Preliminary Results

Primary Health Properties PLC 26 September 2000 PRIMARY HEALTH PROPERTIES PLC Modern accommodation for the Provision of Primary Health Care Services Preliminary Results for the year ended 30 June 2000 Group Financial Highlights * Dividend increased 16.7% to 7.0p (1999: 6.0p) * NAV increased 10.5% to 129.7p (1999: 117.4p) * Portfolio increased to £51.8 m (1999: £ 39.0m) * Plans to increase gearing from 65% to 70% * Total return per share increased to 19.3p (1999: 16.4p) 'We believe that Primary Heath Properties PLC, continues to be the largest specialist investor in primary care properties in the UK and that our portfolio is exceptional in terms of covenant and length of lease. The group is well placed to benefit from the NHS commitment to invest £1billion in primary care facilities and to refurbish or replace 3,000 family doctor's premises by 2004. We are confident of our ability to raise our portfolio while taking advantage of these exciting opportunities.' Harry Hyman, Managing Director Enquiries: Primary Health Properties PLC Harry Hyman Managing Director Tel: 01483 306912 Mobile: 0973 344768 Bell Pottinger Financial Kate Power / Tania Mallett Tel: 0207 353 9203 Preliminary Announcement of Results for the year ended 30 June 2000 Chairman's Statement During the past year the Group has made excellent progress with the total return per share increasing from 16.4p to 19.3p. Group profit before taxation for the year ended 30 June 2000 totalled £1,240,000 (1999: £961,000). The Board has recommended a final dividend of 3.6p per share, which, when added to the interim, makes a total of 7.0p, an increase of 16.7% over the total dividend of 6.0p paid in respect of the previous year. Lambert Smith Hampton has carried out a valuation of the Group's investment properties, which has resulted in a revaluation surplus of £1,912,000. The net asset value per share has risen from 117.4p to 129.7p, an increase of 10.5%. During the year the Group successfully concluded the rent reviews at Charlotte Street, where the rent has increased from £100,000 to £225,000 per annum, and at Rushton Street where the rent has increased from £178,000 to £300,000 per annum. The year-end rent roll has now increased from £2,900,000 to £4,261,000 per annum. Other rent reviews achieved during the period, although smaller in absolute terms, lead us to believe that it should be possible for the Group to achieve annual increases in the order of 2.5% - 3% per annum over our typical three-year rent review period. During the year the Group has continued to expand its portfolio including development loans and finance leases such that, at 30 June 2000, it totalled £51.8 million after revaluation surpluses. In addition, the Group has outstanding commitments to purchase a further £5.4 million of property. During the period medium term interest rates increased significantly and the Group has seen the benefit of the £13 million of swaps that were put in place last year for 51% of bank term loan borrowings. The swap facilities expire in September 2004 with the interest rate fixed at 5.78%. The Group's strategy remains to develop the portfolio, initially to £100 million, at which stage some form of relatively cheaper non-recourse securitisation should be achievable. In the meantime, the Board has concluded that a prudent increase in borrowing levels is desirable, given the security of the Group's income stream, and, accordingly, we are including in this year's Notice of Annual General Meeting a resolution to increase the gearing level from 65% to 70% of gross assets. At last year's Annual General Meeting the Company was given the power to repurchase its shares. Whilst 300,000 shares were repurchased in the previous year, none have been repurchased this year. Nevertheless the Board wishes to retain this option and a resolution to this effect is again included for this year's Annual General Meeting. We believe that the Group continues to be the largest specialist investor in primary care property in the UK and that our portfolio is exceptional in terms of covenant and length of lease. The pipeline of transactions remains longer than ever and we are confident of our ability to make further significant and attractive additions to our portfolio. G A Elliot Chairman 25 September 2000 Consolidated Profit and Loss Account for the year ended 30 June 2000. 30 June 30 June 2000 1999 £'000 £'000 Turnover 3,691 2,391 Administrative expenses - non exceptional item (903) (626) - exceptional item - (104) -------- -------- (903) (730) Operating profit 2,788 1,661 Interest receivable 85 245 Interest payable (1,633) (945) -------- -------- Profit on ordinary activities before taxation 1,240 961 Corporation tax (124) 93 -------- -------- Profit on ordinary activities after taxation 1,116 1,054 Interim dividend of 3.4p per share (1999: 2.6p) (534) (416) Final dividend proposed of 3.6p (1999:3.4p) (565) (534) -------- -------- Profit retained for the period 17 104 -------- -------- Net profit after taxation for the period retained by: The Company 9 (12) Subsidiary undertakings (after declaring dividends of £3,496,000) 8 116 -------- -------- 17 104 -------- -------- Earnings per share - basic 7.1p 6.6p - diluted 7.0p 6.6p Dividends per share (net) 7.0p 6.0p Increase in net asset value per share 12.3p 10.4p -------- -------- Total return per share 19.3p 16.4p -------- -------- All activities are continuing Statement of Total Recognised Gains and Losses 30 June 30 June 2000 1999 £'000 £'000 Profit for the financial year 1,116 1,054 Unrealised surplus on revaluation of properties 1,912 1,505 -------- -------- Total gains and losses relating to the year 3,028 2,559 -------- -------- All activities are continuing Consolidated Balance Sheet as at 30 June 2000 At At 30 June 30 June 2000 1999 £'000 £'000 Fixed assets Tangible assets 49,318 35,640 Investments - development loans 10 901 -------- -------- 49,328 36,541 Current assets Debtors 568 483 Net investment in finance leases - amounts falling due in more than one year 2,498 2,510 Cash at bank 389 201 -------- -------- 3,455 3,194 Creditors - amounts falling due within (2,920) (1,801) one year -------- -------- Net current assets 535 1,393 -------- -------- Total assets less current liabilities 49,863 37,934 Creditors - amounts falling due after more than one year Term loans (25,500) (15,500) Convertible loan stock 2016 (4,000) (4,000) -------- -------- (29,500) (19,500) -------- -------- 20,363 18,434 -------- -------- Capital and reserves Called up share capital 7,850 7,850 Share premium account 5,810 5,810 Capital reserve 1,618 1,618 Revaluation reserve 4,872 2,960 Profit and loss account 213 196 -------- -------- Equity shareholders funds 20,363 18,434 -------- -------- Net asset value per share 129.7p 117.4p Consolidated Cash Flow Statement for the year ended 30 June 2000 30 June 30 June 2000 1999 £'000 £'000 Net cash inflow from operating 3,037 2,467 activities -------- -------- Returns on investments and servicing of finance Interest received 27 53 Interest paid (1,545) (919) -------- -------- (1,518) (866) -------- -------- Taxation UK corporation tax paid (9) (211) Capital expenditure and financial investment Payments to acquire tangible fixed (10,254) (7,410) assets Development loans advanced - (6,664) -------- -------- (10,254) (14,074) Equity dividends paid (1,068) (912) -------- -------- Net cash outflow before financing (9,812) (13,596) -------- -------- Financing Repurchase of shares - (292) Term bank loan 2005 10,000 13,500 -------- -------- 10,000 13,208 -------- -------- Increase / (decrease) in cash 188 (388) -------- -------- Reconciliation of net cash flow to movement in net debt 2000 1999 £'000 £'000 Increase / (decrease) in cash in the 188 (388) period Cash inflow from loans (10,000) (13,500) -------- -------- Movement in net debt in the period (9,812) (13,888) Net debt at 1 July (19,299) (5,411) -------- -------- Net debt at 30 June (29,111) (19,299) -------- -------- NOTES: The above results for the year to 30 June 2000 are audited. 1. Earnings per share The calculation of earnings per share is based on the following: As at 30 June 2000 As at 30 June 1999 Net profit Net profit attibutable Attibutable to ordinary Ordinary To ordinary Ordinary shareholders Shares shareholders Shares £'000 '000 £'000 '000 Basic earnings 1,116 15,700** 1,054 15,977** per share Option - - - conversion* ------------- ----------- ------------ ---------- 1,116 15,882 1,054 15,977 ------------- ----------- ------------ ---------- ** Weighted average number of Ordinary shares in issue during the year. * 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 Financial Reporting Standard No. 14: Earnings per share. 2. Notes to the statement of cash flow Reconciliation of operating profit to net cash inflow from operating activities 2000 1999 £'000 £'000 Operating profit 2,788 1,661 (Increase) / decrease in operating debtors and (101) 549 prepayments Increase in operating creditors 350 257 and accruals --------- --------- Net cash inflow from operating 3,037 2,467 activities --------- --------- Cash flow relating to operating exceptional items Net cash inflow from operating activities in the year ended 30 June 1999 included cash outflows of £104,000 in respect of expenses incurred with the move to the main market and acquiring authority for the share repurchase. 3. At the Annual General Meeting, a resolution to declare a final dividend of 3.6p per share will be put to the members and will be paid on 23 November 2000 to holders registered at close of business on 6 October 2000. 4. The statutory accounts for the year ended 30 June 2000 will be finalised on the basis of the financial information presented by the Directors in this preliminary announcement and will be delivered to Registrar of Companies following the Company's Annual General Meeting. Copies will be sent to shareholders shortly and will also 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 22 November 2000 at 12 noon at Ground Floor, Ryder Court, 14 Ryder Street, London, SW1Y 6QB. 5. The financial information set out above does not constitute the Company's statutory financial statements for the years ended 30 June 2000 or 1999 (but is derived from and has been prepared on the same basis, as those financial statements). Statutory financial statements for 1999 have been delivered to the Registrar of Companies, and those for 2000 will be delivered following the Company's Annual General Meeting. 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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