ADVFN Logo

We could not find any results for:
Make sure your spelling is correct or try broadening your search.

Trending Now

Toplists

It looks like you aren't logged in.
Click the button below to log in and view your recent history.

Hot Features

Registration Strip Icon for default Register for Free to get streaming real-time quotes, interactive charts, live options flow, and more.

MXF Medicx Fund

96.40
0.00 (0.00%)
28 Mar 2024 - Closed
Delayed by 15 minutes
Share Name Share Symbol Market Type Share ISIN Share Description
Medicx Fund LSE:MXF London Ordinary Share GG00B1DVQL92 ORD NPV
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.00% 96.40 95.80 96.00 0.00 00:00:00
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
0 0 N/A 0

The MedicX Fund Limited Full Year Results 2016 (6191R)

13/12/2016 7:00am

UK Regulatory


Medicx (LSE:MXF)
Historical Stock Chart


From Mar 2019 to Mar 2024

Click Here for more Medicx Charts.

TIDMMXF

RNS Number : 6191R

The MedicX Fund Limited

13 December 2016

For immediate release

13 December 2016

MedicX Fund Limited

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

Results for the year ended 30 September 2016

MedicX Fund Limited (LSE: MXF) is a specialist primary care infrastructure investor in modern, purpose built primary healthcare properties in the United Kingdom & Republic of Ireland.

Financial Highlights

Unadjusted performance measures

 
                                  2016    2015 
------------------------------  ------  ------  ------- 
 Earnings per Ordinary Share 
  (pence) (1)                      7.1     9.9   -28.3% 
 Net Asset Value per Ordinary 
  Share (pence) (1)               71.7    69.6    +3.0% 
 Dividend cover(2)               64.0%   63.3%    +1.1% 
 Total Shareholder Return(3)     22.5%   -0.4%      N/a 
 Property valuation (GBPm)(4)    612.3   553.5   +10.6% 
 Weighted average debt term 
  (years)                         14.0    15.0    -6.7% 
 Rent receivable (GBPm)           35.1    32.8    +7.0% 
------------------------------  ------  ------  ------- 
 

Adjusted performance measures

 
                                    2016    2015 
--------------------------------  ------  ------  ------- 
 Adjusted earnings per Ordinary 
  Share (pence) (1)                  3.8     3.7    +2.7% 
 EPRA Net Asset Value per share 
  (pence) (1)                       73.2    70.8    +3.4% 
 Underlying dividend cover(2)      68.5%   68.0%    +0.7% 
 EPRA Net Asset Value total 
  return(5)                        11.8%   17.2%   -31.4% 
--------------------------------  ------  ------  ------- 
 

The Directors believe that presenting the above adjusted performance measures assists readers of the accounts in understanding and analysing the performance and position of the Group, as well as providing industry standard measures for benchmarking against other companies. In particular, the Directors believe EPRA measures provide more meaningful key performance indicators.

Adjusted earnings per Ordinary Share are EPRA earnings for the current year, excluding the performance fee, if any, which is uncertain and cannot be accurately forecast.

Underlying dividend cover shows the expected outcome once all properties under construction are completed from existing resources and generating rental income.

Key Achievements of 2016

Financial results

-- A 2.7% increase in EPRA earnings per Ordinary Share adjusted to exclude the performance fee, from 3.7p per share to 3.8p per share

-- Quarterly dividend of 1.4875p per share announced in October 2016(6) ; total dividends of 5.95p per Ordinary Share for the year or 6.7% dividend yield (2015: total dividends of 5.9p per Ordinary Share; 7.6% dividend yield)(6,7)

-- Rent receivable for the financial year to 30 September 2016 has increased by 7.0% to GBP35.1m. This is due to the annualised rent roll increasing by GBP2.4m to GBP37.2 million of which 89.2% is directly from or reimbursed by the NHS, Irish GPs or HSE.

-- EPRA NAV total return for the financial year was 11.8% (2015: 17.2%) and Total Shareholder Return was 22.5% (2015: -0.4%)

Investments

-- New committed investments in UK and Republic of Ireland, since 1 October 2015, of GBP35.0 million with an average cash yield of 6.02%(8)

-- The value of the portfolio has increased by 10.6% in the financial year to GBP612.3 million. This is as a result of a GBP15.5 million valuation gain and GBP43.3 million of capital investment to acquire standing let properties and fund developments through forward funding schemes(4)

   --      Strong pipeline of approximately GBP108 million of acquisition opportunities(9) 

Funding

-- Market capitalisation GBP344.4 million following share price appreciation and GBP19.0 million net proceeds raised from 22.3 million shares issued since 1 October 2015 at an average issue price of 85.3 pence per share(8)

-- Total drawn debt facilities of GBP336.3 million with an average all-in fixed rate cost of debt of 4.45% and an average unexpired term of 14.0 years, close to the average unexpired lease term of the investment properties of 15.5 years and compared with 4.45% and 15.8 years for the prior year

-- Net debt of GBP315.3 million equating to 50.8% adjusted gearing at 30 September 2016 (30 September 2015: GBP281.4 million; 50.2%)(8,10)

   1      As calculated in note 8 to the financial statements 

2 Dividend cover excludes revaluation gains, performance fee and fair value on reset of loans. Underlying dividend cover includes impact of properties under construction treated as completed properties

3 Based on share price movement between 30 September 2015 and 30 September 2016 and dividends paid and reinvested during the year

   4      As shown in note 9 to the financial statements 

5 Movement on EPRA NAV per share between 30 September 2015 and 30 September 2016 and dividends paid during the year, divided by opening EPRA NAV per share

6 Ex-dividend date 17 November 2016, record date 18 November 2016, payment date 30 December 2016

   7      Total dividends declared divided by share price at 30 September 
   8      As at the financial year end of 30 September 2016 
   9      As at 7 December 2016 
   10    As shown in note 24 to the financial statements 

For further information please contact:

   MedicX Fund                                                                  +44 (0) 1481 723 450 

David Staples, Chairman

   Octopus Healthcare Group                                               +44 (0) 20 3142 4820 

Mike Adams, Chief Executive Officer

   Canaccord Genuity                                                          +44 (0) 20 7523 8000 

Andrew Zychowski/Helen Goldsmith

   Buchanan                                                                      +44 (0) 20 7466 5000 

Charles Ryland/Victoria Hayns

A meeting for analysts will be held at Buchanan, 107 Cheapside, London, EC2V 6DN today, Tuesday 13 December 2016 commencing at 9am. MedicX Fund Full Year Results 2016 are available at www.medicxfund.com

An audio webcast of the analysts' meeting will be available from 12 noon today:

http://vm.buchanan.uk.com/2016/medicx131216/registration.htm

Information on MedicX Fund Limited

MedicX Fund Limited (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 and Ireland, listed on the London Stock Exchange, with a portfolio comprising 153 properties.

The Investment Adviser to the Company is Octopus Healthcare Adviser Ltd, which is part of the Octopus Healthcare group. Octopus Healthcare invests in and develops properties as well as creating partnerships to deliver innovative healthcare buildings to improve the health, wealth and wellbeing of the UK. It currently manages over GBP1 billion of healthcare investments across a number of platforms, with a focus on four core areas: GP surgeries, care homes, retirement housing and private hospitals. Octopus Healthcare is part of the Octopus group, a fast-growing UK fund management business with leading positions in several specialist sectors including healthcare property, energy, property finance and smaller company investing. Octopus manages GBP6 billion of funds for more than 50,000 retail and institutional investors.

Octopus Healthcare Adviser Ltd is authorised and regulated by the Financial Conduct Authority.

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), nor the contents of any website accessible from hyperlinks within this announcement, are incorporated into, or forms part of, this announcement.

Chairman's Statement

I am pleased to present the tenth annual report for the Company, on behalf of the Board.

The demand for new modern primary care infrastructure continues to be strong in both the UK and Republic of Ireland as the population ages and a wider range of clinical services is sought to be delivered over longer hours by GPs in their local communities. Transforming the NHS through improved access to services, better working efficiency and implementing new ways of working remain high priorities. Reform is being led by clinical commissioning groups ("CCGs") and GPs, with provider groups emerging to meet increasing patient and regulatory demands. This modernisation creates opportunities for the Fund to partner with providers and invest in new modern purpose built infrastructure capable of delivering care with improved efficiency.

The Fund has continued to work with its strategic development partners, engaging with provider groups and working with its tenants to deliver new schemes and premises improvements. We continue to seek opportunities to invest in properties that will generate returns for shareholders well beyond their current lease terms. We do this by acquiring assets that are both tailored to the current needs of our tenants and also their evolving needs as they respond to increasing pressure and demand for extensive primary care services. As a result of this focus on value-adding property acquisitions carried out over the past few years, the Fund has created a market leading modern primary care portfolio.

The UK market has remained highly competitive with relatively high values being paid for assets of variable quality. Despite these market conditions the Fund has maintained its price discipline and continued to only acquire UK assets of the highest quality which meet the Fund's investment criteria. The Republic of Ireland demonstrates similar demographic pressures and political will which has enabled the Health Service Executive to drive forward its programme of putting in place a world class modern purpose built estate to deliver healthcare. The Fund is now supporting three new schemes underway in Mullingar, Crumlin and Rialto. We continue to believe there are good opportunities to invest in the Republic of Ireland at attractive yields in high quality properties.

Results overview

Since my statement last year, I am pleased to report that total shareholder return has recovered following the dip in the share price that occurred over the Company's previous year end. The share price recovered from 77.5 pence at 30 September 2015 and was 88.75 pence at 30 September 2016 underlying the total shareholder return for the year of 22.5%, putting the Fund back on track with its long term returns.

Fund progress and performance has been good with unadjusted NAV at 30 September 2016, having increased 3.0% to 71.7 pence per share (30 September 2015: 69.6 pence per share). EPRA NAV at 30 September 2016 has also increased by 3.4% to 73.2 pence per share (30 September 2015: 70.8 pence per share), after paying dividends for the year. Together with dividends paid in the year of 5.9375 pence per share this led to an EPRA NAV total return (being growth in EPRA NAV plus dividends paid) of 8.3375 pence per share or 11.8%.

As explained in my introduction, we maintained our investment discipline in a tough market and consequently the pace of property acquisitions slowed somewhat compare to recent years. At 30 September 2016, the Group had committed investment of GBP580.6 million across 152 properties of which six are under construction. The portfolio value was GBP612.2 million which is an increase of 10.6% above last year's value. In addition, since the year end, the Fund has committed to a further asset in the UK which will add GBP0.3 million to the rent roll.

The rent roll grew by GBP2.4 million or 6.9% during the year. The costs incurred by the Fund, including the finance costs, were in line with expectations given the level of activity and the acquisitions in the year. The Company's earnings for the year to 30 September 2016 were 7.1 pence per share, which is a reduction of 2.8 pence per share or 28.3%. The EPRA earnings for the current year excluding the performance fee earned by the Investment Adviser were GBP14.2 million (30 September 2015: GBP13.4 million) or 3.8pence per share, an increase of 2.7% (30 September 2015: 3.7pence per share).

Funding

The weighted average unexpired term of all drawn debt at 30 September 2016 is 14 years, closely matching the average remaining unexpired lease term of the Fund's portfolio of 15.5 years. The debt strategy remains to try to pick the optimal time to put in place the best available debt facilities with the most favourable terms whilst ensuring adherence to the Company's gearing target.

The adjusted gearing as at 30 September 2016, as detailed in note 24, was 50.8% which is in line with target and marginally increased from 50.2% as at 30 September 2015. The Directors will continue to target borrowings of approximately 50% on average over time but not exceeding 65% of the Company's total assets.

During September 2016, the Group renewed its unsecured RBS revolving credit facility for a further three years. The renewal provides for an option, with lender consent, that the immediately committed GBP20 million facility be extended by a further GBP10 million to GBP30 million or additional lenders be added with a view to increasing the facility on existing terms. Interest is payable on amounts drawn under the facility at a margin of 2% over LIBOR. The facility enables the Group to move quickly if needed when attractive opportunities come to market.

Demand for the Company's shares continued to be high during the year and the Company was able to raise GBP19.0 million from the sale of its shares held in treasury including GBP1.7 million raised through the issue of new shares under a block listing established in September 2016. Both treasury shares and new shares have been and will continue to be utilised to satisfy further demand for shares in the Company, including any demand for shares under the scrip dividend scheme. These shares will only be sold or issued at a premium to EPRA NAV and so will be accretive to NAV per share for existing shareholders.

Dividends

The Company declared dividends totalling 5.95 pence per Ordinary Share in respect of the financial year ended 30 September 2016, an increase of 0.8% compared to 5.9 pence per Ordinary Share in the prior year. This resulted in a dividend yield of 6.7% as measured using the year end share price. The Board is maintaining the Company's progressive dividend policy for the forthcoming year. In response to the current very low interest rate environment and continued low rental growth, the dividend increase will be 0.05 pence per Ordinary Share. Therefore, subject to unforeseen circumstances, the Directors expect that the Company will pay dividends totalling 6.0p for the financial year ending 30 September 2017.

Dividend cover measured against adjusted earnings was 64.0% for the year to 30 September 2016 (2015: 63.3%). Underlying dividend cover, which is dividend cover adjusted to reflect completion of the properties under construction (assuming full annual rent on all properties and a full year of associated interest costs and other expenses) was 68.5% (2015: 68.0%).

As the Fund continues to grow its rental income, deploy capital and complete properties under construction, and when taken with the cap on the Investment Adviser base fee, it is expected that dividend cover and underlying dividend cover will improve further and will align themselves over the medium term.

Potential Conversion to a REIT

We have for some while mentioned that the Company has been considering whether it would be in its best interests to convert to a REIT. Our five year plans and forecasts now strongly indicate that it will be advantageous to effect a conversion possibly on 1 October 2017, the start of the Company's next financial year. However, I would stress that there has been no final decision by the Board to put this proposal to shareholders yet but we expect to make an announcement in the first quarter of 2017.

Board succession

Succession planning is regularly discussed at board meetings. Mr. Hearle and Mrs. Mason, having been with the Company since launch, have served on the Board for ten years and are standing for re-appointment as directors at the forthcoming Annual General Meeting along with the rest of the Board. Mr. Hearle and Mrs. Mason both hold relevant professional qualifications and have considerable expertise which is of great value to the Board, its diversity and effectiveness. Mrs Mason is a highly experienced commercial property lawyer as well as having many years of experience of being on the boards of property/infrastructure listed investment companies. She is of great assistance to the Board in relation to commercial property issues and governance. Mr. Hearle is widely recognised within the primary healthcare property industry as a leading figure and his experience of the asset class is an enormous benefit to the Board and its ability to constructively challenge the Investment Adviser. The Board recognises the benefit of refreshing its membership from time to time and it is proposed that Mrs. Mason will retire from the Board within the next financial year and once a suitable replacement for her has been found. There are likely to be further changes to the composition of the Board within the next two years, the nature and timing of which will depend upon when and whether the Company converts to REIT status.

Outlook

There is no doubt that markets have shown and will continue for some time to show considerable volatility given such things as the Brexit issue, how policies in the US will change, worries over upcoming elections in certain Eurozone countries and the slowdown of the Chinese economy. The fact that the Company's share price has continued to remain strong despite this environment is testament to the relative safety many investors see in primary healthcare property and the yields it can provide.

We believe our strong discipline on investment and funding, our focus on the quality of our portfolio and strong pipeline of investment opportunities provide the foundation for continued sustainable growth of the Fund and the delivery of solid returns for shareholders.

David Staples

Chairman

12 December 2016

Investment Adviser's Report

Market

It is widely accepted primary care has to play a bigger role in health provision due to rising life expectancy and increasingly complex long term health conditions. The policy announcement from the NHS in April, entitled "General Practice Forward View", states that there has been under investment in the sector. The Forward View promises a greater share of the NHS England recurrent budget being directed towards primary care in future, to help GPs respond to the increasing pressure on primary care services. The market remains attractive to investors due to the government backed covenant and demand has remained high whilst supply has been limited due to the well-publicised delays in commissioning of new schemes. To accelerate reform, the NHS has announced high profile initiatives such as the GBP1 billion Estates and Technology Transformation Fund and the establishment of the network of 44 Sustainability and Transformation Plans ("STPs"). STPs are intended to bring all significant stakeholders together within health and social care systems to give structure to local integration which will lead to efficiency savings within the national

health budget.

Achieving the objectives of the NHS Five year Forward View is a significant challenge to the wider health service and the plan was only introduced twelve months ago so it is too early to tell if it will succeed.

The Fund is working with a number of GP tenants and provider groups to support the upgrading of their premises to meet their estate needs.

There is a push to develop new models of care including Multi Speciality Community Providers and Accountable Care Organisations which is encouraging innovation. GPs are beginning to lead transformation and the pace of change is accelerating with practices merging, federating or forming larger provider groups which want to deliver the new models of care from modern purpose built primary care centres such as those owned by the Fund. The limited supply of new property schemes, continues to drive yield compression leading to higher prices. The Fund has maintained a disciplined buying approach, resisting the downward pressure on yields and has continued to acquire best in class assets through its relationship with its framework partners. The increased competition for limited stock has reflected positively on the property valuations of the Fund's portfolio.

As mentioned in last year's report, the Fund has diversified its approach and has invested in the Republic of Ireland where there are opportunities to acquire and/or forward fund large purpose built modern dominant assets at more attractive yields than those seen in the UK. The Fund has now made three investments in the Republic of Ireland and on each has entered into framework agreements with experienced developers for future schemes. Mullingar, the first of the Fund's Irish forward funding deals, is expected to reach practical completion before the end of December.

Portfolio update

As at the year end the Fund has committed investment of GBP580.6 million in 152 primary healthcare properties, an increase of GBP35 million or 6.4% since 1 October 2015. The annualised rent roll of the property portfolio was GBP37.2 million, an increase of GBP2.4 million, or 6.9%, since 1 October 2015. Subsequent to the year end the Fund invested into one further property.

The valuation of the portfolio undertaken by Jones Lang LaSalle Limited, independent valuers to the Group, stood at GBP621.7 million as at 30 September 2016 on the basis that all properties were complete, reflecting a UK net initial yield of 5.25% (5.46% as at 30 September 2015). The results for the year include a net valuation gain of GBP15.5 million.

At 30 September 2016, the portfolio of properties had an average age of 8.0 years, remaining lease length of 15.5 years and an average value of GBP4.1 million. Of the rents receivable, 89.2% are from government-funded doctors and the NHS or HSE, 8.6% from pharmacies and 2.2% from other tenants.

The Group added a total of nine properties representing a total commitment of GBP35.0 million at a cash yield of 6.02% between 1 October 2015 and 30 September 2016. Two of the new developments acquired by the Fund were in the Republic of Ireland. This demonstrates the proactive approach of MedicX Fund; diversifying into the Irish market whilst the UK market is experiencing aggressive pricing conditions and a scarcity of available stock.

During the year, successful completion was achieved on properties previously under construction at Stevenage, Briton Ferry, Kingsbury and Maidstone. All of the completed projects were delivered within budget.

Construction continued on the existing projects at Streatham, Benllech and Mullingar, while the construction of the newly acquired projects at Brynhyfryd, Crumlin and Rialto commenced during the year. The outstanding commitment to complete these properties at 30 September 2016 was GBP11.7 million excluding the Rialto project where construction is yet to start and the site is carried at cost.

The Fund had a pipeline of identified investment opportunities of approximately GBP108 million, with GBP58 million in the UK and GBP50 million in the Republic of Ireland.

Despite only one small disposal during the year, the Fund will continue to look to sell properties which no longer meet its long term investment criteria or have been identified within the CCG's estates strategy as less likely to be used for delivery of primary care beyond their existing lease term.

As described above, the initial valuation yield on investments in the UK is 5.25% compared with the Group's weighted average cost of fixed rate debt of 4.45% and a benchmark 20-year gilt rate of 1.52% at 30 September 2016. This positive spread has enabled growth through committing investment during the year of GBP35 million. The Group remains well placed to continue to grow and deliver value to its shareholders as it locks into the differential available between long term returns and the cost of long term funding.

Rent review performance

For the year ended 30 September 2016, the Fund averaged an uplift of 1.2% on its rent reviews, with reviews of 68 leases and rents of GBP6.1million having been concluded. Of these reviews, 0.8% per annum was achieved on open market reviews, 1.8% per annum was achieved on RPI based reviews and 1.8% per annum on fixed uplift reviews. Reviews of GBP16.1 million of passing rent were under negotiation as at 30 September 2016.

Of the GBP37.2 million annualised rent roll at the year end, there was GBP26.6 million (71.5%) subject to open market review, GBP9.1 million (24.5%) subject to RPI reviews and GBP1.5 million (4.0%) subject to fixed uplift reviews. The proportion of rent subject to RPI uplifts has increased over the last year from 22.6% to 24.5%.

Asset management

The Fund continually reviews its portfolio for asset management opportunities and has identified a number of opportunities to enhance the portfolio mainly through extensions, refurbishments, re-configurations, new pharmacy opportunities and lease re-gearing to increase valuations. The Fund is engaging with CCGs to identify further asset management opportunities and is monitoring closely how GP federations, new provider groups and 'Super Practices' are forming in each locality.

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's assets and associated debt at each year 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 is calculated and then aggregated with the surplus cash position of the Group.

At 30 September 2016, the DCF valuation was 96.6 pence per share compared with 94.9 pence per share at 30 September 2015.

In order to provide a consistent approach the assumptions applied in previous years have remained unchanged. The discount rates used are 7% for completed and occupied properties and 8% for properties under construction. These represent 2.5% and 3.5% risk premiums to an assumed 4.5% long term gilt rate. The weighted average discount rate is 7.06% and this represented a 5.54% risk premium to the 20 year gilt rate at 30 September 2016 of 1.52%.

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.

For the discounted cash flow net asset value to equate to the share price as at 30 September 2016 of 88.75 pence per share, the discounted cash flow calculation would have to assume a 1.1% increase in rents per annum, or a 0.1% capital appreciation per annum, or a weighted average discount rate of 7.9%. These movements in rents and capital values would need to take place every year until the expiry of individual property leases.

For the discounted cash flow net asset value to equate to the share price as at 7 December 2016 of 90.25 pence per share, the discounted cash flow calculation would have to assume a 1.4% increase in rents per annum, or a 0.3% capital reduction per annum, or a weighted average discount rate of 7.7%.

Taking the EPRA NAV of 73.2 pence per share and assumed purchaser costs of 10.6 pence per share, an implied net initial yield of 4.84% would be required to match the discounted cash flow net asset value of 96.6 pence.

A review of sensitivities has been carried out in relation to the valuation of properties. If valuation yields firmed by 0.5% to a net initial yield of 4.75%, the EPRA net asset value would increase by approximately 16.0 pence per share to 89.2 pence per share and the EPRA NNNAV would increase to 69.8 pence per share.

Pipeline and investment opportunity

The spread between the yields at which the Fund can acquire properties and the cost of long term debt and Government gilts remains significant. The Investment Adviser has continued to successfully source properties both through Octopus Healthcare's development arm, Octopus Healthcare Property Ltd, and through its established relationships with investors, developers and agents in the sector. The Fund currently has access to a property pipeline, subject to contract, which is estimated to be worth approximately GBP108 million in value when fully developed.

Interest in voting rights of the Company

The Investment Adviser has a beneficial interest in the following number of shares in the Company:

 
                            2016        2015 
--------------------  ----------  ---------- 
 Octopus Healthcare 
  Adviser Ltd          2,149,537   2,009,360 
--------------------  ----------  ---------- 
 

During the year the Investment Adviser received dividends on the holding in the Company in addition to fees received for services. With the Scrip Dividend Scheme in place, the Investment Adviser elected to receive its dividends in the form of new Ordinary Shares. The cash equivalent of the dividends received by the Investment Adviser for the year was GBP122,437, compared with GBP116,543 in the prior year.

Mike Adams

Chief Executive Officer

Octopus Healthcare Adviser Ltd

Risk Management

The principal risks and uncertainties relating to the Group are regularly reviewed by the Board along with the internal controls and risk management processes that are used to mitigate these risks. The principal risks and the management of those risks are described below:

 
                    Risks & impacts                   Key mitigation 
                                                       factors 
-----------------  --------------------------------  ----------------------------------- 
 Government       Changes to the NHS                The Investment Adviser 
  policy           funding model for                 provides an update 
                   the primary healthcare            on any expected changes 
                   sector could lead                 in NHS provision at 
                   to a reduction in                 each Board meeting 
                   development opportunities         for consideration by 
                   available to the                  the Board. The current 
                   Company.                          government has stated 
                                                     that one of its policy 
                   The NHS currently                 objectives is to increase 
                   reimburses GP's                   the provision of primary 
                   rental costs for                  healthcare services 
                   premises used for                 in the community so 
                   providing primary                 a reduction in funding 
                   healthcare. In the                or support in this 
                   event of a change                 sector is considered 
                   to this mechanism,                unlikely. 
                   the Company may 
                   not receive rental                The GPs have contracts 
                   income when due                   with the NHS to cover 
                   and/or the total                  the length of their 
                   income received                   lease (on average 15.5 
                   may be lower than                 years on properties 
                   due under the current             held by the Company) 
                   contract.                         and so a change to 
                                                     this reimbursement 
                   A change in the                   policy would be expected 
                   tax status or residency           to have little impact 
                   of the Company or                 in the immediate future. 
                   a change in tax 
                   legislation could                 The Company maintains 
                   adversely affect                  a tax forecast and 
                   returns.                          receives regular reports 
                                                     from its tax advisers 
                   A change in political             and the Investment 
                   policies as a result              Adviser. This includes 
                   of the referendum                 keeping potential REIT 
                   vote for the UK                   conversion under review. 
                   to exit the EU is 
                   likely to cause                   The Board monitors 
                   uncertainty in the                the economic environment 
                   economic environment              on a regular basis 
                   and create volatility             with input from its 
                   in prices, interest               advisors. There is 
                   rates, investment                 no exposure to primary 
                   yields and inflation.             care outside the UK 
                                                     and Republic of Ireland. 
---------------  --------------------------------  ----------------------------------- 
 Property         A significant reduction           For existing properties 
  yields           in property yields                contractual cash flows 
                   could result in                   are fixed over the 
                   them falling below                long-term so have little 
                   the cost of capital,              impact on EPRA returns. 
                   or not being available 
                   with an acceptable                The Board regularly 
                   rate of return.                   review the Company's 
                                                     budget and five year 
                   A property recession              forecast and completes 
                   could materially                  a risk assessment and 
                   adversely affect                  a long-term viability 
                   the value of properties           assessment which incorporates 
                   which could put                   the Company WACC, dividend 
                   financial covenants               policy and sets the 
                   under pressure (see               minimum property yield 
                   below).                           boundaries for future 
                                                     acquisitions. 
---------------  --------------------------------  ----------------------------------- 
 Financing        A significant reduction           The Company mainly 
  and debt        in the availability                holds long-term facilities 
  management      of financing could                 which greatly reduce 
                  affect the Company's               the refinancing risk. 
                  ability to source                  The Company maintains 
                  new funding for                    relationships with 
                  both refinancing                   a number of potential 
                  purposes and to                    financing sources ensuring 
                  use for future acquisitions.       a range of financing 
                                                     options. 
 
                                                     The Investment Adviser 
                                                     also regularly monitors 
                                                     and manages the debt 
                                                     facilities and reports 
                                                     on a regular basis 
                                                     to the Board. 
---------------  --------------------------------  ----------------------------------- 
 Covenants        A significant reduction           Covenants are measured 
                   in property valuations           and monitored on a 
                   or income could                  monthly basis by the 
                   result in a breach               Investment Adviser, 
                   of loan covenants.               with results reported 
                                                    to the Board for consideration. 
 
                                                    The impact of potential 
                                                    property de-valuations 
                                                    on the covenants are 
                                                    considered by the Investment 
                                                    Adviser and discussed 
                                                    by the Board at quarterly 
                                                    Board meetings. 
---------------  --------------------------------  ----------------------------------- 
 Cyber Security   There are a number                The security of the 
                   of risks related                  systems are internally 
                   to cyber security                 monitored and regularly 
                   which include the                 reviewed. Training 
                   risk of having the                is provided to employees 
                   internal systems                  of the Investment Adviser 
                   infiltrated, information          on Cyber Security matters 
                   corrupted or information          to increase awareness 
                   stolen.                           and vigilance. Incident 
                                                     management is used 
                                                     to establish an incident 
                                                     response and disaster 
                                                     recovery response. 
 
                                                     The review of suppliers 
                                                     to the Company includes 
                                                     an assessment of the 
                                                     quality of their cyber 
                                                     security systems and 
                                                     processes. 
---------------  --------------------------------  ----------------------------------- 
 
 

Consolidated Statement of Comprehensive Income

For the year ended 30 September 2016

 
                                                         2016       2015 
                                             Notes    GBP'000    GBP'000 
------------------------------------------  ------  ---------  --------- 
 Income 
 Rent receivable                                 1     35,145     32,811 
 Other income                                             372        858 
------------------------------------------  ------  ---------  --------- 
 Total income                                          35,517     33,669 
 Direct property expenses                             (1,195)      (902) 
 Net rental income                                     34,322     32,767 
 
 Realised and unrealised valuation 
  movements 
 Net valuation gain on investment 
  properties                                     9     15,523     25,603 
 Profit on disposal of investment 
  properties                                     9         31          - 
------------------------------------------  ------  ---------  --------- 
                                                       15,554     25,603 
------------------------------------------  ------  ---------  --------- 
 
 Expenses 
 Investment advisory fee                        20      3,852      3,725 
 Investment advisory performance 
  fee                                           20      1,553          - 
 Property management fee                        20        889        849 
 Administrative fees                            20        116         83 
 Audit fees                                      3        171        178 
 Professional fees and other expenses                     584        530 
 Directors' fees                                 2        144        147 
 Total expenses                                       (7,309)    (5,512) 
------------------------------------------  ------  ---------  --------- 
 
 Profit before interest and tax                        42,567     52,858 
 
 Finance costs                                   4   (15,529)   (13,802) 
 Finance income                                  5      1,149         66 
------------------------------------------  ------  ---------  --------- 
 Net finance costs                                   (14,380)   (13,736) 
 
 Profit before tax                                     28,187     39,122 
 
 Taxation                                        6    (1,556)    (3,293) 
------------------------------------------  ------  ---------  --------- 
 Profit attributable to equity holders 
  of the parent                                        26,631     35,829 
------------------------------------------  ------  ---------  --------- 
 
 Other comprehensive income 
 
 Items that are or may be reclassified 
  subsequently to profit or loss: 
 
 Foreign currency translation differences                  53          - 
  - foreign operations 
------------------------------------------  ------  ---------  --------- 
 
 Total comprehensive income attributable 
  to equity holders of the parent                      26,684     35,829 
------------------------------------------  ------  ---------  --------- 
 
 Earnings per Ordinary Share 
 Basic and diluted                               8       7.1p       9.9p 
------------------------------------------  ------  ---------  --------- 
 

The presentation of the comparative period has been updated to show direct property expenses as a deduction in arriving at net rental income.

Consolidated Statement of Financial Position

As at 30 September 2016

 
                                              2016       2015 
                                  Notes    GBP'000    GBP'000 
-------------------------------  ------  ---------  --------- 
 Non-current assets 
 Investment properties                9    612,264    553,479 
-------------------------------  ------  ---------  --------- 
 Total non-current assets                  612,264    553,479 
-------------------------------  ------  ---------  --------- 
 
 Current assets 
 Trade and other receivables         10      8,519      6,778 
 Cash and cash equivalents           16     20,968     56,910 
-------------------------------  ------  ---------  --------- 
 Total current assets                       29,487     63,688 
-------------------------------  ------  ---------  --------- 
 
 Total assets                              641,751    617,167 
-------------------------------  ------  ---------  --------- 
 
 Current liabilities 
 Trade and other payables            11     19,923     18,966 
 Loans due within one year           12      1,983      1,896 
 Total current liabilities                  21,906     20,862 
-------------------------------  ------  ---------  --------- 
 
 Non-current liabilities 
 Loans due after one year            12    334,307    336,412 
 Head lease liabilities              13      1,430      1,405 
 Rental deposits                                60         60 
 Deferred tax liability               6      5,887      4,331 
 Provisions                           7          -          - 
-------------------------------  ------  ---------  --------- 
 Total non-current liabilities             341,684    342,208 
-------------------------------  ------  ---------  --------- 
 
 Total liabilities                         363,590    363,070 
-------------------------------  ------  ---------  --------- 
 
 Net assets                                278,161    254,097 
-------------------------------  ------  ---------  --------- 
 
 Equity 
 Share capital                       14          -          - 
 Share premium                       14    234,846    232,770 
 Treasury shares                     14    (6,835)   (24,321) 
 Other reserve                       15     50,150     45,648 
-------------------------------  ------  ---------  --------- 
 
 Total attributable to equity 
  holders of the parent                    278,161    254,097 
-------------------------------  ------  ---------  --------- 
 
 Net asset value per share 
 Basic and diluted                    8      71.7p      69.6p 
-------------------------------  ------  ---------  --------- 
 

The financial statements were approved and authorised for issue by the Board of Directors on 12 December 2016 and were signed on its behalf by

Shelagh Mason

David Staples

Consolidated Statement of Changes in Equity

For the year ended 30 September 2016

 
                                     Share   Treasury      Other      Total 
                                   Premium     Shares    Reserve     Equity 
                          Notes    GBP'000    GBP'000    GBP'000    GBP'000 
-----------------------  ------  ---------  ---------  ---------  --------- 
 Balance at 1 October 
  2014                             204,946    (5,293)     31,047    230,700 
 
 Share repurchased 
  and held in treasury              27,393   (27,393)          -          - 
 Shares sold from 
  treasury                             491      6,424          -      6,915 
 Scrip issue of 
  shares from treasury 
  (net of costs)                        53      1,941          -      1,994 
 Share issue costs                   (113)          -          -      (113) 
 Dividends paid              17          -          -   (21,228)   (21,228) 
-----------------------  ------  ---------  ---------  ---------  --------- 
 Transactions with 
  owners                            27,824   (19,028)   (21,228)   (12,432) 
 
 Profit attributable 
  to equity holders 
  of the parent                          -          -     35,829     35,829 
-----------------------  ------  ---------  ---------  ---------  --------- 
 Total comprehensive 
  income for the 
  year                                   -          -     35,829     35,829 
 Balance at 30 
  September 2015                   232,770   (24,321)     45,648    254,097 
 
 Shares issued 
  from block listing                 1,763          -          -      1,763 
 Shares sold from 
  treasury                             503     16,909          -     17,412 
 Scrip issue of 
  shares from treasury 
  (net of costs)                        26        577          -        603 
 Share issue costs                   (216)          -          -      (216) 
 Dividends paid              17          -          -   (22,182)   (22,182) 
-----------------------  ------  ---------  ---------  ---------  --------- 
 Transactions with 
  owners                             2,076     17,486   (22,182)    (2,620) 
 
 Profit attributable 
  to equity holders 
  of the parent                          -          -     26,631     26,631 
 Other comprehensive 
  income Foreign 
  currency translation 
  differences                            -          -         53         53 
-----------------------  ------  ---------  ---------  ---------  --------- 
 Total comprehensive 
  income for the 
  year                                                    26,684     26,684 
 Balance at 30 
  September 2016                   234,846    (6,835)     50,150    278,161 
-----------------------  ------  ---------  ---------  ---------  --------- 
 

Consolidated Statement of Cash Flows

For the year ended 30 September 2016

 
                                                     2016       2015 
                                         Notes    GBP'000    GBP'000 
--------------------------------------  ------  ---------  --------- 
 Operating activities 
 Profit before taxation                            28,187     39,122 
 Adjustments for: 
 Net valuation gain on investment 
  properties                                 9   (15,523)   (25,603) 
 Profit on disposal of investment                    (31)          - 
  properties 
 Finance income                              5    (1,149)       (66) 
 Finance costs                               4     15,529     13,802 
--------------------------------------  ------  ---------  --------- 
                                                   27,013     27,255 
 
 (Increase)/decrease in trade and 
  other receivables                               (1,736)      1,392 
 Increase/(decrease) in trade and 
  other payables                                      672    (5,285) 
 Interest paid                                   (14,616)   (13,287) 
 Interest received                                     75         77 
 Net cash inflow from operating 
  activities                                       11,408     10,152 
--------------------------------------  ------  ---------  --------- 
 
 Investing activities 
 Acquisition of investment properties            (15,732)    (2,308) 
 Cash acquired with subsidiaries                    (631)          - 
 Proceeds from sale of investment 
  properties                                 9        121          - 
 Additions to investment properties 
  and properties under construction              (20,039)   (21,008) 
--------------------------------------  ------  ---------  --------- 
 Net cash outflow from investing 
  activities                                     (36,281)   (23,316) 
--------------------------------------  ------  ---------  --------- 
 
 Financing activities 
 Net proceeds from issue of share 
  capital                                          18,962      6,816 
 New loan facilities drawn                  12          -     85,000 
 Repayment of borrowings                    12    (1,895)   (32,923) 
 Loan issue costs                           12      (554)      (697) 
 Repayment of acquired loans                      (6,000)          - 
 Dividends paid                             17   (21,582)   (19,247) 
--------------------------------------  ------  ---------  --------- 
 Net cash (outflow)/inflow from 
  financing activities                           (11,069)     38,949 
--------------------------------------  ------  ---------  --------- 
 
 (Decrease)/increase in cash and 
  cash equivalents                               (35,942)     25,785 
 Opening cash and cash equivalents                 56,910     31,125 
--------------------------------------  ------  ---------  --------- 
 
 Closing cash and cash equivalents          16     20,968     56,910 
--------------------------------------  ------  ---------  --------- 
 

Notes to the Financial Statements

For the year ended 30 September 2016

   1.   Principal accounting policies 

Basis of preparation and statement of compliance

The financial statements of the Group have been prepared in accordance with International Financial Reporting Standards ("IFRS") issued by the International Accounting Standards Board ("IASB") and as adopted by the European Union, interpretations issued by the International Financial Reporting Interpretations Committee ("IFRIC") and applicable legal and regulatory requirements of Guernsey Law. The principal accounting policies are set out below.

The Group has cash reserves and assets available to secure further funding if required, together with long term leases across different geographic areas within the United Kingdom and the Republic of Ireland. The Directors have reviewed the Group's forecast commitments, including commitments to development projects and proposed acquisitions, against the future funding availability, with particular reference to the utilisation of, and continued access to, existing debt facilities and also access to restricted cash balances. The Directors have also reviewed the Group's compliance with covenants on lending facilities.

The Group's financial forecasts show that it can remain within its lending facilities and meet its financial obligations as they fall due for at least the next twelve months. The Directors also believe that the Group is well placed to manage its business risks successfully in the current economic environment. Accordingly, they continue to adopt the going concern basis of accounting in preparing the annual financial statements.

These consolidated financial statements are presented in pounds sterling, which is the company's functional currency and the Group's presentational currency. All amounts have been rounded to the nearest thousand, unless otherwise indicated.

Impact of revision to International Financial Reporting Standards

The accounting policies applied are consistent with those of the annual financial statements for the year ended 30 September 2015. As disclosed at the foot of the Consolidated Statement of Comprehensive Income, the presentation of the comparative figure for direct property expenses has been relocated to make it clearer that those expenses are not administrative in nature.

The following standards and interpretations have been issued by the IASB and IFRIC with effective dates falling after the date of these financial statements. The Board has chosen not to adopt early any of the revisions contained within these standards in the preparation of these financial statements:

 
 International Accounting                    Effective date - periods 
  Standards (IAS/IFRS)                          beginning on or after 
---------------------------  ---------------------------------------- 
 Amendments                 Deferred tax assets        1 January 2017 
  to IAS 12 
 Amendments                 Disclosure of changes      1 January 2017 
  to IAS 7                   in liabilities 
 IFRS 9                     Financial Instruments      1 January 2018 
 IFRS 15                    Revenue from contracts     1 January 2018 
                            with customers 
 IFRS 16                    Leases                     1 January 2019 
-------------------------  -------------------------  --------------- 
 
 

The Directors have assessed the impact of the new standards and do not believe the above will have a material impact on the financial statements. As a lessor, the treatment of the Group's property leases is expected to be broadly the same and changes to the treatment of the Group's revenue will also remain broadly the same when IFRS 16 becomes effective.

Basis of consolidation

The Group financial statements consolidate the financial statements of MedicX Fund Limited and entities controlled by the Company (its subsidiary undertakings) made up to 30 September 2016. Control requires exposure or rights to variable returns and the ability to affect those returns through power over an investee. All intra-group transactions, balances, income and expenses are eliminated on consolidation.

Accounting for acquisitions of investment properties

Where the Group acquires subsidiaries that own real estate, at the time of acquisition, the Group considers whether each acquisition represents the acquisition of an asset or a business. The Group accounts for an acquisition as a business combination where an integrated set of activities, including processes, is acquired in addition to the property.

When the acquisition of subsidiaries does not represent a business combination, it is accounted for as an acquisition of a group of assets and liabilities. The cost of the acquisition is allocated to the assets and liabilities acquired based upon their relative fair values, and no goodwill or deferred tax is recognised.

Segmental reporting

The Directors are of the opinion that the Group is engaged in a single segment of business, being investment in primary healthcare properties in the United Kingdom and the Republic of Ireland.

Expenses

All expenses are accounted for on an accruals basis.

Cash and cash equivalents

Cash and deposits in banks are carried at cost. Cash and cash equivalents are defined as cash, demand deposits, and highly liquid investments readily convertible to known amounts of cash and subject to insignificant risk of changes in value. For the purposes of the Consolidated Statement of Cash Flows, cash and cash equivalents consist of cash and deposits in banks.

Revenue recognition

Rent receivable comprises rent for the year in relation to the Group's investment properties exclusive of Value Added Tax. Rent is recognised on a straight line basis over the period of the lease. Rent is accrued for any outstanding rent reviews from the date that the review was due based on a best estimate of the new expected rent. Any lease incentives taken by tenants to enter into lease agreements, any premium paid by tenants to the Group or any fixed rent uplifts during the lease term are recognised on a straight line basis over the full lease term.

Foreign exchange

Transactions in foreign currencies are recorded at the rate of exchange ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated to the functional currency at the foreign exchange rate ruling at the reporting date. Differences are recognised in profit and loss.

Non-monetary assets and liabilities that are measured at historical cost in a foreign currency are translated to the functional currency using the exchange rate at the date of the transaction.

Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated to the functional currency at foreign exchange rates ruling at the dates the fair values were determined. Differences are recognised in profit and loss.

The results and financial position of all the Group entities that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

-- Assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of the statement of financial position;

-- Income and expenses for each statement of comprehensive income are translated at average rates (unless the average rate is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions); and

-- All resulting exchange differences are recognised directly within equity in the Group's other reserve.

Trade and other receivables

Trade and other receivables are measured at initial recognition at their invoiced value inclusive of any Value Added Taxes that may be applicable. Provision is made for any doubtful debts which are not deemed recoverable.

Trade and other payables

Trade and other payables are recognised and carried at their invoiced value inclusive of any Value Added Taxes that may be applicable.

Finance costs

Borrowing costs are charged to profit and loss in the year to which they relate on an accruals basis except where they relate to properties under construction when borrowing costs are capitalised.

Bank loans and borrowings

All bank loans and borrowings are initially recognised at fair value of the consideration received, less issue costs where applicable. After initial recognition, all interest-bearing loans and borrowings are subsequently measured at amortised cost. Amortised cost is calculated by taking into account any discount or premium on settlement.

Bank loans that are acquired by means of asset acquisitions are recognised at fair value as at the date of acquisition with any resulting fair value adjustment being amortised against finance costs over the life of the loans, on an effective interest basis.

Investment properties

The Group's completed investment properties are held for long-term investment. Freehold and long-leasehold properties acquired are initially recognised at cost, being fair value of the consideration given including transaction costs associated with the property. After initial recognition, freehold and long-leasehold properties are measured at fair value, with unrealised gains and losses recognised in profit and loss. Both the base costs and valuations take account of core fixtures and fittings.

Investment properties under construction are initially recognised at cost and are revalued at the period end as determined by professionally qualified external valuers. Gains or losses arising from the changes in fair value of investment properties under construction are recognised in profit and loss in the period in which they arise.

The fair values of completed investment properties and investment properties under construction are based upon the valuations of the properties as provided by Jones Lang LaSalle Limited, an independent firm of chartered surveyors, as at each period end, adjusted as appropriate for costs to complete, head lease liabilities (the net present value of which are recognised as separate liabilities) and lease incentives.

In rare situation where the Group has purchased a site intended to be developed, but where construction has not started, the site is held at cost unless there are indications of a significant change in value. Sites with a value of GBP2.3 million were not formally revalued at 30 September 2016.

Costs of financing specific developments are capitalised and included in the cost of each development. During the year the loan facilities, as disclosed in note 12, were utilised to fund development work on investment properties under construction. Interest costs of GBP228,000 (2015: GBP250,000) attributable to development work in progress were capitalised.

Current and deferred taxation

The tax liability represents the sum of the current tax and deferred tax payable. The current tax payable is based on taxable profit for the year.

Deferred tax is the tax that may become payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using the liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent it is probable that taxable profits will be available against which deductible temporary differences can be utilised.

Full provision is made for deferred tax assets and liabilities arising from all temporary differences between the recognition of gains and losses in the financial statements and recognition in the tax computation, other than in respect of asset acquisitions in corporate vehicles where deferred tax is recognised in relation to temporary differences arising after acquisition.

Deferred tax assets and liabilities are calculated at the tax rates expected to be effective at the time the temporary differences are expected to reverse by reference to the tax rates substantively enacted at the balance sheet date. Deferred tax assets and liabilities are not discounted.

Impairment of assets

The Group assesses annually whether there are any changes in circumstances indicating that any of its assets have been impaired. If such indication exists, the asset's recoverable amount is estimated and compared to its carrying value. Where it is impossible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the smallest cash-generating unit to which the asset is allocated.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, an impairment loss is recognised immediately in profit and loss.

Fair value measurements

The Group measures certain financial instruments and non-financial assets such as investment property, at fair value at the end of each reporting period. Fair value is the price that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their best economic interest. A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs significant to the fair value measurement as a whole:

-- Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities

-- Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable

-- Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable

For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

Use of judgements and estimates

In the process of applying the Group's accounting policies, the Directors are required to make certain judgements and estimates to arrive at the carrying value for its assets and liabilities. The most significant areas requiring judgement in the preparation of these financial statements were:

Valuation of investment property

The Fund obtains valuations performed by external valuers in order to determine the fair value of its investment properties. These valuations are based upon assumptions including future rental income, anticipated maintenance costs, future development costs and the appropriate discount rate. The valuers also have regard for observable market evidence of transaction prices for similar properties. Further information in relation to the valuation of investment property is disclosed in note 9.

Asset acquisitions

The Fund's approach to recognising investment properties acquired in a corporate entity is to treat the acquisition as an asset purchase, as described in IAS 40, if the corporate entity is not considered to contain any material processes. Each corporate entity acquired is considered to determine if it meets the criteria to be recognised as a business combination in accordance with IFRS 3 or if it is more appropriate to treat it as an asset acquisition.

Rent reviews

The Fund estimates and accrues the expected uplift in rent for rent reviews from the effective review date to the period end. This estimation of future rent takes into account the terms of the underlying occupational leases and the available observable market rental evidence.

Deferred tax assets

The Fund only recognises deferred tax assets if it is considered probable that there will be suitable taxable profits from which the future reversal of the underlying temporary differences can be deducted.

   2.   Directors' fees 
 
                                               2016       2015 
                                            GBP'000    GBP'000 
----------------------------------------  ---------  --------- 
 During the year the directors received 
  the following fees: 
 D Staples (Chairman)                            46         46 
 S Mason                                         31         31 
 S Le Page (Audit Committee Chairman)            36         32 
 J Hearle                                        31         31 
 C Bennett                                        -          7 
----------------------------------------  ---------  --------- 
 Total charged in the Consolidated 
  Statement of Comprehensive Income             144        147 
----------------------------------------  ---------  --------- 
 
   3.   Auditor's remuneration 

The amount disclosed in the Consolidated Statement of Comprehensive Income relates to an accrual for audit fees for the year ended 30 September 2016, payable to KPMG LLP (2015: KPMG LLP).

 
                                              2016       2015 
                                           GBP'000    GBP'000 
---------------------------------------  ---------  --------- 
 Group audit fees for the current year         106        104 
 Audit fees for the subsidiaries                45         54 
---------------------------------------  ---------  --------- 
 Total group audit fees                        151        158 
 Review of the interim report                   20         20 
---------------------------------------  ---------  --------- 
 Total audit and other fees                    171        178 
---------------------------------------  ---------  --------- 
 
   4.   Finance costs 
 
                                            2016       2015 
                                         GBP'000    GBP'000 
-------------------------------------  ---------  --------- 
 Interest payable on long-term loans      15,326     13,709 
 Refinancing costs                           431        343 
-------------------------------------  ---------  --------- 
                                          15,757     14,052 
 Interest capitalised on properties 
  under construction                       (228)      (250) 
-------------------------------------  ---------  --------- 
                                          15,529     13,802 
-------------------------------------  ---------  --------- 
 

During the year interest costs on funding attributable to investment properties under construction were capitalised at an effective interest rate of 4.45% (2015: 4.63%). The funding was sourced from all of the loan facilities outlined within note 12. Where properties under construction were secured against a specific loan, the interest for that facility was capitalised.

   5.   Finance income 
 
                                 2016       2015 
                              GBP'000    GBP'000 
--------------------------  ---------  --------- 
 Bank interest receivable          75         66 
 Foreign exchange gain          1,074          - 
--------------------------  ---------  --------- 
                                1,149         66 
--------------------------  ---------  --------- 
 

The foreign exchange gain is derived from the retranslation of monetary assets and liabilities denominated in Sterling (which is a foreign currency for the Group's Irish property owning subsidiary, MedicX Properties Ireland Limited, which has a functional currency of the Euro). The Company has provided Sterling loans to MedicX Properties Ireland Limited to enable it to invest in properties. To settle these loans, which are eliminated on consolidation, MedicX Properties Ireland Limited will be required to repay fewer Euros than were received by virtue of the Euro having strengthened against Sterling over the year.

   6.   Taxation 
 
                            2016       2015 
                         GBP'000    GBP'000 
---------------------  ---------  --------- 
 Deferred tax 
 Charge for the year       1,556      3,293 
---------------------  ---------  --------- 
 Total tax charge          1,556      3,293 
---------------------  ---------  --------- 
 

For the year under review, the Company does not have any profits chargeable to tax in jurisdictions outside Guernsey.

The Company has obtained exempt company status in Guernsey under the terms of Income Tax (Exempt Bodies) (Guernsey) Ordinance 1989 so that it is exempt from Guernsey taxation on income arising outside Guernsey and on bank interest receivable. The Company is, therefore, only liable to a fixed fee of GBP1,200 per annum. The Directors intend to conduct the Group's affairs such that the Company continues to remain eligible for the exemption. Guernsey companies are subject to UK taxation on UK sourced net rental income. During the year no tax arose in respect of the income of any of the Guernsey companies. The Company's UK subsidiaries are subject to United Kingdom corporation tax on their taxable profits.

A reconciliation of the actual tax charge to the notional tax charge applying the average standard rate of UK corporation tax of 20.0% (2015: 20.5%) is set out below:

 
                                                2016       2015 
                                             GBP'000    GBP'000 
-----------------------------------------  ---------  --------- 
 Profit before tax                            28,187     39,122 
-----------------------------------------  ---------  --------- 
 
 Profit before tax multiplied by the 
  average standard rate of corporation 
  tax in the UK of 
  20.0% (2015: 20.5%)                          5,637      8,020 
 Income/expenses not taxable/deductible 
  for tax purposes                           (1,860)    (4,071) 
 Profits not subject to UK taxation          (1,858)    (1,711) 
 Reassessment of brought forward losses            -      1,094 
 Adjustments in respect of prior periods         614          - 
 Change in closing deferred tax rate           (977)          - 
 Other tax adjustments                             -       (39) 
 Total tax charge                              1,556      3,293 
-----------------------------------------  ---------  --------- 
 

Deferred Taxation

 
                                        Accelerated    Unrelieved 
                           Fair value       capital    management 
                                gains    allowances      expenses      Total 
                              GBP'000       GBP'000       GBP'000    GBP'000 
------------------------  -----------  ------------  ------------  --------- 
 At 1 October 2014                187         2,303       (1,452)      1,038 
 Provided/(released) in 
  year                            583         3,782       (1,072)      3,293 
------------------------  -----------  ------------  ------------  --------- 
 At 30 September 2015             770         6,085       (2,524)      4,331 
 Provided in year                 178           531           847      1,556 
------------------------  -----------  ------------  ------------  --------- 
 At 30 September 2016             948         6,616       (1,677)      5,887 
------------------------  -----------  ------------  ------------  --------- 
 

As required by IAS 12 "Income taxes", full provision has been made for the temporary differences arising on the fair value gains of investment properties held by UK resident companies that have passed through the Group's Consolidated Statement of Comprehensive Income. In the opinion of the Directors, this provision is required to ensure compliance with IAS 12. It is the Directors' view that the deferred tax attributable to the fair value gain on the Group's investment property portfolio is unlikely to significantly crystallise as, in common with practice in the sector, the Group would most likely sell the companies holding the property portfolio rather than sell all properties individually.

The Group's subsidiary undertakings have gross unrelieved management expenses of GBP12.5 million (2015: GBP16.1 million) which after the IAS 12 recognition exemption leaves the Group with unrelieved management expenses of GBP8.9 million (2015: GBP12.6 million) which gave rise to a recognised deferred tax asset of GBP1.7 million (2015: GBP2.5 million) at an average rate of 19.2% (2015: 20%) which reflects the future UK corporation tax rate of 17% and the UK income tax rate of 20%. The deferred tax assets are netted off the deferred tax liabilities where they may be offset in future against the same components of tax.

There are no accumulated Group tax losses within the Group (2015: none), which are currently not recognised as a deferred tax asset within the financial statements of the Group. All of the existing tax losses of the Group are now recognised as part of the net deferred tax liability.

As a result of the deferred tax recognition exemption for asset acquisitions,, deferred tax liabilities of GBP9.2 million (2015: GBP9.9 million) in respect of fair value gains and GBP2.3 million (2015: GBP2.3 million) in respect of capital allowances, and deferred tax assets of GBP0.7 million (2015: GBP0.7 million) in respect of unrelieved management expenses, have not been recognised.

   7.   Provisions 

Other provisions

 
                                  2016       2015 
                               GBP'000    GBP'000 
--------------------------  ----------  --------- 
 Brought forward                     -        215 
 Released during the year            -      (215) 
--------------------------  ----------  --------- 
 At 30 September                     -          - 
--------------------------  ----------  --------- 
 

The Company had previously made provision for potential liabilities relating to compliance and employee related matters arising from transactions which occurred in MPVII Investments Ltd. This provision was reversed during the previous year as MPVII Investments Ltd was sold on 8 July 2015.

   8.   Earnings and net asset value per Ordinary Share 

Basic and diluted earnings and net asset value per share

The basic and diluted earnings per Ordinary Share are based on the profit for the year attributable to Ordinary Shares of GBP26,631,000 (2015: GBP35,829,000) and on 374,517,179 (2015: 361,323,024) Ordinary Shares, being the weighted average aggregate of Ordinary Shares in issue calculated over the year, excluding amounts held in treasury. This gives rise to a basic and diluted earnings per Ordinary Share of 7.1 pence (2015: 9.9 pence) per Ordinary Share.

The basic and diluted net asset value per Ordinary Share are based on the net asset position at the period end attributable to Ordinary Shares of GBP278,161,000 (2015: GBP254,097,000) and on 388,066,844 (2015: 365,125,306) Ordinary Shares being the aggregate of Ordinary Shares in issue at the year end, excluding amounts held in treasury. This gives rise to a basic and diluted net asset value per Ordinary Share of 71.7 pence per Ordinary Share (2015: 69.6 pence per Ordinary Share).

EPRA earnings per share and net asset value per share

The Directors believe that the following EPRA and adjusted earnings per Ordinary Share and net asset value per Ordinary Share are more meaningful key performance indicators for the Group:

 
                                                 2016          2015 
                                              GBP'000       GBP'000 
---------------------------------------  ------------  ------------ 
 Profit attributable to equity holders 
  of the parent                                26,631        35,829 
 Adjusted for: 
 Deferred tax charge                            1,556         3,293 
 Revaluation gain                            (15,523)      (25,603) 
 Fair value gain on acquired loans               (30)          (88) 
---------------------------------------  ------------  ------------ 
 EPRA earnings                                 12,634        13,431 
 EPRA EPS                                        3.4p          3.7p 
 
 Company specific adjustments: 
 Performance fee                                1,553             - 
 Adjusted earnings on basis reported 
  in prior years                               14,187        13,431 
 Adjusted earnings per Ordinary Share 
  - basic and diluted                            3.8p          3.7p 
 Weighted average number of Ordinary 
  Shares                                  374,517,179   361,323,024 
---------------------------------------  ------------  ------------ 
 
                                                 2016          2015 
                                              GBP'000       GBP'000 
---------------------------------------  ------------  ------------ 
 Net assets                                   278,161       254,097 
 Adjusted for: 
 Deferred tax liability                         5,887         4,331 
 EPRA net assets                              284,048       258,428 
 EPRA net asset value per Ordinary 
  Share - basic and diluted                     73.2p         70.8p 
---------------------------------------  ------------  ------------ 
 
                                                 2016          2015 
                                              GBP'000       GBP'000 
---------------------------------------  ------------  ------------ 
 Net assets                                   278,161       254,097 
 Adjusted for: 
 Fair value of debt                          (59,134)      (25,212) 
---------------------------------------  ------------  ------------ 
 EPRA NNNAV                                   219,027       228,885 
 EPRA NNNAV per Ordinary Share - basic 
  and diluted                                   56.4p         62.7p 
 Ordinary Shares in issue at the year 
  end                                     388,066,844   365,125,306 
---------------------------------------  ------------  ------------ 
 
   9.   Investment properties 
 
                                       Completed      Properties         Total 
                                      investment           under    investment 
                                      properties    construction    properties 
                                         GBP'000         GBP'000       GBP'000 
----------------------------------  ------------  --------------  ------------ 
 Fair value 1 October 2014               492,252          10,654       502,906 
 Additions                                 3,712          21,258        24,970 
 Transfer to completed properties         23,145        (23,145)             - 
 Revaluation                              25,381             222        25,603 
----------------------------------  ------------  --------------  ------------ 
 Fair value 30 September 2015            544,490           8,989       553,479 
 Additions                                22,527          20,825        43,352 
 Disposals at valuation                     (90)               -          (90) 
 Transfer to completed properties         14,928        (14,928)             - 
 Revaluation                              15,555            (32)        15,523 
----------------------------------  ------------  --------------  ------------ 
 Fair value 30 September 2016            597,410          14,854       612,264 
----------------------------------  ------------  --------------  ------------ 
 
 
                                                         Total 
                                                    investment 
                                                    properties 
                                                       GBP'000 
------------------------------------------------  ------------ 
 Fair value per JLL valuation report                   561,704 
 Ground rents recognised as finance leases               1,405 
 Rent incentives                                       (1,424) 
 Cost to complete properties under construction        (8,206) 
------------------------------------------------  ------------ 
 Fair value 30 September 2015                          553,479 
------------------------------------------------  ------------ 
 
   Fair value per JLL UK valuation report              603,380 
 Fair value per JLL Ireland                             18,366 
 Sites purchased for forward funding schemes             2,339 
 Ground rents recognised as finance leases               1,430 
 Rent incentives                                       (1,513) 
 Cost to complete properties under construction       (11,738) 
------------------------------------------------  ------------ 
 Fair value 30 September 2016                          612,264 
------------------------------------------------  ------------ 
 

Investment properties are initially recognised at cost and then subsequently measured at fair value, which has been determined based on the market valuations performed by Jones Lang LaSalle Limited for the properties held within the United Kingdom as at 30 September 2016. The valuation takes account of the fact that a purchaser's offer price to the Group would be net of purchaser's costs (which are estimated at 6.1% (2015: 5.8%) of what would otherwise be the purchase price).

Investment properties under construction located in the Republic of Ireland have been valued by Jones Lang LaSalle Limited, Dublin office subsequent to the year end at 2 December 2016 for a potential third party lender. Jones Lang LaSalle have confirmed that they do not consider there to be a material difference to the value at 30 September 2016. The properties have been valued in line with the approach taken within the UK outlined below although purchasers' costs are lower since Irish stamp duty is generally charged at a rate of 2% (4.46% adopted).

The sites purchased for forward funding schemes were acquired before the year end, and as part of the acquisition process were valued by Jones Lang LaSalle Limited, and are valued at cost which approximates to fair value at 30 September 2016.

The freehold and long leasehold interests in the property investments of the Group were valued at an aggregate of GBP621,746,000 as at 30 September 2016 (2015: UK only; GBP561,704,000) by Jones Lang LaSalle Limited. This valuation assumes that all properties, including those under construction, are complete. The difference between the total valuation and the carrying value is the cost to complete those properties under construction, adjustments for the fair value of ground rents and lease incentive adjustments as at 30 September 2016.

The valuer's opinion of market value was derived using valuation techniques and comparable recent market transactions on arm's length terms. Jones Lang LaSalle Limited has valued these properties for reporting purposes since 31 March 2008.

The market valuation was carried out in accordance with the requirements of the Valuation Standards published by the Royal Institution of Chartered Surveyors, and accounting standards. The properties were valued to market value assuming that they would be sold in prudent lots (i.e. not as portfolios) subject to the existing leases, or agreements for lease where the leases had not yet been completed at the date of valuation.

The valuer's fee is a set fee applied to the number of properties in the portfolio, the valuer's fees for the year were GBP77,000 (2015: GBP72,000).

During the year a garage, which was acquired as part of a portfolio acquisition, was disposed of because it did not fit the criteria of the Group acquisition policy. This was disposed of for cash of GBP121,000 which resulted in a profit on disposal of GBP31,000.

The average net initial yield for assets located within the UK at 30 September 2016 was 5.25% (2015: 5.46%).

Fair value hierarchy

The valuation of all investment properties is classified in accordance with the fair value hierarchy described in note 1. As at 30 September 2016 (and as at 30 September 2015), the group determined that all investment properties be included at fair value as Level 3, reflecting significant unobservable inputs.

There were no transfers between Levels 1, 2 or 3 during the year.

Valuation techniques

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As is common for investment property, valuation appraisals are performed using a combination of market and income approaches.

Under the market comparable method (or market comparable approach), a property's fair value is estimated based on comparable observable transactions.

Under income approaches, unobservable inputs are applied to model a property's fair value. The following unobservable inputs are applied:

-- The Estimated Rental Value is the amount that an area could be let for, based on prevailing market conditions at the valuation date;

-- The Equivalent Yield is the internal rate of return from the cash flows generated from renting a property;

-- Rental Growth is an estimate of rental increases expected for contractual or prevailing market conditions; and

-- The physical condition of a property, which would normally be visited by a valuer on a rotational basis.

Properties under construction have been measured at their fair value by taking the fair value at completion and subtracting the contractual costs to complete the assets under the development contracts. The technique inherently assumes that construction will be completed to an acceptable standard and leases will be entered into under the terms and time line agreed.

The fair value of investment properties is considered to be based on a number of significant assumptions. If the valuation yield were to shift by 0.25% on each property, this would result in an impact on the valuation of the properties of approximately GBP32 million. If rent reviews of 2% were achieved on the full portfolio with no yield movement the valuation of properties would increase by approximately GBP13 million.

The property yields of the Fund excluding three outlying properties range from 7.25% to 4.31%.

The property ERVs of the Fund range from GBP104 to GBP387 per square metre.

The majority of investment properties are charged as security for the long-term loans as disclosed in note 12.

Of the completed investment properties GBP141,823,000 (2015: GBP129,837,000) are leasehold properties.

During the year the loan facilities, as disclosed in note 12, were utilised to fund development work on investment properties under construction. Interest costs of GBP228,000 (2015: GBP250,000) attributable to development work in progress were capitalised during the year.

10. Trade and other receivables

 
                                      2016       2015 
                                   GBP'000    GBP'000 
-------------------------------  ---------  --------- 
 Rent receivable                    4, 376      2,916 
 VAT recoverable                         -        731 
 Other debtors and prepayments      4, 143      3,131 
-------------------------------  ---------  --------- 
                                     8,519      6,778 
-------------------------------  ---------  --------- 
 

11. Trade and other payables

 
                                             2016       2015 
                                          GBP'000    GBP'000 
--------------------------------------  ---------  --------- 
 Trade payables                             1,470      1,464 
 VAT payable                                  233          - 
 Other payables                               771      1,268 
 Deferred rental income                     9,150      8,496 
 Interest payable and similar charges       3,092      2,898 
 Accruals                                   5,207      4,840 
                                           19,923     18,966 
--------------------------------------  ---------  --------- 
 

12. Loans

 
                                              2016       2015 
                                           GBP'000    GBP'000 
---------------------------------------  ---------  --------- 
 Total facilities drawn down               336,705    338,687 
 
 Loan issue costs                         (14,662)   (14,108) 
 Amortisation of loan issue costs            4,683      3,316 
 
 Fair value arising on acquisition 
  of subsidiaries                           11,645     11,645 
 Amortisation of fair value adjustment 
  on acquisition                           (4,064)    (3,128) 
---------------------------------------  ---------  --------- 
                                           334,307    336,412 
 Loans due within one year                   1,983      1,896 
---------------------------------------  ---------  --------- 
                                           336,290    338,308 
---------------------------------------  ---------  --------- 
 

The current portion of long term loans relates to the amount due in the next twelve months on the Aviva PMPI, GPG and Fakenham loan facilities; the terms of these loans are disclosed in note 12.

The Group has six primary debt facilities drawn and a smaller loan facility for a single property. In addition the Group has a revolving loan facility with RBS. The RBS facility was undrawn at 30 September 2016. Details of each facility are disclosed below. Repayments of the loans listed above fall due as follows:

 
                                                            2016       2015 
                                                         GBP'000    GBP'000 
---------------------  --------------  --------------  ---------  --------- 
 Due within one 
  year                                                     1,983      1,896 
 
 Between one and 
  two years                                                2,288      1,983 
 Between two and 
  five years                                               8,403      7,602 
 Over five years                                         323,616    326,827 
---------------------  --------------  --------------  ---------  --------- 
 Due after one 
  year                                                   334,307    336,412 
---------------------  --------------  --------------  ---------  --------- 
                                                         336,290    338,308 
---------------------  --------------  --------------  ---------  --------- 
 
                             Interest                       2016       2015 
                                 Rate     Expiry Date    GBP'000    GBP'000 
---------------------  --------------  --------------  ---------  --------- 
 Aviva GBP100m 
  loan facility                5.008%   December 2036     99,679     99,665 
 Aviva GBP50m loan 
  facility                     4.370%   February 2032     48,984     48,932 
 Aviva PMPI loan               4.450%   February 2027 
  facility 
                                        November 2032 
                                         October 2031     59,445     60,887 
 Aviva GPG loan                         December 2031 
  facility              4.130%-5.000%         onwards     22,649     27,380 
 Aviva Fakenham         4.130%-5.000%   December 2031      4,098          - 
  loan facility(1)                            onwards 
 Aviva Verwood 
  loan facility                6.250%       July 2026        827        899 
 Standard Life 
  loan note facility           3.838%    October 2028     49,483     49,597 
                                            September 
 RBS loan facility             2.000%            2019      (332)      (230) 
 Loan note facility            3.990%   December 2028     49,474     49,282 
 Current portion 
  of long term loans                                       1,983      1,896 
---------------------  --------------  --------------  ---------  --------- 
                                                         336,290    338,308 
---------------------  --------------  --------------  ---------  --------- 
 

(1) During the year, GBP4,336,000 of the Aviva GPG loan facility was novated to another group company, MedicX (Fakenham) Ltd.

Covenants

All of the covenants on the loan facilities were complied with during the year and subsequently.

Mark to market of fixed rate debt

The Group does not mark to market its fixed interest debt in its financial statements, other than the recognition of a fair value adjustment on the acquisition of debt facilities. The unamortised fair value adjustment of acquired loans was GBP7,581,000 as at 30 September 2016 (30 September 2015: GBP8,517,000).

A mark to market calculation gives an indication of the benefit or liability to the Group of the fixed rate debt given the prevailing cost of debt over the remaining life of the debt. An approximate mark to market calculation has been undertaken following advice from the Group's lenders, with reference to the fixed interest rate on the individual debt facilities, and the fixed interest rate, including margin, achievable on the last business day of the financial year for a loan with similar terms to match the existing facilities. The debt benefit or liability is calculated as the difference between the present values of the debt cash flows at the two rates over the remaining term of the loan, discounting the cash flows at the prevailing LIBOR rate. The approximate mark to market liability of the total fixed rate debt to the Group was GBP59.1 million as at 30 September 2016 (30 September 2015: GBP25.2 million).

Fair value hierarchy

The valuation of loans is classified in accordance with the fair value hierarchy described in note 1. As at 30 September 2016 (and as at 30 September 2015), the Group determined that loans be included at fair value as Level 3, reflecting significant unobservable inputs.

There were no transfers between Levels 1, 2 or 3 during the year.

Cash flow movements

During the year, the principal cash flow movements on the Fund's loan facilities were as follows:

 
                                                  2016       2015 
                                               GBP'000    GBP'000 
-------------------------------------------  ---------  --------- 
 Draw down of Loan note                              -     35,000 
 Draw down of Standard Life loan note 
  facility                                           -     50,000 
-------------------------------------------  ---------  --------- 
 New loan facilities drawn                           -     85,000 
-------------------------------------------  ---------  --------- 
 
 Repayment of mortgage principal                  (66)       (63) 
 Repayment of Aviva PMPI loan facility         (1,267)    (1,032) 
 Repayment of Aviva GPG loan facility            (466)      (531) 
 Repayment of Aviva Fakenham loan facility        (96)          - 
 Repayment of GE Capital loan facility               -   (31,297) 
 Repayment of long-term borrowings             (1,895)   (32,923) 
-------------------------------------------  ---------  --------- 
 
 Aviva GBP100m loan facility costs                   -       (20) 
 Aviva GPG loan facility costs                    (11)        (7) 
 Aviva Fakenham loan facility costs               (67)          - 
 RBS loan facility costs                         (320)       (21) 
 Loan note costs                                     -      (235) 
 Standard Life facility costs                    (156)      (414) 
-------------------------------------------  ---------  --------- 
 Loan issue costs                                (554)      (697) 
-------------------------------------------  ---------  --------- 
 

Any directly attributable costs incurred relating to the loans are added to the loan issue costs and amortised over the remaining life of the specific loan facility.

13. Head lease liabilities

 
                             30 September           30 September 
                                 2016                   2015 
                                      Minimum                Minimum 
                          Present       lease    Present       lease 
                            value    payments      value    payments 
                          GBP'000     GBP'000    GBP'000     GBP'000 
----------------------  ---------  ----------  ---------  ---------- 
 Due within one year           93         102         94         103 
 Between one and five 
  years                       299         407        300         411 
 Over five years            1,038       7,806      1,011       8,197 
----------------------  ---------  ----------  ---------  ---------- 
                            1,430       8,315      1,405       8,711 
 Less future interest 
  costs                         -     (6,885)          -     (7,306) 
----------------------  ---------  ----------  ---------  ---------- 
                            1,430       1,430      1,405       1,405 
----------------------  ---------  ----------  ---------  ---------- 
 

The Group holds certain long leasehold properties which are classified as investment properties. The head leases are accounted for as finance leases. These leases typically have lease terms between 32 and 999 years and fixed rentals.

14. Share capital

Ordinary Shares of no par value were issued during the year as detailed below:

 
                                                              Issue 
                                                Number        price 
                                             of shares    per share 
----------------------------------------  ------------  ----------- 
 Total shares issued as at 30 September 
  2015                                     394,252,182 
 
 Shares issued under Company's Block 
  listing facility: 
 23 September 2016                           1,000,000       88.25p 
 28 September 2016                           1,000,000       88.00p 
----------------------------------------  ------------  ----------- 
 
 Total shares issued as at 30 September 
  2016                                     396,252,182 
----------------------------------------  ------------  ----------- 
 Shares held in treasury (see below)       (8,185,338) 
----------------------------------------  ------------  ----------- 
 Total voting rights in issue as at 
  30 September 2016                        388,066,844 
----------------------------------------  ------------  ----------- 
 

Demand for shares remained strong throughout the year and in order to satisfy this demand the Group made an application to the UK Listing Authority for a block listing of 23,981,109 Ordinary Shares of no par value on 15 September 2016. At 30 September 2016, 21,981,109 shares remain within the block listing.

During the year, treasury shares were utilised to satisfy market demand for shares and in lieu of cash payment for the dividends payable. The transactions and relevant price per share are noted below:

 
                                                  Number        Price 
                                               of shares    per share 
-----------------------------------------  -------------  ----------- 
 Total shares held in treasury as at          29,126,876        83.50 
  30 September 2015                                             pence 
 
 
 Shares sold for cash: 
 09 December 2015                            (3,000,000)        84.00 
                                                                pence 
 16 December 2015                            (2,000,000)        86.25 
                                                                pence 
 08 January 2016                             (1,000,000)        82.75 
                                                                pence 
 28 January 2016                             (1,000,000)        85.00 
                                                                pence 
 18 February 2016                            (2,000,000)        84.00 
                                                                pence 
 10 March 2016                               (1,000,000)        87.25 
                                                                pence 
 01 June 2016                                (2,500,000)        86.00 
                                                                pence 
 08 July 2016                                (2,000,000)        84.25 
                                                                pence 
 08 August 2016                              (1,250,000)        87.75 
                                                                pence 
 23 August 2016                              (2,000,000)        88.50 
                                                                pence 
 24 August 2016                              (1,000,000)        88.75 
                                                                pence 
 12 September 2016                           (1,500,000)        88.50 
                                                                pence 
-----------------------------------------  -------------  ----------- 
                                            (20,250,000) 
-----------------------------------------  -------------  ----------- 
 
 Shares utilised in lieu of cash payment 
  of dividends: 
 31 December 2015                              (185,789)        84.65 
                                                                pence 
 31 March 2016                                 (163,239)        86.70 
                                                                pence 
 30 June 2016                                  (173,426)        87.50 
                                                                pence 
 30 September 2016                             (169,084)        90.55 
                                                                pence 
-----------------------------------------  -------------  ----------- 
                                               (691,538) 
-----------------------------------------  -------------  ----------- 
 Total shares held in treasury as at              8,185, 
  30 September 2016                                  338 
-----------------------------------------  -------------  ----------- 
 

The closing value of shares held in treasury issued at 83.50 pence per share each is GBP6,834,924.

Any cash consideration received in excess of the price the treasury shares were purchased at has been included as part of share premium.

15. Other reserve

The movement in other reserve is set out in the Consolidated Statement of Changes in Equity.

The Companies (Guernsey) Law 2008, as amended ("2008 Law") made new provisions as to how the consideration received or due for an issue of shares is accounted for and how these sums may be distributed to members.

The other reserve is freely distributable with no restrictions. In addition, distributions from the share premium account do not require the sanction of the court. The Directors may authorise a distribution at any time from share premium or accumulated gains provided that they are satisfied on reasonable grounds that the Company will immediately after the distribution satisfy the solvency test prescribed in the 2008 Law and that it satisfies any other requirements in its Articles of Incorporation.

The Company's other reserve is used to accumulate annual profits or losses for each year, other comprehensive income comprising of foreign exchange differences created on consolidation of foreign operations less dividends declared and paid.

16. Cash and cash equivalents

 
                                     2016       2015 
                                  GBP'000    GBP'000 
------------------------------  ---------  --------- 
 Cash and balances with banks      20,968     56,910 
------------------------------  ---------  --------- 
 

Cash and cash equivalents comprise cash held by the Group and short term bank deposits with an original maturity of three months or less. The carrying amount of these assets approximates their fair value.

Included in the above amounts are balances that are held in restricted accounts which are not immediately available for use by the Group of GBP100,000 (2015: GBP11,030,000).

At 30 September 2015, cash and cash equivalents, included GBP25 million of cash in transit related to the second close of the Standard life loan note facility which completed on 30 September 2015.

17. Dividends

 
                                                          Year ended 30 
                                   Year ended 30             September 
                                   September 2016              2015 
-----------------------------  ---------------------  --------------------- 
                                            Dividend               Dividend 
                                GBP'000    per share   GBP'000    per share 
-----------------------------  --------  -----------  --------  ----------- 
 Quarterly dividend declared 
  and paid 
 31 December                      5,385       1.475p     5,139       1.450p 
 Quarterly dividend declared 
  and paid 
 31 March                         5,538      1.4875p     5,331       1.475p 
 Quarterly dividend declared 
  and paid 
 30 June                          5,585      1.4875p     5,374       1.475p 
 Quarterly dividend declared 
  and paid 
 30 September                     5,674      1.4875p     5,384       1.475p 
-----------------------------  --------  -----------  --------  ----------- 
 Total dividends declared 
  and paid during the 
  year                           22,182                 21,228 
-----------------------------  --------  -----------  --------  ----------- 
 
 Cash flow impact of 
  scrip dividends paid 
  on: 
 31 December 2015                   164                    598 
 31 March 2016                      142                    762 
 30 Jun 2016                        153                    543 
 30 Sept 2016                       141                     78 
-----------------------------  --------  -----------  --------  ----------- 
 Total cash equivalent 
  value of scrip shares 
  issued                            600                  1,981 
-----------------------------  --------  -----------  --------  ----------- 
 Cash payments made for 
  dividends declared and 
  paid                           21,582                 19,247 
-----------------------------  --------  -----------  --------  ----------- 
 Quarterly dividend declared 
  after year end                  5,858      1.4875p     5,386       1.475p 
 

Dividends are scheduled for the end of March, June, September and December of each year, subject to Board approval and shareholder approval at the AGM of the dividend policy. On 1 November 2016, the Board approved a dividend of 1.4875 pence per share, bringing the total dividend declared in respect of the year to 30 September 2016 to 5.95 pence per share. The record date for the dividend was 18 November 2016 and the payment date is 30 December 2016. The amount disclosed above is the cash equivalent of the declared dividend. The option to issue scrip dividends in lieu of cash dividends, with effect from the quarterly dividend paid in June 2010, was approved by a resolution of shareholders at the Company's Annual General Meeting on 10 February 2010. On 1 November 2016 the Board announced an opportunity for qualifying shareholders to receive the December 2016 dividend in new Ordinary Shares instead of cash.

18. Financial instruments risk management

The Group's operations expose it to a number of financial instrument risks. A risk management programme has been established to protect the Group against the potential adverse effects of these financial instrument risks. There has been no significant change in these financial instrument risks since the prior year.

The financial instruments of the Group at both 30 September 2016 and 30 September 2015 comprised trade receivables and payables, other debtors, cash and cash equivalents, non-current borrowings and current borrowings. It is the Directors' opinion that, with the exception of the non-current borrowings for which the mark to market liability or benefit is set out in note 12, the carrying value of all financial instruments in the statement of financial position was equal to their fair value.

Credit risk

From time to time the Group invests surplus funds in high quality liquid market instruments with a maturity of no greater than six months. To reduce the risk of counterparty default, the Group deposits its surplus funds subject to immediate cash flow requirements in A- rated (or better) institutions.

Concentrations of credit risk with respect to customers are limited due to the Group's revenue being largely receivable from UK government backed sources. As at the year end 89% (2015: 90%) of rental income receivable was derived from government backed tenants who are spread across a large number of Clinical Commissioning Groups which further reduces credit risk in this area. The default risk is considered low due to the nature of government backed funding for GP practices.

The Group's maximum exposure to credit risk on financial assets was as follows:

 
                                  2016       2015 
                               GBP'000    GBP'000 
---------------------------  ---------  --------- 
 Financial assets 
 Rent receivable                 4,376      2,916 
 Other current assets            4,143      3,862 
 Cash and cash equivalents      20,968     56,910 
---------------------------  ---------  --------- 
 

It is the Group's policy to assess debtors for recoverability on an individual basis and to make provision where it is considered necessary. Of the Group's trade receivables balance GBP3,862,000 (2015: GBP2,317,000) is neither impaired nor past due. GBP514,000 (2015: GBP599,000) is past due and of this GBP216,000 (2015: GBP525,000) is more than 120 days past due. The Board takes active steps to recover all amounts and has assessed that a provision of GBP51,000 (2015: GBP71,000) against trade receivables is appropriate at the year end.

Market risk

Market risk is the risk that the fair value or future cash flows of the Group's financial instruments will fluctuate because of changes in market prices. The Group is exposed to interest rate risk. The Group operates primarily within Guernsey and the United Kingdom and the majority of the Group's assets, liabilities and cash flows are in pounds sterling which is the reporting currency. The Directors have approved terms to enter into a Euro denominated loan facility and this is in the process of being documented. The facility will provide a natural hedge against current and future Euro denominated investments outside of Guernsey and the United Kingdom but will in itself expose the Group to foreign currency risk related to the monetary financial loan instrument.

Interest rate risk

Interest rate risk is the risk that the value of a financial instrument or cash flows associated with the instrument will fluctuate due to changes in market interest rates. Interest rate risk arises on interest bearing financial assets and liabilities the Group uses.

The Group's Aviva borrowing facilities of GBP100,000,000 (2015: GBP100,000,000), GBP50,000,000 (2015: GBP50,000,000) and GBP59,777,000 (2015: GBP61,045,000) were negotiated at a fixed rate of interest of 5.008%, 4.37% and 4.45% respectively. 12 of the Aviva GPG and Fakenham loan facilities are also fixed, with a weighted average interest rate of 4.45%, as disclosed in note 12. The remaining two Aviva GPG loan facilities are charged at variable interest rates with a 2.5% margin.

On 15 September 2016, the Group extended the term of the RBS loan facility. The amendment also provides for an option, with lender consent, that the immediately committed GBP20 million revolving credit facility may be extended by a further GBP10 million to GBP30 million or additional lenders be added with a view to increasing the facility on existing terms (2015: maximum facility of GBP25 million). Interest is payable on amounts drawn under the amended facility at a rate equal to LIBOR plus a lending margin of 2.00% per annum. A non-utilisation fee of between 1.10% and 0.75% will be payable on the undrawn, GBP20 million immediately available commitment.

The Group's private loan note facility of GBP50,000,000 (2015: GBP50,000,000) has a fixed rate of 3.99% and the loan facility with Standard Life of GBP50,000,000 has a fixed rate of 3.838%.

These facilities represented 99% of the drawn borrowing facilities at the year end and if the RBS loan facility was fully drawn at the year end, the exposure to variable rate borrowings would be approximately 6%. Therefore the Directors consider interest rate risk on borrowings to be immaterial and do not consider it appropriate to perform sensitivity analysis on these items. Of the restricted cash balances held at the year end, GBP100,000 (2015: GBP627,000) was held in an Aviva deposit account which is A+ rated with an average interest rate of 0.2%.

Liquidity risk

Liquidity risk is the risk that the Group will encounter difficulty in realising assets or otherwise raising funds to meet financial commitments. The Directors regularly review the Company's forecast commitments against the future funding availability, with particular reference to the utilisation of and continued access to existing debt facilities and access to restricted cash balances and the ongoing commitments to development projects and proposed acquisitions. The Directors also review the Company's compliance with covenants on lending facilities.

Contractual maturity analysis for financial liabilities including interest payments at 30 September:

 
                                 Due 
                                  or 
                                 due                     Due        Due 
                                less         Due     between    between        Due 
                                than     between    3 months      1 and      after 
                                 one       1 and         and          5          5 
                               month    3 months      1 year      years      years      Total 
                             GBP'000     GBP'000     GBP'000    GBP'000    GBP'000    GBP'000 
-------------------------  ---------  ----------  ----------  ---------  ---------  --------- 
 Trade and other 
  payables                     1,470           -           -          -          -      1,470 
 Accruals                      2,009         217       2,981          -          -      5,207 
 
 Non-current borrowings 
 Principal                         -           -           -     10,691    326,014    336,705 
 Interest payments             1,798           -       9,309     59,100    144,901    215,108 
-------------------------  ---------  ----------  ----------  ---------  ---------  --------- 
                               1,798           -       9,309     69,791    470,915    551,813 
 
 Current portion 
  of non-current 
  borrowings 
 Principal                       164         324       1,495          -          -      1,983 
 Interest payments               369         623       2,942          -          -      3,934 
-------------------------  ---------  ----------  ----------  ---------  ---------  --------- 
                                 533         947       4,437          -          -      5,917 
 
 Liabilities at 
  30 September 2016            3,643         541       4,476     10,691    326,014    345,365 
 Future costs of 
  non-current borrowings       2,167         623      12,251     59,100    144,901    219,042 
-------------------------  ---------  ----------  ----------  ---------  ---------  --------- 
 Balances at 30 
  September 2016               5,810       1,164      16,727     69,791    470,915    564,407 
-------------------------  ---------  ----------  ----------  ---------  ---------  --------- 
 
                                 Due 
                                  or 
                                 due         Due         Due        Due 
                                less     between     between    between        Due 
                                than       1 and    3 months      1 and      after 
                                 one           3         and          5          5 
                               month      months      1 year      years      years      Total 
                             GBP'000     GBP'000     GBP'000    GBP'000    GBP'000    GBP'000 
-------------------------  ---------  ----------  ----------  ---------  ---------  --------- 
 Trade and other 
  payables                     1,464           -           -          -          -      1,464 
 Accruals                      4,047         793           -          -          -      4,840 
 
 Non-current borrowings 
 Principal                         -           -           -      9,585    329,102    338,687 
 Interest payments             1,798           -       9,309     62,059    162,235    235,401 
-------------------------  ---------  ----------  ----------  ---------  ---------  --------- 
                               1,798           -       9,309     71,644    491,337    574,088 
 
 Current portion 
  of non-current 
  borrowings 
 Principal                       157         309       1,430          -          -      1,896 
 Interest payments               496         656       3,431          -          -      4,583 
-------------------------  ---------  ----------  ----------  ---------  ---------  --------- 
                                 653         965       4,861          -          -      6,479 
 
 Liabilities at 
  30 September 2015            5,668       1,102       1,430      9,585    329,102    346,887 
 Future costs of 
  non-current borrowings       2,294         656      12,740     62,059    162,235    239,984 
-------------------------  ---------  ----------  ----------  ---------  ---------  --------- 
 Balances at 30 
  September 2015               7,962       1,758      14,170     71,644    491,337    586,871 
-------------------------  ---------  ----------  ----------  ---------  ---------  --------- 
 

19. Commitments

At 30 September 2016, the Group had commitments of GBP21.2 million (2015: GBP16.0 million) to complete properties under construction including sites purchased for forward funding schemes.

20. Material contracts

Investment Adviser

Octopus Healthcare Adviser Ltd is appointed to provide investment advice under the terms of an agreement dated 17 October 2006 as subsequently amended 20 March 2009, 17 February 2013, 24 September 2013 and 20 November 2015 (the "Investment Advisory Agreement" or "Agreement"). Fees payable under this agreement are:

(i) a tiered investment advisory fee set at 0.50% per annum on healthcare property assets up to GBP750 million, 0.40% per annum payable on assets between GBP750 million and GBP1 billion, and 0.30% per annum payable on assets over GBP1 billion subject to a total minimum annual fee of GBP3.878 million or, if lower, the fee that would have been payable under the old fee structure until the consolidated property asset value reaches GBP782 million after which no minimum fee shall apply;

(ii) a property management fee of 3% of gross rental income up to GBP25 million, and 1.5% property management fee on gross rental income over GBP25 million;

(iii) a corporate transaction fee of 1% of the gross asset value of any property owning subsidiary company acquired;

(iv) a performance fee based upon total shareholder return.

The annual performance fee is 15% of the amount by which the total shareholder return (using an average share price for the month of September) exceeds a compound hurdle rate calculated from the 69.0 pence issue price at 8 April 2009, subject to a high watermark. If in any year the total shareholder return falls short of this hurdle, the deficit in the total shareholder return has to be made up in subsequent years before any performance fee can be earned. The compounding of the hurdle rate is adjusted upwards to compound from the high watermark level at which the performance fee was last earned.

The hurdle rate applied in the year ended 30 September 2016 was 10% per annum (2015: 10%). The high watermark used for the calculation of the performance fee for the year to 30 September 2016 was the theoretical price which would have given a compounded 10% total shareholder return over the high watermark at 30 September 2015 (85.50 pence per share) with dividends reinvested. The current high watermark as at 30 September 2016 is set with reference to the average share price during September 2016 of 89.6 pence per share which will form a base for measuring shareholder return over the next year for the purpose of assessing whether a performance fee is payable.

The investment advisory base fee and performance fee earned in aggregate in any one financial year cannot be paid in excess of 1.5% of gross assets (excluding cash), such limit being equivalent to the investment advisory base fee that was in existence prior to the change. The excess, if any, of the aggregate of the investment advisory base fee and performance fee earned in any one financial year over 1.5% of gross assets (excluding cash) is not payable but is carried forward to future years or termination of the Investment Advisory Agreement, subject at all times to the annual 1.5% of gross assets (excluding cash) fee limit. On 20 November 2015 the Fund agreed to the renewal of the Investment Advisory Agreement, with revised renewal and notice terms to provide a rolling contract subject to the Company's ability to serve two years' notice at any time.

The Investment Adviser provides accounting administration services for no additional fee.

During the year, the agreements with Octopus Healthcare Adviser Ltd gave rise to GBP6,362,000 (2015: GBP4,574,000) of fees as follows:

 
                                                    2016       2015 
                                                 GBP'000    GBP'000 
---------------------------------------------  ---------  --------- 
 Expensed to the consolidated statement 
  of comprehensive income: 
 Investment advisory fee                           3,852      3,725 
 Investment advisory performance fee               1,553          - 
 Property management fees                            889        849 
 
 Capitalised as part of property acquisition 
  costs: 
 Corporate acquisition fees                           68          - 
---------------------------------------------  ---------  --------- 
 Total Fees                                        6,362      4,574 
---------------------------------------------  ---------  --------- 
 

Of these fees, GBPnil (2015: GBPnil) remained unbilled and GBP1,034,000 (2015: GBPnil) outstanding at the end of the year with the exception of the performance fee which was billed after the year end and is included within accruals due within one year in the statement of financial position.

During the year property development costs of GBPnil (2015: GBP552,000) were paid to Octopus Healthcare Property Ltd, a member of the same group of companies as Octopus Healthcare Adviser Ltd. At the year end there was a total of GBPnil that remained unbilled or outstanding (2015: GBPnil). In addition, licence fee income of GBPnil (2015: GBP7,000) was recognised on properties under construction by Octopus Healthcare Property Ltd during the year. At 30 September 2016 there were no licence fees (2015: GBPnil) unbilled or outstanding.

Administrator

Each Group company has entered into a separate administration agreement with International Administration Group (Guernsey) Limited for the provision of administrative services which was renewed with effect from 1 May 2015. Under these agreements fees were incurred totalling GBP116,000 (2015: GBP83,000) for the provision of corporate secretarial services to all Group companies and other administrative services.

Of these fees GBP1,000 (2015: GBP37,000) remained unbilled or outstanding at the year end.

21. Related party transactions

During the year fees of GBP29,000 (2015: GBP56,000) were paid to Aitchison Raffety Limited to negotiate rent reviews, and to act as agent for the disposal of properties, of which GBPnil (2015: GBPnil) remained unbilled or outstanding at the year end. John Hearle was Group Chairman of Aitchison Raffety Limited until October 2015.

During the year Aitchison Raffety Limited managed the service charges for a number of properties held by the Group. No fees have been paid to date for this service, nor are any payable as at 30 September 2016.

The management agreement with Aitchison Raffety was terminated with effect from 31 December 2015.

22. Operating leases

At 30 September 2016 the Group had entered into leases in respect of investment properties for the following rental income, excluding any future rent reviews:

 
                                        2016       2015 
                                     GBP'000    GBP'000 
---------------------------------  ---------  --------- 
 Amounts receivable under leases 
 Within one year                      37,177     33,905 
 Between one and five years          148,707    135,410 
 After more than five years          389,210    365,470 
---------------------------------  ---------  --------- 
 Total                               575,094    534,785 
---------------------------------  ---------  --------- 
 

The length of a typical lease is between 18 and 25 years, with provision for rent reviews mostly every three years. Rent reviews are usually agreed by reference to open market value or the Retail Price Index.

23. Subsidiary companies

The following were the subsidiary companies in the Group at 30 September 2016:

 
                                                                               Nominal 
                                                                                 value    Type of 
                                     Country      Principal     Ownership    of shares      share 
 Name                       of incorporation       activity    percentage     in issue       held 
-----------------------  -------------------  -------------  ------------  -----------  --------- 
 Held Directly: 
 MedicX Properties                                 Property 
  I Limited                         Guernsey     Investment          100%            2   Ordinary 
 MedicX Properties                   England       Property 
  II Ltd                             & Wales     Investment          100%            2   Ordinary 
 MedicX Properties                   England       Property 
  III Ltd                            & Wales     Investment          100%        1,000   Ordinary 
 MedicX Properties                   England       Property 
  IV Ltd                             & Wales     Investment          100%       25,000   Ordinary 
 MedicX Properties                                 Property 
  V Limited                         Guernsey     Investment          100%            2   Ordinary 
 MedicX Properties                  Guernsey       Property          100%          Nil   Ordinary 
  VI Limited                                     Investment 
 MedicX Properties                  Guernsey       Property          100%          Nil   Ordinary 
  VII Limited                                    Investment 
 MedicX GPG Holdings                Guernsey       Property          100%          Nil   Ordinary 
  Limited                                        Investment 
 MedicX Properties                  Guernsey       Property          100%          Nil   Ordinary 
  VIII Limited                                   Investment 
 MedicX Properties                  Guernsey       Property          100%          Nil   Ordinary 
  Ireland Limited                                Investment 
 MedicX Properties                  Guernsey    Non Trading          100%          Nil   Ordinary 
  Northern Ireland 
  Limited 
 
 Held indirectly: 
 MedicX (Verwood)                    England       Property 
  Ltd                                & Wales     Investment          100%        1,000   Ordinary 
                                     England        Holding 
 CSPC (3PD) Limited                  & Wales        company          100%          550   Ordinary 
 Primary Medical                     England        Holding 
  Properties Limited                 & Wales        company          100%        8,420   Ordinary 
 Primary Medical 
  Property Investments               England       Property 
  Limited                            & Wales     Investment          100%      966,950   Ordinary 
 DK Properties                       England       Property 
  (Woolston) Ltd*                    & Wales     Investment          100%            2   Ordinary 
                                     England       Property 
 GPG No5 Limited                     & Wales     Investment          100%       48,500   Ordinary 
                                     England       Property 
 MedicX LHP Limited*                 & Wales     Investment          100%      100,000   Ordinary 
                                     England       Property 
 MedicX LHF Limited*                 & Wales     Investment          100%            1   Ordinary 
 MedicX (Fakenham)                   England       Property 
  Ltd                                & Wales     Investment          100%          100   Ordinary 
-----------------------  -------------------  -------------  ------------  -----------  --------- 
 
   *      Dormant companies 

24. Capital management

The Group's objectives when managing capital are:

-- To safeguard the Group's ability to continue as a going concern and provide returns for shareholders and benefits for other stakeholders; and

-- To provide an adequate return to shareholders by sourcing appropriate investment properties and securing long term debt at attractive rates commensurate with the level of risk.

The Group sets the amount of capital in proportion to risk. The Group manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, purchase shares in the Company, issue new shares or sell assets to reduce debt.

The Group monitors capital on the basis of the adjusted gearing ratio. This is calculated as net debt divided by adjusted capital. Net debt is calculated as total debt, per the statement of financial position, less cash and cash equivalents. Adjusted capital comprises total assets less cash and cash equivalents and goodwill. The Group is not subject to any externally imposed capital requirements. However the Directors intend to secure and utilise long term borrowings of approximately 50% on average over time and not exceeding 65% of the Company's total assets.

The adjusted gearing ratios at 30 September 2016 and 30 September 2015 were as follows:

 
                                        2016       2015 
                                     GBP'000    GBP'000 
---------------------------------  ---------  --------- 
 Total debt                          336,290    338,308 
 Less: cash and cash equivalents    (20,968)   (56,910) 
---------------------------------  ---------  --------- 
 Net debt                            315,322    281,398 
---------------------------------  ---------  --------- 
 
 Total assets                        641,751    617,167 
 Less: cash and cash equivalents    (20,968)   (56,910) 
---------------------------------  ---------  --------- 
 Adjusted capital                    620,783    560,257 
---------------------------------  ---------  --------- 
 
 Adjusted gearing ratio               0.51:1     0.50:1 
---------------------------------  ---------  --------- 
 

25. Post year end events

On 14 October the Fund contracted to acquire, by way of forward funding, a new primary healthcare medical centre in Brynmawr, South Wales. The property is due to be completed in November 2017.

The acquisition is being made under the framework agreement with General Practice Investment Corporation ("GPI") which was agreed in May 2013.

The completed development will be let to the Local Health Board and Bestway Pharmacy. All leases will be for a term of 20 years from practical completion. The completed property will consist of 1,587 m2 with an initial passing rent of approximately GBP300,000 per annum, subject to three-yearly effectively upwards only market rent reviews.

After the year end, 8.9 million shares have been issued under the Company's Block listing facility raising a net GBP7.7 million.

This information is provided by RNS

The company news service from the London Stock Exchange

END

FR UUONRNNAUAAA

(END) Dow Jones Newswires

December 13, 2016 02:00 ET (07:00 GMT)

1 Year Medicx Chart

1 Year Medicx Chart

1 Month Medicx Chart

1 Month Medicx Chart

Your Recent History

Delayed Upgrade Clock