Creating Outstanding Spaces for Health Services in Our Communities Our Business at a Glance Investing to Support Primary Healthcare Infrastructure
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Annual Report and Accounts 2019 Assura plc Assura Annual Report and Accounts 2019 Creating outstanding spaces for health services in our communities Our business at a glance Investing to support primary healthcare infrastructure Our locations We invest in and develop medical centres throughout the UK. The most important characteristic 23 of a building is its importance to the community it serves. Our buildings currently serve approximately 5.6 million patients, or 8.5% of the UK population. Portfolio analysis Total value Number of Total value Capital value £m properties % >£10m 558.5 35 29 £5–10m 474.1 71 24 £1–5m 859.7 348 44 <£1m 68.2 109 3 Total 1,960.51 563 100 Total value Number of Total value Region £m properties % North 756.9 182 38 South 662.4 216 34 57 Midlands 350.6 85 18 Scotland 54.6 23 3 Wales 136.0 57 7 Total 1,960.51 563 100 Tenant Total rent roll Total rent Total rent roll covenant £m roll £m % GPs 69.4 68 NHS body 17.8 17 Pharmacy 8.2 8 Other 7.3 7 Total 102.7 100 1. See Note 10 for reconciliation to balance sheet. Financial highlights INVESTMENT PROPERTY (£M) DILUTED EPRA NAV (P)* £1,978.8 m 53.3p up by 14.2% up by 1.7% 2019 1,978.8 2019 53.3 2018 1,732.7 2018 52.4 2017 1,344.9 2017 49.3 NET RENTAL INCOME (£M) PROFIT BEFORE TAX (£M) £95.2m £84.0m up by 18.7% up by 17.0% 2019 95.2 2019 84.0 2018 80.2 2018 71.8 2017 67.9 2017 95.2 EPRA EPS (P)** TOTAL DIVIDENDS PAID (P) 37 2.7p 2.65p up by 8.0% up by 7.7% 58 2019 2.7 2019 2.65 2018 2.5 2018 2.46 87 2017 2.4 2017 2.25 * See Note 8 ** See Note 7 43 42 11 EPRA summary table 2019 2018 EPRA EPS (p) 2.7p 2.5p 62 EPRA NAV (p) 53.3p 52.4p 94 EPRA NNNAV (p) 52.5p 51.8p 49 EPRA NIY (%) 4.73% 4.77% EPRA “topped-up” NIY (%) 4.78% 4.81% EPRA Vacancy Rate 1.5% 1.8% EPRA Cost Ratio (including direct vacancy costs) (%) 12.5% 13.0% EPRA Cost Ratio (excluding direct vacancy costs) (%) 11.4% 12.0% See a detailed rationale for each performance measure on pages 48 and 49. Who we are We are a leading healthcare real estate investment trust (REIT) with a portfolio of 563 medical centres across the country. Our purpose What we value Our purpose is to create outstanding spaces for health services Innovation in our communities. Expertise What we do Being genuine Fifteen years of working with GPs and the NHS means we have Collaboration a clear understanding of the needs of those using our buildings, and of how their premises can support them. We combine that with Passion our capital strength to develop, invest in, manage and improve our portfolio of essential social infrastructure. How we work We champion new ideas The places where patients receive NHS care are fundamental to and we’re open-minded their experience. And for the NHS’s 1.5 million staff, its buildings are their work places. We do what we say we will We don’t give up We are here to support the right premises in the right places for Britain’s most treasured public service. We strive for excellence We listen to, learn from and encourage others Available online at: www.assuraplc.com Strategic report Governance Financial statements 1 Highlights of the year 50 Chairman’s introduction to governance 82 Independent Auditor’s Report 2 Primary care of the future 52 Leadership 88 Consolidated income statement 4 Chairman’s statement 54 Board of Directors 89 Consolidated balance sheet 6 Development pipeline 56 Effectiveness 90 Consolidated statement of changes 8 CEO review 58 Nominations Committee Report in equity 12 Market overview 60 Audit Committee Report 91 Consolidated cash flow statement 14 Our business model and strategy 62 Directors’ Remuneration Report 92 Notes to the accounts 16 Strategy at a glance 79 Directors’ Report 110 Company financial statements 18 Our business model in action 81 Directors’ Responsibility Statement 24 Key performance indicators Additional information 26 Stakeholder engagement 116 Appendix 38 Risk management 117 Glossary 40 Principal risks and uncertainties 118 Corporate information 44 CFO review Strategic report Highlights Investing £219m in acquisitions including Our biggest year to date for of the year Stratford Healthcare Centre development, completing a new in Warwickshire — one of the country’s largest primary care centre for patients in primary care buildings, South Wales, opening the Durham serving more than 18,000 patients Diagnostics and Treatment Centre, starting on site for new buildings in 11 locations including Essex, Marking Assura’s 15th anniversary year Kent, Gloucestershire and Greater Manchester and extending our pipeline of opportunities WEST GORTON MEDICAL CENTRE MEDICAL GORTON WEST Assigned an investment grade rating of A- by Fitch Ratings Limited and issuing a £300m unsecured listed bond Creating the specialist space for one of the most modern fertility clinics in the NHS, within our Severn Fields Health Village in Shrewsbury Disposing of 12 assets demonstrating our capital recycling capabilities Establishing our major charity partnership with Dementia UK and progressing plans for the country’s first accredited dementia friendly primary care centre design Assura plc Annual Report and Accounts 2019 1 Primary care of the future Thinking long term: planning for the NHS of the future Creating outstanding spaces for health services in our communities. STRATFORD WEST GORTON MEDICAL CENTRE DURHAM HARLECH PRIMARY CARE CENTRE 3 ARDUDWY HEALTH WEST GORTON MEDICAL CENTRE DURHAM DIAGNOSTICS AND CENTRE, HARLECH TREATMENT CENTRE 1 2 Ardudwy Health Centre, Harlech 625 sq.m Small but innovative and crucial to delivery of health services in this Welsh seaside town, Ardudwy Health Centre in Harlech is one of the most sustainable in our portfolio – with an insulated timber frame, biomass boiler and photovoltaic panels on the roof all helping to generate heat and power for this community branch surgery. West Gorton Medical Centre, Greater Manchester 1,190 sq.m In a city region tackling serious health challenges, West Gorton Medical Centre’s building doesn’t just create space for more services, it’s also a trailblazer for the Greater Manchester’s ambition to become carbon neutral by 2038 – dramatically reducing energy use and increasing efficiency for the NHS compared with the average surgery building. 2 Assura plc Annual Report and Accounts 2019 Strategic report Durham Diagnostics and Treatment Centre, Durham 2,069 sq.m From urology and renal services to ENT, oral and maxillofacial surgery and ophthalmology care, Durham Treatment Centre bridges the gap between the GP surgery and hospital sites in the North East of England – acting as a specialist treatment hub for patients who previously had to travel long distances for their care. SUDBURY PRIMARY CARE CENTRE STRATFORD DURHAM STRATFORD HEALTHCARE CENTRE SUDBURY COMMUNITY HEALTH CENTRE 4 5 Stratford Healthcare Centre, Sudbury Community Health Centre, Stratford-upon-Avon Sudbury 5,988 sq.m 2,937 sq.m One of the largest primary care buildings in the A true super-centre for NHS services away from hospital, country, Stratford Healthcare Centre brings Sudbury Community Health Centre houses paediatrics, together general practice, community mental dermatology, audiology, musculoskeletal physiotherapy, health, sexual health and treatment services as X-ray, dentistry, podiatry, mental health, midwifery, well as a pharmacy and training space. diagnostics and pharmacy alongside GPs – in a community which had campaigned for a new facility for decades. Assura plc Annual Report and Accounts 2019 3 Chairman’s statement We continue to solidify our position as a partner of choice to the NHS Ed Smith, CBE Non-Executive Chairman Our people, our capital strength, the quality of our service, our buildings Following the extensive support of our shareholders during 2017 and our long-term relationships are the five unique hallmarks of our we were able to fulfil our intentions to restructure some of our more partnerships with GPs and the NHS. expensive debt facilities. The restructure provided the platform for Assura to gain an A- investment grade rating from Fitch Ratings Limited In these first months as Chairman, I have been struck by just how and successfully execute a £300 million public bond. deeply embedded these qualities are across this business. As our nation’s health service seeks to deliver on the much-needed ambition In a defining year for our development pipeline, we opened new set out in the NHS Long Term Plan, significant capital investment spaces around the country for GP practices and three NHS Trusts, is required to support it, meaning the way we combine our unique and acquired 57 high quality assets including one of the country’s strengths to deliver GP and NHS infrastructure has never been biggest primary care centres. This impressive progress would not more important. have been possible without our long-term relationships and market understanding. The skills and knowledge of our team enable us to bring This year has given us particularly strong examples of all five elements together successfully the many stakeholders on each deal, navigating in action. The team has worked together to cement our strategy around the complex NHS procurement processes and managing our supply a clear vision and purpose, underpinned by a set of values and ways chain to meet the individual needs of each community. of working which we agree are important to us, our customers and the public.