4th Apr 2008 07:01
Assura Group Limited04 April 2008 Assura Group Limited ("Assura" or the "Company") Pre-Close Trading Update Move to the UK Approved Board Changes Approved 4 April 2008 Assura Group Limited (LSE: AGR), the UK healthcare company which partners withGPs, consultants and other healthcare professionals to deliver high qualitypatient care, pharmacy and innovative property solutions in primary care, todayprovides an update on trading for the 15 month period ended 31 March 2008, priorto entering its closed period. The Company will announce its audited results forthe 15 month period in early June 2008. As a part of a series of changes to reposition the Company in line with itsfocus on the healthcare sector, Assura resolved at a Board meeting held on 3April 2008 to move the management and control of the Company from Guernsey tothe UK with immediate effect. This move has the result of the Company becomingresident in the UK for UK tax purposes. The tax consequences for shareholderswere set out in the circular issued to shareholders by the Company on 7 March2008. These changes follow the decision in December 2007 by the FTSE IndustryClassification Committee to move Assura from the "Real Estate" sector to the "Health Care Providers" sector and the Company's recent promotion to the FTSE 250index. The Company also confirms that with effect from 3 April 2008 the followingchanges to the Board have been made: • Rodney Baker-Bates has been appointed non-executive chairman of the Board; • John Curran has stepped down as interim chairman and resumes his role as non-executive deputy chairman and senior independent director; • Richard Burrell, who is the Chief Executive Officer, joins the Board as an executive director; and • Nigel Rawlings, who is the Chief Financial Officer, joins the Board as an executive director. Graham Chase, Peter Pichler and Colin Vibert remain as non-executive directorsand Fred Porter, who joined the Board in November 2003 as a non-executivedirector, will retire from the Board at the Company's AGM. Following thesechanges, the Board will comprise two executive directors and five non-executivedirectors and will be fully compliant with the Combined Code. Pre-Close Trading Update Financial Results Assura's three divisions are continuing to grow strongly and the Company expectsturnover for the 15 month period to be significantly ahead of last year. Thisreflects further revenue growth in the Company's pharmacy division and increasedrental income including rents from recently completed development projects. The Company is expecting to generate a Group Operating Profit* of more than £10mfor the 15 month period to 31 March 2008 which compares with a figure of £12.9mfor the 12 month period to 31 December 2006. The predicted decline in GroupOperating Profit reflects the significant level of planned investment inAssura's pharmacy and medical divisions. This investment is set to continue inthe forthcoming financial year, enabling Assura to generate increasing,sustainable operating profits from the year commencing 1 April 2009. * Group Operating Profit includes development surpluses, unrealised surpluses onrevaluation of investment property and termination of investment managementservices. It excludes any interest rate swap revaluations. Property valuation Savills, the Company's independent valuers, are currently preparing thevaluation of the Company's property assets as at 31 March 2008 and the Companyexpects that its unrealised surplus on revaluation of investment property,including development surpluses, will be higher than the £11.2m reported in thenine month period to 30 September 2007. The valuers have indicated thatinvestment property on the Company's balance sheet is likely to be valued at anet equivalent yield of 5.8% representing a net initial yield of 5.3%. Whilstthe wider commercial property market has experienced significant declines sincelast summer, Assura's properties are generally let on long leases (in excess of18 years on average) and have excellent covenants with rents predominantlyreimbursed out of the NHS annual budget. At the same time, rental growth, asevidenced by rent review settlements during the period, continues to performvery well averaging in excess of 4% per annum. Property development pipeline As at 31 March 2008 the Company had invested or committed £577m on propertyassets and remains on track to invest or commit £750m by the end of 2009.Development surpluses have been credited on completed properties and, at currentvaluation yields, there remain ongoing development surpluses on committedprojects and properties still under construction. GP provider companies ("GPCos") formed As at 31 March 2008 the Company had formed 11 joint ventures with GPs and iscurrently proceeding with the necessary legal formalities to establish a furtherfour GPCos. In aggregate, these 15 GPCos will cover a patient population of 1.7million and there continues to be a strong pipeline of further groups of GPswishing to form joint ventures with the Company. The Company remains confidentthat it will reach its target of having joint ventures covering 5 millionpatients by the end of 2010. GPCo community based services The Company's GPCos are now operating eight community based services acrossseven different clinical specialties in five joint ventures. In addition, afurther nine community based services across eight clinical specialties are nowunder active consideration by Primary Care Trusts ("PCTs") across all 11 GPCoareas. The breadth of the Company's offering is helping to build momentum and soaccelerate the roll-out of new services as additional GPCos are formed. Pharmacy openings and margin As at 31 March 2008, the Company is operating 28 pharmacies and is on target tobe operating at least 40 pharmacies by 31 March 2009. The recent review ofCategory "M" and the impending review of the Prescription Pricing RegulationScheme will have an impact on all pharmacy operators but we believe that theCompany's integrated pharmacy model positions Assura well to grow income fromthe provision of enhanced services in the communities which our pharmaciesserve. Bank debt The Company has recently repaid its short term bank facility and entered into anew five year £250m facility utilising National Australia Bank's securitisationconduit. The margin on this facility is 0.45% above the asset backed commercialpaper rate. The bank also provides a liquidity facility of £255m, the margin onwhich is 1.1% above LIBOR, to guarantee funding availability in the event thatcommercial paper cannot be used. The Company benefits from a £200m LIBOR-basedinterest rate swap expiring in 2027 at a rate of 4.59%. Industry trends The final report of Lord Darzi's review of the NHS is expected in June 2008 andwe believe this may present some very interesting opportunities for the Company. Additionally, at the end of 2007, the Government announced the EquitableAccess Procurement Process in order to address inequalities in quality, accessand utilisation of care in the community. An ambitious timetable has been setby the Department of Health to complete the process (which will be conducted byeach of the 152 PCTs) by December 2008. The process covers both the provision ofprimary care-based service contracts for out-patient, diagnostic and day-casesurgery and the provision of premises contracts (via polyclinics and GP-ledhealth centres), both in combination with each other and separately. We aremonitoring this procurement opportunity closely and will provide further detailsin due course if appropriate. Commenting on today's announcement, Richard Burrell, Chief Executive of Assura,said, "The Company remains encouraged by the increasing role the private sectorhas to play in the provision of NHS services to local communities. We believethat our established business model of integrating medical services in jointventures with GPs combined with providing pharmacy services and developingmodern buildings will position us to benefit from this trend and provide highquality services and facilities to patients. We will continue to invest indeveloping our business to accommodate the changes to the provision of communitybased healthcare in the UK." Further information regarding the new members of the Assura Board Rodney Baker-Bates (age 63) is a fellow of the Institute of CharteredAccountants and Institute of Bankers and an associate of the Institute ofManagement Consultants. He qualified with Arthur Andersen and has held manysenior positions in the finance sector including Managing Director of UK Bankingat Midland Bank and Chief Executive of Prudential Financial Services. In 1993,he joined the Management Committee of the BBC responsible for finance andtechnology. Rodney now holds a number of Chairman and non-executive directorpositions with Stobart Group Limited, Helphire Group plc, Bedlam AssetManagement PLC, FirstAssist Insurance Services Limited, EG Solutions Limited,The Music Solution Limited, Britannia Building Society, G's Group HoldingsLimited and Strategic Investment Group Limited. Rodney is also a consultant tothe board of directors of C. Hoare & Co. Richard Burrell (age 42) graduated from Durham University and started his careerat UBS Investment Bank and latterly at ING where he focused on mergers andacquisitions and raising of equity and debt capital for companies. In 2002, heled the Admission of The Westbury Property Fund Limited ("WPF") to the OfficialList. In 2003, he led the Admission of The Medical Property Investment FundLimited ("MPIF") to the Official List. Both WPF and MPIF were managed byBerrington Fund Management Limited ("Berrington") until May 2006. In May 2006,MPIF acquired Berrington and continued to manage WPF. In November 2006, MPIFchanged its name to Assura Group Limited ("Assura"). In August 2007, WPFacquired Eddie Stobart Limited and changed its name to Stobart Group Limited.Richard Burrell has been the Chief Executive Officer of Assura since itsformation, he is a non-executive director of Stobart Group Limited, HelphireGroup plc and a Trustee of Alder Hey Children's Hospital Imagine Appeal. Nigel Rawlings (age 52) started his career with Price Waterhouse in 1977,working in Manchester, London and Singapore. Nigel was Finance Director andCompany Secretary of Rowlinson Securities plc, a property and contracting groupadmitted to the Official List, from 1987 to 1994 and was Chief Financial Officerand Company Secretary of Barlows PLC, a formerly fully listed propertydevelopment and investment company from 1996 to 2003. Nigel was the ChiefFinancial Officer for Berrington Fund Management ("Berrington"), the investmentmanager of The Westbury Property Fund Limited ("WPF") and The Medical PropertyInvestment Fund Limited ("MPIF"). He worked on the Admission of MPIF to theOfficial List and in 2006 when MPIF acquired Berrington, Nigel became the ChiefFinancial Officer of MPIF. In November 2006, MPIF changed its name to AssuraGroup Limited ("Assura"). Nigel Rawlings has been the Chief Financial Officer ofAssura since its formation and he is a non-executive director of Stobart GroupLimited. Nigel has commercial experience of financial and management accounting,corporate finance and legal and company secretarial matters, is a FCA and FSAapproved Corporate Finance Representative. There are no other matters which require to be disclosed pursuant to ListingRule 9.6.13. Ends Enquiries: Assura Group Tel: 020 7107 3800Richard Burrell/Louise Bathersby Financial Dynamics Tel: 020 7831 3113David Yates/Ben Atwell This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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