Interim Management Statement

RNS Number : 1019A

The MedicX Fund Limited

26 January 2011

 



For immediate release                                                                                                  26 January 2011

MedicX Fund Limited

("MedicX Fund", "the Fund" or "the Company")

Interim Management Statement

MedicX Fund Limited (LSE: MXF), the specialist primary care infrastructure investor in modern purpose-built primary healthcare properties in the United Kingdom, today announces its Interim Management Statement for the period from 1 October 2010 to today's date.

Financial position

Since 30 September 2010, the Company has continued to invest successfully in new acquisitions and properties currently under construction. 

The quarterly valuation of the portfolio undertaken by King Sturge LLP as at 31 December 2010 stood at £214.9 million reflecting a net initial yield of 5.87%.  This is broadly unchanged from the net initial yield of 5.88% in September 2010.

Incorporating the December valuation, the unaudited adjusted net asset value at 31 December 2010 is estimated to be £93.7 million equivalent to 65.8p per share. Long-term interest rates have increased since 30 September 2010 and, including the benefit of the £100 million fixed rate debt, the unaudited adjusted net asset value plus the mark to market benefit of fixed rate debt is estimated now to be £106.2 million equivalent to 74.5p per share, compared with 71.4p per share at 30 September 2010.

There have been no other significant changes to the financial position of the Company since the full year results were announced on 8 December 2010.

Discounted cash flow valuation of assets and debt

On the Fund's behalf the Investment Adviser has carried out a discounted cash flow ("DCF") valuation of the Group assets and associated debt at each period end. The basis of preparation is similar to that calculated by infrastructure funds.  The values of each investment are derived from the present value of the property's expected future cash flows, after allowing for debt and taxation, using reasonable assumptions and forecasts based on the predominant lease at each property.  The total of the present values of each property and associated debt cash flows so calculated is then aggregated with the surplus cash position of the Group. 

The discount rates used are 7% for completed and occupied properties and 8% for properties under construction.  The weighted average discount rate is 7.20% which represents a 2.87% risk premium relative to the 20 year gilt rate as at 31 December 2010.

The discounted cash flows assume an average 2.5% per annum increase in individual property rents at their respective review dates.  Residual values continue to be based upon capital growth at 1% per annum from the current valuation until the expiry of leases, (when the properties are notionally sold), and also assuming the current level of borrowing facilities.

At 31 December 2010, the DCF valuation was £131.7 million or 92.4p per share.

Rent reviews

During the period to 31 December 2010, 7 leases and rents of £0.6 million were reviewed and the equivalent of a 2.2% per annum increase was achieved.  Following these reviews the cash yield of the portfolio has increased to 6.0%, which compares with a benchmark 20-year gilt rate of 4.3%. Reviews of £4.4 million of passing rent are currently under negotiation.

Investment activity

The portfolio, which consists of 57 properties, continues to perform in line with long-term objectives.  Seven properties are now under construction at Halifax, Hounslow, Bilborough, Apsley, Bermondsey, Clapham and West Wirral which are all due to complete in the next year. In addition, the project at Raynes Park, as expected, has yet to start construction.

Share issues

On 17 November 2010, the Company issued 1,100,000 new ordinary shares of no par value for cash at an issue price of 72.75p respectively.  The proceeds will be used to pursue further the investment objectives of the Company.

In addition, on 31 December 2010 the Company issued 149,034 shares pursuant to the Scrip Dividend Scheme, based on a scrip calculation price of 73.05 pence per share.

The total number of ordinary shares of the Company in issue is 142,566,144 with each share holding one voting right, compared with 141,317,110 ordinary shares at 30 September 2010.  No shares are held in treasury.

Dividends

On 31 December 2010 a quarterly dividend of 1.35p per ordinary share in respect of the period 1 July 2010 to 30 September 2010 was paid to ordinary shareholders on the register as at close of business on 19 November 2010.

The quarterly dividend in respect of the period 1 October 2010 to 31 December 2010 will be announced next week.

Fundraising

The announcement of the company's full year results on 8 December 2010 stated that, with access to further attractive opportunities available through the Investment Adviser, the Company was considering raising new equity capital in the New Year. We are pleased now to confirm that the Company intends to raise up to approximately £50 million through an issue of new ordinary shares through an open offer, placing and offer for subscription.  The Company intends to publish a prospectus relating to the proposed issue in early February 2011 and, conditionally upon shareholder approval of the issue at an extraordinary general meeting to be convened for late February, expects dealings in the new ordinary shares to commence in early March 2011.  Collins Stewart Europe Limited is acting as sponsor and lead bookrunner to the proposed issue.

David Staples

Chairman

End

For further information please contact:

MedicX Group:                                                               [phone]

Keith Maddin, Chairman

Mike Adams, Chief Executive Officer

Mark Osmond, Chief Financial Officer

MedicX Fund:                                                                [phone]

David Staples, Chairman

Collins Stewart Europe Limited:                                       [phone]

Dominic Waters

Neil Brierley

Will Barnett

Buchanan Communications:                                             [phone]

Charles Ryland/Suzanne Brocks

Information on MedicX Fund Limited

MedicX Fund Limited ("MXF", the "Fund" or the "Company", or together with its subsidiaries, the "Group") is the specialist primary care infrastructure investor in modern, purpose-built primary healthcare properties in the United Kingdom, listed on the London Stock Exchange, with a portfolio comprising 57 properties.

The Investment Adviser to the Company is MedicX Adviser Ltd, which is authorised and regulated by the Financial Services Authority and is a subsidiary of the MedicX Group. The MedicX Group is a specialist investor, developer and manager of healthcare properties with 30 people operating across the UK.  

The Company's website address is www.medicxfund.com 

Important information

Collins Stewart is acting as sponsor and lead bookrunner to the Company in relation to the proposed placing, open offer and offer for subscription (the "Offer") and is not acting for any other person and will not regard any other person (whether or not a recipient of this announcement) as its customer in relation to the Offer and will not be responsible for providing the protections afforded to customers of Collins Stewart to any other person or for providing advice to any other person in relation to the Offer.  Collins Stewart is authorised and regulated by the Financial Services Authority and is a member of London Stock Exchange plc. This announcement, and the information contained herein, is not for viewing, release, distribution or publication into or in the United States or any other jurisdiction where applicable laws prohibit its release, distribution or publication. All material contained in this announcement (including this disclaimer) shall be governed by and construed in accordance with the laws of England and Wales.  By accepting this announcement you agree to be bound by the above conditions and limitations.

The Company's website address is www.medicxfund.com. Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement.

 

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