Half Year Results

CareCapital Group plc 12 September 2007 12 September 2007 CareCapital Group Plc ("CareCapital" or "the Group") Half Year Results for the Six Months to 30 June 2007 CareCapital Group Plc (AIM: CARE), a healthcare real estate developer and investor in the UK and in Germany, is pleased to announce its half year results for the six months to 30 June 2007. Highlights • Group rental income up 53% to £951,034 (2006: £623,456) • Profit before tax of £675,026 (2006: loss of £971,874) • Property acquisitions and developments of £3.0 million completed in the period • Rent reviews in the period have produced an average uplift of 22% • Portfolio value up 56% to £33.5 million (2006: £21.4 million) • Adjusted diluted Net Asset Value ("NAV") per share* up 29 % to 22p (2006: 17p) • Robust and growing development pipeline in UK and Germany. * Adjusted diluted NAV per share - excludes deferred tax on property portfolio revaluation. Calculated on an equivalent basis for 2006. Dr. Michael Sinclair, Chairman, commented, "Our development pipeline will result in significant increases in owned assets and rental revenues in coming years. The market for quality medical office buildings will continue to grow, is not speculative and will offer a stable long term investment that is resistant to external economic conditions. CareCapital is well positioned to progress within this environment." Paul Stacey, Chief Executive, added, "Progress on projects in the UK and Germany is proceeding as planned. A number of these developments have increased in both size and complexity as they accommodate additional health and community services and more advanced technologies. In some cases these additional services are to be provided to NHS and private patients by private sector and voluntary organisations as part of the emerging mixed economy of primary care. We believe that these developments have the potential of delivering enhanced rental returns over the longer term" For further information, please contact: CareCapital Group Plc Daniel Stewart & Co. Plc Tavistock Communications Paul Stacey, Chief Executive Lindsay Mair, Simon Hudson, Steve Wilden, Finance Director Director, Corporate Finance Paul Youens Tel: 020 7034 1949 Tel: 020 7776 6550 Tel: 020 7920 3150 pstacey@carecapital.co.uk lindsay.mair@danielstewart.co.uk shudson@tavistock.co.uk swilden@carecapital.co.uk pyouens@tavistock.co.uk Chairman's Statement I am pleased to report on the Interim Financial Results for CareCapital Group Plc for the six month period ended 30th June 2007. The Group has produced a robust financial performance during the period under review and made significant progress in terms of both profit before tax and the increase in value of its income generating property assets against the comparable period in 2006. At 30th June 2007 the Group's medical office buildings and other primary care facilities were valued at £33.5 million (30 June 2006: £21.4 million, 31 December 2006: £29.5 million). Profit before tax for the six months under review was £675,026 (2006: loss of £971,874 and a profit of £1,622,258 for the year to 31 December 2006). Profit after tax was £581,858 (2006: loss of £978,369 and a profit of £592,291 for the year to 31 December 2006). Four rent reviews were negotiated in the first six months of 2007. These resulted in increases averaging 21.9% on the applicable rents. This is an improvement on the outcomes achieved in 2006 however there can be no certainty that this level of performance can be maintained. In April the patient hotel in Southampton was disposed of following the cessation of the contract to provide accommodation for patients attending the local radiotherapy centre. The sale price was £1.675 million against a book valuation of £1.5 million. Our development pipeline in both the UK and Germany continues to be progressed in line with anticipated timetables. This will result in significant increases in owned assets and rental revenues in coming years. A number of these projects have grown in both size and complexity as the delivery of primary care encompasses additional services to be delivered at a local level. I remain of the view that the market for quality medical office buildings will continue to grow, is not speculative and will offer a stable long term investment that is resistant to external economic conditions. CareCapital is well positioned to progress within this environment. Dr Michael Sinclair, Chairman 11 September 2007 Consolidated income statement for the six months ended 30 June 2007 Six Six Year months months months ended ended ended 30 June 30 June 31 December 2007 2006 2006 Unaudited Unaudited Audited Notes £ £ £ ----------------------------------------------------------------------------------------- Continuing operations Revenue 951,034 623,456 1,335,733 ----------------------------------------------------------------------------------------- Cost of sales (69,463) (24,532) (48,813) ----------------------------------------------------------------------------------------- Gross profit 881,571 598,924 1,286,920 Administrative expenses (846,198) (824,274) (1,728,927) ----------------------------------------------------------------------------------------- 35,373 (225,350) (442,007) Other operating income 2 126,180 0 0 Net surplus on revaluation of investment 959,000 0 3,528,023 properties ----------------------------------------------------------------------------------------- Operating profit before exceptional items 1,120,553 (225,350) 3,086,016 Exceptional costs of AIM listing 0 (293,791) (589,574) ----------------------------------------------------------------------------------------- Operating profit after exceptional items 1,120,553 (519,141) 2,496,442 exceptional items Finance income 42,383 111,188 186,608 Finance costs (620,495) (585,571) (1,089,873) Change in fair value of financial instruments 132,585 21,650 29,081 ----------------------------------------------------------------------------------------- Net finance costs (445,527) (452,733) (874,184) ----------------------------------------------------------------------------------------- Profit / (Loss) before tax 675,026 (971,874) 1,622,258 Taxation (93,168) (6,495) (1,029,967) ----------------------------------------------------------------------------------------- Profit / (Loss) on ordinary activities 581,858 (978,369) 592,291 after taxation ----------------------------------------------------------------------------------------- Discontinued operations Profit / (Loss) from discontinued 3 (40,325) 20,477 85,532 operations ----------------------------------------------------------------------------------------- Profit / (Loss) for the period attributable to 541,533 (957,892) 677,823 equity shareholders ----------------------------------------------------------------------------------------- Earnings per Ordinary Share -Basic 4 0.71p (0.14)p 0.93p - Continuing operations 4 0.76p (0.14)p 0.81p - Discontinued operations 4 (0.05)p - 0.12p - 4 0.70p (0.14)p 0.92p Diluted - Continuing operations 4 0.75p (0.14)p 0.80p - Discontinued operations 4 (0.05)p - 0.12p Weighted average number of shares (000') 4 76,754 70,696 73,544 ----------------------------------------------------------------------------------------- Consolidated balance sheet as at 30 June 2007 As at As at As at 30 June 31 December 30 June 2007 2006 2006 Unaudited Audited Unaudited Notes £ £ £ Non - current assets Intangible assets 1,751,959 1,751,959 1,751,959 Investment properties 33,477,046 29,517,118 21,430,981 Development properties 904,542 504,916 403,501 ----------------------------------------------------------------------------------------- 36,133,547 31,773,993 23,586,441 Leasehold improvements 93,300 0 0 Plant and equipment 68,003 28,156 36,083 36,294,850 31,802,149 23,622,524 ----------------------------------------------------------------------------------------- Current assets Inventories - - 1,200 Trade and other receivables 677,827 567,160 509,142 Cash and cash equivalents 1,576,299 2,321,933 5,674,133 Financial instruments 336,825 206,781 0 ----------------------------------------------------------------------------------------- Total Current Assets 2,590,951 3,095,874 6,184,475 Non current assets classified as held for sale 2 0 1,500,000 0 ----------------------------------------------------------------------------------------- Total assets 38,885,801 36,398,023 29,806,999 ----------------------------------------------------------------------------------------- Current liabilities Trade and other payables (1,136,091) (1,091,623) (901,909) Tax liabilities (292) (292) (292) Borrowings, including finance leases (395,583) (365,801) (379,568) Derivative financial instruments 0 (99,495) (106,926) ----------------------------------------------------------------------------------------- Total Current Liabilities (1,531,966) (1,557,211) (1,388,695) Non - current liabilities Borrowings, including finance leases (20,828,479) (18,511,279) (13,770,305) Loan from investor - - (2,953,824) Deferred tax provision (2,576,603) (2,249,127) (1,459,851) ----------------------------------------------------------------------------------------- (23,405,082) (20,760,406) (18,183,980) Liabilities directly associated with non current assets held for sale 0 (702,735) 0 ----------------------------------------------------------------------------------------- Total liabilities (24,937,048) (23,020,352) (19,572,675) ----------------------------------------------------------------------------------------- Net assets 13,948,753 13,377,671 10,234,324 ----------------------------------------------------------------------------------------- Equity Share capital 767,541 767,541 706,958 Reverse acquisition reserve 11,038,204 11,038,204 11,038,204 Share option reserve 172,604 143,055 93,506 Share premium account 1,397,500 1,397,500 0 Profit and Loss account 572,904 31,371 (1,604,344) ----------------------------------------------------------------------------------------- Total equity 13,948,753 13,377,671 10,234,324 ----------------------------------------------------------------------------------------- Consolidated statement of changes in equity Balance at Share based Profit for Balance at 1 January payment - the Period 30 June 2006 value of 2007 employee services £ £ £ £ --------------------------------------------------------------------------------- Share Capital 767,541 767,541 Share Premium 1,397,500 1,397,500 Share Option reserve 143,055 29,549 172,604 Reverse Acquisition reserve 11,038,204 11,038,204 Accumulated Profit 31,371 541,533 572,904 --------------------------------------------------------------------------------- Total Equity 13,377,671 29,549 541,533 13,948,753 --------------------------------------------------------------------------------- Consolidated cash flow statement for the six months ended 30 June 2007 Six months Six months Year ended ended ended 30 June 30 June 31 December 2007 2006 2006 Unaudited Unaudited Audited £ £ £ ----------------------------------------------------------------------------------------- Cash flows from operating activities Profit / (Loss) after taxation 541,533 (957,892) 677,823 Adjustments Taxation 93,168 6,495 1,029,967 Change in fair value of financial instruments (132,585) (21,650) (29,081) Finance costs 622,235 587,643 1,094,027 Finance income (42,383) (111,188) (186,608) Unrealised net revaluation gains on investment (959,000) 0 (3,528,023) properties Depreciation 13,628 15,850 33,005 Profit on disposal of property held for resale (126,180) 0 0 Write off of development properties 0 0 40,261 Share based payments 29,550 29,550 79,099 ----------------------------------------------------------------------------------------- Cash flows from operations before changes in 39,966 (451,192) (789,530) working capital Change in inventories 0 0 1,200 Change in trade and other receivables (25,627) (119,957) (187,829) Change in trade and other payables 44,468 215,946 405,544 Cash (used) / generated from operations 58,807 (355,203) (570,615) Interest paid (622,235) (587,643) (1,094,027) ----------------------------------------------------------------------------------------- Cash flows from operating (563,428) (942,846) (1,664,642) activities ----------------------------------------------------------------------------------------- Cash flows from investing activities Purchase of investment property (3,000,237) (3,020) (6,058,524) Capital expenditure on development properties (500,410) (349,253) (481,960) Capital expenditure on leasehold improvements (96,305) 0 0 Purchase of plant and equipment (50,473) (5,065) (14,293) Disposal of property held for resale 1,626,180 0 0 Interest received 42,383 111,188 186,608 ----------------------------------------------------------------------------------------- Cash flows from investing activities (1,978,862) (246,150) (6,368,169) ----------------------------------------------------------------------------------------- Cash flows from financing activities New mortgage loans raised (Net) 2,273,236 (179,514) 4,817,059 Repayment of finance leases (8,041) (9,217) (18,434) Increase / repayment of investors' loan 0 96,732 (2,857,092) Repayment of loan on property held for resale (468,539) 0 0 Proceeds on issue of new shares 0 0 1,458,083 ----------------------------------------------------------------------------------------- Cash flows from financing activities 1,796,656 (91,999) 3,399,616 ----------------------------------------------------------------------------------------- Net decrease in cash and cash equivalents (745,634) (1,280,995) (4,633,195) Cash and cash equivalents at 1 January 2,321,933 6,955,128 6,955,128 ----------------------------------------------------------------------------------------- Cash and cash equivalents at closing 1,576,299 5,674,133 2,321,933 ----------------------------------------------------------------------------------------- Notes to the accounts (Unaudited) 1. Status of financial information The half year results of the Group for the six months ended 30 June 2007 were approved by the Board on 7 September 2007. The half year financial statements for the six months ended 30 June 2007 are unaudited and do not constitute statutory accounts as defined under section 240 of the Companies Act 1985. The half year financial statements have been prepared in accordance with applicable accounting standards and are consistent with those accounting policies adopted in the Consolidated statutory accounts of CareCapital Group Plc for the year ended 31 December 2006. Those accounts, upon which the auditors issued an unqualified opinion, have been delivered to the Registrar of Companies. 2. Disposal of non current asset held for sale At 31 December 2006 the Group owned a property "The Manor House" which was held for sale following the termination of a contract to operate a Patient Hotel from the premises. During the period to 30 June 2007, the property was sold, realising a profit of £ 126,180 in excess of valuation after costs of disposal. A deferred tax provision of £ 234,196 was released to profit, as there are expected to be sufficient allowable tax losses in the year to offset the taxable profit on disposal. 3. Discontinued operations Despite the closure of "The Manor House" Patient Hotel, the Group continued to engage in active discussions with healthcare organisations regarding the potential provision of similar services from different locations. In the event no other contracts were secured, and the decision was made to concentrate on other areas of activity. Consequently, the results in respect of the Patient Hotel activity have been shown as a discontinued operation. There were no residual liabilities in respect of this income stream as at 30 June 2007. The detailed financial results for discontinued activities are set out below. Six months Six months Year ended ended ended 30 June 30 June 31 December 2007 2006 2006 £ £ £ ------------------------------------------------------------------------------- Revenue - 282,740 496,280 Cost of sales - (26,969) (34,747) ------------------------------------------------------------------------------- Gross Profit - 255,771 461,533 Administrative expenses (38,519) (233,222) (623,265) Other operating income - - 251,418 ------------------------------------------------------------------------------- Operating profit (38,519) 22,549 89,686 Finance costs (1,806) (2,072) (4,154) ------------------------------------------------------------------------------- 4. Earnings per Share Six months Six months Year ended ended ended 30 June 30 June 31 December 2007 2006 2006 ------------------------------------------------------------------------------- Basic earnings per share Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year. Profit / (loss) attributable to equity 541,533 (957,892) 677,823 holders of the Company (£) ------------------------------------------------------------------------------- Weighted average number of ordinary 76,754 70,696 73,544 shares in issue (thousands) ------------------------------------------------------------------------------- Earnings / (loss) per share (pence per share) 0.71 (0.14) 0.93 ------------------------------------------------------------------------------- - Continuing operations 0.76 (0.14) 0.81 - Discontinued operations (0.05) - 0.12 Diluted earnings per share The Company has one category of dilutive potential ordinary shares - share options. A calculation has been undertaken to determine the number of shares which could have been acquired at fair value based on the monetary value of the subscription rights attached to outstanding share options. It is compared with the number of shares which would have been issued assuming the exercise of the share options. Six months Six months Year ended ended ended 30 June 30 June 31 December 2007 2006 2006 -------------------------------------------------------------------------------------------- Profit / (loss) attributable to equity holders of the 541,533 (957,892) 677,823 Company (£) -------------------------------------------------------------------------------------------- Weighted average number of ordinary shares in issue 76,754 70,696 73,544 (thousands) -------------------------------------------------------------------------------------------- Adjustment for share options (thousands) 347 - 347 Weighted average number of ordinary shares for diluted earnings (thousands) 77,101 70,696 73,891 -------------------------------------------------------------------------------------------- Diluted Earnings / (loss) per share (pence per share) 0.70 (0.14) 0.92 -------------------------------------------------------------------------------------------- - Continuing operations 0.75 (0.14) 0.80 - Discontinued operations (0.05) - 0.12 Adjusted earnings per share Adjusted earnings per share have been calculated to exclude the unrealised gain on revaluation of investment properties and fair value movement on derivative financial instruments. Six months Six months Year ended ended ended 30 June 30 June 31 December 2007 2006 2006 -------------------------------------------------------------------------------------------- Profit/ (loss) attributable to equity holders of the 541,533 (957,892) 677,823 Company (£) Less gain on revaluation of investment properties (959,000) - 3,528,023) Add deferred tax in respect of investment properties 287,700 - 1,058,407 Less fair value movement on derivative financial (132,585) (21,650) (29,081) instruments Add deferred tax in respect of derivative financial 39,776 6,495 8,724 instruments -------------------------------------------------------------------------------------------- Earnings/ (loss) used for calculation of adjusted (222,576) (973,047) (1,812,150) earnings per share -------------------------------------------------------------------------------------------- Adjusted earnings per share (0.29) (1.38) (2.46) No adjusted, diluted earnings per share is calculated because the Group made losses after the adjustments. 5. Restatement of comparative financial statements for the period ended 30 June 2006 from UK GAAP to IFRS For its results for the year ended 31 December 2006, the Group adopted IFRS, and adjusted those comparative financial statements previously reported under UK GAAP accordingly. The following tables set out the adjustments required to the previously reported results for the period ended 30 June 2006, in order to effect the necessary conversion from UK GAAP to IFRS. (a) Adjustment to retained earnings £ Dr / (Cr) Reversal of goodwill amortisation 141,040 Employee share options (105,476) Reclassification of revaluation reserve - Deferred tax - Investment (84,350) properties Movement on derivative financial (106,926) instruments Deferred tax - derivative financial 32,078 instruments --------- Total adjustment to (123,634) equity ========= --------- Attributable to equity holders of the (123,634) parent: 5 Restatement of comparative financial statements for the period ended 30 June 2006 from UK GAAP to IFRS (continued) (b) Reconciliation of equity at 30 June 2006 30 June 2006 IFRS UK GAAP adjustments IFRS £ £ £ Non Current assets Intangible assets 240,505 1,511,454 1,751,959 Property, plant and equipment 21,882,534 (21,846,451) 36,083 Investment properties - 21,430,981 21,430,981 Development properties - 403,501 403,501 Investments - - ---------------------------------------- 22,123,039 1,499,485 23,622,524 ---------------------------------------- Current assets Inventories 1,200 - 1,200 Trade and other receivables 509,142 - 509,142 Cash and cash equivalents 5,674,133 - 5,674,133 ---------------------------------------- 6,184,475 0 6,184,475 ---------------------------------------- Total assets 28,307,514 1,499,485 29,806,999 ---------------------------------------- Current liabilities Trade and other (901,909) - (901,909) payables Tax liabilities (292) - (292) Borrowings, including finance (379,568) - (379,568) leases Derivative financial - (106,926) (106,926) instruments ---------------------------------------- (1,281,769) (106,926) (1,388,695) ---------------------------------------- Non current liabilities Borrowings, including finance (13,770,305) - (13,770,305) leases Loan from investor (2,953,824) - (2,953,824) Deferred tax provision (37,164) (1,422,687) (1,459,851) ------------------------------------------ (16,761,293) (1,422,687) (18,183,980) ------------------------------------------ Total liabilities (18,043,062) (1,529,613) (19,572,675) ------------------------------------------ Net assets 10,264,452 (30,128) 10,234,324 ========================================== Equity Share Capital 706,958 706,958 Reverse acquisition reserve 11,038,204 11,038,204 Share Options reserve - 93,506 93,506 Share Premium account - - Profit and Loss account (1,480,710) (123,634) (1,604,344) ------------------------------------------ Total equity 10,264,452 (30,128) 10,234,324 ------------------------------------------ 5 Restatement of comparative financial statements for the period ended 30 June 2006 from UK GAAP to IFRS (continued) (c) Reconciliation of loss for the period to 30 June 2006 IFRS UK GAAP adjustments IFRS £ £ £ Continuing operations Revenue 623,456 - 623,456 Cost of sales (24,532) - (24,532) ------------------------------------------------------------------------------- Gross Profit 598,924 - 598,924 Administrative expenses (829,406) 5,132 (824,274) ------------------------------------------------------------------------------- (230,482) 5,132 (225,350) Other operating income - - - Gain on revaluation of investment - - - properties ------------------------------------------------------------------------------- Operating Profit before exceptional items (230,482) 5,132 (225,350) Exceptional costs of AIM (293,791) - (293,791) listing ------------------------------------------------------------------------------- Operating Profit after exceptional items (524,273) 5,132 (519,141) Interest receivable and similar 111,188 - 111,188 income ------------------------------------------------------------------------------- (413,085) 5,132 (407,953) Interest payable and similar charges (585,571) 21,650 (563,921) ------------------------------------------------------------------------------- Loss on ordinary activities before (998,656) 26,782 (971,874) Taxation Tax on Loss on ordinary activities - (6,495) (6,495) Loss for year (998,656) 20,287 (978,369) ------------------------------------------------------------------------------- Discontinued operations Profit from discontinued operations 20,477 - 20,477 ------------------------------------------------------------------------------- Loss for the period (978,179) 20,287 (957,892) ------------------------------------------------------------------------------- (d) Cash flows Under IFRS, the consolidated cashflow statement reconciles the movements in cash and cash equivalents, whereas in the UK GAAP financial statements it reconciled the movements in cash only. Other than this, there are no material differences in the restated consolidated statement of cash flows from that previously published. This information is provided by RNS The company news service from the London Stock Exchange

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