Preliminary Results
Primary Health Properties PLC
26 September 2000
PRIMARY HEALTH PROPERTIES PLC
Modern accommodation for the Provision of Primary Health
Care Services
Preliminary Results for the year ended
30 June 2000
Group Financial Highlights
* Dividend increased 16.7% to 7.0p (1999: 6.0p)
* NAV increased 10.5% to 129.7p (1999: 117.4p)
* Portfolio increased to £51.8 m (1999: £ 39.0m)
* Plans to increase gearing from 65% to 70%
* Total return per share increased to 19.3p (1999: 16.4p)
'We believe that Primary Heath Properties PLC, continues to
be the largest specialist investor in primary care
properties in the UK and that our portfolio is exceptional
in terms of covenant and length of lease. The group is well
placed to benefit from the NHS commitment to invest
£1billion in primary care facilities and to refurbish or
replace 3,000 family doctor's premises by 2004. We are
confident of our ability to raise our portfolio while taking
advantage of these exciting opportunities.'
Harry Hyman, Managing Director
Enquiries:
Primary Health Properties PLC
Harry Hyman
Managing Director
Tel: 01483 306912
Mobile: 0973 344768
Bell Pottinger Financial
Kate Power / Tania Mallett
Tel: 0207 353 9203
Preliminary Announcement of Results for the year ended 30
June 2000
Chairman's Statement
During the past year the Group has made excellent progress
with the total return per share increasing from 16.4p to
19.3p. Group profit before taxation for the year ended 30
June 2000 totalled £1,240,000 (1999: £961,000).
The Board has recommended a final dividend of 3.6p per
share, which, when added to the interim, makes a total of
7.0p, an increase of 16.7% over the total dividend of 6.0p
paid in respect of the previous year.
Lambert Smith Hampton has carried out a valuation of the
Group's investment properties, which has resulted in a
revaluation surplus of £1,912,000. The net asset value per
share has risen from 117.4p to 129.7p, an increase of 10.5%.
During the year the Group successfully concluded the rent
reviews at Charlotte Street, where the rent has increased
from £100,000 to £225,000 per annum, and at Rushton Street
where the rent has increased from £178,000 to £300,000 per
annum. The year-end rent roll has now increased from
£2,900,000 to £4,261,000 per annum. Other rent reviews
achieved during the period, although smaller in absolute
terms, lead 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 year the Group has continued to expand its
portfolio including development loans and finance leases
such that, at 30 June 2000, it totalled £51.8 million after
revaluation surpluses. In addition, the Group has
outstanding commitments to purchase a further £5.4 million
of property.
During the period medium term interest rates increased
significantly and the Group has seen the benefit of the £13
million of swaps that were put in place last year for 51% of
bank term loan borrowings. The swap facilities expire in
September 2004 with the interest rate fixed at 5.78%.
The Group's strategy remains to develop the portfolio,
initially to £100 million, at which stage some form of
relatively cheaper non-recourse securitisation should be
achievable. In the meantime, the Board has concluded that a
prudent increase in borrowing levels is desirable, given the
security of the Group's income stream, and, accordingly, we
are including in this year's Notice of Annual General
Meeting a resolution to increase the gearing level from 65%
to 70% of gross assets.
At last year's Annual General Meeting the Company was given
the power to repurchase its shares. Whilst 300,000 shares
were repurchased in the previous year, none have been
repurchased this year. Nevertheless the Board wishes to
retain this option and a resolution to this effect is again
included for this year's Annual General Meeting.
We believe that the Group continues to be the largest
specialist investor in primary care property in the UK and
that our portfolio is exceptional in terms of covenant and
length of lease. The pipeline of transactions remains
longer than ever and we are confident of our ability to make
further significant and attractive additions to our
portfolio.
G A Elliot
Chairman
25 September 2000
Consolidated Profit and Loss Account
for the year ended 30 June 2000.
30 June 30 June
2000 1999
£'000 £'000
Turnover 3,691 2,391
Administrative expenses
- non exceptional item (903) (626)
- exceptional item - (104)
-------- --------
(903) (730)
Operating profit 2,788 1,661
Interest receivable 85 245
Interest payable (1,633) (945)
-------- --------
Profit on ordinary activities before
taxation 1,240 961
Corporation tax (124) 93
-------- --------
Profit on ordinary activities after
taxation 1,116 1,054
Interim dividend of 3.4p per share
(1999: 2.6p) (534) (416)
Final dividend proposed of 3.6p
(1999:3.4p) (565) (534)
-------- --------
Profit retained for the period 17 104
-------- --------
Net profit after taxation for the
period retained by:
The Company 9 (12)
Subsidiary undertakings (after
declaring dividends of £3,496,000) 8 116
-------- --------
17 104
-------- --------
Earnings per share - basic 7.1p 6.6p
- diluted 7.0p 6.6p
Dividends per share (net) 7.0p 6.0p
Increase in net asset value per share 12.3p 10.4p
-------- --------
Total return per share 19.3p 16.4p
-------- --------
All activities are continuing
Statement of Total Recognised Gains and Losses
30 June 30 June
2000 1999
£'000 £'000
Profit for the financial year 1,116 1,054
Unrealised surplus on revaluation of
properties 1,912 1,505
-------- --------
Total gains and losses relating to the
year 3,028 2,559
-------- --------
All activities are continuing
Consolidated Balance Sheet
as at 30 June 2000
At At
30 June 30 June
2000 1999
£'000 £'000
Fixed assets
Tangible assets 49,318 35,640
Investments - development loans 10 901
-------- --------
49,328 36,541
Current assets
Debtors 568 483
Net investment in finance leases -
amounts falling due in more than one
year 2,498 2,510
Cash at bank 389 201
-------- --------
3,455 3,194
Creditors - amounts falling due within (2,920) (1,801)
one year
-------- --------
Net current assets 535 1,393
-------- --------
Total assets less current liabilities 49,863 37,934
Creditors - amounts falling due after
more than one year
Term loans (25,500) (15,500)
Convertible loan stock 2016 (4,000) (4,000)
-------- --------
(29,500) (19,500)
-------- --------
20,363 18,434
-------- --------
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 4,872 2,960
Profit and loss account 213 196
-------- --------
Equity shareholders funds 20,363 18,434
-------- --------
Net asset value per share 129.7p 117.4p
Consolidated Cash Flow Statement
for the year ended 30 June 2000
30 June 30 June
2000 1999
£'000 £'000
Net cash inflow from operating 3,037 2,467
activities
-------- --------
Returns on investments and servicing
of finance
Interest received 27 53
Interest paid (1,545) (919)
-------- --------
(1,518) (866)
-------- --------
Taxation
UK corporation tax paid (9) (211)
Capital expenditure and financial
investment
Payments to acquire tangible fixed (10,254) (7,410)
assets
Development loans advanced - (6,664)
-------- --------
(10,254) (14,074)
Equity dividends paid (1,068) (912)
-------- --------
Net cash outflow before financing (9,812) (13,596)
-------- --------
Financing
Repurchase of shares - (292)
Term bank loan 2005 10,000 13,500
-------- --------
10,000 13,208
-------- --------
Increase / (decrease) in cash 188 (388)
-------- --------
Reconciliation of net cash flow to movement in net debt
2000 1999
£'000 £'000
Increase / (decrease) in cash in the 188 (388)
period
Cash inflow from loans (10,000) (13,500)
-------- --------
Movement in net debt in the period (9,812) (13,888)
Net debt at 1 July (19,299) (5,411)
-------- --------
Net debt at 30 June (29,111) (19,299)
-------- --------
NOTES:
The above results for the year to 30 June 2000 are audited.
1. Earnings per share
The calculation of earnings per share is based on the
following:
As at 30 June 2000 As at 30 June 1999
Net profit Net profit
attibutable Attibutable
to ordinary Ordinary To ordinary Ordinary
shareholders Shares shareholders Shares
£'000 '000 £'000 '000
Basic earnings 1,116 15,700** 1,054 15,977**
per share
Option - - -
conversion*
------------- ----------- ------------ ----------
1,116 15,882 1,054 15,977
------------- ----------- ------------ ----------
** Weighted average number of Ordinary shares in issue
during the year.
* 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
Financial Reporting Standard No. 14: Earnings per
share.
2. Notes to the statement of cash flow
Reconciliation of operating profit to net cash inflow
from operating activities
2000 1999
£'000 £'000
Operating profit 2,788 1,661
(Increase) / decrease in
operating debtors and (101) 549
prepayments
Increase in operating creditors 350 257
and accruals
--------- ---------
Net cash inflow from operating 3,037 2,467
activities
--------- ---------
Cash flow relating to operating exceptional items
Net cash inflow from operating activities in the year
ended 30 June 1999 included cash outflows of £104,000
in respect of expenses incurred with the move to the
main market and acquiring authority for the share
repurchase.
3. At the Annual General Meeting, a resolution to declare
a final dividend of 3.6p per share will be put to the
members and will be paid on 23 November 2000 to holders
registered at close of business on 6 October 2000.
4. The statutory accounts for the year ended 30 June 2000
will be finalised on the basis of the financial information
presented by the Directors in this preliminary announcement
and will be delivered to Registrar of Companies following
the Company's Annual General Meeting. Copies will be sent
to shareholders shortly and 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. The Annual General Meeting is to
be held on 22 November 2000 at 12 noon at Ground Floor,
Ryder Court, 14 Ryder Street, London, SW1Y 6QB.
5. The financial information set out above does not
constitute the Company's statutory financial statements for
the years ended 30 June 2000 or 1999 (but is derived from
and has been prepared on the same basis, as those financial
statements). Statutory financial statements for 1999 have
been delivered to the Registrar of Companies, and those for
2000 will be delivered following the Company's Annual
General Meeting. The auditors have reported on those
financial statements; their reports were unqualified and did
not contain statements under section 237 (2) or (3) of the
Companies Act 1985.