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Primary Health Props (PHP)

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Friday 23 September, 2005

Primary Health Props

Final Results

Primary Health Properties PLC
23 September 2005





                     PRIMARY HEALTH PROPERTIES PLC ('PHP')
            Modern accommodation for the Provision of Primary Health
                                 Care Services

                     Preliminary Results for the year ended
                                  30 June 2005

Group Financial Highlights

*Pre tax profits increased by 23% to £3,030,000 (2004: £2,472,000)
*Diluted earnings per share increased by 5% to 13.4p (2004: 12.8p)
*Dividend increased 9% to 12.0p (2004: 11.0p)
*Fully diluted NAV per share increased 29% to 314.6p (2004: 243.7p)
*Portfolio (including finance leases) increased by 27% to £166.9m (2004:
 £131.1m)
*Total return per share increased to 62.1p (2004: 59.0p)



Harry Hyman, Managing Director, commented:

"This has been another year of significant achievement for the company.  I am
particularly pleased to announce a 23 per cent increase in pre-tax profits and
an 18 per cent increase in basic net asset value per share.

"We are experiencing a strong marketplace, in terms of both end user and
investor demand.  There is increasing cohesion within Primary Care Trusts to see
the primary care framework evolved and to take the lead in estates strategy to
improve health service delivery in the local health economy.  Our track record
in this field means we have been well placed to service this demand.  I look
forward to the future with confidence."

Enquiries:

Bell Pottinger Financial
David Rydell/Zoe Sanders
Tel: 020 7861 3232

Primary Health Properties PLC
Harry Hyman
Managing Director
Tel: 01483 306912 / 07973 344768




Chairman's Statement

This was another very good year for Primary Health Properties. The Group
produced a further year of profit growth with Group profit before taxation for
the year ended 30 June 2005 totalling  £3,030,000 (2004: £2,472,000), an
increase of 23%. Turnover grew from £7,661,000 to £9,613,000, an increase of
some 25%

Diluted earnings per share increased by 5% to 13.4p (2004: 12.8p).   The size of
the increase was affected by the conversion of the £4.0m Unsecured Loan Stock in
the first half of the year, which resulted in the issue of 3,478,260 Ordinary
shares of 50p each, together with the Placing, in the second half of the year,
of 1,000,000 Ordinary shares raising £3m (gross of expenses). The number of
Ordinary shares in issue is now 22,652,776.



In addition the Group posted its highest ever fully diluted net asset value of
314.6p per share, a rise of 29%.  The diluted total return for the year was
82.9p (2004: 54.0p).

The Board has recommended a final dividend of 6.0p per Ordinary share which,
with the interim dividend, makes a total of 12.0p per share for the year, an
increase of 9% over the total dividend of 11.0p per share paid in respect of the
previous year.

The Board has the authority to offer Ordinary shares instead of cash in respect
of dividends. A circular offering Shareholders on the register on 30 September
2005 the opportunity to receive new Ordinary shares instead of the cash dividend
in respect of the final dividend together with a form of election and/or Notice
of Entitlement will be posted to Shareholders with the Annual Report. The latest
date for receipt of the Forms of Election is 31 October 2005.

The year end valuation carried out on behalf of the Board by Lambert Smith
Hampton has resulted in a revaluation surplus of £16.6m for the year. Of this
£4.7m was accounted for at the interim stage. The undiluted net asset value per
share has risen from 274.7p to 324.8p, and the diluted net asset value from
243.7p to 314.6p, reflecting both rental increases and current yields in the
market. In addition, the calculation of the net asset value was affected by the
conversion of the £4m of loan stock and the Placing mentioned above, as well as
the issue of 27,383 Ordinary shares pursuant to the scrip dividend scheme.

Purchase of investment properties amounted to £19.7m during the year (Total
value of completed properties acquired £21.0m) and our commitments at the year
end totalled £20.1m. Our portfolio, including commitments, was £187.0m at 30
June 2005, an increase from £149.3m at the previous year end.  Unlike some of
our competitors we are not directly exposed to development risk and we are not
an operating business, remaining at heart, a pure property investment vehicle.

Rent reviews during the year have again performed well, which has helped in
increasing our rent roll at the year end from £8.4m to £10.0m, an increase of
19%.

During the year we agreed a further increase of £40m in our banking facilities,
which now total £135m. We also extended the maturity of our term loan to 2013 at
negotiated lower rates. The Group's permitted gearing level is 75% of Gross
Assets. This would enable the Group to expand its portfolio to £294m based on
existing equity resources.

Expansion during the year has in part been financed by both the share issues
noted above and further drawings on our committed medium term finance
facilities. We have continued to monitor our exposure to interest rates and have
entered into several new swap arrangements. For the year to 30 June 2006 we have
covered approximately 62% of our exposure  to interest rates at an average rate
before margin of 4.72%. We have also extended the maturity and average cover of
our interest rate protection so that we have 68% of our current exposure covered
for the next nine years.

The share save scheme has 36 members holding 60,605 shares.

I am pleased to welcome to the Board as a non executive director Dr Ian Rutter
OBE, who is a practising GP and a former Chief Executive of Bradford PCT and a
member of several Government task forces concerned with primary care. Professor
Patrick Pietroni, who has been with us since the Company's flotation in 1996, is
retiring at the forthcoming AGM. I would like to thank him for his valued
contribution and wise counsel during the period.

The portfolio at the date of this report has 72 properties with a further 14
contracted for delivery during the next 12 months. The portfolio has performed
well in both capital and income terms and we believe that, although there is
increased competition in the market place, the prospects for investment in the
sector with its long lease lengths and good quality covenants make the portfolio
attractive.


G A Elliot
Chairman                                                       22 September 2005



Managing Director's Report

The table below sets out the development of our portfolio during the year under
review. We took delivery of eight new developments (2004, ten new developments)
and entered into a further twelve development commitments (2004, nine
development commitments).  At the year end the portfolio, when commitments are
included, reached £187.0 million (2004 £149.3 million) as set out below.

                                                         30 June 2005              30 June 2004
                                                                   £m                        £m
Investment properties                                           160.0                     122.6
Properties in course of development                               2.2                       2.8
Finance leases                                                    2.5                       2.5
Development loans                                                 2.2                       3.2
Total owned and leased                                          166.9                     131.1

Deposits paid                                                     0.4                         -
Committed                                                        19.7                      18.2
Total owned, leased and committed                               187.0                     149.3


Portfolio Purchases during the Year

The Group completed the purchases of a number of properties during the year,
details of which are set out below:


Property                                  Acquisition Cost £m           Occupational Tenants
Dalkeith, Edinburgh                                       6.8     Doctors' Practice and Pharmacy
Burton Latimer, Northants.                                1.5     Doctors' Practice
Bentley, West Midlands                                    3.7     Primary Care Trust and Pharmacy
Llandudno, North Wales                                    1.6     Doctors' Practice and Pharmacy
Southwell, Nottinghamshire                                2.6     Doctors' Practice
Tidworth, Hampshire                                       1.9     Doctors' Practice and Pharmacy
Luton, Bedfordshire                                       1.9     Doctors' Practice
Bilsthorpe, Nottinghamshire                               1.0     Doctors' Practice
TOTAL:                                                   21.0


Revaluation

As reported in the Chairman's Statement, the portfolio valuations have resulted
in an uplift of some £16.6 million, which has been incorporated into the balance
sheet, giving a closing property investment valuation (including finance leases)
of £166.9 million. This increase amounted to 73.3p per share on an undiluted
basis and 68.5p per share on a fully diluted basis. The valuation surplus
reflects the impact, during the period, of our successful rent reviews. There
has also been a further hardening of investment yields during the period.
Notwithstanding this and an increased number of players in the market the Group
has a good pipeline of investments.

Portfolio Rental Levels

The average rent for medical centres across the whole portfolio is approximately
£158 per square metre ("psm") (2004: £155 psm).  The average rent on
accommodation let to the NHS (either directly or through the Doctors Rent and
Rates Scheme) is approximately £154 psm (2004: £149 psm) and the average
pharmacy rent is approximately £213 psm (2004: £190 psm).  The weighted average
length of time to the next review is 1.79 years across the portfolio.

Tenancy split by Floor Area

The table below indicates the tenancy split by floor area (per square metre):

GP's                                             79%               50,277
NHS                                              15%                9,552
Pharmacy                                          5%                3,193
Other                                             1%                  767
TOTAL                                           100%               63,789

Rent Reviews

The Group completed a number of rent reviews during the year and there are a
number of reviews outstanding that we expect to see resolved during the coming
year. The results of the reviews completed during the year added some £303,000
to our rent roll. There are further reviews due from the past year which amount
to some £1.55 million of rent passing.  The pace of reviews is now picking up as
more evidence is presented through the market and more premises go through the
review process. The average increase in rent as a percentage of passing rent
over the three year review process has been 12% equating to 3.85% per annum.

Finance and Interest Rate Hedging

Bank borrowings increased from £72.2 million to £88.8 million during the year,
of which the amounts shown in the table below have been hedged as swap contracts
at an average weighted cost rate of 5.08% (2004: 5.50%) (excluding the lender's
margin).

During the period a number of swaps have been entered into extending the
maturity of the Group's cover under hedging arrangements as shown below.

Year                                             Swaps (£m)
2005/2006                                              55.0
2006/2007                                              62.5
2007/2008                                              60.0
2008/2009                                              55.0
2009/2010                                              42.5
2010/2011                                              52.5
2011/2012                                              55.0
2012/2013                                              60.0
2013/2014                                              60.0

The table above shows the level of fixed rate financing for each of the next
nine financial years from hedging swaps.

Portfolio Characteristics

Users

The table below shows the percentage of our portfolio by rent roll derived from
each of our major tenant classes, GPs, PCTs, Health Authorities, pharmacy
operators and others. Some 99% (2004: 99%) of our rent roll comes directly or
indirectly from the NHS and pharmacy operators.

Covenant Analysis by Annual Rent

GP's                               77%
Health Authorities                 3%
PCT's                              12%
Pharmacy                           7%
Other                              1%
TOTAL                              100%

Length of Leases

Analysis of Annual Rent by Term Unexpired

The table below shows an analysis of rent by term unexpired.

Less than 5 years                               3%
6 - 15 years                                    5%
15 - 20 years                                  42%
More than 20 years                             50%
TOTAL                                         100%

Security of Income by Lease Expiry

The table below shows the length of leases by lease expiry as a percentage of
today's passing rent.

Year                                 % of Passing
                                             Rent
1                                             100%
5                                              97%
10                                             95%
15                                             91%

Security of Income by Term Certain

The table below shows the security of rental income by term certain.

Year                                 % of Passing
                                             Rent
1                                             100%
5                                              97%
10                                             94%
15                                             89%

Geographical Spread

The table below shows the percentage of the portfolio by rent roll derived from
each region.

Annual Rent by Region

East Midlands                                  12%
London                                         15%
North                                           2%
North West                                     10%
South East                                     24%
South West                                      1%
West Midlands                                  17%
Yorkshire & Humberside                          8%
Scotland                                        7%
Wales                                           4%
TOTAL                                         100%


Forthcoming Rent Reviews

The table below shows the annual amount of rent falling due for review in each
of the next 3 years.


Year                                     Rent (£m)
2005/2006                                    3.210
2006/2007                                    2.707
2007/2008                                    3.068

The Primary Care Market

The last year has seen continued development of the government's NHS LIFT
programme.  So far, a handful of projects have been completed, and it is
interesting to note that since the NHS LIFT programme started at the beginning
of 2001, we have completed the purchase of over 30 schemes totalling around £67
million.  Of these, 19 schemes (c. £42 million) were six months or more from
going on site at the start of 2001.  To the best of our knowledge there are 12
NHS LIFT buildings open to the public and whilst there are expected to be more
opening over the next few months, it is our view that it has not been the most
effective approach to solving the lack of investment in deprived areas.

Both within LIFT and outside the LIFT remit, available premises funding for new
primary care schemes is being carefully controlled.  Government's perceived
desire to see Primary Care as the cornerstone of a modern NHS is undermined by
the lack of premises funding reaching the front line.  However, the advent of
Practice Based Commissioning and Alternative Providers of Medical Services
(APMS) will allow PCTs and GP Practices to be far more innovative in sourcing
funding streams and we believe that this is an exciting time for Primary Care as
a whole.

Throughout the country, demand for new medical centres continues.  There is more
cohesion within PCTs to see the primary care framework evolved and to take the
lead in estates strategy to improve health service delivery in the local health
economy.

Increased competition in the marketplace for new purpose built medical
facilities has made these types of investment more attractive and has driven
purchase yields down.  This has a positive effect on the existing portfolio, but
it means new acquisitions are more costly and we must continue to purchase
properties where we believe there to be good long term growth prospects.  During
the year we bid for two portfolios of primary care centres, but due to the
increased interest from other investors the price was pushed above what we
considered to be their intrinsic worth, and therefore we withdrew our bid.

We have continued to add value to properties in the portfolio by negotiating new
lease terms and refurbishing premises.  For example, during the year we
successfully negotiated a substantial extension in building area and a new lease
term at our Droitwich property, which was originally purchased in 1997.

Future Prospects

There are a great number of changes occurring within primary care and pharmacy
relating to the structure and organisation of the sector - including the
introduction of practice based commissioning and the opening up of the sector to
private operators through APMS. In addition competition is increasing through
the entry of new participants. Although in the short term this may lead to
delays in approval of new projects we remain confident that the need to renew
the primary care estate remains a top government priority and that the group has
a good pipeline of deals to complete over the next 12 months.

In the mean time our existing portfolio continues to perform very well and we
are working hard to add value from rent reviews and lease re-gearings.

International Financial Reporting Standards

The European Commission has directed that all listed companies in the European
Union must present their consolidated group results in accordance with
International Financial Reporting Standards (IFRS) for accounting periods
commencing on or after 1 January 2005.  Primary Health Properties plc will,
therefore, apply IFRS for the first time to our financial year ending 30 June
2006. Our first report to Shareholders under IRFS will be the Interim Report for
the six months ending 31 December 2005.

The application of IFRS will not affect the underlying performance of the Group
or its cash flows.  The new accounting standards will, however, represent a
fundamental change in accounting and reporting. The Group has been considering
the challenges of implementing IFRS for some time and is advanced in its
planning and preparations to successfully make the transition from UK Generally
Accepted Accounting Principles (UK GAAP).

The Group is expected to present quantified details of the accounting impact of
adopting IFRS following publication of the Group's 30 June 2005 final UK GAAP
annual results. The principal areas where IFRS differs from UK GAAP that will
affect the Group's results are considered below.

Accounting for Investment Property

Property revaluation movements are recorded in the profit and loss account (or
income statement as it will become) under IFRS.  Currently under UK GAAP they
are treated as a movement in reserves. Reported profits will therefore be
subject to greater volatility.

The Group expects that all of its leasehold properties will be classified as
operating leases under IFRS. They will continue to be revalued every six months
and to be shown as investment properties.

Deferred Tax Accounting

IFRS requires full deferred tax provision to be made for all taxable temporary
differences between cost values for tax purposes and accounting values. UK GAAP
on the other hand allows certain exemptions from this requirement.  In
particular UK GAAP does not require any provision to be made where there is no
binding agreement to dispose of the related property.  UK GAAP also allows
calculating deferred tax on a discounted basis.  There will also be an impact on
the deferred tax position due to the inability to discount under IFRS.

For our Group, the most significant difference between base cost values for tax
purposes and accounting values comes from the revaluation of investment
properties. As a result net assets are expected to be reduced under IFRS
accounting.  The Group will only potentially suffer a payment of tax if it sells
these investments.  The amount of tax then to be paid will reflect the sale
price achieved, the structure of the sale transaction, and any other allowances
for tax that may be available at that time.  Therefore, the deferred tax
provision that the Group will be required to provide within its opening balance
sheet reserves under IFRS, and the subsequent provision movements arising on
future valuation changes in its income statement, will not represent an amount
of tax that the Group expects to suffer at a future date.

In addition, the use of discounting in the assessment of the deferred tax
liability relating to accelerated capital allowances under UK GAAP results in a
provision being required.  Under IFRS discounting will not be allowed and a
deferred tax liability will need to be recorded in respect of accelerated
capital allowances.

Derivatives

The Group has entered into a number of interest rate swap contracts to manage its risk exposure to changes in interest 
rates charged on its floating rate loan facilities. UK GAAP, as it applies to the Group's current financial year, does 
not require these derivatives, when used as a hedge, to be valued in the balance sheet.  Under our present policy, gains
and losses on these hedges are deferred until the underlying hedged item is recognised in the profit and loss account. 
IFRS requires all derivatives, whether cash flow hedges or fair value hedges, to be carried at their fair values in the 
balance sheet. The hedge accounting provisions of IFRS provide for changes in the value of these interest rate swap 
contracts to be recorded as a movement in reserves, thus reducing the sensitivity of the income statement to their fair 
value movements. IFRS requires the effectiveness of these hedges to be regularly tested, with ineffective portions of 
the hedges not treated as a reserve movement but as a charge to the income statement. The Group expects all of its 
interest rate swap contracts to be fully effective and to account for them as cash flow hedges. The impact of IFRS will 
also mean that the valuation of derivatives may have deferred tax implications.

Dividends

IFRS allows for a dividend declared for distribution to shareholders to be only
recorded in a company's accounts when its declaration is within the accounting
period it represents.  Similarly, final dividends that must be approved by
shareholders in general meeting cannot be recorded in the accounting period to
which they relate. UK GAAP, prior to its convergence with IFRS, requires
proposed final dividends to be accrued. A one-off increase in net asset value
will result from this change equivalent to the net cost of the proposed
dividend.

Share Based Payments

The Group has incentivised its Joint Managers with the granting of an option to
subscribe for a fixed amount of shares at a fixed price, exercisable at any time
between 31 March 2006 and 31 March 2013 subject to the achievement of
performance criteria.  Under UK GAAP as applied to the Group's current financial
year, this share option is accounted for prospectively. The number of shares
issued and the funds received from the exercise of options are included in the
calculation of fully diluted net asset value.  IFRS will require the option
granted to be measured at its fair value with an equivalent amount charged over
the vesting period to the income statement.


Harry Hyman                            Adam Dalgliesh
Managing Director                      Property Director       22 September 2005


CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the year ended 30 June 2005
                                                                           30 June 2005  30 June 2004
                                                                                  £'000         £'000

Turnover                                                                          9,613         7,661
Administrative expenses                                                          (1,962)       (1,738)

Operating profit                                                                  7,651         5,923
Share of operating profit in joint venture                                            -             4

                                                                                  7,651         5,927

Interest receivable                                                                 278           183
Interest payable                                                                 (4,899)       (3,638)

Profit on ordinary activities before taxation                                     3,030         2,472

Taxation                                                                              -             -

Profit on ordinary activities after taxation                                      3,030         2,472

Interim dividend of 6.0p per share (2004: 5.5p)                                  (1,299)         (997)
Final dividend proposed of 6.0p per share (2004: 5.5p)                           (1,359)         (998)
Additional final dividend 2003 *                                                      -           (69)

                                                                                 (2,658)       (2,064)

Profit retained for the year                                                        372           408

Net profit after tax and dividends for the year retained by:
The Company                                                                         361           398
Subsidiary undertakings (after declaring dividends of £9,440,000 (2004:              11             6
£7,515,000))
Joint venture                                                                         -             4

                                                                                    372           408

Earnings per share - basic                                                         14.1p         13.9p
                   - diluted                                                       13.4p         12.8p

Dividends per share (net)                                                          12.0p         11.0p

Increase in net asset value per share - basic                                      50.1p         48.0p
                                      - diluted                                    70.9p         43.0p

Total return per share - basic                                                     62.1p         59.0p
                       - diluted                                                   82.9p         54.0p

All activities are continuing.



* Additional Final dividend 2003 - as result of the Joint Managers' exercise of
options to purchase 1,386,667 Ordinary shares on 17 September 2003, they were
entitled as shareholders of these new shares on the register at 26 September
2003 to receive the final dividend in respect of the year ended 30 June 2003.


CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
for the year ended 30 June 2005
                                                                               30 June 2005   30 June 2004
                                                                                      £'000          £'000

Profit for the financial year excluding share of profit in joint venture              3,030          2,468
Share of joint venture's profit for the year                                              -              4

Profit for the financial year attributable to members of the Parent Company           3,030          2,472
Unrealised surplus on revaluation of properties                                      16,602         10,050

Total gains and losses relating to the year                                          19,632         12,522


All activities are continuing.


CONSOLIDATED BALANCE SHEET
as at 30 June 2005
                                                                                 At 30 June     At 30 June
                                                                                       2005           2004
                                                                                      £'000          £'000
Fixed Assets
Tangible assets                                                                     164,621        128,612
Investment in joint venture:
            Share of gross assets                                                         -              4
            Share of gross liabilities                                                    -             (4)

                                                                                          -              -

                                                                                    164,621        128,612
Current assets
Debtors                                                                               1,655          1,104
Net investment in finance leases
                        -amounts falling due within one year                             19             27
                        -amounts falling due after more than one year                 2,504          2,522

Cash at bank                                                                          1,112            709

                                                                                      5,290          4,362

Creditors: amounts falling due within one year                                       (7,539)        (6,911)

Net current liabilities                                                              (2,249)        (2,549)

Total assets less current liabilities                                               162,372        126,063

Creditors: amounts falling due after more than one year

Bank loans                                                                          (88,800)       (72,210)
Convertible loan stock 2016                                                               -         (4,000)

                                                                                    (88,800)       (76,210)

                                                                                     73,572         49,853
Capital and reserves
Called up share capital                                                              11,326          9,074
Share premium account                                                                11,952          7,459
Capital reserve                                                                       1,618          1,618
Revaluation reserve                                                                  46,905         30,303
Profit and loss account                                                               1,771          1,399

Equity shareholders' funds                                                           73,572         49,853

Net asset value per share           - basic                                           324.8p         274.7p
                                    - diluted                                         314.6p         243.7p



CONSOLIDATED CASH FLOW STATEMENT
for the year ended 30 June 2005
                                                                            30 June 2005  30 June 2004
                                                                                   £'000         £'000

Net cash inflow from operating activities                                          7,733         6,167

Returns on investments and servicing of finance
Interest received                                                                     33            16
Interest paid                                                                     (4,275)       (3,157)

                                                                                  (4,242)       (3,141)

Capital expenditure and financial investment
Payments to acquire tangible fixed assets                                        (17,184)      (21,077)
Development loans advanced                                                        (2,550)       (3,223)
Deposits paid                                                                       (393)            -
Loan to joint venture                                                                  -           (27)

                                                                                 (20,127)      (24,327)

Equity dividends paid                                                             (2,231)       (1,804)

Net cash outflow before financing                                                (18,867)      (23,105)

Financing
Ordinary share issue (net of expenses)                                             2,913         1,386
Expenses of listing particulars                                                     (233)            -
Term bank loan 2013                                                               16,590        22,010

Net cash inflow from financing                                                    19,270        23,396

Increase in cash                                                                     403           291


RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT

                                                                       30 June              30 June
                                                                          2005                 2004
                                                                         £'000                £'000

Increase in cash in the year                                               403                  291
Cash inflow from loans                                                 (16,590)             (22,010)
Loan Stock conversion into Ordinary shares                               4,000                    -

Movement in net debt in the year                                       (12,187)             (21,719)

At the beginning of the year                                           (75,501)             (53,782)

At the end of the year                                                 (87,688)             (75,501)

Net debt comprises:

Cash at bank and in hand                                                 1,112                  709
Term loan                                                              (88,800)             (72,210)
Convertible Loan Stock 2016                                                  -               (4,000)
                                                                       (87,688)             (75,501)


NOTES:

The above results for the year to 30 June 2005 are audited.

1. Earnings per share

   The calculation of earnings per share is based on the following:

                       As at 30 June 2005               As at 30 June 2004

                   Net profit                         Net profit     
                 attributable                       attributable   
                  to ordinary     Ordinary           to ordinary     Ordinary
                 shareholders       shares          shareholders       shares
                        £'000       number                 £'000       number

Basic earnings
per share               3,030   21,459,735*                2,472   17,824,559*

Option
conversion***               -      615,402                     -      439,074
Convertible
Loan stock
conversion****             42      926,276                   310    3,478,260**

Diluted
earnings per
share                   3,072   23,001,413                 2,782   21,741,893


 * Weighted average number of Ordinary shares in issue during the year.
** Adjusted for actual known number of shares, following conversion on 19 August
   2004
*** 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.
**** The total number of potential shares on conversion of the convertible loan
     stock.

2. Notes to the statement of cash flow

Reconciliation of operating profit to net cash inflow from operating activities

                                                                       30 June              30 June
                                                                          2005                 2004
                                                                         £'000                £'000

Operating profit                                                         7,651                5,923
Decrease in operating debtors and prepayments                             (158)                (289)
Increase in operating creditors and accruals                               240                  533

Net cash inflow from operating activities                                7,733                6,167


3. The freehold properties are included at valuation as at 30 June 2005. Fixed
assets consist of:

                                                                       30 June              30 June
                                                                          2005                 2004
                                                                         £'000                £'000

Tangible assets:
Investment properties                                                  162,311              125,266
Development Loans                                                        2,310                3,346

                                                                       164,621              128,612
Investments:
Investment in joint venture
  Share of gross assets                                                      -                    4
  Share of gross liabilities                                                 -                   (4)

                                                                       164,621              128,612


JOINT VENTURE

Primary Health Properties plc owns 50% of the issued Ordinary share capital of
Primary Health Solutions Limited, a company created for the purpose of
developing properties for sale and leaseback and to tender for contracts under
the Government's LIFT (Local Improvement Finance Trust) initiative.  The
remaining 50% of the issued Ordinary share capital is owned by Brackley
Investments Limited.  The investment in the Joint Venture was written off to the
profit and loss account during the year ended 30 June 2004.

4. At the Annual General Meeting, a resolution to declare a final dividend of
6.0p per share will be put to the members and, if passed, will be paid on 
21 November 2005 to holders on the  register of members at the close of business 
on 30 September 2005.

5. Fully diluted net asset value has been calculated as follows:

                                                                       30 June               
                                                                          2005         30 June 2004
                                                                         £'000                £'000
                                                                     (audited)            (audited)
Net assets:
Per Consolidated Balance Sheet                                          73,572               49,853
Add - Loan Stock conversion                                                  -                4,000
       - Receipts from the exercise of
          Options                                                        2,736                2,736

                                                                        76,308               56,589

                                                                  No. of shares        No. of shares
Ordinary shares:
Issued share capital                                                22,652,776           18,147,133
Add - Loan Stock conversion into shares                                      -            3,478,260
New shares issued on exercise of options                             1,600,000            1,600,000

                                                                    24,252,776           23,225,393

Calculations assume that the dilution takes place on the respective balance
sheet dates.

6. On 19 August 2004, 3,478,260 Ordinary shares of 50 pence each were issued
arising on the conversion of £4.0m Convertible Loan Stock 2016.

7. On 18 March 2005 the Company raised £2.9 million (net of expenses) pursuant
to a Placing of 1,000,000 Ordinary Shares of 50p each of the Company (the "
Placing Shares"), at a price of 300p per share, comprising 5% of the then
issued share capital.

8.  The statutory accounts for the year ended 30 June 2005 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.

     The Annual Report was signed on 22 September 2005 and will be posted to
shareholders with the Scrip Dividend circular, forms of election and notices of
entitlement on 7 October 2005. The Annual Report will thereafter 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 15 November 2005 at 10.30am in the Board Room,
at Ground Floor, Ryder Court, 14 Ryder Street, London, SW1Y 6QB.

9.  At the Extraordinary General Meeting held on 21 November 2002, the Directors
were granted authority to offer Ordinary shares instead of cash in respect of
dividends.  A Circular, Form of Election and Notice of Entitlement will be
posted to Shareholders on 7 October 2005 offering Shareholders on the Register
of Members on 30 September 2005 the opportunity to elect to receive new Ordinary
shares instead of cash in respect of the final dividend.  The latest date for
receipt of the Forms of Election is 31 October 2005.

10.The financial information set out above does not constitute the Company's
statutory financial statements for the years ended 30 June 2005 or 2004 (but is
derived from and has been prepared on the same basis as those financial 
statements). Statutory financial statements for 2004 have been delivered to the
Registrar of Companies, and those for 2005 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.



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