Interim Results
Medical Property Investment Fd Ltd
20 September 2006
The Medical Property Investment Fund Limited
Unaudited Interim Report for the six months ended 30 June 2006
Six Months Highlights
• Net profit £13.2m (2005: £3.3m)
• Interim dividend up 20% to 2.0p (2005: 1.66p)(1)
• Acquisition of Berrington and BHE completed
• Rapid transition of Company from investment company to asset-backed
operating company
• Two new divisions, Pharmacy and Medical, have demonstrated strong
growth and increased importance in the period under review, leading to
proposed change of Company name to Assura Group Limited
• Property Division has committed over £385m across 112 sites of which
17 are currently in solicitors' hands(2)
• Pharmacy Division opened four pharmacies and is on track to open eight
by December 2006 and at least 20 by end 2007
• Medical Division has established four pilot projects in collaboration
with GPs serving circa 300,000 patients
• Placing and Open Offer in May 2006 raised £105.9m net of expenses
(1) Ex-dividend date 27 September 2006, Record date 29 September 2006, Payment
date 27 October 2006
(2) As at 12 September 2006
Commenting on the Results, Richard Burrell, Chief Executive of the Company,
said:
'The first six months have been very productive. The Company has internalised
its management, maintained its property investment targets, expanded its
pharmacy and medical activities and increased its interim dividend by 20% to 2p
per share.
Over £385m of capital has now been committed across 112 sites and the Company is
on target to invest or commit £750m by the end of 2009. At least eight
integrated pharmacies are expected to open during 2006 and at least 20 are
expected to be open by the end of 2007. The four pilot projects in the Medical
Division cover a patient base of over 300,000 and it is expected that patient
numbers beyond these pilots will rise to over one million during the first six
months of 2007.
In response to the changing focus of the Company's activities, shareholders are
being asked to approve a formal change of name from The Medical Property
Investment Fund Limited to Assura Group Limited. Henceforth, the Company will
operate through three business divisions: Assura Property; Assura Pharmacy and
Assura Medical.'
For further information, please contact:
Richard Burrell / Nigel Rawlings Tony Langham / Charlotte Edgar
Medical Property Fund Lansons Communications
020 7107 3800 07979 692 287 / 020 7294 3622
Chief Executive's Report
For the six months ended 30 June 2006
This unaudited Interim Report is published in respect of the six months to 30
June 2006.
Results
I am pleased to report a very satisfactory first half of the year with good
progress being made to generate future income streams out of property, pharmacy
and related operating businesses.
During the period, total income of £6.3m (2005: £4.0m) contributed to a net
profit before investment result of £0.4m (2005: £1.0m). The decrease in net
profit before investment result was due to the Company's budgeted losses in its
Pharmacy and Medical Divisions which are both early stage businesses.
The resultant net profit for the period was £13.2m (2005: £3.3m). The net
profit included a one off pharmacy establishment cost of £1.1m, a surplus on
revaluation of the Company's property portfolio of £7.6m and a mark-to-market
revaluation surplus of £6.5m in respect of an interest rate swap entered into by
the Company.
An interim dividend of 2.0p (2005: 1.66p) per Ordinary Share has been declared
to shareholders on the register as at 29 September 2006 (ex-dividend date 27
September 2006). In the absence of unforeseen circumstances and in line with
previous statements, the Company intends to pay a total dividend of 6p (2005:
5p) per Ordinary Share in respect of the year to 31 December 2006.
As at 30 June 2006 the Company had net assets of £264.7m including net cash of
approximately £10m. The net asset value per Ordinary Share as at 30 June 2006
was 113.1p which is an increase of 37% over the figure reported as at 31
December 2005.
Operating Review
In April 2006, the Company announced the acquisition of Berrington and a placing
and open offer at 170p per Ordinary Share which raised £105.9m net of expenses.
This transaction combined with the acquisition of the remaining interests in BHE
has now internalised the management of the Company and eliminated, upon
consolidation, substantially all of the future performance fee liability which
was highlighted in the 2005 year end figures.
Property Division
As at 12 September 2006, the Company's Property Division had committed £385m
across 112 sites including 17 which are currently in solicitors' hands. The net
initial yield on all capital commitments continues to average circa 6.5% and
whilst revaluation surpluses have been credited on completed properties, there
remain, assuming current valuation yields, significant potential revaluation
surpluses on development properties currently under construction.
The Company settled rent reviews on nine properties during the first six months
of 2006 resulting in an aggregate increase of 20.9% on the passing rent relating
to those properties. As at 30 June 2006, the portfolio had an average rent of
£144.70 per square metre on GMS space and an average weighted income un-expired
term of 19.04 years.
The expansion of primary health care capacity will require a continual upgrade
of premises infrastructure and capital investment. This will need to
accommodate the shift of certain services previously based in hospitals, for
example diagnostics and outpatient consultations. In response to this, the
Company's development activities continue to be extended and this is reflected
in the number of schemes at an advanced stage of negotiation or under
construction. However, assembling new developments is time consuming and the
Company has also started to invest in and refurbish vacant office buildings and
convert these into suitable health care premises as well as continuing to
partner with specialist regionally-based developers to increase its reach.
Pharmacy Division
The Company's Pharmacy Division opened its first four pharmacies during the
period and is on track to have opened eight pharmacies by the end of December
2006 and 20 pharmacies by the end of 2007. The Pharmacy Division has a
significant pipeline of new licence applications at various stages of approval
and is also expanding its licence applications into independently owned health
centres.
The Pharmacy Division was established in direct response to the Department of
Health's 'A Vision for Pharmacy in the new NHS' and the supporting changes in
the Pharmaceutical Regulations. It is focussed on providing integrated pharmacy
services within health centres working closely with the GPs, PCTs and patients.
Medical Division
The Company's Medical Division is at an early stage of development and is in the
process of forming a number of joint ventures with GPs and locality groups to
provide enhanced medical services. The formation of four pilot projects serving
circa 300,000 patients has commenced and there is a significant pipeline of
projects for 2007 and beyond.
The Medical Division was established to create a collaborative model involving
joint venture partnerships with GP practices and locality groups to deliver high
quality enhanced services and diagnostics closer to the patient. It involves
supporting existing GPs to maximise the opportunities of Practice Based
Commissioning by helping to optimise care pathways and providing leading edge IT
and business support. It aims to create an environment for managing the
provision of a number of enhanced and out-patient services currently being
carried out in hospitals. Where a joint venture partnership occupies premises
leased from the Property Division, it can also incorporate additional space
which can be sub-let to health provider organisations, consultants, diagnostic
providers and professionals allied to medicine, on either a short or longer term
basis.
Investment in the Pharmacy and Medical Divisions is being funded out of the
Company's existing cash resources. It is expected that the current equity base
combined with bank borrowings can continue to fund the roll out of these
businesses as well as finance total capital investment in property and property
developments of at least £750m.
The Company believes that by having a modern portfolio of property assets
capable of housing GPs and other health providers, locating its own pharmacies
within these facilities and in due course entering into collaborative joint
ventures with GPs to provide additional out-patient services, it will be in a
unique position to meet the needs of the rapidly evolving NHS.
Industry Trends and Outlook
The last six months have seen an even greater emphasis on private sector
provision in the NHS for both primary and secondary care. The Government White
Paper published in February 2006 and subsequent announcements relating to NHS
policy continue to support the shift in out-patient service provision from
secondary to primary care.
Against this background, Strategic Health Authority and Primary Care Trust
reorganisations have caused a major slowdown in the decision making process and
an inability to identify core funding streams. This has led to GP uncertainty
and a degree of scepticism in the ability of the NHS to deliver.
Whilst the overall NHS policy context is very positive for the Company there is
no doubt that the various reorganisations within the NHS continue to affect the
Company's speed of investment.
Change of Name
In response to the recent internalisation of management and the Company's
continued investment in the Pharmacy and Medical Divisions, the Board has
concluded that the original name 'The Medical Property Investment Fund Limited'
is no longer appropriate and may well confuse in certain circumstances. As a
result of this and the changing nature of the Company's business generally, the
Board has proposed, in a letter to shareholders published today, that the
Company's name be changed to 'Assura Group Limited'. Assuming shareholder
approval is granted in mid October, the Company intends to operate through three
business divisions: Assura Property; Assura Pharmacy; and Assura Medical.
Richard Burrell
Chief Executive
19 September 2006
Unaudited Consolidated Statement of Operations
for the period from 1 January 2006 to 30 June 2006
1/01/2006 1/01/2005 1/01/2005
to to to
30/06/2006 30/06/2005 31/12/2005
Unaudited Unaudited Audited
Notes £ £
Income
Rent receivable 4,711,952 2,066,208 6,001,041
Fees receivable 680,079 504,231 1,014,862
Pharmacy income 486,208 - -
Bank and other interest 456,552 1,453,907 1,729,486
Total Income 3 6,334,791 4,024,346 8,745,389
Expenses
Property costs 340,398 151,544 480,056
Pharmacy cost of sales 359,988 - -
Interest payable and similar charges 709,049 - 200,526
Investment manager's fees 1,099,048 1,345,902 2,691,686
Staff and consultancy costs 1,395,488 581,581 1,721,775
Legal and professional fees 818,496 128,033 676,957
Audit fees 99,500 18,452 38,824
Administrative expenses 910,573 685,229 871,129
Directors' fees 123,293 103,945 220,370
Depreciation 35,049 9,216 20,623
Bank charges 92,439 9,814 18,804
Total Expenses 5,983,321 3,033,716 6,940,750
Net Profit before Investment Result 3 351,470 990,630 1,804,639
Movement in unrealised gain on revaluation of properties 7,644,565 2,263,087 2,165,005
Net Profit after Investment Result 7,996,035 3,253,717 3,969,644
Minority interest (222,179) 85,501 152,476
Unrealised profit/(loss) on revaluation of derivative 6,513,320 - (3,472,319)
financial instrument
Exceptional Pharmacy establishment cost (1,105,000) - -
Performance fee provision - - (13,050,000)
Net Profit/(Loss) before Taxation 13,182,176 3,339,218 (12,400,199)
Taxation (126) (11,301) (98,241)
Net Profit/(Loss) for the Period 13,182,050 3,327,917 (12,498,440)
Dividends 4 - (3,802,183) (6,166,087)
Retained Profit/(Loss) 13,182,050 (474,266) (18,664,527)
Basic and Diluted Profit/(Loss) per Ordinary Share 6 8.04p 2.34p (8.78p)
Unaudited Consolidated Balance Sheet
as at 30 June 2006
30/06/2006 30/06/2005 31/12/2005
Unaudited Unaudited Audited
Notes £ £ £
Non-current Assets
Property 7 206,218,687 79,009,164 131,642,729
Investment in associates 2,148,555 4,232 1,367,973
Goodwill 8 33,942,476 5,867,768 5,892,020
Development costs 226,805 - 36,458
Tangible fixed assets 460,216 31,864 35,133
Derivative financial instruments at 3,041,001 - -
fair value
246,037,740 84,913,028 138,974,313
Current Assets
Cash and cash equivalents 22,425,602 36,254,599 3,745,649
Debtors 7,511,975 8,626,282 3,537,457
Development work in progress 7,095,460 8,906,919 16,520,686
Stock 250,000 - -
37,283,037 53,787,800 23,803,792
Total Assets 283,320,777 138,700,828 162,778,105
Current Liabilities
Creditors 5,596,016 2,513,755 3,396,239
Non Current Liabilities
Long term loan 12,500,000 - 24,929,710
Performance fee provision 550,000 - 13,050,000
Derivative financial instruments at - - 3,472,319
fair value
13,050,000 - 41,452,029
Total Liabilities 18,646,016 2,513,755 44,848,268
Net Assets 264,674,761 136,187,073 117,929,837
Represented by:
Capital and Reserves
Share capital 9 22,593,170 14,240,385 14,240,385
Share premium 226,983,651 122,239,453 122,239,453
Distributable reserve 14,414,330 - -
Retained earnings 683,610 (137,561) (18,327,822)
264,674,761 136,342,277 118,152,016
Minority interests - (155,204) (222,179)
Total Equity 264,674,761 136,187,073 117,929,837
Net Asset Value per Ordinary Share 113.11p 95.63p 82.81p
The unaudited financial statements were approved at a meeting of the Board of
Directors held on 19 September 2006 and signed on its behalf by:
Dr Mark Jackson, Chairman )
Graham Chase, Director )
Unaudited Company Balance Sheet
as at 30 June 2006
30/06/2006 30/06/2005 31/12/2005
Unaudited Unaudited Audited
Note £ £ £
Non-current Assets
Investments in subsidiary companies 74,596,125 23,181,866 34,841,373
Loans 134,802,898 81,479,629 107,194,059
Derivative financial instruments at fair value 3,041,001 - -
212,440,024 104,661,495 142,035,432
Current Assets
Cash and cash equivalents 18,570,991 31,406,383 1,079,066
Debtors 656,929 275,451 73,334
Loans 33,862,676 - 16,609,554
53,090,596 31,681,834 17,761,954
Total Assets 265,530,620 136,343,329 159,797,386
Current Liabilities
Creditors 305,859 156,256 415,520
Non-current Liabilities
Long term loan - - 24,929,710
Performance fee provision 550,000 - 13,050,000
Derivative financial instruments at - - 3,472,319
fair value
550,000 - 41,452,029
Total Liabilities 855,859 156,256 41,867,549
Net Assets 264,674,761 136,187,073 117,929,837
Represented by:
Capital and Reserves
Share capital 9 22,593,170 14,240,385 14,240,385
Share premium 226,983,651 122,239,453 122,239,453
Distributable reserve 14,414,330 - -
Retained earnings 683,610 (292,765) (18,550,001)
Total Equity 264,674,761 136,187,073 117,929,837
The unaudited financial statements were approved at a meeting of the Board of
Directors held on 19 September 2006 and signed on its behalf by:
Dr Mark Jackson, Chairman )
)
Graham Chase, Director )
Unaudited Consolidated Statement of Changes in Equity
for the period from 1 January 2006 to 30 June 200
Share Share Distributable Retained Minority Total
Capital Premium Reserve Earnings Interest
£ £ £ £ £ £
Balance at 1 January 2006 14,240,385 122,239,453 - (18,327,822) (222,179) 117,929,837
Issue of shares, net of 9,159,462 129,744,198 - - - 138,903,660
costs
Dividends on Ordinary - - (4,756,288) - - (4,756,288)
Shares
Treasury Shares (806,677) - - - - (806,677)
Transfer from share - (25,000,000) 25,000,000 - - -
premium(1)
Transfer to retained - - (5,829,382) 5,829,382 - -
earnings
Minority interest - - - - 222,179 222,179
Profit attributable to - - - 13,182,050 - 13,182,050
equity holders
Balance at 30 June 2006 22,593,170 226,983,651 14,414,330 683,610 - 264,674,761
Balance at 1 January 2005 14,240,385 122,239,453 - 336,705 (69,703) 136,746,840
Dividends on Ordinary - - - (3,802,183) - (3,802,183)
Shares
Minority interest - - - - (85,501) (85,501)
Profit attributable to - - - 3,327,917 - 3,327,917
equity holders
Balance at 30 June 2005 14,240,385 122,239,453 - (137,561) (155,204) 136,187,073
Balance at 1 January 2005 14,240,385 122,239,453 - 336,705 (69,703) 136,746,840
Dividends on ordinary - - - (6,166,087) - (6,166,087)
shares
Minority interest - - - - (152,476) (152,476)
Loss attributable to - - - (12,498,440) - (12,498,440)
equity holders
Balance at 31 December 14,240,385 122,239,453 - (18,327,822) (222,179) 117,929,837
2005
(1) Following an application to the Royal Court of Guernsey, £25m was
transferred from Share Premium account to Distributable Reserve in May 2006.
Unaudited Consolidated Cash Flow Statement
for the period from 1 January 2006 to 30 June 2006
1/01/2006 1/01/2005 1/01/2005
to to to
30/06/2006 30/06/2005 31/12/2005
Unaudited Unaudited Audited
£ £ £
Operating Activities
Rent received 3,982,373 1,980,575 5,680,156
Fees received 680,079 417,051 354,231
Bank and other interest received 456,552 1,107,935 1,835,670
Expenses paid (4,881,236) (3,538,715) (5,274,400)
Interest paid and similar charges (1,015,759) - -
Net cash (outflow)/inflow from operating activities (777,991) (33,154) 2,595,657
Investing Activities
Purchase of property (41,452,523) (21,278,243) (70,962,044)
Purchase of investments - - (35)
Purchase of fixed assets (460,132) (20,997) (35,678)
Pharmacy license application costs (190,347) - (36,458)
Acquisition of subsidiaries, net of cash acquired (10,183,080) - (24,252)
Cost of development work in progress (15,574,774) (5,108,882) (12,722,648)
Net loans advanced to associated companies (780,582) (152,886) (431,615)
Net cash outflow from investing activities (68,641,438) (26,561,008) (84,212,730)
Financing Activities
Issue of Ordinary Shares 110,039,336 - -
Issue costs paid on issuance of Ordinary Shares (4,183,666) - -
Dividends paid (4,756,288) (3,802,183) (6,166,087)
Drawdown of term loan 51,000,000 - 25,500,000
Loan issue costs - - (622,135)
Repayment of term loan (64,000,000) - -
Net cash inflow/(outflow) from financing activities 88,099,382 (3,802,183) 18,711,778
Increase/(decrease) in cash and cash equivalents 18,679,953 (30,396,345) (62,905,295)
Cash and cash equivalents at 1 January 3,745,649 66,650,944 66,650,944
Cash and cash equivalents at 30 June/31 December 22,425,602 36,254,599 3,745,649
Notes to the Unaudited Financial Statements
for the period from 1 January 2006 to 30 June 2006
1. The Company was incorporated on 7 October 2003 and commenced trading
following Admission of its shares to the Official List of the London Stock
Exchange on 21 November 2003.
2. The results for the six months to 30 June 2006 have been prepared on the
basis of the accounting policies set out in the Company's 2005 Annual
Report and Accounts. The results for the six months to 30 June 2006 and
2005 are unaudited. The interim accounts do not constitute statutory
accounts. The results for the full year 2005 have been taken from the
Company's 2005 Annual Report and Accounts. The auditor has reported on
the 2005 accounts and the report was unqualified.
3. All turnover and operating profit arose from continuing operations.
4. Dividends paid on Ordinary Shares
No. of 1/01/2006 1/01/2005 1/01/2005
Ordinary Rate to to to
Shares pence 30/06/2006 30/06/2005 31/12/2005
£ £ £
Final dividend for 142,403,847 3.34 4,756,288 - -
2005 paid 9 June
2006 (declared 13
April 2006)(1)
Interim dividend for 142,403,847 1.66 - - 2,363,904
2005 paid 14 October
2005 (declared 9
September 2005)
Final dividend for 142,403,847 2.67 - 3,802,183 3,802,183
2004 paid 11 April
2005 (declared 21
March 2005)
4,756,288 3,802,183 6,166,087
(1) The final dividend for 2005 was paid out of Distributable Reserve
5. On 20 September 2006 an interim dividend for 2006 of 2p per Ordinary Share,
to be paid out of Distributable Reserves, was declared to shareholders on
the register at 29 September 2006 giving a total amount of £4,679,969.
6. Basic and diluted profit per Ordinary Share is based on the net profit for
the period and on 163,969,190 Ordinary Shares,being the weighted average
number of shares in issue in the period (142,403,847 period ended 30 June
2005 and year ended 31 December 2005).
7. The figures for investment properties at 30 June 2006, 30 June 2005 and 31
December 2005 are based on valuations determined by Savills Commercial
Limited.
8. Goodwill
£
At 1 January 2006 5,892,020
Arising on the acquisition of Berrington Fund Management Ltd and related 25,799,499
parties
Arising on the acquisition of 30% of BHE Holdings Ltd not previously owned by 2,250,957
the Company
Balance at 30 June 2006 33,942,476
Due to the complexity and timing of the acquisitions, the fair values of
the assets and liabilities acquired have been provisionally assessed and
are subject to review during the year ending 31 December 2006.
9. Share Capital
£
Consolidated and Company Authorised
300,000,000 Ordinary Shares of 10p each 30,000,000
20,000,000 Preference Shares of 10p each 2,000,000
32,000,000
Number of Share
Shares Capital
£
Ordinary Shares issued and fully paid
At 1 January 2006 142,403,847 14,240,385
Issued in period 91,594,624 9,159,462
233,998,471 23,399,847
Treasury Shares (8,066,768) (806,677)
Total Share Capital 225,931,703 22,593,170
The authorised share capital was increased from 200,000,000 Ordinary Shares
and 20,000,000 Preference Shares of 10p each to 300,000,000 Ordinary Shares
and 20,000,000 Preference Shares of 10p each on 12 May 2006.
The Treasury Shares were issued in May 2006 to the MPIF Employee Benefit
Trust and are held for the purposes of the MPIF Executive Incentive Plan.
10. A copy of this statement has been sent to every shareholder. Further copies
are available from the Company's registered office or from the website
www.mpif.net.
11. The interim financial statements were approved at a meeting of the Board of
Directors held on 19 September 2006.
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