RNS Number:5132W
Primary Health Properties PLC
15 March 2004
Embargoed for release at 7.00am on 15 March 2004
PRIMARY HEALTH PROPERTIES PLC ("PHP")
Modern accommodation for the Provision of Primary Health
Care Services
Interim Results for the six months ended
31 December 2003
Group Financial Highlights
*Basic earnings per share increased by 16.4% to 6.4p (2002: 5.5p)
*Portfolio revaluation increase of #4m
*Basic NAV per share increased 32.5% to 239.4p (2002: 180.7p)
*Pre-tax profit increased 21% to #1,239,000 (2002: #1,024,000)
*Interim dividend increased 10% to 5.5p (2002: 5.0p)
*Portfolio (including finance leases) increased 27.3% to #106.3m (2002: #83.5m)
Harry Hyman, Managing Director, commented:
"We have made further significant progress in all areas of our business. All of
our key performance indicators have improved on a comparable basis and I am
particularly pleased to report a 32 per cent increase in gross NAV following the
introduction of a new policy of interim valuation. This valuation reflects the
quality of our portfolio and the covenant strength for which we have become
recognised.
"Primary care issues are a mainstay of current government policy and the demand
for modern and proper working environments is increasing. We have made a good
start to the second half of the financial year and look forward to the future
with great confidence."
Enquiries:
Bell Pottinger Corporate & Financial
David Rydell, Director
Tel: 020 7861 3232
Primary Health Properties PLC
Harry Hyman
Managing Director
Tel: 01483 306912
Mobile: 07973 344768
Chairman's Statement
The Group profit before taxation for the six months to 31 December 2003 totalled
#1,239,000 (2002: #1,024,000), an increase of 21%.
Profit after taxation was #1,116,000 (2002: #913,000), an increase of 22%,
yielding basic earnings per share of6.4p (2002: 5.5p) and diluted earnings per
share of 5.9p (2002: 5.1p), an increase of 16%.
The Board has decided to undertake a revaluation of the Group's property
portfolio every six months instead of just annually. As a result of this the
valueof the property portfolio has increased by #4.0 million, with the basic
net asset value per share increasing to 239.4p per share compared to 226.7p at
30 June 2003. This reflects both rental increases and current yields in the
market. In addition the net asset value was also affected by the issue of
1,386,667 shares following the exercise of management options held by the Joint
Managers and the issue of 22,669 Ordinary Shares pursuant to the scrip dividend
scheme. On a diluted basis the net asset value per share was 216.0p (30 June
2003:200.6p).
The Board proposes to pay an interim cash dividend of 5.5p per share on 20 May
2004, an increase of 10% (2002: 5.0p), to Shareholders on the register of
members on 26 March 2004.
The Board has the authority to offer Ordinary Shares instead of cash in respect
of dividends. A circular offering Shareholders on the register of members on 26
March 2004 the opportunity to elect to receive new Ordinary Shares instead of
the cash dividend in respect of the interim dividend, together with a Form of
Election and/or Notice of Entitlement will be posted to Shareholders with the
interim report on 6 April 2004. The latest date for receipt of the Forms of
Election is 6 May 2004.
During the sixmonths ended 31 December 2003 we have taken delivery of completed
and fully let properties at Apsley Lane, Nottingham and Hawthorn Medical
Practice, Skegness and entered into new commitments totalling #12.1 million
during the period at Bentley in West Midlands, Dalkeith in Scotland, Llandudno
in North Wales and Burton Latimer in Northamptonshire. Since 31 December 2003 we
have entered into a further #6.7 million of commitments, including a property at
Amwell Street, London, that has completed at a cost of #4.2 million.
The table below sets out the portfolio at 31 December 2003:
31 December 2003 31 December 2002
#m #m
Investment properties 99.4 80.2
Properties in the course of development 2.6 0.8
Finance Leases 2.6 2.5
Development loans 1.7 0.0
Total owned and leased 106.3 83.5
Deposit paid 0.1 0.0
Committed 21.0 2.6
Total owned, leased and committed 127.4 86.1
We have a strong forward pipeline of transactions.
The rent roll has increased from #6.9 million at 30 June 2003 to #7.2 million at
31 December 2003, representing both new deliveries and rental increases. Work
continues on outstanding rent reviews, and we expect to continue to obtain
satisfactory rent reviews.
We have continued to monitor our exposure to interest rates and have entered
into a new #10 million swap arrangement for six years from 2007 to 2013 and a
new #10 million swap arrangement for ten years from 2004 to 2014. For the 2004
calendar year we have covered approximately 72% of our exposure to interest
rates at an average rate before margin of 4.8%, falling gradually to
approximately 48% in 5 years time with an average rate before margin of 5.0%.
During January we agreed a further increase of #20 million in our banking
facilities which now total #95 million. The Board has decided to recommend to
shareholders at the Annual General Meeting an increase in the Group's gearing
level to 75% of Gross Assets. This would enable the Group to expand its
portfolio to #190.7 million based on existing equity and quasi equity resources.
The Board will also be considering the implications of the Treasury's
consultation programme on Real Estate Investment Trusts.
During the period Nexus Property Management Services Limited and J O Hambro
Capital Management Limited exercised management options in respect of 960,000
and 426,667 shares at #1 each. In addition 22,669 Ordinary Shares were issued
pursuant to the scrip dividend alternative. The number of Ordinary Shares in
issue as at 31 December 2003 was 18,126,313.
The share save scheme has 34 members holding 32,403 Ordinary Shares.
The portfolio at the date of this report has 54 properties with a further 11
contracted for delivery. The portfolio has performed well and we believe that
the combination of the high quality property portfolio, long lease lengths and
strong covenant quality make a very desirable portfolio.
G.A.Elliot
Chairman
12 March 2004
CONSOLIDATED PROFIT AND LOSS ACCOUNT
forthe six months ended 31 December 2003
Six months Year Six months
ended ended ended
31 December 30 June 31 December
2003 2003 2002
#'000 #'000 #'000
(unaudited) (audited) (unaudited)
Turnover 3,641 6,711 3,208
Administrative expenses (823) (1,399) (655)
Operating profit 2,818 5,312 2,553
Share of operating loss in joint venture - (178) (86)
2,818 5,134 2,467
Interest receivable 46 55 32
Interest payable (1,625) (3,010) (1,475)
Profit on ordinary activities before tax 1,239 2,179 1,024
Taxation (123) (226) (111)
Profit on ordinary activities after tax 1,116 1,953 913
Dividend
Interim dividend of 5.5p per share (997) (1,671) (835)
(2003: interim 5.0p and final 5.0p)
Additional final dividend 2003* (69) - -
Profit retained for the period 50 282 78
Earnings per share - basic 6.4p 11.8p 5.5p
-diluted 5.9p 10.8p 5.1p
* Additional final dividend 2003 - as a result of the Joint Managers exercise of
options to purchase 1,386,667 Ordinary shares on 17 September 2003, they were
entitled as Shareholders of these new shares on the register at 26 September
2003 to receive the final dividend in respect of the year ended 30 June 2003.
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
for the six months ended 31 December 2003
Six months Year Six months
ended ended ended
31 December 30 June 31 December
2003 2003 2002
#'000 #'000 #'000
(unaudited) (audited) (unaudited)
Profit for the financial period excluding share of loss 1,116 2,131 999
in joint venture
Share of joint venture loss for the period - (178) (86)
Profit for the financial period attributable to members 1,116 1,953 913
of the Parent Company
Unrealised surplus on revaluation of properties 4,000 7,497 -
Total gains and losses relating for the period 5,116 9,450 913
There were no recognised gains and losses other than those passing through the
profit and loss account.
All activities are continuing
CONSOLIDATED BALANCE SHEET
at 31 December 2003
At 31 At 30 At 31
December June December
2003 2003 2002
#'000 #'000 #'000
(unaudited) (audited) (unaudited)
Fixed Assets
Tangible assets 103,680 93,710 81,051
Investments - (31) (39)
103,680 93,679 81,012
Current assets
Debtors 1,312 658 602
Net investment in finance leases: amounts 2,561 2,573 2,556
falling due in more than 1 year
Cash at bank 1,989 418 2,003
5,862 3,649 5,161
Creditors: amounts falling due within one year: (5,048) (5,219) (11,993)
Net current assets/(liabilities) 814 (1,570) (6,832)
Total assets less current liabilities 104,494 92,109 74,180
Creditors: amounts falling due after
more than one year:
Term loan (57,100) (50,200) (40,000)
Convertible loan stock 2016 (4,000) (4,000) (4,000)
(61,100) (54,200) (44,000)
43,394 37,909 30,180
Capital and reserves:
Called up share capital 9,063 8,358 8,349
Share premium account 7,419 6,689 6,670
Capital reserve 1,618 1,618 1,618
Revaluation reserve 24,253 20,253 12,756
Profit and loss account 1,041 991 787
Equity shareholders' funds 43,394 37,909 30,180
Net asset value - basic 239.40p 226.77p 180.74p
- diluted 216.04p 200.61p 164.94p
SUMMARISED CONSOLIDATED CASH FLOW STATEMENT
for the six months ended 31 December 2003
Six months Year Six months
ended ended ended
31 December 30 June 31 December
2003 2003 2002
#'000 #'000 #'000
(unaudited) (audited) (unaudited)
Net cash inflow from operating activities 2,506 5,916 2,962
Return on investment and servicing of finance
Interest received 6 10 4
Interest paid (1,882) (2,351) (1,419)
Net cash outflow from return on investment and (1,876) (2,341) (1,415)
servicing of finance
Taxation
UK Corporation tax recovered - 3 3
Capital expenditure
Payments to acquire tangible fixed assets (4,820) (8,536) (3,079)
Development loan advanced (1,637) - -
Loan to joint venture (27) (100) -
(6,484) (8,636) (3,079)
Equity dividends paid (857) (1,544) (742)
Net cash outflow before financing (6,711) (6,602) (2,271)
Financing
Ordinary share issue (net of expenses) 1,382 209 213
Term bank loan 2008 6,900 10,200 -
Revolving 364 day facility - (3,750) 3,700
Net cash inflow from financing 8,282 6,6593,913
Increase in cash 1,571 57 1,642
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
Six months Year Six months
ended ended ended
31 December 30 June 31 December
2003 2003 2002
#'000 #'000 #'000
(unaudited) (audited) (unaudited)
Increase in cash in the period 1,571 57 1,642
Cash inflow from loans (6,900) (6,450) (3,700)
Movement in net debt in the period (5,329) (6,393) (2,058)
At the beginning of the period (53,782) (47,389) (47,389)
At the end of the period (59,111) (53,782) (49,447)
Net debt comprises:
Cash at bank and in hand 1,989 418 2,003
Term loan (57,100) (50,200) (40,000)
Convertible Loan Stock 2016 (4,000) (4,000) (4,000)
Revolving364 day bank loan - - (7,450)
(59,111) (53,782) (49,447)
RECONCILIATION OF OPERATING PROFITTO NET CASH INFLOW FROM OPERATING ACTIVITIES
Six months Year Six months
ended ended ended
31 December 30 June 31 December
2003 2003 2002
#'000 #'000 #'000
(unaudited) (audited) (unaudited)
Operating profit 2,818 5,312 2,553
(Increase)/decrease in operating debtors and (380) 272 104
prepayments
Increase in operating creditors and accruals 68 332 305
Net cash inflow from operating activities 2,506 5,916 2,962
NOTES:
1. The interim financial information has been prepared on the basis of the
accounting policies set out in the Group's 2003 statutory accounts.
2. The freehold properties are included at valuation as at 31 December
2003. Fixed assets consist of:
31 December 30June 31 December
2003 2003 2002
#'000 #'000 #'000
(unaudited) (audited) (unaudited)
Tangible assets:
Investment properties 102,001 93,699 81,037
Development Loans 1,679 11 14
103,680 93,710 81,051
Investments:
Investment in joint venture
Share of gross assets 39 75 8
Share of gross liabilities (39) (106) (47)
- (31) (39)
103,680 93,710 81,012
JOINT VENTURE
Primary Health Properties plc owns 50% of the issued Ordinary share capital of
Primary Health Solutions Limited, a company created for the purpose of
developing properties for sale and leaseback and to tender for contracts under
the Government's LIFT (Local Improvement Finance Trust) initiative. The
remaining 50% of the issued Ordinary share capital is owned by Brackley
Investments Limited.
3. The calculation of earnings per share is based on earnings of
#1,116,000 (30 June 2003: #1,953,000; 31 December 2002: #913,000) and 17,520,993
Ordinaryshares (30 June 2003: 16,612,427; 31 December 2002: 16,530,218) being
the weighted average number of shares in issue during the period. Diluted
earnings per share is calculated in accordance with Financial Reporting Standard
No. 14: Earnings per Share. It is based on earnings of #1,257,000 (30 June
2003: #2,232,000; 31 December 2002: #1,054,000) and 21,235,898 Ordinary shares
(30 June 2003: 20,694,213; 31 December 2002: 20,629,066) being the weighted
average number of Ordinary shares in issueduring the period.
Earnings: Weighted Average Number of Ordinary Shares:
# Number
Profit on ordinary activities Issued share capital* 17,520,993
after tax 1,116,000 Dilutive effect of options** 236,644
Interest saved on Dilutive effect of convertible
conversion of loan stock loan stock*** 3,478,261
(including adjustment for tax) 141,000
1,257,000 21,235,898
* Weighted average number of ordinary shares in issue during the period
** Excess of the total number of potential shares on option exercise over the
number that could be issued at fair value ascalculated in accordance with
Financial Reporting Standard No. 14: Earnings per share.
*** The total number of potential shares on conversion of the convertible loan
stock.
4. Diluted net asset value has been calculated as follows:
31 December 30 June 31 December
2003 2003 2002
#'000 #'000 #'000
(unaudited) (audited) (unaudited)
Net assets:
Per Consolidated Balance Sheet 43,394 37,909 30,180
Add - Loan Stock conversion 4,000 4,000 4,000
- Receipts from the exercise of
options 2,736 1,387 1,387
50,130 43,296 35,567
No. ofshares No. of shares No. of shares
Ordinary shares:
Issued share capital 18,126,313 16,716,977 16,698,333
Add - Loan Stock conversion into shares 3,478,261 3,478,261 3,478,261
New shares issued on exercise of options 1,600,000 1,386,667 1,386,667
23,204,574 21,581,905 21,563,261
Calculations assume that the dilution takes place on the respective balance
sheet dates.
5. The financial information herein does not constitute statutory accounts
as defined in Section 240 of the Companies Act 1985. The financial information
for the year ended 30 June 2003 is based on the statutory accounts for the year.
Those accounts, upon which the auditors issued an unqualified opinion, have
been delivered to the Registrar of Companies.
The Interim report will be posted to shareholders and those on the mailing list
as soon as practicable after printing and will also be available on request from
the Company Secretary, J O Hambro Capital Management Limited, Ground Floor,
Ryder Court, 14 Ryder Street, London, SW1Y6QB.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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