REG - MedicX Fund Limited - Interim Management Statement <Origin Href="QuoteRef">CAU.L</Origin> <Origin Href="QuoteRef">MXF.L</Origin>

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RNS Number : 7959N
The MedicX Fund Limited
31 July 2014 
 
For immediate release 
 
31 July 2014 
 
MedicX Fund Limited 
 
("the Fund" or "the Company") 
 
Interim Management Statement 
 
MedicX Fund Limited (LSE: MXF), the specialist primary care infrastructure
investor in modern purpose-built primary healthcare properties in the United
Kingdom, today announces its Interim Management Statement for the period from
1 April 2014 to 31 July 2014. 
 
Financial position 
 
The quarterly valuation of the portfolio undertaken by Jones Lang LaSalle LLP
as at 30 June 2014 stood at £494.5 million, on the basis that all properties
were complete. This reflects a net initial yield of 5.73% which has resulted
in a valuation gain of £0.8 million during the quarter, comprising a £0.9
million appreciation in capital value offset by £0.1 million of purchaser
costs written-off during the period. The portfolio net initial yield of 5.73%
compares favourably with a benchmark 20-year gilt rate of 3.45% and a weighted
average fixed cost of debt of 4.45%. 
 
Incorporating the June valuation, the unaudited adjusted net asset value at 30
June 2014 is estimated to be £229.1 million equivalent to 64.8p per share,
compared with 64.7p per share as at 31 March 2014. On the same basis, the
unaudited adjusted net asset value plus the mark to market benefit of fixed
rate debt is estimated to be £239.9 million equivalent to 67.8p per share at
30 June 2014, compared with 68.6p per share as at 31 March 2014. 
 
Aside from the investment in new acquisitions and the other matters disclosed
below, there have been no significant changes to the financial position of the
Company since the interim results were announced on 30 May 2014. 
 
Discounted cash flow valuation of assets and debt 
 
On the Fund's behalf the Investment Adviser has undertaken a discounted cash
flow ("DCF") valuation of the assets of the Fund and its subsidiary
undertakings (together the "Group") and associated debt at each period 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
each 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 so calculated are then aggregated with the surplus
cash position of the Group. 
 
At 30 June 2014, the DCF valuation was £324.9 million or 91.9p per share,
compared with £319.0 million or 93.1p per share as at 31 March 2014. The
decrease per share is as a direct result of the 10 million shares sold from
treasury by way of tap issues during the period, and the DCF valuation is
expected to improve following the full deployment of the funds raised from the
tap issues. 
 
The discount rates used are 7% for completed and occupied properties and 8%
for properties under construction.  The weighted average discount rate is
7.05% which represents a 3.60% risk premium relative to the 20 year gilt rate
of 3.45% as at 30 June 2014.  The 20 year gilt rate as at 31 March 2014 was
3.55%. 
 
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. 
 
Rent reviews 
 
Since 1 April 2014, 18 leases and rents of £1.0 million have been reviewed and
the equivalent of a 1.81% per annum increase was achieved. Of these reviews,
an uplift of 1.74% was achieved through open market reviews with RPI reviews
achieving 3.27%. Reviews of £9.9 million of passing rent are currently under
negotiation. 
 
Investment activity 
 
During the period from 1 April 2014 the Company has committed £16.9 million to
four further properties, three of which are currently under construction. 
 
Construction on the property at Potters Bar completed in the period since 1
April 2014. Six properties are now under construction at Wigston, Prenton,
Buckley, Peterborough, Stevenage and Devonport.  All of these properties are
due to complete in the next twelve months. 
 
In June 2014 the Group disposed of three non-core smaller properties for a
combined price of £4.3 million. These properties were acquired as part of the
portfolio acquisition announced in March 2014, and were subject to options to
sell to a party connected to the vendor of the portfolio. 
 
The portfolio, which consists of 134 properties, continues to perform in line
with long-term objectives. 
 
The Investment Adviser has access to a strong pipeline of approximately £100
million in value when fully developed. 
 
Share issues 
 
Seven tap issues were completed during the period for a total of 10.0 million
shares, at an average price of 83.60 pence per share. The Fund is seeking to
fully deploy the proceeds quickly into appropriate primary healthcare property
investments whilst maintaining the quality of its portfolio and targeting
investments that will generate long term income and good returns for
shareholders. 
 
Additionally, on 30 June 2014 the Company sold 1,025,290 shares out of
treasury pursuant to the Scrip Dividend Scheme, based on a scrip calculation
price of 82.80 pence per share. 
 
The total number of Ordinary Shares of the Company in issue is 361,445,780, of
which 7,784,654 are held in treasury, compared with 361,445,780 Ordinary
Shares with 18,809,944 held in treasury at 31 March 2014.  Accordingly, as at
today's date, the total voting rights in the Company amount to 353,661,126
Ordinary Shares. 
 
Dividends 
 
On 30 June 2014 a quarterly dividend of 1.45p per Ordinary Share in respect of
the period 1 January 2014 to 31 March 2014 was paid to Ordinary Shareholders
on the register as at close of business on 16 May 2014. 
 
On 28 July 2014 the Directors approved a quarterly dividend of 1.45p per
Ordinary Share in respect of the period 1 April 2014 to 30 June 2014.  The
dividend will be paid on 30 September 2014 to Ordinary Shareholders on the
register as at close of business on 15 August 2014.  Shareholders will be
offered the opportunity to take new ordinary shares in the Company in lieu of
receiving a cash payment under the Scrip Dividend Scheme previously put in
place by the Company on 5 May 2010. 
 
The Company expects, subject to unforeseen circumstances, to pay dividends
totalling 5.8p per Ordinary Share in respect of the financial year ending 30
September 2014, an increase of 0.1p per Ordinary Share from the 5.7p per
Ordinary Share for the financial year ended 30 September 2013. 
 
AIFM Directive 
 
The Company is categorised as a Non-EU Alternative Investment Fund ("AIF") for
the purposes of the AIFM Directive.  It has elected to be its own AIF manager
for this purpose.  The Company has registered under the Directive's private
placement regime in the UK with effect from 22 July 2014 which allows the
Company to market its shares in the UK after 21 July 2014 as an
internally-managed, non-EU AIF, provided certain disclosure and compliance
requirements are met. 
 
The Company complies with such requirements by virtue of its adherence with
legal and regulatory requirements of Guernsey law, the UK Listing Rules,
International Financial Reporting Standards, the UK Corporate Governance Code
and the principles and recommendations of the Association of Investment
Companies Code of Corporate Governance.  The relevant disclosures to investors
are made annually and periodically via company reports, results presentations,
regulatory announcements and through the Company's website. 
 
Acquisition of MedicX Adviser Ltd 
 
During the period, the Company announced that Octopus Capital Limited
("Octopus") had agreed to acquire MedicX Group, including the Investment
Adviser, from funds managed by Cabot Square Capital LLP.  The acquisition is
subject only to Financial Conduct Authority approval and is expected to close
by the end of September 2014. 
 
Octopus is committed, as a long term owner of MedicX Group, to supporting the
Company's continued growth and recognises the importance of the excellent
working relationship and clear focused strategy shared by the Board and the
Investment Adviser.  Mike Adams, CEO of MedicX Group, will continue to work
with his existing team in the same role, and the Company will remain a core
focus. 
 
End 
 
For further information please contact: 
 
MedicX Fund                                                                 
+44 (0) 1481 723 450 
 
David Staples, Chairman 
 
MedicX Group                                                               
+44 (0) 1483 869 500 
 
Keith Maddin, Chairman 
 
Mike Adams, Chief Executive Officer 
 
Mark Osmond, Chief Financial Officer 
 
Canaccord Genuity                                                          +44
(0) 20 7523 8000 
 
Andrew Zychowski / Helen Goldsmith 
 
Buchanan                                                                     
+44 (0) 20 7466 5000 
 
Charles Ryland / Sophie McNulty 
 
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, listed on the London Stock Exchange, with a portfolio comprising 134
properties. 
 
The Investment Adviser to the Company is MedicX Adviser Ltd, which is
authorised and regulated by the Financial Conduct Authority and is a
subsidiary of the MedicX Group. The MedicX Group is a specialist investor,
developer and manager of healthcare properties with 31 people operating across
the UK. 
 
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) is incorporated
into, or forms part of, this announcement. 
 
This information is provided by RNS
The company news service from the London Stock Exchange