Preliminary results for year ended 31 March 2012

RNS Number : 1150G

Assura Group Limited

26 June 2012

Assura Group Limited

("Assura" or the "Company")

Preliminary results for the year ended 31 March 2012

Business Highlights

· Total property assets £549 million (2011: £519 million) ¹.

· Rent roll has risen 12.2% to £34.9 million (core £32.2 million) at 31 March 2012, from £31.1 million (core £28.4 million) at 31 March 2011.

· 99 rent reviews settled in year (29.0% of portfolio by rental value): whole portfolio 3.41% uplift (core portfolio 3.12%).

· Core portfolio of 158 medical centres, with a weighted average lease length of 15.8 years (2011: 15.9 years).

· Net initial yield on core portfolio stable at 5.89% (2011: 5.87%), non-core net initial yield of 14.03% (2011: 10.37%).

· Core portfolio total return of 9.2% over 1 year and 7.4% over 5 years, compared to IPD² Primary Healthcare benchmark of 8.5% over 1 year and 6.3% over 5 years ³.

· 9 new developments completed at a total cost of £37.4 million, with 7.3% yield on cost. At 31 March 2012, 6 current projects on site with a committed cost to complete of £8.5 million, and a pipeline of a further 8 projects.

· Board has concluded to progress with conversion to REIT status.

Corporate & Refinancing Activity

· Refocused activity with the sale of Pharmacy and LIFT consultancy businesses sold for £36.3 million.

· Closure of NAB interest rate swap for a cash cost of £69 million, financed partly through the Rights Issue, which raised £33.5 million net of expenses and disposal proceeds.

· 10 year secured bond issue £110 million, refinancing maturing NAB facility. Average debt maturity now 12.3 years (2011: 9.4 years).

Financial Highlights

· Gross profit from continuing activities has grown 50.0% to £30.9 million (2011: £20.6 million).

· Underlying profit has increased to £7.1 million (2011: £0.7 million) ¹.

· Adoption of a progressive dividend policy, payable on a quarterly basis, with the first quarterly payment of 0.285 pence per share payable on 25 July 2012.

· Loss for the year £60.7 million (2011: profit £15.1 million) after charging exceptional swap costs of £54.7 million and other exceptionals of £20.3m (2011: £6.3 million).

· Adjusted NAV ⁴ at 31 March 2012 is 36.3 pence per share (2011: 55.5 pence per share), reduction is due to the loss for the year after exceptional items.

¹ See Chief Executive's Report and Operating and Financial Review

2 Investment Property Databank

3 To December 2011

4 Net Asset Value - note 10

Simon Laffin, Chairman said:

"Assura is a much changed Company with a new board, a high quality management team, led by our Chief Executive Graham Roberts, and a focus on delivering attractive returns to our shareholders as a primary care REIT.

Our largely government-backed rental stream and our long term secured financing now enable us to start paying a quarterly and progressive dividend."

Graham Roberts, Chief Executive said:

"Primary care is an attractive asset class with rental growth and capital appreciation. Assura's track record and skills mean it is well placed to benefit from increased development activity when it comes. In the meantime income from our core portfolio remains one of the strongest in the property sector."

For more information, please contact:

Assura Group Limited Tel: 01925 420660

Graham Roberts

Carolyn Jones

Espirito Santo Investment Bank Tel: 0207 456 9191

Peter Tracey

Richard Crawley

Andrew Fairclough

Jamie Richards

Investec Bank Plc Tel: 0207 597 5970

Gary Clarence

Patrick Robb

Daniel Adams

RLM Finsbury Tel: 020 7251 3801

Gordon Simpson

Arif Shah

Presentation and Live Webcast

A presentation will be held for analysts and investors on 26 June 2012 at 9.30 am London time, with a live webcast accessible via the following link:

http://www1.axisto.co.uk/webcasting/investis/assura/assura-june-2012/

Chairman's Statement

In the ten months that I have been Chairman, the Group has reaffirmed its strategic focus on primary care property and concluded the final steps to becoming a pure play property company once more.

Policy statements and legislation from successive Governments have all encouraged a greater share of health services to be delivered in the community, in the belief that General Practitioners and local health professionals are the key to driving greater efficiency and quality of patient experience. On the other hand, in order to make a step change in reducing NHS expenditure, the Government urgently needs to address the shortfall in modern, purpose-built primary care buildings. Investing now will generate sustained efficiency savings and improved patient care.

This combination of circumstances underlies the confidence the Board has in the focus of the business and that our prospects remain good to deliver excellent risk adjusted returns to our shareholders.

The last year has been one of great change in the Group. The Pharmacy and LIFT Consultancy businesses have been sold, and the acquisition of AH Medical Properties (AHMP) fully incorporated into Assura. Revenue from continuing operations increased by 40.3% to £34.1 million following the AHMP acquisition and the Group underlying profits were up to £7.1 million (2011: £0.7 million). Assura is unique amongst listed primary care investment vehicles in being internally managed so that shareholders enjoy scale benefits and suffer no leakage of fees to a third party manager.

The company had a number of legacy issues to deal with this year. Most importantly there was an interest rate swap that had become excessive compared to the liability that it was intended to hedge. In the context of falling interest rates and the need to secure refinancing, the Board had no option but to close this out at a cash cost of £69 million. In order to achieve this we launched a Rights Issue in November 2011, raising £33.5 million net of expenses. I would like to record the Board's sincere gratitude to our loyal shareholders for this support.

Following the cancellation of the swap we were successful in issuing a £110 million 10 year Bond, which replaced a maturing facility and extended our average debt maturity to 12.3 years. It also enabled us to lock in lower interest rates, where our average cost of debt is now 5.26%. Substantially all our debt is now at fixed rates or is fixed through economically effective swaps.

Our financial strength is underpinned by our core portfolio of 322 leases on 158 investment properties, with a weighted average unexpired lease length of 15.8 years, of which 90% is backed by the NHS covenant. This degree of income and debt security is exceptional in the property sector. Our core portfolio delivered 3.12% growth on reviews settled in the year, though we observe a slowing in the rate of growth in rents, which we believe will be a relatively short term feature of the market.

The Board has reviewed whether Assura should convert to REIT status and concluded that this would be in the best long term interests of shareholders. Following the abolition of the conversion charge anticipated with Royal Assent to the Finance Act this July, we intend to progress the various steps to enable us to make this election.

A key feature of REITs and the attraction of our business model is the importance of paying sustainable and growing dividends. In March we announced that we would in future pay dividends quarterly to reflect our three monthly rental income cycle. Our first dividend in July 2012 will be 0.285 pence per share, an annualised amount equivalent to 1.14 pence per share. Whilst reserving the ability to change the rate at any time, it is our intention to announce changes to the quarterly dividend rate once a year, normally in June. We will also introduce a scrip dividend programme on conversion to REIT status for those who would prefer equity rather than cash dividends.

Our Board has changed completely over the course of the year and I would like to thank my predecessor, Rodney Baker-Bates, our previous CEO, Nigel Rawlings, and the non-executive directors Peter Pichler and Clare Hollingsworth for their hard work and dedication to the Group over many years. I am delighted that we have been able to attract new directors of the quality of Graham Roberts, our new CEO, David Richardson, Chair of the Audit Committee, and Jenefer Greenwood, Chair of the Remuneration Committee. Graham Roberts, who spent almost ten years as a main board director of British Land, brings a fine mind and deep property knowledge to lead Assura in the years to come. I am very excited to be able to work with such a strong Board.

I would also like to thank our 25 staff for their dedication and focus during a year of unprecedented strain and change. They have my admiration in continuing to deliver sector-leading performance in such a tough environment.

Chief Executive's Report and Operating and Financial Review

Primary care property is an attractive asset class especially in the current uncertain economic climate - one of the few benefitting from supply and demand imbalances and experiencing rental growth. On the demand side, public policy is driving the need for a different property solution for community based healthcare. On the supply side much of the existing stock is insufficient for current needs.

The primary care property sector has proven resilient through a period of unprecedented economic and financial turmoil, with lower volatility than gilts and total returns of 6% comparing favourably against all commercial property which delivered minus 0.7% over the last 5 turbulent years. This is not surprising with primary healthcare's low default risk and lease periods extending well into the middle of the next decade.

Since joining as Chief Executive three months ago, I have been impressed with the depth of professionalism and enthusiasm of the team, the track record in the core business activity and the strength of relationships with health professionals, a key success factor in this market. Assura is well placed to succeed and to deliver excellent risk adjusted returns to shareholders.

The Assura business is much simpler now and I will explain the new structure below. Our property rental business is now split between our core holding of 158 primary care properties and our non-core assets, mainly acquired for the purposes of past businesses rather than property investment. We are investors in 6 LIFT companies (Local Improvement Finance Trusts) and are one of the largest investors in these important and successful public private partnerships supporting community based medical and related developments. These are shown as a separate segment as they differ from our core holdings as the tenant has a right to buy back the property at a later date; and control of the companies rests with the public sector.

Core: £505.7 million invested in 158 medical centres, ERV⁵ £34.0 million, weighted average unexpired lease length outstanding 15.8 years, initial yield 5.89%

Our own core portfolio of 158 medical centres is well-placed. Our task with the core portfolio is to continue to generate good returns. We will do this by a disciplined approach to sourcing new investments and in evaluating developments. Where existing core investments are expected to underperform we will also apply discipline in evaluating hold or sale decisions.

5 Estimated Rental Value

We achieved on average 3.12% annualised growth on rent reviews settled in the year, 2.5% excluding RPI and fixed uplift leases. These reviews date back to rent review dates from a range of periods.

Analysing the 2.5% open market review uplifts by calendar year of review shows a slowing trend. For 2010, 2011, 2012 calendar years the annualised rental growth on rent reviews settled in the financial year to March 2012 was 4.36%, 1.49% and 0.48% respectively. We believe this trend is in line with the market. The ERV of our portfolio was up by £315,000 or 1% in line with the IPD benchmark.

With 21.8% of our portfolio benefiting from RPI and fixed uplifts, and our track record of outperforming the primary care market, we would expect rents nonetheless to progress in the current year albeit at a more modest rate.

The core portfolio was valued by either Savills or DTZ at a total of £505.7 million (2011: £449.8 million). As at 31 March, our core portfolio produced a net initial yield of 5.89% (2011: 5.87%) and a net equivalent yield of 6.11% (2011: 6.12%) - with 90% of our income backed by government reimbursement, this is a healthy yield premium of over 3% on the equivalent maturity government bond.

The like for like valuation increase was £6.4m or 1.4%. This compares with IPD for the sector of 0.8%.

ERV of the core portfolio, which is a forward looking indicator increased by £315,000 or 1% (IPD 1%). There was some £52.9 million of net investment additions comprising £45.9 million of developments completed and transferred to investments, £9.1 million of new acquisitions, less £2.1 million of disposals. In addition when the Pharmacy division was sold during the first half year, £9.2 million of property, previously shown as owner occupied land and buildings, reverted back to investment property.

We completed 9 projects this year at a development cost of £37.4 million, a yield on cost of over 7.3% and a profit on cost of 14.3%. We have 6 new centres underway and a further 8 prospects we expect to commence this year, mostly using external development resource, with an aggregate development cost of some £41.7 million. Development costs to complete on committed projects amount to £8.5 million.

Leading GPs recognise the operational improvements that can be achieved through investing in their premises infrastructure enabling them to deliver more community-based services. In that context we are confident that renewed attention will be given to approvals for new primary care centre developments, reversing an observable decline over the last 18 months as the commissioning bodies within the NHS began to be reorganised.

We have a strong track record in identifying opportunities and will position ourselves to benefit from the pickup in development activity in due course.

The core portfolio contributed to earnings before interest and exceptional items in the year as follows:

	2012	2011
	£m	£m

Gross rental income	30.9	21.4
Other income	0.7	0.5
Direct property costs	(2.0)	(2.9)
Net rental income	29.6	19.0
% recovery	96%	89%

Valuation movement	8.5	12.6
Total Property Return	38.1	31.6

Relative to the IPD Primary Healthcare benchmark we have outperformed over 5 years at a total return level of 7.4% versus 6.3% and with rental value growth of 2.4% versus 2.1%.

Much of this outperformance derives from the performance of the new additions to the portfolio, and our focus on rent reviews for the core portfolio.

An important criterion for success in this market is the maintenance of sound relationships with GPs. New premises take up to 4 years to bring to a resolution and involve multiple stakeholders.

We already do well at these relationships. In light of its significance we will introduce a customer satisfaction survey during 2012/13 so as to introduce a continuous improvement approach to our tenant interaction.

LIFT £8.7 million loan notes and £1.8 million equity stakes in public-private consortia

We have some attractive investments in 6 LIFT companies, comprising loan notes and equity.

Local Improvement Finance Trusts are companies held by the public and private sector to develop and own medical centres predominantly let on long term inflation linked leases to Primary Care Trusts (PCTs). The PCTs have the right to buy back the building at the end of the lease on a formula which is based on fair value but incorporates a discount to fair value usually dependent on performance relative to a residual value estimate at the outset of the contract. The Group receives most of its current returns through its £8.7 million of loan stock. The carrying value of the LIFT investments at 31 March 2012 is £1.8 million, interest received was £0.9 million and our share of the profit in the consortia companies was £0.7 million contributing £1.6 million to underlying profit.

We need to remain close to this market as the NHS begins to reshape its estate. LIFT companies have priority for funding developments in their local areas and offer us the opportunity for adding value through development funding.

Non-core: £26.3 million (comprising £14.9 million investment property, £2.3 million vacant properties and £9.1 million of land sites), ERV £2.3 million, weighted average unexpired lease length 8.1 years.

We have surplus land and buildings and some legacy assets that relate to business activities we have exited. Our approach to non-core assets is that they need to deliver a better return over the medium term than our core holdings. Those that do not meet this criteria are considered available for sale although the timing of their sale will depend on market conditions and asset specific considerations.

The non-core portfolio declined in value by £7.0 million over the period and produced a net initial yield of 14.03% and net equivalent yield of 11.74% on the income earning assets. These are mostly secondary assets and with very limited debt finance available for secondary assets these are difficult assets to realise in the current market.

The non-core portfolio contributed to earnings in the year as follows:

	Total	Total
	2012	2011
	£m	£m

Gross rental income	2.5	2.4
Direct property costs	(1.2)	(0.8)
Net rental income	1.3	1.6
% recovery	52%	67%

Valuation movement	(7.0)	1.3
Total Property Return	(5.7)	2.9

The non-core portfolio includes the former head office, which was acquired in March 2008 and comprises a circa 55,000 square foot modern office building on the Daresbury business park near the M56. It is let on a lease with a break in 2016 and is currently part occupied on sub leases. The valuation of £6.2 million reflects an initial yield of 12.83% due to a difficult office rental market in the North West area. The passing rent is £860,000 per annum or £15 per square foot. Demand remains subdued in the region and rental levels are reducing due to an oversupply of office accommodation.

The non-core also includes three retail malls (valued at £5.3 million) in hospitals which are held on short leases which expire on average in 18 years. The valuation movement therefore reflects the fact that value is eroded over the life of the head-lease and also that there are limited buyers for such assets. These are challenging retail assets and have high direct property costs due to vacancies. Their valuation yields at 31 March 2012 were initial 15.97% (2011: 11.43%) and equivalent 13.16% (2011: 9.41%).

Other properties within non-core comprise surplus land of £9.1 million (2011: £9.9 million). Conditional sale agreements have been exchanged on over £5.5 million where the conditions relate to the purchaser progressing through the final stages of a planning process. There are also 20 other buildings with an estimated value of £5.7 million (2011: £8.8 million).

Total property assets	2012	2011
	£m	£m
Core	505.7	449.8
Non-core	14.9	20.0
Investment portfolio	520.6	469.8
Investment property under construction	8.4	35.0
Properties held for sale	11.4	9.8
Pharmacy lease premiums	5.7	3.2
Finance leases	3.1	1.0
Total	549.2	518.8

Balance sheet classification
Investment property	537.8	499.8
Land and buildings held for sale	11.4	9.8
Fixed assets - pharmacy occupied premises	-	9.2
Total	549.2	518.8

Underlying profit	2012	2011 (re-presented)
	£m	£m
Group trading profit	26.4	15.1
Share of losses of associates and joint ventures - excluding SWAPS	0.6	0.3
Share based payment credit	-	0.2
Finance revenue	1.3	1.5
Finance costs	(21.2)	(16.4)
Underlying profit	7.1	0.7

Administrative costs

Administration costs have been reduced substantially in recent periods as a result of the disposal of several major businesses over the last three years. The reduction in central costs of £1.0 million or 18% is the partial benefit of the office relocation and cost savings. Headcount has reduced from 66 at 31 March 2010 to 25 at 31 March 2012.

Discontinued businesses

During the year, the pharmacy and LIFT consulting businesses were sold for an aggregate consideration of £36.3 million and realising a profit of £3.1 million. Some £9.6 million of deferred consideration and vendor loans remains outstanding and is due in instalments over the next 2 years.

The contribution to profits before tax in the year from discontinued businesses amounts to £1.2 million (2011: £3.2 million).

Other restructuring costs and costs related to acquisition activities amounted to £0.3 million (2011: £3.7 million).

Goodwill

Following changes to commissioning arrangements in the NHS and the strategic changes in the group, including the disposal of the pharmacy and LIFT consultancy businesses, the group is now purely an investment property company and is managed as such by the Board.

In a period when the market for new developments is tighter, the company has adapted and many current projects have been sourced and built out in partnership with development partners who introduce projects to us.

In addition the volume of deals in the near term entirely derived from in-house development, and so supporting the carrying value of goodwill, is uncertain. Prospectively the development activity will also not be reported as a separate segment as it is regarded as just one means of sourcing new investment properties.

All these factors have led to a need to reassess goodwill and accordingly its carrying value has been fully impaired by £20.0 million.

Finance

Whilst financing remains challenging to many property businesses in these markets, it is pleasing that major insurance companies continue to have an appetite for primary care property lending, including development. We currently experience no shortage of debt finance. However the financial structure of the group remains concentrated in a small number of lending institutions and we would seek to encourage new entrants so as to improve diversity. We also intend over time to reduce the level of loan to value.

Our debt finance at the year-end comprised:

	2012	2011
	£m	£m
Loans:
- Aviva loans	213.1	191.6
- 10 year senior secured bond	110.0	-
- Santander facilities	52.4	40.0
- RBS loan	4.0	5.6
- NAB loan	-	126.0
Total loans	379.5	363.2
Issue costs	(3.9)	(1.4)
	375.6	361.8

Details of the facilities and their covenants are set out in note 20.

The NAB loan was repaid in December 2011 at the same time as the related swap was terminated at a cash cost of £69.5 million giving rise to a realisation of the mark to market and an exceptional financing charge of £52.7 million in the current year. The background to the swap termination was set out in the Chairman's letter to investors contained in the Rights Issue prospectus dated 2 December 2011.

Net interest costs in the year amounted to £19.9 million (2011: £14.9 million) included in both years £0.9 million receivable on LIFT loan notes. The increase is attributable to the net effect of the acquisition of AHMP and reduced interest rates as a result of the closure of the NAB swap.

The average interest rate at 31 March was 5.26% (2011: 5.49% rising with the then NAB swaps to 6.79%).

The loan to value at 31 March was 64% (2011: 63%) and the average debt maturity 12.3 years (2011: 9.4 years).

Taxation

Current year taxation

There is no tax charge with respect to current year results as a result of losses incurred in the year.

Deferred tax

As a result of the Board's decision to convert to REIT status the deferred tax asset carried forward amounts to £1.3m representing the tax relief anticipated against property rental profits until the expected date of conversion to REIT status and also on any non REIT income thereafter. The charge for the year of £1.5 million (2011: £3.4 million) is offset by tax losses foregone on business disposals of £1.5 million. The movement in the year is £1.0 million (2011: £3.4 million). At the half year the deferred tax asset was £13.0 million, the reduction being due to the decision to convert to REIT status.

This is an accounting difference only as the REIT status will allow the Group to operate largely free from taxes on rental income and capital gains from investment property disposals.

Cash flow

Net cash inflow from operating activities was £13.4 million. New investments were made of £23.3 million which were largely debt financed. The swap close out resulted in an outflow of £69.3 million, £16.6 million of which was provided at the previous year end, which was funded by rights issue net proceeds of £33.5 million and existing cash resources which had been increased by disposal proceeds of assets and businesses of £24.9 million. A bond issue of £110 million and an increased loan of £10.0 million from Santander, refinanced the NAB bank loan of £120 million. Dividends paid were £5.1 million. Cash and cash equivalents reduced by £17.5 million.

Net Asset Value declined year on year by £32.2 million as follows:

			£m
Net asset value at 31 March 2011			220.1
Operating profit pre goodwill impairment			31.3
Profit from discontinued operations			1.6
Dividend			(5.1)
Rights issue proceeds			33.5
Swap costs			(54.7)
Other finance cost			(19.9)
Deferred tax			1.0
Goodwill impairment			(20.0)
Other			0.1
Net asset value 31 March 2012			187.9
EPRA adjustments (note 10)			4.3
EPRA net asset value at 31 March 2012			192.2

Earnings per share

The adjusted basic and diluted loss per share for the year is 2.70 pence (2.35 pence loss from continuing operations and 0.35 pence profit from discontinued operations) (2011: 4.40 pence profit - 3.34 pence profit from continuing operations and 1.06 pence profit from discontinued operations).

Dividends

The Company has adopted a progressive dividend policy, payable on a quarterly payment cycle in line with the timing of its rental receipts and has declared its first quarterly dividend of 0.285 pence per share to be payable on 25 July 2012. On conversion to a REIT it is intended to introduce a scrip dividend programme providing investors with the option to receive shares rather than cash.

Assura Group Limited

Consolidated Income Statement

For the year from 1 April 2011 to 31 March 2012

		2012	2011 (re-presented)⁶
	Notes	£m	£m
Continuing operations
Revenue	3	34.1	24.3
Cost of sales	4	(3.2)	(3.7)
Gross profit		30.9	20.6

Administrative expenses		(4.5)	(5.5)
Group trading profit		26.4	15.1

Revaluation gains		1.5	13.9
Gain on sale of investment property		0.1	0.4
Share of profits/(losses) of associates and joint ventures		3.6	(0.3)
Share based payment credit		-	0.2
Exceptional items	7	(20.3)	(6.3)

Operating profit		11.3	23.0

Finance revenue	5	1.3	1.5
Finance costs	6	(21.2)	(16.4)
Loss on derivative financial instrument		(54.7)	-
(Loss)/profit before taxation		(63.3)	8.1
Taxation	8	1.0	3.4
(Loss)/profit for the year from continuing operations		(62.3)	11.5

Discontinued operations
Profit for the year from discontinued operations		1.6	3.6
(Loss)/profit for the year and attributable to equity holders of the parent		(60.7)	15.1

(Loss)/earnings per share (pence)
Basic and diluted (loss)/earnings per share from continuing operations	9	(13.81)p	2.31p
Adjusted basic and diluted earnings per share from continuing operations	9	2.35p	3.34p
Basic and diluted (loss)/earnings per share on (loss)/profit for the year	9	(13.46)p	3.37p
Adjusted basic and diluted earnings per share on (loss)/profit for the year	9	2.70p	4.40p

6 The Consolidated Income Statement has been re-presented for the year to 31 March 2011 to transfer profits and losses from the Pharmacy and LIFT consultancy divisions to profit for the year from discontinued operations.

Assura Group Limited

Consolidated Statement of Comprehensive Income

For the year from 1 April 2011 to 31 March 2012

	2012	2011
	£m	£m

(Loss)/profit for the year	(60.7)	15.1

Revaluation of land and buildings	-	1.1
Other comprehensive income for the year, net of tax	-	1.1

Total comprehensive (loss)/profit for the year net of tax attributable to equity holders of the parent	(60.7)	16.2

Assura Group Limited

Consolidated Balance Sheet

as at 31 March 2012

		2012	2011
	Notes	£m	£m
Non-current assets
Investment property	11	537.8	499.8
LIFT investments and associates	12	10.5	9.9
Intangible assets	13	-	44.5
Property, plant and equipment	14	0.2	13.2
Derivative financial instruments at fair value		-	0.2
Deferred tax asset	25	1.3	1.8
		549.8	569.4
Current assets
Cash, cash equivalents and restricted cash	15	21.4	38.9
Trade and other receivables	16	13.8	12.0
Pharmacy inventories		-	2.3
Property assets held for sale		11.4	9.8
		46.6	63.0
Total assets		596.4	632.4
Current liabilities
Trade and other payables	17	13.0	20.4
Borrowings	20	6.9	3.1
Derivative financial instruments at fair value	21	0.2	3.3
Deferred revenue	18	7.8	7.4
Provisions	19	0.1	0.5
		28.0	34.7
Non-current liabilities
Borrowings	20	368.7	358.7
Obligations due under finance leases	17	3.1	0.9
Derivative financial instruments at fair value	21	2.3	14.2
Deferred revenue	18	5.5	3.0
Provisions	19	0.9	0.8
		380.5	377.6
Total liabilities		408.5	412.3
Net assets		187.9	220.1
Capital and reserves
Share capital		53.0	41.2
Own shares held		(1.9)	(2.0)
Share premium		77.1	55.4
Distributable reserve		205.5	210.6
Retained earnings		(149.7)	(89.0)
Revaluation reserve		3.9	3.9
Total equity		187.9	220.1

Basic and diluted net asset value per Ordinary Share	10	35.48p	50.53p
Adjusted basic and diluted net asset value per Ordinary Share	10	36.30p	55.51p

The financial statements were approved at a meeting of the Board of Directors held on 25 June 2012 and signed on its behalf by:

Graham Roberts, Executive Director

Simon Laffin, Chairman

Assura Group Limited

Consolidated Statement of Changes in Equity

For the year from 1 April 2011 to 31 March 2012

	Share Capital	Own Shares Held	Share Premium	Distributable Reserve	Retained Earnings	Revaluation Reserve	Total Equity
	£m	£m	£m	£m	£m	£m	£m

1 April 2010	31.8	(5.1)	23.2	213.7	(104.2)	3.3	162.7
Revaluation of land and buildings	-	-	-	-	-	1.1	1.1
Profit for the year	-	-	-	-	15.1	-	15.1
Total comprehensive income	-	-	-	-	15.1	1.1	16.2
Dividends paid	-	-	-	(3.1)	-	-	(3.1)
Issue of Ordinary Shares	9.4	-	33.4	-	-	-	42.8
Issue costs	-	-	(1.2)	-	-	-	(1.2)
Sale of own shares held	-	3.1	-	-	(0.1)	-	3.0
Depreciation transfer for land and buildings	-	-	-	-	0.5	(0.5)	-
Cost of employee share-based incentives	-	-	-	-	(0.3)	-	(0.3)
31 March 2011	41.2	(2.0)	55.4	210.6	(89.0)	3.9	220.1

Loss for the year	-	-	-	-	(60.7)	-	(60.7)
Total comprehensive loss	-	-	-	-	(60.7)	-	(60.7)
Dividends paid	-			(5.1)	-	-	(5.1)
Issue of Ordinary Shares	11.8	-	23.5	-	-	-	35.3
Issue costs	-	-	(1.8)	-	-	-	(1.8)
Sale of own shares held	-	0.1	-	-	-	-	0.1
31 March 2012	53.0	(1.9)	77.1	205.5	(149.7)	3.9	187.9

Assura Group Limited

Consolidated Cash Flow Statement

For the year from 1 April 2011 to 31 March 2012

		Year ended 31 March 2012	Year ended 31 March 2011
	Note	£m	£m
Operating Activities
Rent received		36.8	27.4
Revenue from pharmacies		10.2	34.1
Fees received		2.8	4.2
LIFT and bank interest received		1.6	1.2
Cash paid to suppliers and employees		(10.8)	(21.2)
Purchases by pharmacies		(6.9)	(23.4)
Acquisition costs		(0.3)	(3.7)
Interest paid and similar charges		(20.0)	(15.7)
Net cash inflow from operating activities	23	13.4	2.9

Investing Activities
Purchase of investment property		(5.1)	(0.9)
Development spend		(18.9)	(19.0)
Proceeds from sale of property		2.6	11.1
Proceeds from sale of businesses		22.3	-
Investment in property, plant and equipment		(0.3)	(1.5)
Proceeds from sale of other fixed assets		0.5	0.7
Costs associated with securing pharmacy licenses		-	(0.2)
Cash acquired on acquisition of subsidiaries		-	1.2
Loans advanced to associated companies		(0.5)	(1.8)
Loans advanced to joint ventures		(0.1)	(0.1)
Subsidiaries acquired		(0.5)	(6.9)
Net cash outflow from investing activities		-	(17.4)

Financing Activities
Issue of Ordinary Shares		35.3	23.4
Issue costs paid on issuance of Ordinary Shares		(1.8)	(1.2)
Own shares sold		0.1	3.0
Dividends paid		(5.1)	(3.1)
Repayment of loan		(146.1)	(11.0)
Long-term loans and bond drawdown		159.0	20.2
Swap cash settlement		(69.5)	-
Loan issue costs		(2.8)	(0.2)
Repayment of convertible loan		-	(2.1)
Net cash (outflow)/inflow from financing activities		(30.9)	29.0

(Decrease)/increase in cash and cash equivalents		(17.5)	14.5

Opening cash and cash equivalents		38.9	24.4

Closing cash and cash equivalents		21.4	38.9

Assura Group Limited

Notes to the Consolidated Financial Statements

For the year from 1 April 2011 to 31 March 2012

1. Principal accounting policies

Basis of preparation

The financial information set out in this preliminary announcement is derived from but does not constitute the Group's statutory accounts for the year ended 31 March 2012 and the year ended 31 March 2011, and as such, does not contain all information required to be disclosed in the financial statements prepared in accordance with the International Financial Report Standards ("IFRS"). The financial information has been extracted from the Group's audited consolidated statutory accounts upon which the auditors have issued an unqualified opinion.

Consolidation

The consolidated financial statements have been prepared on a historical cost basis, except for investment properties including investment properties under construction and land and derivative financial instruments that have been measured at fair value.

The financial statements are presented in pounds sterling to the nearest 0.1 million.

The Group financial statements consolidate the financial statements of Assura and its subsidiary undertakings drawn up to 31 March 2012.

All intra-Group balances, transactions, income and expenses and profits and losses resulting from intra-Group transactions that are recognised in assets, are eliminated in full.

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 the power to govern the financial and operating policies of the investee so as to obtain benefit from its activities and is achieved through direct or indirect ownership of voting rights, currently exercisable or convertible potential voting rights, or by way of contractual agreement. The financial statements of subsidiaries used in the preparation of the consolidated financial statements are prepared for the same reporting period as the parent company and are based on consistent accounting policies. Acquisition-related costs are recognised in profit or loss as incurred.

Joint ventures and associates

The results of joint ventures or associates acquired or disposed of during the year are included based on the proportion of ownership from the effective date of acquisition or to the effective date of disposal. Accounting practices of subsidiaries, joint ventures or associates which differ from Group accounting policies are adjusted on consolidation.

Joint ventures and associates are accounted for under the equity method, whereby the consolidated balance sheet incorporates the Group's share of the net assets of its joint ventures and associates. The consolidated income statement incorporates the Group's share of joint venture and associate profits after tax upon elimination of upstream transactions. Their results include revaluation movements on investment properties and fair value movements on derivatives.

Interests in associates include long term loans receivable, which are held at amortised cost less provision for any impairment.

Going concern

The financial statements are prepared on a going concern basis.

Properties

Properties are externally valued on an open market basis as at the balance sheet date. Investment and owner-occupied properties are recorded at valuation.

Any surplus or deficit arising on revaluing investment and development properties is recognised in the income statement.

Any surplus arising on revaluing owner-occupied properties above cost is recognised in equity and any deficit arising in revaluation below cost is recognised in the income statement.

The cost of properties in the course of development includes attributable interest and other associated outgoings. Interest is calculated on the development expenditure by reference to specific borrowings where relevant and otherwise on the average rate applicable to short-term loans. Interest is not capitalised where no development activity is taking place. A property ceases to be treated as a development property on practical completion.

Disposals are recognised on completion: profits and losses arising are recognised through the income statement, the profit on disposal is determined as the difference between the sales proceeds and the carrying amount of the asset at the commencement of the accounting period plus additions in the period.

In determining whether leases and related properties represent operating or finance leases, consideration is given to whether the tenant or landlord bears the risks and rewards of ownership.

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.

Intangible assets

Intangible assets are measured initially at fair value and impaired as appropriate.

Goodwill

Goodwill arising on consolidation represents the excess of the cost of acquisition over the Group's interest in the fair value of the identifiable assets and liabilities of the subsidiary, associate or jointly controlled entity at the time of acquisition. Goodwill is reviewed for impairment on an annual basis.

Financial assets and liabilities

Trade receivables and payables are initially recognised at fair value and subsequently measured at amortised cost and discounted as appropriate.

Other investments are shown at amortised cost and held as loans and receivables. 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.

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 finance lease obligation.

Property assets held for sale are measured at fair value with gains or losses included in the consolidated income statement.

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, using the effective interest method.

Financial Instruments

Where the Group uses derivative financial instruments, in the form of interest rate swaps, to hedge its risks associated with interest rate fluctuations they are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. The resulting gains or losses are recognised through the Consolidated Income Statement.

Derivatives are carried as assets when the fair value is positive and as liabilities when the fair value is negative. The fair value of interest rate swap contracts is determined by reference to market values for similar instruments.

Cash equivalents are limited to instruments with a maturity of less than three months.

Net rental income

Rental revenue - rental income arising from operating leases on investment properties is accounted for on a straight line basis over the lease term and is shown net of VAT. Pharmacy lease premiums received from tenants 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 management fees - income is accounted for on an accruals basis.

Taxation

Current tax is based on taxable profit for the year and is calculated using tax rates that have been enacted or substantively enacted. 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, on an undiscounted basis. On business combinations, the deferred tax effect of fair value adjustments is incorporated in the consolidated balance sheet.

Property, plant and equipment

Land and buildings are measured at fair value less depreciation on buildings and impairment charged subsequent to the date of the revaluation. Fair value is based on independent values of the property apportioned between that element used for the business of the Group and that element rented to third parties.

Plant and equipment is stated at cost, excluding the costs of day to day servicing, less accumulated depreciation and accumulated impairment in value.

Depreciation is provided on a straight line basis at rates calculated to write off the cost less estimated residual value of each asset over its useful life, as follows:

Buildings	50 years
Fixtures, fittings and furniture	Between 4 and 25 years depending on the nature of the asset
Computer, medical and other equipment	Between 3 and 10 years depending on the nature of the equipment

Valuations are performed frequently to ensure that the fair value of a revalued asset does not differ materially from its carrying amount. Any revaluation surplus is credited to the asset Revaluation Reserve included in the equity section of the balance sheet, except to the extent that it reverses a revaluation decrease of the same asset previously recognised in the Consolidated Income Statement, in which case the increase is recognised in the Consolidated Income Statement. A revaluation deficit is recognised in the Consolidated Income Statement, except that a deficit directly offsetting a previous surplus on the same asset is directly offset against the surplus in the asset revaluation reserve.

An annual transfer from the asset Revaluation Reserve to retained earnings is made for the difference between depreciation based on the revalued carrying amount of the assets and depreciation based on the asset's original cost. Additionally, accumulated depreciation as at the revaluation date is eliminated against the gross carrying amount of the asset and the net amount is restated to the revalued amount of the asset. Upon disposal, any revaluation reserve relating to the particular asset being sold is transferred to retained earnings.

The assets' residual values, useful lives and methods of depreciation are reviewed, and adjusted if appropriate, at each financial year end.

Leases

Group as a lessee

Assets held under finance leases, which transfer to the Group substantially all the risks and benefits incidental to ownership of the leased item, are capitalised at the inception of the lease, with a corresponding liability being recognised for the lower of the fair value of the leased asset and the present value of the minimum lease payments. Lease payments are apportioned between the reduction of the lease liability and finance charges in the Consolidated Income Statement so as to achieve a constant rate of interest on the remaining balance of the liability. Assets held under finance leases are depreciated over the shorter of the estimated useful life of the asset and the lease term.

Leases where the lessor retains a significant portion of the risks and benefits of ownership of the asset are classified as operating leases and rentals payable are charged in the Consolidated Income Statement on a straight line basis over the lease term.

Group as a lessor

The Group has entered into commercial property leases on its investment property portfolio. The Group has determined, based on an evaluation of the terms and conditions of the arrangements, that it retains all the significant risks and rewards of ownership of these properties and so accounts for the leases as operating leases.

Provisions

A provision is recognised when the Group has a legal or constructive obligation as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. If the effect is material, expected future cash flows are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability.

Share-based payment transactions

Employees (including senior executives) of the Group receive remuneration in the form of share-based payment transactions, whereby employees render services as consideration for equity instruments ('equity settled transactions').

In situations where some or all of the goods or services received by the entity as consideration for equity instruments cannot be specifically identified, they are measured as the difference between the fair value of the share-based payment and the fair value of any identifiable goods or services received at the grant date. For cash-settled transactions, the liability is measured at each reporting date until settlement.

Equity-settled transactions

The cost of equity-settled transactions with employees, for awards granted, is measured by reference to the fair value at the date on which they are granted. The fair value is determined by reference to market price on the date of grant.

In valuing equity-settled transactions, no account is taken of any vesting conditions, other than conditions linked to the price of the shares of the company (market conditions).

The cost of equity-settled transactions is recognised by a charge in the Consolidated Income Statement, together with a corresponding credit in Retained Earnings, over the period in which the performance and/or service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award ('the vesting date'). The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group's best estimate of the number of equity instruments that will ultimately vest. The Consolidated Income Statement charge or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that period.

No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market vesting condition or a non-vesting condition, which are treated as vesting irrespective of whether or not the market vesting conditions or non-vesting conditions are satisfied, provided that all other non-market vesting conditions are satisfied.

Where the terms of an equity-settled award are modified, the minimum expense recognised is the expense if the terms had not been modified. An additional expense is recognised for any modification, which increases the total fair value of the share-based payment arrangement, or is otherwise beneficial to the employee as measured at the date of modification.

Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any cost not yet recognised in the Consolidated Income Statement for the award is expensed immediately. Any compensation paid up to the fair value of the award at the cancellation or settlement date is deducted from equity, with any excess over fair value being treated as an expense in the Consolidated Income Statement.

An equity-settled award is deemed to be forfeited when an employee is either made redundant or resigns from the Company. In the event of forfeiture the cumulative expense recognised in the Consolidated Income Statement since the date of grant is reversed immediately.

Cash-settled transactions

The cost of cash-settled transactions is measured initially at fair value at the grant date using a binomial model. This fair value is expensed over the period until vesting with recognition of a corresponding liability.

The fair value of equity-settled share-based payments to employees is determined at the date of grant and is expensed on a straight-line basis over the vesting period based on the Group's estimate of shares or options that will eventually vest. In the case of options granted, fair value is measured by a Black-Scholes pricing model. Compensation linked to performance fees accrued by the Group is amortised over the vesting period.

Adoption of new and revised Standards

In the current year, the following new and revised Standards and Interpretations have been adopted and have affected the amounts reported in these financial statements.

Standards affecting the financialstatements

The following amendments were made as part of Improvements to IFRSs (2010).

Amendment to IFRS 7 Financial Instruments: Disclosures - the amendment clarifies the required level of disclosure around credit risk and collateral held and provides relief from disclosure of renegotiated financial assets. The impact of this amendment has been to reduce the level of disclosure provided on collateral that the entity holds as security on financial assets that are past due or impaired.

Standards not affecting the reported results nor the financial position

The following new and revised Standards and Interpretations have been adopted in the current year. Their adoption has not had any significant impact on the amounts reported in these financial statements but, with the exception of the amendment to IFRS 1, may impact the accounting for future transactions and arrangements.

Amendment to IFRS 1 - Limited Exemption from Comparative IFRS 7 Disclosures for First-time Adopters

The amendment provides a limited exemption for first-time adopters from providing comparative fair value hierarchy disclosures under IFRS 7.

IAS 24 (2009) - Related Party Disclosures

The revised standard has a new, clearer definition of a related party, with inconsistencies under the previous definition having been removed.

Amendment to IAS 32 - Classification of Rights Issues

Under the amendment, rights issues of instruments issued to acquire a fixed number of an entity's own non-derivative equity instruments for a fixed amount in any currency and which otherwise meet the definition of equity are classified as equity.

Amendments to IFRIC 14 - Prepayments of a Minimum Funding Requirement

The amendments now enable recognition of an asset in the form of prepaid minimum funding contributions.

Improvements to IFRSs 2010 - Aside from those items already identified above, the amendments made to standards under the 2010 improvements to IFRSs have had no impact on the group.

Standards in issue not yet effective

At the date of authorisation of these financial statements, the following Standards and Interpretations which have not been applied in these financial statements were in issue but not yet effective (and in some cases had not yet been endorsed by the EU):

· IFRS 7 (amended): Disclosures - Transfers of Financial Assets

· IFRS 9: Financial Instruments

· IFRS 10: Consolidated Financial Statements

· IFRS 11: Joint Arrangements

· IFRS 12: Disclosure of Interests in Other Entities

· IFRS 13: Fair Value Measurement

· IAS 1 (amended): Presentation of Items of Other Comprehensive Income

· IAS 12 (amended): Deferred Tax: Recovery of Underlying Assets

· IAS 19 (revised): Employee Benefits

· IAS 27 (revised): Separate Financial Statements

· IAS 28 (revised): Investments in Associates and Joint Ventures

The directors do not expect that the adoption of the standards listed above will have a material impact on the financial statements of the group in future periods, except as follows:

· IFRS 9 will impact both the measurement and disclosures of Financial Instruments;

· IFRS 12 will impact the disclosure of interests the group has in other entities; and

· IFRS 13 will impact the measurement of fair value for certain assets and liabilities as well as the associated disclosures.

Beyond the information above, it is not practicable to provide a reasonable estimate of the effect of these standards until a detailed review has been completed.

2. Segmental information

Following the adoption of IFRS 8, the Group's operating segments are internally reported to the Chief Executive based on three business segments being core, non-core and LIFT. All the Group's activities and investments in primary healthcare properties and related activities are situated in the UK and in Guernsey.

The following table presents revenue, profit and certain assets and liability information regarding the Group's business segments:

Year ended 31 March 2012:

	Core	LIFT	Non-Core	Continuing	Discontinued	Total
	£m	£m	£m	£m	£m	£m
Gross rental income	30.9	-	2.5	33.4	-	33.4
Non rental income	0.7	-	-	0.7	12.1	12.8
Direct property costs	(2.0)	-	(1.2)	(3.2)	-	(3.2)
Other cost of sales	-	-	-	-	(7.4)	(7.4)
Gross profit	29.6	-	1.3	30.9	4.7	35.6

Administration costs	(4.5)	-	-	(4.5)	(3.5)	(8.0)
Share of profits/(losses) of associates and joint ventures	-	0.7	(0.1)	0.6	(3.1)	(2.5)
Underlying operating profit/(loss)	25.1	0.7	1.2	27.0	(1.9)	25.1
Net finance (cost)/revenue	(19.8)	0.9	(1.0)	(19.9)	-	(19.9)
Underlying profit/(loss)	5.3	1.6	0.2	7.1	(1.9)	5.2
Unrealised surplus/(deficit) on revaluation	8.5	-	(7.0)	1.5	-	1.5
Realised surplus on disposal of assets held for sale	-	-	0.1	0.1	-	0.1
Release of provision against associates	-	3.1	-	3.1	-	3.1
Revaluation of derivative in associates	-	(0.1)	-	(0.1)	-	(0.1)
Exceptional items (note 7)	(20.3)	-	-	(20.3)	3.1	(17.2)
Segment result	(6.5)	4.6	(6.7)	(8.6)	1.2	(7.4)
Exceptional swap costs				(54.7)	-	(54.7)
Taxation				1.0	0.4	1.4
(Loss)/profit for the year				(62.3)	1.6	(60.7)

The Core segment invests in, manages and develops primary care premises.

LIFT companies develop and invest in medical centres in partnership between the public and private sectors. All these companies are associated companies which have financial investments in the LIFT companies.

The non-core segment actively manages the assets to realise maximum value through both income and capital receipts from sales. Unrealised surpluses or deficits on revaluation of investment properties are split between core and non-core, based upon the properties to which they relate.

The discontinued segment includes the results of the pharmacy, LIFT consultancy divisions and the former equity accounted interest in Virgin Healthcare Holdings Limited.

Year ended 31 March 2011:

	Core	LIFT	Non-Core	Continuing	Discontinued	Total
	£m	£m	£m	£m	£m	£m
Gross rental income	21.4	-	2.4	23.8	-	23.8
Non rental income	0.5	-	-	0.5	37.8	38.3
Direct property costs	(2.9)	-	(0.8)	(3.7)	-	(3.7)
Other cost of sales	-	-	-	-	(24.2)	(24.2)
Gross profit	19.0	-	1.6	20.6	13.6	34.2

Administration costs	(5.0)	-	(0.5)	(5.5)	(9.9)	(15.4)
Cost of employee share-based incentives	0.2	-	-	0.2	0.1	0.3
Share of profits/(losses) of associates and joint ventures	-	0.7	(0.4)	0.3	(2.4)	(2.1)
Underlying operating profit	14.2	0.7	0.7	15.6	1.4	17.0
Net finance (cost)/revenue	(14.8)	0.9	(1.0)	(14.9)	-	(14.9)
Underlying profit	(0.6)	1.6	(0.3)	0.7	1.4	2.1
Unrealised surplus on revaluation	12.6	-	1.3	13.9	-	13.9
Realised surplus on disposal of assets held for sale	-	-	0.4	0.4	-	0.4
Revaluation of derivative in associates	-	(0.6)	-	(0.6)	-	(0.6)
Exceptional items (note 7)	(6.3)	-	-	(6.3)	1.8	(4.5)
Segmental result	5.7	1.0	1.4	8.1	3.2	11.3
Taxation				3.4	0.4	3.8
Profit for the year				11.5	3.6	15.1

Assets and Liabilities at 31 March 2012

	Core	LIFT	Non-Core	Continuing	Discontinued	Total
	£m	£m	£m	£m	£m	£m
Fixed assets	520.4	-	17.6	538.0	-	538.0
Investments and loan stock	-	10.5	-	10.5	-	10.5
Current assets	34.4	-	12.2	46.6	-	46.6
Segment assets	554.8	10.5	29.8	595.1	-	595.1
Deferred tax asset				1.3	-	1.3
Total assets				596.4	-	596.4
Segment liabilities
Current liabilities	(29.1)	-	(4.3)	(33.4)	-	(33.4)
Derivative financial instruments				(2.4)	-	(2.4)
Non-current liabilities				(372.7)	-	(372.7)
Total liabilities				(408.5)	-	(408.5)

Other segmental information
Capital expenditure:
Property, plant and equipment	-	-	-	-	0.4	0.4
Depreciation	0.1	-	-	0.1	0.1	0.2

Assets and liabilities at 31 March 2011

Intangibles	17.1	-	-	17.1	27.5	44.6
Fixed assets	483.7	-	25.7	509.4	3.8	513.2
Investments and loan stock	-	6.7	-	6.7	3.2	9.9
Current assets	40.5	-	10.4	50.9	12.0	62.9
Segment assets	541.3	6.7	36.1	584.1	46.5	630.6
Deferred tax asset				1.8	-	1.8
Total assets				585.9	46.5	632.4
Segment liabilities
Current liabilities	(27.8)	-	(1.7)	(29.5)	(8.2)	(37.7)
Derivative financial instruments				(14.2)	-	(14.2)
Non-current liabilities				(360.4)	-	(360.4)
Total liabilities				(404.1)	(8.2)	(412.3)

Other segmental information
Capital expenditure:
Property, plant and equipment	0.6	-	-	0.6	1.2	1.8
Intangible assets	-	-	-	-	6.7	6.7
Depreciation	0.7	-	-	0.7	0.3	1.0

	Continuing operations	Discontinued operations	Total 2012	Continuing operations	Discontinued operations	Total 2011
	£m	£m	£m	£m	£m	£m
3. Revenue

Rental revenue - core	30.9	-	30.9	21.4	-	21.4
Rental revenue - non-core	2.5	-	2.5	2.4	-	2.4
Pharmacy sales	-	10.0	10.0	-	34.1	34.1
LIFT consultancy fees	-	2.1	2.1	-	3.7	3.7
Other income	0.7	-	0.7	0.5	-	0.5
Total revenue	34.1	12.1	46.2	24.3	37.8	62.1

LIFT interest	0.9	-	0.9	0.9	-	0.9
Bank and other interest	0.4	-	0.4	0.6	-	0.6
	1.3	-	1.3	1.5	-	1.5

Total	35.4	12.1	47.5	25.8	37.8	63.6

4. Cost of sales

Property expenses arising
- from core portfolio	2.0	-	2.0	2.9	-	2.9
- from non-core portfolio	1.2	-	1.2	0.8	-	0.8
Purchases by pharmacies	-	6.9	6.9	-	23.4	23.4
LIFT consultancy costs	-	0.5	0.5	-	0.8	0.8
	3.2	7.4	10.6	3.7	24.2	27.9

5. Finance revenue

LIFT interest	0.9	-	0.9	0.9	-	0.9
Bank and other interest	0.4	-	0.4	0.6	-	0.6
	1.3	-	1.3	1.5	-	1.5

6. Finance costs

Interest payable	21.9	-	21.9	17.0	-	17.0
Interest capitalised on developments	(1.0)	-	(1.0)	(0.8)	-	(0.8)
Amortisation of loan issue costs	0.3	-	0.3	0.2	-	0.2
	21.2	-	21.2	16.4	-	16.4
Loss on closing out derivative financial instrument (note 21)	54.7	-	54.7	-	-	-
	75.9	-	75.9	16.4	-	16.4

Interest was capitalised on property developments between 5-6% (2011: 6%).

7. Exceptional items		Continuing operations	Discontinued operations	Total 2012	Continuing operations	Discontinued operations	Total 2011
	Note	£m	£m	£m	£m	£m	£m

Goodwill impairment	13	(20.0)	-	(20.0)	(2.9)	-	(2.9)
Surplus on disposal of pharmacy business	26	-	3.4	3.4	-	-	-
Loss on disposal of LIFT consultancy business	26	-	(0.3)	(0.3)	-	-	-
Acquisition costs		(0.3)	-	(0.3)	(1.9)	-	(1.9)
Reversal of impairment on pharmacy licences	13	-	-	-	-	1.2	1.2
Negative goodwill on acquisition of AH Medical Properties plc		-	-	-	0.4	-	0.4
AH Medical Properties plc employee termination payments		-	-	-	(0.4)	-	(0.4)
AH Medical Properties plc asset management agreement termination fee		-	-	-	(1.5)	-	(1.5)
Assura Pharmacy (South West) Limited revaluation of assets on step acquisition		-	-	-	-	0.2	0.2
Reversal of impairment of property, plant and equipment	14	-	-	-	-	0.4	0.4
Restructuring costs		-	-	-	(0.3)	-	(0.3)
Premises provision	19	-	-	-	0.3	-	0.3
		(20.3)	3.1	(17.2)	(6.3)	1.8	(4.5)

8. Taxation

Consolidated income tax	2012	2011
	£m	£m
Current Tax
Current income tax charge	-	-

Deferred Tax
Relating to origination and reversal of temporary differences	(1.0)	(0.1)
Release of deferred tax on revaluation arising on acquisition	-	(3.4)
Relating to changes in tax rates	-	0.1
Income tax (credit) reported in consolidated income statement	(1.0)	(3.4)
The differences from the standard rate of tax applied to the profit before tax may be analysed as follows:
	2012	2011
	£m	£m
(Loss)/profit from continuing operations before taxation	(63.3)	8.1
Profit from discontinued operations before taxation	1.2	3.2
Net (loss)/profit before taxation	(62.1)	11.3

UK income tax at rate of 26% (2011: 28%)	(16.1)	3.2
Effects of:
Capital losses	(26.8)	-
Non taxable income	(1.4)	-
Unrealised surplus not tax deductible on revaluation of other investments	-	0.1
Expenses not deductible for tax purposes	5.7	0.9
Arising on acquisition of AH Medical Properties plc	-	(3.4)
Utilisation of losses brought forward	(0.7)	-
Gain on disposal of investments/assets	(0.9)	-
Movement in unrecognised deferred tax	38.9	(4.4)
Adjustment in respect of prior years	0.3	0.2
	(1.0)	(3.4)

With effect from 3 April 2008 the Group's affairs have been conducted such that it is resident in the UK for tax purposes. All profits are therefore subject to Corporation Tax at 26% (2011: 28%).

In his budget of 21 March 2012, the Chancellor of the Exchequer confirmed the elimination of the conversion charge for applying for REIT status. As the directors expect to elect to REIT status within the foreseeable future, deferred tax on losses during the year have only been recognised for the expected period to conversion.

In addition the Chancellor announced a reduction of the corporation tax rate to 24% from 1 April 2012. Further changes, which are expected to be enacted separately each year, propose to reduce the tax rate by 1% per annum from 24% to 22% by 1 April 2014. The 24% rate was substantively enacted at the year end and therefore is reflected in the balance sheet; however the further changes have not been substantively enacted at the balance sheet date and are therefore not recognised in the financial statements.

Based on a closing deferred tax asset of £1.3 million at the balance sheet date, the proposed reduction of 24% to 22% would have £0.1 million impact. At the half year the deferred tax asset was £13.0 million, the reduction is due to the decision to convert to REIT status.

9. (Loss)/earnings per Ordinary Share

	Basic & diluted EPS per ordinary share from continuing operations	Adjusted basic & diluted EPS per ordinary share from continuing operations	Basic & diluted EPS per ordinary share from continuing operations	Adjusted basic & diluted EPS per ordinary share from continuing operations

	Year ended 31	Year ended 31	Year ended 31	Year ended 31
	March	March	March	March
	2012	2012	2011	2011
	£m	£m	£m	£m
(Loss)/profit attributable to equity holders of the parent	(62.3)	(62.3)	11.5	11.5
Goodwill impairment	-	20.0	-	2.9
Realised loss on derivative financial instrument	-	54.7	-	-
Revaluation of the derivative financial instrument of associates	-	0.1	-	0.6
	(62.3)	12.5	11.5	15.0

Weighted average number of shares in issue - basic and diluted	462,801,601	462,801,601	341,017,531	341,017,531
(Loss)/earnings per ordinary share from continuing operations	(13.81)p	2.35p	2.31p	3.34p
Earnings per ordinary share from discontinued operations	0.35p	0.35p	1.06p	1.06p
(Loss)/earnings per ordinary share	(13.46)p	2.70p	3.37p	4.40p

			Year ended 31 March 2011

Weighted average number of ordinary shares for basic earnings per share			322,429,574
Adjustment for rights issue			18,587,957
			341,017,531

The denominators for the purposes of calculating basic and adjusted earnings per share have been adjusted to reflect the rights issue in November 2011.

10. Net asset value per Ordinary Share

	Basic & diluted NAV per ordinary share	Adjusted basic & diluted NAV per ordinary share	Basic & diluted NAV per ordinary share	Adjusted basic & diluted NAV per ordinary share
	2012	2012	2011	2011
	£m	£m	£m	£m

Net assets	187.9	187.9	220.1	220.1
Own shares held	-	1.9	-	2.0
Derivative financial instruments	-	2.5	-	17.3
Derivative financial instruments of associates	-	1.2	-	4.2
Deferred tax	-	(1.3)	-	(1.8)
NAV in accordance with EPRA	187.9	192.2	220.1	241.8

Number of shares in issue	529,548,924	529,548,924	435,615,634	435,615,634

Net asset value per share	35.48p	36.30p	50.53p	55.51p

Number of shares in issue at 31 March 2011		411,871,386
Adjustment for rights issue		23,744,248
Adjusted number of shares in issue at 31 March 2011		435,615,634

The denominators for the purposes of calculating basic and adjusted net asset value have been adjusted to reflect the rights issue in November 2011.

11. Property assets

(a) Investment property and Investment property under construction (IPUC)

Properties are stated at fair value, which has been determined for the Company by Savills Commercial Limited and DTZ Debenhams Tie Leung as at 31 March 2012. The properties have been valued individually and on the basis of open market value in accordance with RICS valuation - Professional Standards 2012 (the "Red Book"). Access for buyers to debt finance on reasonable commercial terms has also been assumed.

Initial yields mainly range from 5.75% to 6.25% (2011: 5.75% and 6.25%) for prime units. For properties with weaker tenants and poorer units, the yields range between 6.25% and 16% (2011: 6.25% and 10%). The higher yields are in the non-core portfolio.

Unless stated at cost, the fair value of investment property under construction has been determined on a market value basis in accordance with International Valuation Standards, as set out by the IVSC. In arriving at their estimates of market values the values have used their market knowledge and professional judgment and not only relied on historical transactional comparable. The values had reference to the Proposed Guidance Note 'The Valuation of Investment Property under Construction' issued by the IVSC in August 2009.

In deriving these values, significant judgement is applied due to the relatively small number of recent comparable market transactions. The valuations are stated after deducting 5.8% (2011: 5.8%) for assumed purchasers' costs.

A 0.25% shift of valuation yield would have approximately a £20.5 million (2011: £18.6 million) impact on the investment property valuation.

	Investment	IPUC	Total	Investment	IPUC	Total
	2012	2012	2012	2011	2011	2011
	£m	£m	£m	£m	£m	£m

Opening fair value	463.8	35.0	498.8	314.8	27.7	342.5
Additions:
- directly acquired	4.6	-	4.6	0.4	-	0.4
- business combination	4.5	-	4.5	125.6	6.2	131.8
- improvements	0.5	-	0.5	0.4	-	0.4
	9.6	-	9.6	126.4	6.2	132.6
Development costs	-	18.8	18.8	-	19.4	19.4
Transfers	45.9	(45.9)	-	19.2	(19.2)	-
Transfer from land & buildings (note 14)	9.2	-	9.2	3.4	-	3.4
Transfer from/(to) assets held for sale	0.6	(2.2)	(1.6)	(0.2)	(2.9)	(3.1)
Capitalised interest	-	1.0	1.0	-	0.8	0.8
Disposals	(2.1)	(0.5)	(2.6)	(8.3)	(2.4)	(10.7)
Unrealised (deficit)/ surplus on revaluation	(0.7)	2.2	1.5	8.5	5.4	13.9
Closing market value	526.3	8.4	534.7	463.8	35.0	498.8
Add finance lease obligations recognised separately	3.1	-	3.1	1.0	-	1.0
Closing fair value of investment property	529.4	8.4	537.8	464.8	35.0	499.8

Investment property occupied by the pharmacy business prior to disposal in July 2011 were classed as land and buildings.

	2012	2011
	£m	£m
Market value as estimated by external valuer	520.6	460.6
Add IPUC	8.4	35.0
Add pharmacy lease premiums	5.7	3.2
Add finance lease obligations recognised separately	3.1	1.0
Fair value for financial reporting purposes	537.8	499.8

(b) Property assets held for sale

	2012	2011
	£m	£m
Investment property	2.3	3.1
Land	9.1	6.7
	11.4	9.8

13 non-core property investments and 10 land sites are held as available for sale (2011: 10 non-core property investments and 4 land sites).

12. LIFT investments and joint ventures

The Group has the following investments in associated entities under the Local Improvement Finance Trust Initiative:

Name of Associate	% held	Investment

GBConsortium 1 Limited	35%	Holds 60% of the share capital in the Barnet, Enfield and Haringey, and Liverpool and Sefton LIFT Companies
GBConsortium 2 Limited	39%	Holds 60% of the share capital in the Coventry LIFT Company
GB Primary Care Limited	67%	Holds 60% of the share capital in the South East Essex LIFT Company
GB Primary Care (SWH) Limited	71%	Holds 60% of the share capital in the South West Hampshire LIFT company
Infracare (Midlands) Limited	43%	Holds 60% of the share capital in the Dudley South LIFT Company
Merseycare Development Company Limited	39%	Development company

Infracare (Midlands) Limited has a financial year ended 30 September, all others are 31 March. All of these companies are incorporated in England. Despite owning levels exceeding 50% in some cases these companies are treated as associate entities rather than subsidiaries due to certain restrictions on exercising control in the shareholder agreement. All transfers of funds and distributions from the associated LIFT companies, including non-scheduled loan repayments and dividends, require approval by all shareholders.

The investments underlying the group's interest in its associates can be summarised as follows:

	2012	2011
	Group share	Group share
	£m	£m
Equity in LIFT companies:
Financial investments in medical centres	79.4	80.6
Current assets	7.2	9.1
Share of gross assets	86.6	89.7

Current liabilities	(5.6)	(9.0)
Non-current liabilities	(79.2)	(82.6)
Share of gross liabilities	(84.8)	(91.6)

Share of net assets/(liabilities) of LIFT companies	1.8	(1.9)

LIFT loan stock	8.7	8.7
Total LIFT interests	10.5	6.8
Loan receivable from Virgin Healthcare Holdings Limited	-	3.1
Carrying amount of associates	10.5	9.9

The Group's share of the gross revenue of associates was £18.1 million (2011: £19.1 million).

	Continuing operations	Discontinued operations	Total	Continuing operations	Discontinued operations	Total
	2012	2012	2012	2011	2011	2011
	£m	£m	£m	£m	£m	£m
Associates
Share of profits of associated LIFT companies	0.7	-	0.7	0.7	-	0.7
Release of provision against associates	3.1	-	3.1	-	-	-
Unrealised profit on revaluation of derivative financial instrument of associated LIFT companies	(0.1)	-	(0.1)	(0.6)	-	(0.6)
Virgin Healthcare Holdings Limited	-	(3.1)	(3.1)	-	(2.6)	(2.6)
Share of post tax profits/(losses) of associates	3.7	(3.1)	0.6	0.1	(2.6)	(2.5)

Joint ventures
Assura Pharmacy (South West) Limited	-	-	-	-	0.2	0.2
AH Scarborough Health Park Limited	(0.1)	-	(0.1)	(0.4)	-	(0.4)
Share of post tax (losses)/profits of joint ventures	(0.1)	-	(0.1)	(0.4)	0.2	(0.2)

Share of profits/(losses) of associates and joint ventures	3.6	(3.1)	0.5	(0.3)	(2.4)	(2.7)

The movement on investments in associates during the year was as follows:	2012	2011
	Group	Group
	£m	£m
Opening balance	9.9	10.4
Investments disposed of in year	(0.5)	-
Net loans advanced or transferred	0.5	2.0
Share of profits of continuing associates (before derivative movements)	0.7	0.7
Share of losses of discontinued activities	(3.1)	(2.6)
Release of provision against associates	3.1	-
Share of derivative movements in continuing associates	(0.1)	(0.6)
Closing balance	10.5	9.9

On the 1 December 2011 the Board decided not to participate further in the Virgin Healthcare business and did not subscribe for further equity in the rights issue to fund further investment. As a result Virgin Healthcare ceased to be an associated company and consequently is now classified as an investment. On reclassification the recoverable amount was reassessed in the light of current trading performance and as a result has been fully impaired. The Group retains a 6% holding (book value £nil).

Joint Ventures

The Group had a 50% interest in a joint venture during the year, AH Scarborough Health Park Limited ("AHSHPL"), a property investment company incorporated in England, which it sold in April 2012 for £1. The company had net liabilities of £0.4 million and its bank debt had been guaranteed by the purchaser. AHSHPL owned a site valued at £3.4 million and had no income. The joint venture was carried in the balance sheet at nil value and no profit or loss arose on the disposal.

13. Intangible assets

	Goodwill	Pharmacy licences	Total
	2012	2012	2012
	£m	£m	£m
Cost
At 1 April 2011	38.9	21.2	60.1
Intangible asset disposal on sale of LIFT business	(5.9)	-	(5.9)
Intangible asset disposal on sale of pharmacy business	(2.5)	(21.2)	(23.7)
At 31 March 2012	30.5	-	30.5

Impairment
At 1 April 2011	15.6	-	15.6
Disposals on sale of LIFT business	(5.1)	-	(5.1)
Impairment during the year	20.0	-	20.0
At 31 March 2012	30.5	-	30.5

Net book value at 31 March 2012	-	-	-

	2011	2011	2011
	£m	£m	£m
Cost
At 1 April 2010	38.9	14.3	53.2
Intangible asset additions	-	0.2	0.2
Intangible asset additions acquired as part of a business combination	-	6.7	6.7
At 31 March 2011	38.9	21.2	60.1

Impairment
At 1 April 2010	12.7	1.2	13.9
Impairment during the period - property development	2.9	-	2.9
Write back of previous impairment during the period	-	(1.2)	(1.2)
At 31 March 2011	15.6	-	15.6

Net book value at 31 March 2011	23.3	21.2	44.5

Impairment of goodwill

The Group tests annually whether goodwill has suffered any impairment.

Following the changes to commissioning arrangements in the NHS and the strategic changes in the group, including the disposal of the pharmacy and LIFT consultancy businesses, the group is now purely an investment property company and is managed as such by the Board.

All these factors have led to a need to reassess goodwill and as a result its carrying value has been fully impaired.

Pharmacy licences (discontinued)

Pharmacy licences represent an ongoing open ended relationship with local PCTs to provide drugs and services on behalf of the NHS. They are therefore considered to have an indefinite useful life.

14. Property, Plant and Equipment

	Land and buildings	Computer, medical and other equipment	Fixtures, fittings and furniture	Total
	2012	2012	2012	2012
	£m	£m	£m	£m
Cost or valuation
At 1 April	9.8	1.0	3.9	14.7
Transfer to investment property (note 11)	(9.2)	-	-	(9.2)
Additions at cost	-	0.1	0.3	0.4
Disposed on sale of business	(0.6)	(0.7)	(4.1)	(5.4)
At 31 March	-	0.4	0.1	0.5

Depreciation
At 1 April	-	0.8	0.7	1.5
Depreciation for the year	-	0.1	0.1	0.2
Disposal on sale of business	-	(0.6)	(0.8)	(1.4)
At 31 March	-	0.3	-	0.3

Net book value at 31 March 2012	-	0.1	0.1	0.2

	2011	2011	2011	2011
	£m	£m	£m	£m
Cost or valuation
At 1 April	12.8	1.4	3.5	17.7
Transfer to investment property (note 11)	(4.0)	-	-	(4.0)
Additions at cost	0.3	0.5	0.7	1.5
Disposals at cost	-	(0.9)	(0.9)	(1.8)
Acquired as part of business combination	0.1	-	0.2	0.3
Reversal of impairment	-	-	0.4	0.4
Revaluation	0.6	-	-	0.6
At 31 March	9.8	1.0	3.9	14.7

Depreciation
At 1 April	0.8	1.1	0.9	2.8
Transfer to investment property (note 11)	(0.6)	-	-	(0.6)
Depreciation for the year	0.3	0.5	0.2	1.0
Disposals	-	(0.8)	(0.4)	(1.2)
Revaluation	(0.5)	-	-	(0.5)
At 31 March	-	0.8	0.7	1.5

Net book value at 31 March 2011	9.8	0.3	3.2	13.2

Land and buildings comprised interests in Pharmacy premises used by group companies until the pharmacy business disposal in July 2011. They are now included as investment properties.

15. Cash, cash equivalents and restricted cash

	2012	2011
	£m	£m
Cash held in current account	12.2	26.9
Restricted cash	9.2	12.0
	21.4	38.9

Restricted cash arises where there are interest payment guarantees, cash is ring-fenced for committed property development expenditure, which is released to pay contractors invoices directly, or under the terms of security arrangements under the Group's banking facilities or its bond.

16. Trade and other receivables

	2012	2011
	£m	£m
Trade receivables	2.2	3.7
VAT recoverable	-	1.1
Prepayments and accrued income	1.2	5.4
Deferred consideration	2.6	-
Loan note	1.0	-
Other debtors	0.8	1.8
	7.8	12.0
Loan note due after more than 1 year	6.0	-
	13.8	12.0

Trade and other receivables disclosed above are classified as loans and receivables and are therefore measured at amortised cost.

The loan note is an interest bearing loan of £7.0 million granted to the purchaser of the pharmacy business upon completion of the sale. Interest is charged on the loan at a rate of 6.5% and is payable quarterly. The loan is repayable in three stage payments. £1.0 million is due by 30 June 2012, a further £3.0 million by 30 June 2013 with the balance to be settled on 30 June 2014.

The company'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 (2011: £nil).

As at 31 March 2012 and 31 March 2011, the analysis of trade debtors that were past due but not impaired is as follows:

					Past due but not impaired
	Total	Neither past due nor impaired	>30 days	>60 days	>90 days	>120 days
	£m	£m	£m	£m	£m	£m
2012	2.2	1.9	0.1	0.1	-	0.1
2011	3.7	2.5	0.7	0.2	0.1	0.2

The bulk of the Group's income derives from the NHS or is reimbursed by the NHS, hence the risk of default is minimal.

17. Trade and other payables

	2012	2011
	£m	£m
Trade creditors	1.8	10.2
Other creditors and accruals	10.2	10.1
VAT creditor	0.9	-
Payments due under finance leases	0.1	0.1
	13.0	20.4

Finance lease arrangements are in respect of investment property held by the Group on leasehold property. The amounts due above that are more than one year, which total £3.1 million (2011: £0.9 million) have been disclosed in non-current liabilities on the consolidated balance sheet.

The fair value of the group's lease obligations is approximately equal to their carrying value.

18. Deferred revenue

	2012	2011
	£m	£m
Arising from rental received in advance	7.5	7.2
Arising from pharmacy lease premiums received in advance	5.8	3.2
	13.3	10.4

Current	7.8	7.4
Non-current	5.5	3.0
	13.3	10.4

19. Provisions

	2012	2011
	£m	£m

At 1 April	1.3	2.0
Arising during the year	-	0.2
Utilisation of provision	(0.3)	(0.5)
Reversal of unused amounts	-	(0.4)
At 31 March	1.0	1.3

Analysed as:
Current	0.1	0.5
Non-current	0.9	0.8
	1.0	1.3

Provisions relate to the onerous property lease on the former Pall Mall office and represent management's best estimate of the group's liability.

20. Borrowings

	2012	2011
	£m	£m
Secured bank loans
At 1 April	361.8	255.8
Amount issued or drawn down in year	159.0	20.2
Amount repaid in year	(146.1)	(11.0)
Acquired with acquisition of subsidiaries	3.4	96.8
Loan issue costs	(2.8)	(0.2)
Amortisation of loan issue costs	0.3	0.2
At 31 March	375.6	361.8

Due within one year	6.9	3.1
Due after more than one year	368.7	358.7
At 31 March	375.6	361.8

The Group has the following bank facilities:

1. 10 year senior secured bond for £110m at a fixed interest rate of 4.75% maturing in December 2021. The secured bond carries an LTV covenant of 75% (70% at the point of substitution of an investment property or cash) and an interest cover requirement of 1.15 times (1.5 times at the point of substitution).

2. Loans from Aviva with an aggregate balance of £213.1 million at 31 March 2012 (2011: £191.6 million). The Aviva loans are partially amortised by way of quarterly instalments and partially repaid by way of bullet repayments falling due between 2021 and 2041 with a weighted average term of 15.6 years to maturity, £2.9 million is due within a year. These loans are secured by way of charges over specific medical centre investment properties with cross collaterisation between the loans and security. The loans are subject to fixed all in interest rates ranging between 4.50% and 6.66%, and a weighted average of 5.78% and do not have loan to value covenants. Interest cover required varies between 0.90 times to 1.03 times.

3. Loans from Santander with an aggregate balance of £52.4 million at 31 March 2012 (2011: £40.0 million). This comprises a £50 million Investment facility available until November 2016 and carries interest at 1.95% above LIBOR and a £10 million.

Development facility available until November 2014 and carries interest at 2.75% above LIBOR. On Practical Completion of the development property, the development facility is converted and added to the investment facility. A £50 million interest rate swap at a rate of 2.575% has been taken out to hedge the interest on the existing investment facility. The loan must not exceed 75% of the value of the security, interest cover must be above 1.7 times and debt service cover must be above 1.05 times.

4. Term loan with Royal Bank of Scotland PLC (RBS) secured on the Group's former head office building in Daresbury. The balance on this loan was £4.0 million at 31 March 2012 (2011: £5.6 million) and is due within a year. The asset is categorised as non-core.

The loan from RBS is available until March 2013 and carries interest at 1.2% above LIBOR. Surplus rental income from the property is used to amortise the loan. An interest rate swap at a rate of 5.1% is in place to hedge the interest rate on the loan.

The NAB loan of £120 million was repaid in full in December 2011 along with the associated SWAP.

The Group has been in compliance with all financial covenants on all of the above loans as applicable through the year.

21. Derivative financial instrument at fair value through profit or loss

	Interest rate swaps (NAB)	Interest rate swap (RBS)	Interest rate swaps (Santander)	Total derivative financial instruments of the parent
	£m	£m	£m	£m

Liability at 1 April 2011	16.6	0.5	0.2	17.3
Movement in year	52.7	(0.1)	2.1	54.7
Cash settlement	(69.3)	(0.2)	-	(69.5)
Liability at 31 March 2012	-	0.2	2.3	2.5

The table above includes the net position of derivative financial instruments at the balance sheet date. These are presented under the following captions on the Consolidated Balance Sheet:

	2012	2011
	£m	£m
Non-current assets	-	(0.2)
Current liabilities	0.2	3.3
Non-current liabilities	2.3	14.2
	2.5	17.3

22. Share capital

	2012	2012	2011	2011
Authorised		£m		£m

Ordinary Shares of 10p each	3,000,000,000	300.0	3,000,000,000	300.0
Preference Shares of 10p each	20,000,000	2.0	20,000,000	2.0
		302.0		302.0

	Number of Shares	Share Capital	Number of Shares	Share Capital
	2012	2012	2011	2011
Ordinary Shares issued and fully paid		£m		£m
At 1 April	411,871,386	41.2	317,467,036	31.8
Issued during the year	117,677,538	11.8	94,404,350	9.4
At 31 March	529,548,924	53.0	411,871,386	41.2
Own shares held	(4,218,219)	(1.9)	(4,373,219)	(2.0)
Total Share Capital	525,330,705	51.1	407,498,167	39.2

Own shares held comprise shares held by the Employee Benefit Trust (EBT).

During the year £33.5 million (net of expenses) was raised through a 2 for 7 Rights Issue of 117,677,538 new shares at 30.0 pence per share.

23. Note to the Consolidated Cash Flow Statement

	2012	2011
	£m	£m
Reconciliation of net (loss)/profit before taxation to net cash inflow from operating activities:
Net (loss)/profit before taxation
(Loss)/profit from continuing activities	(63.3)	8.1
Profit from discontinued activities	1.2	3.2
	(62.1)	11.3
Adjustment for non-cash items:
Depreciation	0.2	1.0
Decrease in debtors	4.2	1.9
Increase in creditors	3.1	1.7
Decrease in provisions	(0.3)	(0.7)
Increase in pharmacy inventories	(0.1)	-
Surplus/(deficit) on revaluation of investment property	0.7	(8.5)
Development property revaluation surplus	(2.2)	(5.4)
Interest capitalised on developments	(1.0)	(0.8)
Loss on revaluation of financial instrument	54.7	-
Profit on disposal of investment properties	-	(0.5)
Profit on disposal of pharmacy business	(3.4)	-
Loss on disposal of LIFT business	0.3	-
Profit on disposal of assets	(0.5)	(0.1)
Goodwill impairment	20.0	2.3
Licences impairment reversal	-	(1.2)
Impairment reversal of property, plant and equipment	-	(0.4)
Interest on loan to associate	-	(0.3)
Share of (profits)/ losses of associates and joint ventures	(3.6)	2.7
Impairment of investments - discontinued	3.1	-
Reversal of employee share-based incentive costs	-	(0.3)
Amortisation of loan issue costs	0.3	0.2
Net cash inflow from operating activities	13.4	2.9

24. Dividends paid on Ordinary Shares

	Number of Ordinary Shares	Rate pence	2012 £m	Number of Ordinary Shares	Rate pence	2011 £m
Interim dividend for year ended 31 March 2011	-	-	-	306,427,150	1.0	3.1
Interim dividend for the year ended 31 March 2011	411,871,386	1.25	5.1	-	-	-
			5.1			3.1

Dividends on 'own shares held' of £0.1 million (2011: £0.1 million) are recognised in distributable reserves.

An approved quarterly dividend for 2012/13 of 0.285 pence per share is to be paid on 25 July 2012 to shareholders on the share register at 6 July 2012. This equates to a total cash payment of £1.5 million.

25. Deferred tax

Deferred tax consists of the following:

	2012	2011
	£m	£m

At 1 April	1.8	1.5
Capital allowances in excess of depreciation	(0.3)	(0.1)
Trading losses carried forward	1.3	0.4
Disposals	(1.5)	-
At 31 March	1.3	1.8

The amount of deductible temporary differences and unused tax losses are as follows:

	Consolidated balance sheet
	2012	2011
	£m	£m
Tax losses	250.7	86.7
Other timing differences	(11.9)	7.9
Deficit on revaluation of investment properties in the UK	57.7	45.7
	296.5	140.3

Recognised tax losses of £6.2 million were transferred with Assura Pharmacy Limited on 12 July 2011 on its disposal.

Unrecognised tax losses of £0.6 million were transferred with Assura LIFT Holdings Limited on its disposal.

The following deferred tax assets have not been recognised due to uncertainties around future recoverability:

The tax effect of these unrecognised assets is as follows:

	Consolidated balance sheet
	2012	2011
	£m	£m
Tax losses	60.2	22.5
Other timing differences	(2.9)	2.0
Deficit on revaluation of investment properties in the UK	13.9	11.9
	71.2	36.4

26. Discontinued operations

During the current year the Group discontinued operating its pharmacy, LIFT consultancy business and its effective interest in Virgin Healthcare Holdings Limited.

	Period to 12 July 2011	Year ended 31 March 2011
	£m	£m
Pharmacy division	4.4	5.4
LIFT consultancy division	-	0.4
Losses in connection with Virgin Healthcare Holdings Limited (note 12)	(3.1)	(2.6)
Deferred tax	0.3	0.4
Profit for the year from discontinued operations	1.6	3.6

Pharmacy disposal

On 12 July 2011 the Group completed the sale of the Pharmacy division to Gorgemead Limited, part of the Cohens Group.

The accounting policies applicable to the Pharmacy business are as follows:

Pharmacy sales - revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer, on the date of sale.

Pharmacy inventories are valued at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale. Cost is defined as average purchase price.

The results of the pharmacy division which have been included in the consolidated income statement are presented below:

	Period to 12 July 2011	Year ended 31 March 2011
	£m	£m
Revenue	10.0	34.1
Cost of sales	(6.9)	(23.4)
Administrative expenses	(2.1)	(7.2)
Operating profit	1.0	3.5
Cost of employee share based incentives	-	0.1
Share of losses of joint venture	-	0.2
Reversal of impairment of property, plant and equipment	-	0.4
Revaluation of pharmacy licences	-	1.2
	1.0	5.4
Profit on disposal of discontinued operations	3.4	-
Profit for the period from discontinued operations	4.4	5.4

The net cash flows attributable to the pharmacy division were as follows:

	Period to 12 July 2011	Year ended 31 March 2011
	£m	£m
Operating activities	0.5	2.3
Investing activities	21.7	(1.7)
Net cash inflow	22.2	0.6

The total disposal consideration and major classes of assets and liabilities sold are analysed as follows:

	As at 12 July 2011
	£m
Assets and liabilities disposed of other than cash
Pharmacy licences and goodwill	23.7
Property, plant and equipment	4.0
Deferred tax asset	1.5
Inventories	2.3
Debtors	5.0
Cash and cash equivalents	3.3
Creditors	(7.6)
Net assets	32.2

Net assets sold - 100%	32.2

Fair value of proceeds	36.8
Costs	(1.2)
Net proceeds	35.6

Profit on disposal	3.4

Fair value of proceeds:	£m
Cash	24.5
Deferred consideration (received on completion)	1.4
Loan notes	7.0
Deferred consideration - pipeline	3.5
Deferred consideration - net assets adjustment	0.4
	36.8

Deferred consideration of £7.8 million was receivable based upon a pipeline of pharmacy developments and an adjustment for any increase in net asset value. The £7.8 million is split between property premiums of £2.5 million and pharmacy proceeds of £5.3 million.

£4.2 million of deferred consideration has been received relating to £1.5 million of property premium, £2.3 million of pharmacy proceeds and a £0.4 million adjustment for increase in net asset value. The remaining balance of £4.0 million will be received when each pharmacy development completes.

LIFT disposal

On 26 October 2011 the Group completed the sale of the LIFT consulting business to GB Partnerships Investments Limited. At the same time the Group made a 15% investment in GB Partnerships Limited and loaned that company £0.2 million via a loan note which pays interest at 5%.

The results of the LIFT consulting business for the period to its date of sale are presented below:

	Period to 26 October 2011	Year ended 31 March 2011
	£m	£m
Revenue	2.1	3.7
Cost of sales	(0.4)	(0.8)
Administrative expenses	(1.4)	(2.5)
Operating profit	0.3	0.4
Loss on disposal of discontinued operations	(0.3)	-
Profit for the period from discontinued operations	-	0.4

At the date of disposal the net assets of the LIFT consulting business were £1.0 million. The net cash flows attributable to the LIFT consulting business were as follows:

	Period to 26 October 2011	Year ended 31 March 2011
	£m	£m
Operating activities	0.3	0.4
Net cash inflow	0.3	0.4

Deferred consideration of £0.2 million is payable based upon the financial close of the Merseycare scheme, this has not currently been recognised and will be recognised when financial close is reached and the deferred consideration is considered to be receivable.

The total disposal consideration and major classes of assets and liabilities sold are analysed as follows:

	As at 26 October 2011
	£m
Assets and liabilities disposed of other than cash
Goodwill	0.8
Debtors	0.6
Cash and cash equivalents	0.3
Creditors	(1.1)
Net assets	0.6

Net assets sold - 85%	0.5
LIFT investments sold	0.5
	1.0

Fair value of proceeds - cash	0.8
Costs	(0.1)
Net proceeds	0.7

Loss on disposal	(0.3)

27. Commitments

At the year end the Group had 6 developments on-site with a contracted total expenditure of £16.2 million (2011: £36.2 million) of which £7.7 million (2011: £21.7 million) had been expended.

28. Preliminary announcement

The Announcement can also be accessed on the Internet at www.assuragroup.co.uk

The Annual Report will be posted to Shareholders on or before the 31 July 2012.

29. Approval

The Preliminary Announcement was approved by the Board of Directors on 25 June 2012.

This information is provided by RNS

The company news service from the London Stock Exchange

END

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