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Primary Health Props (PHP)

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Monday 04 October, 1999

Primary Health Props

Final Results

4 October 1999

 Modern accommodation for the Provision of Primary Health Care Services
                 Preliminary Results for the year ended
                              30 June 1999


                                               Year to          Year to
                                            30 June 1999     30 June 1998
Net Asset value per share                       117.4p           107.0p
Portfolio purchased and committed               £45.7m           £36.2m
Annual rent roll                                 £2.9m            £1.7m
Profit before exceptional costs                £1.065m          £1.064m
Profit before taxation                         £0.961m          £1.064m
Profit after taxation                          £1.051m           £0.84m
Earnings per share                                6.6p             5.3p
Final dividend per share                          3.4p             3.1p
Total dividend per share                          6.Op             5.6p
Total return per share                           16.4p            10.6p

'We believe the Group is now the largest specialist investor in primary care
property in the UK and that our portfolio is unrivalled in terms of quality,
length of lease and geographical diversity. Our pipeline of future transactions
under consideration is higher than ever before and we are optimistic that we
will be able to move our portfolio through to a level where securitisation or
other non-recourse funding will be open to the Group, which would then enable us
to continue our growth without necessarily increasing our recourse borrowings.'

Harry Hyman, Managing Director


Primary Health Properties PLC
Harry Hyman                          Tel:    01483 306912
Managing Director                    Mobile: 0973 344768
Bell Pottinger Financial
Bob Gregory                          Tel:    0171 353 9208

Chairman's Statement

I am delighted to report another successful year during which the portfolio has
increased in size to £45.7m (including commitments). Shareholders will be
pleased to know that the total return per share was 16.4p (1998: 10.6p).

The Group profit after taxation for the year ended 30 June 1999 totalled
£1,054,000 (1998: £841,000) after exceptional items of £104,000 (1998: nil),
relating to the costs of moving from AIM to the official list of the London
Stock Exchange. The profit of £1,065,000 before exceptional charges and taxation
was adversely effected by the purchase of 53 Charlotte Street, where, until the
rent review later this year, the carrying cost exceeds the rent passing.

The Board has recommended a final dividend of 3.4p which, when added to the
interim, makes a total of 6.0p (1998: 5.6p).

Lambert Smith Hampton has carried out a valuation of the Group's investment
properties, which has resulted in a revaluation surplus of £1.5million. The net
asset value per ordinary share has risen to 117.4p, an increase of 10.4p per
share (9.7%).

This year saw the continued tightening of yields in the property sector and
while this has had a beneficial impact on valuations it is making it harder to
secure new properties at attractive yields relative to long term gilt yields.

During the current year, the Group's investment portfolio of both delivered and
contracted properties expanded to £45.7 million, £6.7 million of which is to be
delivered after the year end.

At last year's Annual General Meeting, the Company was given power to repurchase
its shares. During the year the Company repurchased a total of 300,000 ordinary
shares at an average cost of 97.3p per share. The Company had 15,700,000 shares
outstanding at the year end.

We believe the Group is now the largest specialist investor in primary care
property in the UK and that our portfolio is unrivalled in terms of quality,
length of lease and geographical diversity. Our pipeline of future transactions
under consideration is higher than ever before and we are optimistic that we
will be able to move our portfolio through to a level where securitisation or
other non-recourse funding will be open to the Group, which would then enable us
to continue our growth without necessarily increasing our recourse borrowings.

We are negotiating an increased banking facility which will increase our
available banking resources by a further £10m to £40m and enable our portfolio
to expand.

During the year approximately 30% of the Group's rent roll falls due for review.
We anticipate that these reviews will result in a significant increase in total
rental income.

G Elliot
Chairman                                                    4 October 1999

Managing Director's Review

The year to 30 June 1999 saw the continued development of our portfolio. This is
reflected in the growth in the Group's turnover, which rose from £1,357,000 to
£2,391,000 and an increase in the year end rent roll from £1,740,000 to

During the year we continued to expand our portfolio, both in total terms and
on a delivered basis, such that at 30 June 1999 our portfolio totalled £39.0
million including £1.1 million of property in the course of development,
£0.9million of development loans and £2.5million property classified as a
finance lease.

As reported in the Chairman's statement, the portfolio has been revalued as at
30 June 1999 and the uplift of £1.5million has been incorporated into the
balance sheet, giving a closing property valuation of £35.6m. The increase in
net asset value amounts to 10.4p per share.

At the year end, the Group also had outstanding commitments to purchase a
further £6.7 million of property and had made funding advances of £901,000. This
brought the portfolio, including commitments, to a total of £45.7 million at the
end of June. As at 30 June 1999 our portfolio had a rent roll of some £2.9
million (1999: £1.7 million) producing a yield on cost of approximately 8.8%
(the yield excluding Charlotte Street being approximately 9.2%).

We continue to believe that the strength and security of our recurring income
stream is extremely attractive because approximately 86% of our rent roll
derives from leases with more than 15 years unexpired.

The year ended 30 June 2000 will see some £0.9 million of current rent being
reviewed, which could have a significant impact on the Company's rent roll,
particularly with regard to the properties at Charlotte Street London Wl and
Rushton Street, London N1, both of which fall due for review in October 1999.

Portfolio Purchases during the Year

During the year, we have completed on a number of purchases, which are set out
in tabular form below.

PROPERTY                            ACQUISITION COST            OCCUPATIONAL

53 Charlotte Street, London W1        £2.6 million          Camden & Islington
                                                            NHS Trust

Withernsea Community Hospital,
East Yorkshire                        £2.5 million          Hull and Holderness
                                                            NHS Trust

Woolston Phase 2, Hampshire           £1.4 million          Doctors

Bourne, Lincolnshire                  £1.6 million          Doctors and Pharmacy

Bicester, Oxfordshire                 £1.8 million          Doctors

New Milton, Hampshire                 £2.2 million          Doctors, Pharmacy
                                                            and Newsagent 

Toddington, Bedfordshire              £0.9 million          Doctors 

Walsall Wood, West Midlands           £1.5 million          Doctors and Pharmacy

Auchtermuchty, Fife                   £0.7 million          Doctors 

TOTAL                                £15.2 million

Since the year end we have continued to take delivery of projects including in
July a doctor's surgery, convenience store and pharmacy located in Douglas
Road, Aylesbury, with a total acquisition cost of £1.9 million and we have
entered into a new commitment at Ringwood.


During the year, we have continued to draw down on the banking facilities
available to the Group. Bank Borrowings at the year end totalled £15.5 million.

In addition to the existing £3 million three year SWAP, a five year SWAP of £10m
took effect from 1 July 1999. Accordingly, some £13 million of our existing bank
facilities are effectively on a fixed rate basis, in addition to the £4 million
of 7.75% convertible loan stock. Thus at the year end £17million of the Group's
£19.5 million borrowings wore on a fixed rate basis.

Your board continues to keep the treasury exposure of the Group under review.
Although short term interest rates are rising, the outlook for medium to long
term rates continues to be positive in the light of a continued shortage of
appropriate lending opportunities in the capital markets for government gilts
and the continued absence of inflation in the UK market place.

Future Prospects

The launch of Primary Care Groups on 1 April 1999, which replaced funding
holding across the country, has led to a short term hiatus in the approval of
new projects for development. Doctors are carefully considering the likely shape
of the NHS before committing to long term lease obligations. However, the
creation of Primary Care Trusts, the first of which will come on stream from 1
April 2000 is, it is believed, likely to see an increase in demand for
properties on a rented basis. At the same time there has been an increase in the
size of doctors surgeries and primary care centres being requested by Health
Authorities, GPs and PCGs. It is possible that the Group may become involved in
a number of purchase and lease back opportunities with these entities, which
would offer us the opportunity to increase our portfolio at a faster rate.

Consolidated Profit & Loss Account 
for the year ended 30 June 1999
                                                    30 June         30 June
                                                      1999            1998
                                                      £'000           £'000

Turnover                                              2,391           1,357

Administrative expenses:
      - non-exceptional items                          (626)           (514)
      - exceptional item                               (l04)              -
                                                       (730)           (514)

Operating profit                                      1,661             843

Interest receivable                                     245             329
Interest payable                                       (945)           (107)

Profit on ordinary activities before taxation           961           1,064

Corporation tax                                          93            (223)

Profit on ordinary activities after taxation          1,054             841
Interim dividend of 2.6p (1998 : 2.5p)                 (4l6)           (400)
Final dividend proposed of 3.4p (1998 : 3.1p)          (534)           (496)
Profit/(loss) retained for the period                   104             (55)

Net (loss)/profit after tax for
       the period retained by:
       The Company                                     (12)            (39)
       Subsidiary undertakings 
       (after declaring
       dividends of £2,512,000)                        116             (16)
                                                       104             (55)

       Earnings per share-basic                        6.6p            5.3p
                         - diluted                     6.5p            5.3p

       Dividends per share                             6.0p            5.6p

       Increase in net asset value 
       per share                                      10.4p            5.0p

       Total return per share                         16.4p           10.6p

       Statement of Total Recognised Gains and Losses
       for the year ended 30 June 1999
                                     30 June   30 June
                                        1999      1998
                                       £'000     £'000
       Profit for the financial year   1,054       841
       Unrealised surplus on revaluation
       of properties                   1,505       849
       Total gains and losses 
       relating to the year            2,559     1,690

       All activities are continuing

       Consolidated Balance Sheet at 30 June 1999
                                          At         At
                                     30 June    30 June
                                        1999       1999
                                       £'000      £'000
       Fixed assets
       Tangible assets                 35,640     22,364
       Investments:development loans      901        897
                                       36,541     23,281
       Current Assets

       Debtors                            483      1,120
       Net investment in finance leases : amounts
       falling due in more  
       than one year                     2,510      -
       Cash at bank                        201       589
                                         3,194     1,709
       Creditors amounts falling due within one year
       Creditors                        (1,801)   (1,873)
       Net current assets
        /(liabilities)                   1,393      (164)
       Total assets less 
       current liabilities              37,934     23,117

       Creditors amounts falling due in more than one year

       Convertible loan stock 2016    (4,000)     (4,000)
       Term loan                      (15,500)    (2,000)
                                      (19,500)    (6,000)
                                       18,434      17,117

       Capital & Reserves

       Called up share capital         7,850       6,000
       Share premium account           5,810       7,570
       Capital reserve                 1,618       -
       Revaluation reserve             2,960       1,455
       Profit and loss account           196          92
       Shareholders' funds : Equity   18,434      17,117
       Net asset value per share       117.4      107.0p

       Approved by the Board of Directors on 4 October 1999.

       Consolidated Cash Flow Statement for the year ended 30 June 1999

                                  30 June         30 June
                                     1999            1998
                                    £'000           £'000
       Net cash inflow from operating
       activities                   2,467             941

       Returns on investments and servicing
       of finance
       Interest received               53              74
       Interest paid                 (919)           (107)
                                     (866)            (33)
       UK corporation tax paid 
       including ACT                 (211)            (96)
       Capital expenditure and financial
       Payments to acquire tangible fixed
       assets                      (7,410)         (8,228)
       Development loans advanced  (6,664)           (897)
                                  (14,074)         (9,125)

       Equity dividends paid         (912)           (720)
       Management of liquid resources
       Net sales of certificates
       of deposit                       -           4,305

       Not cash outflow before 
       financing                  (13,596)         (4,728)

       Repurchase of shares          (292)
       Term bank loan 2005           13,500         2,000
       Convertible loan stock 2016     -            4,000
       Repayment of loan               -           (1,100)
                                     13,208         4,900
       (Decrease)/increase in cash   (388)           172

    Reconciliation of operating profit to net cash flow from operating
                                          1999     1998
                                         £'000    £'000
    Operating profit                     1,661      843
    Decrease/(increase) in operating debtors
    and prepayments                        549    (487)
    increase in operating                  257     585
    creditors and accruals
    Net cash inflow from                 2,467      941
    operating activities

    Reconciliation of net cash flow to movement in net funds

                               30 June         30 June
                                  1999            1999
                                 £1000           £1000
   (Decrease)/increase in cash in
    the period                    (388)           172
    Cash inflow from change in
    liquid resources                  -         (4,305)
    Cash inflow from loans     (13,500)         (6,000)
    Loans acquired with subsidiary    -         (1,100)
    Repayment of loans                -          1,100
    Movement in net debt        (13,888)       (10,133)
    in the period 
    Net (debt)/funds at 1 July   (5,411)         1,722
    Net debt at 30 June         (19,299)        (5,411)


    The financial information has been prepared on the basis of the
    accounting policies set out in the Group's 1998 statutory accounts.

    The freehold properties are included at valuation as at 30 June

    The calculation of basic earnings per share is calculated on
    earnings of £1,054,000 and the weighted average number of ordinary
    shares in issue of 15,965,000.

    The recommended final dividend of 3.4p per share is to be paid on 21
    December 1999 to shareholders whose names appear on the Registrar at
    close of business on 15 October 1999.

    The financial information herein does not constitute statutory accounts as
    defined in section 240 of the Companies Act 1985.  The financial information
    for the preceeding year is based on the statutory accounts for the period
    ended 30 June 1998.  Those accounts, upon which the auditors have been
    issued an unqualified opinion, have been delivered to the Registrar of

    A copy of the Annual Report and Accounts for the year ended 30 June 1999
    will be finalised shortly and sent to shareholders thereafter.

a d v e r t i s e m e n t