Primary Health Properties pleased with performance after MedicX merger

The FTSE 250 company said its adjusted ERPA earnings per share for the year ended 31 December were 5.8% higher at 5.5p.

Its IFRS profit before tax, excluding exceptional adjustments related to MedicX, was up 2.2% at £75.9m.

Looking at its balance sheet, PHP said its EPRA net asset value per share was up 2.7% year-on-year at 107.9p, while its IFRS net asset value per share was down 1.5% at 101p.

The valuation of its investment portfolio rose 2.1% during the period, to £2.41bn, while its net initial yield was up marginally at 4.86% from 4.85%.

Its contracted rent roll stood at £127.7m a year-end, up 1.5%, while the weighted annual unexpired lease term narrowed to 12.8 years from 13.1 years.

Occupancy was 99.5%, compared to 99.8% a year earlier.

Primary Health Properties said its average cost of debt was down to 3.5% from 4%, while its loan-to-value ratio shrunk to 44.2% from 47.8%.

Total undrawn loan facilities at the end of the year totalled £356.6m, compared to £190.6m at the beginning of the period.

The board confirmed a 3.7% rise in the total dividend per share to 5.6p, as dividends paid rose 62.3% to £59.4m.

It reported dividend cover of 101%, which was precisely in line with 2018.

“2019 has been a transformational year in PHP's history following the completion of the all share merger with MedicX in March 2019, bringing together two high quality and complementary portfolios in the UK and Ireland,” said managing director Harry Hyman.

“The business provides a much stronger platform for the future and has already created significant value delivering a total shareholder return of 49.2% in the year.

“We have also delivered the operating synergies of £4.0m per annum outlined at the time of the merger, as well as a 50 basis point reduction in the average cost of debt.”

Hyman said the company had continued to selectively grow the enlarged portfolio, particularly in Ireland where it believed there was a “significant” opportunity, and further strengthened the balance sheet with the oversubscribed £100m equity issue, £150m unsecured convertible bond issue and €70m euro-denominated private placement loan note.

“PHP's high-quality portfolio and capital base have helped to deliver another year of strong earnings performance and our 23rd consecutive year of dividend growth.

“Continuing improvements to the rental growth outlook and further reductions in the cost of finance will help to maintain our strategy of paying a progressive dividend to shareholders which is fully covered by earnings, as we look forward to the future with confidence.”

At 0906 GMT, shares in Primary Health Properties were down 0.07% at 161.48p.