Half Year Results
CareCapital Group plc
12 September 2007
12 September 2007
CareCapital Group Plc
("CareCapital" or "the Group")
Half Year Results for the Six Months to 30 June 2007
CareCapital Group Plc (AIM: CARE), a healthcare real estate developer and
investor in the UK and in Germany, is pleased to announce its half year results
for the six months to 30 June 2007.
Highlights
• Group rental income up 53% to £951,034 (2006: £623,456)
• Profit before tax of £675,026 (2006: loss of £971,874)
• Property acquisitions and developments of £3.0 million completed in the
period
• Rent reviews in the period have produced an average uplift of 22%
• Portfolio value up 56% to £33.5 million (2006: £21.4 million)
• Adjusted diluted Net Asset Value ("NAV") per share* up 29 % to 22p (2006:
17p)
• Robust and growing development pipeline in UK and Germany.
* Adjusted diluted NAV per share - excludes deferred tax on property
portfolio revaluation. Calculated on an equivalent basis for 2006.
Dr. Michael Sinclair, Chairman, commented, "Our development pipeline will result
in significant increases in owned assets and rental revenues in coming years.
The market for quality medical office buildings will continue to grow, is not
speculative and will offer a stable long term investment that is resistant to
external economic conditions. CareCapital is well positioned to progress within
this environment."
Paul Stacey, Chief Executive, added, "Progress on projects in the UK and Germany
is proceeding as planned. A number of these developments have increased in both
size and complexity as they accommodate additional health and community services
and more advanced technologies. In some cases these additional services are to
be provided to NHS and private patients by private sector and voluntary
organisations as part of the emerging mixed economy of primary care. We believe
that these developments have the potential of delivering enhanced rental returns
over the longer term"
For further information, please contact:
CareCapital Group Plc Daniel Stewart & Co. Plc Tavistock Communications
Paul Stacey, Chief Executive Lindsay Mair, Simon Hudson,
Steve Wilden, Finance Director Director, Corporate Finance Paul Youens
Tel: 020 7034 1949 Tel: 020 7776 6550 Tel: 020 7920 3150
pstacey@carecapital.co.uk lindsay.mair@danielstewart.co.uk shudson@tavistock.co.uk
swilden@carecapital.co.uk pyouens@tavistock.co.uk
Chairman's Statement
I am pleased to report on the Interim Financial Results for CareCapital Group
Plc for the six month period ended 30th June 2007.
The Group has produced a robust financial performance during the period under
review and made significant progress in terms of both profit before tax and the
increase in value of its income generating property assets against the
comparable period in 2006.
At 30th June 2007 the Group's medical office buildings and other primary care
facilities were valued at £33.5 million (30 June 2006: £21.4 million, 31
December 2006: £29.5 million). Profit before tax for the six months under review
was £675,026 (2006: loss of £971,874 and a profit of £1,622,258 for the year to
31 December 2006). Profit after tax was £581,858 (2006: loss of £978,369 and a
profit of £592,291 for the year to 31 December 2006).
Four rent reviews were negotiated in the first six months of 2007. These
resulted in increases averaging 21.9% on the applicable rents. This is an
improvement on the outcomes achieved in 2006 however there can be no certainty
that this level of performance can be maintained.
In April the patient hotel in Southampton was disposed of following the
cessation of the contract to provide accommodation for patients attending the
local radiotherapy centre. The sale price was £1.675 million against a book
valuation of £1.5 million.
Our development pipeline in both the UK and Germany continues to be progressed
in line with anticipated timetables. This will result in significant increases
in owned assets and rental revenues in coming years. A number of these projects
have grown in both size and complexity as the delivery of primary care
encompasses additional services to be delivered at a local level. I remain of
the view that the market for quality medical office buildings will continue to
grow, is not speculative and will offer a stable long term investment that is
resistant to external economic conditions. CareCapital is well positioned to
progress within this environment.
Dr Michael Sinclair,
Chairman
11 September 2007
Consolidated income statement for the six months ended 30 June 2007
Six Six Year
months months months
ended ended ended
30 June 30 June 31 December
2007 2006 2006
Unaudited Unaudited Audited
Notes £ £ £
-----------------------------------------------------------------------------------------
Continuing operations
Revenue 951,034 623,456 1,335,733
-----------------------------------------------------------------------------------------
Cost of sales (69,463) (24,532) (48,813)
-----------------------------------------------------------------------------------------
Gross profit 881,571 598,924 1,286,920
Administrative expenses (846,198) (824,274) (1,728,927)
-----------------------------------------------------------------------------------------
35,373 (225,350) (442,007)
Other operating income 2 126,180 0 0
Net surplus on revaluation of investment 959,000 0 3,528,023
properties
-----------------------------------------------------------------------------------------
Operating profit before exceptional items 1,120,553 (225,350) 3,086,016
Exceptional costs of AIM listing 0 (293,791) (589,574)
-----------------------------------------------------------------------------------------
Operating profit after exceptional items 1,120,553 (519,141) 2,496,442
exceptional items
Finance income 42,383 111,188 186,608
Finance costs (620,495) (585,571) (1,089,873)
Change in fair value of financial instruments 132,585 21,650 29,081
-----------------------------------------------------------------------------------------
Net finance costs (445,527) (452,733) (874,184)
-----------------------------------------------------------------------------------------
Profit / (Loss) before tax 675,026 (971,874) 1,622,258
Taxation (93,168) (6,495) (1,029,967)
-----------------------------------------------------------------------------------------
Profit / (Loss) on ordinary activities 581,858 (978,369) 592,291
after taxation
-----------------------------------------------------------------------------------------
Discontinued operations
Profit / (Loss) from discontinued 3 (40,325) 20,477 85,532
operations
-----------------------------------------------------------------------------------------
Profit / (Loss) for the period attributable to 541,533 (957,892) 677,823
equity shareholders
-----------------------------------------------------------------------------------------
Earnings per Ordinary
Share
-Basic 4 0.71p (0.14)p 0.93p
- Continuing operations 4 0.76p (0.14)p 0.81p
- Discontinued operations 4 (0.05)p - 0.12p
- 4 0.70p (0.14)p 0.92p
Diluted
- Continuing operations 4 0.75p (0.14)p 0.80p
- Discontinued operations 4 (0.05)p - 0.12p
Weighted average number of shares (000') 4 76,754 70,696 73,544
-----------------------------------------------------------------------------------------
Consolidated balance sheet as at 30 June 2007
As at As at As at
30 June 31 December 30 June
2007 2006 2006
Unaudited Audited Unaudited
Notes £ £ £
Non - current assets
Intangible assets 1,751,959 1,751,959 1,751,959
Investment properties 33,477,046 29,517,118 21,430,981
Development properties 904,542 504,916 403,501
-----------------------------------------------------------------------------------------
36,133,547 31,773,993 23,586,441
Leasehold improvements 93,300 0 0
Plant and equipment 68,003 28,156 36,083
36,294,850 31,802,149 23,622,524
-----------------------------------------------------------------------------------------
Current assets
Inventories - - 1,200
Trade and other receivables 677,827 567,160 509,142
Cash and cash equivalents 1,576,299 2,321,933 5,674,133
Financial instruments 336,825 206,781 0
-----------------------------------------------------------------------------------------
Total Current Assets 2,590,951 3,095,874 6,184,475
Non current assets classified as held for
sale 2 0 1,500,000 0
-----------------------------------------------------------------------------------------
Total assets 38,885,801 36,398,023 29,806,999
-----------------------------------------------------------------------------------------
Current liabilities
Trade and other payables (1,136,091) (1,091,623) (901,909)
Tax liabilities (292) (292) (292)
Borrowings, including finance leases (395,583) (365,801) (379,568)
Derivative financial instruments 0 (99,495) (106,926)
-----------------------------------------------------------------------------------------
Total Current Liabilities (1,531,966) (1,557,211) (1,388,695)
Non - current liabilities
Borrowings, including finance leases (20,828,479) (18,511,279) (13,770,305)
Loan from investor - - (2,953,824)
Deferred tax provision (2,576,603) (2,249,127) (1,459,851)
-----------------------------------------------------------------------------------------
(23,405,082) (20,760,406) (18,183,980)
Liabilities directly associated with non
current assets held for sale 0 (702,735) 0
-----------------------------------------------------------------------------------------
Total liabilities (24,937,048) (23,020,352) (19,572,675)
-----------------------------------------------------------------------------------------
Net assets 13,948,753 13,377,671 10,234,324
-----------------------------------------------------------------------------------------
Equity
Share capital 767,541 767,541 706,958
Reverse acquisition reserve 11,038,204 11,038,204 11,038,204
Share option reserve 172,604 143,055 93,506
Share premium account 1,397,500 1,397,500 0
Profit and Loss account 572,904 31,371 (1,604,344)
-----------------------------------------------------------------------------------------
Total equity 13,948,753 13,377,671 10,234,324
-----------------------------------------------------------------------------------------
Consolidated statement of changes in equity
Balance at Share based Profit for Balance at
1 January payment - the Period 30 June
2006 value of 2007
employee
services
£ £ £ £
---------------------------------------------------------------------------------
Share Capital 767,541 767,541
Share Premium 1,397,500 1,397,500
Share Option reserve 143,055 29,549 172,604
Reverse Acquisition reserve 11,038,204 11,038,204
Accumulated Profit 31,371 541,533 572,904
---------------------------------------------------------------------------------
Total Equity 13,377,671 29,549 541,533 13,948,753
---------------------------------------------------------------------------------
Consolidated cash flow statement for the six months ended 30 June 2007
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2007 2006 2006
Unaudited Unaudited Audited
£ £ £
-----------------------------------------------------------------------------------------
Cash flows from operating activities
Profit / (Loss) after taxation 541,533 (957,892) 677,823
Adjustments
Taxation 93,168 6,495 1,029,967
Change in fair value of financial instruments (132,585) (21,650) (29,081)
Finance costs 622,235 587,643 1,094,027
Finance income (42,383) (111,188) (186,608)
Unrealised net revaluation gains on investment (959,000) 0 (3,528,023)
properties
Depreciation 13,628 15,850 33,005
Profit on disposal of property held for resale (126,180) 0 0
Write off of development properties 0 0 40,261
Share based payments 29,550 29,550 79,099
-----------------------------------------------------------------------------------------
Cash flows from operations before changes in 39,966 (451,192) (789,530)
working capital
Change in inventories 0 0 1,200
Change in trade and other receivables (25,627) (119,957) (187,829)
Change in trade and other payables 44,468 215,946 405,544
Cash (used) / generated from operations 58,807 (355,203) (570,615)
Interest paid (622,235) (587,643) (1,094,027)
-----------------------------------------------------------------------------------------
Cash flows from operating (563,428) (942,846) (1,664,642)
activities
-----------------------------------------------------------------------------------------
Cash flows from investing activities
Purchase of investment property (3,000,237) (3,020) (6,058,524)
Capital expenditure on development properties (500,410) (349,253) (481,960)
Capital expenditure on leasehold improvements (96,305) 0 0
Purchase of plant and equipment (50,473) (5,065) (14,293)
Disposal of property held for resale 1,626,180 0 0
Interest received 42,383 111,188 186,608
-----------------------------------------------------------------------------------------
Cash flows from investing activities (1,978,862) (246,150) (6,368,169)
-----------------------------------------------------------------------------------------
Cash flows from financing activities
New mortgage loans raised (Net) 2,273,236 (179,514) 4,817,059
Repayment of finance leases (8,041) (9,217) (18,434)
Increase / repayment of investors' loan 0 96,732 (2,857,092)
Repayment of loan on property held for resale (468,539) 0 0
Proceeds on issue of new shares 0 0 1,458,083
-----------------------------------------------------------------------------------------
Cash flows from financing activities 1,796,656 (91,999) 3,399,616
-----------------------------------------------------------------------------------------
Net decrease in cash and cash equivalents (745,634) (1,280,995) (4,633,195)
Cash and cash equivalents at 1 January 2,321,933 6,955,128 6,955,128
-----------------------------------------------------------------------------------------
Cash and cash equivalents at closing 1,576,299 5,674,133 2,321,933
-----------------------------------------------------------------------------------------
Notes to the accounts (Unaudited)
1. Status of financial information
The half year results of the Group for the six months ended 30
June 2007 were approved by the Board on 7 September 2007.
The half year financial statements for the six months ended 30
June 2007 are unaudited and do not constitute statutory accounts
as defined under section 240 of the Companies Act 1985.
The half year financial statements have been prepared in
accordance with applicable accounting standards and are consistent
with those accounting policies adopted in the Consolidated statutory
accounts of CareCapital Group Plc for the year ended 31 December 2006.
Those accounts, upon which the auditors issued an unqualified opinion,
have been delivered to the Registrar of Companies.
2. Disposal of non current asset held for sale
At 31 December 2006 the Group owned a property "The Manor House"
which was held for sale following the termination of a contract to
operate a Patient Hotel from the premises. During the period to 30
June 2007, the property was sold, realising a profit of £ 126,180
in excess of valuation after costs of disposal. A deferred tax
provision of £ 234,196 was released to profit, as there are
expected to be sufficient allowable tax losses in the year to
offset the taxable profit on disposal.
3. Discontinued operations
Despite the closure of "The Manor House" Patient Hotel, the Group
continued to engage in active discussions with healthcare
organisations regarding the potential provision of similar
services from different locations. In the event no other contracts
were secured, and the decision was made to concentrate on other
areas of activity. Consequently, the results in respect of the
Patient Hotel activity have been shown as a discontinued
operation. There were no residual liabilities in respect of this
income stream as at 30 June 2007. The detailed financial results
for discontinued activities are set out below.
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2007 2006 2006
£ £ £
-------------------------------------------------------------------------------
Revenue - 282,740 496,280
Cost of sales - (26,969) (34,747)
-------------------------------------------------------------------------------
Gross Profit - 255,771 461,533
Administrative expenses (38,519) (233,222) (623,265)
Other operating income - - 251,418
-------------------------------------------------------------------------------
Operating profit (38,519) 22,549 89,686
Finance costs (1,806) (2,072) (4,154)
-------------------------------------------------------------------------------
4. Earnings per Share
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2007 2006 2006
-------------------------------------------------------------------------------
Basic earnings per share
Basic earnings per share is calculated by dividing
the profit attributable to equity holders of the
Company by the weighted average number of ordinary
shares in issue during the year.
Profit / (loss) attributable to equity 541,533 (957,892) 677,823
holders of the Company (£)
-------------------------------------------------------------------------------
Weighted average number of ordinary 76,754 70,696 73,544
shares in issue (thousands)
-------------------------------------------------------------------------------
Earnings / (loss) per share
(pence per share) 0.71 (0.14) 0.93
-------------------------------------------------------------------------------
- Continuing operations 0.76 (0.14) 0.81
- Discontinued operations (0.05) - 0.12
Diluted earnings per share
The Company has one category of dilutive potential ordinary shares - share
options. A calculation has been undertaken to determine the number of
shares which could have been acquired at fair value based on the monetary
value of the subscription rights attached to outstanding share options. It
is compared with the number of shares which would have been issued assuming
the exercise of the share options.
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2007 2006 2006
--------------------------------------------------------------------------------------------
Profit / (loss) attributable to equity holders of the 541,533 (957,892) 677,823
Company (£)
--------------------------------------------------------------------------------------------
Weighted average number of ordinary shares in issue 76,754 70,696 73,544
(thousands)
--------------------------------------------------------------------------------------------
Adjustment for share options (thousands) 347 - 347
Weighted average number of ordinary shares for
diluted earnings (thousands) 77,101 70,696 73,891
--------------------------------------------------------------------------------------------
Diluted Earnings / (loss) per share (pence per share) 0.70 (0.14) 0.92
--------------------------------------------------------------------------------------------
- Continuing operations 0.75 (0.14) 0.80
- Discontinued operations (0.05) - 0.12
Adjusted earnings per
share
Adjusted earnings per share have been calculated to exclude the unrealised gain on
revaluation of investment properties and fair value movement on derivative financial
instruments.
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2007 2006 2006
--------------------------------------------------------------------------------------------
Profit/ (loss) attributable to equity holders of the 541,533 (957,892) 677,823
Company (£)
Less gain on revaluation of investment properties (959,000) - 3,528,023)
Add deferred tax in respect of investment properties 287,700 - 1,058,407
Less fair value movement on derivative financial (132,585) (21,650) (29,081)
instruments
Add deferred tax in respect of derivative financial 39,776 6,495 8,724
instruments
--------------------------------------------------------------------------------------------
Earnings/ (loss) used for calculation of adjusted (222,576) (973,047) (1,812,150)
earnings per share
--------------------------------------------------------------------------------------------
Adjusted earnings per share (0.29) (1.38) (2.46)
No adjusted, diluted earnings per share is calculated because the Group made losses after
the adjustments.
5. Restatement of comparative financial statements for the period ended 30
June 2006 from UK GAAP to IFRS
For its results for the year ended 31 December 2006, the Group adopted
IFRS, and adjusted those comparative financial statements previously
reported under UK GAAP accordingly. The following tables set out the
adjustments required to the previously reported results for the period
ended 30 June 2006, in order to effect the necessary conversion from
UK GAAP to IFRS.
(a) Adjustment to retained earnings
£
Dr / (Cr)
Reversal of goodwill amortisation 141,040
Employee share options (105,476)
Reclassification of revaluation reserve -
Deferred tax - Investment (84,350)
properties
Movement on derivative financial (106,926)
instruments
Deferred tax - derivative financial 32,078
instruments
---------
Total adjustment to (123,634)
equity =========
---------
Attributable to equity holders of the (123,634)
parent:
5 Restatement of comparative financial statements for the period ended 30 June
2006 from UK GAAP to IFRS (continued)
(b) Reconciliation of equity at 30 June 2006
30 June 2006
IFRS
UK GAAP adjustments IFRS
£ £ £
Non Current
assets
Intangible assets 240,505 1,511,454 1,751,959
Property, plant and equipment 21,882,534 (21,846,451) 36,083
Investment properties - 21,430,981 21,430,981
Development properties - 403,501 403,501
Investments - -
----------------------------------------
22,123,039 1,499,485 23,622,524
----------------------------------------
Current assets
Inventories 1,200 - 1,200
Trade and other receivables 509,142 - 509,142
Cash and cash equivalents 5,674,133 - 5,674,133
----------------------------------------
6,184,475 0 6,184,475
----------------------------------------
Total assets 28,307,514 1,499,485 29,806,999
----------------------------------------
Current liabilities
Trade and other (901,909) - (901,909)
payables
Tax liabilities (292) - (292)
Borrowings, including finance (379,568) - (379,568)
leases
Derivative financial - (106,926) (106,926)
instruments
----------------------------------------
(1,281,769) (106,926) (1,388,695)
----------------------------------------
Non current liabilities
Borrowings, including finance (13,770,305) - (13,770,305)
leases
Loan from investor (2,953,824) - (2,953,824)
Deferred tax provision (37,164) (1,422,687) (1,459,851)
------------------------------------------
(16,761,293) (1,422,687) (18,183,980)
------------------------------------------
Total liabilities (18,043,062) (1,529,613) (19,572,675)
------------------------------------------
Net assets 10,264,452 (30,128) 10,234,324
==========================================
Equity
Share Capital 706,958 706,958
Reverse acquisition reserve 11,038,204 11,038,204
Share Options reserve - 93,506 93,506
Share Premium account - -
Profit and Loss account (1,480,710) (123,634) (1,604,344)
------------------------------------------
Total equity 10,264,452 (30,128) 10,234,324
------------------------------------------
5 Restatement of comparative financial statements for the period ended 30 June
2006 from UK GAAP to IFRS (continued)
(c) Reconciliation of loss for the period to 30 June 2006
IFRS
UK GAAP adjustments IFRS
£ £ £
Continuing operations
Revenue 623,456 - 623,456
Cost of sales (24,532) - (24,532)
-------------------------------------------------------------------------------
Gross Profit 598,924 - 598,924
Administrative expenses (829,406) 5,132 (824,274)
-------------------------------------------------------------------------------
(230,482) 5,132 (225,350)
Other operating income - - -
Gain on revaluation of investment - - -
properties
-------------------------------------------------------------------------------
Operating Profit before exceptional items (230,482) 5,132 (225,350)
Exceptional costs of AIM (293,791) - (293,791)
listing
-------------------------------------------------------------------------------
Operating Profit after exceptional items (524,273) 5,132 (519,141)
Interest receivable and similar 111,188 - 111,188
income
-------------------------------------------------------------------------------
(413,085) 5,132 (407,953)
Interest payable and similar charges (585,571) 21,650 (563,921)
-------------------------------------------------------------------------------
Loss on ordinary activities before (998,656) 26,782 (971,874)
Taxation
Tax on Loss on ordinary activities - (6,495) (6,495)
Loss for year (998,656) 20,287 (978,369)
-------------------------------------------------------------------------------
Discontinued operations
Profit from discontinued operations 20,477 - 20,477
-------------------------------------------------------------------------------
Loss for the period (978,179) 20,287 (957,892)
-------------------------------------------------------------------------------
(d) Cash flows
Under IFRS, the consolidated cashflow statement reconciles the movements in
cash and cash equivalents, whereas in the UK GAAP financial statements it
reconciled the movements in cash only. Other than this, there are no
material differences in the restated consolidated statement of cash flows
from that previously published.
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