Primary Health Properties earnings rise in pandemic year

Primary Health Properties reported a 13.4% improvement in net rental income in its preliminary results on Thursday, to £131.2m.

The FTSE 250 company said its adjusted earnings were 22.4% higher for the year ended 31 December at £73.1m, as adjusted earnings per share rose 5.5% to 5.8p.

Its IFRS profit before tax, excluding exceptional adjustments for MedicX, was up 44% to £109.3m, with the firm swinging to IFRS earnings per share of 8.8p, from losses of 6.5p in 2019.

Its total dividend per share was 5.4% higher at 5.9p, with the company distributing a total of £73.3m in the year, up from £59.4m.

Looking at its balance sheet, the firm’s adjusted net asset value per share was 4.6% higher at 112.9p, and its IFRS net asset value per share was up 6.4% at 107.5p.

Notwithstanding the impact of Covid-19, Primary Health Properties reported an average uplift of 1.8% per annum on rent reviews completed in the year, with additional annualised rental income on a like-for-like basis totalling £2m or 1.6%, from both rent reviews and asset management projects.

Its contracted annualised rent roll increased 5.9% to £135.2m, as the company acquired 23 purpose-built medical centres in the year for £58.8m.

Four forward-funded developments were purchased in the year with a net development cost of £34.2m, at Arklow and Enniscorthy in Ireland, Epsom in Surrey and Llanbradach in Wales.

Since the period ended, Primary Health Properties had internalised its management structure at a cost including fees of £35.7m, with shareholders representing 99.95% of the votes cast voting in favour of the internalisation.

The move was expected to deliver annual cost savings of around £4m.

Its board also declared a first quarterly dividend of 1.55p per share declared, payable on 26 February, equivalent to 6.2p on an annualised basis.

That represented a further 5.1% increase over the 2020 dividend per share, and marked the start of the company's 25th consecutive year of dividend growth.

Primary Health Properties said it was intending to make further dividend payments in May, August and November, and maintain its strategy of paying a progressive dividend in equal quarterly instalments, covered by underlying earnings in each financial year.

“We continue to see demand for extra space to help enable the redirection of activities out of hospitals,” said chief executive officer Harry Hyman.

“The need for modern, integrated, local primary healthcare facilities is becoming ever more pressing in order to relieve the pressures being placed on hospitals and accident and emergency departments.

“In early 2021, we successfully completed the internalisation of the group's management structure which will immediately deliver material financial and operational benefits driving further earnings and dividend growth, enhancing shareholder returns, whilst simultaneously broadening our appeal to a wider investment community and underpinning the next stage of the company's growth.”

At 0824 GMT, shares in Primary Health Properties were up 0.13% at 148.6p.