Primary Health Properties (PHP) H1 2024 earnings summary

Executive summary

• Achieved 28th consecutive year of dividend growth, with robust operational and financial performance in H1 2024, high occupancy (99.2%), and 89% of rent roll funded by UK and Irish governments, supporting predictable income and a progressive dividend policy.

• Adjusted earnings per share rose 2.9% to 3.5p, driven by organic rental growth and asset management, partially offset by higher interest costs.

• Portfolio valued at £2.75bn across 516 assets, with continued focus on rental growth, asset management, and shareholder value.

• CEO transition completed smoothly, with a capable team and a strategy focused on evolutionary growth and value creation.

• Political and demographic trends, including the new UK government's focus on primary care and population growth, are expected to drive future demand and opportunities.

Financial highlights

• Net rental income increased 0.9% to £76.2m for H1 2024, with like-for-like rental growth of £1.8m (2.4% annualized).

• Adjusted earnings up 0.9% to £46.3m; adjusted EPS up 2.9% to 3.5p, fully covering the dividend.

• Dividend per share increased 3% to 3.45p, marking the 28th consecutive year of growth.

• Revaluation deficit of £40m led to a 1.4% decrease in portfolio value to £2.75bn; adjusted NTA per share fell 2.8% to 105.0p.

• IFRS profit before tax dropped to £4.5m from £38.8m year-over-year, mainly due to the revaluation deficit.

Outlook and guidance

• Management remains focused on earnings and dividend growth, with a strong foundation for future success and optimism about sector growth.

• Political landscape in the UK and Ireland is favorable, with increased government investment in primary care and demand drivers including population growth and new housing developments.

• PHP aims to grow its Irish portfolio to €500m, with a pipeline of €50m in new projects.

• Cost savings of £1m will benefit the second half and next year, with further reductions expected.

• Limited development exposure (£3.3m to complete two projects), with future direct developments paused pending higher rent settlements.