Interim Management Statement

RNS Number : 1714A

The MedicX Fund Limited

17 February 2014

 



For immediate release

17 February 2014

MedicX Fund Limited

("the Fund" or "the Company")

Interim Management Statement

MedicX Fund Limited (LSE: MXF), the specialist primary care infrastructure investor in modern purpose-built primary healthcare properties in the United Kingdom, today announces its Interim Management Statement for the period from 1 October 2013 to today's date.

Financial position

The quarterly valuation of the portfolio undertaken by Jones Lang LaSalle LLP as at 31 December 2013 stood at £457.4 million, on the basis all properties were complete, reflecting a net initial yield of 5.78% which has resulted in a valuation gain of £0.4 million during the quarter, comprising a £0.5 million appreciation in capital value offset by £0.1 million of purchaser costs written-off in the period.  The portfolio net initial yield of 5.78% compares with a benchmark 20-year gilt rate of 3.73% and a weighted average fixed cost of debt of 4.45%.

Incorporating the December valuation, the unaudited adjusted net asset value at 31 December 2013 is estimated to be £217.8 million equivalent to 64.5p per share, compared with 63.1p per share as at 30 September 2013. On the same basis, the unaudited adjusted net asset value plus the mark to market benefit of fixed rate debt is estimated to be £243.2 million equivalent to 71.6p per share at 31 December 2013, compared with 69.4p per share at 30 September 2013.

Aside from the investment in new acquisitions and the other matters disclosed below, there have been no significant changes to the financial position of the Company since the annual results were announced on 10 December 2013.

Discounted cash flow valuation of assets and debt

On the Fund's behalf the Investment Adviser has carried out a discounted cash flow ("DCF") valuation of the Group's assets and associated debt at each period end. The basis of preparation is similar to that calculated by infrastructure funds.  The values of each investment are derived from the present value of each property's expected future cash flows, after allowing for debt and taxation, using reasonable assumptions and forecasts based on the predominant lease at each property.  The total of the present values of each property and associated debt cash flows so calculated are then aggregated with the surplus cash position of the Group.

At 31 December 2013, the DCF valuation was £312.3 million or 91.9p per share, compared with £266.7 million or 97.0p per share as at 30 September 2013. The decrease per share is as a direct result of the equity raising completed on 25 October 2013 and is expected to improve following the deployment of the funds.

The discount rates used are 7% for completed and occupied properties and 8% for properties under construction.  The weighted average discount rate is 7.12% which represents a 3.39% risk premium relative to the 20 year gilt rate of 3.73% as at 31 December 2013.  The 20 year gilt rate as at 30 September 2013 was 3.54%.

The discounted cash flows assume an average 2.5% per annum increase in individual property rents at their respective review dates.  Residual values continue to be based upon capital growth at 1% per annum from the current valuation until the expiry of leases, (when the properties are notionally sold), and also assuming the current level of borrowing facilities.

Rent reviews

Since 1 October 2013, ten leases and rents of £0.7 million were reviewed and the equivalent of a 1.4% per annum increase was achieved. Of these reviews, an uplift of 0.3% was achieved through open market reviews with RPI and fixed uplift reviews achieving 4.73%. Reviews of £10.1 million of passing rent are currently under negotiation.

Investment activity

During the period from 1 October 2013 the Company has committed £12.4 million to three further properties, two being complete and one currently under construction.

Construction on the properties at Wiveliscombe, Caerphilly and Watford completed in the period since 1 October 2013. Ten properties are now under construction at Maidstone, Shoreham, Felixstowe, Grange over Sands, Rugby, Potters Bar, Arnold, Wigston, Prenton and Buckley.  All of these properties are due to complete in the next twelve months.

In October 2013 and November 2013 the Group disposed of two of its smaller properties at Wheathampstead and High Wycombe for £0.6 million and £1.0 million respectively.

The portfolio, which consists of 124 properties, continues to perform in line with long-term objectives.

The Investment Adviser has access to a strong pipeline of £120 million in value when fully developed.

Share issues

A highly successful fund raise was completed in October 2013 resulting in the issue of 85 million shares at 75p per share, by way of a placing, open offer and offer for subscription, of which 20 million were immediately repurchased by the Company and added to those held in treasury. This issue generated net proceeds of £47.6 million excluding those shares held in treasury. The Fund is seeking to deploy the proceeds quickly into appropriate primary healthcare property investments whilst maintaining the quality of its portfolio and targeting investments that will generate long term income and good returns for shareholders.

Additionally, on 31 December 2013 the Company sold 856,441 shares out of treasury pursuant to the Scrip Dividend Scheme, based on a scrip calculation price of 80.55 pence per share.

The total number of Ordinary Shares of the Company in issue is 361,445,780, of which 20,682,625 are held in treasury, compared with 276,445,780 Ordinary Shares with 1,539,066 held in treasury at 30 September 2013.  Accordingly, as at today's date, the total voting rights in the Company amount to 340,763,155 Ordinary Shares.

Dividends

On 31 December 2013 a quarterly dividend of 1.425p per Ordinary Share in respect of the period 1 July 2013 to 30 September 2013 was paid to Ordinary Shareholders on the register as at close of business on 15 November 2013.

On 30 January 2014 the Directors approved a quarterly dividend of 1.45p per Ordinary Share in respect of the period 1 October 2013 to 31 December 2013.  The dividend will be paid on 31 March 2014 to Ordinary Shareholders on the register as at close of business on 14 February 2014.  Shareholders will be offered the opportunity to take new ordinary shares in the Company in lieu of receiving a cash payment under the Scrip Dividend Scheme (the "Scheme") previously put in place by the Company on 5 May 2010.

The Company expects, subject to unforeseen circumstances, to pay dividends totalling 5.8p per Ordinary Share in respect of the financial year ending 30 September 2014, an increase of 0.1p per Ordinary Share from the 5.7p per Ordinary Share for the financial year ended 30 September 2013.

End

For further information please contact:

MedicX Group:                                                               [phone]

Keith Maddin, Chairman

Mike Adams, Chief Executive Officer

Mark Osmond, Chief Financial Officer

MedicX Fund:                                                                 [phone]

David Staples, Chairman

Buchanan:                                                                     [phone]

Charles Ryland/Sophie McNulty

Information on MedicX Fund Limited

MedicX Fund Limited (the "Fund" or the "Company", or together with its subsidiaries, the "Group") is the specialist primary care infrastructure investor in modern, purpose-built primary healthcare properties in the United Kingdom, listed on the London Stock Exchange, with a portfolio comprising 124 properties.

The Investment Adviser to the Company is MedicX Adviser Ltd, which is authorised and regulated by the Financial Conduct Authority and is a subsidiary of the MedicX Group. The MedicX Group is a specialist investor, developer and manager of healthcare properties with 27 people operating across the UK.  

The Company's website address is www.medicxfund.com.  Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement. 

 

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