Assura Annual Report 2014

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FY2014 Annual Report · Assura

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BUILDING
A PLATFORM
FOR GROWTH

ANNUAL REPORT 2014

FINANCIAL HIGHLIGHTS

Investment property

Adjusted EPRA NAV

Net rental income

£656.7m

43.4p

+17.8%

+12.4%

£37.8m

+12.2%

Underlying profit

£10.9m

+23.9%

656.7

43.4

37.8

10.9

557.3

537.8

38.6

36.3

33.7

30.9

8.8

5.6

2012 2013 2014

Contents

Strategic report

Financial highlights

02 Property portfolio
04 Our milestones of the year
06 Chairman’s statement
08 Market
10 Chief Executive’s strategic review
13 Business model
14 Meeting the NHS agenda
16 Strategy
18 Focus
20 Expertise
22 Culture
24 Effectiveness
26 Key performance indicators
30 Risk management
34 Business review

40 Sustainability
42 Charities

Governance
44 Chairman’s introduction

to governance
46 Board of Directors
48 Corporate governance
50 Audit Committee report
52 Nominations Committee report
53 Remuneration report
71 Directors’ report
74 Directors’ responsibility statement

Financial statements
Independent auditor’s report
75
78 Consolidated income statement
79 Consolidated balance sheet
80 Consolidated statement of changes

in equity

81 Consolidated cash flow statement
82 Notes to the accounts
107 Company financial statements
113 Glossary
115 Corporate information

WHO WE ARE
Assura is a leading UK healthcare
REIT and our vision is to be the
UK’s best developer and owner-
manager of primary care property

OUR BUSINESS MODEL
We offer a long-term partner approach
to GPs. That means we:
Develop, Invest, Manage

y p

nage

a
M

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e
m

t
i

f o r m a n ce indicators p26

0
3
p
e
g
a
n
a

e y risks to m

LONG-TERM
SHAREHOLDER
VALUE

Devel o p

Read more p53

Assura Group Annual Report 2014 13

Strategic report Governance Financial statements

MEETING THE
NHS AGENDA

Large co-located GP practices can vastly increase
the services offered to patients in their locality
This reduces the burden on secondary care and
enables Assura to assist in meeting the NHS agenda

SINGLE PRACTICE

CO-LOCATED GP
AND PHARMACY

14 Assura Group Annual Report 2014

GPSurgeryGPSurgeryPharmacyGPSurgeryPharmacyPaediatricsPodiatryAudiologyPhlebotomyMusculoskeletalPhysiotherapyDiagnosticsand ScanningCommunityDentistryCommunityMidwifery and NursingPRIMARY AND
COMMUNITY CARE
RESOURCE CENTRE

Assura Group Annual Report 2014 15

Strategic report Governance Financial statements GPSurgeryGPSurgeryPharmacyGPSurgeryPharmacyPaediatricsPodiatryAudiologyPhlebotomyMusculoskeletalPhysiotherapyDiagnosticsand ScanningCommunityDentistryCommunityMidwifery and NursingSTRATEGY

Vision

TO BE THE UK’S BEST
DEVELOPER AND OWNER-
MANAGER OF PRIMARY
CARE PROPERTY

y p

nage

a
M

R
e
m

t
i

f o r m a n ce indicators p26

0
3
p
e
g
a
n
a

e y risks to m

LONG-TERM
SHAREHOLDER
VALUE

Devel o p

16 Assura Group Annual Report 2014

Strategy

FOCUS

Assura has a deep understanding
of the economic dynamics of
healthcare real estate. By building
on the knowledge and expertise of
our team and engagement with our
healthcare partners we believe we
can generate superior Total Property
Return through a strategic focus on
a highly attractive market.

EXPERTISE

The Assura brand has a strong
reputation for innovation derived
from our bespoke designs for
our medical centres. Our designs
have an emphasis on flexibility
and adaptability to ensure that the
buildings can adapt to the
changing NHS agenda.

CULTURE

We pride ourselves on our commitment
to the highest possible standards in
everything we do, our commitment to
the sustainability agenda, the personal
development of our teams and our role
in spearheading investment in social
infrastructure.

EFFECTIVENESS

We are committed to supporting
the NHS in tackling the major
underinvestment in UK primary
care property and utilising our skills
and capital in achieving this. We have
the right team to source and manage
these opportunities and the right
plans to leverage our team’s skills
to maximum advantage.

Performance in 2014

Priorities for 2015

KPIs (read more p26)

• Delivered rental growth of 1.9% from

• Drive development opportunities

Property return

settled rent reviews.

to support rental growth evidence.

• Total Property Return of 7.9%.

• Newly created role of investment

• Outperformed the IPD Healthcare

Index by 2.1%.

manager to focus on asset
enhancement opportunities.

7.9%

• Continue to seek growth opportunities
through acquisitions and purchase
and leasebacks.

7.2%

6.2%

• Engaged with senior NHS leaders

and politicians to support transforming
primary care property.

• Delivered eight bespoke GP

led developments.

• Promote benefits of investment in

primary care infrastructure for NHS.

• Build on strong brand with GPs

to be at forefront of new
development planning.

• Five out of our eight completed

developments achieved BREEAM
Excellent, with the remainder achieving
Very Good.

• Joined Social Stock Exchange.

• Develop zero carbon medical

centre of the future for the NHS.

• Further investment in our team’s

development.

2012

2013

2014

% NHS tenant covenant

85.8%

85.0%

83.5%

2012

2013

2014

Average EPC rating

2012

2013

2014

• Joined REIT regime.

• Seek further opportunities to expand

Accounting return

• Sold LIFT investments for
a profit of £10.5 million.

• Acquired Trinity portfolio for

£62.9 million and reduced our
administrative costs to 0.82%
of the average property assets.

the portfolio.

• Continue to recycle proceeds from
non-core asset sales into primary
care property.

• Promote Company to wider shareholder

base to continue increase in share
trading volumes.

(18.4%)

8.7%

15.9%

2012

2013

2014

Assura Group Annual Report 2014 17

Strategic report Governance Financial statements FOCUS
STRATEGIC
FOCUS ON
A HIGHLY
ATTRACTIVE
MARKET

GP vision
St Hilary Group Practice has always been
regarded as innovative and forward thinking,
and as part of their selection process wanted
a developer and long-term investor who shared
their enthusiasm for primary care being at the
centre and forefront of the NHS. In selecting
Assura they found a partner who had the focus
and expertise to deliver their ambitions. The
practice very much sees the GP as the focal
point for the delivery of services and a primary
care medical centre as the place that patients
should view as their first port of call.

Dedication
New premises enabled the practice to offer
extended hours, thus relieving pressure on the
overburdened secondary care and repatriating
many services into a primary care medical
centre which were previously impossible from
their old practice property. The extended hours
were only possible from a new building designed
to the highest standards and with the GP vision
being understood by the design team from the
outset. Turning the practice’s vision into reality
can only be achieved by dedication and a
passion for the work we do.

Facilitating change
Restricted in its ambitions by its old premises,
the practice wanted a development team who
could turn its aspirations into reality, enabling
the practice to fundamentally change its way
of working, resulting in a greater range of locally
delivered services, coupled with improved
access. The practice, having its patients at
the heart of all its decisions, wanted to make a
fundamental difference to the lives of its patients.
Assura embraced the challenge and secured a
site at the heart of its community, and worked
strenuously to deliver the premises in what
was a constrained site.

Testament
Dr James Kingsland, senior partner, said:
“The practice premises have been designed
and completed to an extremely high standard.
The extended services offered at the new centre
will allow us to make speedier diagnoses, make
more specific use of hospital resources and
allow us to complete the cycle of care in one
location.” Enabling GPs and the primary care
team to complete more episodes of care in
the community invariably brings benefits to
the patients and vastly improves the patient
experience, especially when delivered from
modern facilities.

18 Assura Group Annual Report 2014

Focus
Assura has a deep understanding of the economic
dynamics of healthcare real estate. By building on
the knowledge and expertise of our team and
engagement with our healthcare partners we believe
we can generate superior Total Property Return
through a strategic focus on a highly attractive market.

OUR NEW PREMISES ARE
FANTASTIC. IT HAS EVERYTHING
WE NEED IN ONE SPACE
MONIKA DOYLE, PRACTICE MANAGER

Compared to our previous property it’s bigger, better
and completely up to the level required for CQC standards.
All staff find it a joy to come to work and you can see the
difference it makes to patients to have everything they
need close by, including the pharmacy right next door.

Assura Group Annual Report 2014 19

Strategic report Governance Financial statements EXPERTISE
RESPONDING TO
THE NHS AGENDA

from the outset, stated: “Our new facilities have
significantly enhanced what we can offer to the
local community. The new buildings are a vast
improvement to our previous practice premises
with much more light and space. It is evident
that patients were at the heart of the design;
the flexible and open plan space is relaxing
and purpose built to cater for a high footfall
and a stress free experience. It is fantastic
to see patients benefiting from all aspects
of the new build.”

Innovation
As part of the vision the stakeholders wanted
a building that promotes health and wellbeing
and education, not just somewhere to go when
feeling sick or ill. The integration of the leisure
facility and library met some of these objectives.
Assura added to the experience, taking advantage
of the adjacent park. We staked out measured
walks around the park, enabling GPs to prescribe
exercise to promote healthy living and lifestyles.
Conscious of the setting within a park, Assura
used environmentally sensitive and ecologically
sound techniques to deal with surface water,
creating a sustainable drainage system that
incorporates wetland areas for wildlife.
Assura engaged a specialist horticulturist
to select plants that promote wildlife and
would also be educational for school children.

NHS vision
Blackpool NHS wanted to increase the service
offering to its communities and patients through
a hub and spoke model for primary care.
Assura was appointed to deliver the North hub
incorporating GP primary care, NHS community
services, dentistry and diagnostics. For a truly
integrated facility at the heart of the community,
a partnership approach was adopted with the
City Council and a site identified within Moor
Park adjacent to the tired Council owned
swimming pool. As part of the development,
Assura facilitated an extensive refurbishment
and upgrade of the leisure facility, and
incorporated a library and café.

Delivery
Once appointed, Assura worked closely with
all stakeholders, including the local residents
and registered patients of the three practices,
to gather the vision and aspirations of all involved
and affected by the development. The resulting
scheme is now a hub for the community offering
extensive services for health and wellbeing in
addition to treatment and diagnosis. Assura’s
expertise and track record in the delivery of
complicated multi-agency premises ensured a
smooth design process and on-site construction.

Occupation
That the completed project was delivered
on time and within budget to the exacting
requirements of the NHS and the Council is
testimony to the professionalism of the entire
team. Dr Steve Parr-Burnham GP, who was
a key advocate and supporter for the scheme

20 Assura Group Annual Report 2014

Expertise
The Assura brand has a strong reputation for innovation
derived from our bespoke designs for our medical
centres. Our designs have an emphasis on flexibility
and adaptability to ensure that the buildings can adapt
to the changing NHS agenda.

OUR PRACTICE IS NO LONGER
JUST A PLACE TO BE SEEN
BY A DOCTOR; PATIENTS HAVE
BEEN MAKING IT A DAY OUT
SHARON ORR, PRACTICE MANAGER

They go to the library and some even have their lunch here.
Previously we didn’t have the capacity to meet patient
demands whereas now we can. The increased space and
modernity of the building has enabled us to offer additional
services such as our own chiropody and dermatology,
making us more of a one stop shop for patients.

Assura Group Annual Report 2014 21

Strategic report Governance Financial statements CULTURE
SPEARHEADING
INVESTMENT
IN SOCIAL
INFRASTRUCTURE

In addition to the above measures, significant
emphasis was given to high quality landscaping
and external finishes, which in this instance
utilise locally sourced Welsh stone to mirror
the traditional dry stone walling of the area and
add to the aesthetic value of the site, which, given
its setting in close proximity to the UNESCO
World Heritage Site of Harlech Castle, was
a key concern of the local planning authority.
As well as locally sourced materials, a local
building contractor and design team were
also appointed, supporting local employment.

The first zero carbon medical
centre in the UK
These leading edge innovations were
complemented by the installation of supplementary
PV panels, which further reduced the Energy
Performance Certificate (“EPC”) rating to
a score of –2 and thereby gives the centre
a zero carbon status; the first zero carbon
medical centre in the UK.

Ardudwy Health Centre, Harlech

Transforming health facilities
for local communities
The new medical centre provides new branch
surgery premises for the Ardudwy Health Centre.
The practice was previously in extremely
cramped and unfit facilities, so the new centre
has transformed working conditions for the
practice as well as primary care services to
the local population.

Innovation in sustainability
Sustainability was a key consideration from the
outset, as with all our new build construction
schemes. We recognise the positive benefits
that carefully designed, environmentally aware
premises bring to staff and patients, and as
long-term owners have a vested interest in
ensuring that the highest possible performance
standards are achieved. All of our current
development projects are set to achieve a
BREEAM Excellent rating and incorporate
a variety of sustainable technologies.

The Harlech scheme typifies this approach with
the incorporation of a biomass boiler, locally
sourced materials and highly insulated timber
structure. The biomass boiler is fed from locally
sourced biofuels, which is a highly sustainable
and efficient system, reducing carbon emissions.

22 Assura Group Annual Report 2014

Culture
We pride ourselves on our commitment to the
highest possible standards in everything we do,
our commitment to the sustainability agenda, the
personal development of our teams and our role
in spearheading investment in social infrastructure.

ASSURA HAS ALWAYS SUPPORTED
MY PROFESSIONAL DEVELOPMENT
AMANDA RODDY, DEVELOPMENT MANAGER

I first joined the Assura team in 2006 as an asset manager for
their rapidly expanding healthcare portfolio. Originally from a non-
surveying background, Assura supported me to fulfil a postgraduate
diploma in Surveying. I simultaneously completed my Assessment
of Professional Competence with the Royal Institution of Chartered
Surveyors (“RICS”) and became a fully qualified Chartered Surveyor
in 2008. In my current role as Property Development Manager, I am
responsible for securing and delivering development and investment
opportunities across the North of England, as well as Wales,
Scotland and Northern Ireland.

Assura Group Annual Report 2014 23

Strategic report Governance Financial statements EFFECTIVENESS
LEVERAGING
SKILLS TO
MAXIMUM
ADVANTAGE

Acquisitions
As a market leader our market intelligence
enables us to source new investment acquisitions
through identification of both on or off-market
portfolios and individual investments along with
purchase and leasebacks.

The acquisition of the Trinity portfolio is an
example of our using market knowledge to
secure an off-market transaction. Our awareness
of the opportunity was able to be converted
into a completed transaction within a matter
of weeks. Our team was able to evaluate and
value the portfolio and to assess its merits and
identify future enhancement opportunities.

Day to day property management
The core of our business is in the long-term
partnering relationship we build with the
tenants and occupiers. Each asset is
assigned to an individual Portfolio Manager
in our team of chartered surveyors who has
personal responsibility for the asset and
getting to know the primary care teams
working within our buildings.

The Trinity portfolio was promptly transferred
onto our property management system with
all leases reviewed, enabling us to achieve
our target rent collection rate of 90% collected
within seven days.

Our surveyors undertook full site visits and
brought all the health and safety inspections up
to date promptly. This allowed our team to start
developing a close working relationship with

24 Assura Group Annual Report 2014

our GP tenants so that we can understand their
ongoing requirements and property needs.

Developing long-term asset plans
In addition to our team of Portfolio Managers,
our Investment Managers set and regularly
review a strategic plan for each asset. The
analysis undertaken includes benchmarking
of assets using internal rates of return and
IPD data.

These plans can involve re-gearing leases to
extend the term, physical extensions to increase
the floor area or identifying complementary
tenants to come onto our sites.

Immediate plans delivered on the Trinity
portfolio include the building of an extension
to accommodate a pharmacy on the premises
in Bishop Auckland, which delivered a rental
increment of £35,000. In addition an agreement
for the development of a new medical centre
in Lanchester has been signed and the former
premises are being marketed for sale.

Summary
The Trinity acquisition is a good example of
how we are able to use our market knowledge
and the expertise of our team to identify an
off-market transaction, execute the deal in a
timely fashion and maximise the value in the
opportunity from strategic asset management
immediately post acquisition.

Effectiveness
We are committed to supporting the NHS in tackling
the major underinvestment in UK primary care property
and utilising our skills and capital in achieving this.
We have the right team to source and manage these
opportunities and the right plans to leverage our
team’s skills to maximum advantage.

MY TEAM HAS THE RIGHT SKILLS
TO IDENTIFY AND MAXIMISE THE
OPPORTUNITIES IN OUR SECTOR
SPENCER KENYON, HEAD OF PORTFOLIO
MANAGEMENT

The Trinity acquisition was a good example of how my team
can add value for shareholders. We sourced the opportunity,
assessed the quality of the portfolio and then integrated the
portfolio seamlessly into our property management systems
and processes.

Assura Group Annual Report 2014 25

Strategic report Governance Financial statements KEY PERFORMANCE
INDICATORS

Our vision
Our vision is to be the UK’s best developer
and owner-manager of primary care property

Strategic priority

KPI and benchmark

FOCUS:

Maintaining a strategic focus
on a highly attractive market

Assura has a deep understanding of the
economic dynamics of healthcare real estate.

By building on the knowledge and expertise of our
team and engagement with our healthcare partners
we believe we can generate superior Total Property
Return through a strategic focus on a highly
attractive market.

EXPERTISE:

Responding to the NHS agenda

The Assura brand has a strong reputation
for innovation derived from our bespoke
designs for our medical centres. Our designs
have an emphasis on flexibility and adaptability
to ensure that the buildings can adapt to the
changing NHS agenda.

26 Assura Group Annual Report 2014

RENTAL GROWTH FROM RENT REVIEWS

1.9%

2014

2.4%

2013

TOTAL PROPERTY RETURN

7.9%

2014

7.2%

2013

IPD FIVE-YEAR TOTAL RETURN

8.5%

ASSURA

6.4%

IPD

LEASE LENGTH

14.4 YEARS

2014

14.8 YEARS

2013

% OF TENANT COVENANT NHS/GP

86%

2014

85%

2013

COMPLETED DEVELOPMENTS

£24.5m

2014 – 8 SITES

£14.4m

2013 – 5 SITES

DEVELOPMENTS ON SITE

£23.2m

2014 – 5 SITES

£34.9m

2013 – 9 SITES

Rental growth is the weighted average annualised uplift

We have delivered rental growth of 1.9% which is in line with inflation

in rent reviews settled in the year.

over the period.

The rate of growth has been slowing, though with construction cost

inflation returning we believe medium-term prospects will recover.

Total Property Return measures the overall return generated

by our properties on a debt free basis. It is calculated as the net

rental income generated by the portfolio plus the change in our

market values, divided by opening property assets plus additions.

We have continued to deliver a Total Property Return in excess

of our net initial yield from delivering capital growth from our

investment portfolio.

We measure our performance against the All Healthcare

Over the last five years, our Total Return of 8.5% has outperformed

Benchmark as calculated by IPD.

the All Healthcare Benchmark of 6.4%.

This has been achieved with low volatility of returns and is in line with

our estimated cost of equity.

The weighted average unexpired lease term (“WAULT”) provides the

average period until the first available break in our underlying property

leases calculated on the basis of the weighted average of the

underlying rent.

Our lease length of 14.4 years provides a high level of income certainty

to underpin investor returns.

The proportion of our rent roll that is paid directly by GPs or NHS PropCo.

An effective government backing for 86% of our income provides low

default risk for our income at a premium to the equivalent gilt rates.

The number and valuation on completion of completed developments

The value of completed schemes has increased during the year

during the year.

to £24.5 million.

The number and estimated valuation on completion of developments

The NHS reorganisation has inevitably led to a slowdown in development

currently commenced at the year end.

activity and so the number of schemes we have on site has reduced.

Despite this we have continued to work with the NHS on future

developments and we currently have an indicative pipeline in excess

of 25 schemes and £75 million.

In order to be the best we need to demonstrate that we can
consistently outperform over time. In order to measure ourselves
against this objective we have a wide range of key performance
indicators, but these can be distilled into three key areas. Firstly
Total Property Return, which measures our success in choosing
the right investments and managing these over time. Secondly Total
Accounting Return, which measures the returns we have delivered
to our shareholders in the form of dividends paid and our growth
in net asset value (“NAV”). Lastly, we consider Total Shareholder
Return as measured by the stock market, which reflects the value
of dividends paid and the relative movement in our share price over
the period.

These measures are complementary and should build on each
other although the share price movement is also affected by other
external factors outside of our control. By managing the Property
Return and Accounting Return over the medium term we should be
able to deliver a superior Total Shareholder Return to our investors.
This overriding objective is reflected in the long-term management
incentive scheme, which was approved by shareholders this year.
The Value Creation Plan (“VCP”) provides incentives to management
based on the Total Shareholder Return delivered to investors over
a five-year time horizon. This is explained in more detail in the
Remuneration Committee Report on pages 53 to 70.

In order to achieve these objectives we have four strategic priorities
and how we monitor ourselves against them is outlined below:

KPI and benchmark

Explanation

Performance

Rental growth is the weighted average annualised uplift
in rent reviews settled in the year.

We have delivered rental growth of 1.9% which is in line with inflation
over the period.

The rate of growth has been slowing, though with construction cost
inflation returning we believe medium-term prospects will recover.

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

We have continued to deliver a Total Property Return in excess
of our net initial yield from delivering capital growth from our
investment portfolio.

We measure our performance against the All Healthcare
Benchmark as calculated by IPD.

Over the last five years, our Total Return of 8.5% has outperformed
the All Healthcare Benchmark of 6.4%.

This has been achieved with low volatility of returns and is in line with
our estimated cost of equity.

The weighted average unexpired lease term (“WAULT”) provides the
average period until the first available break in our underlying property
leases calculated on the basis of the weighted average of the
underlying rent.

Our lease length of 14.4 years provides a high level of income certainty
to underpin investor returns.

% OF TENANT COVENANT NHS/GP

The proportion of our rent roll that is paid directly by GPs or NHS PropCo.

An effective government backing for 86% of our income provides low
default risk for our income at a premium to the equivalent gilt rates.

The number and valuation on completion of completed developments
during the year.

The value of completed schemes has increased during the year
to £24.5 million.

The number and estimated valuation on completion of developments
currently commenced at the year end.

The NHS reorganisation has inevitably led to a slowdown in development
activity and so the number of schemes we have on site has reduced.
Despite this we have continued to work with the NHS on future
developments and we currently have an indicative pipeline in excess
of 25 schemes and £75 million.

Assura Group Annual Report 2014 27

RENTAL GROWTH FROM RENT REVIEWS

1.9%

2014

2.4%

2013

TOTAL PROPERTY RETURN

7.9%

2014

7.2%

2013

IPD FIVE-YEAR TOTAL RETURN

8.5%

ASSURA

6.4%

IPD

LEASE LENGTH

14.4 YEARS

2014

86%

2014

14.8 YEARS

2013

85%

2013

COMPLETED DEVELOPMENTS

£24.5m

2014 – 8 SITES

£14.4m

2013 – 5 SITES

DEVELOPMENTS ON SITE

£23.2m

2014 – 5 SITES

£34.9m

2013 – 9 SITES

Strategic report Governance Financial statements KEY PERFORMANCE INDICATORS CONTINUED

Strategic priority

KPI and benchmark

CULTURE:

Spearheading investment
in social infrastructure

We pride ourselves on our commitment to the
highest possible standards in everything we do,
our commitment to the sustainability agenda, the
personal development of our teams and our role
in spearheading investment in social infrastructure.

BREEAM RATING ACHIEVED ON DEVELOPMENTS
‘VERY GOOD’ OR BETTER

100%

2014

100%

2013

AVERAGE EPC RATING

2014

2013

TOTAL ACCOUNTING RETURN

15.9%

2014

8.7%

2013

ADMIN COSTS AS % OF AVERAGE PORTFOLIO VALUE

0.82%

2014

TOTAL SHAREHOLDER RETURN

24.2%

2014

0.89%

2013

18.6%

2013

UNDERLYING PROFIT PER SHARE

2.1p

2014

1.7p

2013

EFFECTIVENESS:

Leveraging our team’s skills
to maximum advantage

We are committed to supporting the NHS in
tackling the major underinvestment in UK primary
care property and utilising our skills and capital
in achieving this. We have the right team to source
and manage these opportunities and the right plans
to leverage our team’s skills to maximum advantage.

28 Assura Group Annual Report 2014

BREEAM is the world’s foremost environmental assessment method

and ratings for buildings. BREEAM sets the standard for best practice

in sustainable building design, construction and operation, and has

become one of the most comprehensive and widely recognised

measures of a building’s environmental performance.

Five of our developments achieved a rating of Excellent in the current year

with the remaining three achieving a Very Good rating.

An EPC is an assessment based on the construction and type of property

The average EPC rating on all our completed developments in the year

and relevant fittings such as heating systems, insulation or double glazing.

is 19 or a grade A. This is an improvement on the prior year when the

average rating was 49, equating to a grade B.

Total Accounting Return is the overall return generated by the

Group including the impact of debt. It is calculated as the movement

on EPRA NAV for the year plus the dividends paid, divided by the

opening EPRA NAV for the year and is expressed as a percentage.

Over time we would expect our Total Accounting Return to be a

good proxy or our Total Shareholder Return.

Our Total Accounting Return is in excess of our Total Property Return

of 7.9%, which reflects the net positive impact of our borrowings and

our efficient cost base. This is well in excess of our estimated cost

of equity.

5.1% of the return reflects the one-off impact of the profit on sale

of our LIFT investments.

This is measured as the total administrative costs for the year divided

by the average investment property value for the year. It is expressed

The integration of the Trinity portfolio has been achieved with no addition

to headcount, which has contributed to a reduction in the ratio to 0.82%.

as a percentage.

Total Shareholder Return is calculated as the movement in the share price

Total Shareholder Return will differ from Total Accounting Return to the

for the period plus the dividends paid, divided by the opening share price

extent that there has also been a movement during the period of the ratio

for the year expressed as a percentage.

of the share price to the EPRA NAV. During the year we have increased

the share trading volume such that we expect to rejoin the FTSE All Share

Index at the end of June 2014.

The discount to EPRA NAV at 31 March 2014 was 1.5% (2013: 8.1%).

The underlying profit per share is calculated as the underlying profit

(see income statement definitions on page 84 for more detail on this

definition) divided by the average number of shares in issue during

We have increased underlying profits by 24% from £8.8 million to

£10.9 million and on a per share basis from 1.7 pence per share to

2.1 pence per share.

the year.

BREEAM RATING ACHIEVED ON DEVELOPMENTS

‘VERY GOOD’ OR BETTER

100%

2014

100%

2013

AVERAGE EPC RATING

2014

2013

TOTAL ACCOUNTING RETURN

15.9%

2014

8.7%

2013

ADMIN COSTS AS % OF AVERAGE PORTFOLIO VALUE

0.82%

2014

24.2%

2014

2.1p

2014

UNDERLYING PROFIT PER SHARE

0.89%

2013

18.6%

2013

1.7p

2013

Explanation

Performance

BREEAM is the world’s foremost environmental assessment method
and ratings for buildings. BREEAM sets the standard for best practice
in sustainable building design, construction and operation, and has
become one of the most comprehensive and widely recognised
measures of a building’s environmental performance.

Five of our developments achieved a rating of Excellent in the current year
with the remaining three achieving a Very Good rating.

An EPC is an assessment based on the construction and type of property
and relevant fittings such as heating systems, insulation or double glazing.

The average EPC rating on all our completed developments in the year
is 19 or a grade A. This is an improvement on the prior year when the
average rating was 49, equating to a grade B.

Total Accounting Return is the overall return generated by the
Group including the impact of debt. It is calculated as the movement
on EPRA NAV for the year plus the dividends paid, divided by the
opening EPRA NAV for the year and is expressed as a percentage.
Over time we would expect our Total Accounting Return to be a
good proxy or our Total Shareholder Return.

Our Total Accounting Return is in excess of our Total Property Return
of 7.9%, which reflects the net positive impact of our borrowings and
our efficient cost base. This is well in excess of our estimated cost
of equity.

5.1% of the return reflects the one-off impact of the profit on sale
of our LIFT investments.

This is measured as the total administrative costs for the year divided
by the average investment property value for the year. It is expressed
as a percentage.

The integration of the Trinity portfolio has been achieved with no addition
to headcount, which has contributed to a reduction in the ratio to 0.82%.

TOTAL SHAREHOLDER RETURN

Total Shareholder Return is calculated as the movement in the share price
for the period plus the dividends paid, divided by the opening share price
for the year expressed as a percentage.

The underlying profit per share is calculated as the underlying profit
(see income statement definitions on page 84 for more detail on this
definition) divided by the average number of shares in issue during
the year.

Total Shareholder Return will differ from Total Accounting Return to the
extent that there has also been a movement during the period of the ratio
of the share price to the EPRA NAV. During the year we have increased
the share trading volume such that we expect to rejoin the FTSE All Share
Index at the end of June 2014.

The discount to EPRA NAV at 31 March 2014 was 1.5% (2013: 8.1%).

We have increased underlying profits by 24% from £8.8 million to
£10.9 million and on a per share basis from 1.7 pence per share to
2.1 pence per share.

Assura Group Annual Report 2014 29

Strategic report Governance Financial statements RISK MANAGEMENT

Risk management is essential to the way we operate
and is a key responsibility of the Board

The level and type of risk assumed is regularly
monitored by the Board and key to this is
having an appropriate internal controls and
risk management process, which is subject
to regular review by the Board.

With a small head office team with a flat structure
and detailed day to day engagement of Executive
Directors, emerging risks are identified and existing
risks monitored constantly. It is inherent in the
nature of risk that it is not possible to eliminate
all risk. In fact it is not desirable as assuming
manageable risk is key to enhancing profits
and returns to investors.

Many of the key external risks are areas where
we have limited control, such as government
policy towards the NHS and the strength of the
economy. Although these cannot be controlled
we regularly review their potential impact on our
business and consider how our strategy and its
implementation can be adjusted to mitigate any
potential impact.

A summary of the more critical risks identified
through that review and identified by the Board
as having potential to affect the Group’s operating
results, financial control and its reputation are
summarised opposite.

RISK ASSESSMENT REVIEW

Risk assessment

Review

Identify

Assess

Executive Directors

w
e
v
e
R

Audit Committee

Mitigating actions

Head Office

Our flat management structure
and relatively small team enables
a regular two-way information flow.

This enables a complementary
top-down and bottom-up
approach to risk management.

Top-down enables the Board
to review strategic risks and for
these to be communicated down.

Bottom-up enables the head
office team to apply operational
risk management and for the
issues to be communicated up to
the Audit Committee and the Board.

30 Assura Group Annual Report 2014

RISK ASSESSMENT

Risk

Risk rating

Change Description of risk change

External risk –
government policy

2013

2014

High

External risk –
availability and cost of finance

Medium

Low

External risk –
investor demand

Medium

Low

The recent NHS reorganisation has
negatively impacted decision making
processes for approving new premises.
We actively engage with government
and the NHS to highlight the benefits
of “unblocking” future investment.

We have seen new entrants lending
to our sector during the year and
increased competition has reduced
the cost of borrowing in the year.

The fundamentals remain very strong for
our sector. The relative price movements
of other sectors have increased the
attractiveness of our sector to investors.

External risk –
threat of new entrants

Low

The attractiveness of the sector could
lead to new entrants and increased
competition to acquire assets.

Internal risk –
development

Medium

The Group continues to manage
development risk closely through
our investment surveyors.

Internal risk –
capital structure, gearing

Medium

Corporate and compliance risk –
communication

Medium

Low

Corporate and compliance risk –
people

Low

Gearing has remained constant in
the period. An increase in property
values would improve the risk profile.
The Group’s capital structure is subject
to regular review.

The number of investor meetings has
increased in the year and we continue
to treat investor communications as
a key priority.

We continue to focus on a culture of
continuous improvement and personal
development and are increasing our
training and development expenditure
in the year ahead.

Assura Group Annual Report 2014 31

Strategic report Governance Financial statements RISK MANAGEMENT CONTINUED

EXTERNAL RISKS

Risks and impacts

Key mitigating factors

Change from
last year

Government policy
Changes in NHS procurement and funding
could adversely affect the Group.

Reduced funding for premises expenditure
in the primary care sector of the NHS could
lead to a reduction in our development
pipeline and growth prospects.

A change to the reimbursement mechanism
for GPs could lead to a change in the risk
profile of our underlying tenants.

The increased provision of healthcare services in the
community and a closer coordination of primary and elderly
care provision is a stated policy objective of all three major
political parties and so a reduction in funding to this sector
is considered unlikely.

The recent organisation changes in the NHS have led to a
reduction in the number of new developments being approved.
A new procedure for approval is to be announced shortly by
the NHS and we are confident the increasing demands on
GPs and their premises will lead to an increase in the funding
for new developments.

The Group actively engages with the Government over policy
that could impact the business, both directly and through
the recently established Healthcare Committee of the British
Property Federation.

The reimbursement mechanism is not currently under review.
Any change would probably result in an increased cost to the
NHS in the future supply of primary care properties, which
could reduce the opportunities to increase healthcare
provision in the community.

Availability and cost of finance
Reduced availability of real estate financing
could adversely affect the Group’s ability
to source new funding and refinance
existing facilities.

Reduced availability of new financing
could delay or prevent the development
of new premises.

Increasing financing costs could increase
the overall cost of debt to the Group and
so reduce underlying profits.

The Group predominantly has long-term facilities, which
reduces the refinancing risk both in terms of availability
of finance and potential rate increases.

The Group has a policy of active engagement in capital
and banking markets and engages with a range of funders
to ensure a breadth of financing options. The current appetite
for lending into the sector is very strong.

The Group regularly monitors and manages its
re-financing profile.

98% of current debt is fixed for the duration of the loans.

Investor demand
Reduction in investor demand for UK primary
care property may result in falls in asset
valuations, which could reduce the Group’s
future profits and net asset values and could
arise from:

The overall economic position and its impact on the
Group’s operations are regularly assessed and considered
in reviewing the Group’s strategy.

The Group’s focus on the primary care sector provides
a strong covenant and long-term income, which reduces
the impact of the wider economy.

• Changes in NHS policy
• Health of the UK economy
• Availability of finance
• Relative attractiveness of other

asset classes.

The relative attractiveness of the sector has increased during
the year as other prime markets have seen significant price
increases, which are yet to feed into our sector.

Threat of new entrants
Increased competition from new purchasers
could lead to a reduction in our ability to
acquire new properties.

We have seen evidence of new entrants into the sector
during the year. Increased competition could lead to a
general increase in prices across the sector. Our specialist
knowledge and strong brand recognition with GPs reduces
this overall risk.

32 Assura Group Annual Report 2014

INTERNAL RISKS

Risks and impacts

Key mitigating factors

Change from
last year

Development
Development risk could adversely impact
the performance of the Group including:

• Cost overruns and delays on new projects
• Delays in letting parts of premises.

The Group has a dedicated and experienced development
management team to manage this exposure.

The Group’s policy is to engage in developments that
are substantially pre-let with fixed price or capped price
build contracts.

The Group has substantial experience of developments
in the sector and has strong relationships with suppliers.

Capital structure, gearing
Property valuations are inherently uncertain
and subject to significant judgement.
A fall in property values or income could
adversely affect the covenants on facilities
with lenders.

If covenants were breached this could
lead to forced asset disposals which
could reduce the Group’s net assets
and profitability.

The Group engages two external valuers to review property
valuations on a regular basis and these are formally reviewed
by the Board twice a year.

All financial forecasting, including scenario analysis
of prospective transactions, incorporates consideration
of the impact on gearing and covenant headroom.

Covenant headroom and gearing is monitored with reference
to possible valuation movements and future expenditure.

The Board regularly reviews the capital structure of
the Group.

CORPORATE AND COMPLIANCE RISKS

Risks and impacts

Key mitigating factors

Change from
last year

Communication
Failure to adequately communicate the
Company’s strategy and explain performance
in respect of this may result in an increased
disconnect between the investor perceptions
of value and actual performance.

People
Failure to recruit, develop and retain staff and
Directors with the right skills and experience
may result in underperformance.

Strategic priorities in corporate communications, including
the Annual Report, are clearly articulated and reiterated.

We have significantly increased the number of investor
meetings in the year.

The Group reports performance transparently and
communicates regularly with investors and analysts.

Succession planning is regularly evaluated.

Director and employee remuneration and incentives
are aligned with appropriate peer groups and periodically
benchmarked.

The Group has a regular performance appraisal process
with a focus on continuous personal development and
an employee engagement programme, which promotes
its corporate values and culture.

Assura Group Annual Report 2014 33

Strategic report Governance Financial statements BUSINESS
REVIEW

During the year we have integrated the acquisition of the
Trinity portfolio of 32 medical centres that we acquired
in September and disposed of our LIFT investments
Following these successful actions, together with the strong
performance of the underlying business, we created the
capacity to increase our dividend by 49%

Core portfolio £626.8 million (2013: £524.4 million)1
Our business is built on our core investment portfolio of 202 medical centres. This has
a passing rent roll of £40.3 million (2013: £34.1 million), which provides an excellent
base for future shareholder returns with 89% of its income underpinned by the NHS
and a WAULT of 14.7 years. The portfolio is diversified both geographically and by size.

CORE PORTFOLIO ANALYSIS BY CAPITAL VALUE

<£1m
£1–5m
£5–10m
>£10m

Number of
properties
37
139
19
7
202

CORE PORTFOLIO ANALYSIS BY REGION
Number of
properties
90
64
30
9
9
202

North
South
Midlands
Scotland
Wales

Total value
£m
25.1
350.4
139.4
111.9
626.8

Total value
£m
322.0
180.0
83.3
23.0
18.5
626.8

Total value
%
4
56
22
18
100

Total value
%
51
29
13
4
3
100

CORE PORTFOLIO ANALYSIS BY TENANT COVENANT

GPs
NHS body
Pharmacy
Other

Total rent roll
£m
27.7
8.1
3.0
1.5
40.3

Total rent roll
%
69
20
7
4
100

1Calculated as investment property (£523.6 million), plus investment property held for sale (£0.8 million).

34 Assura Group Annual Report 2014

Our approach to development sourcing, which
includes direct development, partnering with other
developers and purchase and leasebacks, means
that we are able to meet a wide range of our
potential customers’ needs. We work very closely
with our design and development partners and
jointly provide the expertise and capital to meet
the aspirations of GPs in delivering their new
premises. Every project we work on is developed
jointly with the GPs to deliver a bespoke, tailored
solution to their property needs.

In addition we offer potential customers a long-
term commitment as development partner,
landlord and asset manager. Our flexible approach,
long track record and commitment as a long-
term owner and asset manager of the sites
we develop provides us with a unique position
in the sector.

We have completed eight developments during the
year with a total development cost of £22.8 million.
This has added £1.5 million to our annual rent roll
and generated a 6.7% yield on cost. We are currently
on site with a further five developments with an
estimated total development cost of £21.5 million.

We have continued to deliver rental growth despite
the disruption from the NHS reforms and have
successfully concluded on 96 rent reviews during
the year to generate a weighted average annual
rent increase of 0.8% (2013: 2.3%) on those
properties. Our portfolio benefits from a 20%
weighting in fixed and Retail Price Index (“RPI”)
uplifts which generated an average uplift of 2.1%
during the year. The majority of our portfolio is
subject to open market reviews and these have
generated an average uplift of 0.4% during the
year. In common with the wider sector we have
experienced a reduction in the rate of growth
in open market reviews and recent increases
in land values and construction cost inflation
have yet to feed through into reviews. We expect
these factors will contribute to rental growth as
the development pipeline picks up and provides
evidence of the increasing rent levels.

At 31 March 2014 our core portfolio was valued at
a total of £626.8 million (2013: £524.4 million), which
produced a net initial yield of 5.88% (2013: 5.95%),
a net equivalent yield of 6.04% (2013: 6.15%) and
a true equivalent yield of 6.28% (2013: 6.40%).
Our valuations reflect a modest increase in valuation
from a movement in the yield on rental income,
rental growth in the period and the enhancement
of the portfolio through acquisition and completed
developments. Given that prime markets in other
sectors have seen significantly greater valuation
movements over the past year there is potential
for a similar re-rating and associated increase in
values in our sector as well. The characteristics
of the sector are strong enough to support this,
though there is no immediately obvious catalyst
to cause this valuation movement.

We work very hard at developing and maintaining
customer relationships. This approach is carried
across the range of services we provide both during
development and after completion, as an asset
manager. We have a dedicated team of asset
managers who are in regular communication with
our customers and we monitor progress through
regular customer satisfaction surveys. All asset
managers are appraised on their success in a
continuous improvement on tenant interaction.

Assura Group Annual Report 2014 35

Strategic report Governance Financial statements BUSINESS REVIEW CONTINUED

During the year we have successfully secured
six new tenancies with an annual rent roll
of £0.2 million covering 1,429 square metres.
In addition we have significantly extended
the lease on two properties and managed
significant capital expenditure projects
across a further four sites.

The core portfolio contributed to earnings
before interest and exceptional items in the
year as follows:

Net rental income
Valuation movement
Total Property Return

2014
£m
36.7
14.1
50.8

2013
£m
32.1
5.4
37.5

Over the last five years, our Total Return of 8.5%
compares to the All Healthcare Benchmark of
6.4% as published by IPD.

The valuation gain of £14.1 million represents a
2.2% valuation gain on a like-for-like basis and
includes profits on developments of £2.3 million.

Our Total Property Return of 7.9% and our
five-year Total Return of 8.5% represent solid
returns on property assets that exhibit low
volatility of returns and low default risk and are
consistent with our estimated cost of equity.

Non-Core portfolio: £16.4 million (2013:
£20.5 million) (comprising £11.6 million
assets held for sale and £4.8 million of
investment property)

We have continued our focus on capital
recycling during the year. In addition to the
LIFT sale we have disposed of six properties
during the year with a further four sites either
exchanged or under offer at the year end.
These have resulted in proceeds of
£3.4 million during the year.

The non-core portfolio contributed to earnings
in the year as follows:

Net rental income

Valuation movement
Total Property Return

2014
£m
1.1

(1.7)
(0.6)

2013
£m
1.6

0.6
2.2

The non-core portfolio includes three retail malls
(valued at £4.7 million) in hospitals which are
held on short leases which expire on average
in 15 years. These are challenging retail assets
and have high direct property costs due to
vacancies. Their valuation yields at 31 March
2014 were initial 17.35% (2013: 16.11%) and
equivalent 12.64% (2013: 12.44%).

Other properties within non-core comprise
surplus land of £9.5 million (2013: £9.7 million).
The largest asset available for sale is a plot of
land in Scarborough, which was the subject
of a conditional sale contract to a national
supermarket chain. This conditional contract has
expired as the requisite conditions were not met.
The land, together with an adjacent site owned
by Scarborough Council, benefits from a recently
approved planning consent for a supermarket
and active discussions are being held with
other end users and sector developers about
an alternative scheme. The land is valued
at £5.5 million.

The current valuation of the land in Scarborough
represents a reduction of £0.7 million from
the value at 31 March 2013 and is the largest
contributor to the negative valuation movement
of £1.7 million. In addition value reductions have
been reported in land values of £0.3 million, retail
malls £0.4 million and other non-core property
£0.3 million.

36 Assura Group Annual Report 2014

Property assets
Market value of investment
property as estimated by valuer
Add IPUC1
Add pharmacy lease premiums
Add finance lease obligations
recognised separately
Fair value for financial reporting
purposes
Investment property held for sale
Vacant property held for sale
Land held for sale
Total property assets held for sale
Total property assets

1 Investment property under construction.

Underlying profit

Net rental income
– Core
– Non-Core

Administration
Net finance costs
Underlying profit

2014
£m

36.7
1.1
37.8
(5.0)
(21.9)
10.9

The movement in underlying profit can be
summarised as follows:

Year ended 31 March 2013
Net rental income
Administrative expenses
Net finance costs
Year ended 31 March 2014

2014
Non-Core

£m

Core
£m

626.8
14.8
7.2

1.0

649.8
–
–
–
–
649.8

4.8
–
–

2.1

6.9
2.0
0.1
9.5
11.6
18.5

Total
£m

631.6
14.8
7.2

Core
£m

523.6
14.3
7.0

3.1

1.0

656.7
2.0
0.1
9.5
11.6
668.3

545.9
0.8
–
–
0.8
546.7

2013
Non-Core

£m

9.3
–
–

2.1

11.4
1.3
0.2
9.7
11.2
22.6

Total
£m

532.9
14.3
7.0

3.1

557.3
2.1
0.2
9.7
12.0
569.3

Taxation
On 1 April 2013 the Company elected to join
the REIT regime. From this date the Group is
free from taxes on rental income and capital
gains from investment property disposals.
Non-property related income will continue
to be subject to corporation tax, though the
Group currently has brought forward losses,
which should minimise this liability from
a cash perspective.

The charge for taxation recorded in the accounts
relates to a movement on the deferred tax asset
during the year. At the year end the deferred tax
asset was £0.7 million (2013: £1.1 million).

2013
£m

32.1
1.6
33.7
(4.9)
(20.0)
8.8

£m
8.8
4.1
(0.1)
(1.9)
10.9

Underlying profit has grown 24% to £10.9 million
in the year to 31 March 2014. The acquisition of
the Trinity portfolio and the completion of new
developments have been the largest contributors
to underlying profit growth during the year.

Administrative costs
The Group measures its operating efficiency
as the proportion of administrative costs to the
average gross investment property value. This
ratio during the year was 0.82% (2013: 0.89%)
and administrative costs stood at £5.0 million
(2013: £4.9 million).

Assura Group Annual Report 2014 37

Strategic report Governance Financial statements BUSINESS REVIEW CONTINUED

LIFT
During the year we disposed of our equity and
loan note investments in seven LIFT companies
for a combined consideration of £22.4 million.
This represented a premium over the book
value of £10.5 million.

Exceptional items
The Trinity acquisition resulted in negative
goodwill of £0.6 million and acquisition costs
of £0.4 million. The release of a provision for
onerous leases on the former head office in
Pall Mall resulted in a credit of £0.5 million.

Corporate finance fees in relation to a preliminary
approach from a competitor were £1.1 million.
These resulted in net exceptional costs of
£0.4 million.

Earnings per share
The adjusted basic and diluted earnings per
share from continuing operations for the year
was 4.2 pence (2013: 2.8 pence). This includes
the net impact of valuation movements and
other capital or one-off items. The underlying
profit per share has increased 24% to 2.1 pence
(2013: 1.7 pence).

Dividends
Total dividends paid in the year to 31 March
2014 were £7.2 million or 1.3575 pence per
share (2013: 0.855 pence per share).

As a result of brought forward tax losses all
dividends paid during the year were normal
dividends with an associated tax credit.

The successful sale of the LIFT assets and
the completion of the Trinity acquisition have
boosted our earnings and our balance sheet
capacity. Reflecting this, the quality of the
assets, the tenant covenant and the underlying
rental growth we have increased the quarterly
dividend by 49% to 0.45 pence per share.

We remain committed to maintaining a covered
dividend that is progressive broadly in line with
underlying rental growth.

Cash flow
Net cash from
operations
Cash flows from
investing activities:
Investment acquisitions
Development expenditure
Sale of properties
Sale of businesses
Other
Cash flows from
financing activities:
Dividend paid
Net borrowings movement
Net increase in cash

2014
£m

2013
£m

7.9

12.9

(9.1)
(23.5)
3.3
27.7
(0.3)

(7.2)
4.1
2.9

(3.6)
(18.1)
8.4
3.6
(0.3)

(4.5)
15.9
14.3

Net cash inflow from operating activities was
£7.9 million (2013: £12.9 million), which represents
a decrease from the prior year as a result of
fluctuations in working capital balances and
the payment of exceptional costs. Development
expenditure was £23.5 million (2013: £18.1 million)
which was partially debt financed with facilities
from both Aviva and Santander. Proceeds
from the sale of properties were £3.3 million
(2013: £8.4 million).

The sale of our LIFT assets (£21.7 million) and
the scheduled receipt of deferred consideration
from the sale of the Pharmacy business in
2012 (£6.0 million) generated cash inflows
of £27.7 million from sale of businesses.

Dividends paid were £7.2 million (2013: £4.5 million).
Cash and cash equivalents increased by £2.9 million
(2013: increased by £14.3 million), which reflected
the proceeds of £27.7 million from the sale
of businesses net of the cash consideration
of £6.9 million paid to acquire Trinity, as well
as development expenditure incurred of
£23.5 million.

38 Assura Group Annual Report 2014

Balance sheet
At 31 March 2014 the EPRA NAV per share
was 43.4 pence per share, an increase of 12.4%
compared with the prior year. The growth has
predominantly been driven by the successful
sale of the LIFT investments and the valuation
performance of the portfolio underpinned
by the continued successful delivery of our
development programme.

EPRA NAV movement:

EPRA NAV at
31 March 2013
Underlying profit
Capital (revaluations and
capital gains)
Dividend
LIFT disposal
Other
EPRA NAV at
31 March 2014

Pence
per share

£m

204.4
10.9

12.6
(7.2)
10.5
(1.6)

38.6
2.1

2.4
(1.4)
2.0
(0.3)

229.6

43.4

Since the year end we have announced the
agreement of a five-year club revolving credit
facility with Royal Bank of Scotland plc (“RBS”)
and Barclays Bank plc (“Barclays”) for £30
million at an initial margin of 185 basis points
over LIBOR. The facility provides the Group with
flexible facilities to support new developments
and acquisitions. The pricing achieved highlights
the increasingly competitive nature of the lending
market and the quality of the borrowing
proposition we are able to provide.

Our loan to value ratio currently stands at 62%,
which is a level that the quality of our cash flows
can comfortably support. The capital structure
of the Group is something which the Board
considers on a regular basis.

98% of the debt facilities are fixed with a
weighted average debt maturity of 10.9 years
compared to a WAULT of 14.4 years, which
highlights the security of the cash flows of the
business. The maturity of the facilities is spread
over a significant number of years, as is
highlighted below:

Our Total Accounting Return for the year ended
31 March 2014 of 15.9% comprises an income
return which represents 1.4 pence per share
(3.5%) that has been distributed to shareholders,
and a movement on EPRA NAV of 4.8 pence per
share (12.4%).

Finance
Financing statistics
Net debt
Weighted average
debt maturity
Weighted average
interest rate
% of debt at fixed/capped
rates
Interest cover2
Loan to value

2014

2013
£414.8m £359.5m

10.9 years 11.3 years

5.28%

5.25%

98%
150%
62%

99%
144%
62%

2 Interest cover is the number of times net interest payable is

covered by underlying profit before net interest.

The appetite for lending into our sector has
remained positive throughout the economic
cycle and we continue to see strong interest
from the banks and insurers who have traditionally
lent into our sector. We believe there is merit in
broadening the range of lenders and so we have
held discussions with a large number of potential
parties through the year. The reduced level of
developments started during the year means
there has been a reduced requirement for new
borrowings during the year.

CONTRACTED DEBT REPAYMENTS £m

140

120

100

Mar
16

Mar
18

Mar
20

Mar
22

Mar
24

Mar
26

Mar
28

Mar
30

Mar
32

Mar
34

Mar
36

Mar
38

Mar
40

Mar
42

Aviva

Santander

Bond

Details of the facilities and their covenants are
set out in Note 22 to the accounts.

Net finance costs in the year amounted to
£21.9 million (2013: £20.0 million) including
£1.6 million from the assumption of the
borrowings from the Trinity acquisition.

Assura Group Annual Report 2014 39

Strategic report Governance Financial statements SUSTAINABILITY

As part of our strategic priority of culture we pride ourselves
on our commitment to the sustainability agenda, the
personal development of our teams and our role in
spearheading investment in social infrastructure

Environmental policy
The Group is committed to minimising the
environmental impact of its activities and
achieving continual improvement in its
environmental performance by:

• openly addressing the environmental risks
of the work carried out, and identifying and
managing the environmental risks associated
with the business on an ongoing basis;

• setting and reviewing annual environmental

objectives and targets, and monitoring
performance;

• complying with applicable environmental

legislation and other requirements relevant
to the Group’s operations;

• gaining certification to the ISO14001: 2004
management standard and carrying out
regular internal and external audits to ensure
good performance and identify opportunities
for improvement;

• working with partners, sub-contractors and
suppliers to promote good environmental
management and performance;

• reducing the environmental impacts of

new developments by achieving a Building
Research Establishment Environmental
Assessment Method (“BREEAM”) Excellent
rating where possible;

• reducing the environmental impacts of all

owned and leased premises by adopting or
promoting reasonable controls for preventing
pollution, improving resource efficiency,
reducing waste and reducing the Group’s
carbon footprint; and

• training employees appropriately and
promoting environmental awareness
and commitment amongst all staff.

This policy is reviewed and updated annually
by the Board of Directors and is available
to the public.

Social and community matters
Assura Group aspires to operate in a responsible,
professional, ethical and reliable manner and is
trusted as a provider of services and facilities.
Reflecting our commitment to the sustainability
agenda, Assura has aligned itself with the wider
corporate and social responsibility interests of
the NHS. Accordingly, the Group has a formal
Environmental Management System and has
gained accreditation of ISO14001: 2004 standard.

The Group’s role in developing new medical
facilities in the community, thereby bringing
services closer to the patient, helps to improve
quality of life. In developing a new medical
centre, the Group enters into consultation
with local communities. Many of the Group’s
developments are part of regeneration schemes
that also enhance the non-medical facilities for
local communities.

Responsibility for reporting to the Board on
environmental, social and community matters
sits with the Chief Executive, who has a
responsibility to maintain attention on policy
and ensure implementation. A current example
of work in this area include the soon to be
completed development at Sudbury which is
targeted to achieve BREEAM Excellent rating.
This scheme includes a biodiverse habitat
creation, a green roof, photovoltaic (“PV”) cells
and combined heat and power.

Assura supports a charity close to its head office
which is heavily involved with the
local communities.

As part of this commitment Assura became
a founder member of the Social Stock Exchange
(“SSE”) during the year. On 6 June 2013 the SSE
was launched by David Cameron to coincide
with the Government’s Social Impact Investment
Conference organised as part of the UK’s
hosting of the G8.

40 Assura Group Annual Report 2014

The SSE showcases Social Impact Businesses
that have taken the step to evidence their impact
via the publication of an Impact Report. A Social
Impact Business is one that uses commercial
models to organise, mobilise and manage
a for-profit business that delivers social and
environmental change.

Health and safety
The Group is committed to maintain safe
working environments, and regularly undertakes
programmes to identify, evaluate and reduce
risk in the work place and on site. Risk reviews,
supported by executive management reporting,
are presented to the Board on a regular basis.

The aim of the SSE is to provide stakeholders
with the information they need to identify and
compare organisations that deliver value to
society and the environment.

To achieve membership of the SSE a rigorous
admissions process takes place. As a result,
impact investors are assured that members of
the SSE adhere to a clear set of values, standards
and disclosures. The admissions process includes
the publication of an Impact Report and
application for admission to an independent
Admissions Panel.

Member companies update their Impact Reports
annually and a mechanism is in place to remove
companies which are no longer operating as
a Social Impact Business.

As part of this commitment, in future periods
we will be reporting on how the Company is:

• increasing the capacity of GP surgeries and
addressing the under-provision of services
within the community setting;

• increasing revenue and employment for local
businesses as a result of development projects;

• minimising the ongoing environment impact

of the portfolio;

• increasing access to co-located pharmacy

services; and

• cost efficiency from efficient running of newly

developed buildings.

Assura Group Annual Report 2014 41

Strategic report Governance Financial statements CHARITIES

“During 2013,
Assura supported
the Urumuri Centre
regional hospital
in Burundi. The
hospital lies in
the hills at an
altitude of some
1,850 metres.”

Médecins Sans Frontières

Médecins Sans Frontières/Doctors
Without Borders (MSF) is an
independent international medical
humanitarian organisation that
delivers emergency aid in more
than 60 countries to people affected
by armed conflict, epidemics,
natural or man-made disasters
or exclusion from healthcare.

In emergencies and their aftermath, MSF
rehabilitates and runs hospitals and clinics,
performs surgery, battles epidemics, carries
out vaccination campaigns, operates feeding
centres for malnourished children and offers
mental healthcare.

Through longer-terms programmes, MSF treats
patients with infectious diseases such as
tuberculosis, sleeping sickness and HIV/AIDS,
and provides medical and psychological care
to marginalised groups such as street children.

Founded by doctors and journalists in 1971,
MSF is now a worldwide movement with
offices in 19 countries and an international
coordination office in Geneva, Switzerland.

During 2013, Assura supported the Urumuri
Centre regional hospital in Burundi. The
hospital lies in the hills at an altitude of some
1,850 metres. This is where MSF built the
Urumuri (meaning “the light chasing darkness
away” in Kirundi) Centre, with the support of the
Burundi Ministry of Health, to treat obstetrical
fistulas. This disease continues to devastate
lives in sub-Saharan Africa, due to a lack of
specialist healthcare for pregnant women.

At the Urumuri Centre, MSF offers free
treatment to women suffering from obstetric
fistulas and is training two Burundian doctors
in the technique. If women are treated for
fistulas early, surgery can be avoided, and
MSF has piloted a programme to do just that.
For women who have developed fistulas within
the previous six weeks, doctors in Gitega insert
a catheter to drain the bladder of urine. This
decompresses the bladder walls and allows
the wounded edges to meet and join together,
so that the fistula heals naturally.

For further information, please go to
www.msf.org.uk

42 Assura Group Annual Report 2014

Our charities for 2014/15

During the forthcoming year
Assura will once again be
supporting MSF and our
local charity will be Brainwave.
Brainwave is a charity that
exists to help children with
disabilities and developmental
delay achieve their full
potential. The children they
work with have a range of
conditions including autism,
brain injuries such as cerebral
palsy and genetic conditions
such as Down’s syndrome.
The centre we are supporting
is in Birchwood, Warrington.
For more information please
see their website
www.brainwave.org.uk

Assura Group Annual Report 2014 43

St Rocco’s Hospice – Corporate Challenge 2013

The challenge was to take £50 and turn it
into as much as they could for the hospice.
Some entered events organised by the
hospice, some did their own events. From
a Wagon Pull across Warrington to dancing
in Strictly St Rocco’s, the companies pulled
out the stops to raise funds for St Rocco’s.

Assura participated in several of the events
organised by St Rocco’s including the Dragon
Boat Race, It’s a Knockout and a sponsored
60 mile cycle race, as well as raising money
selling donated items on eBay.

St Rocco’s Hospice provides
specialist palliative care and
support to hundreds of families
living with life limiting conditions
in the Warrington area each year.
The hospice offers in-patient care,
day therapies and family support
services in a purpose built,
supportive environment.

The cost of running the hospice is around
£3 million. £2 million of this is raised locally
in our community each year. As part of this
fundraising St Rocco’s set up the Corporate
Challenge, which was sponsored by Assura.
This took place throughout 2013 with 33
local companies taking on the challenge –
including Assura.

Strategic report Governance Financial statements CHAIRMAN’S INTRODUCTION
TO GOVERNANCE

DEAR SHAREHOLDER

The Board is committed to maintaining the
highest standards of Corporate Governance,
which we consider to be of fundamental
importance to the future success of Assura.
This commitment is demonstrated by our
continued attention to embedding our core
values, principles, ethics and risk management
throughout the organisation during 2014.

The regulatory and reporting landscape for
UK listed companies continued to evolve during
the year, with the introduction of the new strategic
report, new requirements to report on greenhouse
gas emissions, and a new formal requirement
on the Board to ensure that the Annual Report
presents a “fair, balanced and understandable”
assessment of the Company’s financial position
and future prospects. These new requirements,
together with the enhanced disclosures required
by the Audit Committee, have been the subject
of detailed planning throughout the year,
and processes have been adopted to ensure
that we are able to meet these obligations in
a transparent and open manner.

On a similar theme, this year’s Annual Report
represents the first occasion on which full
implementation of the recent reforms on
remuneration reporting is required. This includes,
for the first time, a binding shareholder vote on
remuneration policy, in addition to a vote to adopt

the Remuneration report (as set out on pages 53
to 70 of this report). We introduced the majority
of these requirements last year and so the
format and disclosure will largely be familiar
to shareholders.

The Board continues to take the view that
it has an effective, well-balanced structure,
which includes a group of Non-Executives
who collectively draw on a wealth and variety
of experience, thus providing for meaningful
discussion, constructive challenge and
effective decision making. In accordance
with Corporate Governance best practice,
all Directors will submit themselves for
re-election at the 2014 Annual General
Meeting (“AGM”).

The Board has engaged widely with
shareholders during the year and we
are delighted to welcome so many new
shareholders to our register during the year.
Effective communication with investors is a
key strategic priority and no fewer than 123
investor meetings have been held during the
year. All shareholders are encouraged to
attend the AGM in July where the Directors
and executive team will be available to meet
shareholders directly and to discuss any
matters of importance.

44 Assura Group Annual Report 2014

Chairman’s responsibilities

• The effective running of the Board, ensuring

that the Directors receive accurate and
timely information to enable debate and
high quality decision making

• Promoting high standards of Corporate

Governance

• Ensuring that the Board agendas take full
account of the important issues facing
the Company and the concerns of all
Board members

• Ensuring, as Chairman of the Nominations

Committee, that there are Board
succession plans in place in order
to retain and build an effective and
complementary Board.

Chief Executive’s responsibilities

• Running the Company’s business
• Implementing the business strategy
• Regularly updating the Board on progress

against approved plans

• Providing effective leadership of the

Executive Board to achieve the agreed
strategies and objectives.

BOARD STRENGTHS

n Non-Executive Chairman
n Executive Director
n Non-Executive Director

Simon Laffin
Non-Executive
Chairman

• Experienced
Chairman

• Strategy
• Finance

Graham Roberts
Chief Executive

• Real Estate
• Capital Markets
• Investment

Jenefer Greenwood
Non-Executive
Director

• Real Estate
• Customer Focus
• Marketing

Jonathan Murphy
Finance Director

• Corporate Finance
• Accounting and

Reporting

• Risk Management

David Richardson
Senior Independent
Director

• Finance and
Accounting
• Merger and
Acquisition
• Corporate

Governance

Composition
of the Board

Chairman

Executive

Independent Non-Executive

Length of tenure
of Directors

One year

Two years

Assura Group Annual Report 2014 45

Strategic report Governance Financial statements BOARD
OF DIRECTORS

Name and title

Simon Laffin
Non-Executive Chairman

Graham Roberts
Chief Executive

Experience

Graham Roberts was previously
Finance Director at The British Land
Company PLC from 2002 to 2011,
and before that was Senior Partner
for real estate at Arthur Andersen,
where he also headed up the public
sector assurance practice, which
included clients such as NHS Estates
and a number of NHS trusts.

His early career was at Binder Hamlyn.
He is currently Non-Executive Director
and Chairman of the Audit Committee
at Balfour Beatty plc.

Simon Laffin is also Non-Executive
Chairman of Flybe Group plc and
Non-Executive Director of Quintain
Estates & Development PLC. He runs
his own advisory business, with clients
having ranged from CVC Capital
Partners to Dentsu Inc. Previously he
has served as Chairman of Hozelock
Group and a Non-Executive Director
of Mitchells & Butlers plc, Aegis Group
plc and Northern Rock plc (as part of
the rescue team).

Between 1995 and 2004 he was
Group CFO of UK grocery retailer
Safeway plc, latterly also responsible
for property, which he joined in 1990.
Prior to that, Simon held a variety
of finance and management roles
in Mars Confectionery, Rank Xerox
and BP. He is a qualified accountant.

Year appointed

2011

2012

Board meetings and attendance

Board meeting
Audit Committee
Remuneration Committee
Nominations Committee (Chair)

14/14
5/5
3/3
3/3

Board meeting

14/14

Nominations Committee

3/3

Independent

Not applicable

46 Assura Group Annual Report 2014

Jonathan Murphy
Finance Director

Jenefer Greenwood
Non-Executive Director

David Richardson
Senior Independent Director

Jonathan Murphy was previously
Finance Director of the fund
management business of Brooks
Macdonald Group plc, having joined
through the acquisition of Braemar
Group plc in 2010, where he was
Finance Director for four years.
Jonathan has extensive experience
in the creation and management of
property funds and was previously
Managing Director for the property
management business of Brooks
Macdonald.

His earlier career included commercial
and strategic roles at Spirit Group
and Vodafone. Jonathan qualified
as a Chartered Accountant with
PricewaterhouseCoopers, holding
management roles in both the UK
and Asia, and holds an MBA from
IESE, the leading European Business
School in Barcelona.

Jenefer Greenwood was appointed
to the Board of The Crown Estate
in 2004, and chairs its Remuneration
Committee. Jenefer is a Chartered
Surveyor and started her career
at Hillier Parker (latterly CBRE) in 1978,
rising to Executive Director and Head
of Retail Division.

Jenefer worked for Grosvenor Estate
from 2003 until 2012, having also been
Chair of the National Skills Academy
for Retail and President of the British
Council of Shopping Centres.

David Richardson is currently Chairman
of BBGI SICAV SA and a Board member
of The Edrington Group. Previously he
spent 22 years at Whitbread Plc where
he was the Strategic Planning Director
for eight years and the Finance
Director for four years.

At Whitbread he played a pivotal
role in transforming the Group from
a brewing and pubs company into
a market leader in hotels, restaurants
and leisure clubs. Following this he
has held a number of non-executive
roles in FTSE listed companies
including Serco Group plc, Forth
Ports PLC, Tomkins plc, Dairy Crest
plc and De Vere Group plc. He is
a Chartered Accountant.

2013

2012

2011

Board meeting

14/14

14/14
Board meeting
Audit Committee
5/5
Remuneration Committee (Chair) 3/3
3/3
Nominations Committee

Board meeting
Audit Committee (Chair)
Remuneration Committee
Nominations Committee

14/14
5/5
3/3
3/3

Not applicable

Yes

Assura Group Annual Report 2014 47

Strategic report Governance Financial statements

CORPORATE
GOVERNANCE

Statement of compliance with the
UK Corporate Governance Code
In accordance with the Listing Rules of the UK
Listing Authority, the Company confirms that
throughout the year ended 31 March 2014
and as at the date of this Annual Report it was
compliant with all the relevant provisions as set
out in the UK Corporate Governance Code
published in September 2012 (“the Code”).
The Board has taken account of the flexibility in
the Code in its application to smaller companies.

Role of the Board
The Company has an effective Board which
is collectively responsible for the long-term
success of the Company by directing and
supervising the activity of the Company. The
Board has approved a schedule of matters
reserved for decision by the Board. This includes
all corporate acquisitions or corporate disposals,
debt raising above £50 million, the remuneration
policy, the annual budget approval and
amendments to delegated authorities. The
Board meets at least six times per year for
scheduled meetings. It also meets as required
to consider any important or urgent business.

The Directors acknowledge their responsibility
for preparing the Annual Report and Accounts.
The Directors consider the Annual Report and
Accounts, taken as a whole, as fair, balanced
and understandable and provides shareholders
with the necessary information to assess the
Company’s performance, business model
and strategy.

Shareholder relations
The Board welcomes open communication with
its shareholders and works with its stockbrokers
Liberum Capital and Oriel Securities to ensure
that an appropriate level of communication is
maintained. The dialogue with shareholders
is facilitated by a series of investor relations
mechanisms, including regular meetings
between senior members of the Company’s
executive management with institutional
investors and sales teams and industry/sector
analysts. Feedback from these meetings is
regularly relayed to the Board in order to ensure
that all Board members, and Non-Executive
Directors in particular, develop an understanding
of the views of major shareholders. This process
augments the regular dissemination of annual
and quarterly interim management statements.
Copies of these announcements and any
accompanying presentational materials are
available on the Company’s website at
www.assuragroup.co.uk.

The Board responds to ad-hoc requests
for information from shareholders and all
shareholders have access to the Board
and senior management, with an opportunity
to raise questions, at the AGM and other
shareholder meetings.

September 2013 AGM – key highlights
• Full Director attendance.
• 274.2 million to 289.2 million votes cast

for each resolution.

• All Directors retired and were re-elected

to the Board.

• Remuneration report resolution passed

with 84.05% of votes cast in favour.

48 Assura Group Annual Report 2014

BOARD STRUCTURE

Board

Audit
Committee

Nominations
Committee

Remuneration
Committee

p50

p52

p53

To assist in the proper discharge of its
Corporate Governance responsibilities,
the Board has established standing committees.
In relation to these committees non-executive
members serve on all committees. This is
appropriate given the relatively small size of
the Board. Each committee follows a Terms
of Reference which is reviewed annually.

Other Director information
On appointment, new Directors receive a full
briefing on the role, duties and responsibilities
of a Director of a listed company, and on the
Company and its Board. An induction pack
with important information is provided. Training
needs are reviewed annually as part of the
Board evaluation.

Each Board member is permitted to take
professional advice on any matter which relates
to their position, role and responsibilities as
a Director at the cost of the Company.

Assura Group Annual Report 2014 49

Strategic report Governance Financial statements CORPORATE GOVERNANCE CONTINUED

Audit Committee report

Responsibilities

Financial statements and reports
• To monitor the integrity of the half year and annual

Financial Statements before submission to the Board,
reviewing significant financial reporting matters and
judgements focusing particularly on matters of material
financial impact.

• To review the effectiveness of the Company’s system

of internal control.

• To conduct an annual review of the need to establish

an internal audit function.

• To discuss the issues arising from the interim and

final audits.

• To monitor and review annually the auditor’s
independence, objectivity and effectiveness.

• To develop and implement the policy for provision

of non-audit services by the external auditor.

• To make recommendations to the Board in relation
to the selection process for the appointment of the
external auditor, their fees and terms of engagement.

Audit Committee members

Key activities of the Committee

• David Richardson (Chairman)
• Simon Laffin
• Jenefer Greenwood

Number of meetings in the year: five

Other attendees
Deloitte LLP
Savills and Jones Lang LaSalle
Graham Roberts – Chief Executive
Jonathan Murphy – Finance Director
Paul Carroll – Financial Controller
Andrew Darke – Managing Director – Property

Allocation of time %

Financial statements and reports
• Reviewed the Annual Report and Financial Statements

and half year financial report and made recommendations
to the Board regarding the approval of these documents.

Review of external audit
• Reviewed, considered and agreed the scope of the audit

work to be undertaken by the external auditor.

• Reviewed the effectiveness, performance and fees of the

external auditor.

Review of external valuer
• Received presentations from both valuers and raised

queries on these.

• Reviewed the effectiveness, performance and fees of the

external valuer.

(cid:127) Review of external audit – 35%
(cid:127) Financial statements
and reports – 25%
(cid:127) Review of external valuer – 15%
(cid:127) Review of internal controls – 15%
(cid:127) Other – 10%

Review of internal controls
• Reviewed the effectiveness of the Company’s internal

controls and processes and the disclosures made in the
Annual Report.

• Reviewed the appropriateness of the accounting policies
and the design and operation of the internal controls.

Other
• Reviewed the effectiveness of the Committee.
• Reviewed the requirement for an internal audit function.
• Reviewed the approved treasury counterparties.

50 Assura Group Annual Report 2014

DEAR SHAREHOLDER

As Chairman of the Audit Committee, I have
pleasure in setting out below the formal report
on its activities for the year ended 31 March
2014. I would like to emphasise three matters.

Your Company acquired the Trinity Property
Portfolio during the year for a gross value of
£62.9 million. The way in which this was
accounted for and the impact its inclusion had
on the overall valuations of the Group’s property
portfolio is key to an understanding of the
Financial Statements for the year. We discussed
the accounting treatments with Deloitte LLP, both
before and after their audit work, and the
valuations with Messrs Jones Lang LaSalle
at the conclusion of their work. We satisfied
ourselves that all aspects were properly treated.

You will also note from the report that the
Company engaged Deloitte LLP in 2011, prior
to their appointment as auditors, to carry out
some tax consultancy to facilitate the Company’s
conversion to REIT status. This work has now
been completed satisfactorily. I am satisfied that
Deloitte LLP’s independence as auditors was not
adversely impacted by carrying out this work.

The Board as a whole has determined that the
Financial Statements are “fair, balanced and
understandable”.

Significant financial reporting matters
• Valuation of investment properties
including those under construction.
• Validity of the going concern basis and
the availability of finance going forward.
• Accounting for the Trinity acquisition and

the disposal of our LIFT investments.

These issues were discussed with management,
the external auditor and external consultants,
such as valuers, where applicable.

We are satisfied that there were no matters
that we wish to draw to the attention of the
shareholders.

Internal audit
The Audit Committee is satisfied that the current
level of control and risk management within the
business adequately meets the Group’s current
needs and that therefore there is no economic
case for having an internal audit department.

Policy of audit independence and services
Prohibited non-audit services:
• Bookkeeping
• Financial information system design or implementation
• Appraisals and valuations
• Internal audit outsourcing
• Management functions
• Executive recruitment services
• Legal services.

Level of fees for non-audit work
• All material non-audit services require approval from the Audit Committee.
• Materiality before VAT and expenses is set at £25,000 or 20% of the audit fee.

Audit/non-audit fees payable
to external auditor
Analysis of the fees earned by the Company’s
external auditor (divided between audit and
non-audit services) is disclosed in Note 6(a)
to the audited accounts.

During the year Deloitte LLP continued two
pieces of tax consultancy work in respect
of capital allowances and REIT conversion.
The fees for both projects in the current year
were £0.1 million. The external auditor was
engaged on an exceptional basis to provide
these services since they are widely recognised
as the market leader in this area. Additionally,
Deloitte LLP were engaged to undertake
preparatory work in contemplation of a transaction.
All engagements were commissioned on an
arm’s length basis.

The Audit Committee carefully considered the
level of total non-audit fees in the current year
and satisfied itself that they were appropriate.
The Committee was therefore able to satisfy
itself that Deloitte LLP’s independence was
not prejudiced.

David Richardson
Chairman of the Audit Committee

Assura Group Annual Report 2014 51

Strategic report Governance Financial statements CORPORATE GOVERNANCE CONTINUED

Nominations Committee report

Responsibilities

The Terms of Reference, which are reviewed annually,
require the Committee to meet at least once per year.

Key issues
• Re-election of all Directors at the September 2013

Annual General Meeting.

• Review of succession planning.
• Review of Board composition, Committee composition

and Committee Chairmanship.

• Consideration of training needs and skills updating.
• Board performance evaluation.

Nominations Committee members

Key activities of the Committee

• Simon Laffin (Chairman)
• David Richardson
• Jenefer Greenwood
• Graham Roberts

Number of meetings in the year: three

Allocation of time %

(cid:127) Board performance
evaluation – 30%
(cid:127) Succession planning – 18%
(cid:127) Review of Board
composition – 16%
(cid:127) Review of Committee
composition – 12%
(cid:127) Review of Committee
Chairmanship – 8%
(cid:127) Consideration of
(cid:127) Re-election of Directors – 6%

training needs – 10%

Board and Committee changes
Following the review of the Board composition there have
been no appointments to the Board or Board Committees
during the year.

Board performance evaluation
The Board has reviewed its performance, its Committees
and individual Directors based on an internal evaluation and
concluded that its access to relevant information is good,
discussions are carried out in an appropriate manner, the
strategy and goals of the Company have been clarified and
the Board is appraised promptly and fully of investor views.
The Nominations Committee also met in the absence of the
Chairman to appraise his performance. There were no major
changes adopted in the way the Board operates. The Board
also concluded that no further appointments were necessary
at this time.

Commitments of the Chairman
During the year Simon Laffin was appointed as Chairman
of Flybe Group plc. Mr Laffin manages his time effectively
in order to allocate sufficient time to each of his roles.

Policies
The Board believes that a diverse workforce and
management team improve the culture of the organisation
and add value to the business as a whole.

The Board targeted having at least 20% female
representation which was achieved in 2012.

The Committee will continue to consider gender diversity
when recommending any future Board appointments. Final
appointments will always be made on merit.

52 Assura Group Annual Report 2014

REMUNERATION
REPORT

Remuneration Committee report

Responsibilities

The Terms of Reference, which are reviewed annually,
require the Committee to meet at least once per year.

The Committee’s activities during the year included:

• Consideration of objectives and targets for

annual bonuses.

• Consideration of annual pay awards and bonuses.
• Approval of increase in staff pension contributions

(company and personal).

• Review and agreement of changes to allocation

basis for the staff bonus pool.

• Confirmation of first vesting of Executive Recruitment

Plan (“ERP”).

• Review of the Directors’ Remuneration Policy.
• Review of new disclosure requirements.
• Review and allocation of staff awards under the VCP.

Remuneration Committee members

• Jenefer Greenwood (Chairman)
• Simon Laffin
• David Richardson

Number of meetings in the year: three

Attendees
Graham Roberts – Chief Executive
Marcus Peaker – PwC

Allocation of time %

(cid:127) Consideration of
objectives/targets – 25%
(cid:127) Consideration of pay
awards/bonuses – 25%
(cid:127) Approval of staff pension
increase – 5%
(cid:127) Changes to staff
bonus pool – 10%
(cid:127) Vesting of ERP – 5%
(cid:127) Review of Directors’
Remuneration Policy – 15%
(cid:127) Review of new disclosure
requirements – 15%

Assura Group Annual Report 2014 53

Strategic report Governance Financial statements

REMUNERATION REPORT CONTINUED

Key reward decisions
• The Executive Directors earned a bonus

equal to 95% of the maximum for 2013/14
(95% of salary for the Chief Executive and
47.5% for the Finance Director).

• The salary for 2014/15 of the Chief Executive,
Graham Roberts, has been increased by 2%.
This is in line with the general inflation increase
for staff of 2%. The average increase for
staff was 4% including experience and
promotion increases.

• The salary of the Finance Director, Jonathan
Murphy, has been increased for 2014/15
by 17.6%. Jonathan’s salary was below policy
on appointment and is being progressively
increased to align with policy over his first few
years in the role dependent on performance.

• The Committee also decided to increase the

payment in lieu of pension for Jonathan Murphy
to 13.5% of salary to bring this element of his
remuneration closer to the policy position.

In conclusion
I trust you find this report helpful and informative.
I look forward to receiving your support for the
resolutions on the Remuneration Policy and
the Annual Report on Remuneration at our
forthcoming AGM.

Jenefer Greenwood
Chairman of the Remuneration Committee

1 The Large and Medium-sized Companies and Groups

(Accounts and Reports) (Amendment) Regulations 2013.

PART 1: ANNUAL STATEMENT –
UNAUDITED

DEAR SHAREHOLDER

On behalf of the Board, I am pleased to
introduce the Directors’ Remuneration Report
for the year ended 31 March 2014. This report
has been prepared by the Remuneration
Committee (“the Committee”) and approved
by the Board. As required by the Regulations1,
this Remuneration Report is split into two parts:

• The Annual Report on Remuneration sets
out payments and awards made to the
Directors and details the link between
Company performance and remuneration
for the 2013/14 financial year.

• The Directors’ Remuneration Policy sets out
the policy for 2014/15 and the subsequent
two years together with the key factors that
have been taken into account.

The Directors’ Remuneration Policy will be subject
to a binding vote at the AGM in July 2014, and
will last for a period of three years from that date
or until another Policy is approved in a general
meeting. The Annual Report on Remuneration
together with this letter is subject to an advisory
shareholder vote at the same meeting.

Policy update
There were no material changes to the remuneration
policy set out in the Annual Report for last year.

Background to award decisions included
in the report
The business has progressed in a number of
important ways in the past year. The Executives
were specifically tasked this year with developing
and executing a strategy to improve substantially
the dividend paying capacity of the group (i.e.
the ability to pay dividends covered by income),
whilst not adversely affecting long-term
performance. The combination of the LIFT
disposal and the Trinity acquisition improved that
capacity by a third, increased NAV by 2 pence
per share and increased underlying profitability
by some 10%, so enabling the Board to declare
a 49% increase in the dividend in November 2013.

The results reflect the benefits of these two deals,
as well as strong operational performance, with
underlying profit up 24% and adjusted net asset
value up 12.4%.

There have been knock-on benefits as intended
from this transformation. The resulting higher
dividend yield has in turn generated a greater
interest in the Company’s shares from a wider
investor base and so improved liquidity for
shareholders. The Company anticipates
re-joining the FTSE index in June 2014.

54 Assura Group Annual Report 2014

Remuneration policy and practice at a glance
We summarise below the linkage between remuneration policy and strategy and highlight the performance and remuneration
outcomes for 2013/14.

Strategy linkage
Our goal is to maximise returns for shareholders over the long term. Our success is measured by three KPIs:

Total Property Return
measuring income and capital
appreciation generated from the portfolio

Total Accounting Return
measuring total reported returns for the
Company after all overheads and
including the effect of leverage

Total Shareholder Return
which is the dividend and capital
appreciation experienced by
shareholders

Over the long term, delivering consistent strong performance in Total Property Return (“TPR”) and Total Accounting Return (“TAR”)
should culminate in a consistent and strong Total Shareholder Return (“TSR”). This is the dominant KPI and is the basis for aligning
Executives’ and shareholders’ interests through the Value Creation Plan.

The remuneration structure is designed to attract and incentivise a top quality management team. We are both a small company and
a long-term investor, so the remuneration structure is geared to reward performance over a five-year horizon. This is reflected in the
approach adopted to each element of remuneration relative to the market: fixed remuneration is set at lower quartile to median; the
annual bonus at median; the VCP at upper quartile.

In selecting targets for the annual bonus, these relate to actions primarily required to deliver the strategy and the desired long-term
outcome, but which need to be completed in the next 12 months.

The VCP is a five-year plan commenced 1 April 2012 which rewards the Executive Directors (and participating members of staff) with
nil-cost options over shares, where the reward is up to 10% of any excess TSR created over an 8% threshold (below which there is no
reward). By linking the main element of reward to TSR rather than absolute or relative accounting returns, Executives’ interests are
directly aligned with the those of long-term shareholders.

The table below shows progress on the three KPIs over the year and over the last two years of the scheme measurement period.

Measure
Total Property Return
Total Accounting Return
Total Shareholder Return

2013/14
7.9%
15.9%
24.2%

Since
1 April
2012
14.0%
25.5%
46.7%

We are a late cycle business as seen by our current rent reviews, which reflect the compression in construction margins and correction
to land prices over the last five-years that have influenced development appraisal rents agreed with District Valuers. We are therefore
currently experiencing good but lower annual returns at the Property level than historically. TAR and TSR, on the other hand are
strong, reflecting the positive outcome from management actions designed to reverse previous underperformance.

Key awards decisions for 2013/14
The key decision for the year related to the annual bonus. The Annual Report on Remuneration (Part 3 below) gives further details of
performance against targets. The Executive Directors each received 95% of maximum. The most important factor driving the reward
was the actions taken in the year to improve dividend capacity by 33%. This important achievement was identified as an essential first
step on the journey to creating a fully capable healthcare REIT. It has had the desired effect of closing substantially the share price
discount to adjusted net asset value per share, enabling future acquisitions to be value enhancing and providing shareholders with
property investor returns from relatively illiquid investments in a more liquid form.

Assura Group Annual Report 2014 55

Strategic report Governance Financial statements REMUNERATION REPORT CONTINUED

PART 2: DIRECTORS’ REMUNERATION POLICY – UNAUDITED

This section of the Remuneration Report sets out the Company’s Directors’ Remuneration Policy governing future remuneration
payments. The policy is subject to approval by shareholders at the Company’s AGM on 22 July 2014, applies for three years and will
be available on the Company’s website.

The Committee has established the remuneration policy for the Executive Directors; the Executive Directors have established
a policy on the remuneration of the Non-Executive Directors.

Remuneration policy for Executive Directors
The Committee’s remuneration policy continues to be based on five key principles:

1. The interests of shareholders and management should be aligned.
2. Excessive risk taking should be discouraged and effective risk management is given due consideration.
3. It should retain and motivate, based on selection and interpretation of appropriate benchmarks.
4. Poor performance should not be rewarded.
5. The long-term interests of the Company should be promoted.

Future policy table – Executive Directors

Performance measures
and assessment

None.

Objective and link to strategy
Fixed remuneration
Base salary
Core element of remuneration set
at a level that recognises the small
size of the Company but when
combined with the performance
based variable remuneration
potential can attract and retain
Executive Directors of the quality
to execute the strategy.

Policy position: Lower quartile
to median

Operation

Maximum opportunity

An Executive Director’s base salary
is considered by the Committee on
appointment and then reviewed
periodically or when an individual
changes position or responsibility.

Any changes normally take effect
from 1 April each year.

When making a determination
as to the appropriate salary level,
the Committee first considers
remuneration practices within
the Group as a whole and, where
considered relevant, conducts
objective research on companies
within the Company’s peers.

It should be noted that the results
of any benchmarking will only be
one of many factors taken into
account by the Committee. Other
factors include:

• individual performance and

experience;

• pay and conditions for employees

across the Group;

• the general performance of the

Company; and

• the economic environment.

No recovery provisions apply
to base salary.

Any increase in salary for the
Executive Directors will take into
account the lower quartile to
median salary levels of comparable
companies within the FTSE Real
Estate Investment Trusts, FTSE
Real Estate Investment Services
sectors, and companies of
comparable size in the FTSE All
Share and FTSE Small Cap.
Individuals who are recruited or
promoted to the Board may, on
occasion, have their salaries set
below the targeted policy level until
they become established in their
role. In such cases subsequent
increases in salary may be higher
than the average until the target
positioning is achieved.

In the normal course of events,
increases in the Executive
Directors’ salaries will not exceed
the average increase for
employees.

The annual salaries for the
Executive Directors for 2014/15 are
set out in the Annual Report on
Remuneration on page 65.

56 Assura Group Annual Report 2014

Objective and link to strategy
Benefits
The Company provides a benefits
package in line with standard
market practice.

Policy position: Market practice

Pension
The Company provides a level of
pension contribution in order to be
competitive and to ensure that it
has the ability to recruit and retain
Executive Directors.

Policy position: Median

Operation
Executive Directors may receive
a benefit package which includes:

• health insurance;
• death in service benefits;
• company car allowance; and
• other benefits as provided from

time to time.

Benefits are reviewed periodically
to ensure that they remain market
competitive.

The payments are not included
in salary for the purposes of
calculating any benefit or level
of participation in incentive
arrangements.

No recovery provisions apply
to benefits.

The Executive Directors receive
payments in lieu of pension
payments.

The payments are not included
in salary for the purposes of
calculating any benefit or level
of participation in incentive
arrangements.

No recovery provisions apply
to pension.

Maximum opportunity
Benefit values vary year on year
depending on premiums and the
maximum value is the cost of the
provision of these benefits.

Performance measures
and assessment
None.

The maximum payment in lieu of
pension is 20% of salary for the
CEO and 15% for other Executive
Directors.

None.

Performance based variable remuneration
Bonus plan
Incentivises the achievement of a
range of key performance targets
that are key to the success of
the Company.

Policy position: Median

Awards may be made annually.

The performance period is one
financial year with pay-out in cash
determined by the Committee
following the financial year end,
based on achievement against a
range of financial and strategic
targets.

Bonus payments are not
pensionable.

Bonus payments are subject
to clawback provisions.

The Committee views the
performance targets for the bonus
plan as commercially sensitive and
that it would be detrimental to the
interests of the Company to
disclose them before the start of
the financial year. The targets will
be disclosed after the end of the
relevant financial year in that year’s
remuneration report, except in
exceptional circumstances where
their disclosure remains
commercially sensitive.

The maximum annual bonus for
Executive Directors is 100% of
salary. Currently the maximum for
the Chief Executive is 100% and
50% for the Finance Director.

At threshold performance 0%
of maximum can be earned.

At target 75% of maximum can
be earned.

Performance measures are set
annually based on a number of
financial and strategic measures,
including for example:

• delivering specific added value

activities;

• delivering financial goals;
• improving operational
performance; and

• developing the performance

capability of the team.

The Committee has the discretion
to vary the performance targets
depending on economic conditions
and Company specific
circumstances that may occur
during the year.

At the end of each financial year the
Committee takes into account the
Company’s financial performance
and achievement against key
short-term objectives established
at the beginning of the year. This
involves establishing in advance
what constitutes success for good,
strong or outstanding performance.
It is the Committee’s approach to
view the performance in the round
at the end of the year, taking into
account extraneous events and
changing priorities, where relevant.

Assura Group Annual Report 2014 57

Strategic report Governance Financial statements REMUNERATION REPORT CONTINUED

Objective and link to strategy
Assura Value Creation
Plan (“VCP”)
The long-term incentive
arrangements are structured
so as to align the incentives of
relevant participants with the
long-term performance of the
business and to motivate and
retain key members of staff.

Policy position: Upper quartile

Operation
Executive Directors, and other
eligible employees, are granted
an award of performance units
that have no value on grant, but
which may convert into nil-cost
options over shares provided
the performance conditions have
been achieved at three separate
dates (known as Measurement
Dates “MDs”) over a five-year
performance period.

The overall effect of the VCP is
that the Executive Directors and
other participants will be able to
earn shares equivalent to 10%
of any TSR created above a
pre-determined hurdle (Threshold
Price) at the three MDs.

The first MD will be in 2015, the
second in 2016 and the third
in 2017.

50% of the total accrued nil-cost
options become exercisable at
the first and second MDs and
100% of accrued nil-cost options
at the third MD.

Maximum opportunity
Under the VCP a total of 1 million
performance units can be granted
to all participants. As at 31 March
2014, 175,000 have not yet been
awarded.

All employees are eligible to
participate in the VCP.

The maximum aggregate number
of shares that can be issued to
satisfy awards under the VCP to all
participants is limited to 25 million.

Following approval of the VCP
by shareholders in 2013, the
Executive Directors were granted
a number of performance units as
set out below:

Executive
G. Roberts
J. Murphy
Total

Number of
performance
units
400,000
175,000
575,000

No further awards were made to
the Executive Directors in 2013/14.

Performance measures
and assessment
At each MD the Threshold Price
will be the higher of the highest
return achieved (Measurement
Price) at any previous MD or 8%
p.a. compound TSR growth from
the Base Price (31.25 pence)
which was the share price on
31 March 2012.

The Measurement Price at each
MD is to be calculated from the
average share price over three
months following the announcement
of the Company’s financial results
plus dividends paid.

Participants in aggregate may earn
shares equivalent to 10% of any
TSR created above the Threshold
Price at each MD.

Unless shareholders receive an 8%
p.a. total return by each MD, the
VCP will not pay out. Any unvested
awards accrued at the first and
second MDs will lapse at the third
MD if the 8% p.a. return to
shareholders has not been
sustained.

A full description of the detailed
conditions and calculations
attached to the VCP awards
are contained in the Circular to
shareholders dated 28 January 2013.

Shareholding requirement
To ensure alignment between
Executive Directors’ and
shareholders’ interests over
a longer time horizon.

The Committee operates a
system of shareholder guidelines
to encourage long-term share
ownership by the Executive
Directors.

Executive Directors may not
sell any shares acquired via
the VCP if the sale would take
their shareholding below the
shareholding requirement.

Not applicable.

The Executive Directors are
expected to acquire shares equal
to at least 100% of their salary.
At the Committee’s discretion
this may be acquired over a time
frame determined by the Committee.

Other Share Incentive Plan awards (i.e. provisions of previous policy that will continue to apply)
Executive Recruitment Plan
(“ERP”)

Up to the value of rewards
foregone.

To facilitate the recruitment of new
Executive Directors

Awards of nil-cost options, or
equivalent incentives, may be made
up to the equivalent value as the
fair value of awards/incentives
foregone from a previous employer.

Outstanding VCP Awards

See description of VCP above.

Following approval of the VCP by
shareholders in 2013, the Executive
Directors were granted a number
of performance units as set out
above. These awards were granted
in a previous year but continue
to apply.

58 Assura Group Annual Report 2014

Jonathan Murphy’s awards in
2013 do not have performance
conditions and vest in three equal
instalments on the first, second
and third anniversary of the award.

See description above.

Notes to the future policy for
Executive Directors
Performance measures and targets
Rationale for the annual bonus plan
The annual bonus plan measures were selected
as the Committee believes they provide direct
alignment with the short-term operational targets
of the Company. Care is taken to ensure that the
short term is always supportive of the long-term
objectives. This is especially important in a
business which has a long-term investment
horizon. These short-term targets are stretching
and geared to encourage outstanding
performance, which if delivered can earn the
Executive up to the maximum under the plan.

Rationale for the Assura Value
Creation Plan
Alignment with the strategic aims
The VCP is intended to directly support the
achievement of the key long-term performance
indicator of the Company, TSR. Growth in TSR is
the main measure demonstrating the successful
execution of a number of the Company’s
financial objectives including:

• capital returns and growth in NAV per share;
• growth in income returns and earnings

per share; and

• the reduction of costs and improvement

in recovery rates.

Further, maximising TSR supports sustainable
growth and a progressive dividend policy.

Alignment of interests with shareholders
One of the main criteria of success by which
shareholders will judge the executive team is
the long-term sustainable increase in absolute
TSR. The VCP provides a direct relationship
between returns to shareholders and value
delivered to participants.

TSR is easy to communicate to shareholders
and participants and also to explain the
basis of the value received by participants
as a proportion of the value delivered
to shareholders.

Risk adjustment
Pay-out under the VCP is capped. This ensures
that participants do not share in a disproportionate
amount of the value created for shareholders.

Before any awards vest and become exercisable
at each measurement date a minimum level
of TSR must have been achieved (i.e. 8% p.a.
compound growth from the Base Price).
This ensures that participants are focused
on sustaining and growing long-term TSR.

The detailed conditions and calculations
attached to the VCP awards are attached in the
Circular to shareholders dated 28 January 2013,
which is available on the Company’s website
www.assuragroup.co.uk.

Discretion
The Committee has discretion in several areas
of policy as set out in this report. The Committee
may also exercise operational and administrative
discretions under relevant plan rules approved
by shareholders. In addition, the Committee
has the discretion to amend policy with regard
to minor or administrative matters where it
would be, in the opinion of the Committee,
disproportionate to seek or await
shareholder approval.

Differences in remuneration policy
for all employees
There are no significant differences in the
types of reward between Directors and staff.
All employees are entitled to base salary, benefits
and defined contribution pension payments and
are eligible for annual bonuses and to participate
in the VCP. The bonus targets for staff are more
focused on specific personal goals that further
the Company’s interests. The maximum
opportunity available is based on the seniority
and responsibility of the role.

Changes to remuneration policy
from previous policy
There have been no changes to the operation,
maximum or performance measures in relation
to the salary, annual bonus, pension, other
benefits or the VCP.

Assura Group Annual Report 2014 59

Strategic report Governance Financial statements REMUNERATION REPORT CONTINUED

Illustrations of application of remuneration policy
The policy of the Committee is to align Executive Directors’ interests with those of shareholders and to give the Executive Directors
incentives to perform at the highest levels. To achieve this it seeks to ensure that a significant proportion of the remuneration package
varies with the performance of the Company and that targets are aligned with the Company’s stated business objectives.

The composition and total value of the Executive Directors’ remuneration package for the financial year 2014/15 at minimum, on-target
and maximum performance scenarios are set out in the charts below.

Graham Roberts £’000

Jonathan Murphy £’000

1,000

800

600

400

200

£742

15%

32%

53%

£392

100%

£933

24%

34%

42%

500

400

300

200

100

£333
15%

20%

65%

£216

100%

£405
24%

22%

54%

Minimum

On-Target

Maximum

Minimum

On-Target

Maximum

n Fixed elements n Annual variable n Multiple reporting periods

Assumptions used in determining the level of pay-out under given scenarios are as follows:

Element

Fixed elements
Annual variable element (bonus plan)
Multiple reporting period elements (VCP)

Minimum
2014/15 base salary, benefits
estimate and pension
0%
0%

On-target

75% of maximum award1
50% of IFRS 2 annual value
of award2

Maximum

100% of maximum award1
100% of the IFRS 2 annual value
of award2

Notes
1. 100% of salary for the CEO, 50% for the FD.
2. The VCP is a one-off award granted in 2013 with a five-year period. The maximum value represents 100% of the annualised IFRS 2 value of the award.
3. In accordance with the Regulations, no allowance has been made for share price appreciation.

60 Assura Group Annual Report 2014

Approach to recruitment remuneration and promotions
The Committee’s approach to recruitment remuneration is to pay no more than is necessary to attract candidates of the appropriate
calibre and experience needed for the role. The remuneration package for any new recruit would be assessed following the same
principles as for the Executive Directors, as set out in the remuneration policy table. The Committee will have regard to guidelines
and shareholder sentiment regarding one-off or enhanced short or long-term incentive payments made on recruitment and the
appropriateness of any performance measures associated with an award.

Where an existing employee is promoted to the Board, the policy set out above would apply from the date of promotion but
there would be no retrospective application of the policy in relation to subsisting incentive awards or remuneration arrangements.
Accordingly, prevailing elements of the remuneration package for an existing employee would be honoured and form part of
the ongoing remuneration of the employee. These would be disclosed to shareholders in the following year’s Annual Report
on Remuneration.

The table below summarises our key policies with respect to recruitment remuneration.

Element
Fixed remuneration

Policy
The salary level, benefits and pension entitlement will be set taking into account a number
of factors including market practice, the individual’s experience and responsibilities and the
policies for salary, benefits and pensions for existing Executive Directors as set out in the
remuneration policy table.

In certain circumstances the Committee may choose to recruit unproven Executive Directors
at a salary below the Committee’s policy position (lower quartile to median) with a view to
providing above average increases in salary until the policy position is achieved, subject to
performance, experience and to the individual proving themselves in the role.

Performance based variable
remuneration

The recruited Executive Director will be eligible to participate in the annual bonus plan and
the Assura Group VCP as set out in the remuneration policy table.

Share buyouts/replacement awards

The maximum annual variable remuneration that an Executive Director can receive is limited
to 100% of salary under the annual bonus plan and a percentage of the value created under
the VCP. Awards under the VCP have no value at grant but provide participants with the
opportunity to receive a percentage of the value created for shareholders (see remuneration
policy table). Under the VCP, a maximum of 25 million shares can be used to satisfy awards
to all participants.

The Committee’s policy is not to provide buyouts as a matter of course. However, should the
Committee determine that the individual circumstances of recruitment justified the provision
of a buyout, the value of any incentives that will be forfeited on cessation of an Executive
Director’s previous employment will be calculated taking into account the following:

• the proportion of the performance period completed on the date of the Director’s cessation

of employment;

• the performance conditions attached to the vesting of these incentives and the likelihood

of them being satisfied; and

• any other terms and conditions having a material effect on their value (“lapsed value”).

The Committee may then grant up to the equivalent value as the lapsed value, where
possible, under the Company’s incentive plans. To the extent that it was not possible or
practical to provide the buyout within the terms of the Company’s existing incentive plans,
a bespoke arrangement would be used.

Relocation policies

In instances where the new Executive is relocated from one work-base to another, the
Company may provide compensation to reflect the cost of relocation for the Executive
at the discretion of the Committee.

The level of the relocation package will be assessed on a case by case basis but will take
into consideration any incremental cost of living differences or housing and schooling costs.

Assura Group Annual Report 2014 61

Strategic report Governance Financial statements REMUNERATION REPORT CONTINUED

Approach to service contracts and cessation of employment

Service contracts
Each of the Executive Directors has a service contract with the Company which is terminable by the Company on six months’ notice
and by the Director on six months’ notice. The Company’s practice is to appoint the Non-Executive Directors, including the Chairman,
under letters of appointment. Their appointment is usually for a term of three years subject to annual re-election by the shareholders,
at the Company’s AGM. When setting notice periods, the Committee has regard for market practice and Corporate Governance best
practice.

Executive Director
Graham Roberts
Jonathan Murphy

Date of contract
29 March 2012
2 January 2013

Unexpired term
Rolling contract
Rolling contract

Notice period by Company
or Director
6 months
6 months

Non-Executive Director
Simon Laffin
David Richardson
Jenefer Greenwood

Date of letter of appointment
13 September 2011
21 December 2011
8 May 2012

Unexpired term as at
31 March 2014
6 months
9 months
13 months

All service contracts and letters of appointment are available for viewing at the Company’s registered office.

When determining any loss of office payment for a departing Director the Committee will always seek to minimise cost to the
Company whilst complying with the contractual terms and seeking to reflect the circumstances in place at the time. The Committee
reserves the right to make additional payments where such payments are made in good faith in discharge of an existing legal
obligation (or by way of damages for breach of such an obligation); or by way of settlement or compromise of any claim arising in
connection with the termination of an Executive Director’s office or employment.

Good leaver status
The Committee has discretion to determine whether an individual is a good leaver. Where the Committee uses its general discretion to
determine that an Executive Director is a good leaver, it will provide a full explanation to shareholders of the basis for its determination.

In the circumstances of a good leaver (see reasons in the table on page 63), the Committee in its absolute discretion will determine:

• whether a pro-rated bonus will be payable for the year of cessation;
• the proportion of awards under the VCP, if any, that will be capable of converting into nil-cost options on cessation;
• whether the awards will convert on the date of cessation or continue until the nearest normal MD on which they would otherwise

have converted; and

• whether unvested accrued nil-cost options shall vest on cessation of employment.

The Committee may also decide to extend the period in which good leavers can exercise their nil-cost options.

62 Assura Group Annual Report 2014

The table below sets out, for each element of total remuneration, the Company’s policy on payment for loss of office in respect of
Executive Directors and any additional discretion available to the Committee.

Salary, benefits and pension contributions/salary supplement
will normally be paid over the notice period. The Company
has discretion to make a lump sum payment on termination
for the salary, value of benefits and pension amounts
payable during the notice period. In all cases the Company
will seek to mitigate any payments due.

Change of control
On a change of control, triggering the Executive’s
termination of contract, the extent to which the
performance requirements are satisfied will determine
the annual bonus which is earned.

Note that this excludes a reorganisation or reconstruction
where ownership does not materially change.

The Committee will take into account such factors as it
consider relevant in relation to the bonus plan payment
for the year in which the event occurs.

On a change of control (takeover, reconstruction,
amalgamation, winding-up or demerger before the MD)
there will be a new MD deemed to be the date of the
change of control.

In determining the value created, the Measurement Price
will be the offer price for the Company’s shares. The
calculation of the number of Company shares to be
allocated to a participant will be as at any other MD.

All accrued nil-cost options will vest on a change of control
and be exercisable together with any other vested nil-cost
options immediately for a set period of up to six months.

Element
Base salary, benefits
and pension

Cessation of employment
There will be no compensation for normal resignation or in
the event of termination by the Company due to misconduct.
In other circumstances, Executive Directors will be entitled
to receive payment in lieu of notice.

Element
Bonus plan

Value Creation Plan
The treatment of awards
granted under the VCP
is governed by the
rules, as approved
by shareholders.

Cessation of employment
Where an Executive Director’s employment is terminated
after the end of a performance year but before the payment
is made, the Executive may be eligible for an annual bonus
award for that performance year subject to an assessment
based on performance achieved over the period.

Where an Executive Director’s employment is terminated
during a performance year and provided the individual is a
“good leaver”, a pro-rata annual bonus award for the period
worked in that performance year may be payable at the
Committee’s discretion subject to an assessment based
on performance achieved over the period.

No award will be made in the event of gross misconduct.

On termination of employment before an MD, all
unvested awards will lapse, unless the following
circumstances apply:

• death, injury, ill-health or disability;
• retirement or redundancy;
• any other circumstances if the Committee decides

in any particular case.

Where an Executive Director is deemed a good leaver
prior to the MD, the Committee will have discretion to
allow some or all of the awards to vest by deeming:

• there to be a new MD at the date of cessation and

the number of nil-cost options to be accrued will be
calculated as at any other MD; or

• that the nearest normal MD to the date of cessation

of employment can be used.

All accrued nil-cost options will then vest and be
immediately exercisable (including any other vested
nil-cost options) for a period of six months.

Anyone who is not a good leaver will be a bad leaver.
Where a bad leaver ceases to be employed prior to
the awards becoming exercisable all awards will lapse
(including accrued unvested nil-cost options).

Assura Group Annual Report 2014 63

Strategic report Governance Financial statements REMUNERATION REPORT CONTINUED

Performance measures
and assessment
None.

Future policy table – Non-Executive Directors

Objective and link to strategy
The Company sets fee levels
necessary to attract and retain
experienced and skilled Non-
Executive Directors to advise and
assist with establishing and
monitoring the strategic objectives
of the Company.

Operation
Fee levels are sufficient to attract
individuals with appropriate
knowledge and experience.

Non-Executive Directors are paid
a base fee and additional fees for
Chairmanship of Committees.

Policy position: Medìan

Fees are reviewed periodically with
any changes generally effective
from 1 April.

In exceptional circumstances, fees
may also be paid for additional time
spent on the Company’s business
outside of the normal duties.

Non-Executive Directors do
not receive a bonus, do not
participate in awards under the
Company’s share plans, and are
not eligible to join the Company’s
pension scheme.

Maximum opportunity
Fees will be in line with the median
fee levels of comparable
companies within the FTSE Real
Estate Investment Trusts and FTSE
Real Estate Investment Services
sectors, and companies of
comparable size in the FTSE All
Share and FTSE Small Cap.

In the normal course of events,
increases in Non-Executive
Directors’ fees will not exceed the
average increase for employees
and will take into consideration the
level of responsibility and fees paid
in companies of comparable size
and complexity.

The Non-Executive Director fees
for 2014/15 are set out in the
Annual Report on Remuneration
on page 67.

Consideration of employment conditions elsewhere in Assura when developing policy
In setting the remuneration policy for Directors, the pay and conditions of other employees of Assura are taken into account, including
any base salary increases awarded. The Committee is provided with data on the remuneration structure for all staff and uses this
information to ensure consistency of approach throughout the Company. No comparison metrics were used.

The Company has a small number of employees and applies the same policy in relation to incentive compensation throughout the
organisation. All employees are eligible for annual bonuses and to participate in the VCP.

Although the Committee takes into account the pay and conditions of other employees, the Company did not consult with employees
when drawing up the policy report.

Consideration of shareholder views
The Committee takes the views of the shareholders seriously and these views are taken into account in shaping remuneration policy
and practice. Shareholder views are considered when evaluating and setting remuneration strategy and the Committee commits to
consulting with key shareholders prior to any significant changes to its remuneration policy.

At the 2013 AGM the Committee obtained support for its proposals. This followed extensive consultation with shareholders on its
Executive Remuneration policy including the VCP during the 2012/13 financial year.

64 Assura Group Annual Report 2014

PART 3: ANNUAL REPORT ON REMUNERATION – UNAUDITED UNLESS STATED

This Annual Report on Remuneration contains details of how the Company’s remuneration policy for Directors was implemented
during the financial year ended 31 March 2014. This report has been prepared in accordance with the provisions of the Companies
Act 2006 and Schedule 8 of the Large and Medium-sized Companies and Groups (Accounts and Reports) (Amendment) Regulations
2013. An advisory resolution to approve this report will be put to shareholders at the AGM.

Single total figure of remuneration – Executive Directors – audited
The remuneration of Executive Directors showing the breakdown between components with comparative figures for the prior year are
shown below. Figures provided have been calculated in accordance with the Regulations.

Executive Director
(£’000)
Graham Roberts

Jonathan Murphy

Salary
309
300
153
38

Taxable
benefits
15
14
11
3

Bonus
294
300
73
19

Pensions
62
60
19
5

Long-term
incentives
0
0
61
0

Total
680
674
317
65

2013/14
2012/13
2013/14
2012/13

Notes
1. Graham Roberts and Jonathan Murphy received payments in lieu of pension contributions equivalent to 20% and 12.5% of salary respectively for 2013/14 and 2012/13.
2. Jonathan Murphy joined the Company on 2 January 2013. His long-term incentive which vested on 29 January 2014 is the first of three due under his Executive

Recruitment Plan and comprised 153,334 shares at 39.55 pence each.

2013/14 annual bonus plan outcome
In determining the award for 2013/14, the Committee took into account the Company’s financial performance and achievement
against key short-term objectives established at the beginning of the year. This involved establishing in advance what would constitute
success for good, strong or outstanding performance. The performance targets and performance are summarised below. It is the
Committee’s approach to view the performance in the round at the end of the year, taking into account extraneous events and
changing priorities, where relevant.

The requirement to rebuild dividend capacity through corporate activity and balance sheet restructuring was identified as the most
critical success factor for the Company at this stage of its evolution, having special regard to its REIT status.

For 2013/14 the maximum potential bonus awards were 100% of salary for the Chief Executive and 50% of salary for the
Finance Director.

Assura Group Annual Report 2014 65

Strategic report Governance Financial statements REMUNERATION REPORT CONTINUED

Performance measures
Restructuring the balance sheet to create
more dividend capacity

Actual targets set at the beginning of the year
Increased dividend capacity created:

Good +15%

Strong +25%

Outstanding +35%

Actual performance outcome
Following sale of LIFT and purchase of Trinity,
capacity increased by 33%

Delivering underlying profit budget and
development surpluses

Underlying profit budget achieved plus
development surpluses recognised:

Good 95% + £2 million

Strong 100% +£2.2 million

Outstanding 105% +£2.5 million

Substantial outperformance: 119% including
capital recycling benefits; 110% outperformance
excluding capital recycling benefits

Development profits were £2.3 million

Increase awareness of Assura’s new business
model in NHS and the importance of
addressing primary care development

Achieve recognition within NHS that primary
care premises development should be at the
heart of the primary care strategy

Included prominently within the results of the
GP “call to action” (March 2014)

(Graham Roberts only)

Achieving a step change in perception
of the Group

Identify and execute initiatives to improve the
Group’s image amongst health professionals

Building the team’s performance capability

Embedding a continuous improvement culture

Membership of Social Stock Exchange

Extensive thought leadership contributions
within health press and in camera

New focus and accountabilities introduced
into property team creating better focus
and enhancing capacity

Other personal goals

(Jonathan Murphy only)

Build finance team as a strong partner for the
property team

Extended finance remit

Build relationships with new banks

Revolving credit facility agreed for £30 million
(completed post year end)

The Remuneration Committee reviewed performance against the above targets and considered that the Chief Executive had had an
outstanding year in respect of financial targets, defending an unwelcome bid for the Company and achieving significant change in the
share register, whilst some further direction could have been given to property related matters and measurable achievements from
lobbying. The Committee concluded the bonus for the Chief Executive should be awarded at 95% of maximum. The Committee
reviewed the performance against targets of the Finance Director and considered he had an outstanding year in respect of financial
targets and in supporting the Chief Executive, defending the unwelcome bid for the Company and achieving significant change in the
share register, whilst further development of the finance team could have been achieved. The Committee concluded a bonus for the
Finance Director should be 95% of maximum.

Vesting of long-term incentive awards – audited
There was no vesting under the VCP in 2013/14 as the first measurement date is in 2015.

Awards were made under the ERP to Jonathan Murphy in 2013 to facilitate his recruitment. The awards have no performance criteria
and vest in three equal instalments on the first, second and third anniversary of their award. One third of the awards granted to
Jonathan Murphy vested on 29 January 2014.

Award
ERP awards

Performance measures
None

Number of nil-cost options
vested
153,334

Value of vested awards £’000
61

Notes
1. The value of nil-cost options is calculated using the closing middle market share price on 29 January 2014 of 39.55 pence per share, the date the awards

became exercisable.

66 Assura Group Annual Report 2014

Total pension entitlements
No Executive Director or any member of staff is entitled to a defined benefit pension arrangement. Graham Roberts and Jonathan
Murphy received payments in lieu of pension contributions equivalent to 20% and 12.5% of salary respectively for 2013/14.

Single total figure of remuneration – Non-Executives – audited
The remuneration of Non-Executive Directors showing the breakdown between components, with comparative figures for the prior
year, are shown below. Figures provided have been calculated in accordance with the Regulations.

Non-Executive Director (£’000)
Simon Laffin

David Richardson

Jenefer Greenwood

Clare Hollingsworth

2013/14
2012/13
2013/14
2012/13
2013/14
2012/13
2013/14
2012/13

Basic fees
126
120
36
34
36
34
–
6

Additional fees
–
–
16
16
8
8
–
–

Total fees
126
120
52
50
44
42
–
6

Notes
1. Simon Laffin’s fees are paid to Simon Laffin Business Services Limited.
2. Clare Hollingsworth stepped down from the Board on 23 May 2012.
3. Additional fees represent Senior Independent Director’s and Chairman of Board Committee fees.

Statement of Directors’ shareholding and share interests
Directors’ share interests and, where applicable, achievement of shareholding requirements are set out below. In order that their
interests are aligned with those of shareholders, Executive Directors are expected to build up and maintain a personal shareholding
equal to 100% of their basic salary in the Company.

Shareholding and other interest at 31 March 2014

Director
Executive
Graham Roberts
Jonathan Murphy
Non-Executive
Simon Laffin
David Richardson
Jenefer Greenwood

Shares
required
to be held
(% salary)

Shareholding
Number of
shares
required
to hold

Number of
beneficially
owned
shares1

Number
of shares
in ERP2

Total
interests
held at
31 March
2014

Shareholding
requirement
met?3

100%
100%

722,800
358,800

1,500,000
281,267

–
306,668

1,500,000
587,935

Yes
On track

–
–
–

2,104,095
253,616
51,279

–
–
–

2,104,095
253,616
51,279

n/a
n/a
n/a

Notes
1. Beneficial interests include shares held directly or indirectly by connected persons.
2. ERP interests are subject to vesting conditions as set out on page 58.
3. Shareholding requirement calculation is based on the share price at the end of the year.
4. VCP interests are not included in this table because they are awards of performance units with a right to a number of nil-cost options over shares at each MD provided

the performance conditions are achieved. At the date of grant of the performance units the number of nil-cost options that could be earned is unknown.

The Company funds its share incentives through a combination of new issue and market purchased shares. The Company monitors
the levels of share grants and the impact of these on the ongoing requirement for shares. In accordance with guidelines set out by the
Association of British Insurers (“ABI”) the Company can issue a maximum of 10% of its issued share capital in a rolling 10-year period
to employees under all its share plans.

There has been no movement in Directors’ shareholdings and share interests from 31 March 2014 to the date of this report.

Assura Group Annual Report 2014 67

Strategic report Governance Financial statements

REMUNERATION REPORT CONTINUED

Performance graph and table
The Committee believes that the current Executive Remuneration policy and the supporting reward structure provide clear alignment
with the Company’s performance. Following the sale of the Company’s Pharmacy business in 2011 and conversion to a REIT in April
2013, the Committee believes it is appropriate to monitor the Company’s performance against the FTSE All Share Real Estate
Investment Trusts index.

The graph below sets out the TSR performance of the Company compared to the FTSE All Share Real Estate Investment Trusts index
and for comparison, the FTSE All Share index over a five-year period as required by regulation and for the two-year period elapsed of
the VCP.

Five-year relative TSR performance

250

100

Two-year relative TSR
performance (VCP period to date)
150

100

March
2009

March
2010

March
2011

March
2012

March
2013

March
2014

March
2012

March
2013

March
2014

– Assura – FTSE UK Real Estate Investment Trusts – FTSE All Share

The table below shows the Chief Executive’s remuneration package over the past five years.

Year
2013/14
2012/13
2011/12
2010/11
2009/10
2009/10

Name
Graham Roberts
Graham Roberts
Nigel Rawlings2
Nigel Rawlings
Nigel Rawlings (from 16/03/10)
Richard Burrell3, 4 (until 15/03/10)

Single figure
of total
remuneration
(£’000)1
680
674
395
314
11
487

Bonus
pay-out
(as %
maximum
opportunity)
95
100
85
75
–
–

Long-term
incentive
vesting rates
(as % maximum
opportunity)
–
–
–
–
–
–

Notes
1. Includes base salary, taxable benefits, bonus payments for the relevant financial year, long-term incentive awards that vested for performance related to the financial

year and cash in lieu of pension.

2. Nigel Rawlings ceased to be a Director with effect from 30 April 2012. The bonus of £100,000 was a one-off award reflecting his contribution to selling the Pharmacy

business.

3. Richard Burrell ceased to be a Director on 15 March 2010.
4. During the financial year 2009/10 Richard Burrell was Chief Executive from 1 April 2009 until 15 March 2010 when Nigel Rawlings assumed the position. The amounts

above are therefore reflective of the relative lengths of service.

68 Assura Group Annual Report 2014

Percentage change in the Chief Executive’s remuneration
The table below compares the percentage increase in the Chief Executive’s pay (including salary and fees, taxable benefits and
annual bonus) with the wider employee population. The Company considers the 27 full-time employee population, excluding the
Executive Board, to be an appropriate comparator group.

Chief Executive
Total employee pay
Average employee pay

Salary %
increase
2.1
4.0
4.0

Taxable
benefits %
increase
–
–
–

Bonus %
increase
(2.0)
2.5
15.3

Relative importance of spend on pay
The table below sets out the overall spend on pay for all employees compared with the returns distributed to shareholders.

Significant distributions
Overall spend on pay for employees including Executive Directors
Distributions to shareholders by way of dividends

Notes
1. The above figures are taken from Notes 6 and 25 to the financial statements.

Payments to past Directors or for loss of office
During the year there were no payments to past Directors, and no payments for loss of office.

Statement of implementation of remuneration policy for 2014/15
Executive Directors
Salary
The salaries for 2014/15 and the relative increases are set out below.

2012/13
(£m)
1.8
4.5

2013/14
(£m)
1.9
7.2

%
change
5.6
60.0

Executive Director
Graham Roberts
Jonathan Murphy

2013/14
salary
£309,000
£153,000

2014/15
salary
£315,500
£180,000

% change
2.1%
17.6%

Annual bonus
The performance objectives under the annual bonus plan for 2014/15 relate to value-added opportunities, refining strategy to reflect
current market drivers, financial targets, external engagement and team development. The Committee is of the opinion that the
precise performance targets for the bonus plan are commercially sensitive and that it would be detrimental to the interests of the
Company to disclose them before the start of the financial year. Actual targets, performance achieved and awards made will be
published at the end of the performance period so shareholders can fully assess the basis for any pay-outs. The Committee will also
follow the same practice of the last two years and view the weightings for bonus purposes at the end of the year, having regard to all
known factors.

Long-term incentive plan
Awards were made under the VCP in 2012/13. These are one-off awards to cover the period up to 2017/18.

Pension and benefits
Graham Roberts and Jonathan Murphy will receive payments in lieu of pension contributions equivalent to 20% and 13.5% of salary
respectively. Benefits will be provided in line with the Executive Directors’ remuneration policy table.

Assura Group Annual Report 2014 69

Strategic report Governance Financial statements REMUNERATION REPORT CONTINUED

Non-Executive Directors
The following table sets out the fee rates for the Non-Executive Directors for 2013/14 and those rates which will apply from 1 April for
2014/15:

Chairman fee
Non-Executive Director base fee
Additional fee for Chairmanship of Audit and Remuneration Committee
Additional fee for Senior Independent Director

2013/14
£126,000
£35,500
£8,000
£8,000

2014/15
£126,000
£35,500
£8,000
£8,000

% change
–
–
–
–

Consideration by the Committee of matters relating to Directors’ remuneration
Role of the Committee and activities
The Committee is responsible for recommending to the Board the remuneration policy for Executive Directors and the senior
management and for setting the remuneration packages for each Executive Director. The Committee also has oversight of the
remuneration policy and packages for other senior members of staff.

The written Terms of Reference of the Committee are available on the Company’s website and from the Company on request.
The Committee’s activities during the 2013/14 financial year included:

• Consideration of objectives and targets for annual bonus
• Consideration of annual pay awards and bonuses
• Approval of increase in staff pension contributions (company and personal)
• Review and agreement of changes to allocation basis for the staff bonus pool
• Confirmation of first vesting of the ERP
• Review of the Directors’ Remuneration Policy
• Review of new disclosure requirements.

Advisors to the Committee
The Committee received external advice in 2013/14 from PwC, who were appointed by the Committee and are considered objective
and independent. PwC are members of the Remuneration Consultants Group and, as such, voluntarily operate under the code of
conduct in relation to Executive remuneration consulting in the UK.

The Committee reviewed the nature of the services provided and was satisfied that no conflict of interest exists or existed in the
provision of these services.

The Committee also sought the views of Graham Roberts during the year. The Chief Executive is given notice of all meetings and,
at the request of the Chairman of the Committee, attends the meetings. The Chief Executive may request that he attends and speaks at
Committee meetings but not on decisions relating to his own remuneration. In normal circumstances, the Chief Executive will be
consulted on general policy matters and matters concerning the other Executive Directors and employees.

The total fees paid to PwC in respect of services to the Committee during the year were £27,500. Fees were determined based on the
scope and nature of the projects carried out for the Committee during the year.

Statement of shareholder voting
The table below shows the advisory vote on the 2012/13 Directors’ Remuneration Report at the AGM held on 19 September 2013.
In addition, at General Meeting of the Company on 15 February 2013 shareholders approved the VCP.

2012/13 Remuneration Report
Approval of the VCP

Votes for
232,558,568
346,064,477

%
84.17
80.40

Votes
against
43,733,310
84,509,520

%
15.83
19.60

Votes
withheld
15,006,818
23,672,207

The first votes on the Annual Report on Remuneration and the Directors’ Remuneration Policy are due to take place at the AGM to be
held on 22 July 2014.

By order of the Board

Jenefer Greenwood
Chairman of the Remuneration Committee
22 May 2014

70 Assura Group Annual Report 2014

The Group’s medical centre property
developments in progress are all substantially
pre-let and in the main have funding in place.

The Group has benefited from periodic sales
of non-core assets which included surplus land
and non-medical properties in the year under
review. We continue to market a number of
non-core properties for sale.

The Group has adequate headroom in its
banking covenants. The Group has been
in compliance with all financial covenants
on its loans throughout the year.

The Group’s properties are substantially let
with rent paid or reimbursed by the NHS and
they benefit from a weighted average lease
length of 14.4 years. They are also diverse
both geographically and by lot size and
therefore represent excellent security.

The Group’s financial forecasts show that
borrowing facilities are adequate and the business
can operate within these facilities and meet its
obligations when they fall due for the foreseeable
future. The Directors believe that the business
is well placed to manage its current and
reasonably possible future risks successfully.

Accordingly, the financial statements have been
prepared on a going concern basis.

DIRECTORS’
REPORT

Financial and business reporting
The Directors present their Annual Report and
Accounts on the affairs of the Group, together
with the financial statements and auditor’s
report, for the year ended 31 March 2014.
The Corporate Governance Statement set
out on page 48 forms part of this report.

The Directors’ Report and the other sections of
this Annual Report contain forward-looking
statements. The extent to which the Company’s
shareholders or anyone may rely on these
forward-looking statements is set out in the
Glossary on page 114.

Principal activities
Assura Group is the UK’s leading primary care
property investor and developer. It owns and
procures good quality primary care properties
across the UK.

The subsidiary and associated undertakings
principally affecting the profits or net assets
of the Group in the year are listed in Note 13
to the financial statements.

Business review
The Group is required to include a business
review in this report. The information that fulfils
the requirements of the business review can
be found on pages 34 to 39, which are
incorporated in this report by reference.

Going concern
The Group’s business activities together with
factors likely to affect its future performance
are set out in the business review on pages
34 to 39. In addition, Note 29 to the financial
statements includes the Group’s objectives,
policies and processes for managing its capital,
its financial risk management objectives, details
of its financial instruments and its exposure to
credit risk and liquidity risk.

The Group has facilities from two financial
institutions, neither of which is repayable before
November 2016 other than modest annual
amortisation and much of the debt is not
repayable before 2021. In addition to surplus
available cash of £27.6 million at 31 March 2014
(2013: £15.6 million), the Group has surplus
security comprising unmortgaged property
assets totalling £7.6 million at that date
(2013: £3.3 million).

Assura Group Annual Report 2014 71

Strategic report Governance Financial statements DIRECTORS’ REPORT CONTINUED

Internal controls and risk management
The Board accepts and acknowledges that it is
both accountable and responsible for ensuring
that the Group has in place appropriate and
effective systems, procedures, policies and
processes for internal controls.

Throughout the period covered by this report
and up to the date of this report the Board
believes that there have been appropriate
internal controls and risk management
processes in place which have been reviewed
and updated as outlined in this report.

Dividends
Details of the dividend can be found in Note 25.
The Group benefits from brought forward tax
losses which results in all dividends paid during
the year being paid as ordinary dividends with
an associated tax credit.

Supplier payment policy
The Group has not signed up to any specific
supplier payment code; it is Assura’s policy
to comply with the terms of payment agreed
with its suppliers. Where specific payment
terms are not agreed, the Group endeavours
to adhere to the suppliers’ standard payment
terms. As at 31 March 2014, the average
number of days taken by the Group to pay
its suppliers was 20 days (2013: 36 days).

Post balance sheet events
Subsequent to the year end, a subsidiary of the
Group has entered into a five-year, £30 million
revolving credit facility with RBS and Barclays.

Directors’ liability insurance
The Company has arranged insurance cover
in respect of legal action against its Directors.

Company share scheme
The Assura Group Employee Benefit Trust holds
4,064,885 (0.8%) of the issued share capital of
the Company on trust for the benefit of employees
of the Group and their dependants. The voting
rights in relation to these shares are exercised
by the Trustees who will take into account any
recommendation made to them by the Board
of Assura Group Limited.

Donations
In the year to 31 March 2014 Assura donated
£13,094 to charities (2013: £23,451), all of which
were UK registered charities, and no
contributions were made for political purpose
(2013: nil). More details of our chosen charities
can be found on pages 42 and 43.

Employees
Employees are encouraged to maximise their
individual contribution to the Group. In addition
to competitive remuneration packages, they
participate in an annual bonus scheme which
links personal contribution to the goals of the
business. Outperformance against the annual
targets can result in a bonus of up to 20% for
all staff below the Senior Leadership Team.
Employees are provided regularly with information
regarding progress against the budget, financial
and economic factors affecting the business’s
performance and other matters of concern
to them. In addition, all staff are eligible to
participate in a defined contribution pension
scheme and the VCP. The views of employees
are taken into account when making decisions
that might affect their interests. Assura
encourages openness and transparency,
with staff having regular access to the Chief
Executive and being given the opportunity
to express views and opinions.

Gender ratios

Board

Senior management team

Employee workforce

14 13

72 Assura Group Annual Report 2014

Share capital
The issued share capital of the Company is
529,548,924 Ordinary Shares of 10 pence each.

The Group is committed to the promotion of
equal opportunities, supported by its Equal
Opportunity and Valuing Diversity Policy. The
policy reflects both current legislation and best
practice. It highlights the Group’s obligations to
race, gender and disability equality. Full and
fair consideration is given to applications for
employment from disabled persons and
appropriate training and career development
is provided.

Interests in voting rights
As at 1 May 2014 the Company had been
notified of the following interests representing
5% or more of its issued Ordinary Share Capital.

Name of shareholder

31 March 2014

1 May 2014

Somerston Investments Limited
Artemis Investment Management
Aberforth
Whitehall Associated SA

Number of
shares
156,928,493
90,856,242
44,363,188
26,500,000

% of
Ordinary
Shares

Number
of shares
29.63 156,736,965
93,034,881
17.16
44,363,188
8.38
26,500,000
5.00

% of
Ordinary
Shares
29.60
17.57
8.38
5.00

Price risk, credit risk, liquidity risk
and cash flow risk
Full details of how these risks are mitigated can
be found in Note 29.

The Directors, on recommendation from the
Audit Committee, intend to place a resolution
before the AGM to re-appoint Deloitte LLP as
auditor for the year ending 31 March 2015.

Future developments
Details of future developments are discussed on
page 35 in the business review.

Greenhouse gas emissions
The greenhouse gas emissions from operating
activities and property occupied by the
Company represented 71.5mt CO2e. These
reported levels exclude investment properties
where we are not the occupier.

Amendments to the Articles
of Incorporation
The Articles of Incorporation of the Company
may be amended by special resolution of
the Company.

Annual General Meeting
The AGM of the Company will be held at the
offices of Addleshaw Goddard, 60 Chiswell
Street, London EC1Y 4AG on 22 July 2014
at 10am.

Auditor
Each of the persons who is a Director at the date
of approval of this Annual Report confirms that:

By order of the Board

• so far as the Director is aware, there is
no relevant audit information of which
the Company’s auditor is unaware; and
• the Director has taken all the steps that

he/she ought to have taken as a Director
in order to make himself/herself aware
of any relevant audit information and
to establish that the Company’s auditor
is aware of that information.

Jonathan Murphy
Company Secretary
22 May 2014

Assura Group Annual Report 2014 73

Strategic report Governance Financial statements DIRECTORS’ RESPONSIBILITY
STATEMENT

We confirm that to the best of our knowledge:

• the financial statements, prepared in

accordance with IFRSs as adopted by the
EU, give a true and fair view of the assets,
liabilities, financial position and profit of the
Group and the undertakings included in
the consolidation taken as a whole;

• the strategic report includes a fair review of
the development and performance of the
business and the position of the Group and
the undertakings included in the consolidation
taken as a whole, together with a description
of the principal risks and uncertainties that
they face; and

• the Annual Report and financial statements,
taken as a whole, are fair, balanced and
understandable and provide the information
necessary for shareholders to assess the
Group’s performance, business model
and strategy.

By order of the Board

Jonathan Murphy
Company Secretary
22 May 2014

The Directors are responsible for preparing the
Annual Report and the financial statements in
accordance with applicable law and regulations.

Guernsey company law requires the Directors
to prepare such financial statements for each
financial year. Under that law the Directors
are required to prepare the Group financial
statements in accordance with International
Financial Reporting Standards (“IFRSs”) as
adopted by the European Union and Article 4
of the IAS Regulation and have also chosen to
prepare the parent company financial statements
under IFRSs as adopted by the European Union.
Under company law the Directors must not
approve the financial statements unless they
are satisfied that they give a true and fair view
of the state of affairs of the Company and of the
profit or loss of the Company for that period.

In preparing these financial statements, IAS 1
requires that directors:

• properly select and apply accounting policies;
• present information, including accounting

policies, in a manner that provides relevant,
reliable, comparable and understandable
information;

• provide additional disclosures when

compliance with the specific requirements
in IFRSs are insufficient to enable users to
understand the impact of particular
transactions, other events and conditions
on the entity’s financial position and financial
performance; and

• make an assessment of the Company’s ability

to continue as a going concern.

The Directors are responsible for keeping
adequate accounting records that are sufficient
to show and explain the Company’s transactions
and disclose with reasonable accuracy at any
time the financial position of the Company and
enable them to ensure that the Financial
Statements comply with the Companies
(Guernsey) Law, 2008. They are also responsible
for safeguarding the assets of the Company
and hence for taking reasonable steps for the
prevention and detection of fraud and other
irregularities.

The Directors are responsible for the maintenance
and integrity of the corporate and financial
information included on the Company’s website.
Legislation in Guernsey and the United Kingdom
governing the preparation and dissemination of
financial statements may differ from legislation
in other jurisdictions.

74 Assura Group Annual Report 2014

INDEPENDENT
AUDITOR’S REPORT
TO THE MEMBERS OF ASSURA GROUP LIMITED

Opinion on financial
statements of Assura
Group Limited

In our opinion the financial statements:

• give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at
31 March 2014 and of the Group’s and the Parent Company’s profit for the year then ended;
• have been properly prepared in accordance with International Financial Reporting Standards

(“IFRSs”) as adopted by the European Union; and

• have been prepared in accordance with the requirements of the Companies (Guernsey) Law,

2008 and, as regards the Group financial statements, Article 4 of the IAS Regulation.

The financial statements comprise the Consolidated and Parent Company Income Statements, the
Consolidated and Parent Company Statements of Comprehensive Income, the Consolidated and
Parent Company Balance Sheets, the Consolidated and Parent Company Cash Flow Statements, the
Consolidated and Parent Company Statements of Changes in Equity and the related notes 1 to 33 and
A to L. The financial reporting framework that has been applied in their preparation is applicable law and
IFRSs as adopted by the European Union.

Going concern

As required by the Listing Rules we have reviewed the Directors’ statement contained within the
Directors’ Report on page 71 that the Group is a going concern. We confirm that:

• we have concluded that the Directors’ use of the going concern basis of accounting in the

preparation of the financial statements is appropriate; and

• we have not identified any material uncertainties that may cast significant doubt on the Group’s

ability to continue as a going concern.

However, because not all future events or conditions can be predicted, this statement is not
a guarantee as to the Group’s ability to continue as a going concern.

Our assessment of risks
of material misstatement

The assessed risks of material misstatement described below are those that had the greatest
effect on our audit strategy, the allocation of resources in the audit and directing the efforts of
the engagement team:

Risk
Valuation of property portfolio
The Group owns and manages a portfolio of primary care
properties (including a number of development properties).
The valuation of the portfolio is underpinned by a number
of judgements and assumptions.

The Group fair values the Group’s portfolio at six-monthly
intervals. The portfolio was valued by the investment
method of valuation with development properties
valued by the same method with a deduction of all
costs necessary to complete the development together
with a developer’s margin.

How the scope of our audit responded to the risk
We assessed management’s process for reviewing and challenging
the work of the external valuer.

We held calls with the third party valuers, Savills and Jones Lang
LaSalle (“JLL”), appointed by management for the valuation of the
property portfolio and we assessed the reasonableness of the
significant judgements and assumptions applied in their valuations
including outstanding rent reviews and yields. Further, our in-house
property specialists were present on these calls in order to provide
sector specific knowledge as part of our discussion and challenge
of the valuation.

We assessed the competence, independence and integrity of the
external valuer, by consideration of the professional qualifications
and market standing as valuers of primary care properties.

We benchmarked and challenged the key assumptions to external
industry data and comparable portfolios, in particular the yield.

We verified the integrity of a sample of information provided to
valuers by management relating to rental income, occupancy
and life of the lease.

Assura Group Annual Report 2014 75

Strategic report Governance Financial statements INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF ASSURA GROUP LIMITED CONTINUED

Risk
Accounting for acquisitions and disposals
The Group has undertaken two significant transactions
during the current year including an acquisition of two
companies which own a portfolio of properties and the
disposal of the Group’s LIFT interests.

How the scope of our audit responded to the risk
We challenged the fair value of consideration paid and received by
reference to acquisition or disposal agreements and other external
evidence.

For the acquisition, we performed procedures to assess the fair value
of the assets and liabilities acquired and assessed the accounting
treatment adopted, with reference to the significant judgements and
estimates involved (as per Note 2).

We considered the date at which the transactions completed based
on the acquisition or disposal agreements and considered the impact
of these transactions on revenue recognition.

We considered the adequacy of the disclosure of the transactions
in the financial statements.

The Audit Committee’s consideration of these risks is set out on page 51.

Our audit procedures relating to these matters were designed in the context of our audit of the financial statements as a whole, and
not to express an opinion on individual accounts or disclosures. Our opinion on the financial statements is not modified with respect
to any of the risks described above, and we do not express an opinion on these individual matters.

Our application
of materiality

We define materiality as the magnitude of misstatement in the financial statements that makes it
probable that the economic decisions of a reasonably knowledgeable person would be changed
or influenced. We use materiality both in planning the scope of our audit work and in evaluating
the results of our work.

We determined materiality for the Group to be £1.1 million. In determining the materiality of the
Group, we have considered a number of factors including net assets, underlying profit and profit
before tax being the critical performance measures of the Group. The figure represents less than
5% of pre-tax profit and less than 0.5% of equity.

We agreed with the Audit Committee that we would report to the Committee all audit differences in
excess of £20,000, as well as differences below that threshold that, in our view, warranted reporting
on qualitative grounds. We also report to the Audit Committee on disclosure matters that we
identified when assessing the overall presentation of the financial statements.

An overview of the scope
of our audit

Our Group audit was scoped by obtaining an understanding of the Group and its environment,
including Group-wide controls, and assessing the risks of material misstatement at the Group level.
The Group is audited in its entirety by Deloitte LLP in Manchester. Our audit work on the individual
subsidiary entities was executed at levels of materiality applicable to each individual entity which
were lower than Group materiality.

At the parent entity level we also tested the consolidation process.

Other matter

In our opinion:

• the part of the Directors’ Remuneration Report to be audited has been properly prepared
in accordance with the Companies Act 2006 as if that Act had applied to the Company.

Matters on which we are
required to report by
exception
Adequacy of explanations
received and accounting
records

76 Assura Group Annual Report 2014

Under the Companies (Guernsey) Law, 2008 we are required to report to you if, in our opinion:

• we have not received all the information and explanations we require for our audit; or
• adequate accounting records have not been kept; or
• the financial statements are not in agreement with the accounting records.

We have nothing to report in respect of these matters.

Corporate Governance
Statement

Under the Listing Rules we are also required to review the part of the Corporate Governance
Statement relating to the Company’s compliance with nine provisions of the UK Corporate
Governance Code. We have nothing to report arising from our review.

Our duty to read
other information
in the Annual Report

Respective
responsibilities of
Directors and auditor

Scope of the audit of the
financial statements

Under International Standards on Auditing (UK and Ireland), we are required to report to you if,
in our opinion, information in the Annual Report is:

• materially inconsistent with the information in the audited financial statements; or
• apparently materially incorrect based on, or materially inconsistent with, our knowledge of the

Group acquired in the course of performing our audit; or

• otherwise misleading.

In particular, we are required to consider whether we have identified any inconsistencies between
our knowledge acquired during the audit and the Directors’ statement that they consider the Annual
Report is fair, balanced and understandable and whether the Annual Report appropriately discloses
those matters that we communicated to the Audit Committee which we consider should have been
disclosed. We confirm that we have not identified any such inconsistencies or misleading statements.

As explained more fully in the Directors’ Responsibility Statement, the Directors are responsible for
the preparation of the financial statements and for being satisfied that they give a true and fair view.
Our responsibility is to audit and express an opinion on the financial statements in accordance with
applicable law and International Standards on Auditing (UK and Ireland). Those standards require us
to comply with the Auditing Practices Board’s Ethical Standards for Auditors. We also comply with
International Standard on Quality Control 1 (UK and Ireland). Our audit methodology and tools aim
to ensure that our quality control procedures are effective, understood and applied. Our quality
controls and systems include our dedicated professional standards review team and independent
strategically focused second partner reviews.

This report is made solely to the Company’s members, as a body, in accordance with section 262
of the Companies (Guernsey) Law, 2008. Our audit work has been undertaken so that we might
state to the Company’s members those matters we are required to state to them in an auditor’s
report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company’s members as a body, for
our audit work, for this report, or for the opinions we have formed.

An audit involves obtaining evidence about the amounts and disclosures in the financial statements
sufficient to give reasonable assurance that the financial statements are free from material
misstatement, whether caused by fraud or error. This includes an assessment of: whether the
accounting policies are appropriate to the Group’s and the Parent Company’s circumstances
and have been consistently applied and adequately disclosed; the reasonableness of significant
accounting estimates made by the Directors; and the overall presentation of the financial
statements. In addition, we read all the financial and non-financial information in the Annual Report
to identify material inconsistencies with the audited financial statements and to identify any
information that is apparently materially incorrect based on, or materially inconsistent with, the
knowledge acquired by us in the course of performing the audit. If we become aware of any
apparent material misstatements or inconsistencies we consider the implications for our report.

Christopher Robertson
for and behalf of Deloitte LLP
Chartered Accountants and Recognised Auditor
Manchester, UK
22 May 2014

Assura Group Annual Report 2014 77

Strategic report Governance Financial statements CONSOLIDATED INCOME STATEMENT
CONSOLIDATED INCOME STATEMENT
For the year ended 31 March 2014
For the year ended 31 March 2014

Continuing operations
Gross rental and related income
Property operating expenses
Net rental income

Administrative expenses
Revaluation gains
Gain/(loss) on sale of property
Share-based payment charge
Exceptional items
Finance revenue
Finance costs
Gain/(loss) on derivative financial
instruments

Profit before taxation
Taxation

Profit for the year from continuing
operations

Discontinued operations
Profit for the year and gain on disposal
from discontinued operations
Profit for the year attributable to
equity holders of the parent

Earnings per share

from underlying profit
from continuing operations –
basic and diluted
from continuing operations –
adjusted basic and diluted
on profit for year –
basic and diluted
on profit for year –
adjusted basic and diluted

Underlying
£m

Note

2014
Capital and
other
£m

Total
£m

Underlying
£m

2013
(represented)1
Capital
and other
£m

4
5

6
15

26
9
7
8

37.1
(3.4)
33.7

(4.9)
–
–
–
–
0.5
(20.5)

–

8.8

–
–
–

–
6.0
(0.1)
(0.6)
–
–
–

(1.2)

4.1

39.9
(2.1)
37.8

(5.0)
–
–
–
–
0.3
(22.2)

–
–
–

–
12.4
0.2
(0.7)
(0.4)
–
–

39.9
(2.1)
37.8

(5.0)
12.4
0.2
(0.7)
(0.4)
0.3
(22.2)

–

1.8

10.9

13.3

24.2
(0.4)

23.8

11.2

35.0

2.1p

1.7p

4.5p

4.2p

6.6p

6.3p

Total
£m

37.1
(3.4)
33.7

(4.9)
6.0
(0.1)
(0.6)
–
0.5
(20.5)

(1.2)

12.9
(0.2)

12.7

1.4

14.1

2.4p

2.8p

2.7p

3.1p

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.

1 The consolidated income statement has been re-presented for the year ended 31 March 2013 to transfer profits and losses from the LIFT segment to profit for the period

from discontinued operations.

78 Assura Group Annual Report 2014
78 Assura Group Annual Report 2014

CONSOLIDATED INCOME STATEMENT

For the year ended 31 March 2014

CONSOLIDATED BALANCE SHEET
CONSOLIDATED BALANCE SHEET
As at 31 March 2014
As at 31 March 2014

Profit before taxation

10.9

13.3

8.8

4.1

1.8

(1.2)

Underlying

Note

£m

Total

Underlying

and other

£m

Capital and

2014

other

£m

2013

(represented)1

Capital

–

12.4

0.2

(0.7)

(0.4)

–

39.9

(2.1)

37.8

(5.0)

–

0.3

(22.2)

–

6.0

(0.1)

(0.6)

37.1

(3.4)

33.7

(4.9)

–

0.5

(20.5)

2.1p

1.7p

39.9

(2.1)

37.8

(5.0)

12.4

0.2

(0.7)

(0.4)

0.3

(22.2)

24.2

(0.4)

23.8

11.2

35.0

4.5p

4.2p

6.6p

6.3p

Continuing operations

Gross rental and related income

Property operating expenses

Net rental income

Administrative expenses

Revaluation gains

Gain/(loss) on sale of property

Share-based payment charge

Exceptional items

Finance revenue

Finance costs

Gain/(loss) on derivative financial

instruments

Taxation

operations

Profit for the year from continuing

Discontinued operations

Profit for the year and gain on disposal

from discontinued operations

Profit for the year attributable to

equity holders of the parent

Earnings per share

from underlying profit

from continuing operations –

basic and diluted

from continuing operations –

adjusted basic and diluted

on profit for year –

basic and diluted

on profit for year –

adjusted basic and diluted

comprehensive income.

Total

£m

37.1

(3.4)

33.7

(4.9)

6.0

(0.1)

(0.6)

–

0.5

(20.5)

12.9

(0.2)

12.7

1.4

14.1

2.4p

2.8p

2.7p

3.1p

Non-current assets
Investment property
LIFT investments and associates
Property, plant and equipment
Deferred tax asset

Current assets

Cash, cash equivalents and restricted cash
Trade and other receivables
Property assets held for sale

Total assets
Current liabilities

Trade and other payables
Borrowings
Deferred revenue
Provisions

Non-current liabilities

Borrowings
Obligations due under finance leases
Derivative financial instruments at fair value
Deferred revenue
Provisions

Total liabilities
Net assets
Capital and reserves

Share capital
Own shares held
Share premium
Reserves
Total equity

Basic and diluted net asset value per Ordinary Share
Adjusted basic and diluted net asset value per Ordinary Share

Note

15
13, 30
16
28

17
18
15

19
22
20
21

22
19
23
20
21

24
24

12
12

2014
£m)

656.7
0.5
0.1
0.7
658.0

38.6
5.5
11.6
55.7
713.7

14.8
5.9
9.9
0.1
30.7

444.4
3.0
1.8
6.8
0.4
456.4
487.1
226.6

53.0
(1.9)
77.1
98.4
226.6

42.8p
43.4p

2013
£m

557.3
11.2
0.1
1.1
569.7

35.7
9.6
12.0
57.3
627.0

14.3
3.9
8.2
0.1
26.5

388.2
3.1
3.6
6.6
0.9
402.4
428.9
198.1

53.0
(1.9)
77.1
69.9
198.1

37.4p
38.6p

There were no items of other comprehensive income or expense and therefore the profit for the year also reflects the Group’s total

The financial statements were approved at a meeting of the Board of Directors held on 22 May 2014 and signed on its behalf by:

Graham Roberts, Chief Executive

Jonathan Murphy, Finance Director

1 The consolidated income statement has been re-presented for the year ended 31 March 2013 to transfer profits and losses from the LIFT segment to profit for the period

from discontinued operations.

78 Assura Group Annual Report 2014

Assura Group Annual Report 2014 79
Assura Group Annual Report 2014 79

Strategic report Governance Financial statements

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 March 2014
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 March 2014

1 April 2012
Profit attributable to equity holders
Total comprehensive income
Dividend (Note 25)
Employee share-based incentives
31 March 2013

Profit attributable to equity holders
Total comprehensive income
Dividend (Note 25)
Employee share-based incentives
31 March 2014

Share
capital
£m
53.0
–
–
–
–
53.0

–
–
–
–
53.0

Own
shares
held
£m
(1.9)
–
–
–
–
(1.9)

–
–
–
–
(1.9)

Share
premium
£m
77.1
–
–
–
–
77.1

–
–
–
–
77.1

Reserves
£m
59.7
14.1
14.1
(4.5)
0.6
69.9

35.0
35.0
(7.2)
0.7
98.4

Total
equity
£m
187.9
14.1
14.1
(4.5)
0.6
198.1

35.0
35.0
(7.2)
0.7
226.6

80 Assura Group Annual Report 2014

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 March 2014

CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 March 2014
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 March 2014

1 April 2012

Profit attributable to equity holders

Total comprehensive income

Dividend (Note 25)

Employee share-based incentives

31 March 2013

Profit attributable to equity holders

Total comprehensive income

Dividend (Note 25)

Employee share-based incentives

31 March 2014

capital

£m

53.0

Own

held

£m

(1.9)

£m

77.1

premium

Reserves

53.0

(1.9)

77.1

–

53.0

(1.9)

77.1

Total

equity

£m

187.9

14.1

(4.5)

0.6

198.1

35.0

(7.2)

0.7

226.6

£m

59.7

14.1

(4.5)

0.6

69.9

35.0

(7.2)

0.7

98.4

Operating activities
Rent received
Interest paid and similar charges
Fees received
LIFT and bank interest received
Cash paid to suppliers and employees (inc. acquisition costs)
Net cash inflow from operating activities

Investing activities
Purchase of investment property
Development spend
Proceeds from sale of property
Proceeds from sale of LIFT investments
Proceeds from sale of businesses
Net loans advanced to associated companies
Subsidiaries acquired
Net cash outflow from investing activities

Financing activities
Dividends paid
Repayment of loan
Long-term loans drawdown
Swap cash settlement
Loan issue costs
Net cash (outflow)/inflow from financing activities

Increase in cash and cash equivalents

Opening cash and cash equivalents
Closing cash and cash equivalents

Note

30
18

25
22
22

2014
£m

39.3
(22.3)
0.9
0.8
(10.8)
7.9

(2.5)
(23.5)
3.3
21.7
6.0
(0.3)
(6.6)
(1.9)

(7.2)
(5.1)
9.2
–
–
(3.1)

2.9

35.7
38.6

2013
£m

37.7
(20.6)
0.8
1.5
(6.5)
12.9

(3.6)
(18.1)
8.4
–
3.6
(0.3)
–
(10.0)

(4.5)
(7.0)
23.2
(0.1)
(0.2)
11.4

14.3

21.4
35.7

80 Assura Group Annual Report 2014

Assura Group Annual Report 2014 81

Strategic report Governance Financial statements

NOTES TO THE ACCOUNTS
NOTES TO THE ACCOUNTS
For the year ended 31 March 2014
For the year ended 31 March 2014

1. Corporate information and operations
Assura Group Limited (“Assura”) is incorporated in Guernsey with its investment objective to achieve capital growth and rising rental
income from the ownership and development of a diversified portfolio of primary care properties.

The Company’s Ordinary Shares are traded on the London Stock Exchange. The Company is domiciled in England and Wales for
taxation purposes. As of 1 April 2013, the Company has elected to be treated as a UK REIT. See Note 10 for further details.

2. Significant accounting policies
Basis of preparation
The consolidated financial statements have been prepared on a historical cost basis, except for derivative financial instruments and
investment properties, including investment properties under construction and land. The financial statements have also been prepared
in accordance with IFRSs and interpretations adopted by the European Union and in accordance with the Companies (Guernsey) Law,
2008.

Standards affecting the financial statements
The following standards and amendments became effective for the Company in the year ended 31 March 2014. The pronouncements
either had no material impact on the financial statements or resulted in changes in presentation and disclosure only (effective for periods
beginning on or after the date in brackets):

– IFRS 13 Fair Value Measurement (1 January 2013)
– IAS 19 Employee Benefits (1 January 2013)
– Amendments to IAS 1 Presentation of Financial Statements – Presentation of Items of Other Comprehensive Income (1 July 2012)
– Amendments to IFRS 7 Financial Instruments: Disclosures – Offsetting Financial Assets and Financial Liabilities (1 January 2013).

Standards in issue not yet effective
The following standards and amendments are in issue as at the date of the approval of these financial statements, but are not yet
effective for the Company. The Directors do not expect that the adoption of the standards listed below will have a material impact on
the financial statements of the Company in future periods (effective for periods beginning on or after the date in brackets):

– IFRS 10 Consolidated Financial Statements (1 January 2014)
– IFRS 11 Joint Arrangements (1 January 2014)
– IFRS 12 Disclosures of Interests in Other Entities (1 January 2014)
– IAS 27 Separate Financial Statements (2011) (1 January 2014)
– IAS 28 Investments in Associates and Joint Ventures (2011) (1 January 2014)
– Amendments to IAS 32 Financial Instruments: Presentation – Offsetting Financial Assets and Financial Liabilities (1 January 2014)
– Amendments to IAS 36 Impairment of Assets – Recoverable Amount Disclosures for Non-Financial Assets (1 January 2014)
– Amendments to IAS 39 Financial Instruments: Recognition and Measurement – Novation of Derivatives and Continuation of Hedge

Accounting (1 January 2014).

The financial statements are prepared on a going concern basis as explained in the Directors’ report on page 71 and are presented
in sterling.

The accounting policies have been applied consistently to the results, other gains and losses, liabilities and cash flows of entities
included in the consolidated financial statements. All intragroup balances, transactions, income and expenses are eliminated on
consolidation.

Significant judgements and key estimates
The preparation of the financial statements requires management to make judgements, estimates and assumptions that may affect the
application of accounting policies and the reported amounts of assets, liabilities, income and expenses.

Property valuations
The key source of estimation and uncertainty relates to the valuation of the property portfolio, where a valuation is obtained twice a year
by professionally qualified external valuers. The evidence to support these valuations is based primarily on recent, comparable market
transactions on an arm’s length basis. However, the assumptions applied are inherently subjective and so are subject to a degree of
uncertainty. Property valuations are one of the principal uncertainties of the Group.

Accounting for acquisitions and disposals
A degree of judgement is required in relation to acquisitions to determine whether they should be accounted for as business
combinations under IFRS 3 or as asset purchases. Consideration is taken of all the facts concerning the transaction in making the
appropriate judgement. In addition, the fair value of assets and liabilities acquired as part of the transaction must be determined, which
is based on external market evidence where available.

82 Assura Group Annual Report 2014
82 Assura Group Annual Report 2014

NOTES TO THE ACCOUNTS

For the year ended 31 March 2014

1. Corporate information and operations

Assura Group Limited (“Assura”) is incorporated in Guernsey with its investment objective to achieve capital growth and rising rental

income from the ownership and development of a diversified portfolio of primary care properties.

The Company’s Ordinary Shares are traded on the London Stock Exchange. The Company is domiciled in England and Wales for

taxation purposes. As of 1 April 2013, the Company has elected to be treated as a UK REIT. See Note 10 for further details.

The consolidated financial statements have been prepared on a historical cost basis, except for derivative financial instruments and

investment properties, including investment properties under construction and land. The financial statements have also been prepared

in accordance with IFRSs and interpretations adopted by the European Union and in accordance with the Companies (Guernsey) Law,

The following standards and amendments became effective for the Company in the year ended 31 March 2014. The pronouncements

either had no material impact on the financial statements or resulted in changes in presentation and disclosure only (effective for periods

2. Significant accounting policies

Basis of preparation

2008.

Standards affecting the financial statements

beginning on or after the date in brackets):

– IFRS 13 Fair Value Measurement (1 January 2013)

– IAS 19 Employee Benefits (1 January 2013)

– Amendments to IAS 1 Presentation of Financial Statements – Presentation of Items of Other Comprehensive Income (1 July 2012)

– Amendments to IFRS 7 Financial Instruments: Disclosures – Offsetting Financial Assets and Financial Liabilities (1 January 2013).

Standards in issue not yet effective

The following standards and amendments are in issue as at the date of the approval of these financial statements, but are not yet

effective for the Company. The Directors do not expect that the adoption of the standards listed below will have a material impact on

the financial statements of the Company in future periods (effective for periods beginning on or after the date in brackets):

– IFRS 10 Consolidated Financial Statements (1 January 2014)

– IFRS 11 Joint Arrangements (1 January 2014)

– IFRS 12 Disclosures of Interests in Other Entities (1 January 2014)

– IAS 27 Separate Financial Statements (2011) (1 January 2014)

– IAS 28 Investments in Associates and Joint Ventures (2011) (1 January 2014)

– Amendments to IAS 32 Financial Instruments: Presentation – Offsetting Financial Assets and Financial Liabilities (1 January 2014)

– Amendments to IAS 36 Impairment of Assets – Recoverable Amount Disclosures for Non-Financial Assets (1 January 2014)

– Amendments to IAS 39 Financial Instruments: Recognition and Measurement – Novation of Derivatives and Continuation of Hedge

Accounting (1 January 2014).

The financial statements are prepared on a going concern basis as explained in the Directors’ report on page 71 and are presented

The accounting policies have been applied consistently to the results, other gains and losses, liabilities and cash flows of entities

included in the consolidated financial statements. All intragroup balances, transactions, income and expenses are eliminated on

in sterling.

consolidation.

Significant judgements and key estimates

The preparation of the financial statements requires management to make judgements, estimates and assumptions that may affect the

application of accounting policies and the reported amounts of assets, liabilities, income and expenses.

Property valuations

The key source of estimation and uncertainty relates to the valuation of the property portfolio, where a valuation is obtained twice a year

by professionally qualified external valuers. The evidence to support these valuations is based primarily on recent, comparable market

transactions on an arm’s length basis. However, the assumptions applied are inherently subjective and so are subject to a degree of

uncertainty. Property valuations are one of the principal uncertainties of the Group.

Accounting for acquisitions and disposals

A degree of judgement is required in relation to acquisitions to determine whether they should be accounted for as business

combinations under IFRS 3 or as asset purchases. Consideration is taken of all the facts concerning the transaction in making the

appropriate judgement. In addition, the fair value of assets and liabilities acquired as part of the transaction must be determined, which

is based on external market evidence where available.

2. Significant accounting policies continued
Basis of consolidation
Subsidiaries
Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be
consolidated until the date that such control ceases. Control comprises the power to govern the financial and operating policies of the
investee so as to obtain benefit from its activities.

In the Company financial statements, investments in subsidiaries are held at cost less any provision for impairment.

Where properties are acquired through the purchase of a corporate entity but the transaction does not meet the definition of a business
combination under IFRS 3, the purchase is treated as an asset acquisition. Where the acquisition is considered a business combination,
the excess of the consideration transferred over the fair value of assets and liabilities acquired is held as goodwill, initially recognised at
cost with subsequent impairment assessments completed at least annually. Where the initial calculation of goodwill arising is negative,
this is recognised immediately in the income statement.

LIFT investments and associates
LIFT investments and associates are accounted for under the equity method, whereby the consolidated balance sheet incorporates the
Group’s share of the net assets of the entities. The income statement incorporates the Group’s share of LIFT investment and associate
profits after tax, although following the sale during the year, these results have been presented as discontinued operations.

Interests in LIFT investments and associates include long-term loans receivable, which are held at amortised cost less provision for any
impairment.

Property portfolio
Properties are externally valued on an open market basis as at the balance sheet date and are recorded at valuation.

Any surplus or deficit arising on revaluing investment properties and investment property under construction (“IPUC”) is recognised in
the income statement.

All costs associated with the purchase and construction of IPUC are capitalised including attributable interest. Interest is calculated on
the expenditure by reference to specific borrowings where relevant and otherwise on the average rate applicable to short-term loans.
When IPUC are completed, they are classified as investment properties.

In determining whether leases and related properties represent operating or finance leases, consideration is given to whether the tenant
or landlord bears the risks and rewards of ownership.

Leasehold properties that are leased out to tenants under operating leases are classified as investment properties or development
properties, as appropriate, and included in the balance sheet at fair value.

Where an investment property is held under a head lease it is initially recognised as an asset as the sum of the premium paid on
acquisition and the present value of minimum ground rent payments. The corresponding rent liability to the head leaseholder is included
in the balance sheet as a finance lease obligation.

The market value of investment property as estimated by an external valuer is increased for the unamortised pharmacy lease premium
held at the balance sheet date.

Net rental income
Rental income is recognised on an accruals basis and recognised on a straight line basis over the lease term. A rent adjustment based
on open market estimated rental value is recognised from the rent review date in relation to unsettled rent reviews. Pharmacy lease
premiums received from tenants are spread over the lease term, even if the receipts are not received on such a basis. The lease term is
the non-cancellable period of the lease.

Property operating expenses are expensed as incurred and property operating expenditure not recovered from tenants through service
charges is charged to the income statement.

Gains on sale of properties
Gains on sale of properties are recognised on the completion of contract, and are calculated by reference to the carrying value at the
end of the previous reporting period, adjusted for subsequent capital expenditure.

82 Assura Group Annual Report 2014

Assura Group Annual Report 2014 83
Assura Group Annual Report 2014 83

Strategic report Governance Financial statements

NOTES TO THE ACCOUNTS CONTINUED
NOTES TO THE ACCOUNTS
For the year ended 31 March 2014
For the year ended 31 March 2014

2. Significant accounting policies continued
Financial assets and liabilities
Trade receivables and payables are initially recognised at fair value and subsequently measured at amortised cost and discounted as
appropriate.

Other investments are shown at amortised cost and held as loans and receivables. Loans and receivables are measured at amortised
cost using the effective interest method, less any impairment. Interest income is recognised by applying the effective interest rate.

Debt instruments are stated at their net proceeds on issue. Finance charges including premiums payable on settlement or redemption
and direct issue costs are spread over the period to redemption at a constant rate on the carrying amount of the liability.

Financial instruments
Where the Group uses derivative financial instruments, in the form of interest rate swaps, to hedge its risks associated with interest rate
fluctuations they are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured
at their fair value by reference to market values for similar instruments. The resulting gains or losses are recognised through the income
statement.

Cash equivalents are limited to instruments with a maturity of less than three months.

Tax
Current tax is based on taxable profit for the year and is calculated using tax rates that have been enacted or substantively enacted.
Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are not
taxable (or tax deductible).

Deferred tax is provided on items that may become taxable at a later date, on the difference between the balance sheet value and tax
base value, on an undiscounted basis.

Income statement definitions
Underlying profit represents adjusted earnings, with further Company adjustments to exclude items such as property revaluations,
exceptional items and share-based payment charges. These adjustments have been made on the basis they are non-cash fair value
adjustments, which are not reflective of the underlying performance of the business.

Capital and other represents all other statutory income statement items that are not considered underlying, including exceptional items.

Employee costs
Defined contribution pension plans
Obligations for contributions to defined contribution pension plans are charged to the income statement as incurred.

Share-based employee remuneration
Share-based employee remuneration is determined with reference to the fair value of the equity instruments at the date at which they
are granted and charged to the income statement over the vesting period on a straight line basis. The fair value of share options is
calculated using the Black Scholes option pricing model or the Monte Carlo Model and is dependent on factors including the exercise
price, expected volatility, option life and risk-free interest rate. IFRS 2 Share-based Payment has been applied to share options granted.

3. Segmental information
The Group’s operating segments are Core and Non-Core, which are both located in the UK.

The Core segment invests in, manages and develops primary care premises.

The Non-Core segment actively manages the assets to realise maximum value through both income and capital receipts from sales.

In addition, the Group previously had a third operating segment: the LIFT segment, which held investments in LIFT companies through
investments in associated companies, along with loan notes. The business interests were sold during the year and consequently the
results are presented as discontinued operations. See Note 30.

84 Assura Group Annual Report 2014
84 Assura Group Annual Report 2014

NOTES TO THE ACCOUNTS

For the year ended 31 March 2014

2. Significant accounting policies continued

Financial assets and liabilities

appropriate.

Trade receivables and payables are initially recognised at fair value and subsequently measured at amortised cost and discounted as

Other investments are shown at amortised cost and held as loans and receivables. Loans and receivables are measured at amortised

cost using the effective interest method, less any impairment. Interest income is recognised by applying the effective interest rate.

Debt instruments are stated at their net proceeds on issue. Finance charges including premiums payable on settlement or redemption

and direct issue costs are spread over the period to redemption at a constant rate on the carrying amount of the liability.

Financial instruments

Where the Group uses derivative financial instruments, in the form of interest rate swaps, to hedge its risks associated with interest rate

fluctuations they are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured

at their fair value by reference to market values for similar instruments. The resulting gains or losses are recognised through the income

Cash equivalents are limited to instruments with a maturity of less than three months.

Current tax is based on taxable profit for the year and is calculated using tax rates that have been enacted or substantively enacted.

Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are not

Deferred tax is provided on items that may become taxable at a later date, on the difference between the balance sheet value and tax

Underlying profit represents adjusted earnings, with further Company adjustments to exclude items such as property revaluations,

exceptional items and share-based payment charges. These adjustments have been made on the basis they are non-cash fair value

adjustments, which are not reflective of the underlying performance of the business.

Capital and other represents all other statutory income statement items that are not considered underlying, including exceptional items.

statement.

Tax

taxable (or tax deductible).

base value, on an undiscounted basis.

Income statement definitions

Employee costs

Defined contribution pension plans

Share-based employee remuneration

Obligations for contributions to defined contribution pension plans are charged to the income statement as incurred.

Share-based employee remuneration is determined with reference to the fair value of the equity instruments at the date at which they

are granted and charged to the income statement over the vesting period on a straight line basis. The fair value of share options is

calculated using the Black Scholes option pricing model or the Monte Carlo Model and is dependent on factors including the exercise

price, expected volatility, option life and risk-free interest rate. IFRS 2 Share-based Payment has been applied to share options granted.

3. Segmental information

The Group’s operating segments are Core and Non-Core, which are both located in the UK.

The Core segment invests in, manages and develops primary care premises.

The Non-Core segment actively manages the assets to realise maximum value through both income and capital receipts from sales.

In addition, the Group previously had a third operating segment: the LIFT segment, which held investments in LIFT companies through

investments in associated companies, along with loan notes. The business interests were sold during the year and consequently the

results are presented as discontinued operations. See Note 30.

3. Segmental information continued
The following table presents revenue, profit and certain assets and liability information regarding the Group’s business segments:

Year ended 31 March 2014:
Gross rental income
Other related income
Property operating expenses
Net rental income

Administration costs
Underlying operating profit
Net finance cost
Underlying profit
Revaluation gains/(losses)
Gain on sale of property
Exceptional items
Share-based payment charge
Segment result

Revaluation of derivative financial instruments
Taxation
Profit for the period from discontinued operations
Profit for the year

Year ended 31 March 2013:
Gross rental income
Other related income
Property operating expenses
Net rental income

Administration costs
Underlying operating profit
Net finance cost
Underlying profit
Revaluation gains
Loss on sale of property
Share-based payment charge
Segment result
Revaluation of derivative financial instruments
Taxation
Profit for the period from discontinued operations
Profit for the year

Core
£m
37.4
0.9
(1.6)
36.7

(5.0)
31.7
(21.3)
10.4
14.1
0.2
(0.4)
(0.7)
23.6

Core
£m
34.0
0.8
(2.7)
32.1

(4.9)
27.2
(19.1)
8.1
5.4
–
(0.6)
12.9

Non-Core
£m
1.6
–
(0.5)
1.1

–
1.1
(0.6)
0.5
(1.7)
–
–
–
(1.2)

Non-Core
£m
2.3
–
(0.7)
1.6

–
1.6
(0.9)
0.7
0.6
(0.1)
–
1.2

Total

£m

39.0
0.9
(2.1)
37.8

(5.0)
32.8
(21.9)
10.9
12.4
0.2
(0.4)
(0.7)
22.4

1.8
(0.4)
11.2
35.0

Total

£m

36.3
0.8
(3.4)
33.7

(4.9)
28.8
(20.0)
8.8
6.0
(0.1)
(0.6)
14.1
(1.2)
(0.2)
1.4
14.1

84 Assura Group Annual Report 2014

Assura Group Annual Report 2014 85
Assura Group Annual Report 2014 85

Strategic report Governance Financial statements

NOTES TO THE ACCOUNTS CONTINUED
NOTES TO THE ACCOUNTS
For the year ended 31 March 2014
For the year ended 31 March 2014

3. Segmental information continued
Assets and liabilities at 31 March 2014

Property assets

Current assets

LIFT investments and associates

Segment assets
Deferred tax asset
Total assets

Segment liabilities
Current liabilities

Derivative financial instruments
Non-current liabilities

Total liabilities

Assets and liabilities at 31 March 2013

Property assets

Current assets
LIFT investments and associates
Segment assets
Deferred tax asset
Total assets

Segment liabilities
Current liabilities

Derivative financial instruments
Non-current liabilities
Total liabilities

86 Assura Group Annual Report 2014
86 Assura Group Annual Report 2014

Core
£m

649.8

44.1

–

693.9

Non-Core
£m

18.5

0.1

0.5

19.1

(30.5)

(0.2)

Core
£m
546.7

45.1
–
591.8

Non-Core
£m
22.6

0.3
–
22.9

LIFT
£m
–

–
11.2
11.2

(26.3)

(0.2)

–

Total
£m

668.3

44.2

0.5

713.0
0.7
713.7

(30.7)

(1.8)
(454.6)

(487.1)

Total
£m
569.3

45.4
11.2
625.9
1.1
627.0

(26.5)

(3.6)
(398.8)
(428.9)

NOTES TO THE ACCOUNTS

For the year ended 31 March 2014

3. Segmental information continued

Assets and liabilities at 31 March 2014

LIFT investments and associates

Property assets

Current assets

Segment assets

Deferred tax asset

Total assets

Segment liabilities

Current liabilities

Derivative financial instruments

Non-current liabilities

Total liabilities

Assets and liabilities at 31 March 2013

LIFT investments and associates

Property assets

Current assets

Segment assets

Deferred tax asset

Total assets

Segment liabilities

Current liabilities

Derivative financial instruments

Non-current liabilities

Total liabilities

Core

£m

649.8

44.1

–

693.9

Non-Core

£m

18.5

0.1

0.5

19.1

(30.5)

(0.2)

Core

£m

546.7

45.1

–

591.8

Non-Core

£m

22.6

0.3

–

22.9

LIFT

£m

–

11.2

(26.3)

(0.2)

–

Total

£m

668.3

44.2

0.5

713.0

0.7

713.7

(30.7)

(1.8)

(454.6)

(487.1)

Total

£m

569.3

45.4

11.2

625.9

1.1

627.0

(26.5)

(3.6)

(398.8)

(428.9)

4. Revenue

Rental revenue – core
Rental revenue – non-core
Other related income
Gross rental and related income

LIFT interest (through discontinued operations)
Bank and other interest

Total revenue

5. Property operating expenses

Property expenses arising
– from core portfolio
– from non-core portfolio

6. Administrative expenses

Wages and salaries
Social security costs

Auditor’s remuneration
Directors’ fees
Other administrative expenses
Depreciation

a) Auditor’s remuneration

Group audit including interim
Statutory audit
Total audit fees
Corporate finance services
Tax services – advisory

2014
£m
37.4
1.6
0.9
39.9

0.6
0.3
0.9

2013
£m
34.0
2.3
0.8
37.1

1.0
0.5
1.5

40.8

38.6

2014
£m

1.6
0.5
2.1

2014
£m
1.6
0.3
1.9
0.3
1.2
1.6
–
5.0

2014
£m
–(
0.1
0.1
0.1
0.1
0.3

2013
£m

2.7
0.7
3.4

2013
£m
1.5
0.3
1.8
0.4
0.9
1.7
0.1
4.9

2013
£m
0.1
0.1
0.2
–(
0.2
0.4

Note 6(a)
p 65 & 67

The Group’s policy on non-audit fees is discussed in detail in the Report of the Audit Committee on page 51.

86 Assura Group Annual Report 2014

Assura Group Annual Report 2014 87
Assura Group Annual Report 2014 87

Strategic report Governance Financial statements

NOTES TO THE ACCOUNTS CONTINUED
NOTES TO THE ACCOUNTS
For the year ended 31 March 2014
For the year ended 31 March 2014

6. Administrative expenses continued
The average monthly number of employees during the year was made up as follows:

Property

Key management are the Executive Directors and other key management personnel.

Key management staff
Salaries, pension, holiday pay, payments in lieu of notice and bonus
Cost of employee share-based incentives
Social security costs

7. Finance revenue

Bank and other interest

8. Finance costs

Interest payable
Interest capitalised on developments
Amortisation of loan issue costs
Amortisation of Trinity loan fair value adjustment

Change in fair value of interest rate swaps

Interest was capitalised on property developments at 5% (2013: 5%).

9. Exceptional items

Negative goodwill on acquisition of Trinity
Acquisition costs of Trinity
Corporate finance fees
Property provision

2014
Number
30
30

2013
Number
28
28

2014
£m

2013
£m

1.6
0.7
0.3
2.6

2014
£m
0.3
0.3

2014
£m
22.4
(0.6)
0.5
(0.1)
22.2
(1.8)
20.4

2014
£m
0.6
(0.4)
(1.1)
0.5
(0.4)

1.4
0.6
0.2
2.2

2013
£m
0.5
0.5

2013
£m
20.4
(0.4)
0.5
–
20.5
1.2
21.7

2013
£m
–
–
–
–
–

Acquisition costs and negative goodwill relate to the acquisition of the Trinity portfolio. For further details see Note 14.

£1.1 million of corporate finance fees were incurred in considering a takeover approach from MedicX Fund Limited during the year.

See Note 21 for further information in respect of the property provision.

88 Assura Group Annual Report 2014
88 Assura Group Annual Report 2014

NOTES TO THE ACCOUNTS

For the year ended 31 March 2014

6. Administrative expenses continued

The average monthly number of employees during the year was made up as follows:

Property

Key management are the Executive Directors and other key management personnel.

Key management staff

Salaries, pension, holiday pay, payments in lieu of notice and bonus

Cost of employee share-based incentives

Social security costs

7. Finance revenue

Bank and other interest

8. Finance costs

Interest payable

Interest capitalised on developments

Amortisation of loan issue costs

Amortisation of Trinity loan fair value adjustment

Change in fair value of interest rate swaps

Interest was capitalised on property developments at 5% (2013: 5%).

9. Exceptional items

Negative goodwill on acquisition of Trinity

Acquisition costs of Trinity

Corporate finance fees

Property provision

2014

Number

2013

Number

2014

£m

2013

£m

2014

2013

1.6

0.7

0.3

2.6

£m

0.3

2014

£m

22.4

(0.6)

0.5

(0.1)

22.2

(1.8)

20.4

2014

£m

0.6

(0.4)

(1.1)

0.5

(0.4)

1.4

0.6

0.2

2.2

£m

0.5

2013

£m

20.4

(0.4)

0.5

–

20.5

1.2

21.7

2013

£m

–

Acquisition costs and negative goodwill relate to the acquisition of the Trinity portfolio. For further details see Note 14.

£1.1 million of corporate finance fees were incurred in considering a takeover approach from MedicX Fund Limited during the year.

See Note 21 for further information in respect of the property provision.

10. Taxation

Consolidated income tax
Current tax
Current income tax charge

Deferred tax
Relating to origination and reversal of temporary differences
Income tax charge reported in consolidated income statement

The differences from the standard rate of tax applied to the profit before tax may be analysed as follows:

Profit from continuing operations before taxation
Profit from discontinued operations before taxation
Net profit before taxation

UK income tax at rate of 23% (2013: 24%)
Effects of:
Non-taxable income (including REIT exempt income)
Expenses not deductible for tax purposes
Utilisation of losses brought forward
Movement in unrecognised deferred tax

2014
£m

2013
£m

–

0.4
0.4

2014
£m
24.2
11.2
35.4

8.1

(7.8)
0.5
–
(0.4)
0.4

0.2
0.2

2013
£m
12.9
1.4
14.3

3.4

(0.9)
–
(1.3)
(1.0)
0.2

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 21% (2014: 23%).

The Group tax charge relates to its non-property income. As the Group has sufficient brought forward tax losses, no tax is payable and
so the charge represents the movement in deferred tax.

As a REIT, the Group is required to pay Property Income Distributions equal to at least 90% of the Group’s exempted net income.
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 2014.

Further reductions in the main rate of corporation tax have been substantively enacted; the rate will reduce to 21% from 1 April 2014
and to 20% from 1 April 2015. These changes have been reflected in the calculation of deferred tax.

88 Assura Group Annual Report 2014

Assura Group Annual Report 2014 89
Assura Group Annual Report 2014 89

Strategic report Governance Financial statements

NOTES TO THE ACCOUNTS CONTINUED
NOTES TO THE ACCOUNTS
For the year ended 31 March 2014
For the year ended 31 March 2014

11. Earnings per Ordinary Share

Profit attributable to equity holders of the parent
Acquisition costs and negative goodwill
Revaluation of derivative financial instrument of:

Parent
Associates

Deferred tax

Basic &
diluted EPS
per Ordinary
Share
2014
£m
35.0

Adjusted EPS
per Ordinary
Share
2014
£m
35.0
(0.2)

Basic &
diluted EPS
per Ordinary
Share
(re-presented)
2013
£m
14.1

Adjusted EPS
per Ordinary
Share
(re-presented)
2013
£m
14.1
–

(1.8)
–
0.4
33.4

1.2
0.7
0.2
16.2

Weighted average number of shares in issue – basic and diluted

529,548,924 529,548,924 529,548,924 529,548,924

Earnings per Ordinary Share from continuing operations
Earnings per Ordinary Share from discontinued operations
Earnings per Ordinary Share

4.5p
2.1p
6.6p

4.2p
2.1p
6.3p

2.4p
0.3p
2.7p

2.8p
0.3p
3.1p

Underlying profit per share of 2.1 pence (2013: 1.7 pence) has been calculated as underlying profit for the year as presented on the
income statement of £10.9 million (2013: £8.8 million) divided by the weighted average number of shares in issue of 529,548,924
(2013: 529,548,924).

Calculations completed in accordance with IAS 33 Earnings Per Share have shown that although share option schemes in place as at
31 March 2014 are potentially dilutive, the low magnitude of potential dilution results in there being no difference between basic and
diluted earnings and NAV per Ordinary Share.

90 Assura Group Annual Report 2014
90 Assura Group Annual Report 2014

NOTES TO THE ACCOUNTS

For the year ended 31 March 2014

Profit attributable to equity holders of the parent

Acquisition costs and negative goodwill

Revaluation of derivative financial instrument of:

Parent

Associates

Deferred tax

Basic &

diluted EPS

Adjusted EPS

per Ordinary

Basic &

diluted EPS

Adjusted EPS

per Ordinary

(re-presented)

2014

£m

35.0

2014

£m

35.0

(0.2)

(1.8)

–

0.4

33.4

4.2p

2.1p

6.3p

2013

£m

14.1

2.4p

0.3p

2.7p

2013

£m

14.1

–

1.2

0.7

0.2

16.2

2.8p

0.3p

3.1p

Earnings per Ordinary Share from continuing operations

Earnings per Ordinary Share from discontinued operations

Earnings per Ordinary Share

4.5p

2.1p

6.6p

Underlying profit per share of 2.1 pence (2013: 1.7 pence) has been calculated as underlying profit for the year as presented on the

income statement of £10.9 million (2013: £8.8 million) divided by the weighted average number of shares in issue of 529,548,924

(2013: 529,548,924).

Calculations completed in accordance with IAS 33 Earnings Per Share have shown that although share option schemes in place as at

31 March 2014 are potentially dilutive, the low magnitude of potential dilution results in there being no difference between basic and

diluted earnings and NAV per Ordinary Share.

11. Earnings per Ordinary Share

12. Net asset value per Ordinary Share

Net assets
Own shares held
Derivative financial instruments of:

Parent
Associates

Deferred tax
NAV in accordance with EPRA

NAV per
Ordinary
Share
2014
£m
226.6

Adjusted
(EPRA)
NAV per
Ordinary
Share
2014
£m
226.6
1.9

1.8
–
(0.7)
229.6

NAV per
Ordinary
Share
2013
£m
198.1

Adjusted
(EPRA)
NAV per
Ordinary
Share
2013
£m
198.1
1.9

3.6
1.9
(1.1)
204.4

Weighted average number of shares in issue – basic and diluted

529,548,924 529,548,924 529,548,924 529,548,924

Number of shares in issue

529,548,924

529,548,924 529,548,924

NAV

42.8p

43.4p

37.4p

38.6p

EPRA NAV
Mark to market of derivative financial instruments
Mark to market of fixed rate debt
EPRA NNNAV

Adjusted NAV
per Ordinary
Share
2014
£m
229.6
(1.8)
(5.5)
222.3

Adjusted NAV
per Ordinary
Share
2013
£m
204.4
(5.5)
(48.2)
150.7

EPRA NNNAV per share

42.0p

28.5p

The EPRA measures set out above are in accordance with the guidance of the European Property Real Estate Association dated
August 2011.

13. Investments
A table listing all the principal subsidiaries of Assura Group Limited is below:

Name of subsidiary
Assura Properties Plc
Assura Properties UK Limited
Assura Medical Centres Limited
Assura Health Investments Limited
Medical Properties Limited
Trinity Medical Properties Limited

The Group also holds the following investments:

Place of incorporation Shareholding
England
England
England
England
England
England

100%
100%
100%
100%
100%
100%

Business activity
Property investment
Property investment
Property investment
Property investment
Property investment
Property investment

GB Partnerships Investments Limited; 15% equity holding (book value £0.5 million, 2013: £0.5 million).

Virgin Healthcare Holdings Limited; made up of a 6% equity holding (book value £nil) and a £4 million loan note receivable
(book value £nil, 2013: £nil).

90 Assura Group Annual Report 2014

Assura Group Annual Report 2014 91
Assura Group Annual Report 2014 91

Strategic report Governance Financial statements

NOTES TO THE ACCOUNTS CONTINUED
NOTES TO THE ACCOUNTS
For the year ended 31 March 2014
For the year ended 31 March 2014

14. Business combinations
On 10 September 2013, the Group acquired 100% of the Ordinary Share capital of Trinity Medical Developments Limited and its wholly
owned subsidiary Trinity Medical Properties Limited (“Trinity”). The companies are involved in property investment and development
and the acquisition has enlarged the existing investment portfolio of the Group. The consideration of £6.9 million was wholly satisfied by
cash as shown below.

The fair values of identifiable assets and liabilities of Trinity as at the date of acquisition were:

Investment properties
Cash, cash equivalents and restricted cash
Trade and other receivables
Trade and other payables
Deferred revenue
Long-term loans
Total identifiable net assets

Cash consideration paid

Negative goodwill arising

Analysis of cash flows on acquisition:
Cash paid as consideration (included within cash flows from investing activities)
Cash acquired (included within cash flows from investing activities)
Transaction costs (included within cash flows from operating activities)
Net cash flow on acquisition

Fair value
£m

62.9
0.3
1.1
(1.7)
(1.4)
(53.7)
7.5

(6.9)

0.6

(6.9)
0.3
(0.4)
(7.0)

The gross value and fair value of the trade receivables acquired was £0.9 million. The full contractual amount has been collected and
therefore no provision for doubtful debt has been recorded.

The principal amount of the debt assumed with the acquisition of Trinity was £52.0 million. The debt has been recorded on the balance
sheet at £53.7 million, which represents the fair value as determined by the Group. This fair value adjustment will be amortised over the
remaining term of the debt.

Total transaction costs of £0.4 million have been expensed and are included within exceptional items.

Negative goodwill of £0.6 million arising from the transaction has been taken to the consolidated income statement and is shown within
exceptional items. Negative goodwill has arisen as a result of movements in the fair value of the assets and liabilities between
negotiation of the transaction and the completion date.

From the date of acquisition to 31 March 2014, Trinity has contributed £2.3 million to consolidated gross rental and related income
and £0.8 million to consolidated profit for the period. If the acquisition had occurred at the start of the financial period, the consolidated
gross rental and related income would have been £41.6 million and the consolidated profit for the period would have been
£35.3 million.

92 Assura Group Annual Report 2014
92 Assura Group Annual Report 2014

14. Business combinations

On 10 September 2013, the Group acquired 100% of the Ordinary Share capital of Trinity Medical Developments Limited and its wholly

owned subsidiary Trinity Medical Properties Limited (“Trinity”). The companies are involved in property investment and development

and the acquisition has enlarged the existing investment portfolio of the Group. The consideration of £6.9 million was wholly satisfied by

cash as shown below.

The fair values of identifiable assets and liabilities of Trinity as at the date of acquisition were:

NOTES TO THE ACCOUNTS

For the year ended 31 March 2014

Investment properties

Cash, cash equivalents and restricted cash

Trade and other receivables

Trade and other payables

Deferred revenue

Long-term loans

Total identifiable net assets

Cash consideration paid

Negative goodwill arising

Analysis of cash flows on acquisition:

Cash paid as consideration (included within cash flows from investing activities)

Cash acquired (included within cash flows from investing activities)

Transaction costs (included within cash flows from operating activities)

Net cash flow on acquisition

The gross value and fair value of the trade receivables acquired was £0.9 million. The full contractual amount has been collected and

therefore no provision for doubtful debt has been recorded.

The principal amount of the debt assumed with the acquisition of Trinity was £52.0 million. The debt has been recorded on the balance

sheet at £53.7 million, which represents the fair value as determined by the Group. This fair value adjustment will be amortised over the

remaining term of the debt.

Total transaction costs of £0.4 million have been expensed and are included within exceptional items.

Negative goodwill of £0.6 million arising from the transaction has been taken to the consolidated income statement and is shown within

exceptional items. Negative goodwill has arisen as a result of movements in the fair value of the assets and liabilities between

negotiation of the transaction and the completion date.

From the date of acquisition to 31 March 2014, Trinity has contributed £2.3 million to consolidated gross rental and related income

and £0.8 million to consolidated profit for the period. If the acquisition had occurred at the start of the financial period, the consolidated

gross rental and related income would have been £41.6 million and the consolidated profit for the period would have been

£35.3 million.

Fair value

£m

62.9

0.3

1.1

(1.7)

(1.4)

(53.7)

7.5

(6.9)

0.6

(6.9)

0.3

(0.4)

(7.0)

15. 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 2014. The properties have been valued individually and on the basis of open market value in accordance with RICS
valuation – Professional Standards 2012 (“the Red Book”).

Initial yields mainly range from 5.60% to 5.80% (2013: 5.70% to 6.00%) for prime units. For properties with weaker tenants and poorer
units, the yields range between 6.50% and 18.30% (2013: 6.50% and 17.00%). The higher yields are in the non-core portfolio.

A 0.25% shift of valuation yield would have approximately a £27.7 million (2013: £21.2 million) impact on the investment property
valuation.

Opening fair value
Additions:
– Directly acquired
– Business combination
– Improvements

Development costs
Transfers
Transfer from/(to) assets held for sale
Capitalised interest
Disposals
Unrealised surplus on revaluation
Closing market value
Add finance lease obligations
recognised separately
Closing fair value of investment property

Market value of investment property as
estimated by valuer
Add IPUC
Add pharmacy lease premiums
Add finance lease obligations
recognised separately
Fair value for financial reporting purposes
Investment property held for sale
Vacant property held for sale
Land held for sale
Total property assets held for sale
Total property assets

Investment
2014
£m
539.9

0.6
62.9
1.9
65.4
–
24.8
0.2
–
(2.6)
11.1
638.8

3.1
641.9

Core
£m

626.8
14.8
7.2

1.0
649.8
–
–
–
–
649.8

IPUC
2014
£m
14.3

–
–
–
–
23.7
(24.8)
0.2
0.6
(0.5)
1.3
14.8

–
14.8

2014
Non-Core
£m

4.8
–
–

2.1
6.9
2.0
0.1
9.5
11.6
18.5

Total
2014
£m
554.2

Investment
2013
£m
526.3

0.6
62.9
1.9
65.4
23.7
–
0.4
0.6
(3.1)
12.4
653.6

3.1
656.7

Total
£m

631.6
14.8
7.2

3.1
656.7
2.0
0.1
9.5
11.6
668.3

2.8
–
0.8
3.6
–
15.6
–
–
(8.1)
2.5
539.9

3.1
543.0

Core
£m

523.6
14.3
7.0

1.0
545.9
0.8
–
–
0.8
546.7

IPUC
2013
£m
8.4

–
–
–
–
18.6
(15.6)
(0.6)
0.4
(0.4)
3.5
14.3

–
14.3

2013
Non-Core
£m

9.3
–
–

2.1
11.4
1.3
0.2
9.7
11.2
22.6

Total
2013
£m
534.7

2.8
–
0.8
3.6
18.6
–
(0.6)
0.4
(8.5)
6.0
554.2

3.1
557.3

Total
£m

532.9
14.3
7.0

3.1
557.3
2.1
0.2
9.7
12.0
569.3

Two non-core property investments and 10 land sites are held as available for sale (2013: one core and three non-core property
investments and 10 land sites).

92 Assura Group Annual Report 2014

Assura Group Annual Report 2014 93
Assura Group Annual Report 2014 93

Strategic report Governance Financial statements

NOTES TO THE ACCOUNTS CONTINUED
NOTES TO THE ACCOUNTS
For the year ended 31 March 2014
For the year ended 31 March 2014

15. Property assets continued
Fair value hierarchy
The fair value measurement hierarchy for all investment property and investment property under construction as at 31 March 2014 was
Level 3 – Significant unobservable inputs (2013: 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: market comparable method
Under the market comparable method (or market comparable approach), a property's fair value is estimated based on comparable
transactions.

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 internal rate of return of the cash
flow from the property); and the physical condition of the property determined by inspections on a rotational basis.

16. Property, plant and equipment
The Group holds computer and other equipment assets with cost of £0.5 million (2013: £0.5 million), accumulated depreciation of
£0.4 million (2013: £0.4 million) giving a net book value of £0.1 million (2013: £0.1 million).

Additions during the year were £nil (2013: £0.1 million) and depreciation charged to the income statement was £nil (2013: £0.1 million).

17. Cash, cash equivalents and restricted cash

Cash held in current account

Restricted cash

2014
£m

27.6

11.0

38.6

2013
£m

15.6

20.1

35.7

Restricted cash arises where there are interest payment guarantees, cash is ring-fenced for committed property development
expenditure, which is released to pay contractors invoices directly, or under the terms of security arrangements under the Group’s
banking facilities or its bond.

18. Trade and other receivables

Trade receivables

Prepayments and accrued income

Loan note

Other debtors

Loan note due after more than one year

2014
£m

2013
£m

3.4

1.4

–

0.7

5.5

–

5.5

2.3

1.1

3.0

0.2

6.6

3.0

9.6

Trade and other receivables disclosed above are classified as loans and receivables and are therefore measured at amortised cost.

The Group’s principal customers are invoiced and pay quarterly in advance, usually on the English quarter days. Other debtors are
generally on 30-60 days’ terms. No bad debt provision was required (2013: £nil).

The loan note receivable related to the sale of the Pharmacy business in 2011. The loan was settled in full during the year.

94 Assura Group Annual Report 2014
94 Assura Group Annual Report 2014

NOTES TO THE ACCOUNTS

For the year ended 31 March 2014

Cash held in current account

Restricted cash

banking facilities or its bond.

18. Trade and other receivables

Trade receivables

Prepayments and accrued income

Loan note

Other debtors

Loan note due after more than one year

15. Property assets continued

Fair value hierarchy

The fair value measurement hierarchy for all investment property and investment property under construction as at 31 March 2014 was

Level 3 – Significant unobservable inputs (2013: 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: market comparable method

Under the market comparable method (or market comparable approach), a property's fair value is estimated based on comparable

transactions.

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 internal rate of return of the cash

flow from the property); and the physical condition of the property determined by inspections on a rotational basis.

16. Property, plant and equipment

The Group holds computer and other equipment assets with cost of £0.5 million (2013: £0.5 million), accumulated depreciation of

£0.4 million (2013: £0.4 million) giving a net book value of £0.1 million (2013: £0.1 million).

Additions during the year were £nil (2013: £0.1 million) and depreciation charged to the income statement was £nil (2013: £0.1 million).

17. Cash, cash equivalents and restricted cash

18. Trade and other receivables continued
As at 31 March 2014 and 31 March 2013, the analysis of trade debtors that were past due but not impaired is as follows:

2014
2013

Past due but not impaired

Neither past
due nor
impaired
£m
2.8
1.9

Total
£m
3.4
2.3

>30 days
£m
0.1
0.2

>60 days
£m
–
0.1

>90 days
0.1
–

>120 days
£m
0.4
0.1

The bulk of the Group’s income derives from the NHS or is reimbursed by the NHS, hence the risk of default is minimal.

The amount due over 120 days relates to one property for which there is currently a legal dispute to clarify the terms of the lease.

19. Trade and other payables

Trade creditors

Other creditors and accruals

VAT creditor

Payments due under finance leases

2014
£m

1.6

11.7

1.4

0.1

14.8

2013
£m

2.4

11.1

0.8

–

14.3

Restricted cash arises where there are interest payment guarantees, cash is ring-fenced for committed property development

expenditure, which is released to pay contractors invoices directly, or under the terms of security arrangements under the Group’s

Finance lease arrangements are in respect of investment property held by the Group on leasehold property. The amounts due after
more than one year, which total £3.0 million (2013: £3.1 million), have been disclosed in non-current liabilities on the consolidated
balance sheet. The maturity of trade and other payables and the minimum payments due under finance leases are disclosed in Note 29.

The fair value of the Group’s lease obligations is approximately equal to their carrying value.

20. Deferred revenue

Trade and other receivables disclosed above are classified as loans and receivables and are therefore measured at amortised cost.

The Group’s principal customers are invoiced and pay quarterly in advance, usually on the English quarter days. Other debtors are

generally on 30-60 days’ terms. No bad debt provision was required (2013: £nil).

The loan note receivable related to the sale of the Pharmacy business in 2011. The loan was settled in full during the year.

2014

2013

Arising from rental received in advance

Arising from pharmacy lease premiums received in advance

Current

Non-current

21. Provisions

At 1 April
Released
At 31 March

Analysed as:
Current
Non-current

2014
£m

9.5

7.2
16.7

9.9

6.8
16.7

2014
£m

1.0
(0.5)
0.5

0.1
0.4
0.5

2013
£m

7.8

7.0
14.8

8.2

6.6
14.8

2013
£m

1.0
–
1.0

0.1
0.9
1.0

2014

£m

27.6

11.0

38.6

2013

£m

15.6

20.1

35.7

£m

3.4

1.4

–

0.7

5.5

–

5.5

£m

2.3

1.1

3.0

0.2

6.6

3.0

9.6

94 Assura Group Annual Report 2014

Assura Group Annual Report 2014 95
Assura Group Annual Report 2014 95

Provisions relate to the onerous property lease on the former Pall Mall office and represent management’s best estimate of the Group’s
liability. A proportion of the provision was released during the year following a subtenant not exercising a break clause.

Strategic report Governance Financial statements

NOTES TO THE ACCOUNTS CONTINUED
NOTES TO THE ACCOUNTS
For the year ended 31 March 2014
For the year ended 31 March 2014

22. Borrowings

At 1 April
Amount issued or drawn down in year
Amount repaid in year
Acquired with acquisition of subsidiaries
Amortisation of Trinity loan fair value adjustment
Loan issue costs
Amortisation of loan issue costs
At 31 March

Due within one year
Due after more than one year
At 31 March

The Group has the following bank facilities:

2014
£m
392.1
9.2
(5.1)
53.7
(0.1)
–
0.5
450.3

5.9
444.4
450.3

2013
£m
375.6
23.2
(7.0)
–
–
(0.2)
0.5
392.1

3.9
388.2
392.1

1. 10-year senior secured bond for £110 million at a fixed interest rate of 4.75% maturing in December 2021. The secured bond

carries a loan to value 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).

2. Loans from Aviva with an aggregate balance of £284.5 million at 31 March 2014 (2013: £230.5 million). The Aviva loans are partially
amortised by way of quarterly instalments and partially repaid by way of bullet repayments falling due between 2021 and 2041 with
a weighted average term of 14 years to maturity; £5.3 million is due within a year. These loans are secured by way of charges over
specific medical centre investment properties with cross-collateralisation between the loans and security. The loans are subject to
fixed all-in interest rates ranging between 4.11% and 6.66%, and a weighted average of 5.65% and do not have loan to value
covenants. Debt service cover required typically ranges between 1.00 times and 1.05 times.

The principal amount of the debt assumed with the acquisition of Trinity was £52.0 million. The debt has been recorded on the
balance sheet at £53.7 million, which represents the fair value as determined by the Group. This fair value adjustment will be
amortised over the remaining term of the debt.

3. Loans from Santander with an aggregate balance of £57.4 million at 31 March 2014 (2013: £55.2 million); £0.6 million is due within
a year. This comprises a £57.4 million investment facility available until November 2016 that carries interest at 1.95% above LIBOR
and a £2.6 million development facility available until November 2014 that carries interest at 2.75% above LIBOR. On practical
completion of the development property, the development facility is converted and added to the investment facility. A £50.0 million
interest rate swap at a rate of 2.575% has been taken out to hedge the interest on the existing investment facility. The loan must not
exceed 75% of the value of the security, interest cover must be above 1.7 times and debt service cover must be above 1.05 times.

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

96 Assura Group Annual Report 2014
96 Assura Group Annual Report 2014

22. Borrowings

23. Derivative financial instrument at fair value through profit or loss

2014

£m

392.1

9.2

(5.1)

53.7

(0.1)

–

0.5

5.9

444.4

450.3

2013

£m

375.6

23.2

(7.0)

–

(0.2)

0.5

3.9

388.2

392.1

450.3

392.1

Liability at 1 April 2013
Movement in year
Liability at 31 March 2014

Interest rate
swaps
(Santander)
£m
3.6
(1.8)
1.8

The table above includes the net position of derivative financial instruments at the balance sheet date. These are presented under the
following captions on the consolidated balance sheet:

Non-current liabilities

2014
£m

1.8
1.8

2013
£m

3.6
3.6

Fair value hierarchy
The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities;

Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly
or indirectly; and

Level 3: techniques that use inputs which have a significant effect on the recorded fair value that are not based on observable
market data.

At 31 March 2014 and 31 March 2013 and throughout the two-year period the financial liabilities measured have been determined and
valued as Level 2.

During the reporting years ending 31 March 2014 and 31 March 2013, there were no transfers between Level 1 and Level 2 fair value
measurements, and no transfers into and out of the Level 3 fair value measurements.

NOTES TO THE ACCOUNTS

For the year ended 31 March 2014

At 1 April

Amount issued or drawn down in year

Amount repaid in year

Acquired with acquisition of subsidiaries

Amortisation of Trinity loan fair value adjustment

Loan issue costs

Amortisation of loan issue costs

At 31 March

Due within one year

Due after more than one year

At 31 March

The Group has the following bank facilities:

1. 10-year senior secured bond for £110 million at a fixed interest rate of 4.75% maturing in December 2021. The secured bond

carries a loan to value 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).

2. Loans from Aviva with an aggregate balance of £284.5 million at 31 March 2014 (2013: £230.5 million). The Aviva loans are partially

amortised by way of quarterly instalments and partially repaid by way of bullet repayments falling due between 2021 and 2041 with

a weighted average term of 14 years to maturity; £5.3 million is due within a year. These loans are secured by way of charges over

specific medical centre investment properties with cross-collateralisation between the loans and security. The loans are subject to

fixed all-in interest rates ranging between 4.11% and 6.66%, and a weighted average of 5.65% and do not have loan to value

covenants. Debt service cover required typically ranges between 1.00 times and 1.05 times.

The principal amount of the debt assumed with the acquisition of Trinity was £52.0 million. The debt has been recorded on the

balance sheet at £53.7 million, which represents the fair value as determined by the Group. This fair value adjustment will be

amortised over the remaining term of the debt.

3. Loans from Santander with an aggregate balance of £57.4 million at 31 March 2014 (2013: £55.2 million); £0.6 million is due within

a year. This comprises a £57.4 million investment facility available until November 2016 that carries interest at 1.95% above LIBOR

and a £2.6 million development facility available until November 2014 that carries interest at 2.75% above LIBOR. On practical

completion of the development property, the development facility is converted and added to the investment facility. A £50.0 million

interest rate swap at a rate of 2.575% has been taken out to hedge the interest on the existing investment facility. The loan must not

exceed 75% of the value of the security, interest cover must be above 1.7 times and debt service cover must be above 1.05 times.

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

96 Assura Group Annual Report 2014

Assura Group Annual Report 2014 97
Assura Group Annual Report 2014 97

Strategic report Governance Financial statements

NOTES TO THE ACCOUNTS CONTINUED
NOTES TO THE ACCOUNTS
For the year ended 31 March 2014
For the year ended 31 March 2014

24. Share capital

Authorised
Ordinary Shares of 10p each

Preference Shares of 10p each

Ordinary Shares issued and fully paid

At 1 April and 31 March
Own shares held

Total share capital

2014

2014
£m

2013

3,000,000,000

300.0

3,000,000,000

20,000,000

Number of
shares
2014

2.0

302.0

Share
capital
2014
£m

20,000,000

Number of
shares
2013

529,548,924
(4,064,885)

525,484,039

53.0
(1.9)

51.1

529,548,924
(4,218,219)

525,330,705

Own shares held comprise shares held by the Employee Benefit Trust.

25. Dividends paid on Ordinary Shares

Payment date
22/01/2014
23/10/2013
24/07/2013
24/04/2013
23/01/2013
24/10/2012
25/07/2012

Pence per share
0.45
0.3025
0.3025
0.3025
0.285
0.285
0.285

Number of
Ordinary Shares
529,548,924
529,548,924
529,548,924
529,548,924
529,548,924
529,548,924
529,548,924

2014
£m
2.4
1.6
1.6
1.6
–
–
–
7.2

2013
£m

300.0

2.0

302.0

Share
capital
2013
£m

53.0
(1.9)

51.1

2013
£m
–
–
–
–
1.5
1.5
1.5
4.5

A dividend of 0.45 pence per share was paid to shareholders on 23 April 2014.

A quarterly dividend for 2014/15 of 0.45 pence per share is expected to be paid on 23 July 2014 to shareholders on the share register
at 11 July 2014.

The dividends paid do not include any Property Income Distributions (“PID”) as defined under the REIT regime.

98 Assura Group Annual Report 2014
98 Assura Group Annual Report 2014

NOTES TO THE ACCOUNTS

For the year ended 31 March 2014

24. Share capital

Authorised

Ordinary Shares of 10p each

Preference Shares of 10p each

Ordinary Shares issued and fully paid

At 1 April and 31 March

Own shares held

Total share capital

Own shares held comprise shares held by the Employee Benefit Trust.

25. Dividends paid on Ordinary Shares

Payment date

22/01/2014

23/10/2013

24/07/2013

24/04/2013

23/01/2013

24/10/2012

25/07/2012

at 11 July 2014.

2014

£m

2.0

302.0

capital

2014

£m

2014

2013

3,000,000,000

300.0

3,000,000,000

20,000,000

Number of

2014

Number of

2013

529,548,924

(4,064,885)

525,484,039

53.0

(1.9)

51.1

529,548,924

(4,218,219)

525,330,705

Number of

2014

Pence per share

Ordinary Shares

0.45

529,548,924

0.3025

0.285

529,548,924

£m

2.4

1.6

–

7.2

2013

£m

300.0

2.0

302.0

capital

2013

£m

53.0

(1.9)

51.1

2013

£m

–

1.5

4.5

A dividend of 0.45 pence per share was paid to shareholders on 23 April 2014.

A quarterly dividend for 2014/15 of 0.45 pence per share is expected to be paid on 23 July 2014 to shareholders on the share register

The dividends paid do not include any Property Income Distributions (“PID”) as defined under the REIT regime.

26. Share-based payments
As at 31 March 2014, the Group had three long-term incentive schemes in place – the Value Creation Plan (“VCP”), the Executive
Recruitment Plan (“ERP”) and the Long Term Incentive Plan (“LTIP”).

The long-term incentive arrangements are structured so as to align the incentives of relevant Executives with the long-term performance
of the business and to motivate and retain key members of staff. To the extent practicable long-term incentives are provided through
the use of share-based (or share-fulfilled) remuneration to provide alignment of objectives with the Group’s shareholders. Long-term
incentive awards are granted by the Remuneration Committee which reviews award levels on a case by case basis.

As at 31 March 2014 the Employee Benefit Trust held a total of 4,064,885 (2013: 4,218,219) Ordinary Shares of 10 pence each
in Assura Group Limited. Previous long-term incentive plans have lapsed without vesting.

Value Creation Plan
As at 31 March 2014, a total of 822,080 performance units (2013: 791,700) had been granted to employees (including 575,000 units
granted to Executive Directors as detailed in the Remuneration Committee Report). No payment has been made for the grant of these
awards and the performance units have no value at grant.

Participants have the opportunity to receive 10% of the total value created for shareholders above a threshold price determined at three
measurement dates in a five-year measurement period. Before any awards vest, which are granted as nil-cost options on conversion of
any value created, a minimum level of Total Shareholder Return of 8% per annum compound growth from the base price at each
measurement date must be achieved.

Further details in respect of the VCP are provided in the Remuneration Committee Report on page 58.

Executive Recruitment Plan
During the prior year, a nil-cost contingent award of 460,002 Ordinary Shares was made under the ERP. The scheme is in respect of
one Executive Director and full details are provided in the Remuneration Committee Report on page 58.

Long Term Incentive Plan
The units (equivalent to one Ordinary Share) outstanding in respect of the LTIP are as follows:

Outstanding as at the start of the year

Expired during the year

Outstanding as at the end of the year
Units exercisable at the end of the year

2014
Units
400,000

2013
Units
725,000

(400,000)

(325,000)

–
–

400,000
–

No Executive Directors hold shares under the scheme and key management personnel had no units at 31 March 2014 (2013: 400,000
units). These relate to grants on 29 July 2011 which had a performance period that ended on 31 March 2014.

98 Assura Group Annual Report 2014

Assura Group Annual Report 2014 99
Assura Group Annual Report 2014 99

Strategic report Governance Financial statements

NOTES TO THE ACCOUNTS CONTINUED
NOTES TO THE ACCOUNTS
For the year ended 31 March 2014
For the year ended 31 March 2014

26. Share-based payments continued
All schemes
The fair value of equity settled units granted during 2013 is estimated as at the date of grant using the Monte Carlo Model, taking into
account the terms and conditions upon which units were granted. The following table lists the inputs to the models used for the year
ended 31 March 2013, being the last point at which a valuation was required under IFRS 2.

Dividend yield (%)

Expected share price volatility (%)
Risk-free interest rate (%)

Expected life of units (years)

2013

3.5

20.7
0.74

4.5

The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may not necessarily be the
actual outcome.

The fair value of the units granted in 2013 was £2,475,000 based on the market price at the date the units were granted. This cost is
allocated over the vesting period. The cost allocation for all outstanding units in the period was a charge of £655,500 (2013: charge
of £575,000).

For share options outstanding as at 31 March 2014, the weighted average remaining contractual life is 1.83 years (2013: 1.98 years).
The weighted average fair value of share options granted during 2014 was n/a (2013: £0.34).

27. Note to the consolidated cash flow statement

2014
£m

2013
£m

24.2

11.2

35.4

–
(1.1)

(0.7)
(0.5)

(12.4)
(0.6)

(1.8)
(0.2)

(0.1)
(10.5)

(0.6)
(0.2)

0.7
0.5

7.9

12.9

1.4

14.3

0.1
0.1

2.8
–

(6.0)
(0.4)

1.2
0.1

–
–

–
(0.4)

0.6
0.5

12.9

Reconciliation of net profit before taxation to net cash inflow from operating activities:

Net profit before taxation
Profit from continuing activities

Profit from discontinued activities

Adjustment for non-cash items:

Depreciation
(Increase)/decrease in debtors

(Decrease)/increase in creditors
Decrease in provisions

Revaluation gain
Interest capitalised on developments

(Gain)/loss on revaluation of financial instrument
(Gain)/loss on disposal of properties

Amortisation of Trinity loan fair value adjustment
Profit on disposal of LIFT business

Negative goodwill on acquisition of Trinity
Share of profits of associates and joint ventures

Employee share-based incentive costs
Amortisation of loan issue costs

Net cash inflow from operating activities

100 Assura Group Annual Report 2014
100 Assura Group Annual Report 2014

NOTES TO THE ACCOUNTS

For the year ended 31 March 2014

26. Share-based payments continued

All schemes

The fair value of equity settled units granted during 2013 is estimated as at the date of grant using the Monte Carlo Model, taking into

account the terms and conditions upon which units were granted. The following table lists the inputs to the models used for the year

ended 31 March 2013, being the last point at which a valuation was required under IFRS 2.

Dividend yield (%)

Expected share price volatility (%)

Risk-free interest rate (%)

Expected life of units (years)

actual outcome.

of £575,000).

The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may not necessarily be the

The fair value of the units granted in 2013 was £2,475,000 based on the market price at the date the units were granted. This cost is

allocated over the vesting period. The cost allocation for all outstanding units in the period was a charge of £655,500 (2013: charge

For share options outstanding as at 31 March 2014, the weighted average remaining contractual life is 1.83 years (2013: 1.98 years).

The weighted average fair value of share options granted during 2014 was n/a (2013: £0.34).

27. Note to the consolidated cash flow statement

2014

£m

2013

£m

Reconciliation of net profit before taxation to net cash inflow from operating activities:

Net profit before taxation

Profit from continuing activities

Profit from discontinued activities

Adjustment for non-cash items:

Depreciation

(Increase)/decrease in debtors

(Decrease)/increase in creditors

Decrease in provisions

Revaluation gain

Interest capitalised on developments

(Gain)/loss on revaluation of financial instrument

(Gain)/loss on disposal of properties

Amortisation of Trinity loan fair value adjustment

Profit on disposal of LIFT business

Negative goodwill on acquisition of Trinity

Share of profits of associates and joint ventures

Employee share-based incentive costs

Amortisation of loan issue costs

Net cash inflow from operating activities

2013

3.5

20.7

0.74

4.5

12.9

1.4

14.3

0.1

2.8

–

(6.0)

(0.4)

1.2

0.1

–

(0.4)

0.6

0.5

12.9

24.2

11.2

35.4

–

(1.1)

(0.7)

(0.5)

(12.4)

(0.6)

(1.8)

(0.2)

(0.1)

(10.5)

(0.6)

(0.2)

0.7

0.5

7.9

28. Deferred tax
Deferred tax consists of the following:

At 1 April
Income statement movement
At 31 March

The amount of deductible temporary differences and unused tax losses are as follows:

Tax losses
Other timing differences

2014
£m
1.1
(0.4)
0.7

2014
£m
207.0
7.5
214.5

2013
£m
1.3
(0.2)
1.1

2013
£m
227.4
71.1
298.5

The majority of tax losses carried forward relate to capital losses generated on the disposal of former divisions of the Group.

The following deferred tax assets have not been recognised due to uncertainties around future recoverability:

The tax effect of these unrecognised assets is as follows:

Tax losses
Other temporary differences

2014
£m

41.4
1.5

42.9

2013
£m

52.3
16.4

68.7

100 Assura Group Annual Report 2014

Assura Group Annual Report 2014 101
Assura Group Annual Report 2014 101

Strategic report Governance Financial statements

NOTES TO THE ACCOUNTS CONTINUED
NOTES TO THE ACCOUNTS
For the year ended 31 March 2014
For the year ended 31 March 2014

29. Derivatives and other financial instruments
The Group holds cash and liquid resources as well as having debtors and creditors that arise directly from its operations.

The main risks arising from the Group's financial instruments and properties are credit risk, liquidity risk, interest rate risk and capital
risk. The Board regularly reviews and agrees policies for managing each of these risks and these are summarised below.

Credit risk
Credit risk is the risk that an issuer or counterparty will be unable or unwilling to meet a commitment that it has entered into with
the Group.

In the event of a default by an occupational tenant, the Group will suffer a rental income shortfall and may incur additional costs,
including legal expenses, in maintaining, insuring and re-letting the property. Given the nature of the Company’s tenants and enhanced
rights of landlords who can issue proceedings and enforcement by bailiffs, defaults are rare and potential defaults are managed
carefully by the credit control department. The maximum credit exposure in aggregate is one quarter’s rent of circa £11 million;
however, this amount derives from all the tenants in the portfolio and such a scenario is hypothetical. The Group’s credit risk is well
spread across circa 470 tenants at any one time. Furthermore the bulk of the Group’s property income derives from the NHS or is
reimbursed by the NHS, which has an obligation to ensure that patients can be seen and treated and steps in when GPs are unable to
practise, hence the risk of default is minimal.

The maximum credit risk exposure relating to financial assets is represented by their carrying values as at the balance sheet date.

Liquidity risk
Liquidity risk is the risk that the Group will encounter in realising assets or otherwise raising funds to meet financial commitments.
Investments in property are relatively illiquid; however, the Group has tried to mitigate this risk by investing in modern purpose built
medical centres which are let to GPs and NHS PropCo. In order to progress its property investment and development programme, the
Group needs access to bank and equity finance, both of which may be difficult to raise notwithstanding the quality, long lease length,
NHS backing and geographical and lot size diversity of its property portfolio.

The Group manages its liquidity risk by ensuring that it has a spread of sources and maturities.

The Group has entered into commercial property leases on its investment property portfolio. These non-cancellable leases have
remaining terms of up to 27 years and have a weighted average lease length of 14.4 years. All leases are subject to revision of rents
according to various rent review clauses. Future minimum rentals receivable under non-cancellable operating leases along with trade
and other receivable as at 31 March are as follows:

Receivables as at 31 March 2014
Non-cancellable leases
Trade and other receivables

Receivables as at 31 March 2013
Non-cancellable leases
Trade and other receivables

On
demand
£m
–
–
–

Less than
3 months
£m
10.6
5.5
16.1

Less than
3 months
£m
8.9
6.6
15.5

3 to 12
months
£m
32.0
–
32.0

3 to 12
months
£m
26.9
–
26.9

1 to 5
years
£m
170.4
–
170.4

1 to 5
years
£m
149.1
3.0
152.1

>5 years
£m
449.9
–
449.9

>5 years
£m
426.9
–
426.9

Total
£m
662.9
5.5
668.4

Total
£m
611.8
9.6
621.4

102 Assura Group Annual Report 2014
102 Assura Group Annual Report 2014

NOTES TO THE ACCOUNTS

For the year ended 31 March 2014

29. Derivatives and other financial instruments

The Group holds cash and liquid resources as well as having debtors and creditors that arise directly from its operations.

The main risks arising from the Group's financial instruments and properties are credit risk, liquidity risk, interest rate risk and capital

risk. The Board regularly reviews and agrees policies for managing each of these risks and these are summarised below.

Credit risk is the risk that an issuer or counterparty will be unable or unwilling to meet a commitment that it has entered into with

Credit risk

the Group.

In the event of a default by an occupational tenant, the Group will suffer a rental income shortfall and may incur additional costs,

including legal expenses, in maintaining, insuring and re-letting the property. Given the nature of the Company’s tenants and enhanced

rights of landlords who can issue proceedings and enforcement by bailiffs, defaults are rare and potential defaults are managed

carefully by the credit control department. The maximum credit exposure in aggregate is one quarter’s rent of circa £11 million;

however, this amount derives from all the tenants in the portfolio and such a scenario is hypothetical. The Group’s credit risk is well

spread across circa 470 tenants at any one time. Furthermore the bulk of the Group’s property income derives from the NHS or is

reimbursed by the NHS, which has an obligation to ensure that patients can be seen and treated and steps in when GPs are unable to

practise, hence the risk of default is minimal.

The maximum credit risk exposure relating to financial assets is represented by their carrying values as at the balance sheet date.

Liquidity risk

Liquidity risk is the risk that the Group will encounter in realising assets or otherwise raising funds to meet financial commitments.

Investments in property are relatively illiquid; however, the Group has tried to mitigate this risk by investing in modern purpose built

medical centres which are let to GPs and NHS PropCo. In order to progress its property investment and development programme, the

Group needs access to bank and equity finance, both of which may be difficult to raise notwithstanding the quality, long lease length,

NHS backing and geographical and lot size diversity of its property portfolio.

The Group manages its liquidity risk by ensuring that it has a spread of sources and maturities.

The Group has entered into commercial property leases on its investment property portfolio. These non-cancellable leases have

remaining terms of up to 27 years and have a weighted average lease length of 14.4 years. All leases are subject to revision of rents

according to various rent review clauses. Future minimum rentals receivable under non-cancellable operating leases along with trade

and other receivable as at 31 March are as follows:

Receivables as at 31 March 2014

Non-cancellable leases

Trade and other receivables

Receivables as at 31 March 2013

Non-cancellable leases

Trade and other receivables

demand

£m

Less than

3 months

3 to 12

months

–

£m

10.6

5.5

16.1

£m

8.9

6.6

15.5

£m

32.0

–

32.0

£m

26.9

–

26.9

demand

£m

Less than

3 months

3 to 12

months

1 to 5

years

£m

170.4

–

170.4

1 to 5

years

£m

149.1

3.0

152.1

>5 years

£m

449.9

–

449.9

>5 years

£m

426.9

–

426.9

Total

£m

662.9

5.5

668.4

Total

£m

611.8

9.6

621.4

29. Derivatives and other financial instruments continued
The table below summarises the maturity profile of the Group’s financial liabilities, including interest, at 31 March 2014 and 31 March
2013 based on contractual undiscounted payments at the earliest date which the Group can be required to pay.

The total contracted discounted payments are higher than the total minimum rentals receivable due to the rent receivable not including
any residual values on properties at the end of the lease contract.

Payables as at 31 March 2014
Non-derivative financial liabilities:
Interest bearing loans and borrowings
Trade and other payables

Derivative financial liabilities:
Interest rate swap

Total financial liabilities

Payables as at 31 March 2013
Non-derivative financial liabilities:
Interest bearing loans and borrowings
Trade and other payables

Derivative financial liabilities:
Interest rate swap

Total financial liabilities

20.2

23.8

167.1

532.4

743.5

On
demand
£m

Less than
3 months
£m

3 to 12
months
£m

On
demand
£m

Less than
3 months
£m

3 to 12
months
£m

8.2
11.7
19.9

0.3
0.3

19.9
3.1
23.0

0.8
0.8

5.0
11.3
16.3

0.2
0.2

9.9
3.0
12.9

0.7
0.7

–
–
–

–
–

–

–
–
–

–
–

–

1 to 5
years
£m

163.5
0.1
163.6

3.5
3.5

>5 years
£m

529.4
3.0
532.4

–
–

Total
£m

721.0
17.9
738.9

4.6
4.6

1 to 5
years
£m

121.0
0.1
121.1

6.0
6.0

>5 years
£m

531.4
3.0
534.4

–
–

Total
£m

667.3
17.4
684.7

6.9
6.9

16.5

13.6

127.1

534.4

691.6

Interest rate risk
The Group’s exposure to market risk for changes in interest rates relates primarily to the Group’s cash deposits and, as debt is utilised,
long-term debt obligations. The Group’s policy is to manage its interest cost using fixed rate debt or by interest rate swaps (see below).
The swaps are revalued to their market value by reference to market interest rates at each balance sheet date.

102 Assura Group Annual Report 2014

Assura Group Annual Report 2014 103
Assura Group Annual Report 2014 103

Strategic report Governance Financial statements

NOTES TO THE ACCOUNTS CONTINUED
NOTES TO THE ACCOUNTS
For the year ended 31 March 2014
For the year ended 31 March 2014

29. Derivatives and other financial instruments continued
The ageing analysis of the financial assets and liabilities excluding trade receivables and payables of the Group at 31 March 2014 was
as follows:

Floating rate asset/(liability)
Cash
Santander – investment facility
Interest rate swap

Fixed rate (all liabilities)
Long-term loans:

Bond
Aviva

Payments due under finance leases

Within
1 year
£m

38.6
(0.6)
–

1 to 5
years
£m

More than
5 years
£m

–
(56.8)
(1.8)

–
–
–

Total
£m

38.6
(57.4)
(1.8)

–
(5.3)
(0.1)

–
(32.6)
(0.1)

(110.0)
(246.6)
(2.9)

(110.0)
(284.5)
(3.1)

In November 2011 the Group issued a £110.0 million 10-year senior secured bond at 4.75%.

Aviva loans were increased during the period to £284.5 million (2013: £230.5 million). The Aviva loans are partially amortised by way of
quarterly instalments and partially repaid by way of bullet repayments falling due between 2021 and 2041. £5.3 million is due within a
year. These loans are secured by way of charges over specific medical centre investment properties with cross-collateralisation
between the loans and security. The loans are subject to fixed all-in interest rates ranging between 4.11% and 6.66%.

In November 2011 the Group entered into an interest rate swap with Santander for a principal of £50.0 million at 2.575% plus 1.95%
margin for five years. This replaced the previous swap held with Santander.

The ageing analysis of the financial assets and liabilities excluding trade receivables and payables of the Group at 31 March 2013 was
as follows:

Within
1 year
£m

1 to 5
years
£m

More than
5 years
£m

35.7
–
–
–

–
(50.0)
(5.2)
(3.6)

–
–
–
–

Total
£m

35.7
(50.0)
(5.2)
(3.6)

–
(3.9)
–

–
(20.5)
(0.1)

(110.0)
(206.1)
(3.0)

(110.0)
(230.5)
(3.1)

Floating rate asset/(liability)
Cash
Santander – investment facility
Santander – development facility
Interest rate swap

Fixed rate (all liabilities)
Long-term loans:

Bond
Aviva

Payments due under finance leases

104 Assura Group Annual Report 2014
104 Assura Group Annual Report 2014

NOTES TO THE ACCOUNTS

For the year ended 31 March 2014

Floating rate asset/(liability)

Cash

Santander – investment facility

Interest rate swap

Fixed rate (all liabilities)

Long-term loans:

Bond

Aviva

Payments due under finance leases

Floating rate asset/(liability)

Cash

Santander – investment facility

Santander – development facility

Interest rate swap

Fixed rate (all liabilities)

Long-term loans:

Bond

Aviva

Payments due under finance leases

In November 2011 the Group issued a £110.0 million 10-year senior secured bond at 4.75%.

Aviva loans were increased during the period to £284.5 million (2013: £230.5 million). The Aviva loans are partially amortised by way of

quarterly instalments and partially repaid by way of bullet repayments falling due between 2021 and 2041. £5.3 million is due within a

year. These loans are secured by way of charges over specific medical centre investment properties with cross-collateralisation

between the loans and security. The loans are subject to fixed all-in interest rates ranging between 4.11% and 6.66%.

In November 2011 the Group entered into an interest rate swap with Santander for a principal of £50.0 million at 2.575% plus 1.95%

margin for five years. This replaced the previous swap held with Santander.

The ageing analysis of the financial assets and liabilities excluding trade receivables and payables of the Group at 31 March 2013 was

as follows:

Within

1 year

£m

38.6

(0.6)

–

1 to 5

years

£m

More than

5 years

£m

–

(56.8)

(1.8)

–

Total

£m

38.6

(57.4)

(1.8)

–

(5.3)

(0.1)

–

(32.6)

(0.1)

(110.0)

(246.6)

(2.9)

(110.0)

(284.5)

(3.1)

Within

1 year

£m

1 to 5

years

£m

More than

5 years

£m

35.7

–

(50.0)

(5.2)

(3.6)

–

Total

£m

35.7

(50.0)

(5.2)

(3.6)

–

(3.9)

–

(20.5)

(0.1)

(110.0)

(206.1)

(3.0)

(110.0)

(230.5)

(3.1)

29. Derivatives and other financial instruments continued

The ageing analysis of the financial assets and liabilities excluding trade receivables and payables of the Group at 31 March 2014 was

as follows:

29. Derivatives and other financial instruments continued
Sensitivity analysis
The Group has largely eliminated its exposure to interest rate movements affecting income by the use of fixed rate debt and interest
rate swaps. The Group is 98% fixed such that a 0.25% movement in interest rate has a negligible impact on underlying profits.

Cash
Interest rate swap
Long-term loan
Payments due under finance leases

Book value
2014
£m
38.6
(1.8)
(450.3)
(3.1)

2013
£m
35.7
(3.6)
(392.1)
(3.1)

Fair value

2014
£m
38.6
(1.8)
(455.8)
(3.1)

2013
£m
35.7
(3.6)
(440.3)
(3.1)

The Group is exposed to the valuation impact on investor sentiment of long-term interest rate expectations, which can impact
transactions in the market and increase or decrease valuations accordingly.

Capital risk
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 loan to value (LTV), which is calculated as net debt divided by total property and
LIFT value. The LTV percentage on this basis is 62% at 31 March 2014 (62% at 31 March 2013).

Investment property
Investment property under construction
Held for sale – investment property
Held for sale – land
LIFT and investments
Total property and LIFT

Loans
Finance lease
Cash
Net debt

LTV

2014
£m
641.9
14.8
2.1
9.5
0.5
668.8

2014
£m

450.3
3.1
(38.6)
414.8

2013
£m
543.0
14.3
2.3
9.7
11.2
580.5

2013
£m

392.1
3.1
(35.7)
359.5

62%

104 Assura Group Annual Report 2014

Assura Group Annual Report 2014 105
Assura Group Annual Report 2014 105

Strategic report Governance Financial statements

NOTES TO THE ACCOUNTS CONTINUED
NOTES TO THE ACCOUNTS
For the year ended 31 March 2014
For the year ended 31 March 2014

30. Discontinued operations
During the year, the Board announced plans to sell the investments held in LIFT companies, as it was concluded that shareholder value
would be best realised through any proceeds being re-invested in primary care property assets. Contracts were exchanged on 24
November 2013, with the sale completed in two tranches: the first on 23 January 2014 and the second on 13 February 2014.

The following table shows the calculation of gain on disposal, relative to the net assets at the effective date of the transaction
(30 September 2013, being the date at which the purchasers were entitled to interest and equity returns):

Gross consideration
Costs
Net proceeds
LIFT investments at 30 September 2013
Additional investment
Gain on disposal of discontinued operations

Prior to the sale, the Group increased its investment in one LIFT company for consideration of £0.3 million.

The results of the LIFT segment for the period are presented below:

Share of profits of associates and joint ventures
Finance revenue
Profit before tax
Gain on disposal of discontinued operations
Profit for the period from discontinued operations

The net cash flows attributable to the LIFT segment were as follows:

Operating activities
Investing activities
Net cash inflow

£m
22.4
(0.7)
21.7
(10.9)
(0.3)
10.5

2013
£m
0.4
1.0
1.4
–
1.4

2013
£m
1.0
(0.3)
0.7

2014
£m
0.1
0.6
0.7
10.5
11.2

2014
£m
0.6
21.4
22.0

31. Commitments
At the year end the Group had five (2013: nine) developments on-site with a contracted total expenditure of £21.5 million
(2013: £33.1 million) of which £12.5 million (2013: £13.9 million) had been expended.

32. Related party transactions
Details of transactions during the year and outstanding balances at 31 March 2014 in respect of associates and joint ventures
are detailed in Notes 13 and 30 as applicable.

Details of payments to key management personnel are provided in Note 6.

33. Post balance sheet events
Subsequent to the year end, a subsidiary of the Group has entered into a five-year, £30 million revolving credit facility with RBS and
Barclays.

106 Assura Group Annual Report 2014
106 Assura Group Annual Report 2014

NOTES TO THE ACCOUNTS

For the year ended 31 March 2014

COMPANY INCOME STATEMENT
COMPANY INCOME STATEMENT
For the year ended 31 March 2014
For the year ended 31 March 2014

Revenue
Dividends received from subsidiary companies
Interest receivable from subsidiary companies
Bank and other interest receivable
Total revenue

Administration costs
Share-based payment charge
Exceptional items
Total operating expenses

Operating (loss)/profit

Reversal of provision/(provision) for diminution in value of investments in subsidiaries
Reversal of provision against subsidiary loan balances
Profit before taxation

Taxation

Note

2014
£m

2013
£m

0.7
0.4
0.1
1.2

(0.9)
(0.7)
(1.1)
(2.7)

(1.5)

19.5
–
18.0

–

3.7
–
0.1
3.8

(0.8)
(0.6)
–(
(1.4)

2.4

(16.2)
27.9
14.1

–

C
G

Profit attributable to equity holders

18.0

14.1

All amounts relate to continuing activities. There were no items of other comprehensive income or expense and therefore the profit for
the period also reflects the Company’s total comprehensive income.

30. Discontinued operations

During the year, the Board announced plans to sell the investments held in LIFT companies, as it was concluded that shareholder value

would be best realised through any proceeds being re-invested in primary care property assets. Contracts were exchanged on 24

November 2013, with the sale completed in two tranches: the first on 23 January 2014 and the second on 13 February 2014.

The following table shows the calculation of gain on disposal, relative to the net assets at the effective date of the transaction

(30 September 2013, being the date at which the purchasers were entitled to interest and equity returns):

Gross consideration

Costs

Net proceeds

LIFT investments at 30 September 2013

Additional investment

Gain on disposal of discontinued operations

Prior to the sale, the Group increased its investment in one LIFT company for consideration of £0.3 million.

The results of the LIFT segment for the period are presented below:

Share of profits of associates and joint ventures

Finance revenue

Profit before tax

Gain on disposal of discontinued operations

Profit for the period from discontinued operations

The net cash flows attributable to the LIFT segment were as follows:

Operating activities

Investing activities

Net cash inflow

31. Commitments

At the year end the Group had five (2013: nine) developments on-site with a contracted total expenditure of £21.5 million

(2013: £33.1 million) of which £12.5 million (2013: £13.9 million) had been expended.

32. Related party transactions

are detailed in Notes 13 and 30 as applicable.

Details of transactions during the year and outstanding balances at 31 March 2014 in respect of associates and joint ventures

Details of payments to key management personnel are provided in Note 6.

33. Post balance sheet events

Barclays.

Subsequent to the year end, a subsidiary of the Group has entered into a five-year, £30 million revolving credit facility with RBS and

£m

22.4

(0.7)

21.7

(10.9)

(0.3)

10.5

2013

£m

0.4

1.0

1.4

–

1.4

2013

£m

1.0

(0.3)

0.7

2014

£m

0.1

0.6

0.7

10.5

11.2

2014

£m

0.6

21.4

22.0

106 Assura Group Annual Report 2014

Assura Group Annual Report 2014 107
Assura Group Annual Report 2014 107

Strategic report Governance Financial statements

COMPANY BALANCE SHEET
COMPANY BALANCE SHEET
For the year ended 31 March 2014
For the year ended 31 March 2014

Non-current assets

Investments in subsidiary companies
Loans to subsidiary companies

Current assets

Cash and cash equivalents
Other receivables
Amounts owed by subsidiary companies

Total assets

Current liabilities
Other payables
Amount owed to subsidiary companies

Total liabilities

Net assets

Represented by:

Capital and reserves

Share capital
Own shares held
Share premium
Reserves

Total equity

Note

C
D

E
F
G

H
I

2014
£m

180.1
53.0
233.1

0.6
0.1
15.2
15.9

2013
£m

154.1
68.1
222.2

3.4
–
0.4
3.8

249.0

226.0

0.8
38.6
39.4

1.0
26.9
27.9

209.6

198.1

53.0
(1.9)
77.1
81.4

53.0
(1.9)
77.1
69.9

209.6

198.1

The financial statements were approved at a meeting of the Board of Directors held on 22 May 2014 and signed on its behalf by:

Graham Roberts, Chief Executive

Jonathan Murphy, Finance Director

108 Assura Group Annual Report 2014
108 Assura Group Annual Report 2014

COMPANY BALANCE SHEET

For the year ended 31 March 2014

COMPANY STATEMENT OF CHANGES IN EQUITY
COMPANY STATEMENT OF CHANGES IN EQUITY
For the year ended 31 March 2014
For the year ended 31 March 2014

1 April 2012
Profit attributable to equity holders
Total comprehensive income
Dividends paid (Note 25 to the Group accounts)
Employee share-base incentives
31 March 2013

Profit attributable to equity holders
Total comprehensive income
Dividends paid (Note 25 to the Group accounts)
Employee share-base incentives
31 March 2014

Share
capital
£m
53.0
–
–
–
–
53.0

Own shares
held
£m
(1.9)
–
–
–
–
(1.9)

–
–
–
–
53.0

–
–
–
–
(1.9)

Share
premium
£m
77.1
–
–
–
–
77.1

–
–
–
–
77.1

Reserves
£m
59.7
14.1
14.1
(4.5)
0.6
69.9

18.0
18.0
(7.2)
0.7
81.4

Total
equity
£m
187.9
14.1
14.1
(4.5)
0.6
198.1

18.0
18.0
(7.2)
0.7
209.6

Non-current assets

Investments in subsidiary companies

Loans to subsidiary companies

Current assets

Cash and cash equivalents

Other receivables

Amounts owed by subsidiary companies

Amount owed to subsidiary companies

Total assets

Current liabilities

Other payables

Total liabilities

Net assets

Represented by:

Capital and reserves

Share capital

Own shares held

Share premium

Reserves

Total equity

Note

2014

£m

180.1

53.0

233.1

0.6

0.1

15.2

15.9

2013

£m

154.1

68.1

222.2

3.4

–

0.4

3.8

249.0

226.0

0.8

38.6

39.4

1.0

26.9

27.9

209.6

198.1

53.0

(1.9)

77.1

81.4

53.0

(1.9)

77.1

69.9

209.6

198.1

The financial statements were approved at a meeting of the Board of Directors held on 22 May 2014 and signed on its behalf by:

Graham Roberts, Chief Executive

Jonathan Murphy, Finance Director

108 Assura Group Annual Report 2014

Assura Group Annual Report 2014 109
Assura Group Annual Report 2014 109

Strategic report Governance Financial statements

COMPANY CASH FLOW STATEMENT
COMPANY CASH FLOW STATEMENT
For the year ended 31 March 2014
For the year ended 31 March 2014

Operating activities

Note

2014
£m

2013
£m

Net cash (outflow)/inflow from operating activities

(1.1)

3.7

Investing activities
Increase in share capital of subsidiaries
Net loans received from subsidiaries
Net cash inflow from investing activities

Financing activities
Dividends paid
Net cash outflow from financing activities

(Decrease)/increase in cash and cash equivalents

Cash and cash equivalents at 1 April

Cash and cash equivalents at 31 March

(6.5)
12.0
5.5

(7.2)
(7.2)

(2.8)

3.4

0.6

(83.0)
85.0
2.0

(4.5)
(4.5)

1.2

2.2

3.4

110 Assura Group Annual Report 2014
110 Assura Group Annual Report 2014

COMPANY CASH FLOW STATEMENT

For the year ended 31 March 2014

NOTES TO THE COMPANY ACCOUNTS
NOTES TO THE COMPANY ACCOUNTS
For the year ended 31 March 2014
For the year ended 31 March 2014

Operating activities

Note

2014

£m

2013

£m

A. Accounting policies
The accounts of the Company are separate to those of the Group.

The accounting policies of the Company are consistent with those of the Group which can be found in Note 2.

Net cash (outflow)/inflow from operating activities

(1.1)

3.7

Investing activities

Increase in share capital of subsidiaries

Net loans received from subsidiaries

Net cash inflow from investing activities

Financing activities

Dividends paid

Net cash outflow from financing activities

(Decrease)/increase in cash and cash equivalents

Cash and cash equivalents at 1 April

Cash and cash equivalents at 31 March

(6.5)

12.0

5.5

(7.2)

(2.8)

3.4

0.6

(83.0)

85.0

2.0

(4.5)

1.2

2.2

3.4

B. Exceptional items

Corporate finance fees

2014
£m
(1.1)
(1.1)

2013
£m
–
–

£1.1 million of corporate finance fees were incurred in considering a takeover approach from MedicX Fund Limited during the year.

C. Investments in subsidiary companies

Cost
Provision for diminution in value

2014
£m
297.0
(116.9)
180.1

2013
£m
290.5
(136.4)
154.1

During the year to 31 March 2014, the Company has increased its investment in certain subsidiaries.

The investment carrying values are reviewed annually by reference to the net assets of the subsidiary companies and any required
provision for impairment is provided for as a diminution in value. A reversal of provision of £19.5 million has been recognised in the year
(2013: additional provision of £16.2 million).

Details of principal subsidiaries as at 31 March 2014 are shown in Note 13 to the Group accounts.

D. Loans to subsidiary companies – non-current

Interest bearing
Non-interest bearing
Amounts owed by Group undertakings

Interest bearing loans comprise unsecured subordinated loans with interest charged at 5%.

Non-interest bearing loans are unsecured subordinated loans.

E. Cash and cash equivalents

Cash held in current account

F. Other receivables

Prepayments and other debtors

G. Loans to subsidiary companies – current

Amounts owed by Group undertakings
Provisions

2014
£m
–
53.0
53.0

2014
£m
0.6

2014
£m
0.1

2014
£m
15.2
–
15.2

2013
£m
15.0
53.1
68.1

2013
£m
3.4

2013
£m
–

2013
£m
3.3
(2.9)
0.4

The above loans are unsecured, non-interest bearing and repayable upon demand.

The recoverable amount of loans receivable from subsidiaries is reviewed annually by reference to the subsidiary balance sheet and
expected future activities, with a provision recorded to the extent the loan is not considered recoverable. In the year to 31 March 2014,
the provision against subsidiary receivables has crystallised following the striking off of certain dormant subsidiaries (2013: reversal of
provision of £27.9 million).

110 Assura Group Annual Report 2014

Assura Group Annual Report 2014 111
Assura Group Annual Report 2014 111

Strategic report Governance Financial statements

NOTES TO THE COMPANY ACCOUNTS CONTINUED
NOTES TO THE COMPANY ACCOUNTS
For the year ended 31 March 2014
For the year ended 31 March 2014

H. Other payables

Trade creditors
Other creditors and accruals

I. Loans from Group undertakings

Amounts owed to Group undertakings

The above loans are unsecured, non-interest bearing and repayable upon demand.

J. Note to the cash flow statement

Reconciliation of net profit before taxation to net cash inflow from operating activities:
Net profit before taxation
Adjustment for non-cash items:
(Increase)/decrease in receivables
(Decrease)/increase in payables
Release of provision for impairment of investments and loan from a subsidiary
Employee share-based incentives cost
Net cash (outflow)/inflow from operating activities

K. Related party transactions

2014
£m
0.1
0.7
0.8

2014
£m
38.6

2013
£m
0.2
0.8
1.0

2013
£m
26.9

2014
£m

2013
£m

18.0

14.1

(0.1)
(0.2)
(19.5)
0.7
(1.1)

0.4
0.3
(11.7)
0.6
3.7

Group undertakings

2014

2013

The above transactions are with subsidiaries.

Interest
receivable
£m

Dividends
received
£m

Amounts
owed by
£m

Amounts
owed to
£m

0.4

–

0.7

3.7

68.2

68.5

38.6

26.9

L. Risk management
Credit risk
Credit risk is the risk that an issuer or counterparty will be unable or unwilling to meet a commitment that it has entered into with
the Company.

Credit risks within the Company derive from non-payment of loan balances. However as the balances are receivable from subsidiary
companies the risk of default is considered minimal.

The maximum credit risk exposure relating to financial assets is represented by the carrying value as at the balance sheet date.

The Company balance sheet largely comprises illiquid assets in the form of investments in subsidiaries and loans to subsidiaries, which
have been used to finance property investment and development activities. Accordingly the realisation of these assets may take time
and may not achieve the values at which they are carried in the balance sheet.

The Company’s other assets are cash of £0.6 million (2013: £3.4 million). Its trade and other payables amount to £0.8 million at
31 March 2014 (2013: £1.0 million) all of which are due within three months.

There are no differences between the book value of cash and trade payables, nor is there any meaningful interest rate sensitivity.

112 Assura Group Annual Report 2014
112 Assura Group Annual Report 2014

GLOSSARY

Adjusted Earnings per Ordinary Share
from Continuing Operations (“Adjusted EPS”)
is the profit attributable to equity holders of the
parent adjusted for non-recurring items including
goodwill impairment, revaluation losses on
derivative financial instruments (including
associates) and movements in deferred tax
divided by the weighted average number of
shares in issue during the period.

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.

Building Research Establishment
Environmental Assessment Method
(“BREEAM”) assesses the sustainability
of buildings against a range of criteria.

Clinical Commissioning Groups (“CCGs”)
is the groups of GPs and other healthcare
professionals that took over commissioning
of primary and secondary healthcare from
PCTs in England with effect 1 April 2013.

Company is Assura Group Limited.

EPRA net assets (“EPRA NAV”) are the
balance sheet net assets excluding own shares
held, mark-to-market derivative financial
instruments (including associates) and
deferred taxation.

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

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

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

Gross Rental Income is the gross accounting
rent receivable.

Group is Assura Group Limited and its
subsidiaries.

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

Debt Service Cover is the number of times net
interest payable plus debt amortisation is
covered by underlying profit before net interest.

Interest Cover is the number of times net
interest payable is covered by underlying profit
before net interest.

Direct Property Costs comprise ground rents
payable under head leases, void costs, other
direct irrecoverable property expenses, rent
review fees and valuation fees.

Interest Rate Swap is a contract to exchange
fixed payments for floating payments linked to
an interest rate, and is generally used to manage
exposure to fluctuations in interest rates.

District Valuer (“DV”) is the District Valuer
Service being the commercial arm of the
Valuation Office Agency (“VOA”). It provides
professional property advice across the public
sector and in respect of Primary Healthcare
represents NHS bodies on matters of valuation,
rent reviews and initial rents on new
developments.

IPD is the Investment Property Databank
Limited which provides performance analysis
for most types of real estate and produces an
independent benchmark of property returns.

IPD Healthcare is the Investment Property
Databank’s UK Annual Healthcare Property
Index.

Dividend Cover is the number of times the
dividend payable (on an annual basis) is covered
by underlying profit.

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.

European Public Real Estate Association
(“EPRA”) is the industry body for European
REITs.

IPD Total Return is calculated as the change
in capital value, less any capital expenditure
incurred, plus net income, expressed as a
percentage of capital employed over the period,
as calculated by IPD.

London Interbank Offered Rate (“LIBOR”) is
the interest rate charged by one bank to another
for lending money.

Local Improvement Finance Trusts (“LIFT”)
are public-private consortia that develop
primary care and community based facilities
and services.

Assura Group Annual Report 2014 113

Strategic report Governance Financial statements GLOSSARY CONTINUED

Loan to Value (“LTV”) is the ratio of net debt
to the total value of property and LIFT assets.

Mark to Market (“MtM”) is the difference
between the book value of an asset or liability
and its market value.

Net Initial Yield 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 purchaser’s
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.

NHS Property Services Limited (“NHS
PropCo”) is the company, wholly owned and
funded by the Department of Health, which,
as of 1 April 2013, has taken on all property
obligations formerly borne by the PCTs.

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

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

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

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

Rent Roll is the passing rent being the total
of all the contracted rents reserved under
the leases.

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.

Retail Price Index (“RPI”) is the 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 fare, etc. RPI is commonly
computed on a monthly and annual basis.

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

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.

Total Shareholder Return (“TSR”) is the
combination of dividends paid to shareholders
and the net movement in the share price during
the year. It is calculated as the movement in the
share price for the period plus the dividends
paid, divided by the opening share price.

Underlying Profit is the pre-tax earnings
measure adjusted for non-cash fair value
adjustments and non-recurring items such
as revaluation gains, revaluation of derivatives,
share-based payment charge and gains on sale
of property.

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
bps) 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.

Forward-looking statements
This document contains certain statements that are neither reported financial results nor other historical information. These statements are forward-looking in nature and are subject to risks
and uncertainties. Actual future results may differ materially from those expressed in or implied by these statements. Many of these risks and uncertainties relate to factors that are beyond
Assura’s ability to control or estimate precisely, such as future market conditions, the behaviour of other market participants, the actions of governmental regulators and other risk factors such
as the Company’s ability to continue to obtain financing to meet its liquidity needs, changes in the political, social and regulatory framework in which the Company operates or in economic or
technological trends or conditions, including inflation and consumer confidence, on a global, regional or national basis. Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date of this document. Assura does not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or
circumstances after the date of this document. Information contained in this document relating to the Company should not be relied upon as a guide to future performance.

114 Assura Group Annual Report 2014

CORPORATE
INFORMATION

Head Office and Principal Place of Business:

Company Secretary:

Registered Office:

Auditor:

Legal Advisors:

Stockbrokers:

Bankers:

The Brew House
Greenalls Avenue
Warrington
Cheshire
WA4 6HL

Jonathan Murphy

Old Bank Chambers
La Grande Rue
St Martin’s
Guernsey
GY4 6RT

Deloitte LLP
2 Hardman Street
Manchester
M60 2AT

Addleshaw Goddard LLP
100 Barbirolli Square
Manchester
M2 3AB

Oriel Securities Limited
150 Cheapside
London
EC2V 6ET

Liberum Capital Limited
Ropemaker Place
25 Ropemaker Street
London
EC2Y 9LY

Aviva plc

Barclays Bank plc

Santander UK plc

The Royal Bank of Scotland plc

Assura Group Annual Report 2014 115

Strategic report Governance Financial statements

NOTES

116 Assura Group Annual Report 2014

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Assura Group
The Brew House
Greenalls Avenue
Warrington
WA4 6HL

T: 01925 420660
F: 01925 234503
E: info@assuragroup.co.uk