Assura Group Limited Results Presentation Year ended 31 March 2010
Refocused & Streamlined Business • 75.1% of medical services business sold to Virgin Healthcare Holdings Ltd Significant cost reductions with payroll alone reduced by £6.5m * • • Reorganised management team with excellent property experience and track record * Gross payroll cost reduction between March 2009 and May 2010 2
Significantly Improved Results • Revenues up 17% to £55.8m (2009: £47.6m) • Group trading profit from continuing operations up 156% to £13.3m (2009: £5.2m) • PBT from continuing operations £4.4m (2009: loss of £99.7m) Our pharmacy business delivered a maiden full year profit of £3.9m *1 (2009: loss • • Our pharmacy business delivered a maiden full year profit of £3.9m (2009: loss £7.6m) and is now sustainably profitable Net assets of £164.2m (2009: £172.0m), equivalent to 60.9p (2009: 66.2p) per share *2 • • £24.6m cash in hand at year end (2009: £24.8m) *1 Includes £1.3m reversal of license impairment and £1.1m profit on disposal of pharmacies *2 Adjusted diluted net asset value per Ordinary Share (excluding the notional mark to market value of the Company’s interest rate swap) 3
Strong Property & Pharmacy Group • Investment portfolio increased 12% to £313.7m at 31 March 2010 from £278.9m at 31 March 2009 Gross rental income receivable at 31 March 2010 increased by 9% to £22.5m *1 • • 84% of rent reimbursed by NHS & average lease length is 17.1 years • Property portfolio outperformed IPD healthcare and all property indices • 7 new developments valued at £36.9m completed in the year • 5 developments on site at year end with anticipated end value of £38.2m • 4 new health centre pharmacies opened in the year Pharmacy revenues increased by 17% *2 • • LIFT consultancy revenue up 86% from £1.4m in 2008/09 to £2.6m in 2009/10 *1 Including the rental value of own premises *2 Excludes 50 per cent share of revenue derived from pharmacies owned in joint venture with GP Care Limited 4
Summary of Results 2010 2009 £m £m Contribution - Operating profit before central costs • Increased contributions from all divisions Property Investment 18.7 13.4 Property Development (0.5) (0.9) Pharmacy 1.0 (1.0) • Central costs reduced very significantly LIFT operations 0.0 0.0 Total 19.2 11.5 especially around the end of the year Central costs (5.8) (8.5) • Central costs target below £2.5m in 2010/11 13.4 3.0 (excluding LTIP & depreciation) Property Disposal Profits (0.8) 1.9 Asset Disposal Profits 0.7 0.3 • Revaluations of investments £6.5m partially Group Trading Profit 13.3 5.2 offset by development write downs Property revaluations & gains 2.4 (58.2) Associates & Joint Ventures 2.1 (1.0) Other items 0.2 (0.5) • Goodwill impairment, restructuring costs and Exceptional Items (8.8) (6.6) premises provision make up much of the Operating Profit 9.2 (61.1) exceptional item Net Finance Costs (4.8) (38.6) • Finance costs reflect SWAP Profit before taxation from continuing operations 4.4 (99.7) Taxation 2.4 0.6 • Loss on sale of Assura Medical - £7.1m and Loss for the year from coninuing operations 6.8 (99.1) its loss in the period prior to its sale - £6.9m Discontinued operations (14.0) (9.8) Loss for the year (7.2) (108.9) 5
Segmental Results 2010 2009 £m £m Property Investment • Growing rent roll Gross income 23.4 20.4 Direct costs (2.4) (1.7) Gross profit 21.0 18.7 • Stable direct property costs – opportunity Administrative expenses (2.3) (5.3) Net Profit 18.7 13.4 for reduction Property Development Administrative expenses (0.5) (0.9) • Property investment administration costs Net Loss (0.5) (0.9) significantly reduced – full effect visible in Pharmacy Revenue Revenue 31.2 31.2 26.7 26.7 the current year the current year Cost of sales (21.9) (18.6) Gross profit 9.3 8.1 Administrative expenses (8.3) (9.1) • No property development gains in 2009/10 Net Profit 1.0 (1.0) - realised and unrealised gains expected LIFT Revenue 2.6 1.4 this year and next Direct costs (0.4) (0.2) Administrative expenses (2.2) (1.2) Net Profit 0.0 0.0 • Pharmacy gross margin %’age has held up Divisional contribution 19.2 11.5 well Central costs (5.8) (8.5) • LIFT revenue has increased strongly and 13.4 3.0 is continuing to grow Property Disposal Profits (0.8) 1.9 Asset Disposal Profits 0.7 0.3 Group Trading Profit 13.3 5.2 6
Balance Sheet Summary 2010 2009 £m £m • Additions & revaluations in year partially offset Investment Property 313.7 278.9 by selected disposals Under Construction 27.7 54.8 Premises/held for sale/WIP 18.7 21.8 • The 2009 investment in Assura Medical was that Investment in Assura Medical 5.5 4.8 in its GP Cos; in 2010 this is our investment in Investments in LIFT 12.2 9.5 Loan to Pharmacy JV 7.6 6.0 Virgin Healthcare Holdings Limited Goodwill - Pharmacy 15.7 13.3 Goodwill - Property development 20.0 24.8 • Many of our pharmacy licenses have been Other fixed assets 4.5 12.5 gained through successful application rather gained through successful application rather 425.6 425.6 426.4 426.4 than acquisition Cash 24.6 24.8 Debtors 10.3 9.7 • Property development goodwill supported by a Stock 1.7 1.6 strong profitable pipeline Creditors - short term (21.9) (24.6) • The SWAP “mark to market” liability was £17.3m Bank debt - short term (6.5) (31.6) at 31 March 2010 but we are only paying Bank debt - long term (249.3) (206.7) interest based on 3.29% till 31 December 2011 Other liabilities (20.3) (27.6) and expect interest rates to rise over this period. Net Assets (excluding "own shares") 164.2 172.0 • SWAP is neutral when long term rates rises to 4.59% NAV per share 53.6 56.2 Adjusted for SWAP 60.9 66.2 7
Property 8
Medical Centre Investments Growth £332m portfolio, £22.5m rent roll *1 , average net initial yield 6.02% • • 84% PCT/GMS, 17.1 year weighted average lease length • £45m of medical centre developments on site at 31 March or due to commence imminently • • Annual increase in rent from 68 reviews settled was 3.5% (£564,000) and growth is Annual increase in rent from 68 reviews settled was 3.5% (£564,000) and growth is continuing • Opportunity to reduce voids (£0.8m ERV and £0.7m cost saving) and direct property costs (£2.4m) • Revaluation surpluses expected from good management, rental growth, voids filled - any favourable yield shift will be a bonus • Resilient and valuable portfolio *1 Including the rental value of own premises 9
Portfolio Summary • Initial Yield • 6.02% Rent pa £22.5m • Reversionary Yield • 6.61% Market Rent (ERV) pa £24.8m (inc vacant space) • Equivalent Yield* (EY) 6.46% Capital Value No. of Investment Value Avge EY* Properties Properties £m £m £0 – £500k 28 £7.6 7.99% £500k – £1m 14 £9.9 7.48% £1m – £5m 59 £135.6 6.72% £5m – £10m 11 £84.9 6.33% £10m – £15m 3 £39.8 6.18% £15m + 2 £35.9 6.2% Total 117 £313.7 6.46% 10
Portfolio Summary • 117 investment properties with 251 demised leases Income Type (£/pa) • Average property value: £2.8m • Largest property: 5.8% of portfolio value 7% 3% (North Ormesby £19.3m) 6% • Average GMS rent: £166 psm Income/Tenant split: 23% 61% • GPs: 61% • PCTs: 23% • Pharmacy: 6% • Health Platform: 3% GMS PCT Pharmacy Health Platform Other • Other ( Mainly retail Malls): 7% 11
Good Development Pipeline • 5 on site at year end with an end value of around £38m • 1 commenced post y/e and 1 due to start with a combined end value of £7m • Identified potential pipeline beyond - £83m • Substantially pre-let with debt finance in place in advance • 15 land bank sites with a value at 31 March of £11m • Rigorous cost control starting to deliver benefit • Best means of growing the investment portfolio • Development funding becoming more widely available 12
Excellent LIFT Investments • Major position in LIFT with 6 investments of 27% to 54% • £6.5m invested in 12% yielding loan stock • Equity stakes all expected to be profitable • LIFT consultancy generated revenue of £2.6m in 2009/10 and growing • LIFT consultancy separable from core property business 13
Pharmacy 14
Profitable & Growing Pharmacy Business • 33 predominantly health centre pharmacies • Expect to buy in 50% of GP Care for nominal consideration next year (7 pharmacies) • Stores maturing and revenue approaching £40m including GP Care including GP Care • Targeting 5% EBITDA • We have the market-leading licensing team – Licence sales – Goodwill creation 15
Profitable & Growing Pharmacy Business • Compatible with Property business and can be valued independently • Steady store opening strategy (4 new health centre pharmacies opened last year and the next store opening in August) • Value growing (significantly enhanced license value growth) • Cash generative 16
Group Overheads 17
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