REG - Assura plc - Assura Full Year Results 2022
24/05/2022 07:00
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RNS Number : 4969M Assura PLC 24 May 2022
24 May 2022
Assura plc
Delivering continued growth
Assura plc ("Assura"), the leading primary care property investor and
developer, today announces its results for the year ended 31 March 2022.
Jonathan Murphy, CEO, said:
"Assura has delivered another year of significant progress, maintaining its
strong financial performance and making a positive contribution to the local
communities in which it operates.
"We have grown our high-quality portfolio to £2.8 billion, progressed our
ambitious development pipeline which stands at over £500 million and expanded
our offering through working with NHS Trusts, independent providers and making
our first investment in Ireland. Supported by our successful bond and equity
raises ‒ with accelerated use of proceeds ‒ we have continued to deliver
critical new capacity for community healthcare and fulfil the ambitions of our
extensive SixBySix social impact strategy.
"With the UK's healthcare estate lacking the critical buildings and facilities
to tackle the growing backlog of treatments following the pandemic, we know
the development of modern, integrated, and high-quality primary care space is
a key enabler in reducing this pressure. This area benefits from cross-party
political support and Assura is committed to making a significant contribution
- all the while accommodating for key emerging trends, including hybrid GP
appointments, the requirement for mental health support, and digitalisation.
"As the NHS seeks to become the world's first net-zero carbon health system,
Assura has continued to roll out initiatives to deliver its strong
sustainability plans that support all stakeholders over the year.
"Against an uncertain economic backdrop, Assura's steady and reliable business
model, strong balance sheet and differentiated market position means it is
extremely well positioned to continue growing and delivering shareholder
value. We remain confident in Assura's outlook for the coming year and
beyond".
Another strong year delivering portfolio, earnings and dividend growth
· Passing rent roll increased 12% to £135.7 million (2021: £121.7
million) with WAULT maintained at 11.8 years
· Profit before tax grew 44% to £155.8 million (2021: £108.3 million)
with EPS up 37% at 5.6p (2021: 4.1p)
· EPRA earnings up 14% to £86.2 million (2021: £75.4 million(1)) and
EPRA EPS of 3.1p (2021: 2.8p(1))
· Portfolio value rose 12% to £2,752 million (2021: £2,453 million)
and Net Initial Yield ("NIY") at 4.48% (2021: 4.58%)
· Proposed 5.4% increase in the quarterly dividend to 0.78 pence per
share
Continuing to provide critical new capacity for community healthcare
· Growing portfolio of 645 high-quality properties (2021: 609) serving
6.8 million people across the UK
· Added 47 properties at a cost of £271 million (yield on cost 4.6%,
WAULT 19 years) and completed four asset enhancement capital projects (£2.7
million)
· Total development pipeline of £522 million(2) with a further 23
asset enhancement projects (£18 million)
· 11 properties sold for above book value proceeds of £15 million;
£76m of assets held for sale
· Lease re-gears completed on £1.3 million existing rent roll with
further £6.9 million in the pipeline
· Rent reviews generated weighted average annual rent increase of
1.9%(3) (absolute increase of 5.1% on rent roll reviewed)
· Acquisition pipeline of 20 properties at cost of £119 million(4)
· Total contracted rental income increased 15% to £1.81 billion (2021:
£1.57 billion)
Strategic expansion into emerging opportunities
· On site developments include scale projects for NHS Trusts and
independent providers
· Acquisitions supporting delivery of mental health services in a
community setting
· Strategic partnerships with two primary care at scale operators
· First acquisition completed in Ireland and currently exploring
several opportunities for developments
We Build for Health; sustainability and social impact at the heart of all
decision-making
· Further progress on our SixBySix social impact and sustainability
strategy
· Assura Community Fund distributed over £550,000 for health improving
projects around our buildings
· EPC improvement programme commenced with 42 existing buildings
upgraded to EPC B
· All development completions rated BREEAM Very Good or Excellent and
EPC B and above
· Net Zero Carbon Development Design Guide launched and being rolled
out into development pipeline
· Sustainability Bond issued under our Sustainable Finance Framework
Strong and diverse financial position
· LTV of 36%, net debt of £1,006 million on a fully unsecured basis
· All drawn debt on fixed rate basis - weighted average interest rate
reduced to 2.30% (2021: 2.47%) with weighted average debt maturity unchanged
at 8 years
· Issued 12-year £300 million Sustainability Bond with coupon of
1.625%
· Cash and undrawn facilities of £369 million
· A- (stable outlook) rating from Fitch Ratings Ltd reaffirmed in
January 2022
Summary results
Financial performance March 2022 March 2021 Change
Net rental income £126.5m £112.0m 12.9%
Profit before tax £155.8m £108.3m 43.9%
IFRS earnings per share 5.6p 4.1p 36.6%
EPRA earnings per share(1) 3.1p 2.8p 10.7%
Dividend per share 2.93p 2.82p 3.9%
Property valuation and performance March 2022 March 2021 Change
Investment property £2,752m £2,453m 12.2%
Diluted EPRA NTA per share 60.7p 57.2p 6.1%
Rent roll £135.7m £121.7m 11.5%
Financing March 2022 March 2021 Change
Loan to Value ("LTV") ratio 36% 37% (1)ppt
Undrawn facilities and cash £369m £272m 35.7%
Weighted average cost of debt 2.30% 2.47% (17)bps
(1) Comparator is Adjusted EPRA earnings per share, adjusted to remove the
£2.5 million contribution to the Assura Community Fund in the year to March
2021
(2) Development pipeline £522 million: £166 million on site, immediate
pipeline £158 million, extended pipeline £198 million
Immediate development pipeline: schemes expected to be onsite within 12 months
Extended development pipeline: Assura appointed exclusive development partner,
awaiting NHS approval
(3) Weighted average annual uplift on all settled reviews
(4) Acquisition pipeline in legal hands and expected to complete within 3-6
months
Alternative Performance Measures ("APMs")
The highlights page and summary results table above include a number of
financial measures to describe the financial performance of the Group, some of
which are considered APMs as they are not defined under IFRS. Further details
are provided in the CFO Review, notes to the accounts and glossary.
For further information, please contact:
Assura plc: Tel: 01925 945354
Jayne Cottam, CFO Email: Investor@assura.co.uk
David Purcell, Investor Relations Director
Finsbury: Tel: 0207 251 3801
Gordon Simpson Email: Assura@Finsbury.com
James Thompson
A presentation for investors and analysts, followed by live Q&A, will be
streamed at the link below on 24 May 2022 at 11.00am BST.
Webcast link:
https://webcasting.brrmedia.co.uk/broadcast/625e82ca841dd838fd0be3a3
(https://webcasting.brrmedia.co.uk/broadcast/625e82ca841dd838fd0be3a3)
In addition, the company will host a presentation with Q&A for retail
investors on the Investor Meet Company platform on Thursday 9 June 2022 at
11.30am BST. Investors can sign up to Investor Meet Company for free and add
to meet
Assura plc via:
https://www.investormeetcompany.com/assura-plc/register-investor
(https://protect-eu.mimecast.com/s/C_iHC59NQcVrRgSzbdmF)
Notes to Editors
Assura plc is a national healthcare premises specialist and UK REIT based in
Warrington, UK - caring for more than 600 primary healthcare buildings, from
which almost seven million patients are served.
A constituent of the FTSE 250 and the EPRA* indices, as at 31 March 2022,
Assura's portfolio was valued at £2,752 million.
At Assura, we BUILD for health. Assura builds better spaces for people and
places, invests in skills and inspires new ways of working, and unlocks the
power of design and innovation to deliver lasting impact for communities -
aiming for six million people to have benefitted from improvements to and
through its healthcare buildings by 2026.
Assura is leading for a sustainable future, targeting net zero carbon across
its portfolio by 2040.
Further information is available at www.assuraplc.com
(http://www.assuraplc.com)
*EPRA is a registered trademark of the European Public Real Estate
Association.
Chairman's statement
Dear Shareholder,
"Why are we working with Assura? Because as much as I am a generalist, they
are the specialists…which means I can get on with what I'm good at, which is
providing high quality local health services."
These words from one of our GP customers this year capture the essence of the
partnership Assura creates with the NHS. Our work enables NHS teams to do
theirs. The NHS's demand for space and capacity - to tackle the COVID backlog;
to redesign and future-proof its premises for hybrid care; and to head towards
its net zero goals
- is unrelenting, and this year 'the Assura way' has continued to set us
apart.
It starts, of course, with you. It is your support for, and your engagement
with, this business to deliver for key public infrastructure, for the
environment and for our society which are growing its financial strength. This
year's £300 million Sustainability Bond was another first for Assura, and we
are busily deploying the proceeds into exciting projects for our NHS partners
which meet our joint ambitions.
We are reporting on another strong financial performance, which you can read
about in Jonathan's statement. We completed some of the biggest financial
deals in our history, including the landmark Northumbria Health and Care
Academy at Northumbria Specialist Emergency Care Hospital - demonstrating
Assura's ability to innovate with the health service to deliver the new
generation of infrastructure which provides vital connections between acute
services, primary and community care.
The Assura way is charting our course to net zero, so that you can clearly see
the actions we intend to take, when and why. The NHS's estate faces unique and
complex challenges to reach net zero: we must play our full part in helping it
get there. While our customers grapple with what the journey to net zero means
for them and their operations, we are digging deeper, to see what more our
buildings can do to support them. In this report you'll be able to see some of
the progress we've made this year on our roadmap for our portfolio and to
bring together our design guide for net zero carbon healthcare buildings. It
is another example of the Assura way, ensuring that our plans and
decision-making are underpinned by evidence and scrutinised with rigour.
The Assura way is as a thought leader: we have continued to work with our
customers, suppliers and wider partners this year on the evolution of our
surgery of the future vision: of the community health hub space which will
underpin the future of hybrid care and increased diagnostic capacity away from
hospital, create the workplaces which NHS staff deserve and play a key part in
the levelling up agenda for health and care. From our development of our
detailed social impact and sustainability strategy and our collaboration with
specialist partners on our entry to this year's Wolfson Economics Prize,
through to finalising our tool for designing primary care environments which
are truly inclusive for people with disabilities and neurodiversity, we are
shaping the future through our innovation for the fabric, the feel and the
further impact that our buildings can have.
The Assura way is delivering for communities beyond our buildings: this year
saw our award-winning Assura Community Fund move past the £1 million
milestone for funds distributed to micro health projects around the country -
many designed to tackle the mental health needs of those already most impacted
by health inequalities, which have deepened during the pandemic.
The Assura way focuses on our people. Just as we supported our customers in
their delivery of three waves of vaccinations to millions of people around the
country, we continued to support our team through the professional and
personal challenges of further lockdowns, a return to office working and the
wider economic pressures of the cost of living. Our diverse and skilled
non-executive team has been further bolstered by the additional insight,
skills and perspectives brought into the business by our three new
Non-Executive Directors who joined us this year.
We have evolved how we articulate 'the Assura way' this year, to better
reflect the purpose-driven business we are. You can read more about it in the
CEO's statement, and in the special section at the front of the annual report.
I look forward to seeing many of you at our AGM in person once again this
year, to discuss the difference 'the Assura way' is making.
Ed Smith CBE
Non-Executive Chairman
23 May 2022
CEO statement
I am proud to report another year of strong progress for Assura. Despite a
volatile economic backdrop, our team has worked hard to deliver against our
successful strategy and advance Assura's positive growth trajectory.
We have continued to work through the challenges as the country has
"re-opened", adapting to new ways of working and collaborating face-to-face as
well as supporting our NHS customers as their operations transition to 'living
with COVID'.
We have delivered significant portfolio growth - through both additions (39
acquisitions and eight completed developments) and asset enhancements (four
completed capital projects, a further seven on site and 22 lease regears).
In its second year, we have made strong progress against our social impact and
sustainability strategy, SixBySix: the rollout of our EPC improvement works
has commenced, we have completed our Net Zero Carbon Design Guide for our
developments and our award-winning Assura Community Fund has again supported
more than 100 projects all over the country.
But the NHS continues to face significant challenges, many only exacerbated by
the pandemic. The volume of demand for NHS services has never been greater;
clinical workforce and capacity cannot keep pace with that growth and the NHS
estate is simply not in shape to accommodate evolving services and delivery.
It's against that backdrop that we've reflected on the role we want to play in
supporting the NHS to rise to these challenges. Subsequently, we've evolved
the way we describe our purpose: "We BUILD for health" and our BUILD
principles describe the breadth and depth of our approach to the role of the
estate in enabling the NHS to do its work, with our net zero carbon ambition
at its heart.
We have also started growing our portfolio in new ways, moving on site with
development schemes directly let to NHS Trusts in the North East and the
Midlands, working with independent healthcare partners to the NHS on schemes
in the South East and North West, and we made our first acquisition in
Ireland.
We are once again indebted to the continued support from our investors with
£185 million raised from our equity investors in November and £300 million
from the successful launch of our Sustainability Bond in June. Deployment of
these funds has been ahead of our initial expectations.
We BUILD for health
Our evolved purpose doesn't change our strategy or business model. We have
refreshed the wording to more clearly articulate what's important to us about
the way in which we continue to grow our impact financially, environmentally
and socially.
Building better futures for people and places. Unlocking the power of design
and innovation. Investing in skills and inspiring new ways of working. Leading
for a sustainable future. Delivering lasting impact with communities. Each of
our BUILD principles defines a different aspect of the way we work and the
impact we want to deliver for our stakeholders.
Financial and operational performance
Assura's business is built on the reliability and resilience of our long-term,
secure cash flows. These are supported by a weighted average unexpired lease
term of 11.8 years and a strong financial position (demonstrated by our A-
credit rating from Fitch Ratings Ltd).
While remaining resilient, Assura has consistently demonstrated an ability to
identify and secure new opportunities for growth, building on our
market-leading capabilities to manage, invest in and develop outstanding
spaces for health services in our communities.
We have continued our strong track record of investing in new properties,
completing 39 acquisitions for a total consideration of £234 million
throughout the year. Our investment team continues to leverage the
relationships we have with existing occupiers to identify new opportunities,
as well as analysing our bespoke database which contains details on all the
medical centres in the UK.
The design of modern fit-for-purpose GP surgeries has always been a
cornerstone of our development activities and we have delivered over £485
million of new developments and improvements to existing properties over 19
years. We have had another strong year with eight development completions and
a further nine schemes moving on site. The recent challenges in the
construction industry, with significant cost inflation and delays in the
supply chain, have primarily impacted us with schemes typically facing a
two-three month extension in the build period. In our immediate pipeline we
are carefully balancing the cost of the schemes and the rents negotiated with
the NHS.
Assura has a high-quality portfolio of 645 properties, which has been
assembled over the course of our 19-year history. An essential part of our
growth strategy is the careful review of every asset for opportunities to
enhance its lifetime cash flows and impact on the community. Reflecting the
importance of this activity, total contracted rental income is set as one of
our key strategic KPIs. This metric is a combination of our passing rent roll
and lease length, providing an effective measure of our ability to both grow
and extend our cash flows for the long term. It captures the crucial
value-enhancing activity of our portfolio management teams as they agree rent
reviews, complete lease re-gears, let vacant space and undertake physical
extensions. This year, the team completed 308 rent reviews, 22 lease re-gears
and nine new tenancies for our vacant space. This has enabled us to increase
our total contracted rental income to £1.81 billion and maintain our weighted
average unexpired lease term which stands at 11.8 years.
The combination of these elements has enabled us to continue our strong track
record of growth year-on-year. Our portfolio has increased by 12% to £2,752
billion and our passing rent roll is up 12% to £136 million. Our adjusted
EPRA earnings have increased by 14% to £86.2 million which translates to an
EPRA EPS of 3.1 pence per share. Taking into account the positive valuation
movements, our net profit is £155.9 million or 5.6 pence per share. Finally,
the resilience of our income and the growth we have delivered is reflected in
our dividend payments. Today, we announce a 5% increase in the quarterly
dividend payment to 0.78 pence with effect from the July 2022 payment, our
ninth consecutive year of increased dividend.
Development pipeline
In house Forward fund Total
# £m # £m # £m
On site 10 71 7 95 17 166
Immediate 19 155 1 3 20 158
Extended 19 130 7 68 26 198
Total 48 356 15 166 63 522
Assura outlook
Assura's success, and its strategy, is built on our complementary offer of
investment, development and management of premises to our customers -
underpinned by our purpose-led approach which seeks to maximise impact for
society and minimise impact on the environment. This multifaceted approach
enables us to better understand the requirements of our customers and
anticipate their future needs. Having demonstrated its effectiveness and
resilience, we have a proven business model focused on delivering sustainable
growth for the long-term.
We once again enter the new financial year with a strong immediate pipeline.
Acquisition opportunities in legal hands total £119 million and we have £18
million of asset enhancement capital projects either on site or in legal
hands. In development, we are on site with a record 17 schemes with a gross
development spend of £166 million, an immediate pipeline of £158 million of
development opportunities that are expected to commence within the next 12
months, and an extended pipeline of £198 million of further opportunities
where Assura is the exclusive partner. Following our strategic acquisitions of
Apollo and GPI in recent years, most of our development pipeline will be
delivered in-house.
Our strategic expansion into premises enabling the delivery of community-based
services away from hospitals is flowing through into our pipelines. We are now
on site with a £25 million multi-use facility for the Northumbria Healthcare
NHS Foundation Trust in Cramlington; a £22 million state-of- the-art facility
for West Midlands Ambulance Service University NHS Foundation Trust in
Oldbury; and a £31 million cancer diagnostic and treatment centre for
GenesisCare in Guildford. These schemes demonstrate our ability to work with a
range of partners in delivering game-changing facilities for NHS care, as well
as for schemes of scale: these represent our three largest developments to
date.
We have also made our first acquisition in the Irish market, a modern asset in
Castlebar for which we are also working on a significant extension
opportunity. The Irish market offers us another growth avenue with a very
similar risk profile, and our initial conversations have yielded some forward
funding opportunities that we are hopeful of progressing over the next few
months.
We remain well funded to support our future growth plans. We currently have
cash and undrawn committed facilities totalling £369 million having completed
well-supported equity and debt raises during the previous 12 months and have
identified £76 million of assets that we are actively seeking to dispose of
to recycle the capital. This financial strength further underpins our future
growth prospects.
Market outlook
The critical need for investment in the infrastructure that supports the
services delivered by the NHS is as pronounced as it has ever been. Waiting
lists are longer than they have been for decades because hospitals are
overburdened, and appropriate space doesn't exist in a community setting to
deliver care where it is needed.
The existing NHS estate is not fit for purpose and requires significant
investment to meet this demand. Healthcare professionals openly admit that the
premises they work in are constraining the services they can provide,
hindering
recruitment of additional staff and holding back progress on tackling the care
backlog. So it is not surprising that 98% of Primary Care Network clinical
directors feel more investment is needed for primary care premises.
The restructuring of the NHS into Integrated Care Partnerships in the coming
months provides an opportunity for greater collaboration across health
professionals, services and estate - with scope to improve individual patient
experiences and reduce health inequalities.
The NHS has ambitious targets to become the world's first net zero carbon
health system, but this is not yet filtering down to plans on how this will be
implemented and paid for across the existing estate. Our role is to be an
expert partner to bridge those gaps and share our learnings with the NHS,
always pushing the bar higher at our buildings and through our impact - using
our unique expertise and financial capacity to deliver.
Jonathan Murphy
CEO
23 May 2022
CFO Review
It has been another strong year for Assura; leveraging the strength of our
balance sheet to continue growing our portfolio and driving scale benefits,
particularly in our cost of debt.
We are delighted to have received continued, strong support from our debt and
equity holders during the year; successfully launching a £300 million
Sustainability Bond in June 2021 and raising £185 million of equity in
November 2021.
The pace of our deployment of these proceeds has been ahead of our initial
expectations, with strong acquisition and development activity, including
progress within several emerging areas we have identified for future growth.
Alternative Performance Measures ("APMs")
The financial performance for the period is reported including a number of
APMs (financial measures not defined under IFRS). We believe that including
these alongside IFRS measures provides additional information to help
understand the financial performance for the period, in particular in respect
of EPRA performance measures which are designed to aid comparability across
real estate companies. Explanations to define why the APM is used and
calculations of the measures, with reconciliations back to reported IFRS
measured normally in the Glossary, are included where possible.
In particular, in the prior period we disclosed an adjusted EPRA earnings
measure (see Note 4). This was introduced to exclude the one-off impact of the
£2.5 million contribution to the Assura Community Fund in the period, so as
to ensure readers of the accounts could continue to understand the
underlying, recurring earnings of the property rental business.
Portfolio as at 31 March 2022 £2,751.9 million (2021: £2,453.3 million)
Our business is based on our investment portfolio of 645 properties (2021:
609).
This has a passing rent roll of £135.7 million (2021: £121.7 million), 82%
of which is underpinned by the NHS. The WAULT is 11.8 years and we have a
total contracted rent roll of £1.81 billion (2021: £1.57 billion).
At 31 March 2022 our portfolio of completed investment properties was valued
at a total of £2,750.3 million, including investment properties held for sale
of £76.0 million (2021: £2,414.7 million and £14.3 million), which produced
a net initial yield ("NIY") of 4.48% (2021: 4.58%). Taking account of
potential lettings of unoccupied space and any uplift to current market rents
on review, our valuers assess the net equivalent yield to be 4.72% (2021:
4.81%). Adjusting this Royal Institution of Chartered Surveyors ("RICS")
standard measure to reflect the advanced payment of rents, the true equivalent
yield is 4.74% (2021: 4.83%).
Our EPRA NIY, based on our passing rent roll and latest annual direct property
costs, was 4.42% (2021: 4.54%).
2022 2021
£m
£m
Net rental income 126.5 112.0
Valuation movement 69.4 41.6
Total Property Return 195.9 153.6
Expressed as a percentage of opening investment property plus additions, Total
Property Return for the year was 7.1% (2021: 6.3%). This can be split as 4.6%
from net rental income (2021: 4.6%) and 2.5% from valuation movement (2021:
1.7%).
The net valuation gain in the year of £69.4 million reflects a 3.4% uplift on
a like-for-like basis net of movements relating to properties acquired in the
period. The valuation gain is split equally between asset enhancement
activities (due to both lease regears and rent review uplifts) and the 9 basis
point movement in our equivalent yield.
The NIY on our assets continues to represent a substantial premium over both
the 10-year and 15-year UK gilts which traded at 1.61% and 1.813% respectively
(2021: 0.845% and 1.22% respectively).
Portfolio additions
We have invested significantly during the period, with this expenditure split
between investments in completed properties, developments, forward funding
projects, extensions and fit-out costs enabling vacant space to be let as
follows:
2022
£m
Acquisition of completed medical centres 233.5
Developments/forward funding arrangements 62.1
Capital interest 1.6
Investment properties - no incremental lettable space 8.5
Total capital expenditure 305.7
We have completed 39 acquisitions and eight developments during the year.
These additions were at a combined total cost of £271 million with a combined
passing rent of £12.3 million (yield on cost of 4.6%) and a WAULT of 19.0
years.
Investment activity
We continue to source properties that meet our investment criteria for future
acquisition. The acquisition pipeline stands at £119 million, being
opportunities that are currently in solicitors' hands and which we would hope
to complete within three to six months, subject to satisfactory due diligence.
During the year, we disposed of 11 properties where we believed there was
lower growth prospects than the rest of our portfolio, generating proceeds of
£15.1 million at a premium over book value of £0.3 million.
We continue to review our portfolio for any indication that properties no
longer meet our investment criteria and as at the year end have £76 million
of investment properties held for sale. These properties are under offer and
we expect to complete the sale in Q1, generating proceeds to recycle into our
pipelines.
Development activity
Of the 16 developments that were on site at March 2021, eight have completed
in the year. The remainder are due to complete during 2022 including six (£28
million) in Q1.
The development team has continued to have success in converting schemes from
the pipeline to live schemes, with nine schemes moving on site during the year
meaning that 17 are on site at 31 March 2022.
Of the 17 developments on site at 31 March 2022, seven are under forward
funding agreements and 10 are in-house developments. These have a combined
development cost of £166 million of which
we had spent £65 million as at the year end.
Our development pipeline has continued to grow. The majority is organic,
generated by the strength of the relationships that our development team hold,
meaning the majority of our pipeline is in house schemes.
In addition to the 17 developments currently on site, we have an immediate
pipeline of 20 properties (estimated cost £158 million, which we would hope
to be on site within 12 months) and an extended pipeline of 26 properties
(estimated cost £198 million, appointed exclusive partner and awaiting NHS
approval).
We recorded a revaluation gain of £4.0 million in respect of investment
property under construction (2021: £4.9 million).
Live developments and forward funding arrangements
Forward fund/ in house Principal tenant Estimated completion date Development costs Costs Size
to date
Beaconsfield In house GPs Q2 22 £6.8m £6.5m 1,668 sq.m
Brighton FF GPs Q2 23 £4.9m £1.9m 948 sq.m
Calne In house GPs Q3 23 £3.8m £0.9m 813 sq.m
Cardiff In house GPs Q3 22 £3.1m £1.4m 633 sq.m
Cramlington In house NHS Trust Q4 23 £25.3m £4.2m 6,500 sq.m
Guildford FF Independent provider Q4 23 £31.4m £2.8m 2,818 sq.m
Hemel Hempstead In house GPs Q2 22 £5.1m £4.9m 997 sq.m
Kelsall FF GPs Q3 22 £3.0m £2.4m 700 sq.m
Kettering FF Independent provider Q2 23 £21.6m £3.6m 3,500 sq.m
Nunthorpe In house GPs Q2 22 £2.2m £1.4m 565 sq.m
Portsmouth In house GPs Q2 22 £4.5m £4.3m 968 sq.m
Southampton In house GPs Q1 23 £7.0m £3.4m 1,385 sq.m
Stourport FF GPs Q2 22 £5.9m £4.2m 1,950 sq.m
Sutton In house GPs Q2 22 £3.2m £2.4m 664 sq.m
Wallsend In house GPs Q3 22 £10.4m £6.7m 2,794 sq.m
West Midlands Ambulance Hub FF NHS Trust Q3 22 £22.3m £13.7m 7,081 sq.m
Wolverhampton FF GPs Q3 23 £5.9m £0.9m 1,325 sq.m
Portfolio management
Our rent roll grew by £14.0 million during the year to £135.7 million.
The growth came from acquisitions (£11.2 million), development completions
(£1.5 million) and portfolio management activity including rent reviews
(£2.2 million), offset by the rent relating to disposals (£0.9 million).
During the year we successfully concluded 308 rent reviews (2021: 320 reviews)
to generate a weighted average annual rent increase of 1.9% (2021: 1.5%) on
those properties, which is a figure that includes 18 reviews we chose not to
instigate in the year. These 308 reviews covered £37.9 million or 31% of our
rent roll at the start of the year and, on a like-for-like basis, the absolute
increase of £1.9 million is a 5.1% increase on this rent. Our portfolio
benefits from a 33% weighting in fixed, RPI and other uplifts which generated
an average uplift of 2.7% during the period. The majority of our portfolio is
subject to open market reviews and these have generated an average uplift
of 1.4% (2021: 1.2%) during the period.
Our total contracted rental income, which is a function of current rent roll
and unexpired lease term on the existing portfolio and on-site developments,
has increased from £1.57 billion at March 2021 to £1.81 billion at March
2022, despite the passage of time.
We grow our total contracted rental income through additions to the portfolio
and getting developments on site, but increasingly our focus has been
extending the unexpired term on the leases on our existing portfolio
("re-gears").
The team has had success in delivering 22 re-gears in the period, covering
£1.3 million of rent roll and adding 10.5 years to the WAULT for those
particular leases (2021: 31 re-gears, £2.8 million of rent). We also have
terms agreed on a pipeline of 49 re-gears covering a further £6.9 million of
rent roll and these are currently in legal hands.
We have secured nine new tenancies with an annual rent roll of £0.3 million
and a pipeline in legal hands of six new tenancies (rent £0.3 million). Our
EPRA Vacancy Rate at March 2022 is 1.2% (2021: 1.3%).
We completed four asset enhancement capital projects during the year (spend
£2.7 million) and are currently on site with a further seven projects with a
total capital spend of £7.4 million. In total we have a pipeline of 16 asset
enhancement capital projects we hope to complete in the next two years. These
have an estimated capital spend of £11.2 million, additional rent of £0.8
million and improve the WAULT on those properties.
Our current rent roll is £135.7 million and, on a proforma basis (i.e.
assuming relevant figures are added to the rent roll as it stands), would
increase to approximately £167 million once the acquisition pipeline and
extended development pipeline are completed plus anticipated rent reviews and
asset enhancements identified.
Administrative expenses
The Group analyses cost performance by reference to our EPRA Cost Ratios
(including and excluding direct vacancy costs) which were 13.1% and 12.1%
respectively (2021: 13.4% and 12.3%, excluding one-off impact of Assura
Community Fund donation in prior year).
We also measure our operating efficiency as the ratio of administrative costs
to the average gross investment property value. This ratio during the period
equated to 0.45% (2021: 0.48%) and administrative costs stood at £11.7
million (2021: £11.0 million).
Financing
As we continue to grow through acquisitions and developments, we are delighted
to have received support from both the debt and equity markets.
In June 2021, following on from the launch of our debut Social Bond in 2020,
we successfully launched a £300 million, 12-year Sustainability Bond which
priced at a fixed interest rate of 1.625%. This was launched alongside our
Sustainable Finance Framework, which supports our SixBySix social impact
strategy, and the proceeds are to be used for investment in eligible
acquisitions, developments and refurbishment of publicly accessible primary
care and community healthcare centres.
Subsequently, in July 2021 we voluntarily took the option to reduce the RCF to
£125 million; benefitting from a reduction in non-utilisation fees with the
increased access to a range of debt options as a result of our strong balance
sheet and A- rating from Fitch Ratings Ltd.
In November 2021 we completed an equity placing for £185 million.
Financing statistics 2022 2021
Net debt (Note 11) £1,006.4m £907.6m
Weighted average debt maturity 8.0 years 8.0 years
Weighted average interest rate 2.30% 2.47%
% of debt at fixed/capped rates 100% 100%
EBITDA to net interest cover 4.1x 3.9x
Net debt to EBITDA 8.8x 9.3x
LTV (Note 11) 36% 37%
Our LTV ratio currently stands at 36% and will increase in the short term as
we utilise cash to fund the pipeline of acquisitions, development and asset
enhancement opportunities. Our LTV policy allows us to reach the range of 40%
to 50% should the need arise.
At 31 March 2022, 100% of our facilities are at fixed interest rates, although
this will change as we draw on the RCF which is at a variable rate. The
weighted average debt maturity is 8.0 years.
As at 31 March 2022, we had undrawn facilities and cash totalling £369
million. Details of the outstanding facilities and their covenants are set out
in Note 8.
Net finance costs presented through EPRA earnings in the year amounted to
£28.0 million (2021: £25.1 million), having increased due to our additional
borrowings funding the growth in our portfolio.
IFRS profit before tax
IFRS profit before tax for the period was £155.8 million (2021: £108.3
million). As can be seen below, adjusted EPRA earnings have increased compared
with the prior year. We have also recorded an increased valuation gain
following our positive asset enhancement activities and valuation yield
movement.
EPRA earnings
2022 2021
£m
£m
Net rental income 126.5 112.0
Administrative expenses (11.7) (13.5)
Net finance costs (28.0) (25.1)
Share-based payments and taxation (0.6) (0.5)
EPRA earnings 86.2 72.9
Add back one-off Assura Community Fund contribution - 2.5
Adjusted EPRA earnings (exc. one-off donation) 86.2 75.4
The movement in adjusted EPRA earnings (exc. one-off donation) can be
summarised as follows:
£m
Year ended 31 March 2021 75.4
Net rental income 14.5
Administrative expenses (0.7)
Net finance costs (2.9)
Share-based payments and taxation (0.1)
Year ended 31 March 2022 86.2
Adjusted EPRA earnings has grown 14.3% to £86.2 million in the year to 31
March 2022 reflecting the property acquisitions and developments completed as
well as the impact of our asset management activity with rent reviews and new
lettings. This has been offset by increases in administrative expenses and
financing costs.
Earnings per share
The basic earnings per share ("EPS") on profit for the period was 5.6 pence
(2021: 4.1 pence).
EPRA EPS, which excludes the net impact of valuation movements and gains on
disposal, was 3.1 pence (2021: 2.7 pence).
Based on calculations completed in accordance with IAS 33, share-based payment
schemes are currently expected to be dilutive to EPS, with 1.2 million new
shares expected to be issued. The dilution is not material with no impact on
EPS figures.
Dividends
Total dividends settled in the year to 31 March 2022 were £80.4 million or
2.93 pence per share (2021: 2.82 pence per share). £5.0 million of this was
satisfied through the issuance of shares via scrip.
As a REIT with requirement to distribute 90% of taxable profits (Property
Income Distribution, "PID"), the Group expects to pay out as dividends at
least 90% of recurring cash profits. Two of the four dividends paid during the
year were normal dividends (non-PID), as a result of brought forward tax
losses and available capital allowances. The April 2021 and October 2021
dividends were paid as a PID and future dividends will be a mix of PID and
normal dividends as required.
The table below illustrates our cash flows over the period:
2022 2021
£m
£m
Opening cash 46.6 18.5
Net cash flow from operations 94.6 77.4
Dividends paid (75.4) (61.9)
Investment:
Property and other acquisitions (245.3) (236.8)
Development expenditure (63.7) (56.9)
Sale of properties 15.1 26.2
Financing:
Net proceeds from equity issuance 177.9 181.7
Net borrowing movement 293.7 98.4
Closing cash 243.5 46.6
Net cash flow from operations differs from EPRA earnings due to movements in
working capital balances, but remains the cash earned that is used to support
dividends paid.
The investment activity in the period has been funded by the proceeds from the
November 2021 equity raise and the June 2021 Sustainability Bond issuance.
Diluted EPRA NTA movement
£m Pence per
share
Diluted EPRA NTA at 31 March 2021 (Note 5) 1,530.2 57.2
EPRA earnings 86.2 3.1
Capital (revaluations and capital gains) 69.7 2.5
Dividends (80.4) (2.9)
Equity issuance 182.6 0.8
Other 0.7 -
Diluted EPRA NTA at 31 March 2022 (Note 5) 1,789.0 60.7
Our Total Accounting Return per share for the year ended 31 March 2022 is
11.2% (2021: 11.4%) of which 2.93 pence per share (5.1%) has been distributed
to shareholders and 3.5 pence per share (6.1%) is movement on EPRA NTA.
Jayne Cottam
CFO
23 May 2022
EPRA performance measures
As in previous years, we disclose in line with the EPRA Best Practice
Recommendations (latest version published October 2019). We believe that
publishing metrics in line with the industry standard benchmarks improves the
relevance of our accounts, in particular aiding investors with comparability
across real estate companies.
Summary table
2022 2021
EPRA EPS (p) 3.1 2.7
EPRA Cost Ratio (including direct vacancy costs) (%) 13.1 15.5
EPRA Cost Ratio (excluding direct vacancy costs) (%) 12.1 14.5
2022 2021
EPRA NRV (p) 66.7 63.2
EPRA NTA (p) 60.7 57.2
EPRA NDV (p) 62.7 56.0
EPRA NIY (%) 4.42 4.54
EPRA "topped-up" NIY (%) 4.43 4.55
EPRA Vacancy Rate (%) 1.2 1.3
Consolidated income statement
For the year ended 31 March 2022
2022 2021
Note EPRA Capital Total EPRA Capital Total
£m
and non-EPRA
£m
£m
and non-EPRA
£m
£m
£m
Gross rental and related income 132.2 4.7 136.9 117.0 3.8 120.8
Property operating expenses (5.7) (4.7) (10.4) (5.0) (3.8) (8.8)
Net rental income 2 126.5 - 126.5 112.0 - 112.0
Administrative expenses (11.7) - (11.7) (13.5) - (13.5)
Revaluation gains 6 - 69.4 69.4 - 41.6 41.6
Gain on sale of property 6 - 0.3 0.3 - 0.9 0.9
Share-based payment charge (0.7) - (0.7) (0.5) - (0.5)
Finance income 0.4 - 0.4 0.2 - 0.2
Finance costs 3 (28.4) - (28.4) (25.3) (7.1) (32.4)
Profit before taxation 86.1 69.7 155.8 72.9 35.4 108.3
Taxation 0.1 - 0.1 - - -
Profit for the year attributable to equity holders of the parent 86.2 69.7 155.9 72.9 35.4 108.3
EPS - basic & diluted 4 5.6p 4.1p
EPRA EPS - basic & diluted 4 3.1p 2.7p
There were no items of other comprehensive income or expense and therefore the
profit for the year also reflects the Group's total comprehensive income. All
income arises from continuing operations in the UK.
Consolidated balance sheet
As at 31 March 2022
Note 2021 2020
£m
£m
Non-current assets
Investment property 6 2,751.9 2,453.3
Property work in progress 15.2 13.6
Property, plant and equipment 0.5 0.3
Investments 3.8 0.7
Deferred tax asset 0.6 0.5
2,772.0 2,468.4
Current assets
Cash, cash equivalents and restricted cash 243.5 46.6
Trade and other receivables 28.6 27.4
Property assets held for sale 6 76.4 14.7
348.5 88.7
Total assets 3,120.5 2,557.1
Current liabilities
Trade and other payables 44.9 40.7
Head lease liabilities 0.1 0.1
Deferred revenue 7 30.1 25.4
75.1 66.2
Non-current liabilities
Borrowings 8 1,244.4 948.7
Head lease liabilities 5.4 5.4
Deferred revenue 7 6.0 6.1
1,255.8 960.2
Total liabilities 1,330.9 1,026.4
Net assets 1,789.6 1,530.7
Capital and reserves
Share capital 9 294.8 267.2
Share premium 918.5 763.1
Merger reserve 9 231.2 231.2
Retained earnings 345.1 269.2
Total equity 1,789.6 1,530.7
NAV per Ordinary Share - basic 5 60.7p 57.3p
- diluted 5 60.7p 57.3p
EPRA NTA per Ordinary Share - basic 5 60.7p 57.3p
- diluted 5 60.7p 57.2p
The financial statements were approved at a meeting of the Board of Directors
held on 23 May 2022 and signed on its behalf by:
Jonathan Murphy Jayne Cottam
CEO CFO
Consolidated statement of changes in equity
For the year ended 31 March 2022
Note Share Share Merger Retained Total
capital
premium
reserve
earnings
equity
£m
£m
£m
£m
£m
1 April 2020 241.3 595.5 231.2 234.4 1,302.4
Profit attributable to equity holders - - - 108.3 108.3
Total comprehensive income - - - 108.3 108.3
Issue of Ordinary Shares 9 24.2 161.8 - - 186.0
Issue costs 9 - (4.3) - - (4.3)
Dividends 10 1.6 10.1 - (73.6) (61.9)
Employee share-based incentives 0.1 - - 0.1 0.2
31 March 2021 267.2 763.1 231.2 269.2 1,530.7
Profit attributable to equity holders - - - 155.9 155.9
Total comprehensive income - - - 155.9 155.9
Issue of Ordinary Shares 9 26.9 155.7 - - 182.6
Issue costs 9 - (4.7) - - (4.7)
Dividends 10 0.6 4.4 - (80.4) (75.4)
Employee share-based incentives 0.1 - - 0.4 0.5
31 March 2022 294.8 918.5 231.2 345.1 1,789.6
Consolidated cash flow statement
For the year ended 31 March 2022
Note 2022 2021
£m
£m
Operating activities
Rent received 139.3 117.2
Interest paid and similar charges (25.0) (24.6)
Fees received 1.4 1.1
Interest received 0.4 0.2
Cash paid to suppliers and employees (21.5) (16.5)
Net cash inflow from operating activities 94.6 77.4
Investing activities
Purchase of investment property (241.8) (236.1)
Development expenditure (63.7) (56.9)
Proceeds from sale of property 15.1 26.2
Other investments and property, plant and equipment (3.5) (0.7)
Net cash outflow from investing activities (293.9) (267.5)
Financing activities
Issue of Ordinary Shares 9 182.6 186.0
Issue costs paid on issuance of Ordinary Shares 9 (4.7) (4.3)
Dividends paid (75.4) (61.9)
Repayment of loan/borrowings 8 (20.0) (190.0)
Long-term loans drawn down 8 315.9 298.1
Early repayment costs - (6.4)
Interest on head lease liabilities (0.1) (0.1)
Loan issue costs 8 (2.1) (3.2)
Net cash inflow from financing activities 396.2 218.2
Increase in cash, cash equivalents and restricted cash 196.9 28.1
Opening cash, cash equivalents and restricted cash 46.6 18.5
Closing cash, cash equivalents and restricted cash 243.5 46.6
Notes to the accounts
For the year ended 31 March 2022
1. Corporate information and operations
The Company is a public limited company, limited by shares, incorporated and
domiciled in England and Wales, whose shares are publicly traded on the main
market of the London Stock Exchange.
With effect from 1 April 2013, the Group has elected to be treated as a UK
REIT.
Basis of preparation
The financial information set out in this preliminary announcement is derived
from but does not constitute the Group's statutory accounts for the years
ended 31 March 2022 and 31 March 2021, and as such, does not contain all
information required to be disclosed in the financial statements prepared in
accordance with UK-adopted international accounting standards (IFRSs). The
financial information has been extracted from the Group's audited consolidated
statutory accounts. The auditor has reported on those accounts: their reports
were unqualified, did not draw attention to any matters by way of emphasis,
and did not contain statements under s498(2) or (3) of the Companies Act
2006.
In concluding that the going concern basis of preparation is appropriate for
the period to 31 May 2023, the Board of Directors have had reference to
financial forecasts showing that borrowing facilities are adequate, the Group
can operate within these facilities and meets its obligations when they fall
due. The Group has adequate headroom in its banking covenants and has been in
compliance throughout the previous 12 months. In reaching its conclusion, the
Directors have considered the specific impact of Brexit, COVID-19 and climate
change, concluding that none of these are significant risks to the Group based
on the current position.
The Annual Report will be posted to Shareholders on or before 31 July 2022.
The Preliminary Announcement was approved by the Board of Directors on 23 May
2022.
The Announcement and Annual Report can also be accessed on the internet at
www.assuraplc.com (http://www.assuraplc.com) .
2. Net rental income
2022 2021
£m
£m
Rental revenue 130.8 115.9
Service charge income 4.7 3.8
Other related income 1.4 1.1
Gross rental and related income 136.9 120.8
2022 2021
£m
£m
Gross rental and related income 136.9 120.8
Direct property expenses (5.7) (5.0)
Service charge expenses (4.7) (3.8)
Net rental income 126.5 112.0
During the year, £0.2m of rental revenue was generated from operations in
Ireland (2021: nil).
3. Finance costs
2022 2021
£m
£m
Interest payable 28.0 25.8
Interest capitalised on developments (1.6) (1.8)
Amortisation of loan issue costs 1.9 1.2
Interest on head lease liability 0.1 0.1
Total finance costs - presented through EPRA earnings 28.4 25.3
Write-off of loan issue costs - 0.7
Early repayment costs - 6.4
Total finance costs 28.4 32.4
Interest was capitalised on property developments at the appropriate cost of
finance at commencement. During the year this ranged from 4% to 5% (2021: 4%
to 5%).
4. Earnings per Ordinary Share
Earnings EPRA Earnings EPRA
2022
earnings
2021
earnings
£m
2022
£m
2021
£m
£m
Profit for the year 155.9 155.9 108.3 108.3
Revaluation gains (69.4) (41.6)
Gain on sale of property (0.3) (0.9)
Loan early repayment cost - -
EPRA earnings 86.2 72.9
Additional Company-specific adjustment
Add back: One-off Assura Community Fund contribution - 2.5
Adjusted EPRA earnings (exc. Community Fund contribution) 86.2 75.4
EPS - basic & diluted 5.6p 4.1p
EPRA EPS - basic & diluted 3.1p 2.7p
Adjusted EPRA EPS (exc. Community Fund contribution) 3.1p 2.8p
2022 2021
Weighted average number of shares in issue 2,780,731,947 2,658,746,619
Potential dilutive impact of share options 1,225,519 1,637,671
Diluted weighted average number of shares in issue 2,781,957,466 2,660,384,290
The current number of potentially dilutive shares relates to nil-cost options
under the share-based payment arrangements and is 1.2 million (2021: 1.6
million).
The EPRA measures set out above are in accordance with the Best Practices
Recommendations of the European Public Real Estate Association dated October
2019.
5. NAV per Ordinary Share
2022 IFRS EPRA NRV EPRA NTA EPRA NDV
£m
IFRS net assets 1,789.6 1,789.6 1,789.6 1,789.6
Deferred tax (0.6) (0.6) -
Fair value of debt - - 59.4
Real estate transfer tax 179.3 - -
EPRA adjusted 1,968.3 1,789.0 1,849.0
NTA per Ordinary Share - basic 60.7p 60.7p
60.7p 60.7p
- diluted
NRV per Ordinary Share - basic 66.8p
66.7p
- diluted
NDV per Ordinary Share - basic 62.7p
62.7p
- diluted
2021 IFRS EPRA NRV EPRA NTA EPRA NDV
£m
IFRS net assets 1,530.7 1,530.7 1,530.7 1,530.7
Deferred tax (0.5) (0.5) -
Fair value of debt - - (34.6)
Real estate transfer tax 158.8 - -
EPRA adjusted 1,689.0 1,530.2 1,496.1
NTA per Ordinary Share - basic 57.3p 57.3p
57.3p 57.3p
- diluted
NRV per Ordinary Share - basic 63.2p
63.2p
- diluted
NDV per Ordinary Share - basic 56.0p
56.0p
- diluted
2022 20.1
Number of shares in issue 2,948,359,637 2,671,853,938
Potential dilutive impact of share options 1,225,519 1,637,671
Diluted number of shares in issue 2,949,585,156 2,673,491,609
For definitions of the above EPRA NAV metrics, see the glossary.
Mark to market adjustments have been provided by the counterparty or by
reference to the quoted fair value of financial instruments.
6. Property assets
Investment property and investment property under construction ("IPUC").
Properties are stated at fair value as at 31 March 2022. The fair value has
been determined by the Group's external valuers CBRE, Cushman & Wakefield
and Jones Lang LaSalle. The properties have been valued individually and on
the basis of open market value (which the Directors consider to be the fair
value) in accordance with RICS Valuation - Professional Standards 2020 ("the
Red Book"). Valuers are paid on the basis of a fixed fee arrangement, subject
to the number of properties valued.
Investment 2022 IPUC Total Investment 2021 IPUC Total
£m
2022
2022
£m
2021
2021
£m
£m
£m
£m
Opening market value 2,404.3 43.5 2,447.8 2,075.9 57.5 2,133.4
Additions:
- acquisitions 233.5 - 233.5 228.9 - 228.9
- improvements 8.5 - 8.5 4.6 - 4.6
242.0 - 242.0 233.5 - 233.5
Development costs - 62.1 62.1 - 56.9 56.9
Transfers 42.1 (42.1) - 77.7 (77.7) -
Transfer to assets held for sale (76.0) - (76.0) (14.3) - (14.3)
Capitalised interest - 1.6 1.6 - 1.9 1.9
Disposals (0.5) - (0.5) (5.2) - (5.2)
Unrealised surplus on revaluation 65.4 4.0 69.4 36.7 4.9 41.6
Closing market value 2,677.3 69.1 2,746.4 2,404.3 43.5 2,447.8
Add head lease liabilities recognised separately 5.5 - 5.5 5.5 - 5.5
Closing fair value of 2,682.8 69.1 2,751.9 2,409.8 43.5 2,453.3
investment property
2022 2021
£m
£m
Market value of investment property as estimated by valuer 2,674.3 2,400.4
Add IPUC 69.1 43.5
Add capitalised lease premiums and rental payments 3.0 3.9
Add head lease obligations recognised separately 5.5 5.5
Fair value for financial reporting purposes 2,751.9 2,453.3
Completed investment property held for sale 76.0 14.3
Land held for sale 0.4 0.4
Total property assets 2,828.3 2,468.0
2022 2021
£m
£m
Investment property 2,647.3 2,400.4
Investment property held for sale 76.0 14.3
Total completed investment property 2,750.3 2,414.7
2022
£m
Assets held for sale at 1 April 2021 14.7
Disposals during the year (14.3)
Net transfers from investment property 76.0
Assets held for sale at 31 March 2022 76.4
Fair value hierarchy
The fair value measurement hierarchy for all investment property and IPUC as
at 31 March 2022 was Level 3 - Significant unobservable inputs (2021: Level
3). There were no transfers between Levels 1, 2 or 3 during the year.
Descriptions and definitions relating to valuation techniques and key
unobservable inputs made in determining fair values are as follows:
Valuation techniques used to derive Level 3 fair values
The valuations have been prepared on the basis of fair market value which is
defined in the Red Book as "the estimated amount for which an asset or
liability should exchange on the valuation date between a willing buyer and a
willing seller in an arms-length transaction after proper marketing and where
the parties had each acted knowledgeably, prudently and without compulsion".
Unobservable inputs
The key unobservable inputs in the property valuation are the net initial
yield, the equivalent yield and the ERV, which are explained in more detail
below. It is also worth noting that the properties are subject to physical
inspection by the valuers on a rotational basis (at least once every three
years).
In respect of 93% of the portfolio by value, the net initial yield ranges from
3.5% to 8.7% (2021: 3.4% to 8.1%) and the equivalent yield ranges from 3.3% to
8.5% (2021: 3.8% to 8.1%). A decrease in the net initial or equivalent yield
applied to a property would increase the market value. Factors that affect the
yield applied to a property include the weighted average unexpired lease term,
the estimated future increases in rent, the strength of the occupier covenant
and the physical condition of the property. Lower yields generally represent
properties with index-linked reviews, 100% NHS tenancies and longer unexpired
lease terms, ranging from 3.5% to 4.5%. Higher yields (range 5.0% to 8.0%) are
applied for a weaker occupier mix and leases approaching expiry. Our
properties have a range of occupier mixes, rent review basis and unexpired
terms. A 0.25% shift in either net initial or equivalent yield would have
approximately a £153 million (2021: £132 million) impact on the investment
property valuation.
The ERV ranges from £100 to £669 per sq.m (2021: £100 to £427 per sq.m),
in respect of 100% of the portfolio by value. An increase in the ERV of a
property would increase the market value. A 2% increase in the ERV would have
approximately a £54.8 million (2021: £48.3 million) increase in the
investment property valuation. The nature of the sector we operate in, with
long unexpired lease terms, low void rates, low occupier turnover and upward
only rent review clauses, means that a significant fall in the ERV is
considered unlikely.
7. Deferred revenue
2022 2021
£m
£m
Arising from rental received in advance 29.5 24.9
Arising from pharmacy lease premiums received in advance 6.6 6.6
36.1 31.5
Current 30.1 25.4
Non-current 6.0 6.1
36.1 31.5
8. Borrowings
2022 2021
£m
£m
At 1 April 948.7 841.5
Amount drawn down in year 315.9 298.1
Amount repaid in year (20.0) (190.0)
Loan issue costs (2.1) (3.2)
Amortisation of loan issue costs 1.9 1.6
Write-off of loan issue costs - 0.7
At 31 March 1,244.4 948.7
Due within one year - -
Due after more than one year 1,244.4 948.7
At 31 March 1,244.4 948.7
The Group has the following bank facilities:
1. 10-year senior unsecured bond of £300 million at a fixed rate of 3%
maturing July 2028, 10-year senior unsecured Social Bond of £300 million at a
fixed interest rate of 1.5% maturing September 2030 and 12-year senior
unsecured Sustainability Bond of £300 million at a fixed rate of 1.625%
maturing June 2033. The Social and Sustainability Bonds were launched in
accordance with Assura's Social & Sustainable Finance Frameworks
respectively to be used for eligible investment in the acquisition,
development and refurbishment of publicly accessible primary care and
community healthcare centres. The bonds are subject to an interest cover
requirement of at least 150%, maximum LTV of 65% and priority debt not
exceeding 0.25:1. In accordance with pricing convention in the bond market,
the coupon and quantum of the facility are set to round figures with the
proceeds adjusted based on market rates on the day of pricing.
2. Five-year club revolving credit facility with Barclays, HSBC, NatWest and
Santander for £125 million on an unsecured basis at an initial margin of
1.60% above SONIA subject to LTV and expiring in November 2024. The margin
increases based on the LTV of the subsidiaries to which the facility relates,
up to 1.95% where the LTV is in excess of 45%. The facility is subject to a
historical interest cover requirement of at least 175% and maximum LTV of 60%.
As at 31 March 2022, the facility was undrawn (2021: undrawn). The facility
was £300 million as at March 2021 and during the year the decision was taken
by the Company to reduce the facility to £125 million.
3. 10-year notes in the US private placement market for a total of £100
million. The notes are unsecured, have a fixed interest rate of 2.65% and were
drawn on 13 October 2016. An additional £107 million of notes were issued in
two series, £47 million in August 2019 and £60 million in October 2019, with
maturities of 10 and 15 years respectively and a weighted average fixed
interest rate of 2.30%. The facilities are subject to a historical interest
cover requirement of at least 175%, maximum LTV of 60% and a weighted average
lease length of seven years.
4. £150 million of unsecured privately placed notes in two tranches with
maturities of eight and ten years drawn on 20 October 2017. The weighted
average coupon is 3.04%. The facility is subject to a historical cost interest
cover requirement of at least 175%, maximum LTV of 60% and a weighted average
lease length of seven years.
The Group has been in compliance with all financial covenants on all of the
above loans as applicable throughout the year. Debt instruments held at
year-end have prepayment options that can be exercised at the sole discretion
of the Group. As at the year end no prepayment option has been exercised.
Borrowings are stated net of unamortised loan issue costs and unamortised bond
pricing adjustments totalling £12.6 million (2021: £8.3 million).
9. Share capital
Number Share capital Number Share capital
of shares
2022
of shares
2021
2022
£m
2021
£m
Ordinary Shares issued and fully paid
At 1 April 2,671,853,938 267.2 2,413,241,827 241.3
Issued 9 April 2020 - - 240,207,920 24.0
Issued 15 April 2020 - scrip - - 6,543,440 0.7
Issued 15 July 2020 - scrip - - 1,290,983 0.1
Issued 22 July 2020 - - 676,549 0.1
Issued 4 September 2020 - - 213,319 -
Issued 14 October 2020 - scrip - - 1,879,606 0.2
Issued 4 November 2020 - - 1,199,598 0.1
Issued 13 January 2021 - scrip - - 6,433,015 0.7
Issued 5 February 2021 - - 167,681 -
Issued 9 April 2021 682,128 0.1 - -
Issued 14 April 2021 - scrip 3,011,418 0.3 - -
Issued 7 July 2021 867,377 0.1 - -
Issued 14 July2021 - scrip 501,077 - - -
Issued 13 October 2021 - scrip 362,022 - - -
Issued 26 October 2021 240,000 0.1 - -
Issued 11 November 2021 267,554,740 26.7 - -
Issued 12 January 2022 - scrip 3,286,937 0.3 - -
Total share capital 2,948,359,637 294.8 2,671,853,938 267.2
There is no difference between the number of Ordinary Shares issued and
authorised. At the AGM each year, approval is sought from shareholders giving
the Directors the ability to issue Ordinary Shares, up to 10% of the Ordinary
Shares in issue at the time of the AGM.
The Ordinary Shares issued in April 2020, July 2020, October 2020, January
2021, April 2021, July 2021, October 2021 and January 2022 were issued to
shareholders who elected to receive Ordinary Shares in lieu of a cash dividend
under the Company scrip dividend alternative. In the year to 31 March 2022
this increased share capital by £0.6 million and share premium by £4.4
million (2021: £1.6 million and £10.1 million respectively).
In April 2020, a total of 240,207,920 new Ordinary Shares were placed at a
price of 77 pence per share. The equity raise resulted in gross proceeds of
£185.0 million which has been allocated appropriately between share capital
(£24.0 million) and share premium (£161.0 million). Issue costs totalling
£4.3 million were incurred and have been allocated against share premium.
In November 2021, a total of 267,554,740 new Ordinary Shares were placed at a
price of 68 pence per share. The equity raise resulted in gross proceeds of
£182.0 million which has been allocated appropriately between share capital
(£26.8 million) and share premium (£155.2 million). Issue costs totalling
£4.7 million were incurred and have been allocated against share premium.
The Ordinary Shares issued on 4 November 2020, 9 April 2021 and 26 October
2021 were issued as part consideration for the acquisition of medical centres.
The Ordinary Shares issued in July 2020, September 2020, February 2021 and
July 2021 relate to employee share awards under the Performance Share Plan.
The shares issued on 4 September 2020 (213,319) and a portion of the shares
issued on 7 July 2021 (230,934) were issued to the EBT on behalf of employees
under the PSP.
The merger reserve relates to the capital restructuring in January 2015
whereby Assura plc replaced Assura Group Limited as the top company in the
Group and was accounted for under merger accounting principles.
10. Dividends paid on Ordinary Shares
Payment date Pence per Number of 2022 2021
share
Ordinary Shares
£m
£m
15 April 2020 0.697 2,413,241,824 - 16.9
15 July 2020 0.71 2,654,993,187 - 18.9
14 October 2020 0.71 2,662,174,038 - 18.9
13 January 2021 0.71 2,665,253,242 - 18.9
14 April 2021 0.71 2,671,853,938 19.0 -
14 July 2021 0.74 2,675,547,484 19.8 -
13 October 2021 0.74 2,676,915,938 19.8 -
12 January 2022 0.74 2,945,072,700 21.8 -
80.4 73.6
The April dividend for 2022/23 of 0.74 pence per share was paid on 13 April
2022 and the July dividend for 2022/23 of 0.78 pence per share is currently
planned to be paid on 13 July 2022 with a record date of 10 June 2022.
A scrip dividend alternative was introduced with effect from the January 2016
quarterly dividend. Details of shares issued in lieu of dividend payments can
be found in Note 9.
The April 2020, October 2020, April 2021 and October 2021 dividends were PIDs
as defined under the REIT regime. Future dividends will be a mix of PID and
normal dividends as required.
11. LTV
The Group manages its capital structure and makes adjustments to it in light
of changes in economic conditions. To maintain or adjust the capital
structure, the Group may make disposals, adjust the dividend payment to
shareholders, return capital to shareholders or issue new shares.
The Group monitors capital structure with reference to LTV, which is
calculated as net debt divided by total property. The LTV percentage on this
basis is 36% at 31 March 2022 (31 March 2021: 37%).
2022 2021
£m
£m
Investment property 2,682.8 2,409.8
Investment property under construction 69.1 43.5
Held for sale 76.4 14.7
Total property 2,828.3 2,468.0
2022 2021
£m
£m
Borrowings 1,244.4 948.7
Head lease liabilities 5.5 5.5
Cash (243.5) (46.6)
Net debt 1,006.4 907.6
LTV 36% 37%
12. Commitments
At the year end the Group had 17 (2021: 16) committed developments which were
all on site with a contracted total expenditure of £166.4 million (2021:
£72.5 million) of which £65.2 million (2021: £36.6 million) had been
expended.
The Group is committed to invest up to £5 million in PropTech investor PI
Labs III LP, which can be requested on demand to cover investments that the
fund makes in qualifying, selected PropTech businesses. £0.7 million had been
invested as at 31 March 2022.
Glossary
AGM is the Annual General Meeting.
Average Debt Maturity is each tranche of Group debt multiplied by the
remaining period to its maturity and the result divided by total Group debt in
issue at the year end.
Average Interest Rate is the Group loan interest and derivative costs per
annum at the year end, divided by total Group debt in issue at the year end.
British Property Federation ("BPF") is the membership organisation, the voice,
of the real estate industry.
Building Research Establishment Environmental Assessment Method ("BREEAM")
assess the sustainability of buildings against a range of criteria.
Clinical Commissioning Groups ("CCGs") are the groups of GPs and other
healthcare professionals responsible for commissioning primary and secondary
healthcare services in their locality.
Code or New Code is the UK Corporate Governance Code 2018, a full copy of
which can be found on the website of the Financial Reporting Council.
Company is Assura plc.
Direct Property Costs comprise cost of repairs and maintenance, void costs,
other direct irrecoverable property expenses and rent review fees.
District Valuer ("DV") is the commercial arm of the Valuation Office Agency.
It provides professional property advice across the public sector and in
respect of primary healthcare represents NHS bodies on matters of valuations,
rent reviews and initial rents on new developments.
Earnings per Ordinary Share from Continuing Operations ("EPS") is the profit
attributable to equity holders of the parent divided by the weighted average
number of shares in issue during the period.
EBITDA is EPRA earnings before tax and net finance costs. In the current
period this is £114.1 million, calculated as net rental income (£126.5
million) less administrative expenses (£11.7 million) and share-based payment
charge (£0.7 million).
European Public Real Estate Association ("EPRA") is the industry body for
European REITs. EPRA is a registered trade mark of the European Public Real
Estate Association.
EPRA Cost Ratio is administrative and operating costs divided by gross rental
income. This is calculated both including and excluding the direct costs of
vacant space.
EPRA earnings is a measure of profit calculated in accordance with EPRA
guidelines, designed to give an indication of the operating performance of the
business, excluding one-off or non-cash items such as revaluation movements
and profit or loss on disposal. See Note 4.
EPRA EPS is EPRA earnings, calculated on a per share basis. See Note 4.
EPRA NAV is IFRS NAV adjusted to adjust certain assets to fair value and
exclude long‑term items not expected to crystallise. This has now been
replaced by EPRA NTA. See Note 5.
EPRA Net Disposal Value ("EPRA NDV") is the balance sheet net assets adjusted
to reflect the fair value of debt and derivatives. See Note 5.
EPRA Net Reinstatement Value ("EPRA NRV") is the balance sheet net assets
excluding deferred tax and adjusted to add back theoretical purchasers' costs
that are deducted from the property valuation. See Note 5.
EPRA Net Tangible Assets ("EPRA NTA") is the balance sheet net assets
excluding deferred taxation. See Note 5.
EPRA NIY is annualised rental income based on cash rents passing at the
balance sheet date, less non-recoverable property operating expenses, divided
by the market value of property, increased with (estimated) purchasers' costs.
EPRA "topped up" NIY incorporates an adjustment to the EPRA NIY in respect of
the expiration of rent-free periods or other unexpired lease incentives.
EPRA NNNAV is EPRA NAV adjusted to include the fair value of debt, financial
instruments and deferred tax. This has now been replaced by EPRA NDV.
EPRA Vacancy Rate is the ERV of vacant space divided by the ERV of the whole
portfolio.
Equivalent Yield is a weighted average of the Net Initial Yield and
Reversionary Yield and represents the return a property will produce based
upon the timing of the income received. The true equivalent yield assumes
rents are received quarterly in advance. The nominal equivalent assumes rents
are received annually in arrears.
Estimated Rental Value ("ERV") is the external valuers' opinion as to the open
market rent which, on the date of valuation, could reasonably be expected to
be obtained on a new letting or rent review of a property.
GMS is General Medical Services.
Gross Rental Income is the gross accounting rent receivable.
Group is Assura plc and its subsidiaries.
IFRS is International Financial Reporting Standards adopted pursuant to
Regulation (EC) 1606/2002 as it applies in the EU.
Interest Cover is the number of times net interest payable is covered by
EBITDA. In the current period net interest payable is £28.0 million, EBITDA
is £114.1 million, giving interest cover of 4.1 times.
KPI is a Key Performance Indicator.
Like-for-like represents amounts calculated based on properties owned at the
previous year end.
Loan to Value ("LTV") is the ratio of net debt to the total value of property
assets. See Note 11.
Mark to Market is the difference between the book value of an asset or
liability and its market value.
MSCI is an organisation that provides performance analysis for most types of
real estate and produces an independent benchmark of property returns. The
MSCI All Healthcare Index refers to the MSCI UK Annual Healthcare Property
Index, incorporating all properties reported to MSCI for the 12 months to
December that meet the definition of healthcare.
NAV is Net Asset Value.
Net debt is total borrowings plus head lease liabilities less cash. See Note
11.
Net Initial Yield ("NIY") is the annualised rents generated by an asset, after
the deduction of an estimate of annual recurring irrecoverable property
outgoings, expressed as a percentage of the asset valuation (after notional
purchasers' costs). Development properties are not included.
Net Rental Income is the rental income receivable in the period after payment
of direct property costs. Net rental income is quoted on an accounting basis.
Operating efficiency is the ratio of administrative costs to the average gross
investment property value. This ratio during the period equated to 0.45%. This
is calculated as administrative expenses of £11.7 million divided by the
average property balance of £2,603 million (opening £2,453 million plus
closing £2,752 million, divided by two).
Primary Care Network ("PCN") is a GP practice working with local community,
mental health, social care, pharmacy, hospital and voluntary services to build
on existing primary care services and enable greater provision of integrated
health services within the community they serve.
Primary Care Property is the property occupied by health services providers
who act as the principal point of consultation for patients such as GP
practices, dental practices, community pharmacies and high street
optometrists.
Property Income Distribution ("PID") is the required distribution of income as
dividends under the REIT regime. It is calculated as 90% of exempted net
income.
PSP is Performance Share Plan.
Real Estate Investment Trust ("REIT") is a listed property company which
qualifies for and has elected into a tax regime which exempts qualifying UK
profits, arising from property rental income and gains on investment property
disposals, from corporation tax, but requires the distribution of a PID.
Rent Reviews take place at intervals agreed in the lease (typically every
three years) and their purpose is usually to adjust the rent to the current
market level at the review date.
Rent Roll is the passing rent (i.e. at a point in time) being the total of all
the contracted rents reserved under the leases, on an annual basis. At March
2022 the rent roll was £135.7 million (March 2021: £121.7 million) and the
growth in the year was £14.0 million.
Retail Price Index ("RPI") is an official measure of the general level of
inflation as reflected in the retail price of a basket of goods and services
such as energy, food, petrol, housing, household goods, travelling fares, etc.
RPI is commonly computed on a monthly and annual basis.
Reversionary Yield is the anticipated yield which the initial yield will rise
to once the rent reaches the ERV and when the property is fully let. It is
calculated by dividing the ERV by the valuation.
RPI Linked Leases are those leases which have rent reviews which are linked to
changes in the RPI.
Total Accounting Return is the overall return generated by the Group including
the impact of debt. It is calculated as the movement on EPRA NTA (see glossary
definition and Note 5) for the period plus the dividends paid, divided by the
opening EPRA NTA. Opening EPRA NTA (i.e. at 31 March 2021) was 57.2 pence per
share, closing EPRA NTA was 60.7 pence per share, and dividends paid total
2.93 pence per share giving a return of 11.2% in the year.
Total Contracted Rent Roll or Total Contracted Rental Income is the total
amount of rent to be received over the remaining term of leases currently
contracted. For example, a lease with rent of £100 and a remaining lease term
of ten years would have total contracted rental income of £1,000. At March
2022, the total contracted rental income was £1.81 billion (March 2021:
£1.57 billion) and the growth in the year was £240 million.
Total Property Return is the overall return generated by properties on a
debt-free basis. It is calculated as the net rental income generated by the
portfolio plus the change in market values, divided by opening property assets
plus additions. In the year to March 2022, the calculation is net rental
income of £126.5 million plus revaluation of £69.4 million giving a return
of £195.9 million, divided by £2,748 million (opening investment property
£2,400.4 million and IPUC £43.5 million plus additions of £242.0 million
and development costs of £62.1 million). This gives a Total Property Return
in the year of 7.1%.
Total Shareholder Return ("TSR") is the combination of dividends paid to
shareholders and the net movement in the share price during the period,
divided by the opening share price. The share price at 31 March 2021 was 72.1
pence, at 31 March 2022 it was 66.9 pence, and dividends paid during the
period were 2.93 pence per share.
UK GBC is the UK Green Building Council.
Weighted Average Unexpired Lease Term ("WAULT") is the average lease term
remaining to first break, or expiry, across the portfolio weighted by
contracted rental income.
Yield on cost is the estimated annual rent of a completed development divided
by the total cost of development including site value and finance costs
expressed as a percentage return.
Yield shift is a movement (usually expressed in basis points) in the yield of
a property asset or like-for-like portfolio over a given period.
Yield compression is a commonly used term for a reduction in yields.
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