Annual Report and Accounts 2022
WE BUILD
FOR HEALTH
FO R T H E
LO N G -T E R M
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.
6.8m
Patients served by our buildings
2040
Net zero carbon target date
£522m
Total development pipeline
FO R T H E
LO N G -T E R M
2022 HIGHLIGHTS
Operational highlights
– Over £300m invested in portfolio growth
Financial highlights
2022
2021
Change
during the year
– Acquisitions, developments and asset
enhancements grew rent roll by 12%
to £135.7m
– 1.9% annual equivalent growth on rent
reviews settled, £2.2m in absolute terms
– 8 developments completed (benefitting
over 74,000 patients) and a further 17
currently on site
– Strategic expansion in adjacent
opportunities (NHS Trusts, mental health,
independent providers) yielding acquisition
and development opportunities
– 22 lease regears completed, covering
£1.3m of existing rent roll
– £300m, 12-year Sustainability Bond
successfully launched in June 2021 and
£185m equity raise completed in
November 2021
– Over 694,000 people impacted by
SixBySix activities (new buildings, energy
efficient building improvements and
Assura Community Fund grants)
Financial performance
Net rental income
Profit before tax
IFRS earnings per share (Note 6)
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)
£126.5m
£155.8m
5.6p
3.1p
2.93p
£2,752m
60.7p
£135.7m
36%
£369m
2.30%
£112.0m
£108.3m
4.1p
2.7p
2.82p
£2,453m
57.2p
£121.7m
37%
£272m
2.47%
2022
3.1p
60.7p
66.7p
62.7p
4.42%
4.43%
1.2%
13.1%
12.1%
12.9%
43.9%
36.6%
14.8%
3.9%
12.2%
6.1%
11.5%
(1)ppt
35.7%
(17)bps
2021
2.7p
57.2p
63.2p
56.0p
4.54%
4.55%
1.3%
15.5%
14.5%
See pages 26 and 27
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.
Portfolio analysis by capital value
Portfolio analysis by region
Portfolio analysis by occupier covenant
> £10m
£5 – 10m
£1 – 5m
< £1m
Number of
properties
57
111
405
72
645
Total value
£m
932.0
732.5
1,040.3
45.5
2,750.3
Total value
%
34%
27%
38%
1%
100%
South
North
Midlands
Wales
Scotland, Ireland
& NI
Number of
properties
256
198
106
56
Total value
£m
1,055.6
953.1
495.4
145.0
Total value
%
38%
35%
18%
5%
29
645
101.2
2,750.3
4%
100%
GPs
NHS body
Pharmacy
Independent providers
Other
Total rent roll
£m
84.4
26.5
10.5
7.5
6.8
135.7
Total value
%
62%
20%
8%
5%
5%
100%
REGIONAL PORTFOLIO COVER AGE
01 SCOTLAND,
IRELAND & NI
3 4 20 2
02 NORTH EAST
10 27 91 16
03 NORTH WEST
14 6 27 7
04 MIDLANDS
9 25 61 11
05 SOUTH WEST
6 7 34 12
06 LONDON
9 12 57 2
07 SOUTH EAST
5 23 79 10
08 WALES
1 7 36 12
Value of property
The number of properties within each value
range is shown in the location marker.
> £10 million
£5 – 10 million
£1 – 5 million
< £1 million
01
02
03
04
08
05
The Bridge Centre
Greater Manchester
This specialist hub for Children
and Young People’s Mental
Health Services (CAMHS) was
one of seven mental health
facilities which joined the
portfolio – providing dedicated
space to support young people
facing emotional, behavioural
or mental health challenges.
Nunthorpe Medical Centre
Middlesbrough
This new-build facility in an area of
housing growth is needed to serve
the health needs of an expanding
community, with increasing
pressure on local NHS services.
The new facility will offer the
practice more space for consulting,
treatment and training.
06
07
Wantage Health Centre
Oxfordshire
Our extension and refurbishment
of this medical centre moved to
site this year. It will create more
than 700m² of extra space for two
busy GP practices and reduce the
building’s energy use.
Strategic report
Highlights of the year
2 How we deliver our purpose
– Build better futures for people
and places
– Unlock the power of design
and innovation
– Invest in skills and inspire new ways
of working
– Lead for a sustainable future
– Deliver lasting impact with
communities
14 Chairman’s statement
16 s172 statement
18 CEO statement
22 CFO review
28 Our market
36 Our strategy
42 Our key performance indicators
48 Our business model
51 Our impact
66 Our environmental impact
72 Task force on climate-related
financial disclosures
74 Principal risks and uncertainties
80 Compliance statements
Governance
81 Key Board decisions
82 Chairman's introduction
to governance
84 Our governance framework
86 Board of Directors
89 Key Board activities
94 Nominations Committee Report
97 Audit Committee Report
99 Directors’ Remuneration Report
124 Directors’ Report
126 Directors’ Responsibility Statement
Financial statements
127 Independent Auditor’s Report
134 Consolidated income statement
135 Consolidated balance sheet
136 Consolidated statement of changes
in equity
137 Consolidated cash flow statement
138 Notes to the accounts
155 Company financial statements
Additional information
161 Appendices
163 Glossary
165 Corporate information
W E
B U I L D
BUILD
better futures
for people
and places
UNLOCK
the power of
design and
innovation
INVEST
in skills and
inspire new ways
of working
LEAD
for a sustainable
future
DELIVER
lasting impact
with communities
645
Properties
£135.7m
Rent roll
17
Developments on site
39
Properties acquired
8
Developments completed
By 2026, our goal is that six million
people will benefit from
improvements to or through
our buildings.
£300m
Sustainability Bond launched during
the year to fund green projects
FO R
H E A LT H
1
Assura plc Annual Report and Accounts 2022
Strategic reportGovernanceFinancial statementsAdditional information B U I
BUILD
better futures
for people
and places
UNLOCK
the power of
design and
innovation
INVEST
in skills and
inspire new ways
of working
A purpose for the future
of our business:
Jonathan Murphy, CEO
We have never been more aware
of the importance of our health. Of
how fragile it can be, of our shared
responsibility to protect it, of how
it must shape the places where
we live, learn, work and enjoy
ourselves, and why it’s fundamental
to the imperative to take care of
our planet and each other.
Last year, we talked about our
plans to take a fresh look at our
purpose. Being a purpose-led
organisation is nothing new for us;
we’ve long steered our business
through our vision of outstanding
spaces for healthcare in our
communities. The performance of
our business is testament to that
approach: investing in Assura is
not just an investment in essential
community infrastructure, it is also
an investment in our commitments
to sustainability and social impact;
our steady, risk-adjusted returns
year-on-year are delivered on
those fundamentals. Our £600m
in recent bonds demonstrate our
ability to raise and deploy capital
into schemes which deliver both
financially and make a difference
for our environment and for society.
But as we considered the
long-term inequalities which have
been further entrenched by the
pandemic, and our unique
position to contribute through
our relationships with local health
systems and the communities
they serve, we wanted to further
strengthen that approach.
Ultimately, our impact for
health must reach far beyond
our buildings.
2
Assura plc Annual Report and Accounts 2022
L D
DELIVER
lasting impact
with communities
LEAD
for a sustainable
future
Our evolved purpose
doesn’t change our
strategy or business
model. But it does
articulate more clearly
what we care about and
what matters to us about
the way we work, as we
look to continue growing
our impact financially,
environmentally
and socially.
Jonathan Murphy, CEO
Why invest in Assura?
1
4
We have a low risk, growing portfolio and
scalable platform that provides a recurring
and predictable revenue stream.
5
We have a strong balance sheet that
enables us to invest in our portfolio and
provide a sustainable, covered and
progressive dividend policy.
We're delivering our purpose to build
better futures for people and places
by deploying capital into schemes which
deliver financially and make a difference
to the environment and society.
2
We use our extensive sector experience
and creative skills to meet the unrelenting,
critical need for investment in fit-for-purpose,
community health buildings.
3
We use the power of design and
innovation to create outstanding buildings,
ensuring we play our part in a sustainable
future and supporting the NHS to meet its
goal to be the first net zero carbon health
service by 2045.
3
Assura plc Annual Report and Accounts 2022
Strategic reportGovernanceFinancial statementsAdditional information B
BUILD BETTER
FUTURES FOR PEOPLE
AND PLACES
This principle is about always striving to make a greater impact
for health through our work, whatever we’re working on. Through
a new-build scheme, that might mean we’re creating space for
community projects wanting to work more closely with primary
care, improving nearby outdoor facilities for exercise or mental
health, or investing in research, bursaries or new skills programmes
to help the NHS or local young people into work.
Through our portfolio management and asset enhancement
activities, we’ll be creating crucial capacity for existing healthcare
sites and also working to improve their surroundings and the
experience of that building for patients and healthcare workers.
When we’re investing, we’ll always be looking at how our capital
can make a difference to the local area beyond the bricks and
mortar, and for the health of those who live there.
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Assura plc Annual Report and Accounts 2022
These new premises also allow
us to extend our capacity to
support the training of future
doctors, something that the
surgery has always supported as
an established training practice.
We can’t wait to move in!
Dr Gareth Lloyd
Senior Partner, Whitchurch Road Surgery
This development will provide
excellent health facilities for the
community and the remediated
land will result in a significant
net increase in the number of
allotment plots that can be let
to local residents.
Flaxland Avenue Allotments Society
Whitchurch Road
Surgery, Cardiff
This £3 million new-build medical centre isn’t
just creating the modern consulting rooms,
spacious reception and waiting area, minor
surgery facilities and an on-site pharmacy
for a busy city GP practice which is currently
stuck in a converted terraced house. It will
also convert nearby contaminated land into
40 new allotments – greatly increasing the
growing and gardening space available
to the local community.
5
Assura plc Annual Report and Accounts 2022
Strategic reportGovernanceFinancial statementsAdditional information U
UNLOCK THE
POWER OF DESIGN
AND INNOVATION
This one’s about using every tool in the kit – coupled with our
research and development activities, partnerships with suppliers
and listening to our customers – to solve challenges facing
healthcare, the built environment, our climate and our society.
We’re problem solvers, and we know the Assura network
of experts is stronger together.
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Assura plc Annual Report and Accounts 2022
We’re really excited about what
this sort of technology can do for
our operations – what we learn
here on the Riverside site will help
inform our approach to tech like
this for every construction project
we undertake. There's huge
potential for efficiencies in the
supply of materials, cost savings
and improved reporting, so we're
looking forward to evaluating
how it's worked.
Paul Warwick
Senior Project Manager
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Assura plc Annual Report and Accounts 2022
Making site waste
smart in West
Yorkshire
At our extension project to create more
space for the team at Riverside Medical
Centre in Castleford, we’re piloting the
Q-Flow system to help us improve the
efficiency of our construction projects.
The system, a start-up developed with
support from PiLabs – Europe’s first
proptech venture capital fund which
counts us among its investors – is helping
us to track deliveries to site and collections
from it more accurately. It means we can
ensure materials are compliant with our
specification, as the system checks against
points such as FSC for timber and ISO14001,
and we can communicate more effectively
with suppliers if information is missing or
unchecked. By tracking the waste that’s
removed from site, we can see where we
can reduce this across our supply chain and
report more effectively on the impact of
measures for our work to reduce our
carbon emissions.
Strategic reportGovernanceFinancial statementsAdditional information I
INVEST IN SKILLS
AND INSPIRE NEW WAYS
OF WORKING
This principle is about using our work to foster learning – whether
for our team, our suppliers, the communities we’re working in or
creating opportunities for those who need them most. That might
take the form of apprenticeships on one of our construction
schemes, or work experience and internship opportunities with
our team. It might be an Assura Community Fund grant to support
a community project which is training up new volunteer
bereavement counsellors, a research partnership or building
new skills in our team to support their development.
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Assura plc Annual Report and Accounts 2022
Our academy is going to be such
a valuable addition to our trust.
I have had the opportunity to
progress to my current role,
so I am very passionate about
colleagues being able to access
the training and education they
need to progress in a career
which is so rewarding. Our nurses,
midwives and allied healthcare
professionals all do an incredibly
important job and to be able to
be at the forefront of educating
these colleagues is really very
special indeed.
Marion Dickson
Northumbria Healthcare’s executive
director for nursing, midwifery and
allied health professionals
Northumbria Health
and Care Academy
This year, we secured planning permission
for our £25 million health and education
centre of excellence in Northumberland,
which will be run by Northumbria Healthcare
NHS Foundation Trust on the site of its
emergency care hospital in Cramlington.
The clinical skills centre of excellence will
focus initially on nursing, midwifery and
allied health professional training.
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Assura plc Annual Report and Accounts 2022
Strategic reportGovernanceFinancial statementsAdditional information L
LEAD FOR A
SUSTAINABLE
FUTURE
We believe healthcare buildings have a responsibility to help lead
the way to a healthier planet. The NHS has set its own goal of
becoming the world’s first net zero healthcare system, and we’re
playing our part – both through our actions as a business and as a
team of people who care. We’ve set out our ambitious next steps:
this principle is about making the decisions which may not be easy,
but are right for our environment. It reflects our commitment to
deliver the country’s first whole life net zero carbon medical
centre; our work to reduce the carbon footprint of our head office
activities; our efforts to help our customers reduce their energy
use and costs; and our projects to make outdoor spaces work
as hard as they can for local health.
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Assura plc Annual Report and Accounts 2022
This project was a real first for
us, and the support we had from
investors was enormous. As with
the Social Bond we issued in 2020,
this bond fits squarely within our
SixBySix framework which is aimed
at maximising our contribution to
society and minimising our impact
on the environment.
Jayne Cottam
Assura CFO
Sustainable finance
In 2021, we launched our £300 million
Sustainability Bond – the first under our
Sustainable Finance Framework, which
is focused on the funding and refinance
of green and social projects. It is already
supporting schemes such as our proposed
development for Polegate in Sussex –
which we hope will be among our first
net zero carbon pilots – and development
of our Net Zero Carbon Design Guide,
to inform every new project we take on.
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Assura plc Annual Report and Accounts 2022
Strategic reportGovernanceFinancial statementsAdditional information D
DELIVER
LASTING IMPACT WITH
COMMUNITIES
This principle is about what we can do with, through and beyond
our buildings to support health. It’s about how we involve
communities with our work, how we are steered by them on ways
to improve access to health services and activities, and how we
can play our part in reducing local health inequalities. Our Assura
Community Fund is just one element: community impact is about
using our capital, our people, our skills and our portfolio to
make a difference in every place we work.
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Assura plc Annual Report and Accounts 2022
It started off as one afternoon
a week and recently I’ve actually
been three days a week. For me
that’s unbelievable as I spend
so much time just having to be
in bed. There’s so much laughter
and learning, I just can’t express
enough how I love being part
of this team. I just spoke to my
doctor now…I said you have
to tell people about it!
Nelly
Project participant
Deeper underground
York Archaeology, a project by the York
Archaeological Trust, applied to the Assura
Community Fund for a grant to support a
social prescribing scheme which would
build a detailed picture of life from medieval
times to the modern day in one part of the
city. Excavating a site just a few metres
away from the city walls, the project sees
participants working with archaeologists
to improve their health and wellbeing,
spending time outdoors as well as learning
new skills in archaeology, finds processing,
archive digitisation, and report preparation.
13
Assura plc Annual Report and Accounts 2022
Strategic reportGovernanceFinancial statementsAdditional information CHAIRMAN’S STATEMENT
“The best way to
invent the future
is to build it.”
“Our work enables NHS teams
to do theirs.”
Ed Smith CBE
Non-Executive Chairman
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Assura plc Annual Report and Accounts 2022
694k+
people benefitting from our
SixBySix strategy in year two
6.8m
patients served by our buildings
Dear shareholder,
“Why are we working with Assura? Because
as much as I am a generalist, they are the
specialists…which means I can get on with
what I’m good at, which is providing high
quality local health services.”
These words from one of our GP customers
this year capture the essence of the
partnership Assura creates with the NHS.
Our work enables NHS teams to do theirs.
The NHS’s demand for space and capacity
– to tackle the COVID-19 backlog; to redesign
and future-proof its premises for hybrid
care; and to head towards its net zero goals
– is unrelenting, and this year ‘the Assura
way’ has continued to set us apart.
It starts, of course, with you. It is your
support for, and your engagement with,
this business to deliver for key public
infrastructure, for the environment and for
our society which are growing its financial
strength. This year’s £300 million
Sustainability Bond was another first for
Assura, and we are busily deploying the
proceeds into exciting projects for our NHS
partners which meet our joint ambitions.
We are reporting on another strong
financial performance, which you can
read about in Jonathan's statement. We
completed some of the biggest financial
deals in our history, including the landmark
Northumbria Health and Care Academy at
Northumbria Specialist Emergency Care
Hospital – demonstrating Assura’s ability to
innovate with the health service to deliver
the new generation of infrastructure which
provides vital connections between acute
services, primary and community care.
The Assura way is charting our course to net
zero, so that you can clearly see the actions
we intend to take, when and why. The NHS’s
estate faces unique and complex challenges
to reach net zero: we must play our full part
in helping it get there. While our customers
grapple with what the journey to net zero
means for them and their operations, we
are digging deeper, to see what more our
buildings can do to support them. In this
report you’ll be able to see some of the
progress we’ve made this year on our
roadmap for our portfolio and to bring
together our design guide for net zero
carbon healthcare buildings. It is another
example of the Assura way, ensuring that our
plans and decision-making are underpinned
by evidence and scrutinised with rigour.
The Assura way is as a thought leader: we
have continued to work with our customers,
suppliers and wider partners this year on
the evolution of our surgery of the future
vision: of the community health hub space
which will underpin the future of hybrid
care and increased diagnostic capacity
away from hospital, create the workplaces
which NHS staff deserve and play a key part
in the levelling up agenda for health and
care. From our development of our detailed
social impact and sustainability strategy
and our collaboration with specialist
partners on our entry to this year’s Wolfson
Economics Prize, through to finalising our
tool for designing primary care
environments which are truly inclusive for
people with disabilities and neurodiversity,
we are shaping the future through our
innovation for the fabric, the feel and the
further impact that our buildings can have.
The Assura way is delivering for communities
beyond our buildings: this year saw our
award-winning Assura Community Fund
move past the £1 million milestone for funds
distributed to micro health projects around
the country – many designed to tackle the
mental health needs of those already most
impacted by health inequalities, which have
deepened during the pandemic.
The Assura way focuses on our people.
Just as we supported our customers in their
delivery of three waves of vaccinations to
millions of people around the country, we
continued to support our team through the
professional and personal challenges of
further lockdowns, a return to office
working and the wider economic pressures
of the cost of living. Our diverse and skilled
non-executive team has been further
bolstered by the additional insight, skills
and perspectives brought into the business
by our three new Non-Executive Directors
who joined us this year.
We have evolved how we articulate ‘the
Assura way’ this year, to better reflect the
purpose-driven business we are. You can
read more about it in the CEO’s statement,
and in the special section at the front of this
report. And over the following pages you
can read our Section 172 statement
outlining our core stakeholders, how we
engage with them and the impact of that
engagement for our decision-making.
I look forward to seeing many of you
at our AGM in person once again this year,
to discuss the difference 'the Assura way'
is making.
Ed Smith CBE
Non-Executive Chairman
23 May 2022
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Assura plc Annual Report and Accounts 2022
Strategic reportGovernanceFinancial statementsAdditional information
S172 STATEMENT
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.
We adopt a long-term approach to holding
our assets as set out in our strategy and
business model on pages 36 to 41 and 48
to 50. 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
as the standard length of our leases is
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
Newbyres and Wantage, 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
£300 million Sustainability Bond focused
on the funding and refinance of green and
social projects (see page 89). Our dividend
policy is based on paying out a proportion
of recurring earnings (see our CFO Review
page 25).
Understanding and responding
to stakeholder concerns
Pages 51 to 65 describe how we have
engaged with and responded to matters
raised by employees, suppliers, customers,
investors and communities. We undertook
extensive investor consultation on our
updated Remuneration Policy (see page 100)
and also consulted widely with suppliers,
investors, employees and customers on
what social value means to them as we
developed our SixBySix plans further.
Our impact on the environment
Pages 66 to 71 set out our approach to
minimising our impact on the environment,
including climate change. This year, all
completed developments have again hit
our BREEAM and EPC targets. We have
started the roll out of our EPC improvements
works, installing LED lighting at 42 properties.
We have finalised our Net Zero Carbon
Design Guide following extensive work
exploring our development process in full
on several schemes. We have also
advanced our TCFD workstreams.
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 81 to 126). 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 60 and 92. We aim
to work with our suppliers to ensure their
values on social impact and sustainability
align with ours. In the year the tender
for our LED pilot project included criteria
for social impact in the scoring matrix.
See page 63 for further details.
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 90 demonstrates this further.
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Assura plc Annual Report and Accounts 2022
Strategic reportGovernanceFinancial statementsAdditional information CEO STATEMENT
“The design of modern
fit-for-purpose GP
surgeries has always
been a cornerstone
of our activities.”
“Assura’s success is built on our
complementary offer of investment,
development and management
of premises to our customers.”
Jonathan Murphy
CEO
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Assura plc Annual Report and Accounts 2022
Assura has a high-quality portfolio of 645
properties, which has been assembled over
the course of our 19-year history. An essential
part of our growth strategy is the careful
review of every asset for opportunities to
enhance its lifetime cash flows and impact
on the community. Reflecting the
importance of this activity, total contracted
rental income is set as one of our key
strategic KPIs. This metric is a combination
of our passing rent roll and lease length,
providing an effective measure of our ability
to both grow and extend our cash flows
for the long term. It captures the crucial
value-enhancing activity of our portfolio
management teams as they agree rent
reviews, complete lease re-gears, let vacant
space and undertake physical extensions.
This year, the team completed 308 rent
reviews, 22 lease re-gears and nine new
tenancies for our vacant space. This has
enabled us to increase our total contracted
rental income to £1.81 billion and maintain
our weighted average unexpired lease term
which stands at 11.8 years.
The combination of these elements has
enabled us to continue our strong track
record of growth year-on-year. Our portfolio
has increased by 12% to £2,752 billion and
our passing rent roll is up 12% to £136 million.
Our adjusted EPRA earnings have increased
by 14% to £86.2 million which translates to
an EPRA EPS of 3.1 pence per share. Taking
into account the positive valuation
movements, our net profit is £155.9 million
or 5.6 pence per share.
Finally, the resilience of our income and the
growth we have delivered is reflected in our
dividend payments. Today, we announce a
5% increase in the quarterly dividend
payment to 0.78 pence with effect from the
July 2022 payment, our ninth consecutive
year of increased dividend.
We BUILD for health
Our evolved purpose doesn’t change
our strategy or business model. We have
refreshed the wording to more clearly
articulate what’s important to us about
the way in which we continue to grow
our impact financially, environmentally
and socially.
Building better futures for people and
places. Unlocking the power of design and
innovation. Investing in skills and inspiring
new ways of working. Leading for a
sustainable future. Delivering lasting impact
with communities. Each of our BUILD
principles defines a different aspect of the
way we work and the impact we want to
deliver for our stakeholders.
Financial and operational performance
Assura’s business is built on the reliability
and resilience of our long-term, secure cash
flows. These are supported by a weighted
average unexpired lease term of 11.8 years
and a strong financial position (demonstrated
by our A- credit rating from Fitch Ratings Ltd).
While remaining resilient, Assura has
consistently demonstrated an ability to
identify and secure new opportunities for
growth, building on our market-leading
capabilities to manage, invest in and
develop outstanding spaces for health
services in our communities.
We have continued our strong track record
of investing in new properties, completing
39 acquisitions for a total consideration of
£234 million throughout the year. Our
investment team continues to leverage
the relationships we have with existing
occupiers to identify new opportunities,
as well as analysing our bespoke database
which contains details on all the medical
centres in the UK.
The design of modern fit-for-purpose
GP surgeries has always been a cornerstone
of our development activities and we have
delivered over £485 million of new
developments and improvements to
existing properties over 19 years. We
have had another strong year with eight
development completions and a further
nine schemes moving on site. The recent
challenges in the construction industry, with
significant cost inflation and delays in the
supply chain, have primarily impacted us
with schemes typically facing a two-three
month extension in the build period. In our
immediate pipeline we are carefully
balancing the cost of the schemes and
the rents negotiated with the NHS.
I am proud to report another year of strong
progress for Assura. Despite a volatile
economic backdrop, our team has worked
hard to deliver against our successful
strategy and advance Assura's positive
growth trajectory.
We have continued to work through the
challenges as the country has “re-opened”,
adapting to new ways of working and
collaborating face-to-face as well as
supporting our NHS customers as their
operations transition to ‘living with
COVID-19’.
We have delivered significant portfolio
growth – through both additions
(39 acquisitions and eight completed
developments) and asset enhancements
(four completed capital projects, a further
seven on site and 22 lease regears).
In its second year, we have made strong
progress against our social impact and
sustainability strategy, SixBySix: the rollout
of our EPC improvement works has
commenced, we have completed our
Net Zero Carbon Design Guide for our
developments and our award-winning
Assura Community Fund has again
supported more than 100 projects
all over the country.
But the NHS continues to face significant
challenges, many only exacerbated by the
pandemic. The volume of demand for NHS
services has never been greater; clinical
workforce and capacity cannot keep pace
with that growth and the NHS estate is
simply not in shape to accommodate
evolving services and delivery.
It’s against that backdrop that we’ve
reflected on the role we want to play
in supporting the NHS to rise to these
challenges. Subsequently, we’ve evolved
the way we describe our purpose: “We
BUILD for health” and our BUILD principles
describe the breadth and depth of our
approach to the role of the estate in
enabling the NHS to do its work, with
our net zero carbon ambition at its heart.
We have also started growing our
portfolio in new ways, moving on site with
development schemes directly let to NHS
Trusts in the North East and the Midlands,
working with independent healthcare
partners to the NHS on schemes in the
South East and North West, and we made
our first acquisition in Ireland.
We are once again indebted to the
continued support from our investors with
£185 million raised from our equity investors
in November and £300 million from the
successful launch of our Sustainability Bond
in June. Deployment of these funds has
been ahead of our initial expectations.
19
Assura plc Annual Report and Accounts 2022
Strategic reportGovernanceFinancial statementsAdditional information CEO STATEMENT
CONTINUED
Development pipeline
On site
Immediate
Extended
Total
In house
Forward fund
Total
#
10
19
19
48
£m
71
155
130
356
#
7
1
7
15
£m
95
3
68
166
#
17
20
26
63
£m
166
158
198
522
The NHS has ambitious targets to become
the world’s first net zero carbon health
system, but this is not yet filtering down to
plans on how this will be implemented and
paid for across the existing estate. Our role
is to be an expert partner to bridge those
gaps and share our learnings with the NHS,
always pushing the bar higher at our
buildings and through our impact – using
our unique expertise and financial capacity
to deliver.
Jonathan Murphy
CEO
23 May 2022
Assura outlook
Assura’s success, and its strategy, is built
on our complementary offer of investment,
development and management of premises
to our customers – underpinned by our
purpose-led approach which seeks to
maximise impact for society and minimise
impact on the environment. This multi-
faceted approach enables us to better
understand the requirements of our
customers and anticipate their future needs.
Having demonstrated its effectiveness and
resilience, we have a proven business
model focused on delivering sustainable
growth for the long-term.
We once again enter the new financial
year with a strong immediate pipeline.
Acquisition opportunities in legal hands
total £119 million and we have £18 million of
asset enhancement capital projects either
on site or in legal hands. In development,
we are on site with a record 17 schemes
with a gross development spend of
£166 million, an immediate pipeline of
£158 million of development opportunities
that are expected to commence within the
next 12 months, and an extended pipeline of
£198 million of further opportunities where
Assura is the exclusive partner. Following
our strategic acquisitions of Apollo and GPI
in recent years, most of our development
pipeline will be delivered in-house.
Our strategic expansion into premises
enabling the delivery of community-based
services away from hospitals is flowing
through into our pipelines. We are now on
site with a £25 million multi-use facility for
the Northumbria Healthcare NHS Foundation
Trust in Cramlington; a £22 million state-of-
the-art facility for West Midlands Ambulance
Service University NHS Foundation Trust in
Oldbury; and a £31 million cancer diagnostic
and treatment centre for GenesisCare in
Guildford. These schemes demonstrate our
ability to work with a range of partners in
delivering game-changing facilities for NHS
care, as well as for schemes of scale: these
represent our three largest developments
to date.
We have also made our first acquisition in
the Irish market, a modern asset in Castlebar
for which we are also working on a
significant extension opportunity. The Irish
market offers us another growth avenue
with a very similar risk profile, and our initial
conversations have yielded some forward
funding opportunities that we are hopeful
of progressing over the next few months.
We remain well funded to support our
future growth plans. We currently have cash
and undrawn committed facilities totalling
£369 million having completed well-
supported equity and debt raises during
the previous 12 months and have identified
£76 million of assets that we are actively
seeking to dispose of to recycle the capital.
This financial strength further underpins our
future growth prospects.
Market outlook
The critical need for investment in the
infrastructure that supports the services
delivered by the NHS is as pronounced as it
has ever been. Waiting lists are longer than
they have been for decades because
hospitals are overburdened, and appropriate
space doesn’t exist in a community setting
to deliver care where it is needed.
The existing NHS estate is not fit for purpose
and requires significant investment to meet
this demand. Healthcare professionals
openly admit that the premises they work
in are constraining the services they can
provide, hindering recruitment of additional
staff and holding back progress on tackling
the care backlog. So it is not surprising that
98% of Primary Care Network clinical
directors feel more investment is needed
for primary care premises.
The restructuring of the NHS into Integrated
Care Partnerships in the coming months
provides an opportunity for greater
collaboration across health professionals,
services and estate – with scope to improve
individual patient experiences and reduce
health inequalities.
20
Assura plc Annual Report and Accounts 2022
Expanding
our offering
As introduced last year, we
continue to look for ways to grow
our portfolio in areas that are
complementary to our existing
strengths.
In the year we have moved on site
with development schemes for NHS
Trusts (West Midlands Ambulance
Hub and Northumbria Health and
Care Academy), schemes with
selected independent providers
(GenesisCare at Guildford and
Ramsay at Kettering) as well as
making our first investment in
Ireland (Castlebar).
Each of these buildings will
make a positive contribution
to the delivery of health services
in that community, and for us the
building characteristics (lease
length, tenant covenant) meet
our investment criteria.
21
Assura plc Annual Report and Accounts 2022
Strategic reportGovernanceFinancial statementsAdditional information CFO REVIEW
“We are pleased to be
reporting on another
strong year of delivery,
successfully deploying
the capital raised
during the year.”
Jayne Cottam
CFO
22
Assura plc Annual Report and Accounts 2022
PORTFOLIO
HIGHLIGHTS:
£2.8bn
current portfolio
11.8 years
WAULT
£1.81bn
total contracted
rental income
36%
LTV
2.3%
weighted average interest
rate on debt
It has been another strong year
for Assura; leveraging the strength
of our balance sheet to continue
growing our portfolio and driving
scale benefits, particularly in our
cost of debt.
We are delighted to have received
continued, strong support from
our debt and equity holders during
the year; successfully launching a
£300 million Sustainability Bond in
June 2021 and raising £185 million
of equity in November 2021.
The pace of our deployment of
these proceeds has been ahead of
our initial expectations, with strong
acquisition and development
activity, including progress within
several emerging areas we have
identified for future growth.
PIPELINES AT MARCH 22:
£166m
on site developments,
17 schemes
£158m
immediate development pipeline,
20 schemes
£198m
extended development pipeline,
26 schemes
£119m
acquisition pipeline,
20 assets
£76m
properties held for sale,
63 assets
23
Assura plc Annual Report and Accounts 2022
The net valuation gain in the year of
£69.4 million reflects a 3.4% uplift on a
like-for-like basis net of movements relating
to properties acquired in the period. The
valuation gain is split equally between asset
enhancement activities (due to both lease
regears and rent review uplifts) and the 9
basis point movement in our equivalent yield.
The NIY on our assets continues to represent
a substantial premium over both the 10-year
and 15-year UK gilts which traded at 1.61%
and 1.813% respectively (2021: 0.845% and
1.22% respectively).
Portfolio additions
We have invested significantly during the
period, with this expenditure split between
investments in completed properties,
developments, forward funding projects,
extensions and fit-out costs enabling vacant
space to be let as follows:
Acquisition of completed
medical centres
Developments/forward
funding arrangements
Capitalised interest
Investment properties – no
incremental lettable space
Total capital expenditure
2022
£m
233.5
62.1
1.6
8.5
305.7
We have completed 39 acquisitions and
eight developments during the year.
These additions were at a combined total
cost of £271 million with a combined passing
rent of £12.3 million (yield on cost of 4.6%)
and a WAULT of 19.0 years.
Investment activity
We continue to source properties that meet
our investment criteria for future acquisition.
The acquisition pipeline stands at £119 million,
being opportunities that are currently in
solicitors’ hands and which we would hope
to complete within three to six months,
subject to satisfactory due diligence.
During the year, we disposed of 11 properties
where we believed there was lower growth
prospects than the rest of our portfolio,
generating proceeds of £15.1 million at a
premium over book value of £0.3 million.
We continue to review our portfolio for
any indication that properties no longer
meet our investment criteria and as at the
year end have £76 million of investment
properties held for sale. These properties
are under offer and we expect to complete
the sale in Q1, generating proceeds to
recycle into our pipelines.
Alternative Performance Measures
(“APMs”)
The financial performance for the period
is reported including a number of APMs
(financial measures not defined under IFRS).
We believe that including these alongside
IFRS measures provides additional
information to help understand the financial
performance for the period, in particular in
respect of EPRA performance measures
which are designed to aid comparability
across real estate companies. Explanations
to define why the APM is used and
calculations of the measures, with
reconciliations back to reported IFRS
measured normally in the Glossary, are
included where possible.
In particular, in the prior period we disclosed
an adjusted EPRA earnings measure (see
Note 6). This was introduced to exclude
the one-off impact of the £2.5 million
contribution to the Assura Community Fund
in the period, so as to ensure readers of the
accounts could continue to understand
the underlying, recurring earnings of the
property rental business.
Portfolio as at 31 March 2022
£2,751.9 million (2021: £2,453.3 million)
Our business is based on our investment
portfolio of 645 properties (2021: 609).
This has a passing rent roll of £135.7 million
(2021: £121.7 million), 82% of which is
underpinned by the NHS. The WAULT is
11.8 years and we have a total contracted
rent roll of £1.81 billion (2021: £1.57 billion).
At 31 March 2022 our portfolio of completed
investment properties was valued at a total
of £2,750.3 million, including investment
properties held for sale of £76.0 million
(2021: £2,414.7 million and £14.3 million),
which produced a net initial yield (“NIY”)
of 4.48% (2021: 4.58%). Taking account of
potential lettings of unoccupied space and
any uplift to current market rents on review,
our valuers assess the net equivalent yield
to be 4.72% (2021: 4.81%). Adjusting this
Royal Institution of Chartered Surveyors
(“RICS”) standard measure to reflect the
advanced payment of rents, the true
equivalent yield is 4.74% (2021: 4.83%).
Our EPRA NIY, based on our passing rent
roll and latest annual direct property costs,
was 4.42% (2021: 4.54%).
Net rental income
Valuation movement
Total Property
Return
2022
£m
126.5
69.4
2021
£m
112.0
41.6
195.9
153.6
Expressed as a percentage of opening
investment property plus additions,
Total Property Return for the year was 7.1%
(2021: 6.3%). This can be split as 4.6% from
net rental income (2021: 4.6%) and 2.5%
from valuation movement (2021: 1.7%).
Strategic reportGovernanceFinancial statementsAdditional information
CFO REVIEW
CONTINUED
Development activity
Of the 16 developments that were on site
at March 2021, eight have completed in the
year. The remainder are due to complete
during 2022 including six (£28 million) in Q1.
The development team has continued to
have success in converting schemes from
the pipeline to live schemes, with nine
schemes moving on site during the year
meaning that 17 are on site at 31 March 2022.
Of the 17 developments on site at 31 March
2022, seven are under forward funding
agreements and 10 are in-house
developments. These have a combined
development cost of £166 million of which
we had spent £65 million as at the year end.
Our development pipeline has continued
to grow. The majority is organic, generated
by the strength of the relationships that
our development team hold, meaning the
majority of our pipeline is in house schemes.
In addition to the 17 developments currently
on site, we have an immediate pipeline of
20 properties (estimated cost £158 million,
which we would hope to be on site within
12 months) and an extended pipeline of
26 properties (estimated cost £198 million,
appointed exclusive partner and awaiting
NHS approval).
We recorded a revaluation gain of
£4.0 million in respect of investment property
under construction (2021: £4.9 million).
Portfolio management
Our rent roll grew by £14.0 million during
the year to £135.7 million.
The growth came from acquisitions
(£11.2 million), development completions
(£1.5 million) and portfolio management
activity including rent reviews (£2.2 million),
offset by the rent relating to disposals
(£0.9 million).
During the year we successfully concluded
308 rent reviews (2021: 320 reviews) to
generate a weighted average annual
rent increase of 1.9% (2021: 1.5%) on those
properties, which is a figure that includes
18 reviews we chose not to instigate in
the year. These 308 reviews covered
£37.9 million or 31% of our rent roll at the
start of the year and, on a like-for-like basis,
the absolute increase of £1.9 million is a 5.1%
increase on this rent. Our portfolio benefits
from a 33% weighting in fixed, RPI and other
uplifts which generated an average uplift of
2.7% during the period. The majority of our
portfolio is subject to open market reviews
and these have generated an average uplift
of 1.4% (2021: 1.2%) during the period.
Our total contracted rental income, which is
a function of current rent roll and unexpired
lease term on the existing portfolio and
on-site developments, has increased from
£1.57 billion at March 2021 to £1.81 billion at
March 2022, despite the passage of time.
24
Assura plc Annual Report and Accounts 2022
Live developments and forward funding arrangements
Beaconsfield
Brighton
Calne
Cardiff
Cramlington
Guildford
Forward
fund/
in house
In house
FF
In house
In house
In house
FF
Hemel Hempstead In house
FF
Kelsall
FF
Kettering
Nunthorpe
Portsmouth
Southampton
Stourport
Sutton
Wallsend
West Midlands
Ambulance Hub
Wolverhampton
In house
In house
In house
FF
In house
In house
FF
Principal
tenant
GPs
GPs
GPs
GPs
NHS Trust
Independent
provider
GPs
GPs
Independent
provider
GPs
GPs
GPs
GPs
GPs
GPs
NHS Trust
Estimated
completion
date
Q2 22
Q2 23
Q3 23
Q3 22
Q4 23
Q4 23
Development
costs
Costs to
date
Size
£6.8m £6.5m 1,668 sq.m
£1.9m 948 sq.m
£4.9m
813 sq.m
£3.8m £0.9m
633 sq.m
£1.4m
£3.1m
£25.3m £4.2m 6,500 sq.m
£31.4m £2.8m 2,818 sq.m
Q2 22
Q3 22
Q2 23
Q2 22
Q2 22
Q1 23
Q2 22
Q2 22
Q3 22
Q3 22
997 sq.m
£5.1m £4.9m
£3.0m £2.4m 700 sq.m
£21.6m £3.6m 3,500 sq.m
£2.2m
£1.4m 565 sq.m
£4.5m £4.3m 968 sq.m
£7.0m £3.4m 1,385 sq.m
£5.9m £4.2m 1,950 sq.m
£3.2m £2.4m
664 sq.m
£6.7m 2,794 sq.m
£10.4m
£22.3m £13.7m 7,081 sq.m
FF
GPs
Q3 23
£5.9m £0.9m 1,325 sq.m
We grow our total contracted rental
income through additions to the portfolio
and getting developments on site, but
increasingly our focus has been extending
the unexpired term on the leases on our
existing portfolio (“re-gears”).
The team has had success in delivering 22
re-gears in the period, covering £1.3 million
of rent roll and adding 10.5 years to the
WAULT for those particular leases (2021: 31
re-gears, £2.8 million of rent). We also have
terms agreed on a pipeline of 49 re-gears
covering a further £6.9 million of rent roll
and these are currently in legal hands.
Administrative expenses
The Group analyses cost performance
by reference to our EPRA Cost Ratios
(including and excluding direct vacancy
costs) which were 13.1% and 12.1%
respectively (2021: 13.4% and 12.3%,
excluding one-off impact of Assura
Community Fund donation in prior year).
We also measure our operating efficiency
as the ratio of administrative costs to the
average gross investment property value.
This ratio during the period equated to
0.45% (2021: 0.48%) and administrative costs
stood at £11.7 million (2021: £11.0 million).
We have secured nine new tenancies with
an annual rent roll of £0.3 million and a
pipeline in legal hands of six new tenancies
(rent £0.3 million). Our EPRA Vacancy Rate
at March 2022 is 1.2% (2021: 1.3%).
Financing
As we continue to grow through
acquisitions and developments, we are
delighted to have received support from
both the debt and equity markets.
We completed four asset enhancement
capital projects during the year (spend
£2.7 million) and are currently on site with
a further seven projects with a total capital
spend of £7.4 million. In total we have a
pipeline of 16 asset enhancement capital
projects we hope to complete in the next
two years. These have an estimated capital
spend of £11.2 million, additional rent of
£0.8 million and improve the WAULT
on those properties.
Our current rent roll is £135.7 million and,
on a proforma basis (i.e. assuming relevant
figures are added to the rent roll as it
stands), would increase to approximately
£167 million once the acquisition pipeline
and extended development pipeline are
completed plus anticipated rent reviews
and asset enhancements identified.
In June 2021, following on from the launch
of our debut Social Bond in 2020, we
successfully launched a £300 million, 12-year
Sustainability Bond which priced at a fixed
interest rate of 1.625%. This was launched
alongside our Sustainable Finance
Framework, which supports our SixBySix
social impact strategy, and the proceeds
are to be used for investment in eligible
acquisitions, developments and
refurbishment of publicly accessible primary
care and community healthcare centres.
Subsequently, in July 2021 we voluntarily
took the option to reduce the RCF to
£125 million; benefitting from a reduction
in non-utilisation fees with the increased
access to a range of debt options as a result
of our strong balance sheet and A- rating
from Fitch Ratings Ltd.
In November 2021 we completed an equity
placing for £185 million.
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 2021
Net rental income
Administrative expenses
Net finance costs
Share-based payments and
taxation
Year ended 31 March 2022
£m
75.4
14.5
(0.7)
(2.9)
(0.1)
86.2
Adjusted EPRA earnings has grown 14.3%
to £86.2 million in the year to 31 March 2022
reflecting the property acquisitions and
developments completed as well as the
impact of our asset management activity
with rent reviews and new lettings. This has
been offset by increases in administrative
expenses and financing costs.
Earnings per share
The basic earnings per share (“EPS”)
on profit for the period was 5.6 pence
(2021: 4.1 pence).
EPRA EPS, which excludes the net impact of
valuation movements and gains on disposal,
was 3.1 pence (2021: 2.7 pence).
Based on calculations completed in
accordance with IAS 33, share-based
payment schemes are currently expected
to be dilutive to EPS, with 1.2 million new
shares expected to be issued. The dilution
is not material with no impact on EPS figures.
Dividends
Total dividends settled in the year
to 31 March 2022 were £80.4 million or
2.93 pence per share (2021: 2.82 pence
per share). £5.0 million of this was satisfied
through the issuance of shares via scrip.
As a REIT with requirement to distribute
90% of taxable profits (Property Income
Distribution, “PID”), the Group expects
to pay out as dividends at least 90% of
recurring cash profits. Two of the four
dividends paid during the year were normal
dividends (non-PID), as a result of brought
forward tax losses and available capital
allowances. The April 2021 and October
2021 dividends were paid as a PID and
future dividends will be a mix of PID and
normal dividends as required.
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
2022
£m
46.6
94.6
(75.4)
2021
£m
18.5
77.4
(61.9)
(245.3)
(236.8)
(63.7)
15.1
(56.9)
26.2
177.9
181.7
293.7
243.5
98.4
46.6
Net cash flow from operations differs
from EPRA earnings due to movements
in working capital balances, but remains
the cash earned that is used to support
dividends paid.
The investment activity in the period
has been funded by the proceeds from
the November 2021 equity raise and the
June 2021 Sustainability Bond issuance.
Diluted EPRA NTA movement
Diluted EPRA NTA
at 31 March 2021
(Note 7)
EPRA earnings
Capital (revaluations
and capital gains)
Dividends
Equity issuance
Other
Diluted EPRA NTA
at 31 March 2022
(Note 7)
£m
Pence per
share
1,530.2
86.2
69.7
(80.4)
182.6
0.7
57.2
3.1
2.5
(2.9)
0.8
–
1,789.0
60.7
Our Total Accounting Return per share
for the year ended 31 March 2022 is 11.2%
(2021: 11.4%) of which 2.93 pence per share
(5.1%) has been distributed to shareholders
and 3.5 pence per share (6.1%) is movement
on EPRA NTA.
Jayne Cottam
CFO
23 May 2022
2022
8.0 years 8.0 years
Financing statistics
2021
Net debt (Note 22) £1,006.4m £907.6m
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)
4.1x
8.8x
36%
3.9x
9.3x
37%
2.30%
2.47%
100%
100%
Our LTV ratio currently stands at 36% and
will increase in the short term as we utilise
cash to fund the pipeline of acquisitions,
development and asset enhancement
opportunities. Our LTV policy allows us to
reach the range of 40% to 50% should the
need arise.
At 31 March 2022, 100% of our facilities
are at fixed interest rates, although this will
change as we draw on the RCF which is at
a variable rate. The weighted average debt
maturity is 8.0 years.
As at 31 March 2022, we had undrawn
facilities and cash totalling £369 million.
Details of the outstanding facilities and
their covenants are set out in Note 16.
Net finance costs presented through EPRA
earnings in the year amounted to £28.0
million (2021: £25.1 million), having increased
due to our additional borrowings funding
the growth in our portfolio.
IFRS profit before tax
IFRS profit before tax for the period was
£155.8 million (2021: £108.3 million). As can
be seen below, adjusted EPRA earnings
have increased compared with the prior
year. We have also recorded an increased
valuation gain following our positive asset
enhancement activities and valuation
yield movement.
EPRA earnings
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)
2022
£m
126.5
(11.7)
(28.0)
2021
£m
112.0
(13.5)
(25.1)
(0.6)
86.2
(0.5)
72.9
–
2.5
86.2
75.4
25
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Strategic reportGovernanceFinancial statementsAdditional information CFO REVIEW
CONTINUED
EPRA performance measures
As in previous years, we disclose in line with the EPRA Best Practice Recommendations (latest version published October 2019). We
believe that publishing metrics in line with the industry standard benchmarks improves the relevance of our accounts, in particular aiding
investors with comparability across real estate companies.
Summary table
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 (%)
2022
3.1
13.1
12.1
2022
66.7
60.7
62.7
4.42
4.43
1.2
2021
2.7
15.5
14.5
2021
63.2
57.2
56.0
4.54
4.55
1.3
EPRA EPS
3.1p
2021: 2.7p
EPRA NAV Metrics
EPRA NRV
66.7p
2021: 63.2p
EPRA NTA
60.7p
2021: 57.2p
EPRA NDV
62.7p
2021: 56.0p
Definition
Earnings from operational
activities.
Definitions
EPRA Net Reinstatement Value assumes that 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.
26
Assura plc Annual Report and Accounts 2022
EPRA NIY
4.42%
2021: 4.54%
EPRA “topped-up” NIY
4.43%
2021: 4.55%
EPRA Vacancy Rate
1.2%
2021: 1.3%
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 (%)
2022
£m
2,827.9
(69.1)
2021
£m
2,453.3
(43.5)
2,758.8
2,409.8
179.3
158.8
2,938.1
135.7
(5.7)
130.0
2,568.6
121.7
(5.0)
116.7
0.3
130.3
4.42%
4.43%
0.3
117.0
4.54%
4.55%
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 (%)
2022
£m
1.6
136.1
1.2%
2021
£m
1.7
125.1
1.3%
EPRA Cost Ratio (including
direct vacancy costs)
13.1%
2021: 15.5%
EPRA Cost Ratio (excluding
direct vacancy costs)
12.1%
2021: 14.5%
Definition
Administrative and operating costs (including and excluding
direct vacancy costs) divided by gross rental income. In the
current year, £1.0 million of overhead was capitalised by the
Company (2021: £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
2022
£m
5.7
11.7
0.7
(0.4)
2021
£m
5.0
13.5
0.5
(0.5)
(0.5)
(0.4)
17.2
(1.3)
18.1
(1.2)
15.9
16.9
131.7
131.7
116.6
116.6
13.1%
15.5%
12.1%
14.5%
27
Assura plc Annual Report and Accounts 2022
Strategic reportGovernanceFinancial statementsAdditional information OUR MARKET
An evolving
primary care
market
28
Assura plc Annual Report and Accounts 2022
1 Demand for care
How can the primary care estate
help manage demand for care?
2 The state of the estate
Is the primary care estate in shape
for the health services of the future?
3 Reorganisation of the NHS
What will the new integrated Care
system mean for the NHS estate?
4 Inequality of access
What is the role of NHS premises
in reducing health inequalities?
5 The net zero challenge
What sort of challenges do our
buildings face as the NHS works
towards its net zero carbon targets?
6 Lack of investment
Is the NHS estate suffering from
lack of investment?
Being close to our customers, understanding
their challenges and working with them to
find solutions through their buildings is why
we are firmly positioned as a specialist
partner to the NHS – at a time of huge
disruption for the national health service.
Waiting lists are longer than they have been
in decades: 1 Demand for care/. The NHS
desperately needs capacity – in terms of
physical space, equipment and staff –
to address this 2 The state of the estate/.
Structural change is on the way for
how health services plan and work together,
as Integrated Care Partnerships have their
formal launch this year 3 Reorganisation
of the NHS/. Infrastructure has an important
part to play in helping to reduce health
inequalities 4 A lever to help reduce health
inequalities/ and the health service has
set itself ambitious net zero carbon targets,
which will demand a far more energy-efficient
estate 5 The NHS’s net zero challenge.
Tackling these issues requires significant,
long-term investment for the NHS’s
primary care buildings and premises.
6 Lack of investment.
29
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OUR MARKET
CONTINUED
DEMAND FOR CARE
Q
How can the primary
care estate help manage
demand for care?
we know they’re available,
and to link that with the
available GP provision at
evenings and weekends.
It’s really difficult to
maintain that – both getting
the workforce but also the
estate, where there will be
simple access for patients
and where the equipment
can be to do it.
Dr Jim Barwick,
Chief Executive of the
Leeds Confederation
As just one example,
there’s a diagnostic called
spirometry and that tests
whether people have
respiratory disease, or
whether they may have
asthma – a big cohort
of conditions in general
practice. We’re moving
to create hubs where
spirometry can be run, so
instead of people traipsing
into hospital to have that
done it can be held in
multiple settings in the
community, managed by
general practice. The only
way we can do that at the
moment is to use clinic
rooms on a Saturday when
6m
number of people currently
waiting for NHS treatment
95%
NHS target for proportion of
people who get the diagnostic
test they need within six weeks
by March 2025 (NHS England)
7.5m
number of additional people
aged 65 and over in the UK
in 50 years' time (ONS)
349.7m
estimated number of
appointments delivered by
general practice in England
in 2021 (NHS Digital)
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Assura plc Annual Report and Accounts 2022
THE STATE OF THE ESTATE
Q
Is the primary care
estate in shape for
health services of
the future?
Having a closer relationship
with our customers who
are delivering healthcare
services allows us to shape
bespoke property solutions
for them, particularly as
the mix of remote and
face-to-face care continues
to evolve. It also helps us
explore growth in markets
such as diagnostics, mental
health and supporting the
independent sector
provide elective capacity
to the NHS. Through these
relationships, we’re
developing off-market
routes to an investment
and development pipeline,
as well as insight and early
visibility of operational
changes that could impact
on our estate.
Patrick Lowther,
our Head of Strategy and
Markets
40%
healthcare professionals who
say the premises they work in
are constraining the services
that can be provided to patients
speaking to a
GP the other day who’d
recruited a really important
member of staff, a
pharmacist who will do
medicines optimisation
work and the
pharmaceutical controls
that are required within
general practice. They need
to work in the practice
because they see patients,
they work alongside the
GPs and others: literally no room
or space for them to sit.
Multiply that and it’s a
significant problem.
Along with the access
challenges for people
to access care, estate is
probably in the top three
major issues in general
practice.
Dr Jim Barwick,
Chief Executive of the
Leeds Confederation
34%
who say their premises are
holding back progress on
tackling the care backlog
(YouGov plc for Assura,
August 2021)
54%
proportion of Brits who say
they’re happy to get medical
advice from a doctor via a
video link rather than in person
(YouGov)
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CONTINUED
REORGANISATION OF THE NHS
Q
What will new Integrated
Care Systems mean for
the NHS’s estate?
GP practices, primary care
at scale organisations and
independent providers are
all working in partnership
with these new governance
structures – Integrated Care
Systems and collaboratives
– to map out new service
pathways and locations
where services will
be delivered.
This represents
opportunities for our
customers to deliver
additional services if there
is capacity in the estate to
deliver. For example, one
aspect of our partnership
offer to primary care at
scale is about our providing
capacity and estate
solutions to facilitate
this change.
A key benefit of our
bespoke, customer-focused
partnership solution is that
it gives us this unrivalled
market insight.
It provides opportunities
across all of our property
teams that ultimately
support resilience and
sustainability of primary
care and for independent
providers, creates resource
and financial capacity to
enable them to respond
quickly and flexibly to the
needs of the NHS.
Simon Oborn,
our Head of Property
Management and Investment
42
new Integrated Care
Partnerships which will become
statutory bodies in July
1-3m
number of patients served
under each Integrated Care
System area
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Assura plc Annual Report and Accounts 2022
INEQUALIT Y OF ACCESS
Q
What is the role of NHS
premises in reducing
health inequalities?
We see a lot of low level
mental health and the
challenges around how
those are solved are not
just a health issue, it might
be employment, it might
be housing or a family
circumstance, so all of
these things create a level
of new complexity and
scale of demand which
we’ve not seen before.
Dr Jim Barwick,
Chief Executive of the
Leeds Confederation
Where a primary care or
community health hub is
located; how it is designed;
how it is used and the
services it can enable can
be the difference between
someone accessing a
particular health service or
not. For someone receiving
help or care, the place
where that care happens
is all-important for their
experience: a poor
environment which adds to
a patient’s sense of anxiety
or fear can mean they
simply never go forward
with what could be life-
changing care.
Simon Oborn,
our Head of Property
Management and Investment
78%
proportion of people living
with disabilities who had
experienced difficulty accessing
public buildings and health
services (National Disability
Strategy, 2021)
10,000
per this number of patients,
there are fewer GPs, total DPC
staff and paramedics employed
in more deprived areas
(Nussbaum et al, 2021)
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Strategic reportGovernanceFinancial statementsAdditional information OUR MARKET
CONTINUED
THE NET ZERO CHALLENGE
Q
What sorts of practical
challenges do our
buildings face as the
NHS works towards its
net zero carbon targets?
it’s cooler during the day.
There are lots of different
things we’re looking at
which all add to the overall
benefit – smaller things
which don’t add to cost,
but do allow us to reduce
carbon just through design.
Steve West and Jim Hart
Corstophine and Wright our
specialist architecture partners
Buildings now are
becoming so well-insulated.
What that does of course is
it makes the buildings very
easy to heat up, but the
challenge actually comes
in trying to get the building
to cool down. Where that
leads you to is the details:
things like really deep
reveals: windows really
set into the structure which
give you shadowing, the
introduction of brise soleil
and purge ventilation to
cool the building down
securely at night so that
6.1
MtCO2e which must be
removed from the NHS’s
Scope 1 and 2 emissions
10%
of NHS carbon emissions
come from building energy
(NHS England)
100%
target for Assura buildings
to be rated as EPC band B
or above by March 2026
2030
for Assura to be net
zero for emissions under
operational control
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Assura plc Annual Report and Accounts 2022
LACK OF INVESTMENT
Q
Is the NHS estate still
suffering from lack
of investment?
As government further
rolls out and develops
its diagnostic and elective
surgical hub strategy,
which is a key pillar of
the pandemic backlog
recovery plan, this must
be complemented by
wider work to invest in
the primary care estate.
As a recent report from
The King’s Fund highlights,
the capacity of the estate
is one of the crucial
blockers to embedding
government’s core policy
of additional roles such
as social prescribing link
workers, clinical
pharmacists and
physiotherapists into
general practice –
particularly to allowing
them to work at scale,
across multiple sites – so
that the pressure-relieving
impact for primary care
can be realised.
Simon Oborn
our Head of Property
Management and Investment
£0
new government investment
announced for the primary care
estate under the Health
Infrastructure Plan since 2019
(DHSC)
3
number of government’s
community diagnostic centres
announced so far which aren’t
based at existing hospital sites
(DHSC)
98%
proportion of Primary Care
Network clinical directors who
feel more funding for primary
care estates is needed (NHS
Confederation)
35
Assura plc Annual Report and Accounts 2022
Strategic reportGovernanceFinancial statementsAdditional information OUR STRATEGY
Demand for more capacity in primary care
is unrelenting, exacerbated by the waiting lists
caused by the pandemic. And as hybrid models
of face-to-face and digital care embed, the NHS
is evolving its infrastructure to support the future
of local health services.
We’re driven by our purpose:
We BUILD for health. We’re generating long-term value for
our stakeholders through providing high quality facilities for our
customers, growing financial returns for our shareholders, helping
the NHS to reach its net zero carbon ambitions and delivering
lasting impact with communities.
Read more in Our market, pages 28 to 35
Read more in We build for health, pages 2 to 13
To achieve these aims, we focus on five strategic priorities,
which are all underpinned by our purpose:
1
2
Leveraging our
financial strength
Quality
of buildings
3
Quality
of service
To invest in our
portfolio, making
each £ invested
work harder aiming
to generate secure,
growing returns
for investors.
Delivering the
outstanding spaces
our customers need,
leading for a
sustainable future
and a net zero
carbon NHS.
To deliver on the
promises we make
to the customers
and communities
our buildings serve,
unlocking the power
of design and
innovation to tackle
their challenges.
36
Assura plc Annual Report and Accounts 2022
4
People
5
Long-term
relationships
Through our
SixBySix pledges,
our strategic
priorities aim to
minimise our impact
on the environment
and maximise our
impact on society.
Read more on pages 40 and 41
To attract, retain
and develop our
high-quality, specialist
team, investing in
skills and new ways
of working.
Building better
futures for people
and places through
our enduring
partnerships with
them, and delivering
lasting impact
with communities.
37
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Strategic reportGovernanceFinancial statementsAdditional information OUR STRATEGY
CONTINUED
1 Leveraging our financial strength
To invest in our portfolio, making each £ invested work harder aiming to generate secure, growing returns for investors.
2022 priorities
– Minimise natural reduction
in WAULT through investment
and asset-enhancing activities
– Exploring sustainability-linked
debt financing options
– Driving rental growth from
rent reviews, to grow recurring
earnings and contracted
rental income
2022 actions & progress
– Rental growth of £2.2 million
achieved from rent reviews
(1.9% equivalent annual amount
on those rents)
– WAULT maintained at 11.8 years
– A- investment grade rating
reiterated by Fitch Ratings Ltd
– £300 million Sustainability
Bond issued
2023 priorities
– Continue to invest in earnings
accretive portfolio additions
– Use asset enhancement pipeline
to drive sustainability
improvements
– Drive rental growth from
rent reviews, to grow recurring
earnings and contracted
rental income
– Maintain investment grade
– EPRA Cost Ratio maintained
– Maintain investment grade
rating of A- from Fitch
Ratings Ltd
at 13%
– Dividend increase for ninth
consecutive year
– 22 lease re-gears completed
adding £13.9 million to total
contracted rental income
rating of A- from Fitch
Ratings Ltd
– Continue to recycle capital
and explore finance sources
including joint ventures
as appropriate
– Seek to continue improving
customer engagement
and satisfaction
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
2 Quality of buildings
Delivering the outstanding spaces our customers need, leading for a sustainable future and a net zero carbon NHS.
2022 priorities
– Progressing identified pilot
developments for net zero
carbon for construction
and operation
2022 actions & progress
– 17 developments on site
and immediate pipeline
of 20 further schemes
KPIs
– Portfolio: Rental growth
from rent reviews, WAULT,
occupier covenant,
developments on site
2023 priorities
– Deliver on site developments
– EPC B across 50% of our
portfolio by March 2023
– Complete net zero carbon
audits across 50 sites in our
portfolio with a view to
completing pilot NZC
retrofit programme
Risks
– Changes to government
policy
– Roll out Net Zero Carbon Design
Guide to development pipeline
– Development programmes
– Underperformance of assets
– Completed developments
hit BREEAM and EPC targets
– Net Zero Carbon Design Guide
created for development
pipeline
– 42 buildings with improved
energy efficiency following
LED improvement works
– Step up rollout of EPC
rating 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 42 to 47
See Principal risks and uncertainties on pages 74 to 79
38
Assura plc Annual Report and Accounts 2022
3 Quality of service
To deliver on the promises we make to the customers and communities our buildings serve, unlocking the power of design and innovation
to tackle their challenges.
2022 priorities
– Continue to strive to maximise
2022 actions & progress
– Eight developments completed
2023 priorities
– Continue to strive to maximise
the asset enhancement
opportunities throughout
the portfolio, delivering
sustainability improvements
– Complete developments on site
and convert immediate pipeline
to on site
– Implementing learnings from
QFlow and BuiltID trials
– Continue to leverage investment
in Pi Labs to identify
technological solutions and
better ways of working
during the year
– 39 properties acquired and
successfully integrated by our
portfolio management team
– Four asset enhancement
capital projects completed
and a further seven underway
– 22 lease regears completed
and nine new tenancies
delivered
– 42 buildings with improved
energy efficiency following
LED improvement works
– Continued strong response
rates and results from our
customer satisfaction survey
– Trial projects run with QFlow
(on site waste management)
and BuiltID (customer and
community engagement)
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
– 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, investing in skills and new ways of working.
2022 priorities
– Focus on working patterns,
2023 priorities
– Supporting our employees to
2022 actions & progress
– Supporting our employees
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
in working remotely through
the pandemic
– 88% response rate to staff
survey, indicating strong
engagement in the employee
feedback process
– Commitments made with
respect to Diversity & Inclusion
and being Disability Confident
Committed Level 1 employer
– 33% of staff now work flexibly
or part-time
drive a high performance culture
– Setting metrics for EDI
advancement across the
organisation
– 50% of employees undertaking
volunteering activities
– Development of clear career
pathways to aid employee
development and succession
planning
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
KPIs
– Stakeholder: Staff
satisfaction survey
Risks
– Staff dependency
5 Long-term relationships
Building better futures for people and places through our enduring partnerships with them, and delivering lasting impact with communities.
2022 priorities
– Finalise development of our
2023 priorities
– Advance work of the Assura
KPIs
– Portfolio: Growth in rent roll,
2022 actions & progress
– Four asset enhancement
supply chain framework, rolling
out and asking for supplier
commitments to follow and
leveraging shared social
impact objectives
capital projects completed
and a further seven underway
– Over £550,000 of grants
delivered to 116 projects by
the Assura Community Fund
Community Fund through third
year of grants, leveraging our
position as Community Health
Partner to the 2021 Rugby
League World Cup
– 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
– Partnership for premises
– Finalise development of our
solutions developed with two
national providers of primary
care at scale
– Developed our offering: moved
on site with development
schemes at Cramlington and
in the West Midlands (NHS Trust
as primary tenant) and with
independent providers Ramsay
and GenesisCare
supply chain framework, rolling
out and asking for supplier
commitments to follow and
leveraging shared social
impact objectives
– Advance relationships with
NHS Trusts and independent
providers to deliver more
buildings that ease pressure
faced by the NHS
developments on site
– Stakeholders: Customer
satisfaction survey
Risks
– Changes in government
policy
– Competitor threat
– Underperformance of assets
39
Assura plc Annual Report and Accounts 2022
Strategic reportGovernanceFinancial statementsAdditional information OUR STRATEGY
CONTINUED
SOCIAL IMPACT AND SUSTAINABILIT Y STR ATEGY
AMBITIONS
No.1 listed property business
for long-term social impact
Net zero across our portfolio by 2040
CURRENT 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
ESG, Social Impact and Sustainability are terms that we refer to
interchangeably. Ultimately, what we are talking about is how we
frame and position our actions in this area to have a positive impact
on the communities and environment that we operate in,
benefitting all stakeholders of our business.
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
Our approach
Our strategy is guided by our ambitions; to be the number one
listed real estate business for social impact and to have a net zero
portfolio by 2040.
Our starting point was alignment with the UN Sustainable
Development Goals – two of the goals particularly resonating
with our purpose.
SixBySix is our first strategy on the journey to meet our ambitions;
being six pledges that we aim to deliver by 2026. SixBySix was
created by our Social Impact Committee, made up of team
members across all departments of the business, who went
through a materiality assessment process of deciding what
was important to us and our stakeholders.
SixBySix governance
Overall responsibility for progress against SixBySix targets rests
with the CEO, Jonathan Murphy.
Progress against the ambitions and pledges is overseen by the
Social Impact and Sustainability Steering Group (which superseded
the Social Impact Committee in the past year) with regular reporting
to both the Executive Committee and the Board. In particular,
Sustainability is led by our Head of Property Management and
Investment (Simon Oborn) and Social Impact by our Head of Public
Affairs (Claire Rick). We have boosted our in house capability in
the year with the appointment of a Sustainability Lead and a
Social Impact Lead.
40
Assura plc Annual Report and Accounts 2022
Progress against our SixBySix pledges
Our SixBySix ambition is that six million people will benefit from improvements to or through our buildings by 2026. In the year to March
2022 (second year of the strategy), we impacted over 694,000 people (2021: 275,000), mainly through our delivery of eight completed
developments, 42 building projects enhancing energy efficiency 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
2021/22 progress
2022/23 priorities
KPI
i
y
t
e
c
o
s
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o
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u
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i
s
i
m
i
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a
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t
n
e
m
n
o
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i
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n
o
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M
i
i
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
Develop a sustainable
supply chain
which shares our
commitment to
adding value for
the communities
we work in
– Distribute a further £550,000
through the third 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
– Over £550,000 distributed
via the Assura Community
Fund to more than 115
health-improving projects
and impacting over
116,000 people
– Following projects
supported in 2021, retained
role as Official Community
Health Partner for the
delayed 2021 Rugby
League World Cup
– Included social impact
– Build social value and
and sustainability criteria
into scoring matrix for
LED pilot projects
sustainability criteria into
a growing proportion
of purchase contracts
Supply Chain Framework1
– Proportion of suppliers
that have certified to
us they comply
Create opportunity
via volunteering,
education,
partnerships and
mentoring to help
reduce inequalities
and build more
inclusive communities
– Social Mobility pledge
launched and now a
Disability Confident
Committed Level 1 employer
– Opportunities offered with
four interns and five work
experience students during
the year
– Extend our apprentice,
graduate, intern and work
experience programmes
further
– Developing plans to work
with our supply chain to
develop apprenticeship
opportunities focused on
people from black, Asian or
minority ethnic 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
– 42 buildings with improved
energy efficiency, through
LED pilot project
– EPC improvement works
costed into all acquisition
decisions
– Accelerate roll out of
EPC improvement works,
targeting portfolio at
50% EPC B or better
by March 2023
– Learnings from net zero
– Roll out Net Zero Carbon
carbon pilot reflected in Net
Zero Carbon Design Guide
Design Guide into
development schemes at
the appropriate design stage
– Finalise offsetting policy
where carbon cannot be
removed through design
Source only
renewable energy
and drive innovative
energy solutions for
customers through
the use of appropriate
technology
– All electricity purchased
– Improve proportion
on behalf of tenants subject
to 100% renewably sourced
requirement with energy
provider
of portfolio with access
to energy data
– Complete net zero carbon
audits at 50 buildings
– Scope 3 emissions estimated
where we do not have
access to the data
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
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
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
1. Not currently reported against – aiming for reporting by March 2023.
41
Assura plc Annual Report and Accounts 2022
Strategic reportGovernanceFinancial statementsAdditional information
OUR KEY PERFORMANCE
INDICATORS
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”).
These KPIs are reflected in both
the short-term (annual bonus
details on page 115) 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 116).
Certain of these measures are
considered Alternative Performance
Measures (calculations or references
provided where appropriate)
which, as explained in the
CFO Review on pages 22 to 27,
are provided to help provide
relevant information to understand
how our business is performing.
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.
42
Assura plc Annual Report and Accounts 2022
FINANCIAL KPIS
EPRA EPS (p)
Performance
Diluted EPRA NTA (p)
Performance
EPRA Cost Ratio (%)
Performance
2.7
2.8
2.7
2.5
3.1
52.4
53.3
53.9
57.2
60.7
13.0
12.5
12.6
13.4
13.1
2018
2019
2020
2021
2022
2018
2019
2020
2021
2022
2018
2019
2020
2021
2022
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 increased to 3.1 pence. This growth
has been delivered from accretive
portfolio additions, rent reviews and
effective use of our capital structure
to reduce our cost of debt.
Target
Grow
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 payout ratio,
movements in our EPRA NTA primarily are
attributed to asset revaluations, and the
boost in the year from the November
equity raise at a premium to EPRA NTA.
Target
Grow
Definition
See page 27
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 decreased in the year,
reflecting the portfolio growth being
delivered with efficient operating costs.
Target
Maintain or reduce
Total Property Return (%)
Total Accounting Return (%)
Total Shareholder Return (%)
Performance
9.7
Performance
11.0
Performance
11.4
11.2
50.3
5.9
5.3
6.4
7.1
6.8
6.3
6.8
1.3
(9.8)
(3.1)
2018
2019
2020
2021
2022
2018
2019
2020
2021
2022
2018
2019
2020
2021
2022
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 72.1 pence and closed at 66.9 pence.
Target
Maintain or grow over long term
43
Assura plc Annual Report and Accounts 2022
Strategic reportGovernanceFinancial statementsAdditional information OUR KEY PERFORMANCE INDICATORS
CONTINUED
PORTFOLIO METRICS
Growth in rent roll (£m)
Total contracted rental income (£bn)
WAULT (years)
Developments completed (£m)
Developments on site (£m)
Performance
16.6
11.7
6.2
Performance
Performance
Performance
Performance
12.8
14.0
1.35
1.43
1.22
1.57
1.81
12.6
12.0
11.7
11.9
11.8
69.5
166.4
2018
2019
2020
2021
2022
2018
2019
2020
2021
2022
2018
2019
2020
2021
2022
2018
2019
2020
2021
2022
2018
2019
2020
2021
2022
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 £14.0 million increase in the current
year reflects acquisitions (£11.2 million),
development completions (£1.5 million)
and portfolio management activity
including rent reviews (£2.2 million),
offset by the rent relating to disposals
(£0.9 million).
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 £1.81 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 only
decreased to 11.8 years.
Target
Positive
Target
Maintain or grow
Target
Maintain or grow
% of occupier covenant NHS/GPs (%)
Rental growth from rent reviews (%)
Performance
Performance
84
85
85
84
82
2.2
1.7
1.8
1.5
1.9
2018
2019
2020
2021
2022
2018
2019
2020
2021
2022
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 82%, reflecting that
portfolio additions have an occupier mix
that is consistent with our existing portfolio,
with the slight reduction reflecting our
recent developments to selected
independent operators.
Target
Maintain or grow
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
reviewed £37.9m of existing rent (circa 31%
of opening rent roll). Open market reviews
generated an average uplift of 1.4%
(1.2% in the prior year).
Target
> inflation
44
Assura plc Annual Report and Accounts 2022
31.3
18.7
14.8
36.5
80.5
72.5
48.6
23.6
Strategic priority
3 Quality of service
Definition
the year.
Commentary
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
indication of how we are moving schemes
of our success in moving opportunities
from the pipeline through to our portfolio.
from 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. Nine schemes have
growing in the NHS approval of new medical
moved to on site during the year, giving
centre developments over the past
18 months, which will flow through into
completions following the build period
which is normally between 14 and 18
us a total of 17 at year end. In addition,
we have a strong immediate pipeline of
20 schemes (estimated cost £158 million)
which we would hope to be on site in the
months for each scheme. We are currently
next 12 months.
expecting 10 of the 17 on site developments
to complete in the next financial year.
Target
Maintain or grow
Target
Maintain or grow
Performance
16.6
11.7
6.2
Strategic priority
5 Long-term relationships
3 Quality of service
Definition
See Glossary
Commentary
Growth in rent roll (£m)
Total contracted rental income (£bn)
WAULT (years)
Developments completed (£m)
Developments on site (£m)
Performance
Performance
Performance
Performance
12.8
14.0
1.35
1.43
1.22
1.57
1.81
12.6
12.0
11.7
11.9
11.8
69.5
166.4
31.3
18.7
14.8
36.5
80.5
72.5
48.6
23.6
2018
2019
2020
2021
2022
2018
2019
2020
2021
2022
2018
2019
2020
2021
2022
2018
2019
2020
2021
2022
2018
2019
2020
2021
2022
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
Average period until the next available
the remaining term of leases currently
break clause in our leases, weighted
contracted. See Glossary
Commentary
by 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 £14.0 million increase in the current
year reflects acquisitions (£11.2 million),
development completions (£1.5 million)
and portfolio management activity
including rent reviews (£2.2 million),
offset by the rent relating to disposals
(£0.9 million).
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
portfolio additions and asset enhancement
activities, has seen this natural decline be
natural decline be offset to an extent that
offset such that the WAULT has only
the total contracted rental income has
decreased to 11.8 years.
Target
Positive
increased to £1.81 billion.
Target
Maintain or grow
Target
Maintain or grow
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 10 of the 17 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. Nine schemes have
moved to on site during the year, giving
us a total of 17 at year end. In addition,
we have a strong immediate pipeline of
20 schemes (estimated cost £158 million)
which we would hope to be on site in the
next 12 months.
Target
Maintain or grow
% of occupier covenant NHS/GPs (%)
Rental growth from rent reviews (%)
Performance
Performance
84
85
85
84
82
2.2
1.7
1.8
1.5
1.9
2018
2019
2020
2021
2022
2018
2019
2020
2021
2022
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
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
has remained strong at 82%, reflecting that
our dividend policy. In the current year we
portfolio additions have an occupier mix
reviewed £37.9m of existing rent (circa 31%
that is consistent with our existing portfolio,
of opening rent roll). Open market reviews
with the slight reduction reflecting our
generated an average uplift of 1.4%
recent developments to selected
(1.2% in the prior year).
independent operators.
Target
Maintain or grow
Target
> inflation
45
Assura plc Annual Report and Accounts 2022
Strategic reportGovernanceFinancial statementsAdditional information OUR KEY PERFORMANCE INDICATORS
CONTINUED
STAKEHOLDER METRICS
Our customers
Our investors and lenders
Our communities
Customer satisfaction (%)
Growing, covered dividend (p)
Assura Community Fund Reach (people)
Performance
Performance
Performance
96
95
91
90
92
2.46
2.65
2.75
2.82
2.93
116,000
60,700
2018
2019
2020
2021
2022
2018
2019
2020
2021
2022
2021
2022
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
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 110
projects, distribute over £550,000 and
positively impact 116,000 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 two.
We aim to report against this KPI from
March 2023.
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
Commentary
Our dividend policy is for the dividend
paid to be progressive and covered
by EPRA earnings (before charitable
donations).
Target
Grow
Staff satisfaction survey (%)
ESG linked financing (%)
Performance
Performance
76
74
66
48
25
2020
2021
2022
2021
2022
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
As with many companies, our staff
survey results during the pandemic have
dipped slightly as employees focus on
their individual wellbeing and we
continue to evolve our plans accordingly.
Strategic priority
1 Leveraging our financial strength
Definition
Proportion of available facilities certified
as being linked to social or green
objectives.
Commentary
Following the issuance of our debut
Social Bond in September 2020, in the
current year we launched our first
Sustainability Bond, in line with our
Sustainable Finance Framework.
Target
Maintain or grow
Target
Maintain or grow
46
Assura plc Annual Report and Accounts 2022
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 2023.
The environment
EPC ratings (%)
Performance
Renewably sourced energy (%)
Performance
33
30
87
48
21
2021
2022
2020
2021
2022
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
on behalf of tenants that is renewably
sourced.
Commentary
During the year we completed a pilot
project for EPC improvements, upgrading
the lighting to LEDs at 42 buildings. All
acquisitions completed below EPC B
included a cost deduction for the required
improvement works.
Commentary
Most of the properties for which we
procure energy on behalf of tenants is
subject to a 100% renewably sourced
energy supply contract.
Target
100% by March 2026
Target
100%
Net zero carbon developments (%)
BREEAM rating (%)
Performance
Performance
100
100
100
100
100
0
2021
0
2022
2018
2019
2020
2021
2022
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 in
the coming months. We have also issued
our Net Zero Carbon Design Guide.
Target
>50% by March 2026
47
Assura plc Annual Report and Accounts 2022
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%
Strategic reportGovernanceFinancial statementsAdditional information OUR BUSINESS MODEL
What
we do
Who
we are
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 that we
BUILD for health. 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
48
Assura plc Annual Report and Accounts 2022
DEVELOPMENT
Growing our portfolio
through new
developments
Our team of development managers work
with existing and prospective customers
to design and deliver bespoke new medical
centres that meet the evolving 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, in line with our recently
launched Net Zero Carbon Design Guide.
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
customers sign an agreement for lease and
our third-party building contractor partners
sign fixed price contracts.
Following the 14–20 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 benefit
all stakeholders.
49
Assura plc Annual Report and Accounts 2022
INVESTMENT
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 long-standing
reputation as a landlord that owns and
operates buildings as a long-term partner
to our customers.
Our knowledge of the sector, bespoke
database covering all primary healthcare
properties in the country, our reputation as
a landlord seeking a positive social impact
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.
MANAGING OUR PORTFOLIO
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.
Enhancing the building through extension
or refurbishment benefits our customers and
the patients as well as allowing us to extend
the lease through a re-gear. Our social
impact strategy ensures 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.
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; listening to the problems they face
before working with them to provide
innovative, sustainable solutions; building
better futures for people and places.
Our reputation for
being innovative,
sector experts
We are the partner of choice with more
than 92% 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 ensure buildings are
fit for the NHS’s future needs. We innovate
to incorporate the latest advances in the
delivery of care, looking at use of space,
technological change and sustainability.
We then agree with the District Valuers
(responsible for agreeing rents on new
build developments and rent reviews) that
our buildings 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.
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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.
Leading for a
sustainable future,
delivering lasting
impact with
communities
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.
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.
80%
of respondents to our annual
satisfaction survey rated our
service positively
OUR SUPPLIERS
Our supplier partners benefit from
a collaborative approach to finding
innovative solutions to meet the
needs of our customers.
£94m
paid during the year to suppliers
for construction, property
management and overheads
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.
2.9p
dividends per share paid during
the year, 2.30% weighted average
interest rate paid on debt facilities
Our
impact
OUR COMMUNITIES
The communities that use our
spaces get a building that meets
the bespoke health needs of that
local health economy.
6.8m
patients served by our buildings,
and over £550,000 distributed by
the Assura Community Fund
OUR PEOPLE
Assura employees work in a
friendly, engaging environment that
supports aspirations to develop
their skills and opportunities.
88%
employees taking part in employee
engagement survey
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Strategic reportGovernanceFinancial statementsAdditional information OUR IMPACT
Our customers
WHO THEY ARE
– GP practices
– NHS Trusts
– Other professionals delivering
health services in the community.
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.
ISSUES RAISED THIS YEAR
– Vital building improvements
and replacements
– Vaccination rollout support
– Changing building features for
the future, informed by growing
demand and experiences
of COVID-19
– Speed of response to queries
and NHS decision-making
– Challenges of moving into
a new building
STAKEHOLDER METRICS
– Customer satisfaction
METHOD OF ENGAGEMENT
– Existing relationships with our
portfolio managers, portfolio
administrators and portfolio asset
assistants, credit controller (ongoing)
– Instant, adhoc and annual feedback
surveys
– Quarterly customer ezine which
invites dialogue
– Supplier relationships (ongoing)
– Public affairs activities with local
influencers (adhoc).
These 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
and Public Affairs.
Board members periodically hold
meetings with NHS influencers and
leaders, join sessions with suppliers
and consider feedback from
customer surveys.
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92%
customers who would consider
recommending Assura as a landlord
(Assura customer satisfaction survey,
March 2022)
80%
customers who were positive about
Assura’s service (Assura customer
satisfaction survey, March 2022)
84%
healthcare professionals say fit-for-
purpose premises will be important or
essential in delivering effective hybrid
primary care (YouGov for Assura,
August 2021)
Highly commended
Assura’s development team for its
landmark Cinderford Medical Centre,
Building Better Healthcare Awards 2021
ACHIEVEMENTS AND
NEXT PRIORITIES
We continued working to support the
emerging needs of our customers through
the second and third phases of the
COVID-19 vaccination programme. This
included communicating clearly with our
supply chain, as the NHS issued guidance
on compulsory vaccination for healthcare
staff and its implications for visiting suppliers.
Through our close relationships with
customers, we’ve been able to progress
schemes to add crucial new capacity at
some of our buildings whilst they continued
providing patient care, phasing schemes
and planning work carefully around their
operations: at Lawrence House Medical
Centre in Scarborough, we refurbished
the site to create more waiting space for
patients and six new clinical rooms, while
at Newbyres Medical Centre in Gorebridge,
Midlothian, we’ve been adding a new
extension to create more space before
refurbishing existing clinical rooms and
the waiting area.
We’ve opened the doors on eight new
primary care buildings, supporting our
customers to make the transition from older,
unfit GP sites to brand new healthcare
facilities and on the engagement they need
to make with their patients and communities
during the process.
We commissioned further bespoke
research with YouGov to understand the
views of frontline healthcare professionals
on the impact of premises for the NHS’s
work to tackle the care backlog caused by
the pandemic, and for their efforts to recruit
more staff to increase capacity. Our support
for the Excellence in Primary Care category
of the NHS Parliamentary Awards continued,
helping primary care professionals to share
their best practice with MPs and NHS
organisations around the country.
In the coming year, we’ll be focusing on our
facilities management approach, applying
feedback from our customers on how we
can make our service ever better. We’re
reviewing our process for customers moving
into our new buildings to see how we can
help them settle in more quickly and easily,
and we’ll be piloting new technology for
gathering instant feedback from patients
and primary care teams using our sites.
CASE STUDIES FOR PROFILING:
New clinical rooms
in Yorkshire
A fast-expanding patient list in Beverley,
East Riding meant that our Manor Road
Surgery site was in desperate need of more
space. We funded this expansion and
refurbishment project which also included a
new climate control system, to help improve
the energy efficiency of the building.
“The population of
Beverley and surrounding
areas continues to grow
and this refurbishment to
create additional space will
help to ensure GP services
in Beverley remain
sustainable and continue
to meet the Primary Care
health needs for local
patients.”
Richard Dodson
East Riding of Yorkshire Clinical
Commissioning Group.
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Strategic reportGovernanceFinancial statementsAdditional information OUR IMPACT
CONTINUED
Making healthcare
part of regeneration
A warm welcome for
Coldharbour Works
In Newcastle, we completed our new-build
medical centre for the city’s largest GP
practice – working with the city council to
create Saville Medical Group’s new site as a
key part of the Newbiggin Hall community
regeneration scheme, which is bringing
new homes and retail units to the area.
“This has been a significant
project to ensure Saville
Medical Group can provide
the required levels of care
to a growing number of
patients in Newcastle. I’m
delighted that residents
will have access to this
fantastic modern facility
just a short distance away
from the existing site.”
Amanda Senior
Head of Fairer Housing,
Newcastle City Council.
This refurbished former corn merchant’s
premises in Brixton is home to renal,
neuroscience and liver research, clinical
coding and research and innovation work
for King’s College Hospital NHS Foundation
Trust and moved into our portfolio this year.
The site is a crucial part of King’s programme
to reduce pressure on the main hospital
site, and is one of our biggest acquisitions
of the year.
“This was an excellent
opportunity to make
a prime investment of
long-dated, indexed-linked
NHS infrastructure income
in London. Its role in
providing vital space for
important clinical research
and freeing up space
within the hospital campus
for clinical services is such
a great example of the role
we and our infrastructure
can play in easing
pressure on overwhelmed
hospital sites.”
Alex Taylor
our Director – Investment
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Strategic reportGovernanceFinancial statementsAdditional information OUR IMPACT
CONTINUED
Our communities
WHO THEY ARE
– 6.8 million patients who use our
buildings and those who live in the
communities around our buildings.
STAKEHOLDER METRICS
– Assura Community Fund reach
– Developments supporting
community activities.
Patients 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. And communities are the
ultimate custodians of better health:
the primary care delivered by our
customers sits within a whole
ecosystem of wider local health
projects and activities.
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 issues
– Local public consultations
to seek feedback on proposed
new developments
– Engagement with councillors,
MPs and community organisations
on specific issues
– Outreach by Assura Community
Fund to seek funding bids from local
health-improving projects, including
joining focus groups with
community organisations.
These methods ensure that our work
delivers for those who will receive
care in our buildings and those who
live in the surrounding community –
led by our understanding of local
priorities, issues and concerns.
ISSUES RAISED
– Impact of the pandemic for third
sector organisations and charities
working to deliver services in
response to the longer-term
impacts of isolation, lack of access
to education and employment
– Accessibility of medical centre
buildings
– New development schemes
and their impact on communities
– Car parking at and transport
to medical centres
Monitored by: Heads of Property
and Public Affairs.
Board members received feedback
on new development schemes
progressing through public planning
processes when significant issues
were raised, heard from those
delivering/benefitting from Assura
Community Fund projects at every
board meeting and had updates
from the Chief Executive of Cheshire
Community Foundation, which
manages the fund.
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Joint winner
of Property Awards’ Social
Impact Initiative of 2021
£1.3m
total distributed by Assura
Community Fund to date
£551,699
Assura Community Fund awards
made to charities this year
116,623
beneficiaries of Assura Community
Fund grants awarded in 2021
35%
proportion of national programme
awarded to projects supporting
mental health
5,124
calls to Dementia UK helpline on
Sundays, supported by our funding
ACHIEVEMENTS FOR 2022
AND PRIORITIES FOR 2023
Drawing on our learning from our Building
Better Together report with national charity,
Dimensions – which made recommendations
on improving primary care environments
for people with learning disabilities and
neurodiversity – we completed the next
phase of this work. The University of
Worcester’s Centre for Dementia Studies
worked with us to deliver a suite of practical
tools to support anyone in designing a
primary care environment, to ensure it
meets the needs of everyone who uses
it including people living with a disability,
cognitive impairment or neurodiversity.
We incorporated all of our learnings into our
entry to the 2021 Wolfson Economics Prize,
which set down the challenge of designing
the healthcare buildings of the future.
For new development schemes moving
through concept and planning stages,
we engaged with patients and surrounding
communities in a range of ways to help
people understand proposals for new
healthcare buildings, what they will do
for local health services and how they
can be involved with design approaches.
Dedicated microsites, meetings with
patient participation groups, virtual
meetings with community members and
detailed surveys were used to offer more
detailed opportunities for questions and
discussion of new development proposals,
including for our proposed redevelopment
of a Grade 2 listed building in Blackburn
to create a new primary care centre on
a derelict heritage site. We liaised with
councillors and MPs seeking information on
planned projects and answered questions
on issues such as car parking at specific
sites. We made preparations to begin using
technology in every building to allow
patients to give instant feedback on their
experience of the physical environment.
“This has been in the
making for a really long
time and there’s no doubt
that the experiences of the
last year have brought our
premises challenges into
even sharper focus. This
would be a huge project
but an enormously exciting
one for the care we can
deliver to our patients
and the working life of our
teams, as well as a fantastic
thing for Blackburn to see
this historic site transformed
and put to work once
again for our community.”
Dr Hereward Brown from Limefield
Medical Centre, Blackburn during the public
consultation on plans to bring the historic
Griffin Lodge back into use as a community
health hub.
The Assura Community Fund distributed
almost £500,000 to health-improving
projects in communities around our
buildings across the UK aimed at reducing
isolation, improving mental and physical
health, creating stronger community
cohesion and improving access to
community services, education and
employability skills. Projects ranged from
activities to support young carers and
people experiencing homelessness to
gardening and growing projects helping
people improve health and wellbeing,
and will reach more than 100,000 people.
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Strategic reportGovernanceFinancial statementsAdditional information OUR IMPACT
CONTINUED
Our fund also continued to work with
Dementia UK, providing vital funds for its
national Admiral Nurse Helpline on Sundays
– which acts as a lifeline for families living
with dementia on the day in the week when
other sources of support can be hard to
find. And our relationship with Warrington
Youth Zone, as founder patrons, continued:
our team donated food and Christmas gifts
which helped the club distribute more than
335 Christmas hampers to families living
in poverty across Warrington. Ten team
members volunteered to wrap presents,
packed hampers and ran miles around
Warrington marshalling a Santa sleigh to
visit local families in December. Other team
members laced up their trainers to complete
an ultramarathon and a Tough Mudder,
raising thousands of pounds for future
grant making by our fund.
Members of our Assura Community Fund
panel came together at a sister Youth Zone
to understand how these anchor
organisations for young people deliver
their work, and also visited Jericho Tree
in Nantwich, which received a grant from
us to deliver CBT sessions to families of
children who’ve completed cancer
treatment, helping parents and carers
to handle negative thoughts and ongoing
fears and anxieties. In the autumn, we were
delighted to be invited to join a reception
with HRH Prince Edward on a visit to
understand the work of Cheshire’s charity
and community sector organisations and
major funders through the pandemic.
“The support from Assura
has really helped so many
people change their lives
and, I believe, in a number
of cases saved lives. Thank
you so much for your
support in enabling us
to provide this service free
of charge to people who
needed it most.”
“Honestly I’ll never forget
this. Your support has meant
so much to me, at a time
when even my own family
weren’t supporting me.”
Beneficiaries of work by Street Connect
Clydebank, an outreach hub for people
who struggle with substance abuse, poor
mental health, and homelessness; Caring
Connections on Merseyside, which used
our funding to provide free bereavement
counselling to people affected by suicide;
and Redthread, a youth violence
intervention programme working with
victims of serious youth violence at
Homerton Hospital in London. The projects
were among more than 100 providing
impact reports this year on their completed
work using Assura Community Fund grants.
In 2022–23, we will be rolling out our
Designing for Everyone tools with our team
and customers, and sharing these for use
by anyone designing a primary care
environment in partnership with Dimensions,
and we will be applying our learnings on
our next best practice project, looking
at more inclusive design for Children and
Young People’s Mental Health Services
(CAMHS). We are exploring opportunities for
the Assura Community Fund to undertake its
first co-funded activity, focusing on specific
issues of need with other major grant
funders. We are about to launch some pilot
micro-programmes in areas of particular
health need where there has been less
engagement with the fund, such as in
Blackpool and West Yorkshire, and a
dedicated programme to support health
projects in Wales will run this summer.
Board members plan to visit some Assura
Community Fund projects over the course
of the year. As we deepen our approach
to social impact, we are exploring potential
to support projects at buildings around
our portfolio to help social prescribing
link workers and local community projects
deliver their work in partnership with
primary care, such as mini community
allotments and charity use of vacant space.
We plan to pilot Built-ID’s Give My View
technology, funded by proptech investor
PiLabs, on one of our developments this
year to deepen community outreach
and engagement on the scheme.
“Street Connect has
probably saved my life.
Without their help I would
still be stuck in that
fishbowl – going round in
circles chasing drugs. I was
in the world of addiction,
my life was broken and
I needed help, but first
I needed hope.”
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CONTINUED
Our people
WHO THEY ARE
– Our 87 strong team around the UK.
Our people are Assura. Their expertise
and skills are what allows us to deliver
for our customers and to our purpose.
STAKEHOLDER METRICS
– Best Companies survey
– 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
– Team wellbeing, engagement
and performance app (pilot)
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METHOD OF ENGAGEMENT
– Weekly virtual team town hall
– New ‘intranet’ hub
– Departmental team meetings
– The Voice
– Virtual social events and individual
wellbeing calls during lockdown
– Office welcome back events and
face-to-face team days
– Mentoring programmes
– Virtual training/coaching for
managers both one to one
and group
ISSUES RAISED
– Mental wellbeing, isolation and
stress due to impacts of longer-
term home working
– Facilities and portfolio management
team resourcing
– Greater autonomy for managers
– Knowledge and detailed
understanding of issues such
as net zero carbon for Assura
GENDER DIVERSITY
Female
4
3
37
44
Male
4
3
36
43
We seek regular feedback from the
team representatives group, the Voice,
to understand the effectiveness of our
engagement methods. We also track
engagement with internal surveys and
events to judge their impact.
Board of Directors
Senior Management
(excluding executives)
Employees
Total employees
(including NEDs)
Monitored by: Head of HR.
Board members took part in an event
with the whole team in a return to
our annual ‘meet the board’ social
evening in September, and each
board member provides direct
mentoring for a member of the
executive committee. Louise Fowler
continued quarterly meetings with
the Voice group, bringing direct
feedback into the boardroom.
We continue to work with local schools
and universities in the region. In the year we
were delighted to issue our second annual
prize for Liverpool John Moore’s University
Best Overall Level 5 Student in Real Estate.
This year’s training offer has included
business planning workshops, a future
leaders programme, Think Future sessions
for team members identified as particularly
creative thinkers, a gender leadership
programme and communications
fundamentals for managers.
In addition to specific individual training
needs, business-wide training in the coming
year will include additional focus on
equality, diversity and inclusion,
sustainability and social impact.
“I really enjoy working
with my team and building
those relationships, and all
the learning and training
I’ve had the chance to do
along the way. Working
with all the different teams
around the business means
that no day is ever the
same. The most surprising
thing for me having never
worked in an office before
was the structure of it all
– how all of the different
departments fit together
and our board and
committees. Most
importantly, it’s such
a friendly place and
everyone wants to help
and support you.”
Megan Leigh
Business Administration Apprentice
ACTIONS FROM 2022,
AND PRIORITIES FOR 2023
We implemented our new employee
wellbeing and engagement app, Yoomi,
which allows more efficient tracking of team
wellbeing and performance through a quick
fortnightly check-in process. All members
of ExCo and selected team members across
the organisation took part in the
MissionInclude programme as mentors
or mentees for peers in other businesses.
The executive committee had presentations
on topics including social mobility and
the changing EDI landscape. All staff were
invited to take part in an equality and
diversity survey (84% response rate), which
informed our priority areas of gender
equality and leadership.
We joined the Social Mobility Pledge,
committing to improve our outreach,
access and recruitment practices aimed
at levelling the playing field for people
from disadvantaged backgrounds or
circumstances. During the year to March
2022 this has included several members
of our team giving a careers presentation
at a local college.
We achieved Disability Confident
Committed Level 1 employer, implementing
appropriate policies particularly with respect
to recruitment and a code of conduct for all
agencies working with us to fill roles from
July 2021.
In the coming year, we intend to work with
our supply chain to develop apprenticeship
opportunities focused on people from
black, Asian or minority ethnic communities.
We will be monitoring supplier compliance
with EDI standards and developing an
allyship education programme focusing on
disability, ethnicity and sexual orientation.
We have a long track record of supporting
employees through professional
qualifications, including chartered surveyor,
chartered accountant, marketing and
company secretarial.
During the year to March 2022 we had four
interns and five work experience students
at various points during the year. This was
the second year of our internship
programme and we had one of the original
cohort join as a permanent employee.
In 2022/23 we expect to continue and
extend each of these programmes amongst
our head office team, aiming to:
– take on two more apprentices;
– employ two graduates; and
– extend our internship and work
experience programmes.
2
team members completing
RICS qualifications
1
graduate completing their
professional training programme
with us and joining as a permanent
member of the team
Shortlisted
Inspiring Women Awards 2022:
Extraordinary People, Extraordinary
Times category
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CONTINUED
Our suppliers
WHO THEY ARE
Our network of businesses and
organisations providing goods
and services to enable us to serve
our customers.
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 embedded
with 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
(including Human Rights) 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.
£94m
paid to our suppliers and contractors
£27m
Total Tax Contribution
ACHIEVEMENTS FOR 2022
AND PRIORITIES FOR 2023
We appointed our first Supply Chain Lead,
who will act as the central point for supply
chain strategy and to accelerate and
embed our work with suppliers on
sustainability and social impact targets.
Activities continued to remind and verify
suppliers about our requirements to meet
specific compliance targets such as Safe
Contractor, and many suppliers joined focus
groups as we developed our social impact
and sustainability strategy, bringing their
ideas and potential contributions to
the table.
With the acquisition of Apollo, we have
again widened our pool of relationships with
professionals working on our expanding
development pipeline and we teamed up
with expert advisors, Evora Global, Hawkins
and Brown, Civic Engineering and Atelier
Ten, to deliver our innovative Net Zero
Carbon Design Guide and our net zero
roadmap. We made headway on work
to improve our processes for tracking
and auditing compliance by our suppliers.
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.
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Case Study
Placing our LED improvement
contract
As part of our plans to improve
our portfolio to EPC B or better
by 2026, we completed a pilot
LED improvement project on
42 buildings.
To ensure that we identified
contractors that aligned with our
social impact and sustainability
objectives, the tender scoring
matrix included weightings
assigned to various net zero
and social impact measures.
This included asking the
contractors to submit statistics on
Living Wage commitment, details
of apprentices to be used and
low-emissions vehicles utilised.
This is something we are aiming to
roll out more widely in the coming
months – helping us to build a
sustainable supply chain that
shares our values.
“Glenn and Joe have
gone above and beyond
to make the renovation
experience as painless
as possible, allowing our
busy surgery to function
as normal in these
challenging times.”
Jayne Gudgeon, project lead, Shepley
Medical Centre in Huddersfield, where we
worked around appointments and clinical
activities to add ten new clinic rooms,
higher quality infection control and changes
to make the building more energy efficient
including new LED lighting.
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Assura plc Annual Report and Accounts 2022
Strategic reportGovernanceFinancial statementsAdditional information OUR IMPACT
CONTINUED
Our investors
and lenders
As detailed in the Governance section
on page 89, the Board is committed
to maintaining an appropriate level
of communication with shareholders.
The Executive Directors and Investor
Relations Director 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 held
further sessions with 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.
£300m
Sustainability Bond issued in June
143
meetings held with investors
ACHIEVEMENTS FOR 2022
AND PRIORITIES FOR 2023
This year saw us offer a virtual capital
markets event focusing on our market, with
opportunities to hear directly from some
of our NHS customers and partners, and to
deep dive into our work on our first net zero
carbon pilot schemes as well as hearing
from the CEO, CFO and the wider team.
A virtual visit to Birkenhead Medical Building
– one of our only 365-day walk-in treatment
centre buildings and a base where we
made space available for a huge COVID-19
treatment and vaccination hub – gave
investors an insight into the reality of the
infrastructure needed to deliver these
services on a mass scale.
The launch of our first Sustainability
Bond gave us opportunities for greater
engagement with our investors on our
social impact plans and priorities and we
completed a number of other, smaller visits
to development sites including Kelsall in
Cheshire, where a community hub to
support a brand new primary care building
will offer huge potential to link general
practice with community activities which
reduce isolation and loneliness.
We widened our outreach to retail
investors, including ensuring our November
2021 equity raise was available via the
PrimaryBid platform. We also engaged
with shareholders to get their view on what
social value means to them and in respect
of the updated remuneration policy.
In 2023, we will maintain 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 13 equity analysts that currently
cover Assura. We are planning a
programme of site tour options to
showcase our buildings, including of the
West Midlands Ambulance Hub which
is due to complete in Q1.
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Assura plc Annual Report and Accounts 2022
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 Investor
Relations Director.
“It’s been particularly
fantastic this year to be
back out on site with
investors, as nothing beats
the opportunity to see
face-to-face the reality of
the role our buildings play
in the care that patients
receive and in the NHS’s
evolving response to
the care backlog which
was exacerbated by
the pandemic.”
Jayne Cottam
CFO
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Assura plc Annual Report and Accounts 2022
TIMELINE OF ENGAGEMENT
WITH INVESTORS
May
– Year end results
presentation
– Results
roadshow
July
– Trading statement
– AGM, via
InvestorMeetCompany
platform
October
– Trading statement
– EPRA Asia week
December
– Private wealth
manager focused
roadshow
March
– Bank of America
EMEA Real Estate
Conference
June
– Morgan Stanley
Sustainable Future
Conference
– Morgan Stanley
European Property
Conference
– Investor consultation
re Social Value
– ESG investor
roadshow
– Sustainability Bond
roadshow
September
– Unsecured bond
holder call
November
– Interim results
presentation
– Results roadshow
– £185m equity raise
– Capital markets event
– Retail investor
presentation via
InvestorMeetCompany
platform
January
– Trading
statement
– Barclays
European Real
Estate
Conference
Strategic reportGovernanceFinancial statementsAdditional information OUR ENVIRONMENTAL IMPACT
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. This is all a
part of our vision for healthcare spaces
that lead for a sustainable future,
helping our customer, the NHS, meet
its own net zero carbon aspirations.
But we also want to go a lot further.
We’re targeting net zero for our
whole portfolio by 2040, with our
current focus being our SixBySix
pledges which we aim to achieve
by 2026.
Sustainability actions are ingrained
throughout our team:
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.
Investment: sustainability and social
impact is a key element of the
investment criteria, with the cost
of any necessary EPC improvement
works costed into an acquisition.
Portfolio management: EPC
improvement programme is central
to individual property strategies and
all asset enhancements seek to
improve energy efficiency.
Development: Continual evolution of
sector-leading development designs,
advancing our strong BREEAM track
record by creating Net Zero Carbon
Design Guide.
2022 KEY ACTIONS
AND PROGRESS
– All developments completed hit BREEAM
targets of “Very Good” or better
– 42 buildings in our portfolio improved
to EPC B through our LED capital
works programme
– Learnings from net zero pilot at
Polegate developed into Net Zero
Carbon Design Guide.
– TCFD disclosures included (see page 72)
2023 PRIORITIES
– Delivering on site developments
to achieve BREEAM targets
– Incorporating Net Zero Carbon Design
Guide for developments added to
our pipeline.
– Continuing EPC improvement works,
targeting 50% of portfolio at B by
March 2023
– Completing net zero carbon audits
on 50 existing buildings
– Improving energy data coverage
across our portfolio
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Assura plc Annual Report and Accounts 2022
2040
Net zero for our whole portfolio
by 2040
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.
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.
Our SixBySix pledges are a stepping
stone on the net zero journey, and we
are targeting an improvement to the EPC
ratings of the portfolio – aiming for all
properties to have a rating of B by 2026,
where this doesn’t conflict with net zero
carbon aspirations.
In the prior year we completed our
assessment of the EPC ratings across our
portfolio and estimated the cost of the
improvement works, being in the range
£25–30 million across the portfolio, and
where possible, we will look to complete
these works alongside a lease regear or
asset enhancement project.
During the year, we have completed
an LED improvement pilot project – across
42 properties. This was with the aim of
understanding the nature of the works
and also testing the estimated cost range.
This project successfully completed in
March 2022, and we are targeting bringing
our portfolio EPC B rating up to 50% by
March 2023.
We also completed four asset enhancement
projects during the year, 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
four 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.
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 or lower
% of certificates
6%
27%
45%
17%
5%
In respect of 46 properties (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.
Energy procured by Assura on behalf of
tenants is via a 100% renewably sourced tariff.
For these buildings, we plan to commission
net zero carbon audits in the coming year
to understand the works required and
approximate costs to bring these up to net
zero carbon in operation. This will improve
our understanding and allow us to identify
properties where there may be a conflict
between EPC improvement works and
net zero aspirations, to better inform our
strategy at a property level going forward.
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.
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.
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Assura plc Annual Report and Accounts 2022
Strategic reportGovernanceFinancial statementsAdditional information OUR ENVIRONMENTAL IMPACT
CONTINUED
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.
Following our initial work on our net zero
carbon pilot project at Polegate (which
we covered in detail at our November 2021
capital markets event), we have recently
finalised our Net Zero Carbon Design Guide
for developments, which will be published
Summer 2022. Where possible (i.e.
depending on the current stage of design
work), this will be utilised for all
developments added to our pipeline.
The Design Guide covers all elements
of the development design process, laying
out the principles to be applied to every
stage – starting with site planning, building
structure and fabric, right through to final
elements of interior design and post
occupancy evaluation. We expect the
Design Guide to evolve as we work through
our first few projects and technology
continues to advance.
We continue to measure our current
developments by reference to BREEAM
and also our EPC targets – read more about
how we do this in our BREEAM section on
this page.
BREEAM
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.
All developments completed in the year
met our target of EPC B or better. Of the
five eligible developments completed
during the year, three achieved BREEAM
ratings of Excellent and two achieved
Very Good, although two are awaiting
the final certification.
All of the 14 eligible on site developments
are on track to achieve at least EPC B and
BREEAM Very Good with 71% on track
for Excellent.
Case Study
Newbyres Medical Centre, Edinburgh
Our on site asset enhancement project
at Newbyres Medical Centre showcases
how improvement works benefit all
stakeholders. We’re delivering a 123 m2
extension to the building to increase the
clinical space (allowing the GP practice
to serve more patients) and at the same
time improving the energy efficiency by
installing LED lighting throughout and a
solar photo voltaic array (reducing carbon
emissions and saving the GP practice
money on annual energy bills). And in return,
Assura gets an improved quality building
and a new 20-year lease.
Case Study
Kelsall Medical Centre, Cheshire
In Cheshire, our sustainable design solution
for the nearby, relocating GP practice is
part of a wider development site including
29 senior living units as well as a badger
habitat within the ecology plan. The
building, which will serve circa 6,000
patients, is on track for BREEAM Excellent,
incorporates air source heat pumps and
dementia friendly signage and paint work.
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Assura plc Annual Report and Accounts 2022
Targeting net zero
We’re targeting net zero carbon
for our portfolio by 2040
Our Net Zero carbon pledge
We’ve also signed up to the
World Green Building Council
net zero carbon pledge; by
2030 our own operations,
portfolio where we have
operational control and all new
developments will be net zero
for operational energy.
Net Zero Carbon Design Guide
Our recently finalised Net Zero
Carbon Design Guide sets out our
approach to minimising the carbon
emissions of all developments added
to our pipeline going forward. The
Guide will be published on our
website during Summer 2022.
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Assura plc Annual Report and Accounts 2022
Strategic reportGovernanceFinancial statementsAdditional information OUR ENVIRONMENTAL IMPACT
CONTINUED
520m2
Photovoltaic panels installed
at WMAS Hub as well as a
heat recovery system
100%
LED lighting used
throughout building
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 continued to evolve
through the pandemic and our split of time
spent working at the office or remotely, as
well as business travel, has not yet settled
into a new, post-pandemic normal.
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 the 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.
For both years presented, 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 decreased by 5%.
During the year our business travel has
begun to increase again, but this has been
offset to a degree by reduced gas used in
homeworking as our team partly returned
to the office. We expect this trend will
continue further in 2022/23.
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 (including Scope 3 emissions
for the properties where we have energy
data): www.assuraplc.com
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Assura plc Annual Report and Accounts 2022
20222021ChangeScope 1Mt CO2e52.252.3–Mt CO2e per employee0.630.68(7%)kWh157,664256,615(39%)Scope 2Mt CO2e17.515.712%Mt CO2e per employee0.210.204%kWh82,54567,52423%Total (Scope 1 plus Scope 2)Mt CO2e69.768.13%Mt CO2e per employee0.840.88(5%)kWh240,209324,140(26%)kWh per employee2,8944,210(31%) Case Study
Northumbria Health and Care
Academy, Northumberland.
Our on site development in
Cramlington has been designed
to reach our usual standards of
BREEAM Excellent and EPC A, but
we’re also going one step further.
We are also targeting certification
under the IWBI WELL Building
Standard, aiming for the Academy
to become the UK’s first Gold
accredited healthcare sector
building. WELL certification is
aimed at improving health and
human experience through design,
focusing on 10 concepts including
air, water, light, thermal comfort
and community. The building will
also be a flagship for our social
impact programme, working
with the NHS Trust community
engagement programme on local
arts projects and contributing
towards the delivery of a hospital
nature trail designed to promote
staff wellbeing.
1st
aiming to become the UK’s first
Gold accredited healthcare sector
building under the IWBI WELL
Building Standard.
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Assura plc Annual Report and Accounts 2022
Strategic reportGovernanceFinancial statementsAdditional information TCFD 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.
On this page we set out our
disclosures in accordance with
the requirements of the Task Force
on Climate-related Financial
Disclosures (“TCFD”), as required
by listing Rule 9.8.6(R)8. We have
taken into account all guidance
stipulated by the listing rules
and have complied in full with the
exception of scenario analysis that
is in progress and planned for
completion in the coming year.
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Assura plc Annual Report and Accounts 2022
Our SixBySix strategy focuses on the areas
we believe require the initial focus in the
period to 2026 (when our strategy runs to).
This includes targeting improvements to
our portfolio from a regulatory perspective
(i.e. ensuring compliance with expected
minimum energy efficiency regulations and
advancing our development process to
minimise carbon embodied in construction),
and is reflected in our business planning
and budgeting as appropriate.
During the year, we have completed an initial
assessment of how we will develop our
scenario analysis for assessing the potential
future impact on our business. This involved
workshops with our environmental
consultants Evora to increase the
understanding in our team of how to
determine the appropriate scenarios and
what factors should be assessed, and then
how to conclude on impact on identified
risks, opportunities and any appropriate
actions to be taken. We will finalise this
scenario resilience exercise in the next
financial year.
Risk Management
Our assessment of climate-related risks
follows the existing processes of the Risk
Committee, as detailed on pages 74 to 79,
including escalation to the Audit Committee
as appropriate and decisions of assessing
the size and materiality of each risk,
mitigations in place, risk owner and
proposed actions.
Our process for identification of risks and
opportunities includes team members
from across our organisation and property
team, with appropriate support from our
environmental consultants (Evora)
as appropriate.
During the year, the Risk Committee has
received several specific updates in respect
of our TCFD processes and a formal paper
has also been presented to the Audit
Committee.
The output of this work has included a
consideration of the linkage and impact of
specific climate risks and opportunities on
the principal risks and uncertainties facing
the business. We have reflected this in
the table on page 73.
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, wider sustainability
efforts and during the year has received
specific updates in respect of TCFD progress.
Strategic papers presented to the Board
for consideration (such as recommended
acquisitions or proposed actions within
a particular team) include discussion
of environmental factors as appropriate,
typically covering how a new acquisition
will fit in with our existing SixBySix strategy.
Overall responsibility for progress against
environmental targets rests with the CEO,
Jonathan Murphy. Efforts are led by the
Head of Property Management and
Investment, who is a member of the
Executive Committee with responsibility
for sustainability, supported by the Social
Impact & Sustainability Steering Committee,
which monitors progress against the
specific SixBySix targets and regularly
reports into the Executive Committee.
Strategy
Our assessment of climate-related risks and
opportunities considers the short (1–3 years,
up to 2025), medium (3–8 years, up to 2030)
and long-term (>8 years, beyond 2030 and
up to 2040) time horizons, and incorporates
consideration of both transitional and
physical climate risks.
Most of the climate-related risks facing our
business are relatively limited in the short
term, with growing potential exposure over
time. This is because the nature of our
business (landlord with long-term tenants
with whom we have strong relationships)
and our existing SixBySix strategy (i.e.
placing emphasis on improving buildings in
our existing portfolio to EPC B and ensuring
our new developments are designed to
high energy performance standards) means
most of the climate-related risks fall into the
“monitor” category where we continue to
observe emerging trends that may identify
properties at higher risk.
As well as the example risks highlighted on
page 73, which were deemed the highest
specific to climate change on our risk
register, our assessment included carbon
taxing, energy price fluctuations and long
term increases in the cost of materials,
amongst others, and our assessment
concluded no additional disclosures in
respect of these were deemed necessary
in the current year.
Targets & Metrics
Key metrics and targets relating to climate-related risks and opportunities are primarily those within our SixBySix pledges, being targeted
at what we have identified as the most material areas for our business.
The table below highlights the specific metrics that indicate exposure to the risks or performance against opportunities below, with targets
set as appropriate.
The Group’s disclosure of Scope 1 and 2 emissions can be found in the environmental analysis on page 70, and available Scope 3 emissions
are disclosed in our sustainability disclosures included on our website.
Appropriate climate-related performance measures have been included within the remuneration targets for the Executive Directors,
in respect of both the short-term and long-term incentives. Further details are provided in the Remuneration Committee Report on
pages 115 to 116.
Example of risk
Regulatory requirements for
minimum energy efficiency.
Risks to buildings from climate-
related events such as flooding
and temperature rise affecting
water supply temperature.
Failure to appropriately address
climate-related expectations of
stakeholders could result in
lower investor demand.
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 is 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.
This may also affect requirements
for new developments including
availability or appropriate
materials.
SixBySix ESG strategy in place
and continual improvement plan
in place relating to ESG related
disclosures.
Financial impact from lower
investor demand (both equity
and debt) would be higher cost
of finance and/or capital.
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.
Linkage to Principal Risks
– Changes to Government
Policy
– Building obsolescence
Specific metrics that monitor this risk
% of portfolio at EPC B or better
Current: 33% (2021: 30%)
Target 100% by March 2026
– Building obsolescence
(Sustainability)
– Development programmes
– Reduction in investor demand
– Reduction in availability and/
or increase in cost of finance
Linkage to Principal Risks
– Lack of rental growth (i.e.
this opportunity may provide
evidence for rental growth
in the future)
– Staff dependency (i.e. strong
ESG performance could
aid recruitment)
% of portfolio (by area)
identified as higher risk of flood
by insurers:
Current: 1.9% (2021: not reported)
Target: 0%
By March 2023 we aim to have
assessed proportion of portfolio
at higher risk of additional
specific climate-related risk
(such as temperature rise) and
any required mitigating actions.
ESG rating assigned by
appropriate ratings agencies:
MSCI: A (2021: BB)
Target: AAA
EPRA: Silver (2021: Silver)
Target: Gold
Specific metrics that monitor
the opportunity
% of completed developments
hitting BREEAM and EPC
targets:
Current: 100% (2021: 100%)
Target: 100%
In future years, this will track
% of developments designed
in line with the Assura Net
Zero Carbon Design Guide
and schemes certified as
net zero carbon.
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Assura plc Annual Report and Accounts 2022
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; and
– occupier default risk – by investing in
strategically important premises which
will be supported by the NHS with
ongoing due diligence of our
independent tenants.
Our approach to risk management
The Risk Committee includes staff from
all areas of the business; together with the
CEO and CFO it met four 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;
– health and safety compliance (including
on asbestos, legionella and cladding);
– 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
74
Assura plc Annual Report and Accounts 2022
(there have been no GP occupier defaults
in the year) or where non-GP occupiers
are facing financial difficulties;
– an update on complaints (none); and
– EPC updates.
Following on from the TCFD disclosures
on the previous pages we have considered
how climate affects each of our principal
risks and added linkage to TCFD on
pages 77 to 79.
Internal audit in the year focused on
data integrity, acquisition process and the
finance system upgrade and further detail
on their findings is set out in the Audit
Committee report on page 97.
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.
Emerging risks
Emerging risks were considered by the
Committee, including:
– rising costs on development contracts
and contractors in potential difficulty –
contracts are primarily fixed price and
managed by monitoring surveyors, but
contractor overspend/rising costs was
included as a regular item on ExCo and
risk committee agendas;
– structural reforms in NHS (due April 2022)
– main risks were perceived to be
difficulty in decision making with the
change in personnel/regions. However,
in time, there could be benefits in dealing
with smaller number of organisations;
– climate related risks and opportunities
under TCFD;
– digital health risks in terms of building
obsolescence;
– recruitment and retention of key staff;
– inflation/supply chain disruption; and
– monitoring financial health of
independent occupiers.
Ukraine
We held a specific risk committee meeting
to consider additional risks to the business
from the war in Ukraine. We continue to
monitor materials cost inflation which may
impact development start dates, and
Assura’s IT team have reconfirmed our
disaster recovery and business continuity
plan, clarified the roles and responsibilities
in the event of a business interruption and
continue to engage with our IT partners
and the NCSC for best practice or
emerging threats.
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 76 to 79.
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 38 to 39.
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
and the threat of state-sponsored attacks.
Penetration testing, cyber awareness
training, disaster recovery tests and social
engineering simulations were completed
in the year. The Group entered its third year
of a managed assurance service to cover
email phishing, external vulnerability
scanning, online security awareness training
and cyber health check-up. The Group
continues to focus on achieving reputable
cyber security accreditations, with more
expected to be achieved in the coming
year. Given this increased protection it was
considered that an appropriate level of risk
mitigation was in place. All significant
recommendations from internal audit
reports on the cyber security were
implemented in the year.
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 2022 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
75
Assura plc Annual Report and Accounts 2022
Strategic reportGovernanceFinancial statementsAdditional information PRINCIPAL RISKS AND UNCERTAINTIES
CONTINUED
h
g
H
i
i
m
u
d
e
M
1
7
8
4
12
t
c
a
p
m
I
w
o
L
Likelihood
Unlikely
5
6
2
3
11
9
10
Possible
Likely
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.
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.
A new risk was identified of building
obsolescence as a result of sustainability
requirements and risk rating of
development programmes (previously
called development overspend) and staff
dependency marginally increased.
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 –
digital risks
8 Building obsolescence –
sustainability
9 Development programmes
10 Staff dependency
11 Lack of rental growth
12 Occupier default
76
Assura plc Annual Report and Accounts 2022
STR ATEGIC 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
and the CBI.
Trap
The Board monitors changes in
government policy and management
reports to the Board at every meeting.
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
_ ESG expectations
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 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.
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.
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
Active engagement with Government,
where appropriate.
Mitigate
Continuing use of our specialist
expertise.
Mitigate
The dividend yield and the underlying
strength of the cash flows supporting
it remain attractive relative to other
asset classes.
Mitigate
Investor communication, particularly
through face-to-face meetings,
remains a key priority.
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.
Comment
143 meetings have been held during
the year with investors via a range of
mediums – including a capital markets
webinar, property tours and one to
one meetings.
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
continued to strengthen our
development pipeline and team.
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.
Building relationships with key
contacts responsible for NHS property
at a strategic level.
Comment
There continues to be significant
support for sustainable healthcare
infrastructure. The COVID-19 pandemic
and consequent lengthening waiting
lists in the NHS has only further
highlighted the shortage 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; government mood
music on the idea of giving GP’s the
option of becoming NHS contractors
do not signal any negative change
to third-party premises ownership.
Gross risk rating
M
Net risk rating
M
Risk owner
CEO and Head of Public Affairs
Link to TCFD
Risk monitored
Gross risk rating
Gross risk rating
Gross risk rating
M
Net risk rating
M
Risk owner
CEO
Link to TCFD
No link
M
Net risk rating
M
Risk owner
CEO and CFO
Link to TCFD
Risk monitored
L
Net risk rating
L
Risk owner
CEO and CFO
Link to TCFD
No link
77
Assura plc Annual Report and Accounts 2022
Strategic reportGovernanceFinancial statementsAdditional information
PRINCIPAL RISKS AND UNCERTAINTIES
CONTINUED
STR ATEGIC 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
– Digital risks
8 Building obsolescence
– Sustainability
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.
Risk
Increasing requirements for energy
efficiency/carbon reduction could
reduce the value of buildings if we fail
to achieve net zero carbon aspirations
for the estate.
Avoid
We work closely with our GPs to keep
our buildings up to current standards
and provide adaptable solutions for
healthcare access.
Avoid
We work closely with our GPs and
other partners to keep our buildings
up to current standards. Sustainability
forms a key metric in the investment
appraisal process and EPC ratings
of all buildings are closely monitored.
Trap
The Group regularly monitors and
manages its refinancing profile and
cash requirements.
Trap
The Group engages three external
valuers to review property valuations.
Trap
We carefully monitor the latest
standards and digital solutions.
Trap
We carefully monitor the latest
standards.
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.
A Net Zero Carbon Design Guide will
be used to guide all new developments
and a roadmap has been developed
to ensure the portfolio achieves the
EPC Band B target.
Mitigate
Working closely with professional
advisers, we are continually monitoring
the estate for compliance with EPC
Band B by 2026 as well as
implementing best practice into
new development projects.
Comment
Our surgery of the future concept
embraces sustainability which we
consider on each new development.
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 see digital health
as an opportunity for our business and
there will be opportunities to work with
our partners on digital first projects
in FY22/23 to create some innovative
virtual and physical solutions.
Comment
LTV is currently at 36% and this provides
covenant headroom. The Group has
recently disposed of 11 assets which
were considered to have lower
growth prospects.
We have completed a number
of transactions post year end, both
acquisitions and disposals, at values
in line with our current yields.
Gross risk rating
Gross risk rating
M
Net risk rating
L
Risk owner
CFO
Link to TCFD
No link
M
Net risk rating
L
Risk owner
Head of Property Management
and Investment
Link to TCFD
No link
M
Gross risk rating
N
Net risk rating
N
L
Risk owner
Head of Property Management
and Investment
Link to TCFD
Risk monitored
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 and geopolitical turmoil
due to the war in Ukraine have meant
that capital markets are more volatile.
However, we maintain our strong cash
flows and A- rating from Fitch Ratings
Ltd and during the year our
oversubscribed Sustainability Bond
raised £300 million at a coupon of
1.625% and £185 million was raised
from the equity market. As at the year
end net debt stood at £1,006 million
with undrawn facilities of £125 million
and cash of £243.5 million.
Gross risk rating
M
Net risk rating
L
Risk owner
CFO
Link to TCFD
No link
78
Assura plc Annual Report and Accounts 2022
OPER ATIONAL RISKS
9 Development
programmes
10 Staff dependency
11 Lack of rental
growth
12 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.
Avoid
The Group has continued to
strengthen its development pipeline
and team.
The Group’s policy is to engage in
developments that are substantially
pre-let with fixed price or capped
price build contracts.
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.
Avoid
The Group engages experienced third
parties to conduct rent reviews.
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 independent 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.
We undertake financial due diligence
on independent providers prior to
granting a lease or making an
acquisition.
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
Continual review of culture and
offer beyond pay and benefits and
engagement of the team in various
ways to understand views and
feedback.
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 and independent
providers during the term of the lease.
Mitigate
For new developments, the Group
targets initial rents that create positive
open market rental evidence for the
region. Open market rent reviews are
either upwards-only or have a landlord-
only trigger. Where considered
advantageous, the Group will look to
agree index-linked rent reviews as an
alternative to open market reviews.
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
on our independent occupiers and as
part of the acquisition due diligence
and during the term of the lease.
Comment
The average number of employees
in the year was 83 (2021: 77).
Several members of staff are currently
working towards professional
qualifications.
As the world emerges from the
pandemic we have worked hard to
support employees changing needs
and to address changing expectations
in the job market.
Specialist internal and external team in
place to focus on maximising growth
opportunities.
Comment
The commission-driven agreements
with our team of designated rent
review agents and internal
improvements to the rent review
process with better data capture and
analysis continues to drive rental
growth. In addition the internal
property team has recently been
restructured with the implementation
of specialist roles to focus on driving
value through the rent review process.
Comment
Approximately 33% of leases have
fixed uplifts or are linked to RPI.
Less than 5% of leases have occupier
ability to trigger a downward rent review.
We are aware of increased inflationary
pressures on our tenants and we have
increased focus on tenant profile reviews
in response. 82% of our rent is directly
or indirectly reimbursed by the NHS.
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.
Gross risk rating
Gross risk rating
Gross risk rating
M
Net risk rating
M
Risk owner
Head of HR
Link to TCFD
Opportunity
M
Net risk rating
M
L
Net risk rating
L
Risk owner
Head of Property Management
and Investment
Risk owner
Head of Property Management
and Investment
Link to TCFD
Opportunity
Link to TCFD
No link
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 and contractor financial
health is closely monitored throughout
development projects.
Mitigate
We remain confident in our ability
to manage this risk through our
experienced team of development
surveyors and professional advisers.
Internal cost reviews have been
enhanced and we continue to 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
during the year as the number of
developments on site has increased.
COVID-19 and Brexit have contributed
to contractor workforce shortages
leading to wage inflation and
COVID-19 and the war in Ukraine has
resulted in material supply chain issues.
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.
Gross risk rating
M
Net risk rating
M
Risk owner
Head of Property Management
and Investment
Link to TCFD
Risk monitored
79
Assura plc Annual Report and Accounts 2022
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 pages 48 to 50)
and strategic priorities (see page 36) 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 Ltd).
In completing the assessment of viability,
the Board has considered the principal risks
of the Group, as set out on pages 74 to 79,
as well as historical performance, 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)
80
Assura plc Annual Report and Accounts 2022
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 respect of climate change, the Group
modelling includes capital expenditure
improvements to our current portfolio in
line with our current environmental targets
(i.e. to achieve EPC B).
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.
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.
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 forecasts prepared (including
application of the specific scenarios
detailed above in aggregate) showed that
the business remained viable throughout
the forecast period. In addition, a reverse
stress test was completed to consider by
how much valuations would need to fall
(35%) and how much rental income would
need to be removed (62%) for covenants
to be breached.
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 22
to 27. 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 addition to surplus available cash
of £243.5 million at 31 March 2022 (2021:
£46.6 million), the Group has undrawn
facilities of £125 million at the balance sheet
date, with commitments as at year end of
£101.2 million (see Note 23).
The Group has borrowing facilities from
a number of financial institutions and the
public debt markets, none of which are
repayable before November 2024.
The Group’s primary care property
developments in progress are all
substantially pre-let and operate with fixed
price construction contracts where possible.
The Group has adequate headroom in
its banking covenants. The Group has been
in compliance with all financial covenants
on its loans throughout the year.
The Group’s properties are substantially
let with rent paid or reimbursed by the NHS
and they benefit from a WAULT of 11.8 years.
They are diverse both geographically
and by lot size and therefore represent
excellent security.
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.
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
including climate change, 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 over the period to 31 May 2023.
GOVERNANCE AT A GLANCE
KEY BOARD DECISIONS
The major decisions taken by the Board and its Committees during the year included:
Approval of
social impact and
sustainability strategy
Launch of first
Sustainability Bond
and successful
equity raise
Mid-term review
of our five-year plan
Supporting staff
returning to the
office and improving
hybrid working
Refinement of
company purpose
First acquisition
in Ireland
Approval of scale
development projects
for NHS Trusts (West
Midlands, Cramlington)
Review of strategic
decision-making
framework
KEY GOVERNANCE
ACTIVITIES
1
External Board
evaluation
4
Approval of Board
Fellowship programme
2
Employee engagement
through our designated NED
3
Shareholder consultation on
new remuneration policy
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Assura plc Annual Report and Accounts 2022
Strategic reportGovernanceFinancial statementsAdditional information CHAIRMAN’S INTRODUCTION
TO GOVERNANCE
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Assura plc Annual Report and Accounts 2022
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 2022, 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. This has
been formalised in the new Directors’
Remuneration Policy, for which
shareholder support is sought at the AGM.
– Code Provision 36 – during the year under
review, we did not have post-employment
shareholding requirements in place, in
recognition of the investor alignment
through other aspects of the Directors’
Remuneration Policy. However, as
promised last year, such requirements are
being introduced as part of the new Policy
and will apply from the date of its approval
at the AGM.
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 two strategy days with ExCo
specifically considering progress against
our strategy, potential challenges facing
the business model and how to evolve our
strategy to target attractive markets with
customer-focused products and a strategic
framework for decision-making.
The Board believes that its legacy should
be as a dynamic partner to the NHS and
a leading social impact business, playing
a key role in modernising and improving
community healthcare infrastructure
whilst delivering consistent long-term
shareholder returns.
Culture
Our purpose has evolved and is now
captured in the revised language that
“We Build for health”. Read more about
what this means on pages 2 to 13.
Our strong culture supports our purpose
and strategy 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.
Board collaboration is supported by
informal board dinners where Board
members share their expertise and
experience, and the wider market
perspective is gained from external
speakers. The Board members also
collaborate and share their expertise and
experience with the wider business through
mentoring individual members of ExCo.
ExCo also attended the most recent board
dinner in Warrington to engage in the
discussions and hear firsthand from the
external speaker on the wider NHS agenda.
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.
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 93.
When COVID-19 restrictions were relaxed,
the Board were delighted to commence
face-to-face Board meetings holding every
other board meeting at the head office in
Warrington where they “walk the floor” and
engage with employees, particularly those
who joined during lockdown. In addition,
employees will get direct feedback from
the Board when they present Board papers
and accompany them on site visits. The
Board specifically engages with ExCo at
the strategy days and through mentoring.
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.
Performance evaluation
The Board Review carried out by Weva Ltd in
2022 highlighted the current strengths of the
Board and made several recommendations
as to how the Board could further enhance
its effectiveness as part of its approach to
continuous improvement. Weva Ltd also
provides development support to ExCo
when required.
The Board has continued to make progress
in all areas; it has demonstrated particular
strength in creating a collaborative,
productive Board climate and successfully
onboarding three new NEDs despite the
difficulties of remote working. The Board
has also proved its capability in terms
of effective oversight and assurance
of strategy delivery, together with the
strategic perspective necessary to support
long-term, purpose-led growth.
The Board has adopted all the review’s
recommendations and will take action
during 2022–23 to address them. Particular
areas of focus include:
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.
– Continued development of the Board
as a team including: regular Board dinners
and strategy days; a refresh of the Board’s
purpose and legacy; clarity on the
Board’s role in supporting a culture that
will enable delivery of the Company’s
purpose and strategy.
– Gaining assurance that the Company
culture supports the purpose and strategy
and that staff are actively engaged in the
discussion to embed desired behaviours.
– Gaining assurance that the Board and
ExCo have the capability required to
deliver the strategy; ensure formal
succession plans reflect this.
– A review of the stakeholder map,
materiality assessment and engagement
strategy to align with the purpose and
strategy, and to enhance the Board’s
collective understanding of Assura’s
outside world.
Remuneration
We received over 97% of votes in favour
of our Remuneration Report at the 2021
AGM and I am grateful to shareholders
for the level of engagement and support
during the year, particularly on the new
Remuneration Policy.
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 86 to 87, which enable
them to challenge, motivate and support
the business.
We have updated our skills matrix for Sam,
Emma and Noel’s appointment in May 2021
and this shows our breadth of experience
and strengths, for example, in NHS strategy
and technology, capital markets, governance,
investor relations, strategy, finance and
risk, leadership, people and change
management, business development as
well as social purpose and ethical focus.
Diversity
The Board is committed to ensuring that
the Group is free from discrimination and
equitable to all employees.
We came 19th for Women on Boards and
in Leadership for FTSE 250 companies and
6th for Women on Boards and in Leadership
in the FTSE 350 Real Estate Sector Rankings
in the FTSE Women Leaders Review, the
successor phase to the Hampton-Alexander
Review. 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 we have built on
the results of last year’s cross-team survey
on diversity and inclusion in our recruitment
and training strategies for the business. We
have also concluded the Mission INCLUDE
mentoring programme as both mentors and
mentees for peers in other businesses and
committed to becoming a Disability
Confident employer.
We are working with Warren and Partners to
build the pipeline of ethnically diverse Board
talent and are in the process of inviting an
ethnically diverse Board fellow who would
benefit from corporate experience to sit on
the Board pro bono (save for expenses) for
one year to gain firsthand experience of a
FTSE 250 Board and receive mentoring from
myself. They will receive full Board papers
and be encouraged to take an active part
in Board discussions with the aim of going
on to secure a permanent FTSE 250 Board
appointment at Assura or elsewhere at
the conclusion of their fellowship.
Ed Smith, CBE
Non-Executive Chairman
23 May 2022
GOVERNANCE IN NUMBERS
Board composition
Meetings per year
1
Chairman
2
Executive
Directors
5
Non-Executive
Directors
7
Board
4
Audit
Committee
2
Nominations
Committee
7
Remuneration
Committee
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Assura plc Annual Report and Accounts 2022
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 and Sustainability Steering Committee
Establishes which social impact and sustainability risks and opportunities are
of strategic significance, integrates them into business strategy and ensures
effective communication to stakeholders.
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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.
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Strategic reportGovernanceFinancial statementsAdditional information BOARD OF DIRECTORS
BOARD
Board tenure
(in current role)
4 4
0–4 years
(67%)
4+ years
(33%)
Board gender balance
4 4
Female
Male
Executive Committee
gender balance
4 4
Female
Male
Ed Smith CBE
Non-Executive
Chairman
Appointed
October 2017
Skills and experience
As an experienced
Chairman, Ed has
extensive governance
skills in both the private
and public sectors
including as former Chair
of NHS Improvement
and Deputy Chair of
NHS England.
Ed’s skills include
strategy and operational
excellence as he was the
former Global Assurance
Chief Operating Officer
and Strategy Chairman of
PricewaterhouseCoopers
(“PwC”), with broad
experience in finance
and accounting,
capital markets and
customer focus.
Ed is currently
Non-Executive Director
at Saxton Bampfylde.
Jonathan Murphy
CEO
Jayne Cottam
CFO
Jonathan Davies
Senior Non-Executive
Director
Appointed
February 2017
Appointed
September 2017
Appointed
June 2018
Skills and experience
Jonathan joined Assura in
2013 as Finance Director
and became CEO in 2017,
bringing with him broad
experience in finance
and accounting,
corporate finance,
capital markets and real
estate investment having
previously worked as
finance director for the
fund management
business of Brooks
Macdonald and Braemar
Group plc, and in
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.
Skills and experience
Jayne 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.
Skills and experience
Jonathan is Deputy Chief
Executive and Chief
Financial Officer of
SSP Group plc and has
extensive experience
of finance, mergers
and acquisitions and
corporate governance.
Jonathan took SSP
private in 2006, listed
it on the London Stock
Exchange in 2014 and
has undertaken
numerous debt and
equity raises since then.
His skills in strategy,
commercial and financial
management were built
in his earlier roles with
Unilever plc, OC&C and
Safeway plc. Jonathan
chairs our Audit
Committee and is our
Senior Independent
Director.
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Assura plc Annual Report and Accounts 2022
Emma Cariaga
Non-Executive Director
Louise Fowler
Non-Executive Director
Noel Gordon
Non-Executive Director
Dr Sam Barrell CBE
Non-Executive Director
Orla Ball
Company Secretary
Appointed
May 2021
Appointed
June 2019
Appointed
May 2021
Appointed
May 2021
Appointed
April 2015
Skills and experience
Emma is the Joint Head
of Canada Water, one of
the largest regeneration
schemes in London, and
Head of Residential with
British Land where she
also sits on their Executive
Committee. Her 20 years
of experience in the
property sector span
residential, retail,
commercial and leisure
with previous roles at
Landsec, Barratt Homes
and Crest Nicholson.
Emma was previously
on the Board of Thames
Valley Housing
Association where she
chaired the Investment
Committee, and is
currently a non-executive
with TEDI-London –
a higher education
provider for engineering.
Skills and experience
Louise’s customer,
marketing and digital
experience is drawn
from her time as a senior
executive in regulated
services industries. She
spent the first part of her
executive career in travel
and tourism working for
British Airways and was
CEO of Brymon Airways
before moving into roles
with Barclays, the
Co-operative Group,
First Direct and the
Post Office.
Now an independent
consultant advising
consumer brands
such as M&S, Barclays,
Costa Coffee and ITV,
Louise also serves as a
Non-Executive Director
on the boards of a
number of publicly
listed businesses. She
is honorary professor
of Marketing at Lancaster
University Business
School and chairs our
Remuneration Committee.
Skills and experience
Having led significant
restructuring
programmes to enable
banks to adopt new
digital channels, Noel
brought that experience
to NHS England and NHS
Digital, reshaping their
approach to digital
change and new models
for healthcare delivery.
Noel’s former board
roles include, Chair
of NHS Digital, Chair
of Healthcare UK
and Non-Executive
Director on the Board
of NHS England.
Noel is a Non-Executive
Director of Bestway
Panacea Holdings.
Skills and experience
Sam is the Chief
Operating Officer 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 was a National
Advisory Council
Member of the King’s
Fund, an active Mentor
for the NHS Innovator
Accelerator Programme
and was awarded the
CBE in 2014 for services
to healthcare.
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 as a
corporate lawyer for
more than 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 chairs our
Risk Committee and
is a member of the
Executive Committee.
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Strategic reportGovernanceFinancial statementsAdditional information BOARD OF DIRECTORS
CONTINUED
Time
commitments and
independence
Other directorships of the Board
members are set out on pages
86 to 87. 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.
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 2022 AGM
and the Notice of AGM will
explain why their contribution
remains important to the
Company’s long-term
sustainable success.
Number of Non-
Executive Directors
(including the Chairman)
6
3
Number of
Executive
Directors
2
2
3
6
4
4
2
3
Nom
2/2
2/2
2/2
2/2
2/2
2/2
1/2
2/2
0/0
2
2
2
2
2
2
Rem
7/7
7/7
7/7
7/7
7/7
7/7
6/7
7/7
2/2
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
Committee meeting attendance
Ed Smith
Jonathan Murphy
Jayne Cottam
Jonathan Davies
Louise Fowler
Emma Cariaga
Noel Gordon
Sam Barrell
Jenefer Greenwood*
* Prior to retirement at the 2021 AGM.
Board
7/7
7/7
7/7
7/7
7/7
7/7
6/7
7/7
2/2
Audit
4/4
4/4
4/4
4/4
4/4
4/4
3/4
4/4
1/1
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Assura plc Annual Report and Accounts 2022
KEY BOARD ACTIVITIES
Raising Finance –
Sustainability and
fairness to investors
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Assura plc Annual Report and Accounts 2022
The Company announced the successful
placing of new ordinary shares representing
approximately 10 per cent of the Company’s
existing issued share capital in November.
The Company consulted with a number
of its major shareholders prior to the
Placing and respected the principles of
pre-emption through the allocation process
insofar as possible.
The Company values its retail investor base
and the Board took the decision to allow
retail investors to subscribe in the offer
via the PrimaryBid platform noting that no
commission is charged to investors using
PrimaryBid. The Board was pleased by
the strong support received from new
and existing shareholders, including retail
shareholders via the PrimaryBid offer.
The net proceeds of the placing are to
be used to fund the Company’s current
short-term pipeline of acquisition
opportunities; onsite developments;
and asset enhancement capital projects.
Our social impact strategy, SixBySix, aims
to maximise our contribution to society and
minimise our impact on the environment.
In June 2021 we announced the launch
of our first Sustainability Bond in an amount
of £300 million with a tenor of 12 years,
following a series of UK fixed income
investor meetings which generated strong
institutional demand.
The Sustainability Bond is the first issued
under the Assura Sustainable Finance
Framework and the proceeds of which
are to be used to fund or refinance eligible
green and social projects, specifically the
acquisition, development or refurbishment
of publicly accessible primary care and
community healthcare centres with green
building certification as appropriate.
Strategic reportGovernanceFinancial statementsAdditional information 500,000+
During the pandemic, Ramsay looked
after over 500,000 NHS patients.
KEY BOARD ACTIVITIES
CONTINUED
Making the right
strategic decisions
– Ramsay Day
Surgery, Kettering
The Board factors all stakeholders, the
long-term impact on the business and the
environment into all decisions in line with
s172 Companies Act 2006.
In May 2020 the Board approved the
development funding agreement for the
construction of the new day surgery and
sterile services unit in Kettering for Ramsay
Healthcare UK, building on the successful
delivery of several projects for Ramsay
by the same developer using the same
design team.
The Board affirmed the commitment to be a
long-term funding partner to the developer
in order to open dialogue with Ramsay and
provide an opportunity to work with the
developer to include primary care within
their other development sites.
Ramsay Healthcare UK has a network
of 34 acute hospitals and day procedure
centres providing a comprehensive range
of clinical specialties to private and
self-insured patents as well as to patients
referred by the NHS. Ramsay also operates
a diagnostic imaging service and provides
neurological services through its three
neurorehabilitation facilities. It is the largest
independent provider of NHS elective
services in the UK and targets approximately
70–80% of patient capacity via the NHS.
During the pandemic, Ramsay looked
after over 500,000 NHS patients, treating
the highest volume of NHS patients in the
independent sector, with over 20 NHS
services hosted in Ramsay facilities and
210 Ramsay team members supporting
NHS teams in local trusts.
The rationale behind the Kettering project
was that Ramsay’s existing hospital at
Woodlands was working at capacity
and struggling to meet local demand.
Advancement in surgical procedures enable
more activity to be undertaken without
in-patient stays. The Kettering Day Surgery
Unit would provide additional capacity for
high volume day case elective surgery to
be undertaken in an efficient manner and
so would be of great benefit to the local
patient community in providing an essential
health service to 750,000 people and to
the local NHS trusts, one of which requires
additional capacity and support during a
redevelopment of their existing site.
The building will be constructed to EPC B.
However, there is a willingness from both
Ramsay and the developer to improve
environmental performance at this and
future sites and as a result of further
discussion a 57kWp solar panel array has
been incorporated into the Kettering design
during the construction phase. This will
reduce CO2 emissions by over 27,000kg
per annum. In addition the developer is
committed to delivering the next scheme
at BREEAM Excellent.
The developer and their preferred contractor
also recognised the importance of social
impact in developments and were open
to training, mentoring and apprenticeship
opportunities as well as community
activities around the site.
Construction on the Kettering facility
commenced in January 2022 and is
progressing well with completion
anticipated in Q2 of 2023.
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Strategic reportGovernanceFinancial statementsAdditional information Q&A WITH LOUISE FOWLER
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Assura plc Annual Report and Accounts 2022
Q&A
“Our new team members are
complimentary about how they
have been made welcome and
inducted remotely.”
Louise Fowler
Non-Executive Director
Q
Q
Q
5. Have there
been any
disappointments?
Staff were disappointed that they
could not take part in the equity
raise but appreciate that this
was due to confidentiality and
regulations and a large number
of staff participate in the Assura
Share Incentive Plan.
Q
6. What other
improvements
would staff
welcome?
Staff would like more frequent
and better clarity on how the
business is doing overall and
better ongoing communications
between teams about general
workload and larger projects.
They tell us we can always
do better at communicating
how performance-related pay
is calculated, and relates to
business outcomes.
1. Do you think
the Voice feel
they add value?
Yes I think they do. They tell
me that the Voice is making a
big difference and getting good
engagement from colleagues.
They felt there is an open and
trusting culture and they are
able to raise concerns with ExCo,
and to share with colleagues, the
actions that are taken as a result.
I am very grateful to them, and
their colleagues, for what they
are doing and agree that they
are making a big difference.
Q
2. How has
hybrid working
addressed both
employee and
business needs?
The Voice tell me that overall,
it’s seen as working well and the
flexibility is valued. Earlier in the
year there was a sense that some
people are often in the office
whilst there are others who
seldom come in but there was
an understanding that there may
be good reason for this, especially
with the COVID-19 situation at that
time. As the work from home
guidance changed, staff were
encouraged to spend at least two
days in the office to benefit from
face-to-face collaboration and
this has helped with team morale.
The business is working to address
practical issues such as noise and
facilitating hybrid teams meetings.
3. There have
been a number
of new starters
in lockdown.
Has the induction
process been
different?
Our new team members are
complimentary about how they
have been made welcome and
inducted remotely. However,
they are feeling “new again”
when they come into the office
and are embarrassed that there are
people they don’t know or haven’t
met. There may be a time, next
year, to find a way to introduce
people to each other more widely
and share what everyone does.
Q
4. What issues
have been raised
in the year and
how has the
business
responded?
The Voice tell me that colleagues
have welcomed the new finance
system and improvements in
facilities management. There is a
new intranet which it is hoped will
store all important information in
one place. Staff are getting used
to hybrid working and grateful
for the help with work from home
equipment and upgrading to
peoples’ Wi-Fi.
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Assura plc Annual Report and Accounts 2022
Strategic reportGovernanceFinancial statementsAdditional information 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, maintains 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
Emma Cariaga, Sam Barrell and Noel
Gordon were appointed in May 2021 and
their contribution to the Board has been
exceptional. I would personally like to thank
them for embracing their roles and for the
support and oversight they have provided
during the year, particularly in mentoring
members of ExCo.
Remuneration Chair and designated
Non-Executive Director for employee
representation
Louise Fowler took over from Jenefer
Greenwood as chair of the Remuneration
Committee at the AGM but also retained
her role as designated Non-Executive
Director for employee representation. See
page 92 for an overview of her discussions
with the Voice during the year.
Induction of new Non-Executive Directors
Emma, Noel and Sam undertook 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:
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.
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.
NOMINATIONS COMMITTEE
REPORT
The Board believes that
a diverse workforce and
management team improve
the performance and culture
of the organisation.
Ed Smith CBE
Non-Executive Chairman
Committee members
Ed Smith CBE
(Committee Chair)
Jenefer Greenwood OBE
Jonathan Davies
Louise Fowler
Dr Sam Barrell CBE
Attendance*
2/2
0/0
2/2
2/2
2/2
* Out of the maximum possible meetings.
Additional attendees*
– Orla Ball – Company Secretary
– Jonathan Murphy – CEO
– Emma Cariaga
– Noel Gordon
* As appropriate.
Meetings in the year:
2
Terms of Reference
https://www.assuraplc.com/
investorrelations/shareholder-
information/sustainability-and-
corporate-governance-policies
94
Assura plc Annual Report and Accounts 2022
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.
We are working with Warren and Partners
to build the pipeline of ethnically diverse
Board talent and are in the process of
inviting an ethnically diverse Board fellow
who would benefit from corporate
experience to sit on the Board pro bono
(save for expenses) for one year to gain
firsthand experience of a FTSE 250 Board
and receive mentoring from myself. They
will receive all Board papers and be fully
involved in Board discussions with the aim
of going on to secure a permanent FTSE 250
board appointment at Assura or elsewhere
at the conclusion of their fellowship.
Female representation on the Board
remains at 50% and the Group came 19th
for Women on Boards and in Leadership for
FTSE 250 companies and 6th for Women on
Boards and in Leadership in the FTSE 350
Real Estate Sector Rankings in the FTSE
Women Leaders Review, the successor
phase to the Hampton-Alexander Review.
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 activities to promote
equality and diversity can be found on
pages 61 but in summary this year we have:
– achieved Disability Confident Committed
Level 1 employer, implementing
appropriate policies particularly with
respect to recruitment;
– taken on four interns and five work
experience students at various points
during the year and provided a permanent
position to an intern from the 2020 cohort;
and
– continued to work with local schools
and universities in the region.
In the coming year, we intend to:
– work with our supply chain to develop
apprenticeship opportunities focused
on people from black, Asian or minority
ethnic communities;
– monitor supplier compliance with EDI
standards and developing an allyship
education programme focusing on disability,
ethnicity and sexual orientation; and
– take on two more apprentices; employ
two graduates; and extend our internship
and work experience programmes.
Outside world
The Board is consciously building a
common understanding of Assura’s outside
world, for example through inviting external
speakers to Board dinners and through
holding regular Board strategy days to
explore new insights and ideas. This has
helped the Board think widely about Assura’s
outside world and the opportunities arising
from the NHS reconfiguration.
Creating the future
The Board has appropriately supported
work on the strategy and focused ExCo
to prioritise investment decisions in line
with Assura’s purpose.
The Board has also ensured that it
effectively oversees strategy delivery
to ensure traction in the right areas.
Board team effectiveness
The strong relationship between the Chair
and CEO has continued to support a healthy
and collaborative climate on the Board.
Internal Board evaluation
The externally facilitated Board review in
2022 was again carried out by Weva Ltd – a
specialist board and leadership consultancy
which is also engaged in individual and
team coaching work for ExCo.
The Board has maintained a healthy
relationship with ExCo where support
is appreciated and challenge welcomed;
this has been supported by the newly
established mentor relationships between
NEDs and ExCo members.
The review followed the Board effectiveness
framework (“the Framework”) already in use
by the Board. The Framework is regularly
reviewed by the Board as part of the
internal Board evaluation process and is
used as the basis for annual self-evaluation
by the Board. This allows the Board to
identify any required changes in focus
or priority and to agree future actions
for Board effectiveness.
The Board demonstrates quality, collective,
decision-making for example around capital
raises in 2021 and major investment decisions.
Nurturing identity
The Board has worked hard to support
staff welfare and engagement through
the COVID-19 pandemic and The Voice staff
group has proved a valuable channel for
staff views.
Managing the present
The Board provides effective operational
leadership: monitoring and steering
performance against the current strategy
with appropriate, effective risk management
and assurance frameworks in place.
– taken part in the Mission include
programme as mentors or mentees
for peers in other businesses;
– received presentations on topics
including social mobility and the
changing EDI landscape;
– carried out an equality and diversity
survey (84% response rate), which
informed our priority areas of gender
equality and leadership;
– joined the Social Mobility Pledge,
Strengths highlighted by the Board review
Overall strengths
The Chair provides strong leadership and
creates a positive, constructive climate on
the Board. This has allowed the three new
NEDs to onboard smoothly, despite the
restrictions of remote working. The
collaborative climate also allows the
enlarged Board to benefit increasingly from
its diversity of experience and perspective.
committing to improve our outreach,
access and recruitment practices aimed
at levelling the playing field for people
from disadvantaged backgrounds
or circumstances;
The Board is highly engaged and
enthusiastic in its support of Assura’s
purpose and is ambitious in its approach
to operationalising the purpose through
implementation of its strategy.
The Board’s motivating clarity is providing
the necessary support, challenge and
oversight for ExCo to secure long-term,
purpose-led growth.
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Assura plc Annual Report and Accounts 2022
Strategic reportGovernanceFinancial statementsAdditional information Managing the Present
The Board is working with ExCo to finalise
an update of the KPI pack and ensure
alignment to the strategy.
The risk assurance process will also
be reviewed to ensure a formalised risk
assessment process and documentation
is in place in the context of the strategy.
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
23 May 2022
NOMINATIONS COMMITTEE REPORT
CONTINUED
Recommended actions from
the Board review
Outside world
It is appropriate to review the existing
stakeholder map, materiality assessment and
engagement strategy in light of the strategy.
This will include a competitor map and a
‘power map’ to support strategic advocacy.
Establishing two-way feedback with ExCo
on stakeholder interactions will enhance
the Board and ExCo shared understanding
of Assura’s outside world.
Creating the future
The Board capability map is being refreshed
against the strategy to include the three
new NEDs and to confirm the Board has
the capabilities it needs to oversee
strategy delivery.
The Board has commissioned a similar
capability map for ExCo to ensure that it
has the capabilities it needs to deliver the
strategy. The Board has also asked for
NomCo to confirm formal succession plans
for the Chair and SID, and for CEO and CFO
as part of business risk management.
Board team effectiveness
The Board will continue to invest in itself
as a team now that meetings in person are
possible – the recent Board dinners have
been a successful element of this and
relationships will continue to be built
through 1:1s and Board strategy days.
More formally, a review of the Board’s
existing purpose and legacy in the context
of Assura’s purpose and strategy will
provide clarity for all Board members.
The Board will also review its existing
self-evaluation process to ensure it is simple
to use and encourages reflection and action
around the Board’s continuous improvement.
Nurturing Identity
The Board has sought appropriate
assurance from ExCo that the company
culture will support the purpose and
strategy. The Board will also seek assurance
that the culture required to deliver the
strategy is clearly articulated and staff
actively engaged in the discussion
to embed desired behaviours.
As part of the discussion on Board purpose,
the Board will consider its role in supporting
a culture that will enable delivery of the
strategy. This role will include actively
nurturing the culture through conscious role
modelling of Assura’s values and behaviours.
96
Assura plc Annual Report and Accounts 2022
AUDIT COMMITTEE REPORT
The culture of the business
promotes a good discussion
of the risks faced and controls
in place.
Jonathan Davies
Chair of the Audit Committee
Committee members
Jonathan Davies
(Committee Chair)
Emma Cariaga
Louise Fowler
Noel Gordon
Jenefer Greenwood OBE
Attendance*
4/4
4/4
4/4
3/4
1/1
* Out of the maximum possible meetings.
Additional attendees*
– Deloitte LLP (auditor until May 2021)
– EY LLP (auditor from May 2021)
– CBRE, Cushman & Wakefield and
Jones Lang LaSalle as valuers
– KPMG LLP as internal auditor
– Ed Smith, CBE – Non-executive Chairman
– Jonathan Murphy – CEO
– Jayne Cottam – CFO
– Orla Ball – Company Secretary
– David Purcell – Investor Relations Director
– Owen Roach – Finance Director
* As appropriate.
Meetings in the year:
4
Terms of Reference
https://www.assuraplc.com/investor-
relations/shareholder-information/
sustainability-and-corporate-
governance-policies
97
Assura plc Annual Report and Accounts 2022
Dear shareholder
In my third 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 2022.
During the year, the Committee comprised
myself and three other Non-Executive
Directors, with Jenefer Greenwood joining
for the one meeting before her retirement as
Director. 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 2021
– Reviewed the external portfolio valuations
for the financial year ended 31 March 2021
– 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
– Reviewed the viability and going concern
statements and assumptions
– Reviewed the external auditor’s
performance, the use of Deloitte for
non-audit work and auditor independence
– Considered the recommended
appointments of EY LLP as auditor and
CBRE, Cushman & Wakefield and JLL
as property valuers
November 2021
– 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
March 2022
– 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
– Received an update on IT projects and
cyber risk
– Approved the draft viability statement
and assumptions used in modelling
– Received an update on cyber risk
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
2022 annual report and accounts were
reviewed at the May 2022 Audit Committee
meeting along with accounting papers in
respect of going concern, viability and our
joint venture with Modality, and including
a review of the report from EY in their first
year as auditor.
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.
February 2022
– Approved the agenda items and schedule
of Committee meetings for the upcoming
calendar year
Significant financial reporting matters
During the year, the Committee reviewed
the following significant financial reporting
judgements:
– Approved the terms of reference
for the Committee
– Reviewed the quarterly valuation
– Received an update on progress with
TCFD compliance and disclosures
– Reviewed cyber risk processes and actions
– Approved the treasury counterparties
– Reviewed accounting for the disposal
of Virgin Care investment
– Received an update on progress of actions
recommended by internal audit and
approved the processes to be reviewed
by internal audit this calendar year
– Valuation of investment properties,
including those under construction –
valuations and yields are discussed with
management and benchmarked against
comparable portfolios. Following the
tender of the valuation work during the
year, the three external valuers, CBRE,
Cushman & Wakefield and JLL, presented
and discussed their findings with the
Committee. EY separately discuss the
valuations and the assumptions they
are based on with the valuers.
Strategic reportGovernanceFinancial statementsAdditional information 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 2022, the previous auditor (Deloitte)
provided non-audit non-statutory services
in the form of a comfort letter on the
Sustainability Bond issuance and the newly
appointed auditor (EY) completed the
review of the interim report, both of these
services being closely related to assurance.
The Committee is satisfied that the
Company 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.
Effectiveness of external audit process
Following the completion of a competitive
audit tender in the prior year, the year
ended 31 March 2022 is the first audit
completed by EY, who have replaced
Deloitte as external auditor. The Committee
would like to thank Deloitte for their services
over the past 10 years.
The Committee assessed the effectiveness
of the external audit process, initially
reviewing and challenging the audit
planning memorandum prepared by EY
and then monitoring fulfilment of this plan.
The Committee received regular feedback
from management on the service provided
by EY, reviewed at an Audit Committee
and concluded that the external audit was
carried out efficiently and effectively with
objective, independent challenge, although
we note the late change in the results
announcement date for the additional
time requested by EY to complete internal
review procedures.
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
23 May 2022
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
is on page 80.
– 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 2022 report
and appears on page 80. The Committee
reviewed and challenged the various
assumptions adopted by management in
the exercise, including the period covered
by the viability statement. The Committee
continues to consider a five-year period to
be the most appropriate timespan in this
regard and believes other assumptions and
sensitivities applied are also appropriate.
– Revenue recognition – the Committee
considers this risk to be appropriately
addressed by the control environment
in place, and upgrades to the accounting
system in the current year have added
further automation to the calculations
in this area.
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 EY.
During the year this included the following:
– Consideration of the appropriate
accounting and disclosures around the
disposal of the investment in VirginCare,
concluding that the disclosures are
reasonable.
– Consideration of the current work
completed by management in respect
of TCFD, including appropriateness of the
disclosures. The Committee concluded
that the work completed by management
is proportionate, was appropriately included
within the existing risk management
systems, and the disclosures accurately
reflect the Group’s risks and opportunities
in this area.
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.
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
84. 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 the impact of
developments in Ukraine. 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 74 to 79.
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
situation in Ukraine in respect of cyber risk),
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 data integrity, acquisition
process and the finance system upgrade.
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
are in the process of being implemented.
The Committee has agreed that the
processes to be reviewed this calendar year
are data integrity, technology roadmap and
purchase to pay.
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.
98
Assura plc Annual Report and Accounts 2022
DIRECTORS’ REMUNERATION
REPORT
We received some extremely
useful feedback from investors
on our new policy.
Louise Fowler
Chair of the Remuneration Committee
Committee members
Louise Fowler
(Committee Chair)
Ed Smith CBE
Jonathan Davies
Dr Sam Barrell CBE
Jenefer Greenwood OBE
Attendance*
7/7
7/7
7/7
7/7
2/2
* Out of the maximum possible meetings.
Additional attendees*
– Jonathan Murphy – CEO
– Jayne Cottam – CFO
– Orla Ball – Company Secretary
– Emma Cariaga – Non-Executive Director
– Noel Gordon – Non-Executive Director
– Korn Ferry
* As appropriate.
Meetings in the year:
7
Terms of Reference
https://www.assuraplc.com/investor-
relations/shareholder-information/
sustainability-and-corporate-
governance-policies
99
Assura plc Annual Report and Accounts 2022
Annual Statement
Dear shareholder
On behalf of the Board, I am pleased
to introduce the Directors’ Remuneration
Report for the year ended 31 March 2022.
This is the first report since I took over as
Chair of the Remuneration Committee
following the AGM in July 2021.
This report is split into three parts:
– This Annual Statement – in which I explain
the work of the Remuneration Committee
during 2021/22 and the key decisions
taken during the year;
– The new Directors’ Remuneration Policy
– which sets the overall parameters for
the remuneration of the Directors; 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 2021/22 and information
on how we intend to implement the
Remuneration Policy for 2022/23.
At the AGM to be held on 6 July 2022,
you will be asked to approve the new
Remuneration Policy by way of a binding
resolution. As normal, there will be a
separate advisory resolution covering this
Annual Statement and the Annual Report
on Remuneration.
Remuneration for 2021/22
For the year under review the Remuneration
Committee applied the Remuneration Policy
approved by shareholders at the 2019 AGM.
As disclosed in last year’s Directors’
Remuneration Report, the Committee agreed
salary increases for both of the Executive
Directors with effect from 1 April 2021 up to
the limit set out in the Policy. This was done
to ensure appropriate levels of salary for a
team which had demonstrated exceptional
leadership and performance over a
challenging period, and to follow through
on our previously stated intention to move
the Directors’ salaries closer to the market
rate. Major shareholders were supportive
of our approach, both in feedback provided
during engagement and when voting on
remuneration at last year’s AGM. The
Committee was pleased to receive a 97%
vote in favour of the Directors’ Remuneration
Report resolution at the meeting.
As normal, we continued to operate the
annual bonus scheme and the Performance
Share Plan (“PSP”) during 2021/22. Early
in the financial year we granted an award
under the PSP which will vest following an
assessment of performance to the end of
the 2023/24 financial year. As disclosed last
year, the performance targets for this award
are based on a mixture of EPRA EPS, TSR
and ESG metrics.
After the end of the year, the Committee
considered the extent to which the
performance targets had been met for
the PSP award granted in 2019. This award
was based equally on TSR and EPRA EPS
performance, measured over a three-year
period, with full vesting requiring a very
challenging 15% per annum growth in both
TSR and EPS over the period. The overall
level of vesting for the award was 28.7%,
reflecting TSR performance around the
middle of the range and EPS growth
at just above threshold.
Jonathan Murphy has decided to donate
the proceeds of the sale of 10% of his
vested shares to the Assura Community
Fund (“ACF”). The Committee supports
his decision to make this donation and
has exercised its discretion to permit these
shares to be sold for this purpose. Other
than those required to be sold to pay tax
at the point of vesting, the remaining shares
remain subject to the standard two-year
post-vesting holding period for PSP awards.
Jayne Cottam’s vested shares are also
subject to this holding period.
The Committee also reviewed performance
against the annual bonus targets which
were set for 2021/22. A total of 70% of the
bonus was based on financial targets linked
to total accounting return, EPRA earnings
and growth in contracted rent roll. The final
30% was based on non-financial targets,
both personal objectives and key strategic
and operational goals linked in part to
Assura’s social impact strategy. Full details
of the specific targets are disclosed in the
Annual Report on Remuneration. The overall
bonus outcome for the year was 54% of
maximum for Jonathan Murphy and 56%
of maximum for Jayne Cottam. There was
a strong level of performance on total
accounting return. On EPRA earnings and
against the non-financial measures, there
was good performance, although not all
targets and objectives were met. Threshold
performance was not achieved for the
contracted rent roll metric.
The above remuneration outcomes are
consistent with the overall performance
of the Company during the year. With the
exception of disapplying the post-vesting
holding period for a portion of the CEO’s
vested PSP award, as explained above, no
discretion was exercised by the Committee
in respect of the level of bonus payout or
PSP vesting for 2021/22.
A new Directors’ Remuneration Policy
Ahead of the requirement to seek
shareholder approval for a new Remuneration
Policy at this year’s AGM, the Remuneration
Committee spent a considerable amount
of time during the financial year reviewing
the existing Policy and its operation.
We considered how best the Policy should
evolve over the next three-year period to
align with Assura’s strategy and growth
Strategic reportGovernanceFinancial statementsAdditional information DIRECTORS’ REMUNERATION REPORT
CONTINUED
expectations, to provide fair levels of
remuneration for the Executive Directors
(subject to the satisfaction of stretching
performance conditions), and to meet
the evolving governance expectations
of shareholders.
Our overall conclusion was that the broad
shape of the existing Policy should be
retained by continuing to offer a package
based on fixed remuneration, an annual
incentive scheme and annual grants of
shares under the PSP. Pay for performance
remains a key principle for Assura.
We also reflected on the growth and
development of the business since the
existing Policy was approved in 2019,
and the ongoing contribution of Jonathan
Murphy and Jayne Cottam to Assura’s
success. We agreed that the new Policy
needed to be capable of providing levels
of remuneration which fairly reflected the
leadership and performance of the
management team, and that we should
continue to make inroads into narrowing
the gap between their remuneration and
that of the broader market. This is not
because we feel we need to match market
median levels of reward; Assura has never
taken this approach, and we do not
propose to start now. We do, however,
believe that as Jonathan and Jayne are now
very well established in their roles, and as
they continue to progress and perform,
there is no reason why their pay should not
be brought closer to market levels. In taking
stock of comparator pay, we considered
benchmarking data for FTSE Real Estate
companies of a similar size to Assura,
supplemented with information on pay
across the market more broadly. To be clear,
the Committee does not set Directors’ pay
by an undue focus on benchmarking data;
it is instead used as one reference point
as context for our decisions.
As additional reference points, we also
considered the broader stakeholder
experience of recent years, wider workforce
remuneration issues and developments in
corporate governance.
Following our review, we developed a set
of proposals for a new Remuneration Policy
on which we sought the views of major
shareholders and the leading proxy
advisory and investor representative bodies
in a consultation exercise undertaken in late
2021 and early 2022. We received some
extremely useful feedback. Some investors
were very supportive of the direction of
travel, while others raised questions and
concerns on specific points. Following this
engagement, we agreed to make some
modifications to our original proposals
to take into account comments made.
The new Policy we are presenting to
shareholders for approval includes the
following key changes:
– Basic salary. The overall annual approach
to setting salary, and the factors taken into
account when considering any increase,
remain unchanged. We are, however,
removing the wording in the Policy which
limits any annual increase to a maximum of
7% above the general workforce increase.
This aligns the Policy with typical market
practice, where such a limit is not normally
specified. Salary increases to Directors will
usually be in line with the wider workforce
average, although we have agreed a
higher increase for the CFO for 2022/23,
for the reasons set out in the relevant
section below.
– Pension. In line with the commitment
made in last year’s Directors’ Remuneration
Report, the new Policy specifies that the
pension contribution rate for the Executive
Directors will be aligned with the rate for
the majority of the wider workforce with
effect from 1 January 2023. In practice,
this means that their current pension
of 13.5% of salary will reduce to 6%.
– Annual bonus. The bonus scheme will
continue to operate in a similar way to
previous years, but we are making three
key changes. First, the individual maximum
opportunity is being increased from 125%
to 150% of salary for the CEO, and from
100% to 135% of salary for the CFO. We
recognise these are significant increases.
The purpose is to help focus the
management team on continuing to drive
performance over each year of the next
three-year period as Assura seeks to take
advantage of multiple acquisition and
development opportunities. There is
real potential for a step change in
performance, which we hope to
incentivise and encourage. Appropriate
stretch will be built in to the bonus targets
each year corresponding to the higher
level of potential reward. For 2022/23,
as discussed below, we are putting a
slightly greater weighting on financial
performance and reducing the total
number of non-financial objectives
that will be assessed.
The increase in the bonus potential also
takes into account the fact that salary
levels are below median against the
market. Putting greater emphasis on the
performance-related bonus is considered
to link more closely to shareholder
interests than bringing salaries up to
market median levels. The new bonus
limits are in line with the market median for
the CEO and below median for the CFO.
The second bonus change is that the
amount payable for achieving on-target
performance is being reduced to 50%
of the maximum award level. This is
consistent with investor expectations.
The third change is to the deferral
arrangements. Under the current Policy,
bonus deferral only applies in certain
circumstances (i.e. where the shareholding
guidelines have not been met, or for any
bonus above 100% of basic salary). The
new Policy makes it clear that one-third of
any bonus will be deferred into equity, to
be held for a minimum of two years. This
results in a more consistent approach to
deferral between both Executive Directors
and ensures that alongside the higher
maximum bonus opportunity there is an
appropriate level of equity investment.
– Performance Share Plan. The PSP will
remain broadly unchanged: we are not
increasing the annual grant size or the
overall structure of PSP awards.
Performance will continue to be tested
over three years, with an additional
two-year post-vesting holding period.
One change we are making is that
the amount which vests for threshold
performance has been increased from 10%
to 25% of the maximum award. This is now
aligned with conventional market practice,
and thus helps us in offering a competitive
remuneration package.
– Corporate governance enhancements.
We are making three changes to bring
the Policy fully into line with good practice.
First, and in line with the commitment we
made last year, the new Policy introduces
post-employment shareholding guidelines
for the Executive Directors. These will
apply for a minimum period of two years
following cessation of employment, at the
lower of (1) the shareholding requirement in
place prior to departure and (2) the actual
shareholding at the point of departure.
Any shares purchased by the Directors
will be excluded from these arrangements,
as will any shares vesting prior to the date
of shareholder approval of the new Policy.
Second, we are clarifying that the
Remuneration Committee has the full
discretion to adjust the formulaic outcomes
of incentive schemes when considered
appropriate. Third, we have updated the
malus and clawback provisions in the
incentive schemes to ensure that they
reflect current good practice, principally
through the inclusion of additional “trigger
events” which may lead the Committee
to invoke the provisions.
Taken together, we believe that these
changes will mean we have a Remuneration
Policy which is fit for purpose for the next
three years.
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Implementation of the Remuneration
Policy for 2022/23
Assuming shareholders approve the new
Policy, we intend to implement it as follows.
The basic salary for Jonathan Murphy will
rise by 5% to £489,605, consistent with the
average increase for the wider workforce.
For Jayne Cottam, we have agreed a higher
increase of 8.8% to take her salary to
£285,000 for the year ahead. This is the first
phase of a proposed two-stage increase to
move her salary to £300,000, before any
additional cost of living increases. The
Remuneration Committee (and the Board
more widely) believes that this level of base
pay more fairly reflects Jayne’s contribution,
performance and continued development
in the CFO role. Jayne was appointed as
CFO in 2017 on a salary of £180,000, a very
low rate compared to the wider market but
reflective of Assura being Jayne’s first plc
CFO role. Instead of fixing the salary at the
market rate from the date of appointment,
the Committee determined to apply
increases as Jayne developed in the
role and demonstrated a strong level of
performance. Given Jayne’s contribution
and development, her salary has increased
in stages over recent years – but it remains
below lower quartile when compared with
the salaries paid to CFOs of similarly-sized
listed real estate companies. (The data
reviewed by the Committee showed a
lower quartile sector benchmark of
£312,000 and a median of £348,000.)
We have no intention of matching market
median, but the Committee feels that an
increase to £300,000 is warranted in the
interests of paying a fair amount to a CFO
who is now very well established in role,
and in the interests of retaining Jayne’s
talents for the longer term. Our initial plan
was to apply the £300,000 salary for
2022/23, but we agreed the two-stage
approach following comments received
from some shareholders and advisory bodies
during the consultation process on the
new Remuneration Policy. The second
stage of the increase will apply from 1 April
2023 and will be subject to the Committee
reconfirming its appropriateness in 12 months’
time. The Committee will also consider any
additional cost of living increase as deemed
appropriate at that time, and as awarded
to the wider workforce.
These increases and the resulting salary
are not considered excessive given the
positioning against the market. We do
appreciate that the increase for 2022/23
is beyond that awarded to the wider
workforce but in this specific case we
believe it to be entirely justified for the
reasons set out above.
Pension provision for the Executive
Directors will reduce from 13.5% of salary
to 6% with effect from 1 January 2023, in line
with the new Remuneration Policy.
The annual bonus scheme will operate
with a maximum opportunity of 150% of
basic salary for the CEO and 135% for the
CFO. In the case of the CFO, we are aware
that, coupled with the salary increase set
out above, this leads to a significant
increase in potential remuneration. The
Committee is comfortable that this is wholly
appropriate given the role played by the
CFO and the need to offer a level of pay
which is more fairly reflective of her
contribution and responsibilities.
The financial performance metrics used in
previous years – EPRA earnings, contracted
rent roll and total accounting return – will
remain unchanged, although each will have
an equal weighting of 25%. This results in a
small increase (from 70% to 75%) of the total
bonus which is payable for the achievement
of financial performance conditions,
and a corresponding reduction in the
non-financial element. For the coming year,
this puts greater emphasis on certain of our
key financial performance indicators and, as
noted above, appropriate stretch has been
built in to the targets to reflect the higher
level of potential bonus. We have also taken
the opportunity to revise our approach to
assessing non-financial performance: the
number of objectives have been reduced,
and there will be clear, tangible outcomes
expected for each objective. Full details of
the performance targets for all elements of
the bonus scheme will be disclosed in next
year’s Directors’ Remuneration Report.
The PSP award to be granted this year
will again be over shares with a face value
of 150% of basic salary. The performance
conditions will be similar to those used in
recent years. One-third of the award will
depend on EPRA EPS growth, which
remains a key measure of our long-term
financial performance. A further third will
be based on TSR, a measure of particular
importance for shareholders. For the EPS
element, we have decided that vesting will
occur on a range of between 5% per annum
growth (for threshold payout) to 10%
per annum growth (for maximum). For TSR,
the range will be between 5% and 12.5%.
In both cases, the maximum target is lower
than the 15% we have used for prior grants.
While we have high ambitions for the
business, there is a real concern that 15%
annual growth is an unrealistically stretching
target, and not reflective of internal or
external expectations of performance.
For example, consensus estimates of EPS
over the next few years suggest the market
is expecting annual growth of c. 6–7%.
With this in mind, and in order to offer
an incentive which is challenging but
achievable, the Committee believes that
lower maximum targets for both EPS and
TSR are appropriate. We will review the
range ahead of next year’s grant and may
apply different targets, depending on the
business circumstances at the time.
The final third of the PSP award will again
relate to ESG, reflecting the centrality of the
SixBySix social impact strategy to Assura’s
business and investment case. One half of
the ESG portion of the award will require
further progress in the proportion of the
portfolio receiving an EPC performance
rating of B or higher. The other half will be
a fully disclosed, quantifiable new metric
which assesses the extent to which
in-house development schemes meet the
best practice standards set in our new Net
Zero Carbon Design Guide (which will be
published Summer 2022). An ultimate goal
of the business – as set out in one of the
SixBySix pledges – is for all developments
to be net zero, but this will take some time
to achieve given the long-term nature of
the process of design and construction.
The new metric rewards management for
ensuring that net zero design is central to as
many new developments as possible over
the coming period. This is an important
indication of Assura’s commitment to
sustainability and for making a step change
in design and construction over a relatively
short space of time. Full details of the
specific performance targets are set out
in the Annual Report on Remuneration.
The Committee continues to believe that
a PSP award based on a mixture of financial,
market and ESG measures provides a
suitably balanced approach for assessing
different strands of performance over the
next three-year period.
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Strategic reportGovernanceFinancial statementsAdditional information DIRECTORS’ REMUNERATION REPORT
CONTINUED
UK Corporate Governance Code
The Committee is mindful of the principles
and provisions of the UK Corporate
Governance Code. We believe that our
approach to remuneration is fully compliant
with the principles set out in the Code,
given the clear link between incentives
and the delivery of long-term strategy. The
Remuneration Policy and its implementation
remain consistent with the six factors set
out in Provision 40 of the Code:
– Clarity – our Policy is well understood
by the management team and has been
clearly articulated to our shareholders,
proxy advisers and investor representative
bodies. Full disclosure of the Policy and
its implementation is provided in this
Directors’ Remuneration Report;
– 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. Although there
are multiple performance metrics used in
the annual bonus scheme and PSP, all are
linked to strategic objectives and are
clearly understood internally;
– Risk – our Remuneration Policy is
The Code quite rightly places an emphasis
on the importance of engaging with key
stakeholders on remuneration issues.
As noted above, I consulted with major
shareholders during the year on the terms
of the new Directors’ Remuneration Policy
and our implementation plans for 2022/23.
The feedback received from investors on
our proposals was very helpful, and we
made some modifications to our original
plans in response. The Committee will
continue to engage with shareholders
where appropriate as we implement the
Policy over the next three-year period.
In my additional role as the designated
Non-Executive Director for engagement
with the workforce, I have also had
discussions with The Voice, the body which
includes a representative sample of Assura
colleagues. This engagement covered a
wide variety of topics. In relation to
executive remuneration, I explained the
recent decisions taken by the Committee
and the rationale for the new Remuneration
Policy. Among other things this included
explaining the context within which
Directors’ remuneration is set and the need
to ensure that the packages on offer to the
most senior executives within the business
are suitably reflective of their responsibilities
of leading a company the size of Assura.
designed to ensure that inappropriate
risk-taking is discouraged and will not
be rewarded. This is done through (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),
(iii) the Committee’s ability to override the
formulaic outcome of incentive schemes,
and (iv) the malus/clawback provisions
in place;
In line with the Code, the Committee
considers Directors’ pay in the context
of wider workforce remuneration, and also
reviews pay policies across the organisation
as a whole. We remain of the view that the
approach for Directors is appropriate in the
context of the wider employee perspective.
Although the CFO has received an
exceptional salary increase for 2022/23, as
explained above, this is for reasons specific
to her role. For the year ahead, and in
recognition of rising inflation, the average
salary increase across the workforce is 5.0%.
All permanent employees continue to
participate in an annual bonus scheme
which pays out subject to performance
conditions based on a mix of financial
and personal targets. There is also a
comprehensive – and competitive –
benefits package for all employees. While
it is not considered appropriate to roll out
participation in the PSP throughout the
organisation, equity is provided to certain
senior staff in the form of restricted shares
and we encourage colleagues to
participate in the all-employee Share
Incentive Plan (“SIP”), which was launched
last year. An additional award of free shares
was made to all eligible employees during
the financial year under review.
– 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
the business performs against targets that
directly underpin the delivery of 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.
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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 121, alongside
the supporting detail as required by the
relevant regulations. There has been a small
reduction in the ratio this year, primarily
reflecting lower total remuneration for the
CEO when compared with the prior year.
A key explanatory factor behind the ratio
is that the CEO’s pay includes amounts
relating to his participation in the annual
bonus and PSP, and his incentive
opportunities are the highest in the
organisation, reflective of his position and
standard practice. As noted above, annual
bonuses are standard throughout the
Company and while PSP participation
is relatively limited, other equity-related
reward is provided. The Committee is
comfortable that remuneration for the CEO
is appropriate in the context of pay levels
across the Company as a whole.
We were not compliant with two areas
of the Code during 2021/22, namely the
requirement for pension provision for
Directors to be aligned with that for the
wider workforce, and for a policy on
post-employment shareholding
requirements to be established. As
explained above, these matters have been
addressed as part of the new Directors’
Remuneration Policy and as such these
issues have fallen away.
Concluding remarks
2021/22 has been a busy year for the
Committee, particularly given the work
undertaken in developing the new
Remuneration Policy. We hope you will
agree that the new Policy will help ensure
that executive remuneration is fully aligned
with the business objectives for the coming
years, is consistent with the expectations of
shareholders and is appropriately retentive,
competitive and incentivising. We look
forward to your support at the AGM for the
new Policy and for the separate advisory
report on remuneration. Ahead of this,
I would be delighted to receive any
feedback or comments you may have
on our approach during 2021/22 and our
plans for 2022/23. I can be contacted via
the Company Secretary.
Louise Fowler
Chair of the Remuneration Committee
23 May 2022
REMUNERATION AT A GLANCE
What our Executive Directors earned during 2021/22
The following table provides a summary single total figure of remuneration for 2021/22. Further details are set out in the Annual Report
on Remuneration.
£000
Jonathan Murphy
Jayne Cottam
Salary
466
262
Pensions
63
35
Benefits
15
14
Bonus
315
147
LTIs
194
109
Other
3
3
Total
1,055
570
How our Executive Directors will be paid in 2022/23
A summary of how the Committee intends to operate the new Remuneration Policy for 2022/23 is as follows:
Component
Basic salary
Pension allowance (% of salary)
Annual bonus (% of salary)
Annual bonus deferral
Annual bonus metrics
PSP (% of salary)
PSP performance conditions
Post vesting holding period
Shareholding guidelines (% of salary)
Post-employment shareholding
guidelines
Jonathan Murphy
£489,605
(Increased by 5% from 1 April 2022)
Jayne Cottam
£285,000
(Increased by 8.8% from 1 April 2022)
13.5% (until 31 December 2022); 6% (from 1 January 2023)
135%
150%
One-third of any bonus payable must be invested into Assura shares which must be held
for a minimum of two years
25% total accounting return, 25% EPRA earnings, 25% total contracted rent roll,
25% key non-financial/strategic objectives
150%
33% TSR, 33% EPS and 33% key ESG measures
Two years
300%
200%
Apply for a minimum of two years at the lower of (1) the shareholding requirement in place
prior to departure and (2) the actual shareholding at the point of departure
Remuneration Scenarios for 2022/23
The charts on page 112 show how total pay for the Executive Directors varies under four different performance scenarios: Minimum; Target;
Maximum; and Maximum with share price growth.
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Strategic reportGovernanceFinancial statementsAdditional information DIRECTORS’ REMUNERATION POLICY
Introduction
The Directors’ Remuneration Policy sets
the framework for the remuneration of the
Chairman, Executive Directors and Non-
Executive Directors. It has been prepared
in line with the relevant legislation for UK
companies. The Policy will be presented
to shareholders for approval by way of a
binding vote at the AGM scheduled to take
place on 6 July 2022. Subject to shareholder
approval, the Policy will formally apply from
the date of the AGM although in practice
its provisions will apply from the start of
the 2021/22 financial year on 1 April 2022.
The current intention is that the Policy will
remain in place for three years.
Payments to Directors and payments for
loss of office can only be made if they are
consistent with the terms of the approved
Remuneration Policy. The Committee will
be required to seek shareholder approval
for an amendment to the Policy if it wishes
to make a payment to Directors which is
not envisaged by the approved Policy.
Development of the Remuneration Policy
The Policy replaces the Policy approved
by shareholders at the AGM in 2019.
In developing the new Policy, the
Remuneration Committee undertook
a detailed review of the 2019 Policy and
considered Assura’s strategic development,
market trends and changes in corporate
governance best practice and investor
expectations. The Committee reviewed
benchmarking data prepared by its external
advisers to assess the level of Executive
Director remuneration relative to the
wider market.
As part of the review, the Committee
considered various potential changes to the
2019 Policy and developed a set of proposals
which were the subject of a consultation
exercise with major shareholders in late
2021 and early 2022. In light of the feedback
received, the Committee agree to make
a number of amendments to its initial
proposals before finalising the Policy for
which shareholder approval will be sought
at the AGM.
Conflicts of interest are managed through
the operation of existing Board and
Committee governance procedures. The
Remuneration 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 appoints external advisers to
provide independent advice on the Policy
and its implementation.
Overview of Remuneration Policy
The Policy is designed to align with Assura’s
values and behaviours, to encourage a
strong performance culture and to be
aligned with the interests of shareholders
and other stakeholders.
The Policy has been designed with the
following principles in mind:
– To reflect a remuneration structure
which supports the Company’s strong
performance culture and the key objective
of creating long-term shareholder value;
– To provide a fair level of reward to help
enable Assura to retain and recruit
Executive Directors with the capability
to lead the Company on its ambitious
growth path;
– To reflect principles of best practice; and
– To be transparent and easily understood
both internally and externally.
Changes to the Remuneration Policy
While the overall shape of the new
Remuneration Policy is similar to the Policy
approved by shareholders in 2019, a number
of changes have been made following the
Committee’s review. The main changes
are as follows:
– The Policy no longer specifies that
the maximum basic salary increase for
individuals recruited or promoted to the
Board is limited to 7% above the general
workforce increase. This provision is no
longer considered necessary, and
removing it will align the Policy with
common market practice.
– On pensions, the Policy confirms the
position set out in last year’s Directors’
Remuneration Report, namely that the
contribution rate for the Executive
Directors will fall from 13.5% of basic salary
to the rate payable to the wider workforce
(currently 6%) by the end of December
2022. Any new Executive Director will be
appointed on the wider workforce rate.
These changes bring this aspect of the
Policy into line with the UK Corporate
Governance Code and the expectations
of investors on this matter.
– The maximum annual bonus opportunity
under the Policy has been increased from
125% to 150% of basic salary. The limit
applicable to the CEO will be 150% of
salary (previously 125%) and the limit for
the CFO will be 135% of salary (previously
100%). These increases will help to focus
the management team on continuing to
drive the performance of the business
over the coming years as Assura seeks to
take advantage of multiple acquisition and
development opportunities. They also
help narrow the pay gap with the wider
market in a situation where the Directors’
basic salaries are at below-median levels
(and below lower quartile in the case of
the CFO). The Committee has a
preference for increasing the
performance-related elements of
remuneration rather than focusing solely
on basic pay.
– The proportion of the annual bonus which
is paid for on-target performance has
been reduced to 50% of the maximum
opportunity, to align with investor
expectations.
– The Policy specifies that one-third of
any bonus payable must be invested into
Assura shares which must be held for a
minimum of two years. This simplifies the
current arrangements, whereby the extent
of bonus deferral depends on the extent to
which shareholding guidelines have been
met and the size of the bonus. The new
framework is market standard and aligns
the approach for both Executive Directors.
– Under the Performance Share Plan (PSP),
the amount which vests for meeting
threshold performance targets has been
increased from 10% of the award to 25%.
This is consistent with conventional market
practice for schemes of this nature.
– We have clarified that the two-year
post-vesting holding period which applies
to PSP awards made to Directors will
continue to apply to those who leave
employment with Assura. This brings the
Policy into line with investor guidance on
this matter.
– In line with the commitment made in last
year’s Directors’ Remuneration Report,
we have introduced post-employment
shareholding guidelines for the Executive
Directors. These will apply for a minimum
period of two years following cessation
of employment, at the lower of (1) the
shareholding requirement in place prior
to departure or (2) the actual shareholding
at the point of departure.
– The malus and clawback provisions in
the Policy have been extended to reflect
developments in market practice since
the 2019 Policy was approved.
– The Policy clarifies that the Remuneration
Committee has the full discretion to adjust
the formulaic outcomes of incentive
schemes if considered appropriate. This is
in line with the UK Corporate Governance
Code and standard market practice.
– The Policy table for the Executive
Directors has been extended to include
reference to the all-employee Share
Incentive Plan (SIP), introduced during
the 2020/21 financial year.
In addition, a number of minor changes to
the wording of the Policy have been made to
clarify meaning and reflect standard practice.
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POLICY TABLE FOR EXECUTIVE DIRECTORS
Objective and link to strategy
Operation
Maximum opportunity
Performance measurement
and assessment
None.
Any increase in salary for
Executive Directors will
normally be in line with the
annual average increase
for the wider workforce,
although a different
approach may be taken
if considered appropriate.
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 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.
Fixed remuneration
Basic 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 Company’s strategy.
Benefits
The Company provides benefits
in line with market practice.
An Executive Director’s basic salary
is considered by the Committee on
appointment and then reviewed
periodically or when an individual
changes position or responsibility.
Any changes normally take effect
from 1 April each year.
When making a determination
as to the appropriate salary level,
the Committee first considers
remuneration practices within
the Group as a whole and, where
considered relevant, reviews
objective research on relevant
peer comparators.
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 basic 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.
Any reasonable business-related
expenses may be reimbursed (and
any tax thereon met if deemed to
be a taxable benefit).
Benefits payments are not included
in salary for the purposes of
calculating the level of participation
in incentive arrangements.
No recovery provisions apply
to benefits.
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Strategic reportGovernanceFinancial statementsAdditional information DIRECTORS’ REMUNERATION POLICY
CONTINUED
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.
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 the level of
participation in incentive
arrangements.
No recovery provisions apply.
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
based on the achievement of
performance targets.
Two-thirds of any bonus is payable
in cash. The remaining third must
be invested in shares which must
be held for a minimum period of
two years. If a Director voluntarily
donates a portion of his or her
bonus to the Assura Community
Fund, these deferral requirements
apply to bonuses net of any
such donations.
Bonus payments are not
pensionable, but are subject to
malus and clawback provisions.
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Assura plc Annual Report and Accounts 2022
Maximum opportunity
Until 31 December 2022,
the maximum employer’s
pension contribution is
13.5% of basic salary for the
current Executive Directors.
With effect from 1 January
2023, this reduces to the
contribution rate payable
to the wider workforce
(currently 6%).
For any new Executive
Director appointments to
the Board, pension provision
will be aligned with the
contribution rate payable
to the wider workforce.
The maximum annual bonus
for Executive Directors is
150% of salary. At threshold
performance 0% of maximum
can be earned. At on-target
performance, 50% of
maximum can be earned.
The CEO has a maximum
bonus opportunity of 150%
of salary and an on-target
level of 75% of salary.
The CFO has a maximum
bonus opportunity of 135%
of salary and an on-target
level of 67.5% of salary.
Performance measurement
and assessment
None.
Performance is measured over
one financial year.
Performance measures are set
annually based on a number of
financial and strategic measures
which may include (but are not
limited to) for example:
– delivering specific added
value activities;
– delivering financial goals;
– improving operational
performance; and
– developing the performance
capability of the team.
The Committee will determine
the weighting between specific
metrics each year. In any
specific year there will always
be a majority weighting on
financial measures.
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 the key short-term
objectives established at
the beginning of the year.
The Committee has the
discretion to adjust the bonus
outcome where it believes
this is appropriate, including
(but not limited to) where the
outcome is not reflective of the
underlying performance of the
business or the experience of
the Company’s shareholders,
employees or other
stakeholders.
Maximum opportunity
The PSP allows for awards
over shares with a maximum
value of 150% of basic 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.
Executive Directors are then
required to hold their vested shares
for a further two years (other than
shares which are required to be
sold to pay tax due at the point of
vesting, or shares which are sold for
the purposes of making a donation
to the Assura Community Fund).
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.
Malus and clawback 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 25% 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 once set,
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.
The Committee has the
discretion to adjust the
outcome of vesting where
it believes this is appropriate,
including (but not limited to)
where the outcome is not
reflective of the underlying
performance of the business
or the experience of the
Company’s shareholders,
employees or other
stakeholders.
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CONTINUED
Objective and link to strategy
Other
All-employee Share
Incentive Plan (SIP)
Provides employees with the
opportunity to participate in a
tax-advantaged share plan and
increases the level of alignment
with shareholders.
Operation
Maximum opportunity
Performance measurement
and assessment
Awards under the SIP may be
offered annually to all eligible
employees, including Executive
Directors.
Participants can receive awards
of free shares and also benefit from
additional matching shares in the
event of their voluntary investment
in additional shares.
Executive Directors can
participate in the SIP subject
to the limits prescribed under
the applicable legislation
governing this type of plan.
N/A
Shareholding requirement
To ensure alignment between
Executive Directors and
shareholders’ interests over
a long-term time horizon.
The Committee operates
shareholding guidelines to
encourage long-term share
ownership by the Executive
Directors.
The minimum shareholding
which should be built up
by an Executive Director
is equivalent to 200%
of basic salary.
N/A
Other than shares required to be
sold to pay tax due at the point of
vesting or PSP shares sold for the
purposes of making a donation
to the Assura Community Fund,
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.
Where an Executive Director
participated in the former
Value Creation Plan, the
requirement is 300% of salary.
Executive Directors must
also maintain a minimum
level of shareholding for
a period of at least two
years following cessation
of employment, at the
lower of (1) the shareholding
requirement in place prior to
departure and (2) the actual
shareholding at the point
of departure. Any shares
purchased by the Executive
Director are excluded from
these arrangements, as
are any shares which vest
prior to the date on which
this Remuneration Policy is
approved by shareholders.
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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 financial measures used for the annual
bonus plan in 2022/23 – EPRA earnings, contracted rent roll and total accounting return – are linked to key performance indicators which
are monitored closely by the Board. The non-financial objectives include a number of strategic and personal targets which are aligned
to the immediate priorities of the business.
The performance measures used in the PSP are selected to ensure that the Executive Directors are encouraged to deliver the Company’s
key long-term strategic goals and receive an appropriate level of reward. This helps ensure a clear and transparent alignment of interests
between executives and shareholders and the generation of sustainable long-term returns. The performance measures used for the PSP
award to be granted in 2022/23 are based on EPRA EPS (a key financial metric for the business), TSR (an indicator of the value created
for shareholders) and metrics linked to ESG and sustainability (integral parts of Assura’s SixBySix social impact strategy).
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 the relevant plan rules approved by shareholders. This includes (but is not limited to) the choice of
participants, the size of awards in any year (subject to the relevant limits in the Policy table), the determination of good or bad leavers and
the treatment of outstanding awards in the event of a change of control (subject to the provisions of the Policy). 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.
Malus and clawback
The Committee retains the power to reduce the annual bonus or the potential vesting of unvested 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 a material misstatement of financial results for any period;
– there has been an error or the use of inaccurate information in assessing the extent to which any performance condition was satisfied;
– there has been a material error in determining whether an award should be made, or the size and nature of the award;
– there are circumstances warranting the summary dismissal of an individual;
– an award holder has participated in or is responsible for conduct which resulted in significant losses, or the Company has evidence
of the award holder’s fraud, gross misconduct or dishonesty;
– an award holder has acted in a manner which has brought the Group into disrepute;
– an award holder was a good leaver by reason of retirement, but becomes employed in an executive role with another company; or
– there is a material failure of risk management or other corporate failure or occurrence of an event which is a serious health and safety event.
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 will take into account the various components
of remuneration as set out in the Policy table above.
Where an existing employee is promoted to the Board, the Policy set out in the Policy table will apply from the date of promotion
but there would be no retrospective application of the Policy in relation to existing incentive awards or remuneration arrangements.
Accordingly, prevailing elements of the remuneration package for an existing employee would be honoured and would form part of the
ongoing remuneration of the employee. These would be disclosed to shareholders in the following year’s Annual Report on Remuneration.
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CONTINUED
The table below summarises our key policies with respect to recruitment remuneration:
Element
Fixed remuneration
Policy
The salary level, benefits and pension entitlement will be set taking into account a number of factors
including market practice, the individual’s experience and responsibilities and the policies for salary,
benefits and pensions for existing Executive Directors as set out in the Policy table. Pension provision
for any new Executive Director will be aligned with the wider workforce contribution rate.
In certain circumstances the Committee may choose to recruit Executive Directors on a salary
below the market rate with a view to providing above average increases until an appropriate salary
positioning is achieved, subject to performance, experience and the individual proving themselves
in the role.
Performance-based variable
remuneration
A new Executive Director will be eligible to participate in the annual bonus plan and the PSP as set out
in the Policy table.
The maximum annual variable remuneration that an Executive Director can receive is 300% of basic
salary (i.e. the annual bonus plan maximum of 150% of basic salary plus the long-term incentive
maximum of 150%).
Share buyouts/
replacement awards
The Committee’s policy is not to provide buyouts as a matter of course. However, should the
Committee determine that the individual circumstances of a recruitment justify the provision of a
buyout, the value of any incentives that will be forfeited on cessation of a new Executive Director’s
previous employment will be calculated taking into account the following:
– the proportion of the performance period completed on the date of the individual’s cessation
of employment;
– the performance conditions attached to the vesting of these incentives and the likelihood of them
being satisfied;
– any other terms and conditions having a material effect on their value.
The Committee will then determine the value of the forfeited incentives and may then grant an award
up to the estimated equivalent value under the Company’s existing incentive plans. To the extent
that it was not possible or practical to provide the buyout within the terms of the Company’s existing
incentive plans, a bespoke arrangement would be used to grant up to the estimated equivalent value,
for example as permitted under Listing Rule 9.4.2 (2).
Relocation policy
In instances where the new Executive Director is required to relocate, the Company may provide
compensation to reflect the cost of relocation, at the discretion of the Remuneration Committee.
The level of any relocation package will be assessed on a case-by-case basis but will take into
consideration any incremental cost of living differences and/or housing and schooling costs.
Approach to service contracts and cessation of employment
Both of the Executive Directors have 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.
The service contracts are available for viewing at the Company’s registered office.
The service contract for any new Executive Director would be expected to include a similar notice period. No Director will be appointed
with a notice period that exceeds 12 months’ notice.
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.
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.
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Assura plc Annual Report and Accounts 2022
The table below sets out, for each element of remuneration, the Company’s policy on payment for loss of office in respect of Executive
Directors and any additional discretion available to the Committee.
Element
Fixed remuneration
Annual bonus plan
Performance Share Plan
The treatment of awards
granted under the PSP will be
governed by the plan rules, as
approved by shareholders.
Change of control
No special provisions.
On a change of control triggering the
termination of the Executive Director’s
contract, the Remuneration Committee’s
determination of the extent to which the
performance targets have been satisfied
will determine the annual bonus which
is earned.
The Committee will take into account such
other factors as it considers relevant in
relation to the bonus plan payment for the
year in which the change of control occurs.
This excludes a reorganisation or
reconstruction of the Company where
ownership does not materially change.
On a change of control (takeover,
reconstruction, amalgamation, winding
up or demerger), unvested awards will
vest subject to the application of the
performance conditions and subject to
time pro-rating. The Committee retains
a standard discretion to vary/waive time
pro-rating on a takeover if this is deemed
appropriate in the circumstances. There
will be compulsory rollover of awards
on an internal reconstruction.
Cessation of employment
There will be no compensation for normal resignation
or in the event of termination by the Company due to
gross misconduct. In other circumstances, Executive
Directors will be entitled to receive a payment in lieu
of notice.
Salary, benefits and pension contribution/salary
supplement will normally be paid over the notice
period. The Company has discretion to make a lump
sum payment on termination for the salary, value of
benefits and pension amounts payable during the
notice period. In all cases the Company will seek
to mitigate any payments due.
Where an Executive Director’s employment is
terminated after the end of a performance year but
before the payment is made, the individual may be
eligible for an annual bonus award for that performance
year subject to an assessment of performance achieved
over the period.
Where an Executive Director’s employment is
terminated during a performance year and provided
the individual is a “good leaver”, a pro-rata annual
bonus award for the period worked in that performance
year may be payable at the Remuneration Committee’s
discretion subject to an assessment of performance
achieved over the period. No award will be made in
the event of gross misconduct or other “bad leaver”
circumstances.
Normally, on termination of employment before the
end of the performance period, awards lapse in full.
However, in good leaver situations (e.g. death, injury,
ill-health, disability, retirement with the agreement
of the employer, sale of business/subsidiary, or
otherwise at the Committee’s discretion), awards
will not lapse but will instead continue and will vest
at the normal vesting date or (if the Committee so
decides in exceptional circumstances) on cessation of
employment, subject in both cases to satisfaction of the
performance conditions and a pro-rata reduction as the
Committee determines to reflect the shortened length
of service. In addition, to reflect standard practice,
the Committee can waive pro-rating in its discretion.
For leavers, awards granted following approval of this
Remuneration Policy will remain subject to any post-
vesting holding period although the Committee can
exercise discretion to waive this requirement if deemed
appropriate in the specific circumstances.
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Strategic reportGovernanceFinancial statementsAdditional information DIRECTORS’ REMUNERATION POLICY
CONTINUED
Remuneration for other employees
The Remuneration Committee takes into account the pay and conditions of other employees of Assura when setting the Remuneration
Policy for Directors and making decisions on the implementation of the Policy. The Company has a relatively small number of employees
and there are some obvious differences between Executive Director pay and the arrangements for other colleagues. However, there is
a strong focus on performance and on remuneration structures which are aligned with the specific needs of the business.
Although the levels of remuneration of the Executive Directors are higher than those of other employees, reflecting their specific roles
and responsibilities, the Committee is comfortable that in general there is an appropriate level of alignment between their remuneration
and the pay for other employees in the Company. Fixed remuneration is structured in a broadly similar way, and further alignment will
be achieved as the level of pension provision for the Directors reduces to the workforce contribution rate after 31 December 2022.
The Committee is satisfied that Assura offers an appropriately competitive benefits package for employees.
All permanent staff are eligible to participate in annual bonus arrangements, with bonus targets linked to a mix of financial and personal
objectives. Equity incentives (in the form of awards of restricted shares) are limited to more senior members of staff, reflecting standard
practice. However, all permanent employees are eligible to participate in the Share Incentive Plan (launched in 2020/21), and there has
been a good level of take-up to date.
Although the Committee takes into account the pay and conditions of other employees, the Company did not directly consult with
employees on the terms of the new Directors’ Remuneration Policy. However, the Chair of the Committee maintains regular contact with
employees in her role as the designated Non-Executive Director for workforce engagement. During the year she discussed executive
remuneration and the work of the Remuneration Committee with The Voice, Assura’s representative group of colleagues.
Consideration of shareholder views
The Committee takes the views of shareholders seriously and these views are taken into account in shaping the Directors’ Remuneration
Policy and its implementation. Shareholder views are considered when evaluating and setting remuneration strategy and the Committee
has a long-standing practice of consulting with major shareholders prior to any significant changes to the Policy. During the year under
review, the Committee engaged with shareholders on the proposals for the revised Remuneration Policy and its implementation and,
in response to comments received, made a number of changes to the proposed approach.
The Committee will continue to engage with major shareholders as required during the lifetime of the Policy.
External appointments
The Company’s policy is to permit an Executive Director to serve as a Non-Executive Director elsewhere when this does not conflict with
the individual’s duties to the Company, and where an Executive Director takes such a role they may be entitled to retain any fees which
they earn from that appointment.
Illustrations of application of the Remuneration Policy
The composition and total value of the Executive Directors’ remuneration package for the financial year 2022/23 at minimum, on-target
and maximum performance scenarios are set out in the charts below:
CEO
(£’000)
2,500
2,000
1,500
1,000
500
0
£1,296k
28%
28%
44%
£562k
100%
CFO
(£’000)
2,500
£2,398k
£2,030k
2,000
36%
36%
28%
1,500
1,000
500
0
£332k
100%
£738k
29%
26%
45%
£1,358k
£1,144k
37%
34%
29%
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
Assumptions used in determining the level of payout under given scenarios are as follows:
– Minimum – Basic salary at 1 April 2022, estimated 2022/23 benefits and pension (or cash allowance) calculated at 13.5% of salary for the
period to 31 December 2022 and 6% of salary for the period from 1 January 2023.
– 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 67.5% of salary for Jayne Cottam).
• Long-term incentive: consists of the midpoint level of vesting (50% vesting) under the PSP.
– Maximum – Based on the maximum remuneration receivable (excluding share price appreciation and dividends):
• Annual bonus: consists of maximum bonus of 150% of salary for Jonathan Murphy and 135% 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.
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Performance measurement
and assessment
None.
Maximum opportunity
Fees will take account of fee
levels of comparable listed real
estate companies and other
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).
Policy table – Non-Executive Directors
Objective and link to strategy
The Company sets fee levels
necessary to attract and retain
experienced and skilled Non-
Executive Directors to advise
and assist with establishing
and monitoring the strategic
objectives of the Company.
Operation
Fee levels are sufficient
to attract individuals with
appropriate knowledge
and experience.
The Board Chairman is
paid a fee reflective of the
responsibilities of the role.
Other 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 may also settle
any tax incurred in relation to
business expenses that are
deemed taxable.
The Company’s practice is to appoint the Non-Executive Directors, including the Chairman, under letters of appointment, terminable by
either party on three months’ notice. Their appointment is usually for a term of three years subject to annual re-election by the shareholders
at the Company’s AGM.
The letters of appointment for the current Non-Executive Directors are available for inspection at the Company’s registered office. The dates
of the letters of appointment are October 2017 for Ed Smith, June 2018 for Jonathan Davies, June 2019 for Louise Fowler and May 2021 for
Emma Cariaga, Noel Gordon and Sam Barrell.
Any new Non-Executive Director would be recruited on the terms set out in the Policy table above.
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Assura plc Annual Report and Accounts 2022
Strategic reportGovernanceFinancial statementsAdditional information 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 2022. 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 2022 AGM.
Consideration by the Committee of matters relating to Directors’ remuneration
The members of the Committee during 2021/22 were Jenefer Greenwood (Committee Chair and a member of the Committee until
6 July 2021), Louise Fowler (Committee Chair from 6 July 2021), Ed Smith, Jonathan Davies and (with effect from 1 May 2021) Sam Barrell.
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; 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 policies and packages for other senior members of staff and of the overall approach to remuneration across the
Company as a whole. The written Terms of Reference of the Committee are available on the Company’s website and from the Company
on request.
The Committee held 7 meetings during the year. Its activities during and relating to the financial year 2021/22 included:
– Review of the Directors’ Remuneration Policy and consultation with major shareholders on proposals for amendments to the Policy
and its implementation for 2022/23
– Consideration of objectives and targets for annual bonuses
– Consideration of annual pay awards and bonuses
– Consideration of targets and awards under the PSP
– Oversight of pay levels and incentives for the Executive Committee
– Preparing this report
Advisors to the Committee
Korn Ferry continued to serve as independent advisors to the Remuneration Committee during 2021/22, 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 £63,433 (ex VAT). Fees were determined based on the scope and nature of
the projects undertaken for the Committee. Korn Ferry also provided separate pay benchmarking data services to Assura during 2021/22.
During the year under review, Committee meetings were also attended by Jonathan Murphy (CEO), Jayne Cottam (CFO) and Orla Ball
(Head of Legal and Company Secretary). No Director was present when his or her own remuneration was discussed.
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
2021/22
2020/21
2021/22
2020/21
Salary
466
416
262
234
Pensions
63
56
35
32
Taxable
benefits
15
15
14
13
Bonus1
315
430
147
181
Long-term
incentives2,3
194
271
109
137
Other4
3
2
3
2
Total
1,055
1,190
570
599
Total fixed
544
487
311
279
Total
variable
511
703
258
320
1. In respect of 2021/22 payments, for Jayne Cottam a portion of bonus is deferred, as explained on page 116.
2. The long-term incentive value for 2021/22 reflects the outturn for the 2019 PSP which vests in 2022 at 28.7%. The vesting share price has been estimated at 65.35 pence,
based on the three-month average share price ended 31 March 2022. Further details are set out below. The long-term incentive value for 2020/21 has been restated
to reflect the value of the shares (inclusive of dividend equivalents) at the time of vesting, 3 July 2021. The share price on this date was 74.2 pence.
3. £3,950 and £2,220 of the 2021/22 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 for 2021/22.
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 2022
2021/22 annual bonus plan outcome
The bonus scheme for 2021/22 incorporated similar measures as used in the prior year. 80% of the bonus scheme was based on a mixture
of financial and business targets, with 10% of this depending on strategic and operational goals specific to each Executive Director. The
remaining 20% was based on personal objectives. The table below includes details of the specific targets and the extent to which they
were achieved.
For 2021/22 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
EPRA earnings
Growth in total contracted rent roll1
Strategic and operational goals
Personal objectives
Individual targets
Weight
Threshold
Maximum
Result
Bonus achieved
20%
25%
25%
10%
20%
5.4%
£82.5m
£315.7m
8.7%
£92.2m
£442.8m
11.2%
£86.2m
£292m
100%
60%
0%
See below
See below
1. The growth in total contracted rent roll is measured on the basis of the gross increase, which was £292 million. On a net basis, the total contracted rent roll increased
£240 million compared with March 2021, factoring in the passage of time on existing leases.
Strategic and operational goals (10% 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 the successful delivery of the strategic plan as agreed by the Board. Various
success indicators were set for this metric, including: identification and prioritisation of new opportunities, with timelines for delivery; the
continued development of core capabilities to support growth opportunities; strong delivery of the year three targets for the strategic plan
and evidence of momentum towards multi-year targets; and significant employee engagement and understanding of the strategic plan.
The Committee assessed Jonathan’s performance against these objectives after the year end and agreed that a bonus of 80% was
payable. In reaching this conclusion, the Committee determined that there had been a good level of progress against the strategic plan,
as evidenced in the disclosures in the Strategic Report. In particular, the Committee took into account the following key achievements:
– First acquisition made in Ireland with potential significant extension scheme for acquired asset. A pipeline of opportunities for acquisitions
and forward funding of new developments has been identified. Good engagement with the HSE and positive reception to Assura entering
the Irish market
– Strategic plan moving forward, with clear alignment to Assura’s we BUILD for health purpose
– Mental health strategy progressing well, with 7 units acquired for £48 million. Further opportunities being appraised
– Several flagship schemes have been secured in the year, which extend Assura’s activities and boost our development expertise and reach.
These include the West Midlands Ambulance Hub, the Northumbria Health and Care Academy, Coldharbour works in Brixton (let to King’s
College Hospital NHS Foundation Trust) and the Genesis Cancer Care Diagnostics and Treatment Centre on the site of the Royal Surrey
NHS Foundation Trust.
For Jayne Cottam, this element of the bonus was based on continuing to embed operational excellence within the business. Success
indicators for this metric included: creation and development of internal KPIs to measure and track financial and non-financial successes
of initiatives; ensuring the successful upgrade of the finance system; and improving the targets for the success of operational excellence.
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 there had been excellent progress in some areas and good progress in others. In particular,
the Committee took into account the following key achievements:
– Successful delivery of the finance system upgrade. This has improved efficiencies across the finance function and has enabled the finance
team to work in a streamlined way either from home or in the office and improvements to our processes have meant that the month end
close has been reduced
– Improvements in management information and integration of key data across the business, now being embraced by the whole team
– Operational excellence committee established, delivering key improvements across the business, driving efficiencies and improving
data flows
– Technology roadmap and review in progress with new projects underway to start in 2022/23.
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: in-year delivery of the SixBySix social impact strategy; the development of a digital offering
to support Assura’s core property solutions; continuing to demonstrate effective leadership of the Group; and further development of
the Executive Committee into a high-performing team. For Jayne Cottam, the objectives were linked to: the creation of a three-year data
strategy with a focus on data management and reporting; supporting the effective delivery of SixBySix, including a focus on sustainable
financing and increased targeting of ESG investors; and the further development of a high-performing finance team. For both Jonathan
and Jayne, success indicators were identified for each objective to help determine the extent of achievement.
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CONTINUED
The Committee assessed Jonathan’s performance against his objectives after the year end and agreed that a bonus of 85% was payable.
In reaching this conclusion, the Committee determined that, overall, Jonathan had continued to perform very strongly and had successfully
achieved many of the objectives set. In particular, the Committee took into account the following key achievements:
– Development of the we BUILD for health purpose and clear understanding from colleagues of the principles behind the approach
– Strong communication across the business of Assura’s overall strategy and business goals, with excellent internal engagement on the
business-critical social impact and sustainability strategies
– External recognition of Assura’s market-leading approach to social impact, with the company shortlisted for the EG and Property Week
Social Impact Awards
– Development of Net Zero Carbon Design Guide and detailed plans put in place for two trial schemes, with net zero design now set
to become a standard approach for the business
– Commencement of trials with three investee companies from PiLabs
– Review of Executive Committee membership and responsibilities, with changes made to further enhance effectiveness and ensure Assura
has the best leadership structure in place for future success.
The Committee also assessed Jayne’s performance and agreed that a bonus of 95% was payable. In reaching this conclusion, the
Committee determined that the year had been an exceptionally successful one for Jayne. In particular, the Committee took into account
the following key achievements:
– Driven increased acceptance and awareness across the business that successful data management and reporting is critical for future
success and will continue to be prioritised
– Power BI successfully implemented in property team, enabling easy access to full portfolio analysis and with new asset planning tools;
foundations laid for successful rollout across other parts of the business
– Materially increased timeliness of details of properties being available on internal systems
– Launch of £300m Sustainability Bond to supplement social bond launched in prior year, placing Assura at the forefront of sustainable
investing in the fixed income space
– Further development of ESG IR strategy, with outreach across a broader investor base, and increasing recognition of the benefits of Assura
as a key ESG investment
– Ongoing development of quality finance team and evolution of roles and responsibilities for key individuals to ensure continued success.
In total, the bonus payable to Jonathan Murphy in light of his performance against both the Group and personal objectives was equivalent
to 54% of the maximum payable (68% of his basic salary). This resulted in a bonus award of £314,746, payable in cash.
The bonus payable to Jayne Cottam in light of her performance against both the Group and personal objectives was equivalent to 56%
of the maximum payable (56% of her basic salary). This resulted in a bonus award of £146,758, 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 2022
The LTIP value included in the single figure relates to the awards granted to Jonathan Murphy and Jayne Cottam in July 2019. These awards
will vest in July 2022 based on the achievement of TSR and EPRA EPS performance measured to 31 March 2022.
Under the TSR performance target (50% of awards), which uses a sliding scale, 10% 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 2022:
Performance target
TSR (50% of awards)
Threshold TSR
5% p.a.
Maximum TSR
15% p.a.
Actual TSR
9.05% p.a.
Vesting % (max 100%)
46.5%
Under the EPRA EPS performance target (50% of awards), which uses a sliding scale, 10% 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 2022:
Performance target
EPRA EPS (50% of awards)
Threshold EPS growth
5% p.a.
Maximum EPS growth
15% p.a.
Actual EPS growth
5.10% p.a.
Vesting % (max 100%)
10.9%
As a result of TSR (46.5% of awards vest) and EPRA EPS (10.9% of awards vest) performance, the total vesting percentage is 28.7% and the
gross value of LTIP share awards expected to vest in 2022 is as follows:
Jonathan Murphy
Jayne Cottam
Share price as
31 March 20221
65.35p
65.35p
Proportion to vest
28.7%
28.7%
Shares to vest
266,346
149,693
Dividend equivalents2
30,262
17,008
Total shares to vest
296,608
166,701
Total
£
193,833
108,939
1. The share price is based on a three-month average to 31 March 2022.
2. Additional shares awarded in respect of dividend equivalents accrued over the vesting period. This represents the position as at 31 March 2022. 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 2022
Scheme interests awarded during the year (PSP)
The following awards were made under the PSP to the Executive Directors during the year:
Jonathan Murphy
Jayne Cottam
Date of grant
6 July 2021
6 July 2021
Basis of award
150% of salary
150% of salary
Face value of award £
699,435
393,101
End of performance period
31 March 2024
31 March 2024
1. The awards made on 6 July 2021 were granted using the average mid-market share price on the three dealing days prior to the date of grant (74.48 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
3 July 2018
2 July 2019
7 July 2020
6 July 2021
3 July 2018
2 July 2019
7 July 2020
6 July 2021
Awards
outstanding at
01/04/21
951,897
927,714
764,145
–
481,165
521,398
429,469
–
Awards
granted during
the year
–
–
–
939,091
–
–
–
527,793
Awards
vested during
the year1
322,8832
–
–
–
163,211
–
–
–
Awards
lapsed during
the year
629,014
–
–
–
317,954
–
–
–
Interests
outstanding at
31/03/22
–
927,714
764,145
939,091
–
521,398
429,469
527,793
Normal vesting/
exercise date
From 3 July 2021
From 2 July 2022
From 7 July 2023
From 6 July 2024
From 3 July 2021
From 2 July 2022
From 7 July 2023
From 6 July 2024
1. Excludes additional shares awarded in respect of dividend equivalents accrued over the vesting period.
2. Jonathan Murphy sold 36,540 of the shares which vested to make a contribution to the Assura Community Fund.
Outstanding PSP awards vest based on performance against 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. The performance targets in place
for the 2019 awards are summarised on the previous pages.
For the 2020 PSP awards, the following targets apply:
33% of awards
33% of awards
Absolute average
Vesting schedule
annual compound TSR
< 5% p.a.
5% p.a.
(% of the TSR part which vests)
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 vests)
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 31 March 2023
< 60%
60%
Between 60% and 80%
80%
Between 80% and 100%
100%
Vesting schedule (% of the EPC element which vests)
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.
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CONTINUED
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.
As explained in last year’s Directors’ Remuneration Report, for the 2021 PSP awards the Remuneration Committee applied the same
approach as for the 2020 awards, i.e. with one-third based on TSR, one-third on EPRA EPS and one-third on ESG measures (with one half of
the ESG element again based on EPC and the other half on a broader assessment of Assura’s social impact strategy). The specific TSR and
EPRA EPS targets are the same as those which apply to the 2020 awards, as set out above. The ESG measures are similar to those in place
for the 2020 awards, albeit with a slightly different set of targets for the EPC 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 vests)
0%
10%
Pro-rata between 10% and 50%
50%
Pro-rata between 50% and 100%
100%
The rationale for the different EPC targets for the 2021 awards was set out in last year’s Directors’ Remuneration Report.
The approach for assessing performance against the wider social impact strategy for the 2021 PSP awards is the same as that in place
for the 2020 PSP awards, as explained above.
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 Greenwood2
Jonathan Davies
Louise Fowler3
Sam Barrell4
Emma Cariaga4
Noel Gordon4
2021/22
2020/21
2021/22
2020/21
2021/22
2020/21
2021/22
2020/21
2021/22
2020/21
2021/22
2020/21
2021/22
2020/21
Basic
fees
158.1
155.8
10.8
40.1
40.7
40.1
40.7
40.1
37.3
–
37.3
–
37.3
–
Additional
fees1
–
–
2.4
9.1
18.4
18.1
6.8
–
–
–
–
–
–
–
Total
fees
158.1
155.8
13.3
49.2
59.1
58.2
47.5
40.1
37.3
–
37.3
–
37.3
–
Total
fixed
158.1
155.8
13.3
49.2
59.1
58.2
47.5
40.1
37.3
–
37.3
–
37.3
–
Total
variable
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1. Additional fees represent Senior Independent Director and Chair of Board Committee fees.
2. Jenefer Greenwood stepped down from the Board on 6 July 2021.
3. Louise Fowler was appointed as Chair of the Remuneration Committee with effect from 6 July 2021.
4. Sam Barrell, Emma Cariaga and Noel Gordon were appointed to the Board on 1 May 2021.
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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.
Shareholding and other interests at 31 March 2022
Director
Jonathan Murphy
Jayne Cottam
Ed Smith
Jonathan Davies
Louise Fowler
Sam Barrell
Emma Cariaga
Noel Gordon
Shares required
to be held
(% of salary)
300%
200%
–
–
–
–
–
–
Number of
shares required
to hold1
2,090,987
783,459
–
–
–
–
–
–
Number of
beneficially
owned shares2
2,604,870
428,553
100,026
213,360
14,706
29,411
–
–
SIP shares
5,917
5,917
–
–
–
–
–
–
Shareholding
requirement
met?
Yes
No
n/a
n/a
n/a
n/a
n/a
n/a
Total number
of scheme
interests3
2,630,950
1,478,660
–
–
–
–
–
–
1. Shareholding requirement calculation is based on the share price at the end of the year (66.9 pence at 31 March 2022).
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 117).
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.
Subsequent to the year end, Ed Smith, Sam Barrell and Louise Fowler have acquired 877 shares, 322 shares and 161 shares respectively
through their participation in the Company’s scrip dividend alternative. Jonathan Murphy and Jayne Cottam have each acquired an
additional 1,053 shares through their participation in the Share Incentive Plan.
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.
400
350
300
250
200
150
100
50
0
March
2012
March
2013
March
2014
March
2015
March
2016
March
2017
March
2018
March
2019
March
2020
March
2021
March
2022
Assura
FTSE All Share
FTSE Real Estate Investment Trusts
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CONTINUED
The table below shows the CEO’s remuneration packages over the past ten years:
Year
2021/22
2020/21
2019/20
2018/19
2017/18
2016/171
2016/171
2015/16
2014/15
2013/14
2012/13
Name
Jonathan Murphy
Jonathan Murphy
Jonathan Murphy
Jonathan Murphy
Jonathan Murphy
Jonathan Murphy
Graham Roberts
Graham Roberts
Graham Roberts
Graham Roberts
Graham Roberts
Single figure
£’0002
1,055
1,190
1,155
794
1,513
1,232
3,489
3,747
677
680
674
Bonus
(% of max)
54
83
47
61
84
93
–
71
90
95
100
LTI
(% of max)
29
34
64
32
100
100
100
100
–
–
–
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.
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)
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 Davies
Louise Fowler
Sam Barrell1
Emma Cariaga1
Noel Gordon1
Employees
Average per employee –
parent company2
Average per employee –
group
2021/22 vs 2020/21
2020/21 vs 2019/20
Salary/fees
% change
Taxable benefits
% change
Bonus
% change
Salary/fees
% change
Taxable benefits
% change
Bonus
% change
12.1%
12.1%
1.5%
(73.1)%
1.5%
18.4%
–
–
–
–
1.5%
2.5%
(26.8)%
(18.7)%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
5.3%
5.3%
1.8%
1.8%
10.4%
22.3%
–
–
–
–
0.44%
0.38%
84.5%
79.8%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
4.26%
1.42%
(17.01)%
4.3%
1.7%
5.5%
1. No comparative information provided for these Directors because they were appointed during 2021/22.
2. No employees (other than Directors) are directly employed by Assura plc.
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Assura plc Annual Report and Accounts 2022
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
2021/22
Total pay and benefits
Salary
2020/21
2019/20
Method
Option A
Option A
Option B
25th percentile
pay ratio
39:1
£27,053
£24,000
45:1
35:1
Median
pay ratio
19:1
£55,207
£40,600
22:1
21:1
75th percentile
pay ratio
12:1
£85,387
£63,266
15:1
15:1
1. The calculations of the pay for the employees at the different levels have been calculated as at 31 March 2022 for the 2021/22 figures, 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.
Option A was chosen for the pay ratio calculation for 2021/22 and 2020/21 as it ensures that the most accurate and up-to-date employee
pay information has been used. Option B was chosen for 2019/20 to ensure that the calculation was undertaken in the most efficient manner
possible at the time. 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 2021/22, 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.
There has been a small reduction to the median pay ratio for 2021/22 when compared with 2020/21. This reflects the single total figure
for the CEO for 2021/22 being lower than the prior year, resulting from a lower annual bonus payout and level of PSP vesting, as explained
earlier in this report. There has also been a small increase in the total pay and benefits of the employee identified at the median level of the
organisation in 2021/22 compared with 2020/21. The Committee is comfortable that the median pay ratio for 2021/22 is consistent with
Assura’s wider pay, reward and progression policies. These policies have not materially changed during the year under review. The pay
ratio continues to reflect the differentials between the CEO’s pay and others within the organisation, both in terms of salary and the other
components of remuneration, with a significant proportion of his total pay for the year again comprising the outcomes of performance-
related pay. 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.
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
2021/22
£m
2020/21
£m
7.6
80.4
6.5
73.6
% change
16.9%
9.2%
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 (2021 AGM)
Votes for
1,615,726,915
2,075,806,854
%
89.43
97.36
Votes against
190,877,698
56,304,860
%
10.57
2.64
Votes withheld
151,645
42,778
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Assura plc Annual Report and Accounts 2022
Strategic reportGovernanceFinancial statementsAdditional information ANNUAL REPORT ON REMUNERATION
CONTINUED
STATEMENT OF IMPLEMENTATION OF REMUNERATION POLICY FOR 2022/23
Executive Directors
Salary
As explained in the Annual Statement from the Chair of the Remuneration Committee, the Committee has agreed to increase the salaries
of the Executive Directors with effect from 1 April 2022. The increase for Jonathan Murphy is in line with the average increase for the wider
workforce. The increase for Jayne Cottam is the first stage of a proposed two-stage increase to move her salary to £300,000, before any
additional cost of living increases. The full rationale for this is set out in the Annual Statement from the Chair of the Committee.
The salaries with effect from 1 April 2022 are set out below:
Executive Director
Jonathan Murphy
Jayne Cottam
1 Apr 2021
salary
£
466,290
262,067
1 Apr 2022
salary
£
489,605
285,000
% change
5.0%
8.8%
Pension and benefits
Until 31 December 2022, Jonathan Murphy and Jayne Cottam will continue to receive payments in lieu of pension contributions equivalent
to 13.5% of basic salary. After this date, and in line with the new Directors’ Remuneration Policy, their contributions will reduce to the level
of pension contribution for the wider workforce (currently 6% of salary). Benefits will be provided in line with the Remuneration Policy.
Annual bonus
The maximum bonus opportunity for 2022/23 will be 150% of salary for Jonathan Murphy and 135% of salary for Jayne Cottam. Payment
for on-target performance will be 50% of the maximum bonus, i.e. 75% of salary for Jonathan and 67.5% of salary for Jayne.
The performance objectives under the annual bonus plan for 2022/23 will continue to relate to measures which are critical to Assura’s
strategy and will include a mixture of financial and non-financial goals. The three financial metrics are the same as those in place for
previous years, namely total accounting return, EPRA earnings and contracted rent roll. Each of these metrics will be weighted at 25%,
resulting in an increase (to 75%) in the total proportion of the bonus subject to financial measures. The remaining 25% will be based on
key non-financial metrics linked to specific ESG and strategic priorities for the business for the coming year. These targets have been
structured differently than in previous years, with a greater focus on the achievement of specific quantitative targets and with clear,
tangible outcomes expected for each measure.
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 at the start of the financial year. For all bonus metrics, full details of the actual
targets, performance achieved and awards made will be published in next year’s report.
In line with the new Directors’ Remuneration Policy, any bonus payable for 2022/23 will be subject to deferral requirements such that
a minimum of one-third of any bonus must be invested in shares which must be held for a period of at least two years.
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 TSR, EPRA EPS and key ESG performance targets are satisfied over the three-year period to 31 March
2025. These three measures are equally weighted, with the ESG component further separated into two different elements. As explained in
the Annual Statement from the Chair of the Remuneration Committee, some changes have been made to the specific targets for this year’s
grant. In addition, and in line with the new Directors’ Remuneration Policy, the amount vesting for threshold performance will be set at
25%, in line with common market practice.
33% of awards
33% of awards
Absolute average annual compound TSR
< 5% p.a.
5% p.a.
Between 5% and 12.5% p.a.
12.5% p.a. or more
Vesting schedule
(% of the TSR part which vests)
0%
25%
Pro-rata between 25% and 100%
100%
EPRA EPS growth
< 5% p.a.
5% p.a.
Vesting schedule
(% of the EPS part which vests)
0%
25%
Between 5% and 10% p.a. Pro-rata between 25% and 100%
100%
10% p.a. or more
The final 33% of these awards, relating to ESG, is split into two halves. For the first half, vesting will again depend on the proportion of
buildings receiving an EPC rating of B or higher, as set out below. These targets reflect our expectation that a higher proportion of the
overall portfolio will have an EPC rating of B or above by the end of March 2025 than March 2024. We have therefore increased the targets
beyond those set for the PSP award granted in 2021.
Proportion of portfolio receiving an EPC rating of B or higher by 31 March 2025
< 50%
50%
Between 50% and 70%
70%
Between 70% and 100%
100%
Vesting schedule (% of the EPC element which vests)
0%
25%
Pro-rata between 25% and 50%
50%
Pro-rata between 50% and 100%
100%
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Assura plc Annual Report and Accounts 2022
For the second half of the ESG component, vesting will be based on the extent to which Assura is making progress with net zero
developments, as set out below. This is a new metric which reflects the priority Assura is attaching to net zero carbon developments,
as set out in the SixBySix social impact strategy. Our ultimate goal is for all developments to be net zero, but this will take some time
to achieve given the long-term nature of the process of design and construction. The metric has been structured as follows:
Proportion of in-house development schemes commencing in the year
to 31 March 2025 which have been designed to hit Best Practice
as defined in Assura’s Net Zero Carbon Design Guide
< 50%
50%
Between 50% and 75%
75%
Vesting schedule (% of the Net Zero element which vests)
0%
25%
Pro-rata between 25% and 100%
100%
The Net Zero Carbon Design Guide will shortly be available on Assura’s website. “Best Practice” as outlined in the Guide is defined as
follows:
Upfront carbon (A1-A5)
Embodied carbon
Operational energy
Best Practice as defined in the NZC Design Guide
475 kg CO2e/sqm
750 kg CO2e/sqm
50 kWhr/sqm/yr
RIBA 2030 Climate Challenge target
475 kg CO2e/sqm
750 kg CO2e/sqm
55 kWhr/sqm/yr
As indicated above, we are aiming for consistency with the RIBA Climate Challenge target, albeit we are targeting achievement in
2025 rather than 2030. To give an additional indication of the challenge involved in meeting these targets, the design for the Polegate
development in East Sussex (where we have been testing net zero options) currently incorporates upfront carbon of 600 kg CO2e/sqm,
embodied carbon of 780 kg CO2e/sqm and operational energy of 50 kWhr/sqm/yr. Bringing the majority of new developments to a level
well beyond this by 2025 is considered by the Committee to represent an appropriately stretching target for this element of the PSP.
At the end of the performance period we will also disclose the extent to which the performance targets were met and the resulting level
of vesting. 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 2022:
Non-Executive Director
Chairman fee
Non-Executive Director base fee
Additional fee for chairing of Audit and Remuneration Committee
Additional fee for Senior Independent Director
2021/22
£’000
158.1
40.7
9.2
9.2
2022/23
£’000
166.0
42.7
9.7
9.7
% change
5.0
5.0
5.0
5.0
The 5% increase in the fees is in line with the salary increases for the Executive Directors and the average increase for the wider workforce.
By order of the Board
Louise Fowler
Chair of the Remuneration Committee
23 May 2022
123
Assura plc Annual Report and Accounts 2022
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 2022. The Corporate Governance
Statement set out on page 82 forms part
of this report.
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.
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 165.
As at 31 March 2022, the average number of
days taken by the Group to pay its suppliers
was 10 days (2021: 20 days). Further details
of how the Group manages and monitors
relationships with suppliers, and our
supplier policies can be found on page 62.
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 22 to 27, which are incorporated
in this report by reference.
Future developments
Details of future developments are
discussed on page 24 in the CFO Review.
Going concern
The Company’s going concern statement
is on page 80.
Long-term viability statement
The Company’s viability statement is on
page 80.
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.
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 2021 and October 2021
dividend were both paid as a PID. Details of
the Group’s dividend policy can be found
in the CFO review on page 25.
Donations
In the year to 31 March 2022, Assura donated
£190,000 to charities (2021: £2,608,700),
with all activity through the Assura
Community Fund which is administered by
the Cheshire Community Foundation, and
no contributions were made for political
purposes (2021: nil). More details of our
chosen charities can be found on our
website and pages 56 to 59.
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 and the
Share Incentive Plan.
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 60 to 61 and in the Corporate
Governance section on pages 92 to 93.
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 61.
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Assura plc Annual Report and Accounts 2022
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 2022, there
were 2,948,359,637 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 317,384 Ordinary Shares via scrip in
respect of the April 2022 dividend paid and
a further 7,887,822 Ordinary Shares as part
consideration for the acquisition of a medical
centre. As at 23 May 2022, the number of
Ordinary Shares in issue is 2,956,564,843.
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.
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 2021 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 2022, the EBT held 444,253
Ordinary Shares (2021: 213,319) 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.
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 2022. The
principal meeting location will be confirmed
in the AGM notice.
Provisions have been made for investors
to observe the AGM and ask questions via
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 124
and 125 and the Strategic Report on pages
1 to 80 were approved by the Board and
signed on its behalf.
Orla Ball
Company Secretary
23 May 2022
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.
GHG emissions and energy usage
Details of greenhouse gas emissions from
employee and head office activities can
be found on page 70. The annual quantity
of energy consumed from activities for
which the company is responsible is
240,209 kWh (2021: 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 2023.
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.
Interests in voting rights
As at 23 May 2022, the Company had
been notified of the following interests
in accordance with Disclosure Guidance
and Transparency rules 5:
31 March
2022
Percentage
of Ordinary
Shares
10.11
5.42
23 May
2022
Percentage
of Ordinary
Shares
10.64
<5
5.37
n/a
5.07
5.47
Name of shareholder
Blackrock, Inc.
abrdn plc
Resolution Capital
Limited
Schroders plc
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.
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.
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Assura plc Annual Report and Accounts 2022
Strategic reportGovernanceFinancial statementsAdditional information DIRECTORS’ RESPONSIBILITY STATEMENT
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;
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.
– Provide additional disclosures when
By order of the Board
Orla Ball
Company Secretary
23 May 2022
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.
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Assura plc Annual Report and Accounts 2022
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ASSURA PLC
Opinion
In our opinion:
– Assura plc’s Group financial statements and Parent Company financial statements (the financial statements) give a true and fair view of the
state of the Group’s and of the Parent Company’s affairs as at 31 March 2022 and of the Group’s and the Parent Company’s profit for the year
then ended;
– the financial statements have been properly prepared in accordance with UK adopted international accounting standards; and
– the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements of Assura plc (the “Parent Company”) and its subsidiaries (the “Group”) for the year ended
31 March 2022 which comprise:
Group
Consolidated Income Statement for the year ended 31 March 2022
Consolidated Balance Sheet as at 31 March 2022
Consolidated Statement of Changes in Equity for the year ended
31 March 2022
Consolidated Cash Flow Statement for the year ended 31 March 2022
Related Notes 1 to 24 to the financial statements, including
a summary of significant accounting policies
Parent Company
Company Income Statement for the year ended 31 March 2022
Company Balance Sheet as at 31 March 2022
Company Statement of Changes in Equity for the year ended
31 March 2022
Company Cash Flow Statement for the year ended 31 March 2022
Related Notes A to G to the financial statements including
a summary of significant accounting policies
The financial reporting framework that has been applied in their preparation is applicable law and UK adopted international accounting
standards.
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 believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We are independent of the Group and Parent in accordance with the ethical requirements that are relevant to our audit of the financial
statements in the UK, including 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 prohibited by the FRC’s Ethical Standard were not provided to the Group or the Parent Company and we remain
independent of the Group and the Parent Company in conducting the audit.
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 the following procedures:
– We obtained management’s going concern assessment including the cash forecast and covenant calculations for the going concern
period through to 31 May 2023 and tested these for arithmetical accuracy;
– We challenged the appropriateness of the key assumptions in management’s forecasts including growth in rental income by comparing this
to historical rental growth. We also considered whether there could be any material impact of climate change in the going concern period;
– We obtained the additional scenarios prepared by management including the extreme downside scenario, which included suspending
planned bond/equity raises;
– We assessed the plausibility of management’s downside scenarios by corroborating the key assumptions to third party data for indicators
of contradictory evidence, for example, valuation reports, main competitors’ performance records, and industry and company-specific
impacts of external factors such as of COVID-19, cyber-attacks, climate change, Brexit, and the conflict in Ukraine;
– We applied further sensitivities where appropriate to stress test the liquidity of the Group over the going concern period including
performing a reverse stress test to identify and understand what factors would lead to the group breaching the financial covenants during
the going concern period. Reverse stress testing showed that performance would need to reduce in excess of independently forecast
worst case scenarios in order to breach financial covenants;
– We obtained the agreement for all borrowings and reviewed the nature of the facilities, repayment terms, covenants and attached conditions.
We assessed their continued availability to the Group throughout the going concern period and checked completeness of covenants
identified by management;
– We reperformed the covenant calculations using management’s forecasts and evaluated whether the covenants would be met during the
going concern period, considering the assessment of our chartered surveyors of the likelihood of future falls in property values which may
result in future breaches of loan to value covenants;
– We considered the quantum and timing of mitigating factors and discretionary expenditure available to management, the most significant
of which relates to the reduction of spend on acquisition of properties. We assessed the extent to which these are within their control;
– We read board minutes from meetings held during the year to identify any other matters that may impact the going concern assessment;
– We reviewed the disclosures in the financial statements in relation to going concern in order to assess the appropriateness of the
disclosures and conformity with reporting standards.
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Assura plc Annual Report and Accounts 2022
Strategic reportGovernanceFinancial statementsAdditional information INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ASSURA PLC
CONTINUED
Our key observations
– The Group has a cash balance of £243.5m, undrawn RCF of £125.0m and total borrowings of £1,257.0m as at 31 March 2022. There is significant
available liquidity via the RCF and expected cash generated from contracted rentals will enable the Group to continue to meet its liabilities
as they fall due through the going concern period.
– The Group has significant headroom on covenants and the likelihood of breaching the covenants during the going concern period
is considered remote due to the Group’s strong balance sheet position, and the high degree of predictability in rental income due
to contractual arrangements.
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 the period
through to 31 May 2023.
In relation to the Group and Parent Company’s reporting on how they have 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. However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the Group’s ability
to continue as a going concern.
Overview of our audit approach
Audit scope
– We performed an audit of the complete financial information of 18 components and audit procedures
on specific balances for a further 43 components.
– The components where we performed full or specific audit procedures accounted for 100% of adjusted
profit, 100% of revenue and 96% of total assets.
Key audit matters
Materiality
– Valuation of completed investment property.
– Revenue recognition on rental income.
– Overall Group materiality of £31.17m which represents 1% of total assets.
An overview of the scope of the Parent Company and Group audits
Tailoring the scope
Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determine our audit scope for
each company within the Group. Taken together, this enables us to form an opinion on the consolidated financial statements. We take into
account size, risk profile, the organisation of the Group and effectiveness of group-wide controls, changes in the business environment and
other factors such as recent Internal audit results when assessing the level of work to be performed at each company.
In assessing the risk of material misstatement to the Group financial statements, and to ensure we had adequate quantitative coverage
of significant accounts in the Group financial statements, of the 101 reporting components of the Group, we selected 61 components
covering entities within the United Kingdom, which represent the principal business units within the Group.
Of the 61 components selected, we performed an audit of the complete financial information of 18 components (“full scope components”)
which were selected based on their size or risk characteristics. For the remaining 43 components (“specific scope components”), we
performed audit procedures on specific accounts within that component that we considered had the potential for the greatest impact
on the significant accounts in the financial statements either because of the size of these accounts or their risk profile.
The reporting components where we performed audit procedures accounted for 100% (2021: 100%) of the Group’s adjusted profit,
100% (2021: 100%) of the Group’s revenue and 96% (2021: 100%) of the Group’s total assets. For the current year, the full scope components
contributed 64% (2021: 100%) of the Group’s adjusted profit, 83% (2021: 100%) of the Group’s revenue and 88% (2021: 100%) of the Group’s
total assets. The specific scope components contributed 36% (2021: 0%) of the Group’s adjusted profit, 17% (2021: 0%) of the Group’s
revenue and 8% (2021: 0%) of the Group’s total assets. The audit scope of these components may not have included testing of all
significant accounts of the component but will have contributed to the coverage of significant accounts tested for the Group.
Of the remaining 40 components that together represent 4% of the Group’s total assets, none are individually greater than 3% of the
Group’s total assets. For these components, we performed other procedures, including review of Group wide entity level controls over
these components, including the level of CEO, CFO and other Group management oversight, analytical review procedures over these
components and enquiry of management about unusual transactions in these components to respond to any potential risks of material
misstatement to the Group financial statements.
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Assura plc Annual Report and Accounts 2022
The charts below illustrate the coverage obtained from the work performed by our audit teams.
Adjusted profit
Revenue
Total assets
17%
4%
8%
36%
64%
83%
88%
Full scope components
Specific scope components
Full scope components
Specific scope components
Full scope components
Specific scope components
Other procedures
Changes from the prior year
The predecessor auditor performed full scope procedures over all components within the Group. We have scoped the Group audit based
on materiality, resulting in the scoping and coverage presented above.
Involvement with component teams
All audit work performed for the purposes of the audit was undertaken by the Group audit team.
Climate change
There has been increasing interest from stakeholders as to how climate change will impact Assura plc. The Group has determined that
the most significant future impacts from climate change on its operations will be meeting regulatory requirements for minimum energy
efficiency, the risk to buildings from climate-related events such as flooding and temperature rise affecting water supply temperature, and
the risk of failure to appropriately address climate-related expectations of stakeholders which could result in lower investor demand. These
are explained on pages 72 to 73 in the required Task Force for Climate related Financial Disclosures and on pages 74 to 79 in the principal
risks and uncertainties, which form part of the “Other information,” rather than the audited financial statements. Our procedures on these
disclosures therefore consisted solely of considering whether they are materially inconsistent with the financial statements or our
knowledge obtained in the course of the audit or otherwise appear to be materially misstated.
As explained in Note 2 of the Consolidated Financial Statements (pages 138 to 140), management considered the impact of climate change
when preparing the Group Financial Statements. The Group did not identify any climate risk that would impact the carrying values of the
Group’s assets or have any other impact on the financial statements.
Our audit effort in considering climate change was focused on ensuring that the effects of material climate risks disclosed on pages 72
to 73 have been appropriately considered in the preparation of the Group Financial Statements, particularly in the valuation of investment
properties. We also challenged the Directors’ considerations of climate change in their assessment of going concern and viability and
associated disclosures.
Key audit matters
Key audit matters are those matters that, in our professional judgment, 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 our opinion thereon, and we do not provide a separate opinion on these matters.
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Assura plc Annual Report and Accounts 2022
Strategic reportGovernanceFinancial statementsAdditional information Key observations
communicated to the
Audit Committee
We concluded
that the valuation
of investment
properties is
reasonably stated.
We concluded that
revenue on rental
income has been
appropriately
recognised in
accordance with
the requirements
of IFRS 15.
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ASSURA PLC
CONTINUED
Risk
Valuation of investment
property (£2,667.3m,
PY comparative £2,404.3m)
Refer to the Audit Committee
Report (page 97); Accounting
policies (pages 138 to 140);
and Note 9 of the
Consolidated Financial
Statements (page 145 to 146)
The valuation of investment
properties requires
significant judgement and
estimation by Management
and their external valuers.
Any input inaccuracies or
unreasonable bases used
in these judgements (such
as in respect of estimated
rental value or yield profile
applied) could result in a
material misstatement of
the income statement and
balance sheet. There is also
a risk that Management may
influence the significant
judgements and estimates
in respect of property
valuations in order to meet
market expectations or
bonus targets.
Revenue recognition on
rental income (£126.5m,
PY comparative £112.0m)
Refer to the Audit Committee
Report (page 97); Accounting
policies (page pages 138
to 140); and Note 3 of the
Consolidated Financial
Statements (page 141)
Market expectations
and revenue profit-based
targets may place pressure
on Management to distort
revenue recognition. This
may result in overstatement
or deferral of revenues to
assist in meeting current
or future targets or
expectations, through
the use of manual topside
journals or the incorrect
treatment of accrued
and/or deferred income.
Our response to the risk
– We obtained the valuation reports for the investment property portfolio directly
from the third party valuers and agreed these to the general ledger.
– We walked through the Group’s controls over data used in the valuation
of the property portfolio and management’s review of the valuations.
– We engaged our internal valuations specialists to support the following
audit procedures:
• Meeting with the external valuers, CBRE, JLL and Cushman Wakefield (“CW”),
to understand the methodology used and the key basis for assumptions applied
such as the NIY and the WAULT. We assessed the competence of the valuers and
reviewed the engagement agreements with these specialists.
• Assisting the audit team in determining criteria (such as yield) to categorise the
full investment property portfolio into low risk, high risk and significant risk
assets. This was then used by the audit team to calculate an expected range for
the year-end valuation of low and high-risk assets based on market data. We also
disaggregated the high-risk assets by region and calculated an expected range
for the valuation of these assets based on market data specific to each region.
• The audit team applied various criteria to identify assets with the potential to
be significant risk assets. These were then investigated further by the audit team,
with those determined to be significant risk assets provided to the EY valuations
specialists who independently determined an expected range for each of
these properties.
• Providing expected yields ranges for each property. This was utilised in our
analytics tool to compare an expected value by property to the actual value
at the year end and the audit team investigated outliers which did not match
our expectation.
– We tested a sample of input data provided by the group to CBRE, CW & JLL since
this forms the basis of the portfolio valuation. This included agreeing a sample of
input data back to underlying lease information such as lease agreements and
subsequent rent review documentation. We verified that this information had been
provided to the valuers and management had not overridden the property values
provided by the third-party valuers.
– We tested a sample of additions and disposals in the year and also tested a sample
of transfers into Investment Property to completion certificate. We also tested a
sample of Assets Held for Sale at year-end, checking that they met the criteria to
be disclosed as such.
– We performed data analytics over the whole population of leases in the Group’s
portfolio. This involved:
• Using the data held in Assura’s property management system to set
an expectation of rental income for every lease in every property.
• Setting a tolerance threshold to assess whether rental income is in line
with expectations.
• Analysing and comparing our expectation to actual rental income recognised
in the general ledger.
• Investigating differences between expectation and actual rental income
that exceed our tolerance threshold.
• Testing a sample of input data provided by agreeing a sample of input data
from the system back to underlying lease information.
– We reviewed manual journals posted to revenue, including those relating to back
rent, and corroborated a sample of journals to supporting documentation.
– We performed substantive analytical review procedures over deferred income.
This included taking into consideration the number of tenants year on year and
calculating an average deferred income per tenant to be used as the base for
our expectation for the current year.
– We tested a sample of deferred income balances to supporting documentation
such as lease agreements and invoices and performed a recalculation of the
deferred income balance. This included a focus on manual correction journals
where we corroborated the transaction amount through to supporting
documentation and recalculated the net deferred income amount for
that property.
– We performed analytical review procedures over accrued income. This included
disaggregating the balance by property and comparing the balance year on year
then investigating any significant/unusual movements.
– We agreed a sample of input data from the Property Management system back
to underlying lease information such as lease agreements and subsequent rent
reviews to address the completeness and accuracy of the data utilised in our
substantive analytical procedures.
– We performed cut-off testing over trade debtors around the balance sheet date
to check transactions were recorded in the correct period.
– We tested a sample of accrued income balances to supporting documentation
(such as lease agreement) and performed a recalculation of the balance.
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Assura plc Annual Report and Accounts 2022
The predecessor auditor did not include a key audit matter in relation to revenue recognition on rental income. In the current year, this risk
has been identified as a key audit matter following the change in auditor.
Our application of materiality
We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified misstatements on the audit
and in forming our audit opinion.
Materiality
The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to influence the economic
decisions of the users of the financial statements. Materiality provides a basis for determining the nature and extent of our audit procedures.
When establishing our overall audit strategy, we determined a magnitude of uncorrected misstatements that we judged would
be material for the financial statements as a whole. We determined that an asset-based measure would be the most appropriate basis
for determining overall materiality given that the key users of the Group’s financial statements are primarily focused on the valuation
of the Group’s assets. Based on this, we determined that it is appropriate to set the overall materiality for the Group at £31.17 million
(2021: £30.6 million), which is 1% of total assets (2021: 2% of net assets). We apply overall materiality to all balances relating to investment
properties, properties under development, loans & borrowings and equity.
We have determined that for other account balances not related to investment properties, properties under development, loans and
borrowings or equity, a misstatement of less than overall materiality for the financial statements as a whole could influence the economic
decisions of users. We believe that it is most appropriate to use a profit-based measure as profit is also a focus of users of the financial
statements. We have determined that materiality for these areas should be based upon 5% of adjusted profit (2021: 5% of EPRA earnings),
being £4.33m (2021: £3.3m).
We determined materiality for the Parent Company to be £28.86 million (2021: £1.64 million), which is 2% of equity (2021: 2% of net assets,
capped at 50% of lower level Group materiality).
During the course of our audit, we reassessed initial materiality with the only change in the final materiality from our original assessment
at planning being to reflect the actual reported performance of the group in the year. This resulted in an overall materiality of £31.17m
compared with our initial assessment at the planning stage of £30.75m and a specific materiality of £4.33m compared with our initial
assessment at the planning stage of £4.25m. Materiality for the Parent Company was also reassessed, resulting in materiality of £28.86m
compared with our initial assessment at the planning stage of £28.67m.
Performance materiality
The application of materiality at the individual account or balance level. It is set at an amount to reduce to an appropriately low level
the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality.
On the basis of our risk assessments, together with our assessment of the Group’s overall control environment, our judgement was that
performance materiality was 50% (2021: 70%) of our planning materiality, namely £15.59m (2021: £21.42m) for overall materiality and £2.17m
(£2.31m) for specific materiality. We have set performance materiality at this percentage due this being our first year as auditor of Assura plc.
Audit work at component locations for the purpose of obtaining audit coverage over significant financial statement accounts is undertaken
based on a percentage of total performance materiality. The performance materiality set for each component is based on the relative
scale and risk of the component to the Group as a whole and our assessment of the risk of misstatement at that component. In the current
year, the range of performance materiality allocated to components was £0.43m to £1.30m (2021: £0.01m to £1.8m).
Reporting threshold
An amount below which identified misstatements are considered as being clearly trivial.
We agreed with the Audit Committee that we would report to them all uncorrected audit differences in excess of £1.6m (2021: £1.5m),
as well as audit differences in excess of £0.2m (2021: £0.2m) that relate to our specific testing of the other account balances not related
to investment properties, properties under development, loans and borrowings or equity. These thresholds are set at 5% of planning
materiality. We also agreed to report differences below that threshold that, in our view, warranted reporting on qualitative grounds.
We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed above and in light of other
relevant qualitative considerations in forming our opinion.
131
Assura plc Annual Report and Accounts 2022
Strategic reportGovernanceFinancial statementsAdditional information INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ASSURA PLC
CONTINUED
Other information
The other information comprises the information included in the annual report set out on pages 1 to 80, including the Strategic Report
and Governance section, 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 this 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 the other information, we are required to report that fact.
We have nothing to report in this regard.
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.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and the Parent Company and its environment obtained in the course of the
audit, we have not identified material misstatements in the Strategic Report or the Directors’ Report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if,
in our opinion:
– 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 and the part of the Directors’ Remuneration Report to be audited are not in agreement with the
accounting records and returns; or
– certain disclosures of Directors’ remuneration specified by law are not made; or
– we have not received all the information and explanations we require for our audit
Corporate Governance Statement
We have reviewed the Directors’ statement in relation to going concern, longer-term viability and that part of the Corporate Governance
Statement relating to the Group and Company’s compliance with the provisions of the UK Corporate Governance Code specified for our
review by the Listing Rules.
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 or our knowledge obtained during the audit:
– Directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any material uncertainties
identified set out on page 80;
– Directors’ explanation as to its assessment of the Company’s prospects, the period this assessment covers and why the period is
appropriate set out on page 80;
– Director’s statement on whether it has a reasonable expectation that the group will be able to continue in operation and meets its liabilities
set out on page 80;
– Directors’ statement on fair, balanced and understandable set out on page 126;
– Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on pages 74 to79;
– The section of the Annual Report that describes the review of effectiveness of risk management and internal control systems set out
on page 98; and;
– The section describing the work of the Audit Committee set out on page 97.
Responsibilities of Directors
As explained more fully in the Directors’ Responsibilities Statement set out on page 126, 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 and 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.
132
Assura plc Annual Report and Accounts 2022
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.
Explanation as to what extent 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 irregularities, including fraud. The risk of not detecting a material misstatement due to fraud
is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or
intentional misrepresentations, or through collusion. The extent to which our procedures are capable of detecting irregularities, including
fraud is detailed below.
However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the company
and management.
– We obtained an understanding of the legal and regulatory frameworks that are applicable to the group and determined that the most
significant are those that relate to the reporting framework (UK adopted international accounting standards, UK Companies Act, Listing
Rules), REIT, EPRA and tax legislation.
– We understood how Assura plc is complying with those frameworks by making enquiries of management, those charged with governance,
internal audit, those responsible for legal and compliance procedures and the Company Secretary. We corroborated our enquiries through
our review of board minutes and papers provided to the Audit Committee and attendance at all meetings of the Audit Committee.
– We assessed the susceptibility of the Group’s financial statements to material misstatement, including how fraud might occur by meeting
with individuals from various parts of the business to understand where it considered there was a susceptibility to fraud. We considered the
programmes and controls that the Group has established to address the risks identified, or that otherwise prevent, deter or detect fraud,
and how senior management monitors those programmes and controls. Where the risk was considered to be higher, we performed audit
procedures to address each identified fraud risk or other risk of material misstatement. These procedures included those on revenue
recognition and investment properties detailed above and the testing of journals, and were designed to provide reasonable assurance
that the financial statements were free from material fraud and error.
– Based on this understanding we designed our audit procedures to identify non-compliance with such laws and regulations that could
give rise to a material misstatement in the financial statements. Our procedures involved journal entry testing, with a focus on consolidation
journals and journals indicating large or unusual transactions based on our understanding of the group; enquiries of Group management,
those charged with governance, legal counsel, and internal audit; and testing as described above. In addition, we completed procedures
to conclude on the compliance of the disclosures in the Annual Report and Accounts with the requirements of the relevant accounting
standards, UK legislation and the UK Corporate Governance Code 2018.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website
at https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Other matters we are required to address
– Following the recommendation from the Audit Committee we were appointed by the Company to audit the financial statements
for the year ending 31 March 2022 and subsequent financial periods
– The period of total uninterrupted engagement including previous renewals and reappointments is 1 year, covering the year ending
31 March 2022.
– The audit opinion is consistent with the additional report to the Audit Committee.
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.
Jamie Dixon (Senior statutory auditor)
for and on behalf of Ernst & Young LLP, Statutory Auditor
Manchester
23 May 2022
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Assura plc Annual Report and Accounts 2022
Strategic reportGovernanceFinancial statementsAdditional information CONSOLIDATED INCOME STATEMENT
For the year ended 31 March 2022
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
19
5
21
6
6
2022
Capital and
non-EPRA
£m
4.7
(4.7)
–
–
69.4
0.3
–
–
–
69.7
–
69.7
EPRA
£m
132.2
(5.7)
126.5
(11.7)
–
–
(0.7)
0.4
(28.4)
86.1
0.1
86.2
3.1p
Total
£m
136.9
(10.4)
126.5
(11.7)
69.4
0.3
(0.7)
0.4
(28.4)
155.8
0.1
155.9
5.6p
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
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.
134
Assura plc Annual Report and Accounts 2022
CONSOLIDATED BALANCE SHEET
As at 31 March 2022
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
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
2022
£m
2021
£m
9
10
8
21
11
12
9
13
14
15
16
14
15
17
17
7
7
7
7
2,751.9
15.2
0.5
3.8
0.6
2,772.0
243.5
28.6
76.4
348.5
3,120.5
44.9
0.1
30.1
75.1
1,244.4
5.4
6.0
1,255.8
1,330.9
1,789.6
294.8
918.5
231.2
345.1
1,789.6
60.7p
60.7p
60.7p
60.7p
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
The financial statements were approved at a meeting of the Board of Directors held on 23 May 2022 and signed on its behalf by:
Jonathan Murphy
CEO
Jayne Cottam
CFO
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Strategic reportGovernanceFinancial statementsAdditional information
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 March 2022
1 April 2020
Profit attributable to equity holders
Total comprehensive income
Issue of Ordinary Shares
Issue costs
Dividends
Employee share-based incentives
31 March 2021
Profit attributable to equity holders
Total comprehensive income
Issue of Ordinary Shares
Issue costs
Dividends
Employee share-based incentives
31 March 2022
Note
17
17
18
17
17
18
Share capital
£m
241.3
–
–
24.2
–
1.6
0.1
267.2
Share premium
£m
595.5
–
–
161.8
(4.3)
10.1
–
763.1
Merger reserve
£m
231.2
–
–
–
–
–
–
231.2
Retained earnings
£m
234.4
108.3
108.3
–
–
(73.6)
0.1
269.2
–
–
26.9
–
0.6
0.1
294.8
–
–
155.7
(4.7)
4.4
–
918.5
–
–
–
–
–
–
231.2
155.9
155.9
–
–
(80.4)
0.4
345.1
Total equity
£m
1,302.4
108.3
108.3
186.0
(4.3)
(61.9)
0.2
1,530.7
155.9
155.9
182.6
(4.7)
(75.4)
0.5
1,789.6
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Assura plc Annual Report and Accounts 2022
Note
20
17
17
16
16
16
16
11
2022
£m
139.3
(25.0)
1.4
0.4
(21.5)
94.6
(241.8)
(63.7)
15.1
(3.5)
(293.9)
182.6
(4.7)
(75.4)
(20.0)
315.9
–
(0.1)
(2.1)
396.2
196.9
46.6
243.5
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
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 March 2022
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
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Strategic reportGovernanceFinancial statementsAdditional information NOTES TO THE ACCOUNTS
For the year ended 31 March 2022
1. Corporate information and operations
The Company is a public limited company, limited by shares, incorporated and domiciled in England and Wales, whose shares are publicly
traded on the main market of the London Stock Exchange.
With effect from 1 April 2013, the Group has elected to be treated as a UK REIT. 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
UK-adopted international accounting standards (IFRS).
In concluding that the going concern basis of preparation is appropriate for the period to 31 May 2023, the Board of Directors have had
reference to financial forecasts (including a number of sensitivities and scenarios) showing that borrowing facilities are adequate, the Group
can operate within these facilities and meets its obligations when they fall due. All investment in the financial forecasts is at management’s
discretion, with the exception of committed development spend (see Note 23). The Group has adequate headroom in its banking
covenants and has been in compliance throughout the previous 12 months. In reaching its conclusion, the Directors have considered
the specific impact of Brexit, COVID-19 and climate change, concluding that none of these are significant risks to the Group based
on the current position.
The 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.
In preparing the financial statements, management has considered the impact of climate change, taking into account the relevant
disclosures in the Strategic Report, including those made in accordance with TCFD, and considered the impact of the issues identified
to be appropriately built into the financial statements (albeit the impact is currently considered immaterial to the carrying value of the
Group’s assets).
Standards affecting the financial statements
There are no new standards or amendments that became effective for the Company in the year ended 31 March 2022.
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)
– Amendments to IFRS 3 Business Combinations reference to the Conceptual Framework (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.
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Assura plc Annual Report and Accounts 2022
2. Significant accounting policies continued
Basis of consolidation
Subsidiaries, associates and joint ventures
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 and joint ventures are accounted for using the equity method, initially recognised at cost and adjusted for
post-acquisition changes in the Group’s share of the net assets. Losses of the joint venture in excess of the Group’s interest are not recognised.
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
recognised dividend income when the rights to receive payment have been established (normally when declared and paid).
Foreign currency transactions
Transactions in foreign currencies are translated into the functional currency as at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies are translated into the functional currency at the exchange rate at the reporting date.
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 the scheme becomes legally committed (i.e. agreement for lease
in place and NHS approval is received). 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.
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For the year ended 31 March 2022
2. Significant accounting policies continued
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.
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 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. See Notes 6 and 7 for EPRA measures and the Glossary for a description of key terms.
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, and the Glossary for description of key terms.
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.
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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
During the year, £0.2m of rental revenue was generated from operations in Ireland (2021: nil).
4. Administrative expenses
Wages and salaries
Social security costs
Auditor’s remuneration
Directors’ remuneration and fees
Assura Community Fund contribution
Other administrative expenses
2022
£m
130.8
4.7
1.4
136.9
2022
£m
136.9
(5.7)
(4.7)
126.5
2022
£m
5.4
0.8
6.2
0.5
2.0
–
3.0
11.7
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
Note
4(a)
The Group operates a defined contribution pension scheme, available to all employees. The Group contribution to the scheme during
the year was £363,700 (2021: £315,100), which represents the total expense recognised through the income statement. As at 31 March 2022,
contributions of £37,500 (2021: £33,300) due in respect of the reporting period had not been paid over to the plan but were all paid in
April 2022.
The average number of employees in the year was 83 (2021: 77).
Full disclosure of Directors’ emoluments, as required by the Companies Act 2006, can be found in the Remuneration Report
on pages 99 to 123.
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 to auditor) – half year review and bond comfort letters
2022
£m
3.1
0.6
0.5
4.2
2022
£m
0.2
0.1
0.3
0.1
0.4
2021
£m
3.0
0.2
0.5
3.7
2021
£m
0.2
0.1
0.3
0.1
0.4
The Group changed auditor with effective from 1 April 2021, £0.1m was paid to the previous auditor in the current year relating
to non-audit services.
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For the year ended 31 March 2022
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
2022
£m
28.0
(1.6)
1.9
0.1
28.4
–
–
28.4
2021
£m
25.8
(1.8)
1.2
0.1
25.3
0.7
6.4
32.4
Interest was capitalised on property developments at the appropriate cost of finance at commencement. During the year this ranged
from 4% to 5% (2021: 4% to 5%).
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)
Weighted average number of shares in issue
Potential dilutive impact of share options
Diluted weighted average number of shares in issue
Earnings
2022
£m
155.9
5.6p
EPRA
earnings
2022
£m
155.9
(69.4)
(0.3)
–
86.2
–
86.2
3.1p
3.1p
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
2022
2021
2,780,731,947 2,658,746,619
1,637,671
2,781,957,466 2,660,384,290
1,225,519
The current number of potentially dilutive shares relates to nil-cost options under the share-based payment arrangements and is 1.2 million
(2021: 1.6 million).
The EPRA measures set out above are in accordance with the Best Practices Recommendations of the European Public Real Estate
Association dated October 2019.
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Assura plc Annual Report and Accounts 2022
7. NAV per Ordinary Share
2022
£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
2021
£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
For definitions of the above EPRA NAV metrics, see page 163.
IFRS
1,789.6
60.7p
60.7p
IFRS
1,530.7
57.3p
57.3p
EPRA NTA
1,789.6
(0.6)
–
–
1,789.0
60.7p
60.7p
EPRA NTA
1,530.7
(0.5)
–
–
1,530.2
57.3p
57.2p
EPRA NRV
1,789.6
(0.6)
–
179.3
1,968.3
66.8p
66.7p
EPRA NRV
1,530.7
(0.5)
–
158.8
1,689.0
63.2p
63.2p
EPRA NDV
1,789.6
–
59.4
–
1,849.0
62.7p
62.7p
EPRA NDV
1,530.7
–
(34.6)
–
1,496.1
56.0p
56.0p
2022
2021
2,948,359,637 2,671,853,938
1,637,671
2,949,585,156 2,673,491,609
1,225,519
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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Strategic reportGovernanceFinancial statementsAdditional information
NOTES TO THE ACCOUNTS CONTINUED
For the year ended 31 March 2022
8. Investments
Below is a listing of all subsidiaries of Assura plc:
Property investment companies
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 PCP UK Ltd*
Assura Primary Care Properties Ltd*
Assura Properties Ltd*
Assura Properties UK Ltd*
Assura Trellech Ltd*
Park Medical Services Ltd*
PCC Investments (IE) Ltd (Ireland)*
PH Investments (No 2) Limited
Pentagon HS Ltd*
Prime Hereford Hub Ltd*
Primeoak Investments Ltd*
Prospect Medical (Malvern) Ltd*
BHE (Heartlands) Ltd*
BHE (St James) Ltd*
Bicester HC Developments Ltd*
Community Ventures Windmill Ltd*
Donnington Healthcare Ltd*
Haven Health (Portsmouth) Ltd*
Haven Health (Shirley) Ltd*
Lakeland Health Village Ltd (Northern Ireland)* Shotfield Development Business Partnership Ltd*
Malmesbury Medical Enterprise Ltd*
Medical Properties Limited*
Meridian Medical Services Ltd*
Metro MRH Ltd*
Metro MRI Ltd*
Metro MRM Ltd*
Newton Healthcare Ltd*
SJM Developments Ltd*
Spark Property Investments Ltd*
Sunfair Properties Ltd*
Surgery Developments Ltd*
Trinity Medical Properties Ltd*
Upton Community Health Care Ltd*
Holding or dormant companies
Apollo Capital Projects Development Ltd* Assura P3 Ltd*
Assura P4 Ltd*
Assura (AHI) Ltd*
Assura P5 Ltd*
Assura Banbury Ltd*
Assura P6 Ltd*
Assura Beeston Ltd*
Assura Property Management Ltd*
Assura CS Ltd*
Assura Services Ltd*
Assura CVSK Ltd*
Broadfield Surgery Ltd*
Assura Financing plc*
Cheltenham Family Health Care Centre Ltd*
Assura Group Ltd (Guernsey)
Community Ventures Hartlepool Ltd*
Assura Haven Health Ltd*
Community Ventures Hartlepool Midco Ltd*
Assura IH Ltd
Crescent Exchange Solutions Holdings Limited* Whitton Limited (Jersey)*
Assura Investments Ltd*
Destra Windmill Ltd*
Assura Management Services Ltd*
General Practice Investment Corporation Ltd* Xantaris Investments (March) Ltd*
Assura P1 Ltd*
GP Premises Holdings Ltd*
Assura P2 Ltd*
GP Premises Ltd*
Holywell House Ltd*
Mapleoak Investments Ltd*
Oakcastle Investments (XXI) Ltd*
PCD Pembrokeshire Ltd*
PCI Management Ltd*
Primary Care Properties (Manchester) Ltd*
Ridge Medical Ltd*
The 3P Development Ltd*
Upton Medical Ltd*
Xantaris Investments (XXI) Ltd*
Whitton Property Limited*
* 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 company
registered in Guernsey has a registered address of PO Box 286, Floor 2, Trafalgar Court, Les Banques, St Peter Port, Guernsey. The Jersey
company’s registered address is 2nd Floor, Gaspe House, 66–72 Esplanade, St Helier, Jersey. The company registered in Ireland has a
registered address of 5th Floor Beaux Lane House, Mercer Street Lower, Dublin 2, Ireland and the company registered in Northern Ireland
has a registered address of 42 Queen Street, Belfast, Northern Ireland, BT1 6HL. Taking into consideration the facts of each transaction,
acquisitions of companies completed during the years ended 31 March 2022 and 31 March 2021 have been accounted for as asset
purchases as opposed to business combinations.
(a) Joint ventures
The Group has a 50% interest in and joint control of Theia Investments LLP, a joint venture with Modality Partnership. The LLP is registered
in England (the registered address is The Brew House, Greenalls Avenue, Warrington WA4 6HL). There was no profit or loss for the year
ended 31 March 2022. The carrying amount of interests in joint ventures was £3.1 million (2021: n/a).
(b) Investments
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 2022 (2021: £0.7 million). This investment has initially been recorded at cost and will subsequently be recorded at fair value
through the income statement. At 31 March 2022, the Group owns less than 10% (2021: 30%) and the Directors believe the cost is equal
to the fair value.
During the year, the Group disposed of its remaining interest in Virgin Healthcare Holdings Limited which comprised 0.7% equity holding
(2021 book value: £nil) and loan note receivable (2021 book value: £nil) for consideration of £1. As the investment had been written down
to nil book value in prior years, no profit or loss on disposal has been recognised in the current period.
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Assura plc Annual Report and Accounts 2022
9. Property assets
Investment property and investment property under construction (“IPUC”).
Properties are stated at fair value as at 31 March 2022. The fair value has been determined by the Group’s external valuers CBRE, Cushman &
Wakefield and Jones Lang LaSalle. The properties have been valued individually and on the basis of open market value (which the Directors
consider to be the fair value) in accordance with RICS Valuation – Professional Standards 2020 (“the Red Book”). Valuers are paid on the
basis of a fixed fee arrangement, subject to the number of properties valued.
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
2022
£m
2,404.3
233.5
8.5
242.0
–
42.1
(76.0)
–
(0.5)
65.4
2,677.3
5.5
2,682.8
IPUC
2022
£m
43.5
–
–
–
62.1
(42.1)
–
1.6
–
4.0
69.1
–
69.1
Total
2022
£m
2,447.8
233.5
8.5
242.0
62.1
–
(76.0)
1.6
(0.5)
69.4
2,746.4
5.5
2,751.9
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
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 2021
Disposals during the year
Net transfers from investment property
Assets held for sale at 31 March 2022
IPUC
2021
£m
57.5
–
–
–
56.9
(77.7)
–
1.9
–
4.9
43.5
–
43.5
2022
£m
2,674.3
69.1
3.0
5.5
2,751.9
76.0
0.4
2,828.3
2022
£m
2,674.3
76.0
2,750.3
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
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
2022
£m
14.7
(14.3)
76.0
76.4
At March 2022, 63 assets are held as available for sale (2021: 11 assets). These properties are either being actively marketed for sale or have
a negotiated sale agreed which is currently in legal hands.
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For the year ended 31 March 2022
9. Property assets continued
Fair value hierarchy
The fair value measurement hierarchy for all investment property and IPUC as at 31 March 2022 was Level 3 – Significant unobservable
inputs (2021: Level 3). There were no transfers between Levels 1, 2 or 3 during the year.
Descriptions and definitions relating to valuation techniques and key unobservable inputs made in determining fair values are as follows:
Valuation techniques used to derive Level 3 fair values
The valuations have been prepared on the basis of fair market value which is defined in the Red Book as “the estimated amount for which
an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arms-length transaction after
proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion”.
Unobservable inputs
The key unobservable inputs in the property valuation are the net initial yield, the equivalent yield and the ERV, which are explained
in more detail below. It is also worth noting that the properties are subject to physical inspection by the valuers on a rotational basis
(at least once every three years).
In respect of 93% of the portfolio by value, the net initial yield ranges from 3.5% to 8.7% (2021: 3.4% to 8.1%) and the equivalent yield
ranges from 3.3% to 8.5% (2021: 3.8% to 8.1%). A decrease in the net initial or equivalent yield applied to a property would increase the
market value. Factors that affect the yield applied to a property include the weighted average unexpired lease term, the estimated future
increases in rent, the strength of the occupier covenant and the physical condition of the property. Lower yields generally represent
properties with index-linked reviews, 100% NHS tenancies and longer unexpired lease terms, ranging from 3.5% to 4.5%. Higher yields
(range 5.0% to 8.0%) are applied for a weaker occupier mix and leases approaching expiry. Our properties have a range of occupier mixes,
rent review basis and unexpired terms. A 0.25% shift in either net initial or equivalent yield would have approximately a £153 million
(2021: £132 million) impact on the investment property valuation.
The ERV ranges from £100 to £669 per sq.m (2021: £100 to £427 per sq.m), in respect of 100% of the portfolio by value. An increase in the
ERV of a property would increase the market value. A 2% increase in the ERV would have approximately a £54.8 million (2021: £48.3 million)
increase in the investment property valuation. The nature of the sector we operate in, with long unexpired lease terms, low void rates,
low occupier turnover and upward only rent review clauses, means that a significant fall in the ERV is considered unlikely.
10. Property, plant and equipment
The Group holds computer and other equipment assets with cost of £1.7 million (2021: £1.3 million) and accumulated depreciation
of £1.2 million (2021: £1.0 million), giving a net book value of £0.5 million (2021: £0.3 million).
There were £0.4 million additions during the year (2021: £0.2 million) and depreciation charged to the income statement was £0.2 million
(2021: £0.1 million).
Depreciation is charged on a straight-line basis over the estimated useful economic life of the asset.
11. Cash, cash equivalents and restricted cash
Cash held in current account
Restricted cash
2022
£m
243.4
0.1
243.5
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.
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Assura plc Annual Report and Accounts 2022
12. Trade and other receivables
Trade receivables
Accrued income
Prepayments
Other debtors
2022
£m
14.3
5.9
1.4
7.0
28.6
2021
£m
18.4
5.4
1.4
2.2
27.4
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 (2021: £nil). As at 31 March 2022 and 31 March 2021,
the analysis of trade debtors that were past due but not impaired is as follows:
2022
2021
Total
£m
14.3
18.4
Neither past due
nor impaired
£m
8.9
13.7
Past due but not impaired
>30 days
£m
0.4
1.2
>60 days
£m
0.4
0.5
>90 days
£m
4.6
3.0
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.
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
2022
£m
2.4
40.5
2.0
44.9
2022
£m
0.1
5.4
5.5
2021
£m
5.2
31.9
3.6
40.7
2021
£m
0.1
5.4
5.5
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.
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Strategic reportGovernanceFinancial statementsAdditional information NOTES TO THE ACCOUNTS CONTINUED
For the year ended 31 March 2022
15. Deferred revenue
Arising from rental income 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
2022
£m
29.5
6.6
36.1
30.1
6.0
36.1
2022
£m
948.7
315.9
(20.0)
(2.1)
1.9
–
1,244.4
–
1,244.4
1,244.4
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
The Group has the following bank facilities:
1. 10-year senior unsecured bond of £300 million at a fixed rate of 3% maturing July 2028, 10-year senior unsecured Social Bond of
£300 million at a fixed interest rate of 1.5% maturing September 2030 and 12-year senior unsecured Sustainability Bond of £300 million
at a fixed rate of 1.625% maturing June 2033. The Social and Sustainability Bonds were launched in accordance with Assura’s Social &
Sustainable Finance Frameworks respectively to be used for eligible investment in the acquisition, development and refurbishment of
publicly accessible primary care and community healthcare centres. The bonds are subject to an interest cover requirement of at least
150%, maximum LTV of 65% and priority debt not exceeding 0.25:1. In accordance with pricing convention in the bond market, the
coupon and quantum of the facility are set to round figures with the proceeds adjusted based on market rates on the day of pricing.
2. Five-year club revolving credit facility with Barclays, HSBC, NatWest and Santander for £125 million on an unsecured basis at an initial
margin of 1.60% above SONIA subject to LTV and expiring in November 2024. The margin increases based on the LTV of the subsidiaries
to which the facility relates, up to 1.95% where the LTV is in excess of 45%. The facility is subject to a historical interest cover requirement
of at least 175% and maximum LTV of 60%. As at 31 March 2022, the facility was undrawn (2021: undrawn). The facility was £300 million
as at March 2021 and during the year the decision was taken by the Company to reduce the facility to £125 million.
3. 10-year notes in the US private placement market for a total of £100 million. The notes are unsecured, have a fixed interest rate of
2.65% and were drawn on 13 October 2016. An additional £107 million of notes were issued in two series, £47 million in August 2019
and £60 million in October 2019, with maturities of 10 and 15 years respectively and a weighted average fixed interest rate of 2.30%.
The facilities are subject to a historical interest cover requirement of at least 175%, maximum LTV of 60% and a weighted average
lease length of seven years.
4. £150 million of unsecured privately placed notes in two tranches with maturities of eight and ten years drawn on 20 October 2017.
The weighted average coupon is 3.04%. The facility is subject to a historical cost interest cover requirement of at least 175%, maximum
LTV of 60% and a weighted average lease length of seven years.
The Group has been in compliance with all financial covenants on all of the above loans as applicable throughout the year. Debt instruments
held at year-end have prepayment options that can be exercised at the sole discretion of the Group. As at the year end no prepayment
option has been exercised. Borrowings are stated net of unamortised loan issue costs and unamortised bond pricing adjustments totalling
£12.6 million (2021: £8.3 million).
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Assura plc Annual Report and Accounts 2022
17. Share capital
Ordinary Shares issued and fully paid
At 1 April
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
Issued 9 April 2021
Issued 14 April 2021 – scrip
Issued 7 July 2021
Issued 14 July 2021 – scrip
Issued 13 October 2021 – scrip
Issued 26 October 2021
Issued 11 November 2021
Issued 12 January 2022 – scrip
Total share capital
Number
of shares
2022
Share
capital
2022
£m
Number
of shares
2021
2,671,853,938
–
–
–
–
–
–
–
–
–
682,128
3,011,418
867,377
501,077
362,022
240,000
267,554,740
3,286,937
2,948,359,637
267.2 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
–
–
–
–
–
–
–
–
294.8 2,671,853,938
–
–
–
–
–
–
–
–
–
0.1
0.3
0.1
–
–
0.1
26.7
0.3
Share
capital
2021
£m
241.3
24.0
0.7
0.1
0.1
–
0.2
0.1
0.7
–
–
–
–
–
–
–
–
–
267.2
There is no difference between the number of Ordinary Shares issued and authorised. At the AGM each year, approval is sought from
shareholders giving the Directors the ability to issue Ordinary Shares, up to 10% of the Ordinary Shares in issue at the time of the AGM.
The Ordinary Shares issued in April 2020, July 2020, October 2020, January 2021, April 2021, July 2021, October 2021 and January 2022
were issued to shareholders who elected to receive Ordinary Shares in lieu of a cash dividend under the Company scrip dividend
alternative. In the year to 31 March 2022 this increased share capital by £0.6 million and share premium by £4.4 million (2021: £1.6 million
and £10.1 million respectively).
In April 2020, a total of 240,207,920 new Ordinary Shares were placed at a price of 77 pence per share. The equity raise resulted in gross
proceeds of £185.0 million which has been allocated appropriately between share capital (£24.0 million) and share premium (£161.0 million).
Issue costs totalling £4.3 million were incurred and have been allocated against share premium.
In November 2021, a total of 267,554,740 new Ordinary Shares were placed at a price of 68 pence per share. The equity raise resulted
in gross proceeds of £182.0 million which has been allocated appropriately between share capital (£26.8 million) and share premium
(£155.2 million). Issue costs totalling £4.7 million were incurred and have been allocated against share premium.
The Ordinary Shares issued on 4 November 2020, 9 April 2021 and 26 October 2021 were issued as part consideration for the acquisition
of medical centres.
The Ordinary Shares issued in July 2020, September 2020, February 2021 and July 2021 relate to employee share awards under the
Performance Share Plan. The shares issued on 4 September 2020 (213,319) and a portion of the shares issued on 7 July 2021 (230,934)
were issued to the EBT on behalf of employees under the PSP, see Note 19.
The share capital relates to the Group and Company.
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.
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Strategic reportGovernanceFinancial statementsAdditional information NOTES TO THE ACCOUNTS CONTINUED
For the year ended 31 March 2022
18. Dividends paid on Ordinary Shares
Payment date
15 April 2020
15 July 2020
14 October 2020
13 January 2021
14 April 2021
14 July 2021
13 October 2021
12 January 2022
Pence per
share
0.697
Number of
Ordinary
Shares
2,413,241,824
0.71 2,654,993,187
0.71 2,662,174,038
0.71 2,665,253,242
0.71 2,671,853,938
0.74 2,675,547,484
0.74 2,676,915,938
0.74 2,945,072,700
2022
£m
–
–
–
–
19.0
19.8
19.8
21.8
80.4
2021
£m
16.9
18.9
18.9
18.9
–
–
–
–
73.6
The April dividend for 2022/23 of 0.74 pence per share was paid on 13 April 2022 and the July dividend for 2022/23 of 0.78 pence per share
is currently planned to be paid on 13 July 2022 with a record date of 10 June 2022.
A scrip dividend alternative was introduced with effect from the January 2016 quarterly dividend. Details of shares issued in lieu of dividend
payments can be found in Note 17.
The April 2020, October 2020, April 2021 and October 2021 dividends were PIDs as defined under the REIT regime. Future dividends will
be a mix of PID and normal dividends as required.
The dividends paid disclosure relates to both the Group and Company.
19. Share-based payments
As at 31 March 2022 the Group has two long-term incentive schemes in place – the Performance Share Plan (“PSP”) and the newly introduced
Share Incentive Plan (“SIP”).
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 2022, the Employee Benefit Trust held 444,253 (2021: 213,319) 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, 1,697,818 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 2021
Options issued during the year
Options exercised during the year
Options lapsed during the year
Options outstanding at 31 March 2022
5,165,952
1,697,818
(636,443)
(1,200,476)
5,026,851
Of the options outstanding at 31 March 2022, 1,922,100 have a performance period ending 31 March 2022, 1,406,933 for the period ending
31 March 2023 and 1,697,818 for the period ending 31 March 2024.
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)
2022
23
0.14
3
2021
22
(0.06)
3
The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may not necessarily be the
actual outcome.
The fair value of the awards granted in 2022 was £1,039,344 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 £0.7 million (2021: £0.5 million).
150
Assura plc Annual Report and Accounts 2022
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
2022
£m
2021
£m
155.8
108.3
(0.9)
8.4
(69.4)
(1.6)
(0.3)
0.2
0.5
–
1.9
94.6
(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 2022 or 2021. 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% (2021: 19%)
Effects of:
Non-taxable income (including REIT exempt income)
Movement in unrecognised deferred tax
2022
£m
155.8
29.6
(29.6)
(0.1)
(0.1)
2021
£m
108.3
20.6
(20.6)
–
–
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 2022/23 (2021/22: 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 2021 and October 2021 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 2022.
The deferred tax asset consists of the following:
At 1 April
Income statement movement
At 31 March
2022
£m
0.5
0.1
0.6
2021
£m
0.5
–
0.5
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Strategic reportGovernanceFinancial statementsAdditional information NOTES TO THE ACCOUNTS CONTINUED
For the year ended 31 March 2022
21. Tax and deferred tax continued
The amounts of deductible temporary differences and unused tax losses (which have not been recognised) are as follows:
Tax losses
Other timing differences
2022
£m
219.6
0.9
220.5
The majority of tax losses carried forward relate to capital losses generated on the disposal of former divisions of the Group.
Tax losses
Other temporary differences
2022
£m
55.0
0.3
55.3
2021
£m
212.3
0.9
213.3
2021
£m
40.3
0.2
40.5
An increase in the main rate of corporation tax from 19% to 25%, effective from April 2023, was substantively enacted on 24 May 2021.
The deferred tax assets at 31 March 2022 have been re-measured accordingly.
22. 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 £33.9 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
1,350 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 £125 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 11.8 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 receivables as at 31 March are
as follows:
Receivables as at 31 March 2022
Non-cancellable leases
Trade and other receivables
Receivables as at 31 March 2021
Non-cancellable leases
Trade and other receivables
152
Assura plc Annual Report and Accounts 2022
On
demand
£m
–
–
–
On
demand
£m
–
–
–
Less than
3 months
£m
34.0
28.6
62.6
Less than
3 months
£m
30.4
27.4
57.8
3 to 12
months
£m
101.9
–
101.9
3 to 12
months
£m
91.2
–
91.2
1 to 5
years
£m
525.7
–
525.7
1 to 5
years
£m
475.2
–
475.2
>5 years
£m
1,147.1
–
1,147.1
>5 years
£m
970.7
–
970.7
Total
£m
1,808.7
28.6
1,837.3
Total
£m
1,567.5
27.4
1,594.9
22. Financial instruments continued
The table below summarises the maturity profile of the Group’s financial liabilities, including interest, at 31 March 2022 and 31 March 2021
based on contractual undiscounted payments at the earliest date on which the Group can be required to pay.
Payables as at 31 March 2022
Non-derivative financial liabilities:
Interest bearing loans and borrowings
Trade and other payables
Total financial liabilities
Payables as at 31 March 2021
Non-derivative financial liabilities:
Interest bearing loans and borrowings
Trade and other payables
Total financial liabilities
On
demand
£m
Less than
3 months
£m
–
–
–
7.2
34.4
41.6
On
demand
£m
Less than
3 months
£m
–
–
–
6.3
32.9
39.2
3 to 12
months
£m
21.5
10.7
32.2
3 to 12
months
£m
18.8
7.8
26.6
1 to 5
years
£m
284.7
0.3
285.0
1 to 5
years
£m
177.2
0.2
177.4
>5 years
£m
1,171.9
5.0
1,176.9
>5 years
£m
1,018.3
5.1
1,023.4
Total
£m
1,485.3
50.4
1,535.7
Total
£m
1,220.6
46.0
1,266.6
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 2022 was
as follows:
Floating rate asset
Cash, cash equivalents and restricted cash
Liabilities (fixed rate unless stated)
Long-term loans:
Private placements
Unsecured bonds
Payments due under finance leases
Within
1 year
£m
243.5
1 to 5
years
£m
–
>5 years
£m
Total
£m
–
243.5
–
–
0.1
(170.0)
–
0.4
(187.0)
(900.0)
5.0
(357.0)
(900.0)
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 2021 was
as follows:
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
Floating rate asset
Cash, cash equivalents and restricted cash
Liabilities (fixed rate unless stated)
Long-term loans:
Private placements
Unsecured bond
Payments due under finance leases
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Strategic reportGovernanceFinancial statementsAdditional information NOTES TO THE ACCOUNTS CONTINUED
For the year ended 31 March 2022
22. Financial instruments continued
Sensitivity analysis
The table below shows the book and fair value of financial instruments. As at 31 March 2022, 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 (2021: no change to profit), 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
2022
£m
900.0
357.0
–
243.5
5.5
2021
£m
596.9
357.0
–
46.6
5.5
2022
£m
844.6
346.4
–
243.5
5.5
2021
£m
627.0
364.5
–
46.6
5.5
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 36% at 31 March 2022 (31 March 2021: 37%).
Investment property
Investment property under construction
Held for sale
Total property
Borrowings
Head lease liabilities
Cash, cash equivalents and restricted cash
Net debt
2022
£m
2,682.8
69.1
76.4
2,828.3
2022
£m
1,244.4
5.5
(243.5)
1,006.4
2021
£m
2,409.8
43.5
14.7
2,468.0
2021
£m
948.7
5.5
(46.6)
907.6
LTV
36%
37%
Financial liabilities, which comprise loans and head lease liabilities in the table above, have increased from £954.2 million to £1,249.9 million
as at 31 March 2022. 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 17 (2021: 16) committed developments which were all on site with a contracted total expenditure
of £166.4 million (2021: £72.5 million) of which £65.2 million (2021: £36.6 million) had been expended.
As detailed in Note 8, the Group is committed to invest up to £5 million in PropTech investor PI Labs III LP, which can be requested on demand
to cover investments that the fund makes in qualifying, selected PropTech businesses. £0.7 million had been invested as at 31 March 2022.
24. Related party transactions
Details of transactions during the year and outstanding balances at 31 March 2022 in respect of investments held are detailed in Note 8.
Details of payments to key management personnel are provided in Note 4.
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Assura plc Annual Report and Accounts 2022
COMPANY INCOME STATEMENT
For the year ended 31 March 2022
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
B
2022
£m
136.5
3.6
140.1
(4.0)
(0.6)
(77.3)
58.2
58.2
–
58.2
2021
£m
70.0
3.0
73.0
(6.1)
(0.4)
–
66.5
66.5
–
66.5
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.
155
Assura plc Annual Report and Accounts 2022
Strategic reportGovernanceFinancial statementsAdditional information COMPANY BALANCE SHEET
As at 31 March 2022
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
2022
£m
2021
£m
B
C
D
E
17
B
87.5
1,356.5
1,444.0
266.1
1,162.8
1,428.9
0.2
0.2
0.4
(1.6)
–
(1.6)
1,442.8
294.8
918.5
–
229.5
1,442.8
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
The financial statements were approved at a meeting of the Board of Directors held on 23 May 2022 and signed on its behalf by:
Jonathan Murphy
CEO
Jayne Cottam
CFO
Company registered number: 9349441
156
Assura plc Annual Report and Accounts 2022
COMPANY STATEMENT OF CHANGES IN EQUITY
For the year ended 31 March 2022
1 April 2020
Profit attributable to equity holders
Total comprehensive income
Issue of Ordinary Shares
Issue costs
Dividends
Employee share-based incentives
31 March 2021
Profit attributable to equity holders
Total comprehensive income
Merger reserve release
Issue of Ordinary Shares
Issue costs
Dividends
Employee share-based incentives
31 March 2022
Note
17
17
18
17
17
18
Share
capital
£m
241.3
–
–
24.2
–
1.6
0.1
267.2
–
–
–
26.9
–
0.6
0.1
294.8
Share
premium
£m
595.5
–
–
161.8
(4.3)
10.1
–
763.1
–
–
–
155.7
(4.7)
4.4
–
918.5
Merger
reserve
£m
77.3
–
–
–
–
–
–
77.3
–
–
(77.3)
–
–
–
–
–
Retained
earnings
£m
180.8
66.5
66.5
–
–
(73.6)
0.3
174.0
58.2
58.2
77.3
–
–
(80.4)
0.4
229.5
Total
equity
£m
1,094.9
66.5
66.5
186.0
(4.3)
(61.9)
0.4
1,281.6
58.2
58.2
–
182.6
(4.7)
(75.4)
0.5
1,442.8
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Assura plc Annual Report and Accounts 2022
Strategic reportGovernanceFinancial statementsAdditional information Note
D
2022
£m
3.6
(3.9)
(0.1)
(0.4)
55.0
(157.0)
(102.0)
182.6
(4.7)
(75.4)
102.5
0.1
0.1
0.2
2021
£m
3.0
(6.1)
(0.8)
(3.9)
70.0
(186.0)
(116.0)
186.0
(4.3)
(61.7)
120.0
0.1
–
0.1
COMPANY CASH FLOW STATEMENT
For the year ended 31 March 2022
Operating activities
Amounts received from subsidiaries
Amounts paid to suppliers and employees
Amounts paid to subsidiaries
Net cash outflow from operating activities
Investing activities
Dividends received from subsidiaries
Amounts paid to subsidiaries
Net cash outflow from investing activities
Financing activities
Issue of Ordinary Shares
Issue costs paid on issuance of Ordinary Shares
Dividends paid
Net cash inflow from financing activities
Increase in cash and cash equivalents
Cash and cash equivalents at start of period
Cash and cash equivalents at end of period
158
Assura plc Annual Report and Accounts 2022
NOTES TO THE COMPANY ACCOUNTS
For the year ended 31 March 2022
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,
including basis of preparation and accounting policies.
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 99 to 123 and form part of these accounts.
The average number of employees in the Company during the year was 2 (2021: 2).
B. Investments in subsidiary companies
Cost
Provision for diminution in value
2022
£m
87.5
–
87.5
2021
£m
484.2
(218.1)
266.1
Details of all subsidiaries as at 31 March 2022 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 year the Company received a dividend of £81.5 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 £77.3 million was recorded. A corresponding amount was transferred from the merger
reserve to retained earnings which is considered distributable. In the year, Assura Group Limited was wound up, remaining balances were
cleared and distributed (being treated as a return in investment), therefore there is no remaining investment in Assura Group Limited, the
share holding is £1.
C. Amounts owed by subsidiary companies – non-current
Amounts owed by Group undertakings
2022
£m
1,356.5
2021
£m
1,162.8
The above amounts are unsecured, non-interest bearing and repayable upon demand. 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.
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Assura plc Annual Report and Accounts 2022
Strategic reportGovernanceFinancial statementsAdditional information NOTES TO THE COMPANY ACCOUNTS CONTINUED
For the year ended 31 March 2022
D. Cash and cash equivalents
Cash held in current account
E. Amounts owed to subsidiary companies – current
Amounts owed to Group undertakings
2022
£m
0.2
2022
£m
–
2021
£m
0.1
2021
£m
(146.2)
Amounts owed to Group undertakings are unsecured, non-interest bearing and repayable on demand.
F. Related party transactions
Group undertakings
31 March 2022
31 March 2021
The above transactions are with subsidiaries.
Charges received
£m
3.6
3.0
Dividends
received
£m
136.5
70.0
Amounts
owed by
£m
1,356.5
1,162.8
Amounts
owed to
£m
–
(146.2)
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 £1.6 million at 31 March 2022 (31 March 2021: £1.5 million).
There are no differences between the book value of cash and trade payables, nor is there any meaningful interest rate sensitivity.
160
Assura plc Annual Report and Accounts 2022
APPENDIX A
Medical centres valued over £10 million
Building official name
10 Hammersmith Broadway
79 Harley Street
Ashfields Health Centre
Aspen Centre
Birkenhead Medical Building
Bonnyrigg Medical Centre
Buckshaw Treatment Centre
Castlebar Primary Care Centre
Centre for Diagnostics, Oncology & Wellbeing
Cheltenham Family Health Centre
Church View Medical Centre
Church View Primary Care Centre
Coldharbour Works
Crompton Health Centre
Dean Street
Dene Drive Primary Care Centre
Durham Diagnostic Treatment Centre
Eagle Bridge Health and Wellbeing Centre
Fleetwood Health and Wellbeing Centre
Freshney Green Primary Care Centre
Frome Medical Centre
Garstang Medical Practice
Hall Green Health Centre
Heysham Primary Care Centre
Hillside Primary Care Centre
Jubilee Health Centre
Malmesbury Primary Care Centre
Market Drayton Primary Care Centre
Meddygfa Padarn Surgery
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
The Wells Medical Practice
Todmorden Medical Centre
Turnpike House Medical Centre
Upton Surgery
Waters Green Medical Centre
Waterside Health Centre
Well Street Surgery
Centre for Diagnostics, Oncology & Wellbeing
161
Assura plc Annual Report and Accounts 2022
Town
London
Marylebone
Sandbach
Gloucester
Birkenhead
Bonnyrigg
Buckshaw
Castlebar
Bristol
Cheltenham
South Kirkby
Nantwich
London
Bolton
London
Winsford
Durham
Crewe
Fleetwood
Grimsby
Frome
Garstang
Birmingham
Heysham
Harlesden
Shotfield
Malmesbury
Market Drayton
Aberystwyth
Blackpool
North Ormesby
Bridgnorth
Middlesbrough
Richmond
Wells
Malvern
Rothbury
Shrewsbury
Banbury
Lytham St Annes
Hereford
Stratford-upon-Avon
Sudbury
Middlesbrough
Harrogate
Ramsgate
Bradford
Chesterfield
Tunbridge Wells
Todmorden
Worcester
Upton
Macclesfield
Londonderry
Hackney
Windsor
Build date
1989
2006
2004
2014
2010
2005
2021
2016
2014
1999
2013
2008
2021
2007
2011
2007
2018
2007
2012
2009
2012
2006
2003
2012
2008
2012
2008
2005
2012
2011
2005
2007
2005
2014
2003
2011
2007
2012
2009
2009
2020
2005
2014
2018
1990
2006
2008
2008
2009
2008
2006
2006
2006
2006
2008
2017
Sq.m
691
1,492
1,567
3,481
2,636
4,083
2,415
3,637
1,729
3,732
2,812
3,271
3,901
2,964
1,083
2,793
2,069
6,809
5,204
6,590
4,062
2,480
2,409
3,127
1,945
3,011
3,205
3,589
3,371
4,964
7,652
3,588
3,326
1,221
4,628
2,316
1,476
6,003
3,692
2,259
2,562
5,988
2,937
4,389
3,978
2,339
3,763
2,862
2,758
4,166
4,132
1,685
6,018
4,458
1,080
1,831
List size
–
–
26,912
30,458
20,634
22,327
–
–
–
47,615
15,209
25,057
–
12,879
–
25,129
–
46,988
12,067
27,384
29,431
19,872
28,852
18,042
15,738
29,645
16,478
17,825
–
28,313
20,700
16,254
10,879
14,675
19,510
24,708
5,994
16,979
34,412
18,758
49,578
20,094
10,842
–
–
27,912
23,711
15,477
18,481
16,180
29,925
11,789
61,884
–
13,970
–
NHS rent %
100%
n/a
88%
83%
92%
97%
n/a
88%
n/a
87%
90%
89%
86%
82%
84%
88%
100%
91%
92%
86%
79%
98%
85%
93%
100%
90%
89%
90%
80%
95%
64%
89%
91%
100%
83%
91%
n/a
95%
89%
97%
85%
98%
100%
n/a
n/a
85%
89%
74%
91%
91%
90%
94%
93%
66%
100%
n/a
Strategic reportGovernanceFinancial statementsAdditional information APPENDIX A CONTINUED
Portfolio statistics
Portfolio statistics
North East
Midlands
London
North West
South East
South West
Wales
Scotland,
Ireland & NI
Number
144
106
80
54
117
59
56
29
645
Rent (£m)
30.3
23.6
18.0
16.9
22.4
11.5
7.7
5.3
135.7
WAULT
(years)
12.5
13.1
10.9
10.4
10.4
14.9
9.8
11.1
11.8
Total floor
area (sq.m)
153,737
125,469
68,410
84,346
113,315
63,159
49,376
34,200
692,012
Value (£m)
595.5
495.4
399.1
357.6
426.9
229.6
145.0
101.2
2,750.3
<£1m
9.9
7.3
1.5
4.1
8.6
6.7
6.5
0.9
45.5
£1–5m
232.1
171.9
155.8
64.8
210.0
87.7
81.0
37.0
1,040.3
£5–10m
172.1
167.8
79.9
36.9
152.5
49.0
47.2
27.1
732.5
>£10m
181.4
148.4
161.9
251.8
55.8
86.2
10.3
36.2
932.0
162
Assura plc Annual Report and Accounts 2022
GLOSSARY
AGM is the Annual General Meeting.
Average Debt Maturity is each tranche
of Group debt multiplied by the remaining
period to its maturity and the result divided
by total Group debt in issue at the year end.
Average Interest Rate is the Group loan
interest and derivative costs per annum at
the year end, divided by total Group debt
in issue at the year end.
British Property Federation (“BPF”) is the
membership organisation, the voice, of the
real estate industry.
Building Research Establishment
Environmental Assessment Method
(“BREEAM”) assess the sustainability
of buildings against a range of criteria.
Clinical Commissioning Groups (“CCGs”)
are the groups of GPs and other healthcare
professionals responsible for commissioning
primary and secondary healthcare services
in their locality.
Code or New Code is the UK Corporate
Governance Code 2018, a full copy of which
can be found on the website of the Financial
Reporting Council.
Company is Assura plc.
Direct Property Costs comprise cost of
repairs and maintenance, void costs, other
direct irrecoverable property expenses and
rent review fees.
District Valuer (“DV”) is the commercial
arm of the Valuation Office Agency. It
provides professional property advice
across the public sector and in respect of
primary healthcare represents NHS bodies
on matters of valuations, rent reviews and
initial rents on new developments.
Earnings per Ordinary Share from
Continuing Operations (“EPS”) is the profit
attributable to equity holders of the parent
divided by the weighted average number
of shares in issue during the period.
EBITDA is EPRA earnings before tax and
net finance costs. In the current period this
is £114.1 million, calculated as net rental
income (£126.5 million) less administrative
expenses (£11.7 million) and share-based
payment charge (£0.7 million).
European Public Real Estate Association
(“EPRA”) is the industry body for European
REITs. EPRA is a registered trade mark of the
European Public Real Estate Association.
163
Assura plc Annual Report and Accounts 2022
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 27.
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.
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.
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.
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 27.
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.
EPRA Vacancy Rate is the ERV of vacant
space divided by the ERV of the whole
portfolio. See page 27.
Equivalent Yield is a weighted average
of the Net Initial Yield and Reversionary
Yield and represents the return a property
will produce based upon the timing of the
income received. The true equivalent yield
assumes rents are received quarterly in
advance. The nominal equivalent assumes
rents are received annually in arrears.
Estimated Rental Value (“ERV”) is the
external valuers’ opinion as to the open
market rent which, on the date of valuation,
could reasonably be expected to be
obtained on a new letting or rent review
of a property.
GMS is General Medical Services.
Gross Rental Income is the gross
accounting rent receivable.
Group is Assura plc and its subsidiaries.
IFRS is International Financial Reporting
Standards adopted pursuant to Regulation
(EC) 1606/2002 as it applies in the EU.
Interest Cover is the number of times
net interest payable is covered by EBITDA.
In the current period net interest payable
is £28.0 million, EBITDA is £114.1 million,
giving interest cover of 4.1 times.
KPI is a Key Performance Indicator.
Like-for-like represents amounts calculated
based on properties owned at the previous
year end.
Loan to Value (“LTV”) is the ratio of net
debt to the total value of property assets.
See Note 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.
NAV is Net Asset Value.
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.
Strategic reportGovernanceFinancial statementsAdditional information UK GBC is the UK Green Building Council.
Weighted Average Unexpired Lease Term
(“WAULT”) is the average lease term
remaining to first break, or expiry, across
the portfolio weighted by contracted
rental income.
Yield on cost is the estimated annual rent
of a completed development divided by
the total cost of development including
site value and finance costs expressed
as a percentage return.
Yield shift is a movement (usually expressed
in basis points) in the yield of a property asset
or like-for-like portfolio over a given period.
Yield compression is a commonly used
term for a reduction in yields.
GLOSSARY CONTINUED
Operating efficiency is the ratio of
administrative costs to the average gross
investment property value. This ratio
during the period equated to 0.45%. This
is calculated as administrative expenses
of £11.7 million divided by the average
property balance of £2,603 million (opening
£2,453 million plus closing £2,752 million,
divided by two).
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.
Primary Care Network (“PCN”) is a GP
practice working with local community,
mental health, social care, pharmacy,
hospital and voluntary services to build on
existing primary care services and enable
greater provision of integrated health
services within the community they serve.
Primary Care Property is the property
occupied by health services providers who
act as the principal point of consultation
for patients such as GP practices, dental
practices, community pharmacies and
high street optometrists.
Property Income Distribution (“PID”) is the
required distribution of income as dividends
under the REIT regime. It is calculated as
90% of exempted net income.
PSP is Performance Share Plan.
Real Estate Investment Trust (“REIT”) is
a listed property company which qualifies
for and has elected into a tax regime which
exempts qualifying UK profits, arising from
property rental income and gains on
investment property disposals, from
corporation tax, but requires the
distribution of a PID.
Rent Reviews take place at intervals agreed
in the lease (typically every three years) and
their purpose is usually to adjust the rent to
the current market level at the review date.
Rent Roll is the passing rent (i.e. at a point
in time) being the total of all the contracted
rents reserved under the leases, on an
annual basis. At March 2022 the rent roll was
£135.7 million (March 2021: £121.7 million) and
the growth in the year was £14.0 million.
Retail Price Index (“RPI”) is an official
measure of the general level of inflation
as reflected in the retail price of a basket
of goods and services such as energy, food,
petrol, housing, household goods, travelling
fares, etc. RPI is commonly computed on
a monthly and annual basis.
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 2021) was 57.2 pence per share,
closing EPRA NTA was 60.7 pence per
share, and dividends paid total 2.93 pence
per share giving a return of 11.2% in the year.
Total Contracted Rent Roll or Total
Contracted Rental Income is the total
amount of rent to be received over the
remaining term of leases currently
contracted. For example, a lease with rent
of £100 and a remaining lease term of ten
years would have total contracted rental
income of £1,000. At March 2022, the total
contracted rental income was £1.81 billion
(March 2021: £1.57 billion) and the growth
in the year was £240 million.
Total Property Return is the overall return
generated by properties on a debt-free
basis. It is calculated as the net rental income
generated by the portfolio plus the change
in market values, divided by opening
property assets plus additions. In the year
to March 2022, the calculation is net rental
income of £126.5 million plus revaluation of
£69.4 million giving a return of £195.9 million,
divided by £2,748 million (opening investment
property £2,400.4 million and IPUC
£43.5 million plus additions of £242.0 million
and development costs of £62.1 million).
This gives a Total Property Return in the
year of 7.1%.
Total Shareholder Return (“TSR”) is
the combination of dividends paid to
shareholders and the net movement in
the share price during the period, divided
by the opening share price. The share
price at 31 March 2021 was 72.1 pence,
at 31 March 2022 it was 66.9 pence, and
dividends paid during the period were
2.93 pence per share.
164
Assura plc Annual Report and Accounts 2022
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
EY LLP
2 St Peter’s Square
Manchester
M2 3DF
Legal Advisors
CMS Cameron McKenna Nabarro Olswang LLP
DWF Law LLP
Joint Corporate Brokers
Barclays Bank Plc
5 North Colonnade
Canary Wharf
London
EI4 4BB
Stifel Nicolaus Europe Limited
150 Cheapside
London
EC2V 6ET
Bankers
Barclays Bank plc
HSBC plc
NatWest Bank plc
Santander UK plc
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Assura plc
The Brew House
Greenalls Avenue
Warrington
WA4 6HL
T: 01925 420660
F: 01925 234503
E: info@assura.co.uk
www.assuraplc.com
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