TIDMAGR
RNS Number : 9438O
Assura PLC
23 May 2018
Assura plc
Accelerated investment, improved balance sheet and strong
financial performance
23 May 2018
Assura plc ("Assura"), the leading primary care property
investor and developer, is pleased to announce its results for the
year to 31 March 2018:
Continued growth of the portfolio
-- 28.8% increase in investment property to GBP1.7 billion (2017: GBP1.3 billion)
-- 6.3% growth in diluted EPRA NAV per share to 52.4 pence (2017: 49.3 pence)
-- 22.3% increase in rent roll to GBP91.0 million (2017: GBP74.4 million)
Delivering for investors
-- 4.2% increase in EPRA EPS to 2.5 pence (2017: 2.4 pence)
-- Profit before tax of GBP71.8 million (2017: GBP95.2 million)
reduced reflecting the net impact of the GBP56.4 million early
repayment costs payable to Aviva
-- Dividend increased by 9.1% to 2.455 pence (2017: 2.25 pence)
Strengthened balance sheet enabling reduction in cost of
debt
-- Over GBP400 million, gross of expenses, raised from equity
placing in June 2017 and share issue in December 2017
-- Weighted average cost of debt reduced by 94 bps to 3.12% (March 2017: 4.06%)
-- GBP211 million of Aviva debt repaid in January 2018
-- Unsecured revolving credit facility increased to GBP300
million at initial margin of 150 bps
-- GBP150 million notes in two tranches privately placed in
October 2017, weighted average coupon 3.04%, maturities of eight
and ten years
Well positioned, sector leader in a market that is in
significant need of investment
-- Current LTV of 26% (2017: 37%) giving Assura significant headroom for future investment
-- Strong pipeline with GBP152 million of acquisitions and developments
-- Scalable internally managed operating model, with in-house development team
-- Consensus that primary care must play a bigger role in health provision
-- Significant underinvestment in the nation's primary care
premises, many GP premises not currently fit for purpose
-- Group operates in a highly fragmented market: portfolio of
518 medical centres compares with a total UK market of
approximately 9,000 surgery buildings
Jonathan Murphy, CEO, said:
"We have delivered against our key objectives for the past year
of growing the portfolio through acquisitions, strengthening the
balance sheet to allow us to capitalise on the opportunities in our
market and delivering sustainable returns to investors. Primary
care remains key to the future requirements of the NHS. Our unique
model, which delivers significant value to the NHS, and diversified
funding structure, positions us well to deliver the improvements
needed for a primary care estate that is fit for the future."
Summary Results
2018 2017 Change
Financial performance
EPRA earnings per share 2.5p 2.4p 4.2%
Profit before tax GBP71.8m GBP95.2m (24.6%)
Net rental income GBP80.2m GBP67.9m 18.1%
Dividend per share 2.455p 2.25p 9.1%
Property valuation and performance
Investment property GBP1,733m GBP1,345m 28.8%
Diluted EPRA NAV per share 52.4p 49.3p 6.3%
Rent roll GBP91.0m GBP74.4m 22.3%
Financing
Loan to value ratio 26% 37% (11ppts)
Undrawn facilities and cash GBP199m GBP123m 61.8%
Weighted average cost of debt 3.12% 4.06% (94bps)
For further information, please contact:
Assura plc: Tel: 01925 420
Jonathan Murphy 660
Jayne Cottam
Orla Ball
Edelman: Tel: 0203 047
John Kiely 2546
Brett Jacobs
Rob Yates
This announcement contains inside information as defined in
Article 7 of the EU Market Abuse Regulation No 596/2014 and has
been announced in accordance with the Company's obligations under
Article 17 of that Regulation.
Presentation and webcast:
A presentation will be held for analysts and investors on 23 May
2018 at 11am London time, with a webcast available from our website
or via the following link:
http://webcasting.brrmedia.co.uk/broadcast/5ad4d1f35a296618f1792adc
Notes to Editors
Assura plc, a constituent of the FTSE 250 and the EPRA* indices,
is a UK REIT and long-term investor in and developer of primary
care property. The company, headquartered in Warrington, works with
GPs, health professionals and the NHS to create innovative property
solutions in order to facilitate delivery of high quality patient
care in the community. At 31 March 2018, Assura's property
portfolio was valued at GBP1,733 million.
Further information is available at www.assuraplc.com
*EPRA is a registered trademark of the European Public Real
Estate Association.
Chairman's statement
Dear Shareholder
Assura exists to provide premises to the UK's primary care
sector and we are proud of our role in supporting the public health
of the UK. The NHS is often maligned, but it is in fact a great
organisation providing free health services to everyone, based on
need not means, and at a cost that is competitive in international
terms. It is widely accepted now that the NHS needs to leverage its
investment in primary care more effectively in order to relieve the
strain on secondary care and to reduce costs whilst improving
patient outcomes. When the Government makes this change of
emphasis, as surely it must, Assura will be well placed to assist
by providing further private sector capital to enhance primary care
premises, enabling GPs to provide more services and attend to more
patients.
The NHS is Assura's prime customer, accounting for 84% of our
total rent roll. Some 7.5% of the UK's NHS patients now use our
premises. This important social dimension to our work is reflected
in our alignment with the values of the NHS and our commitment to
the highest standards of ethics and integrity.
Over the last 12 months, Assura has continued to grow, providing
more and better premises to the primary care sector. Our property
portfolio has been expanded significantly, through both
acquisitions and new developments. We now own and manage 518
premises, up by 120 since last year. Over the period under review
we have added GBP314 million of property and this, together with
the GBP170 million of property additions in the previous year,
increased our net rental income by 18% to GBP80.2 million.
Thanks to the continued support of our shareholders we were able
to raise GBP409 million in two separate equity raises in June 2017
and December 2017. This support has enabled us to fund our
investment programme and restructure some of our more expensive
debt facilities. We are well advanced in implementing our plan to
deploy these proceeds.
We remain the UK's largest developer and owner-manager of
primary healthcare property with a property portfolio valued at
over GBP1.7 billion. The increased scale of our operations and our
strong financial position have assisted us in obtaining better
terms on our debt. We have signed new unsecured debt facilities of
GBP200 million, lowering the overall cost of borrowings by 94 basis
points to 3.12%.
Following the two equity raises in the year our loan to value
("LTV") fell from 37% to 26% at the year end. We have stated
previously that we are comfortable with LTV increasing to a level
between 40% and 50%, so the current position gives us a significant
level of headroom for future investment. We are continuing to
source attractive opportunities and currently have a GBP152 million
pipeline of further property acquisitions and developments in
solicitors' hands.
A key part of our strategy is our unique partnership with GPs,
to whom we offer all elements of property service. This provides
GPs with a long-term partner approach throughout the lifecycle of a
medical centre, from first idea for a new surgery through the NHS
business case; the development and build of the new surgery; moving
in; sale of the old property; and maintenance of the new premises
over the next 25 plus years. Our ability to "develop, invest and
manage" gives us a crucial advantage when securing new development
opportunities and other asset management initiatives. Moreover, our
model is highly scalable meaning that, as we grow, the benefits of
scale accrue to shareholders through a growing dividend stream. The
benefit of this model has been illustrated again this year as net
rental income rose by 18% to GBP80.2 million and EPRA earnings rose
by 24% to GBP50 million, and profit before tax was GBP71.8
million.
Dividends
We aim to deliver superior risk adjusted returns to our
shareholders and a key component of this return is a growing,
covered dividend. In January 2018 the Board increased the quarterly
dividend payment by 9% to 0.655 pence per share. This represents an
increase of nearly one third from the level of 0.5 pence per share
paid three years ago.
Shareholder engagement
We are committed to the highest standards of financial
transparency and believe a significant investment in investor
relations activity is a key responsibility for any public company.
We have held 141 meetings with investors during the year and I am
delighted to welcome a number of significant new shareholders onto
our register.
Our people and the Board
Following the appointment of Jonathan Murphy as CEO in February
2017, we then recruited a very talented new CFO in Jayne Cottam,
who joined us in September 2017. Jayne brings a wealth of financial
and debt strategy experience as well as a keen mind. Andrew Darke
retired from the Board on 31 March 2018 after 14 years of sterling
service, although I am pleased to report that he continues to
support the business as an advisor.
I indicated to the Board last year that I was considering
retiring, and as a result Ed Smith was appointed as a
Non--Executive Director in October 2017 with a view to succeeding
me as Chairman. On 22 March 2018, I announced my intention to
retire at the conclusion of the AGM and the Board has announced
that it intends to appoint Ed Smith as Chairman at that time. Ed
has a long and successful career in finance as well as deep
experience of the health service and government and this will serve
us well when he becomes Chairman of this Company.
Assura has undergone much change since I joined back in August
2011. We refocused to become a pure property company, sold non-core
activities, simplified the Group structure, launched five equity
issues to raise a total of GBP933 million, refinanced our debt,
became a REIT and entered the FTSE 250 index. Over this period, our
property portfolio increased from some GBP500 million to GBP1.7
billion today, and our market capitalisation increased from GBP120
million at its low point to just over GBP1.4 billion today. The
business is now in excellent shape with a leadership position in
its chosen market, a supportive shareholder base and a strong
financial position to underpin future growth.
We have 50 people employed in Assura and, on behalf of the
Board, I would like to thank each and every one of them for their
hard work, dedication and contribution to the success of the
business. They are the key to Assura's success.
Looking ahead
Assura has the strongest balance sheet in the sector and we are
well placed to continue investing in primary care property, which
remains a very fragmented market. In addition, we remain focused on
carefully managing our existing portfolio with our in-house
management team striving to deliver the highest standard of
customer service and operational excellence for the nation's GPs,
while also maximising the value of our portfolio through asset
management initiatives.
Although the policy consensus across all mainstream parties to
increase emphasis and investment in primary care is more positive
now than ever before, we remain frustrated by the slow progress in
transforming policy into meaningful investment. Everyone seems to
agree that better healthcare hinges on more care being provided in
the primary sector. Having more doctors and better leveraging their
expertise through ancillary healthcare professionals will require
more and better premises. We stand ready to support this essential
investment in NHS infrastructure by offering a powerful combination
of the right skills, relationships and capital to make such plans a
reality on the ground.
Simon Laffin
Non-Executive Chairman
22 May 2018
CEO review
Overview
Assura has continued to deliver significant growth in 2018,
adding 120 medical centres to create a portfolio of 518 properties
at the year end.
The UK primary care market remains highly fragmented with
approximately 9,000 medical centres and so this represents a market
share of around 6%.
Assura maintains a distinct model that offers investment,
development and management of premises to our GP customers. This
multi-faceted approach enables us to understand better the
requirements of the GPs and to anticipate their future needs, thus
giving us an advantage in securing investment or development
opportunities. This has been a key factor behind our success in
adding GBP314 million of property additions. We continue to source
many schemes off market, taking advantage of our relationships and
market knowledge to identify opportunities that are not widely
advertised.
I would specifically highlight four successful portfolio
transactions in the year which between them included 57 properties
for a gross consideration of GBP134 million. They neatly reflect
our long-term approach to business as we had been patiently
tracking several of these deals for a number of years to ensure
that we were in pole position when the opportunities
materialised.
Delivering long-term outperformance in property returns
Assura is a constituent of the IPD All Healthcare Index and over
the last five years we have delivered an annualised ungeared return
of 9.9% which compares favourably to the Index at 9.4% over the
same period.
Moreover, these strong returns have been achieved against a
background of historically low levels of development activity.
Development activity enhances our returns in two ways: firstly, we
are typically able to develop new premises at an effective yield on
cost that is 100 basis points higher than achieved through buying
existing premises; and secondly, developments provide evidence of
construction cost inflation that in turn drives rental growth.
Our 518 medical centres, which are geographically diverse and
collectively serve more than 7.5% of the UK's population, currently
have a rent roll of GBP91.0 million. Our investment approach is to
identify and acquire those assets we believe are best in class in
their local catchment areas and facilitate provision of a broad
range of services to their local communities. We believe such
properties provide better prospects for lease renewal on expiry and
so drive higher property returns over the long term.
A good example of this approach is seen in our acquisition of
Argyle Surgery Medical Centre, which was acquired off market after
a direct approach through our marketing team. This centre today
serves over 24,000 patients and as such is the largest practice in
Wales. It provides almost 20 additional services on site including
counselling, phlebotomy, asthma treatment, coronary disease clinics
and a minor surgery suite.
At the same time, we are prepared to acquire shorter leases, and
then use our property skills to redevelop or enhance the premises,
whilst seeking to re-gear the lease to a longer period.
Rental income
The key driver of our property return is the income from our
long-term leases. In the year, rental growth was 1.7% from settled
rent reviews. Most of our rent reviews are on an open market basis,
set by reference to rental awards agreed with the District Valuer
on new schemes. This means that rents are influenced by land and
construction cost inflation over the medium term. While there has
been significant inflation in these costs in recent years, this is
not yet fully reflected in our passing rents as the slowdown in new
schemes has reduced the available evidence of that inflation. Our
portfolio is well placed to capture this rental growth once new
development activity picks up and this gives us confidence in
rental growth prospects over the medium term.
Capital growth
The balance of our ungeared annualised return is generated from
capital growth, which has seen a like-for-like valuation growth of
6.9% in the past year. This increase has primarily come from a
movement in yields, with our net equivalent yield moving down by 31
basis points over the past year. The portfolio net initial yield as
at 31 March 2018 was 4.80%. We completed six developments during
the year at a total development cost of GBP31.3 million. This has
added GBP1.6 million to our annual rent roll.
We also add value through active asset management of our
properties, working with our GP tenants on proposals for physical
extensions or agreeing new or extended lease terms. We have done
this at Wide Way Medical Centre, where working with the practice
and the NHS, with part funding from the NHS London Improvement
Grant Fund, we were able deliver a 195 sq.m extension. This
provides five new patient consultation rooms, a minor operations
suite and a conference room, as well as improved reception, waiting
and administration areas allowing the premises to provide seven day
extended access to primary care. As part of this new extension
Assura was able to agree a new 25-year lease with the GP tenant.
Overall, during the year we agreed three extensions, 13 new leases
and 15 lease extensions, significantly improving surgery provision
for some 235,000 patients, whilst adding a further GBP0.5 million
to our rent roll.
The combined impact of our investment and asset management
activity has been to achieve a 6% growth in EPRA NAV to 52.4 pence
per share.
Maximising operational efficiency
GPs are our principal customer, so we naturally measure
ourselves against their satisfaction with what we do for them and
the best test of this is whether our GPs would recommend us to
other GPs. In our annual tenant satisfaction survey, over 96% of
our tenants said they would recommend us as potential landlords to
other GPs. This is reflected in the fact that our GPs remain our
greatest source of referrals for new business. We continue to focus
on understanding their evolving needs and demands, so we can be at
the forefront of the significant investment required in improving
premises going forward.
Our team of portfolio and investment managers are responsible
for identifying value enhancing asset management opportunities,
such as lease extensions and redevelopments within our existing
estate, as well as new acquisition opportunities.
This approach enables us to optimise the efficiency with which
we can translate increased rental income into underlying profit and
hence dividends. In the year we have delivered a 24% growth in EPRA
earnings to GBP50.0 million, which has been achieved from a
combination of 18% growth in our net rental income and a reduction
from 14% to 13% in our EPRA Cost Ratio. Profit before tax was
GBP71.8 million.
The overall impact of all of these factors has enabled us to
increase our quarterly dividend from January 2018 by 9% to 0.655
pence per share, which is the sixth successive dividend increase
over a period of six years.
Continued focus on our specialist sector
Assura maintains a proprietary database of every primary care
property in the UK from which we can identify and analyse potential
acquisition opportunities. This unique market perspective has been
a key contributor to our continued success in expanding our
portfolio. We closed the year with a portfolio of 518 properties
and a valuation in excess of GBP1.7 billion.
The ongoing growth in the portfolio has largely been achieved
through acquisitions. In the year we completed GBP314 million of
property additions, which was the largest contributor to the GBP388
million increase in investment property in the year. This has
enabled our rent roll to grow by 22% to GBP91.0 million.
Meanwhile our in-house development team is currently busier than
it has been for a number of years. We completed six schemes in the
year for a gross development cost of GBP31.3 million and the number
of potential opportunities has increased markedly. We are currently
on site at a further five schemes with a gross development cost of
GBP23.6 million. The pipeline where we expect to be on site within
the next 12 months remains strong, comprising a further 10 schemes
with a gross development cost of GBP47 million.
This increased level of activity is encouraging and has resulted
in us increasing the size of our development team from two to five
colleagues as we look to both secure more schemes and increase the
proportion that we manage in-house.
There continue to be delays in implementing approved schemes
under the Estates and Technology Transformation Fund, although we
are encouraged by the announcement in the Autumn Budget of GBP2.6
billion being made available to support capital projects by
Sustainability and Transformation Partnerships ("STPs"). More than
GBP700 million of this total has already been allocated to the most
advanced projects, including a number of primary care schemes, and
we remain optimistic that these central initiatives will result in
increased future investment across the NHS estate. Assura has the
skills, resources and capital to support these plans when they
convert into action.
Funding further growth
The success in delivering growth in our portfolio has only been
possible thanks to the continued support of our shareholders and we
successfully raised GBP409 million in two separate equity issues in
June 2017 and December 2017.
In October 2017 we secured GBP150 million from a UK private
placement with Legal & General Investment Management with a
maturity split between eight and 10 years and a blended interest
rate of 3.04%. In addition, the available facilities under the RCF
were increased to GBP300 million, which is a variable rate facility
at an initial margin of 150 basis points. In line with Assura's
funding strategy, the new notes and the RCF are unsecured.
Our LTV was 26% at the year end. We are comfortable with our LTV
increasing to a level between 40% and 50% and so we retain
significant headroom to fund future growth. We are continuing to
source attractive investment opportunities and we currently have a
pipeline of further property acquisitions and developments of
GBP152 million in solicitors' hands.
Market developments
Estates have been a continuing theme of focus for STPs this
year, with government expecting detailed estates strategies to be
submitted by all areas this summer. Through work with the Nuffield
Trust, we have played our part in supporting a number of STPs with
their thinking and planning on primary care infrastructure matters.
Providing a wider range of health services closer to home, from a
broader range of primary care professionals, creates a better care
experience for patients and the conditions for better outcomes for
the NHS. The outdated and unfit converted residential stock of
surgery premises must evolve into purpose built medical centres,
with the capacity and the capability to meet the challenges the NHS
will face in the future. The NHS desperately needs more investment
in its primary care estate, which is largely owned now by GPs
themselves, and we stand ready to provide capital to deliver this
investment.
In the past year the importance of improving the quality of
physical infrastructure for primary care has been explicitly
recognised as being part of the solution to broader NHS challenges,
with the Government's formal response to the Naylor Review largely
accepting its recommendations as well as highlighting the need for
private capital to play a role in funding the investment that will
be required.
Executive Board
I am delighted to report that Jayne Cottam was appointed Chief
Financial Officer in September, joining us from the leading private
house builder, Morris Homes. She serves on both the Group and
Executive Boards.
Andrew Darke stepped down from both Boards at the end of the
year. Following this change, I have taken the opportunity to rejig
the Executive Board to include the three Heads of Department from
our property team who join Jayne Cottam, our CFO, Orla Ball, our
Head of Legal, and myself. The three new members are: Spencer
Kenyon (Head of Portfolio Management) who has been with the
business since its formation and has managed the portfolio
throughout this time; Simon Gould (Head of Development) who has led
our development efforts for the last decade; and Patrick Lowther
(Head of Investment) who joined us last year having previously been
a property fund manager at Savills and so benefits from extensive
investment management experience.
The new Executive Board has been in place only a few months, but
I am pleased with the progress the newly established team has made
already and I look forward to working with them as we enter the
next chapter in Assura's development as a leading real estate
business and partner to the NHS.
Outlook
The political agenda continues to be dominated by Brexit, but in
its 70th anniversary year, the NHS is one of the few domestic
issues managing to secure meaningful debate. The Prime Minister has
publicly accepted the need for a long-term funding settlement for
the health service, and MPs from all parties are working together
on potential solutions. Assura firmly believes in the NHS.
Regardless of the politics, the fundamentals for primary care
estate will remain steadfast: to reduce pressure on hospitals,
improve access to general practice and help the people who rely on
health services the most to reach them closer to home. GP surgery
buildings and primary care premises must be fit for the future.
Jonathan Murphy
CEO
22 May 2018
Business review
Portfolio as at 31 March 2018 GBP1,732.7 million (31 March 2017:
GBP1,344.9 million)
Our business is based on our investment portfolio of 518
properties. This has a passing rent roll of GBP91.0 million (March
2017: GBP74.4 million), 84% of which is underpinned by the NHS. The
WAULT is 12.6 years and 74% of the rent roll will still be
contracted in 2028.
At 31 March 2018 our portfolio of completed investment
properties was valued at a total of GBP1,709.6 million, including
investment properties held for sale of GBP7.4 million (March 2017:
GBP1,315.3 million and GBPnil), which produced a net initial yield
("NIY") of 4.80% (March 2017: 5.10%). 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 4.98%
(March 2017: 5.29%). Adjusting this Royal Institution of Chartered
Surveyors ("RICS") standard measure to reflect the advanced payment
of rents, the true equivalent yield is 5.15% (March 2017:
5.47%).
Our EPRA NIY, based on our passing rent roll and latest annual
direct property costs, was 4.77% (March 2017: 5.05%).
2018 2017
GBPm GBPm
----------------------- ------ ------
Net rental income 80.2 67.9
Valuation movement 79.4 56.5
----------------------- ------ ------
Total Property Return 159.6 124.4
----------------------- ------ ------
Expressed as a percentage of opening investment property plus
additions, Total Property Return for the year was 9.7%, which is
the same return as in 2017.
Our annualised Total Return over the five years to 31 December
2017 as calculated by IPD was 9.9% compared with the IPD All
Healthcare Benchmark of 9.4% over the same period.
The net valuation gain in the year of GBP79.4 million comprises
a 6.86% uplift on a like-for-like basis net of movements relating
to properties acquired in the period. The uplift has arisen due to
the downward pressure on yields with increased demand for assets in
the sector. Despite the downward pressure, the NIY on our assets
continues to represent a substantial premium over the 15-year UK
gilt which traded at 1.588% at 31 March 2018.
Investment and development activity
We have invested substantially 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:
2018
GBPm
------------------------------------------- ------
Acquisition of completed medical centres 278.9
Developments/forward funding arrangements 31.7
Like-for-like portfolio (improvements) 6.0
------------------------------------------- ------
Total capital expenditure 316.6
------------------------------------------- ------
The bulk of the growth in our investment portfolio has come from
the acquisition of 115 properties for GBP278.9 million during the
period.
Despite the continued delay in NHS approval of new developments,
we have completed six developments during the period (all under
forward funding agreements) with a total development cost of
GBP31.3 million. This has added GBP1.6 million to our annual rent
roll and generated a 5.2% yield on cost. The GBP31.7 million in the
table above is development spend during the year, whereas the
GBP31.3 million relates to projects completed.
During the year we recorded a revaluation gain of GBP6.2 million
in respect of investment property under construction (2017: GBP0.8
million).
Development gains are recorded based on the stage of completion
whilst there has also been uplift reflecting an element of yield
shift, as with the existing portfolio.
As at 31 March 2018, we had five developments on site (four
under forward funding agreements), with a total committed
investment value of GBP23.6 million, and a further 10 which we
would hope to be on site shortly (estimated cost of GBP47
million).
Live developments and forward funding arrangements
Estimated
completion Development Costs
date costs to date Size
----------------- ------------ ------------ --------- ---------
Brixworth May-18 GBP1.2m GBP0.1m 600 sq.m
Darley Dale Sep-18 GBP2.3m GBP1.0m 773 sq.m
2,069
Durham Apr-18 GBP10.2m GBP9.7m sq.m
2,212
Porthcawl Feb-19 GBP7.2m GBP2.0m sq.m
Stow-on-the-Wold Dec-18 GBP2.7m GBP1.0m 742 sq.m
----------------- ------------ ------------ --------- ---------
Portfolio management
We have continued to deliver rental growth and have successfully
concluded 182 rent reviews during the year to generate a weighted
average annual rent increase of 1.70% (2017: 1.57%) on those
properties. Our portfolio benefits from a 28% weighting in fixed,
RPI and other uplifts which generated an average uplift of 3.14%
during the period. The majority of our portfolio is subject to open
market reviews and these have generated an average uplift of 0.68%
during the period.
We have secured 13 new tenancies with an annual rent roll of
GBP0.4 million, in addition to 15 lease re-gears (rent of GBP0.9
million) and three extensions to existing buildings (rent of GBP0.1
million). Our EPRA Vacancy Rate was 1.8% (March 2017: 2.1%).
Administrative expenses
The Group analyses cost performance by reference to our EPRA
Cost Ratios (including and excluding direct vacancy costs) which
were 13.0% and 12.0% respectively (2017: 13.7% and 12.4%).
We also measure our operating efficiency as the proportion of
administrative costs to the average gross investment property
value. This ratio during the period was 0.51% (2017: 0.57%) and
administrative costs stood at GBP7.9 million (2017: GBP7.0
million).
Financing
In line with our financing strategy, we have continued the move
from secured to unsecured facilities and increased our share
capital base through two equity issuances.
In May 2017, we extended the revolving credit facility to GBP250
million. The terms were unchanged, being unsecured and at an
initial margin of 150 basis points above LIBOR, subject to
leverage. In October 2017, this was further extended to GBP300
million.
In June 2017, we completed a GBP98.4 million, gross of expenses,
equity raise via a placing of approximately 164 million shares.
In October 2017, we issued GBP150 million of privately placed
loan notes in two tranches with maturities of eight and 10 years.
The weighted average coupon is 3.04% and the notes are
unsecured.
In December 2017, we completed a GBP310.7 million, gross of
expenses, equity raise via Firm Placing, Placing and Open Offer and
Offer for Subscription.
In January 2018, the proceeds from the December equity raise
were used, in part, to repay the remaining GBP211 million of
long-term loans held by Aviva Commercial Finance, with associated
repayment costs of GBP56 million.
Financing statistics 2018 2017
--------------------------------- ---------- ----------
Net debt GBP460.4m GBP499.6m
Weighted average debt maturity 6.0 years 8.7 years
Weighted average interest rate 3.12% 4.06%
% of debt at fixed/capped rates 73% 81%
Interest cover(1) 327% 296%
LTV 26% 37%
--------------------------------- ---------- ----------
1. Interest cover is the number of times net interest payable is
covered by EPRA earnings before net interest.
Our LTV ratio currently stands at 26% following the equity
raises in the year. LTV will increase in the short term as we
invest in additional properties and our policy allows us to reach
the range of 40% to 50% should the need arise. 73% of the debt
facilities are fixed with a weighted average debt maturity of 6.0
years.
As at 31 March 2018, we had undrawn facilities and cash
totalling GBP199 million. Details of the outstanding facilities and
their covenants are set out in Note 9.
Net finance costs presented through EPRA earnings in the year
amounted to GBP22.0 million (2017: GBP20.6 million).
Finance costs presented outside of EPRA earnings totalled
GBP57.3 million (2017: GBP1.4 million). These costs represent
one-off costs associated with early repayment of facilities or
accounting adjustments to write off loan fees where the revolving
credit facility was amended. The 2018 charge included GBP56.4
million of early redemption fees associated with the Aviva loans
being repaid in January 2018, in line with the plan announced in
the prospectus for the December 2017 equity raise.
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 measures which are
designed to aid comparability across real estate companies.
Calculations of the measures, with reconciliations back to reported
IFRS measures, are included where possible.
Profit before tax
Profit before tax for the period was GBP71.8 million (2017:
GBP95.2 million). The decrease reflects the net impact of the early
repayment costs incurred relating to the repayment of the Aviva
facilities, offset by increased valuation gain on investment
property and the higher net rental income following additions to
the portfolio.
EPRA earnings
2018 2017
GBPm GBPm
----------------------------------- ------- -------
Net rental income 80.2 67.9
Administrative expenses (7.9) (7.0)
Net finance costs (22.0) (20.6)
Share-based payments and taxation (0.3) -
----------------------------------- ------- -------
EPRA earnings 50.0 40.3
----------------------------------- ------- -------
The movement in EPRA earnings can be summarised as follows:
GBPm
----------------------------------- ------
Year ended 31 March 2017 40.3
Net rental income 12.3
Administrative expenses (0.9)
Net finance costs (1.4)
Share-based payments and taxation (0.3)
----------------------------------- ------
Year ended 31 March 2018 50.0
----------------------------------- ------
EPRA earnings has grown 24% to GBP50.0 million in the year to 31
March 2018 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 3.7 pence (2017: 5.8 pence).
EPRA EPS, which excludes the net impact of valuation movements
and gains on disposal, was 2.5 pence (2017: 2.4 pence).
Based on calculations completed in accordance with IAS 33,
share-based payment schemes are currently expected to be dilutive
to EPS, with 0.2 million new shares expected to be issued. The
dilution is not material as illustrated in the table below:
EPS measure Basic Diluted
----------------- ----- -------
Profit for year 3.7p 3.7p
EPRA 2.5p 2.5p
----------------- ----- -------
Dividends
Total dividends settled in the year to 31 March 2018 were
GBP46.4 million or 2.455 pence per share (2017: 2.25 pence per
share). GBP9.7 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. Three 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 October 2017 dividend was 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:
2018 2017
GBPm GBPm
----------------------------------- -------- --------
Opening cash 23.5 44.3
Net cash flow from operations 49.9 39.0
Dividends paid (36.7) (31.9)
Investment:
Property acquisitions (282.3) (157.9)
Development expenditure (31.7) (19.9)
Sale of properties 0.9 1.4
Other - (0.3)
Financing:
Net proceeds from equity issuance 397.1 -
Net borrowings movement (92.0) 148.8
----------------------------------- -------- --------
Closing cash 28.7 23.5
----------------------------------- -------- --------
Net cash flow from operations differs from EPRA earnings due to
movements in working capital balances.
Diluted EPRA NAV movement
Pence
per
GBPm share
------------------------------------------- -------- ------
Diluted EPRA NAV at 31 March 2017 817.5 49.3
EPRA earnings 50.0 2.5
Capital (revaluations and capital losses) 79.1 4.0
Dividends (46.4) (2.5)
Shares issued 411.0 1.4
Refinancing costs (57.3) (2.4)
Other (4.0) 0.1
------------------------------------------- -------- ------
Diluted EPRA NAV at 31 March 2018 1,249.9 52.4
------------------------------------------- -------- ------
Our Total Accounting Return per share for the year ended 31
March 2018 is 11.0% of which 2.455 pence per share (5.0%) has been
distributed to shareholders and 3.1 pence per share (6.0%) is the
movement on EPRA NAV.
Portfolio analysis by capital value
Total Total
Number value value
of properties GBPm %
---------- --------------- -------- -------
>GBP10m 29 437.5 26
GBP5-10m 67 440.3 26
GBP1-5m 315 764.3 45
<GBP1m 107 67.5 3
---------- --------------- -------- -------
518 1,709.6 100
---------- --------------- -------- -------
Portfolio analysis by region
Total Total
Number value value
of properties GBPm %
---------- --------------- -------- -------
North 172 664.0 39
South 182 557.2 33
Midlands 84 313.3 18
Scotland 23 50.3 3
Wales 57 124.8 7
---------- --------------- -------- -------
518 1,709.6 100
---------- --------------- -------- -------
Portfolio analysis by tenant covenant
Total
Total rent
rent roll
roll GBPm %
---------- ----------- ------
GPs 61.8 68
NHS body 14.6 16
Pharmacy 7.4 8
Other 7.2 8
---------- ----------- ------
91.0 100
---------- ----------- ------
Consolidated income statement
For the year ended 31 March 2018
2018 2017
Capital Capital
EPRA and other Total EPRA and other Total
Note GBPm GBPm GBPm GBPm GBPm GBPm
------------------------- ---- ----- ---------- ----- ----- ---------- -----
Gross rental and related
income 2 83.5 - 83.5 71.1 - 71.1
Property operating
expenses (3.3) - (3.3) (3.2) - (3.2)
========================= ==== ===== ========== ===== ===== ========== =====
Net rental income 80.2 -80.2 67.9 -67.9
Administrative expenses (7.9) - (7.9) (7.0) - (7.0)
Revaluation gains 7 - 79.4 79.4 - 56.5 56.5
Loss on sale of property - (0.3) (0.3) - (0.1) (0.1)
Share-based payment
charge (0.3) - (0.3) (0.1) - (0.1)
Finance revenue 2 0.1 - 0.1 0.1 - 0.1
Finance costs 3(22.1) (0.9) (23.0) (20.7) (1.4) (22.1)
Early repayment costs 9 - (56.4) (56.4) - - -
========================= ====== ====== ====== ====== ===== ======
Profit before taxation 50.0 21.8 71.8 40.2 55.0 95.2
======================== ==== ==== ==== ==== ==== ====
Taxation 4---0.1 -0.1
========= === ===
Profit for the year
attributable to equity
holders of the parent 50.0 21.8 71.8 40.3 55.0 95.3
========================= ==== ==== ==== ==== ==== ====
EPRA
EPS - basic & diluted 52.5p 2.4p
EPS - basic & diluted 5 3.7p 5.8p
===== ================== ==== ==== ==== ====
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 derives from continuing
operations.
Consolidated balance sheet
For the year ended 31 March 2018
2018 2017
Note GBPm GBPm
---- ----- -----
Non-current assets
Investment property 71,732.7 1,344.9
Property, plant and equipment 0.4 0.4
Deferred tax asset 0.5 0.5
=============================== ======= =======
1,733.6 1,345.8
=============================== ======= =======
Current assets
Cash, cash equivalents and restricted cash 28.7 23.5
Trade and other receivables 13.7 9.4
Property assets held for sale 7 8.4 0.9
============================================ ==== ====
50.8 33.8
============================================ ==== ====
Total assets 1,784.4 1,379.6
===================== ======= =======
Current liabilities
Trade and other payables 20.2 16.4
Borrowings 9 - 4.3
Deferred revenue 819.0 16.3
========================== ==== ====
39.2 37.0
========================== ==== ====
Non-current liabilities
Borrowings 9486.3 515.8
Obligations due under finance leases 2.8 3.0
Deferred revenue 8 5.7 5.8
====================================== ===== =====
494.8 524.6
====================================== ===== =====
Total liabilities 534.0 561.6
====================== ======= =====
Net assets 1,250.4 818.0
====================== ======= =====
Capital and reserves
Share capital 10 238.3 165.5
Share premium 580.4 246.1
Merger reserve 231.2 231.2
Reserves 200.5 175.2
================ ======= =====
Total equity 1,250.4 818.0
================ ======= =====
NAV per Ordinary Share - basic 652.5p 49.4p
- diluted 652.5p 49.3p
EPRA NAV per Ordinary Share - basic 652.4p 49.4p
- diluted 652.4p 49.3p
==================================================================== ===== =====
Consolidated statement of changes in equity
For the year ended 31 March 2018
Own
Share shares Share Merger Total
capital held premium reserve Reserves equity
Note GBPm GBPm GBPm GBPm GBPm GBPm
---- -------- ------- -------- -------- -------- -------
1 April 2016 163.8 (0.6) 241.9 231.2 118.0 754.3
Profit attributable to equity holders - -- --95.3 95.3
====
Total comprehensive income ----95.3 95.3
Dividends 11 0.9 - 4.2 -(37.0) (31.9)
Employee share-based incentives 0.8 0.6 - - (1.1) 0.3
================================ === === === ====== ======
31 March 2017 165.5 -246.1 231.2 175.2 818.0
=============== ===== ===== ===== ===== =====
Profit attributable to equity holders ----71.8 71.8
==== ====
Total comprehensive income ----71.8 71.8
Issue of Ordinary Shares 10 70.9 - 338.2 - - 409.1
Issue costs - -(12.0) - - (12.0)
Dividends 11 1.6 - 8.1 -(46.4) (36.7)
Employee share-based incentives 0.3 - - - (0.1) 0.2
================================ ==== ====== ====== ======
31 March 2018 238.3 -580.4 231.2 200.5 1,250.4
=============== ===== ===== ===== ===== =======
Consolidated cash flow statement
For the year ended 31 March 2018
2018 2017
Note GBPm GBPm
-------------------- ---- ----- -----
Operating activities
Rent received 81.0 71.1
Interest paid and similar charges (22.8) (19.2)
Fees received 0.8 0.8
Interest received 0.1 0.1
Cash paid to suppliers and employees (9.2) (13.8)
====================================== ====== ======
Net cash inflow from operating activities 49.9 39.0
=========================================== ==== ====
Investing activities
Purchase of investment property (282.3) (157.9)
Development expenditure (31.7) (19.9)
Proceeds from sale of property and investments 0.9 1.4
Expenditure on property, plant and equipment - (0.3)
================================================ ======= =======
Net cash outflow from investing activities (313.1) (176.7)
============================================ ======= =======
Financing activities
Issue of Ordinary Shares 409.1 -
Issue costs paid on issuance of Ordinary
Shares (12.0) -
Dividends paid 11 (36.7) (31.9)
Repayment of loans 9 (213.8) (59.0)
Long-term loans drawdown 9 180.0 210.0
Early repayment costs 9 (56.4) -
Loan issue costs 9 (1.8) (2.2)
========================================= ======= ======
Net cash inflow from financing activities 268.4 116.9
=========================================== ===== =====
Increase/(decrease) in cash and cash equivalents 5.2 (20.8)
================================================== === ======
Opening cash and cash equivalents 23.5 44.3
=================================== ==== ====
Closing cash and cash equivalents 28.7 23.5
=================================== ==== ====
Notes to the accounts
For the year ended 31 March 2018
1. Corporate information and operations
Assura plc ("Assura") is incorporated in England and Wales and
the Company's Ordinary Shares are listed on the London Stock
Exchange.
As of 1 April 2013, the Group has elected to be treated as a UK
REIT. See Note 4 for further details.
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 2018 and 31 March
2017, and as such, does not contain all information required to be
disclosed in the financial statements prepared in accordance with
International Financial Reporting Standards ("IFRSs"). The
financial information has been extracted from the Group's audited
consolidated statutory accounts upon which the auditor has issued
has unqualified opinion.
The Annual Report will be posted to Shareholders on or before 31
July 2018.
The Preliminary Announcement was approved by the Board of
Directors on 22 May 2018.
The Announcement can also be accessed on the internet at
www.assuraplc.com.
2. Revenue
2018 2017
GBPm GBPm
-------------------------------- ----- -----
Rental revenue 82.7 70.4
Other related income 0.8 0.7
================================ ===== =====
Gross rental and related income 83.5 71.1
================================ ===== =====
Finance revenue
Bank and other interest 0.1 0.1
================================ ===== =====
0.1 0.1
================================ ===== =====
Total revenue 83.6 71.2
================================ ===== =====
3. Finance costs
2018 2017
GBPm GBPm
-------------------------------------------- ----- -----
Interest payable 21.9 20.4
Interest capitalised on developments (0.7) (0.4)
Amortisation of loan issue costs 0.9 0.7
============================================ ===== =====
Finance costs presented through EPRA profit 22.1 20.7
Write off of loan issue costs 0.9 1.4
Early repayment costs (Note 9) 56.4 -
============================================ ===== =====
Total finance costs 79.4 22.1
============================================ ===== =====
Interest was capitalised on property developments at the
appropriate cost of finance at commencement. During the year this
ranged from 4% to 5% (2017: 5%).
Loan costs written off related to facilities terminated prior to
their maturity.
4. Taxation
2018 2017
Consolidated income tax GBPm GBPm
---------------------------------------------------- ----- -----
Deferred tax
Relating to origination and reversal of temporary
differences - (0.1)
==================================================== ===== =====
Income tax charge/(credit) reported in consolidated
income statement - (0.1)
==================================================== ===== =====
The differences from the standard rate of tax applied to the
profit before tax may be analysed as follows:
2018 2017
GBPm GBPm
-------------------------------------------------- ------ ------
Profit before taxation 71.8 95.2
UK income tax at rate of 19% (2017: 20%) 13.6 19.0
Effects of:
Non-taxable income (including REIT exempt income) (13.5) (18.6)
Expenses not deductible for tax purposes - -
Movement in unrecognised deferred tax (0.1) (0.5)
================================================== ====== ======
- (0.1)
================================================== ====== ======
The Group elected to be treated as a UK REIT with effect from 1
April 2013. The UK REIT rules exempt the profits of the Group's
property rental business from corporation tax. Gains on properties
are also exempt from tax, provided they are not held for trading or
sold in the three years post completion of development. The Group
will otherwise be subject to corporation tax at 19% in 2018/19
(2017/18: 19%).
Any Group tax charge/(credit) relates to its non-property
income. As the Group has sufficient brought forward tax losses, no
tax is due.
As a REIT, the Group is required to pay Property Income
Distributions ("PIDs") equal to at least 90% of the Group's rental
profit calculated by reference to tax rules rather than accounting
standards. During the year the Group paid its first PID as part of
the October 2017 dividend. Future dividends will be a mix of PID
and normal dividends as required.
To remain as a UK REIT there are a number of conditions to be
met in respect of the principal company of the Group, the Group's
qualifying activities and the balance of business. The Group
remains compliant at 31 March 2018.
Further reductions in the main rate of corporation tax have been
substantively enacted; the rate reduced to 19% from 1 April 2017
and will reduce to 17% from 1 April 2020. These changes have been
reflected in the calculation of deferred tax.
5. Earnings per Ordinary Share
EPRA EPRA
Earnings earnings Earnings earnings
2018 2018 2017 2017
GBPm GBPm GBPm GBPm
---------------------------------- ------------- ------------- ------------- -------------
Profit for the year 71.8 71.8 95.3 95.3
================================== ============= ============= ============= =============
Early repayment costs 56.4 -
Revaluation gains (79.4) (56.5)
Loss on sale of property 0.3 0.1
Write off of loan issue costs 0.9 1.4
================================== ============= ============= ============= =============
EPRA earnings 50.0 40.3
================================== ============= ============= ============= =============
Weighted average number of shares
in issue - basic 1,963,754,891 1,963,754,891 1,647,388,495 1,647,388,495
Potential dilutive impact of
share options 210,307 210,307 3,243,291 3,243,291
================================== ============= ============= ============= =============
Weighted average number of shares
in issue - diluted 1,963,965,198 1,963,965,198 1,650,631,786 1,650,631,786
================================== ============= ============= ============= =============
Earnings per Ordinary Share
- basic & diluted 3.7p 2.5p 5.8p 2.4p
================================== ============= ============= ============= =============
6. NAV per Ordinary Share
EPRA EPRA
NAV NAV NAV NAV
2018 2018 2017 2017
GBPm GBPm GBPm GBPm
--------------------------------- ------------- ------------- ------------- -------------
Net assets 1,250.4 1,250.4 818.0 818.0
================================= ============= ============= ============= =============
Deferred tax (0.5) (0.5)
================================= ============= ============= ============= =============
EPRA NAV 1,249.9 817.5
================================= ============= ============= ============= =============
Number of shares in issue 2,383,122,112 2,383,122,112 1,655,040,993 1,655,040,993
Potential dilutive impact of
PSP (Note 19) 210,307 210,307 3,243,291 3,243,291
================================= ============= ============= ============= =============
Diluted number of shares in
issue 2,383,332,419 2,383,332,419 1,658,284,284 1,658,284,284
================================= ============= ============= ============= =============
NAV per Ordinary Share - basic 52.5p 52.4p 49.4p 49.4p
NAV per Ordinary Share - diluted 52.5p 52.4p 49.3p 49.3p
================================= ============= ============= ============= =============
EPRA EPRA
NNNAV NNNAV
2018 2017
GBPm GBPm
------------------------------ ------- ------
EPRA NAV 1,249.9 817.5
Mark to market of fixed rate
debt (14.4) (77.7)
=============================== ======= ======
EPRA NNNAV 1,235.5 739.8
=============================== ======= ======
EPRA NNNAV per Ordinary Share
- basic 51.8p 44.7p
=============================== ======= ======
The EPRA measures set out above are in accordance with the Best
Practices Recommendations of the European Public Real Estate
Association dated November 2016.
Mark to market adjustments have been provided by the
counterparty or by reference to the quoted fair value of financial
instruments.
7. Property assets
Investment property and investment property under construction
("IPUC")
Properties are stated at fair value, which has been determined
for the Group by Savills Commercial Limited and Jones Lang LaSalle
as at 31 March 2018. The properties have been valued individually
and on the basis of open market value in accordance with RICS
Valuation - Professional Standards 2017 ("the Red Book"). Valuers
are paid on the basis of a fixed fee arrangement, subject to the
number of properties valued.
Initial yields mainly range from 4.10% to 4.75% (2017: 4.40% to
5.00%) for prime units, increasing up to 8.00% (March 2017: 8.00%)
for older units with shorter unexpired lease terms. For properties
with weaker tenants and poorer units, the yields range from 5.50%
to 8.00% (March 2017: 6.00% to over 8.00%) and higher for those
very close to lease expiry or those approaching obsolescence.
A 0.25% shift of valuation yield would have approximately a
GBP94.0 million (2017: GBP68.1 million) impact on the investment
property valuation.
Investment IPUC Total Investment IPUC Total
2018 2018 2018 2017 2017 2017
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------ ---------- ------ ------- ---------- ------ -------
Opening market value 1,321.7 20.2 1,341.9 1,094.9 11.5 1,106.4
Additions:
========== ====== ======= ========== ====== =======
- acquisitions 278.9 - 278.9 155.6 - 155.6
- improvements 6.0 - 6.0 2.4 - 2.4
========== ====== ======= ========== ====== =======
284.9 - 284.9 158.0 - 158.0
Development costs - 31.7 31.7 - 20.9 20.9
Transfers 35.5 (35.5) - 14.0 (14.0) -
Transfer (to)/from assets
held for sale (7.4) (0.2) (7.6) - 0.8 0.8
Capitalised interest - 0.7 0.7 - 0.4 0.4
Disposals (0.2) (0.9) (1.1) (0.9) (0.2) (1.1)
Unrealised surplus on
revaluation 73.2 6.2 79.4 55.7 0.8 56.5
============================== ========== ====== ======= ========== ====== =======
Closing market value 1,707.7 22.2 1,729.9 1,321.7 20.2 1,341.9
Add finance lease obligations
recognised separately 2.8 - 2.8 3.0 - 3.0
============================== ========== ====== ======= ========== ====== =======
Closing fair value of
investment property 1,710.5 22.2 1,732.7 1,324.7 20.2 1,344.9
============================== ========== ====== ======= ========== ====== =======
2018 2017
GBPm GBPm
---------------------------------------------------- ------- -------
Market value of investment property as estimated by
valuer 1,702.2 1,315.3
Add IPUC 22.2 20.2
Add pharmacy lease premiums/rent adjustments 5.5 6.4
Add finance lease obligations recognised separately 2.8 3.0
==================================================== ======= =======
Fair value for financial reporting purposes 1,732.7 1,344.9
==================================================== ======= =======
Completed investment property held for sale 7.4 -
Land held for sale 1.0 0.9
==================================================== ======= =======
Total property assets 1,741.1 1,345.8
==================================================== ======= =======
At March 2018, 15 assets are held as available for sale (2017:
three assets).
The total value of investment property is GBP1,709.6 million,
which is completed investment property of GBP1,702.2 million plus
GBP7.4 million of investment properties held for sale.
Fair value hierarchy
The fair value measurement hierarchy for all investment property
and IPUC as at 31 March 2018 was Level 3 - Significant unobservable
inputs (2017: 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 a property should exchange on the date of valuation between a
willing buyer and a willing seller in an arm's-length transaction
after proper marketing wherein the parties had acted knowledgeably,
prudently and without compulsion".
Unobservable inputs
These include: estimated rental value ("ERV") based on market
conditions prevailing at the valuation date; estimated average
increase in rent based on both market estimations and contractual
situations; equivalent yield (defined as the weighted average of
the net initial yield and reversionary yield); and the physical
condition of the property determined by inspections on a rotational
basis (target once every three years). A decrease in the ERV would
decrease market value. A decrease in the equivalent yield would
increase the market value. An increase in the remaining lease term
would increase the fair value.
8. Deferred revenue
2018 2017
GBPm GBPm
--------------------------------------------------------- ----- -----
Arising from rental received in advance 18.5 15.7
Arising from pharmacy lease premiums received in advance 6.2 6.4
========================================================= ===== =====
24.7 22.1
========================================================= ===== =====
Current 19.0 16.3
Non-current 5.7 5.8
========================================================= ===== =====
24.7 22.1
========================================================= ===== =====
9. Borrowings
2018 2017
GBPm GBPm
--------------------------------- ------- ------
At 1 April 520.1 369.2
Amount drawn down in year 180.0 210.0
Amount repaid in year (213.8) (59.0)
Loan issue costs (1.8) (2.2)
Amortisation of loan issue costs 0.9 0.7
Write off of loan issue costs 0.9 1.4
================================= ======= ======
At 31 March 486.3 520.1
================================= ======= ======
Due within one year - 4.3
Due after more than one year 486.3 515.8
================================= ======= ======
At 31 March 486.3 520.1
================================= ======= ======
The Group has the following bank facilities:
1. 10-year senior secured bond for GBP110 million at a fixed
interest rate of 4.75% maturing in December 2021. The secured bond
carries a loan to value ("LTV") covenant of 75% (70% at the point
of substitution of an investment property or cash) and an interest
cover requirement of 1.15 times (1.5 times at the point of
substitution). In addition, the bond is subject to a WAULT test of
10 years which, if not met, gives the bondholder the option to
change the facility to an amortising basis.
2. Five-year club revolving credit facility with RBS, HSBC,
Santander and Barclays for GBP300 million on an unsecured basis at
an initial margin of 1.50% above LIBOR, expiring in May 2021. The
margin increases based on the LTV of the subsidiaries to which the
facility relates, up to 2.0% where the LTV is in excess of 50%. The
facility is subject to a historical interest cover requirement of
at least 175%, maximum LTV of 60% and a weighted average lease
length of seven years. As at 31 March 2018, GBP130 million of this
facility was drawn.
3. 10-year notes in the US private placement market for a total
of GBP100 million. The notes are unsecured, have a fixed interest
rate of 2.65% and were drawn on 13 October 2016. The facility is
subject to a historical interest cover requirement of at least
175%, maximum LTV of 60% and a weighted average lease length of
seven years.
4. GBP150 million of privately placed notes in two tranches with
maturities of eight and 10 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.
In January 2018, in line with the debt reduction plan announced
in the Prospectus for the November 2017 equity raise, GBP211
million of long-term debt held by Aviva Commercial Finance was
repaid. The weighted average interest rate on the loans redeemed
was 5.43% with associated early repayment costs of GBP56
million.
The Group has been in compliance with all financial covenants on
all of the above loans as applicable throughout the year.
10. Share capital
Share Share
Number capital Number capital
of shares 2018 of shares 2017
2018 GBPm 2017 GBPm
---------- -------- ---------- --------
Ordinary Shares issued and fully
paid
================================= ============= ===== ============= =====
At 1 April 1,655,040,993 165.5 1,637,706,738 163.8
Issued 20 April 2016 - scrip - - 2,291,541 0.2
Issued 27 July 2016 - scrip - - 1,880,037 0.2
Issued 26 August 2016 - - 8,000,000 0.8
Issued 19 October 2016 - scrip - - 2,130,150 0.2
Issued 18 January 2017 - scrip - - 3,032,527 0.3
Issued 19 April 2017 - scrip 1,514,247 0.2 - -
Issued 23 June 2017 163,999,820 16.4 - -
Issued 19 July 2017 - scrip 3,861,017 0.4 - -
Issued 30 August 2017 3,226,687 0.3 - -
Issued 18 October 2017 - scrip 3,061,389 0.3 - -
Issued 6 December 2017 545,124,813 54.5 - -
Issued 17 January 2018 - scrip 7,293,146 0.7 - -
=============================== ============= ===== ============= =====
At 31 March 2,383,122,112 238.3 1,655,040,993 165.5
Own shares held - - (61,898) -
=============================== ============= ===== ============= =====
Total share capital 2,383,122,112 238.3 1,654,979,095 165.5
=============================== ============= ===== ============= =====
The Ordinary Shares issued in April 2016, July 2016, October
2016, January 2017, April 2017, July 2017, October 2017 and January
2018 were issued to shareholders who elected to receive Ordinary
Shares in lieu of a cash dividend under the Company scrip dividend
alternative.
In June 2017, a total of 163,999,820 new Ordinary Shares of 10
pence each were placed at a price of 60 pence per share. The
raising resulted in gross proceeds of approximately GBP98.4 million
which has been allocated appropriately between share capital
(GBP16.4 million) and share premium (GBP82.0 million). Issue costs
totalling GBP2.3 million were incurred and have been allocated
against share premium.
In August 2017 and August 2016, 3,226,687 and 8,000,000 Ordinary
Shares respectively were issued following employees exercising
nil-cost options awarded under the VCP. Further information can be
found in respect of the VCP in the Remuneration Report included in
the Annual Report and Accounts.
On 6 December 2017, 545,124,813 Ordinary Shares were issued by
way of a Firm Placing, Placing and Open Offer and Offer for
Subscription at a price of 57 pence per Ordinary Share. Gross
proceeds to the Company were GBP310.7 million, which has been
allocated appropriately between share capital (GBP54.5 million) and
share premium (GBP256.2 million). Issue costs totalling GBP9.7
million were incurred and have been allocated against share
premium.
11. Dividends paid on Ordinary Shares
Number of
Pence per Ordinary 2018 2017
Payment date share Shares GBPm GBPm
---------------- --------- ------------- ----- -----
20 April 2016 0.55 1,637,706,738 - 9.0
27 July 2016 0.55 1,639,998,279 - 9.0
19 October 2016 0.55 1,649,878,316 - 9.1
18 January 2017 0.60 1,655,040,993 - 9.9
19 April 2017 0.60 1,656,555,240 9.9 -
19 July 2017 0.60 1,656,555,240 9.9 -
18 October 2017 0.60 1,827,642,764 11.0 -
17 January 2018 0.655 2,383,122,112 15.6 -
================ ========= ============= ===== =====
46.4 37.0
================ ========= ============= ===== =====
The April dividend for 2018/19 of 0.655 pence per share was paid
on 18 April 2018 and the July dividend for 2018/19 of 0.655 pence
per share is currently planned to be paid on 18 July 2018 to
shareholders on the share register at 15 June 2018.
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 10.
The October 2017 dividend was a PID as defined under the REIT
regime. Future dividends will be a mix of PID and normal dividends
as required.
12. Commitments
At the year end the Group had five (2017: seven) committed
developments which were all on site with a contracted total
expenditure of GBP23.6 million (2017: GBP39.7 million) of which
GBP13.9 million (2017: GBP15.9 million) had been expended.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR LLFIDEFIFFIT
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