Interim Results
Medical Property Investment Fd Ltd
12 September 2005
The Medical Property Investment Fund Limited
Unaudited Interim Report for the six months ended 30 June 2005
Six Months Highlights
• Excellent progress over six months with 72 sites now acquired (and a
further 13 sites in solicitors' hands)(1)
• Over £260m of capital committed(1)
• Estimated average net initial yield on capital committed circa 6.7%
• Acquisition of the Apollo portfolio completed successfully
• Substantial pipeline of new acquisitions and developments
• Good progress in the formation of Healthcare Pharmacies Limited
• Post election government policy shifting to increased emphasis on
primary care provision closer to patients
• Initial £100m revolving credit facility agreed with National Australia
Bank providing an all-in cost of funds of 5.4% fixed under a 20 year swap
arrangement
• Interim dividend up 25% to 1.66p2 (1.33p last year)
1 As at 1 September 2005
2 Ex -dividend date 21 September 2005, Record date 23 September 2005, Payment
date 14 October 2005
Commenting on the Results, Richard Burrell, Investment Manager to the Company,
said:
'We are pleased with an extremely satisfactory first six months of the year.
The Company has acquired 72 properties to date and has a substantial pipeline of
new acquisitions and developments. In the six months to June 2005, MPF
generated a net profit of £3.3m and has increased its interim dividend by 25% to
1.66p.
It is clear that there is a continuing shift in emphasis to bring a wider range
of medical and support services into the community closer to patients and these
initiatives are supported by an increased allocation of the NHS budget in favour
of the primary health care sector. The Company will pursue innovative and
sustainable ways to accommodate other service providers both locally and
nationally.
The outlook for the Company is very positive and there is significant earnings
potential assisted by the favourable reforms taking place within the NHS. The
Company has a strong pipeline of deals and developments; it has established an
integrated pharmacy model; and it now intends to expand its serviced premises
vision via its new Assura Health and Wellness Centres. These centres will offer
practices wishing to expand their range of activities with a modern serviced
health platform.'
#
For further information, please contact:
Richard Burrell Henrietta Guthrie / Charlotte Edgar
Berrington Fund Management Lansons Communications
020 7659 6271 020 7294 3612 / 020 7294 3622
Investment Manager's Report
For the six months ended 30 June 2005
This unaudited Interim Report is published in respect of the six months to 30
June 2005.
Results
I am pleased to report an extremely satisfactory first half of the year.
As at 1 September 2005, the Company had acquired or exchanged contracts on 52
income producing properties and had 20 development sites. A further 13
properties were in solicitors' hands.
Following completion of the Apollo portfolio acquisition described in the
circular to shareholders dated 15 June 2005 and certain other acquisitions and
developments, the total capital committed by the Company is now in excess of
£260m with an estimated average net initial yield on completion of circa 6.7%.
The Company is on target to invest or commit £400m by the end of 2006.
During the period, total income of £4.0m (20041: £3.9m) produced a net profit
for the period of £3,328,000 (20041: net loss £719,000).
An interim dividend of 1.66p (1.33p last year) per Ordinary Share has been
declared to shareholders on the register as at 23 September 2005 (ex-dividend
date 21 September 2005). In the absence of unforeseen circumstances and in line
with the Prospectus, the Board intends to pay a total dividend of 5p (4p last
year) per Ordinary Share in respect of the year to 31 December 2005.
As at 30 June 2005 the Company had net assets of £136.2m and no bank borrowings.
The net asset value per Ordinary Share as at 30 June 2005 was 95.63p. The
Company's property portfolio, as stated in the balance sheet as at 30 June 2005,
shows an aggregate net initial yield of 7.0%. The transaction costs relating to
the balance of the Apollo portfolio which completed after the period end, will
amount to a net asset value reduction of 3.6p per Ordinary Share.
The Company has settled rent reviews on 12 properties during the first six
months of 2005 resulting in an aggregate increase of 30.7% on the passing rent
relating to those properties. As at 30 June 2005, the portfolio had an average
rent of £141.70 per square metre on GMS space and an average weighted income
un-expired term of 19.85 years.
Operating Review
The national infrastructure and marketing initiatives established on behalf of
the Company are now helping to drive significant deal flow. This has led to a
continued strengthening of the transaction pipeline which includes acquisitions
via sale and leasebacks, investment purchases and the forward funding of new
developments.
The recent completion of the acquisition of the Apollo portfolio has provided
the Company with seven purpose built primary care centres, a multi-let Health
Park and four developments due to be completed by the end of March 2006. The
portfolio has added significant critical mass to the Company's investment
portfolio and has strengthened its presence in a number of geographical
locations. There are also further opportunities to expand income from the
properties acquired.
The Company's development activities continue to be extended and this is
reflected in the number of schemes under construction or at an advanced stage of
negotiation. Assembling new developments is time consuming and, by partnering
with specialist, regionally-based developers, the Company has been able to
increase its reach in terms of the number of developments it is able to pursue.
The Company is continuing to trial a fast track procurement process by adopting
a speculative approach in certain cases which should unlock some substantial and
high quality schemes.
At the end of last year, the Company set up its own pharmacy business,
Healthcare Pharmacies Limited. This is in direct response to the increasing
role of pharmacy as an integral part of the service provision within larger
primary health care developments. As at 1 September 2005, Healthcare Pharmacies
Limited had been granted its first pharmacy licence and there are a further
eight applications pending. More licence applications are expected to be made
as the Company's property portfolio expands.
The Company has recently agreed terms with National Australia Bank for the first
tranche of its banking facility and amounts under the facility will begin to be
drawn down shortly. The facility is a three year revolving credit facility of
£100m and the terms allow for full flexibility in the event of a re-financing
once the Company's property portfolio becomes larger. The Company has entered
into a 20 year interest rate swap at a rate of 4.5725% which together with the
margin and related fees provides the Company with an all-in fixed cost of funds
of 5.4%.
Industry Trends
Government announcements post the general election have reinforced pre-election
NHS policy and it is clear that there is a continuing shift in emphasis to bring
a wider range of medical and support services into the community and closer to
the patient. These initiatives are supported by an increased allocation of the
NHS budget in favour of the primary health care sector of circa £8bn by 2008.
The key policy initiative to encourage a more 'service led' culture within the
primary care sector is the establishment of Practice Based Commissioning (PBC).
Under PBC the whole health budget for a practice registered patient list,
including the costs of hospital appointments and operations, is devolved to the
GP practice. In addition, PBC will offer GP practices the opportunity to expand
the range of services provided from their own facilities.
It is anticipated that the development and adoption of PBC will be a major
catalyst for change within the primary and intermediate care sectors. Many of
the details, including the speed of adoption by the larger GP practices, are as
yet unclear but the provision of a supporting infrastructure to allow medical
professionals to embrace the opportunities of PBC will be a key ingredient.
This supporting infrastructure will also need to accommodate the increasing
operational demands required from the interaction between GPs, practice nursing
staff, pharmacists and other clinicians which is becoming crucial to the new
model of efficient service delivery.
It is expected that a White Paper on further NHS reforms will be announced by
the end of the year and the Company is confident that its flexible business
model can be closely aligned to the new government initiatives on healthcare
delivery.
Strategy and Outlook
The transfer of ownership of primary care premises by Doctors and PCT's will be
a continuing trend as further NHS reforms are introduced. The Company will be
an active acquirer of such assets where redevelopment and relocation
opportunities are possible. The Company will also continue to acquire completed
investment properties and portfolios.
PBC and the expansion of primary healthcare capacity will require a continual
upgrade of premises infrastructure and capital investment. This will need to
accommodate the shift of certain services previously based in hospitals, for
example diagnostics and specialist consultants. At the same time, there are a
large number of providers of medical services from both the private and public
sector keen to co-locate in new primary health care developments.
As the Company's development pipeline gathers momentum and PBC becomes more
prevalent, the Company intends to pursue innovative and sustainable ways to work
with the larger GP practices as well as accommodating other service providers
both locally and through its national network. To achieve this, the Company
intends to establish a new generation of medical buildings under the name of '
Assura Health and Wellness Centres.' These centres will offer a modern serviced
health platform to practices wishing to expand their range of activities. A
number of pilot sites are being considered and the first trial scheme will open
in early 2006. More announcements on this important initiative will be made in
due course
Whilst the investment market is buoyant the Company's balance sheet strength
will allow it to purchase and develop larger lot sizes as well as take on
speculative space. This, combined with an ability to process transactions
quickly, will continue to provide quality opportunities.
The outlook for the Company is very positive and there is significant earnings
potential assisted by the favourable reforms taking place within the NHS. The
Company has a strong pipeline of deals and developments, it has established an
integrated pharmacy model and it now intends to expand its serviced premises
vision via its new Assura Health and Wellness Centres.
Richard Burrell
Berrington Fund Management Limited
9 September 2005
1 The interim period figures to 30 June 2004 were in respect of a nine month
period rather than the current six month period under review.
Unaudited Consolidated Statement of Operations
for the period from 1 January 2005 to 30 June 2005
1/01/2005 7/10/2003 7/10/2003
to to to
30/06/2005 30/06/2004 31/12/2004
Unaudited Unaudited Audited
Notes £ £ £
Income
Rent receivable 2,066,208 1,617,978 3,399,736
Fees receivable 504,231 - 358,488
Bank and other interest 1,453,907 2,238,835 3,829,875
Total Income 3 4,024,346 3,856,813 7,588,099
Expenses
Interest payable and similar charges - 4,970 43,448
Investment Manager's fees 1,345,902 1,607,950 2,958,265
Salaries 581,581 - 409,520
Legal and professional fees 128,033 120,491 189,893
Property management expenses 151,544 55,987 186,546
Audit fees 18,452 - 35,000
Tax and accountancy fees 20,000 60,060 22,560
Administration fee 44,955 70,251 113,453
Directors' fees 103,945 143,287 243,287
Insurance 13,885 22,742 37,686
Advertising , PR & marketing 113,767 - 260,420
Other expenses 492,622 237,652 409,168
Depreciation 9,216 - 350
Bank charges 9,814 2,395 9,503
Total Expenses 3,033,716 2,325,785 4,919,099
Net Profit before Investment Result 3 990,630 1,531,028 2,669,000
Movement in unrealised gain/(loss) on revaluation of 2,263,087 (2,250,046) (508,027)
properties
Minority interest 85,501 - 69,703
Net Profit/(Loss) before Taxation 3,339,218 (719,018) 2,230,676
Taxation (11,301) - -
Net Profit/(Loss) for the Period 3,327,917 (719,018) 2,230,676
Dividends 7 (3,802,183) - (1,893,971)
Retained (Loss)/Profit (474,266) (719,018) 336,705
Basic and Diluted Profit/(Loss) per Ordinary Share 4 2.34p (0.50p) 1.58p
Unaudited Consolidated Balance Sheet
as at 30 June 2005
30/06/2005 30/06/2004 31/12/2004
Unaudited Unaudited Audited
Notes £ £ £
Non-current Assets
Property 5 79,009,164 47,355,092 51,739,136
Investments 4,232 - 4,232
Goodwill 5,867,768 - 5,867,768
Tangible fixed assets 31,864 - 20,078
84,913,028 47,355,092 57,631,214
Current Assets
Cash and cash equivalents 36,254,599 85,308,824 66,650,944
Debtors 8,626,282 1,776,065 4,615,396
Development work in progress 8,906,919 - 10,071,702
53,787,800 87,084,889 81,338,042
Total Assets 138,700,828 134,439,981 138,969,256
Current Liabilities
Creditors 2,513,755 1,179,162 2,222,416
Total Liabilities 2,513,755 1,179,162 2,222,416
Net Assets 136,187,073 133,260,819 136,746,840
Represented by:
Capital and
Reserves
Share capital 6 14,240,385 14,000,000 14,240,385
Share premium 122,239,453 119,979,837 122,239,453
Reserves (137,561) (719,018) 336,705
136,342,277 133,260,819 136,816,543
Minority interests (155,204) - (69,703)
Total Equity 136,187,073 133,260,819 136,746,840
Net Asset Value per Ordinary Share 95.63p 95.20p 96.03p
The unaudited financial statements on pages 10 to 15 were approved at a meeting
of the Board of Directors held on 9 September 2005 and signed on its behalf by:
Dr Mark Jackson, Chairman )
Graham Chase, Director )
Unaudited Company Balance Sheet
as at 30 June 2005
30/06/2005 30/06/2004 31/12/2004
Unaudited Unaudited Audited
Notes £ £ £
Non-current Assets
Investments in subsidiary companies 23,181,866 5,484,824 15,696,868
Loans 81,479,629 42,925,749 53,299,452
104,661,495 48,410,573 68,996,320
Current Assets
Cash and cash equivalents 31,406,383 84,668,166 66,340,103
Debtors 275,451 526,596 1,515,910
31,681,834 85,194,762 67,856,013
Total Assets 136,343,329 133,605,335 136,852,333
Current Liabilities
Creditors 156,256 344,516 105,493
Total Liabilities 156,256 344,516 105,493
Net Assets 136,187,073 133,260,819 136,746,840
Represented by:
Capital and
Reserves
Share capital 6 14,240,385 14,000,000 14,240,385
Share premium 122,239,453 119,979,837 122,239,453
Reserves (292,765) (719,018) 267,002
Total Equity 136,187,073 133,260,819 136,746,840
The unaudited financial statements on pages 10 to 15 were approved at a meeting
of the Board of Directors held on 9 September 2005 and signed on its behalf by:
Dr Mark Jackson, Chairman )
Graham Chase, Director )
Unaudited Consolidated Statement of Changes in Equity
for the period from 1 January 2005 to 30 June 2005
1/01/2005 7/10/2003 7/10/2003
to to to
30/06/2005 30/06/2004 31/12/2004
Unaudited Unaudited Audited
£ £ £
Equity at 1 January 136,746,840 - -
Retained (loss)/profit (474,266) (719,018) 336,705
Minority interest (85,501) - (69,703)
Issue of Ordinary Shares, net of issue costs - 133,979,837 136,479,838
Equity at 30 June 136,187,073 133,260,819 136,746,840
Unaudited Consolidated Cash Flow Statement
for the period from 1 January 2005 to 30 June 2005
1/01/2005 7/10/2003 7/10/2003
to to to
30/06/2005 30/06/2004 31/12/2004
Unaudited Unaudited Unaudited
£ £ £
Operating Activities
Rent received 1,980,575 1,464,845 3,285,877
Fees received 417,051 - 358,488
Bank and other interest received 1,107,935 2,036,044 3,829,875
Expenses paid (3,538,715) (2,567,294) (5,240,581)
Interest paid and similar charges - (4,970) (43,448)
Net cash (outflow)/inflow from operating activities (33,154) 928,625 2,190,211
Investing Activities
Purchase of property (21,278,243) (49,599,638) (53,228,913)
Purchase of investments - - (4,232)
Purchase of fixed assets (20,997) - (20,428)
Acquisition of subsidiary, net of cash acquired - - (5,867,768)
Cost of development work in progress (5,108,882) - (10,071,702)
Short term loan to associated company (152,886) - (932,091)
Net cash outflow from investing activities (26,561,008) (49,599,638) (70,125,134)
Financing Activities
Issue of Ordinary Shares - 140,000,000 142,500,000
Issue costs paid on issuance of Ordinary Shares - (6,020,163) (6,020,162)
Dividend paid (3,802,183) - (1,893,971)
Net cash (outflow)/inflow from financing activities (3,802,183) 133,979,837 134,585,867
(Decrease)/Increase in cash and cash equivalents (30,396,345) 85,308,824 66,650,944
Cash and cash equivalents at 1 January 2005 66,650,944 - -
Cash and cash equivalents at 30 June 2005 36,254,599 85,308,824 66,650,944
Notes to the Unaudited Financial Statements
for the period from 1 January 2005 to 30 June 2005
1. The Company was incorporated on 7 October 2003 and commenced trading
following Admission of its shares to the Official List of the London Stock
Exchange on 21 November 2003.
2. The results for the period, which are not statutory accounts and which
have not been audited, have been prepared on a going concern basis under
the historical cost convention, except for the measurement at fair value of
investment properties.
3. All turnover and operating profit arose from continuing operations.
4. Basic and diluted profit per Ordinary Share is based on the net profit for
the period and on 142,403,847 Ordinary Shares in issue (period ended
30 June 2004 - 140,000,000, weighted average number of shares for the
period ended 31 December 2004 - 140,909,564).
5. The figures for investment properties at 30 June 2005, 30 June 2004 and
31 December 2004 are based on valuations determined by Savills Commercial
Limited.
6. Share Capital
Consolidated and Company Authorised
200,000,000 Ordinary Shares of 10p each 20,000,000
20,000,000 Preference Shares of 10p each 2,000,000
22,000,000
Number of Share
Shares Capital
£
Ordinary Shares issued and fully paid
142,403,847 Ordinary Shares of 10p each 142,403,847 14,240,385
Total Share Capital 142,403,847 14,240,385
7. Dividends paid on Ordinary Shares
1/01/2005 7/10/2003 7/10/2003
No. of Rate to Rate to Rate to
Ordinary pence 30/06/2005 pence 30/06/2004 pence 31/12/2004
Shares £ £ £
Dividend paid 142,403,847 2.67 3,802,183 - - 1.33 1,893,971
8. On 9 September 2005 a dividend of 1.66p per Ordinary Share was declared to
shareholders on the register at 23 September 2005, giving a total amount
of £2,363,904.
9. A copy of this statement has been sent to every shareholder. Further
copies are available from the Company's registered office or from the
website www.mpif.net.
10. The interim financial statements were approved at a meeting of the Board
of Directors held on 9 September 2005.
This information is provided by RNS
The company news service from the London Stock Exchange
Wednesday, 15th May 2024
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