Interim Results - 6 Months to 31 December 1999

Primary Health Properties PLC 14 March 2000 PRIMARY HEALTH PROPERTIES PLC Modern accommodation for the Provision of Primary Health Care Services Announcement of Interim Results for the six months ended 31 December 1999 Group Financial Highlights Six months to Six months to Increase 31 December 31 December 1999 1998 Net assets £18.4m £17.1m 7.5% Net asset value per share 117.4p 107.0p 10% Portfolio purchased and committed £48.9m £43.2m 13% Annual rent roll £3.6m £2.5m 31% Profit before taxation and exceptional charges £0.603m £0.467m 29% Earnings per share: basic 3.5p 2.5p 40% Interim dividend, net, per share 3.4p 2.6p 31% 'The pipeline of transactions that the Group is examining at present has never been higher and we are optimistic that the advent of the first wave of Primary Care Trusts which come into being on the 1 April 2000 will enable us to make faster and more substantial progress' G A Elliot, Chairman Enquiries: Primary Health Properties PLC Harry Hyman Tel: 01483 306912 Managing Director Mobile: 0973 344768 Bell Pottinger Financial Bob Gregory Tel: 020 7353 9203 Chairman's Statement Group profit before tax for the six months to 31 December 1999 totalled £603,000 (1998: £467,000 before exceptional charges) an increase of 29%. Profit after taxation was £542,000 (1998: £401,000), an increase of 35% yielding earnings per share of 3.5p (1998: 2.5p), an increase of 40%. As the Group undertakes its valuation at the year end (30 June 2000) the net assets of the Group at 31 December 1999 were a basic 117.4p per share (30 June 1999: 117.4p) after providing for the interim dividend. The Board has declared an interim dividend of 3.4p net per share (1998: 2.6p) payable to shareholders on the register on 31 March 2000. The interim dividend will be paid on 14 April 2000. The first half of our financial year has seen the continued development of our portfolio. At the period end our paid out portfolio had increased to £43.2 million (£40.7million investment properties and development loans, £2.5 million finance leases) with a rent roll of some £3.6 million representing a running yield of just in excess of 9% on cost. Of the rent roll of £3.6 million, 65% was receivable from GPs, 21% from NHS Trusts, 5% from Health Authorities and the residual 9% is largely due from retail pharmacists such as Lloyds Chemists. During the period we have taken delivery of a number of properties, the acquisition costs and details of which are set out below: Acquisition Cost Property £m Occupational Tenant Douglas Road, Aylesbury 1.9 Doctors, Pharmacy and Convenience Store Stotfold, Bedfordshire 1.0 Doctors West Timperley, Manchester 1.0 Doctors Eaton Wood, Birmingham 1.7 Doctors and Pharmacy Total £5.6m New commitments entered into during the period totalled £5.7 million representing four new Primary Care Centres located at Tibshelf in Derbyshire, Nottingham, Ringwood in Hampshire and Sale in Cheshire. During the period the Group has successfully concluded the rent review relating to its property in Charlotte Street, where the rent has increased from £100,000 to £225,000 per annum with effect from mid October 1999. At the same time the other important rent review for our portfolio this year at Rushton Street is in train and we are optimistic that we will secure a good increase in the passing rent. Other rent reviews achieved during the period, although smaller in absolute terms, have led us to believe that it should be possible for the Group to achieve annual increases in the order of 2.5% - 3% per annum over our typical three year rent review period. During the period medium term interest rates have increased dramatically and the Group has seen the benefit of the £13 million of swaps that were put in place last year. These swaps were consolidated at the end of December and we now have in position a total of £13 million of swapped out facilities expiring in September 2004 at a cost of 5.78%. In addition the Group is fully drawn on its existing £4 million 7 7/8% convertible loan stock. The pipeline of transactions that the Group is examining at present has never been higher and we are optimistic that the advent of the first wave of Primary Care Trusts which come into being on the 1 April 2000 will enable us to make faster and more substantial progress. G A Elliot Chairman 14 March 2000 Property Portfolio at 31 December 1999 Stokewood Surgery, Fair Oak Road, Eastleigh, Hants. Blackthorn Surgery, Station Road, Netley Abbey, Hants. Falcon Road Medical Centre, Falcon Road, London SW11. Rushton Street Medical Centre, Rushton Street, London N1. Chorleywood Surgery, Lower Road, Chorleywood, Herts. The Old Fire Station Surgery, Portsmouth Road, Southampton, Hants. Lever Chambers Centre for Health, Ashburner Street, Bolton, Gt.Man. Willesden Medical Centre, Willesden High Road, London NW10. Corbett Medical Practice, Corbett Avenue, Droitwich, Worcs. Astonia House, High Street, Baldock, Herts. Llandaff North Medical Centre, Station Road, Llandaff, Cardiff. Maypole Health Centre, Sladepool Farm Road, Birmingham, B14. Sherwood House Medical Practice, Sandon Road, Birmingham, B17. Trinity Medical Centre, Thornhill Street, Wakefield, West Yorkshire. James Pringle House, Charlotte Street, London, W1. Withernsea Community Hospital, Withernsea, Hull, East Yorkshire. Hereward Group Practice, Exeter Street, Bourne, Lincs. Hazeleigh Medical Centre, Portsmouth Road, Southampton, Hants. Montgomery House Surgery, Piggy Lane, Bicester, Oxon. Toddington Medical Centre, Luton Road, Toddington, Beds. Milton Medical Centre, Station Road, New Milton, Hants. St Johns Medical Centre, High Street, Walsall Wood, West Midlands. The Surgery, Carswell Wynd, Auchtermuchty, Fife. Poplar Grove Practice, Meadow Way, Aylesbury, Bucks. West Timperley Medical Centre, Dawson Road, West Timperley, Cheshire. Larksfield Surgery, Arlesey Road, Stotfold, Beds. Eaton Wood Medical Centre, Tyburn Road, Birmingham, B24. Consolidated Profit and Loss Account for the six months ended 31 December 1999 Six months Six months Year to ended ended 30 June 31 December 31 December 1999 1999 1998 £'000 £'000 £'000 Notes (unaudited) (unaudited) (audited) Turnover 1,670 929 2,391 Administrative expenses (380) (301) 626 Exceptional expenses - promotion to main market - (80) 104 --------- --------- --------- Operating profit 1,290 548 1,661 Interest receivable 25 184 245 Interest payable (712) (345) (945) --------- --------- --------- Profit on ordinary activities before tax 603 387 961 Taxation (61) 14 93 --------- --------- --------- Profit on ordinary activities after tax 542 401 1,054 Dividend Interim dividend of 3.4p per share 4 (1998: 2.6p) (534) (416) (950) --------- --------- --------- Retained profit/(loss) for the period 8 (15) 104 ========= ========= ========= Earnings per share - basic 3 3.5p 2.5p 6.6p Earnings per share - diluted 3 3.4p 2.5p 6.5p There we no recognised gains and losses other than those passing through the profit and loss account. Consolidated Balance Sheet at 31 December 1999 At At 31 December 30 June 1999 1999 £'000 £'000 Notes (unaudited) (audited) Fixed assets Tangible assets 2 40,695 35,640 Investments: development loans 50 901 --------- --------- 40,745 36,541 Current assets Debtors 585 395 VAT recoverable 417 88 Net investments in finance leases: amounts falling due in more than one year 2,500 2,510 Cash at bank and in hand 740 201 --------- --------- 4,242 3,194 Creditors: amounts falling due within one year: (2,045) (1,801) --------- --------- Net current assets 2,197 1,393 --------- --------- Total assets less current liabilities 42,942 37,934 Creditors: amounts falling due after more than one year: Convertible loan stock 2016 (4,000) (4,000) Term loan (20,500) (15,500) --------- --------- (24,500) (19,500) --------- --------- 18,442 18,434 ========= ========= Share capital and reserves Called up share capital 7,850 7,850 Share premium account 5,810 5,810 Capital reserve 1,618 1,618 Revaluation reserve 2,960 2,960 Profit and loss account 204 196 --------- --------- Equity shareholders' funds 18,442 18,434 ========= ========= Consolidated Cash Flow Statement for the six months ended 31 December 1999 Six months Year ended ended 31 December 30 June 1999 1999 £'000 £'000 (unaudited) (audited) Net cash inflow from operating activities 890 2,467 --------- --------- Returns on investments and servicing of finance Interest received 21 53 Interest paid (634) (919) --------- --------- (613) (866) --------- --------- Taxation UK corporation tax paid (including advance corporation tax) - (211) Capital expenditure and financial investment Payments to acquire tangible fixed assets (4,204) (7,410) Development loans advanced - (6,664) --------- --------- (4,204) (14,074) --------- --------- Equity dividends paid (534) (912) --------- --------- (4,461) (13,596) --------- --------- Financing Repurchase of shares - (292) Term bank loan 2005 4,500 13,500 Revolving 364 day facility 500 - --------- --------- 5,000 13,208 --------- --------- Increase/(decrease) in cash 539 (388) ========= ========= Notes to the Interim Financial Statements 1.The interim financial information has been prepared on the basis of the accounting policies set out in the Group's 1999 Statutory Accounts. The taxation charge is calculated by applying the Directors' best estimate of the annual tax rate to the profits for the period, together with refinements of estimations for prior years. . 2. The freehold properties are included at valuation as at 30 June 1999 plus additions at cost since that date. 3. The calculation of basic earnings per share is based on earnings of £542,000 (1998: £401,000) and 15,700,000 Ordinary shares (1998: 16,000,000). Diluted earnings per share has been calculated in accordance with Financial Reporting Standard No. 14: Earnings per Share. It is based on earnings of £542,000 (1998: £401,000) and 15,859,486 Ordinary shares (1998: 16,000,000) being the weighted average number of Ordinary shares in issue during the period. Weighted Average Number of Ordinary Shares: Issued share capital 15,700,000 Dilutive effect of options 159,486 ---------------- 15,859,486 The dilutive effect relates to options under an agreement dated 14 March 1996 between the Company, Nexus Management Services (NMS) and J O Hambro Capital Management Limited (JOHCM). NMS and JOHCM have been granted options to subscribe for a total of 1.6 million shares in the proportion of 960,000 shares to NMS and 640,000 shares to JOHCM at a subscription price of £1 per share. These options are exercisable at any time after publication of the audited accounts of the Company for the financial year ended 30 June in the year immediately preceding the proposed date of exercise provided that, on the basis of those accounts, the net asset value per share (adding back all gross dividends paid on each share) has increased since the date of admission at a rate in excess of the equivalent compound growth rate of 10%, and subject to the Managers remaining advisors at the date of exercise. As at 30 June 1999 these conditions had been met. 4. The interim dividend of £534,000 has been calculated on the issued share capital of 15,700,000 Ordinary shares at 3.4p net per share. 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 1999 is based on the statutory accounts for that year. Those accounts, upon which the auditors issued an unqualified opinion, have been delivered to the Registrar of Companies. 6. The Interim Report will be sent to shareholders shortly and copies can be obtained from J O Hambro Capital Management Limited at 10 Park Place London SW1A 1LP.

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