Annual Financial Report

RNS Number : 4210L

Assura Group Limited

29 July 2011

 



Assura Group Limited ("Assura" or the "Company")

Publication Of Annual Report And Accounts 2011

Notice of Annual General Meeting

In compliance with LR 9.6.1 Assura Group Limited announces that its Annual Report and Accounts for the year ended 31 March 2011 ("2011 Annual Report") has been submitted to the UK Listing Authority electronically via the National Storage Mechanism and will shortly be available for inspection at www.Hemscott.com/nsm.do.

The 2011 Annual Report may also be viewed on the Company's website at www.assuragroup.co.uk/financial-reports.

The Company will hold its 2011 Annual General Meeting at 10 a.m. on Thursday 8 September 2011 at the offices of Addleshaw Goddard, Milton Gate, 60 Chiswell Street, London, EC1Y 4AG.  The Notice of Annual General Meeting, a Form of Proxy and the 2011 Annual Report and will be sent to Assura shareholders on or around 5 August.

The following information in the Appendix to this announcement is provided for the purposes of compliance with DTR 6.3.5 and is as set out in the 2011 Annual Report.  It should be read in conjunction with the Company's Preliminary Results announcement released on 21 June 2011 which included a set of consolidated financial statements and a review of the development and performance of the business and the position of the Company. Together these constitute the information required by DTR 6.3.5 to be communicated to the media in unedited full text.

APPENDIX

DIRECTORS' RESPONSIBILITIES STATEMENTS (from page 11 of the 2011 Annual Report)

The Directors are responsible for preparing the financial statements in accordance with applicable Guernsey law and International Financial Reporting Standards ('IFRS') as adopted in the European Union.

Guernsey company law requires the Directors to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the Group and Company and of the profit or loss of the Group and Company for that year.  In preparing these financial statements, the Directors should:

·           select suitable accounting policies and then apply them consistently;

·           make judgments and estimates that are reasonable and prudent; and

·           prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The Directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the Group and Company and enable them to ensure that the financial statements comply with the Companies (Guernsey) Law, 2008.  They are also responsible for safeguarding the assets of the Group and Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors' are responsible for the maintenance and integrity of the corporate and financial information included on the company website.  Legislation in Guernsey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Each of the Directors in office at the date of approval of this report has confirmed that:

·           The financial statements, prepared in accordance with IFRS as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit of the Group and Company and its undertakings included in the consolidation taken as a whole; and

·           The Directors' Report includes a fair review of the development and performance of the business and the position of the Company and its undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

The Directors acknowledge their responsibilities for the accuracy of this Report. All sections of this Annual Report, including the Chairman's Statement, Chief Executive's Statement, Corporate Governance Report and Directors' Remuneration Committee Report, are regarded as forming one and the same Directors' Report which is the management report for the purpose of DTR 4.1.8R.

Each of the Directors in office at the date of approval of this report has confirmed that:

·           so far as thatDirector is aware, there is no relevant audit information of which the Company's auditors are unaware; and

·           the Director has taken all of the steps that he ought to have taken as a director to make himself aware of any relevant audit information and to establish that the Company's auditors are aware of that information.

PRINCIPAL RISKS AND UNCERTAINTIES (from page 23 in the 2011 Annual Report)

The Board regularly reviews all of the major existing risks: and newly identified risks, and the mitigation action for each major risk. As part of the preparation of the documentation for the Placing and Open Offer in January 2011, the Board and its advisers undertook a thorough review of the risks and uncertainties that may affect the business of the Group. A summary of the more critical risks identified through that review and identified by the Board as having potential to affect the Company's operating results, financial control and/or the trading price of its shares is given below.

Principal Risks

Risks relating to real estate investment

·           Any weakening of rental yields and valuations could have an adverse impact on the Group's future profits

The Group has reported an increase in the value of its core medical centre investment properties in the year ended 31 March 2011. While the Board believes that the property valuations are fairly stated and its properties represent robust, defensive investments in the current market due to their long lease length and NHS backed covenant, any weakening of rental yields and valuations could adversely impact the Group's future profits including revaluation surpluses or deficits.

·           Property is inherently difficult to value

Property and property related assets are inherently difficult to value due to the individual nature of each property. As a result valuers' opinions may differ and there can be no guarantee that the estimates resulting from the valuation process will reflect sale prices in the future.

Risks relating to property development

·           Property development can be high risk and the Group may be exposed to cost overruns, completion delays and financing shortfalls

Property development can be high risk and the Group may be exposed to cost overruns, completion delays and financing shortfalls, in which case the Group is likely to need to commit more money to the relevant development than it had originally planned. Where a development may not be fully pre-let, should no tenants be found for the surplus space, the Group would be left with empty space in buildings which may have limited application to alternative uses. The Group's current policy is to engage in developments that are substantially pre-let with fixed price build contracts (or contracts with a price ceiling) in place at their inception.

Risks relating to corporate acquisitions

·           The future growth of the Group will in part be dependent on its ability to successfully identify, negotiate and  integrate corporate acquisitions

The Groups success in growing its portfolio and taking advantage of acquisition opportunities will be dependent on its ability to identify, negotiate and integrate purchases into its existing business without significant disruption. The commercial justification for any acquisition will normally include a heavy reliance on potential savings and synergies. Failure to negotiate a sensible transaction or integrate a new business effectively in a way that maximizes synergies could have a negative impact on the results of operations and/or financial condition of the Group.

Risks relating to regulation, Government Policy and tax

·           Changes in NHS procurement and funding could adversely affect the Group

The Group is operating in the primary healthcare market providing property, pharmacy and LIFT services to the NHS. Cuts in the funding available for rent of medical centres, delays and uncertainty while the Health & Social Care Bill is implemented, or other uncertainties such as future rental reimbursement mechanisms to GPs by the NHS, or changes to the LIFT operating models, may reduce expenditure available to fund services provided by the Group or impact on the covenant strength of the underlying tenants in future. Further changes to the reimbursement for the provision of pharmaceutical goods and services following the recent NHS pharmacy pricing reductions could have an adverse effect on the Group.

Risks relating to financing

·           Growth of the Group's business is dependent on the continued availability of funding for new projects

The growth of the Group's business, and in particular its medical centre property development business, is dependent on the continued availability of funding for new projects and it is not certain that facilities will be able to be secured in the future at levels or on terms acceptable to the Board.

·           A fall in asset value or revenues may result in the breach of financial covenants

A significant fall in the Group's underlying asset value may result in the Group breaching one or more of the financial covenants given to its lenders, although the Group's loans from Aviva are not subject to loan-to-value covenants and the Group's facilities from NAB, The Royal Bank of Scotland and Santander currently have significant headroom. In the event of a breaching of financial covenants, the Group may be required to repay such borrowings in whole or in part together with any costs. This could in turn result in assets having to be divested at unfavourable prices.

·           Access to new debt financing will depend on suitable market conditions and the maintenance of suitable long term credit ratings

The Group's loan from NAB expires in March 2013. If conditions in credit markets are unfavourable or the Group's credit rating is downgraded, new sources of funding may not be available or may be only available at higher cost.

·           Interest rate swaps may lead to cash outflows

The Group has entered into certain fixed interest rate loans and interest rate swap transactions with the objective of fixing its interest payments on its bank facilities. Repayments to NAB, planned and made ahead of schedule, have caused the amount drawn to fall below the amount hedged. To the extent that the amount drawn on its bank facilities is below the level envisaged in the swap contracts, or in periods when three month LIBOR is below the swap reference rate, there is a risk of the Group suffering cash outflows, as at present.

Residual Risk

In implementing its processes for identification, evaluation and management of significant risks, the Board has put in place a system which is designed to manage rather than eliminate risk of failure to achieve business objectives whilst accepting that such a system can only provide reasonable and not absolute assurance against material misstatement and loss.

Throughout the year covered by this report and up to the date of this report the Board believes there have been appropriate internal controls and risk management processes in place which have been reviewed and updated as described above. This process ensures that the Group complies with the relevant corporate governance requirements and best practice on risk management including the Turnbull Guidance.

AUDIT REPORT (from page 50 in the 2011 Annual Report)

To the Members of Assura Group Limited

We have audited the Parent Company Financial Statements of Assura Group Limited for the year ended 31 March 2011 which comprise the Company Income Statement, the Statement of Comprehensive Income, the Company Balance Sheet, the Company Statement of Changes in Equity, the Company Cash Flow Statement and the related Notes A to N. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

This report is made solely to the Company's members, as a body, in accordance with section 262 of the Companies (Guernsey) Law, 2008. 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.

Respective responsibilities of Directors and Auditors

As explained more fully in the Directors' Responsibilities Statement set out on page 8, the Directors are responsible for the preparation of the Company financial statements and for being satisfied that they give a true and fair view.

Our responsibility is to audit and express an opinion on the Company Financial Statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's (APB's) Ethical Standards for Auditors.

Scope of the Audit of the Company Financial Statements

An audit involves obtaining evidence about the amounts and disclosures in the Company Financial Statements sufficient to give reasonable assurance that the Company Financial Statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the Annual Report to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Opinion on Financial Statements

In our opinion the Company Financial Statements:

·          Give a true and fair view of the state of the Company's affairs as at 31 March 2011 and of its profit for the year then ended;

·          Have been properly prepared in accordance with IFRSs as adopted by the European Union; and

·          Have been properly prepared in accordance with the requirements of the Companies (Guernsey) Law, 2008.

Matters on which we are required to report by exception

We have nothing to report in respect of the following:

Under the Companies (Guernsey) Law, 2008 we are required to report to you if, in our opinion:

·          Proper accounting records have not been kept by the Company;

·          The Company's financial statements are not in agreement with the accounting records; or

·          We have not received all the information and explanations we require for our audit.

Other Matter

We have reported separately on the Group Financial Statements of Assura Group Limited for the year ended 31 March 2011.

Stuart Watson

For and on behalf of Ernst & Young LLP, Manchester

21 June 2011

 

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