TIDMPHP
RNS Number : 2400M
Primary Health Properties PLC
22 August 2013
Primary Health Properties PLC
("PHP", the "Group" or the "Company")
Half Year Report for the six months ended 30 June 2013
Primary Health Properties PLC, the UK's leading investor in
modern primary healthcare facilities, is pleased to announce its
half year report for the six months ended 30 June 2013.
Group Financial Highlights
-- Increased interim dividend of 9.5p (30 June 2012: 9.25p) and
the 17(th) successive year of dividend growth
-- Net Asset Value ("NAV") per share increased 12.9% to 265.9p
(31 December 2012: 235.5p); EPRA NAV per share 301.3p (31 December
2012: 305.0p)
-- Issued 21.7 million new shares at GBP3.15 per share, raising
GBP65.8 million of new capital (net of issue costs)
-- Total debt facilities of GBP501 million; net debt GBP342
million, LTV 52.8% (31 December 2012: 60.9%)
Group Operational Highlights
-- Total portfolio including development properties increased
2.3% to GBP660.5 million (December 2012: GBP645.4 million)
-- Total annualised rent roll including development properties
has risen by 2.1% to GBP39.7 million (December 2012: GBP38.9
million)
-- Over GBP61 million of assets acquired to date:
o Four transactions in the reported period worth GBP15.9
million
o 16 additional properties acquired post balance sheet date for
GBP45.6 million, including Primary Health Care Centres Limited
Outlook
-- Continue to prioritise returning to full dividend cover
through acquisition activity; GBP55.0 million of earnings enhancing
acquisitions currently in solicitors hands as well as a significant
pipeline of further acquisition opportunities
-- Primary Care Trusts ("PCT") were abolished on 1 April 2013
and responsibility for the delivery of primary care in England was
transferred to NHS England. Nationwide drive to move more
healthcare services to primary care in local communities will
require a significant number of new, high quality primary care
facilities which the Group is well funded and placed to deliver
-- Strengthened balance sheet gives PHP significant resources to
continue to expand its portfolio of high-quality, modern primary
healthcare facilities
Harry Hyman, Managing Director of PHP, said:
"We are delighted at the performance of the group in the first
six months of the year. We have continued to build our portfolio of
high-quality, modern primary healthcare facilities and increased
our rent roll. Our recent, successful equity raising demonstrates
the continued appeal both to retail and institutional investors, of
the Group's business, underpinned by long term leases where 90% of
the rent roll is directly or indirectly received from the NHS. We
will continue to build the portfolio in 2013 and focus on returning
to full dividend cover while providing the best returns for
shareholders."
For further information please contact:
Harry Hyman/Phil Holland
Primary Health Properties PLC
T: +44 (0) 20 7451 7050
David Rydell / Victoria Geoghegan / Elizabeth Snow
Bell Pottinger Pelham
T: +44 (0) 20 7861 3232
Joshua Cryer / Robert Irvin
Broker Profile
T: +44 (0) 207 448 3244
Chairman's Statement
In the six months ended 30 June 2013 we have put the foundations
in place to enable us to execute our planned expansion of the
Group's property portfolio.
The underlying primary health care market in England has seen
the implementation of the long awaited Health and Social Care Act
(the "Act"). Primary Care Trusts ("PCT") were abolished on 1 April
2013 and responsibility for the delivery of primary care in England
was transferred to NHS England (formerly the NHS Commissioning
Board) and more localised Clinical Commissioning Groups that have a
significant GP management involvement.
The reimbursement of GP property costs was not materially
impacted by the Act and has been taken on by NHS England in place
of PCTs. PCT assets and obligations, such as those of occupational
leases with PHP, were transferred to NHS Property Services Limited
("NHSPS"), a company wholly-owned by the Secretary of State for
Health who has indemnified it for the cost of funding its
obligations.
The changes and transfers have slowed the rate of approvals of
capital related transactions and new schemes, but this will ease as
the new operating procedures are enacted and approval and authority
systems take shape. There remains a nationwide drive to move more
healthcare services to primary care in local communities,
increasing the breadth of patient choice and the efficiency of care
delivery. This will require a significant number of new, high
quality primary care facilities to be provided and the Group is
well funded and placed to deliver such premises and continue to
achieve satisfactory returns for our shareholders.
Performance
Building on the growth achieved in 2012, rental income for the
period increased by 21.5% to GBP19.7 million (30 June 2012: GBP16.2
million), as the full impact of the Apollo acquisition took effect
and rent review increases were achieved. The rate of rental growth,
however, continues to be under pressure, with increases on reviews
completed in the first half of 2013 averaging 2.3% per annum as
compared to 2.4% achieved for 2012 as a whole.
As the size of the Group's portfolio grows, costs as a
proportion of gross assets reduce, reflecting the sliding scale of
the cost of managing the Group. Operating profit before finance
costs and the revaluation of investment properties and interest
rate derivatives increased by 22.3% to GBP16.5 million (30 June
2012: GBP13.4 million). Recurring debt costs increased to GBP12.5
million (30 June 2012: GBP9.3 million) reflecting the higher
average debt position as a result of the larger portfolio, however,
the first half of 2013 also includes a first full period of
increased margins on the debt refinanced in April 2012.
Property portfolio
We completed four property transactions in the first half of the
year, committing a total of GBP15.9 million. The portfolio
generated a revaluation surplus of GBP0.2 million (30 June 2012:
GBP0.6 million) as average yields have remained stable, showing an
initial yield of 5.71% at the half year (31 December 2012: 5.72%).
The Group's investment property portfolio as at 30 June 2013
(independently valued by Lambert Smith Hampton) stood at GBP660.5
million including development commitments (31 December 2012:
GBP645.4 million).
In the period since the balance sheet date, we have completed
the acquisition of an additional 16 properties for a total
consideration of GBP45.6 million. This brings the total portfolio
value to GBP706.1 million and increases the contracted rent roll to
GBP42.6 million (31 December 2012: GBP38.9 million).
We continue to have a good pipeline of further acquisition
opportunities as we work to achieve our main priority of returning
the company to full dividend cover. Acquisitions of assets with a
total value in the region of GBP55 million are currently in
solicitors' hands and, as completed in the second part of the year,
will result in an increase in earnings.
The Group will continue to seek to add value to its existing
portfolio through lease renewals, rent review and the expansion
and/or modification of existing premises and lease re-gearing.
Funding and capital value
To facilitate the acquisitions that we have completed to date
and provide the funds to enable us to grow our property portfolio
further; we have successfully undertaken transactions in both
equity and debt markets.
In March 2013, we completed the refinance of the debt that we
assumed with our acquisition of the Apollo portfolio in December
2012. This saw a new GBP70 million, four year revolving debt
facility being arranged with Barclays Bank PLC. We have drawn under
this facility and locked into recent historically low interest
rates to generate an all in cost of funding that is less than 3.5%.
Debt facilities available to the Group at 30 June 2013 totalled
GBP501 million with available headroom of GBP159 million. Group
loan to value was 52.8% (31 December 2012: 60.9%).
In June, we completed a successful equity capital raise, issuing
21.7 million new shares at 315 pence each, realising proceeds of
GBP65.8 million, net of issue costs. The choice of a varied offer
structure allowed existing shareholders to participate in the issue
and also a number of new institutional shareholders to be added to
the register, widening and strengthening our shareholder base. The
issue price reflected a small discount of 6.3% to the share price
immediately before announcing the issue, but was 3.3% ahead of the
European Public Real Estate Association net asset value per share
("EPRA NAV") as at 31 December 2012 of 305 pence.
Dividends
The Company paid an interim dividend of 9.5 pence per share in
April, an increase of 2.7% over that of the same period in 2012 (30
June 2012: 9.25 pence). The Board has approved the payment of a
further interim dividend for 2013 of 9.5 pence per share, payable
on 1 November 2013 to shareholders on the register on 20 September
2013. A total of 19.0 pence per share will then have been paid in
dividends to shareholders in 2013, the 17th successive year of
dividend growth for the Company.
Adjusted earnings per share for the period stood at 4.8 pence
(30 June 2012: 6.1 pence). Dividend cover stood at 52% evidencing
the first step taken in restoring full dividend cover at the
earliest opportunity when comparing the outturn to previous six
month dividend periods. The impact of the assets added to date in
2013 will be evident in the second half of the year as they
contribute to earnings.
Six month period Dividend Key events
cover
----------------- --------- -------------------------------------------
30 June 2013 52% Impact of Apollo acquisition, equity raise
to fund pipeline
31 December 2012 45% First period at higher margins on debt,
Retail Bond issued
30 June 2012 68% Core debt refinance completed in April
2012
----------------- --------- -------------------------------------------
Auditors
In recognition of best governance practice, during the period a
number of audit firms were invited to tender for the audit of the
Group. After much deliberation following a thorough tender process,
the Directors have appointed Deloitte LLP as auditors to the
Group.
Ernst & Young LLP have been auditors to the Group since its
incorporation and I would like to thank them for the high quality
of the audit services provided throughout their tenure.
Outlook
We have taken significant steps towards achieving the Group's
main business objective of returning to a fully covered dividend
whilst maintaining a progressive dividend policy. We have raised
further equity that, alongside existing debt facilities, has and
will continue to be deployed in the acquisition and development of
high quality primary care assets to generate earnings accretive
returns. Our existing property portfolio presents numerous
opportunities to enhance returns and contribute to increasing
dividend cover.
Your Board remains confident that the changes in the management
of the NHS and the trends in care delivery will result in an
ongoing demand for new, purpose built assets that the Group is well
placed to provide. We continue to achieve growth from rent reviews
and asset management projects that contribute to generating
benchmark beating returns from the property business.
I look forward to another positive period for the remainder of
2013.
Graeme Elliot
Chairman
22 August 2013
Managing Director's Review
We have demonstrated our ability to source attractive
acquisitions through both portfolio purchases and individual
property transactions. The positive earnings margin that we are
able to secure has boosted dividend cover, which is our number one
priority.
Overview
The first six-month period of 2013 has seen the Group
successfully incorporate the Apollo assets into our business,
secure new debt and equity funding and start to deliver on a
pipeline of high quality assets that are earnings enhancing as we
build dividend cover back towards 100%. Assets added in 2013 to the
date of this report total GBP62 million and add GBP3.8 million to
annual contracted rent roll.
Capital resources
In June, the Company completed a successful equity raising,
issuing a total of 21,746,032 shares at a price of 315 pence per
share. This issue was structured by the Board to allow existing
shareholders the opportunity to participate in the offering,
alongside the continued drive to attract new investors to the
Company. This proved to be the correct mix of opportunity as
investors showed strong support for the issue and our initial
target fund raise was exceeded.
A total of GBP68.5 million was raised, which after costs netted
some GBP65.8 million of funds for deployment into new primary care
assets. The issue price of 315 pence was at a small discount to the
share price immediately preceding the offering, but ahead of 31
December 2012 EPRA NAV. From the GBP65.8 million, two of the
Group's revolving credit facilities were temporarily repaid in full
using GBP50.3 million from the funds raised. These funds are
available to be re-drawn as we require them for portfolio
growth.
A further 64,036 shares were issued in the period to satisfy the
scrip alternative to the cash dividend paid in April.
Debt finance
Management finalised the refinance of the underlying debt
facilities acquired with the Apollo portfolio in December 2012. In
March 2013, a new GBP50 million, four year, interest only revolving
debt facility was completed with Barclays Bank PLC, refinancing the
Apollo loans and providing capacity for new acquisitions. This was
subsequently increased to an overall facility of GBP70 million. The
initial draw down to fund the Apollo loans has been swapped for the
four year term of the loan at an all in rate of 90 basis points,
which together with the loan margin and other management costs
delivers a surplus of over 200 basis points between the cash yield
on the property assets and their associated costs.
The GBP27 million Allied Irish Banks plc ("AIB") facility was
repaid upon its maturity in January 2013 but the underlying
interest rate swaps remain in place and no breakage cost was
crystallised. As the condition of banking markets improves,
discussions have begun with AIB and continue with other funders to
provide new and extended facilities as new assets are acquired and
developed and existing lines reach their maturity.
Total facilities available to the Group as at 30 June 2013 were
GBP501 million (31 December 2012: GBP511 million), for an average
term of 5.2 years. At the same date debt drawn, net of cash
balances totalled GBP342 million, resulting in the Group LTV being
52.8% (31 December 2012: 56.4%).
Longer-term swap rates have increased in the period, which has
led to the Mark to Model ("MtM") valuation of the Group's interest
rate hedging portfolio falling substantially. At 30 June 2013, the
MtM liability stood at GBP34.8 million (31 December 2012: GBP52.8
million) demonstrating the volatility of what is a bookkeeping
adjustment and not something that impacts the Group's cash
flows.
The Group's incremental cost of debt is averaging 230 basis
points over LIBOR and despite the recent small increases in market
rates, the overall cost of funding will still be at historic lows
as we deploy the proceeds of our capital raising activity in the
months ahead, generating a satisfying rental surplus after debt and
management costs.
Operations
Six months Six months Year to
to 30 June to 30 June 31 Dec 2012
2013 2012
GBPm GBPm GBPm
---------------------------------------- ------------ ------------ -------------
Rental and related income 19.7 16.2 33.2
Expenses (3.2) (2.8) (5.6)
---------------------------------------- ------------ ------------ -------------
Operating profit before revaluation
gain and financing 16.5 13.4 27.6
Net financing costs (12.4) (9.0) (20.2)
Profit on sale of asset held on a 0.6 - -
finance lease
---------------------------------------- ------------ ------------ -------------
Underlying profit before revaluation
gain, fair value movement on interest
rate swaps and provision for early
loan repayment fee 4.7 4.4 7.4
Early loan repayment fee (0.8) - (1.6)
Fair value gain/(loss) on interest
rate swaps 9.5 (0.8) (2.9)
Revaluation gain/(loss) on property
portfolio 0.2 0.6 (1.8)
---------------------------------------- ------------ ------------ -------------
Profit before tax 13.6 4.2 1.1
---------------------------------------- ------------ ------------ -------------
The earnings benefits of the Apollo portfolio are reflected in
the first half-year performance as rental income has grown some
21.6% over the same period in 2012. The increase has also been
aided by other acquisitions closed in the latter part of 2012 and
the first part of 2013, completed property developments delivered
in the same periods and also from growth achieved on rent reviews
determined in the period.
Reviews have been completed in the period on a total of GBP3.6
million of rent. These include a mix of open market reviews, fixed
rental uplifts and rents formally linked to the Retail Prices
Index. An average increase of 2.3% per annum has been achieved,
down marginally from that for the year in 2012 of 2.4%.
Administrative costs continue to reduce as a proportion of gross
assets, with fees paid to the Joint Advisors being at an average of
0.72% of gross assets (12 months ended 31 December 2012: 0.75%).
The net rental surplus from the Group's rental activities, before
financing and non-recurring items, was GBP16.5 million an increase
of 23% over the equivalent period in 2012 (six months to 30 June
2012: GBP13.4 million).
A full six-month impact of the higher margin 2012 debt
refinancing was recorded in the period. This, together with the
overriding increase in debt as the Group's portfolio has increased,
has led to net finance costs increasing by 35% for the six month
period from GBP9.0 million in the six months to 30 June 2012 to
GBP12.4 million in the six months to 30 June 2013. Resultant
earnings per share, excluding property and derivative revaluations
and non-recurring items, were 4.8 pence (six months to 30 June
2012: 6.1 pence).
The Group also sold an asset held on a finance lease to the NHS
in March 2013, generating a surplus of GBP0.6 million over book
value. The strength of the Group's asset portfolio and stability of
yields is reflected in a surplus on revaluation at the balance
sheet date, after absorbing the costs of property acquisitions in
the period, of GBP0.2 million. An amount of GBP9.5 million is
reflected in the Income Statement from the reduced MtM liability on
revaluation of interest rate swaps as at 30 June 2013. A one-off
early repayment fee of GBP0.8 million was incurred when repaying
the Aviva loans acquired with the Apollo portfolio due to a short
lived fall in gilt rates at the time of repayment. These
non-recurring and valuation movements are included in an overall
profit for the period of GBP13.6 million (30 June 2012: GBP4.2
million).
Property portfolio
Four primary care assets were completed in the period. Two
standing let properties were acquired and two further development
properties contracted for a total of GBP15.9 million. Detailed
below, these represent a variety of assets across the United
Kingdom but all are purpose-built, modern premises with a large
majority of the rental income funded by the UK government. We have
also continued to source asset management projects from within the
existing portfolio that provide further growth in terms of rent and
capital value. Lease extensions have been agreed at Eastleigh and
Aylesbury.
Asset acquired Sq m GBPm Occupational tenants
(1)
------------------------------ ------ ----- ----------------------
Chard, Somerset (2) 653 1.9 GP Practice
5 partner GP practice
Worcester, West Midlands (2) 1,205 4.5 and pharmacy
GP practice and local
Llanrumney, South Wales 1,099 2.3 health board
Bromley-by-Bow, London 1,784 7.2 NHS Property Services
------------------------------ ------ ----- ----------------------
15.9
------------------------------ ------ ----- ----------------------
(1) including legal expenses
(2) development property
The property portfolio, on the basis that all development
commitments are completed, was independently valued at open market
value by Lambert Smith Hampton, Chartered Surveyors and Valuers, as
at 30 June 2013 at a total of GBP660.3 million. Including some
areas of expansion land held at cost, the aggregate value of the
Group's property assets including completed commitments at the
balance sheet date was GBP660.5 million.
Investors have continued to seek out longer term, secure income
streams as general commercial property markets continue to stutter
outside of London. The demand for the good quality assets that
comprise the Group's portfolio with the longevity of their
contracted income and the continued strength of the NHS covenant
has seen valuation yields for the Group's portfolio remaining
broadly stable valued at an initial yield of 5.71% as at 30 June
2013 (31 December 2012: 5.72%).
Number of
properties 30 June 31 December
at 30 June 2013 2012
2013
GBPm GBPm
----------------------------------------- ------------ --------- -------------
Investment properties 180 632.5 606.7
Properties in the course of development 6 14.0 15.7
----------------------------------------- ------------ --------- -------------
Total properties 186 646.5 622.4
Finance leases and expansion land - 0.2 3.1
----------------------------------------- ------------ --------- -------------
Total owned and leased 186 646.7 625.5
Balance of purchases committed at the
period end - 13.8 19.9
----------------------------------------- ------------ --------- -------------
Total owned, leased and committed 186 660.5 645.4
----------------------------------------- ------------ --------- -------------
Using a discounted cash flow ("DCF") methodology to value the
total property portfolio held at 30 June 2013, reflecting the
long-term stable cash flows from the underlying occupational
leases, the Group's property portfolio would be valued at GBP731.2
million. Compared to the LSH valuation of GBP660.3 million, the
difference in value represents 72.5 pence per share in net asset
value terms. For this DCF valuation, we have continued to discount
the rental flows from the assets at 7% in order to provide
comparability with prior periods.
Following the equity raise in June, we have completed the
purchase of a number of assets that were included in our identified
pipeline at that time. Since the balance sheet date we have
acquired Primary Health Care Centres ("PHCC") Limited and its
portfolio of 11 assets for GBP26.8 million, and 5 further
individual property purchases.
Including the post balance sheet transactions detailed below,
the Group's portfolio comprises 202 assets with a total value of
some GBP706.1 million.
Asset committed Sq m Occupational tenants
---------------------- ------ ---------------------------
Basingstoke (1) 1,076 GP Practice, NHS, Dentist,
Pharmacy
Chandlers Ford (1) 372 GP Practice
Darvel (1) 562 GP Practice
Dover (1) 1,005 2 GP Practices
Hounslow (1) 601 2 GP Practices
Melksham (1) 833 GP Practice
Paisley (1) 1,505 3 GP Practices
Portsmouth (1) 685 GP Practice
Speke (1) 631 GP Practice, Pharmacy
Swaffham Barn (1) 595 GP Practice
Walthamstow (1) 803 GP Practice
Gracemount, Edinburgh 2,050 GP Practice, NHS
Farrow, Bradford (2) 812 GP Practice, Pharmacy
Ewell 1,764 2 GP Practices, Dentist
Haywards Heath 810 GP Practice, Dentist,
Pharmacy
New Cumnock (2) 540 GP Practice
(1) PHCC asset
(2) development property
Annualised rent roll stood at GBP39.7 million including
development commitments and the WAULT of the portfolio was 16 years
as at 30 June 2013 (31 December 2012: 16 years). Including the
assets contracted since the balance sheet date, contracted rent
roll increases to GBP42.6 million.
Work has continued to generate a number of asset management
projects from within the Group's property portfolio. One such
project was completed at our property in Stotfold and two further
projects have been contracted at Eastleigh and Aylesbury that will
all commence on site in the coming months. These projects represent
GBP2.5 million of capital expenditure and will generate a valuation
surplus of 40% and secure new leases with an average unexpired term
of 24 years. There are five further schemes that have been approved
by the Board where we hope to achieve financial close in 2013,
committing a further GBP3.3 million to enhance the existing
portfolio and generate similar returns and lease terms.
Portfolio performance
One year Three years Five years
--------------------------- --------- ------------ -----------
Primary Health Properties 7.0% 10.1% 5.6%
IPD Healthcare Property
Index 6.8% 8.8% 6.5%
IPD All Property Index 2.7% 8.4% 0.5%
--------------------------- --------- ------------ -----------
Source: Investment Property Databank
Social responsibility
On 6 June 2013, the Company was admitted as an initial member of
the Social Stock Exchange ("SSE"). The SSE is a unique platform,
which gives investors access to publicly listed businesses with
strong social and environmental purpose, and guarantees full and
transparent disclosure on the impact of those businesses. We are
pleased to be one of the founding members and are proud to be
recognised as a generator of positive social impact.
Going concern
Set out above and in the financial statements are details of the
Group's business activities, and development, performance and
position including its cash flows, liquidity position and borrowing
facilities. The Directors believe that the Group is well placed to
manage its business risks successfully, despite the continuing
uncertain general economic outlook. Having reviewed the Group's
current position and cash flow projections, actual and prospective
debt facilities and covenant cover, the Directors have a reasonable
expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future. The Directors
continue to adopt the going concern basis of accounting in
preparing the financial statements. This is discussed further in
note 1 to the financial statements.
Auditors
Following a competitive tender process the Board appointed
Deloitte LLP as Group auditor with effect from 17 June 2013. The
appointment was made to fill a "casual vacancy" in accordance with
the Companies Act 2006 and is subject to shareholder approval at
the 2014 Annual General Meeting.
Ernst and Young LLP has provided the Company with a "statement
of circumstances" confirming that it resigned as auditor of the
Company with effect from 17 June 2013 following its unsuccessful
tender and for no other reason.
Prospects
The Company has achieved some notable success to date in 2013,
securing further equity and debt capital in what have been volatile
markets. This demonstrates the continued appeal of the Group's
business, underpinned by long-term occupational leases where 90% of
the rent roll is directly or indirectly received from the NHS. We
have subsequently applied these funds to acquire earnings enhancing
assets that will show an immediate and recurring positive impact to
our annual income surplus and provide the opportunity to undertake
additional asset management projects including some redevelopment
work to increase this surplus further.
We continue to have a strong pipeline of acquisition
opportunities, a number of which are scheduled for the remainder of
2013.
With the major impact of the NHS structural changes in England
now behind us, we believe that we will start to see the new regime
looking to work with private investors such as the Group to provide
additional new modern premises. This will enable the provision of
an increasing range of primary care services in a more localised
environment. We are well placed to play a major role in this
repositioning of the primary care estate and add to the Group's
property assets.
We have demonstrated our ability to source attractive asset
acquisitions through both portfolio purchases and individual
property transactions including continuing to develop new centres
together with sector specialist developers. The positive earnings
margin that we are able to secure has boosted dividend cover from
its low in 2012 and, as we invest our available capital into
further, prudently assessed assets, I am confident of being able to
achieve our main priority of returning the Group to full dividend
cover.
Harry Hyman
Managing Director
22 August 2013
Principal Risks
The 2012 Annual Report includes details of the Group's principal
financial risks which the Audit Committee sees as unchanged for the
remaining six months of 2013. These may be summarised as
follows:
Funding and available finance
-- The Group uses leverage to acquire its property assets.
Without confirmed debt facilities in the future, PHP may be unable
to meet commitments or repay or refinance debt facilities as they
become due.
-- The Group's debt facilities include a number of covenant
requirements, all of which are in compliance and expected to remain
so for the foreseeable future. Should the Group be unable to meet
these covenants it could result in possible default and/or
penalties being levied.
-- After interest rate swaps, some 17.6% of the Group's debt
facilities would be exposed to movements in underlying interest
rates if fully drawn.
-- The mark to model valuation of the Group's interest rate
derivative portfolio is based on underlying market interest rates.
Changes to market rates give rise to volatility in mark to model
values.
Property market risks
-- The valuation of property and property-related assets is
inherently subjective and is subject to uncertainty. There are no
assurances that the valuations of the properties reflect the actual
sale prices that may be achievable.
-- The Group intends to continue its strategy of acquiring and
developing solely primary care premises. The Group has no influence
over the future direction of primary care initiatives in the public
sector and there can be no assurance that the UK government's
primary care budget will not decline or that growth will stay at
present levels. A change in policy, moving resources away from the
primary care market, could materially and adversely affect the
Group's prospects for continued profitability and rental
growth.
-- The majority of the Group's occupational lease counterparties
are GP practices who benefit from rental and premises cost
reimbursement under the National Health Service (General Medical
Services - Premises Costs) Direction 2013. Cuts in the funding
available for the renting of medical centres may reduce funds
available to meet the costs of accommodation provided by the Group
or impact on the underlying covenant strength in the future.
Taxation risks
-- A breach of the REIT requirements may lead to the Group
losing its REIT status and the taxation benefits that this
affords.
Operational risks
-- The Group is managed by the Board of Directors, but has no
other employees. The Board appoints specialist third party advisers
to assist it with the day to day management of the Group. The
termination of the advisory contract with Nexus and J O Hambro
could adversely affect the Board's ability to effectively manage
ongoing Group operations.
Further details of how the Audit Committee monitors risks and
how these are mitigated can be found in the Group's 2012 Annual
Report.
Condensed Group Statement of Comprehensive Income
for the six months ended 30 June 2013
Six months Six months Year
ended ended ended
30 June 30 June 31 Dec 2012
2013 2012
GBP000 GBP000 GBP000
Notes (unaudited) (unaudited) (audited)
--------------------------------------- ------ ------------ ------------ -------------
Rental income 19,606 16,038 32,806
Finance lease income 87 172 345
--------------------------------------- ------ ------------ ------------ -------------
Rental and related income 19,693 16,210 33,151
Direct property expenses (153) (175) (402)
Administrative expenses 9 (2,890) (2,592) (5,124)
Non-recurring expenses: Project
costs 9 (200) - -
--------------------------------------- ------ ------------ ------------ -------------
Operating profit before net valuation
gain on property portfolio 16,450 13,443 27,625
Profit on sale of finance lease 641 - -
Net valuation gain/(deficit) on
property portfolio 3 240 631 (1,768)
--------------------------------------- ------ ------------ ------------ -------------
Operating profit before financing
costs 17,331 14,074 25,857
Finance income 5 172 175 518
Finance costs 6 (12,545) (9,308) (20,760)
Early loan repayment fee (825) - (1,564)
Fair value gain/(loss) on derivative
interest rate swaps and amortisation
of cash flow hedging reserve 6 9,446 (785) (2,922)
--------------------------------------- ------ ------------ ------------ -------------
Profit on ordinary activities before
tax 13,579 4,156 1,129
Current taxation credit 7 1 - 1
--------------------------------------- ------ ------------ ------------ -------------
Profit for the period (1) 13,580 4,156 1,130
Items that may be reclassified
subsequently to profit and loss:
Fair value movement on interest
rate swaps treated as cash flow
hedges 8,707 982 (285)
--------------------------------------- ------ ------------ ------------ -------------
Other comprehensive income/(loss) 8,707 982 (285)
--------------------------------------- ------ ------------ ------------ -------------
Total comprehensive income for
the period net of tax 22,287 5,138 845
--------------------------------------- ------ ------------ ------------ -------------
Earnings per share - basic and
diluted (2) 4 17.4p 5.9p 1.6p
Adjusted earnings per share (3)
- basic and diluted (2) 4 4.8p 6.1p 10.2p
--------------------------------------- ------ ------------ ------------ -------------
The above relates wholly to continuing operations.
(1) Wholly attributable to equity shareholders of Primary Health
Properties PLC.
(2) There is no difference between basic and fully diluted
EPS.
(3) Adjusted for large one-off items and movements in fair value
of properties and derivatives and provision for early loan
repayment fee. See note 4.
Condensed Group Balance Sheet
at 30 June 2013
At At At
30 June 30 June 31 Dec 2012
2013 2012
GBP000 GBP000 GBP000
Notes (unaudited) (unaudited) (audited)
--------------------------------------- ------ ------------ ------------ -------------
Non current assets
Investment properties 2,3 646,728 539,154 622,447
Net investment in finance leases - 3,084 3,100
Derivative interest rate swaps 203 8 -
--------------------------------------- ------ ------------ ------------ -------------
646,931 542,246 625,547
Current assets
Trade and other receivables 3,033 3,116 2,916
Net investment in finance leases - 25 21
Cash and cash equivalents 14,624 964 25,096
--------------------------------------- ------ ------------ ------------ -------------
17,657 4,105 28,033
--------------------------------------- ------ ------------ ------------ -------------
Total assets 664,588 546,351 653,580
--------------------------------------- ------ ------------ ------------ -------------
Current liabilities
Term loans 10 (617) (27,610) (79,934)
Derivative interest rate swaps (7,482) (7,126) (7,523)
Trade and other payables (10,275) (6,975) (10,687)
Deferred rental income (8,166) (6,848) (7,811)
Provision for liabilities and charges - - (1,564)
--------------------------------------- ------ ------------ ------------ -------------
(26,540) (48,559) (107,519)
--------------------------------------- ------ ------------ ------------ -------------
Non current liabilities
Term loans 10 (276,704) (269,956) (247,905)
Retail bond (73,849) - (73,755)
Derivative interest rate swaps (27,315) (42,148) (45,311)
--------------------------------------- ------ ------------ ------------ -------------
(377,868) (312,104) (366,971)
--------------------------------------- ------ ------------ ------------ -------------
Total liabilities (404,408) (360,663) (474,490)
--------------------------------------- ------ ------------ ------------ -------------
Net assets 260,180 185,688 179,090
--------------------------------------- ------ ------------ ------------ -------------
Equity
Share capital 14 48,922 37,305 38,017
Share premium account 58,786 54,722 58,606
Capital reserve 1,618 1,618 1,618
Special reserve 107,191 66,374 59,473
Cash flow hedging reserve (18,470) (25,910) (27,177)
Retained earnings 62,133 51,579 48,553
--------------------------------------- ------ ------------ ------------ -------------
Total equity (1) 260,180 185,688 179,090
--------------------------------------- ------ ------------ ------------ -------------
Net asset value per share
-- Basic 11 265.9p 248.9p 235.5p
-- EPRA (2) net asset value per
share 11 301.3p 314.9p 305.0p
--------------------------------------- ------ ------------ ------------ -------------
(1) Wholly attributable to equity shareholders of Primary Health
Properties PLC.
(2) See definition of 'EPRA' as contained within the Chairman's
Statement.
Condensed Group Cash Flow Statement
for the six months ended 30 June 2013
Six months Six months Year ended
ended 30 ended 30 31 Dec 2012
June 2013 June 2012
GBP000 GBP000 GBP000
(unaudited) (unaudited) (audited)
--------------------------------------------- ------------ ------------ -------------
Operating activities
Profit before tax 13,579 4,156 1,129
Less: Finance income (172) (175) (518)
Plus: Finance costs 12,545 9,308 20,760
Plus: Early loan repayment fee 825 - 1,564
Plus: Fair value (gain)/loss on derivatives
and amortisation of cash flow hedging
reserve (9,446) 785 2,922
--------------------------------------------- ------------ ------------ -------------
Operating profit before financing 17,331 14,074 25,857
Adjustments to reconcile Group operating
profit to net cash flows from operating
activities:
Profit on sale of finance lease (641) - -
Revaluation gain on property portfolio (240) (631) 1,768
Increase in trade and other receivables (102) (488) (133)
(Decrease)/increase in trade and other
payables (1,195) 634 7,940
--------------------------------------------- ------------ ------------ -------------
Cash generated from operations 15,153 13,589 35,432
Taxation paid - - -
--------------------------------------------- ------------ ------------ -------------
Net cash flow from operating activities 15,153 13,589 35,432
--------------------------------------------- ------------ ------------ -------------
Investing activities
Payments for investment properties (22,720) (12,937) (42,221)
Proceeds from disposal of asset held 3,768 - -
on a finance lease
Payments to acquire Apollo - - (3,298)
Interest received on development funding - - 237
Bank interest received 27 56 199
--------------------------------------------- ------------ ------------ -------------
Net cash flow used in investing activities (18,925) (12,881) (45,083)
--------------------------------------------- ------------ ------------ -------------
Financing activities
Proceeds from issue of shares (net of
expenses) 65,814 18,399 18,399
Term bank loan drawn down 80,063 36,335 75,685
Term bank loan repayments (79,614) (19,792) (100,101)
Proceeds of Retail Bond issue (net of
costs) - - 73,671
Temporary offset of proceeds of share
issue against revolving bank loan (50,250) (18,399) -
Swap interest payable (3,875) (3,238) (6,736)
Non utilisation fees (418) (176) (714)
Loan arrangement fees paid (1,273) (2,280) (2,655)
Interest paid (7,862) (4,701) (10,670)
Loan breakage costs (2,279) - -
Equity dividends paid (net of scrip
dividend) (7,006) (5,969) (12,209)
--------------------------------------------- ------------ ------------ -------------
Net cash flow from financing activities (6,700) 179 34,670
--------------------------------------------- ------------ ------------ -------------
Movement in cash and cash equivalents
for the period (10,472) 887 25,019
Cash and cash equivalents at start of
period 25,096 77 77
--------------------------------------------- ------------ ------------ -------------
Cash and cash equivalents at end of
period 14,624 964 25,096
--------------------------------------------- ------------ ------------ -------------
Condensed Group Statement of Changes in Equity
Share Share Capital Special Cash flow Retained Total
capital premium reserve reserve hedging reserve earnings
(1)
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------------------- --------- --------- --------- --------- ----------------- ---------- --------
Six months ended
30 June 2013 (unaudited)
1 January 2013 38,017 58,606 1,618 59,473 (27,177) 48,553 179,090
--------------------------- --------- --------- --------- --------- ----------------- ---------- --------
Profit for the
period - - - - - 13,580 13,580
Income and expense
recognised directly
in equity:
Fair value movement
on interest rate
swaps and amortisation
of cash flow hedging
reserve - - - - 8,707 - 8,707
--------------------------- --------- --------- --------- --------- ----------------- ---------- --------
Total comprehensive
income - - - - 8,707 13,580 22,287
Proceeds from
capital raising 10,873 - - 57,627 - - 68,500
Expenses of capital
raising - - - (2,686) - - (2,686)
Dividends paid:
Second interim
dividend for period
ended 31 December
2012 (9.50p) - - - (7,006) - - (7,006)
Scrip dividends
in lieu of interim
cash dividends 32 185 - (217) - - -
Share issue expenses - (5) - - - - (5)
30 June 2013 48,922 58,786 1,618 107,191 (18,470) 62,133 260,180
--------------------------- --------- --------- --------- --------- ----------------- ---------- --------
Six months ended
30 June 2012 (unaudited)
1 January 2012 34,136 54,430 1,618 57,405 (26,892) 47,423 168,120
--------------------------- --------- --------- --------- --------- ----------------- ---------- --------
Profit for the
period - - - - - 4,156 4,156
Income and expense
recognised directly
in equity:
Fair value movement
on interest rate
swaps and amortisation
of cash flow hedging
reserve - - - - 982 - 982
--------------------------- --------- --------- --------- --------- ----------------- ---------- --------
Total comprehensive
income - - - - 982 4,156 5,138
Proceeds from
capital raising 3,115 - - 15,885 - - 19,000
Expenses of capital
raising - - - (601) - - (601)
Dividends paid:
Second interim
dividend for period
ended 31 December
2011 (9.25p) - - - (5,969) - (5,969)
Scrip dividends
in lieu of interim
cash dividends 54 292 - (346) - -
--------------------------- --------- --------- --------- --------- ----------------- ---------- --------
30 June 2012 37,305 54,722 1,618 66,374 (25,910) 51,579 185,688
--------------------------- --------- --------- --------- --------- ----------------- ---------- --------
Year ended
31 December 2012
(audited)
1 January 2012 34,136 54,430 1,618 57,405 (26,892) 47,423 168,120
------------------------- ------- ------- ------ -------- --------- ------- --------
Profit for the
year - - - - - 1,130 1,130
Income and expense
recognised directly
in equity:
Fair value movement
on interest rate
swaps and amortisation
of cash flow hedging
reserve - - - - (285) - (285)
------------------------- ------- ------- ------ -------- --------- ------- --------
Total comprehensive
income - - - - (285) 1,130 845
Proceeds from
capital raising 3,115 - - 15,885 - - 19,000
Expenses of capital
raising - - - (601) - - (601)
Share issue as
part of consideration
for Apollo 616 3,325 - - - - 3,941
Dividends paid:
Second interim
dividend for the
year ended 31
December 2011
(9.25p) - - - (5,969) - - (5,969)
Scrip dividends
in lieu of second
interim cash dividend
(net of expenses) 54 292 - (346) - - -
First interim
dividend for the
year ended 31
December 2012
(9.25p) - - - (6,240) - - (6,240)
Scrip dividends
in lieu of interim
cash dividends
(net of expenses) 96 565 - (661) - - -
Share issue expenses - (6) - - - - (6)
31 December 2012 38,017 58,606 1,618 59,473 (27,177) 48,553 179,090
------------------------- ------- ------- ------ -------- --------- ------- --------
(1) The special reserve is a distributable reserve.
Notes to the Condensed Financial Statements
1. Accounting policies
General information
The financial information set out in this report does not
constitute statutory accounts as defined in section 434 of the
Companies Act 2006. The Group's statutory financial statements for
the year ended 31 December 2012 have been filed with the Registrar
of Companies. The auditor's report on these financial statements
was unqualified and did not contain a statement under section
498(2) or 498(3) of the Companies Act 2006.
The condensed consolidated interim financial statements of the
Group are unaudited but have been formally reviewed by the auditor
and their report to the Company is included on page 33.
These condensed interim financial statements of the Group for
the six months ended 30 June 2013 were approved and authorised for
issue by the Board on 22 August 2013.
Basis of preparation/Statement of compliance
The half year report for the six months ended 30 June 2013 has
been prepared in accordance with IAS 34 'Interim Financial
Reporting' and reflects consistent accounting policies as set out
in the Group's financial statements at 31 December 2012 which have
been prepared in accordance with IFRS as adopted by the European
Union.
The half-year report does not include all the information and
disclosures required in the statutory financial statements and
should be read in conjunction with the Group's financial statements
as at 31 December 2012.
Convention
The financial statements are presented in Sterling rounded to
the nearest thousand.
Segmental reporting
The Directors are of the opinion that the Group has one
operating and reportable segment, being the acquisition and
development of property in the United Kingdom leased principally to
GPs, NHS organisations and other associated health care users.
Going concern
The Group's property portfolio is let to tenants with strong
covenants and the acquisition pipeline is strong. In the period the
Group has finalised the refinancing of GBP70 million of bank debt
facilities into a new four year interest only facility. This helps
maintain the average maturity of the Group's banking facilities to
over five years. The Group's loan to value ratio is currently 52.8%
and the Group's interest cover test is currently 1.51 times, well
below the maximum Group banking covenant of 1.3 times. The Group
also raised GBP65.8 million, net of costs, from the issue of new
equity in the period. The Directors are therefore satisfied that
the Group has sufficient resources to continue in operation for the
foreseeable future, a period of not less than 12 months from the
date of this report. Accordingly, they continue to adopt the going
concern basis in preparing the condensed financial statements.
Changes in accounting policies
In the current financial year, the Group has adopted the
amendments to IAS 1 "Presentation of Items of Other Comprehensive
Income". Otherwise, the same accounting policies, presentation and
methods of computation are followed in the condensed set of
financial statements as applied in the Group's latest annual
audited financial statements. The amendments to IAS 1 require items
of other comprehensive income to be grouped by those items that
will be reclassified subsequently to profit and loss and those that
will never be reclassified, together with their associated income
tax. The amendments have been applied retrospectively.
IFRS 13 has impacted the measurement criteria of fair value for
certain assets and liabilities and also introduced new disclosures
as set out in note 13. No retrospective changes were necessary as a
result of the addition of the standard.
2. Investment properties and investment properties under
construction
Investment properties have been independently valued at fair
value by Lambert Smith Hampton, Chartered Surveyors and Valuers, as
at 30 June 2013 in accordance with IAS 40: Investment Property.
The revaluation gain for the six months ended 30 June 2013
amounted to GBP0.2 million. The revaluation loss for the year ended
31 December 2012 amounted to GBP1.8 million and the gain for the
six months ended 30 June 2012 amounted to GBP0.6 million.
Property additions, including acquisitions, for the six months
ended 30 June 2013 amounted to GBP22.7 million. No properties were
disposed of in the six months to 30 June 2013. Commitments
outstanding at 30 June 2013 amounted to GBP13.8 million (31
December 2012: GBP19.9 million).
Property additions for the 12 months ended 31 December 2012 and
the six months ended 30 June 2012 amounted to GBP99.1 million and
GBP13.0 million respectively. Property disposals for the 12 months
ended 31 December 2012 amounted to GBP0.5 million.
3. Property
Investment Investment Investment Total
properties long leasehold properties
freehold under construction
GBP000 GBP000 GBP000 GBP000
(unaudited) (unaudited) (unaudited) (unaudited)
------------------------------- ------------ ---------------- -------------------- ------------
As at 1 January 2013 513,345 93,371 15,731 622,447
Acquisitions 3,473 9,453 - 12,926
Additions 209 481 9,103 9,793
Impact of lease incentive
adjustment 1,120 202 - 1,322
Transfer from properties
in the course of development 2,466 8,275 (10,741) -
Revaluation gain for the
period 62 89 89 240
------------------------------- ------------ ---------------- -------------------- ------------
As at 30 June 2013 520,675 111,871 14,182 646,728
------------------------------- ------------ ---------------- -------------------- ------------
4. Earnings per share
The purpose of calculating an adjusted earnings per share is to
provide a better indication of dividend cover for the period by
excluding large one-off items affecting earnings per share during
the period.
Six months Six months Year ended
ended 30 ended 30 31 Dec 2012
June 2013 June 2012
GBP000 GBP000 GBP000
(unaudited) (unaudited) (audited)
--------------------------------------- ------------ ------------ -------------
Net profit attributable to Ordinary
Shareholders
Basic profit 13,580 4,156 1,130
Adjusted profit - Adjustments to
remove:
Net (gain)/loss on revaluation of
property (240) (631) 1,768
Fair value (gain)/loss on derivatives
(1) (9,446) 785 2,922
Profit on termination of finance (641) - -
lease
Provision for early loan repayment
fees (4) 825 - 1,564
Non recurring expenses: Project costs 200 - -
Non recurring income: Adjustment (537) - -
to recognise fixed rental uplifts
(5)
Taxation (1) - (1)
--------------------------------------- ------------ ------------ -------------
Adjusted basic and diluted earnings
(2) 3,740 4,310 7,383
--------------------------------------- ------------ ------------ -------------
Number of Ordinary Shares (3) 78,221,562 70,413,807 72,675,900
--------------------------------------- ------------ ------------ -------------
Earnings per share (2) 17.4p 5.9p 1.6p
Earnings per share - Adjusted (1)
(2) 4.8p 6.1p 10.2
--------------------------------------- ------------ ------------ -------------
(1) In view of the continuing volatility in the mark to model
adjustment in respect of the period end valuation of derivatives
that flows through the Condensed Group Statement of Comprehensive
Income, the Directors believe that it is appropriate to remove the
(gain)/loss in the calculation of adjusted earnings.
(2) There is no difference between basic and fully diluted
EPS.
(3) Weighted average number of Ordinary Shares in issue during
the period. In April 2013, the Group issued 64,036 Ordinary Shares
following the scrip dividend issue and on 13 June 2013, 21.7
million Ordinary Shares were issued by way of a firm placing, open
offer and offer for subscription.
(4) The provision for early loan repayment fees is considered a
one-off exceptional item following the acquisition of Apollo and
its subsidiary. Directors believe that it is appropriate to remove
the charge in the calculation of adjusted earnings.
(5) In the period an adjustment was made to rental income to
recognise fixed rental uplifts within the Group's property
portfolio in accordance with IFRS. An amount of GBP0.537 million
related to periods before 1 January 2013.
5. Finance income
Six months Six months Year ended
ended 30 ended 30 31 Dec 2012
June 2013 June 2012
GBP000 GBP000 GBP000
(unaudited) (unaudited) (audited)
------------------------------------- ------------ ------------ -------------
Interest income on financial assets
not at fair value through profit
or loss
Bank interest 32 57 206
Development loan interest 132 65 257
Other interest 8 53 55
------------------------------------- ------------ ------------ -------------
172 175 518
------------------------------------- ------------ ------------ -------------
6. Finance costs
Six months Six months Year ended
ended 30 ended 30 31 Dec 2012
June 2013 June 2012
GBP000 GBP000 GBP000
(unaudited) (unaudited) (audited)
------------------------------------------- ------------ ------------ -------------
Interest expense on financial liabilities
(i) Interest paid
Bank loan interest payable 5,725 5,433 10,296
Swap interest payable 3,788 3,219 6,860
Other interest payable 12 10 -
Bond interest payable 1,990 - 1,789
Bank facility non utilisation fees 395 206 733
Bank charges and loan commitment
fees 635 440 1,082
------------------------------------------- ------------ ------------ -------------
12,545 9,308 20,760
------------------------------------------- ------------ ------------ -------------
(ii) Derivatives
Net fair value (gain)/loss on interest
rate swaps (9,896) 113 1,577
Amortisation of cash flow hedging
reserve 450 672 1,345
------------------------------------------- ------------ ------------ -------------
(9,446) 785 2,922
------------------------------------------- ------------ ------------ -------------
The fair value gain on derivatives recognised in the Condensed
Group Statement of Comprehensive Income has arisen from the
interest rate swaps for which hedge accounting does not apply. A
fair value gain on derivatives which meet the hedge effectiveness
criteria under IAS39 of GBP8.2 million (30 June 2012: gain of
GBP0.3 million) is accounted for directly in equity, together with
amortisation of the hedging reserve of GBP0.5 million (30 June
2012: GBP0.7).
Net finance costs excluding fair value movements on derivatives
can be summarised as follows:
Six months Six months Year ended
ended 30 ended 30 31 Dec 2012
June 2013 June 2012
GBP000 GBP000 GBP000
(unaudited) (unaudited) (audited)
------------------------- ------------ ------------ -------------
Finance income (note 5) (172) (175) (518)
Finance costs 12,545 9,308 20,760
------------------------- ------------ ------------ -------------
Net finance costs 12,373 9,133 20,242
------------------------- ------------ ------------ -------------
7. Taxation
Six months Six months Year ended
ended 30 ended 30 31 Dec 2012
June 2013 June 2012
GBP000 GBP000 GBP000
(unaudited) (unaudited) (audited)
------------------------------------------- ------------ ------------ -------------
Taxation in the Condensed Group Statement
of Comprehensive Income:
Current tax
UK corporation tax credit on non-property
income (1) - (1)
Taxation credit in the Condensed
Group Statement of Comprehensive
Income (1) - (1)
------------------------------------------- ------------ ------------ -------------
8. Dividends paid
Six months Six months Year ended
ended 30 ended 30 31 Dec 2012
June 2013 June 2012
GBP000 GBP000 GBP000
(unaudited) (unaudited) (audited)
----------------------------------------- ------------ ------------ -------------
Second interim dividend for the period
ended 31 December 2012 (9.50p) paid
22 April 2013 (2012: 9.25p) 7,006 5,969 5,969
Scrip dividend in lieu of second
interim cash dividend 217 346 346
First interim dividend for the period
ended 31 December 2012: (9.25p) paid
26 October 2012 - - 6,240
Scrip dividend in lieu of first interim
cash dividend - - 661
----------------------------------------- ------------ ------------ -------------
7,223 6,315 13,216
----------------------------------------- ------------ ------------ -------------
Per share 9.50p 9.25p 18.50p
----------------------------------------- ------------ ------------ -------------
The Board proposes to pay an interim cash dividend of 9.50p per
Ordinary Share for the six months to 30 June 2013, payable on 1
November 2013. This dividend will not be a Property Income
Distribution ("PID").
9. Administrative expenses
As the portfolio has grown, administrative expenses as a
proportion of rental and related income fell to 14.7% (30 June
2012: 16.0%). This equates to an annualised rate of 0.9% of gross
real estate assets (30 June 2012: 1.0%). Of the total GBP2.9
million of administrative expenses, fees of GBP2.3 million were
payable to the Joint Advisors as shown in note 12.
During the year the Group incurred non-recurring project costs
of GBP0.2 million.
No performance incentive fee is payable to the Joint Advisors
for the period ended 30 June 2013
(six months to 30 June 2012 and year ended 31 December 2012:
GBPnil). Under the terms of the management agreement there is a
deficit of some GBP59.8 million to be made up in the net asset
value before any further performance incentive fee becomes
payable.
10. Bank and other borrowings reconciliation
Bank borrowing Bank borrowing Retail Bond Total facility
drawn down headroom drawn down
GBP000 GBP000 GBP000 GBP000
(unaudited) (unaudited) (unaudited)
------------------------------ --------------- --------------- ------------ ---------------
As at 1 January 2013 331,016 105,000 75,000 511,016
------------------------------ --------------- --------------- ------------ ---------------
Term bank loans drawn
down 50,250 (50,250) - -
Term bank repayments - - - -
Temporary offset of proceeds
of share issue against
revolving bank facility (50,250) 50,250 - -
Repayment of Aviva loans (310) - - (310)
------------------------------ --------------- --------------- ------------ ---------------
(310) - - (310)
------------------------------ --------------- --------------- ------------ ---------------
330,706 105,000 75,000 510,706
------------------------------ --------------- --------------- ------------ ---------------
Repayment of Allied Irish
Banks PLC loan (27,000) - - (27,000)
Repayment in full of Aviva
loans (Apollo) (52,305) - - (52,305)
Draw down from Barclays
Bank PLC on new revolving
credit facility 29,813 40,187 - 70,000
------------------------------ --------------- --------------- ------------ ---------------
(49,492) 40,187 - (9,305)
------------------------------ --------------- --------------- ------------ ---------------
Total term loans as at
30 June 2013 281,214 145,187 75,000 501,401
------------------------------ --------------- --------------- ------------ ---------------
Any bank facility arrangement fee amounts unamortised as at the
period end are offset against amounts drawn on the facilities as
shown in the table below:
30 June 2013
GBP000
(unaudited)
-------------------------------------------------------- -------------
Term loans drawn: due within one year 617
Term loans drawn: due in greater than one year 280,597
-------------------------------------------------------- -------------
Total term loans drawn 281,214
Less: Unamortised borrowing costs (3,893)
-------------------------------------------------------- -------------
Total term loans due in greater than one year 276,704
-------------------------------------------------------- -------------
Total term loans per the Condensed Group Balance Sheet 277,321
-------------------------------------------------------- -------------
11. Net asset value calculations
Net asset values have been calculated as follows:
30 June 2013 30 June 2012 31 Dec 2012
GBP000 GBP000 GBP000
(unaudited) (unaudited) (audited)
------------------------------------------ ------------- ------------- ------------
Net assets per Condensed Group Balance
Sheet 260,180 185,688 179,090
------------------------------------------ ------------- ------------- ------------
Derivative interest rate swaps liability
(net) 34,594 49,266 52,834
------------------------------------------ ------------- ------------- ------------
EPRA net asset value 294,774 234,954 231,924
------------------------------------------ ------------- ------------- ------------
Number of Number of Number of
shares shares shares
------------------------------------------ ------------- ------------- ------------
Ordinary Shares:
Issued share capital 97,844,276 74,609,070 76,034,208
------------------------------------------ ------------- ------------- ------------
Basic net asset value per share 265.9p 248.9p 235.6p
------------------------------------------ ------------- ------------- ------------
EPRA net asset value per share 301.3p 314.9p 305.0p
------------------------------------------ ------------- ------------- ------------
12. Related party transactions
The fees calculated and payable for the period to the Joint
Advisors were as follows:
30 June 2013 30 June 2012 31 Dec 2012
GBP000 GBP000 GBP000
(unaudited) (unaudited) (audited)
--------------------------------------- ------------- ------------- ------------
Nexus TradeCo Limited 1,439 1,236 2,497
J O Hambro Capital Management Limited 842 851 1,669
--------------------------------------- ------------- ------------- ------------
2,281 2,087 4,166
--------------------------------------- ------------- ------------- ------------
13. Financial Instruments' fair value disclosure
The Group held the following financial instruments at fair value
at 30 June 2013. The Group has no financial instruments with fair
values that are determined by reference to significant unobservable
inputs i.e. those that would be classified as level 3 in the fair
value hierarchy, nor have there been any transfers of assets or
liabilities between levels of the fair value hierarchy. There are
no non-recurring fair value measurements.
Fair value measurements at 30 June 2013 using:
Level 1 (1) Level 2 (2) Level 3 (3) Total
Recurring fair value measurements GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------- ------------- ------------ ------------ ---------
2013 - Financial assets
Derivative interest rate
swaps - 203 - 203
----------------------------------- ------------- ------------ ------------ ---------
2013 - Financial liabilities
Derivative interest rate
swaps - (34,797) - (34,797)
----------------------------------- ------------- ------------ ------------ ---------
(1) Valuation is based on unadjusted quoted prices in active
markets for identical financial assets and liabilities.
(2) Valuation is based on inputs (other than quoted prices
included in Level 1) that are observable for the financial asset or
liability, either directly (i.e. as unquoted prices) or indirectly
(i.e. derived from prices).
(3) Valuation is based on inputs that are not based on
observable market data.
The interest rate swaps whose fair values include the use of
level 2 inputs are valued by discounting expected future cash flows
using market interest rates and yield curves over the remaining
term of the instrument. The following inputs are used in arriving
at the valuation:
-- Interest rates
-- Yield curves
-- Swaption volatility
-- Observable credit spreads
-- Credit default swap curve
14. Called up share capital
30 June 2013 30 June 2012 31 Dec 2012
GBP000 GBP000 GBP000
(unaudited) (unaudited) (audited)
---------------------------------------- ------------- ------------- ------------
Issued and fully paid at 50p each 48,922 37,305 38,017
---------------------------------------- ------------- ------------- ------------
At beginning of year 38,017 34,136 34,136
Scrip issues in lieu of second interim
cash dividends 32 54 54
Scrip issues in lieu of first interim
cash dividends - - 96
Proceeds from capital raisings 10,873 3,115 3,115
Shares issued in consideration of
Apollo acquisition - - 616
---------------------------------------- ------------- ------------- ------------
48,922 37,305 38,017
---------------------------------------- ------------- ------------- ------------
On 13 June 2013, the Group completed a share issue at a price of
315 pence per share. 21,746,032 shares were issued, generating net
cash proceeds of GBP65.8 million.
On 20 December 2012, the Company issued 1,231,395 new Ordinary
Shares at 50 pence each at an agreed price of 320 pence per share
as part of the consideration for the acquisition of Apollo Medical
Partners Limited ("Apollo").
On 24 May 2012, the Group completed a small share placing at a
price of 305 pence per share. 6,229,509 shares were issued,
generating net cash proceeds of GBP18.4 million.
15. Contingent liabilities
The terms and conditions agreed on acquiring Apollo in 2012 may
oblige the Group to pay a number of potential additional elements
of consideration conditional upon events that may be achieved by
the vendor in an agreed period after acquisition.
In particular, a number of properties acquired with Apollo
include small areas of vacant lettable space to which no value has
been ascribed on acquisition. PHP has agreed a three year period
from completion of the Apollo acquisition within which the vendor
is engaged to let this space and should they be successful,
additional consideration may become payable. The Group estimates
the maximum potential payment for these events at GBP1.21 million
at the interim balance sheet date. The new lettings would add value
to the property portfolio.
16. Post balance sheet events
On 2 July 2013, PHP announced that it had agreed to acquire the
entire issued share capital of Primary Health Care Centres Limited,
an investor in primary care and pharmacy properties in the UK. The
consideration payable was approximately GBP10.5m, including
transaction costs of
GBP0.3 million and was settled in cash upon completion. The
acquisition has added 11 high quality, fully let properties across
the UK, generating a total annual rent roll of GBP1.7 million, with
a weighted average lease length of 19.3 years.
On 1 August 2013, PHP announced that it had acquired a single
purpose company whose sole asset is a substantial modern medical
centre near to the centre of Edinburgh. The Gracemount Medical
Centre was acquired for GBP6.35 million and is fully let, jointly
to the Scottish Ministers and a GP Practice. On the same day, PHP
announced that a wholly-owned subsidiary had entered into a forward
commitment to develop a new primary care centre to be built in
Bradford. The completed property will cost GBP2.2 million with
completion anticipated in mid 2014.
On 7 August 2013, PHP announced that a wholly-owned subsidiary
had completed the acquisition of three modern, purpose built
medical centres for a total consideration of GBP9.55 million
located in Surrey, West Sussex and Ayrshire. The Ayrshire property
is under construction and will be completed in September 2013.
Independent review report to Primary Health Properties PLC
We have been engaged by the Company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 June 2013 which comprises the Condensed Group
Statement of Comprehensive Income, the Condensed Group Balance
Sheet, the Condensed Group Cash Flow Statement, the Condensed Group
Statement of Changes in Equity and related notes 1 to 16. We have
read the other information contained in the half-yearly financial
report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
This report is made solely to the Company in accordance with
International Standard on Review Engagements (UK and Ireland) 2410
"Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" issued by the Auditing Practices
Board. Our work has been undertaken so that we might state to the
Company those matters we are required to state to it in an
independent review report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the Company, for our review work, for this
report, or for the conclusions we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the Directors. The Directors are responsible
for preparing the half-yearly financial report in accordance with
the Disclosure and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
As disclosed in Note 1, the annual financial statements of the
company are prepared in accordance with IFRS as adopted by the
European Union. The condensed set of financial statements included
in this half-yearly financial report has been prepared in
accordance with International Accounting Standard 34, "Interim
Financial Reporting," as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 "Review of
Interim Financial Information Performed by the Inde-pendent Auditor
of the Entity" issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial inform-ation
consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK and Ireland) and consequently does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
June 2013 is not prepared, in all material respects, in accordance
with International Accounting Standard 34 as adopted by the
European Union and the Disclosure and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
Deloitte LLP
London
22 August 2013
DIRECTORS' RESPONSIBILITY STATEMENT
The Directors confirm that to the best of their knowledge this
condensed set of financial statements has been prepared in
accordance with IAS 34 as adopted by the European Union and that
the operating and financial review herein includes a fair review of
the information required by DTR 4.2.7 and DTR 4.2.8 of the
Disclosure and Transparency rules of the United Kingdom's Financial
Services Authority namely:
-- an indication of important events that have occurred during
the first six months of the financial year and their impact on the
condensed financial statements and a description of the principal
risks and uncertainties for the remaining six months of the
financial year; and
-- material related party transactions in the first six months
and any material changes in the related party transactions
described in the last Annual Financial Report.
Shareholder information is as disclosed in the Annual Financial
Report and is also available on the PHP website
www.phpgroup.co.uk.
Graeme Elliot
Chairman
22 August 2013
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR PGURARUPWGMG
Primary Health Properties (LSE:PHP)
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부터 9월(9) 2024 으로 10월(10) 2024
Primary Health Properties (LSE:PHP)
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부터 10월(10) 2023 으로 10월(10) 2024
