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Primary Health Props (PHP)

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Thursday 24 February, 2011

Primary Health Props

Final Results

RNS Number : 7575B
Primary Health Properties PLC
24 February 2011
 



Primary Health Properties PLC ("PHP" or the "Group")

Annual Report for the year ended 31 December 2010

 

Primary Health Properties PLC, one of the UK's largest providers of modern primary healthcare facilities, is pleased to announce its audited results for the year ended 31 December 2010.

 

GROUP FINANCIAL HIGHLIGHTS

 

• Operating profit before revaluation result and change in fair value of derivatives rose from £7.9million to £9.1million; Profit after 
tax for the year rose by £14.9million to £25.7million

•  Payment of 17.5p of dividends during the year (2009: 17.0p); 9.00p second interim dividend for 2010 declared, payable on 31 
March 2011

•  Basic net asset value increased to 262.3p per share (2009: 247.2p)

•  EPRA net asset value of 311.5p per share (2009: 279.9p)

•  Loan to Value ratio 57.6% at 31 December 2010 against covenant of 70% (2009: 48.9%)

•  Interest cover was 2.1 times compared to a covenant requirement of 1.3 times (2009: 2.2 times)

 

GROUP OPERATIONAL HIGHLIGHTS

 

• Total rents received by the Group increased by £5.6million to £26.6million

• 33 high quality properties acquired during the year, at a cost of £102.6million, adding £6.71million to the rent roll

• Portfolio value increased from £341.9million to £469.3million.

•Including commitments as at the date of this announcement, the portfolio value is now £507.8million at an initial yield of 5.8%

• Average annualised uplift of 3.2% on reviews completed in the year, combined with acquisitions, increased contracted rent roll 
to £28.0million

• Portfolio 100% let

• Review of Joint Manager Agreement reduces marginal cost of management for gross assets over £500million to 0.525% from 0.75%, and over £750million to 0.4375%

• Health and Social Care Bill proposals for England should enhance role of GPs should lead to increased demand for modern primary healthcare facilities in the medium term

 

Harry Hyman, Executive Managing Director of PHP, commented:

 

"I am pleased to report PHP's financial performance has again been strong with rental growth continuing to be achieved against a backdrop of full occupancy. The niche market in which PHP operates has good fundamentals and there is continued demand for the provision of modern primary health facilities from tenants, investors and the NHS. Primary care activities are also set to expand further as part of the changes outlined in the January 2011 Health and Social Care Bill.

 

"The position of primary care in the health economy, the stable outlook for commercial property generally and the excellent income characteristics of our portfolio bode well for the future. We look forward to reporting further progress in due course."

 

Enquiries:

 

Pelham Bell Pottinger

David Rydell/ Victoria Geoghegan/ Elizabeth Snow

Tel: 020 7861 3925

 

Primary Health Properties PLC

Harry Hyman

Managing Director

Tel: 020 7451 7050

 

 

OPERATING AND FINANCIAL REVIEW

 

Overview

After a rise in capital values in the first half of the year, the second half of 2010 has seen stability in the market place for primary health property. The niche market in which we operate has good fundamentals and there is continued demand for the provision of modern primary health facilities from tenants, investors and the NHS. The Group has an excellent portfolio of modern properties with secure long leases and high quality tenants, backed by the Government. At 31 December 2010, the 148 delivered properties were occupied by 866 GPs serving nearly 1.5million patients.

 

Our buildings are all used in the provision of primary care, which is the front line of delivery of NHS services. Spending on healthcare through the NHS has been ring fenced in real terms in recent budget announcements and primary care activities are set to be expanded as part of the changes to be brought in by the Health and Social Care Bill published in January 2011.

 

The Board remains committed to increasing the Group's portfolio on a prudent basis, actively managing assets through refurbishment, enhancement and redevelopment; increasing revenue from existing leases and delivering returns for Shareholders. We believe that the business is well positioned and we remain confident in the prospects for the Group.

 

Trading performance

An analysis of the trading performance for the year ended 31 December 2010 is set out below:

 








2010

2009


£m

£m

Annualised rent roll*

28.0

21.3

 

Rental and related income

 

26.9

 

21.3

Expenses

(5.0)

(3.3)

Operating profit before revaluation result and financing

21.9

18.0

Net financing costs

(12.8)

(10.1)

Operating profit before revaluation result and fair value (loss)/gain on interest rate swaps

9.1

7.9




Fair value (loss)/gain on interest rate swaps

(4.7)

1.3

Revaluation gain on property portfolio

22.8

1.6

Profit before tax

27.2

10.8

Dividends paid

10.8

5.8

 

*On completed properties

 

Interim dividends were paid on 26 March 2010 and 29 October 2010 both at 8.75p, per ordinary share.

 

Rental growth

The Group achieved weighted average annual rental growth on reviews completed in the year to 31 December 2010 of 3.2% (2009: 3.1%). For a typical three year review pattern this equates to a rental uplift of 10.0% (2009: 9.4%).

 

Traditionally, the rate of rental growth has been correlated to the underlying rate of inflation in the wider economy.  In addition, the ever increasing specification requirements of the NHS for new buildings, requiring higher energy efficiency and reduced carbon footprints, is expected to drive replacement costs higher, which together with inflation should continue to justify higher rents.

 

Portfolio activity and valuation

The table below sets out the Group's real estate portfolio.

 





2010

2009


£m

£m

Investment properties

462.1

338.4

Properties in the course of development

7.2

3.5

Total properties

469.3

341.9

Finance leases

3.1

3.0

Total owned and leased

472.4

344.9

Committed as at 31 December

31.2

26.1

Total owned, leased and committed

503.6

371.0

Closing annualised rent roll (on completed properties)

28.0

21.3

 

The freehold, leasehold and development properties of the Group have been independently valued at open market value by Lambert Smith Hampton, Chartered Surveyors and Valuers ("LSH"), as at 31 December 2010. Yields in the primary care property market have tightened and stabilised during the year and the property portfolio was valued at £469.3million at 31 December 2010. This represents a true equivalent yield of 6.0% (2009: 6.2%) and an initial yield of 5.8% (2009: 6.0%) and gave rise to a property revaluation gain of £22.8million compared to £1.6million in 2009.

 

 

Acquisitions

The Group completed the purchase of the following properties during the year that it had previously committed to acquire.

 


Development


Property

cost £m

Occupational tenants

Sheffield

3.0

GP practice and pharmacy

Treharris

4.6

GP practice, LHB accommodation and a pharmacy

Connah's Quay

9.7

Three GP practices and LHB accommodation

 

The Group also purchased 33 completed investment properties during the year including the Health Investments and Care Capital portfolios, which each comprised 14 health centres. Fully let investments were acquired in the period at the following locations:

 

Aldridge, West Midlands

Basingstoke, Hampshire *

Bitterne, Southampton, Hampshire *

Burnley, Lancashire **

Chafford Hundred, Essex **

Chalford, Gloucestershire **

Castleford, Yorkshire *

Consett, County Durham **

Darlington, County Durham **

Eastbourne, Sussex *

Fareham, Hampshire *

Farnborough, Hampshire *

Farnham, Hampshire *

Flansham, Bognor, Sussex *

Hinckley, Leicestershire **

Hornchurch, Essex **

Hornsea, East Yorkshire

Horley, Surrey *

Kesgrave, Suffolk **

Lanark, Scotland

Leamington Spa, Warwickshire **

Leigh, Manchester

Lydney, Gloucestershire **

Maywood, Bognor, Sussex *

Mitcham, Surrey *

Portslade, Sussex *

Restalrig, Edinburgh **

Southwick, Brighton, Sussex *

St Marys, Southampton, Hampshire *

Stockton on Tees, County Durham

Stoneham, Southampton, Hampshire **

Watlington, Norfolk **

Wingate, County Durham **

 

* Purchased as part of the Health Investments Portfolio ("HI")

** Purchased as part of the Care Capital portfolio

 

Asset management

2010 has been a busy year in terms of asset management activities. Enhancement projects were completed at eight sites. Four of these included surgery leases (with a combined total rent in excess of £500,000 pa) which have been extended by between ten and 15 years, increasing the guaranteed longevity of Group income. The addition of a pharmacy at Burton Latimer was started on-site, with completion expected in April 2011, and is pre-let to Lloyds Pharmacy. Terms have been agreed for projects at a further five sites to be undertaken in 2011.

 

Disposals

There were no disposals during the year.

 

Commitments

As at 31 December 2010, the Group has committed to acquire the following health centres at dates in the future.


Total




commitment

Outstanding

Details

Contracted in 2010

£m

£m


South Queensferry

4.3

4.3

1,442 sqm medical centre (six GP practice and NHS Trust) constructed in 2002

Chesham

5.6

4.6

1,802 sqm medical centre (eight GPs in two practices and PCT) and 130 sqm pharmacy

Oswestry

8.8

5.1

3,750 sqm medical centre (four GP practice and PCT) with 804 sqm expansion space and 75 sqm retail unit

Blackpool

4.1

4.1

1,493 sqm medical centre (six GP practice and PCT) and 120 sqm pharmacy

Allesley

2.8

2.2

795 sqm medical centre (five GP practice) with 294 sqm expansion space and 154 sqm pharmacy

Total new commitments

25.6

20.3






Pre-existing commitments




Shefford

5.5

5.3

1,792 sqm medical centre (seven GP practice and PCT) with 96 sqm pharmacy

Cowbridge

6.6

5.6

2,450 sqm medical centre (ten GPs in two practices and NHS Trust) with 96 sqm pharmacy

Total commitments at 31 December 2010

37.7

31.2


 

All commitments are 100% pre-let. On 18 February 2011, the Group entered into an agreement to purchase a newly developed health centre at Newark with a committed cost of £4.2million.  This asset comprises a 1,275 sq m GP practice and a 159 sq m pharmacy.

 

Discounted cash flow property valuation

In addition to the market value exercise performed by LSH, the Joint Managers monitor the value of the Group's investment portfolio based on a discounted cash flow ("DCF") analysis. The DCF valuation of delivered and committed assets as at 31 December 2010 was £554.3million compared to the market value of £503.6million, including cash flows on commitments from their anticipated completion date. The difference in value of £50.7million represents an additional 80.7p of net asset value per share. The DCF analysis covers the remaining term of each lease and a terminal value on a property-by-property basis, with current passing rent until expiry totalling £378.2million, contributing 68.2% of the DCF valuation.

 

The assumptions used in the DCF analysis are:

• A discount rate of 7% (2009: 7%)

• An average annual increase in the individual property rents at review of 2.5% (2009: 2.5%)

• Capital growth in residual values of 1% per annum (2009: 1%)

 

DCF values using alternative discount rates would be as follows:

 



Impact on

Discount rate

Value

NAV per share

6.50%

£573.3m

111.7p

7.50%

£516.7m

21.5p

 

Portfolio performance

The PHP portfolio is a founder member of the IPD Healthcare Property Index, whose constituents include approximately 50% Primary Care assets. As a specialised index it is published on an annual basis, with 2010 figures to be released in May 2011.  Accordingly, PHP is not able to benchmark its performance against the sector index at this time, but will provide an update together with its interim statement later in 2011.

 

The table below details the performance of the Group's portfolio as compared to the All Property Index and recognised alternative asset classes.  Focusing on property returns, the income component of the return on both the PHP portfolio and the IPD All Property Index has been relatively constant at approximately 6% per annum.  In addition to the greater security of income from government backed tenants, the benefits of the PHP portfolio are illustrated by the relative stability of the capital element of returns, where PHP's health sector valuations have been significantly less volatile than those of other real estate sectors through the recent turbulent period for property markets.

 

 

Performance for year ended 31 December 2010

1 year

3 years

PHP portfolio return

10.2%

4.9%

IPD All Property Index total return

15.2%

(2.5%)

Equities

14.5%

1.4%

Bonds

9.1%

7.7%

 

 

Net assets and EPRANAV

The European Public Real Estate Association ("EPRA")  net asset value is calculated as balance sheet net assets including the valuation result on trading properties, excluding fair value adjustments for debt and related derivatives ("EPRA" is the European Public Real Estate Association).

 





2010

2009

Net assets

£164.7m

£151.9m 

Net asset value per share

262.3p

247.2p

EPRA net asset value per share

311.5p

279.9p

 

Revenue and administrative expenses

At a trading level, revenues for the year ended 31 December 2010 rose to £26.9million as a result of income from acquisitions, new deliveries and favourable rent reviews. Operating profit before the property revaluation gain and the change in the fair value of interest rate swaps was £9.1million. An exceptional charge of £1.6million was incurred in respect of converting acquired companies to REIT status during the year. Administrative expenses were slightly higher during 2010 mainly due to additional management fees commensurate with the increase in the portfolio and professional fees incurred as the Group explores refinancing options.

 

Financing

The table below summarises the debt facilities available to the Group as at 31 December 2010. The weighted average duration of Group debt was 4.5 years, with a weighted average cost of debt including the non-floating element of fixed rate swaps of 4.57%. As part of the Board's continuing policy to have secured facilities to cover the commitments of the Group, a new £25million facility was completed with Aviva on 15 December 2010.

 

All loans are interest only unless stated.

 





Maximum

Drawn at


Facility

Type

Basis

Term

credit

31-Dec-10

Headroom

Expiring within 12 months







National Westminster Bank plc

Term loan

Floating rate

31 May 2011

£3,350,000

£3,000,000

£350,000

Royal Bank of Scotland plc

Overdraft

Floating rate

30 Nov 2011*

£10,000,000

-

£10,000,000








Expiring after more than 12 months







Royal Bank of Scotland plc

Term loan

Floating rate

31 Jan 2013

£140,000,000

£134,300,000

£5,700,000

Allied Irish Bank

Term loan

Floating rate

31 Jan 2013

£50,000,000

£37,900,000

£12,100,000

Santander

Term loan

Floating rate

31 Jan 2013

£65,000,000

£65,000,000

-

Aviva**

Term loan

Fixed rate***

31 Jan 2032****

£28,140,297

£28,140,297

-

Aviva

Term loan

Fixed rate

14 Dec 2022

£25,000,000

-

£25,000,000





£321,490,297

£268,340,297

£53,150,000

 

* Renewable on a 12 month basis

** Acquired within the HI portfolio acquisition

*** Loan is amortised over period to maturity

**** Date of maturity of longest dated tranche

 

Existing term loans totalling £255million fall due for renewal on 31 January 2013. In order to secure the longer term financial stability of the Group and provide capacity for future acquisitions, the Joint Managers have entered into discussions with its lead bankers to re-finance the Term Loans and enlarge the overall facilities made available to the Group.  It is envisaged that this will include introducing new banks to the Group's pool of lenders. Separately, the Group has received heads of terms for a £50million interest only facility with a new lender.

 

The loan to value ratio at 31 December 2010 was 57.6% (2009: 48.9%) compared to a maximum covenanted level of 70.0%. Interest cover was 2.1 times compared to a minimum covenanted level of 1.3 times (2009: 2.2 times).

 

Interest rate hedging

The amount of fixed rate cover in place at 31 December 2010 was £208million. This included £88million of swaps that are callable at the option of the bank on a quarterly basis. These were not called on 11 February 2011 and the next date on which they may be called is 11 May 2011. Basis rate swaps totalling £200million matured on 11 February 2010.

 

All swaps are taken out in order to mitigate exposure to interest rate risk, but under accounting rules only certain swaps qualify as "effective" hedges and the mark-to-model movement on these is matched against the hedged liability in the Balance Sheet.  The mark-to-model liability of the Group's "effective" interest rate swaps increased by £6.0million in the year to £30.9million, (2009: decreased £7.7million) reflecting the decrease in medium term interest rates year-on-year and continued volatility. There is no cash flow impact from these mark-to-model adjustments but the net asset value has been reduced by this year's losses. This loss is charged directly to reserves but is included in the Statement of Comprehensive Income. The revaluation of swaps regarded as ineffective for IAS39 purposes resulted in a loss of £4.7million (2009: gain £1.7million), which is included in the profit for the period.

 

The mark-to-model value fluctuates with movements in term interest rates and, in the case of the callable swaps, also with market volatility. A further valuation undertaken as at 21 February 2011, valued the Group's total mark-to-model liability at £21.9million, a decrease of £7.7million from the 31 December 2010 figure as forward rates have risen since that date.

 

Finance and interest rate hedging (assuming callable swaps are not called)

This table shows the level of bank borrowings economically hedged by interest rate swaps for each financial

year to 31 December 2027. Shown in £million.*

 

Year

Weighted average amount hedged (£m)

Rate (%)

2010

202

4.80

2011

208

4.80

2012

212

4.80

2013

190

4.79

2014

178

4.81

2015

180

4.79

2016

164

4.75

2017

158

4.69

2018

168

4.69

2019

168

4.69

2020

168

4.69

2021

131

4.66

2022

80

4.58

2023

80

4.58

2024

80

4.58

2025

80

4.58

2026

50

4.62

2027

20

4.76

 

Finance and interest rate hedging

This chart shows the level of bank borrowings covered by effective hedges for each financial year to

31 December 2027. Shown in £million.*

Year

Weighted average amount hedged (£m)

Rate (%)

2010

114

4.80

2011

120

4.81

2012

124

4.81

2013

102

4.79

2014

90

4.81

2015

92

4.79

2016

76

4.69

2017

70

4.56

2018

80

4.58

2019

80

4.58

2020

80

4.58

2021

80

4.58

2022

80

4.58

2023

80

4.58

2024

80

4.58

2025

80

4.58

2026

50

4.62

2027

20

4.76

 

* The tables assume that term loans held by the Group which expire in 2013 will be renewed.

 

Management arrangements

On 21 February 2011, the Management Engagement Committee approved favourable changes to the terms of the Management Agreement which will be of benefit to Shareholders as the assets under management increase. The incremental fee payable to the Joint Managers under the Management Agreement as gross assets increase above £500million will be reduced. Full details were given in the announcement released on 22 February 2011 and can also be found on the Group website.

 

Key Performance Indicators ("KPIs")

 

1. Objective

To deliver sustainable long-term shareholder returns         

 

Metric

• Sustained real growth in EPS  

• Sustained dividend growth       

• Growth in NAV           

 

Performance

• Turnover rose to £26.9million from £21.3million

• Adjusted EPS fell from 18.4p to 14.7p

• Dividend grew for eleventh year to 17.5p per share, 2.9% higher than in 2009

• Basic NAV increased from 247.2p to 262.3p

• EPRA NAVgrew from 279.9p to 311.5p

 

2. Objective

To maximise the returns from the investment portfolio

 

Metric

• Out-performance versus IPD benchmark           

 

Performance

• Three year performance was better than the IPD benchmark

• Rental growth of 3.2% p.a.

• Portfolio valuation uplift of £22.8million for the year

 

3. Objective

To manage our balance  sheet effectively

 

Metric

• Maintain appropriate balance between debt and equity within covenanted levels

 

Performance

• Total debt increased in year due to acquisitions

• Value of real estate portfolio increased

• Equity issue as part of HI portfolio acquisition

• Gearing increased to 57.6% but is well within covenant limits

 

4. Objective

To identify new units to purchase

 

Metric

• Future commitments

• Deliveries       

• Acquisitions

 

Performance

• 33 fully let investment properties were acquired

• Acquisitions and deliveries in the year added £6.7million to annual rent roll

• New development commitments of £25.6million were entered into during the year.  New commitment of £4.2million entered into since the year end

 

5. Objective

To maximise rent roll from the portfolio and maintain security of income. To minimise vacancy in the portfolio. To complete purchase of properties under development.

 

Metric

• Growth in annualised rent roll   

• Composition of tenant covenant            

• Long average remaining lease term       

• Maintain a minimal percentage of voids 

 

Performance

• New deliveries added £6.7million to the rent roll

• 90% of income effectively paid for by the NHS, with the balance payable by pharmacies

• Weighted average lease length (including commitments) of 16.9 years                                                    

• The portfolio was 100% let at the year end

 

 

Principal risks and uncertainties

In common with most businesses, the Group is affected by a number of risks and uncertainties, not all of which are wholly within the Group's control. The Board has reviewed and agreed policies for managing each of the risks and uncertainties which are summarised below, but regards the first three items as its principal risks at the present time:

 

1. Risk description: Capital adequacy

 

Impact/risk       

• Unable to counteract the impact of fluctuating property values on the Group's balance sheet

• Inability to invest in suitable property on favourable terms to enable expansion

 

Mitigation and management

• Capital raisings strengthened the Group's balance sheet

• Liquidity and gearing are kept under constant review      

                                               

2. Risk description: Liquidity risk

 

Impact/risk

• Inability to fund operations and capital expenditure programme   

• Restrictive covenant regime

• Limited debt market capacity

• Inability to raise sufficient new funding

• Breach of covenants and LTVs

 

Mitigation and management

• Board approves an annual plan setting out expected financial requirements

• Majority of borrowing matures in more than 12 months

• Covenant and LTV ratio actively monitored        

• Commitments not wholly taken up        

 

3. Risk description: Interest rate risk       

 

Impact/risk

• Increased borrowing costs

• Market risk exposure through interest rates and availability of credit

 

Mitigation and management

• Borrowings on a variable basis but interest rate risk mitigated through use of swaps

                                               

4. Risk description: Tax risk       

 

Impact/risk

• Increased taxes payable as a result of Government policy changes

• Compliance with the Real Estate Investment Trust ("REIT") taxation regime                      

 

Mitigation and management

• Ongoing monitoring and management of the criteria to meet UK-REIT status

                       

                                                           

5. Risk description: Occupier market conditions  

 

Impact/risk

• Downturn in primary care market and demand for specialist portfolios      

• Government changes primary care initiative and policies

• Threat of voids in the portfolio

• Prolonged downturn in tenant demand

 

Mitigation and management

• 100% of the portfolio let

• Demographics increasing demand for healthcare facilities

• Effectively upwards only rent reviews and weighted average lease length of some 16.9 years (including commitments)

 

6. Risk description: Market cycles          

 

Impact/risk

• Risk of falling property values

           

Mitigation and management

• Target ranges for balance sheet gearing

• Secure income under UK lease structure          

 

7. Risk description: Property risks          

 

Impact/risk

• Asset value concentration        

• Poor performance of single asset having a material impact on the portfolio

• Loss of value

• Property deterioration

 

Mitigation and management

• No sign of policy changes regarding primary care

• Multi-asset portfolio with long leases

• Primarily let to the NHS

• Properties predominantly leased on tenant repairing leases

• Properties regularly inspected and adequately insured

 

8. Risk description: Retention of Joint Managers  

 

Impact/risk

• As the Group has no employees, operations would be adversely affected if the services of the Joint Managers were not available

 

Mitigation and management

• Contractual arrangements are in place which are regularly reviewed by the Management Engagement Committee

           

Environmental matters 

PHP specialises in the ownership of freehold or long leasehold interests in modern purpose-built healthcare facilities, the majority of which are leased to general practitioners and other associated healthcare users. The Board considers environmental matters as part of the assessment of the suitability of purchasing new medical centres to expand the portfolio, either through forward purchase development agreements or through open market purchases. PHP undertakes an assessment of environmental risk as an important element of its due diligence process obtaining an environmental desktop study and energy efficiency certificates. PHP has engaged an Environmental Consultant, Collier & Madge, to help in this process. PHP's ability to influence the energy efficiency of buildings is limited where completed properties are acquired and let on FRI terms. Where possible and as a norm for newly built premises, environmental issues are included in the leases entered into by the medical practitioners. More generally, buildings acquired are usually specified to meet the NHS's exacting standards which provide some environmental consideration.

 

PHP is committed to the principles of continuous improvement in managing environmental issues, including the proper management and monitoring of waste, the reduction of pollution and emissions, and compliance with environmental legislation and codes of practice.

 

Relationships

Other than Shareholders, the Group's performance and value are influenced by other stakeholders, principally its lessees (the GPs, NHS organisations and healthcare users), the property developers, the District Valuers, lenders and the Joint Managers. The Group's approach to these relationships is based on the principle of mutual understanding of aims and objectives and the highest standards of ethics and business practice.

 

Social and community issues

The Group provides purpose built healthcare properties for use by GPs, NHS organisations, pharmacies and healthcare users, thus indirectly benefiting the communities in which they are based.

 

Outlook

Spending on healthcare is driven by demographics as well as the growth of the economy. Primary care remains at the heart of the changes going on in healthcare provision in the UK. There remains a strong demand for larger purpose built primary care centres from operators, and we also see evidence of more institutional and corporate interest in investing in the sector.

 

The underlying property portfolio remains attractive, particularly in today's market. It currently offers 100% occupancy with some 90% of rent roll effectively being paid for by the Government and has an unexpired lease term of almost 17 years. We are recording pleasing rental increases and the new procedure for rent appeals has started to yield positive results.

 

2010 was a very active year in terms of acquisitions. The structural changes announced and to be implemented into the NHS are likely to bring greater opportunities for the deployment of capital, but inevitably have brought about a reduction in the number of new projects being approved. We do, however, have a good pipeline of potential deals that we are working on for 2011.

 

The position of primary care in the health economy, the stable outlook for commercial property generally and the excellent income characteristics of our portfolio bode well for the future. We look forward to reporting further progress in due course.

 

Graeme Elliot

Chairman

23 February 2011          

 

 

 

GROUP STATEMENT OF COMPREHENSIVE INCOME for the year ended 31 December 2010

 



2010

2009


Notes

£000

£000

Rental income


26,574

20,994

Finance lease income


341

338

Rental and related income


26,915

21,332

Direct property expenses


(398)

(210)

Administrative expenses: recurring


(4,646)

(3,460)

Administrative expenses: non-recurring


-

372

Operating profit before net valuation gain on property portfolio

21,871

18,034

Net valuation gain on property portfolio


22,790

1,615

Operating profit before financing costs

44,661

19,649

Finance income

4

160

86

Finance costs

5

(12,882)

(10,267)

Fair value (loss)/gain on interest rate swaps

5

(4,714)

1,318

Profit on ordinary activities before taxation

27,225

10,786

Current taxation credit

6

36

-

Conversion to UK-REIT charge

6

(1,586)

-

Taxation expense


(1,550)

-

Profit for the year (1)


25,675

10,786

Fair value movement on interest rate swaps treated as cash flow hedges


(6,013)

7,657

Unrealised gain on current asset investment


79

-

Other comprehensive (loss)/income


(5,934)

7,657

Total comprehensive income for the year net of tax (1)

19,741

18,443





Earnings per share (2)

3

41.3p

26.6p

Adjusted earnings per share (2) (3)

3

14.7p

18.4p

 

The above relates wholly to continuing operations.

 

(1) Wholly attributable to equity Shareholders of Primary Health Properties PLC.

(2) There is no difference between basic and fully diluted EPS.

(3) Adjusted for large one-off items and movements in fair value of properties and derivatives (see note 3).

 

 

GROUP BALANCE SHEET as at 31 December 2010

 



2010

2009


Notes

£000

£000

Non current assets




Investment properties

8

469,290

341,890





Net investment in finance leases


3,036

3,014





Interest rate swaps


413

1,386



472,739

346,290

Current assets




Current asset investment

9

555

-

Interest rate swaps


-

63

Trade and other receivables


2,582

1,939

Net investment in finance leases


48

49

Cash and cash equivalents


370

212



3,555

2,263

Total assets


476,294

348,553

Current liabilities




Interest rate swaps


(16,859)

(12,208)

Corporation tax payable


(48)

(29)

UK-REIT conversion charge payable


(1,998)

(1,455)

Deferred rental income


(5,942)

(4,638)

Trade and other payables


(4,837)

(1,991)

Term loans

10

(3,000)

-



(32,684)

(20,321)

Non current liabilities




Term loans

10

(264,445)

(166,139)

Interest rate swaps


(14,419)

(9,322)

UK-REIT conversion charge payable


-

(856)



(278,864)

(176,317)

Total liabilities


(311,548)

(196,638)

Net assets


164,746

151,915





Equity




Share capital


31,401

30,729

Share premium


53,934

50,664

Capital reserve


1,618

1,618

Special reserve


44,442

44,442

Cash flow hedging reserve


(13,279)

(7,266)

Retained earnings


46,630

31,728

Total equity (1)


164,746

151,915





Net asset value per share

11

262.3p

247.2p





EPRA net asset value per share

11

311.5p

279.9p

 

(1) Wholly attributable to equity Shareholders of Primary Health Properties PLC.

 

 

These financial statements were approved by the Board of Directors on 23 February 2011 and signed on its behalf by:

 

Graeme Elliot

Chairman

 

 

GROUP CASH FLOW STATEMENT for the year ended 31 December 2010

 



2010

2009


Notes

£000

£000

Operating activities




Profit before tax


27,225

10,786

Less: Finance income


(160)

(86)

Plus: Finance costs


12,882

10,267

Plus: Fair value loss/(gain) on derivatives


4,714

(1,318)

Operating profit before financing


44,661

19,649

Adjustments to reconcile Group operating profit to net cash flows from operating activities:




Revaluation gain on property


(22,790)

(1,615)

Increase in trade and other receivables (1)


(946)

(131)

Increase/(decrease) in trade and other payables (1)


4,003

(377)

Cash generated from operations


24,928

17,526

UK-REIT conversion charge instalments


(1,934)

(1,575)

Taxation paid (2)


(193)

-

Net cash flow from operating activities


22,801

15,951

Investing activities




Payments to acquire investment properties


(25,234)

(23,413)

Payments to acquire shares in AH Medical Properties PLC


(476)

-

Payments to acquire Anchor Meadow Limited


(5,498)

-

Payments to acquire Sinclair Montrose Properties Limited


(23,842)

-

Payments to acquire Abstract Integrated Healthcare Limited (3)


(1,856)

-

Payments to acquire Charter Medinvest Limited


(6,787)

-

Payments to acquire Health Investments Limited (3)


(7,214)

-

Interest received on developments


134

46

Bank interest received


4

4

Other interest


8

36

Net cash flow used in investing activities


(70,761)

(23,327)

Financing activities




Proceeds from issue of shares (net of expenses)


-

60,748

Term bank loan drawdowns


85,700

38,990

Term bank loan repayments


(15,924)

(77,290)

Swap interest payable


(8,461)

(6,541)

Loan arrangement fees


(176)

-

Interest paid


(3,211)

(3,432)

Dividends received


15

-

Equity dividends paid


(9,825)

(5,562)

Net cash flow from financing activities


48,118

6,913

Increase/(decrease) in cash and cash equivalents for the year


158

(463)

Cash and cash equivalents at start of year


212

675

Cash and cash equivalents at end of year


370

212

 

(1) Asset movements include movements relating to acquisitions

(2) Taxation was paid in the period in order to settle the outstanding liabilities in the acquired companies. All amounts payable were included in the consideration calculation.

(3) Payment net of acquired debt commitments.

 

 

GROUP STATEMENT OF CHANGES IN EQUITY for the year ended 31 December 2010

 

  

Share capital

Share premium

Capital reserve

Special reserve*

Cash flow hedging reserve

Retained earnings

Total 

  

£000

£000

£000

£000

£000

£000

£000

1 January 2010

30,729

50,664

1,618

44,442

(7,266)

31,728

151,915

Profit for the year

-

-

-

-

-

25,675

25,675

 

 

 

 

 

 

 

 

Income and expense recognised directly in equity:

 

 

 

 

 

 

 









Fair value movement on interest rate swaps treated as cash flow hedges

-

-

-

-

(6,013)

-

(6,013)

Unrealised gains at fair value through equity

-

-

-

-

-

79

79

 

 

 

 

 

 

 

 

Total comprehensive income

-

-

-

-

(6,013)

25,754

19,741

Dividends paid:








Second dividend for the year ended 31 Dec 2009 (8.75p)

-

-

-

-

-

(5,061)

(5,061)

First interim dividend for the year ended 31 Dec 2010 (8.75p)

-

-

-

-

-

(4,764)

(4,764)

Scrip issue in lieu of first interim cash dividends (net of expenses)

54

262

-

-

-

(316)

-

Scrip issue in lieu of second interim dividend (net of expenses)

116

595

-

-

-

(711)

-

Share consideration for the HI acquisition

502

2,413

-

-

-

-

2,915

31 December 2010

31,401

53,934

1,618

44,442

(13,279)

46,630

164,746









 

1 January 2009

 

16,794

 

48,009

 

1,618

 

-

 

(14,923)

 

26,788

 

78,286

Profit for the year

-

-

-

-

-

10,786

10,786

 

 

 

 

 

 

 

 

Income and expense recognised directly in equity:

 

 

 

 

 

 

 









Fair value movement on interest rate swaps treated as cash flow hedges

-

-

-

-

7,657

-

7,657

















Total comprehensive income

-

-

-

-

7,657

10,786

18,443

Proceeds from capital raisings

13,883

2,855

-

46,956

-

-

63,694

Expenses of capital raisings

-

(433)

-

(2,514)

-

-

(2,947)

Dividends paid:








Second dividend for the year ended 31 Dec 2008 (8.50p)

-

-

-

-

-

(2,855)

(2,855)

First interim dividend for the year ended 31 Dec 2009 (8.50p)

-

-

-

-

-

(2,707)

(2,707)

Scrip issue in lieu of interim cash dividends (net of expenses)

52

233

-

-

-

(284)

1

 

 

 

 

 

 

 

 

31 December 2009

30,729

50,664

1,618

44,442

(7,266)

31,728

151,915

 

* The Special Reserve is a distributable reserve

NOTES TO THE FINANCIAL STATEMENTS

 

1. Corporate information

 

The Group's financial statements for the year ended 31 December 2010 were approved by the Board of Directors on 23 February 2011 and the Balance Sheets were signed on the Board's behalf by the Chairman, G A Elliot. Primary Health Properties PLC is a public limited company incorporated and domiciled in England & Wales. The Company's Ordinary Shares are admitted to the Official List of the UK Listing Authority, a division of the Financial Services Authority and traded on the London Stock Exchange.

 

 

2. Accounting policies

 

2.1 Basis of preparation

The Group's financial statements have been prepared on the historical cost basis, except for investment properties and derivative financial instruments that have been measured at fair value.

 

The Group's financial statements are presented in Sterling rounded to the nearest thousand.

 

Statement of compliance

The Group prepares consolidated financial statements under International Financial Reporting Standards ("IFRS") as adopted by the European Union and applied in accordance with the Companies Act 2006 and Article 4 of the IAS Regulations.

 

2.2 Summary of significant accounting policies

 

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.

 

The Parent Company financial statements of Primary Health Properties PLC and each of its subsidiary undertakings will continue to be prepared under UK GAAP. The use of IFRS at Group level does not affect the distributable reserves available to the Group.

 

Segmental reporting

The Directors are of the opinion that the Group is engaged in a single segment of business, being investment in property in the United Kingdom leased principally to GPs, NHSOrganisations and other associated health care users.

 

Investment properties and investment properties under construction

The Group's investment properties are held for long-term investment. Initially, investment properties are measured at cost including transaction costs. Subsequent to initial recognition, investment properties and investment properties under construction are stated at fair value based on a professional valuation made as of each reporting date. The fair value of investment property does not reflect future capital expenditure that will improve or enhance the property and does not reflect future benefits from this future expenditure.

 

Gains or losses arising from changes in the fair value of investment properties and investment properties under construction are included in the Group Statement of Comprehensive Income in the year in which they arise.

 

Investment properties cease to be recognised for accounting purposes when they have been disposed of. Any gains and losses arising are recognised in the Group Statement of Comprehensive Income in the year of disposal.

 

Property acquisitions and business combinations

Where a property is acquired through the acquisition of corporate interests, the Board considers the substance of the assets and activities of the acquired entities in determining whether the acquisition represents the acquisition of a business.

 

Where such acquisitions are not judged to be an acquisition of a business, they are not treated as business combinations. Rather, the cost to acquire the corporate entity is allocated between the identifiable assets and liabilities of the entity based on their relative fair values on the acquisition date. Accordingly, no goodwill or additional deferred taxation arises. Otherwise, corporate acquisitions are accounted for as business combinations.

 

Current asset investments

Current asset investments are held as Available For Sale ("AFS") in accordance with IAS39. Any unrealised gain or loss is recognised through the Group Statement of Comprehensive Income.

 

 

3. Earnings per share

 

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

 

Adjusted earnings per share:

 


2010

2009


Net profit attributable to Ordinary Shareholders

 Ordinary Shares

Per
Share

Net profit attributable to Ordinary Shareholders

 Ordinary Shares

Per Share


£000

(number)*

(pence)

£000

(number)**

(pence)

Basic earnings per share

25,675

62,162,797

41.3p

10,786

40,623,413

26.6p

Adjustments to remove:














Net property valuation gains

(22,790)



(1,615)



Fair value loss/(gain) on derivatives*

4,714



(1,318)



Other non-recurring items

-



(372)



Charge on conversion to UK-REIT status

1,586



-



UK corporation tax credit

(36)



-



Adjusted basic and diluted earnings per share

9,149

62,162,797

14.7p

7,481

40,623,413

18.4p

 

*Weighted average number of Ordinary Shares in issue during the year.

**In view of the continuing volatility in the mark-to-model adjustment in respect of the period end valuation of derivatives that flows through the Group Statement of Comprehensive Income, the Directors believe that it is appropriate to remove the gain or loss in the calculation of adjusted earnings.

 

 

4. Finance income

 


2010

2009


£000

£000

Interest income on financial assets



Bank interest

3

4

Development loan interest

134

46

Other interest

8

36

Dividend income received

15

-


160

86

 

 

5. Finance costs

 


2010

2009


£000

£000

Interest expense on financial liabilities

 

 

Not at fair value through profit or loss

 

 

(i) Interest paid

 

 

Swap interest paid

8,518

6,473

Bank loan interest paid

3,812

3,228

Other interest paid

15

(12)

Notional UK-REIT interest

36

103

Bank facility non utilisation fees

105

148

Bank charges and loan commitment fees

396

327

 

12,882

10,267

At fair value through profit or loss

 

 

(ii) Derivatives

 

 

Net fair value loss/(gain) on interest rate swaps

4,714

(1,318)


4,714

(1,318)

 

The fair value loss of £4.7million (2009: gain of £1.3million) on derivatives recognised in the Group Statement of Comprehensive Income for the year has arisen from the interest rate swaps for which hedge accounting does not apply. The gain in 2009 is net of a loss of £391,000 on the basis rate swaps which matured during the year.

Net finance costs may be summarised as follows:

 


2010

2009


£000

£000

Finance income

(160)

(86)

Finance costs

12,882

10,267

Net finance costs

12,722

10,181

 

 

6. Taxation

 

a)  Tax expense in the Group Statement of Comprehensive Income

The tax expense is made up as follows:

 


2010

2009


£000

£000

Current tax



UK corporation tax credit on non property income

(36)

-

Charge on conversion to UK-REIT status (1)

1,586

-

Total tax charge in Group Income Statement

1,550

-

 

The Emergency Budget on 22 June 2010 announced that the UK corporation tax rate will reduce from 28% to 24% over a period of four years from 2011. The reduction from 28% to 27% was substantively enacted on 20 July 2010 and will be effective from April 2011. This will reduce the Group's future current tax charge on non property income.

 

b) Factors affecting the tax charge for the year

The tax assessed for the year is lower than (2009 - lower) the standard rate of corporation tax in the UK. The differences are explained below:

 


2010

2009


£000

£000

Profit on ordinary activities before taxation

27,225

10,786

Theoretical tax at UK corporation tax rate of 28% (2009: 28%)

7,623

3,020

REIT exempt income

(2,658)

(3,052)

Non taxable items

(5,059)

-

Other differences

-

(2)

Finance lease adjustment

4

4




Losses carried forward

90

30

Movement in tax provision during the year

Current tax charge

(36)

(36)

-

-







 

(1) Conversion to a UK REIT means that the Group is no longer subject to UK corporation tax. The UKREIT charge of £1.6million has arisen on the conversion of the companies acquired during the year ended 31 December 2010 to UK REIT status, based on the values of the individual properties held within those companies.

 

 

7. Dividends

 

Amounts recognised as distributions to equity holders in the year:

 


2010

2009


£000

£000

Second interim dividend for the year ended  31 December



  2009 (8.75p) paid 26 March 2010 (2009: 8.50p) 

5,061

2,855

Scrip dividend in lieu of second interim cash dividend

316

284

First interim dividend for the year ended 31 December

  2010 (8.75p) paid 29 October 2010 (2009: 8.50p)

4,764

2,707

Scrip dividend in lieu of first interim cash dividend

711

-


10,852

5,846

Per share

17.5p

17.0p

 

 

 

8. Investment properties, investment properties under construction

 


Investment properties freehold

Investment properties long leasehold

Investment properties under construction

Total


£000

£000

£000

£000

As at 1 January 2010 (1)

280,739

57,655

3,496

341,890

Property additions

517

262

20,442

21,221

Acquired investment property

3,641

-

-

3,641

Anchor Meadow Limited

5,498

-

-

5,498

Sinclair Montrose Properties Limited

22,073

1,792

-

23,865

Abstract Integrated Healthcare Limited

1,770

3,086

-

4,856

Charter Medinvest Limited

6,787

-

-

6,787

Health Investment Limited

22,924

15,818

-

38,742

Transfer from properties in the course of development

14,313

2,989

(17,302)

-

Revaluations for the year

24,961

(2,742)

571

22,790

As at 31 December 2010

383,223

78,860

7,207

469,290






As at 1 January 2009  

271,880

42,479

2,503

316,862

Additions  

205

112

23,096

23,413

Transfer from properties in the course of development

21,138

-

(21,138)

-

Revaluation for the year 

1,197

1,383

(965)

1,615

As at 31 December 2009 

294,420

43,974

3,496

341,890

 

(1) The split between freehold and long leasehold properties has been reclassified. This reclassification has no impact on the gross asset value.

 

The historical cost of properties held by the Group, including properties in the course of development, was £393.7million (2009: £284.7million).

 

Head lease outgoings on long leasehold assets total less than £32,000 in the current year.

 

Properties have been independently valued at fair value by Lambert Smith Hampton ("LSH"), Chartered Surveyors and Valuers, as at the balance sheet date in accordance with IAS 40: Investment Property. LSH confirm that they have valued the properties in accordance with the Practice Statements in the RICS Appraisal and Valuation Standards ("Red Book"). The Valuers are appropriately qualified and have sufficient market knowledge and relevant experience of the location and category of investment property and have had full regard to market evidence when determining the values.

 

The properties are fully let. The valuations reflected a 5.8% initial yield (2009: 6.0%) and a 6.0% (2009: 6.24%) true equivalent yield. Where properties are within three months of their reviews, an estimate is made of the likely rent on review in line with market expectations and the knowledge of the valuer.

 

 In addition to the market value exercise performed by LSH, the Joint Managers monitor the value of the Group's investment portfolio based on DCF analysis and with alternative discount rates. Full details can be found in the Operating and Financial Review.

 

In accordance with IAS 40, investment properties under construction have also been valued at fair value by LSH. In determining the fair value, the valuer is required to consider the significant risks which are relevant to the development process including, but not limited to, construction and letting risks. In the case of the Group's portfolio under construction, where the sites are pre-let and construction risk remains with the builder/developer, the valuers have used the special assumptions that, as at the valuation date, the developments have been completed satisfactorily, the agreements of leases have been completed and the rents and other tenants lease obligations have commenced. A fair value increase of £571,000 (2009: decrease of £965,000) in respect of investment property under construction has been recognised in the Group Statement of Comprehensive Income.

 

In line with Accounting Policies, the Group has treated the corporate acquisitions during the year as asset purchases rather than business combinations as they were judged to be acquisitions of properties rather than businesses.

 

 

9. Current asset investment

 


2010

2009


£000

£000

As at beginning of period

-

-

Additions at cost

476

-

Unrealised gain recognised directly in equity

79

-


555

-

 

The current asset investment acquired during the year at a cost of £476,000 represents 1,970,500 ordinary shares in AH Medical Properties PLC ("AHMP") and is held as an Available For Sale ("AFS") asset in accordance with IAS 39 and has been valued at the quoted price on 31 December 2010 of 28p per share. The unrealised gain on the investment is recognised directly in equity and through the Group Statement of Comprehensive Income. On 19 January 2011, an offer was made by Assura Group Limited for the entire share capital of AHMP.

 

 

10. Term loans

 

At 31 December 2010, total facilities of £321.5million including the £10million overdraft facility (2009: £265.0million) were available. Of these facilities, as at 31 December 2010, £268.3million was drawn (2009: £167.3million) and secured by an unlimited guarantee from each subsidiary and a first fixed charge over the ownership of each property. Interest is payable on the loans at a fixed percentage rate above LIBOR and interest payable has fluctuated in the period between 1.4% and 1.5% (2009: 3.2% and 1.2%), including lenders' margins and costs (excluding margins and costs 0.6% and 0.8% (2009: 2.5% and 0.5%)). However, the Group has entered into interest rate swaps to manage its exposure to interest rate fluctuations.

 

Interest on floating rate loans is payable over three months using underlying reference rates (e.g. LIBOR plus margin plus costs). The fixed rate margin above LIBOR is 0.76% (including lenders' costs of 0.06%).

 

The table below indicates amounts drawn and undrawn from each individual facility:

 


Facility

Amounts drawn

Undrawn









2010

2009

2010

2009

2010

2009


£000

£000

£000

£000

£000

£000

Current







364 day revolving (1)

10,000

10,000

-

-

10,000

10,000

Term to May 2011 (4)

3,350

-

3,000

-

350

-








Non-current







Term to January 2013 (1)

140,000

140,000

134,300

116,500

5,700

23,500

Term to January 2013 (2)

50,000

50,000

37,900

-

12,100

50,000

Term to January 2013 (3)

65,000

65,000

65,000

50,800

-

14,200

Fixed term loan (5)

28,140

-

28,140

-

-

-

Term to December 2020 (6)

25,000

-

-

-

25,000

-


321,490

265,000

268,340

167,300

53,150

97,700

 

Provider:

(1) The Royal Bank of Scotland plc

(2) Allied Irish Banks, p.l.c.

(3) Abbey National Treasury Services plc (branded Santander from January 2010)

(4) Natwest Bank plc (acquired as part of Abstract acquisition)

(5) Aviva facility (acquired as part of HI acquisition) repayable in tranches to 31 January 2032

(6) Aviva facility (new facility)

 

Since the term loan facilities have been in existence, the Group has suffered costs in association with the arrangement of the facilities including legal advice and loan arrangement fees. These costs are amortised over the remaining life of the related facility.

 

Any amounts unamortised as at the period end are offset against amounts drawn on the facilities as shown in the table below:

 





2010

2009


£000

£000

Term loans drawn: due within one year

Term loans drawn: due after more than one year

3,000

265,340

-

167,300

Less: Unamortised borrowing costs

(895)

(1,161)

Term loans per Group Balance Sheet

267,445

166,139

 

 

11. Net asset value per share

 

Net asset values have been calculated as follows:

 


2010

2009


£000

£000

Net assets per Group Balance Sheet  

164,746

151,915

Derivative interest rate swaps (net liability)

30,865

20,144

Basis rate swaps

-

(63)

EPRA NAV

195,611

171,996





Number of

Number of


shares

shares

Ordinary Shares:



Issued share capital 

62,802,333

61,457,298




Net asset value per Share

262.3p

247.2p




EPRA NAV per Share

311.5p

279.9p

 

EPRA NAV is calculated as Balance Sheet net assets including the valuation result on trading properties but excluding fair value adjustments for debt and related derivatives.

 

12. Related party transactions

 

The Joint Managers of the Group, NPM and JOHCML, receive a management fee, calculated at a combined 1% of the first £50million of the property assets of the Group and 0.75% thereafter, subject to a minimum of £120,000 per annum, the first £100,000 of which is paid to NPM. NPM also receives a property management fee and a fee for the preparation of the tax provisions, both based on a reimbursement of the costs of services of NPM employees engaged directly on the Group's activities, totalling £158,000 (2009: £135,000).

 

The Joint Managers are 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 is 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 in such period) against the fully diluted net asset value per share from the previous period's audited accounts. No performance incentive fee was payable in respect of 2010 (2009: Nil).

 

As announced on 22 February 2011, changes have been made to the Management Agreement, further details of which can be found in that announcement.

 

 

13. Subsequent events

 

The Group holds 1,970,500 ordinary shares in AHMP as a current asset investment (note 9) at its year end quoted value of 28 pence per share. On 19 January 2011, an offer was made by Assura Group Limited for the entire share capital of AHMP. The Group has elected to take the cash alternative of this offer of 40 pence per share and the cash should be received by 4 March 2011.

 

On 21 February 2011, the Group announced it had entered into a purchase and funding agreement for a new medical centre in Newark, Nottinghamshire, for approximately £4.2million (excluding associated costs).

 

14. Annual report

 

The financial information set out above does not constitute the Group's statutory accounts fot the years ended 31 December 2010 or 2009 but is derived from those accounts.  Statutory accounts for 2009 have been delivered to the Registrar of Companies and those for 2010 will be delivered in due course.  The Auditor has reported on those accounts; their reports were (i) unqualified, (ii) did not include a reference to any matters to which the Auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498(2) or (3) of the Companies Act 2006.

 

Full financial statements for the year ended 31 December 2010 will be published on the Group's website at www.phpgroup.co.uk and will be posted to Shareholders on 4 March 2011.

 

Copies of this announcement are available from the Company Secretary of Primary Health Properties PLC, Ground Floor, Ryder Court, 14 Ryder Street, London SW1Y 6QB.

 

 

Directors' responsibility statement under the Disclosure and Transparency Rules

 

The Directors confirm that, to the best of their knowledge and belief:

 

1)   the financial statements, prepared in accordance with IFRSs as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit of the Company and the undertakings included in the consolidation as a whole;

2)   the management reports (which are incorporated into the Directors' Report) contained in the Annual Report include a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation as a whole, together with a description of the principal risks and uncertainties faced.

 

For and on behalf of the Board

Graeme Elliot

Chairman

23 February 2011

 

 

 


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