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Edited Transcript of AGR.L earnings conference call or presentation 12-Nov-19 10:30am GMT

Half Year 2020 Assura PLC Earnings Presentation

Warrington Nov 25, 2019 (Thomson StreetEvents) -- Edited Transcript of Assura PLC earnings conference call or presentation Tuesday, November 12, 2019 at 10:30:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Jayne Marie Cottam

Assura Plc - CFO, Member of Executive Board & Executive Director

* Jonathan Stewart Murphy

Assura Plc - CEO, Member of Executive Board & Executive Director

* Patrick Lowther

Assura Plc - Head of Investment & Member of Executive Board

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Conference Call Participants

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* James Carswell

Peel Hunt LLP, Research Division - Analyst

* Miranda Sarah Cockburn

Panmure Gordon (UK) Limited, Research Division - Analyst

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Presentation

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Jonathan Stewart Murphy, Assura Plc - CEO, Member of Executive Board & Executive Director [1]

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Good morning, everyone, and welcome to Assura's half year results presentation. Before we start, I would just like to introduce the newest member of our executive team, Simon Oborne, who joins us as Head of Portfolio Management. Simon, welcome.

I am pleased to be reporting on another very strong, if somewhat quieter 6 months of results. I will introduce the highlights and update you on our recent GPI acquisition before Jayne covers the financials in detail. Patrick Lowther, our Head of Investment, will then give you the property update. Then I will look at the importance of social impact, the political backdrop and the outlook for the business.

The last time we met, I explained that, increasingly, we were allocating resources to the higher-margin areas of development and asset enhancement. Against this backdrop, we were delighted to acquire the development business, GPI. This provided an immediate boost to our pipeline and supplemented our expertise in development and asset enhancement.

The continuing desirability of the investment market has provided us with an opportunity to recycle some of our capital. To this end, we disposed of 15 assets for GBP 18.5 million, the first significant disposal in many years. And we invested the proceeds into London assets that we felt had greater growth potential. Patrick will cover this in more detail later.

Our pipeline of growth opportunities continues to build across all areas of development, asset enhancement and investment. This sustainable and long-term growth potential is supported by our robust financial position. The ultimate test is how this converts into shareholder returns and so I am pleased to be reporting an uplift in earnings per share and dividends per share of 8%.

As I mentioned earlier, in May, we acquired one of the leading developers in our sector, GPI. They had more than 25 years of experience, and this has further consolidated our position as the leader in our sector. Our teams are now fully integrated, and this has enriched our in-house development capability. By giving us access to their pipeline and network, the combination of knowledge and expertise is already opening up new opportunities for us.

From their pipeline, we have started on-site in Launceston in Cornwall, where we are extending and refurbishing an existing practice that will double in size. The enlarged practice will meet a broader range of the 18,000 patients' needs. We'll have capacity for future growth and we'll meet the latest sustainability standards.

A further 4 schemes are planned to be on-site before the year-end. Overall, an excellent start for this important acquisition.

These new schemes are also a welcome boost to our development pipeline, which now stands at an all-time high of GBP 309 million. Given the scale of our pipeline and our ambition to expand this further, it is worth just looking at our approach to managing these developments.

Firstly, all of our schemes are managed by a highly experienced team of development surveyors and any risks are mitigated as far as possible. Sites are not acquired in advance, schemes are typically 100% pre-let with NHS funding, with fixed-price contracts and supported by a full industry standard suite of warranties. This ensures our full confidence in continuing to expand this important part of our business.

Our market is built on its long leases, a low default risk from NHS funding. No rent-free periods and a 3 yearly rent review cycle with a linkage to construction cost inflation.

Secondly, our market is experiencing strong demand growth due to an aging population, the growing push for more GP-led services in our communities and a significant need for further development after years of underinvestment.

The third key characteristic is the strong risk-adjusted returns that our sector delivers. The specialist nature of our sector acts as a natural barrier to entry, and the secure long-term income streams are supported by the lack of speculative development. Taken together, these provide the foundation for predictable and low volatility returns.

Insurer's portfolio of 560 medical centers is now valued at GBP 2 billion, evaluation built on the resilience of the underlying NHS covenant with 85% of NHS funded and a rent roll of GBP 104 million. As well as building a portfolio, we have also built a unique brand and reputation, nurtured over 16 years through long-term trusted relationships with the NHS and its GPs.

Our purpose, values and culture align us with the NHS, and our commitment to sustainability and social impact underpin everything we do. This reflects not only the inherent positive impact our buildings can have on communities, but also our commitment to maximize this positive social impact through our support for social prescribing initiatives and the highest standards of sustainability. This sets us apart and is sustained by a dedicated team of 67, which seems quite remarkable, as when I joined Assura 7 years ago, there were only 28 of us.

The team's knowledge, expertise and commitment to service delivery is unrivaled.

Now I'd like to hand over to Jayne to take you through the financial performance in the period. Jayne?

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Jayne Marie Cottam, Assura Plc - CFO, Member of Executive Board & Executive Director [2]

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Thank you, Jonathan. Good morning, everybody. It's good to see you all again. The first 6 months of this year has seen continued growth and development for the company. We acquired GPI in May, which strengthened our position as the U.K.'s leading primary care developer. Our investment team have made strategic acquisitions alongside a number of disposals. Open market rental growth continues to move in the right direction, and we have maintained our drive to lower our cost of debt, with GBP 107 million private placement note issuance. All of this has had a positive impact on our business. So with that in mind, let me take you through the numbers.

Our net rental income has grown in the period by 10% through property additions of GBP 43 million plus rental growth of just over 2%. This helps us achieve net rental income of GBP 50.6 million, an increase of GBP 4.4 million over the prior year. Our EPRA earnings have grown by 4% to GBP 32.9 million. These earnings have been marginally impacted in the first half by the integration of the GPI we've highlighted at the year-end.

[Our EPRA earnings per share for the year has increased by 8% to 1.4p.] Investment property increased by GBP 60 million to just over GBP 2 billion following the property additions. And our yields have moved in slightly from our year-end valuation to 4.72%. Our EPRA net asset value per share increased marginally from 53.3p to 53.5p and our loan-to-value increased to 36% in the period, allowing us to retain headroom to fund our growing pipeline of opportunities.

At the year-end, we announced our intention to align our annual dividend increase announcements with our year-end from May 2020 results. Therefore, at this half year, we'll be increasing our quarterly dividend in line with inflation at 1.8%.

Looking at our rent roll, we have delivered growth in our annualized rent roll of 2% to GBP 104.4 million. The security and longevity of our cash flows is underpinned by our weighted average unexpired lease length of 11.6 years and 85% of our rental income derived from GPs and the NHS.

The rental growth in the period is 2.04%, with open market rent reviews increasing by 1.15%, which is a further improvement upon our year-end position.

EPRA earnings for the period have grown to GBP 32.9 million. The investment in the expansion of our development team as well as other areas of the business has led to higher admin expenses of GBP 0.7 million. Our earnings in the period have increased by 4% as the improvement in net rental income flows through.

At the year-end, I talked about the impact in the short term of the GPI acquisition and our investment in the development team, along with the impact on our EPRA cost ratio as we expense rather than capitalize the costs. As the slide demonstrates, we are currently at an EPRA cost ratio of 12.8%, which is still industry-leading. However, if we've chosen to capitalize the cost and take them through the development profits, then the ratio, as can be demonstrated by the slide, would reduce to 11.3%.

Looking to the balance sheet, the EPRA net asset value per share increased by 0.2p from 53.3p to 53.5p. The growth in EPRA income added 1.4p. This has been passed on to our investors through dividend payments of 1.4p, and the revaluation of our portfolio showed a gain of 0.2p.

Our investment property is now valued at just over GBP 2 billion. We had assets held for sale of GBP 17 million at the year-end. However, we've actually disposed of 15 assets, was GBP 18.5 million in the period achieving an increase over book value for these assets of GBP 1.6 million. Our acquisitions in the period were GBP 34 million, and we have a further pipeline of GBP 65 million, which we expect to be completed over the coming months. The growing emphasis on our development activity can be clearly seen with the significant spend of GBP 20 million in the period, and we have a very healthy pipeline of opportunities for the second half.

And finally, our valuation gains were modest at GBP 2 million, which is an increase of 2 basis points to 4.72%.

Our gross debt stands at GBP 757 million, with our weighted average interest rates having fallen slightly to 3.16%. Our 2018 bond issue has been trading extremely well in the secondary market. From this strong position and taking advantage of lower long-term [gilt] rates, we decided it was a good time to borrow a further GBP 107 million from some of our private placement lenders. These were a mix of 10- and 15-year notes at a blended rate of 2.3%.

GBP 60 million of these funds were deferred to the end of October in order to match our cash flows. At the half year, we had GBP 250 million of headroom on our revolving credit facility, with a loan-to-value of 36%. Our debt maturity is 6.9 years. With our revolving credit facility and our GBP 110 million bond due for refinancing within the next 2 years or so. That leaves the maturity on the balance of our other debt at over 8 years.

In our aim to provide long-term income for our investors, maintaining and growing contracted rental income is one of our key objectives. We have contracted rental income of GBP 1.35 billion. We manage this income through acquisitions, developments and, increasingly, asset enhancement initiatives. We have a dedicated team looking at each asset and providing a long-term asset plan. We have a clear focus on rental growth, physical extensions, lease regears and, in some cases, the disposal of some assets. This growing emphasis is value-enhancing for both the portfolio and long-term income.

Given the changing nature of our property additions, I've once again included the pro forma rent roll slide. The strength of our development program, both our immediate and extended pipeline, will add around GBP 15 million to our rent roll in the coming years. Approximately GBP 5 million will come from our known asset enhancement initiatives and rental growth and GBP 3 million from acquisitions. We will continue to make strategic disposals along the way but have nothing held for sale at the moment.

Taking into account what is known to the business at this time, we would expect our rent roll to be in excess of GBP 125 million on completion of the above. This is a good set of results in what has been a quieter period, yet we have demonstrated yet again our ability to deliver on our commitment to shareholders by growing our development pipeline, investing in high-quality assets, proving our asset enhancement credentials and driving down our overall cost of debt, whilst continuing to grow our dividend. This concludes the financial review. Thank you for listening. I'll now hand you over to Patrick Lowther, our Head of Investment, to take you through the property review.

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Patrick Lowther, Assura Plc - Head of Investment & Member of Executive Board [3]

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Great. Thank you very much, Jayne. Good morning, everybody. I'm pleased also to report successful 6 months across investments, developments and portfolio management teams. While I'll update you on our progress, I also want to share with you some examples of how the 3 teams are increasingly building our collaborative approach, responding to changing dynamics and opportunities in our market.

This brings into play the combined expertise that we have meticulously built over the last 16 years, and it's delivering results, which I'll come onto shortly.

It's further allowing us to move from a period of sustained acquisition-led growth to an environment in which the teams can place additional focus and energy on working our assets harder and our lasting social impact.

Now while our sector remains a highly desirable investment proposition, there's been a low level of investment-led growth with a selected number of disposals over the period. That said, we have successfully acquired 9 really good quality assets that we believe will be accretive to our portfolio. Alongside this, we've completed 2 new developments. And to put this into context, these additions will serve around 150,000 patients. That's roughly the size of a city like Cambridge over just a 6-month period.

Our replenished pipeline now stands at GBP 65 million, which is 50% more than when we reported last time.

Now building on the collective experience across the 3 teams, we have stepped up our detailed review process. We've looked in detail at every asset using a 10-point score matrix, and this has resulted in a number of disposals over the period.

We sold 15 assets. These were a mix of mature assets, sometimes better suited to investors with a lower cost of capital or equally, assets whereby we'd completed our value-enhancing activities. As part of this review process, we also considered what opportunities there were to recycle our capital, thereby improving our overall portfolio. This led us to reinvest our sales proceeds in 2 high-quality London assets, serving 20,000 patients with good long-term income growth potential and a shift in management commitment.

Now momentum and optimism continue to build around our development activity, and I'm pleased to say that Assura has an increasingly dominant position. I'd like to put this into perspective and just remind you of how active the market was in the early 2000s and the near cliff edge it fell off in 2012 after the Health and Social Care Act, which inadvertently stymied a lot of the new development in our sector.

Following 2012, the majority of primary care developers either pivoted into new sectors, retired or some sold several to Assura. Whilst at the same time, [with an aging estates] and a growing population, the need of the NHS only increased.

As you will see from this graph, Assura at this point, remained active and patient, and we're starting to see this activity increase year-on-year. The GPI transaction has bolstered this further, and we have, without a doubt, the most experienced development platform in the sector, led by Simon Gould.

Now this slide just really sets out the numbers in a little bit more detail for you. And in particular, it shows how we're successfully moving schemes through our pipeline. I think it's particularly pleasing to see how our extended pipeline has grown from some 16 schemes last year to the 32 it stands at today.

Now over the last 6 months, we've completed our scheme in South Woodham Ferrers, Essex, where we successfully co-located 3 GP practices in a state-of-the-art new building, serving 20,000 patients. As you know, buildings like this are no longer simply focused around the GPs, but bring a variety of health care professionals under one roof with the clear intention to significantly improve and transform services.

This particular center pushes boundaries in bringing together those services normally found in hospitals, including community nursing, stroke rehabilitation, physiotherapy, specialist services for children, and for those with long-term conditions.

One particular innovation in this center is a dedication of 2 rooms for Skype conferencing. The benefits here are that you can have smaller rooms, costing less and freeing up clinical space. This particular health center was also underwritten by the local NHS commissioners on the basis that it would contribute strongly to the GBP 53 million worth of savings that they needed to find in the local area.

And not only does a high-quality asset like this demonstrate our ability to align ourselves with the NHS, but it also helps move forward the rental evidence for up to 10 of our schemes in the nearby vicinity.

And then in Derbyshire, we've completed our scheme in Darley Dale, which will serve 7,000 patients and forms part of a wider residential scheme. Now the story here goes back to 2016 when we acquired a small surgery on the anticipation that there might be development opportunity in the future.

This opportunity accelerated on the back of new planning housing applications, and it laid the foundations for the delivery of a new facility that we, senior partner, Dr. Smith, and the local residents are really proud to play part in.

Over the last 6 months, 5 schemes moved on site: Canterbury, Hastings, Bournville, Hereford and Launceston. And while these schemes are all at different shapes and sizes, they've only reached this stage due to the patience and commitment, invested into bringing together a variety of stakeholders, negotiating complex business cases with the NHS and also complex planning and design process.

If I was to highlight one scheme, in particular, it would be Bournville, again, where we're bringing 3 practices together across a wider area. What sets Bournville apart is not necessarily its high-profile setting on an arterial route into Birmingham, but rather that we are delivering a scheme that forms part of a wider retirement village.

Our development is being assisted by work we're doing with the staff and the patients of the adjoining dementia care facility. Their feedback will be integral to the whole as we look at the colors, the textures and signage within our design process. We're building a real understanding of the important role the design of our buildings will have in meeting the needs coming from a variety of specific ailments befalling an aging population.

And a final point on Bournville is that it will be one of the first new build schemes to have been delivered with the NHS' national ETTF grant funding, and we believe is one step forward for Assura being seen as the partner of choice for the NHS.

Now I mentioned the importance that our development activity has on our existing assets. And in particular, how we look to use this evidence to move our portfolio rent forward, although accepting there's always an inevitable lag.

3 years ago, the schemes we had on the site had an average rent of GBP 180 per square meter. And today, that average is around GBP 200 per square meter. And critically, it's evidence from schemes like South Woodham Ferrers that influences assets in the wider area.

With rising evidence, we've also looked in detail at our internal review processes to turn around rent reviews and while district valuers need to ensure that rents in our sector remain value for money, we're becoming increasingly efficient about the speed in which we're setting our reviews.

In the 12 months to March '19, we settled 178, and I'm pleased to say that we've already settled [another] 148 in the 6-month period.

Now this slide points to the energy that we're increasingly directing in our existing portfolio. The team led by Simon Oborne have had a really busy period, and we've concluded over 24 asset-enhancing transactions.

If we just look at the lease regears, you will see that in the first half, we've been running at over double what we did in the previous 12-month period to March. The team are incentivized, and they're focused on building our contracted rent roll and we're now in a position where our pipeline has never been stronger.

One transaction that we're particularly pleased of is the extension of our surgery at Pont Newydd in Wales, where we've created 6 new consulting rooms in return for a new 20-year lease. While we've secured this longer-term commitment and we've increased our income, we've also given Dr. O'Sullivan, the ability to deal with increased patient numbers and maintain a really positive momentum for his practice.

With a considerable number of our practices operating at close to capacity, the team are now frequently faced with similar situations, and they're becoming increasingly adept at helping our customers put forward a business case to the commissions that reinforces their commitment to our buildings.

Now in conclusion, I believe that there's momentum, energy and dedication to build on these activities I've spoken about across the 3 teams, creating value by serving our customer base, indirectly their patients, and of course, our shareholders.

Thank you very much for your time this morning. And I'd now like to hand you back to Jonathan.

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Jonathan Stewart Murphy, Assura Plc - CEO, Member of Executive Board & Executive Director [4]

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Thank you, Patrick. The fundamentals of our sector remain constant: long-term government-funded income, with a linkage to cost inflation and with strained supply. These fundamentals, combined with the impact of an increasingly competitive market, can be seen in rising values over the past 5 years.

Although prices are now only rising modestly with a 2-basis-point movement in the past 6 months, this sector remains robust. And with new entrants appearing, there's little sign of the market going into reverse anytime soon.

We continue to see opportunities. We will retain our selective approach focusing only on those assets that have a long-term role in health care provision in their communities. Actively engaging in public posting, whatever the situation in Westminster, remains a key priority for us. We continue to make the strong case for the importance of the investments in buildings as the right buildings provide the physical framework for everything the health service is trying to do and for everyone it serves.

I described last time how the NHS Long Term Plan was published in January with its spending plans. Out of the GBP 20 billion pledged -- additional money pledged, primary care secured GBP 4.5 billion, which is more than double its normal allocation.

Welcome, though, this commitment was, it made no specific provision for capital investment to improve buildings and infrastructure. This is an often neglected area and so we are heartened by 2 recent announcements.

Firstly, only a few weeks ago, the Health Secretary published his infrastructure plan. This specifically highlighted the need to modernize our primary care estate, recognizing the urgency for a commitment on capital investment program over many years.

Secondly, many influencers, as you can see listed on the slide and led by the BMA, called on the Prime Minister to address the persistent underfunding of GP premises. Both of these announcements bolster our long-held position that the primary care estate remains significantly under-invested.

Increased investment is an area that has cross-party support. And so whatever the outcome of current events, Assura is ideally placed to capitalize when these plans become reality.

The role of today's medical centers and the impact of the services they aspire to deliver is greater than ever before and can only increase. Already, we are at the forefront in innovation and development of the technology that has enabled our buildings to evolve.

Sustainability is crucial to the new generation of medical centers, and we are looking to develop improvements for all of our new buildings. These improvements may only be gradual, but each element can make a significant difference to each building.

For example, at Tonbridge in Kent, we have installed an all-electric system and are generating a high proportion of the energy on-site. Sustainability is not the only factor which drives building design for Assura. We are in the process of rethinking, reimagining and realigning all of the elements that go to make up a medical center: signage, natural light, integrating the outdoors within the building, technology, the patient experience. All of these elements will play their part.

And in the coming months, we hope to be launching a new initiative with our concept of the health center of the future.

As part of our national partnership with the charity, Dementia UK, we support their Admiral Nurse program and their help line, we have developed the first U.K. medical center that is built on the principles of cognitive supportive design, which minimizes as far as possible, the negative effects for dementia sufferers.

These are ideas we hope to roll out on all our future buildings as well as our existing estate.

There is much more for us to do in these areas as well as continuing to support our important work in the arena of social prescribing. And we will be announcing long-term social impact and sustainability targets at our full year results next year.

These efforts are the right thing to do. They also crucially align us with the values and the strategy of the NHS and will support our relevance and commercial success for many years to come.

So in conclusion, in a highly attractive sector, we have continued our track record and delivered sustainable growth. We have refocused our attention on higher-margin activity in asset enhancement and development, capitalized on our financial strength to secure attractive financing returns and thus have delivered earnings per share and dividend per share growth of 8% for the period.

Given that the government-backed NHS is at the core of everything we are and everything we do, it is impossible for us not to look at the current unprecedented political situation and wonder how will it affect our future.

We know there is a chronic need for investment in primary care buildings and cross-party support is growing. However, if we have learned anything from the last 3 years, it is that nothing can be taken for granted, and nothing is at face value. At such points in time, it is crucial that as a business, we are able to identify our own certainties.

In the past 16 years, Assura has built a sector-leading business with a unique portfolio and a strong reputation, all underpinned by our financial strength.

Of the 560 buildings in our care, no 2 are the same, and each requires individual nurturing with constant reevaluation and planning for its future. This has meant for our dedicated best-in-class team, feet on the ground, day-by-day interaction with GPs and other health professionals over many years.

The result is Assura has a deep knowledge base and highly trusted relationships. It is these relationships that have enabled us to increase our portfolio threefold in the past 5 years and to establish ourselves as an innovator with the skills of leading architects and designers, working with us to deliver cutting-edge medical centers.

And finally, it has secured our position as a key partner to the NHS. These capabilities have been the bedrock of our success. And it is these that give us the confidence that we will meet whatever challenges are put before us in the coming months as we continue to play our part in delivering the outstanding health spaces that our NHS so badly needs.

Now that concludes this morning's results presentation, and I would like to invite any questions you may have. If you would just wait for the microphone, that'd be good. Thank you.

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Questions and Answers

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Miranda Sarah Cockburn, Panmure Gordon (UK) Limited, Research Division - Analyst [1]

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Miranda Cockburn from Panmure. Just one question, can you give an indication of the average capital uplift following a regearing from one of those lease regearings? I don't know if you've got an average for the ones that you did over the last 6 months.

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Jonathan Stewart Murphy, Assura Plc - CEO, Member of Executive Board & Executive Director [2]

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Yes. I think, Miranda, that -- it's quite difficult to give an average based on the sample size, I'd be reluctant to do that because it might give you a slightly misleading position. But you can rest assured that we analyze each of those transactions. And obviously, we absolutely do look to secure an uplift.

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Unidentified Analyst, [3]

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[Elisa at IDCM]. Patrick, you mentioned in context of Bournville, the NHS ETTF grant funding, would you mind explaining a bit more about that? And how and when that is available to Assura?

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Jonathan Stewart Murphy, Assura Plc - CEO, Member of Executive Board & Executive Director [4]

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Would you like to take that, Patrick?

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Patrick Lowther, Assura Plc - Head of Investment & Member of Executive Board [5]

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Yes. The NHS ETTF grant funding is a capital funding solution that has -- was established a few years back and has had some challenges around actually how you access it, and from a timing implication as well in terms of the speed of delivery.

Simon Gould and his team have been working very closely with the senior decision-makers with regards to that funding. And with Bournville, in particular, have been able to secure the release of it. It's a good opportunity to work with the NHS, but equally as ever, there are a number of sort of loopholes one needs to go through. So we're not seeing a wave of new schemes coming through that.

But it's just a good example of how we can work collaboratively with them.

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Unidentified Analyst, [6]

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And it's more efficient for you than capital markets funding?

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Patrick Lowther, Assura Plc - Head of Investment & Member of Executive Board [7]

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Each scheme is slightly different and the ETTF scheme is obviously based on a specific situation on-site at any one time. So with regards to the GPs in this particular scheme it's more efficient for them. From our point of view, obviously, we're always keen to invest our capital where we can, but where we can partner and do more schemes as a result of it and equally that's in our interest.

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James Carswell, Peel Hunt LLP, Research Division - Analyst [8]

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It's James from Peel Hunt. Just on the valuation, because I think you touched on the rental growth, it's picking up. And I think, I'm right, in the U.K. it came [up] a tiny bit as well.

Is there some -- because the valuation is pretty much flat. I'm just wondering what the missing kind of piece was there or if I'd missed something.

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Jonathan Stewart Murphy, Assura Plc - CEO, Member of Executive Board & Executive Director [9]

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No. I think the valuation reflects a relatively conservative approach. I think what you'll expect to see is that as we continue to deliver further improvements in rental growth, then the values will start to reflect that in their respective ERV numbers, and then that will start to flow through into values. But I think what we've seen to date is a prudent approach on that, which is not untypical in the sector. I'm sure you understand.

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Patrick Lowther, Assura Plc - Head of Investment & Member of Executive Board [10]

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We do have 2 questions from the web. The first one is from George Shiel at Numis. What is your appetite or the likelihood of international expansion? Are there any geographies you have identified with similar characteristics to that of the U.K.?

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Jonathan Stewart Murphy, Assura Plc - CEO, Member of Executive Board & Executive Director [11]

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Yes. So in terms of international expansion, the obvious contender there would be the Republic of Ireland. It's an area that Assura looked at in some detail 3 or 4 years ago, and we reflected on that opportunity, and we decided not to invest on the basis that we weren't convinced that the scale of the opportunity was big enough to warrant the investment of management time and capital. And certainly, it is an emerging market, but over that time period, we've been very successful at deploying capital in the U.K. So I think we're very comfortable with that decision.

In terms of other geographies, we're always keen to understand how health spaces around the world are being created. We're always looking for ways to innovate. There's some great examples in the Netherlands, for example. So we're always looking for new ideas to bring to bear on what we're doing in the U.K., but we have no plans to operate outside of the U.K. There's a fantastic market opportunity here and so we're very comfortable focusing on that.

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Patrick Lowther, Assura Plc - Head of Investment & Member of Executive Board [12]

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And the second question is from Andrew Gill at Jefferies. Can you provide some more color on your acquisitions, please? Do they broadly have potential asset management, extension or redevelopment angles. And additionally, given your increased development capabilities will you focus on standing asset acquisitions with development or extension opportunities for a stronger return on investment?

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Jonathan Stewart Murphy, Assura Plc - CEO, Member of Executive Board & Executive Director [13]

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Yes. So in terms of the pipeline of opportunities, we obviously evaluate every single acquisition on its own merits. So there will be a whole mix of opportunities within there. There'll be some examples of investments where we will absolutely be acquiring the assets specifically because we believe there is an asset enhancement angle, so there might be a short-term opportunity. There's one in Kent that we're just working on at the moment, where we are very positive about the prospects for an extension in quite short order, and that will boost the returns of that investment. So that's a good example of that.

We also do make acquisitions where we have a view for a potential development. And Patrick, in his presentation, referenced Darley Dale in Derbyshire, where we bought a site with a view that over a number of years we might be able to bring forward development. And absolutely, we've been able to do that. And then lastly, of course, we also invest in assets which have got a good investment prospects stand-alone. So there were the 2 schemes in London that we referenced where we acquired those because we believe they had above-market average rental growth prospects. There's no asset enhancement or development opportunity there, but there was above market average rental growth.

Great. Well, if there are no further questions in the room, then it just goes for me to say, thank you very much for your time and attention this morning, and look forward to seeing you at the next results. Thank you.

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Jayne Marie Cottam, Assura Plc - CFO, Member of Executive Board & Executive Director [14]

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Thank you.