2011, AH Medical Properties PLC has contributed £696,000 of revenue and £78,000 to the profit after tax of the Group. If the combination had taken place at the beginning of the year, the consolidated profit for the year from continuing operations of the Group would have been £18,231,000 and revenue from continuing operations would have been £68,745,000.

The following transactions were entered into during the negotiation of the acquisition:

·     The termination of the asset management contract with Ashley House PLC for which £1.5m was paid on completion and was accounted for post acquisition;

·     A period of exclusivity was granted to Ashley House PLC to conduct due diligence on the possible acquisition of Assura LIFT Holdings Limited for initial consideration of £0.75m, rising to £1.5m subject to certain performance criteria. Assura Group Limited would retain the LIFT investments and investment rights in the business;

·      Assura Group Limited would loan AH Scarborough Health Park Limited the sum of £0.4m to enable it to pay Ashley House PLC a design fee of £0.4m in respect of the project at Scarborough; and

·      An initial 6 month agreement giving Assura Group Limited first refusal over Ashley House PLC's available pipelineof development schemes.

Goodwill on an acquisition normally relates to the value of future cashflows not being reflected in the value of net assets acquired. However, as the properties acquired with AH Medical Properties PLC are valued at fair value, and therefore already incorporate future cashflows, there was no positive goodwill arising. The negative goodwill therefore only represents minimal differences between the consideration paid for other assets and liabilities.

The fair value of assets acquired is considered to be final.

Assura Pharmacy (South West) Limited (formerly GP Care Pharmacy Limited)

On 28 February 2011 the Group acquired the remaining 50% Ordinary Share Capital of Assura Pharmacy (South West) Limited which was included within joint ventures in the previous year. The acquisition has enlarged the wholly owned pharmacy portfolio. Of the £1,350,000 total consideration, £100,000 was paid in cash. There is no contingent consideration due.

	Fair value
	Pharmacy assets
	£'000
Tangible fixed assets	340
Intangible fixed assets	6,673
Investment in subsidiary	109
Inventory	335
Cash	522
Receivables	708
Payables	(931)
Intercompany loans	(6,294)
Total identifiable net assets at fair value	1,462
Pre-acquisition share of losses	66
Pre-acquisition gain on asset revaluation	(172)
Negative goodwill arising on acquisition	(6)
Total purchase consideration transferred	1,350
Purchase consideration:
Capitalisation of loan	1,250
Cash	100
Total purchase consideration	1,350

Analysis of cash flows on acquisition:
Transaction costs of the acquisition (included in cash flows from operating activities)	(10)
Net cash acquired with the subsidiary (included in cash flows from investing activities)	522
Net cash flow on acquisition	512

The fair value of the trade receivables amounts to £674,000. The gross amount of trade receivables is £674,000. None of the trade receivables have been impaired and it is expected that the full contractual amount can be collected.

Transaction costs of £10,000 have been expensed and are included within exceptional items (see note 3).

The pre-acquisition gain on asset revaluation of £172,000 and negative goodwill of £6,000 have been taken to the Consolidated Income Statement and are shown within exceptional items (see note 3).

From the date of acquisition to 31 March 2011, Assura Pharmacy (South West) Limited has contributed £586,000 of revenue and £90,000 to the profit after tax of the Group. If the combination had taken place at the beginning of the year, the consolidated profit for the year from continuing operations of the Group would have been £15,356,000 and revenue from continuing operations would have been £67,923,000.

Goodwill on an acquisition normally relates to the value of future cashflows not being reflected in the value of net assets acquired. However, as the assets acquired with Assura Pharmacy (South West) Limited are valued at fair value, and therefore already incorporate future cashflows, there was no positive goodwill arising. The negative goodwill therefore only represents minimal differences between the consideration paid for other assets and liabilities.

The fair value of assets acquired is considered to be final.

Assura Fund Management LLP

During the year Assura Fund Management LLP was sold. The partnership was dormant and was sold for its book value of £2. No gain or loss was recorded on the sale.

2010

On 28 August 2009 Assura Group Limited purchased the remaining 20% interest in Assura Diagnostics Limited for £63,000.

	Book Value	Fair Value
	Medical acquisitions	Medical acquisitions
	£'000	£'000
Non-controlling Interest as at 31st March 2009	(178)	(178)
Share of losses during the year ended 31 March 2010	(38)	(38)
Net liabilities acquired	(216)	(216)
Cash paid		63
Goodwill arising on acquisition		279

9. Dividends paid on Ordinary Shares

	Number of Ordinary Shares	Rate pence	2011	Number of Ordinary Shares	Rate pence	2010
			£'000			£'000
Interim dividend for year ending 31 March 2011	306,427,150	1	3,064	306,427,150	-	-
		-	-
		-	3,064		-	-

Dividends on 'own shares held' of £111,000 (2010: £nil) are recognised in distributable reserves.

A final dividend of 2011 1.25p per share is to be paid on 26 July 2011 to shareholders on the share register at 1 July 2011. This equates to a total cash payment of £5,094,000.

10. Note to the Consolidated Cash Flow Statement

		2011	2010
		£'000	£'000
			(restated)
Reconciliation of net profit/(loss) before taxation to net cash inflow from operating activities:
Net profit/(loss) before taxation
Profit from continuing activities		11,248	2,887
Loss from discontinued activities		-	(13,983)
		11,248	(11,096)
Adjustment for non-cash items:
Depreciation		1,023	2,432
(Decrease)/increase in debtors		1,868	(567)
Increase/(decrease) in creditors		1,673	(1,072)
(Decrease)/increase in provisions		(663)	1,993
Increase in pharmacy inventories		(150)	(81)
Surplus on revaluation of investment property		(8,490)	(6,466)
Development property (gain)/impairment		(5,368)	2,322
Deficit on revaluation of property, plant and equipment		-	47
Surplus on revaluation of other investments		-	(814)
Loss on disposal of other investments		-	405
Interest capitalised on developments		(818)	(1,364)
Loss/(profit) on revaluation of financial instrument		37	(8,334)
Profit on disposal of investment properties		(464)	(394)
Profit on disposal of pharmacies		-	(1,118)
Profit on disposal of assets		(116)	(665)
Movement on goodwill		2,268	5,046
Licences impairment reversal		(1,197)	(1,300)
Impairment (reversal)/charge of property, plant and equipment		(354)	258
Interest on loan to associate		(286)	-
Share of losses of associates and joint ventures		2,704	2,464
(Reversal)/charge of employee share-based incentives		(264)	(1,109)
Discontinued operations		-	4,118
Restructuring costs		-	2,981
Other gains and losses		-	2
Amortisation of loan issue costs		208	566
Net cash inflow/(outflow) from operating activities		2,859	(11,746)

11. Preliminary announcement

The Announcement can also be accessed on the Internet at www.assuragroup.co.uk

The Annual Report will be posted to Shareholders on or before the 27th July 2011.

12. Approval

The Preliminary Announcement was approved by the Board of Directors on 21^st June 2011.

 

END

 

 

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