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Primary Health Props (PHP)

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Thursday 10 April, 2008

Primary Health Props

Preliminary Results

Primary Health Properties PLC
10 April 2008

9 April 2008





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

            Preliminary Results for the Eighteen month period ended
                                31 December 2007



Primary Health Properties PLC, one of the UK's largest providers of modern
primary healthcare facilities, is pleased to announce its Preliminary Results
for the eighteen months ended 31 December 2007.



Group Financial Highlights



•   Profit after tax £16.8m (30 June 2006: £15.9m)

•   Diluted NAV per share increased to 369.4 p (30 June 2006: 305.1p)

•   Total dividends in respect of the financial period ended 31 December
    2007 of 23.25p (2006: 13.5p)

•   Net portfolio revaluation surplus over the period increased by £5m
    (30 June 2006: £15m)

•   Rent Roll increased to £16.2m per annum (2006: £11.3m)

•   Portfolio owned, leased and committed increased by 44% to £324.2 m
    (2006: £224.8m)

•   Moved to calendar year end to align with UK-REIT conversion

•   New term facilities of £50m have been arranged









Harry Hyman, Managing Director, commented:


"The period under review has been one of great change for PHP.  During the 18
months, the Company was in the vanguard of converting to UK-REIT status,
completed the acquisition of Cathedral group for £31m and successfully raised
new money through an equity placing with new and existing investors.  The last
six months of the period have been characterised by a weakening in values for
the commercial property market overall and this has impacted on PHP.  However,
the niche market in which the Company operates remains strong in comparison to
the uncertainty afflicting other parts of the property sector.



"The provision of modern primary health care facilities in the UK continues to
enjoy strong tenant and investor demand and is supported by significant
Government spending programmes that are not impacted by traditional economic
factors.  The Group remains a leader in its market with secure cash flows, good
visibility of long term revenue and a strong forward pipeline of new product.
The softening of yields offers opportunities for PHP to be opportunistic in its
acquisition policy and the Company continues to search for appropriate additions
to complement its existing portfolio.  The Board looks to the future with
confidence."



                                    - ends -



Enquiries:



Bell Pottinger Corporate and Financial
David Rydell/Victoria Geoghegan
Tel: 020 7861 3232







Primary Health Properties PLC
Harry Hyman
Managing Director
Mobile: 07973 344768






Chairman's Statement



Since the last reported audited figures, the Group has achieved a number of
important milestones:

•  It has acquired or taken delivery of £76.7m of assets

•  It's portfolio including commitments is now £324m

•  It has over 106 primary care centres (99 completed and 8 contracted)

•  Net asset value increased to 369.4p per Ordinary Share

•  £40m gross of equity capital was raised

•  New term loan facilities of £50m have been arranged

•  23.25p of dividends for the eighteen month period including 8.25p paid
   per Ordinary Share on 28 March 2008

In addition, on 1 January 2007, PHP converted into a REIT, thereby releasing
£30m of deferred tax liabilities and incurring a conversion charge of £5.1m.

The market in which the Group operates remains strong and while there has been
uncertainty in other parts of the property sector, investor and tenant demand
for modern primary health care facilities remains high. The Group has an
excellent portfolio of modern properties with secure long leases, high quality
tenants and the prospect of continued rental growth flowing through into
dividends. The Group has substantial resources to continue with its strategy for
growth through:

•  selective investment in appropriate new opportunities

•  minimising development risk

•  sourcing new investments from several developers.

These results cover the statutory reporting period for the eighteen months ended
31 December 2007, which follows the change of the Group's year-end to 31
December. The results of the Group for each of the past five periods of six
months are shown in the table below. The annualised results for the last two
calendar years (31 December 2007 and 31 December 2006) are also summarised. The
results of the previous statutory reporting year to 30 June 2006 are included in
the main body of the financial statements.

Financial information is provided in various sections of the Chairman's
Statement below. This information has been extracted from the following sources:



•  Information at 31 December 2007 and the eighteen month period then
   ended from the Group's financial statements;

•  Information at 30 June 2006 and for the year then ended from the
   Group's annual financial statements; and

•  Information for various six month periods has been extracted from
   interim accounts and other internal reports.







Results

Group financial highlights




                       Eighteen    Six months         Six     Six months         Six    Six months    Twelve
                      months to         to 31   months to          to 31   months to         to 31    months
                             31      December     30 June       December     30 June      December     to 30
                       December          2007        2007           2006        2006          2005      June
                           2007                                                                         2006
                                                                                   
Income Statement                                                                                            
Annualised               £16.2m        £16.2m      £14.5m        £13.3m      £11.3m        £11.1m     £11.3m
delivered rent
roll
 
(Loss)/profit           (£3.7m)      (£18.0m)       £5.3m         £9.0m       £9.0m         £9.4m     £18.4m
before taxation
 
Profit/(loss)            £16.8m      (£18.0m)       £5.2m        £29.6m       £8.2m         £7.7m     £15.9m
after taxation
 
Balance Sheet                                                                                               
Revaluation               £4.9m      (£13.6m)       £5.1m        £13.4m       £7.2m         £7.8m     £15.0m
surplus/(deficit)
 
Net assets              £124.1m       £124.1m     £151.1m       £102.2m      £71.3m        £62.3m     £71.3m
 
Shares in issue at        33.6m         33.6m       33.6m         24.3m       22.7m         22.7m      22.7m
period end
 
NAV per share            369.4p        369.4p      449.8p        420.9p      314.5p        274.7p     314.5p
 
Portfolio owned and     £288.3m       £288.3m     £282.5m       £260.3m     £202.1m       £185.9m    £202.1m
leased including
leases
 
Commitments              £35.9m        £35.9m      £38.5m        £33.5m      £22.7m        £24.0m     £22.7m
including
deposits and
development loans
 
Portfolio owned         £324.2m        £24.2m     £321.0m       £293.8m     £224.8m       £209.9m    £224.8m
leased and committed
 
Earnings per              59.3p       (53.6p)       18.9p        125.4p       36.2p         33.0p      70.3p
share - Basic
 
Dividends                23.25p         8.25p        7.5p          7.5p       6.75p         6.75p      13.5p
relating to the
period per share
 
Bank debt net of        £155.3m       £155.3m     £132.0m       £149.4m     £108.8m        £99.8m    £108.8m
cash
 
Gearing debt as %         56.2%         56.2%       47.3%         60.0%       61.2%         62.1%      61.3%
gross assets




To enable a direct comparison on an annualised basis, the key results for the
twelve months ended 30 June 2007 and 2006 were as follows:

                                 Twelve months to   Twelve months to 30
                                     30 June 2007             June 2006
Annualised delivered rent roll             £14.5m                £11.3m
Profit before taxation                     £14.3m                £18.4m
Profit after taxation                      £34.8m                £15.9m
Earnings per share - Basic                 135.7p                 70.3p
Dividends relating to the                   15.0p                 13.5p
period per share



To assist shareholders the profit (loss) for the respective periods has been
further analysed as shown below:

                                               Eighteen    Twelve months    Twelve months    Twelve months
                                              months to               to               to               to 
                                            31 December      31 December      31 December          30 June 
                                                   2007             2007             2006             2006
                                                    £'m              £'m              £'m              £'m
                                                                                                          
Rental and related income                          22.2             15.7             12.2             11.1
                                                                                                          
Revaluation gains/(losses) on                       4.9            (8.6)             20.6             15.0
property portfolio
Impairment loss                                   (3.8)            (3.8)                -                -
Gain on disposal of property                          -                -              0.4              0.4
                                                    1.1           (12.4)             21.0             15.4
                                                                                                          
Administration expenses                                                                                   
Management fee                                    (3.2)            (2.2)            (1.5)            (1.5)
Incentive fee                                     (2.6)            (1.8)                -                -
Other                                             (1.8)            (1.4)            (2.1)            (1.2)
                                                  (7.6)            (5.4)            (3.6)            (2.7)
                                                                                                          
Profit/(loss) before interest and                  15.7            (2.1)             29.6             23.8
exceptional items
                                                                                                          
Exceptional items                                                                                         
UK-REIT conversion costs                          (0.2)                -            (0.2)                -
Goodwill impairment                               (5.5)            (0.2)            (5.3)                -
                                                  (5.7)            (0.2)            (5.5)                -
                                                                                                          
Profit/(loss) after exceptional items              10.0            (2.3)             24.1             23.8
before interest
                                                                                                          
Development loan interest                           0.9              0.8              0.2              0.3
Mark to market loss on non-hedging                (2.8)            (2.8)                -                -
derivatives
Loan interest (net of interest                   (11.8)            (8.4)            (6.3)            (5.7)
receivable and swap interest)
                                                                                                          
                                                                                                          
(Loss)/profit before taxation                     (3.7)           (12.7)             18.0             18.4
                                                                                                          
Current taxation                                  (0.1)            (0.1)              0.5              0.5
Conversion to UK-REIT charge                      (5.1)                -            (5.1)                -
Deferred taxation                                 (3.9)                -            (5.2)            (2.9)
Deferred taxation release on                       29.6                -             29.6                -
conversion to UK-REIT
Taxation credit/(expense)                          20.5            (0.1)             19.8            (2.5)
                                                                                                          
Profit/(loss) after taxation                       16.8           (12.8)             37.8             15.9



Performance

The performance for the eighteen months can be divided into three very distinct
periods. The six months prior to conversion to a UK-REIT when the property
market was firm, six months as a UK- REIT when the property market remained firm
and the most recent six months when the property market was weakening.



The property market performed differently in each six month period.   During the
six months to 31 December 2006, the market was buoyant and yields continued to
fall. During the first half of 2007, yields fell but at a slower pace. In the
second half of 2007, the market began to decline with yields softening by about
35 basis points.  The December balance sheet includes the results of the period
end valuation by LSH, has resulted in a surplus of £4.9m.



Financial Adjustments

The results for the eighteen month period have also been affected by various
other matters arising in the six months to 31 December 2006. These include the
release of deferred tax liabilities (£29.6m), the goodwill write off relating to
the purchase of Cathedral (£5.5m) and the REIT conversion charge (£5.1m).  None
of these items had comparables in any other period.

The loss after tax of £18.0m for the six months to 31 December 2007 includes an
impairment loss of £3.8m on property under development.



Financial Instruments

As at 31 December 2007, the mark to market valuation of the Group's interest
rate swaps showed a £9.3m reduction in value from 30 June 2007 and a reduction
of £2.7m during the 18 month period under review, ( £0.1m has been recorded as a
movement in equity in relation to interest rate swaps qualifying for hedge
accounting and £2.8m has been recorded in the Group Income Statement).  The
swaps were entered into at various dates to hedge the Group's exposure to higher
interest rates and improve cash flow. The mark to market value fluctuates with
movements in term interest rates and, in the case of the callable swap, with
market volatility.   In the earlier two six month periods, the mark to market
valuation of the interest rate swaps qualifying for hedge accounting showed
gains of £6.0m and £ 0.5m respectively.



Both the revaluation adjustment to the property portfolio and the mark to market
valuation of swaps represent unrealised adjustments and do not affect cash flow.
During the period, the average rate of the swaps was lower than the prevailing
LIBOR rate, thus saving the Group considerable cash outflow. The swaps have also
mitigated the Group's exposure to interest rate risk.



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 completed investment portfolio based on a
discounted cash flow analysis.  On this basis, the valuation at 31 December 2007
is £316.1m, compared to the market value of £281.7m.  The difference of £34.4m
represents an additional 102.4p of net asset value per Share.  The assumptions
used in the discounted cash flow analysis are a discount rate of 7%; an average
increase in the individual property rents at their respective review dates of
3%; and capital growth of residual values of 1% per annum.



Dividends

On 28 March 2008, the Group paid an ordinary cash interim dividend of 8.25p per
Ordinary Share in respect of the six months ended 31 December 2007.  This
compares to 7.5p for each of the two previous interim dividends, paid on 22 May
and 23 November 2007. The decision to pay three interim dividends for the
eighteen month period rather than two interim and one final dividend was to
accelerate payment of dividends to Shareholders.



Borrowings

In March 2008, the Group entered into a £50m secured facility to augment its
existing facilities of £200m, resulting in current facilities of £250m. £160m
was drawn at 31 December 2007 and, taking into account existing outstanding
commitments of £36m, this leaves a further £54m of facilities available to the
Group to continue with its acquisition policies. These term facilities mature in
2013.



Total borrowings at 31 December 2007 were £160m. The Group has £145m of fixed
rate cover including £55m of callable swaps. Loan to value at the period end was
56% and interest cover (as defined within the loan facility agreements) was 1.8
times.



Revenues, Administration Expenses and Net Asset Value

At a trading level, revenues for the eighteen month period increased to £22.2m
as a result of favourable rent reviews and new deliveries and operating profit
before financing costs was £10.0m. The eighteen month period to 31 December 2007
saw the effect of the inclusion of a Management Incentive Fee of £2.6m rather
than the previous management share option scheme. The eighteen month period was
also affected by the UK-REIT Conversion charge of £5.1m and other non-recurring
costs. During the eighteen month period the diluted net asset value per share
rose from 305.1p to 369.4p.



Management Incentive Scheme

The results for the two six month periods ended 31 December 2006 and 30 June
2007 also incorporated the Management Incentive Fee approved by Shareholders in
November 2006 which replaced the management share option scheme.  There is no
Management Incentive Fee payable for the last six month period and, under the
terms of the scheme, the deficit in Total Return  will be made up before any fee
is payable in future years.



Portfolio



During this period, the Group has taken delivery of £76.7m completed and let
properties at locations noted in the acquisitions table in the Managing
Directors' Report, and also entered into additional new commitments totalling
£18.4m.



The table below sets out the portfolio as at 31 December 2007.


                                                  31 December         31 December          30 June
                                                         2007                2006             2006
                                                           £m                  £m               £m
Investment properties                                   281.7               245.5            197.5
Development properties                                    2.8                 9.5                -
Properties in the course of development                   0.8                 2.8              2.1


Total investment properties                             285.3               257.8            199.6
Finance leases                                            3.0                 2.5              2.5
Total owned and leased                                  288.3               260.3            202.1
Development Loans                                         0.2                 1.2              1.7
Total owned and leased (including                       288.5               261.5            203.8
development loans)



Deposits paid                                               -                 0.1              0.1
Committed                                                35.7                32.2             20.9
Total owned, leased and committed                       324.2               293.8            224.8


Closing annualised rent roll                             16.2                13.3             11.3





The Group's portfolio of 107 properties (including eight contracted schemes) is
almost 100% let with an average lease length outstanding of 18.4 years. 89% of
the rent roll is paid for directly or indirectly by the NHS and most of the
balance is let to pharmacy operators.  The closing rent roll at 31 December 2007
was £16.2m compared to £14.5m at 30 June 2007. Between 31 December 2007 and 30
June 2006, 93% of the increase related to new deliveries and 7% to rental
increases secured during the period.



Financing



In April 2007, the Group completed a Placing and Open Offer, raising £38.7m net
of expenses and thereby expanding its shareholder base. The Placing and Open
Offer resulted in 9,309,376 new Ordinary Shares being issued on 11 April 2007.



Other matters



The Share Plan allowing investors to purchase the Company's Ordinary Shares by
lump sum or regular payments currently has 39 members holding 105,299 Ordinary
Shares. Further details can be found on the website www.phpgroup.co.uk and
www.capitaregistrars.com/php.



The Notice of the Annual General Meeting, explanatory circular and proxy card
for the Annual General Meeting to be held on 17 June 2008  at 2.30pm will be
enclosed with the Annual Report due to be delivered to Shareholders on or around
28 April 2008 .



The Board intends to appoint a third Independent Non Executive Director.



Outlook





Unlike some sectors of the property market the supply of new purpose built
accommodation for the delivery of primary care services is very limited with
nearly all space being developed on a pre-let basis. Accordingly, there is
little or no speculative building of space. As a result, the sector does not
suffer from the potential oversupply of space that may affect other sectors of
the property market.





As at 31 December 2007, the Group had £35.7m of commitments. By 31 March 2008
all of these transactions except two, amounting to £9.2m, had been delivered. At
the date of this statement that remains the Group's commitment position. The
Group has several deals in solicitors' hands but is currently adopting a prudent
policy with regard to entering into forward commitments.



The Group remains a leader in its niche market, with secure cash flows and
currently has a strong forward pipeline of new properties. Future growth will be
driven by these additions and further rental increases from the portfolio, which
continues to perform well. Despite the recent turmoil in banking and money
markets, the Board is satisfied with the Group's funding position and remains
optimistic about the prospects for the Group.







G A Elliot
Chairman
9 April 2008












Managing Director's Report


Property portfolio

The table in the Chairman's Statement sets out the development of our portfolio
during the period under review. We took delivery of twelve new developments and
acquired nine modern purpose built investments (2006: twelve new developments)
and entered into a further six commitments on developments in the course of
construction at the period end (2006: seven development commitments). At the
period end the portfolio, when commitments are included, reached £324.2m (2006:
£224.8m).



Portfolio Purchases during the Period

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




Property                                        Acquisition     Occupational Tenants
                                                       Cost

                                                        £m
30 June 2006 to 31 December 2006
Barlow Medical Centre, Didsbury                         4.2      Doctors' Practice and Pharmacy
Springs Health Centre, Clowne                           3.5      Doctors' Practice and Pharmacy
Oaklands Health Centre, Hythe                           2.7      Doctors' Practice and Pharmacy
Chapelfield Medical Centre, Wombwell                    3.2      Doctors' Practice and Pharmacy
St Georges Medical Centre, Sheerness *                  2.6      Doctors' Practice and Pharmacy
Hetherington Group Medical Practice, Clapham *          2.6      Doctors' Practice
Hailey View Surgery, Hoddesdon *                        2.6      Doctors' Practice
Central Milton Keynes Medical Centre *                  3.3      Doctors' Practice and Pharmacy
Oxted Therapies Unit *                                  4.0      PCT Treatment Centre
St Stephens Gate Medical Centre, Norwich *              6.1      Doctors' Practice and Pharmacy

31 December 2006 to 30 June 2007
Jubilee Health Centre, Wednesbury                       1.6      Doctors' Practice and Pharmacy
Ouse Valley Practice, Handcross *                       3.5      Doctors' Practice
Frederick Treves House, Poundbury                       5.9      2 Doctors' Practices, PCT and Pharmacy
Penkridge Medical Practice                              3.2      Doctors' Practice and Pharmacy
Leslie Medical Centre                                   2.3      Doctors' Practice and Pharmacy

30 June 2007 to 31 December 2007
Kippax Health Centre                                    4.9      Doctors' Practice, PCT and Pharmacy
Brough Ambulance Station                                2.5      Ambulance Station and PCT Accommodation
The Glenn Medical Centre, Hebburn                       5.2      Doctors' Practice, PCT and Pharmacy
Sandown Medical Centre, I.o.W.                          3.7      Doctors' Practice and Pharmacy
Waterloo Health Centre, Huddersfield                    2.0      Doctors' Practice and Pharmacy
Robin Hood Lane Health Centre, Sutton *                 7.1      Doctors' Practice


TOTAL                                                  76.7

* properties acquired as part of the Group's acquisition of Cathedral Healthcare
Holdings Limited (now PHIP CHH Limited).







Property Disposals during the Period

The Group disposed of one property during the period. This was a former doctors'
surgery, where the tenant had been relocated to a new PHP facility, and which
was sold for residential development at a price above its investment value. The
property was valued at £0.40 m at 30 June 2006 and disposed of in October 2006
realising a gain of £0.04m.




Revaluation

As reported in the Chairman's Statement, the portfolio valuations have resulted
in surplus for the eighteen month period of £4.9m which has been incorporated
into the Group Balance Sheet, giving a closing investment property valuation of
£281.7m (2006: £197.5m)

The revaluation adjustments for each of the three six month interim periods
were: 31 December 2007: loss of £13.6m, 30 June 2007: gain of £5.1m, 31 December
2006: gain of £13.4m.

The £4.9m increase amounted to 17.3p per Ordinary Share on both a basic and
diluted basis.

The valuation surplus reflects the impact of our successful rent reviews. There
has been a softening of investment yields throughout the UK commercial property
market in the latter half of 2007 and, despite the long leases and secure
covenants that typify our portfolio, it has not been immune. 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 at the period
end is approximately £169 per square metre ('psm') (2006 £162 psm). The average
rent on accommodation let to the NHS (either directly or through the Doctors'
Rent and Rates Scheme) is approximately £196 psm (2006: £157 psm) and the
average pharmacy rent is approximately £239 psm (2006: £220 psm). The weighted
average length of time to the next review is 1.6 years (2006: 1.8 years) across
the portfolio.




Tenant                   Area (sqm) Area (sq ft) Rent (£psm)  Rent (£ psf)
GP's                         78,342      842,961         161            15
NHS                          10,150      109,214         196            18
Pharmacy                      5,742       61,779         239            22
Other                         1,380       14,854         160            15
TOTAL                        95,614    1,028,808         169            16







Tenancy split by Floor Area

The table below indicates the tenancy split by floor area (psm):


GP's                                                    82%
NHS                                                     11%
Pharmacy                                                 6%
Other                                                    1%
TOTAL                                                  100%




Rent Reviews

The Group completed a number of rent reviews during the period and there are a
number of reviews outstanding that we expect to be resolved during the coming
year. The results of the reviews completed during the period added £365,000 to
our rent roll. There are further reviews due from the past year which amount to
some £3m of rent passing. We have accounted for an amount based on expected
outcomes. The "forthcoming rent reviews" table below shows the timing of reviews
across the portfolio. 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 11% (2006 11%) equating to 3.39% p.a. (2006 3.39%p.a.).

Finance and Interest Rate Hedging

Bank borrowings increased from £112.8m to £159.9m during the period, of which
the amounts shown in the table below have been hedged by interest rate swaps at
an average weighted cost rate of 4.78% (2006: 4.89%) (excluding the lenders'
margins).

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


Year                                             Swaps (£m)
2008                                                   90.0
2009                                                   80.0
2010                                                   95.0
2011                                                   85.0
2012                                                   89.0
2013                                                   89.0
2014                                                   90.0
2015                                                   92.0
2016                                                   76.0
2017                                                   70.0
2018                                                   80.0
2019                                                   80.0
2020                                                   80.0
2021                                                   80.0
2022                                                   80.0
2023                                                   80.0
2024                                                   80.0
2025                                                   80.0
2026                                                   50.0
2027                                                   20.0



The table above shows the level of bank borrowings hedged by interest rate swaps
for each of the next twenty financial years (assuming callable swaps are not
called).




Year                                              Swaps (£m)
2008                                                   165.8
2009                                                   168.0
2010                                                   178.0
2011                                                   173.0
2012                                                   177.2
2013                                                   177.2
2014                                                   178.0
2015                                                   179.7
2016                                                   163.8
2017                                                   158.0
2018                                                   168.0
2019                                                   168.0
2020                                                   168.0
2021                                                   131.3
2022                                                    80.0
2023                                                    80.0
2024                                                    80.0
2025                                                    80.0
2026                                                    50.0
2027                                                    20.0







The table above shows the level of bank borrowings hedged by both hedge
accounted interest rate swaps and callable swaps for each of the next twenty
financial years.


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% (2006: 99%) of our rent roll comes directly or
indirectly from the NHS, GPs, PCTs and pharmacy operators.





Covenant Analysis by Annual Rent


GP's                                         78%
Pharmacy                                     10%
PCT's                                         9%
Health Authorities                            2%
Other                                         1%
TOTAL                                       100%





Length of Leases



Analysis of Annual Rent by Term Unexpired



The table below shows an analysis of rent by expiry and indicates that some 84%
(2006: 95%) of the lease income has more than 15 years unexpired.


Less than 5 years                               1%
6 - 15 years                                   15%
15 - 20 years                                  47%
More than 20 years                             37%
TOTAL                                         100%





Security of Income by Term Certain

The table below shows the security of income by term certain and shows the
rental cash flow as a percentage of the year end rent roll, ignoring any
increases and any lease renewals during the subsequent periods. This shows that
by year 15 the Group would still be receiving 84% of its current income, without
further action.


Year                                  % of Passing
                                              Rent
1                                             100%
5                                              99%
10                                             96%
15                                             84%




Geographical Spread



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





Annual Rent by Region


East Anglia                                    3%
East Midlands                                  8%
London                                         9%
North                                          2%
North West                                    12%
South East                                    30%
South West                                     3%
West Midlands                                 15%
Yorkshire & Humberside                        10%
Scotland                                       5%
Wales                                          3%
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)
2008                                         5.441
2009                                         5.005
2010                                         5.036







The Primary Care market



The National Health Service, ("NHS"), which this year celebrates its sixtieth
birthday, is an integral part of life in Britain and is an important and large
part of overall Government spending.

The NHS budget is some £110 bn for 2008/9. We believe that whichever political
party is in power, the twin drivers of demography (an ageing population) and
technology (the ability to perform more procedures and diagnostics outside of
major facilities) will continue to ensure that spending on health will rise by
at least the increase in the country's GDP. Moreover, Government policy is to
continue to switch large amounts of activity and budget into the primary care
arena.



To put it in context there are 1 million patient visits to primary care, per
day, and the GP remains the gatekeeper to the NHS.

This means that the demand for modern purpose built medical centres remains
high. Although at some stages and in some parts of the UK, revenue budgets, out
of which primary care rents are paid, remain under pressure, the NHS overall is
believed to have a surplus for 2007-8.  Spending in parts of the UK that have
greater requirements and greater flexibility over funding such as Wales and
Scotland have seen greater amounts of new building sanctioned in the last 18
months.



However the period has seen a major dislocation in the re-organisation of the
PCT structure within England and this led to delays in approving new projects
within England.

The period under review also saw the publication of Professor Lord Darzi's
report "our NHS our future" which specifically identified the need for at least
100 more GP surgeries and 150 new polyclinics. This is all positive for the
continued expenditure of capital on the primary care estate.

Primary care property market

Within the primary care property market, the pricing of investments has followed
general market trends. For the 18 month period, this has meant that yields
tightened during the period to September 2007 after which, notwithstanding the
undoubted nature of the covenant behind some 89% of our rent roll and the long
lease lengths, yields have moved out. At 31 December, our advisers reported to
us that initial yields were approximately 5.5%. It is worth noting that the
sector has not seen the very dramatic movement out of yields seen in more
secondary property sectors because the demand from investors for this type of
property remains high. It is also our belief that there is little chance of
oversupply of product as there are few if any speculative developments of
primary care space for the NHS market and all new rent reimbursements are
subject to lengthy approval processes and are controlled both by the Heath
Authorities and PCTs and also by the District Valuer's office. Similarly there
are few voids in the sector and particularly in our portfolio. The risk of
oversupply and voids are twin spectres that affect pricing in other parts of the
property market.

These features are part of the reason why adequate banking finance continues to
be available - although it is worth noting that pricing for new facilities has
risen as banks and other funding institutions seek to recover losses incurred
elsewhere in their portfolios.

Adding Value

Our portfolio now has over 100 properties. We have a number of these properties
where there could be extensions or where there is land adjacent to the surgeries
for new development. We are exploring ways of adding value through the
development of these situations. In the period, we carried out our first small
'own development' - constructing on a pre-let basis a pharmacy adjacent to our
existing medical centre at Broxbourne. The returns from this for the Group were
satisfactory.

Elsewhere, as the majority of our leases have a three year review pattern we
have a large number of leases due for rent review in 2008 and in respect of the
last 18 month period. As reported elsewhere the average rental increase obtained
during the period was 11%. We are investigating challenging the judge and jury
nature of the review process in terms of the use by the Government of the
District Valuer's office.

Future prospects

As we are not a developer, our business model does not require us to continue to
buy property. However, we do have strong links with a number of developers who
have good pipelines of deals for us to transact at sensible prices in the
current period. Where necessary, we have adjusted purchase yields to reflect the
changes in the more general property market.

In addition, we are looking at a number of situations where vendors have
companies pregnant with capital gains to sell which enable us as a UK-REIT to
purchase the assets in a tax efficient manner.

We believe that the investments we are purchasing reflect good long term value
for the shareholders. We look forward to reporting more progress in the growth
of our portfolio over the coming 12 month period.










Harry Hyman
Managing Director
9 April 2008


GROUP INCOME STATEMENT
for the eighteen month period ended 31 December 2007
                                                                                Eighteen months            Year 
                                                                                          ended           ended
                                                                                    31 December         30 June
                                                                                           2007            2006
                                                                                          £'000           £'000

Rental income                                                                            21,301          10,850

Finance lease income                                                                        908             281

Rental and related income                                                                22,209          11,131

Net valuation gain on property portfolio                                                  4,857          14,997
Impairment loss                                                                          (3,750)              -
Net gain on disposal of property                                                             44             401
Administrative expenses - exceptional goodwill impairment                                (5,551)              -
Administrative expenses - exceptional UK-REIT conversion costs                             (195)              -
Administrative expenses - other                                                          (7,646)         (2,689)

Operating profit before financing costs                                                   9,968          23,840

Finance income                                                                            2,178             258
Finance costs                                                                           (13,022)         (5,695)
Mark to market loss on derivatives                                                       (2,808)               -

(Loss)/profit before taxation                                                            (3,684)         18,403


Current taxation                                                                           (100)            465
Conversion to UK-REIT charge                                                             (5,157)               -
Deferred taxation                                                                        (3,880)         (2,931)
Deferred taxation release on conversion to UK-REIT status                                29,622                -
Taxation credit/(charge)                                                                 20,485          (2,466)


Profit for the period/year                                                               16,801          15,937


Earnings per share - basic                                                                 59.4p           70.3p
                   - diluted                                                               59.4p           67.7p

Adjusted earnings per share - basic                                                       (1.8p)           17.1p
                            - diluted                                                     (1.8p)           16.5p

Increased net asset value per share since previous annual report  - basic                  54.9p           62.6p
                                                                  - diluted                64.3p           58.5p
              



Total return per share - basic                                                             76.7p           76.1p
                       - diluted                                                           86.1p           72.0p

Dividends paid in the period/year per share                                               21.75p          12.75p

The above relates wholly to continuing operations.




GROUP BALANCE SHEET
as at 31 December 2007
                                                                           At 31 December    At 30 June
                                                                                     2007          2006
                                                                                    £'000         £'000
Non current assets

Investment properties                                                             282,495       199,569
Development properties                                                              2,853             -
Development loans                                                                     182         1,712
                                                                                  285,530       201,281

Net investment in finance leases                                                    2,914         2,492
Derivative interest rate swaps                                                      1,651         1,415

                                                                                  290,095       205,188
Current assets

Trade and other receivables                                                         4,186         1,033
Net investment in finance leases                                                       53            12
Cash and cash equivalents                                                           3,862         3,973


                                                                                    8,101         5,018

Total assets                                                                      298,196       210,206

Current liabilities

Derivative interest rate swaps                                                     (2,808)          (74)
Corporation tax payable                                                               (29)         (181)
UK-REIT conversion charge payable                                                  (1,208)            -
Deferred rental income                                                             (3,660)       (2,466)
Trade and other payables                                                           (3,576)       (2,604)

                                                                                  (11,281)       (5,325)



Non current liabilities

Term loan                                                                        (159,219)     (112,363)
Derivative interest rate swaps                                                       (224)            -
Deferred taxation                                                                       -       (21,193)
UK-REIT conversion charge payable                                                  (3,395)            -


                                                                                 (162,838)     (133,556)

Total liabilities                                                                (174,119)     (138,881)



Net assets                                                                        124,077        71,325

Equity

Share capital                                                                      16,794        11,339

Share premium                                                                      48,009        12,022
Capital reserve                                                                     1,618         1,618
Cash flow hedging reserve                                                           1,427           939
Retained earnings                                                                  56,229        45,407


Total equity *                                                                    124,077        71,325


Net asset value per share   - basic                                                369.42p       314.52p
                            - diluted                                              369.42p       305.06p




Adjusted net asset value per share  - basic                                        369.42p       407.97p
                                    - diluted                                      369.42p       392.35p


*Wholly attributable to equity shareholders of Primary Health
Properties PLC ("PHP PLC")

** Adjusted to remove deferred tax (applicable to 30 June 2006
only)

                                                                          




Group Statement of Changes in Equity
for the eighteen month period ended 31 December 2007


                                                                              Cash flow
                                                  Share       Share   Capital   hedging    Retained
                                                capital     premium   reserve   reserve    earnings     Total
                                                 £'000       £'000     £'000      £'000      £'000      £'000




30 June 2006                                    11,339      12,022     1,618        939     45,407     71,325


Profit for the period                                -           -         -          -     16,801      16,801

Transfer to income statement on cash flow            -           -         -     (1,231)         -     (1,231)
hedges
                                                                                                 

Income and expense recognised directly in
equity:

Gains on cash flow hedges taken to equity            -           -         -      1,317          -      1,317

                                                     
Deferred tax on cash flow hedges                     -           -         -        402          -        402

                                                     

Total recognised income and expense for the
period                                               -           -         -        488      16,801    17,289
Issue of shares (net of expenses)                5,455      35,987         -          -          -     41,442
Dividends paid:
Final dividend for the year ended 30 June
2006 (6.75p)                                         -           -         -          -     (1,639)    (1,639)
First interim dividend for the  period ended
31 December 2007 (7.5p)                              -           -         -          -     (1,821)    (1,821)
Second interim dividend for the period ended         -           -         -          -     (2,519)    (2,519)
31 December 2007(7.5p)


31 December 2007                                16,794      48,009     1,618      1,427     56,229    124,077






Group Statement of Changes in Equity
for the year ended 30 June 2006 (continued)

                                                                               Cash flow
                                                 Share       Share   Capital     hedging  Retained
                                               capital     premium   reserve     reserve  earnings      Total
                                                 £'000       £'000     £'000      £'000      £'000      £'000





1 July 2005                                     11,326      11,952     1,618     (1,292)    32,175     55,779

Profit for the year                                  -           -         -          -     15,937     15,937

Transfer from income statement on cash flow
hedges                                               -           -         -        238          -        238
                                                     

Income and expense recognised directly in
equity:

Gains on cash flow hedges taken to equity            -           -         -      2,949          -      2,949
Deferred tax on cash flow hedges taken to
equity                                               -           -         -       (956)         -       (956)
                                                     

Total recognised income and expense for the
year                                                 -           -         -      2,231     15,937     18,168
Issue of shares (net of expenses)                   13          70         -          -          -         83
Share based payment adjustment                       -           -         -          -        185        185
Dividends paid:
Final dividend for the year ended 30 June
2005 (6.0p)                                          -           -         -          -     (1,359)    (1,359)
Interim dividend for the year ended 30 June
2006 (6.75p)                                         -           -         -          -     (1,531)    (1,531)
                                                     

30 June 2006                                    11,339      12,022     1,618        939     45,407     71,325










GROUP CASH FLOW STATEMENT
for the eighteen month period ended 31 December 2007
                                                                          Eighteen months   Year ended
                                                                        ended 31 December      30 June 
                                                                                     2007         2006
                                                                                    £'000        £'000
Operating activities
(Loss)/profit before tax                                                           (3,684)      18,403
Less: Finance income                                                               (2,178)        (258)
Plus: Finance costs                                                                13,022        5,695
Plus: Mark to market loss on derivatives                                            2,808            -
Operating profit before financing costs and financing income                        9,968       23,840


Adjustments to reconcile Group operating profit to net cash flows from
operating activities
Less: Revaluation gains on property                                                (4,857)     (14,997)
Less: Gains on disposal of property                                                   (44)        (401)
Plus: Impairment loss                                                               3,750            -
Plus: Goodwill impairment                                                           5,551            -
Plus: Shares based payment expense                                                      -          185
Increase in trade and other receivables                                            (1,177)         (54)
(Decrease)/increase in trade and other payables                                      (448)         212

Cash generated from operations                                                     12,743        8,785
UK-REIT conversion charge                                                            (554)           -
Taxation paid                                                                        (272)        (34)


Net cash flow from operating activities                                            12,198        8,970

Investing activities
Receipts from disposal of investment properties                                       464        7,711
Payments to acquire investment properties                                         (48,972)     (25,770)
Interest received from developments                                                    281          219
Development loans advanced                                                         (2,671)      (2,612)
Bank interest received                                                                 83           47
Acquisition of Cathedral                                                          (30,924)           -
Cash acquired on acquisition of Cathedral                                             174            -


Net cash flow used in investing activities                                        (81,846)     (20,624)

Financing activities
Term bank loan drawdowns                                                           47,050       24,000
Placing and option exercise (net of expenses)                                      41,443           (4)
Interest paid                                                                     (12,977)      (6,678)
Equity dividends paid                                                              (5,979)      (2,803)


Net cash flow from financing activities                                            69,537       14,515

(Decrease)/increase in cash and cash equivalents for the period/year                 (111)       2,861


Cash and cash equivalents at start of period/year                                   3,973        1,112

Cash and cash equivalents at end of period/year                                     3,862        3,973







NOTES:

The above results for the eighteen month period ended to 31 December 2007 are
audited.



1.         Accounting policies



Basis of preparation and statement of compliance

The Group's financial statements for the period ended 31 December 2007 have been
presented under International Financial Reporting Standards (IFRS) as adopted by
the European Union.

The financial information contained in this report does not constitute statutory
accounts within the meaning of Section 240 Companies Act 1985. The auditors'
report on the full financial statements under section 235 Companies Act 1985,
for the eighteen month period ended 31 December 2007, contains a statement under
Section 237 (2) or (3) Companies Act 1985. This audit report, which was
unqualified, will be delivered to the Registrar of Companies, together with
financial statements for the eighteen months period ended 31 December 2007.



Convention

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



Segmental reporting

The Group operates under one business segment and one geographical segment,
being investment in primary health care property within the United Kingdom.



Conversion to UK-REIT

The Group's conversion to UK-REIT status was effective from 1 January 2007.



Conversion to UK-REIT results in, subject to continuing relevant UK-REIT
criteria being met, the Group's property profits, both income and gains, being
exempt from UK taxation from 1 January 2007. Therefore, deferred tax liabilities
as at 31 December 2006 of £30.0m were released with £29.6m is credited to the
Group Income Statement and £0.4m to the cashflow hedging reserve.



On conversion to UK-REIT, the Group was subject to a one-off taxation charge
based on the value of properties as at the date of conversion, which amounted to
£5.1m. This amount is payable over four years.


Change of accounting reference date



The Group changed its accounting reference date to 31 December. The current
accounting reference period, which commenced on 1 July 2006, therefore comprises
18 months ended 31 December 2007.



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.





2.         Acquisition of Cathedral Healthcare (Holdings) Limited ("CHH")



On 22 December 2006, the Group acquired 100% of the Ordinary Shares of
CHH for a cash consideration of £31.0m, equivalent to the fair value of the
assets obtained.



CHH was the holding company of a group of companies that owned nine
primary healthcare facilities across the UK which have been incorporated into
the Group's portfolio.


Consideration of £30.9m was paid upon completion with a further 0.1m paid in
April 2007. Cash acquired upon acquisition of CHH amounted to £0.2m.


The total gross assets acquired once fully developed are expected to
amount to £39.2m. These assets are expected to generate a total annual rental
income of approximately £2.0m, reflecting an initial yield of approximately 5%.



As the Group paid consideration equal to the assessed value of the
acquired properties, goodwill arises in respect of the other liabilities,
principally a deferred tax liability of £4.9m. However, on conversion to
UK-REIT, the deferred tax liability is eliminated resulting in an impairment of
goodwill arising on acquisition.

No further goodwill has deemed to have been acquired from other assets.


Fair values of the net assets at date of acquisition were as follows:




                                         £'000



Investment properties                   21,300
Development properties                   9,525
Trade receivables                          810
Cash                                       173
Trade payables                         (1,346)
Deferred tax liabilities               (4,951)
                                   -----------

Net assets acquired                     25,511



Goodwill arising on acquisition          5,551
                                   -----------
                                        31,062




3           Investment properties



The freehold, leasehold and development properties have been independently
valued at fair value by Lambert Smith Hampton Chartered Surveyors and Valuers,
as at 31 December 2007 in accordance with IAS 40 "Investment Property"..



The revaluation loss for the six month period ended 31 December 2007 amounted to
£13.6m, giving an overall revaluation gain of £4.9m for the eighteen month
period ended 31 December 2007.



Property additions for the six months ended 31 December 2007 amounted to £21.7m,
giving total additions for the eighteen month period of £83.6m (including £30.8m
on the PHIP CHH acquisition).  There were no properties disposed of in the six
months to 31 December 2007. Properties disposed of during the eighteen month
period ended 31 December 2007, valued at £0.4m as at 30 June 2006, realised a
gain of £0.04m.



An impairment of £3.75m has been reflected as an impairment provision against
the capitalised cost of property.

This impairment reflects the difference between the estimated market value of
the properties in the course of the development at the period-end and their
contracted development cost.


4           Earnings per share


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

                          Eighteen months to 31 December 2007                Year to 30 June 2006
                            Net profit                                 Net profit                          
                       attributable to                            attributable to                          
                             Ordinary       Ordinary^                    Ordinary       Ordinary^             
                         Shareholders          Shares  Per Share     Shareholders          Shares Per Share
                                £'000          number      pence            £'000          Number     pence
                                                                                                            
Basic earnings per             16,801      28,297,852       59.4           15,937      22,667,946      70.3 
share
                                                                                                            
Option conversion *                  -               -                           -        861,960           
                                                                                                            
Diluted earnings per           16,801      28,297,852       59.4           15,937      23,529,906      67.7 
share
                                                                                                            
Adjusted earnings                                                                                           
per share for the
period
                           Eighteen months to 31 December 2007                Year to 30 June 2006
                           Net profit                                  Net profit                          
                      attributable to                             attributable to                          
                             Ordinary        Ordinary^                   Ordinary       Ordinary^          
                         Shareholders          Shares  Per Share     Shareholders          Shares Per Share
                                £'000          number      pence            £'000          number     pence
                                                                                                            
Basic earnings per             16,801      28,297,852       59.4           15,937      22,667,946      70.3 
share
Adjustment to remove:                                                                                       
   Performance                  2,591                                           -                          
   Incentive fee#
   Goodwill                     5,551                                           -                          
   impairment
   UK-REIT                                                                                                  
   conversion charge            5,157                                           -
   Deferred tax                 3,880                                       2,931                           
   charge
   Deferred tax               (29,622)                                          -                          
   release
   Net valuation               (4,857)                                    (14,997)                          
   gains
                                                                                                            
Adjusted basic                   (499)     28,297,852       (1.8)           3,871      22,667,946      17.1 
earnings per share
Options conversion*                  -              -                           -       **861,960           
                                                                                                            
Adjusted diluted                 (499)     28,297,852       (1.8)           3,871      23,529,906      16.5 
earnings per share




^    Weighted average number of Ordinary Shares in issue during the period.



* 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 IAS 33 '
Earning per share'



** All Management Options were exercised in full on 21 September 2006.


#   The Performance Incentive Fee depends primarily on revaluation gains, which
are eliminated in calculating adjusted earnings per share.


5           Performance incentive scheme


On 16 November 2006, Shareholders approved the amendments to the Management
Agreement whereby 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 shall be determined by comparing the variation in the stated
net asset value per share (on a fully diluted basis, adjusting for deferred tax
and the REIT conversion charge and adding back gross dividends paid or declared
per share in such period), against the fully diluted net asset value per share
from the previous period's audited accounts.

The performance incentive fee was initially calculated on an annual basis ending
30 June. However, following the Group's conversion to UK-REIT and change in its
accounting reference date to 31 December, it has been necessary to calculate the
fee based in six-monthly steps, using interim accounts.  From 1 January 2008,
the fee will be calculated on an annual basis, using the audited financial
statements.

Included in Administration Expenses within the Income Statement is a performance
incentive fee expense of £2,591,000 (six months to 30 June 2007: £1,839,000, six
months to 31 December 2006: £752,000). There is no performance incentive fee
payable for the six months ended 31 December 2007.






6. Dividends paid

Dividends paid in the period are as follows:

                                No of shares    Eighteen months               Year 
                               dividend paid                 to                 to
                                        upon        31 December            30 June                              
                                                           2007               2006
                                                          £'000              £'000


Final dividend for the year      24,277,718              1,639                  -
ended 30 June 2006 (6.75p)       
First interim dividend for the   24,277,718              1,821                  -
period ending 31 December 2007   
(7.5p)
Second interim dividend for the  33,587,094              2,519                  -
period ending 31 December 2007   
(7.5p)
Final dividend for the year      22,677,718                  -               1,359
ended 30 June 2005 (6.0p)        
Interim dividend for the year    22,677,718                  -               1,531
ended 30 June 2006 (6.75p)       


                                                         5,979              2,890


A third interim dividend was paid on 28 March 2008, in respect of the
period ended 31 December 2007, of 8.25p per Ordinary Share (2006: final dividend
of 6.75p per Ordinary Share), amounting to a total of £2,770,935 (2006:
£1,530,746). No final dividend is proposed.



7       Taxation

                                                  31 December 2007    30 June 2006
                                                             £'000           £'000

Tax(credit)/charge in the Group Income
Statement:
The tax(credit)/charge is made up as follows:


Current tax

UK Corporation tax                                             27             181
Adjustment in respect of prior period/year                     73            (646)
                                                              100            (465)

Charge on conversion to UK-REIT status                      5,157               -

                                                            5,257            (465)

Deferred tax

Deferred tax charge for the 6 months to 31                  3,880           2,931
December 2006/year
Deferred tax release on conversion to UK-REIT             (29,622)              -
status (see note 1)

                                                          (25,742)          2,931
Conversion to a UK-REIT means that the Group is
no longer subject to UK Corporation Tax.   This
enables the Group to release its deferred tax
liabilities at the expense of suffering a
conversion (5.1m) plus additional legal costs
(£0.20m).


Taxation (credit)/charge in the Group Income              (20,485)          2,466
Statement


Taxation in the Balance Sheet:
Deferred tax liability
   - on temporary differences                                   -           6,186
   - on revaluation gains                                       -          14,605
   - on derivative interest rate swaps                          -             402

Deferred tax liability at end of period                         -          21,193

Deferred tax reconciliation:
Balance at beginning of period/year                        21,193          17,860
Charge for the period                                       3,880           2,931
Deferred tax liability on acquisition of                    4,951               -
Cathedral Healthcare (Holdings) Limited
Deferred tax on cash flow hedge                              (402)            402
Deferred tax release on conversion to UK-REIT              (29,622              -
status

Balance at end of period/year                                   -          21,193







8.         Net asset value calculations


Net asset values have been calculated as follows
                                             Eighteen months ended                  Year to 
                                                       31 December                  30 June   
                                                              2007                     2006
                                                             £'000                    £'000

Net assets:
Per Group Balance Sheet *                                  124,077                   71,325
Add - Receipts from the exercise of                              -                    2,736
Management Options

                                                           124,077                   74,061


                                                      No. of Shares            No. of Shares
Ordinary Shares:
Issued share capital *                                  33,587,094               22,677,718
Add - New Shares issued assuming the                             -                1,600,000
exercise of Management Options


                                                        33,587,094               24,277,718

Basic net asset value per share                             369.42p                  314.52p
Diluted net asset value per share                           369.42p                  305.06p



* Figures for the basic net asset value calculations



Calculations assume that the dilution takes place on the respective Balance
Sheet dates.

Diluted adjusted net asset value has been calculated as follows:


                                                                                Eighteen months ended         Year to   
                                                                                          31 December         30 June
                                                                                                 2007            2006   
                                                                                                £'000           £'000

Net assets:                                                                                   124,077          71,325
Per Group Balance Sheet
Adjustments to add back:
Deferred tax on temporary differences                                                               -           6,186
Deferred tax on revaluation gains                                                                   -          14,605
Deferred tax on derivatives                                                                         -             402

Adjusted net assets                                                                           124,077          92,518

Add - Receipts from the exercise of Management Options                                              -           2,736




                                                                                              124,077          95,254

                                                                                         No. of shares  No. of shares
Ordinary Shares:
Issued share capital                                                                       33,587,094      22,677,718
Add - New Shares issued assuming the exercise of Management Options                                 -       1,600,000


                                                                                           33,587,094      24,277,718


Basic adjusted net asset value per share                                                        369.4p         408.0p
Diluted adjusted net asset value per share                                                      369.4p         392.4p



Calculations assume that the dilution takes place on the respective Balance
Sheet dates.





The statutory accounts for the eighteen months ended 31 December 2007 will be
delivered to Registrar of Companies following the Company's Annual General
Meeting.   The Annual Report was signed on 9 April 2008 and will be posted to
shareholders and those on the mailing list on or around 28 April 2008. 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 17
June 2008 at 2.30 pm in the Board Room, at Ground Floor, Ryder Court, 14 Ryder
Street, London, SW1Y 6QB.





The financial information set out above does not constitute the Company's
statutory financial statements for the period ended 31 December 2007 or 30 June
2006. 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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