Interim Results
Primary Health Properties PLC
15 March 2007
Primary Health Properties PLC
PRIMARY HEALTH PROPERTIES PLC ('PHP PLC')
Modern accommodation for the Provision of Primary Health
Care Services
Interim Results for the six months ended
31 December 2006
Group Financial Highlights
*Portfolio revaluation increased by £13.4m to £260.3m
*Diluted NAV per share increased 38% to 420.9p (30 June 2006: 305.1p)
*Portfolio owned, leased and committed increased by 40% to £293.8m (2005:
£209.9m)
*Pre tax profits totalled £9.0m (2005: £9.4m)
*Basic earnings per share increased by 268% to 125.4p (2005: 34.1p)
*Adjusted earnings per share increased by 6% to 6.9p (2005: 6.5p)
*Dividend increased by 11% to 7.5p (2005: 6.75p)
*Successful acquisition and integration of CHH for £30.9m in December 2006
* Placing of £32m underwritten by Numis Securities Limited and Open Offer of £8m
announced 15 March 2007
Harry Hyman, Managing Director, commented:
"The first half of our financial year has started strongly with all of our key
performance indicators rising. The commercial property market continued to
enjoy strong investor demand and rental appreciation has been positive. We took
the opportunity to make the strategic acquisition of CHH which has now been
fully integrated and is performing well. I am pleased to announce today that
the Company is, subject to Shareholder approval, raising up to £40m of new
equity to further develop the business. The second half has started well and
the Board looks forward to the future with confidence."
Enquiries:
Bell Pottinger Corporate & Financial
David Rydell/Victoria Geoghegan
Tel: 020 7861 3232
Primary Health Properties PLC
Harry Hyman
Managing Director
Tel: 01483 306912
Mobile: 07973 344768
Chairman's Statement
In June 2006, the Group announced its intention to convert to a real estate
investment trust ("UK-REIT") and on 1 January 2007 the Group's conversion to a
UK-REIT became effective.
The Group also, with effect from 1 January 2007, changed its accounting
reference date to 31 December. The current accounting period, which commenced on
1 July 2006, will therefore comprise 18 months ending 31 December 2007. In
addition to the publication of these financial statements for the six months
ended 31 December 2006, the Group will prepare a second interim report for the
six months ending 30 June 2007 and final financial statements for the 18 months
ending 31 December 2007.
The results of the Group for the six months ended 31 December 2006 reflect
further progress. The Group has continued to expand its portfolio of modern
purpose built primary care properties, both through individual asset purchases
from a number of developers and by portfolio acquisitions, having recently
completed, in December 2006, the acquisition of Cathedral Healthcare (Holdings)
Limited ("CHH") with its portfolio of nine properties, for a cash consideration
of £30.9m.
The total gross assets acquired as a result of the CHH acquisition, once fully
developed, are expected to amount to £39.2m. It is expected that these assets
will generate an annual rental income of approximately £2.0m, reflecting an
initial yield of approximately 5%.
As a result of the regular six monthly review, the property portfolio has
increased by £13.4m, with the diluted net asset value per share increasing by
38% to 420.9p per share compared to 305.1p at 30 June 2006. This increase
reflects both higher rents and the tightening of yields in the market.
As a consequence of the CHH acquisition, continued individual property
acquisitions and the revaluation surplus, the Group's investment portfolio, at
31 December 2006, had risen to £260.3m. The Group's closing portfolio, including
development loans, leases and commitments, totalled £293.8m.
The Group's profit before taxation, for the six months to 31 December 2006,
totalled £9.0m (2005: £9.4m), a decrease of 4.2%. After the UK-REIT conversion
charge and release of the deferred tax provision, profit after tax for the
period was £29.6m (2005: £7.7m). Diluted earnings per share, which include the
benefit of revaluation gains on investment properties, were 125.4p, an increase
of 280% over the first half of last year (33.0p). Adjusted diluted earnings per
share for the first half were 6.9p, 6% higher than the interim period last year
(6.5p).
The Board proposes to pay an interim dividend of 7.5p per share, a rise of 0.75p
per share over last year's interim dividend. The dividend will be paid on 22 May
2007 to Shareholders on the Register of Members on 23 March 2007.
During the six months ended 31 December 2006, the Group has taken delivery of
£34.9m of completed and fully let properties at Didsbury, Clowne, Hythe,
Wombwell, Sheerness, Clapham, Hoddesden, Milton Keynes, Oxted and Norwich and
entered into new commitments totalling £34.5m during the period at Penkridge,
Kettering, Sheerness, Sutton, Handcross, Wednesbury, Hoddesden (extension) and
Milton Keynes (extension).
The table below sets out the portfolio as at 31 December 2006:
31 December 30 June 31 December
2006 2006 2005
£m £m £m
Investment properties 245.5 197.5 180.2
Development properties 9.5 - -
Properties in the course of development 2.8 2.1 3.2
Total investment properties 257.8 199.6 183.4
Finance leases 2.5 2.5 2.5
Total owned and leased 260.3 202.1 185.9
Development loans 1.2 1.7 1.8
Total owned and leased (including development loans) 261.5 203.8 187.7
Deposits paid 0.1 0.1 0.2
Committed 32.2 20.9 22.0
Total owned, leased and committed 293.8 224.8 209.9
Although there have been reports of funding delays within the NHS, the Group has
a strong forward pipeline of transactions. The annualised rent roll has
increased from £11.3m at 30 June 2006 to £13.3m at 31 December 2006,
representing both new deliveries and rental increases. Rental increases secured
during the period amounted to £0.3m. On balance, the Group continues to obtain
satisfactory rent reviews.
The Group continues to monitor its exposure to interest rates and, during the
period, has consolidated the RBS interest rate swaps. The gearing of the Group
was 59% as at 31 December 2006 (based on the value of property covering debt)
and the Group has covered 59% of its exposure to interest rates for the
remainder of the financial period. The Group has broadly similar hedging in
place for the next eight years.
The share save scheme currently has 35 members representing 83,779 shares.
Further details can be found on the website: www.phpgroup.co.uk.
The Board has made alternative arrangements with the Registrar, Capita IRG, to
offer a dividend reinvestment scheme for Shareholders who wish to reinvest their
dividend as shares. A letter explaining this scheme, together with terms and
conditions and an application form, will be posted to new Shareholders with the
published Interim Report.
On 21 September 2006, the Joint Managers exercised their options to acquire 1.6m
shares at a price of £1.71 per share pursuant to the Management Options
agreement dated 17 September 2003. The number of shares in issue as at 31
December 2006 was 24,277,718.
On 16 November 2006, Shareholders approved the amendments to the Management
Agreement by way of a Deed of Variation whereby the Joint Managers will be
entitled to a performance incentive fee.
On 14 February 2007, the Group negotiated a £20m increase in loan facilities to
£140m from The Royal Bank of Scotland plc and a £20m increase to £50m from
Allied Irish Banks, p.l.c.
The portfolio now has some 89 properties with a further seven contracted for
delivery and two extensions also contracted for delivery. The portfolio has
performed extremely well and the Board believes that the combination of the
high-quality property portfolio, long lease lengths and strong covenant quality
make a desirable portfolio for future income and capital appreciation.
G A Elliot
Chairman
14 March 2007
GROUP INCOME STATEMENT
for the six months ended 31 December 2006
Six months ended Year ended Six months ended
31 December 30 June 31 December
Note 2006 2006 2005
£'000 £'000 £'000
(unaudited) (audited) (unaudited)
Rental income 6,410 10,850 5,303
Finance lease income 141 281 140
Rental and related income 6,551 11,131 5,443
Net valuation gain on property portfolio 13,442 14,997 7,837
Net gain on disposal of property 44 401 -
Administrative expenses (2,271) (2,689) (1,308)
Exceptional items:
Goodwill impairment 2 (5,339) - -
UK-REIT conversion costs (175) - -
Operating profit before financing costs 12,252 23,840 11,972
Finance income 110 258 161
Finance costs (3,394) (5,695) (2,768)
Profit before tax 8,968 18,403 9,365
Current taxation 7 - 465 -
Deferred taxation charge for the period 7 (3,880) (2,931) (1,639)
Deferred taxation release on conversion to 7 29,622 - -
UK-REIT
Conversion to UK-REIT charge (5,157) - -
Taxation credit/(expense) 20,585 (2,466) (1,639)
Profit for the period* 29,553 15,937 7,726
Earnings per share - basic 4 125.4p 70.3p 34.1p
- diluted 4 125.4p 67.7p 33.0p
Adjusted earnings per share - basic 4 6.9p 17.1p 6.7p
- diluted 4 6.9p 16.5p 6.5p
Dividends paid: 6 £'000 £'000 £'000
Final dividend for the year ended 30 June 2006 1,639 - -
(6.75p)
Interim dividend for the year ended 30 June - 1,531 -
2006 (6.75p)
Final dividend for the year ended 30 June 2005 - 1,359 1,359
(6.0p)
* Wholly attributable to equity shareholders of Primary Health Properties PLC
All activities are continuing.
GROUP BALANCE SHEET
as at 31 December 2006
Note At 31 At 30 At 31
December June December
2006 2006 2005
£'000 £'000 £'000
(unaudited) (audited) (unaudited)
Non current assets
Investment properties 3 248,316 199,569 183,430
Development properties 3 9,525 - -
Development loans 1,184 1,712 1,758
Net investment in finance leases 2,487 2,492 2,510
Derivative interest rate swaps 1,901 1,415 -
263,413 205,188 187,698
Current assets
Trade and other receivables 1,855 1,470 1,678
Net investment in finance leases 12 12 -
Cash and cash equivalents 3,829 3,973 2,236
5,696 5,455 3,914
Total assets 269,109 210,643 191,612
Current liabilities
Derivative interest rate swaps - (74) -
Corporation tax payable (201) (181) (681)
UK-REIT conversion charge payable 1 (645) - -
Deferred rental income (2,988) (2,466) (2,347)
Trade and other payables (4,591) (2,604) (3,472)
(8,425) (5,325) (6,500)
Non current liabilities
Term Loan (153,250) (112,800) (102,000)
Deferred tax 7 - (21,193) (18,930)
UK-REIT conversion charge payable 1 (4,512) - -
Derivative interest rate swaps (735) - (1,896)
(158,497) (133,993) (122,826)
Total liabilities (166,922) (139,318) (129,326)
Net assets 102,187 71,325 62,286
Equity
Share capital 12,139 11,339 11,339
Share premium 13,943 12,022 12,022
Capital reserve 1,618 1,618 1,618
Cash flow hedging reserve 1,166 939 (1,327)
Retained earnings 73,321 45,407 38,634
Total equity * 102,187 71,325 62,286
Net asset value per share Note
- basic 8 420.9p 314.5p 274.7p
- diluted 8 420.9p 305.1p 267.8p
Adjusted net asset value per share
- basic 8 420.9p 408.0p 358.1p
- diluted 8 420.9p 392.4p 345.8p
* Wholly attributable to equity holders of Primary Health Properties PLC
These financial statements have been prepared in accordance with the accounting
policies set out in the latest Annual Report for the year ended 30 June 2006.
Group Statement of Changes in Equity
for the six months ended 31 December 2006
Cash flow
Share Share Capital hedging Retained
capital premium reserve reserve earnings Total
£'000 £'000 £'000 £'000 £'000 £'000
30 June 2006 11,339 12,022 1,618 939 45,407 71,325
Profit for the period - - - - 29,553 29,553
Transfer to income statement on cash flow
hedges - - - 5 - 5
Income and expense recognised directly in
equity:
Loss on cashflow hedges taken to equity - - - (180) - (180)
Deferred tax on loss on cashflow hedges for 52 52
the period - - - -
Deferred tax on cashflow hedges released * - - - 350 - 350
Total recognised income and expense for the
period - - - 227 29,553 29,780
Issue of shares (net of expenses) 800 1,921 - - - 2,721
Dividends paid:
Final dividend for the year ended 30 June
2006 (6.75p) - - - - (1,639) (1,639)
31 December 2006 12,139 13,943 1,618 1,166 73,321 102,187
*Deferred tax has been released due to impending conversion to UK-REIT.
Group Statement of Changes in Equity
for the year ended 30 June 2006
Cash flow
Share Share Capital hedging Retained
capital premium reserve reserve earnings Total
£'000 £'000 £'000 £'000 £'000 £'000
1 July 2005 11,326 11,952 1,618 (1,292) 32,175 55,779
Profit for the period - - - - 15,937 15,937
Transfer to income statement on cashflow
hedges - - - 238 - 238
Income and expense recognised directly in
equity:
Gains on cashflow hedges taken to equity - - - 2,949 - 2,949
Deferred tax on cashflow hedges taken to
equity - - - (956) - (956)
Total recognised income and expense for the
period - - - 2,231 15,937 18,168
Issue of shares 13 74 - - - 87
Issue expenses - (4) - - - (4)
Share based payment charge - - - - 185 185
Dividends paid:
Final dividend for the year ended 30 June
2005 (6.0p) - - - - (1,359) (1,359)
Interim dividend for the year ended 30 June
2006 (6.75p) - - - - (1,531) (1,531)
30 June 2006 11,339 12,022 1,618 939 45,407 71,325
Group Statement of Changes in Equity
for the six months ended 31 December 2005
Cash flow
Share Share Capital hedging Retained
capital premium reserve reserve earnings Total
£'000 £'000 £'000 £'000 £'000 £'000
1 July 2005 11,326 11,952 1,618 (1,292) 32,175 55,779
Profit for the period - - - - 7,726 7,726
Transfer to income statement on cashflow
hedges - - - 118 - 118
Income and expense recognised directly in
equity:
Losses on cashflow hedges taken to equity - - - (168) - (168)
Deferred tax on cashflow hedges taken to
equity - - - 15 - 15
Total recognised income and expense for the
period - - - (35) 7,726 7,691
Issue of shares 13 74 - - - 87
Issue expenses - (4) - - - (4)
Share based payment charge - - - - 92 92
Dividends paid:
Final dividend for the year ended 30 June
2005 (6.0p)
- - - - (1,359) (1,359)
31 December 2005 11,339 12,022 1,618 (1,327) 38,634 62,286
Group Cash Flow Statement
for the six months ended 31 December 2006
Six months Year Six months
ended ended ended
31 December 30 June 31 December
2006 2006 2005
£'000 £'000 £'000
(unaudited) (audited) (unaudited)
Operating activities
Group operating profit before financing costs 12,252 23,840 11,972
Adjustments to reconcile group operating profit to net
cash flows from operating activities:
Less: Revaluation gains on property (13,442) (14,997) (7,837)
Less: Gains on disposal of property (44) (401) -
Plus: Goodwill impairment 5,339 - -
Plus: Share based payment expense - 185 92
Decrease/(increase) in trade and other receivables 430 (54) (196)
Increase in trade and other payables 734 212 160
Cash generated from operations 5,269 8,785 4,191
Interest received from developments 107 219 102
Taxation paid - (34) -
Net cash flow from operating activities 5,376 8,970 4,293
Investing activities
Receipts from disposal of investment properties 465 7,711 -
Payments to acquire investment properties (12,891) (25,770) (10,459)
Development loans advanced (1,133) (2,612) (749)
Bank interest received 28 47 12
Acquisition of subsidiary (30,393) - -
Net cash flow from investing activities (43,924) (20,624) (11,196)
Financing activities
Expenses on issue of shares (5) (4) (4)
Cash received on exercise of Management Options 2,726 - -
Term bank loan 40,450 24,000 13,200
Interest paid (3,128) (6,678) (3,897)
Equity dividends paid (1,639) (2,803) (1,272)
Net cash flow from financing activities 38,404 14,515 8,027
(Decrease)/increase in cash and cash equivalents for (144) 2,861 1,124
the period
Cash and cash equivalents at start of period 3,973 1,112 1,112
Cash and cash equivalents at end of period 3,829 3,973 2,236
NOTES:
1. Accounting Policies
Basis of preparation/ Statement of compliance
The Group's financial statements for the six months to 31 December 2006 have
been presented under International Financial Reporting Standards ("IFRS") as
adopted by the European Union and on the basis of the accounting policies set
out in the statutory accounts for the year ended 30 June 2006, which are also
expected to apply for the period ending 31 December 2007.This report is prepared
in compliance with IAS34:"Interim Financial Reporting".
The financial information contained in this report does not constitute statutory
accounts within the meaning of Section 240 Companies Act 1985. The auditors'
report on the full financial statements under section 235 Companies Act 1985,
for the year ended 30 June 2006, did not contain a statement under Section 237
(2) or (3) Companies Act 1985. This audit report, which was unqualified, was
delivered to the Registrar of Companies together with financial statements for
the year ended 30 June 2006.
Convention
The financial statements are presented in Sterling rounded to the nearest
thousand.
Segmental reporting
The Group operates under one business segment and one geographical segment,
being investment in primary health care property within the United Kingdom.
Basis of consolidation
The Group's financial statements consolidate the financial statements of Primary
Health Properties PLC and its wholly owned subsidiary undertakings. Subsidiaries
are consolidated from the date of their acquisition, being the date on which the
Group obtained control and continue to be consolidated until the date that such
control ceases. Control comprises the power to govern the financial and
operating policies of the investee so as to obtain benefit from its activities
and is achieved through direct or indirect ownership of voting rights; currently
exercisable or convertible potential voting rights; or by way of contractual
agreement. The financial statements of the subsidiary undertakings are prepared
for the accounting reference period ending 31 December each year, using
consistent accounting policies. All intercompany balances and transactions,
including unrealised profits arising from them, are eliminated.
Conversion to UK-REIT
The Group's conversion to UK REIT status was effective from 1 January 2007.
Conversion to a UK-REIT means that, where the relevant UK-REIT criteria are met,
the Group's property profits, both income and gains, should be exempt from UK
taxation from 1 January 2007. The deferred tax liabilities as at 31 December
2006 of £30.0m are therefore released with £29.6m credited to the Group Income
Statement and £0.4m taken direct to the cashflow hedging reserve.
On conversion to UK-REIT, the Group is subject to a taxation charge based on the
value of properties as at the date of conversion, amounting to £5.2m. The amount
is payable over four years.
Change of accounting reference date
The Group changed its accounting reference date to 31 December, with effect from
1 January 2007. The current accounting reference period, which commenced on 1
July 2006, will therefore comprise 18 months ending 31 December 2007. In
addition to these interim financial statements for the six months ended 31
December 2006, the Group will prepare a second interim report for the six months
ending 30 June 2007 and final financial statements for the 18 month period
ending 31 December 2007.
2. Acquisition of Cathedral Healthcare (Holdings) Ltd ("CHH")
On 22 December 2006, the Group exchanged contracts to acquire 100% of CHH for a
cash consideration of £30.9m. CHH was the holding company of a group of
companies that owned nine primary healthcare facilities across the UK which have
been incorporated into the Group portfolio.
Of the nine facilities, three are under construction and are expected to be
completed by 31 December 2007. In addition, two of the completed facilities are
undergoing extension work, which is expected to be finished in 2007.
Consideration of £30.9m was paid upon completion. Cash acquired upon acquisition
of CHH amounted to £0.2m.
The total gross assets acquired once fully developed are expected to amount to
£39.2m. These assets are expected to generate a total annual rental income of
approximately £2.0m, reflecting an initial yield of approximately 5%.
Details of the acquisition of CHH:
£'000
Total cost of acquisition 30,852
Investment and development property acquired (30,825)
Other net liabilities acquired 5,312
Goodwill arising on acquisition 5,339
Prior to the acquisition of CHH, the investment and development properties were
included in the books of CHH at £21.5m. A fair value exercise was carried out by
Lambert Smith Hampton as at 1 December 2006 resulting in an uplift in value of
these properties of £9.3m to £30.8m. A deferred tax liability arose on this
uplift of £2.8m.
As the Group paid consideration equal to the value of the acquired properties,
goodwill arises in respect of the other assets and liabilities, principally a
deferred tax liability of £4.9m. On conversion to UK-REIT, the deferred tax
liability is eliminated resulting in an impairment of goodwill arising on
acquisition.
The impact of post-acquisition trading on the Group Income Statement is not
material.
3 Investment Properties
The freehold, leasehold and development properties have been independently
valued at fair value by Lambert Smith Hampton Chartered Surveyors and Valuers,
for the six months ended 31 December 2006.
The revaluation gain for the six months ended 31 December 2006 amounted to
£13.4m.
Property additions during the period amounted to £45.3m (including the acquired
CHH properties of £30.8m). Properties disposed of during the period, valued at
£0.4m as at 30 June 2006, realised a gain of £0.04m.
4 Earnings per share
The calculation of basic and diluted earnings per share as at 31 December 2006
is based on the following:
Earnings per share as at 31 December 2006
Net profit Ordinary Per share
attributable to shares pence
Ordinary (weighted
Shareholders average)
£'000 number
Basic and diluted earnings per 29,553 23,573,370 125.4
share
Adjusted earnings per share as at 31 December 2006
Net profit Ordinary Per share
attributable to shares pence
Ordinary (weighted
Shareholders average)
£'000 number
Basic and diluted earnings per share 29,553 23,573,370 125.4
Adjustments to remove:
Incentive fee accrual 752
Goodwill impairment 5,339
UK-REIT conversion charge 5,157
Deferred tax charge 3,880
Deferred tax release (29,622)
Net valuation gains on valuation of property (13,442)
Adjusted basic and diluted earnings per share 1,617 23,573,370 6.9
Following the exercise of the Management options by the Joint Managers on 21
September 2006, there is no dilution.
Earnings per share as at 30 June 2006
Net profit Ordinary Per share
attributable to shares pence
Ordinary (weighted
Shareholders average)
£'000 number
Basic earnings per share 15,937 22,667,946 70.3
Option exercise* - 861,960 **
Diluted earnings per share 15,937 23,529,906 67.7
Adjusted earnings per share as at 30 June 2006
Net profit Ordinary Per share
attributable to shares pence
Ordinary (weighted
Shareholders average)
£'000 number
Basic earnings per share 15,937 22,667,946 70.3
Adjustments to remove:
Deferred tax charge 2,931
Net valuation gains on valuation of (14,997)
property
Adjusted basic earnings per share 3,871 22,667,946 17.1
Option exercise* - 861,960 **
Adjusted diluted earnings per share 3,871 23,529,906 16.5
Earnings per share as at 31 December 2005
Net profit Ordinary Per share
attributable to shares pence
Ordinary (weighted
Shareholders average)
£'000 number
Basic earnings per share 7,726 22,658,334 34.1
Option exercise* - 782,328 **
Diluted earnings per share 7,726 23,440,662 33.0
Adjusted earnings per share as at 31 December 2005
Net profit Ordinary Per share
attributable to shares pence
Ordinary (weighted
Shareholders average)
£'000 number
Basic earnings per share 7,726 22,658,334 34.1
Adjustments to remove:
Deferred tax charge 1,639
Net valuation gains on valuation of (7,837)
property
Adjusted basic earnings per share 1,528 22,658,334 6.7
Option exercise* - 782,328 **
Adjusted diluted earnings per share 1,528 23,440,662 6.5
* Excess of the total number of potential shares on option exercise over the
number that could be issued at fair value as calculated in accordance with
International Accounting Standard No.33: Earnings per share.
** All Management Options were exercised in full on 21 September 2006.
The purpose of calculating an adjusted earnings per share calculation is to
provide a better indication of the normalised pre-tax tax trading performance
for the period.
5 Performance incentive scheme
On 16 November 2006, Shareholders approved the amendments to the Management
Agreement whereby the Joint Managers will be entitled to a performance incentive
fee of 15% of any performance in excess of an 8% per annum increase in the
Company's "Total Return" as derived from the audited financial statements for
the respective financial period.
The Total Return shall be determined by comparing the variation in the stated
net asset value per share (on a fully diluted basis, adjusting for deferred tax
and the REIT conversion charge and adding back gross dividends paid or declared
in such period) against the fully diluted net asset value per share from the
previous period's audited accounts.
Included in Administration Expenses within the Income Statement is an estimated
incentive fee expense of £752,000. This amount has been calculated based on 50%
of the expected performance incentive fee for the 12 month period to 30 June
2007.
6. Dividends paid
Dividends paid in the period are as follows:
No of shares Six months to Year to Six months to
dividend paid 31 December 30 June 31 December
upon 2006 2006 2005
£'000 £'000 £'000
Final dividend for the year 1,639 - -
ended 30 June 2006 (6.75p) 24,277,718
Interim dividend for the year - 1,531 -
ended 30 June 2006 (6.75p) 22,677,718
Final dividend for the year - 1,359 1,359
ended 30 June 2005 (6.0p) 22,677,718
1,639 2,890 1,359
The Directors propose to pay a dividend of 7.5p per Ordinary Share for the six
months to 31 December 2006, payable on 22 May 2007, amounting to £1,820,829.
7. Taxation
31 December 2006 30 June 2006 31 December 2005
£'000 £'000 £'000
Taxation in the Income Statement:
Current tax
UK Corporation tax - 181 -
Adjustment in respect of prior year - (646) -
UK-REIT conversion charge 5,157 - -
5,157 (465) -
Deferred tax
Deferred tax charge for the period 3,880 2,931 1,639
Deferred tax release on conversion to UK-REIT (29,622) - -
(see note 1)
(25,742) 2,931 1,639
Taxation (credit)/charge in the Income (20,585) 2,466 1,639
Statement
Taxation in the Balance Sheet:
Deferred tax liability
- on timing differences - 6,186 5,045
- on revaluation gains - 14,605 14,454
- on derivative interest rate swaps - 402 (569)
Deferred tax liability at end of period - 21,193 18,930
8. Net asset value calculations
Net asset values have been calculated as follows:
31 December 2006 30 June 2006 31 December 2005
£'000 £'000 £'000
(unaudited) (audited) (unaudited)
Net assets per Group Balance Sheet * 102,187 71,325 62,286
Add - Receipts from the exercise of
Management Options - 2,736 2,736
Diluted net assets 102,187 74,061 65,022
No. of shares No. of shares No. of shares
Ordinary shares:
Issued share capital * 24,277,718 22,677,718 22,677,718
Add - New shares issued assuming the exercise
of the Management Options - 1,600,000 1,600,000
Diluted number of Ordinary Shares 24,277,718 24,277,718 24,277,718
Net asset value per share 420.9p 314.5p 274.7p
Diluted net asset value per share 420.9p 305.1p 267.8p
* figures for basic net asset value calculations
Calculations assume that the dilution takes place on the respective balance
sheet dates.
Following the exercise of the Management Options by the Joint Managers on 21
September 2006, there is no dilution and therefore there is no difference
between the basic and diluted net asset values as at 31 December 2006.
Diluted adjusted net asset values per share
31 December 2006 30 June 2006 31 December 2005
£'000 £'000 £'000
(unaudited) (audited) (unaudited)
Net assets per Group Balance Sheet * 102,187 71,325 62,286
Adjustments to add back:
Deferred tax on timing differences - 6,186 5,045
Deferred tax on revaluation gains - 14,605 14,454
Deferred tax on derivative interest rate swaps - 402 -
Adjustment to remove:
Deferred tax on derivative interest rate swaps - - (569)
Adjusted net assets 102,187 92,518 81,216
Add - Receipts from the exercise of
Management Options - 2,736 2,736
Diluted adjusted net assets 102,187 95,254 83,952
No. of shares No. of shares No. of shares
Ordinary shares:
Issued share capital * 24,277,718 22,677,718 22,677,718
Add - New shares issued assuming the exercise
of the Management Options - 1,600,000 1,600,000
Diluted number of Ordinary Shares 24,277,718 24,277,718 24,277,718
Adjusted net asset value per share 420.9p 408.0p 358.1p
Diluted adjusted net asset value per share 420.9p 392.4p 345.8p
* figures for basic net asset value calculations
There is no difference between the normal and adjusted net asset values as at 31
December 2006, due to the release of all deferred tax liabilities due to
conversion to UK-REIT.
Calculations assume that the dilution takes place on the respective balance
sheet dates.
Following the exercise of the Management Options by the Joint Managers on 21
September 2006, there is no dilution as at 31 December 2006 and therefore there
is no difference between adjusted basic and diluted net asset values as at 31
December 2006.
9. The Interim Report will be posted to Shareholders on 3 April 2007, and to
those on the mailing list as soon as practicable thereafter. It will also be
available on request from the Company Secretary, J O Hambro Capital Management
Limited, Ground Floor, Ryder Court, 14 Ryder Street, London, SW1Y 6QB.
END
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