12th Sep 2005 07:00
Medical Property Investment Fd Ltd12 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 ofnew acquisitions and developments. In the six months to June 2005, MPFgenerated a net profit of £3.3m and has increased its interim dividend by 25% to1.66p. It is clear that there is a continuing shift in emphasis to bring a wider rangeof medical and support services into the community closer to patients and theseinitiatives are supported by an increased allocation of the NHS budget in favourof the primary health care sector. The Company will pursue innovative andsustainable ways to accommodate other service providers both locally andnationally. The outlook for the Company is very positive and there is significant earningspotential assisted by the favourable reforms taking place within the NHS. TheCompany has a strong pipeline of deals and developments; it has established anintegrated pharmacy model; and it now intends to expand its serviced premisesvision via its new Assura Health and Wellness Centres. These centres will offerpractices wishing to expand their range of activities with a modern servicedhealth platform."# For further information, please contact: Richard Burrell Henrietta Guthrie / Charlotte EdgarBerrington Fund Management Lansons Communications020 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 30June 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 52income producing properties and had 20 development sites. A further 13properties were in solicitors' hands. Following completion of the Apollo portfolio acquisition described in thecircular to shareholders dated 15 June 2005 and certain other acquisitions anddevelopments, 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 profitfor 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 beendeclared to shareholders on the register as at 23 September 2005 (ex-dividenddate 21 September 2005). In the absence of unforeseen circumstances and in linewith the Prospectus, the Board intends to pay a total dividend of 5p (4p lastyear) 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. TheCompany'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 tothe balance of the Apollo portfolio which completed after the period end, willamount to a net asset value reduction of 3.6p per Ordinary Share. The Company has settled rent reviews on 12 properties during the first sixmonths of 2005 resulting in an aggregate increase of 30.7% on the passing rentrelating to those properties. As at 30 June 2005, the portfolio had an averagerent of £141.70 per square metre on GMS space and an average weighted incomeun-expired term of 19.85 years. Operating Review The national infrastructure and marketing initiatives established on behalf ofthe Company are now helping to drive significant deal flow. This has led to acontinued strengthening of the transaction pipeline which includes acquisitionsvia sale and leasebacks, investment purchases and the forward funding of newdevelopments. The recent completion of the acquisition of the Apollo portfolio has providedthe Company with seven purpose built primary care centres, a multi-let HealthPark and four developments due to be completed by the end of March 2006. Theportfolio has added significant critical mass to the Company's investmentportfolio and has strengthened its presence in a number of geographicallocations. There are also further opportunities to expand income from theproperties acquired. The Company's development activities continue to be extended and this isreflected in the number of schemes under construction or at an advanced stage ofnegotiation. Assembling new developments is time consuming and, by partneringwith specialist, regionally-based developers, the Company has been able toincrease 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 adoptinga speculative approach in certain cases which should unlock some substantial andhigh 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 increasingrole of pharmacy as an integral part of the service provision within largerprimary health care developments. As at 1 September 2005, Healthcare PharmaciesLimited had been granted its first pharmacy licence and there are a furthereight applications pending. More licence applications are expected to be madeas the Company's property portfolio expands. The Company has recently agreed terms with National Australia Bank for the firsttranche of its banking facility and amounts under the facility will begin to bedrawn 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-financingonce the Company's property portfolio becomes larger. The Company has enteredinto a 20 year interest rate swap at a rate of 4.5725% which together with themargin and related fees provides the Company with an all-in fixed cost of fundsof 5.4%. Industry Trends Government announcements post the general election have reinforced pre-electionNHS policy and it is clear that there is a continuing shift in emphasis to bringa wider range of medical and support services into the community and closer tothe patient. These initiatives are supported by an increased allocation of theNHS 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 theprimary 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 theGP practice. In addition, PBC will offer GP practices the opportunity to expandthe range of services provided from their own facilities. It is anticipated that the development and adoption of PBC will be a majorcatalyst for change within the primary and intermediate care sectors. Many ofthe details, including the speed of adoption by the larger GP practices, are asyet unclear but the provision of a supporting infrastructure to allow medicalprofessionals to embrace the opportunities of PBC will be a key ingredient.This supporting infrastructure will also need to accommodate the increasingoperational demands required from the interaction between GPs, practice nursingstaff, pharmacists and other clinicians which is becoming crucial to the newmodel of efficient service delivery. It is expected that a White Paper on further NHS reforms will be announced bythe end of the year and the Company is confident that its flexible businessmodel can be closely aligned to the new government initiatives on healthcaredelivery. Strategy and Outlook The transfer of ownership of primary care premises by Doctors and PCT's will bea continuing trend as further NHS reforms are introduced. The Company will bean active acquirer of such assets where redevelopment and relocationopportunities are possible. The Company will also continue to acquire completedinvestment properties and portfolios. PBC and the expansion of primary healthcare capacity will require a continualupgrade of premises infrastructure and capital investment. This will need toaccommodate the shift of certain services previously based in hospitals, forexample diagnostics and specialist consultants. At the same time, there are alarge number of providers of medical services from both the private and publicsector keen to co-locate in new primary health care developments. As the Company's development pipeline gathers momentum and PBC becomes moreprevalent, the Company intends to pursue innovative and sustainable ways to workwith the larger GP practices as well as accommodating other service providersboth locally and through its national network. To achieve this, the Companyintends to establish a new generation of medical buildings under the name of "Assura Health and Wellness Centres." These centres will offer a modern servicedhealth platform to practices wishing to expand their range of activities. Anumber of pilot sites are being considered and the first trial scheme will openin early 2006. More announcements on this important initiative will be made indue course Whilst the investment market is buoyant the Company's balance sheet strengthwill allow it to purchase and develop larger lot sizes as well as take onspeculative space. This, combined with an ability to process transactionsquickly, will continue to provide quality opportunities. The outlook for the Company is very positive and there is significant earningspotential assisted by the favourable reforms taking place within the NHS. TheCompany has a strong pipeline of deals and developments, it has established anintegrated pharmacy model and it now intends to expand its serviced premisesvision via its new Assura Health and Wellness Centres. Richard BurrellBerrington Fund Management Limited9 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 £ £ £IncomeRent receivable 2,066,208 1,617,978 3,399,736Fees receivable 504,231 - 358,488Bank and other interest 1,453,907 2,238,835 3,829,875 Total Income 3 4,024,346 3,856,813 7,588,099 ExpensesInterest payable and similar charges - 4,970 43,448Investment Manager's fees 1,345,902 1,607,950 2,958,265Salaries 581,581 - 409,520Legal and professional fees 128,033 120,491 189,893Property management expenses 151,544 55,987 186,546Audit fees 18,452 - 35,000Tax and accountancy fees 20,000 60,060 22,560Administration fee 44,955 70,251 113,453Directors' fees 103,945 143,287 243,287Insurance 13,885 22,742 37,686Advertising , PR & marketing 113,767 - 260,420Other expenses 492,622 237,652 409,168Depreciation 9,216 - 350Bank 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)propertiesMinority interest 85,501 - 69,703 Net Profit/(Loss) before Taxation 3,339,218 (719,018) 2,230,676Taxation (11,301) - - Net Profit/(Loss) for the Period 3,327,917 (719,018) 2,230,676Dividends 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 andReserves 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 andReserves 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) 336,705Minority 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 ActivitiesRent received 1,980,575 1,464,845 3,285,877Fees received 417,051 - 358,488Bank and other interest received 1,107,935 2,036,044 3,829,875Expenses 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 ActivitiesPurchase 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 ActivitiesIssue of Ordinary Shares - 140,000,000 142,500,000Issue 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 Authorised200,000,000 Ordinary Shares of 10p each 20,000,00020,000,000 Preference Shares of 10p each 2,000,000 22,000,000 Number of Share Shares Capital £Ordinary Shares issued and fully paid142,403,847 Ordinary Shares of 10p each 142,403,847 14,240,385Total 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 ExchangeRelated Shares:
Assura