Annual Report and
Accounts 2021
DELIVERING
WITH PURPOSE
AT A GLANCE
WHO WE ARE
2021
HIGHLIGHTS
We are a listed UK real estate investment trust (“REIT")
specialising in the development of, investment in and
management of, a portfolio of primary care, community,
diagnostic and treatment buildings across the UK.
Portfolio analysis
by capital value
Portfolio analysis
by region
Portfolio analysis
by occupier covenant
Number of
properties
Total
value
£m
Total
value
%
Number
of
properties
Total
value
£m
Total
value
%
< £1m
£1 – 5m
£5 – 10m
> £10m
78
48.8
393
1,001.3
91
47
606.1
758.5
2
41
25
32
609 2,414.7
100
North
South
Midlands
Wales
Scotland
& NI
190
232
104
58
25
878.6
861.7
465.8
140.6
68.0
36
36
19
6
3
609 2,414.7
100
GPs
NHS body
Pharmacy
Private
providers
Other
4.8
Total
rent roll
£m
Total
value
%
80.3
20.8
9.6
6.4
4.6
121.7
66
17
8
5
4
100
Operational highlights
– Over £290m invested in portfolio growth during the year
– Acquisitions, developments and asset enhancements grow rent roll by 12% to £121.7m
– 12 developments completed (benefitting over 170,000 patients) and a further 16 currently
on site
– Development capability further boosted by acquisition of pipeline and team of primary care
developer Apollo
– 31 lease regears completed, covering £2.8m of existing rent roll
– £300m, 10-year Social Bond successfully launched in September 2020 and £185m equity raise
completed in April 2020
– Assura Community Fund established with initial £2.5m contribution and over £800,000
distributed to eligible projects
Financial highlights
Financial performance
Net rental income
Profit before tax
IFRS earnings per share (Note 6)
Adjusted EPRA earnings per share (Note 6)
Dividend per share
Property valuation and performance
Investment property
Diluted EPRA NTA per share (Note 7)
Rent roll
Financing
Loan to Value (“LTV”) ratio (Note 22)
Undrawn facilities and cash
Weighted average cost of debt
EPRA summary table
EPRA EPS
EPRA NTA
EPRA NRV
EPRA NDV
EPRA NIY
EPRA ‘topped up’ NIY
EPRA Vacancy Rate
EPRA Cost Ratio (including direct vacancy costs)
EPRA Cost Ratio (excluding direct vacancy costs)
2021
2020
Change
£112.0m
£108.3m
4.1p
2.8p
2.82p
£2,453m
57.2p
£121.7m
37%
£272m
2.47%
£103.7m
£78.9m
3.1p
2.8p
2.75p
£2,139m
53.9p
£108.9m
38%
£238m
3.03%
2021
2.7p
57.2p
63.2p
56.0p
4.55%
4.56%
1.3%
15.5%
14.5%
8.0%
37.3%
32.3%
–
2.5%
14.7%
6.1%
11.8%
(1)ppt
14.3%
(56)bps
2020
2.8p
53.9p
59.7p
52.7p
4.69%
4.73%
1.6%
12.6%
11.5%
See pages 66 and 67
This page includes a number of financial measures to describe the financial performance of the Group, some of
which are considered Alternative Performance Measures as they are not defined under IFRS. Further details are
provided in the CFO Review, notes to the financial statements and the Glossary.
REGIONAL PORTFOLIO
COVERAGE
Value of property
The number of properties within each value
range is shown in the location marker.
0
0
0
0
> £10 million
£5 – 10 million
£1 – 5 million
< £1 million
Leeds Student Medical Centre
Leeds
Serving almost 40,000 patients
in the heart of Leeds’ student
community, this centre provides
mental health services and ‘Linking
Leeds’, a wellbeing coordinator
helping isolated local people. The
practice’s priorities also include
eating disorders, sexual health
and gender identity issues.
Properties
609
Rent roll
£121.7m
Developments
on site
Properties
acquired
16
Developments
completed
12
50
Disposals
29
Northgate Medical Centre
Pontefract
We carried out extensive
refurbishment work here to create
a new mezzanine level, adding two
extra consulting rooms and more
office space. We also installed
solar panels and LED lighting
throughout the building to reduce
energy consumption.
Jubilee Health Centre
Wallington, Surrey
This key hub for health services in
South London provides not just
general practice, but also services
from Epsom and St Helier University
Hospitals NHS Trust and South
West London and St George’s
Mental Health NHS Trust.
SCOTLAND & NI
1
3
17
4
NORTH EAST
10
22 90
17
NORTH WEST
12
6 25
8
MIDLANDS
9
21 63
11
WALES
0
8 36
14
SOUTH WEST
6
5 30
13
SOUTH EAST
4
17 74
9
L O N D O N
5
9
58
2
The pandemic has made the
whole world reconsider the
role of buildings and space
for health and wellbeing.
With this in mind, we’re taking
a fresh look at our purpose for
the post-COVID world.
Patients have always been the
end users of our buildings, but
the long-term social impacts
of the pandemic prompted us
to look even more deeply at
the role we can play through
the buildings and spaces we
create and care for.
With our commitment to
social impact, we’re in a
unique position to support
and collaborate with local
health systems and health
services through extensive
partnerships as they build
back beyond COVID-19 – with
patient experiences, reducing
health inequalities and a net
zero carbon health service
at the heart of their mission.
DELIVERING
WITH PURPOSE
Our purpose is to create outstanding spaces
for health services in our communities.
Our ambition is to be the number one listed
property business for social impact.
Strategic report
Highlights of the year
2 How we deliver our purpose
Creating outstanding spaces
Supporting our people
Collaborating with our
communities
Performing for our
shareholders
10 Chairman’s statement
12 COVID-19 – our response
14 CEO statement
18 Our market
20 Our strategy
26 Our key performance indicators
32 Our business model
36 s172 statement
38 Our impact
52 Our environmental impact
55 Task force on climate-related
financial disclosures
56 Principal risks and uncertainties
62 CFO Review
68 Compliance statements
Governance
70 Chairman’s introduction to
governance
72 Our governance framework
74 Board of Directors
77 Key Board activities
82 Nominations Committee
Report
85 Audit Committee Report
87 Directors’ Remuneration Report
106 Directors’ Report
108 Directors’ Responsibility
Statement
Financial statements
109 Independent Auditor’s Report
116 Consolidated income
statement
117 Consolidated balance sheet
118 Consolidated statement of
changes in equity
119 Consolidated cash flow
statement
120 Notes to the accounts
135 Company financial statements
Additional information
141 Appendices
143 Glossary
145 Corporate information
CREATING OUTSTANDING SPACES
5.9mOur buildings serve 5.9m people across the UK.
Read more on pages 2 and 3
SUPPORTING OUR PEOPLE
82%of eligible team members joined the
Share Incentive Plan.
Read more on pages 4 and 5
COLLABORATING WITH OUR COMMUNITIES
£800k
distributed to health-improving
charity projects.
Read more on pages 6 and 7
PERFORMING FOR OUR SHAREHOLDERS
2.8p
Dividends paid during the year.
Read more on pages 8 and 9
Assura plc Annual Report and Accounts 2021
1
Strategic reportGovernanceFinancial statementsAdditional information
CREATING
OUTSTANDING
SPACES
Better patient experiences and access to healthcare for everyone
As our research with Dimensions’ #MyGpAndMe campaign
completed, our new medical centre building in Cinderford,
Gloucestershire opened its doors with a focus on neuro-inclusive
design for people living with conditions such as dementia.
2
Assura plc Annual Report and Accounts 2021
This report marks an exciting new phase in
the work Dimensions has led to support
better outcomes for people who have a
learning disability and autism in primary
care. The buildings in which we all access
healthcare can both help and hinder our
engagement with health services and, as
this report shows, it is vital that primary care
buildings meet the needs of all patients.”
Steve Scown
Dimensions CEO
5.9mpeople are served by our
buildings across the UK
80%of GPs say their premises
aren’t fit for future needs
(The BMA)
74%of patients feel very or somewhat
confident to go back to primary care
buildings after lockdown (Patients
Association survey for Assura)
Assura plc Annual Report and Accounts 2021
3
Strategic reportGovernanceFinancial statementsAdditional information SUPPORTING
OUR PEOPLE
Sharing in success and giving back
In a year when many businesses were forced to furlough and lose
staff, close offices and mothball plans, we launched our Share
Incentive Plan, giving all staff the chance to benefit from the
company’s success and support their personal plans for the future.
4
Assura plc Annual Report and Accounts 2021
I think it’s a fabulous way to save
and invest in your Company, the
matched shares from the Company
are very generous and I look
forward to the benefits in a few
years’ time!”
Debbie Chalcraft
Group Compliance Manager
82%of eligible team members joined
the Share Incentive Plan
Outstanding
Indicative employee engagement levels
in pulse survey with Best Companies
83%of team members fed back in our
first Mind Workplace Wellbeing
Index survey
Assura plc Annual Report and Accounts 2021
5
Strategic reportGovernanceFinancial statementsAdditional information COLLABORATING
WITH OUR
COMMUNITIES
Led by local
Our Assura Community Fund launched in May and set out on its
mission to distribute millions of pounds in funding and reach one
million people through health-improving projects by March 2026.
With support from our partners at Cheshire Community Foundation,
we invited applications from projects working around our buildings
across the country, finding those which are making a unique
difference to health in their community.
6
Assura plc Annual Report and Accounts 2021
We are so grateful for your pledge to support
our psychological wellbeing service for young
care leavers in Warrington. Care leavers are
often surviving at a very young age without
the practical or emotional support they need
to live a happy and successful life. Your pledge
will help us to support the mental health
needs of a really vulnerable group of young
people who are often overlooked. A huge
heartfelt thank you.”
Sarah Sturmey
Pure Insight Founder and CEO
£800k+
distributed to health-improving
charity projects
115grants to grassroots health
causes across the country,
28% of which focused on
mental health
60kpeople impacted
Assura plc Annual Report and Accounts 2021
7
Strategic reportGovernanceFinancial statementsAdditional information PERFORMING
FOR OUR
SHAREHOLDERS
We notched up a first for UK real estate with our launch of the sector’s
first social bond. The £300m issuance with a rate of 1.5% saw us set
the bar high and reinforced our commitment to invest only in projects
which deliver on our social impact goals. The bond has widened our
debt investor base by further promoting our social credentials.
8
Assura plc Annual Report and Accounts 2021
Our Social Bond wasn’t just a huge step
forward for us – it was about our commitment
to investing, decision-making and prioritising
in a way which is focused on growing our
impact for the patients, health services and
communities we serve, and to minimising our
impact on the environment. It was also a real
first for the property sector. I couldn’t be
more proud that it’s Assura leading the way
on this.”
Jayne Cottam
CFO
2.8pper share dividend
paid during year
Our eighth consecutive year
of increased dividends paid
2.5%current average interest
rate on debt facilities
Assura plc Annual Report and Accounts 2021
9
Strategic reportGovernanceFinancial statementsAdditional information CHAIRMAN’S STATEMENT
Non-financial
highlights for
the year
100%
development completions
hitting Building Research
Establishment Environmental
Assessment Method
(“BREEAM") and EPC targets
“We remain passionate about the role of
community space for health and wellbeing."
£800k+
distributed by the Assura Community Fund
10
Assura plc Annual Report and Accounts 2021
Dear Shareholder,
If I asked you to think of a word to describe
the response of society and business to the
last twelve months, one of these may well
be high on your list: Innovative.
Collaborative. Genuine. Passionate.
All of these are ways of working which the
Assura team chose as our guiding values
many years ago, and which have been at
the heart of our approach to the quickly-
changing external environment, our
business and the unique pressures on both
our people and those working in our
buildings this year. Our continued solid
progress, financial strength at a time of
unprecedented economic shocks, strong
investment pipeline and the quality of our
service to those working in and using our
buildings are testament to how we have
delivered in a year like no other.
It’s been a year of innovation: while the NHS
pivoted people, systems and places to
cope with the virus’ peaks and to maintain
essential care, we kept our buildings and
the skills of our team at the NHS’s disposal.
We end the year with close to one in ten of
our buildings as designated vaccine hubs,
and we have worked to support our
customers in their needs to equip buildings
for longer-term social distancing and hybrid
care across both physical and virtual
consultations. In the year when the NHS
announced its goal of becoming the
world’s first net carbon zero health system,
we advanced our plans to create the first
primary care centre to achieve net carbon
zero for both construction and operation.
We have identified test locations and our
research and development activity is
well underway.
It’s been a year for deep collaboration:
we’ve worked with our customers, suppliers
and wider partners to understand the
longer-term impacts of the pandemic and
the inequalities it has further exposed for
the NHS’s estate and for the future of care.
We’re building a picture of how our already
ground-breaking surgery of the future vision
must evolve for health services which want
to build back greener and fairer, using the
lived experiences from the frontline this year
and the realities of emerging integrated
care systems. We’re about to start on-site
275k+
people benefitting from our SixBySix
strategy in year one
5.9m
patients served by our buildings
We will continue to
step up: providing the
outstanding spaces that
will be needed to deliver
excellent care and access
to it for everyone.”
Ed Smith, CBE
Non-Executive Chairman
tests of our assessment tool for designing
primary care environments which are truly
inclusive and welcoming for everyone:
ensuring that our spaces are doing
everything they can to help people with
disabilities and conditions such as autism,
dementia and anxiety to access health
services when they need to.
It’s been a year where doing the right thing
by people has been the lens through which
we’ve made our decisions: our reputation
for ‘being genuine’ is important to us. As a
microcosm of society, our team has faced
into the personal and professional
challenges of the last year and we’ve
worked hard to support them emotionally,
technically, socially and financially. The team
sought to make a real difference for tens of
thousands of people in the communities
around our buildings across the country
through the Assura Community Fund,
focusing its early grants on projects
addressing the health impacts of loneliness,
isolation, financial pressures and the
widening inequalities of those already
facing disadvantage. We remain passionate
about the role of community space for
health and wellbeing, whether within or
through our developments and existing
buildings, with some exciting schemes
getting underway.
Underpinning all these things has been our
financial strength. Assura delivered a sector
first with its social bond and social finance
framework – helping investors focus their
investment on work which fits with their
social goals. I want to thank our many
shareholders for their support of the values
of our business and for the values they bring
to us.
This year sees Jenefer Greenwood step
down from the Assura Board after nine
years of incredible service – our thanks and
best wishes to her cannot go far enough.
In turn, we welcome Emma Cariaga, Noel
Gordon and Sam Barrell to the team as
Non-Executive Directors. Each brings with
them unique experiences from the worlds
of property, the NHS and technology (see
page 76) – I very much look forward to their
new energy and insights within the
non-executive team.
Looking ahead, as health and care systems
begin to move beyond the pandemic,
begin to address the diagnostic and
treatment backlogs and formally launch
integrated care systems, we will continue to
step up: providing the outstanding spaces
that will be needed to deliver excellent care
and access to it for everyone.
Ed Smith CBE
Non-Executive Chairman
17 May 2021
Assura plc Annual Report and Accounts 2021
11
Strategic reportGovernanceFinancial statementsAdditional information It’s been a year where
doing the right thing by
people has been the lens
through which we have
made our decisions”
Ed Smith, CBE
Non-Executive Chairman
12
Assura plc Annual Report and Accounts 2021
COVID-19
OUR CONTINUED RESPONSE
Doing the right thing by our
people, customers and suppliers
was our starting point in
responding to the crisis in March
2020, and is still our constant
today. We’ve worked hard to help
our team through the personal
and professional challenges of
three lockdowns and a year of
uncertainty. We’ve responded
quickly to ever-evolving customer
needs both large and small,
supported our suppliers where
necessary and – most importantly
of all – we’ve listened. We’ve
sought out the views of patients
and healthcare professionals
across the country and the health
service on what they will need
from us and local healthcare
buildings in the future: how will
the spaces where we all access
care in our communities need to
change, and what must they
deliver for the people they serve?
Experiences of delivering the
vaccine programme, the ambition
to level up and build back better
and the practicalities of premises
which can cope with more flexible
delivery of healthcare both face-
to-face and remotely are informing
the way we design, invest and
innovate for the future beyond
COVID-19.
Our people
– We ensured all staff have the IT, desks,
Our customers
– We kept our portfolio and skills on
chairs and other equipment they need to
work from home permanently as required,
whilst keeping the office open, in line with
national guidance and health and safety
requirements, for those whose individual
circumstances made home working
particularly challenging.
permanent offer to support the NHS
response, with vacant space to help
practices with distancing requirements
and temporary reconfigurations including
one-way systems being put into action.
– Regular practical guidance to customers.
– Support to help local planning for vaccine
– We’ve evolved our internal communications
hub sites.
channels and techniques to meet the
needs of a team working almost entirely
from home. Increased management time
was spent on regular contact with team
members one to one, and also ensuring
visibility of the leadership team through
weekly all-team calls.
– Business travel was permitted for critical
site visits only, with clear safety protocols
and guidance for advance testing.
– No staff were furloughed or made
redundant during the year.
– We reinforced information on employee
assistance programme support around
mental health, finances and other personal
challenges, and provided weekly online
physical fitness and wellbeing sessions.
– Social initiatives continued throughout the
year to combat isolation and boost morale.
– Flexibility and staff autonomy promoted.
– Online training provided on a range
of topics.
– Succession planning and business
continuity plans were reviewed.
– Regular review of workloads.
Our communities
– Our first national grants programme from
the Assura Community Fund included
a particular focus on supporting local
charities and community organisations
to deliver projects which tackled the
long-term health impacts of the pandemic
such as loneliness, financial instability and
digital exclusion.
– Payment plans agreed with minority
of debtors.
– Technology used to progress projects
remotely, such as virtual design meetings
with practices.
Our suppliers
– We’ve continued to work closely with our
suppliers and contractors, supporting
them to prioritise the health of their teams
and to apply best practice guidance for
construction and essential building works.
– Prompt payment of invoices to aid
supplier cash flow, with faster payments
to development contractors where
appropriate.
– Support to contractors to work safely on
site and when visiting premises.
– Regular contact maintained to identify
issues and provide support and aid
remobilisation.
– Remote meetings/inspections.
Our financial stability and
operations
– Continuing with e-invoicing and
careful monitoring of debtors with
escalation process.
– Costs carefully monitored and
advice sought as appropriate, with
enhanced authorisation procedure for
payments introduced.
– Microsoft Teams introduced to promote
safe communication.
– Ongoing review of marketing channels.
– Teams video conferencing successfully
used for board meetings, and board
agenda changed to cover COVID-specific
updates at each meeting. Additional
meetings were held when required and
the Board asked for particular focus on
the people aspects of our response.
– Regular updates from management
for shareholders.
Assura plc Annual Report and Accounts 2021
13
Strategic reportGovernanceFinancial statementsAdditional information CEO STATEMENT
“Our approach has been to put our team first
and we’ve seen the true benefit of this in the
sustained, high level of service.”
14
Assura plc Annual Report and Accounts 2021
In preparing for our annual results
presentation this year, we asked a few
members of our team – Luke, who started
working with us as an apprentice in our IT
team only a few months ago, and Lisa, a
senior portfolio manager who’s been with
us for almost four years now – to answer
some questions about how they reflect on
the last year. While I think we’d all agree
wholeheartedly with their description of
the last 12 months as ‘like no other’, what
also came through was their sense of pride
at having been part of a business playing its
small part to help the NHS – taking care of
the local medical centres which needed
to be safe and open to patients, offering
support to those which have become
vaccination centres and keeping new-build
schemes on track to create essential new
local capacity for the NHS.
Just like every team in every business all
over the world over the last 12 months, for
every person in our organisation there is
an individual story of working through the
pandemic. I couldn’t be prouder of how our
whole team has adapted to support our
customers over the last year.
Our approach has been to put our team first
and we’ve seen the true benefit of this in
the sustained, high level of service.
Inevitably we have had some challenges and
suffered some lost productivity – disruption
from adapting to remote working, site visits
not able to be completed, delays in
construction, the lost benefits of
collaborations between customers and the
team on future solutions, all of which are
inevitably harder to undertake remotely.
Despite this, the team has excelled in
delivering enhancement to our portfolio.
Over the year we completed £230 million of
acquisitions, completed 12 developments
(more than in any other year in our history)
and moved a further 13 on site, and our
asset enhancements continued to deliver
with 31 lease re-gears all of which
contributed to an increase in both our
total contracted rent roll and WAULT.
This growth has only been possible thanks
to the continued support from our investors
with £185 million raised from our equity
investors in April and £300 million from the
successful launch of our debut Social Bond
in September.
Of course, the launch of the Social Bond
was only possible due to the strength of our
social impact strategy, SixBySix, which we
launched in May 2020. The six core pledges
are all designed to maximise our positive
impact on society and the environment.
During the year, we started the
implementation of our pledges and plans.
We’ve completed our assessment of the
EPC ratings of our portfolio and know what
we need to do to achieve an average rating
of a B. We’ve identified two development
projects which will be our first net zero
carbon pilots and we hope to be on site
with these within 12 months. And the Assura
Community Fund has been able to support
more than 115 projects all over the country
following its launch with an initial
contribution of £2.5 million in 2020.
There is a long way to go to deliver the
ambitious social impact targets we have set
ourselves. The big questions around patient
experiences and health inequalities beyond
the pandemic and the NHS’s big goal of
becoming the world’s first net zero carbon
health system have got us deepening our
thinking about how we want our work to
contribute. The team has embraced the
challenge and I look forward to reporting
to you the positive achievements over the
coming months and years.
Financial and operational performance
Assura’s business and our ability to
continue to deliver on our purpose to
create outstanding spaces for health
services in our communities is built on the
reliability and resilience of our long-term,
secure cash flows. These are supported by
a weighted average unexpired lease term
of 11.9 years and a strong financial position
(demonstrated by our A- credit rating from
Fitch Ratings Ltd).
While remaining resilient, Assura has
consistently demonstrated an ability to
identify and secure new opportunities for
growth, building on our market-leading
capabilities to manage, invest in and
develop outstanding spaces for health
services in our communities.
The launch of the Social
Bond was only possible
due to the strength of our
social impact strategy,
SixBySix”
Jonathan Murphy
CEO
Jonathan Murphy and
Emma Degg, Chief
Executive, NWBLT
Top
Jayne Cottam, CFO
volunteering at a
COVID-19 vaccination
centre
Above
Assura plc Annual Report and Accounts 2021
15
Strategic reportGovernanceFinancial statementsAdditional information We are also pleased to report that we
have signed a strategic partnership with a
national provider of primary care at scale.
This is an exciting emerging area for us with
the full scale of our offering – management,
investment and development – supporting
the growth prospect of the provider and
providing attractive investment
opportunities for our portfolio.
We remain well funded to support our
future growth plans. We currently have cash
and undrawn committed facilities totalling
£272 million having completed well-
supported equity and debt raises during
the previous 12 months. This financial
strength further underpins our future
growth prospects.
Market outlook
As we head into a summer which we all
hope will bring an end to many of the
pandemic’s restrictions, attention must turn
to the NHS’s future needs and to how the
response to COVID-19 should change the
sorts of spaces we need for healthcare in
local communities. Demographics remain
the same, with a growing, ageing
population in the UK requiring care. But this
is one of the groups with the greatest
reliance on primary care, and research by
Age UK suggests that many older people
with long-term conditions have been
struggling to manage given the more
limited access to services during the
pandemic, with worsening symptoms,
reduced ability to complete day-to-day
activities and an increase in pain. While
remote consulting is here to stay, it does
not work for all patients or every clinical
scenario. Healthwatch has warned about
the dangers of older people being left
behind, so the primary care spaces of
the future must be fit for a sophisticated
marriage of remote and face-to-face care.
CEO STATEMENT
CONTINUED
We have continued our strong track record
of investing in new properties, completing
50 acquisitions for a total consideration of
£230 million throughout the year. Our
investment team continues to leverage the
relationships we have with existing occupiers
to identify new opportunities, as well as
analysing our bespoke database which
contains details on all the medical centres
in the UK.
The design of modern fit-for-purpose GP
surgeries has always been a cornerstone
of our development activities and we
have delivered over £450 million of new
developments and improvements to
existing properties over 18 years. We have
had a record year with 12 development
completions and a further 13 schemes
moving on site. In addition, our
development capability was further
strengthened in February 2021 when we
completed the acquisition of the
development pipeline and team of Apollo
Capital Projects Development Ltd (“Apollo"),
one of the leading developers in primary
care across the country. Their experienced
team and strong pipeline are a welcome
addition to the Assura proposition as we
move forward.
Assura has a high-quality portfolio of 609
properties, which has been meticulously
assembled over the course of our 18-year
history. This is an essential part of our
growth strategy as we carefully review
every asset for opportunities to enhance
its lifetime cash flows and impact on the
community. Reflecting the importance of
this activity, we have now set total
contracted rental income as a key strategic
KPI. This metric is a combination of our
passing rent roll and lease length, providing
an effective measure of our ability to both
grow and extend our cash flows for the
long term. It captures the crucial value-
enhancing activity of our portfolio
management teams as they agree rent
reviews, complete lease re-gears, let vacant
space and undertake physical extensions.
This year, the team completed 320 rent
reviews, 31 lease re-gears and 15 new
tenancies for our vacant space. This has
enabled us to increase both our total
contracted rental income to £1.57 billion
and our weighted average unexpired lease
term which stands at 11.9 years.
The combination of these elements has
enabled us to continue our strong track
record of growth year-on-year. Our portfolio
has increased by 15% to £2,453 billion and
our passing rent roll is up 12% to £121 million.
Our adjusted EPRA earnings have increased
by 12% to £75.4 million which translates to
an adjusted EPRA EPS of 2.8 pence per
share. Taking into account the positive
valuation movements, our net profit is
£108.2 million or 4.2 pence per share.
Finally, the resilience of our income and the
growth we have delivered is reflected in our
dividend payments. Today, we announce
a 4% increase in the quarterly dividend
payment to 0.74 pence with effect from the
July 2021 payment, our eighth consecutive
year of increased dividend.
Assura outlook
Assura’s success, and its future strategy,
is built on our complementary offer of
investment, development and management
of premises to our customers. This multi-
faceted approach enables us to better
understand the requirements of our
customers and anticipate their future needs.
This year we have demonstrated the
effectiveness of this model, and the
resilience of our business to extreme
economic shocks. However, the real test
will be our ability to sustain and support this
growth for the long-term.
We enter the new financial year with a
strong immediate pipeline. In development,
we are on site at 16 schemes with a gross
development spend of £72 million, an
immediate pipeline of £111 million of
development opportunities that are
expected to commence within the next
12 months, and an extended pipeline of
£222 million of further opportunities where
Assura is the exclusive partner. Acquisition
opportunities in legal hands total £46 million
and we have £15 million of asset
enhancement capital projects in the
immediate pipeline.
We are also exploring exciting
opportunities in new areas, all supporting
delivery of community-based services away
from hospitals. Our development pipeline
includes a multi-use facility for the
Northumbria Healthcare NHS Foundation
Trust in Cramlington (which will be our
largest development to date), a state-of-
the-art facility for an Ambulance Trust in the
West Midlands and we have acquired a site
in Greater Manchester let to a local mental
health trust.
16
Assura plc Annual Report and Accounts 2021
Assura Community Fund
Launched in 2020 with an initial
contribution of £2.5 million, our fund
supports health-improving projects in
the communities around our buildings.
Administered by the fantastic team at
Cheshire Community Foundation and
a panel of Assura team members, over
£800,000 has been distributed during the
first year to more than 115 charities and
organisations working across the UK for
the benefit of over 60,000 people.
£2.5m
Our initial contribution to support
health-improving projects
£800k+
Over £800,000 has been distributed to
more than 115 charities and organisations
across the UK
Waiting times for non-urgent procedures
grew exponentially last year as the system
pivoted to cope with the pandemic, and
will take years to clear. The wider health,
social and economic impacts of this, such
as the mental health challenges of living
with long-term pain, are lurking. But it is
clear that local access to diagnostic
services will be crucial in reducing waiting
lists and their ripple effects for wider health
and society. The Government remains
committed to the expansion of access to
primary care and to a broader range of
professionals there; as Integrated Care
Systems become formally part of the
landscape in the coming year, the role of
primary care as the gateway to wider health
services is at their heart.
All of those changes notwithstanding, the
primary care and community health estate
remains doggedly unfit for purpose. Many
of these gateway buildings to the NHS are
too old, too small, don’t meet accessibility
requirements and – as our YouGov research
with healthcare professionals found this
year – have not provided the flexibility
needed during the pandemic and beyond
to a future with hybrid care routes.
A recovery built on new housing and
infrastructure must include the healthcare
provision to care for new communities, and
equality of access to healthcare is as much
about the NHS’s places, spaces and
technology as it is the design of local
systems and pathways. The NHS’s net zero
ambition – to become the world’s first
healthcare system to achieve this – will
require a shift like we have never seen
before across its vast estate.
Assura’s role beyond the pandemic is as a
trusted partner to help the NHS on all of
these fronts, particularly on the social and
environmental tests which have been laid
bare over the last year. Over a time of global
uncertainty, Assura has shown that it has the
financial strength, innovation and skills to
rise to the challenge.
Jonathan Murphy
CEO
17 May 2021
Assura plc Annual Report and Accounts 2021
17
Strategic reportGovernanceFinancial statementsAdditional information OUR MARKET
18
Assura plc Annual Report and Accounts 2021
Changing demographicsWe are living longer and with more complex, long-term conditions. –There are nearly 12 million people aged 65 and above in the UK, of which 1.6 million are 85 or older (ONS) –The 85+ age group – the group with the highest GP consultation rate – is the fastest growing (ONS, Hobbs et al 2016) –GP practices in England delivered almost 280m appointments in 2020 (NHS Digital) –One million people will have dementia by 2025, and this figure will double by 205085+The number of people aged 85+ is projected to double by 2043 (ONS)1 in 14Approximately 1 in 14 people over the age of 65 have dementia (Alzheimer’s Society, 2014)Unfit infrastructureMany primary care buildings are too old, too small, don’t meet accessibility requirements and have not provided the flexibility needed during the pandemic. Remote consulting is here to stay, but does not work for all patients or every clinical scenario. –80% of GP practices say their premises will not be fit to cope with future growth (The BMA) –58% of patients responding said that there was not enough space to allow reasonable privacy. (The Patients Association, 2019) –More than one third of disabled respondents said they felt stressed in their primary care environment and almost 45% felt worried (Dimensions, 2020) –Certain groups also risk being left behind (by remote consultation), such as older people, disabled people, people affected by homelessness and on low incomes, and those whose first language isn’t English. (Healthwatch, 2021) 27% of healthcare professionals say healthcare buildings haven’t worked sufficiently for services during the pandemic (YouGov)70% say community medical centre buildings of the future need flexible space which can be adapted quickly when needed (YouGov)47% of adults over 65 and 24% of people who are Equality Act disabled don’t have a smartphone for private use (ONS, cited by Healthwatch) Lack of investment and capitalPrimary care has more revenue funding under the Long Term Plan, but capital options remain limited. –Primary care aspects of the Health Infrastructure Plan not yet clear –2015/16 – 2019/20 Estates and Technology Fund complete, and was heavily oversubscribed –The long-term economic recovery from COVID-19 means added pressure on all government investment, including that for the NHS estate£850m committed to 20 hospital upgrade projectsGrowing backlogWaiting times for non-urgent procedures grew exponentially last year as the system pivoted to cope with the pandemic, and will take years to clear. The wider health impacts of this, such as the mental health challenges of living with long-term pain, cannot yet be quantified. –The treatment backlog for non-urgent procedures was at 4.52 million people by the end of 2020 (NHS Confederation) –224,000 of those people had been waiting more than a year for their treatment, compared to fewer than 1,500 people at the end of 2019 –Major expansion and reform of diagnostic services is needed over the next five years to facilitate recovery from the COVID-19 pandemic and to meet rising demand… new facilities and equipment will be needed (Richards Review, 2021) 5.9mfewer referrals for elective treatment made in 2020 compared to 2019 33.3% proportion of total patients referred for any of 15 key diagnostic tests who had been waiting six weeks or more by end of January (NHS England) Assura plc Annual Report and Accounts 2021
19
Healthcare policyEasier access to more services in primary care. –Integration of health services –There will be more GPs, nurses and 20,000 additional pharmacists, physiotherapists, paramedics, physician associates and social prescribing link workers working in primary care (NHS Long Term Plan) –Call for “additional investment in the primary care estate and digital infrastructure… to capitalise on this expanding workforce, by ensuring they have sufficient facilities to meet patient needs.” (RCGP and the BMA, 2021) –New homes need supporting health infrastructure –Focus on the need to tackle loneliness through place-strengthening community infrastructure (Department for Digital, Culture, Media & Sport)2 in 5say loneliness is having a negative impact on their mental health (British Red Cross) 1mnew homes by the end of this parliament Building back greener and fairerThe Government has set out its recovery strategy from the pandemic – which focuses on levelling up geographic and social disparities, and accelerating the green economy. –The NHS aims to become the world’s first net carbon zero health system –Infrastructure investment is one of government’s three core pillars for growth –There are significantly fewer GPs per head in the most deprived areas of England compared to the least deprived (Nuffield Trust/Financial Times, 2018) –Certain groups also risk being left behind on access to care from their GP practice, such as older people, disabled people, people affected by homelessness and on low incomes, and those whose first language isn’t English. (Healthwatch, 2021) 18% of all emissions from non-domestic buildings in the UK are generated by the NHS’s built footprint (University of Cambridge)53GPs per 100,000 patients in the least deprived CCGs, compared with 47 in the most deprived (Nuffield Trust, 2018)60% of people with learning disabilities or autism said their GP did not make reasonable adjustments for them (Dimensions) What does this mean for Assura? We take the time to understand the health needs of our communities, the challenges the healthcare system faces – to recover from COVID-19, to launch formal integrated care systems and to build on both face-to-face and remote means to improve access to health services – and the role we play in helping the NHS deliver the Long Term Plan. We are always looking ahead to ensure our buildings have longevity and can evolve with the changing needs of healthcare professionals and patients. We understand the responsibility we have to future generations. We are playing our part in the journey to net zero carbon through our work to create vital community infrastructure. We believe our contribution to improving health in the communities we work in must reach far beyond our buildings.Strategic reportGovernanceFinancial statementsAdditional information OUR STRATEGY
The primary
healthcare property
sector is subject to
strong growth in
underlying demand
and Assura holds a
leading position in
this distinct market.
Our purpose
Our purpose is to create
outstanding spaces for health
services in our communities.
We aim to generate long-term
value for all of our stakeholders
through providing high quality
facilities for our customers,
growing financial returns for our
shareholders and aiming to be
the UK’s number one listed
property business for long-term
social impact.
To achieve these aims, we focus
on five strategic priorities,
which are all underpinned by
our commitment to positive
social impact:
20
Assura plc Annual Report and Accounts 2021
Our strategic priorities
1.
Leveraging our
financial strength
2.
Quality of buildings
3.
Quality of service
4.
People
5.
Long-term
relationships
To invest in our portfolio,
making each £ invested
work harder aiming to
generate secure, growing
returns for investors.
To develop buildings
that serve all relevant
stakeholders and are
fit for the future of
healthcare.
To deliver on the
promises we make to
existing and prospective
customers and the
communities our
buildings serve.
To attract, retain and
develop our high-quality,
specialist team.
To build long-term
relationships that benefit
all of our stakeholders.
Our strategic priorities
Leveraging our
financial strength
Quality of buildings
Quality of service
1.
2.
3.
4.
People
5.
Long-term
relationships
To invest in our portfolio,
making each £ invested
work harder aiming to
generate secure, growing
returns for investors.
To develop buildings
that serve all relevant
stakeholders and are
fit for the future of
healthcare.
To deliver on the
promises we make to
existing and prospective
customers and the
communities our
buildings serve.
To attract, retain and
develop our high-quality,
specialist team.
To build long-term
relationships that benefit
all of our stakeholders.
Our commitment
to ESG through
our social impact
strategy
Our strategic priorities are
underpinned by our SixBySix
pledges, aiming to minimise our
impact on the environment and
maximise our impact on society.
Read more on page 24 and 25
Assura plc Annual Report and Accounts 2021
21
Strategic reportGovernanceFinancial statementsAdditional information OUR STRATEGY
CONTINUED
KPIs
– Financial: EPRA EPS, EPRA
NTA & EPRA Cost Ratio
– Total Property Return,
Total Shareholder Return,
Total Accounting Return
– Portfolio: Rental growth
from rent reviews
– Stakeholder: Growing,
covered dividend,
ESG-linked financing
Risks
– Reduction in investor
demand
– Failure to communicate
– Reduction in availability
and/or increase in cost
of finance
– Failure to maintain capital
structure and gearing
– Underperformance of assets
KPIs
– Portfolio: Rental growth
from rent reviews, WAULT,
occupier covenant,
developments on site
Risks
– Changes to government
policy
– Development overspend
– Underperformance of assets
1 Leveraging our financial strength
To invest in our portfolio, making each £ invested work harder aiming to generate secure, growing returns for investors.
2021 priorities
– Driving rental growth from
2022 priorities
– Minimise natural reduction in WAULT
2021 actions & progress
– Rental growth of 1.5%
rent reviews, to grow
recurring earnings and
contracted rental income
– Maintain EPRA Cost Ratio
below 13%, excluding
charitable donations
– Maintain investment grade
rating of A-
– Exploring ESG and
sustainability-linked debt
financing options
achieved from rent reviews
– A- investment grade rating
through investment and asset-
enhancing activities
reiterated by Fitch
– Exploring sustainability-linked debt
financing options
– Driving rental growth from rent
reviews, to grow recurring earnings
and contracted rental income
– Maintain investment grade rating of A-
– £300m Social Bond issued
and RCF refinanced to 2024
– EPRA Cost Ratio maintained
at 13%, excluding Assura
Community Fund contribution
– Dividend increase for eighth
consecutive year
– 31 lease re-gears completed
adding £43 million to total
contracted rental income
2 Quality of buildings
To develop buildings that serve all relevant stakeholders and are fit for the future of healthcare.
2021 priorities
– Rolling out cognitive design
principles across on site and
immediate pipeline schemes
where possible
2021 actions & progress
– 16 developments on site and
immediate pipeline of 17
further schemes
2022 priorities
– Progressing identified pilot
developments for net zero carbon for
construction and operation
– Step up rollout of EPC rating
– Identifying and delivering
the first development that
is net zero carbon for
construction and operation
– Continue to develop
sustainable solutions
– Begin rollout of EPC rating
improvements across
existing portfolio
– Immediate and extended
development pipeline
boosted by acquisition of
pipeline and team of primary
care developer Apollo
– Completed developments
hit BREEAM and EPC targets
– Working with partners to
develop Designing For
Everyone framework
improvements across existing
portfolio
– Continue to develop sustainable and
innovative solutions for our customers
utilising the latest technology
– Revising space requirements to meet
our customers evolving needs
See our KPIs on pages 26 to 31
See Principal risks and uncertainties on pages 56 to 61
22
Assura plc Annual Report and Accounts 2021
3 Quality of service
To deliver on the promises we make to existing and prospective customers and the communities our buildings serve.
2021 priorities
– Advance the asset
2021 actions & progress
– 12 developments completed
enhancement opportunities
throughout the portfolio,
delivering sustainability
improvements
– Complete developments on
site and convert immediate
pipeline to on site
– Begin rollout of smart
meters across existing
portfolio and review current
energy purchase
arrangements
– Establish Assura
Community Fund
during the year
– 50 properties acquired
and successfully
integrated by our portfolio
management team
– Eight asset enhancement
projects completed or
underway and 31 re-gears
completed
– Assura Community Fund
launched with initial £2.5m
contribution
– Energy contract tendered
and now 100% of energy
purchased is renewably
sourced
– Continued strong results
from our customer
satisfaction survey
KPIs
– Portfolio: Growth in rent roll,
WAULT, customer covenant,
developments completed
– Stakeholder: Customer
satisfaction surveys
Risks
– Changes to government
policy
– Competitor threat
– Staff dependency
– Underperformance of assets
2022 priorities
– Continue to strive to maximise the
asset enhancement opportunities
throughout the portfolio, delivering
sustainability improvements
– Listening to our customers and
understanding and adapting to their
changing requirements
– Complete developments on site and
convert immediate pipeline to on site
– Launch pilot project with selected
customers to review technological
solutions that can be implemented
to reduce energy consumption
– Advance work of the Assura
Community Fund through second
years of grants, leveraging our
position as Community Health Partner
to the 2021 Rugby League World Cup
– Working closely with supply chain
partners to improve the quality of
service delivery and attainment of our
wider social impact objectives
– Implementing a Customer Service
Desk approach to our FM activities in
order to maximise customer service
and responsiveness
4 People
To attract, retain and develop our high-quality, specialist team.
2021 priorities
– Support employee
wellbeing
– Continue with flexible
working culture
– Further improvements to
diversity and inclusion
2021 actions & progress
– Supporting our employees in
working remotely through
the pandemic
– 91% response rate to staff
survey, achieving indicative
increase on employee
engagement from Very Good
to Outstanding
– Commitments made with
respect to Diversity &
Inclusion and being Disability
Confident Committed
– 26% of staff now work flexibly
or part-time
KPIs
– Stakeholder: Staff
satisfaction survey
Risks
– Staff dependency
2022 priorities
– Focus on working patterns,
encouraging flexible arrangements
to support employee health and
wellbeing
– Advancing diversity and inclusion
measures, working on the back of the
findings from our first cross-team
survey
– Continuing to develop our employees
at all levels, building on existing
manager, intern and apprenticeship
programmes
5 Long-term relationships
To build long-term relationships that benefit all of our stakeholders.
2021 priorities
– Advance the asset
enhancement opportunities
throughout the portfolio,
delivering sustainability
improvements
– Review our supply chain
processes to ensure we
share the same social
impact values
– Develop our offering for NHS
Trusts, local authorities and
GP collaboratives in a
primary care setting
– Establish Assura Community
Fund
2021 actions & progress
– Eight asset enhancement
projects completed or
underway
– Partnership for premises
solutions developed with
national provider of primary
care at scale
– Development pipeline
includes schemes for NHS
Trusts in the North East and
West Midlands
2022 priorities
– Finalise development of our supply
chain framework, rolling out and
asking for supplier commitments to
follow and leveraging shared social
impact objectives
– Develop our offering for NHS Trusts,
local authorities and GP collaboratives
in a primary care setting
– Advance work of the Assura
Community Fund through second
year of grants, leveraging our position
as Community Health Partner to the
2021 Rugby League World Cup
KPIs
– Portfolio: Growth in rent roll,
developments on site
– Stakeholders: Customer
satisfaction survey
Risks
– Changes in government
policy
– Competitor threat
– Underperformance of assets
See our KPIs on pages 26 to 31
See Principal risks and uncertainties on pages 56 to 61
Assura plc Annual Report and Accounts 2021
23
Strategic reportGovernanceFinancial statementsAdditional information OUR SOCIAL
IMPACT STRATEGY
Maximising
our contribution
to society
By 2026, our goal is that six million
people will benefit from
improvements to or through
our buildings.
Minimising
our impact on
the environment
We refer to ESG as being our Social Impact
Strategy. We published our SixBySix plan
alongside our March 2020 Annual Report
and the disclosures in this year’s report
reflect the progress made over the first
12 months. As we have worked through
our plans, we have improved the wording
of several pledges.
Our approach
In setting our SixBySix pledges and targets,
our starting point was alignment with the
UN Sustainable Development Goals – two
of the goals particularly resonating with
our purpose.
The Social Impact Committee, made up of
team members across all departments of the
business, then went through a materiality
assessment process of deciding what was
important to us and our stakeholders.
Our approach considered three main factors:
– what is the right thing to do
– what is within our control
– what is the most ambitious target
we can set
SixBySix governance
Overall responsibility for progress against
SixBySix targets rests with the CEO,
Jonathan Murphy. Efforts are led by the
Head of Sustainability, who is a member of
the Executive Committee, and the Social
Impact Committee, which monitors
progress against the specific SixBySix
targets and regularly reports into the
Executive Committee and Board.
24
Assura plc Annual Report and Accounts 2021
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Progress against our SixBySix pledges
Our SixBySix ambition is that six million people will benefit from improvements to or through our buildings. In the first year, we impacted
over 275,000 people, mainly through our delivery of 12 completed developments and the activities of the Assura Community Fund. This
number will accelerate as we rollout our plans to improve the environmental performance of our existing portfolio.
Pledge
2020/21 progress
2021/22 priorities
KPI
Through the Assura
Community Fund’s
grant-making and our
support for shared
community space, to
help improve the
wellbeing of more
than one million
people
– Fund launched with £2.5m
initial contribution
– £800,000 distributed to more
than 120 health-improving
projects, impacting over
60,000 people
– Official Community Health
Partner for upcoming 2021
Rugby League World Cup
– Distribute a further £550,000
through the second year of
the grant programme
– Pilot innovation community
space partnerships
– Launch staff fundraising
activities
Assura Community Fund
reach
– Total fundraising achieved
– Amounts distributed to
health improving projects
– People reached by
projects supported
Develop a sustainable
supply chain which
shares our
commitment to
adding value for the
communities we work
in
Create opportunity
via volunteering,
education,
partnerships and
mentoring to help
reduce inequalities
and build more
inclusive communities
Work with our
customers to reduce
the energy consumed
in our buildings –
targeting an EPC
rating of B or better
across our portfolio
Advance our
development process
to be creating only
buildings with a net
zero carbon rating
for construction
and operation
– Advanced our review of
– Finalise our Supply Chain
existing supply chain and
developed priorities for our
Supply Chain Framework
– Joined Mission INCLUDE
mentoring programme
– Delivered over 850 training
hours to our employees
– Taken on three apprentices
and four interns
Framework working with our
supply chain partners for
attainment of our social
impact objectives
– Roll out compliance
programme, initially targeting
our largest suppliers
– Launch diversity and inclusion
strategy across the business,
applying actions from the
team survey
– Create volunteering
opportunities with Assura
Community Fund projects
– Create education, mentoring
and volunteering
opportunities through our
Supply Chain Framework
Supply Chain Framework1
– Proportion of suppliers
that have certified to us
they comply
Staff satisfaction survey
– Proportion of staff stating
they are engaged, satisfied
and able to contribute
Staff volunteering1
– Proportion of staff
engaging in community
fundraising and
volunteering activities
– Appointed Murton & Co as
our EPC improvement partner
– Completed assessment of
our existing portfolio and
incorporated into our strategy
for each individual building
– Begin implementation of
improvement plan for
individual buildings
– Incorporate sustainability
feature into all customer
newsletters
EPC ratings of our portfolio
– Proportion of buildings
(by area) that have an EPC
rating of B or better, or
have been improved by at
least two bands
– Launch the Assura Energy
Forum for customers
– Technology & Innovation
– Finalise design on pilot
Group established to further
advance our development
process
– Two pilot net zero carbon
schemes identified, and
appointed Hoare Lea as net
zero carbon consultant
schemes, including method
of assessing compliance
under UK Green Building
Council framework
– Aim for at least one of the
pilot schemes to be on site
Net zero carbon
developments
– Proportion of net
developments with a net
zero carbon rating for
construction and operation
BREEAM ratings
– Sum of completed
developments achieving
the certified BREEAM rating
of Very Good or better
Renewably sourced energy
– Proportion of the energy
purchased by Assura that is
from renewable sources
Source only
renewable energy and
drive innovative
energy solutions for
customers through
the use of appropriate
technology
– Appointed Head of
Sustainability
– Energy contract replaced in
November 2020 with new
stipulation that all energy is
100% renewably sourced
– First phase of smart metering
programme, focusing on
properties where we control
the supply of utilities
– Development of sustainability
strategy at a property level
1. not currently reported against – aiming for reporting by March 2022.
Assura plc Annual Report and Accounts 2021
25
Strategic reportGovernanceFinancial statementsAdditional information
OUR KEY PERFORMANCE
INDICATORS
These KPIs are reflected in both
the short-term (annual bonus
details on page 97) and long-term
management incentive schemes
(linked to TSR, growth in EPRA
EPS and performance against ESG
targets over a three-year period,
further details on page 99).
Certain of these measures
are considered Alternative
Performance Measures
(calculations or references
provided where appropriate)
which, as explained in the
CFO Review on pages 62 to 67,
are provided to help provide
relevant information to
understand how our business
is performing.
Assura is one of the UK’s leading
healthcare REITs. In order to
sustain this position, we need
to demonstrate that we can
consistently outperform over
time. To measure ourselves
against this objective we have a
wide range of key performance
indicators (“KPIs”).
Our financial KPIs track the
performance of the business in
terms of the returns we generate
for shareholders. Our portfolio
metrics measure the quality of our
portfolio and our development
activities. Our stakeholder metrics
measure the influence we have on
the wide range of stakeholders
impacted by our activities. All of
these KPIs link back to our
strategic priorities and SixBySix
pledges and form the basis for
how the executive management
team is judged and rewarded.
26
Assura plc Annual Report and Accounts 2021
FINANCIAL KPIS
EPRA EPS (p)
Performance
Diluted EPRA NTA (p)
Performance
EPRA Cost Ratio (%)
Performance
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0
2.4
2.5
2.7
2.8
2.7
2017
2018
2019
2020 2021
70
60
50
40
30
20
10
0
49.3
52.4
53.3
53.9
57.2
2017
2018
2019
2020 2021
15.0
12.5
10.0
7.5
5.0
2.5
0
13.7
13.0
12.5
12.6
13.4
2017
2018
2019
2020 2021
Strategic priority
1 Leveraging our financial strength
Strategic priority
1 Leveraging our financial strength
Strategic priority
1 Leveraging our financial strength
Definition
See Note 6 to the accounts
Commentary
EPRA EPS provides an indication of the
recurring profits of the Group. EPRA EPS
has fallen to 2.7 pence as a result of the
one-off £2.5 million contribution to the
Assura Community Fund. Adding this
one-off item back gave an adjusted EPRA
EPS of 2.8 pence, which has remained flat
due to the timing of the equity raise at the
start of the year.
Definition
See Note 7 to the accounts
Commentary
EPRA NTA shows the net accounting value
of our assets and liabilities, adjusted in
accordance with the widely used EPRA
guidelines for the real estate industry. As
a REIT with a high dividend pay out ratio,
movements in our EPRA NTA primarily are
attributed to asset revaluations.
Target
Grow
Target
Grow
Definition
See page 66
Commentary
EPRA Cost Ratio is the operating efficiency
of our model, being the costs incurred as
a proportion of rental income. The EPRA
Cost Ratio has increased slightly during the
period, excluding the £2.5 million Assura
Community Fund donation. The portfolio
has grown during the period and the
corresponding increase in costs reflects
the investment we have made during the
year in growing the development team,
boosting our in-house capability to deliver
our growing development pipeline.
Target
Maintain or reduce
Total Property Return (%)
Total Accounting Return (%)
Total Shareholder Return (%)
Performance
Performance
Performance
12
10
8
6
4
2
0
9.7
9.7
5.9
5.3
6.4
2017
2018
2019
2020 2021
14
12
10
8
6
4
2
0
12.0
11.0
11.4
6.8
6.3
2017
2018
2019
2020 2021
60
50
40
30
20
10
0
-10
50.3
13.2
6.8
1.3
(9.8)
2017
2018
2019
2020 2021
Strategic priority
1 Leveraging our financial strength
Strategic priority
1 Leveraging our financial strength
Strategic priority
1 Leveraging our financial strength
Definition
Net rental income plus revaluation, divided
by opening property assets plus additions.
See Glossary
Commentary
Total Property Return measures our
success in choosing the right investments
and managing these assets over time.
The return is made up of two components
– the income return (which has remained
broadly consistent with previous years)
and any valuation movement (which has
remained positive).
Target
Maintain or grow over long term
Definition
Movement on EPRA NAV plus dividends
paid, divided by opening EPRA NAV.
See Glossary
Commentary
Total Accounting Return measures the
returns we have delivered to shareholders
in the forms of dividends paid and the
growth in NAV. In the current year, the
dividend paid had again grown compared
with the prior year, and the return has
been strengthened by the positive
valuation movement.
Target
Maintain or grow over long term
Definition
Movement in share price plus dividends
paid, divided by opening share price.
See Glossary
Commentary
Total Shareholder Return reflects the value
of dividends paid and the relative
movement of the share price over the year.
In the current year, the dividend paid had
again grown compared with the prior year,
although the TSR is negative due to the
share price movement, having opened the
year at 83.5 pence and closed at 72.1 pence.
Target
Maintain or grow over long term
Assura plc Annual Report and Accounts 2021
27
Strategic reportGovernanceFinancial statementsAdditional information 90
75
60
45
30
15
0
31.3
13.8
18.7
14.8
Strategic priority
3 Quality of service
Definition
the year
Commentary
90
75
60
45
30
15
0
48.6
31.0
23.6
Strategic priority
3 Quality of service
Definition
course of construction
Commentary
Number and total cost of developments
Number and expected cost of
that reached practical completion during
developments that are currently in the
Developments completed give an
Developments on site give a measure of
indication of how we are moving schemes
our success in moving opportunities from
from the pipeline through to our portfolio.
our pipeline through to live schemes.
Figures quoted represent the total cost of
Figures quoted represent the total cost
the schemes. We have seen momentum
of the schemes. 13 schemes have moved
growing in the NHS approval of new medical
to on site during the year, giving us a total
centre developments over the past 18
months, which will flow through into
completions following the build period
which is normally between 14 and 18
of 16 at year end. In addition, we have a
strong immediate pipeline of 17 schemes
(estimated cost £111 million) which we
would hope to be on site in the next
months for each scheme. We are currently
12 months.
expecting 13 of the 16 on site developments
to complete in the next financial year.
Target
Maintain or grow
Target
Maintain or grow
OUR KEY PERFORMANCE INDICATORS
CONTINUED
PORTFOLIO METRICS
Growth in rent roll (£m)
Performance
Total contracted rental income (£bn)
Performance
WAULT (years)
Performance
Developments completed (£m)
Developments on site (£m)
Performance
Performance
18
15
12
9
6
3
0
16.6
10.6
11.7
12.8
6.2
2017
2018
2019
2020 2021
1.8
1.5
1.2
0.9
0.6
0.3
0
1.35
1.43
1.57
1.22
1.05
2017
2018
2019
2020 2021
15.0
12.5
10.0
7.5
5.0
2.5
0
13.2
12.6
12.0
11.7
11.9
69.5
80.5
72.5
2017
2018
2019
2020 2021
2017
2018
2019
2020 2021
2017
2018
2019
2020 2021
Strategic priority
5 Long-term relationships
3 Quality of service
Definition
Increase in rent roll over the year.
See Glossary
Commentary
Growth in rent roll is a measure of how
we are growing our income which in turn
should support our dividend policy.
The £12.8 million increase in the current
year reflects acquisitions (£10.2 million),
development completions (£3.1 million)
and portfolio management activity
including rent reviews (£1.1 million),
offset by the rent relating to disposals
(£1.6 million).
Strategic priority
5 Long-term relationships
3 Quality of service
Strategic priority
2 Quality of buildings
3 Quality of service
Definition
Total amount of rent to be received over
the remaining term of leases currently
contracted. See Glossary
Commentary
Total contracted rental income is the total
amount of rent we are due to receive over
the remaining term of leases currently in
place and committed rent for developments
on site. The passage of time would see this
figure reduce each year. However, the
positive actions we have taken in the year,
through portfolio additions and asset
enhancement activities, has seen this
natural decline be offset to an extent that
the total contracted rental income has
increased to £1.57 billion.
Definition
Average period until the next available
break clause in our leases, weighted by
rent roll
Commentary
Weighted Average Unexpired Lease Term
(“WAULT") provides a measure of the
average time remaining on the leases
currently in place on our portfolio. The
passage of time would see this figure
reduce each year. However, the positive
actions we have taken in the year, through
portfolio additions and asset enhancement
activities, has seen this natural decline be
offset such that the WAULT has increased
to 11.9 years.
Target
Positive
Target
Maintain or grow
Target
Maintain or grow
% of occupier covenant NHS/GPs (%)
Performance
Rental growth from rent reviews (%)
Performance
120
100
80
60
40
20
0
86
84
85
85
84
2017
2018
2019
2020 2021
Strategic priority
2 Quality of buildings
3 Quality of service
Definition
Proportion of our rent roll that is paid
directly by GPs or NHS bodies
Commentary
The occupier covenant provides an
indication of the security of our rental
income, reflecting how much is paid
directly by GPs or the NHS. The figure
has remained strong at 84%, reflecting
that portfolio additions have an
occupier mix that is consistent with
our existing portfolio.
Target
Maintain or grow
3.0
2.5
2.0
1.5
1.0
0.5
0
2.2
1.6
1.7
1.8
1.5
2017
2018
2019
2020 2021
Strategic priority
1 Leveraging our financial strength
3 Quality of service
Definition
Weighted average annualised uplift on rent
reviews settled during the year
Commentary
Rental growth from rent reviews settled in
the year provides a measure of the growth
in our rent roll, which we would expect to
flow through to our income and support
our dividend policy. In the current year, we
have increased the number of rent reviews
settled to 320 (296 in prior year). Open
market reviews generated an average
uplift of 1.2% (1.2% in the prior year).
Target
> inflation
28
Assura plc Annual Report and Accounts 2021
Total contracted rental income (£bn)
Performance
WAULT (years)
Performance
Developments completed (£m)
Performance
Developments on site (£m)
Performance
90
75
60
45
30
15
0
69.5
31.3
13.8
18.7
14.8
2017
2018
2019
2020 2021
90
75
60
45
30
15
0
80.5
72.5
48.6
31.0
23.6
2017
2018
2019
2020 2021
Strategic priority
3 Quality of service
Strategic priority
3 Quality of service
Definition
Number and total cost of developments
that reached practical completion during
the year
Commentary
Developments completed give an
indication of how we are moving schemes
from the pipeline through to our portfolio.
Figures quoted represent the total cost of
the schemes. We have seen momentum
growing in the NHS approval of new medical
centre developments over the past 18
months, which will flow through into
completions following the build period
which is normally between 14 and 18
months for each scheme. We are currently
expecting 13 of the 16 on site developments
to complete in the next financial year.
Target
Maintain or grow
Definition
Number and expected cost of
developments that are currently in the
course of construction
Commentary
Developments on site give a measure of
our success in moving opportunities from
our pipeline through to live schemes.
Figures quoted represent the total cost
of the schemes. 13 schemes have moved
to on site during the year, giving us a total
of 16 at year end. In addition, we have a
strong immediate pipeline of 17 schemes
(estimated cost £111 million) which we
would hope to be on site in the next
12 months.
Target
Maintain or grow
PORTFOLIO METRICS
Growth in rent roll (£m)
Performance
16.6
10.6
11.7
12.8
1.22
1.05
6.2
1.35
1.43
1.57
13.2
12.6
12.0
11.7
11.9
15.0
12.5
10.0
7.5
5.0
2.5
0
2017
2018
2019
2020 2021
2017
2018
2019
2020 2021
2017
2018
2019
2020 2021
Strategic priority
5 Long-term relationships
3 Quality of service
Definition
See Glossary
Commentary
Strategic priority
5 Long-term relationships
3 Quality of service
Definition
Strategic priority
2 Quality of buildings
3 Quality of service
Definition
Increase in rent roll over the year.
Total amount of rent to be received over
the remaining term of leases currently
Average period until the next available
break clause in our leases, weighted by
contracted. See Glossary
Commentary
rent roll
Commentary
Growth in rent roll is a measure of how
Total contracted rental income is the total
Weighted Average Unexpired Lease Term
we are growing our income which in turn
amount of rent we are due to receive over
(“WAULT") provides a measure of the
should support our dividend policy.
The £12.8 million increase in the current
year reflects acquisitions (£10.2 million),
development completions (£3.1 million)
and portfolio management activity
including rent reviews (£1.1 million),
offset by the rent relating to disposals
(£1.6 million).
the remaining term of leases currently in
average time remaining on the leases
place and committed rent for developments
currently in place on our portfolio. The
on site. The passage of time would see this
passage of time would see this figure
figure reduce each year. However, the
reduce each year. However, the positive
positive actions we have taken in the year,
actions we have taken in the year, through
through portfolio additions and asset
enhancement activities, has seen this
natural decline be offset to an extent that
the total contracted rental income has
increased to £1.57 billion.
portfolio additions and asset enhancement
activities, has seen this natural decline be
offset such that the WAULT has increased
to 11.9 years.
Target
Positive
Target
Maintain or grow
Target
Maintain or grow
18
15
12
9
6
3
0
120
100
80
60
40
20
0
1.8
1.5
1.2
0.9
0.6
0.3
0
3.0
2.5
2.0
1.5
1.0
0.5
0
% of occupier covenant NHS/GPs (%)
Rental growth from rent reviews (%)
Performance
Performance
86
84
85
85
84
2.2
1.6
1.7
1.8
1.5
2017
2018
2019
2020 2021
2017
2018
2019
2020 2021
Strategic priority
2 Quality of buildings
3 Quality of service
Definition
Strategic priority
1 Leveraging our financial strength
3 Quality of service
Definition
Proportion of our rent roll that is paid
Weighted average annualised uplift on rent
directly by GPs or NHS bodies
reviews settled during the year
Commentary
Commentary
The occupier covenant provides an
indication of the security of our rental
income, reflecting how much is paid
directly by GPs or the NHS. The figure
has remained strong at 84%, reflecting
that portfolio additions have an
occupier mix that is consistent with
our existing portfolio.
Rental growth from rent reviews settled in
the year provides a measure of the growth
in our rent roll, which we would expect to
flow through to our income and support
our dividend policy. In the current year, we
have increased the number of rent reviews
settled to 320 (296 in prior year). Open
market reviews generated an average
uplift of 1.2% (1.2% in the prior year).
Target
Maintain or grow
Target
> inflation
Assura plc Annual Report and Accounts 2021
29
Strategic reportGovernanceFinancial statementsAdditional information OUR KEY PERFORMANCE INDICATORS
CONTINUED
STAKEHOLDER METRICS
Our customers
Our investors and lenders
Our communities
Customer satisfaction (%)
Performance
Growing, covered dividend (p)
Performance
Assura Community Fund Reach (people)
Performance
100
90
80
70
60
50
95
96
95
91
90
2017
2018
2019
2020 2021
Strategic priority
5 Long-term relationships
3 Quality of service
Definition
Proportion of completed customer
satisfaction surveys that would consider
recommending us as a landlord to others
Commentary
The satisfaction of the customers in our
buildings is a crucial benchmark of the
quality of the service we provide. The
score obtained from our customer
satisfaction survey again indicates that
our customers value having Assura as a
landlord and would recommend us to
prospective customers.
Target
>90%
Our people
Staff satisfaction survey (%)
Performance
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0
2.46
2.65
2.25
2.75
2.82
2017
2018
2019
2020 2021
75,000
60,000
45,000
30,000
15,000
0
60,700
2021
Strategic priority
1 Leveraging our financial strength
SixBySix pledge
1 Community impact
Definition
Dividend per share paid out during the
financial year
Definition
People impacted by projects supported
by the Assura Community Fund
Commentary
Our dividend policy is for the dividend
paid to be progressive and covered by
EPRA earnings (before charitable
donations).
Target
Grow
ESG linked financing (%)
Performance
Commentary
The aim of the Assura Community Fund is
to distribute funds to support community
programmes in and around our buildings.
Having been seeded with an initial
contribution of £2.5m, we are delighted
to have been able to support over 115
projects, distribute over £800,000 and
positively impact 60,000 people.
Target
>50,000 per year
Staff volunteering
We aim for over 50% of staff to be
engaged in community fundraising and
volunteering activities during the year,
increasing to 75% in year 2.
We aim to report against this KPI from
March 2022.
100
80
60
40
20
0
76
74
30
25
20
15
10
5
0
25
2021
2020 2021
Strategic priority
1 Leveraging our financial strength
Strategic priority
4 People
Definition
Proportion of respondents to the
employee opinion survey stating they
were engaged, satisfied and able to
make a valuable contribution to the
success of Assura
Commentary
Our staff survey in the year to March
2020 saw us obtain a Best Companies
One Star award. Our pulse survey
completed during 2021 saw us obtain an
indicative improvement in engagement
from Very Good to Outstanding.
Definition
Proportion of available facilities certified
as being linked to social or green
objectives
Commentary
Reflecting the positive social impact that
is ingrained within our business model,
and our plans to minimise the
environmental impact of our portfolio,
we successfully launched our debut
Social Bond during the year.
Target
Maintain or grow
Target
Maintain or grow
30
Assura plc Annual Report and Accounts 2021
Our suppliers
We are currently conducting a review
of our supply chain. This includes
development of a revised supplier code
of conduct with reference to our SixBySix
pledges and gaining an understanding
of how our suppliers currently source
labour for work on our properties.
Our aim is to have >95% of our suppliers
(by spend) certifying to us that they
are compliant with our Supply Chain
Framework. We expect to start reporting
against these new KPIs from March 2022.
The environment
EPC ratings (%)
Performance
36
30
24
18
12
6
0
Renewably sourced energy (%)
Performance
30
2021
60
50
40
30
20
10
0
48
21
2020 2021
SixBySix pledge
4 EPC ratings
SixBySix pledge
6 Renewable energy
Definition
Proportion of portfolio buildings that have
an EPC rating of B or better, or have been
improved by at least two bands
Definition
Proportion of energy purchased by Assura
(whether for own use or on behalf of
customers) that is renewably sourced
Commentary
During the year we completed our
assessment of the entire portfolio and
generated plans for each property
that requires an improvement on the
current rating.
Commentary
During the year we tendered our utilities
supply contract and switched to 100%
renewably sourced with effect from
December 2020.
Target
100% by March 2026
Target
100%
Net zero carbon developments (%)
BREEAM rating (%)
Performance
Performance
30
25
20
15
10
5
0
100
80
60
40
20
0
0
2021
100
100
100
100
100
2017
2018
2019
2020 2021
SixBySix pledge
5 Net zero development
Strategic priority
2 Quality of buildings
Definition
Proportion of on site developments
designed to be net zero carbon for
construction and operation
Commentary
We would expect this to be low in the
initial years of SixBySix as we run pilot
projects. We have identified our first pilot
project and are targeting being on site by
March 2022.
Target
>50% by March 2026
Definition
Proportion of completed developments
achieving the BREEAM certified rating of
“Very Good” or better
Commentary
BREEAM is the world’s foremost
environmental assessment method and
rating for buildings and sets the standard
for best practice in sustainable building
design, construction and operation.
Strong performance against this measure
demonstrates our commitment to building
sustainable buildings that improve the
local infrastructure. All developments
completed during the year achieved our
BREEAM target.
Target
100%
Assura plc Annual Report and Accounts 2021
31
Strategic reportGovernanceFinancial statementsAdditional information OUR BUSINESS MODEL
WHO WE ARE
WHAT WE DO
We are a listed UK real estate investment trust
(“REIT”) specialising in the development of,
investment in and management of a portfolio of
primary care, diagnostic and treatment buildings
across the UK.
Our purpose is to create outstanding spaces for
health services in our communities. We aim to be
the UK’s number one listed property business for
long-term social impact.
Our values
Innovation
Expertise
Being genuine
Collaboration
Passion
How we work
We champion new ideas and
we’re open minded
We do what we say we will
We don’t give up
We strive for excellence
We listen to, learn from and
encourage others
Development
Growing our portfolio through new developments
Our team of development managers work with
existing and prospective GP customers to design
and deliver bespoke new medical centres that meet
the needs of the communities they serve.
The customers and patients benefit from our strong
relationships with our expert healthcare partners,
with whom we work to incorporate the latest
sustainability and design innovations.
A development only moves on site when everyone
is agreed that the project is the highest quality and
value for money; the District Valuer agrees the rent,
the GPs sign an agreement for lease and our
third-party building contractor partners sign fixed
price contracts.
Following the 12–18 month build period, we get
a long, secure income stream at a return on cost
that reflects the relatively low development risk
we take on, and a building that showcases our
ability to deliver sustainable solutions that
benefits all stakeholders.
32
Assura plc Annual Report and Accounts 2021
Investment
Managing our portfolio
Growing our portfolio through acquisition
of existing properties
Our investment team identify opportunities to add
existing buildings to our portfolio, whether through
a competitive bidding process or an off-market
opportunity benefitting from our reputation as
a landlord that owns and operates buildings as
a long-term partner to the GP customer.
Maintaining and enhancing our properties
Our portfolio management team looks after the
needs of the customers in our existing buildings.
This covers a range of offerings: lease renewals,
extensions or refurbishments, improving
environmental performance, managing building
costs or simply sharing their experience with a
customer that wants assistance fixing a problem.
Our knowledge of the sector, bespoke database
covering all primary healthcare properties in the
country, our reputation as a landlord and our long-
standing relationships give us strong credentials
when sourcing opportunities and speaking to
prospective customers, who are often the same
people that are selling their building.
The investment process considers numerous criteria
including the quality of the building, environmental
impact and physical climate change risk, asset
enhancement opportunities and returns but the key
factor is the importance of the building to its local
health economy – i.e. is this building the right
solution for that community in the long term.
Enhancing the building through extension or
refurbishment benefits the GPs and the patients
as well as allowing us to extend the lease through
a re-gear. Our social impact strategy includes
measures to ensure these initiatives include
sustainability improvements, reducing both the
impact of the building on the environment and
hopefully reducing the running costs for the
customers.
The portfolio management team also liaise with
the District Valuer in settling rent reviews, making
sure the rents on our leases are at the latest
open market rates.
Assura plc Annual Report and Accounts 2021
33
Strategic reportGovernanceFinancial statementsAdditional information OUR BUSINESS MODEL
CONTINUED
HOW WE DO IT
Our unique offering
We are unique in offering our customers (mainly
GPs and other primary healthcare professionals)
a full property service; we develop new buildings,
invest in high-quality existing buildings, look after
and enhance our portfolio (manage), and
ultimately, own them for the long term. Our
internally managed structure provides a highly
scalable model and gives us direct relationships
with our customers. This enables us to be
responsive to their evolving needs and to provide
innovative solutions.
Our reputation for being sector experts
We are the partner of choice with more than 90%
of respondents to our annual customer survey
saying they would consider recommending
Assura to others.
Operating within a market that supports the NHS
means we have a responsibility not just to meet
current NHS specifications for buildings, but also
to advance the sustainability agenda to ensure
buildings are fit for the NHS’s future needs and to
satisfy District Valuers (responsible for agreeing
rents on new build developments and rent
reviews) that our developments represent value
for money.
We have a highly knowledgeable and
experienced in-house team of surveyors and
external expert partners in architecture,
sustainability and construction. Our team across
development, investment, management and
external experts work closely with each other
and our customers.
Our secure, stable occupier base
We have a secure, long-term rental income stream
from our stable customer base made up mainly of
GPs and NHS bodies who benefit from government
reimbursement of their rent. Our typical leases are
21+ years in length, giving us strong visibility of
future income.
Our carefully managed balance sheet
The continued support of our shareholders and
lenders is crucial to funding future growth in our
portfolio. We generally borrow on an unsecured
basis (which we believe gives us access to a larger
range of funding options) with a loan-to-value that
is currently sub-40% with a policy that allows us to
reach the range 40–50% should the need arise.
As we grow, so the benefits of scale will accrue
to shareholders and drive our progressive
dividend policy.
Our commitment to long-term social and
environmental impact
Consideration of social and environmental
impact is ingrained through our operations
and long-term strategy for each building in our
portfolio. Minimising the environmental impact
and maximising the positive social impact of each
building in our portfolio through our SixBySix
pledges is fundamental to our offering for all
stakeholders. See our SixBySix strategy on
page 24–25.
34
Assura plc Annual Report and Accounts 2021
Strategic report
Governance
OUR IMPACT
Our customers
Our GP and NHS customers get spaces at the forefront of the
sector in terms of design, innovation and environmental
performance that allow them to provide the services needed
by the communities that they serve.
Our communities
The communities that use our spaces get a building that meets
the bespoke health needs of that local health economy.
Our suppliers
Our supplier partners benefit from a collaborative approach to
finding innovative solutions to meet the needs of our customers.
Our people
Assura employees work in a friendly, engaging environment that
supports aspirations to develop their skills and opportunities.
Our investors and lenders
Our financial supporters, both equity and debt, get a fair
financial return derived from rental income from investment
in the essential health infrastructure of our country.
90%
of respondents to our annual
satisfaction survey rated our
service as either ‘good’ or ‘OK’
5.9mpatients served by our buildings,
£800,000 distributed by the
Assura Community Fund
£92mpaid during the year to suppliers
for construction, property
management and overheads
84%
of team members took part
in our first diversity and
inclusion survey
2.8p
dividends per share paid during
the year, 2.47% weighted
average interest rate paid
on debt facilities
Assura plc Annual Report and Accounts 2021
35
Financial statementsAdditional information S172 STATEMENT
Listening to and understanding our stakeholders underpins our
decision-making and the way we work. The following pages make
up our Section 172 statement, outlining our core stakeholders,
how we and our Board members engage with them and the impact
of that engagement.
Understanding and responding to
stakeholder concerns
Pages 38 to 51 describe how we have
engaged with and responded to matters
raised by employees, suppliers, customers,
investors and communities. Unsurprisingly,
the key matters raised this year across all
our stakeholder groups have centred
around the impact on COVID. Read more
about our COVID response on page 13.
Our impact on the environment
Pages 52 to 54 set out our approach to
minimising our impact on the environment,
including climate change. This year all our
completed developments have hit BREEAM
targets and finalised all EPC certifications
and costed improvements required. We
have also piloted our first net zero carbon
developments and retendered our energy
contract and are now 100% renewable.
Maintaining high standards of
business conduct
We believe good governance is crucial
to ensuring high standards of business
conduct are maintained (see our
Governance Report on pages 69 to 108).
We have a clear purpose that is embedded
through our culture and values of innovation,
expertise, being genuine, collaboration and
passion (read more on pages 49 and 80).
This year we have undertaken a review
of our supplier chain including the
development of a revised Supplier Code
of Conduct. Our target is for >95% of our
suppliers by value certify their compliance
to us by March 2022.
The Board considers that throughout the
year, it has acted in a way and made
decisions that would most likely promote
the success of the Group for the benefit of
its members as a whole and the case study
on page 78 demonstrates this further.
The Board is required to understand the
views of the Group’s key stakeholders and
describe in the annual report how their
interests and the matters set out in s172
of the Companies Act 2006 have been
considered in Board discussions and
decision-making.
Making long-term decisions
The very nature of what we do makes it
necessary for us to consider all decisions
for the long term. This year our decision-
making has been influenced by the impact
of COVID-19. The Board has met more
frequently to discuss our strategic,
financial and operational resilience. Read
more on our response to COVID-19 on
page 13 and Governance Report on pages
69 to 108.
We adopt a long-term approach to
holding our assets as set out in our
strategy and business model on pages 32
to 35. In February 2021 the Board
approved the acquisition of Apollo which
will enhance our development pipeline,
capabilities and capacity for managing on
site schemes. Read more on page 78. Our
investment decisions consider how crucial
an asset is to the local health economy for
the long term. We strive to build lasting
relationships with our occupiers with the
average length of our leases being 21
years. We seek to improve and enhance
existing assets so they remain fit for
purpose by working collaboratively with
our occupiers, for example this year with
asset enhancement projects at our
properties in Scarborough and Swindon,
and aim to develop new properties that
incorporate future-proof technology and
environmental measures.
We maintain a conservative funding
structure. This year we have issued a
£300m social bond which represents 25%
of our available funding (see page 77 in our
Governance Report). Our dividend policy
is based on paying out a proportion of
recurring earnings (see our CFO Review
page 65).
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Assura plc Annual Report and Accounts 2021
Assura plc Annual Report and Accounts 2021
37
Strategic reportGovernanceFinancial statementsAdditional information OUR IMPACT
STAKEHOLDER ENGAGEMENT
Our communities
Who they are
– 5.9 million patients who use
our buildings and those who
live in the communities
around our buildings.
Important because individuals
are the end users of our
buildings. Their experiences
of the physical space and
environment impact upon their
engagement with health
services and their perceptions
of the care they receive. Their
feedback helps us improve
design and ensure that our
buildings are helping to
improve equal access to local
health services. We need
buy-in from communities to
create new health facilities,
which may involve services
moving to a different location.
Read more on page 42-43
Stakeholder metrics
– Assura Community Fund reach
– Developments supporting
community space.
Issues raised
– COVID-19 impacts on
healthcare buildings
– Accessibility of medical centre
buildings
– New development schemes
and their impact on
communities
– Car parking at medical centres
to support vaccination
programme
– Need for funding for local
charity health projects to tackle
impacts of COVID-19.
Method of engagement
– Seeking views from Patient Participation Groups, local
Healthwatch/Community Health Council members on proposed
new development schemes
– Using expertise of national patient organisations to gather
feedback on specific design issues
– Local public consultations to seek feedback on proposed
new developments
– Engagement with councillors and MPs on specific issues
– Outreach by Assura Community Fund to seek funding bids from
local health-improving projects.
Why these methods are effective: Ensuring that our work
delivers for those who will receive care in our buildings and those
who live in the surrounding community relies on understanding
local priorities, issues and concerns.
Monitored by: Heads of Property, Business Development
and Public Affairs.
Board members met with the Chief Executive of Cheshire
Community Foundation, which manages the Assura Community
Fund, to understand our 20–21 priorities and approach to best
support communities recovering from the health impacts of
COVID-19. Board members also receive updates on SixBySix
activities at every Board meeting.
Our response (and next year’s priorities)
– National survey with the Patients Association to understand
measures required at primary care buildings to help patients feel
confident to return to them when they are asked to – with
recommendations communicated to every GP practice in our
buildings
– Building Better Together report on improving primary care
environments for people with disabilities and autism published
with Dimensions and launched by Baroness Jolly and the BMA’s
Executive Committee Lead for Premises.
– Virtual meetings with community councils to offer more detailed
opportunities for questions and discussion of new development
proposals
– Assura Community Fund distributed more than £800,000 in
grants to health-improving projects around our buildings
– Liaison with individual MPs on issues such as suspending the
parking management system at a major vaccination centre to
get elderly and vulnerable patients through more quickly.
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Assura plc Annual Report and Accounts 2021
Stakeholder metrics
– Customer satisfaction.
Our customers
Who they are
– GP practices
– NHS Trusts
– Other professionals delivering
health services in the
community.
Important because the local
health services which our
customers deliver are what
make our buildings so vital in
the communities and local
health ecosystems they serve.
The long-term rental income
from our customers is
reimbursed by government.
Read more on page 44-45
Method of engagement
– Existing relationships with our portfolio managers, portfolio
administrators and portfolio asset assistants, credit controller
(ongoing)
– Instant, adhoc and annual feedback surveys
– Monthly customer ezine which invites dialogue
– Supplier relationships (ongoing)
– Public affairs activities with local influencers (adhoc).
Why these methods are effective: All approaches allow us
to get a real-time sense of how our customers are feeling,
the challenges they are facing and the problems they need us
to solve.
Monitored by: Heads of Property, Business Development and
Public Affairs.
Board members periodically hold meetings with NHS influencers
and leaders, join sessions with suppliers and consider feedback
from customer surveys.
Issues raised
– Vital building improvements
Our response (and next year’s priorities)
– Projects to improve space for occupiers in several locations, or
and replacements
to support COVID-19 operations
– Changing layouts, signage and
infrastructure for COVID-19
social distancing
– Vaccination rollout support
– Changing building features for
the future, informed by
experiences of COVID-19
– Speed of response to queries
– Challenges of moving in.
– Kept new-build schemes progressing under COVID-safe
working practices
– All customers offered direct support to meet vaccine centre
specifications
– Trialled new ways of working in our property team to offer faster
and more consistent reactive maintenance and facilities
management support
– Used national polling of healthcare professionals to understand
views on immediate and future premises needs from COVID-19,
along with feedback from similar questioning in our customer
survey calling for temporary external covered areas, external
space for patients and staff and more flexible space which can
be adapted quickly when needed.
Assura plc Annual Report and Accounts 2021
39
Strategic reportGovernanceFinancial statementsAdditional information OUR IMPACT
CONTINUED
Our people
Who they are
– Our team around the UK.
Important because they are
Assura. Their expertise and
skills are what allow us to
deliver for our customers and to
our purpose.
Read more on page 48-49
Stakeholder metrics
KPI:
– Best Companies survey
Supporting metrics:
– Internal mood surveys
– Annual diversity and inclusion
data
– Quarterly feedback from The
Voice team representatives
with designated employee
NED
– Data on staff turnover, training
and sickness trends reported
to the Board.
Method of engagement
– Weekly virtual team town hall
– Monthly team ezine which includes calls to action for feedback
– Departmental team meetings
– The Voice
– Virtual social events to help encourage dialogue and feedback
during full remote working
– Individual wellbeing calls during lockdown
– Mission INCLUDE Mentoring programme
– Virtual training/coaching for managers both one to one and
group.
Why these methods are effective: We seek regular feedback
from the team representatives group, the Voice, to understand
which methods are effective and which need reviewing. We also
track engagement with internal surveys and events to judge their
effectiveness.
Monitored by: Head of HR.
Board members have participated in a range of virtual team
social events across the year and undertook wellbeing calls with
the executive committee. Louise Fowler has completed quarterly
meetings with The Voice group and has brought feedback into
the wider Board.
Issues raised
– Mental wellbeing, isolation and
Our response (and next year’s priorities)
– Flexibility for all staff on working patterns and ongoing
stress due to pressures of
lockdown, home-schooling and
uncertainty
– IT systems and equipment/
furniture for long-term remote
working
– FM/maintenance desk
resourcing
encouragement to raise new pressures
– Increased signposting to Employee Assistance Programme
resources
– Making one day per week a day with no internal meetings
– Weekly virtual mindfulness, yoga, HIT and fitness sessions open
to all
– Regular virtual social events
– Equipment upgrades and launch of major programme to
– Greater autonomy for
upgrade finance system
managers
– Pilot of alternative team structure to support FM/maintenance
– Knowledge stagnation/feeling
of lack of creativity/innovation.
helpdesk operations
– Coaching and training for all managers on change, leadership
and business planning
– Cross section of team members being externally mentored
under the Mission INCLUDE diversity and inclusion programme.
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Assura plc Annual Report and Accounts 2021
Our suppliers
Who they are
– The contractors and
businesses providing goods
and services to us or for us.
Important because our
suppliers help us meet the
needs of communities and
customers and to deliver our
social impact, thus growing our
business.
Read more on page 46-47
Stakeholder metrics
– Supplier conduct code
compliance
Method of engagement
– Facilities management, portfolio and development team
member relationships (ongoing)
– Supply chain locality.
– Executive Committee and Board meetings with key suppliers
from time to time (adhoc).
Why these methods are effective: Our relationships with our
regular suppliers allows us to understand emerging issues and
challenges, and to respond accordingly.
Monitored by: Heads of Property, Finance and Legal.
Issues raised
– Financial and operational
pressures of COVID-19
– Supporting local jobs.
Our response (and next year’s priorities)
– Working to pay all suppliers promptly
– ‘COVID-terms’ for some suppliers to help their cash flow
– Move to e-invoicing
– Keeping guidance for maintenance contractors visiting primary
care sites under continual review in line with COVID-19
– Continuing to use smaller, local suppliers when possible.
Our investors and lenders
Important because their
investment allows us to
generate long-term value for all
our stakeholders.
register
Stakeholder metrics
– Share price
– Composition of investor
Read more on page 50-51
– Growing covered dividend
– ESG linked financing.
Method of engagement
– Results presentations
– Virtual investor tour
– Chairman meets with major shareholders when requested
– Direct meetings with investors and lenders
– Appropriate use of expert advisors.
Why these methods are effective: Regular dialogue with our
investors and lenders allows us to respond to questions, seek
feedback and test ideas with our financial stakeholders.
Monitored by: Heads of Finance and Investor Relations.
Board members receive updates on investor issues raised at
every meeting.
Issues raised
– Deployment of proceeds from
equity raise and Social Bond
Our response (and next year’s priorities)
– Rolling programme of investor and lender meetings
– Increased use of virtual tools to provide regular updates.
– Development pipeline
– Apollo acquisition
– ESG benchmarking and
reporting
– Net zero carbon
– Rent collection during
COVID-19
– Political developments for our
sector.
Assura plc Annual Report and Accounts 2021
41
Strategic reportGovernanceFinancial statementsAdditional information OUR IMPACT
CONTINUED
OUR COMMUNITIES
53,400
beneficiaries of the Assura Community
Fund national small grants scheme
6,500
callers supported by Dementia UK’s Admiral
Nurse Helpline thanks to our funding
Shortlisted
for Estates Gazette Social Impact Award
and Third Sector Magazine’s Business
Charity Award for Community Impact
Men Up North want to
see increased feelings of
improved mental health
amongst men. We want men to
become more open to talking
as a result of these sessions and
for them to feel in a position to
positively deal with navigating
the ever changing and often
challenging world.”
Men Up North, one of the
projects supported during the
year
How we engage
We seek feedback from, listen to and
communicate with patients through Patient
Participation Groups, national and local
charities, research partnerships, community
groups, local and social media, MPs and
local councillors. This year, of course, we’ve
had to employ virtual techniques and online
channels for public consultation events,
meetings with local residents and to gather
feedback. We’ve also engaged with local
health projects all over the country this year
through our work making grants from the
Assura Community Fund.
Why these methods are effective
Ensuring that our work delivers for those
who will receive care in our buildings and
those who live in the surrounding
community relies on seeking out their
perspectives and understanding local
priorities, issues and concerns.
Achievements for 2021 and priorities
for 2022
The power of place in access to healthcare
This year, we published our research with the
national charity Dimensions – to explore how
primary care buildings could work better
for people with disabilities and autism – at a
virtual roundtable led by Baroness Jolly and
the British Medical Association’s Executive
Committee lead for premises, Dr Gaurav
Gupta. The final research was extended to
include additional feedback experiences of
people with disabilities and autism during
the first stages of the pandemic. The report
is informing the next phase of this work,
which will create an assessment tool to help
any GP practice or community health
service understand how their premises
design and environment works for people
with disabilities, dementia or autism and
steps they can take to make improvements.
We will be testing this tool in our buildings
this year, and are working with Dimensions
and the University of Worcester’s
Association for Dementia Studies to launch
the tool as a resource within the national
#MyGPAndMe campaign.
We joined forces with the Patients
Association once again to gauge patient
confidence to return to primary care
buildings when they are asked to, and the
steps which will make patients feel more
comfortable to be in spaces which may
look very different for some time to come.
We ran virtual sessions allowing local
residents, MPs and councillors to chat with
GPs, architects and scheme leads to feed in
their views and understand more about our
plans for new medical centre buildings in
places including Cardiff and Wallsend in
North Tyneside, and we used surveys of
communities to gather input and ideas for
scheme design, location and local
connections. In 21–22, we plan to further
deepen our digital engagement capabilities
to better understand the live experiences of
all patients in our buildings.
Helping grassroots health projects
The Assura Community Fund distributed
more than £550,000 in small grants to
health-improving projects in communities
around our buildings across the UK, ranging
from projects helping young care leavers
and those experiencing homelessness to
schemes reducing loneliness and isolation,
helping families with budgeting and cooking
skills, and innovation with primary care to
support people who are digitally excluded.
These projects will reach 53,400 people with
better health outcomes including increased
self-esteem and confidence, improved
mental health and wellbeing, improved
physical health and wellbeing, reduced
stress or anxiety, taking part in sport or
activity, improved diet and improved social
networks. A further £200,000 was donated
from the fund to a number of more strategic
health projects in Assura’s ‘home’ county of
Cheshire, and almost £38,000 to Dementia
UK to fund their national Admiral Nurse
helpline on Sundays, Christmas Eve and
Boxing Day, to help support people living
with dementia who have been particularly
hard-hit by the pandemic. And our
relationship with Warrington Youth Zone, as
founder patrons, continued to deepen; our
team donated food and Christmas gifts
which help the club distribute more than
500 Christmas hampers to families living in
poverty across Warrington and one team
member volunteered her time to support the
youth zone on the development of a unique
online hub which will bring together virtual
mental health support and activities for
young people from charities across Cheshire.
Projects that matter for health:
The Men Up North charity operates in South
Yorkshire and Derbyshire to provide men,
particularly those from a BAME background,
with a safe space to have open and honest
conversations about mental health and
masculinity within a supportive network.
The charity was given a £5,000 grant from
the Assura Community Fund to support its
‘Micro Greens for Mental Health’ project that
will use food growing to reduce loneliness,
build skills for cooking and eating healthily
and raise awareness of the impact of
COVID-19 on the BAME community
in Sheffield near our buildings for
Dovercourt and Upwell
Street surgeries.
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Assura plc Annual Report and Accounts 2021
£550kdistributed in our
national small grants
programme
Largest beneficiary groups: children and
young people, families and lone parents
and people with mental health issues
Assura plc Annual Report and Accounts 2021
43
Strategic reportGovernanceFinancial statementsAdditional information OUR IMPACT
CONTINUED
90%
respondents to our
annual satisfaction
survey rating our service
as either good or OK
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Assura plc Annual Report and Accounts 2021
OUR CUSTOMERS
70%
of healthcare professionals want to see
more flexible space which can be adapted
quickly in community medical centre
buildings of the future, based on their
experiences of care during the pandemic
(YouGov Plc, June 2020)
52%
want both face-to-face consulting rooms
and smaller remote consulting spaces
49%
want external spaces for both patients
and staff
Ours is a purpose-built medical
centre which houses three GP
practices along with community
staff. It’s quite a modern
building but due to the
pandemic, we needed to
review a one-way system for
the building.”
Tina Birkby
Practice Manager, Dene Drive
Medical Centre, Winsford
How we engage
This year, our direct communication routes
with customers have been particularly
important in understanding the live issues
they’ve been dealing with during the
pandemic and vaccination programme. The
day-to-day interactions of our portfolio,
maintenance and facilities management
team members, our monthly customer
ezine which encourages two-way dialogue,
instant feedback and sector polling have all
helped us identify where we can offer more
support to practices in our buildings. We’ve
given virtual welcomes to customers in
buildings which are new to our network and
we are piloting a Facebook group to offer
our customers peer networking and
learning opportunities. We’ve continued to
maintain our relationships with
organisations such as the British Medical
Association, National Association of Primary
Care and our chair of the British Property
Federation’s Healthcare Committee.
Why these methods are effective
Our mixed approach to gathering customer
feedback and ideas give us a sense of how
our customers are feeling, the challenges
they are facing and the problems they need
us to solve.
Achievements for 2021 and priorities
for 2022
Support during COVID-19
We moved quickly to support our
customer’s emerging needs at various
points during the pandemic, such as NHS
England’s call-out for venues to act as
vaccination hubs. We reached out to
understand which buildings may need
additional support to operate as a vaccine
centre and have at various points helped
our customers with speedy reconfigurations
to support social distancing and one-way
patient flow. Through our close
relationships with customers, we’ve been
able to progress schemes to add crucial
new capacity at some of our buildings
despite the limitations of distancing and
repeated lockdowns. At Northgate Medical
Centre in Pontefract, we worked with NHS
England’s Estates and Technology
Transformation Fund to complete an internal
extension adding two mezzanine level
consulting rooms. We commissioned
research with YouGov to understand how
well health premises were working for staff
across the NHS as the pandemic
progressed, gaining invaluable insight into
the priority improvements they would make
to healthcare infrastructure for the future.
Small things make a big difference
“Ours is a purpose-built medical centre
which houses three GP practices along with
community staff. It’s quite a modern
building but due to the pandemic, we
needed to review a one-way system for the
building. We approached Assura for
permission to convert two existing
windows into exit doors for the two
practices on the ground floor. Within days
the permission was granted and, much to
our delight, over a period of three weeks
the works have almost been completed!
Cannot thank Natalie enough for all her hard
work and enthusiasm for our project and
thanks to her, this was carried out
effectively and efficiently.” Tina Birkby,
Practice Manager, Dene Drive Medical
Centre, Winsford.
Helping customers reduce the health
impacts of digital exclusion
A social prescribing and community
development service based in 10 GP
practices across Mendip received funding
from the Assura Community Fund to
increase digital awareness and access for
local people who aren’t digitally
connected. The grant funding will make a
Digital Connector available in our Frome
Medical Practice building every week to
provide advice on where to get free wi-fi,
where to find use of digital devices, advice
on SIM cards, pay-as-you-go tariffs, courses
on setting up an email account, using a
mouse or key pad and using a search
engine. Digital exclusion has an impact on
poorer health outcomes, lower life
expectancy, increased isolation, less access
to jobs and education and challenges in
accessing welfare benefits.
Assura plc Annual Report and Accounts 2021
45
Strategic reportGovernanceFinancial statementsAdditional information OUR IMPACT
CONTINUED
OUR SUPPLIERS
£92m
paid to our suppliers and contractors
£21m
Total Tax Contribution – £7.0m borne
(payroll and stamp taxes) and £13.0m
collected (PID withholding tax and net VAT)
How we engage
We’ve continued to keep in close contact
with our supplier network through our
relationships across the business, with key
maintenance service relationships now
coordinated by our facilities manager and
property asset assistants. The Executive
Committee invites suppliers to meetings
from time to time to hear about the latest
trends in the sector. We require that all
suppliers are Safe Contractor verified,
whether for a large repair or for small
routine maintenance on a building –
ensuring the suitability of health and safety
procedures and insurance in relation to the
work they are set to complete. We also
require all of our suppliers to adhere to our
Modern Slavery and Anti-Bribery and
Corruption Policies, both of which are
available to view on our website. We also
communicate our Quality and
Environmental policies (as part of our
procedures in relation to our ISO 9001 and
ISO 14001 accreditation) to suppliers as well
as making clear our policies in respect of
whistleblowing and the prevention of tax
evasion.
Why these methods are effective
Dialogue with our regular suppliers allows
us to understand emerging issues and
challenges, and to respond accordingly.
Achievements for 2021 and priorities
for 2022
With the acquisition of Apollo, we have
again widened our pool of relationships
with professionals working on our
expanding development pipeline. We have
made headway on work to improve our
processes for tracking and auditing
compliance by our suppliers, and launched
work to map the potential social value
which can be created by our supplier
network to support our SixBySix pledges;
conversations have already begun on
potential ideas and opportunities with
some of our major suppliers. In the 21–22
year we plan to pilot a quarterly ezine for
our suppliers to increase our engagement
with them on growing the social impact we
can have together.
Getting the work done with minimal
disruption
Our suppliers are often completing essential
maintenance, refurbishments, major
reconfigurations and construction work for
our buildings alongside the busy day-to-day
of primary care continues at pace. We work
with our customers and suppliers to plan
jobs carefully, minimising disruption for
patients and staff. During the year we
helped our development contractors and
other suppliers by accelerating payment
dates to help with cash flow during the
pandemic, and prompt payment of
suppliers is a value that will feed into the
Supply Chain Framework work under
SixBySix.
We are delighted with the progress
on site to date. It’s not an easy
development, which involves the
refurbishment of a building of
significant local interest together
with a large contemporary extension.
It is located in a very busy town
centre with limited working area and
Conamar have created absolutely
minimal disruption.”
Dolphin House Surgery, Ware
on the work of our contractor to create their new primary
care building to serve more than 14,500 local people.
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Assura plc Annual Report and Accounts 2021
Strategic report
Governance
40apprenticeship
weeks delivered
by our development
at Cinderford
Assura plc Annual Report and Accounts 2021
47
Financial statementsAdditional information OUR IMPACT
CONTINUED
84%of team members took
part in our first diversity
and inclusion survey
Employee gender diversity
Board of Directors
Senior management
(excluding executives)
Employees
Total no. of employees
(including NEDs)
Female
3
Male
3
3
37
43
4
31
38
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Assura plc Annual Report and Accounts 2021
OUR PEOPLE
15%
of employees are living with a health
problem or disability
80%
of men in our business have kept mental
health symptoms to themselves, compared
to 42% of women
My mentee is going through a huge
life change at the moment and her
courage and resilience to deal with
that in both her personal and
professional life has me looking at
some things in my own life very
differently. It’s also great to hear how
the business she works for is
supporting her in the ways which are
right for her – it’s helping me look at
my emotional intelligence as a
manager and how I need to think
about the individual every time.”
Assura mentor
Mission INCLUDE
How we engage
Our annual team survey and adhoc polls,
our team representatives group, weekly
virtual team town hall meetings, a monthly
team ezine, departmental team meetings,
virtual social events and team away days,
virtual health and wellbeing sessions,
coaching and training and individual
wellbeing calls during lockdown have all
been important routes for our engagement
with our team this year. The Board has
joined a number of our social events,
recorded personal messages of
encouragement to the team during some of
the toughest parts of lockdown and our
designated team NED, Louise Fowler, has
held regular sessions with our team
representatives group, The Voice, to
feedback ideas and concerns. Our culture
reflects the values of being genuine,
innovation, collaboration, expertise and
passion which were chosen by the team as
the things they see as important at Assura;
we engage to understand how our people
are feeling about change and future plans,
and to support them to embrace these.
Why these methods are effective
We seek regular feedback from the team
representatives group, the Voice, to ensure
we are engaging in ways which work for
our people, understand which methods are
effective and which need reviewing.
Achievements for 2021 and priorities
for 2022
Growing engagement
The team participated in a pulse employee
opinion survey with Best Companies and
responses indicated an increase in levels of
employee engagement from ‘very good’
during 2019 to ‘outstanding’ during 2020.
Areas of continued focus are team
wellbeing and internal communication
which we have kept in sharp focus
throughout the year, creating as many
opportunities as we can to keep a fully-
remote team connected and healthy with
virtual mindfulness, yoga, HIT and fitness
sessions open to all every week, a guest
speaker session on resilience, team ‘away’
time and social events including an online
‘Assura Big Day In’, a virtual Christmas party
complete with yule log decorating and
wine tasting, an afternoon tea with our
NEDs and the ever-popular Friday quiz.
Diversity and inclusion
This has been an important year for our
work to create a more inclusive business:
we carried out our first cross-team survey
on diversity and inclusion, highlighting ways
in which our team wants to see faster
progress. As a result, in the coming year we
will be focusing on further building a culture
of gender equality and championing female
representation in more senior roles, and to
grow our understanding of and diversity of
support for mental health challenges at work.
This year also saw every executive committee
member and a cross section of employees
from the business joining the award-winning
Mission INCLUDE mentoring programme as
both mentors and mentees for peers in
other businesses. We also joined the national
Disability Confident employer scheme and
were named one of joint top businesses in
the European Women On Boards Gender
Equality Index, placing eleventh in the
Hampton-Alexander league table.
Developing talent
Core to our long-term success as an
organisation is the development of our
current and future talent. We increased our
team to 81 people during the year, offering
further graduate internships to real estate
students from Liverpool John Moores
University and taking on three more
apprentices in our finance, IT and HR teams.
A number of internal promotions offered
new opportunities to existing team
members, and we built our learning and
development offering with a particular
focus on autonomy and empowerment in
our manager’s group. We have listened to
staff ideas and feedback on the need for
flexibility to work around the pressures of
home schooling, isolation and poor mental
wellbeing during national lockdowns,
offering alternative working patterns where
needed, encouraging a ‘no internal
meetings’ day once a week and
implementing recommendations from our
survey with the MIND Wellbeing Index.
A brew and a bake with the
#TeamAssura Board
Our usual dinner with the Board for the
whole team couldn’t be held in person this
year – so we ran a virtual afternoon tea with
every member of the business and the full
Board taking part. Boxes of scones, cake
and tea were sent to everyone’s homes
around the country and we joined together
online for discussions on lockdown
memories and our hopes for 2021. The
format allowed every team member the
chance to chat with our NEDs and the NEDs
to get a deep sense of the team’s
experiences of both personal and
professional challenges during 2020.
Assura plc Annual Report and Accounts 2021
49
Strategic reportGovernanceFinancial statementsAdditional information OUR IMPACT
CONTINUED
OUR INVESTORS AND LENDERS
128
investor meetings held during the year
67%
of the share register seen
12
equity analysts currently cover Assura
(up from nine at March 2021)
We’ve focused on expanding the
number of channels through
which we are available for
investors; conferences, virtual
property tours, platforms such
as InvestorMeetCompany and
of course, video meetings."
David Purcell
Head of Investor Relations
How we engage
As detailed in the Governance section on
page 81, the Board is committed to
maintaining an appropriate level of
communication with shareholders. The
Executive Directors and Head of Investor
Relations are available throughout the year
for investor meetings, and work with
advisors to give investors the opportunity
to engage with management at a range of
forums, the most important being the year
end and interim results presentations, to
which our lenders are also invited. Direct
feedback is sought from investors from
every meeting we hold during the year,
through our shareholder engagement
platform (Ingage) and we also signed up to
Investor Meet Company, a platform that
aims to give retail investors appropriate
access to management to ask questions
and provide feedback.
Relationships with our diverse pool of
lenders are also maintained through regular
interaction, primarily with the CFO, as well
as our website and financial documents.
Why these methods are effective
Regular dialogue with our investors and
lenders allows us to respond to questions,
seek feedback and test ideas with our
financial stakeholders.
Achievements for 2021 and priorities
for 2022
This year saw us offer our first virtual site
tour, giving investors the opportunity to
hear from the CEO, CFO and team members
working on some of our latest completed
developments across the country. Fly-
through footage and interviews with
primary care teams working in our new
buildings for Cinderford in Gloucestershire
and Netherfield in Nottinghamshire offered
an insight into the bespoke design
processes and social impact created
through both new schemes and allowed us
to highlight our next steps and priorities in
these areas.
The launch of our Social Finance Framework
and our first Social Bond gave us
opportunities for greater engagement with
our investors on our social impact plans and
priorities.
In 2022, our priorities are maintaining our
extensive engagement activities – ensuring
we continue to identify new potential
investors, particularly through highlighting
our positive social impact to ESG-focused
investors and leveraging our relationships
with the 12 equity analysts that currently
cover Assura. We look forward to
conducting physical meetings again,
following the entire 2021 investor relations
activity having been completed virtually,
including plans for additional events giving
further detailed information on our
sustainability plans and a tour of one of our
completed developments.
Key materials and contact information
Our website (www.assuraplc.com) includes
all regulatory announcements, financial
results, news stories and additional
background on our strategy and policies.
The materials are supplemented by videos
giving further information.
Interaction with our shareholders and
equity analysts is managed by our Head of
Investor Relations.
50
Assura plc Annual Report and Accounts 2021
Strategic report
Governance
Activities in 2021 -
all activities completed virtually
April
£185m equity raise
June
Morgan Stanley European
Property Conference
September
– Chairman meetings with
larger shareholders
– Virtual property tour
– £300m Social Bond
launched
– Unsecured bond
investor call
November
– Interim results
presentation
– Results roadshow
February
Non-holder targeting
roadshow
May
– Year end results
presentation
– Results roadshow
– RCF extended to
November 2024
– EPRA Corporate
Access Day
July
– Trading statement
– AGM
– North American
focused roadshow
October
Trading statement
January
– Trading statement
– Barclays European
Real Estate
Conference
– Private wealth
manager focused
roadshow
March
– JP Morgan ESG
Conference
– Retail investor
presentation via
InvestorMeetCompany
platform
– Bank of America EMEA
Real Estate Conference
Assura plc Annual Report and Accounts 2021
51
Financial statementsAdditional information OUR ENVIRONMENTAL
IMPACT
We continue to advance our environmental progress, for the benefit of
all stakeholders, with ambitious targets for both our existing portfolio and
new developments, all as part of our vision for healthcare spaces that are
good for the environment.
Our environmental strategy is fundamental
to our whole offering:
– Ensuring our developments meet the
needs of our customers: the GPs, the NHS
and the communities they serve;
– Helping our customers reduce their
energy bills; and
– Driving value in our portfolio through
sustainability linked asset enhancements
giving us extended leases or increased
rent.
But we also want to go a lot further. Our
goal is to produce the first medical centre
in the UK that is net zero carbon for both
construction and operation, and then make
that standard for all of our developments
by 2026.
2021 key actions and progress
– Newly appointed Head of Sustainability
– All developments completed hit BREEAM
targets of “Very Good" or better
– EPC certifications finalised and
improvements costed
– Energy purchase contract retendered and
now 100% renewably sourced
– Updated green lease clauses to advance
expectations of customers
– Net zero carbon development pilot
projects identified.
2022 priorities
– Delivering on site developments to
achieve BREEAM targets
– Advancing pilot net zero carbon
development design and approval
process, aiming to have pilot on site
in 2022.
– Rolling out plans to commence EPC
improvement programme amongst
existing portfolio
– Advancing plans in respect of metering
and customer energy usage reduction
amongst existing portfolio
– Developing plans to ensure compliance
with TCFD from March 2022 (see page 55).
Minimising the environmental impact of
our existing properties
As a landlord of a large portfolio, our ability
to influence the energy consumed in our
buildings is through improving the fabric of
the buildings and specifically more efficient
heating, lighting and ventilation systems for
our customers. That is why we have created
our SixBySix pledges targeting an
improvement to the EPC ratings of the
portfolio – aiming for all properties to have
a rating of B by 2026.
Our actions during the year have been to
complete the current assessment of our
portfolio and cost the plans for the
improvements. Our initial assessment
indicates we will need to spend £15–20
million over the next five years to achieve
our target and will aim for this spend to be
linked to a lease regear or asset
enhancement project.
In respect of 47 properties (7.7% of
portfolio), we purchase utilities on behalf of
the customers which are recharged, usually
through a service charge. In these buildings,
energy consumption is at the discretion of
the customer but we are generally in more
frequent discussion with these customers.
During the year, we have tendered our
energy purchase contract and mandated
that energy bought is 100% renewably
sourced.
One of our SixBySix pledges is to drive
innovative energy solutions for customers
through the use of appropriate technology.
During the year we plan to launch a pilot
scheme in the buildings for which we
currently procure energy to gather detailed
data on energy consumption and building
utilisation with the aim of using this analysis
to help our customers to use the building
more efficiently and reduce utility bills.
During the year, we completed four asset
enhancement projects, all of which
included an improvement in the energy
performance of the building, generally
through an upgrade of the lighting to LEDs.
All of these 4 buildings are now at EPC B or
better. All of our pipeline asset
enhancement schemes include measures to
improve sustainability at the same time as
the capital works.
Our standard leases include green lease
clauses that allow us to request data on
energy usage, to gain access to make
energy performance improvements and to
prevent customer works on our buildings
that negatively impact the energy
performance. We continue to review our
standard lease clauses and whether further
advancements would be appropriate for
our customers.
The following table shows the proportion of
certificates in our portfolio in each EPC
band, weighted by building area.
EPC band
A/A+
B
C
D
E
% of certificates
6%
24%
49%
17%
4%
For the majority of our portfolio, customers
purchase energy directly from the utility
companies. For these properties, our
portfolio management team meets
regularly with the customers to understand
their needs, concerns around energy usage
and working with them to identify energy
saving opportunities.
Minimising the environmental impact of
our developments
As a developer of buildings, we are focused
on ensuring our new buildings are designed
to be right at the cutting edge of
sustainability within our sector, and we
pride ourselves on innovating to advance
our environmental performance. As
mentioned above, our SixBySix pledge is to
advance our developments to be net zero
carbon for construction and operation and
to measure the whole life carbon impact of
the buildings we develop. We continue to
measure our current developments by
reference to BREEAM – read more about
how we do this in our Sustainable
Development section opposite.
During the year we completed 12
developments which all hit our minimum
EPC target of B, with six achieving an A.
52
Assura plc Annual Report and Accounts 2021
Sustainable development
The environmental impact of a new building
is something that we consider from the
initial design phase and maintain focus on
throughout the project. We measure this
against BREEAM for which we target a score
of “Very Good” or “Excellent” on all our
in-house developments.
BREEAM is a holistic methodology for
assessing the environmental, social and
economic sustainability performance of a
building. It measures sustainability in a
range of categories (such as energy,
innovation, materials, pollution, waste and
water), assessing factors such as carbon
emissions reduction, design durability,
adaptation to climate change and
protection of ecology and biodiversity.
In practice, this means that we need to
select the materials in the right way (BRE
produces a Green Guide to Specification
from which materials are chosen), we
commission environmental and ecological
reports from which the actions are
incorporated into our plans, and we work
with our customers to ensure that the
energy systems installed are both
environmentally friendly and cost effective.
All of this needs to be completed to a high
standard and is independently assessed.
Of the 10 eligible developments completed
during the year, seven achieved BREEAM
ratings of Excellent and three achieved Very
Good, although three are awaiting the final
certification. All of the 16 currently on site
developments are on track to achieve at
least BREEAM Very Good with 85% on track
for Excellent.
Signatory of the World Building
Council Net Zero Carbon
Buildings Commitment
For 2021, in light of the pandemic, Scope 1
and Scope 2 figures include an estimate of
the energy consumed by employees for
homeworking which we calculated in
accordance with a whitepaper published
by EcoAct (https://info.eco-act.com/en/
homeworking-emissions-whitepaper-2020).
We consider the most appropriate intensity
factor to be Mt CO2e per employee. During
the year the intensity has reduced, mainly as
a result of reduced business travel during
the pandemic – in previous years business
travel has represented over 75% of our
greenhouse gas emissions. However, the
reduced travel has been offset by estimated
gas used by homeworkers – our usual office
operations do not use gas normally, and
hence the Scope 1 usage in kWh was nil in
the prior year.
100% of Scope 1 and 2 emissions relate to
consumption in the UK and as we re-
evaluate how we work post-pandemic we
are reviewing how we can reduce energy
consumed by the team.
See the Sustainability and Corporate
Governance policies section of our website
for detailed energy disclosures in respect of
our portfolio: www.assuraplc.com
2021
2020
Change
52.3
0.68
256,615
15.7
0.20
67,524
68.1
0.88
324,140
4,210
62.2
0.94
–
21.7
0.33
84,869
83.9
1.27
84,869
1,286
(16%)
(28%)
n/a
(27%)
(38%)
(20%)
(19%)
(30%)
282%
227%
Minimising the environmental impact of
our employees
The greenhouse gas emission data below
relates to the environmental impact of
Assura employees – specifically electricity
consumed at the head office and fuel usage
from travelling to visit our properties.
During the past year, our energy usage and
working patterns have changed significantly
and we would expect our travel to reduce
in future years relative to pre-pandemic
levels, with greater time spent working from
home and more meetings hosted virtually
where possible.
Environmental policy and greenhouse
gas emissions
We have in place an environmental policy
(available in the Corporate Governance
section of our website) which is reviewed
on an annual basis by the Board. The policy
sets out our commitment we make in
addressing environmental risks in the work
we carry out, working with suppliers and
partners to promote environmentally
friendly behaviours, and maintaining our ISO
14001 Environmental Management System
certification.
The table below shows the Scope 1 and
Scope 2 emissions directly within the
operational control of the Group. Scope 1
relates to business vehicles and estimated
gas used by homeworkers for heating, and
Scope 2 relates to grid electricity
consumed at the Company head office,
both of which have been converted using
government published conversion factors.
Scope 1
Mt CO2e
Mt CO2e per employee
kWh
Scope 2
Mt CO2e
Mt CO2e per employee
kWh
Total (Scope 1 plus Scope 2)
Mt CO2e
Mt CO2e per employee
kWh
kWh per employee
Assura plc Annual Report and Accounts 2021
53
Strategic reportGovernanceFinancial statementsAdditional information OUR ENVIRONMENTAL IMPACT
CONTINUED
Case Study
Ware Primary Care Centre
In Hertfordshire, our sustainable design
solution for the nearby, relocating GP
practices involves the extension and
refurbishment of Meade House, a building
that was previously used as a police, fire
and Citizens Advice hub. The badly needed
additional space for the local Dolphin House
Surgery and The Maltings practices will
serve over 14,500 patients. The building is
on track for BREEAM Very Good with plans
for the site to include on site renewable
energy (PV panels and air source heat
pumps) and an efficient waste management
plan designed for all waste to be either
recycled or diverted from landfill.
23%
forecast reduction in carbon emissions at
Ware through use of PV panels and air
source heat pump
100%
of waste from Ware either recycled or
diverted from landfill as part of sustainable
development plan
54
Assura plc Annual Report and Accounts 2021
Case Study
Health and
Wellbeing Centre
Bournville Village Trust
Our newly completed development at
Bournville is on track to achieve a BREEAM
rating of Excellent – with all measures
designed to reduce costs for the customers
and minimise the environmental impact on
the surrounding area. The design
incorporates eight electric car charging
points for building users and the designs
result in a 23% reduction in energy usage
versus a notional medical centre.
8
electric car charging points installed for
new building users
100%
LED lighting used throughout building.
TASK FORCE ON CLIMATE-RELATED
FINANCIAL DISCLOSURES
The Board recognises the significance of combatting climate change and the
role that Assura must play in relation to the buildings owned and operations.
This is reflected in the social impact strategy, SixBySix, incorporating plans to
minimise our impact on the environment.
Targets & Metrics
In our first year of reporting under TCFD, we
have identified the risks and opportunities
that we consider material to our business
and strategy. Over the coming year we will
assess which specific targets and metrics
we consider to be most relevant for our
business in direct response to climate-
related risks and opportunities.
We would expect this to include a specific,
science-based target for reduction of our
Scope 1 and Scope 2 emissions (disclosure
of which can be found on page 53), and be
closely aligned with our SixBySix targets
which are already aimed at minimising our
environmental impact. The SixBySix targets
are incorporated into the Executive
Remuneration targets as detailed on pages
97 to 98.
Below, we have set out for the first-time
disclosures against the requirements of Task
Force on Climate-related Financial
Disclosures (“TCFD”).
Governance
The Board review climate-related risks and
opportunities within our existing reporting
and governance structure. This is typically
within relevant update papers presented to
the Board at each meeting from relevant
members of the Executive Committee, and
through Risk Committee reporting into the
Audit Committee.
At each Board meeting, the Board receive
an update of progress against SixbySix,
which includes pledges to minimise our
environmental impact, and from the newly
appointed Head of Sustainability.
Overall responsibility for progress against
environmental targets rests with the CEO,
Jonathan Murphy. Efforts are led by the
Head of Sustainability, who is a member of
the Executive Committee, and the Social
Impact Committee, which monitors
progress against the specific SixBySix
targets and regularly reports into the
Executive Committee.
Strategy
During the year we completed a review of
the climate-related risks and opportunities,
considering the short (< 1 year), medium (1–5
years) and long-term (> 5 years) time
horizons, and incorporating consideration
of both transitional and physical climate
risks.
This initial review has been fed into the Risk
Committee and an action plan for the
course of 2021/22 has been agreed.
Below we have included examples of the
risks and opportunities that could have a
material impact on the business.
In line with the requirement for full reporting
against TCFD for the March 2022 annual
report, we will conduct a review over the
coming year of the resilience of our strategy
taking into consideration different climate-
related scenarios.
Risk Management
Our assessment of climate-related risks
follows the existing processes of the Risk
Committee, as detailed on pages 56 to 61,
including escalation to the Audit Committee
as appropriate and decisions of assessing
the size and materiality of each risk. The
review highlighted in the Strategy section
was reported into the Risk Committee in
March.
Examples of risks
Regulatory requirements for minimum energy efficiency.
Risks to buildings from climate-related events such as flooding and
temperature rise affecting water supply temperature.
Example of opportunity
Enhanced reputation with GP occupiers and the NHS through
better, more energy efficient buildings could lead to more
development opportunities and higher rents.
Impact on business strategy
and financial planning
Energy performance certificate for every building obtained and
action plans created to improve where necessary.
Financial impact would be through lost revenue or negative
valuation movement were a building not able to be re-let.
Individual building strategies incorporate risks for each property.
Financial impact would be through additional insurance
requirements or property maintenance required to meet water
supply obligations.
Impact on business strategy
and financial planning
We continue to ensure our buildings provide the latest technology
and innovation for our customers. Being at the forefront will ensure
our customers continue to demand our spaces. Financial impact
would be through portfolio growth and increased rent roll.
Assura plc Annual Report and Accounts 2021
55
Strategic reportGovernanceFinancial statementsAdditional information PRINCIPAL RISKS AND
UNCERTAINTIES
Risk management is the responsibility of the Board, which sets the risk appetite and
tolerances for the business, determines the nature and extent of the principal risks the
Group is willing to take in achieving its strategic objectives and ensures that risk
management and internal controls are embedded in the Group’s operations.
Risk appetite
The Group’s risk appetite is to target above
market, risk adjusted returns in our chosen
healthcare real estate assets, by developing
assets ourselves (as opposed to purchasing
only completed developments) and using
debt to gear returns in line with our LTV
policy. However, we seek to avoid, trap or
heavily mitigate risks in all other areas of the
business, including:
– property event risk – by full insurance
cover, full due diligence and committed
funds for acquisitions
– development risk – by only undertaking
developments where there is already an
agreement for lease in place with fixed
price or capped price build contracts
– control risk – by clear management
controls and Board reporting
– gearing risk – we maintain an appropriate
range of lenders and debt maturities with
variable rate debt being restricted to an
appropriate level
– political risk – which could limit future
growth but does not affect the current
business assets.
Our approach to risk management
The Risk Committee includes staff from all
areas of the business; together with the
CEO and CFO it met five times in the year,
to review the risk register, identify emerging
risks and conduct “deep dives” into
individual risks to ensure that sound
assurance is in place. KPMG, the Group’s
internal auditor attended all Risk Committee
meetings in the year.
The regular business of the meetings
included:
– a brainstorm on emerging risks,
– an IT update with a particular focus on
increased cyber risk facing staff working
from home (addressed through increased
IT penetration testing and cyber
awareness training), extra capacity
requirements for remote working
(including server access, extra portable
hardware and increased system
functionality) and our reliance on an
external IT provider with increased
demand from its customers (no issues
arose),
– health and safety compliance (including
on asbestos and legionella),
– a review of potential occupier defaults
where there is a possibility of GPs revoking
their GMS contract or where GPs on the
lease are no longer practising (there have
been no GP occupier defaults in the year)
or where non-GP occupiers are facing
financial difficulties (a small number of rent
deferment plans have been agreed)
– an update on complaints (none).
Internal audit in the year focused on
developments, financial close and
reporting, IT general controls and internal
audit follow up and further detail on their
findings is set out in the Audit Committee
report on page 85.
The Risk Committee provides copies of the
Risk Committee Minutes to the Audit
Committee and twice yearly provides a
detailed report on its activity to the Audit
Committee. The Audit Committee regularly
monitors risk management and internal
control systems and reports to the Board.
The Board has carried out a robust
assessment of the principal risks facing the
business. These are the risks which would
threaten its business model, future
performance, solvency or liquidity and are
summarised on pages 58 to 61.
The Board has also considered which of the
Group’s strategic objectives may be
affected by these risks and its findings are
set out in the table on pages 22 to 25.
Brexit, Climate and Cyber
As during the previous financial year, the
Risk Committee, the Audit Committee and
the Board considered the impact of Brexit
on the business and again concluded, on
the basis that the Group is a wholly
UK-based operation with no reliance on
exports and limited reliance on imports for
building products, that Brexit did not, in
itself, constitute a significant risk to the
business. The review again examined a
number of potential areas where business
operations could be impacted, including
property valuations, interest rates and the
supply chain, with the conclusion being that
the impact from the specific risk factor was
not material.
Cyber security was also kept under close
review recognising the heightened risk of
cyber-attacks on staff working remotely.
Penetration testing and cyber awareness
training were increased in the year, firewalls
were upgraded, and the Group signed up
to its second year of a managed assurance
service to cover email phishing, external
vulnerability scanning, online security
awareness training and cyber health
check-up. The Group is close to achieving
Cyber Essentials Plus Certification which it
hopes to secure in the Autumn following an
upgrade to its finance system. Given this
increased protection it was considered that
an appropriate level of risk mitigation was in
place. All significant recommendations from
the previous year’s internal audit report on
the cyber security report were
implemented in the year.
Climate risks were considered in relation to
the EPC ratings of existing properties
(specifically the requirement for a minimum
EPC of B for all properties being let by 2030.
EPC surveys were commissioned for 288
properties which did not have a rating and
further details of the Company’s activities to
identify and improve these ratings are set
out on page 52. Climate risk is not currently
consider a principal risk of the Group, but this
will be kept under review. In addition, our
TCFD disclosures can be found on page 55.
While staff have been working remotely, the
culture of working collaboratively, freedom
to raise concerns and all departments being
represented on the risk committee means,
risks are quickly and easily identified.
COVID-19
Emerging risks were considered by the
Committee with many of these centred
around the effects of COVID-19, including:
– changing working practices and building
requirements for healthcare providers
including for the vaccination programme,
– ongoing pressures faced by staff and real
and perceived risks in returning to the
workplace,
– financial pressures on pharmacy occupiers
and other occupiers impacted by reduced
footfall,
– financial pressures facing suppliers and
contractors,
– delays to planning approvals and
approvals of new leases due to staff
shortages in the planning departments
and district valuers offices.
The business departments reviewed the
COVID-19 risk register and updated it for
lessons learnt. The register is kept under
constant review.
The Board held four extra Board meetings
in the year with the specific aim of keeping
abreast of the impact of COVID-19 on the
business, particularly on staff and their
wellbeing. You can read more about our
response to the pandemic on page 13.
56
Assura plc Annual Report and Accounts 2021
RISK MANAGEMENT FRAMEWORK
The Board has established a clear risk management framework that defines responsibilities for
risk management across the Group. The framework provides an effective process for the
identification, assessment, monitoring, and reporting of risk, with a strategic top-down approach
to risk management and a bottom-up operational management of risk by the business. This
framework is regularly reviewed by the Board to ensure its effectiveness and has been in place
for the financial year ended 31 March 2021 and to the date of approval of this report.
Top-down
Strategic Risk Management
BOARD AND AUDIT COMMITTEE
Sets strategic objectives and the Group’s risk
appetite to optimise delivery of Group
strategy, whilst reviewing external
environment to assess emerging risk.
Oversees management of risk management
and internal control systems and assesses
their effectiveness.
Reports principal risks.
EXECUTIVE COMMITTEE
Executes the Group’s strategy and the
day-to-day management of the business,
considering the risk appetite and the impact
of key business risks.
Monitors key risk indicators.
Ensures risk management strategies are in
place to manage risk in line with the Board’s
expectations.
Considers completeness of risk register and
adequacy of mitigation.
RISK COMMITTEE
Reviews adequacy of risk register and risk
mitigation by reference to the Group’s risk
appetite.
Considers and evaluates emerging risks and
their impact on strategy.
Identifies, evaluates, prioritises, mitigates
and monitors operational risks including
emerging risks and records them in the risk
register. Carries out deep dives to review
the effective management of risks.
Reports to the Executive Committee and the
Audit Committee on principal and emerging
risks and movement in these risks.
BUSINESS UNITS AND ALL EMPLOYEES
Ensures that risk is assessed and managed
effectively in their areas, through
engagement with the business, and by
establishing processes to identify, manage
and escalate changing or emerging risks.
Responsible for identifying risks in
performing their daily duties and acting to
limit the likelihood and impact of these risks
in line with expectations. Reports these risks
or changes in them to the Risk Committee or
its members.
Bottom-up
Operational Risk Management
Assura plc Annual Report and Accounts 2021
57
Strategic reportGovernanceFinancial statementsAdditional information PRINCIPAL RISKS AND UNCERTAINTIES
CONTINUED
h
g
H
i
i
m
u
d
e
M
1
7
6
5
2
3
10
4
11
8
9
t
c
a
p
m
I
w
o
L
Likelihood
Unlikely
Risk heat map
The gross risk exposure of the Company’s
principal risks are shown in the heat map
which plots likelihood of a risk occurring
against potential impact if it does, before
likelihood is reduced due to mitigation in
place.
Movements in principal risks
The Board has carried out a robust
assessment of the principal risks facing the
business. These are the risks which would
threaten its business model, future
performance, solvency or liquidity.
The gross risk exposure of the principal
risks is unchanged from last year.
Possible
Likely
The gross risk (prior to any mitigation) and
net risk (post mitigation) exposure of each
risk is set out in the table opposite which
does not list such risks in order of priority or
concern.
The Board considers that the top risks the
business faces are those with a net risk
rating of medium and above, being, change
in government policy, competitor threat,
reduction in investor demand and lack of
rental growth.
1 Changes to Government policy
2 Competitor threat
3 Reduction in investor demand
4 Failure to communicate
5 Reduction in availability of finance
6 Failure to maintain capital
structure and gearing
7 Building obsolescence
8 Development overspend
9 Staff dependency
10 Lack of rental growth
11 Occupier default
58
Assura plc Annual Report and Accounts 2021
2 Competitor threat
Risk
Increased competition from new
purchasers could lead to a reduction in
our ability to acquire new properties
and a general increase in prices across
the sector.
3 Reduction in
investor demand
Risk
Reduced investor demand for UK
primary care property could lead to a
falling share price and difficulty raising
equity to fund our strategic plans.
This could arise from:
– Changes in NHS policy
– Health of the UK economy
– Availability of finance
– Relative attractiveness of other
asset classes.
4 Failure to communicate
strategy
Risk
Failure to adequately communicate the
Company’s strategy and explain
performance may result in an
increased disconnect between
investors’ perceptions of value and
actual performance.
Avoid
We maintain our specialist knowledge,
team structure and strong brand
recognition with GPs, and focus
heavily on customer care.
Avoid
We are open in communicating our
strategy to investors and maintain an
LTV range which is acceptable to the
market.
Avoid
Strategic priorities are clearly
articulated in corporate
communications and the Group’s
performance is transparently reported.
Trap
The overall economy and its impact on
the Group’s operations are regularly
assessed and considered in reviewing
the Group’s strategy.
The Board receives regular reports on
investor relations and the development
of our share register.
Mitigate
The dividend yield and the underlying
strength of the cash flows supporting
it remain attractive relative to other
asset classes.
Comment
The fundamentals for our sector
remain very strong and the longevity
and security of our cash flows have
continued to generate strong investor
demand for our shares in the past year.
We communicate regularly with
investors and analysts.
Trap
The Board receives regular reports on
investor attitudes and the market.
The Group maintains close links with
its two brokers, which communicate
investor thoughts and concerns.
Mitigate
Investor communication, particularly
through face-to-face meetings,
remains a key priority.
Comment
128 meetings have been held during
the year.
STRATEGIC RISKS
1 Changes to
Government policy
Risk
Reduced funding for primary care
premises’ expenditure 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 occupiers.
Avoid
The Group proactively engages with
the Government over policy that could
impact the business, both directly and
through the Healthcare Committee of
the British Property Federation.
Trap
The Board monitors changes in
government policy and management
reports to the Board at every meeting.
Trap
The Board receives regular property
reports, highlighting where we have
lost to competitors and when new
entrants are identified. The market is
increasingly competitive, and every
proposed transaction is reviewed by
our Investment Committee to ensure
that the prospective returns are
adequate.
Mitigate
Active engagement with Government,
where appropriate.
Mitigate
Continuing use of our specialist
expertise.
Comment
There continues to be significant
progression of support for sustainable
healthcare infrastructure. The current
pandemic has highlighted the need for
delivery of appropriate health services
in a community setting, in quality,
fit-for-purpose premises. Proposed
revisions to the NHS premises costs
directions shows no material change
to the system of GPs rent
reimbursement.
Comment
A further significant increase in asset
prices increases the risk of these
returns not achieving our required level
and our rate of acquisitions slowing
significantly. However, we have made
substantial additions to our portfolio
during the year and we have
strengthened our development
pipeline and team through the
acquisition of Apollo.
While sector specialists and other low
risk income-focused funds continue to
drive competition and pricing in the
sector, our investment team maintains
a pipeline of suitable investment
opportunities.
Gross risk rating
M
Net risk rating
M
Risk owner
CEO and Head of Public Affairs
Gross risk rating
Gross risk rating
Gross risk rating
M
Net risk rating
M
Risk owner
Executive Board
M
Net risk rating
M
Risk owner
CEO and CFO
L
Net risk rating
L
Risk owner
CEO and CFO
Risk key
Low
L
Medium
M
High
H
Decreasing
No change
Increasing
New
N
Assura plc Annual Report and Accounts 2021
59
Strategic reportGovernanceFinancial statementsAdditional information
PRINCIPAL RISKS AND UNCERTAINTIES
CONTINUED
STRATEGIC RISKS
5 Reduction in availability
and/or increase in cost
of finance
Risk
A reduction in available financing could
adversely affect the Group’s ability to
source new funding and refinance
existing facilities.
This 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.
Avoid
The Group has a number of long-term
facilities which reduce these
refinancing risks, choosing to take fixed
interest rates where possible.
6 Failure to maintain capital
structure and gearing
7 Building obsolescence
Risk
Property valuations are inherently
uncertain and subject to significant
judgement.
A fall in property values or income
could adversely affect bank covenants.
Breach of covenants could lead to
forced asset disposals which could
reduce the Group’s net assets and
profitability.
Avoid
Valuations and yields are regularly
benchmarked against comparable
portfolios.
All financial forecasting, including for
new acquisitions, considers gearing
and covenant headroom.
Risk
The shift in service delivery towards
more digital consultations could
reduce overall demand for medical
centre buildings and could increase the
risk of our buildings being no longer fit
for purpose if we fail to implement
latest standards and guidance or equip
them for remote consultations.
Avoid
We work closely with our GPs to keep
our buildings up to current standards
and provide adaptable solutions for
healthcare access. We are working
through our partnerships to get a
better understanding of the digital
healthcare landscape, get their
(customer) feedback on who is good in
those different customer segments and
understand impact. We can through
these develop our response (which
could take many forms).
Trap
The Group regularly monitors and
manages its refinancing profile and
cash requirements.
Trap
The Group engages two external
valuers to review property valuations.
Trap
We carefully monitor the latest
standards and digital solutions.
The valuations are formally reviewed by
the Board twice a year.
Covenant headroom and gearing are
regularly monitored with reference to
possible valuation movements and
future expenditure.
The Board regularly reviews the capital
structure of the Group.
Mitigate
The Group actively engages with a
range of funders to ensure a breadth of
funder and maturity profiles.
Mitigate
It is possible to dispose of properties
to preserve covenants as the majority
of facilities are unsecured.
We continue to explore financing
options with other lenders as well as
maintaining strong relationships with
existing lenders.
Comment
Current market conditions due to
COVID-19 have meant that capital
markets are more volatile. However, we
maintain our strong cash flows and A-
rating from Fitch Ratings Ltd and in
September 2020 our oversubscribed
Social Bond raised £300 million at a
coupon of 1.5% allowing us to reduce
our RCF facility and repay our 4.75%
£110 million secured bond. As at the
year end net debt stood at £908 million
with undrawn facilities of £225 million
and cash of £46.6 million.
Comment
LTV is currently at 37% and this
provides covenant headroom. The
Group has recently disposed of 29
assets which were considered to have
lower growth prospects.
COVID-19 has presented challenges in
the ability to value properties at current
market prices in certain sectors.
We have completed a number of
transactions post year end, both
acquisitions and disposals, at values in
line with our current yields.
Mitigate
We seek to future proof our new
developments for digital readiness, for
example through provision of remote
consultation rooms where clinicians
can contact patients remotely in a
confidential manner. We are also
mitigating through a structured
approach to understanding the market
and developing our strategic response
to digital health.
Comment
Our surgery of the future concept
embraces digital health solutions which
we consider on each new
development. We adapted many GP
premises for COVID-safe working
during the pandemic. We see digital
health as an opportunity for our
business and there will be
opportunities to work with our partners
on digital first projects in FY21/22 to
create some innovative virtual and
physical solutions.
Gross risk rating
M
Net risk rating
L
Risk owner
CFO
Gross risk rating
M
Net risk rating
L
Risk owner
CFO
60
Assura plc Annual Report and Accounts 2021
Gross risk rating
N
M
Net risk rating
N
L
Risk owner
Head of Property
OPERATIONAL RISKS
8 Development
overspend
9 Staff dependency
10 Lack of rental
growth
11 Occupier
default
Risk
Development risk could adversely
impact the performance of the Group
as a result of cost overruns and delays
on new projects.
Risk
Failure to recruit, develop and retain
staff and Directors with the right skills
and experience may result in
underperformance.
Risk
Not all rent reviews are upwards only
and challenges to reviews and appeals
could lead to lack of rental growth.
Risk
Loss of income could arise from failing
practices handing back GP contracts and
losing the right to rent reimbursement or
from financial pressures on pharmacy and
other occupiers putting pressure on their
business and becoming unable to meet
their financial obligations under the lease.
Avoid
The strategic importance of a practice
to its location is a key investment
decision.
Avoid
The Group engages experienced third
parties to conduct rent reviews.
Avoid
The Group has strengthened its
development pipeline and team with
the acquisition of Apollo.
The Group’s policy is to engage in
developments that are substantially
pre-let with fixed price or capped
price build contracts.
Trap
A high level of due diligence is
undertaken before works commence
and detailed designs are negotiated to
prevent variations.
Regular reviews are conducted of
latest cost estimates as each project
progresses.
Mitigate
We remain confident in our ability to
manage this risk through our
experienced team of development
surveyors and reduce the potential risk
through the use of fixed price contracts
and the use of performance bonds.
A performance bond insures against
the risk of the main contractor
becoming insolvent.
Comment
The potential impact of this increased
slightly during the year as the number
of developments gathered momentum
and COVID-19 led to some delays on site.
Our future development programme is
more geared towards in-house
development (as opposed to forward
funding commitments) so increased
scrutiny on contract conditions and
pre-contract due diligence is required
in conjunction with our legal advisors.
The successful integration of the
experienced GPI and Apollo team
strengthens our development team
and our ability to manage risk on
development projects.
Avoid
Competitive salary and benefit
packages are aligned with appropriate
peer groups and periodically
benchmarked.
Professional development and training
are encouraged and costs are met by
the Group.
Succession plans are in place for each
department.
Long-term incentive plans span
three-year periods to encourage
retention of staff.
Trap
Succession planning, team structure
and skill sets are regularly evaluated
and planned.
The appraisal process acts as a
two-way discussion forum to identify
employee aspirations and any
dissatisfaction.
Any employee resignations are
reported at each Board meeting.
Mitigate
Continuing use of our specialist
expertise.
Comment
The average number of employees in
the year was 77 (2019: 66).
Seven members of staff are currently
working towards professional
qualifications.
We successfully recruited several
qualified members of staff in the year.
See pages 48 and 49 for details of
improvements to employee
engagement in the year including the
work of the designated workforce
Non-Executive Director and activities
to promote staff wellbeing during
lockdown.
Gross risk rating
M
Net risk rating
L
Risk owner
Head of Property
Gross risk rating
Gross risk rating
L
Net risk rating
L
Risk owner
Head of HR
M
Net risk rating
M
Risk owner
Head of Property
Trap
Leases are carefully reviewed on
acquisition and the Group does not
acquire any new leases with an
occupier right to trigger a downward
rent review.
Trap
We are in regular contact with GPs to
ensure there are no financial issues and
carefully monitor the financial health of
non GP occupiers, including
pharmacies.
Mitigate
The Group targets Retail Price Index
(“RPI”) reviews for new leases but if this
is unachievable then open market
upwards only reviews or open market
landlord trigger only reviews are
accepted.
Comment
The commission-driven agreements
with its two designated rent review
agents and internal improvements to
the rent review process with better
data capture and analysis continues to
drive rental growth, although there
have been some delays to rent review
approvals as a result of staff shortages
in DV departments.
Mitigate
We liaise with GPs and NHS
commissioning bodies to ensure
continuing provision of services from
that practice. GPs remain personally
liable as named individuals under the
lease. We review financial information
provided by the NHS on our occupiers
and as part of the acquisition due
diligence.
Comment
Approximately 30% of leases have
fixed uplifts or are linked to RPI.
Less than 5% of leases have occupier
ability to trigger a downward rent review.
There are very limited cases of GPs
handing back medical contracts and
we are in active discussion with the
occupiers and NHS commissioning
bodies in these cases.
Rent reimbursement for GP occupiers
has not been threatened by COVID-19.
We have agreed a small number of
payment plans for certain non-GP
occupiers. We continue to monitor
the situation and manage our
debtors carefully.
Gross risk rating
L
Net risk rating
L
Risk owner
Head of Property
Assura plc Annual Report and Accounts 2021
61
Strategic reportGovernanceFinancial statementsAdditional information
CFO REVIEW
Highlights for the year:
£2.45bn
Current portfolio
11.9 years
WAULT
£1.57bn
Total contracted rental income
37%
LTV
2.47%
Weighted average interest rate on debt
We are delighted
to report another
strong year of
growth, despite
the pandemic.”
Jayne Cottam
CFO
Development pipeline:
March 2020
£81m
on site cost of
15 schemes
£77m
12
schemes
completed
13
immediate pipeline cost of
18 schemes
schemes
moved on site
March 2021
£72m
on site cost of
16 schemes
£111m
immediate pipeline cost of
17 schemes
62
Assura plc Annual Report and Accounts 2021
We are delighted to have received
continued, strong support from our debt
and equity holders during the year; raising
£185 million of equity in April 2020,
extending our RCF to November 2024 and
successfully launching our debut £300
million Social Bond in September 2020.
Our deployment of these proceeds has
been ahead of our initial expectations, with
strong acquisition and development
activity.
Whilst our asset enhancement activity has
been a little slower than initially intended
due to the NHS rightly concentrating on
their heroic pandemic response and
vaccine roll out, we continue to report
positive performance on lease regears and
rent reviews.
Alternative Performance Measures
(“APMs”)
The financial performance for the period is
reported including a number of APMs
(financial measures not defined under IFRS).
We believe that including these alongside
IFRS measures provides additional
information to help understand the financial
performance for the period, in particular in
respect of EPRA performance measures
which are designed to aid comparability
across real estate companies. Explanations
to define why the APM is used and
calculations of the measures, with
reconciliations back to reported IFRS
measured normally in the Glossary, are
included where possible.
In particular, in the current period we have
disclosed an adjusted EPRA earnings
measure. This has been introduced to
exclude the one-off impact of the £2.5
million contribution to the Assura
Community Fund in the period, so as to
ensure readers of the accounts can
continue to understand the underlying,
recurring earnings of the property rental
business.
Portfolio as at 31 March 2021 £2,453.3
million (2020: £2,139.0 million)
Our business is based on our investment
portfolio of 609 properties (2020: 576).
This has a passing rent roll of £121.7 million
(2020: £108.9 million), 84% of which is
underpinned by the NHS. The WAULT is 11.9
years and we have a total contracted rent
roll of £1.57 billion (2020: £1.43 billion).
At 31 March 2021 our portfolio of completed
investment properties was valued at a total
of £2,414.7 million, including investment
properties held for sale of £14.3 million
(2020: £2,093.6 million and £20.3 million),
which produced a net initial yield (“NIY”) of
4.58% (2020: 4.68%). Taking account of
potential lettings of unoccupied space and
any uplift to current market rents on review,
our valuers assess the net equivalent yield
to be 4.81% (2020: 4.94%). Adjusting this
Royal Institution of Chartered Surveyors
(“RICS”) standard measure to reflect the
advanced payment of rents, the true
equivalent yield is 4.83% (2020: 4.96%).
These additions were at a combined total
cost of £298.6 million with a combined
passing rent of £13.3 million (yield on cost of
4.4%) and a WAULT of 18.8 years.
Our EPRA NIY, based on our passing rent roll
and latest annual direct property costs, was
4.55% (2020: 4.69%).
Net rental income
Valuation
movement
Total Property
Return
2021
£m
112.0
41.6
2020
£m
103.7
9.7
153.6
113.4
Expressed as a percentage of opening
investment property plus additions, Total
Property Return for the year was 6.3%
(2020: 5.3%). This can be split as 4.6% from
net rental income (2020: 4.9%) and 1.7%
from valuation movement (2020: 0.4%).
Our annualised Total Return over the five
years to 31 December 2020 as calculated by
MSCI was 8.1% compared with the MSCI All
Healthcare Benchmark of 8.2% over the
same period.
The net valuation gain in the year of £41.6
million reflects a 2.1% uplift on a like-for-like
basis net of movements relating to
properties acquired in the period. The
valuation gain is split equally between our
asset enhancement activities (due to both
lease regears and rent review uplifts) and
the 13 basis point movement in our
equivalent yield.
The NIY on our assets continues to
represent a substantial premium over both
the 10-year and 15-year UK gilts which
traded at 0.845% and 1.22% respectively at
31 March 2021 (2020: 0.35% and 0.59%
respectively).
Investment and development activity
We have invested significantly during the
period, with this expenditure split between
investments in completed properties,
developments, forward funding projects,
extensions and fit-out costs enabling vacant
space to be let as follows:
Acquisition of completed
medical centres
Developments/forward funding
arrangements
Capitalised interest
Investment properties – no
incremental lettable space
Total capital expenditure
2021
£m
228.9
56.9
1.9
4.6
292.3
We have completed 50 acquisitions and 12
developments during the year.
We continue to source properties that meet
our investment criteria for future acquisition.
The acquisition pipeline stands at £46
million, being opportunities that are
currently in solicitors’ hands and which we
would hope to complete within three to six
months, subject to satisfactory due
diligence.
During the year, we disposed of 29
properties where we believed there was
lower growth prospects than the rest of our
portfolio, generating proceeds of £26.2
million at a premium over book value of £0.9
million.
We continue to review our portfolio for any
indication that properties no longer meet
our investment criteria and as at the year
end have £14.3 million of investment
properties held for sale.
Of the 15 developments that were on site at
March 2020, 12 have completed in the year
and the remainder are due to complete
during the remainder of 2021.
The development team has continued to
have success in converting schemes from
the pipeline to live schemes, with 13
schemes moving on site during the year
meaning that 16 are on site at March 2021.
Of the 16 developments on site at 31 March
2021, nine are under forward funding
agreements and seven are in-house
developments. These have a combined
development cost of £72 million of which
we had spent £37 million as at the year end.
Our already strong in-house development
capabilities have been further boosted by
the acquisition of the pipeline and team of
primary care development Apollo in
February 2021. The acquisition added four
experienced development surveyors to our
team (which now stands at 11) and an initial
£50 million to our immediate and extended
pipelines.
In addition to the 16 developments currently
on site and including the addition of the
Apollo figures, we have an immediate
pipeline of 17 properties (estimated cost £111
million, which we would hope to be on site
within 12 months) and an extended pipeline
of 37 properties (estimated cost £222
million, appointed exclusive partner and
awaiting NHS approval).
We recorded a revaluation gain of £4.9
million in respect of investment property
under construction (2020: £1.3 million).
Assura plc Annual Report and Accounts 2021
63
Strategic reportGovernanceFinancial statementsAdditional information CFO REVIEW
CONTINUED
Portfolio management
Our rent roll grew by £12.8 million during the
year to £121.7 million.
The growth came from acquisitions (£10.2
million), development completions (£3.1
million) and portfolio management activity
including rent reviews (£1.1 million), offset by
the rent relating to disposals (£1.6 million).
During the year we successfully concluded
320 rent reviews (2020: 296 reviews) to
generate a weighted average annual rent
increase of 1.5% (2020: 1.8%) on those
properties, which is a figure that includes 74
reviews we chose not to instigate in the
year. These 320 reviews covered £36.6
million or 34% of our rent roll at the start of
the year and, on a like-for-like basis, the
absolute increase of £1.5 million is a 4.2%
increase on this rent. Our portfolio benefits
from a 33% weighting in fixed, RPI and other
uplifts which generated an average uplift of
2.0% during the period. The majority of our
portfolio is subject to open market reviews
and these have generated an average uplift
of 1.2% (2020: 1.2%) during the period.
Our total contracted rental income, which is
a function of current rent roll and unexpired
lease term on the existing portfolio and
on-site developments, has increased from
£1.43 billion at March 2020 to £1.57 billion at
March 2021, despite the passage of time.
We grow our total contracted rental
income through additions to the portfolio
and getting developments on site, but
increasingly our focus has been extending
the unexpired term on the leases on our
existing portfolio (“re-gears”).
The team has had success in delivering 31
re-gears in the period, covering £2.8 million
of rent roll and adding 15.5 years to the
WAULT for those particular leases (2020: 32
re-gears, £2.9 million of rent). We also have
terms agreed on a pipeline of 39 re-gears
covering a further £5.0 million of rent roll
and these are currently in legal hands.
We have secured 15 new tenancies with an
annual rent roll of £0.4 million and a pipeline
in legal hands of six new tenancies (rent £0.3
million). Our EPRA Vacancy Rate at March
2021 is 1.3% (2020: 1.6%).
We completed four asset enhancement
capital projects during the year (spend £1.2
million) and are currently on site with a
further four projects with a total capital
spend of £2.7 million. In total we have a
pipeline of 19 asset enhancement capital
projects we hope to complete in the next
two years. These have an estimated capital
spend of £15 million, additional rent of £0.9
million and improve the WAULT on those
properties.
Live developments and forward funding arrangements
Beaconsfield
Brighton
Broadway
Calne
Hackbridge
Hemel Hempstead
Kelsall
Leeds
London Colney
Newcastle
Portsmouth
Preston
Stourport
Sutton
Timperley
Ware
Estimated
completion date
Q1 22
Q1 23
Q3 21
Q2 22
Q3 21
Q1 22
Q4 21
Q3 21
Q3 21
Q3 21
Q1 22
Q3 21
Q4 21
Q1 22
Q2 21
Q2 21
Development
costs
£6.2m
£4.7m
£3.6m
£3.7m
£1.6m
£5.1m
£2.9m
£3.0m
£4.0m
£3.8m
£4.8m
£12.9m
£5.6m
£3.2m
£2.1m
£5.3m
Costs to date
£4.0m
£1.9m
£3.5m
£0.3m
£0.2m
£2.8m
£0.7m
£1.5m
£2.8m
£1.6m
£1.8m
£6.3m
£2.7m
£1.4m
£0.2m
£4.9m
Size
1,668 sq.m
948 sq.m
1,027 sq.m
813 sq.m
565 sq.m
997 sq.m
700 sq.m
680 sq.m
680 sq.m
1,212 sq.m
968 sq.m
1,894 sq.m
1,950 sq.m
664 sq.m
424 sq.m
1,191 sq.m
Our current rent roll is £121.7 million and, on
a proforma basis (i.e. assuming relevant
figures are added to the rent roll as it
stands), would increase to approximately
£145 million once the acquisition pipeline
and extended development pipeline are
completed plus anticipated rent reviews
and asset enhancements identified.
Financing
As we continue to grow through
acquisitions and developments, we are
delighted to have received support from
both the debt and equity markets.
In April 2020 we completed an equity
placing for £185 million.
In May 2020 we extended the term on our
RCF to November 2024. In October 2020
we took the option to reduce the facility
from £300 million to £225 million.
In September 2020 we successfully
launched a £300 million, 10-year Social Bond
which priced at a fixed interest rate of 1.5%.
This was launched alongside our Social
Finance Framework, which supports our
SixBySix social impact strategy, and the
proceeds are to be used for investment in
eligible acquisitions, developments and
refurbishment of publicly accessible primary
care and community healthcare centres.
In October 2020 we repaid in full our sole
remaining secured debt instrument, the
£110 million 4.75% secured bond which was
due to mature in December 2021. The early
repayment cost of £6.4 million has been
presented through the income statement as
Capital and Non-EPRA.
Administrative expenses
The Group analyses cost performance by
reference to our EPRA Cost Ratios
(including and excluding direct vacancy
costs) which were 15.5% and 14.5%
respectively (2020: 12.6% and 11.5%).
These ratios would reduce to 13.4% and
12.3% respectively excluding the impact of
the one-off contribution of £2.5 million to
the Assura Community Fund which was
announced as part of the equity raise in
April 2020.
Making a further adjustment to exclude the
direct and indirect costs of the
development team, the EPRA Cost Ratio
(including direct vacancy costs) for the year
is 11.9% (2020: 11.1%). All direct development
team costs are taken to the income
statement as opposed to an element being
capitalised within the cost of investment
property under construction.
We also measure our operating efficiency
as the ratio of administrative costs to the
average gross investment property value.
This ratio during the period equated to
0.48% (2020: 0.48%) and administrative
costs stood at £11.0 million (2020: £9.9
million) excluding the £2.5 million
contribution to the Assura Community
Fund.
64
Assura plc Annual Report and Accounts 2021
Financing statistics
Net debt (Note 22)
Weighted average
debt maturity
Weighted average
interest rate
% of debt at fixed/
capped rates
EBITDA to net
interest cover
Net debt to EBITDA
LTV (Note 22)
2021
2020
£906.6m £828.6m
8.0 years
6.8 years
2.47%
3.03%
100%
3.9x
9.3x
37%
91%
3.6x
8.9x
38%
Our LTV ratio currently stands at 37% and
will increase in the short term as we utilise
cash to fund the pipeline of acquisitions,
development and asset enhancement
opportunities. Our LTV policy allows us to
reach the range of 40% to 50% should the
need arise.
At 31 March 2021, 100% of our facilities are at
fixed interest rates, although this will
change as we draw on the RCF which is at a
variable rate. The weighted average debt
maturity is 8.0 years.
As at 31 March 2021, we had undrawn
facilities and cash totalling £271.6 million.
Details of the outstanding facilities and their
covenants are set out in Note 16.
Net finance costs presented through EPRA
earnings in the year amounted to £25.2
million (2020: £26.1 million), having increased
due to our additional borrowings funding
the growth in our portfolio.
Profit before tax
Profit before tax for the period was £108.3
million (2020: £78.9 million). As can be seen
below, adjusted EPRA earnings have
increased compared with the prior year and
we have also recorded an increased
valuation gain following our positive asset
enhancement activities and valuation yield
movement.
EPRA earnings
Net rental income
Administrative
expenses
Net finance costs
Share-based
payments and
taxation
EPRA earnings
Add back one-off
Assura Community
Fund contribution
Adjusted EPRA
earnings (exc. one-
off donation)
2021
£m
112.0
(13.5)
(25.2)
2020
£m
103.7
(9.9)
(26.1)
(0.5)
72.8
(0.2)
67.5
2.5
–
75.3
67.5
The movement in adjusted EPRA earnings
(exc. one-off donation) can be summarised
as follows:
The table below illustrates our cash flows
over the period:
Year ended 31 March 2020
Net rental income
Administrative expenses
Net finance costs
Share-based payments
Year ended 31 March 2021
£m
67.5
8.3
(1.1)
1.0
(0.3)
75.4
Adjusted EPRA earnings has grown 11.5% to
£75.4 million in the year to 31 March 2021
reflecting the property acquisitions and
developments completed as well as the
impact of our asset management activity
with rent reviews and new lettings. This has
been offset by increases in administrative
expenses and financing costs.
Earnings per share
The basic earnings per share (“EPS”) on
profit for the period was 4.2 pence (2020:
3.3 pence).
EPRA EPS, which excludes the net impact of
valuation movements and gains on disposal,
was 2.7 pence (2020: 2.8 pence). Excluding
the £2.5 million Assura Community Fund
contribution, adjusted EPRA EPS was 2.8
pence (2020: 2.8 pence).
Based on calculations completed in
accordance with IAS 33, share-based
payment schemes are currently expected
to be dilutive to EPS, with 1.6 million new
shares expected to be issued. The dilution
is not material as illustrated in the following
table:
EPS measure (pence)
Profit for year
EPRA
Adjusted EPRA (exc.
one-off donation)
Basic
4.2
2.7
2.8
Diluted
4.2
2.7
2.8
Dividends
Total dividends settled in the year to 31
March 2021 were £73.6 million or 2.82 pence
per share (2020: 2.76 pence per share). £11.7
million of this was satisfied through the
issuance of shares via scrip.
As a REIT with requirement to distribute
90% of taxable profits (Property Income
Distribution, “PID”), the Group expects to
pay out as dividends at least 90% of
recurring cash profits. Two of the four
dividends paid during the year were normal
dividends (non-PID), as a result of brought
forward tax losses and available capital
allowances. The April 2020 and October
2020 dividends were paid as a PID and
future dividends will be a mix of PID and
normal dividends as required.
Opening cash
Net cash flow from
operations
Dividends paid
Investment:
Property and other
acquisitions
Development
expenditure
Sale of properties
Financing:
Net proceeds from
equity issuance
Net borrowing
movement
Closing cash
2021
£m
18.5
77.4
(61.9)
2020
£m
18.3
66.3
(56.6)
(236.8)
(132.6)
(56.9)
26.2
(53.7)
20.1
181.7
98.4
46.6
–
156.7
18.5
Net cash flow from operations differs from
EPRA earnings due to movements in
working capital balances, but remains the
cash earned that is used to support
dividends paid.
The investment activity in the period has
been funded by the proceeds from the
April 2020 equity raise and the September
2020 Social Bond issuance.
Diluted EPRA NTA movement
Diluted EPRA NTA
at 31 March 2020
(Note 7)
EPRA earnings
Capital (revaluations
and capital gains
Dividends
Equity issuance
Other
Diluted EPRA NTA
at 31 March 2021
(Note 7)
Pence per
share
£m
1,301.9
72.8
42.5
(73.6)
185.2
1.6
53.9
2.7
1.5
(2.8)
1.9
0.0
1,530.2
57.2
Our Total Accounting Return per share for
the year ended 31 March 2021 is 11.4% of
which 2.82 pence per share (5.2%) has been
distributed to shareholders and 3.3 pence
per share (6.2%) is the movement on
EPRA NTA.
Jayne Cottam
CFO
17 May 2021
Assura plc Annual Report and Accounts 2021
65
Strategic reportGovernanceFinancial statementsAdditional information CFO REVIEW
CONTINUED
EPRA performance measures
The calculations below are in accordance with the EPRA Best Practice Recommendations published October 2019.
Summary table
EPRA EPS (p)
EPRA Cost Ratio (including direct vacancy costs) (%)
EPRA Cost Ratio (excluding direct vacancy costs) (%)
EPRA NRV (p)
EPRA NTA (p)
EPRA NDV (p)
EPRA NIY (%)
EPRA “topped-up” NIY (%)
EPRA Vacancy Rate (%)
2021
2.7
15.5
14.5
2021
63.2
57.2
56.0
4.55
4.56
1.3
2020
2.8
12.6
11.5
2020
59.6
53.9
52.6
4.69
4.73
1.6
EPRA EPS
2.7p
2020: 2.8p
EPRA NAV Metrics
EPRA NRV
63.2p
2020: 59.6p
EPRA NTA
57.2p
2020: 53.9p
EPRA NDV
56.0p
2020: 52.6p
Definition
Earnings from operational
activities.
Definitions
EPRA Net Reinstatement Value assumes entities never sell assets and aims to represent the value
required to rebuild the entity.
Purpose
A key measure of a
company’s underlying
operating results and an
indication of the extent to
which current dividend
payments are supported
by earnings.
The calculation of EPRA
EPS and diluted EPRA EPS
are shown in Note 6 to
the accounts.
EPRA Net Tangible Assets assumes that entities never buy and sell assets thereby crystallising
certain levels of unavoidable deferred tax.
EPRA Net Disposal Value represents the shareholders’ value under a disposal scenario, where
deferred tax, financial instruments and certain other adjustments are calculated to the full extent
of their liability, net of any resulting tax.
Purpose
The EPRA NAV set of metrics make adjustments to the NAV per the IFRS financial statements to
provide stakeholders with the most relevant information on the fair value of the assets and
liabilities of a real estate investment company, under different scenarios.
The calculations of EPRA NRV, EPRA NTA and EPRA NDV are shown in Note 7 to the accounts.
66
Assura plc Annual Report and Accounts 2021
EPRA NIY
4.55%
2020: 4.69%
EPRA “topped-up” NIY
4.56%
2020: 4.73%
EPRA Vacancy Rate
1.3%
2020: 1.6%
Definitions
EPRA NIY is annualised rental income based on the cash rents
passing at the balance sheet date, less non-recoverable
property operating expenses, divided by the market value of
the property, increased with (estimated) purchasers’ costs.
EPRA “topped-up” NIY – this measure incorporates an
adjustment to the EPRA NIY in respect of the expiration of
rent-free periods (or other unexpired lease incentives such as
discounted rent periods and step rents).
Purpose
A comparable measure for portfolio valuations, this measure
should make it easier for investors to judge for themselves
how the valuation compares with that of portfolios in other
listed companies.
Investment property
Less developments
Completed investment property
portfolio
Allowance for estimated purchasers’
costs
Gross up completed investment
property – B
Annualised cash passing rental income
Annualised property outgoings
Annualised net rents – A
Notional rent expiration of rent-free
periods or other incentives
Topped-up annualised rent – C
EPRA NIY – A/B (%)
EPRA “topped-up” NIY – C/B (%)
2021
£m
2,453.3
(45.0)
2020
£m
2,139.0
(57.5)
2,408.3
2,081.5
158.8
137.5
2,567.1
121.7
(5.0)
116.7
2,219.0
108.1
(4.1)
104.0
0.3
117.0
4.55
4.56
0.9
104.9
4.69
4.73
Definition
Estimated rental value (“ERV”) of vacant space divided by
ERV of the whole portfolio.
Purpose
A “pure” (%) measure of investment property space that is
vacant, based on ERV.
ERV of vacant space (£m)
ERV of completed property
portfolio (£m)
EPRA Vacancy Rate (%)
2021
£m
1.7
125.1
1.3
2020
£m
1.7
111.7
1.6
EPRA Cost Ratio (including
direct vacancy costs)
EPRA Cost Ratio (excluding
direct vacancy costs)
15.5%
2020: 12.6%
14.5%
2020: 11.5%
Definition
Administrative and operating costs (including and excluding
direct vacancy costs) divided by gross rental income. Note
that in the current year, no overhead was capitalised by the
Company (2020: £nil).
Purpose
A key measure to enable meaningful measurement of the
changes in a company’s operating costs.
Direct property costs
Administrative expenses
Share-based payment costs
Net service charge costs/fees
Exclude:
Ground rent costs
EPRA Costs (including direct vacancy
costs) – A
Direct vacancy costs
EPRA Costs (excluding direct vacancy
costs) – B
Gross rental income less ground rent
costs (per IFRS)
Gross rental income – C
EPRA Cost Ratio (including direct
vacancy costs) – A/C
EPRA Cost Ratio (excluding direct
vacancy costs) – B/C
2021
£m
5.0
13.5
0.5
(0.5)
2020
£m
4.1
9.9
0.2
(0.3)
(0.4)
(0.4)
18.1
(1.2)
16.9
116.6
116.6
13.5
(1.2)
12.3
107.4
107.4
15.5%
12.6%
14.5%
11.5%
Assura plc Annual Report and Accounts 2021
67
Strategic reportGovernanceFinancial statementsAdditional information COMPLIANCE STATEMENTS
Viability statement
In accordance with provision C.2.2 of the
UK Corporate Governance Code 2014, the
Board has conducted a review of the
Company’s current position and principal
risks to assess the Company’s longer-term
viability.
The Board believes the Company has
strong long-term prospects, being
well-positioned to address the need for
better primary health care buildings in the
UK and the Company culture placing
emphasis on long-term relationships and
market understanding.
The business model (see page 32) and
strategic priorities (see page 20) are
designed to identify, assess and meet the
evolving needs of our occupiers and other
stakeholders through the lifecycle of our
buildings, utilising our balance sheet
strength and capital discipline (as reflected
in our current rating of A- from Fitch Ratings
Limited).
In completing the assessment of viability,
the Board has considered the principal risks
of the Group, as set out on pages 56 to 61,
in developing sensitivities that have been
applied in aggregate to financial forecasts
covering the five-year assessment period.
Link to principal risks
Strategic risks –
competitor threat
and investor
demand
Financial risks –
increase in cost
of finance
Operational risks –
underperformance
of assets
Specific scenarios
modelled
Prolonged downturn
in property valuations
(75bps over two
years with no further
growth)
Increase in interest
rates (assumed 0.5%
increase in base rate
per annum)
Sustained absence
of rental growth
(assumed 0% open
market rental growth)
and increased risk
of occupier default
(assumed bad debt
at 3% of rent roll
per annum)
This assessment has not assumed any
significant changes to Government policy
with respect to NHS estates strategy or the
GP reimbursement model, or any specific
implications as a result of Brexit or the
current COVID-19 outbreak, all of which we
consider to have a low likelihood
(government policy) or low potential
impact (Brexit and COVID-19).
In addition, it has been assumed that debt
facilities can be refinanced as required in
normal market lending conditions. For
prudence, we have assumed that the
interest rates achieved are in excess of what
we have achieved in the current year.
In addition to surplus available cash of £46.6
million at 31 March 2021 (2020: £18.3 million),
the Group has undrawn facilities of £225
million at the balance sheet date, with
commitments as at year end of £40.2 million
(see Note 23).
Company forecasts are prepared using a
comprehensive financial model which
projects the income statement, balance
sheet, cash flows and key performance
indicators (including covenant compliance)
over the relevant timeframe. The model
allows various assumptions to be applied
and altered in respect of factors such as
level of investment, investment yield,
availability and cost of finance, rental
growth and potential movements in interest
rates and property valuations.
The Group has facilities from a number of
financial institutions, none of which are
repayable before November 2024.
The Group’s primary care property
developments in progress are all
substantially pre-let.
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.
A five-year period is considered appropriate
for this review as this corresponds with the
Company’s strategic planning timeframe. In
addition, the long-term nature of leases and
debt facilities support an assessment over
this period.
The Group’s properties are substantially let
with rent paid or reimbursed by the NHS
and they benefit from a WAULT of 11.9 years.
They are diverse both geographically and
by lot size and therefore represent excellent
security.
The forecasts prepared (including
application of the specific scenarios
detailed above in aggregate) showed that
the business remained viable thoughout the
forecast period. In addition, a reverse stress
test was completed to consider by how
much valuations would need to fall (30%)
and how much rental income would need
to be removed (65%) for covenants to be
breached.
The Group’s financial forecasts (including
the financial models prepared in relation to
the viability statement) 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.
Based on this consideration of principal risks
and the forecasting exercise completed,
the Board has a reasonable expectation that
the Company will be able to withstand the
impact of the specific scenarios considered
over the five-year period assessed. The
Board considers that the long-term nature
of the leases and financing arrangements in
place mean that the business model would
remain viable in the event that further
growth of the business was not achieved.
Going concern
Assura’s business activities together with
factors likely to affect its future performance
are set out in the CFO Review on pages 62
to 67. In addition, Note 22 to the accounts
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.
In reaching its conclusion, the Directors
have considered the specific impact in
respect of Brexit and COVID-19, neither of
which, in themselves, are considered
significant risks to the business based on
the current position. The Directors continue
to monitor these, and any other emerging
risks, as appropriate.
Accordingly, the Board considers it
appropriate that the financial statements
have been prepared on a going concern
basis of accounting and there are no
material uncertainties regarding the
Company’s ability to continue to prepare
them on this basis over a period of at least
12 months.
68
Assura plc Annual Report and Accounts 2021
Strategic report
Governance
GOVERNANCE
REPORT
70 Chairman’s introduction
to governance
72 Our governance framework
74 Board of Directors
77 Key Board activities
82 Nominations Committee
Report
85 Audit Committee Report
87 Directors’ Remuneration Report
106 Directors’ Report
108 Directors’ Responsibility
Statement
Assura plc Annual Report and Accounts 2021
69
Financial statementsAdditional information CHAIRMAN’S INTRODUCTION
TO GOVERNANCE
Our strong culture
supports our strategic
priorities and promotes
employee engagement”
Ed Smith, CBE
Non-Executive Chairman
Dear shareholder
This is our Corporate Governance
Report, which sets out how the
Board and its Committees operate
and how we are committed to
maintaining the highest level of
corporate governance.
Implementing the 2018 Code (“Code”)
In accordance with the Listing Rules, I am
very pleased to confirm that throughout the
year ended 31 March 2021, the Company
was compliant with all the relevant
provisions as set out in the Code save for:
– Code Provision 38 – the pension
contribution rate for the current Executive
Directors is currently higher than the rate
applicable to the majority of the wider
workforce (currently 6%). We recognise
that this is an important matter of principle
for investors and therefore the
Remuneration Committee has agreed that
the pension rate for the Directors will be
aligned with that of the majority of the
wider workforce by the end of December
2022, consistent with the guidance issued
by the Investment Association.
– Code Provision 36 – we have not
introduced shareholding requirements to
apply for a period of time following
cessation of employment. The
Remuneration Committee believes that
the Remuneration Policy as currently
structured provides for sufficient
alignment between Executive Directors
and shareholders, but also recognises that
these post-employment requirements are
now favoured by a majority of investors.
As a result, we commit to introducing
post-employment shareholding
requirements as part of the Remuneration
Policy to be proposed for shareholder
approval at the AGM in 2022.
This Report explains how the Board has
applied the other principles of the Code.
Leadership
The Board is collectively responsible for the
effective leadership and long-term success
of the Group.
We held four specific Board meetings in the
year to discuss the impact of COVID-19 on
the business and staff wellbeing with the
Board providing support and sharing helpful
insights from their other business interests.
I recorded a video message for staff at
Christmas and the Board members shared
their experiences of lockdown and
messages of support in other videos shared
in the year.
Culture
Our clear strategic and social purpose is to
create outstanding spaces for health
services in our communities. Our strong
culture supports our strategic priorities and
promotes employee engagement, retention
and productivity. We are genuine and
passionate about what we do, working
collaboratively and using our expertise to
find innovative quality solutions for our
occupiers and the people who use our
buildings.
The Board leads by example, focusing on
our purpose and values in all decision
making and demonstrating the behaviours
we encourage and support in everyone at
Assura. The Board agreed that its legacy
should be as a dynamic partner to the NHS
and leading social impact business, playing
a key role in modernising and improving
community healthcare whilst delivering
consistent long-term shareholder returns.
Our social impact strategy, SixBySix,
embodies the simple aim of improving the
healthcare buildings used by more than six
million patients by 2026.
Culture is measured through the results of
our employee engagement surveys,
absenteeism and staff turnover,
whistleblowing reports, health and safety
incidents and initiatives and customer
satisfaction.
Our executive pay policies are fully aligned
to Assura’s culture through the use of
metrics in both the annual bonus and PSP
that measure how we perform against our
targets that directly underpin the delivery
of our strategy. The incentive schemes are
aligned with our strong performance
culture and are linked to a strategy to
support the clear social purpose of Assura’s
business.
70
Assura plc Annual Report and Accounts 2021
Diversity
The Board is committed to ensuring that
the Group is free from discrimination and
equitable to all employees.
We were delighted to be ranked 11th in the
Hampton-Alexander Report 2020 for FTSE
250 Women on Boards and in Leadership
and were named one of the joint top
businesses in the European Women On
Boards Gender Equality Index. With 50%
female representation on our main Board,
this shows our commitment to gender
diversity throughout the organisation.
The Board aspires to greater diversity
throughout the Group and this year we
carried out our first cross-team survey on
diversity and inclusion with the results
informing our recruitment and training
strategies for the business. We have also
joined the Mission INCLUDE mentoring
programme as both mentors and mentees
for peers in other businesses and the
national Disability Confident employer
scheme.
Ed Smith, CBE
Non-Executive Chairman
Employee and other stakeholder
engagement
Louise Fowler has responsibility for
workforce engagement and regularly meets
with the employee representative group
“the Voice”, feeding their comments back
to the Board so that their views can be
understood and considered in Board
decisions. You can read more on their
interaction on page 80.
The Board members usually “walk the floor”
when attending Board meetings at the
head office in Warrington and engage with
employees who present Board papers and
accompany them on site visits. However,
since the start of the pandemic all Board
meetings have been held virtually and the
Board have not been able to meet with staff
or attend any site visits.
Instead, our colleagues have continued to
engage with the Board through presenting
their papers in the virtual Board meetings
and the annual informal dinner, which allows
the Board to interact freely with employees
and understand what matters to them, was
replaced with a remote “cream tea” where
the Board members led informal sessions
with groups of employees reflecting on
highlights from 2020 and discussing what
people were most looking forward to when
lockdown ends.
Performance evaluation
The Board Review carried out by Weva Ltd
(who has no other involvement with the
Company or Board members) in 2019
recommended that the Board consider
several areas of effectiveness to build on or
develop as part of its approach to
continuous improvement. The Board has
continued to make progress in all areas, for
example, completing a skills matrix to aid
with succession planning, regularly
engaging with management on COVID-19
and on the development of the Group’s
strategy and inviting external speakers to
present to the Board to build skills and
develop and explore new insights and
ideas.
Remuneration
We received over 83% of votes in favour of
our Remuneration Report and over 99%
votes in favour of our all employee share
incentive plan at the 2020 AGM and I am
grateful to shareholders for the level of
engagement and support during the year.
Effectiveness
I believe that the Board has an effective,
well-balanced structure. Board members
have a wealth of skills and experience, as
shown on pages 74 to 76, which enable
them to challenge, motivate and support
the business.
The Board were particularly concerned
about staff wellbeing during the pandemic
and so this was a standing agenda item for
all Board meetings held in the year. In the
Pulse employee survey undertaken in the
Summer of 2020, we were delighted to
achieve an indicative improvement in
engagement from Very Good to
“Outstanding" which is a credit to
management’s efforts in looking after their
colleagues during this difficult time.
The skills matrix identified our breadth of
experience and strengths for example in
capital markets, governance, investor
relations, strategy, finance and risk,
leadership, people and change
management, business development as
well as social purpose and ethical focus.
The Board’s experience in NHS strategy and
technology has been bolstered by the
appointment of three Non-Executive
Directors in May 2021.
The Board factors stakeholders into all our
decisions and management regularly
updates the Board on the implementation
of our strategy with a particular focus on
stakeholders and the risks and
opportunities which have arisen in the year
in relation to these groups.
I am pleased to report that all the Directors
continue to devote sufficient time to
discharging their duties to a high standard
and remain committed to their roles.
GOVERNANCE IN NUMBERS
Board composition
Meetings per year
1
Chairman
2
Executive
Directors
3
Non-Executive
Directors
10
Board
4
Audit
Committee
4
Nominations
Committee
6
Remuneration
Committee
Assura plc Annual Report and Accounts 2021
71
Strategic reportGovernanceFinancial statementsAdditional information OUR GOVERNANCE
FRAMEWORK
THE BOARD
Responsible for setting the Group’s strategy for delivering long-term value to our
shareholders and other stakeholders and setting the culture, values and governance
framework for the Group. Provides effective challenge to management concerning
execution of the strategy and ensures the Group maintains an effective risk management
and internal control system.
The Board has approved a schedule of matters reserved for decision by the Board.
The Board delegates certain matters to its three principal committees:
Nominations
Committee
Responsible for ensuring our
Board and its Committees have
the right balance of skills,
knowledge and experience and
ensuring adequate succession
plans are in place.
Audit
Committee
Responsible for reviewing and
reporting to the Board on the Group’s
financial reporting, maintaining an
appropriate relationship with the
Group’s auditor and monitoring the
internal control systems.
Remuneration
Committee
Responsible for establishing the
Group’s Remuneration Policy and
ensuring there is a clear link
between performance and pay
and pay is fair relative to the
workforce.
EXECUTIVE COMMITTEE
The Board delegates the execution of the Company’s strategy and the day-to-day
management of the business to the Executive Committee which operates under
the direction and authority of the CEO.
The Committee makes key decisions to ensure achievement of strategic plans,
ratifies the decisions of the supporting committees, considers key business risks
and shapes and sustains the culture and values of the business.
It is supported by sub-committees each focusing on an area of the business.
Risk Committee
Reviews and monitors key risks and the effectiveness of the risk management
systems. Identifies emerging risks. Reports to the Audit Committee.
Investment Committee
Reviews and approves investment, development and asset enhancement
transactions, allocates investment capital and agrees investment hurdle rates.
Operational Excellence Committee
Drives operational excellence in systems and processes across the business
and is responsible for performance management of our IT systems and
controls including cyber controls.
Social Impact Committee
Establishes which social impact risks and opportunities are of strategic
significance, integrates them into business strategy and ensures effective
communication to stakeholders.
72
Assura plc Annual Report and Accounts 2021
DIVISION OF RESPONSIBILITIES
Chairman
– The effective running of the Board.
– Ensuring the Directors receive accurate and timely information.
– Promoting high standards of Corporate Governance.
– Ensuring Board agendas take full account of relevant issues and Board members’ concerns.
– As Chair of the Nominations Committee, ensuring effective Board succession plans are in place.
CEO
– Running the Company’s day-to-day operations.
– Implementing the business strategy and culture.
– Regularly updating the Board on progress against approved plans.
– Providing effective leadership of the Executive Committee to achieve agreed strategies and
objectives.
CFO
– Responsible for the preparation and integrity of financial information.
– Operating effective systems of risk management and control.
– Developing and implementing financial strategy and policies.
Non-Executive Directors
– Challenging and helping to develop proposals on strategy.
– Satisfying themselves as to the integrity of the financial information and that there are effective
systems of risk management and financial control.
– Chairing and/or serving on relevant Committees.
Senior Independent Director
– Acting as Chair of the Board if the Chairman is conflicted.
– If necessary, acting as a conduit to the Board for communicating shareholder concerns.
– Ensuring the Chairman is provided with effective feedback on performance.
– Serving as an intermediary for other Directors when necessary.
Company Secretary
– Ensuring good information flow within the Board and Committees.
– Facilitating induction and training of Board members.
– Advising the Board on all governance matters.
Assura plc Annual Report and Accounts 2021
73
Strategic reportGovernanceFinancial statementsAdditional information BOARD OF DIRECTORS
BOARD AT
YEAR END
Board tenure
(in current role)
4 2
0–4 years
(67%)
4+ years
(33%)
Board gender balance
3
Female
3
Male
Executive Committee
gender balance
4 5
Female
Male
Jonathan Murphy
CEO
Appointed
February 2017
Ed Smith, CBE
Non-Executive Chairman
Jayne Cottam
CFO
Appointed
October 2017
Appointed
September 2017
Skills and experience
Jonathan has been with Assura
since January 2013 having joined
the Group as Finance Director
and becoming CEO in 2017.
Jonathan was previously finance
director for the fund
management business of
Brooks Macdonald and Braemar
Group plc and these roles
provided broad experience in
finance and accounting,
corporate finance, capital
markets and real estate
investment.
Jonathan’s earlier career
included commercial and
strategic roles at Spirit Group
and Vodafone.
Jonathan is a Non-Executive
Director for the British Property
Federation and chairs their
Healthcare Committee, sits on
the Advisory Board of EPRA and
is Chair of the North West
Business Leadership Team.
He qualified as a Chartered
Accountant with PwC, holding
management roles in both the
UK and Asia.
Skills and experience
As an experienced Chairman, Ed
has extensive governance skills
in both the private and public
sectors. During his time as
Chairman of NHS Improvement
and Deputy Chairman of NHS
England he gained significant
health service and public sector
experience. Ed’s skills include
strategy and operational
excellence as he was the former
Global Assurance Chief
Operating Officer and Strategy
Chairman of
PricewaterhouseCoopers
(“PwC”). During his 30-year
career as a Senior Partner at
PwC, holding many leading
Board and top client roles in the
UK and globally, he gained
broad experience in finance and
accounting, capital markets and
customer focus.
He is Senior Independent
Director at HS2 Ltd, the
independent Non-Executive
Director at Push Doctor Ltd and
chairs the Advisory Board at
HCA Healthcare UK.
Ed is a Chartered Accountant.
Skills and experience
Jayne is a CIMA qualified
accountant, with skills including
finance, debt strategy and risk
management. She joined Assura
from Morris Homes, one of the
UK’s largest private national
housing developers where she
was the Finance Director for
Operations, heading up the
operational finance team across
the Group and providing
financial and strategic support
as a member of the Board for
each of the three operating
regions.
Jayne was previously Director of
Finance for the Continental
Europe Division of European
Metal Recycling Limited, one of
the world’s largest metal
recyclers, and before that held a
number of other senior finance
positions.
Jayne sits on the North West
Regional Council of the CBI
(Confederation of British
Industry) and the Finance
Committee of the British
Property Federation.
In order to deliver the
Group’s purpose and
strategy, the Board believes
the following mix of skills
within our leadership team
is required:
Skills and experience
Executive and strategic leadership
Financial accounting, reporting or corporate finance
Property development,
investment or real estate management
Governance and compliance
Social impact, people or charities
Health and safety, risk management or internal controls
Investor relations and engagement
Prior remuneration committee experience and or
experience in remuneration
74
Assura plc Annual Report and Accounts 2021
Number of Non-
Executive Directors
(including the
Chairman)
4
2
Number of
Executive
Directors
2
2
2
4
3
2
2
3
2
2
2
2
2
2
Jonathan Davies
Senior Non-Executive Director
Jenefer Greenwood, OBE
Non-Executive Director
Louise Fowler
Non-Executive Director
Orla Ball
Company Secretary
Appointed
June 2018
Appointed
May 2012
Appointed
June 2019
Appointed
April 2015
Skills and experience
As Chief Financial Officer of SSP
Group plc, Jonathan has
extensive experience of finance,
mergers and acquisitions and
corporate governance. He has
broad capital market skills,
taking SSP private in 2006,
listing it on the London Stock
Exchange in 2014 and
undertaking various debt and
equity raises since then.
Jonathan’s skills include
strategy, commercial and
financial management.
He began his career in Unilever
plc’s management
development programme
before joining OC&C, the
strategic management
consultancy, as a start-up in 1987
where he was part of its rapid
growth to become a leading
international consulting firm.
From 1995 to 2004 Jonathan
worked for Safeway plc, where
he was Finance Director on its
Executive Board between 1999
and 2004.
Jonathan chairs the Audit
Committee and is Senior
Independent Director.
Committee meeting attendance
Ed Smith
Jonathan Murphy
Jayne Cottam
Jenefer Greenwood
Jonathan Davies
Louise Fowler
Skills and experience
Jenefer is a Chartered Surveyor
with extensive knowledge of
the real estate industry. Jenefer
started her career at Hillier
Parker in 1978, becoming
Executive Director and Head of
Retail on merger with CBRE.
She worked for Grosvenor
Estate from 2003 until 2012
where she expanded her skills in
development and maximising
real estate value.
Jenefer chairs the Remuneration
Committee, having initially
gained remuneration
experience as chair of the
remuneration committee of The
Crown Estate. She has
significant board level
experience and is currently on
the board of St Modwen
Properties plc and LiveWest
Housing.
Jenefer will be retiring as a
Non-Executive Director at the
conclusion of the 2021 AGM.
Skills and experience
From beginning her career at
British Airways before moving
into financial services with
Barclays and the Co-operative
Banking Group, Louise has
achieved 25 years’ marketing,
customer and digital experience
at a senior level in the travel and
financial services industries.
In recent years, she has been
working as an independent
consultant for well-known
consumer brands such as the
Post Office, First Direct and M&S
furthering her skills in branding
and developing strategy
through customer focus.
Louise is a Non-Executive
Director at Howdens Joinery
Group plc.
Skills and experience
Orla is a lawyer, qualified
Chartered Secretary and an
Associate of ICSA whose skills
include corporate governance
and managing legal risk. She
qualified as a solicitor with
Eversheds Manchester and
gained significant legal,
mergers and acquisitions and
capital markets experience
working as a corporate lawyer
for over 14 years.
Orla’s move in-house to
Braemar Group plc,
subsequently acquired by
Brooks Macdonald plc,
provided her with real estate
skills as she looked after the
legal matters for its property
management and property
funds business.
Orla is Head of Legal for the
Group, Chair of the Risk
Committee and a member of
the Executive Committee.
Board
10/10
10/10
10/10
10/10
9/10
10/10
Audit
4/4
4/4
4/4
4/4
4/4
4/4
Rem
6/6
6/6
6/6
6/6
6/6
6/6
Nom
4/4
4/4
4/4
4/4
4/4
4/4
Assura plc Annual Report and Accounts 2021
75
Strategic reportGovernanceFinancial statementsAdditional information BOARD OF DIRECTORS
CONTINUED
OUR NEWLY
APPOINTED
NON-EXECUTIVE
DIRECTORS
Emma Cariaga
Non-Executive Director
Noel Gordon
Non-Executive Director
Dr Sam Barrell, CBE
Non-Executive Director
Appointed
May 2021
Appointed
May 2021
Appointed
May 2021
Skills and experience
Emma is the Joint Head of
Canada Water, one of the
largest regeneration schemes in
London, with British Land where
she also sits on their Executive
Committee. She also holds a
current Non-Executive role with
TEDI-London – a higher
education provider for
engineering.
Skills and experience
Noel is a recognised figure
across the UK health system,
formerly as Chair of NHS Digital,
Chair of Healthcare UK and as a
Non-Executive Director on the
Board of NHS England. He spent
most of his career transforming
the footprint and operating
models of large, multinational
banking institutions.
In the late 90’s, Noel led
significant restructuring
programmes to enable banks to
adopt new digital channels. He
brought this transformative
experience to NHS England and
NHS Digital, reshaping their
approach to digital change and
new models for healthcare
delivery.
Noel is a Non-Executive Director
of Bestway Panacea Holdings.
Skills and experience
Sam is the COO of the Francis
Crick Institute – a world-leading
biomedical research
organisation which she joined
from a career in the NHS as a
noted healthcare leader. Sam
was CEO of the Taunton and
Somerset NHS Foundation Trust
and before that, established
and led the South Devon and
Torbay CCG. Earlier in her
career, as a practising GP, she
led the formation of a practice
based commissioning
consortium.
Sam offers strong ESG
credentials, as a past National
Advisory Council Member of the
King’s Fund and an active
Mentor for the NHS Innovator
Accelerator Programme. She is
a Non-Executive Director of the
York Health Economics
Consortium.
She was awarded the CBE in
2014 for services to healthcare.
The Board regularly considers
the independence of our
Non-Executive Directors and all
Directors are required to
declare any relationships or
interests which may constitute a
conflict of interest at the
commencement of each Board
meeting.
Re-election of Directors
In accordance with Corporate
Governance best practice, it is
the Company’s policy that all
Directors will submit themselves
for re-election at the 2021 AGM
and the Notice of AGM will
explain why their contribution
remains important to the
Company’s long-term
sustainable success.
She has over 20 years’
experience in the property
sector across residential, retail,
commercial and leisure with
previous roles at Landsec,
Barratt Homes and Crest
Nicholson. She was previously
on the Board of Thames Valley
Housing Association where she
chaired the Investment
Committee.
Emma is passionate about
sustainable development within
the property sector and has a
strong interest in the evolution
of cities and the social impact of
property.
Other directorships of the Board
members are set out on pages
74 to 76. Executive Directors
would be permitted to serve on
one other Board if this would
not interfere with their time
commitment to the Company.
At present, neither of the
Executive Directors holds any
Non-Executive Director
positions. However, Jonathan
Murphy has recently been
appointed as chair of the North
West Business Leadership
Team.
Time
commitments and
independence
76
Assura plc Annual Report and Accounts 2021
KEY BOARD
ACTIVITIES
Social impact strategy –
launch of our first
Social Bond
We launched our SixBySix social impact
strategy last year, to put our purpose –
creating outstanding spaces for health
services in our communities – at the centre
of everything we do. Our ambition is to
become the UK’s number one listed
property business for social impact.
In September 2020 we announced the
launch of our first Social Bond, a Sterling-
denominated senior unsecured bond in an
amount of £300 million with a tenor of 10
years. This followed a series of UK fixed
income investor meetings which generated
strong institutional demand.
Our Social Bond is the first issued under the
Assura Social Finance Framework and the
proceeds will be used to fund or refinance
eligible social projects, specifically the
acquisition, development or refurbishment
of publicly accessible primary care and
community healthcare centres.
The issuance of our first Social Bond
demonstrates our commitment to
contributing to the communities in which
we operate and will be used to support our
continued investment in providing more
fit-for-purpose primary and community
healthcare centres.
The strong level of bond investor support
leaves us well positioned to deliver against
our acquisition and development pipeline,
as well as SixBySix.
£300m
Sterling denominated senior unsecured
bond was launched in Septemeber 2020
Assura plc Annual Report and Accounts 2021
77
Strategic reportGovernanceFinancial statementsAdditional information KEY BOARD ACTIVITIES
CONTINUED
Making the right
strategic decision –
acquisition of Apollo
The Board factors our stakeholders, the
long-term impact on the business and the
impact on the environment into all our
decisions in line with its duties under s172
Companies Act 2006.
In March 2020 the Board approved the
acquisition of primary care developer
Apollo.
The Board considered that the acquisition
would be beneficial to the Group’s
long-term strategy of becoming the
number one listed business for social
impact as Apollo had a strong, 20-year track
record of developing high-quality primary
care properties across the UK.
The acquisition would also provide
continuity of service and enhanced benefits
for the very experienced four-person
development team and two administration
staff who shared our culture and high
standards for design.
Extensive due diligence was carried out on
the pipeline to ensure its viability for
shareholders and that the schemes
presented no adverse environmental
impact. The Board noted that the
acquisition would secure the ongoing
workstreams for the Apollo suppliers
including building contractors and
architects.
The Board approved the acquisition as it
expanded the Assura development team to
11 specialist surveyors, increased our
immediate and extended development
pipeline and further deepened our
understanding of the future trends shaping
the sector, from building design to
sustainability allowing us to expand our
offer to the NHS as its partner of choice.
Apollo pipeline scheme
Top
On site at the
Beaconsfield
development
Right
78
Assura plc Annual Report and Accounts 2021
We aim to become
the number one
listed business for
social impact with
the acquisition of
businesses like Apollo
No.1
Assura plc Annual Report and Accounts 2021
79
Strategic reportGovernanceFinancial statementsAdditional information KEY BOARD ACTIVITIES
CONTINUED
Q&A
with Louise Fowler
Overall, there
has been a
sense of
‘looking out
for each other’
and a very
supportive
culture.”
Louise Fowler
Non-Executive Director
Q. Do you feel that the Voice
trust you with their feedback?
Yes, I feel that they do. As the designated
NED for workforce engagement, I explain to
them that I will share any feedback with the
Board on an anonymous basis respecting
any confidences shared. I also stress that
this communication should not replace
normal lines of communication in the
business through line managers or the
whistle-blowing process. The team are
pretty open with me about what’s on their
minds.
Q. From your discussions can
you comment on how the
business has looked after
colleagues in these difficult
times?
The Voice feel that Assura has reacted
incredibly well. They really appreciated the
early confirmation of job security and the
prompt extension of fixed-term contracts
which put their minds at ease as well as the
speed with which IT equipment and office
chairs were provided to ensure successful
remote working. The Company adopted a
very flexible approach to working from
home patterns allowing employees with
young children to vary their hours to suit
childcare arrangements and everyone was
encouraged to switch off the screen at
regular intervals, go for more walks, to keep
in touch and look out for each other. From
speaking to friends and relatives they felt
very lucky and proud to work for an
organisation that has clearly done so much
more than some others. Obviously, as time
has gone on, it has become harder for some
people: it has been noted that Assura is
doing much to provide individual support
and there is strong desire for the Company
to continue, and increase, the focus on
mental health issues beyond the pandemic.
This has been highlighted as a key priority
for all staff through a recent survey.
Q. How well does the Voice feel
the business communicated
with staff during lockdown?
The Voice said that the Company worked
very hard to keep everyone included and
up to date with what has been happening
in the business with lots of regular emails,
Teams meetings and the weekly call with
Jonathan which is very well-liked. They
understand that there is a lot of uncertainty,
but they believe they will be given the
information they need at the right time, and
particularly appreciated some of the
insights into the home lives of senior
managers, for example, when small children
or pets wandered into the video
conference.
Q. Do the Voice feel concerned
about returning to the office?
They appreciate that the Company is taking
the time to consider what’s right, and no
decision has been made about a return
date although it is good that the office has
been opened to colleagues who are
struggling to work from home. Some are
impatient to get back whilst others are
naturally more cautious. They have said they
do not feel pressured, and communication
has been very good.
80
Assura plc Annual Report and Accounts 2021
Q. What are the Voice hoping
will be learnt from how we are
working now?
They have been surprised at how well
working from home has worked. The
biggest challenge has been managing
children at home as well as a job but people
have surprised themselves at how
productive they can be, and at their ability
to keep motivated and not get distracted.
There is a widespread hope that when they
do go back, it’s not to exactly the same and
the business should look at how we use the
office for example mixing remote and office
working.
Before lockdown, Assura was very meetings
oriented. There is a hope that there will be
fewer meetings, or that they can be shorter
or a mix of face-to-face and video
conferencing. Often employees can drive 3
– 4 hours for a half-hour meeting with an
occupier. Whilst there is no doubt face-to-
face is sometimes necessary, they think it
will be possible to reduce costs, help the
environment and increase productivity by
doing things like this less often.
They also hope that a short, weekly,
informal communication from Jonathan (or
“the top”) could continue after lockdown as
this makes them feel involved and engaged
in how the business is doing in a way that
may have been missing before.
Q. How is staff wellbeing?
There are a mix of views here: Lockdown
has meant less physical activity, commuting,
walking around the office etc but while
some have felt encouraged to go outside
and get exercise during office hours, others
were afraid it would be frowned on. There
is a greater all-Assura team spirit because of
this period, when before there was more of
an emphasis on individual teams.
People feel they have been working very
hard and obviously some parts of the
business have been more affected than
others by the lockdown: engaging with GPs
and practice managers during the
pandemic, for example, has been harder as
they have quite naturally had other
priorities, whilst new buildings under
construction have continued much as
before, so there is a hope that everyone is
rewarded fairly for what they have done
during this difficult period.
Q. What have people found
most difficult and what are they
worried about?
The prolonged working from home and
isolation, particularly among colleagues
who live alone, or younger colleagues still
early in their career, has really begun to take
a toll, especially in this third lockdown, and
of course parents having to home-school as
well as do their busy jobs have found it
tough. There is a high level of appreciation
for what Assura has done to help,
particularly when people talk to family or
friends who work elsewhere and whose
experiences have been quite different.
Q. What has been the culture of
Assura during lockdown?
Overall, there has been a sense of “looking
out for each other” and a very supportive
culture. Line managers are accessible and
frequently make contact, colleagues keep in
touch and look out for each other. Some
employees are speaking to more people
now than when they were in the office.
There has also been a little less formality
and they have loved seeing the more
personal side of Jonathan, hearing about his
family etc and we have held numerous
virtual team events that have really brought
people together. Assura has always had a
supportive, people-led culture, but during
this difficult year people have come to feel
that they are really part of one big team and
have greatly valued the feeling of everyone
supporting each other and us all being in it
together.
Stakeholder
engagement
The Board embraces open dialogue with
shareholders and works with its
stockbrokers Stifel and JP Morgan
Cazenove to ensure that an appropriate
level of communication is facilitated
through a series of investor relations
activities, including regular meetings
between the Executive Directors,
institutional investors, sales teams and
industry/sector analysts, as well as regular
advice from Makinson Cowell. Details of
the investor relations programme over the
year is shown on page 51.
We have increased IR reporting to the
Board with a dedicated slot at each Board
meeting where feedback from meetings
and observations from the equity markets
is provided for discussion. This is to ensure
that all Board members, and Non-
Executive Directors in particular, develop
an understanding of the views of major
shareholders and of the market in general.
This year the Chairman again offered
direct meetings to our largest
shareholders to allow the Chairman to
directly hear their views and feedback to
the Board. The Chairman found these
discussions very useful as they covered
current strategy, the NHS and the
importance of social impact.
Committee Chairs consult with
shareholders on appropriate matters.
During the year, the Remuneration
Committee deemed it appropriate to
consult with shareholders in respect of the
proposed increase in remuneration for the
Executive Directors, further details of
which can be found on page 88.
There is a greater
all-Assura team spirit
because of this period,
when before there was
more of an emphasis on
individual teams.”
Assura plc Annual Report and Accounts 2021
81
Strategic reportGovernanceFinancial statementsAdditional information NOMINATIONS COMMITTEE REPORT
Our Board has a wealth of
skills and experience,
bolstered by our three
new Non-Executive
Directors”
Ed Smith, CBE
Non-Executive Chairman
Committee members
Ed Smith, CBE
(Committee Chair)
Jenefer Greenwood, OBE
Jonathan Davies
Louise Fowler
Attendance*
4/4
4/4
4/4
4/4
* out of the maximum possible meetings
Additional attendees*
– Orla Ball – Company Secretary
– Jonathan Murphy – CEO
* as appropriate
Meetings in the year:
4
Terms of Reference
https://www.assuraplc.com/
investorrelations/shareholder-information/
sustainability-and-corporate-governance-
policies
Dear shareholder
The Committee continues to play a crucial
role in supporting Assura’s strategy by
ensuring the Board and its Committees
have an appropriate balance of skills,
experience and knowledge, with
succession plans in place, maintain a diverse
pipeline for board and senior management
positions and a robust evaluation process to
ensure the Board and Committees are
working effectively.
Board composition
Resignation of Jenefer Greenwood
Jenefer intends to step down from the
Board at the conclusion of the AGM. I would
sincerely like to thank Jenefer for her
significant contribution to Assura over the
last nine years, a period during which the
Group has been transformed and its future
growth prospects have never looked
better. We all wish her the very best.
Appointment of Emma Cariaga, Sam
Barrell and Noel Gordon.
In October 2020 we appointed recruitment
firm Warren Partners to assist with the
search process for two Non-Executive
Directors to further strengthen the Board.
Warren Partners had been engaged on the
appointment of Jayne Cottam and have no
other connections with the Group or any
members of the Board.
The Committee agreed the recruitment
brief based on the board skills analysis
carried out by the Company Secretary and
the desire to replace Jenefer’s skills with
someone from an equally strong property
background. In addition, across the two
roles, the brief sought to find candidates
with an understanding of the health
ecosystem, digital/technology expertise
along with strong ESG credentials.
The position was open to those with no
previous Non-Executive Directorship
experience but who would be attracted by
our purpose, values and wider social
strategies and diversity in its broadest
sense was encouraged. Warren Partners
carried out an extensive external search
process from which they identified a long
list of potential candidates for the
Committee to review and, from this, a
shortlist was selected. The Committee then
interviewed a number of these candidates.
The calibre of the shortlist was extremely
high, and the Committee recommended
the appointment of three shortlisted
candidates who would fulfil the brief and
bring complementary skills to the Board. In
May 2021, the Board appointed Sam Barrell,
Emma Cariaga and Noel Gordon on the
Committee’s recommendation.
Remuneration Chair and designated
Non-Executive Director for employee
representation
As Louise Fowler will take over from Jenefer
Greenwood as chair of the Remuneration
Committee at the AGM, a new designated
Non-Executive Director for employee
representation will be appointed at the
AGM.
Induction of new Non-Executive Directors
Emma, Noel and Sam are undertaking a full,
formal and tailored induction programme.
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, and
have access to the advice and services of
the Company Secretary.
Non-Executive Director
induction process
The new Non-Executive Directors are
currently undertaking the following
induction process:
Meetings with the Chairman
and other Board members
Meetings with the CEO, CFO and
Executive Committee members
Directors’ duties and governance
training from the Company’s legal
advisors and briefings from the
Company Secretary
A full support pack of relevant reading
materials
Briefings from the Company’s advisors
including auditors, corporate brokers
and PR firm
Meetings with senior management and
other staff members at the Company’s
head office in Warrington
Visits to premises
Succession planning
The Committee maintains regular focus on
succession planning for both Board and
senior leadership roles. Our talent pipeline
of high performing individuals are identified
as part of the annual appraisal process.
82
Assura plc Annual Report and Accounts 2021
Female representation on the Board
remains at 50% and the Group were ranked
11th in the final Hampton-Alexander Review
– FTSE 250 Rankings Women on Boards and
in Leadership, and 5th in the FTSE 350 real
estate sector Rankings Women on Boards
and in Leadership.
Diversity overview
The Committee will continue to consider
gender and wider aspects of diversity such
as industry experience, nationality, disability
and age when recommending any future
Board appointments and recruitment firms
are instructed to include a diverse list of
candidates for the Committee’s
consideration. Final appointments will
always be made on merit.
Further details of our employee policies to
promote equality and diversity can be
found on pages 48 to 49 but in summary
this year we have:
– established six diversity and inclusion
objectives which underpin the
organisation and provide strategic
guidance for our work. These objectives
also sit alongside our core values and
behaviours of Innovation, Expertise, Being
Genuine, Collaboration and Passion.
Objective 1: Creation and promotion of
culture of openness and candour, one in
which we treat each other with the
dignity we all deserve
Objective 2: Consulting and involving
staff and customers in developing the
business and improving our services;
driving a sense of autonomy and
empowerment
– Gained a “Committed to Action” rating in
the MIND Wellbeing Index and developed
a Mental Health Strategy for our workforce
– Joined the Mission INCLUDE cross
organisational diversity mentoring
programme
– Committed to become a Disability
Confident employer
– Recruited three apprentices
– Captured employee diversity and
inclusion data for the first time – achieving
response rates of 84%
– Under our social impact strategy, set a
goal to improve the gender diversity of
managers at all levels within the
organisation
– Reviewed employee satisfaction by
gender in the recent Best Companies
survey (equal levels)
Internal Board evaluation
The externally facilitated Board review
carried out by Weva Limited – a specialist
board and leadership consultancy which
has no connections with the Group or the
Board members – in 2018 developed a
Board effectiveness framework (“the
Framework”) under the specific headings:
– Outside World
– Creating the Future
– Board Team Effectiveness
– Nurturing Identity
– Managing the Present
The Framework is regularly reviewed by the
Board as part of the internal board
evaluation process to identify any required
changes in focus or priority and to agree
future actions for board effectiveness.
The Board have noted success in a number
of areas. In particular the Board has:
Objective 3: To understand and embrace
our differences and have a zero tolerance
to stereotypes or discrimination
1. Agreed a statement of the Board’s
purpose and legacy.
Objective 4: To continuously strive to
deliver new and innovative working
practices and approaches which
promote inclusivity, greater work-life
balance, and access to opportunities for
underrepresented groups
Objective 5: Work to ensure that our
contractors comply with our equality
standards
Objective 6: To develop a range of
metrics and KPIs against which our
progress can be measured
2. Actively supported Assura’s social
purpose and its importance to long-term
success.
3. Created formal succession plans to
ensure the Board continues to have the
capability it needs to deliver the strategy.
The Board skills matrix was used to create
the brief for the latest Board
appointments.
The Company Secretary carried out a
review of the Board member’s skills and
created a skills matrix which formed the
basis of the brief for the new Non–
Executive Directors. The skills matrix
identified wide board skills in capital
markets, plc governance and investor
relations and business skills such as finance,
strategy, leadership and people and
change management but a concentration
of skills in NHS Strategy and technology/
digital health. As Jenefer is stepping down
from the Board in July, there was also a
need to replace her strong real estate skills.
A formal succession planning exercise is
undertaken biannually and seeks to identify
training needs, high potential employees
and risks to the organisation across a 3-year
horizon. External consultants are engaged
to provide executive coaching and 360
feedback where appropriate. Internal
secondment opportunities are also
available. This overarching approach
dovetails with the quarterly business
planning activity which seeks to set targets
which enhance business performance and
people management and development
approaches.
Diversity
The Board believes that a diverse workforce
and management team improve the
performance and culture of the organisation
and add value to the business as a whole.
Warren Partners were tasked with
searching for possible Non-Executive
Director candidates who could increase the
diversity of the Board.
Warren Partners, conducted an extensive
search to identify and engage with a
diverse and broad pool of candidates
across sectors linked to Assura. In order to
attract candidates from minority ethnic
backgrounds, a range of talent engagement
strategies were used including: leveraging
professional diversity networks within the
property and healthcare sectors;
uncovering ethnically diverse talent utilising
technology (such as LinkedIn and advanced
search operators in online search engines);
identifying potential candidates outside
listed companies including exploring talent
within the public sector/privately owned
organisations; and by assessing ‘first time’
Non-Executives/candidates operating
below Board level. We were pleased to
have assessed five ethnically diverse
candidates at the longlist stage of the
search process who were independently
benchmarked against the wider talent pool
by Warren Partners. Whilst this search
process did not result in an ethnically
diverse appointment, partly due to the
exceptional calibre of the shortlisted
candidates, the exercise has delivered
Assura with a pipeline of ethnically diverse
talent to consider for future appointments.
Assura plc Annual Report and Accounts 2021
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CONTINUED
4. Encouraged active Board engagement
with management to extend trust-
building, share knowledge of the
business and develop insights around
successful delivery of the strategy. The
Board have engaged regularly with
management around COVID-19 and on
development of the strategy and plan to
have two half days to analyse and stress
test the strategy in September.
5. Commissioned management to produce
a clear articulation of the Assura business
model to explain how value is created
over time, and a clear set of strategy
success criteria with ongoing refinement
through updates to the strategy.
6. Continued engagement with staff around
Assura’s purpose and strategy and the
behaviours that will support long-term
success.
7. Commissioned management to develop
a formal stakeholder engagement
strategy to manage external risks and
opportunities around delivery of the
strategy.
8. Scheduled regular Board Development
sessions to explore new insights and
ideas, develop skills and build Board
dynamics – this has been difficult due to
the current pandemic and remote
working but Sir Jim Mackey joined a
virtual catch up in July 2020 and the
Cheshire Community Fund presented at
the July Board meeting. More external
speakers will be invited to virtual catch
ups.
9. Supported individual Board members to
see themselves as more than a subject
matter expert, and to vary the nature of
their Board contributions – this will be
crucial at the strategy days in September.
The Board carried out a self-evaluation this
year and the results show that the Board is
committed to strengthening its
effectiveness across all areas of the
Framework with a focus on continuous
improvement. A questionnaire was
compiled by the Company Secretary to
cover all areas of the Framework. Each
Board member scored the perceived
strength of the Board and its Committees in
each area and added commentary if they
wished.
The Company Secretary collated the scores
from the questionnaire and reported back
to the Board anonymising the comments.
Recommended actions from the self-
evaluation include:
Outside World
Opportunity to reinforce understanding of
healthcare environment, including potential
digital/online and political developments
which has been addressed through recent
Non-Executive Director appointments. The
Board should also undertake more horizon
scanning and external speakers from
non-related industries will help to challenge
our thinking.
Creating the Future
Continue to explore organic growth
opportunities and partnerships. The Board
should spend more time on strategic
questions and the purpose/social impact
discussions will further help.
Board Team Effectiveness
Take care to properly on-board the new
Non-Executive Directors and accommodate
any changes to dynamics positively.
Continue to build on good board
relationships when face to face contact
resumes.
Nurturing Identity
Lockdown has hampered the Board’s
visibility to staff, despite the Teams
meetings, calls, videos and virtual teas – we
will need to work hard once we can get
back into the office on this.
Managing the Present
We will need to think about the implications
of moving from a situation where all
Non-Executive Directors are on all
committees to a more usual, split
responsibilities and how we make that work
effectively.
These actions will be progressed this year
and the Framework will be regularly
considered at Board meetings to identify
any required changes in focus or priority.
Ed Smith, CBE
Chair of the Nominations Committee
17 May 2021
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Assura plc Annual Report and Accounts 2021
AUDIT COMMITTEE REPORT
Dear shareholder
In my second year as Chair of the Audit
Committee (“the Committee”) I have
pleasure in setting out below the formal
report on its activities for the year ended 31
March 2021.
During the year the Committee comprised
myself and the two other Non-Executive
Directors, with two of the newly appointed
NEDs (Emma Cariaga and Noel Gorden)
joining from May 2021. I confirm I have
recent and relevant financial experience as
CFO of SSP Group plc. We met four times in
the year and the key matters considered by
the Committee at each meeting were as
follows:
May 2020
– Reviewed the external portfolio valuations
for the financial year ended 31 March 2020
– Received a report from Deloitte on the
audit and the annual report and accounts
– Reviewed use of Deloitte for non-audit
work and confirmed their independence
– Reviewed the draft annual report and
accounts
– Considered the impact of COVID-19 on the
annual report and disclosure
– Reviewed the going concern statement
and assumptions
– Reviewed the viability statement and
assumptions
– Reviewed the external auditor’s
performance, the use of Deloitte for
non-audit work and auditor independence
November 2020
– Reviewed the half year external portfolio
valuations
– Reviewed the interim report and accounts
and auditor’s report
– Carried out a detailed review of going
concern
– Received reports from the internal auditor
on internal processes
– Confirmed compliance with REIT tests,
considered property income distributions
and nominated Jayne Cottam as HMRC
Senior Accounting Officer
February 2021
– Approved the agenda items and schedule
of Committee meetings for the upcoming
calendar year
– Approved the terms of reference for the
Committee
– Reviewed the quarterly valuation
– Approved the treasury counterparties
– Received an update on progress of
actions recommended by internal audit
and approved the processes to be
reviewed by internal audit this calendar
year
March 2021
– Approved the external audit plan and fee
– Received a report on the Risk Committee
activity for the year, reviewed principal risk
movement and approved the risk section
of the annual report
– Reviewed the accounting treatment for
the acquisition of Apollo
– Received an update on IT projects and
cyber risk
– Received an internal audit update
– Approved the draft viability statement
– Received an update on the audit tender
process
Audit meetings are held in advance of the
Board meeting and I provide a report to the
Board of the key matters discussed giving
the Board the opportunity to consider any
recommendations proposed by the
Committee.
Subsequent to the year end, the March 2021
annual report and accounts was reviewed
at the May 2021 Audit Committee meeting.
Fair, balanced and understandable
assessment
The Committee performed a detailed
review of the content and tone of the
annual report and half year results and has
satisfied itself that there are robust controls
over the accuracy and consistency of the
information presented, including
comprehensive reviews undertaken by the
Board, senior management and the
auditors. Accordingly, the Committee has
advised the Board that the annual report
taken as a whole is “fair, balanced and
understandable” and provides the
information necessary for the shareholders
to assess the Company’s position and
performance, business model and strategy.
Significant financial reporting matters
During the year the Committee reviewed
the following significant financial reporting
judgements:
– Valuation of investment properties,
including those under construction –
valuations and yields are discussed with
management and benchmarked against
comparable portfolios. The two external
valuers, Savills and JLL, presented and
discussed their findings with the
Committee. Deloitte separately discuss
the valuations and the assumptions they
are based on with the valuers. The
Committee considered the impact of
COVID-19 on the reported basis of
valuation, concluding the valuation was
accurate.
The Board has established
a framework of financial
reporting and controls to
provide effective
assessment and
management of risk”
Jonathan Davies
Chair of the Audit Committee
Committee members
Jonathan Davies
(Committee Chair)
Jenefer Greenwood, OBE
Louise Fowler
Attendance*
4/4
4/4
4/4
* out of the maximum possible meetings
Additional attendees*
– Deloitte LLP
– Savills Commercial Limited and Jones Lang
LaSalle
– KPMG LLP as internal auditor
– Ed Smith, CBE – Non-Executive Chairman
– Jonathan Murphy – CEO
– Jayne Cottam – CFO
– Orla Ball – Company Secretary
– David Purcell – Head of Investor Relations
– Owen Roach – Group Financial Controller
* as appropriate
Meetings in the year:
4
Terms of Reference
https://www.assuraplc.com/investor-
relations/shareholder-information/
sustainability-and-corporate-governance-
policies
Assura plc Annual Report and Accounts 2021
85
Strategic reportGovernanceFinancial statementsAdditional information AUDIT COMMITTEE REPORT
CONTINUED
– Validity of the going concern basis and
the availability of finance going forward –
the Committee considers the financing
requirements of the Group in the context
of committed facilities and evaluates
management’s assessment of going
concern and the assumptions made.
The external auditor also reports to the
Committee following its review. The going
concern statement which confirms the
going concern status of the business
despite the current situation with
COVID-19 is on page 68
– Viability statement – the Committee
considered the viability statement
proposed for inclusion in the annual report
and the supporting analysis produced by
management. The statement was
approved for inclusion in the 2021 report
and appears on page 68. The Committee
reviewed the period covered by the
viability statement and continues to be of
the view that a five-year period remains
the most appropriate timespan in this
regard.
Other financial reporting matters
In addition to the significant financial
reporting matters discussed above, the
Committee considers other financial
reporting matters as and when they arise
to ensure appropriate treatment in the
accounts, receiving appropriate briefings
on emerging regulations and standards
from management and Deloitte.
During the year this included the following:
– Consideration of whether the acquisition
of the pipeline and team of Apollo should
be accounted for under IFRS 3 Business
Combinations, or the purchase of
individual assets, concluding that we have
purchased a collection of assets so it
should not be accounted for under IFRS 3
Business Combinations.
We are satisfied that there were no matters
arising from any of the above that we wish
to draw to the attention of the shareholders.
Audit/non-audit fees payable to
external auditor
The fees paid to the external auditor are
disclosed in Note 4(a) to the accounts, and
the policy for non-audit services is in the
Audit Committee Terms of Reference
available on our website. In the year ended
31 March 2021, the auditor provided
non-audit non-statutory services in the form
of a comfort letter on the Social Bond
issuance and the review of the interim
report, being services closely related to
assurance.
Effectiveness of external audit process
The Committee assessed the effectiveness
of the external audit process, initially
reviewing and challenging the audit
planning memorandum prepared by
Deloitte and then monitoring fulfilment of
this plan. As in the prior year, the audit was
carried out remotely due to the COVID-19
pandemic but this did not impact the audit
process in any material way. The Committee
received regular feedback from
management on the service provided by
Deloitte, reviewed at an Audit Committee
and concluded that the external audit was
carried out efficiently and effectively with
objective, independent challenge.
During the year, the Company completed a
competitive audit tender including Deloitte,
EY and PwC. Several mid-tier firms were
invited to tender but all declined to
participate. Following the tender, the Audit
Committee has decided to appoint EY as
auditor. The Committee would like to thank
Deloitte for their diligent service over the
past 10 years.
We receive regular updates on potential
regulatory changes affecting the audit
industry and are assessing their impact on
the Company and the work of the
Committee.
Jonathan Davies
Chair of the Audit Committee
17 May 2021
Risk and internal controls
The Committee is aware of the Code’s
requirements in relation to risk and the
monitoring of internal control systems and
the risk assessment and internal control
processes are a key consideration of the
Committee. The Board has established a
framework of financial reporting and
controls to provide effective assessment
and management of risk as set out on page
56. During the year the Committee received
minutes from the meetings of the Risk
Committee, reviewed the principal risk
register and monitored the Group’s risk
management and internal control systems
including in relation to Brexit and COVID-19.
The Committee has not identified any
significant failings or material weakness in
these control systems during the year. The
risk report is set out in full on pages 56 to 61.
The Group’s internal control systems are
codified in policies and procedures which
are regularly reviewed and include a
detailed authorisation process, formal
documentation of all transactions, a robust
system of financial planning (including cash
flow forecasting and scenario testing),
regular financial reporting and reports to
the Board from the CEO and CFO and on
specialist risks including tax, and a robust
appraisal process for all property
investments. Changes to internal controls,
or controls to respond to changing risks
identified (for example in the current
COVID-19 situation in respect of cyber risk
and remote working), are addressed by the
Risk Committee with appropriate escalation
to the Audit Committee as required.
Internal audit
The Committee appointed KPMG as internal
auditor to complete reviews of specific
internal processes on a rolling basis. The
Committee agreed that the processes to be
reviewed last calendar year were controls
over property development, financial close
and reporting and general IT controls. The
Committee received detailed reports on
the work completed and the KPMG internal
audit partner attended Audit Committee
meetings to present their findings and
answer questions. Improvements were
identified for each of these processes which
have now been substantially implemented.
The Committee has agreed that the
processes to be reviewed this calendar year
are data integrity, acquisition process,
finance systems upgrade and supplier
management.
Save for commissioning specific processes
for review, the Committee is satisfied that
the correct level of control and risk
management within the business
adequately meets the Group’s current
needs.
86
Assura plc Annual Report and Accounts 2021
DIRECTORS’ REMUNERATION REPORT
The Committee paid close
attention to the impact of
COVID-19 on Assura and
considered carefully the
implications from a
remuneration perspective."
Jenefer Greenwood
Chair of the Remuneration Committee
Committee members
Jenefer Greenwood, OBE
(Committee Chair)
Ed Smith, CBE
Jonathan Davies
Louise Fowler
Attendance*
6/6
6/6
6/6
6/6
* out of the maximum possible meetings
Additional attendees*
– Jonathan Murphy (CEO)
– Jayne Cottam (CFO)
– Orla Ball (Company Secretary)
– Korn Ferry
* as appropriate
Meetings in the year:
6
Terms of Reference
https://www.assuraplc.com/investor-
relations/shareholder-information/
sustainability-and-corporate-governance-
policies
Annual Statement
Dear shareholder
On behalf of the Board, I am pleased to
introduce the Directors’ Remuneration
Report for the year ended 31 March 2021.
This report is split into three parts:
– This Annual Statement – in which I explain
the work of the Remuneration Committee
during 2020/21 and the key decisions
taken during the year;
– A summary of the Directors’
Remuneration Policy – which was
approved by shareholders at the AGM on
2 July 2019, and which was in force for the
year under review; and
– The Annual Report on Remuneration
– which details the link between Company
performance and remuneration and
includes payments and awards made to
the Directors for 2020/21 and information
on how the Remuneration Policy will be
implemented for 2021/22.
At the AGM to be held on 6 July 2021, you
will be asked to approve an advisory
resolution covering this Annual Statement
and the Annual Report on Remuneration.
Remuneration for 2020/21
For the year under review the Remuneration
Committee applied the Remuneration
Policy approved by shareholders at the 2019
AGM. The Policy includes a sensible balance
of fixed and variable remuneration,
providing the Executive Directors with the
opportunity to benefit from annual
incentive payments and the vesting of
long-term share awards in the event of
challenging performance conditions being
met.
Throughout the year, the Committee paid
close attention to the impact of COVID-19
on Assura and considered carefully the
implications from a remuneration
perspective. As discussed in the Strategic
Report, business performance during the
year was very strong despite the disruption
caused by the pandemic. The Committee
was impressed by the leadership
demonstrated by the management team to
support all colleagues during this period
and drive ongoing business success. In the
circumstances, results for the year were
exceptional.
The Committee has given extensive
thought to Executive Director remuneration
during the year. As discussed with major
shareholders during the consultation
exercise on the Remuneration Policy in late
2018/early 2019, and as explained in detail in
recent Remuneration Reports, we have for
some time been concerned with the
material gap between the Directors’ basic
salaries and those available in the wider real
estate market.
We do not seek to precisely benchmark
against the median or rigidly match the
salaries offered elsewhere, but we wish to
ensure that the Directors are paid fairly,
reflecting their performance and
commitment. To help narrow the gap with
the market, the Remuneration Policy
explicitly provides the Committee with
scope to increase the Directors’ salaries
each year by an amount up to 7% higher
than the increase for the wider workforce.
In last year’s report I explained that the
Committee had considered applying a
basic salary increase for the Executive
Directors with effect from 1 April 2020 at a
level above inflation and above the wider
workforce average. However, the
Committee decided to defer this increase in
light of the market uncertainties triggered
by COVID-19 and instead limit the Directors’
April increase to 1.8%, in line with inflation
and the increase for the rest of the
workforce. I also explained that the
Committee intended to review this matter
further, later in the financial year.
The Committee met later in 2020 and
agreed to apply an increase of 7% for the
salaries of both the CEO and CFO with
effect from 1 October 2020, to £429,760 and
£241,536 respectively. In reaching this
decision, the Committee considered the
excellent performance of the business over
the first half of the financial year and the
continued performance and growth of both
the CEO and the CFO in their roles. We
reflected on Assura’s resilience during the
pandemic and noted, among other things,
the continuation of dividend payments and
the fact that Assura had made no use of
Government support. No employees were
furloughed or made redundant as a result of
the pandemic. Assura did raise equity from
shareholders in April 2020 but, unlike those
companies which sought urgent
emergency support from investors to
bolster their balance sheets as the impact
of the pandemic was felt, our placing was
designed to fund Assura’s near-term
development, acquisition and asset
enhancement pipeline.
This salary increase was a deferred
implementation of the increase we had
initially envisaged making in April 2020, but
prudently decided against at the time, as
explained above. The increase was not
backdated to April and thus applied only to
the second half of the financial year.
After the year end, we assessed the
Directors’ performance against the annual
bonus targets set at the start of the year.
The bonus scheme again used a mixture of
financial and non-financial targets linked
closely to Assura’s strategic priorities for
the year.
Assura plc Annual Report and Accounts 2021
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CONTINUED
Given the strong level of performance of
the business, the overall level of
achievement against the financial targets
was very good, with the maximum target
exceeded for total accounting return and a
relatively high level of bonus earned for the
measures linked to EPRA earnings and
growth in total contracted rent roll. In
addition, both Executive Directors partially
achieved their objectives linked to strategic,
operational and personal goals.
As a result, we determined that the CEO
and CFO had earned bonuses of 83% of
maximum and 77% of maximum
respectively. Details of the targets
employed during the year and the extent of
achievement against them are set out in the
Annual Report on Remuneration. This
includes detailed information on the
specific non-financial objectives used and
the performance achieved.
For the Performance Share Plan (“PSP"), we
measured TSR and EPRA EPS performance
over the three-year period to 31 March 2021
to determine the level of vesting for the
awards granted in July 2018. The TSR
performance condition was partially met
but EPS performance was unfortunately
insufficient to meet the threshold level of
vesting for the EPS portion of the award.
Taking into account this level of
performance, the Committee agreed that
the PSP awards will vest at a level of 33.9%.
In line with the Remuneration Policy that
applied at the date of grant, (i) Jonathan
Murphy’s vested shares will not be subject
to a two-year post-vesting holding period
because at the time of vesting he will have
satisfied his shareholding requirement, but
(ii) Jayne Cottam’s vested shares will be
subject to a two-year post-vesting holding
period as she has not yet built up the
required shareholding (with it noted that
the Remuneration Policy approved in 2019
requires a post-vesting holding period for all
shares that vest under awards made from
2019 onwards).
In summary, we believe that that there has
been a clear link between executive
remuneration outcomes and the experience
of shareholders during the year. No
discretion was exercised by the Committee
in deciding upon the level of bonus payout
or PSP vesting for 2020/21.
Our plans for 2021/22
We have reviewed all aspects of the
remuneration package for the Executive
Directors for the year ahead.
The Committee considered the basic
salaries of the Executive Directors to apply
with effect from 1 April 2021. After further
assessment of the performance of the
Company and of the individual Directors,
the Committee agreed that an increase of a
further 7% above the wider workforce
average increase (1.5%) was appropriate.
The resulting salaries are £466,290 and
£262,067 for the CEO and CFO respectively,
these being 8.5% higher than the salaries in
place since October 2020.
In reaching this decision, the Committee
took into account a number of key
achievements over 2020/21, including the
accelerated development programme and
the multiple successes achieved as Assura
has sought to become the UK’s number one
listed property business for social impact.
This includes the launch of the Assura
Community Fund, the rollout of the SixBySix
strategy, the strong investment in our
portfolio and the successful launch of the
Social Bond in September 2020. The CEO
and CFO have continued to demonstrate
exceptional leadership of the business
during this period and the Committee was
unanimous in its view that the salary gap
with the market must continue to be
narrowed. Even after these increases, the
salaries of the CEO and the CFO remain well
below the median for comparably-sized
companies in the FTSE 250 Real Estate
sector and the FTSE 250 more broadly.
I would like to reiterate that these increases,
and those implemented in October 2020,
while significant in percentage terms, are
within the limit set out in the Directors’
Remuneration Policy and are entirely
consistent with the approach set out in the
2019 Remuneration Report, at the time
shareholder approval of the Policy was
sought. The Committee believes that we
would be remiss in our duty to shareholders
if we did not maintain appropriate and fair
packages for a high-performing
management team. Continuing material
misalignment with the market is a concern
for the Committee and we remain well
aware that remuneration opportunities on
offer elsewhere exceed what Assura
currently provides. The Committee has also
considered this matter very carefully in the
context of remuneration for the wider
employee base. While, as noted above, the
increases are higher than those for the
wider workforce, they are considered
necessary to address a misalignment with
the market against the backdrop of
continued strong performance. Limiting the
Executive Directors’ salary increases to the
inflationary increase agreed for the wider
team would not have been consistent with
our previously stated intention to move the
Directors’ salaries closer to the market rate.
The Committee reflected on this in the
context of the employee experience during
2020/21 and concluded that the proposal
remained appropriate.
I wrote to major shareholders and the
leading advisory bodies in February 2021 to
explain the Committee’s decision on this
matter and to seek feedback.
I am pleased to report that the majority of
those who responded were supportive of
the increases and recognised that they
were appropriate in the context of the
Executive Directors’ performance and in
light of salary positioning against the
market. Nevertheless, there were some
questions regarding the appropriateness of
the salary increases at the current time. We
therefore commit to further consideration of
our approach to basic salary when
reviewing the Directors’ Remuneration
Policy later in 2021.
For the year ahead, the annual bonus
scheme will operate in a similar fashion to
2020/21, with performance assessed
against a mix of financial and non-financial
metrics. We are making a small but
important change and increasing the overall
weighting on financial metrics to 70% of the
maximum bonus (up from 60%), with a
corresponding reduction in the weighting
on non-financial performance. This will
ensure an appropriate level of focus on the
key drivers of performance for the coming
year and also bring our approach more into
line with market standards more generally.
The specific bonus targets are considered
commercially confidential at the current
time but will be disclosed in next year’s
Annual Report on Remuneration. The
Committee will continue to have the
discretion to determine the appropriate
bonus amount based on a rounded
assessment of performance at the end of
the year. The maximum bonus opportunity
will remain at 125% of basic salary for the
CEO and 100% of basic salary for the CFO.
During the course of 2020/21 the
Committee considered long-term incentive
provision for the Executive Directors and
compared the current PSP with alternative
models. It was decided not to make any
changes and therefore continue with the
PSP. We intend to make a PSP grant in 2021
at a level of 150% of basic salary for both the
CEO and the CFO. The performance metrics
will again be a mixture of TSR, EPS and
targets linked to Assura’s long-term
performance on critical ESG measures,
measured over the three-year performance
period to 31 March 2024. The specific
targets are set out on pages 104 and 105
and are the same as those which applied to
the award granted in 2020, with the
exception of minor changes to one of the
ESG measures. A two-year holding period
will apply to any vested awards.
The Committee believes that the
combination of measures used for the
bonus scheme and the PSP continues to
ensure a clear link between a number of key
strategic objectives and Executive
Directors’ remuneration. As evidenced with
the launch of the SixBySix strategy, ESG is
central to Assura’s business and investment
case and we wish to continue to ensure this
is reflected appropriately in incentives.
88
Assura plc Annual Report and Accounts 2021
UK Corporate Governance Code
We have again sought to comply with the
provisions of the UK Corporate Governance
Code and we continue to believe that in all
material respects the Remuneration Policy
and its implementation are aligned with the
Code (save where indicated below). The
Policy and its implementation are consistent
with the six factors set out in Provision 40 of
the Code:
– Clarity – our Policy is well understood by
our management team and has been
clearly articulated to our shareholders and
representative bodies;
– Simplicity – the Committee is mindful of
the need to avoid overly complex
remuneration structures which can be
misunderstood and deliver unintended
outcomes. Therefore, one of the
Committee’s objectives is to ensure that
our executive remuneration policies and
practices are straightforward to
communicate and operate;
– Risk – our Remuneration Policy is
designed to ensure that inappropriate
risk-taking is discouraged and will not be
rewarded via (i) the balanced use of both
short- and long-term incentive plans which
employ a blend of financial, non-financial
and shareholder return targets, (ii) the
significant role played by equity in our
incentive plans (together with
shareholding guidelines) and (iii) malus/
clawback provisions;
– Predictability – our incentive plans are
subject to individual caps, with our share
plans also subject to market standard
dilution limits;
– Proportionality – there is a clear link
between individual awards, delivery of
strategy and our long-term performance.
In addition, the significant role played by
incentive/’at-risk’ pay, together with the
structure of the Executive Directors’
service contracts, ensures that poor
performance is not rewarded; and
– Alignment to culture – our executive pay
policies are fully aligned to Assura’s culture
through the use of metrics in both the
annual bonus and PSP that measure how
we perform against our targets that
directly underpin the delivery of our
strategy. The incentive schemes are
aligned with our strong performance
culture and, as noted above, are linked to
a strategy to support the clear social
purpose of Assura’s business.
As required by the Code, the Committee
has again reviewed workforce remuneration
and related policies. This has been
particularly important during what has been
a highly unusual year for our employees. As
stated above, we are comfortable that the
approach for Directors is appropriate in the
context of the wider employee perspective.
Below Board level, we believe that Assura
offers attractive and market-competitive
remuneration packages.
In addition to basic salary, all permanent
employees participate in an annual bonus
scheme which pays out subject to
performance conditions based on a mix of
financial and personal targets. We also offer
a comprehensive benefits package to all
employees. On top of this, a key
development during the course of the year
was the launch of a Share Incentive Plan for
employees following shareholder approval
at last year’s AGM. Under the plan,
participants can receive awards of free
shares and also benefit from additional
matching shares in the event of their
voluntary investment in additional shares.
The Committee was pleased to see a very
high level of participation in the plan, with
approximately 82% of eligible employees
taking part, thus demonstrating commitment
to the organisation and alignment with
shareholders. At the year end, the
Committee was delighted to support a
proposal from management to make an
additional award of £500 of free shares to all
employees in recognition of their dedication
and contribution throughout 2020/21.
One of the members of the Committee,
Louise Fowler, is the designated Non-
Executive Director for engagement with the
workforce and has had discussions with The
Voice, a cross-functional, cross-hierarchical
representative group of colleagues, on a
number of matters during the year, with a
particular focus on colleague engagement.
Shortly after the year end, Louise held a
session with The Voice which covered,
among other things, the Remuneration
Committee’s approach to setting executive
remuneration, the alignment of Directors’
pay with that of the wider workforce, and
the key issues being considered by the
Committee. There was a helpful discussion
of the bonus scheme for the Directors and
that for colleagues and comments on the
wider benefits package, all of which will be
reflected upon by the Committee as it
reviews the Directors’ Remuneration Policy
and workforce pay more widely.
The Code recommends that we consider the
appropriateness of Directors’ remuneration
using internal and external measures such
as pay ratios. In this report, we are again
voluntarily reporting the ratio of the CEO’s
pay to the remuneration of employees more
broadly, in line with best practice and the
expectations of investors. The ratio is set out
on page 102 alongside the supporting detail
as required by the relevant regulations. The
median pay ratio for 2020/21 is similar to
that for 2019/20, reflecting the similar level
of total CEO pay for each year and the lack
of material changes to the total pay of
employees at the median level of the
organisation. A significant portion of the
CEO’s pay for the year represents the value
of his performance-related incentives (annual
bonus and PSP). Although the vast majority
of other colleagues participate in a bonus
scheme, the level of award for the CEO is the
highest in the organisation, reflecting the
responsibilities of the role. In addition, and as
noted above, the CEO benefited from the
partial vesting of a PSP award for 2020/21,
and PSP participation has not been extended
broadly throughout the organisation. This is
reflective of an approach which recognises
that while Executive Directors should be
provided with market-relevant incentives
linked to aligning their interests with those of
shareholders, such incentives are not
appropriate at all levels of the business. At
the same time, we believe that the incentives
for the Directors should not result in rewards
which are excessive when compared to pay
levels throughout the organisation.
There are two areas of current non-
compliance with the Code. First, under
Code Provision 38, the pension contribution
rate for the current Executive Directors is
currently higher than the rate applicable to
the majority of the wider workforce
(currently 6%). We recognise that this is an
important matter of principle for investors
and therefore the Committee has agreed
that the pension rate for the Directors will
be aligned with that of the majority of the
wider workforce by the end of December
2022, consistent with the guidance issued
by the Investment Association.
The second issue of non-compliance,
relating to Code Provision 36, is that we
have not introduced shareholding
requirements to apply for a period of time
following cessation of employment. The
Committee believes that the Remuneration
Policy as currently structured provides for
sufficient alignment between Executive
Directors and shareholders, but also
recognises that these post-employment
requirements are now favoured by a
majority of investors. As a result, we commit
to introducing post-employment
shareholding requirements as part of the
Remuneration Policy to be proposed for
shareholder approval at the AGM in 2022.
In conclusion
During the course of the current financial
year, the Committee will review all aspects
of Executive Directors’ remuneration as part
of a full Policy review, and will consult with
major shareholders on the proposals. This
process will be led by Louise Fowler, who
will succeed me as Chair of the Committee
at the conclusion of the AGM on 6 July 2021.
I would like to take this opportunity to wish
Louise well in her new role and also to thank
you, our shareholders, for your support on
remuneration matters during my tenure as
Committee Chair.
Ahead of the AGM, I would be delighted to
receive any feedback or comments you
may have on our approach during 2020/21
and our plans for 2021/22.
Jenefer Greenwood
Chair of the Remuneration Committee
17 May 2021
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At a Glance
What our Executive Directors earned during 2020/21
The following table provides a summary single total figure of remuneration for 2020/21. Further details are set out in the Annual Report on
Remuneration.
£’000
Jonathan Murphy
Jayne Cottam
Salary
416
234
Pensions
56
32
Benefits
15
13
Bonus
430
181
LTIs
268
136
Other
2
2
Total
1,187
598
How our Executive Directors will be paid in 2021/22
A summary of how the Committee intends to operate the Remuneration Policy for 2021/22 is as follows:
Component
Base salary
Pension allowance (% of salary)
Annual bonus max (% of salary)
Annual bonus deferral
Annual bonus metrics
PSP (% of salary)
PSP Performance Conditions
Post vesting holding period
Shareholding guidelines (% of salary)
Jonathan Murphy
£466,290
(Increased by 8.5% from 1 April 2021)
Jayne Cottam
£262,067
(Increased by 8.5% from 1 April 2021)
13.5%
125%
Any bonus payable over 100% of salary
deferred into shares for two years
100%
50% of any bonus deferred for two years until
shareholding guideline is met
20% total accounting return, 25% EPRA earnings, 25% total contracted rental roll, 10%
strategic plan (CEO only)/10% operational excellence (CFO only), 20% personal objectives
150%
33% TSR, 33% EPS and 33% key ESG measures
Two years
300%
200%
Remuneration Scenarios for 2021/22
The charts on page 94 show how total pay for the Executive Directors varies under four different performance scenarios: Minimum; Target;
Maximum; and Maximum with share price growth.
Directors’ Remuneration Policy (Summary)
Policy scope
The policy applies to the Chairman, Executive Directors and Non-Executive Directors.
Policy duration
The policy was passed by a binding shareholder vote at the Company’s Annual General Meeting on 2 July 2019 and became effective from
that date. It will remain in place for three years unless approval for a new policy is sought. All payments to Directors during the policy
period will be consistent with the approved policy.
Overview of Remuneration Policy
The Committee considers that the Group’s remuneration policies should align to Assura’s values and behaviours, encourage a strong
performance culture and emphasise long-term shareholder value creation in order to be aligned with its shareholders’ interests.
The policy was developed following an extensive review by the Committee in 2018 of the previous policy. This included consideration of
the link between Assura’s strategy and executive remuneration, developments in market practice and the expectations of institutional
investors. Following this review, a set of proposals was developed which was then the subject of a comprehensive consultation exercise
with major shareholders in late 2018 and early 2019. The proposals were refined as a result of feedback received and the policy presented
for shareholder approval at the AGM in 2019. Throughout the policy period, the Committee keeps the policy and its implementation under
review. The Committee will consult with major shareholders if it considers that a change to the policy is required.
Conflicts of interest are managed through the operation of existing governance procedures. The Committee is comprised of independent
Non-Executive Directors and the Chairman of the Board. While Executive Directors may attend meetings of the Committee, they are not
present when matters specifically relating to their own remuneration are discussed. The Committee receives advice on the remuneration
policy from independent external advisers who are appointed by the Committee.
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Assura plc Annual Report and Accounts 2021
The policy has the following objectives:
– to develop a remuneration structure which supports the Company’s strong performance culture and our key objective of creating
long-term shareholder value;
– to enable the Company to recruit and retain Executives with the capability to lead the Company on its ambitious growth path;
– to reflect principles of best practice; and
– to ensure our remuneration structures are transparent and easily understood both internally and externally.
The full policy was included in the Annual Report and Accounts 2019, available on Assura’s website. A summary of the policy is set out
below and on the following pages.
Objective and
link to strategy
Fixed remuneration
Base salary
Core element
of remuneration
set at a level that
recognises the size
and complexity
of the Company
and, when
combined with
the performance
based variable
remuneration
potential, can
attract and retain
Executive Directors
of the quality
to execute the
strategy.
Benefits
The Company
provides benefits
in line with market
practice.
Operation
Maximum
opportunity
Performance measurement
and assessment
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.
Any increase in salary for
Executive Directors will take
into account salary levels of
comparable FTSE Real Estate
companies and companies of
comparable size and
complexity.
None.
However, 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
although the maximum increase
in any year will be 7% above the
general workforce increase.
None.
Benefit values vary year on
year depending on premiums
and the maximum value is the
cost of the provision of these
benefits. The Committee will
monitor the costs of benefits
in practice and will ensure that
the overall costs do not increase
by more than the Committee
considers appropriate in all the
circumstances.
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 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.
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.
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Operation
Executive Directors may receive pension
contributions to personal pension
arrangements or a cash supplement.
Pension-related payments are not included
for the purposes of calculating any benefit
or level of participation in incentive
arrangements. No recovery provisions apply.
Objective and
link to strategy
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.
Performance-based variable remuneration
Bonus
Incentivises the
achievement of
a range of key
performance
targets that are key
to the success of
the Company.
Awards may be made annually.
The performance period is one financial
year. Pay-outs may be made in a mix of cash
and deferred shares determined by the
Committee following the financial year end,
based on achievement against a range of
financial and strategic targets.
Performance measurement
and assessment
None.
Maximum
opportunity
The maximum employer’s
contribution is 13.5% of base
salary for the current Executive
Directors.
For any new Executive Director
appointments to the Board, the
Committee will look to align
pension provision to general
workforce levels.
The maximum annual bonus for
Executive Directors is 125% of
salary. At threshold performance
0% of maximum can be earned.
Performance measures are set
annually based on a number of
financial and strategic measures
which may include (but are not
limited to) for example:
The CEO has a maximum bonus
opportunity of 125% of salary
and an on-target level of 75% of
salary.
– 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.
Where an element of bonus is payable as
deferred shares, individuals may be able to
receive a dividend equivalent in cash or shares
equal to the value of dividends which would
have accrued during the vesting period.
The CFO has a maximum bonus
opportunity of 100% of salary
and an on-target level of 56.25%
of salary.
50% of any bonus is deferred into shares for
two years where the shareholding guideline
has not been met. Additionally, any bonus
payment above 100% of salary will be
deferred into shares for two years.
Bonus payments are not pensionable, but are
subject to malus and clawback provisions.
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Assura plc Annual Report and Accounts 2021
Maximum
opportunity
The PSP allows for awards over
shares with a maximum value of
150% of base salary per financial
year.
Objective and
link to strategy
Long-term
Incentives
To motivate and
incentivise delivery
of sustained
performance over
the long term,
and to promote
alignment with
shareholders’
interests, the
Company operates
the Performance
Share Plan (“PSP”).
Operation
Awards under the PSP may be granted as nil/
nominal cost options or conditional awards
which vest to the extent performance
conditions are satisfied over a period of at
least three years, with a two-year post vesting
holding period also applying. In exceptional
circumstances, vested awards may also be
settled in cash.
PSP awards may be increased to reflect the
value of dividends that would have been paid
in respect of any ex-dividend dates falling
between the grant of awards, and the expiry
of any vesting period and any holding period.
Clawback and malus provisions apply to PSP
awards.
Performance measurement
and assessment
The Committee may set such
performance conditions on
PSP awards as it considers
appropriate (whether financial
or non-financial and whether
corporate, divisional or
individual).
Performance periods may
be over such periods as the
Committee selects at grant,
which will not be less than (but
may be longer than) three years.
No more than 10% of awards
vest for attaining the threshold
level of performance conditions.
In addition, while performance
measures and targets used in
the PSP will generally remain
unaltered, if in the Committee’s
opinion, circumstances are such
that a different or amended
target would be a fairer measure
of performance, such amended
or different target can be set
provided that it is not materially
more or less difficult to satisfy
than the original target was at
the time it was set.
Shareholding
requirement
To ensure alignment
between Executive
Directors and
shareholders’
interests over a
longer time horizon.
The Committee operates shareholder
guidelines to encourage long-term share
ownership by the Executive Directors.
Executive Directors may not sell any shares
acquired via any share-based incentive plan if
the sale would take their shareholding below
the shareholding requirement.
200% of salary.
Where an Executive Director
has participated in the former
Value Creation Plan (“VCP”) the
requirement is 300% of salary.
Notes to the Policy table for Executive Directors
Performance measures and targets
The annual bonus plan measures are selected to provide direct alignment with the short-term operational targets of the Company. Care is
taken to ensure that the short-term performance measures are always supportive of the long-term objectives. This is especially important
in a business which has a long-term investment horizon. 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.
The PSP targets are selected to ensure that the executives are encouraged in, and appropriately rewarded for, delivering against the
Company’s key long-term strategic goals so as to ensure a clear and transparent alignment of interests between executives and
shareholders and the generation of sustainable long-term returns.
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Discretion
The Committee has discretion in several
areas of the 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 the 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. In addition,
for the avoidance of doubt, in approving
this Policy, authority is given to the
Company to honour any commitments
entered into with current or former
Directors prior to the adoption of this Policy.
Differences in Remuneration Policy for
all employees
Any differences in the types of reward
between Directors and staff reflect
common practice. All employees are
entitled to base salary, benefits and defined
contribution pension payments and are
eligible for annual bonuses and to
participate in the PSP (although actual
participation in the PSP will be limited to the
most senior executives within the
Company). The bonus targets for staff are
more focused on specific personal goals
that further the Company’s interests. The
maximum bonus opportunity available is
based on the seniority and responsibility of
the role.
Clawback
The Committee retains the power to reduce
the annual bonus or potential vesting of
unvested deferred bonus/PSP awards
(including to zero) (often referred to as
malus) or to recoup the value of previously
paid or vested awards from an individual
within two years of vesting if it considers
appropriate to do so (often referred to as
clawback). The Committee may choose to
exercise this power where there has been:
Maximum – Based on the maximum
remuneration receivable (excluding share
price appreciation and dividends):
– Annual bonus: consists of maximum bonus
of 125% of salary for Jonathan Murphy and
100% of salary for Jayne Cottam.
– Long-term incentive: consists of the face
value of awards (at 150% of salary).
Maximum with share price growth – As
per maximum but with a 50% share price
growth assumed on PSP awards.
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.
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, the
Committee 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 2021/22 at minimum,
on-target and maximum performance
scenarios are set out in the charts below:
Assumptions used in determining the level
of pay-out under given scenarios are as
follows:
Minimum – Base salary at 1 April 2021,
estimated 2021/22 benefits and 13.5% of
salary for pension provision (or cash
allowance).
On-target – Based on what the Director
would receive if performance were on-
target (excluding share price appreciation
and dividends):
– Annual bonus: consists of the on-target
bonus (75% of salary for Jonathan Murphy
and 56.25% of salary for Jayne Cottam).
– Long-term incentive: consists of the
midpoint level of vesting (50% vesting)
under the PSP.
Remuneration scenarios for 2021/22
CEO
(£’000)
2,500
CFO
(£’000)
2,500
– a material misstatement of financial results
2,000
for any period;
– an error or the use of inaccurate
information in assessing the extent to
which any performance condition was
satisfied; or
– circumstances warranting the summary
dismissal of an individual.
1,500
1,000
£544k
500
£1,244k
28%
28%
£2,176k
£1,827k
38%
32%
100%
44%
30%
0
2,000
1,500
1,000
500
0
£1,126k
£966k
41%
27%
32%
£654k
30%
23%
47%
£310k
100%
Fixed
On target
Maximum
Fixed
On target
Maximum
Fixed pay
LTIP
LTIP value with 50% share price growth
Annual Bonus
Fixed pay
LTIP
LTIP value with 50% share price growth
Annual Bonus
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Assura plc Annual Report and Accounts 2021
Approach to service contracts and
cessation of employment
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. Jonathan Murphy’s contract is dated
April 2017 and Jayne Cottam’s contract is
dated August 2017.
Good leaver status
The Committee has discretion to determine
whether an individual is a “good leaver”
under the Company’s incentive plans.
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.
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.
Consideration of employment conditions
elsewhere in Assura when developing the
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.
The Company has a small number of
employees and applies the same broad
policy in relation to incentive compensation
throughout the organisation.
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. A discussion with colleagues in The
Voice on executive remuneration and the
alignment with wider workforce pay took
place shortly after the 2020/21 year end.
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 (as was
the case in relation to the Policy introduced
in 2019). During 2020/21, the Committee
wrote to those shareholders who voted
against the Remuneration Report resolution
at the 2020 AGM to understand their
reasons for doing so. The Committee also
consulted with major shareholders in early
2021 in respect of basic salary changes, as
explained in the Annual Statement from the
Chair of the Remuneration Committee.
Policy table – Non-Executive Directors
Performance measurement
and assessment
None.
Maximum
opportunity
Fees will take account of fee levels
of comparable companies within
the FTSE Real Estate Investment
Trusts and FTSE Real Estate
Investment Services sectors, and
companies of comparable size and
complexity.
The aggregate fees and any
benefits of Non-Executive Directors
will not exceed the limit from time
to time prescribed within the
Company’s Articles of Association
for such fees (currently £700,000
p.a. in aggregate).
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 and/or acting as the
Senior Independent Director.
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.
The Company reserves the right to
provide benefits (including travel and
office support) to the Non-Executive
Directors.
The Company’s practice is to appoint the Non-Executive Directors, including the Chairman, under letters of appointment rather than
service contracts. 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. The dates of
the letters of appointment for the current Non-Executive Directors are October 2017 for Ed Smith, May 2012 for Jenefer Greenwood, June
2018 for Jonathan Davies, June 2019 for Louise Fowler and May 2021 for Emma Cariaga, Noel Gordon and Sam Barrell.
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Annual Report on Remuneration
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 2021. This report has been prepared in accordance with the provisions of the Companies Act 2006 and
the associated reporting regulations. An advisory resolution to approve this report will be put to shareholders at the 2021 AGM.
Consideration by the Committee of matters relating to Directors’ remuneration
The members of the Committee during 2020/21 were Jenefer Greenwood (Committee Chair), Ed Smith, Jonathan Davies and Louise
Fowler. Sam Barrell joined the Committee following her appointment to the Board on 1 May 2021. Jenefer Greenwood will step down from
the Board at the AGM on 6 July 2021 and will be replaced as Committee Chair by Louise Fowler. The members of the Committee have no
personal financial interest, other than as shareholders, in matters to be decided, and no potential conflicts of interest arising from cross-
directorships. The Non-Executives have no day-to-day involvement in running the business.
The Committee is responsible for recommending to the Board the Remuneration Policy for Executive Directors and for setting the
remuneration packages for each Executive Director and the executive tier directly below Board. The Committee sets the fees of the
Chairman and the fees for the Non-Executive Directors are set by the Chairman in conjunction with the CEO. 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 held six meetings during the year. Its activities during and relating to the financial year 2020/21 included:
– Consideration of objectives and targets for annual bonuses
– Consideration of annual pay awards and bonuses
– Consideration of targets and awards under the PSP
– Review of the basic salary levels of the Executive Directors
– Oversight of pay levels for the Executive Committee
– Preparing this report
Advisors to the Committee
Korn Ferry served as independent advisors to the Remuneration Committee during 2020/21, having been appointed with effect from
1 January 2020.
Korn Ferry is a member of the Remuneration Consultants Group and, as such, voluntarily operates under its code of conduct in relation to
executive remuneration consulting in the UK. The Committee reviewed the nature of the services provided by Korn Ferry during the year
and was satisfied that no conflict of interest exists or existed in relation to the provision of these services. The total fees paid to Korn Ferry
for services provided to the Committee during the year were £39,320 (ex VAT). Fees were determined based on the scope and nature of
the projects undertaken for the Committee.
Korn Ferry did not provide additional services to Assura during 2020/21.
The Committee also sought the views of Jonathan Murphy during the year. The CEO is given notice of all meetings and, at the request of
the Chair of the Committee, attends part of the meetings. The CEO may request that he attends and speaks at Committee meetings. In
normal circumstances, the CEO will be consulted on general policy matters and matters concerning the other Executive Director and
employees.
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 is
shown below. Figures provided have been calculated in accordance with the reporting regulations:
£’000
Jonathan Murphy
Jayne Cottam
Year
2020/21
2019/20
2020/21
2019/20
Salary
416
395
234
222
Pensions
56
53
32
30
Taxable
benefits
15
15
13
13
Bonus1
430
233
181
100
Long-term
incentives2,3
268
459
136
124
Other4
2
–
2
–
Total
1,187
1,155
598
489
Total
fixed
487
463
279
265
Total
variable
700
692
319
224
Notes
1. For both Jonathan Murphy and Jayne Cottam a portion of bonus is deferred as explained on page 98.
2. The long-term incentive value for 2020/21 reflects the outturn for the 2018 PSP which vests in 2021 at 33.9%. The vesting share price has been estimated at 74.10 pence,
based on the three-month average share price ended 31 March 2021. Further details are set out below. The long-term incentive value for 2019/20 has been restated to
reflect the value of the shares (inclusive of dividend equivalents) at the time of vesting, being 78.60p on 22 July 2020 for Jonathan Murphy and 73.76p on 9 February 2021
for Jayne Cottam.
3. £53,598 and £27,093 of the 2020/21 figure for Jonathan Murphy and Jayne Cottam respectively is attributable to share price appreciation since the date of grant.
The Committee has not exercised any discretion in relation to this matter.
4. This relates to the value of free shares and matching shares awarded under the terms of the Share Incentive Plan, which was introduced during 2020/21.
Total pension entitlements
The Executive Directors received payments in lieu of pension contributions equivalent to 13.5% of salary respectively for 2020/21.
Benefits
Taxable benefits comprised health insurance, death in service benefits, critical illness, group income protection and company car
allowance.
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Assura plc Annual Report and Accounts 2021
2020/21 annual bonus plan outcome
The bonus scheme for 2020/21 was based on similar measures as used in 2019/20. 80% of the bonus scheme was based on a mixture of
financial and business targets, with 20% of this depending on strategic and operational goals specific to each Executive Director. The
remaining 20% based on personal objectives. The table below includes details of the specific targets and the extent to which they were
achieved.
For 2020/21 the maximum potential bonus awards were 125% of salary for Jonathan Murphy and 100% of salary for Jayne Cottam.
Metric
Financial and business targets
Total Accounting Return
Adjusted EPRA earnings
Growth in total contracted rent roll¹
Strategic and operational goals
Personal objectives
Individual targets
Weight
Threshold
Maximum
Result Bonus achieved
20%
20%
20%
20%
5.3%
£67.7m
£237.8m
See below
8.8%
£78.4m
£358.8m
See below
11.4%
£75.4m
£319m
See below
100%
82%
87%
See below
20%
See below
See below
See below
See below
Note
1. The growth in total contracted rent roll is measured on the basis of the gross increase, which was £319 million. On a net basis, the total contracted rent roll increased £142
million compared with March 2020, factoring in the passage of time on existing leases.
Strategic and operational goals (20% of the total bonus)
For this element of the bonus scheme, each Executive Director had objectives linked to a specific area of strategic and/or operational
importance for the year under review. For Jonathan Murphy, this element of the bonus was based on his success in launching and
delivering on Assura’s social impact strategy, a major area of focus for the business in 2020/21 and critical to Assura’s long-term market
positioning. Various success factors were included for this metric, including: employee engagement and commitment to the social impact
strategy; increasing the public profile of Assura’s impact on society; increased engagement with occupiers on the sustainability agenda,
e.g. through the take-up of new sustainability programmes; recognition from an investment body of Assura’s position as a leading player in
social impact; and delivery of the first year targets across key areas such as progress towards zero carbon construction and community
fund actions.
The Committee assessed Jonathan’s performance against these objectives after the year end and agreed that a bonus of 85% was
payable. In reaching this conclusion, the Committee determined that Jonathan had successfully met many of the targets set for him
although not all objectives had been met in full. In particular, the Committee took into account the following key achievements:
– A strong level of awareness and commitment from the team to the social impact strategy, and an evolved level of understanding on how
this acts as a unifying motivator across the business;
– The successful launch of the SixBySix strategy and its recognition by the investment community as a market-leading approach, with Assura
a target investment for ESG funds;
– The successful launch of Assura’s first Social Bond, generating a strong level of demand from fixed income investors;
– Occupier buy-in to make sustainability-linked improvements; and
– The creation of the Assura Community Fund and its initial funding, to help support charities and other organisations in their health-
improving work around Assura’s buildings.
For Jayne Cottam, this element of the bonus was based on demonstrating further progress in improving operational excellence, i.e.
enhancing the work undertaken in previous years to develop measures designed to improve business processes and increase efficiency
across the Group. Various success indicators were agreed for this metric, including: creation of a Project Board for the process review and
subsequent systems implementation; implement further detailed process reviews across the whole business; have a full tender for all IT
systems requiring an upgrade; preparing the business for systems upgrades in 2021/22; and drive cost and efficiency savings to offset new
system costs.
The Committee assessed Jayne’s performance against these objectives and agreed that a bonus of 80% was payable. In reaching this
conclusion, the Committee determined that performance had been strong but not all objectives had been met in full, in part due to the
challenges of remote working in force for the entire financial year. In particular, the Committee took into account the following key
achievements:
– Reviews of key systems and processes across different aspects of the business, with good progress made in implementation of changes
and new technology where required;
– Groundwork done to establish basis for necessary systems upgrades in 2021/22;
– Cost savings within the finance team achieved despite the growth of the business; and
– The trialling of additional reporting technology to improve access to data on performance across the entire business
Personal objectives (20% of the total bonus)
Personal objectives were set for both Jonathan Murphy and Jayne Cottam based on their individual areas of responsibility. For Jonathan
Murphy, these objectives were based on: championing team welfare as Assura moved to working from home during the pandemic;
continuing to deliver business objectives and meet customer requirements during a period of significant disruption; demonstrating
effective crisis management leadership; and successfully delivering the second year of the Strategic Plan and ensuring appropriate
planning for future years. For Jayne Cottam, the objectives were linked to: effective IR promotion of the social impact strategy; improving
reporting and management of the cost of capital and investment returns; further improvements to the operation of the finance team; and
ensuring business continuity during the pandemic. For both Jonathan and Jayne, success indicators were identified for each objective to
help determine the extent of achievement.
Assura plc Annual Report and Accounts 2021
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CONTINUED
The Committee assessed Jonathan’s performance against his objectives after the year end and agreed that a bonus of 92% was payable. In
reaching this conclusion, the Committee determined that Jonathan had performed exceptionally well during the year and successfully met
many of the targets set for him. In particular, the Committee took into account the following key achievements:
– Clear and effective leadership during an unprecedented period of disruption, with priorities identified and communicated;
– The prioritisation of employee welfare during an unprecedented and unsettling period, with employee support packages put in place to
support wellbeing and an emphasis placed on flexibility;
– Positive feedback from the Voice, Assura’s committee of staff representatives, on the measures taken to adapt to the challenges presented
by the pandemic;
– A very strong level of overall business performance for the year despite the disruption. Under Jonathan’s leadership, Assura was able to
minimise the impact of the pandemic by quickly putting in place effective remote working solutions. As a result, cash collection was largely
unaffected, construction sites were maintained and growth opportunities were identified and delivered;
– Significant strategic progress was made, with primary care at scale gaining momentum and new market entry confirmed; and
– Restructuring of the executive team to further drive performance, with greater levels of cross-business working and a unified property team
structure.
The Committee also assessed Jayne’s performance and agreed that a bonus of 85% was payable in light of the successful achievement of
key individual objectives. Factors taken into account by the Committee included:
– The effective integration of the SixBySix strategy across Assura’s reporting suite and a successful campaign to ensure a positive response
from the market on Assura’s position as a leading social impact investment;
– Significant improvement in the costs of debt through the Social Bond issue and an improvement in RCF pricing;
– Additional enhancements made to the reporting of the cost of capital, with ongoing work undertaken to enhance KPI reporting;
– Impressive leadership of the finance team, with all members of the team performing strongly and taking on additional responsibilities; and
– The overall level of business performance during the year was very strong, evidencing good levels of business continuity despite the shift
to remote working. Finance processes held up well and a number of projects were successfully executed as staff adapted well to the new
ways of working.
In total, the bonus payable to Jonathan Murphy in light of his performance against both the Group and personal objectives was equivalent
to 83% of the maximum payable (103% of his average basic salary for the year). This resulted in a bonus award of £430,077. In line with the
provisions of the Directors’ Remuneration Policy, the amount of the bonus above 100% of Jonathan’s basic salary will be deferred into
shares for two years.
The bonus payable to Jayne Cottam in light of her performance against both the Group and personal objectives was equivalent to 77% of
the maximum payable (77% of her basic salary for the year). This resulted in a bonus award of £180,584, of which 50% will be deferred into
shares for two years, in line with the provisions of the Directors’ Remuneration Policy. This recognises that Jayne is in the process of
building her shareholding towards the guideline specified in the Policy.
Vesting of long-term incentive awards based on performance to 31 March 2021
The LTIP value included in the single figure relates to the awards granted to Jonathan Murphy and Jayne Cottam in July 2018. These awards
will vest in July 2021 based on the achievement of TSR and EPRA EPS performance measured to 31 March 2021.
Under the TSR performance target (50% of awards), which uses a sliding scale, 0% of this part of an award vests for TSR of 5% p.a.
increasing pro-rata to full vesting for TSR of 15% p.a., measured over the three years to 31 March 2021:
Performance target
TSR (50% of awards)
Threshold
TSR
5% p.a.
Maximum
TSR
15% p.a.
Actual
TSR
11.78% p.a.
Vesting %
(max 100%)
67.83%
Under the EPRA EPS performance target (50% of awards), which uses a sliding scale, 0% of this part of an award vests for EPRA EPS growth
of 5% p.a. increasing pro-rata to full vesting for EPRA EPS growth of 15% p.a., measured over the three years to 31 March 2021:
Performance target
EPRA EPS (50% of awards)
Threshold
EPS growth
5% p.a.
Maximum
EPS growth
15% p.a.
Actual
EPS growth
3.85% p.a.
Vesting %
(max 100%)
0%
As a result of TSR (67.83% of awards vest) and EPRA EPS (0% of awards vest) performance, the total vesting percentage is 33.9% and the
gross value of LTIP share awards expected to vest in 2021 is as follows:
Jonathan Murphy
Jayne Cottam
Share price at
31 March 20211
74.10p
74.10p
Proportion
to vest
33.9%
33.9%
Shares
to vest
322,883
163,211
Dividend
equivalents2
38,936
19,681
Total shares
to vest
361,819
182,892
Total
£
268,108
135,523
Notes
1. The share price at 31 March 2021 is based on a three-month average to 31 March 2021.
2. Additional shares awarded in respect of dividend equivalents accrued over the vesting period. This represents the position as at 31 March 2021. The precise number of
additional shares awarded as dividend equivalents will depend on the share price at the time of vesting. Participants will also have an entitlement to additional shares in
respect of further dividends declared prior to the vesting date.
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Assura plc Annual Report and Accounts 2021
Performance Share Plan
The following awards were made under the PSP to the Executive Directors during the year:
Jonathan Murphy
Jayne Cottam
Date of
grant
7 July 20201
7 July 20201
Basis of
award
150% of salary
150% of salary
Face value
of award
£
End of
performance
period
603,165 31 March 2023
338,994 31 March 2023
Note
1. The awards made on 7 July 2020 were granted using the average mid-market share price on the three dealing days prior to the date of grant (78.93 pence). The awards
were granted as nil-cost options and the exercise price is nil.
Details of the outstanding PSP awards are:
Executive
Jonathan Murphy
Jayne Cottam
Date of grant
18 July 2017
3 July 2018
2 July 2019
7 July 2020
9 February 2018
3 July 2018
2 July 2019
7 July 2020
Awards
outstanding at
01/04/20
803,781
951,897
927,714
–
230,967
481,165
521,398
–
Awards
granted during
the year
–
–
–
764,145
–
–
–
429,469
Awards
vested during
the year1
514,419²
–
–
–
147,818
–
–
–
Awards
lapsed during
the year
289,362
–
–
–
83,149
–
–
–
Notes
1. Excludes additional shares awarded in respect of dividend equivalents accrued over the vesting period.
2. Jonathan Murphy sold 45,000 of the shares which vested to make a contribution to the Assura Community Fund.
Interests
outstanding at
31/03/21
–
951,897
927,714
764,145
481,165
521,398
429,469
Normal vesting/
exercise date
From 18 July 2020
From 3 July 2021
From 2 July 2022
From 7 July 2023
– From 9 February 2021
From 3 July 2021
From 2 July 2022
From 7 July 2023
For PSP awards granted prior to 2019, a two-year post-vesting holding period applies to the extent that, on vesting, a participant does not
comply with the shareholding guideline in place at the time (currently 300% of salary for the CEO and 200% for the CFO). For PSP awards
granted in 2019 and subsequent years, a two-year post-vesting holding period applies irrespective of whether or not the shareholding
guideline has been met.
Outstanding PSP awards vest based on performance against the following targets which encourage the generation of sustainable
long-term returns to shareholders over a three-year performance period commencing at the start of the financial year of grant:
2018 PSP awards:
50% of awards
50% of awards
Absolute average
annual compound TSR
< 5% p.a.
5% p.a.
Between 5% and 15% p.a.
15% p.a. or more
Vesting schedule
(% of the TSR part which vest)
0%
0%
Pro-rata between 0% and 100%
100%
EPRA EPS growth
< 5% p.a.
5% p.a.
Between 5% and 15% p.a.
15% p.a. or more
Vesting schedule
(% of the EPS part which vest)
0%
0%
Pro-rata between 0% and 100%
100%
2019 PSP awards:
50% of awards
50% of awards
Absolute average
annual compound TSR
< 5% p.a.
5% p.a.
Vesting schedule
(% of the TSR part which vest)
0%
10%
Between 5% and 15% p.a. Pro-rata between 10% and 100%
100%
15% p.a. or more
EPRA EPS growth
< 5% p.a.
5% p.a.
Vesting schedule
(% of the EPS part which vest)
0%
10%
Between 5% and 15% p.a. Pro-rata between 10% and 100%
100%
15% p.a. or more
Assura plc Annual Report and Accounts 2021
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CONTINUED
2020 PSP awards:
As disclosed in last year’s report, for these awards new ESG performance targets were introduced to supplement the TSR and EPRA EPS
measures:
33% of awards
33% of awards
Absolute average
annual compound TSR
< 5% p.a.
5% p.a.
Vesting schedule
(% of the TSR part which vest)
0%
10%
Between 5% and 15% p.a. Pro-rata between 10% and 100%
100%
15% p.a. or more
EPRA EPS growth
< 5% p.a.
5% p.a.
Vesting schedule
(% of the EPS part which vest)
0%
10%
Between 5% and 15% p.a. Pro-rata between 10% and 100%
100%
15% p.a. or more
The final 33% of these awards is split into two halves. For the first half, vesting will depend on the proportion of buildings receiving an EPC
rating of B or higher, as set out below:
Proportion of portfolio receiving an EPC rating of B or higher by March 2023
< 60%
60%
Between 60% and 80%
80%
Between 80% and 100%
100%
Vesting schedule
(% of the EPC element which vest)
0%
10%
Pro-rata between 10% and 50%
50%
Pro-rata between 50% and 100%
100%
For the second half, vesting will depend on the Remuneration Committee’s assessment of the success of Assura’s social impact strategy,
with the Committee judging the extent to which targets linked to the main elements of the strategy are met. These targets involve metrics
linked to:
– Buildings (including additional measures to the EPC rating set out above)
– Operations (including suppliers and the use of contractors)
– People (including diversity and employee engagement)
– Communities
– Investors
In considering the extent to which awards vest under this element of the PSP, the Committee will review progress against the targets by
the end of the 2022/23 financial year. In the Directors’ Remuneration Report for that year, the Committee will explain in detail its rationale
for determining the appropriate vesting percentage, taking into account the performance against the targets set and other relevant
factors.
In addition, the Committee will also reflect on Assura’s overall financial and business performance over the course of the performance
period when determining the extent of vesting.
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,
is shown below. Figures provided have been calculated in accordance with the reporting regulations:
Non-Executive Director (£’000)
Ed Smith
Jenefer Greenwood
Jonathan Davies1
Louise Fowler2
David Richardson3
2020/21
2019/20
2020/21
2019/20
2020/21
2019/20
2020/21
2019/20
2019/20
Basic
fees
155.8
153.0
40.1
39.4
40.1
39.4
40.1
32.8
10.1
Additional
fees4
–
–
9.1
8.9
18.1
13.3
–
–
4.6
Total
fees
155.8
153.0
49.2
48.3
58.2
52.7
40.1
32.8
14.7
Total
fixed
155.8
153.0
49.2
48.3
58.2
52.7
40.1
32.8
14.7
Total
variable
–
–
–
–
–
–
–
–
–
Notes
1. Jonathan Davies was appointed as Senior Independent Director and Chairman of the Audit Committee on 2 July 2019.
2. Louise Fowler was appointed to the Board on 3 June 2019.
3. David Richardson retired from the Board on 2 July 2019.
4. Additional fees represent Senior Independent Director and Chairman of Board Committee fees.
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Assura plc Annual Report and Accounts 2021
Statement of Directors’ shareholding and share interests (audited)
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 300%
of their basic salary in the Company if they participated in the former Value Creation Plan (i.e. Jonathan Murphy), or 200% of salary for other
Executive Directors (i.e. Jayne Cottam). The Remuneration Committee notes that Jayne Cottam is building her holding in Assura shares
following her appointment to the Board in 2017. As set out in the Remuneration Policy, 50% of any annual bonus is required to be deferred
into shares for two years where the shareholding guideline has not been met.
Shareholding and other interests at 31 March 2021
Director
Jonathan Murphy
Jayne Cottam
Ed Smith
Jenefer Greenwood
Jonathan Davies
Louise Fowler
Shares required
to be held
(percentage of
salary)
300
200
–
–
–
–
Number of
shares required
to hold1
1,788,183
670,003
–
–
–
–
Number of
beneficially
owned shares2
2,427,390
266,966
96,490
117,256
63,360
–
Shareholding
requirement
met?
Yes
No
n/a
n/a
n/a
n/a
Total number of
scheme
interests3
2,643,756
1,432,032
–
–
–
–
Notes
1. Shareholding requirement calculation is based on the share price at the end of the year (72.1 pence at 31 March 2021).
2. Beneficial interests include shares held directly or indirectly by connected persons.
3. This relates to unvested PSP awards (see also the table on page 99).
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
Investment Association 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, with an inner 5% limit applying to discretionary plans.
There has been no movement in Directors’ shareholdings since the year-end, except for shares issued relating to the April dividend
payment by Ed Smith, Jonathan Murphy and Jayne Cottam under the scrip alternative.
Performance graph and table
The Committee believes that the Executive Directors’ Remuneration Policy and the supporting reward structure provide clear alignment
with the Company’s performance. The Committee believes it is appropriate to monitor the Company’s performance against the FTSE All
Share Real Estate Investment Trusts index for these purposes. 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 ten-year period as required
by the reporting regulations. Assura is a member of both of these indices and therefore these are viewed as appropriate comparators for
the purpose of the regulations.
Rebased TSR
300
250
200
150
100
50
0
March
2011
March
2012
March
2013
March
2014
March
2015
March
2016
March
2017
March
2018
March
2019
March
2020
March
2021
Assura
FTSE All Share
FTSE Real Estate Investment Trusts
Assura plc Annual Report and Accounts 2021
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CONTINUED
The table below shows the CEO’s remuneration packages over the past ten years:
Year
2020/21
2019/20
2018/19
2017/18
2016/171
2016/171
2015/16
2014/15
2013/14
2012/13
2011/12
Name
Jonathan Murphy
Jonathan Murphy
Jonathan Murphy
Jonathan Murphy
Jonathan Murphy
Graham Roberts
Graham Roberts
Graham Roberts
Graham Roberts
Graham Roberts
Nigel Rawlings3
Single figure
£’0002
1,187
1,155
794
1,513
1,232
3,489
3,747
677
680
674
395
Bonus
(% of max)
83
47
61
84
93
–
71
90
95
100
85
LTI
(% of max)
34
64
32
100
100
100
100
–
–
–
–
Notes
1. Both Graham Roberts’ and Jonathan Murphy’s remuneration details have been included as they both served as CEO during the year.
2. 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.
3. 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.
Percentage change in Directors’ remuneration
The table below compares the percentage change in pay of all Directors (including salary and fees, taxable benefits and annual bonus)
from 2019/20 to 2020/21 with the average percentage change for employees, as required by the reporting regulations:
Director
Executive Directors
Jonathan Murphy
Jayne Cottam
Non-Executive Directors
Ed Smith
Jenefer Greenwood
Jonathan Davies¹
Louise Fowler¹
Employees
Average per employee – parent company²
Average per employee – group
Salary/fees
% change
Taxable
benefits
% change
Bonus
% change
5.3
5.4
1.8
1.9
10.6
22.3
–
4.3
–
–
–
–
–
–
–
1.7
84.5
81.0
–
–
–
–
–
5.5
Notes
1. Percentage change reflects the fact that Jonathan Davies and Louise Fowler were appointed part way through the prior financial year.
2. No employees (other than Directors) are directly employed by Assura plc.
CEO pay ratio information
Although Assura does not have more than 250 UK employees, and is thus not formally required to publish the ratio of the CEO’s pay to the
wider UK employee base, we have again decided to do so as a matter of good practice.
Year
2020/21¹
Total pay and benefits
Salary
2019/201
Total pay and benefits
Salary
Method
Option A
Option B
25th percentile
pay ratio
45:1
£26,372
£23,414
35:1
£32,561
£28,619
Median
pay ratio
22:1
£54,425
£43,729
21:1
£54,999
£41,205
75th percentile
pay ratio
14:1
£82,274
£60,571
15:1
£78,472
£60,000
Note
1. The calculations of the pay for the employees at the different levels have been calculated as at 31 March 2021 for the 2020/21 figures and as at 31 March 2020 for the
2019/20 figures. Where relevant, full-time equivalent employee pay was calculated by applying a proportionate increase to the pay and benefits of part-time employees.
Employees who joined Assura following the acquisition of Apollo in February 2021 have been excluded from the calculations given they were not fully integrated into
Assura’s remuneration policies for the vast majority of the financial year.
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Assura plc Annual Report and Accounts 2021
Option A was chosen for the pay ratio calculation for 2020/21 as it ensures that the most accurate and up-to-date employee pay
information has been used. Option B was chosen for the prior year to ensure that the calculation was undertaken in the most efficient
manner possible. We have considered carefully the remuneration of the employees identified through this exercise and believe that they
are reasonably representative of the 25th, 50th and 75th percentiles of remuneration in both 2020/21 and 2019/20. This assessment took
into account their pay arrangements, the pay of other employees at a similar level with the organisation and pay structures and levels
across the Company as a whole.
The median pay ratio for 2020/21 is similar to that for 2019/20, reflecting the similar level of total CEO pay for each year and the lack of
material changes to the total pay of employees at the median level of the organisation. The Committee believes that the median pay ratio
for the year is consistent with Assura’s wider pay, reward and progression policies for its employees and takes into account the pay and
incentives available to employees at or around the median level. The ratio reflects the differentials between the CEO’s pay and others
within the organisation, most notably in terms of the incentives received by the CEO during the year under review. Together, the
performance-related incentives for the CEO (annual bonus and PSP) make up the largest component of his single figure for 2020/21. The
bonus payment reflects a high level of achievement against the financial and non-financial targets set for the year, as discussed on page 97,
and the value ascribed to the PSP award reflects partial achievement of the performance conditions, as disclosed on page 99. Although
the vast majority of other colleagues participate in a bonus scheme, the level of award for the CEO is the highest in the organisation,
reflecting the responsibilities of the role. In addition, PSP awards have been limited to Executive Directors and other members of the
Executive Committee, and therefore the employee remuneration disclosed in the table above does not include a value for long-term
incentives. The Committee has noted that the pay ratio for the 25th percentile is notably higher for 2020/21 than for 2019/20. This reflects
the appointment during the financial year of a number of new junior colleagues whose salary and total pay is at the lower end of the overall
spectrum within the organisation.
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
2020/21
£m
6.5
73.6
2019/20
£m
5.8
66.2
% change
12.0
11.2
Payments to past Directors or for loss of office
No Executive Director left the Company during the year. No payments for compensation for loss of office were paid to, or receivable by,
any Director for that or any earlier year.
Statement of shareholder voting
The table below shows the results of voting on remuneration resolutions at recent AGMs:
AGM resolution
Remuneration Policy (2019 AGM)
Annual Report on Remuneration (2020 AGM)
Votes for
1,615,726,915
1,732,647,243
%
89.43
83.74
Votes against
190,877,698
336,543,380
% Votes withheld
151,645
59,655
10.57
16.26
After the 2020 AGM, the Chair of the Committee wrote to a number of shareholders who it was understood had voted against the Annual
Report on Remuneration but who had not communicated their rationale for doing so ahead of the AGM. This process was helpful in
gaining some additional feedback on matters of concern to specific investors. The Committee gave further attention to these matters later
in the financial year when determining Directors’ remuneration for 2021/22 and will also revisit some of the points made during the
upcoming review of the Remuneration Policy.
Assura plc Annual Report and Accounts 2021
103
Strategic reportGovernanceFinancial statementsAdditional information DIRECTORS’ REMUNERATION REPORT
CONTINUED
Statement of implementation of Remuneration Policy for 2021/22
Executive Directors
Salary
As explained in the Annual Statement from the Chairman of the Remuneration Committee, the salaries of the Executive Directors were
increased with effect from 1 October 2020, this increase representing the deferred implementation of the increase the Committee
originally envisaged making in April 2020. The Committee has decided to apply a further increase to the Executive Directors’ salaries with
effect from 1 April 2021, up to the limit set out in the Remuneration Policy. The full rationale for this further increase is set out in the Annual
Statement from the Chairman of the Committee.
The salaries with effect from 1 April 2021 and the relative increases are set out below:
Executive Director
Jonathan Murphy
Jayne Cottam
1 Oct 2020
salary
£’000
430
242
1 April 2021
salary
£’000
466
262
% change
8.5%
8.5%
Pension and benefits
Jonathan Murphy and Jayne Cottam will continue to receive payments in lieu of pension contributions equivalent to 13.5% of salary
respectively. Benefits will be provided in line with the Remuneration Policy.
Annual bonus
The maximum bonus opportunity for 2021/22 will remain at 125% of salary for Jonathan Murphy and 100% of salary for Jayne Cottam. The
on-target levels will remain at the current level of 75% of salary for Jonathan and 56.25% of salary for Jayne. The Committee remains aware
that these on-target levels are slightly higher than the 50% of total opportunity recommended by some investors and advisory bodies as
the maximum applicable for on-target levels of performance. The Committee believes that the current framework is appropriate given the
levels of stretch inherent in the bonus targets, but will review this matter again as part of the wider review of the Remuneration Policy later
in 2021.
The performance objectives under the annual bonus plan for 2021/22 will continue to relate to measures which are critical to Assura’s
strategic goals and will include a mixture of financial and non-financial goals. The metrics will be similar to those in place for 2020/21
although there will be a slightly increased weighting on financial measures, recognising the importance of these metrics to Assura’s
short-term goals. The metrics and weightings will therefore be: total accounting return (20%), EPRA earnings (25%), growth in total
contracted rental roll (25%) and personal objectives (20%). The final 10% of the bonus will be based on key strategic and operational goals
specific to each Executive Director. For the CEO, payments will depend on his success in overseeing the continued successful roll-out of
the strategic plan. For the CFO, this final element will be linked to further progress in improving operational excellence. 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. Appropriate levels of disclosure of the 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.
As was the case with the bonus for earlier years, a deferred share element will apply, under which up to 50% of any bonus earned by an
Executive Director will be deferred into shares for two years to the extent that the Executive Director does not already hold shares worth
at least equal to the relevant shareholding guideline (300% of salary for the CEO and 200% of salary for the CFO). In addition, any bonus
earned above 100% of salary will be similarly deferred (regardless of shareholding).
Long-term incentives
A further grant of awards will be made under the PSP to Jonathan Murphy and Jayne Cottam over shares worth 150% of salary. These will
vest subject to the extent to which three-year TSR, EPRA EPS and key ESG performance targets are satisfied. No changes will be made to
the required growth ranges for the TSR and EPRA EPS measures. As such, the performance targets for the 2021 PSP awards, which are
expected to be granted in July 2021, will be as follows:
33% of awards
33% of awards
EPRA EPS growth
< 5% p.a.
5% p.a.
Vesting schedule
(% of the EPS part which vest)
0%
10%
Between 5% and 15% p.a. Pro-rata between 10% and 100%
100%
15% p.a. or more
Absolute average
annual compound TSR
< 5% p.a.
5% p.a.
Vesting schedule
(% of the TSR part which vest)
0%
10%
Between 5% and 15% p.a. Pro-rata between 10% and 100%
100%
15% p.a. or more
104
Assura plc Annual Report and Accounts 2021
The final 33% of the awards will vest subject to the proportion of buildings receiving an EPC rating of B or higher (for one half of this
element) and the Committee’s assessment of the success of Assura’s social impact strategy (for the other half of this element), as set
out below:
Proportion of portfolio receiving an EPC rating
of B or higher by 31 March 2024
< 45%
45%
Between 45% and 65%
65%
Between 65% and 100%
100%
Vesting schedule
(% of the EPC element which vest)
0%
10%
Pro-rata between 10% and 50%
50%
Pro-rata between 50% and 100%
100%
The EPC targets are similar to those which are in place for the PSP award granted in July 2020. The Committee has, however, agreed to
reduce the threshold and intermediate vesting targets from 60% (threshold) and 80% (intermediate) to 45% (threshold) and 65%
(intermediate), as set out in the table above. This follows further assessment of the expected levels of achievement against this measure
over the coming three-year period, taking into account the impact of the pandemic on progress during 2020/21 and the desire to set
challenging but achievable targets. Assura has a stated goal of 100% of the portfolio having an EPC rating of B or higher by March 2026 (see
page 25) and the revised targets are consistent with what can realistically be achieved by March 2024. Notwithstanding these adjustments,
the Committee wishes to ensure that full vesting continues to require stretching outperformance, and therefore full vesting of this portion
of the PSP award will continue to require 100% of the portfolio having an EPC rating of B or higher. This target is unchanged from the award
granted in July 2020.
For the element of the PSP based on Assura’s social impact strategy, the Committee will judge the extent to which targets linked to the
main elements of the strategy are met. These targets involve metrics linked to:
– Buildings (including additional measures to the EPC rating set out above)
– Operations (including suppliers and the use of contractors)
– People (including diversity and employee engagement)
– Communities
– Investors
In considering the extent to which awards vest under this element of the PSP, the Committee will review progress against the targets by
the end of the 2023/24 financial year. In the Directors’ Remuneration Report for that year, the Committee will explain in detail its rationale
for determining the appropriate vesting percentage, taking into account the performance against the targets set and other relevant
factors.
In addition, the Committee will also reflect on Assura’s overall financial and business performance over the course of the performance
period when determining the extent of vesting.
A two-year post vesting holding period will also apply.
Non-Executive Directors
The following table sets out the fee rates for the Non-Executive Directors from 1 April 2021:
Executive Director
Chairman fee
Non-Executive Director base fee
Additional fee for chairing of Audit and Remuneration Committee
Additional fee for Senior Independent Director
By order of the Board
Jenefer Greenwood
Chair of the Remuneration Committee
17 May 2021
2020/21
£’000
155.8
40.1
9.1
9.1
2021/22
£’000
158.1
40.7
9.2
9.2
% change
1.5
1.5
1.5
1.5
Assura plc Annual Report and Accounts 2021
105
Strategic reportGovernanceFinancial statementsAdditional information 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 2021. The Corporate Governance
Statement set out on page 70 forms part of
this report.
Dividends
Details of the dividend can be found in Note
18 to the accounts. The Group benefits from
brought forward tax losses, which resulted
in two of the four dividends paid during the
year being paid as ordinary dividends. The
April 2020 and October 2020 dividend were
both paid as a PID.
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 on page 145.
Principal activities
Assura plc is a leading primary care
property investor and developer. It owns
and procures good quality primary care
properties across the UK.
The subsidiary and associated undertakings
are listed in Note 8 to the accounts.
CFO 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 in the CFO Review on
pages 62 to 67, which are incorporated in
this report by reference.
Future developments
Details of future developments are
discussed on page 64 in the CFO Review.
Going concern
The Company’s going concern statement is
on page 68.
Long-term viability statement
The Company’s viability statement is on
page 68.
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 risk management
and internal control systems, including
financial, operational and compliance
control systems.
The Board monitors these systems on an
ongoing basis and this year’s review found
them to be operating effectively.
Price risk, credit risk, liquidity risk and
cash flow risk
Full details of how these risks are mitigated
can be found in Note 22 to the accounts.
Details of the Group’s dividend policy can
be found in the CFO review on page 65.
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
2021, the average number of days taken by
the Group to pay its suppliers was 20 days
(2020: 28 days).
Further details of how the Group manages
and monitors relationships with suppliers,
and our supplier policies can be found on
page 46.
Donations
In the year to 31 March 2021, Assura donated
£2,608,700 to charities (2020: £103,500),
with all activity through the Assura
Community Fund which is administered by
the Cheshire Community Foundation, and
no contributions were made for political
purposes (2020: nil). More details of our
chosen charities can be found on our
website and pages 42 to 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 award proportionate
to the individual’s contribution. 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. 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 Directors and being given the
opportunity to express views and opinions.
Further details of how the Directors engage
with employees can be found in the
Employees section on pages 48 to 49 and in
the Corporate Governance section on
pages 80 to 81.
The Group is committed to the promotion
of equal opportunities, supported by its
Equal Opportunity and 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 are provided. Further details
are provided on page 49.
Share capital
Assura has a single class of share capital
which is divided into Ordinary Shares of
nominal value 10 pence each ranking pari
passu. No other securities have been issued
by the Company. At 31 March 2021, there
were 2,671,853,938 Ordinary Shares in issue
and fully paid, none of which are held in
treasury. No shares were bought back
during the year. Further details relating to
share capital, including movements during
the year, are set out in Note 17 to the
financial statements.
Subsequent to the year end, the Company
issued 3,011,418 Ordinary Shares via scrip in
respect of the April 2020 dividend paid and
a further 682,128 Ordinary Shares as part
consideration for the acquisition of a
medical centre. As at 17 May 2021, the
number of Ordinary Shares in issue is
2,675,547,484.
The Board manages the business of Assura
under the powers set out in the Articles of
Association. These powers include the
Directors’ ability to issue or buy back
shares. Shareholders’ authority to empower
the Directors to make market purchases of
up to 10% of its own Ordinary Shares is
sought at the AGM each year.
All the issued and outstanding Ordinary
Shares of Assura have equal voting rights
with one vote per share. There are no
special control rights attaching to them
save that the control rights of Ordinary
Shares held in the Employee Benefit Trust
(“EBT”) can be directed by the Company to
satisfy the vesting of outstanding awards
under the PSP.
106
Assura plc Annual Report and Accounts 2021
Amendments to the Articles
of Association
The Articles can only be amended, or new
Articles adapted, by a resolution passed by
shareholders in a general meeting and
being approved by at least three quarters
of the votes cast.
Change of control
The Group’s financing agreements afford
the lender a right to mandatory repayment
on change of control following a takeover.
The Company’s PSP contains provisions that
take effect in such an event but do not
entitle participants to a greater interest in
the shares of the Company than created by
the initial grant or award under the relevant
plan.
Annual General Meeting
The AGM will be held on 6 July 2021. The
principal meeting location will be at the
offices of CMS, Cannon Place, 78 Cannon
Street, EC4N 6AF. However, if it is not
possible or advisable for the Board to meet
in person, the AGM will be held at the
Chairman’s private residence in Kent.
The AGM will address formal matters only.
A question and answer session for
investors will be hosted by the Chairman
on the Investor Meet Company platform for
which investors can register at this link
(https://www.investormeetcompany.com/
assura-plc/register-investor). Shortly after
the meeting, the Company will publish on
its website the result of the AGM.
Both the Directors’ Report on pages 106
and 107 and the Strategic Report on pages 1
to 68 were approved by the Board and
signed on its behalf.
Orla Ball
Company Secretary
17 May 2021
The rights, including full details relating to
voting of shareholders and any restrictions
on transfer relating to Assura’s Ordinary
Shares, are set out in the Articles and in the
explanatory notes that accompany the
Notice of the 2020 AGM. These documents
are available on Assura’s website at:
www.assuraplc.com. Assura is not aware of
any agreements or control rights between
existing shareholders that may result in
restrictions on the transfer of securities or
on voting rights. The EBT is used to act as a
vehicle for the issue of new shares under
the PSP. As at 31 March 2021, the EBT held
213,319 Ordinary Shares (2020: nil) related to
restricted share awards under the PSP. A
dividend waiver is in place from the Trustee
in respect of all dividends payable by
Assura on shares which it holds in trust.
Interests in voting rights
As at 17 May 2021, the Company had been
notified of the following interests in
accordance with Disclosure Guidance and
Transparency rules 5:
31 March 2021
17 May 2021
Percentage
of Ordinary
Shares
10.67
Percentage
of Ordinary
Shares
11.01
Name of
shareholder
BlackRock, Inc.
Resolution
Capital Limited
Legal & General
Group plc
Subject to provisions of the Act, the
Articles, and to any directions given by
special resolution, the business of the
Company shall be managed by the Board,
which may exercise all the powers of the
Company.
The Directors may exercise all the powers of
the Company to borrow money.
There are no agreements between the
Company and its Directors or employees
providing for compensation for loss of
office or employment or otherwise that
occurs specifically because of a takeover.
The Company has arranged qualifying
third-party indemnity insurance cover in
respect of legal action against its Directors,
including all Directors of the wholly owned
subsidiaries within the Group structure.
Competition and Markets Authority
(“CMA”) Order
The Company confirms that it has complied
with the Statutory Audit Services for Large
Companies Market Investigation (Mandatory
use of Competitive Tender Processes and
Audit Committee Responsibilities) Order
2014 published by the CMA on 26
September 2014.
5.17 No change
3.01 No change
GHG emissions and energy usage
Details of greenhouse gas emissions from
employee and head office activities can be
found on page 53.
Directors
The appointment and replacement of
Directors is governed by Assura’s Articles of
Association, the UK Corporate Governance
Code, the Companies Act 2006 (“The Act”)
and related legislation. The Board may
appoint a Director either to fill a casual
vacancy or as an addition to the Board so
long as the total number of Directors does
not exceed the limit prescribed in the
Articles. An appointed Director must retire
and seek election to office at the next AGM.
In addition to any power of removal
conferred by the Act, Assura may by
ordinary resolution remove any Director
before the expiry of their period of office
and may, subject to the Articles, by ordinary
resolution appoint another person who is
willing to act as a Director in their place. In
line with the Code and the Board’s policy,
all Directors are required to stand for
re-election at each AGM.
The annual quantity of energy consumed
from activities for which the company is
responsible is 324,140 kWh. This is the
energy consumed by employees either
through our head office activities or
through homeworking.
Auditor
Each of the persons who is a Director at the
date of approval of this annual report
confirms that:
– 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.
This confirmation is given and should be
interpreted in accordance with the
provisions of section 418 of the Act.
The Directors, on recommendation from the
Audit Committee, intend to place a
resolution before the AGM to appoint EY as
auditor for the year ending 31 March 2022.
Assura plc Annual Report and Accounts 2021
107
Strategic reportGovernanceFinancial statementsAdditional information DIRECTORS’ RESPONSIBILITY STATEMENT
The Directors are responsible for the
maintenance and integrity of the corporate
and financial information included on the
Company’s website. Legislation in the
United Kingdom governing the preparation
and dissemination of financial statements
may differ from legislation in other
jurisdictions.
We confirm that to the best of our
knowledge:
– The financial statements, prepared in
accordance with IFRSs as adopted
pursuant to Regulation (EC) 1606/2002 as
it applies in the EU, give a true and fair
view of the assets, liabilities, financial
position and profit of the Company 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
Company 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, is fair,
balanced and understandable and
provides the information necessary for
shareholders to assess the Company’s
position and performance, business model
and strategy.
By order of the Board
Orla Ball
Company Secretary
17 May 2021
The Directors are responsible for preparing
the annual report and the financial
statements in accordance with applicable
law and regulations.
Company law requires the Directors to
prepare financial statements for each
financial year. Under that law the Directors
are required to prepare the Group financial
statements in accordance with international
accounting standards in conformity with
the requirements of the Companies Act
2006 and International Financial Reporting
Standards (“IFRSs") adopted pursuant to
Regulation (EC) No 1606/2002 as it applies
in the EU. The Directors have also chosen to
prepare the Parent Company financial
statements under IFRSs adopted pursuant
to Regulation (EC) 1606/2002 as it applies in
the EU. 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 Act
2006. 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.
108
Assura plc Annual Report and Accounts 2021
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ASSURA PLC
Report on the audit of the financial statements
1. Opinion
In our opinion:
– the financial statements of Assura plc (the “Parent Company”) and its subsidiaries (the “Group”) give a true and fair view of the state of
the Group’s and of the Parent Company’s affairs as at 31 March 2021 and of the Group’s profit for the year then ended;
– the Group financial statements have been properly prepared in accordance with international accounting standards in conformity with
the requirements of the Companies Act 2006 and International Financial Reporting Standards (“IFRSs”) adopted pursuant to Regulation
(EC) No 1606/2002 as it applies in the European Union (“EU”);
– the Parent Company financial statements have been properly prepared in accordance with international accounting standards in
conformity with the requirements of the Companies Act 2006; and
– the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements, which comprise:
– the Consolidated and Parent Company Income Statement;
– the Consolidated and Parent Company Balance Sheets;
– the Consolidated and Parent Company Statements of Changes in Equity;
– the Consolidated and Parent Company Cash Flow Statement;
– the related Notes 1 to 24 and the Parent Company Notes A to G.
The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable law and
international accounting standards in conformity with the requirements of the Companies Act 2006 and IFRSs adopted pursuant to
Regulation (EC) No 1606/2002 as it applies in the EU. The financial reporting framework that has been applied in the preparation of the
Parent Company financial statements is applicable law and international accounting standards in conformity with the requirements of the
Companies Act 2006.
2. Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities
under those standards are further described in the auditor’s responsibilities for the audit of the financial statements section of our report.
We are independent of the Group and the Parent Company in accordance with the ethical requirements that are relevant to our audit of
the financial statements in the UK, including the Financial Reporting Council’s (the ”FRC’s”) Ethical Standard as applied to listed public
interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. The non-audit services
provided to the Group and Parent Company for the year are disclosed in Note 4 to the financial statements. We confirm that the non-audit
services prohibited by the FRC’s Ethical Standard were not provided to the Group or the Parent Company.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
3. Summary of our audit approach
Key audit matters
The key audit matter that we identified in the current year was:
– Valuation of the completed investment property (excluding properties under development).
Within this report, key audit matter is identified as follows:
(>) denotes similar level of risk
Materiality
The materiality applied for the Group financial statements was £30.6 million which was determined on the basis of 2% of net assets and
specific materiality applied was £3.3 million which was determined on the basis of 5% of EPRA earnings (as defined in Note 6 to the
financial statements).
Scoping
The Group audit team performed full scope audit procedures giving a coverage of 100% of the Group’s profit and net assets.
Significant changes in our approach
There were no significant changes in our approach in the current year.
Assura plc Annual Report and Accounts 2021
109
Strategic reportGovernanceFinancial statementsAdditional information INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ASSURA PLC
CONTINUED
4. Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the preparation
of the financial statements is appropriate.
Our evaluation of the Directors’ assessment of the Group and Parent Company’s ability to continue to adopt the going concern basis of
accounting included:
– obtaining an understanding of relevant controls related to management’s process for evaluating the Group’s ability to continue as a going
concern, including the identification and evaluation of the relevant business risks and the method, model and assumptions applied by
management;
– obtaining management’s approved going concern model, including the sensitivities performed;
– performing a retrospective review of management’s historical accuracy of forecasting;
– challenging the assumptions and sensitivities used in management’s going concern model with reference to analyst reports, market data
and other external information;
– assessing the appropriateness of the scenario analysis, including the ‘additional stress-testing’ performed by management with reference
to analyst reports and forecasts, historical performance and other external data;
– assessing the Group’s position in relation to its debt facilities and respective covenants at the period end date and throughout the going
concern period using forecast performance with management’s going concern model; and
– evaluating the appropriateness of management’s disclosures in the financial statements on going concern.
– Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually
or collectively, may cast significant doubt on the Group and Parent Company’s ability to continue as a going concern for a period of at
least twelve months from when the financial statements are authorised for issue.
In relation to the reporting on how the Group has applied the UK Corporate Governance Code, we have nothing material to add or draw
attention to in relation to the Directors’ statement in the financial statements about whether the Directors considered it appropriate to
adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this
report.
5. Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements
of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we
identified. These matters included those, which had the greatest effect on the overall audit strategy, the allocation of resources in the
audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and
we do not provide a separate opinion on these matters.
5.1. Valuation of Investment property (excluding properties under development) (>)
Key audit matter
description
The Group owns and manages a portfolio of 609 (2020: 576) modern primary healthcare properties that are
carried at fair value in the financial statements. The portfolio is valued at £2,410 million as at 31 March 2021 (2020:
£2,082 million) and comprises the majority of the assets in the Group balance sheet.
The Group uses professionally qualified external valuers, (the “Valuers”), to fair value the Group’s portfolio at half-
yearly intervals. The Valuers are engaged by the Directors and perform their work in accordance with the Royal
Institution of Chartered Surveyors (“RICS”) Valuation – Professional Standards. The Valuers used by the Group are
independent and have considerable experience in the markets in which the Group operates.
In determining a property’s valuation, the Valuers take into account property specific information such as current
tenancy agreements and rental income attached to the asset. The portfolio (excluding development properties)
is valued by the investment method of valuation.
The fair value of the Group’s property portfolio is primarily derived by net initial yield (“NIY”) with the Valuers and
Assura looking to market based factors such as net equivalent yield (“NEY”) and estimated rental value (“ERV”) to
support the valuation number.
The estimation of the property valuations, by reference to net initial yield adopted, is a significant judgement
area, underpinned by a number of assumptions relating to the volume of transactional evidence in the sector and
the characteristics of the individual property and lease like current tenancy agreements, rental income, condition
and location of the property and future rental prospects. Further, the judgemental nature of the yields used in
the valuation process is compounded by the uncertainty caused by COVID-19 and Brexit, which has resulted
in fluctuations in the investment and occupier markets. Recent market information supports that the primary
healthcare market has shown resilience however there remains judgement in the estimations made.
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Key audit matter
description
continued
We considered a variety of factors and inputs to focus our key audit matter on those investment properties
within the portfolio that carry the highest level of risk. This involved identifying a common range for NIY across
the portfolio of 4% – 6.5%, through reference to market reports and data. This in combination with other factors
such as weighted average unexpired lease terms (“WAULTs”), unusual market value changes, NIY and NEY
changes year on year informed our determination of the assets that had the greatest characteristics of risk
associated with them.
Given the high level of judgement involved, we determined that there was a potential for fraud through
manipulation of the net initial yield year on year to result in optimistic valuations on an asset level. The inherent
subjectivity in relation to estimation of yields, coupled with the fact that only a small percentage difference in
individual property valuations, when aggregated, could result in a material misstatement on the Statement of
Comprehensive Income and the Statement of Financial Position, warrants specific audit focus in this area.
Valuation of property represents a key source of estimation uncertainty for the Group, as described in the
Group’s accounting policies in Note 2, and a significant financial reporting matter considered by the audit
committee, as described in page 85. Further details are disclosed in Note 9 to the financial statements.
Given the inherent subjectivity involved in the valuation of investment properties, the need for detailed
market knowledge when determining the most appropriate assumptions, and the technicalities of a valuation
methodology, we involved our internal valuation specialists (qualified chartered surveyors) in addressing the key
audit matter.
How the scope of
our audit responded
to the key audit
matter
In conjunction with our internal valuation specialists, the following procedures were performed on those assets
in the portfolio having the highest level of risk:
– We obtained an understanding of management’s and the Valuers controls over data, model and assumptions,
including assessing management’s process and control for reviewing and challenging the work of the external
Valuers as well as management’s experience and knowledge to undertake this activity. We observed discussions
between Assura’s portfolio managers and the Valuers, which demonstrated appropriate challenge before final
valuations were determined.
– We assessed the accuracy and completeness of information provided to the Valuers by agreeing (on a sample
basis) to underlying leases and other supporting documents for observable inputs.
– We compared the portfolio of assets used by the Valuers to an estimated range of expected yields, determined
via reference to published benchmarks, and to recent transactions. Where assumptions were outside the
expected range or otherwise deemed unusual, and/or valuations appeared to experience unexpected
movements, we undertook further investigations and, where necessary, held further discussions with
management and the Valuers in order to challenge the assumptions and impacts upon the valuations.
– We reviewed the valuation reports prepared by the Valuers and in order to assess whether the valuations are
based on RICS valuation standards. We obtained explanations directly from the Valuers and management,
relating to specific considerations with regards to COVID-19 and Brexit, and any events subsequent to 31 March
of relevance to the market and associated valuation trend.
– We assessed NIY movements on an asset-by-asset basis against the prior year to understand whether any lease
events have occurred to justify the movement in NIY and therefore the valuation itself.
– We assessed the assumptions adopted by the Valuer within the valuations and review of responses provided by
the Valuers and liaised with the Assura in-house property team and the Valuers to challenge the appropriateness
of the explanations and evidence provided.
– We evaluated variances between NEY and NIY to determine whether any assets present a risk of being
overvalued or undervalued due to rentals currently achieved not being in line with ERV.
– We assessed the competence, capabilities, independence and objectivity of the external Valuers and read their
terms of engagement with the Group to determine whether there were any matters that might have affected
their objectivity or may have imposed scope limitations on their work.
Key observations
We also assessed the appropriateness of the Group’s disclosures about the degree of the estimation and
sensitivity to key assumptions made when valuing these properties, including the impact of the COVID-19
and Brexit.
We concluded that the assumptions applied in relation to NIY, and any supporting judgements relating to NEY
and ERV, in arriving at the fair value of the Group’s property portfolio were appropriate and reasonably disclosed.
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CONTINUED
6. Our application of materiality
6.1. 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.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Materiality
Basis for
determining
materiality
Group financial statements
£30.6 million (2020: £26.0 million) and a lower materiality of
£3.3 million (2020: £3.3 million) for balances affecting EPRA
earnings.
2% (2020: 2%) of net assets
The lower materiality used for balances affecting EPRA
earnings was determined using 5% (2020: 5%) of EPRA
earnings.
Parent Company financial statements
£1.64 million (2020: £2.97 million).
The Parent Company materiality represents 2%
(2020: 2%) of net assets, which is capped at 50%
(2020: 90%) of lower level Group materiality.
Rationale for the
benchmark applied
In arriving at this judgement we considered the primary
performance measure of the Group is the carrying value of
property investments and therefore set the overall Group
materiality level based on net assets.
As a non-trading parent Company, equity is the key
driver of the company. The cap is applied against
the lower level group materiality due to the EPRA
earnings affecting transactions within the company.
In addition to net assets, we consider EPRA earnings to be
a critical financial performance measure for the Group and
we applied a lower threshold of £3.3 million based on 5% of
that measure for testing of all impacted balances, classes of
transactions and disclosures.
1. Net Assets
2. Group materiality
Net Assets £1,531m
1.
2.
Group materiality £31m
Company materiality £2.9m
Materiality for items affecting EPRA earnings £3.3m
Audit Committee reporting threshold impacting EPRA £0.16m
6.2. Performance materiality
We set performance materiality at a level lower than materiality to reduce the probability that, in aggregate, uncorrected and undetected
misstatements exceed the materiality for the financial statements as a whole.
Performance
materiality
Basis and rationale
for determining
performance
materiality
Group financial statements
70% (2020: 70%) of Group materiality
Parent Company financial statements
70% (2020: 70%) of Parent Company materiality
We set performance materiality at a level lower than materiality to reduce the probability that, in aggregate,
uncorrected and undetected misstatements exceed the materiality for the financial statements as a whole.
In determining performance materiality, we considered factors including:
– our assessment of the group’s overall control environment; and
– our past experience of the audit, which has indicated a low number of uncorrected misstatements identified in
prior periods.
6.3. Error reporting threshold
We agreed with the Audit Committee (the “Committee”) that we would report to the Committee all audit differences in excess of £1.5
million (2020: £1.3 million) or £163,000 (2020: £165,000) for differences impacting EPRA earnings, as well as differences below that threshold
that, in our view, warranted reporting on qualitative grounds. We also report to the Committee on disclosure matters that we identified
when assessing the overall presentation of the financial statements.
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7. An overview of the scope of our audit
7.1. Identification and scoping of components
Our Group audit was scoped by obtaining an understanding of the Group and its internal and external environment, including group-wide
controls and assessing the risks of material misstatement at the Group level. This also involved looking at where the directors make
subjective judgements, for example in respect of significant accounting estimates or adoption of accounting policies that are underpinned
by a number of assumptions.
Audit work to respond to the risks of material misstatement was performed directly by the Group engagement team and led the Senior
Statutory Auditor.
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, and ranged between £0.01 million and £1.8 million (2020: £0.2 million and £8.1 million). This result in full scope
audit procedures performed on 100% (2020: 100%) of the Group’s profit and net assets. We also tested the consolidation process and
carried out analytical procedures to conclude that there were no significant risks of material misstatement of the aggregated financial
information.
7.2. Our consideration of the control environment
We have also obtained an understanding of the processes and controls operated by the Group in relation to certain key business cycles
including the property valuations and revenue processes.
8. Other information
The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report
thereon. The directors are responsible for the other information contained within the annual report.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our
report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with
the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated.
If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a
material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a
material misstatement of this other information; we are required to report that fact.
We have nothing to report in this regard.
9. Responsibilities of Directors
As explained more fully in the Directors’ Responsibilities Statement, the Directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary
to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Parent Company’s ability to continue
as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless the
Directors either intend to liquidate the Group or the Parent Company or to cease operations, or have no realistic alternative but to do so.
10. Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
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CONTINUED
11. Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our
procedures are capable of detecting irregularities, including fraud is detailed below.
11.1. Identifying and assessing potential risks related to irregularities
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and
regulations, we considered the following:
– the nature of the industry and sector, control environment and business performance including the design of the Group’s remuneration
policies, key drivers for Directors’ remuneration, bonus levels and performance targets;
– results of our enquiries of management and the audit committee about their own identification and assessment of the risks of irregularities;
– any matters we identified having obtained and reviewed the Group’s documentation of their policies and procedures relating to:
– identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-compliance;
– detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud;
– the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations; and
– the matters discussed among the audit engagement team and relevant internal specialists, including valuations specialists regarding how
and where fraud might occur in the financial statements and any potential indicators of fraud.
As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for fraud and
identified the greatest potential for fraud through the manipulation of the net initial yield year on year to result in optimistic valuations on an
asset level in respect of the valuation of completed investment property (excluding properties under development). In common with all
audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override.
We also obtained an understanding of the legal and regulatory frameworks that the Group operates in, focusing on provisions of those laws
and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements. The key laws
and regulations we considered in this context included the UK Companies Act, Listing Rules, pensions legislation, REIT and tax legislation.
In addition, we considered provisions of other laws and regulations that do not have a direct effect on the financial statements but
compliance with which may be fundamental to the Group’s ability to operate or to avoid a material penalty.
11.2. Audit response to risks identified
As a result of performing the above, we identified valuation of completed investment property (excluding properties under development)
as a key audit matter related to the potential risk of fraud. The key audit matters section of our report explains the matter in more detail and
also describes the specific procedures we performed in response to that key audit matter.
In addition to the above, our procedures to respond to risks identified included the following:
– reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with provisions of relevant
laws and regulations described as having a direct effect on the financial statements;
– enquiring of management, the audit committee and in-house legal counsel concerning actual and potential litigation and claims;
– performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due
to fraud;
– reading minutes of meetings of those charged with governance, reviewing internal audit reports and reviewing correspondence with
HMRC; and
– in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other
adjustments; assessing whether the judgements made in making accounting estimates are indicative of a potential bias; and evaluating the
business rationale of any significant transactions that are unusual or outside the normal course of business.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members including
internal specialists, and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
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Report on other legal and regulatory requirements
12. Opinions on other matters prescribed by the Companies Act 2006
In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the
Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
– the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial statements are
prepared is consistent with the financial statements; and
– the Strategic Report and the Directors’ Report have been prepared in accordance with applicable legal requirements.
– In the light of the knowledge and understanding of the Group and the Parent Company and their environment obtained in the course of
the audit, we have not identified any material misstatements in the Strategic Report or the Directors’ Report.
13. Corporate Governance Statement
The Listing Rules require us to review the Directors’ statement in relation to going concern, longer-term viability and that part of the
Corporate Governance Statement relating to the Group’s compliance with the provisions of the UK Corporate Governance Code specified
for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate
Governance Statement is materially consistent with the financial statements and our knowledge obtained during the audit:
– the Directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any material
uncertainties identified set out on page 68;
– the Directors’ explanation as to its assessment of the group’s prospects, the period this assessment covers and why the period is
appropriate set out on page 68;
– the Directors’ statement on fair, balanced and understandable set out on page 108;
– the Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on pages 56 to 61;
– the section of the annual report that describes the review of effectiveness of risk management and internal control systems set out on
page 86; and
– the section describing the work of the Audit Committee set out on pages 85 to 86.
14. Matters on which we are required to report by exception
14.1. Adequacy of explanations received and accounting records
Under the Companies Act 2006, 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 by the Parent Company, or returns adequate for our audit have not been received from
branches not visited by us; or
– the Parent Company financial statements are not in agreement with the accounting records and returns.
We have nothing to report in this regard.
14.2. Directors’ remuneration
Under the Companies Act 2006 we are also required to report if in our opinion certain disclosures of Directors’ remuneration have not
been made or the part of the Directors’ Remuneration Report to be audited is not in agreement with the accounting records and returns.
We have nothing to report in this regard.
15. Other matters which we are required to address
15.1. Auditor tenure
Following the recommendation of the Audit Committee, we were appointed by the Board of Directors on 21 January 2012 to audit the
financial statements for the year ending 31 March 2012 and subsequent financial periods. The period of total uninterrupted engagement
including previous renewals and reappointments of the firm is 10 years, covering the years ending 31 March 2012 to 31 March 2021.
15.2. Consistency of the audit report with the additional report to the audit committee
Our audit opinion is consistent with the additional report to the audit committee we are required to provide in accordance with ISAs (UK).
16. Use of our report
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. 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.
Scott Bayne, FCA (Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
Manchester, United Kingdom
17 May 2021
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For the year ended 31 March 2021
Gross rental and related income
Property operating expenses
Net rental income
Administrative expenses
Revaluation gains
Gain on sale of property
Share-based payment charge
Finance income
Finance costs
Profit before taxation
Taxation
Profit for the year attributable to
equity holders of the parent
EPS – basic & diluted
EPRA EPS – basic & diluted
Note
3
4
9
9
19
5
21
6
6
2021
Capital and
non-EPRA
£m
3.8
(3.8)
–
–
41.6
0.9
–
–
(7.1)
35.4
–
35.4
EPRA
£m
117.0
(5.0)
112.0
(13.5)
–
–
(0.5)
0.2
(25.3)
72.9
–
72.9
2.7p
Total
£m
120.8
(8.8)
112.0
(13.5)
41.6
0.9
(0.5)
0.2
(32.4)
108.3
–
108.3
4.1p
2020
Capital and
non-EPRA
£m
3.7
(3.7)
–
–
9.7
1.7
–
–
–
11.4
–
11.4
EPRA
£m
107.8
(4.1)
103.7
(9.9)
–
–
(0.2)
–
(26.1)
67.5
–
67.5
2.8p
Total
£m
111.5
(7.8)
103.7
(9.9)
9.7
1.7
(0.2)
–
(26.1)
78.9
–
78.9
3.3p
There were no items of other comprehensive income or expense and therefore the profit for the year also reflects the Group’s total
comprehensive income. All income arises from continuing operations in the UK.
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Assura plc Annual Report and Accounts 2021
CONSOLIDATED BALANCE SHEET
As at 31 March 2021
Non-current assets
Investment property
Property work in progress
Property, plant and equipment
Investments
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
Head lease liabilities
Deferred revenue
Non-current liabilities
Borrowings
Head lease liabilities
Deferred revenue
Total liabilities
Net assets
Capital and reserves
Share capital
Share premium
Merger reserve
Retained earnings
Total equity
NAV per Ordinary Share
– basic
– diluted
EPRA NTA per Ordinary Share – basic
– diluted
Note
2021
£m
2020
£m
9
10
8
21
11
12
9
13
16
14
15
16
14
15
17
17
7
7
7
7
2,453.3
13.6
0.3
0.7
0.5
2,468.4
46.6
27.4
14.7
88.7
2,557.1
40.7
–
0.1
25.4
66.2
948.7
5.4
6.1
960.2
1,026.4
1,530.7
267.2
763.1
231.2
269.2
1,530.7
57.3p
57.3p
57.3p
57.2p
2,139.0
11.1
0.2
0.2
0.5
2,151.0
18.5
19.1
20.7
58.3
2,209.3
32.2
11.0
0.1
22.8
66.1
830.5
5.5
4.8
840.8
906.9
1,302.4
241.3
595.5
231.2
234.4
1,302.4
54.0p
53.9p
54.0p
53.9p
The financial statements were approved at a meeting of the Board of Directors held on 17 May 2021 and signed on its behalf by:
Jonathan Murphy
CEO
Jayne Cottam
CFO
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 March 2021
1 April 2019
Profit attributable to equity holders
Total comprehensive income
Dividends
Employee share-based incentives
31 March 2020
Profit attributable to equity holders
Total comprehensive income
Issue of Ordinary Shares
Issue costs
Dividends
Employee share-based incentives
31 March 2021
Note
18
17
17
18
Share capital
£m
239.8
–
–
1.5
–
241.3
Share premium
£m
587.4
–
–
8.1
–
595.5
Merger reserve
£m
231.2
–
–
–
–
231.2
–
–
24.2
–
1.6
0.1
267.2
–
–
161.8
(4.3)
10.1
–
763.1
–
–
–
–
–
–
231.2
Retained
earnings
£m
221.5
78.9
78.9
(66.2)
0.2
234.4
108.3
108.3
–
–
(73.6)
0.1
269.2
Total equity
£m
1,279.9
78.9
78.9
(56.6)
0.2
1,302.4
108.3
108.3
186.0
(4.3)
(61.9)
0.2
1,530.7
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Assura plc Annual Report and Accounts 2021
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 March 2021
Operating activities
Rent received
Interest paid and similar charges
Fees received
Interest received
Cash paid to suppliers and employees
Net cash inflow from operating activities
Investing activities
Purchase of investment property
Development expenditure
Proceeds from sale of property
Other investments and property, plant and equipment
Net cash outflow from investing activities
Financing activities
Issue of Ordinary Shares
Issue costs paid on issuance of Ordinary Shares
Dividends paid
Repayment of loan/borrowings
Long-term loans drawn down
Early repayment costs
Interest on head lease liabilities
Loan issue costs
Net cash inflow from financing activities
Increase in cash, cash equivalents and restricted cash
Opening cash, cash equivalents and restricted cash
Closing cash, cash equivalents and restricted cash
Note
20
17
17
16
16
16
16
11
2021
£m
117.2
(24.6)
1.1
0.2
(16.5)
77.4
(236.1)
(56.9)
26.2
(0.7)
(267.5)
186.0
(4.3)
(61.9)
(190.0)
298.1
(6.4)
(0.1)
(3.2)
218.2
28.1
18.5
46.6
2020
£m
104.6
(23.7)
0.9
–
(15.5)
66.3
(132.4)
(53.7)
20.1
(0.2)
(166.2)
–
–
(56.6)
–
157.0
–
(0.1)
(0.2)
100.1
0.2
18.3
18.5
Assura plc Annual Report and Accounts 2021
119
Strategic reportGovernanceFinancial statementsAdditional information NOTES TO THE ACCOUNTS
For the year ended 31 March 2021
1. Corporate information and operations
The Company is a public limited company, limited by shares, incorporated and domiciled in England and Wales, whose shares are publicly
traded on the main market of the London Stock Exchange.
With effect from 1 April 2013, the Group has elected to be treated as a UK REIT. See Note 21 for further details.
2. Significant accounting policies
Basis of preparation
The consolidated financial statements have been prepared on a historical cost basis, except for investment properties, including
investment properties under construction and land which are included at fair value. The financial statements have been prepared in
accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 and IFRSs adopted
pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union.
The financial statements are prepared on a going concern basis, having factored in considerations for Brexit, COVID-19 and climate change,
as explained in the Directors’ Report on pages 106 to 107 and are presented in pounds 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.
Standards affecting the financial statements
The following standards and amendments became effective for the Company in the year ended 31 March 2021. 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):
– Amendments to IFRS 3 regarding the definition of a business (1 January 2020)
– Amendments regarding the definition of materiality (1 January 2020)
– Amendments to references to the Conceptual Framework in IFRS Standards (1 January 2020)
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 but are continuing to assess the potential impact (effective for periods beginning on or after
the date in brackets).
– Amendments to IAS 1 regarding the classification of Liabilities as Current or Non-Current (1 January 2023)
– Annual improvements to IFRS Standards 2018–2020 (1 January 2022)
There are no other standards or interpretations yet to be effective that would be expected to have a material impact on the financial
statements of the Group.
Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheet date, that have a
significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed
below.
Property valuations
The key source of estimation uncertainty relates to the valuation of the property portfolio, where a valuation is obtained twice a year from
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 and details of the accounting policies applied in
respect of valuation are set out below. The valuation is most subjective to the inputs of net initial yield, equivalent yield and Estimated
Rental Value (“ERV”), which are considered by the Group to be the assumptions with the highest risk of causing a material movement in the
next financial year. Note 9 includes details and sensitivities of these outputs.
Critical judgements in applying the Group’s accounting policies
In the process of applying the Group’s accounting policies, which are described below, the Directors do not consider there to be
significant judgements applied with regard to the policies adopted, other than in respect of property valuations as described above.
Basis of consolidation
Subsidiaries and associates
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 power over the entity, exposure to variable returns and the ability
to use its power over the entity to affect the amount of returns.
Investments in associates are initially held at cost, and then applying equity accounting rules. Investments which are not deemed to be
subsidiaries or associates due to insufficient control are initially held at cost and subsequently remeasured to fair value through the income
statement.
In the Company financial statements, investments in subsidiaries are held at cost less any provision for impairment. In addition, the
Company recognises dividend income when the rights to receive payment have been established (normally when declared and paid).
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Assura plc Annual Report and Accounts 2021
2. Significant accounting policies (continued)
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.
Property portfolio
Properties are externally valued on an open market basis, which represents fair value, as at the balance sheet date and are recorded at
valuation.
Investment property under construction (“IPUC”) is valued as if complete, with appropriate deductions for expected cost to complete and
theoretical developer’s margin on remaining costs.
Any surplus or deficit arising on revaluing investment property and 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.
Leasehold properties that are leased out to occupiers 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 head lease liability. Short-term leases (less than 12 months) or those of low value assets are kept off balance sheet in
accordance with IFRS 16.
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. Properties are classified as assets held for sale when it is considered highly probable that it will be disposed in
the next financial year and are recorded at the lower of carrying value and fair value less costs to sell.
Costs incurred prior to a development being legally committed (“on site”) are recorded as property work in progress and held at cost,
being transferred to investment property under construction when legally committed. With the increase in value of the acquisition,
development and asset enhancement pipelines, the Group has deemed it appropriate to present property work in progress as a separate
line item on the face of the balance sheet.
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 occupiers 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 occupiers through service charges is charged to the income statement.
In accordance with IFRS 15, service charge income and expenditure is shown gross on the face of the income statement, presented within
the capital and non-EPRA column in accordance with EPRA guidelines.
Gains on sale of properties
Gains on sale of properties are recognised on the completion of the contract and are calculated by reference to the carrying value at the
end of the previous reporting period, adjusted for subsequent capital expenditure.
Financial assets and liabilities
Trade receivables are recorded at transaction value and trade payables are recorded at invoice value (including VAT where applicable).
Appropriate provisions are made for expected credit losses considering historical credit losses incurred and future expected losses.
Other investments are shown at amortised cost and held as loans and receivables. Loans and receivables are initially valued at fair value
less directly attributable transaction costs. After recognition, 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 assets are derecognised only when the contractual rights to the cash flows from the asset expire or when substantially all the risks
and rewards of ownership of the asset have been transferred to another entity. Any difference between the asset’s carrying value and any
consideration received is recognised in the income statement.
Financial liabilities are derecognised only when the Group’s obligations have been discharged, cancelled or have expired. The difference
between the carrying amount of the financial liability derecognised and the consideration paid is recognised in the income statement.
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For the year ended 31 March 2021
2. Significant accounting policies (continued)
Financial instruments
Cash equivalents are limited to instruments with a maturity of less than three months measured at amortised cost.
Tax
Current tax is expected tax payable on any non-REIT taxable income for the period and is calculated using tax rates that have been
enacted or substantively enacted at the balance sheet date. 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.
Alternative performance measures
In the reporting of financial information, the Group uses certain measures (non-GAAP measures, also known as “Alternative Performance
Measures”) that are not required under IFRS, the generally accepted accounting principles (“GAAP”) under which the Group reports.
The Board believes that these measures, as described in the CFO review, provide additional useful information on performance and trends
to shareholders, in particular where EPRA measures are used to aid comparability between real estate companies. These are used by the
Board for internal performance analysis and incentive compensation arrangements for employees. They are not intended to be a substitute
for, or superior to, GAAP measures.
Income statement definitions
EPRA earnings represents profit calculated in accordance with the guide published by the European Public Real Estate Association. See
Note 6 for details of the adjustments.
Capital and non-EPRA represents all other statutory income statement items that are excluded from EPRA earnings.
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 an appropriate valuation 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.
Segmental information
The Group is run and management assess performance as one business and as such no segmental analysis is presented for the current or
prior year results.
3. Net rental income
Rental revenue
Service charge income
Other related income
Gross rental and related income
Gross rental and related income
Direct property expenses
Service charge expenses
Net rental income
4. Administrative expenses
Wages and salaries
Social security costs
Auditor’s remuneration
Directors’ remuneration and fees
Assura Community Fund contribution
Other administrative expenses
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Assura plc Annual Report and Accounts 2021
2021
£m
115.9
3.8
1.1
120.8
2021
£m
120.8
(5.0)
(3.8)
112.0
2021
£m
4.7
0.7
5.4
0.4
1.8
2.5
3.4
13.5
2020
£m
106.9
3.7
0.9
111.5
2020
£m
111.5
(4.1)
(3.7)
103.7
2020
£m
4.0
0.7
4.7
0.2
1.5
–
3.5
9.9
Note
4(a)
4. Administrative expenses (continued)
The Group operates a defined contribution pension scheme, available to all employees. The Group contribution to the scheme during the
year was £315,100 (2020: £205,600), which represents the total expense recognised through the income statement. As at 31 March 2021,
contributions of £33,300 (2020: £17,800) due in respect of the reporting period had not been paid over to the plan but were all paid in
April 2021.
The average number of employees in the year was 77 (2020: 66).
Full disclosure of Directors’ emoluments, as required by the Companies Act 2006, can be found in the Remuneration Report on pages
87 to 105.
Key management staff (Executive Committee)
Salaries, pension holiday pay, payments in lieu of notice and bonus
Cost of employee share-based incentives (including related social security costs)
Social security costs
(a) Auditor’s remuneration
Fees payable to auditor for audit of Company’s annual accounts
Fees payable to auditor for audit of Company’s subsidiaries
Total audit fees
Other assurance services (total non-audit fees) – half year review and bond comfort letters
5. Finance costs
Interest payable
Interest capitalised on developments
Amortisation of loan issue costs
Interest on head lease liability
Total finance costs – presented through EPRA earnings
Write-off of loan issue costs
Early repayment costs
Total finance costs
2021
£m
3.0
0.2
0.5
3.7
2021
£m
0.2
0.1
0.3
0.1
0.4
2021
£m
25.8
(1.8)
1.2
0.1
25.3
0.7
6.4
32.4
2020
£m
2.1
0.2
0.3
2.6
2020
£m
0.1
0.1
0.2
–
0.2
2020
£m
25.6
(1.0)
1.4
0.1
26.1
–
–
26.1
Interest was capitalised on property developments at the appropriate cost of finance at commencement. During the year this ranged from
4% to 5% (2020: 4% to 5%).
Loan costs written off related to facilities terminated prior to their maturity, and early repayment costs were amounts paid in the year to
terminate the secured bond due 2021.
6. Earnings per Ordinary Share
Profit for the year
Revaluation gains
Gain on sale of property
Loan early repayment cost
EPRA earnings
Additional Company-specific adjustment
Add back: One-off Assura Community Fund contribution
Adjusted EPRA earnings (exc. Community Fund contribution)
EPS – basic & diluted
EPRA EPS – basic & diluted
Adjusted EPRA EPS (exc. Community Fund contribution)
Earnings
2021
£m
108.3
4.1p
EPRA
earnings
2021
£m
108.3
(41.6)
(0.9)
7.1
72.9
2.5
75.4
2.7p
2.8p
Earnings
2020
£m
78.9
3.3p
EPRA
earnings
2020
£m
78.9
(9.7)
(1.7)
–
67.5
–
67.5
2.8p
2.8p
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For the year ended 31 March 2021
6. Earnings per Ordinary Share (continued)
Weighted average number of shares in issue
Potential dilutive impact of share options
Diluted weighted average number of shares in issue
2021
2020
2,658,745,619 2,407,359,922
2,506,034
2,660,384,290 2,409,865,956
1,637,671
The current number of potentially dilutive shares relates to nil-cost options under the share-based payment arrangements and is 1.6 million
(2020: 2.5 million).
7. NAV per Ordinary Share
2021
£m
IFRS net assets
Deferred tax
Fair value of debt
Real estate transfer tax
EPRA adjusted NAV
NTA per Ordinary Share
NRV per Ordinary Share
NDV per Ordinary Share
2020
£m
IFRS net assets
Deferred tax
Fair value of debt
Real estate transfer tax
EPRA adjusted
NTA per Ordinary Share
NRV per Ordinary Share
NDV per Ordinary Share
– basic
– diluted
– basic
– diluted
– basic
– diluted
– basic
– diluted
– basic
– diluted
– basic
– diluted
Number of shares in issue
Potential dilutive impact of share options
Diluted number of shares in issue
IFRS
1,530.7
57.3p
57.3p
IFRS
1,302.4
54.0p
53.9p
EPRA NTA
1,530.7
(0.5)
–
–
1,530.2
57.3p
57.2p
EPRA NTA
1,302.4
(0.5)
–
–
1,301.9
54.0p
53.9p
EPRA NRV
1,530.7
(0.5)
–
158.8
1,689.0
63.2p
63.2p
EPRA NRV
1,302.4
(0.5)
–
137.5
1,439.4
59.6p
59.6p
EPRA NDV
1,530.7
–
(34.6)
–
1,496.1
56.0p
56.0p
EPRA NDV
1,302.4
–
(30.9)
–
1,271.5
52.6p
52.6p
2021
2020
2,671,853,938 2,413,241,827
2,506,034
2,415,747,861
1,637,671
2,673,491,609
The EPRA measures set out above are in accordance with the Best Practices Recommendations of the European Public Real Estate
Association dated October 2019.
Mark to market adjustments have been provided by the counterparty or by reference to the quoted fair value of financial instruments.
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Assura plc Annual Report and Accounts 2021
8. Investments
Below is a listing of all subsidiaries of Assura plc:
Property investment companies
Apollo Capital Projects Development Ltd* Assura Trellech Ltd*
Assura (SC1) Ltd*
Assura (SC2) Ltd*
Assura Aspire Ltd*
Assura Aspire UK Ltd*
Assura Development Hub Ltd*
Assura GHC Ltd*
Assura HC Ltd*
Assura HC UK Ltd*
Assura Health Investments Ltd*
Assura Medical Centres Ltd*
Assura Primary Care Properties Ltd*
Assura Properties plc*
Assura Properties UK Ltd*
BHE (Heartlands) Ltd*
BHE (St James) Ltd*
Bicester HC Developments Ltd*
Cheltenham Family Health Care Centre Ltd*
Community Ventures Windmill Ltd*
Donnington Healthcare Ltd*
Holywell House Ltd*
Malmesbury Medical Enterprise Ltd*
Medical Properties Limited*
Meridian Medical Services Ltd*
Metro MRH Ltd*
Metro MRI Ltd*
Metro MRM Ltd*
Newton Healthcare Ltd*
Park Medical Services Ltd*
Pentagon HS Ltd*
Prime Hereford Hub Ltd*
Prospect Medical (Malvern) Ltd*
Ridge Medical Ltd*
Shotfield Development Business Partnership Ltd*
SJM Developments Ltd*
Surgery Developments Ltd*
Trinity Medical Properties Ltd*
Upton Community Health Care Ltd*
Whitton Property Limited*
Holding or dormant companies
Assura Property Ltd* (Guernsey)
Assura (AHI) Ltd*
Assura Property Management Ltd*
Assura Banbury Ltd*
Assura Services Ltd*
Assura Beeston Ltd*
Broadfield Surgery Ltd*
Assura CS Ltd*
Community Ventures Hartlepool Ltd*
Assura CVSK Ltd*
Community Ventures Hartlepool Midco Ltd* Stratford Healthcare Ltd*
Assura Financing plc*
The 3P Development Ltd*
Destra Hartlepool Ltd*
Assura Group Ltd (Guernsey)
Upton Medical Ltd*
Destra Windmill Ltd*
Assura IH Ltd
General Practice Investment Corporation Ltd* Xantaris Investments (March) Ltd*
Assura Investments Ltd*
GP Premises Ltd*
Assura Management Services Ltd*
Assura PCP UK Ltd*
GP Premises Holdings Ltd*
Assura Pharmacy Holdings Ltd* (Guernsey) Mapleoak Investments Ltd*
Oakcastle Investments (XXI) Ltd*
PCD Pembrokeshire Ltd*
PCI Management Ltd*
Primary Care Properties (Manchester) Ltd*
SHC Holdings Ltd* (Jersey)
Xantaris Investments (XXI) Ltd*
Whitton Limited* (Jersey)
* Indicates subsidiary owned by intermediate subsidiary of Assura plc.
All companies are wholly owned by the Group (holding the Ordinary Shares) and registered in England unless otherwise indicated.
All companies registered in England have a registered address of The Brew House, Greenalls Avenue, Warrington WA4 6HL. The
companies registered in Guernsey have a registered address of PO Box 286, Floor 2, Trafalgar Court, Les Banques, St Peter Port, Guernsey
and the Jersey company registered addresses are 44 Esplanade, St Helier, Jersey (SHC) and 2nd Floor, Gaspe House, 66–72 Esplanade,
St Helier, Jersey (Whitton). Taking into consideration the facts of each transaction, acquisitions of companies completed during the years
ended 31 March 2021 and 31 March 2020 have been accounted for as asset purchases as opposed to business combinations.
During the year ended 31 March 2020, a 100% subsidiary of the Group committed to invest up to £5 million in PI Labs III LP, a limited
partnership registered in England (LP020025, registered address 151 Wardour Street, London, W1F 8WE). £0.7 million had been invested as
at 31 March 2021. The first £3 million can be drawn on demand to cover investments the fund makes in qualifying, selected PropTech
businesses. The remaining £2 million may only be drawn in tranches of £1 million when total investment in the fund exceeds £40 million and
£50 million respectively (currently £10 million of committed investors of which Assura represents 30%). This investment has initially been
recorded at cost and will subsequently be recorded at fair value through the income statement. At 31 March 2021, the Directors believe the
cost is equal to the fair value.
The Group also holds an investment in Virgin Healthcare Holdings Limited, made up of a 0.7% equity holding (book value £nil) and
a £4 million loan note receivable (book value £nil, 2020: £nil). The registered address is Lynton House, 7–12 Tavistock Square, London
WC1H 9LT.
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For the year ended 31 March 2021
9. 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 2021. The properties have been valued individually and on the basis of open market value (which the Directors consider to be the
fair value) in accordance with RICS Valuation – Professional Standards 2020 (“the Red Book”). Valuers are paid on the basis of a fixed fee
arrangement, subject to the number of properties valued.
Opening market value
Additions:
– acquisitions
– improvements
Development costs
Transfers
Transfer to assets held for sale
Capitalised interest
Disposals
Unrealised surplus on revaluation
Closing market value
Add head lease liabilities recognised
separately
Closing fair value of investment property
Investment
2021
£m
2,075.9
228.9
4.6
233.5
–
77.7
(14.3)
–
(5.2)
36.7
2,404.3
5.5
2,409.8
IPUC
2021
£m
57.5
–
–
–
56.9
(77.7)
–
1.9
–
4.9
43.5
–
43.5
Total
2021
£m
2,133.4
228.9
4.6
233.5
56.9
–
(14.3)
1.9
(5.2)
41.6
2,447.8
5.5
2,453.3
Investment
2020
£m
1,952.9
119.4
1.7
121.1
–
15.1
(18.9)
–
(2.7)
8.4
2,075.9
5.6
2,081.5
Market value of investment property as estimated by valuer
Add IPUC
Add capitalised lease premiums and rental payments
Add head lease liabilities recognised separately
Fair value for financial reporting purposes
Completed investment property held for sale
Land held for sale
Total property assets
Investment property
Investment property held for sale
Total completed investment property
Assets held for sale at 1 April 2020
Disposals during the year
Net transfers from investment property
Assets held for sale at 31 March 2021
IPUC
2020
£m
23.0
–
–
–
47.3
(15.1)
–
1.0
–
1.3
57.5
–
57.5
2021
£m
2,400.4
43.5
3.9
5.5
2,453.3
14.3
0.4
2,468.0
2021
£m
2,400.4
14.3
2,414.7
Total
2020
£m
1,975.9
119.4
1.7
121.1
47.3
–
(18.9)
1.0
(2.7)
9.7
2,133.4
5.6
2,139.0
2020
£m
2,073.3
57.5
2.6
5.6
2,139.0
20.3
0.4
2,159.7
2020
£m
2,073.3
20.3
2,093.6
2021
£m
20.7
(20.3)
14.3
14.7
At March 2021, 11 assets are held as available for sale (2020: 24 assets). These properties are either being actively marketed for sale or have
a negotiated sale agreed which is currently in legal hands.
Fair value hierarchy
The fair value measurement hierarchy for all investment property and IPUC as at 31 March 2021 was Level 3 – Significant unobservable
inputs (2020: Level 3). There were no transfers between Levels 1, 2 or 3 during the year.
Descriptions and definitions relating to valuation techniques and key unobservable inputs made in determining fair values are as follows:
Valuation techniques used to derive Level 3 fair values
The valuations have been prepared on the basis of fair market value which is defined in the Red Book as “the estimated amount for which
an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arms-length transaction after
proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion”.
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Assura plc Annual Report and Accounts 2021
9. Property assets (continued)
Unobservable inputs
The key unobservable inputs in the property valuation are the net initial yield, the equivalent yield and the ERV, which are explained in
more detail below. It is also worth noting that the properties are subject to physical inspection by the valuers on a rotational basis (at least
once every three years).
In respect of 95% of the portfolio by value, the net initial yield ranges from 3.4% to 8.1% (2020: 3.6% to 8.3%) and the equivalent yield ranges
from 3.8% to 8.1% (2020: 3.9% to 8.3%). A decrease in the net initial or equivalent yield applied to a property would increase the market
value. Factors that affect the yield applied to a property include the weighted average unexpired lease term, the estimated future
increases in rent, the strength of the occupier covenant and the physical condition of the property. Lower yields generally represent
properties with index-linked reviews, 100% NHS tenancies and longer unexpired lease terms, ranging from 3.80% to 4.65%. Higher yields
(range 5.15% to 8.00%) are applied for a weaker occupier mix and leases approaching expiry. Our properties have a range of occupier
mixes, rent review basis and unexpired terms. A 0.25% shift in either net initial or equivalent yield would have approximately a £132 million
(2020: £111.8 million) impact on the investment property valuation.
The ERV ranges from £100 to £427 per sq.m (2020: £100 to £427 per sq.m), in respect of 97% of the portfolio by value. An increase in the
ERV of a property would increase the market value. A 2% increase in the ERV would have approximately a £48.3 million (2020: £41.9 million)
increase in the investment property valuation. The nature of the sector we operate in, with long unexpired lease terms, low void rates,
low occupier turnover and upward only rent review clauses, means that a significant fall in the ERV is considered unlikely.
10. Property, plant and equipment
The Group holds computer and other equipment assets with cost of £1.3 million (2020: £1.1 million) and accumulated depreciation of
£1.0 million (2020: £0.9 million), giving a net book value of £0.3 million (2020: £0.2 million).
There were £0.2 million additions during the year (2020: £0.1 million) and depreciation charged to the income statement was £0.1 million
(2020: £0.1 million).
11. Cash, cash equivalents and restricted cash
Cash held in current account
Restricted cash
2021
£m
46.3
0.3
46.6
Restricted cash arises where there are rent deposits, interest payment guarantees or cash is ring-fenced for committed property
development expenditure, which is released to pay contractors’ invoices directly.
12. Trade and other receivables
Trade receivables
Accrued income
Prepayments
Other debtors
2021
£m
18.4
5.4
1.4
2.2
27.4
2020
£m
18.3
0.2
18.5
2020
£m
12.8
4.3
1.1
0.9
19.1
Trade receivables are recognised initially at their transaction price and subsequently measured at amortised cost less loss allowance for
expected credit losses.
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 during the year (2020: £nil). As at 31 March 2021 and 31 March 2020,
the analysis of trade debtors that were past due but not impaired is as follows:
2021
2020
Neither past due
nor impaired
£m
13.7
9.8
Total
£m
18.4
12.8
Past due but not impaired
>30 days
£m
1.2
0.9
>60 days
£m
0.5
0.7
>90 days
£m
3.0
1.4
The Group has not recognised a loss allowance as historical experience has indicated that the risk profile of trade receivables is deemed
low and the bulk of the Group’s income derives from the NHS or is reimbursed by the NHS; the risk of default is not considered significant.
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Strategic reportGovernanceFinancial statementsAdditional information NOTES TO THE ACCOUNTS CONTINUED
For the year ended 31 March 2021
13. Trade and other payables
Trade creditors
Other creditors and accruals
VAT creditor
The maturity of trade and other payables is disclosed in Note 22.
14. Head lease liabilities
Current
Non-current
2021
£m
5.2
31.9
3.6
40.7
2021
£m
0.1
5.4
5.5
2020
£m
4.8
25.6
1.8
32.2
2020
£m
0.1
5.5
5.6
Head lease liabilities are amounts payable in respect of leasehold investment property held by the Group. The fair value of the Group’s
lease liabilities is approximately equal to their carrying value. The minimum payments due under head lease liabilities is disclosed in
Note 22.
15. Deferred revenue
Arising from rental received in advance
Arising from pharmacy lease premiums received in advance
Current
Non-current
16. Borrowings
At 1 April
Amount drawn down in year
Amount repaid in year
Loan issue costs
Amortisation of loan issue costs
Write-off of loan issue costs
At 31 March
Due within one year
Due after more than one year
At 31 March
2021
£m
24.9
6.6
31.5
25.4
6.1
31.5
2021
£m
841.5
298.1
(190.0)
(3.2)
1.6
0.7
948.7
–
948.7
948.7
2020
£m
22.3
5.3
27.6
22.8
4.8
27.6
2020
£m
683.3
157.0
–
(0.2)
1.4
–
841.5
11.0
830.5
841.5
The Group has the following bank facilities:
1. 10-year senior unsecured bond of £300 million at a fixed rate of 3% maturing July 2028 and 10-year senior unsecured Social Bond of
£300 million at a fixed interest rate of 1.5% maturing September 2030. The Social Bond was launched in accordance with Assura’s Social
Finance Framework to be used for eligible investment in the acquisition, development and refurbishment of publicly accessible primary
care and community healthcare centres. The bonds are subject to an interest cover requirement of at least 150%, maximum LTV of 65%
and priority debt not exceeding 0.25:1. In accordance with pricing convention on the bond market, the coupon and quantum of the
facility are set to round figures with the proceeds adjusted based on market rates on the day of pricing.
2. Five-year club revolving credit facility with Barclays, HSBC, NatWest and Santander for £225 million on an unsecured basis at an initial
margin of 1.60% above LIBOR, expiring in November 2024. The margin increases based on the LTV of the subsidiaries to which the
facility relates, up to 1.95% where the LTV is in excess of 45%. The facility is subject to a historical interest cover requirement of at least
175% and maximum LTV of 60%. As at 31 March 2021, the facility was undrawn (2020: £80 million drawn).
128
Assura plc Annual Report and Accounts 2021
16. Borrowings (continued)
3. 10-year notes in the US private placement market for a total of £100 million. The notes are unsecured, have a fixed interest rate of 2.65%
and were drawn on 13 October 2016. An additional £107 million of notes were issued in two series, £47 million in August 2019 and
£60 million in October 2019, with maturities of 10 and 15 years respectively and a weighted average fixed interest rate of 2.30%.
The facilities are subject to a historical interest cover requirement of at least 175%, maximum LTV of 60% and a weighted average lease
length of seven years.
4. £150 million of unsecured privately placed notes in two tranches with maturities of eight and ten years drawn on 20 October 2017. The
weighted average coupon is 3.04%. The facility is subject to a historical cost interest cover requirement of at least 175%, maximum LTV
of 60% and a weighted average lease length of seven years.
In October 2020, the Group repaid in full the £110 million 10-year senior secured bond that was due to mature in December 2021. The loan
carried an interest rate of 4.75% and an early termination fee of £6.4 million was paid.
The Group has been in compliance with all financial covenants on all of the above loans as applicable throughout the year. Debt
instruments held at year-end have prepayment options that can be exercised at the sole discretion of the Group. As at the year end no
prepayment option has been exercised. Borrowings are stated net of unamortised loan issue costs and unamortised bond pricing
adjustments totalling £8.3 million.
17. Share capital
Ordinary Shares issued and fully paid
At 1 April
Issued 17 April 2019 – scrip
Issued 17 July 2019 – scrip
Issued 9 August 2019
Issued 16 October 2019 – scrip
Issued 15 January 2020 – scrip
Issued 9 April 2020
Issued 15 April 2020 – scrip
Issued 15 July 2020 – scrip
Issued 22 July 2020
Issued 4 September 2020
Issued 14 October 2020 – scrip
Issued 4 November 2020
Issued 13 January 2021 – scrip
Issued 5 February 2021
At 31 March
Own shares held
Total share capital
Number
of shares
2021
2,413,241,827
–
–
–
–
–
240,207,920
6,543,440
1,290,983
676,549
213,319
1,879,606
1,199,598
6,433,015
167,681
2,671,853,938
–
2,671,853,938
Share
capital
2021
£m
Number
of shares
2020
–
–
–
–
–
24.0
0.7
0.1
0.1
–
0.2
0.1
0.7
–
241.3 2,398,371,795
3,707,485
3,664,995
323,781
4,478,732
2,695,039
–
–
–
–
–
–
–
–
–
267.2 2,413,241,827
–
267.2 2,413,241,827
–
Share
capital
2020
£m
239.8
0.4
0.4
–
0.4
0.3
–
–
–
–
–
–
–
–
–
241.3
–
241.3
There is no difference between the number of Ordinary Shares issued and authorised. At the AGM each year, approval is sought from
shareholders giving the Directors the ability to issue Ordinary Shares, up to 10% of the Ordinary Shares in issue at the time of the AGM.
The Ordinary Shares issued in April 2019, July 2019, October 2019, January 2020, April 2020, July 2020, October 2020 and January 2021 were
issued to shareholders who elected to receive Ordinary Shares in lieu of a cash dividend under the Company scrip dividend alternative. In
the year to 31 March 2021 this increased share capital by £1.6 million and share premium by £10.1 million (2020: £1.5 million and £8.1 million
respectively).
In April 2020, a total of 240,207,920 new Ordinary Shares were placed at a price of 77 pence per share. The equity raise resulted in gross
proceeds of £185.0 million which has been allocated appropriately between share capital (£24.0 million) and share premium (£161.0 million).
Issue costs totalling £4.3 million were incurred and have been allocated against share premium.
On 4 November 2020, 1,199,598 Ordinary Shares were issued as part consideration for the acquisition of a medical centre, which further
increased share capital and share premium.
The Ordinary Shares issued in August 2019, July 2020, September 2020 and February 2021 relate to employee share awards under the
Performance Share Plan. Full details of amounts paid to Executive Directors can be found in the Directors’ Remuneration Report.
The merger reserve relates to the capital restructuring in January 2015 whereby Assura plc replaced Assura Group Limited as the top
company in the Group and was accounted for under merger accounting principles.
Assura plc Annual Report and Accounts 2021
129
Strategic reportGovernanceFinancial statementsAdditional information NOTES TO THE ACCOUNTS CONTINUED
For the year ended 31 March 2021
18. Dividends paid on Ordinary Shares
Payment date
17 April 2019
17 July 2019
16 October 2019
15 January 2020
15 April 2020
15 July 2020
14 October 2020
13 January 2021
Pence per
share
Number of
Ordinary
Shares
0.685 2,398,371,795
0.685 2,402,079,280
0.685 2,406,068,056
0.697 2,410,546,788
2,413,241,824
0.697
0.71 2,654,993,187
0.71 2,662,174,038
0.71 2,665,253,242
2021
£m
–
–
–
–
16.9
18.9
18.9
18.9
73.6
2020
£m
16.4
16.5
16.5
16.8
–
–
–
–
66.3
The April dividend for 2021/22 of 0.71 pence per share was paid on 14 April 2021 and the July dividend for 2021/22 of 0.74 pence per share
is currently planned to be paid on 14 July 2021 with a record date of 11 June 2021.
A scrip dividend alternative was introduced with effect from the January 2016 quarterly dividend. Details of shares issued in lieu of dividend
payments can be found in Note 17.
The October 2019, April 2020, October 2020 and April 2021 dividends were PIDs as defined under the REIT regime. Future dividends will be
a mix of PID and normal dividends as required.
19. Share-based payments
As at 31 March 2021, the Group has two long-term incentive schemes in place – the Performance Share Plan (“PSP”) and the newly
introduced Share Incentive Plan (“SIP”). Further details in respect of the PSP can be found in the Remuneration Committee Report on pages
87 to 105.
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.
The SIP is open to all permanent employees that have passed their probationary period and works on the principle of the Group matching
voluntary employee contributions deducted from the monthly payroll. This scheme is accounted for as an expense when the shares are
granted to the employees, with the fair value based on the share price on the day of grant.
As at 31 March 2021, the Employee Benefit Trust held 213,319 (2020: nil) Ordinary Shares of 10 pence each in Assura plc. The Trust remains in
place to act as a vehicle for the issuance of new shares under the PSP and holding any restricted shares awarded to employees.
Performance Share Plan
During the year, 1,406,933 nil-cost options were awarded to senior management under the PSP. Participants’ awards will vest after a
three-year period if certain targets relating to TSR, EPS and ESG are met, as detailed in the Remuneration Committee Report.
The following table illustrates the movement in options (all of which were nil-cost options) outstanding:
Options outstanding at 1 April 2020
Options issued during the year
Options exercised during the year
Options lapsed during the year
Options outstanding at 31 March 2021
4,920,356
1,406,933
(743,253)
(418,084)
5,165,952
Of the options outstanding at 31 March 2021, 1,836,919 have a performance period ending 31 March 2021, 1,922,100 for the period ending
31 March 2022 and 1,406,933 for the period ending 31 March 2023.
The fair value of the newly issued PSP equity settled options granted during the year was estimated as at the date of grant using the Monte
Carlo Model, taking into account the terms and conditions upon which awards were granted. The following table lists the key inputs to the
models used:
Expected share price volatility (%)
Risk free interest rate (%)
Expected life units (years)
2021
22
(0.06)
3
2020
22
0.46
3
The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may not necessarily be the
actual outcome.
130
Assura plc Annual Report and Accounts 2021
19. Share-based payments (continued)
The fair value of the awards granted in 2021 was £869,583 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 £0.5 million (2020: £0.2 million).
20. Note to the consolidated cash flow statement
Reconciliation of net profit before taxation to net cash inflow from operating activities:
Net profit before taxation
Adjustments for:
Increase in debtors
Increase in creditors
Revaluation gain
Interest capitalised on developments
Gain on disposal of properties
Depreciation
Employee share-based incentive costs
Early repayment costs
Amortisation of loan issue costs
Net cash inflow from operating activities
2021
£m
108.3
(5.2)
9.5
(41.6)
(1.9)
(0.9)
0.1
0.4
7.1
1.6
77.4
21. Tax and deferred tax
There were no amounts relating to corporation tax recorded in the income statement during 2021 or 2020. The differences from the
standard rate of tax applied to the profit before tax may be analysed as follows:
Profit before taxation
UK income tax at rate of 19% (2020: 19%)
Effects of:
Non-taxable income (including REIT exempt income)
Movement in unrecognised deferred tax
2021
£m
108.2
20.6
(20.6)
–
–
2020
£m
78.9
(5.8)
3.9
(9.7)
(1.0)
(1.7)
0.1
0.2
–
1.4
66.3
2020
£m
78.9
15.0
(14.9)
(0.1)
–
The Group elected to be treated as a UK REIT with effect from 1 April 2013. The UK REIT rules exempt the profits of the Group’s property
rental business from corporation tax. Gains on properties are also exempt from tax, provided they are not held for trading or sold in the
three years post completion of development. The Group will otherwise be subject to corporation tax at 19% in 2021/22 (2020/21: 19%).
Any Group tax charge/(credit) relates to its non-property income. As the Group has sufficient brought forward tax losses, no tax is due in
relation to the current or prior period.
As a REIT, the Group is required to pay Property Income Distributions (“PIDs”) equal to at least 90% of the Group’s rental profit calculated
by reference to tax rules rather than accounting standards. During the year, the April 2020 and October 2020 dividends paid by the Group
were PIDs. Future dividends will be a mix of PID and normal dividends as required. To remain as a UK REIT there are a number of conditions
to be met in respect of the principal company of the Group, the Group’s qualifying activities and the balance of business. The Group
remains compliant at 31 March 2021.
The deferred tax asset consists of the following:
At 1 April
Income statement movement
At 31 March
2021
£m
0.5
–
0.5
The amounts of deductible temporary differences and unused tax losses (which have not been recognised) are as follows:
Tax losses
Other timing differences
2021
£m
212.3
0.9
213.3
2020
£m
0.5
–
0.5
2020
£m
211.9
1.1
213.0
The majority of tax losses carried forward relate to capital losses generated on the disposal of former divisions of the Group.
Assura plc Annual Report and Accounts 2021
131
Strategic reportGovernanceFinancial statementsAdditional information NOTES TO THE ACCOUNTS CONTINUED
For the year ended 31 March 2021
21. Tax and deferred tax (continued)
Tax losses
Other temporary differences
2021
£m
40.3
0.2
40.5
2020
£m
40.3
0.2
40.5
The March 2021 Budget announced a further increase to the main rate of corporation tax to 25% from April 2023. This rate has not been
substantively enacted at the balance sheet date, as a result deferred tax balances as at 31 March 2021 continue to be measured at 19%. If all
of the deferred tax was to reverse at the amended rate the impact to the closing deferred tax position would be to increase the deferred
tax asset by £0.1m.
22. 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 occupier, 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 occupiers 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 £30 million; however, this
amount derives from all the occupiers in the portfolio and such a scenario is hypothetical. The Group’s credit risk is well spread across circa
1,250 occupiers 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 current £225 million revolving credit
facility is due to mature in November 2024 and the next maturity of the long-term fixed facilities is 2025.
The Group has entered into commercial property leases on its investment property portfolio. These non-cancellable leases have remaining
terms of up to 30 years and have a WAULT of 11.9 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 2021
Non-cancellable leases
Trade and other receivables
Receivables as at 31 March 2020
Non-cancellable leases
Trade and other receivables
On
demand
£m
–
–
–
On
demand
£m
–
–
–
Less than
3 months
£m
30.4
27.4
57.8
Less than
3 months
£m
27.3
19.1
46.4
3 to 12
months
£m
91.2
–
91.2
3 to 12
months
£m
81.8
–
81.8
1 to 5
years
£m
475.2
–
475.2
1 to 5
years
£m
436.2
–
436.2
>5 years
£m
970.7
–
970.7
>5 years
£m
880.6
–
880.6
Total
£m
1,567.5
27.4
1,594.9
Total
£m
1,425.9
19.1
1,445.0
The table below summarises the maturity profile of the Group’s financial liabilities, including interest, at 31 March 2021 and 31 March 2020
based on contractual undiscounted payments at the earliest date on which the Group can be required to pay.
132
Assura plc Annual Report and Accounts 2021
22. Derivatives and other financial instruments (continued)
Payables as at 31 March 2021
Non-derivative financial liabilities:
Interest bearing loans and borrowings
Trade and other payables
Total financial liabilities
Payables as at 31 March 2020
Non-derivative financial liabilities:
Interest bearing loans and borrowings
Trade and other payables
Total financial liabilities
On
demand
£m
Less than
3 months
£m
–
–
–
6.3
32.9
39.2
On
demand
£m
Less than
3 months
£m
–
–
–
6.4
25.7
32.1
3 to 12
months
£m
18.8
7.8
26.6
3 to 12
months
£m
30.3
6.6
36.9
1 to 5
years
£m
177.2
0.2
177.4
1 to 5
years
£m
262.1
0.2
262.3
>5 years
£m
1,018.3
5.1
1,023.4
>5 years
£m
715.0
5.3
720.3
Total
£m
1,220.6
46.0
1,266.6
Total
£m
1,013.8
37.8
1,051.6
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, for the
majority of loans and borrowings although the Group will accept some exposure to variable rates where deemed appropriate and
restricted to one third of the loan book.
The ageing analysis of the financial assets and liabilities excluding trade receivables and payables of the Group at 31 March 2021 was as
follows:
Floating rate asset
Cash, cash equivalents and restricted cash
Liabilities (fixed rate unless stated)
Long-term loans:
Revolving credit facility (variable rate)
Private placements
Unsecured bonds (inc. Social Bond)
Payments due under finance leases
Within
1 year
£m
46.6
–
–
–
0.1
1 to 5
years
£m
–
–
–
–
0.4
>5 years
£m
–
Total
£m
46.6
–
(357.0)
(600.0)
5.0
–
(357.0)
(600.0)
5.5
Details of the principal amounts, maturities, interest rates and covenants of all debt instruments are provided in Note 16.
The ageing analysis of the financial assets and liabilities excluding trade receivables and payables of the Group at 31 March 2020 was
as follows:
Floating rate asset
Cash, cash equivalents and restricted cash
Liabilities (fixed rate unless stated)
Long-term loans:
Revolving credit facility (variable rate)
Private placements
Secured bond
Unsecured bond
Payments due under finance leases
Within
1 year
£m
18.5
–
–
(11.0)
–
(0.1)
1 to 5
years
£m
–
(80.0)
–
(99.0)
–
(0.4)
>5 years
£m
–
–
(357.0)
–
(300.0)
(5.1)
Total
£m
18.5
(80.0)
(357.0)
(110.0)
(300.0)
(5.6)
Assura plc Annual Report and Accounts 2021
133
Strategic reportGovernanceFinancial statementsAdditional information NOTES TO THE ACCOUNTS CONTINUED
For the year ended 31 March 2021
22. Derivatives and other financial instruments (continued)
Sensitivity analysis
The table below shows the book and fair value of financial instruments. As at 31 March 2021, 100% of debt drawn by the Group is subject to
fixed interest rates and the only current variable rate facility is the RCF. A 0.25% movement in interest rates (deemed to be a reasonable
approximation of possible changes in interest rates) would cause no change to profit (2020: change of £0.2 million), based on the amount
of variable rate debt drawn at the period end.
Long-term loans – fair value hierarchy Level 1
– fair value hierarchy Level 2
– Other
Cash, cash equivalents and restricted cash
Payments due under head leases
Book value
Fair value
2021
£m
596.9
357.0
–
46.6
5.5
2020
£m
408.5
357.0
80.0
18.5
5.6
2021
£m
627.0
364.5
–
46.6
5.5
2020
£m
422.7
375.2
80.0
18.5
5.6
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. The fair value of long-term loans has been included by reference to either
quoted prices in active markets (Level 1), calculated by reference to observable estimates of interest rates (Level 2), or book value is
determined to be approximately equal to fair value for variable rate debt (other).
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 LTV, which is calculated as net debt divided by total property. The LTV percentage
on this basis Is 37% at 31 March 2021 (31 March 2020: 38%).
Investment property
Investment property under construction
Held for sale
Total property
Borrowings
Head lease liabilities
Cash, cash equivalents and restricted cash
Net debt
2021
£m
2,409.8
43.5
14.7
2,468.0
2021
£m
948.7
5.5
(46.6)
907.6
2020
£m
2,081.5
57.5
20.7
2,159.7
2020
£m
841.5
5.6
(18.5)
828.6
LTV
37%
38%
Financial liabilities, which comprise loans and head lease liabilities in the table above, have increased from £847.1 million to £954.2 million as
at 31 March 2021. The movement primarily relates to loans drawn (movement reconciled in Note 16) which, combined with the equity raise
completed during the year, has been used to fund the growth in the investment property portfolio.
23. Commitments
At the year end the Group had 16 (2020: 15) committed developments which were all on site with a contracted total expenditure of
£72.5 million (2020: £80.5 million) of which £36.6 million (2020: £50.3 million) had been expended.
As detailed in Note 8, the Group is committed to invest up to £5 million in PropTech investor PI Labs III LP. £0.7 million had been invested
as at 31 March 2021. The first £3 million can be drawn on demand to cover investments the fund makes in qualifying, selected PropTech
businesses. The remaining £2 million may only be drawn in tranches of £1 million when total investment in the fund exceeds £40 million and
£50 million respectively.
24. Related party transactions
Details of transactions during the year and outstanding balances at 31 March 2021 in respect of investments held are detailed in Note 8.
Details of payments to key management personnel are provided in Note 4.
134
Assura plc Annual Report and Accounts 2021
COMPANY INCOME STATEMENT
For the year ended 31 March 2021
Revenue
Dividends received from subsidiary companies
Group management charge
Total revenue
Administrative expenses
Share-based payment charge
Impairment of investment in subsidiary
Operating profit
Profit before taxation
Taxation
Profit attributable to equity holders
Note
19
B
2021
£m
70.0
3.0
73.0
(6.1)
(0.4)
–
66.5
66.5
–
66.5
2020
£m
76.0
3.1
79.1
(3.1)
(0.2)
(30.9)
44.9
44.9
–
44.9
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.
Assura plc Annual Report and Accounts 2021
135
Strategic reportGovernanceFinancial statementsAdditional information COMPANY BALANCE SHEET
As at 31 March 2021
Non-current assets
Investments in subsidiary companies
Amounts owed by subsidiary companies
Current assets
Cash and cash equivalents
Other receivables
Current liabilities
Trade and other payables
Amounts owed to subsidiary companies
Net assets
Capital and reserves
Share capital
Share premium
Merger reserve
Retained earnings
Total equity
Note
2021
£m
2020
£m
1 April 2019
£m
B
C
D
E
17
B
266.1
1,162.8
1,428.9
0.1
0.3
0.4
(1.5)
(146.2)
(147.7)
1,281.6
267.2
763.1
77.3
174.0
1,281.6
266.1
917.2
1,183.3
–
0.2
0.2
(1.3)
(87.3)
(88.6)
1,094.9
241.3
595.5
77.3
180.8
1,094.9
297.0
926.1
1,223.1
0.1
0.1
0.2
(1.1)
(115.8)
(116.9)
1,106.4
239.8
587.4
108.2
171.0
1,106.4
Amounts owed by subsidiary companies of £917.2 million were previously presented within current receivables in 2020. As explained in
Note A, these have been reclassified as non-current receivables and following this change, amounts owed to subsidiary companies have
been split out as current liabilities. As required under IFRS, a third balance sheet has also been presented to illustrate the effect of this
change at the beginning of the comparative period.
The financial statements were approved at a meeting of the Board of Directors held on 17 May 2021 and signed on its behalf by:
Jonathan Murphy
CEO
Jayne Cottam
CFO
Company registered number: 9349441
136
Assura plc Annual Report and Accounts 2021
COMPANY STATEMENT OF CHANGES IN EQUITY
For the year ended 31 March 2021
1 April 2019
Profit attributable to equity holders
Total comprehensive income
Merger reserve release
Dividends
Employee share-based incentives
31 March 2020
Profit attributable to equity holders
Total comprehensive income
Issue of Ordinary Shares
Issue costs
Dividends
Employee share-based incentives
31 March 2021
Note
B
18
17
17
18
Share
capital
£m
239.8
–
–
–
1.5
–
241.3
–
–
24.2
–
1.6
0.1
267.2
Share
premium
£m
587.4
–
–
–
8.1
–
595.5
–
–
161.8
(4.3)
10.1
–
763.1
Merger
reserve
£m
108.2
–
–
(30.9)
–
–
77.3
–
–
–
–
–
–
77.3
Retained
earnings
£m
171.0
44.9
44.9
30.9
(66.2)
0.2
180.8
66.5
66.5
–
–
(73.6)
0.3
174.0
Total
equity
£m
1,106.4
44.9
44.9
–
(56.6)
0.2
1,094.9
66.5
66.5
186.0
(4.3)
(61.9)
0.4
1,281.6
Assura plc Annual Report and Accounts 2021
137
Strategic reportGovernanceFinancial statementsAdditional information COMPANY CASH FLOW STATEMENT
For the year ended 31 March 2021
Operating activities
Amounts received from subsidiaries
Amounts paid to suppliers and employees
Amounts paid to subsidiaries
Net cash (outflow)/inflow from operating activities
Investing activities
Dividends received from subsidiaries
Amounts paid to subsidiaries
Net cash (outflow)/inflow from investing activities
Financing activities
Issue of Ordinary Shares
Issue costs paid on issuance of Ordinary Shares
Dividends paid
Net cash inflow/(outflow) from financing activities
Increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at start of period
Cash and cash equivalents at end of period
Note
D
2021
£m
3.0
(6.1)
(0.8)
(3.9)
70.0
(186.0)
(116.0)
185.0
(4.3)
(61.7)
119.0
0.1
–
0.1
2020
£m
3.1
(3.0)
–
0.1
56.4
–
56.4
–
–
(56.6)
(56.6)
(0.1)
0.1
–
138
Assura plc Annual Report and Accounts 2021
NOTES TO THE COMPANY ACCOUNTS
For the year ended 31 March 2021
A. Accounting policies and corporate information
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 to the Group accounts.
The auditor’s remuneration for audit and other services is disclosed in Note 4(a) to the Group accounts. Disclosure of each Director’s
remuneration, share interests, share options, long-term incentive schemes, pension contributions and pension entitlements required by the
Companies Act 2006 and those specified for audit by the Listing Rules of the Financial Conduct Authority are shown in the Remuneration
Report on pages 87 to 105 and form part of these accounts.
The average number of employees in the Company during the year was 2 (2020: 2).
Amounts owed by subsidiary companies of £917.2 million were previously presented within current receivables in 2020. The amounts are
not expected to be settled within the Company’s normal operating cycle and have therefore been presented as non-current receivables.
Accordingly amounts presented in current receivables in 2020 have been reclassified to non-current receivables. Additionally, amounts
that were owed by the Company (£87.3 million) had been aggregated with the receivables. These amounts have been separated and
included in current payables. As required under IFRS, a third balance sheet has also been presented illustrating the effect of this change at
the beginning of the comparative period, at which point the amount reclassified to non-current receivables was £926.1 million and the
amount shown as current liabilities was £115.8 million.
B. Investments in subsidiary companies
Cost
Provision for diminution in value
2021
£m
484.2
(218.1)
266.1
2020
£m
484.2
(218.1)
266.1
Details of all subsidiaries as at 31 March 2021 are shown in Note 8 to the Group accounts.
The Company directly holds investments in Assura Group Limited and Assura IH Limited, which are both intermediate holding companies
for the property-owning subsidiaries in the Assura plc group.
During the prior period the Company received a dividend of £40 million from its wholly owned subsidiary company, Assura Group Limited,
which was settled by clearing an intercompany balance owed by Assura plc to Assura Group Limited. The resulting reduction in net assets
of Assura Group Limited led to management completing an impairment assessment of the investment held in Assura Group Limited.
Following this assessment, an impairment charge of £30.9 million was recorded, which was determined by reference to the net assets of
subsidiaries, which is considered to be equivalent to the fair value less costs to sell. The net assets are driven by the investment property
valuations, in addition to intragroup dividends, and sensitivities in respect of property valuations and appropriate Level 3 unobservable
input disclosures are provided in Note 9 to the Group accounts. A corresponding amount was transferred from the merger reserve to
retained earnings which is considered distributable.
C. Amounts owed by subsidiary companies – non-current
Amounts owed by Group undertakings
2021
£m
1,162.8
2020
£m
917.2
The above amounts are unsecured, non-interest bearing and repayable upon demand. As explained in Note A, the amounts have been
included as non-current as the Company believes it is more representative as they are not expected to be settled in the normal operating
cycle.
The recoverable amount of amounts 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 amount is not considered recoverable. No provision has been
deemed necessary.
D. Cash and cash equivalents
Cash held in current account
E. Amounts owed to subsidiary companies – current
Amounts owed to Group undertakings
2021
£m
0.1
2021
£m
(146.2)
2020
£m
–
2020
£m
(87.3)
Amounts owed to Group undertakings are unsecured, non-interest bearing and repayable on demand.
Assura plc Annual Report and Accounts 2021
139
Strategic reportGovernanceFinancial statementsAdditional information NOTES TO THE COMPANY ACCOUNTS CONTINUED
For the year ended 31 March 2021
F. Related party transactions
Group undertakings
31 March 2021
31 March 2020
The above transactions are with subsidiaries.
Charges
received
£m
Dividends
received
£m
Amounts
owed by
£m
Amounts
owed to
£m
3.0
3.1
70.0
76.0
1,162.8
917.2
(146.2)
(87.3)
G. 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 had trade and other payables of £1.5 million at 31 March 2021 (31 March 2020: £1.3 million).
There are no differences between the book value of cash and trade payables, nor is there any meaningful interest rate sensitivity.
140
Assura plc Annual Report and Accounts 2021
APPENDIX A
Medical centres valued over £10 million
Building official name
Ashfields Health Centre
Aspen Centre
Birkenhead Medical Building
Bonnyrigg Medical Centre
Centre for Diagnostics, Oncology & Wellbeing
Cheltenham Family Health Centre
Church View Medical Centre
Church View Primary Care Centre
Crompton Health Centre
Dene Drive Primary Care Centre
Dickson House
Durham Diagnostic Treatment Centre
Eagle Bridge Health and Wellbeing Centre
Fleetwood Health and Wellbeing Centre
Freshney Green Primary Care Centre
Frome Medical Centre
Hall Green Health Centre
Heysham Primary Care Centre
Hillside Primary Care Centre
Jubilee Health Centre
Malmesbury Primary Care Centre
Market Drayton Primary Care Centre
Moor Park Medical Centre
North Ormesby Health Village
Northgate Health Centre
One Life Building
Parkshot Medical Centre
Priory Health Park
Prospect View Medical Centre
Rothbury Community Hospital & Medical Centre
Severn Fields Health Village
South Bar House
St Annes Health Centre
Station Medical Centre
Stratford Healthcare Centre
Sudbury Community Health Centre
Tees Valley Treatment Centre
The Duchy
The Montefiore Medical Centre
The Ridge
The Surgery @ Wheatbridge
Todmorden Medical Centre
Turnpike House Medical Centre
Upton Surgery
Waters Green Medical Centre
Well Street Surgery
Centre for Diagnostics, Oncology & Wellbeing
Town
Sandbach
Gloucester
Birkenhead
Bonnyrigg
Bristol
Cheltenham
South Kirkby
Nantwich
Bolton
Winsford
Basingstoke
Durham
Crewe
Fleetwood
Grimsby
Frome
Birmingham
Heysham
Harlesden
Shotfield
Malmesbury
Market Drayton
Blackpool
North Ormesby
Bridgnorth
Middlesbrough
Richmond
Wells
Malvern
Rothbury
Shrewsbury
Banbury
Lytham St Annes
Hereford
Stratford-upon-Avon
Sudbury
Middlesbrough
Harrogate
Ramsgate
Bradford
Chesterfield
Todmorden
Worcester
Upton
Macclesfield
Hackney
Windsor
Build date
2004
2014
2010
2005
2014
1999
2013
2008
2007
2007
2007
2018
2007
2012
2009
2012
2003
2012
2008
2012
2008
2005
2011
2005
2007
2005
2014
2003
2011
2007
2012
2009
2009
2020
2005
2014
2018
1990
2006
2008
2008
2008
2006
2006
2006
2008
2017
Sq.m
1,567
3,481
2,636
4,083
1,729
3,732
2,812
3,271
2,964
2,793
2,316
2,069
6,809
5,204
6,590
4,062
2,409
3,127
1,945
3,011
3,205
3,589
4,964
7,652
3,588
3,326
1,221
4,628
2,316
1,476
6,003
3,692
3,393
2,562
5,988
2,937
4,389
3,978
2,339
3,763
2,862
4,166
4,132
1,685
6,018
1,080
1,831
List size
26,328
30,042
19,988
22,168
–
47,884
14,889
24,930
12,832
24,935
46,849
–
45,959
12,063
27,578
29,326
26,921
53,779
15,926
29,644
16,075
17,771
28,157
15,566
16,247
10,420
14,704
19,355
13,951
5,873
16,893
54,312
19,104
47,404
19,380
10,184
–
–
27,696
23,639
15,382
16,239
29,439
11,493
61,689
13,945
–
NHS rent %
88%
86%
92%
97%
n/a
79%
90%
89%
87%
88%
66%
100%
90%
91%
86%
79%
85%
93%
100%
90%
91%
90%
94%
64%
89%
91%
100%
83%
91%
100%
94%
89%
96%
100%
98%
100%
n/a
n/a
85%
89%
74%
91%
90%
94%
94%
100%
n/a
Assura plc Annual Report and Accounts 2021
141
Strategic reportGovernanceFinancial statementsAdditional information APPENDIX A CONTINUED
Portfolio statistics
Portfolio
statistics
North East
Midlands
North West
South East
London
South West
Wales
Scotland & NI
Number
139
104
104
51
74
54
58
25
609
Rent (£m)
29.0
22.7
18.8
15.7
14.1
10.1
7.7
3.6
121.7
WAULT
(years)
12.6
13.4
9.6
10.8
11.5
14.6
10.4
11.1
11.9
Total floor
area (sq.m)
147,328
119,949
96,122
81,060
58,071
57,849
48,692
22,210
631,281
Value (£m)
552.4
465.8
359.8
326.2
299.2
202.7
140.6
68.0
2,414.7
<£1m
10.2
7.0
7.7
5.1
1.5
7.7
6.7
2.9
48.8
£1–5m
228.2
175.0
190.4
62.3
160.1
77.3
78.6
29.4
1,001.3
£5–10m
138.7
141.7
115.4
39.8
62.0
33.5
55.3
19.7
606.1
>£10m
175.3
142.1
46.3
219.0
75.6
84.2
–
16.0
758.5
142
Assura plc Annual Report and Accounts 2021
GLOSSARY
AGM is the Annual General Meeting.
Average Debt Maturity is each tranche of Group debt multiplied by
the remaining period to its maturity and the result divided by total
Group debt in issue at the year end.
Average Interest Rate is the Group loan interest and derivative
costs per annum at the year end, divided by total Group debt in
issue at the year end.
British Property Federation (“BPF”) is the membership
organisation, the voice, of the real estate industry.
EPRA Net Reinstatement Value (“EPRA NRV”) is the balance sheet
net assets excluding deferred tax and adjusted to add back
theoretical purchasers’ costs that are deducted from the property
valuation. See Note 7.
EPRA Net Tangible Assets (“EPRA NTA”) is the balance sheet net
assets excluding deferred taxation. See Note 7.
EPRA NIY is annualised rental income based on cash rents passing
at the balance sheet date, less non-recoverable property operating
expenses, divided by the market value of property, increased with
(estimated) purchasers’ costs.
Building Research Establishment Environmental Assessment
Method (“BREEAM”) assess the sustainability of buildings against a
range of criteria.
EPRA “topped up” NIY incorporates an adjustment to the EPRA
NIY in respect of the expiration of rent-free periods or other
unexpired lease incentives. See page 67.
Clinical Commissioning Groups (“CCGs”) are the groups of GPs
and other healthcare professionals responsible for commissioning
primary and secondary healthcare services in their locality.
EPRA NNNAV is EPRA NAV adjusted to include the fair value of
debt, financial instruments and deferred tax This has now been
replaced by EPRA NDV. See Note 7.
Code or New Code is the UK Corporate Governance Code 2018, a
full copy of which can be found on the website of the Financial
Reporting Council.
EPRA Vacancy Rate is the ERV of vacant space divided by the ERV
of the whole portfolio. See page 67.
Company is Assura plc.
Direct Property Costs comprise cost of repairs and maintenance,
void costs, other direct irrecoverable property expenses and rent
review fees.
District Valuer (“DV”) is the commercial arm of the Valuation Office
Agency. It provides professional property advice across the public
sector and in respect of primary healthcare represents NHS bodies
on matters of valuations, rent reviews and initial rents on new
developments.
Earnings per Ordinary Share from Continuing Operations (“EPS”)
is the profit attributable to equity holders of the parent divided by
the weighted average number of shares in issue during the period.
EBITDA is EPRA earnings before tax and net finance costs. In the
current period this is £98.0 million, calculated as net rental income
(£112.0 million) less administrative expenses (£13.5 million) and
share-based payment charge (£0.5 million).
European Public Real Estate Association (“EPRA”) is the industry
body for European REITs. EPRA is a registered trade mark of the
European Public Real Estate Association.
EPRA Cost Ratio is administrative and operating costs divided by
gross rental income. This is calculated both including and excluding
the direct costs of vacant space. See page 67.
EPRA earnings is a measure of profit calculated in accordance with
EPRA guidelines, designed to give an indication of the operating
performance of the business, excluding one-off or non-cash items
such as revaluation movements and profit or loss on disposal.
See Note 6.
EPRA EPS is EPRA earnings, calculated on a per share basis. See
Note 6.
EPRA NAV is IFRS NAV adjusted to adjust certain assets to fair value
and exclude long-term items not expected to crystallise. This has
now been replaced by EPRA NTA. See Note 7.
Equivalent Yield is a weighted average of the Net Initial Yield and
Reversionary Yield and represents the return a property will
produce based upon the timing of the income received. The true
equivalent yield assumes rents are received quarterly in advance.
The nominal equivalent assumes rents are received annually in
arrears.
Estimated Rental Value (“ERV”) is the external valuers’ opinion as
to the open market rent which, on the date of valuation, could
reasonably be expected to be obtained on a new letting or rent
review of a property.
GMS is General Medical Services.
Gross Rental Income is the gross accounting rent receivable.
Group is Assura plc and its subsidiaries.
IFRS is International Financial Reporting Standards adopted
pursuant to Regulation (EC) 1606/2002 as it applies in the EU.
Interest Cover is the number of times net interest payable is
covered by EBITDA. In the current period net interest payable is
£25.1 million, EBITDA is £98.0 million, giving interest cover of 3.9
times.
KPI is a Key Performance Indicator.
Like-for-like represents amounts calculated based on properties
owned at the previous year end.
Loan to Value (“LTV”) is the ratio of net debt to the total value of
property assets. See Note 22.
Mark to Market is the difference between the book value of an
asset or liability and its market value.
MSCI is an organisation that provides performance analysis for most
types of real estate and produces an independent benchmark of
property returns. The MSCI All Healthcare Index refers to the MSCI
UK Annual Healthcare Property Index, incorporating all properties
reported to MSCI for the 12 months to December that meet the
definition of healthcare.
EPRA Net Disposal Value (“EPRA NDV”) is the balance sheet net
assets adjusted to reflect the fair value of debt and derivatives.
See Note 7.
NAV is Net Asset Value.
Assura plc Annual Report and Accounts 2021
143
Strategic reportGovernanceFinancial statementsAdditional information GLOSSARY CONTINUED
Net debt is total borrowings plus head lease liabilities less cash.
See Note 22.
Net Initial Yield (“NIY”) is the annualised rents generated by an
asset, after the deduction of an estimate of annual recurring
irrecoverable property outgoings, expressed as a percentage of
the asset valuation (after notional purchasers’ costs). Development
properties are not included.
Net Rental Income is the rental income receivable in the period
after payment of direct property costs. Net rental income is quoted
on an accounting basis.
Operating efficiency is the ratio of administrative costs (before
one-off charitable donation of £2.5 million) to the average gross
investment property value. This ratio during the period equated to
0.48%. This is calculated as administrative expense of £11.0 million
(£13.5 million less the £2.5 million donation) divided by the average
property balance of £2,296 million (opening £2,139 million plus
closing £2,453 million, divided by two).
Primary Care Network (“PCN”) is a GP practice working with local
community, mental health, social care, pharmacy, hospital and
voluntary services to build on existing primary care services and
enable greater provision of integrated health services within the
community they serve.
Primary Care Property is the property occupied by health services
providers who act as the principal point of consultation for patients
such as GP practices, dental practices, community pharmacies and
high street optometrists.
Property Income Distribution (“PID”) is the required distribution of
income as dividends under the REIT regime. It is calculated as 90%
of exempted net income.
PSP is Performance Share Plan.
Real Estate Investment Trust (“REIT”) is a listed property company
which qualifies for and has elected into a tax regime which exempts
qualifying UK profits, arising from property rental income and gains
on investment property disposals, from corporation tax, but
requires the distribution of a PID.
Total Accounting Return is the overall return generated by the
Group including the impact of debt. It is calculated as the
movement on EPRA NTA (see glossary definition and Note 7) for the
period plus the dividends paid, divided by the opening EPRA NTA.
Opening EPRA NTA (i.e. at 31 March 2020) was 53.9 pence per share,
closing EPRA NTA was 57.2 pence per share, and dividends paid
total 2.82 pence per share giving a return of 11.4% in the year.
Total Contracted Rent Roll or Total Contracted Rental Income is
the total amount of rent to be received over the remaining term of
leases currently contracted. For example, a lease with rent of £100
and a remaining lease term of ten years would have total
contracted rental income of £1,000. At March 2021, the total
contracted rental income was £1.57 billion (March 2020: £1.43 billion)
and the growth in the year was £142 million.
Total Property Return is the overall return generated by properties
on a debt-free basis. It is calculated as the net rental income
generated by the portfolio plus the change in market values,
divided by opening property assets plus additions. In the year to
March 2021, the calculation is net rental income of £112.0 million plus
revaluation of £41.6 million giving a return of £153.6 million, divided
by £2,420.9 million (opening investment property £2,066.7 million
and IPUC £57.5 million plus additions of £233.2 million and
development costs of £56.9 million). This gives a Total Property
Return in the year of 6.3%.
Total Shareholder Return (“TSR”) is the combination of dividends
paid to shareholders and the net movement in the share price
during the period, divided by the opening share price. The share
price at 31 March 2020 was 83.5 pence, at 31 March 2021 it was 72.1
pence, and dividends paid during the period were 2.82 pence per
share.
UK GBC is the UK Green Building Council.
Weighted Average Unexpired Lease Term (“WAULT”) is the
average lease term remaining to first break, or expiry, across the
portfolio weighted by contracted rental income.
Yield on cost is the estimated annual rent of a completed
development divided by the total cost of development including
site value and finance costs expressed as a percentage return.
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.
Yield shift is a movement (usually expressed in basis points) in the
yield of a property asset or like-for-like portfolio over a given
period.
Yield compression is a commonly used term for a reduction in
yields.
Rent Roll is the passing rent (i.e. at a point in time) being the total of
all the contracted rents reserved under the leases, on an annual
basis. At March 2021 the rent roll was £121.7 million (March 2020:
£108.9 million) and the growth in the year was £12.8 million.
Retail Price Index (“RPI”) is an official measure of the general level
of inflation as reflected in the retail price of a basket of goods and
services such as energy, food, petrol, housing, household goods,
travelling fares, etc. RPI is commonly computed on a monthly and
annual basis.
Reversionary Yield is the anticipated yield which the initial yield will
rise to once the rent reaches the ERV and when the property is fully
let. It is calculated by dividing the ERV by the valuation.
RPI Linked Leases are those leases which have rent reviews which
are linked to changes in the RPI.
144
Assura plc Annual Report and Accounts 2021
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.
CORPORATE INFORMATION
Registered Office
The Brew House
Greenalls Avenue
Warrington
WA4 6HL
Company Number: 9349441
Directors
Sam Barrell
Emma Cariaga
Jayne Cottam
Jonathan Davies
Louise Fowler
Noel Gordon
Jonathan Murphy
Ed Smith
Company Secretary
Orla Ball
Auditor
Deloitte LLP
The Hanover Building
Corporation Street
Manchester
M4 4AH
Legal Advisors
CMS Cameron McKenna Nabarro Olswang LLP
DWF Law LLP
Stockbrokers
J.P. Morgan Securities plc
25 Bank Street
Canary Wharf
London
E14 5JP
Stifel Nicolaus Europe Limited
150 Cheapside
London
EC2V 6ET
Bankers
Barclays Bank plc
HSBC plc
NatWest Bank plc
Santander UK plc
Designed by Gather
+44 (0)20 7610 6140
www.gather.london
Assura plc
The Brew House
Greenalls Avenue
Warrington
WA4 6HL
T: 01925 420660
F: 01925 234503
E: info@assura.co.uk
www.assuraplc.com