Final Results

RNS Number : 5720O

CareCapital Group plc

30 June 2010

 



30 June 2010

CARECAPITAL GROUP PLC

("CareCapital", "the Group" or "the Company")

Financial statements for the year to 31 December 2009 & Notice of AGM

CareCapital plc (AIM: CARE), the healthcare real estate developer and owner, is pleased to announce its audited financial statements for the year to 31 December 2009.

Highlights

·   A year of successful consolidation in difficult market conditions

·   In the UK, entered into agreement for development of the Southampton Gateway development

·   Outline planning consent for Buckley, North Wales obtained

·   Financial/legal completion of a development in Coventry, which includes a library for the City Council

·    At 31 December 2009 the value of our completed investment properties was £49.8 million (2008: £52.3 million) and developments in progress was £10.2 million (2008: £3.5 million)

·   Rental income from the completed investment properties increased to £3.4 million (2008: £2.86 million)

·   Disposed of the bulk of UK portfolio for consideration of £23.5 million

·   Rental income from the properties disposed in February 2010 amounted to £1.4 million on an annualised basis

·   Net cash proceeds after repayment of associated senior debt of £4.4 million used to pay down other short term debts

·   The loss for the year after tax was £1.77 million after writing off goodwill (£1.75 million) and development costs (£0.5 million) together with a reduction in the deferred tax provision of £1.7 million (2008: loss £1.69 million)

·   Valuation of portfolio in August 2009 shows an increase and progression over previous year showing stability of our property sector niche

·   German portfolio being actively marketed

·   Participation in leadership roles in a number of advanced cancer treatment centres

For further information please visit www.carecapital.co.uk or contact:

Paul Stacey, Managing Director Clive Hyman, Finance Director	Simon Leathers	Simon Hudson, Paul Young
CareCapital Group Plc	Daniel Stewart & Co. Plc	Tavistock Communications
Tel: [phone]	Tel: [phone]	Tel: [phone]
[e-mail]	[e-mail]	[e-mail]
[e-mail]		[e-mail]

Chairman's and Chief Executive's statement

We are pleased to present our report on the 2009 financial results for CareCapital Group plc and the Group's activities since our last year end statement which was published on 29 June 2009.

2009 proved to be a year of challenges given the prevailing economic conditions and uncertainties. However the market for medical office buildings both in the UK and Germany, the Group's operational territories, has remained more stable than that of other property sectors and Senior Debt for quality projects is readily available on commercial terms. The particular challenge for a Company such as ours has been to secure equity finance on terms that are minimally dilutive to existing shareholders. Consequently, in order to make progress in achieving this aim, we decided to dispose of the bulk of our UK built portfolio and make selected realisations from our German portfolio. The proceeds have and will continue to reduce our short term debt and provide working capital and equity funding to enable us to develop our very considerable development pipeline.

On 8 February 2010 we announced that we had disposed of 14 primary care investment properties for a cash consideration of £23.5 million and realising net cash proceeds of £4.4million after the repayment of the senior debt attributable to these properties. These proceeds were used for the repayment of a substantive proportion of the Group's short term debt and the balance retained as working capital. In addition, instructions have been given for the marketing of the German portfolio.

Our development programme has been progressed since the last Chairman's statement. In Germany, the 3,600 sq m Adlershof 2 project was completed on 1 May 2010 and is being tenanted with further progress being made on other projects. In the UK we have entered an agreement with a major international development company whereby that company assumes responsibility for the development of the residential element of the Southampton Gateway project; obtained outline planning consent for the 4,000 sq m project in Buckley, North Wales and financial/legal completion of the 2,500 sq m development on Coventry where work will start on site this month with completion of the scheme, which includes a library for the City Council, in August of next year.

The emphasis on progressing the development pipeline and other opportunities has enabled a rationalisation of the Group's staffing and other central overhead costs. The benefit of these reductions in cost will be principally realised in 2010.

At 31 December 2009 the value of our completed investment properties was £49.8 million (2008: £52.3 million) and developments in progress was £10.2 million (2008: £3.5 million). Rental income from the completed investment properties increased to £3.4 million (2008: £2.86 million). Rental income from the properties disposed of in February 2010 amounts to £1.4 million on an annualized basis. The loss for the year after tax was £1.77 million after writing off goodwill (£1.75 million) and development costs (£0.5 million) together with a reduction in the deferred tax provision of £1.7 million (2008: loss £1.69 million).

As in previous years valuations of the investment properties have been independently carried out. These valuation exercises were conducted in August 2009 in respect of both the UK and German properties and showed an increase in value over previous valuations as a consequence of slightly firmer capital yields. This outcome further demonstrates the underlying stability within this particular part of the property market.

Whilst of modest corporate size, Care Capital has a team of senior management with very many decades of experience of Healthcare Real Estate development throughout the world. These skills have enabled us to take a leading role in a number of specialist Healthcare projects over the last twelve months, particularly in the area of advanced Cancer therapies.

CareCapital has entered into a joint venture as a 25% shareholder in Proton Therapy Global Management (PTGM). The company will design, develop and manage a global network of proton beam therapy centres, providing access to this specialised and highly effective treatment to the world's growing population of cancer patients. Proton beam therapy is a precise form of radiation treatment that has been very successful in treating a wide range of localised tumors, while leaving healthy tissue mostly intact. To date, letters of intent have been signed to build four centres in the US in partnership with some of the world's most prominent hospitals, and one in the UK, at a site in central London. It is anticipated that PTGM will develop and manage fifteen centres over the next seven years.

CareCapital has spent 12 months investigating opportunities in auxiliary healthcare services in order to extend our existing tenant portfolio. We are pleased to announce collaboration with Professor David Sinclair (no relation to Dr Michael Sinclair) and Dr Roy Eskapa who we will be working with us to launch a new programme for the treatment of alcoholism. This programme, "The Sinclair Programme", will run from healthcare centres across London, expanding over the coming years to sites across the UK and possibly further afield.

CareCapital's board is in receipt of an offer for two of its developments in Germany and is in discussions with its major shareholders to raise additional equity by means of a placing as a result of an approach from a third party. It is likely one or other or both events will take place and on this basis the Directors are of the opinion that the Group can continue to meet its obligations when they fall due for at least the next 12 months. At the appropriate time we will provide shareholders with further information.

Following the publication of these accounts, Steve Wilden, our Finance Director, will be stepping down from his position, whilst continuing as a consultant to the company. Steve has been a colleague of both Paul Stacey and myself, for many years. Paul and I would like, publicly, to record our appreciation to Steve for his dedication and contribution to the company. Steve's replacement as Finance Director will be Clive Hyman, who has been working with us since the start of this year.

Clive is joining us as Group Finance Director and as Chief Executive Officer of our German business. His international skills in deal related areas and experience in the property development world have already proved to be highly valuable. He was interim Chief Operating Officer and Group Finance Director of Candy and Candy Limited in 2005 and prior to this a partner with KPMG in London for 10 years being one of the founder partners of their transaction services, private equity and early stage advisory businesses. In addition he ran a private equity fund for KPMG between 1999 and 2003.

Our compact and dedicated team of professionals in the UK and Germany has much to be proud of. They have built up one of the largest development pipelines in our sector, successfully disposed of the bulk of our UK built portfolio and maximised rental income from our properties. Paul and I would like them to know how grateful we are for all their efforts.

Dr. Michael Sinclair

Chairman

Paul Stacey
Chief Executive

30 June 2010

Consolidated statement of comprehensive income

For the year ended 31 December 2009

	Group 2009	Group 2008
	£	£
Revenue	3,414,698	2,856,110
Cost of sales	(455,296)	(416,025)
Gross profit	2,959,402	2,440,085
Administrative expenses	(1,808,043)	(1,750,826)
Impairment of goodwill	(1,751,960)	-
Net gain/(loss) revaluation of investment properties	596,807	(1,655,932)
Development costs written off	(502,032)	(16,933)
Operating loss	(505,826)	(966,673)
Finance income	4,303	1,208,929
Finance costs	(2,963,463)	(2,548,868)
Change in fair value of financial instruments	-	92,256
Loss on ordinary activities before taxation	(3,464,986)	(2,214,356)
Taxation	1,696,466	524,195
(Loss) after taxation	(1,768,520)	(1,690,161)
Loss for the period		-
- attributable to equity shareholders	(1,903,049)	(1,688,027)
- attributable to minority interest	134,529	(2,134)
	1,768,520	(1,690,161)
Other comprehensive income
Exchange differences on translating foreign operations	(648,614)	488,168
Total comprehensive loss for the year	(2,417,134)	(1,201,993)
Total comprehensive income/(loss) attributable to:
-Equity shareholders	(2,486,802)	(1,248,676)
-Minority interest	69,668	46,683
	(2,417,134)	(1,201,993)
Loss per ordinary share
Basic and diluted - total	(2.48)p	(2.20)p
Weighted average number of shares (000s)	76,754	76,754

Consolidated statement of financial position

As at 31 December 2009

	Group 2009	Group 2008
	£	£
Non-current assets
Goodwill	-	1,751,959
Investment properties	55,982,399	52,331,824
Development properties	4,4074,198	3,512,716
Leasehold improvements	73,908	79,914
Plant and equipment	47,199	58,941
	60,177,704	57,735,354
Current assets
Trade and other receivables	512,571	465,181
Cash and cash equivalents	268,573	2,519,519
	781,144	2,984,700
Total assets	60,958,848	60,720,054
Current liabilities
Trade and other payables	(2,453,857)	(1,940,940)
Borrowings	(9,207,414)	(4,438,452)
	(11,661,271)	(6,379,392)
Non-current liabilities
Borrowings	(37,376,534)	(38,327,667)
Deferred tax	(406,954)	(2,103,420)
	(37,783,488)	(40,431,087)
Total liabilities	(49,444,759)	(46,810,479)
Net assets	11,514,089	13,909,575
Equity
Share capital	767,541	767,541
Share premium account	1,397,500	1,397,500
Share option reserve	412,254	390,606
Reverse acquisition reserve	11,038,204	11,038,204
Exchange movements reserve	(140,349)	443,404
Profit and loss account	(2,206,518)	(303,469)
Equity attributable to shareholders of the Parent	11,268,632	13,733,786
Minority Interest	245,457	175,789
Total equity	11,514,089	13,909,575

Consolidated statement of cash flows

For the year ended 31 December 2009

	Group 2009	Group 2008
	£	£
Cash flow from operating activities
(Loss)/profit after taxation	(1,769,520)	(1,690,161)
Adjustments:
Taxation	(1,696,466)	(524,195)
Change in fair value of financial instruments	-	(92,256)
Finance costs	2,963,463	2,548,868
Finance income	(4,303)	(1,208,929)
Unrealised net revaluation (gains)/losses on investment properties	(596,807)	1,655,932
Impairment of goodwill	1,751,959	-
Depreciation	33,132	38,460
Write off of development costs incurred	502,032	16,933
Share based payments	21,648	21,649
Cash flows from operations before changes in working capital	1,206,138	766,301
Change in trade and other receivables	(47,389)	(13,770)
Change in trade and other payables	556,477	808,538
Cash generated/(used) from operations	1,715,226	1,561,069
Interest paid	(2,457,309)	(2,186,557)
Cash flows from operating activities	(742,083)	(625,488)
Cash flows from investing activities
Purchase of investment property	-	(520,845)
Capital expenditure on development properties	(6,305,031)	(8,461,421)
Purchase of leasehold improvements	(3,815)	(400)
Purchase of plant and equipment	(13,199)	(31,133)
Sale of plant and equipment		-
Interest received	4,303	10,933
Cash flows from investing activities	(6,317,742)	(9,002,866)
Cash flows from financing activities
New mortgage loans raised (net of transaction costs)	4,446,523	22,868,788
Repayment of loans	(823,382)	(12,588,154)
Directors' loans (net of costs)	300,000	3,666,724
Other short term loans	950,000	-
Cash flow from financing activities	4,873,141	13,947,358
Increase/(decrease) in cash and cash equivalents	(2,186,684)	4,319,004
Cash and cash equivalents at 1 January	2,455,257	(1,863,747)
Cash and cash equivalents at 31 December	268,573	2,455,257

Consolidated statement of changes in equity

For the year ended 31 December 2009

	Share capital £	Share premium £	Share options reserve £	Reverse acquisition reserve £	Exchange rate movement reserve £	Profit and loss account £	Equity share-holders' interest £	Minority interest £	Total £
Balance at 1 January 2008	767,541	1,397,500	209,332	11,038,204	4,053	1,384,558	14,801,188	129,106	14,930,294
Exchange rate movement	-	-	-	-	439,351	-	439,351	48,817	488,168
Loss for the year	-	-	-	-	-	(1,688,027)	(1,688,027)	(2,134)	(1,690,161)
Total comprehensive income	-	-	-	-	439,351	(1,688,027)	(1,248,676)	46,683	(1,201,993)
Share based payment
- employee services*	-	-	21,649	-	-	-	21,649	-	21,649
- costs of raising finance	-	-	159,625	-	-	-	159,625	-	159,625
Balance at 31 December 2009	767,541	1,397,500	390,606	11,038,204	443,404	(303,469)	13,733,786	175,789	13,909,575
Balance at 1 January 2009	767,541	1,397,500	209,332	11,038,204	4,053	1,384,558	14,801,188	129,106	14,930,294
Exchange rate movement	-	-	-	-	(583,753)	-	(583,753)	(64,861)	488,168
Loss for the year	-	-	-	-	-	(1,903,049)	(1,903,049)	134,529	(1,768,520)
Total recognised income and expenditure	-	-	-	-	(583,753)	(1,903,049)	(2,248,802)	69,668	(2,417,134)
Share based payment
- employee services	-	-	21,648	-	-	-	21,648	-	21,648
Balance at 31 December 2009	767,541	1,397,500	412,254	11,038,204	(140,349)	(2,206,518)	11,268,632	245,457	11,514,089

Notice of Annual General Meeting

Notice is hereby given that the Annual General Meeting of CareCapital Group Plc ("the Company") will be held at 54 Baker Street, London W1U 7BU on Tuesday, 27 July 2010 at 10.00 a.m.  Details of the resolutions proposed are included in the Notice of the Annual General Meeting which will be posted to shareholders by 3 July 2010 and is available on the Company's web site at www.carecapital.co.uk.

Financial Statements & Audit Opinion

The financial information included in this preliminary results announcement for the years ended 31 December 2009 and 31 December 2008 does not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006. It represents an extract from the statutory accounts, which for the year ended 31 December 2008 have been delivered to the Registrar of Companies and which for the year ended 2009 were today approved by the Board of directors and delivered to the Registrar of Companies.

The auditors have issued an unqualified opinion in respect of the financial statements which does not contain any statements under the Companies Act 2006, Section 498(2) or Section 498(3).  The Auditors have raised an Emphasis of Matter in relation to Going Concern as follows: "In forming our opinion on the financial statements, which is not qualified, we have considered the adequacy of the disclosure made in accounting policy (a) to the financial statements concerning the company's ability to continue as a going concern. The group had net current liabilities of £10.9m as at 31 December 2009 and has identified a requirement to raise additional funds through a combination of asset disposals and new equity from existing and potential investors, the issue of which requires the directors to successfully identify investors and complete a placing which will require the consent of shareholders in general meeting.  Moreover, the trading forecasts prepared by the directors assume an increase in existing activities and the exploitation of new ventures available to the group. These conditions, along with the other matters explained in accounting policy (a) to the financial statements, indicate the existence of a material uncertainty which may cast significant doubt about the group and the company's ability to continue as a going concern. The financial statements do not include the adjustments that would result if the group and the company was unable to continue as a going concern."

Basis of preparation

The financial information has been prepared  in accordance with the recognition and   measurement   criteria  of  International  Financial  Reporting  Standards ("IFRSs")  and with IFRSs as adopted for use in the European Union. Attention is drawn  to  the  detailed  disclosures  made  in the audited Financial Statements regarding  the Basis of Preparation and  in particular the following disclosures extracted  directly from  the audited  Financial Statements  in respect of Going Concern.

"As at 31 December 2009, the Group had net current liabilities of £10.9 million including a Director's loan of £4.3 million and other short term loans of £ 0.95 million which, at the date of approval of these accounts were overdue. This figure also includes the £2.6 million proportion of a loan which is due in over 1 year, but was the subject of a technical covenant breach during the year. The Company have not breached any substantive terms of the loan such as repayments, and have received written assurances from the bank that the loan will not be recalled. However, this does not amount to a formal waiver as the bank has reserved its position, as is customary in these circumstances. In addition to the borrowings described, the Group has operating overheads and several development projects progressing which will require additional working capital in order to fund the initial development work.

During January 2010 the Group received an offer for the substantial part of its UK portfolio which was accepted. This transaction completed during February 2010 and enabled the Group to repay £3.2 million of its short term loans and £17.8 million of loans due in over one year, as well as releasing £1.3 million for working capital requirements. The Group has also received an offer on two of its German properties which the directors are considering.  In addition, the same purchaser has indicated they will buy two other properties when the rent reviews have been completed next year in 2011, if the directors determine to sell the properties.  The Group is also in discussions with its own existing shareholders and other interested outside parties on raising new equity via a placing and the directors are confident that there is sufficient investor interest to support such a placing.

The lenders of the short term borrowings which are overdue have indicated they will not seek repayment of their loans until adequate funds have been raised from the disposal of the German properties to be sold. The disposal proceeds from the sale of the two German properties will enable short term debt to be repaid and the second charge over the German portfolio to be released and further funding to be negotiated in Germany. 

In addition, the directors have prepared trading and cash flow forecasts for the Group for the period to 31 December 2011 as part of a five year plan. The forecasts incorporate trading assumptions, including increased development activity in the UK and Germany and the exploitation of new ventures available to the Group as discussed in the Chairman's Statement, as well as assumptions regarding the funding of the business in future. The directors believe these forecasts to be realistic, and consequently have prepared the financial statements on the going concern basis, which assumes that the Group will continue in operational existence for the foreseeable future. However, due to the need to successfully identify investors and complete the placing, including obtaining shareholder consent for the issue of new shares, there is a material uncertainty which may cast significant doubt about the ability of the Company to continue as a going concern.

If the fund raising efforts are unsuccessful the remaining German portfolio will be disposed of as soon as practical and will provide further working capital whilst other funding options are considered."

Publication of the Annual Report & Accounts

Copies of the Annual Report & Accounts will be posted on the Company's web site at www.carecapital.co.uk.  Printed copies of the financial statements will be posted to shareholders by 3 July 2010.

 

END

 

 

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