Interim Results

Unite Group PLC 5 September 2000 The Unite Group PLC Interim Results For the six months ended 30th June 2000 The Unite Group PLC, the UK's leading specialist provider of accommodation services for students and NHS key workers, is pleased to announce its interim results for the six months ended 30th June 2000. Highlights * Successful move from AIM to the Official List and Placing and Open Offer raising £38.5m * Significant achievement across all activities in line with plans * Strong pipeline of projects on a national scale * Successful completion of a number of important schemes * Facilities management revenue significantly increased * Net assets increased by 167% to £70.25m (FY 1999: £26.33m) * Net asset value per share increased by 53% to 158.6p (FY 1999:104.0p) * Pre-tax profit of £0.85m exceeds £0.84m for full year 1999 * Eps increased by 15% to 2.52p (1999: 2.20p) * Interim dividend of 0.683p Commenting on the results Geoffrey Maddrell, Chairman, said: 'I am delighted that performance for the first six months has demonstrated our ability to deliver in line with the plan. With leadership in our core market now established, we are seeing many new opportunities opening up to our unique approach, in this and related markets. 'I am confident that with a clear focus, a strategy based on progressive improvement and a continually strengthening management structure, we are capable of capitalising on the huge potential of our specialised market place.' For further information, please contact: The Unite Group PLC On 5th September: 020 7253 2252 Nicholas Porter, Chief Executive Thereafter: 0117 907 8100 David Ransome, Finance Director Golin/Harris Ludgate 020 7253 2252 Roya Nasser Teather & Greenwood 020 7426 9000 Richard Thompson/Martin Lampshire Chairman's Statement for the 6 months ended 30 June 2000 Strategy and Performance The first half of our financial year, to 30 June 2000, has been a period of significant achievement, in line with our strategy. We have strengthened our position as the UK's leading specialist provider of student accommodation services and made important inroads into the NHS key worker accommodation sector. In April we successfully stepped up to the Official List of the London Stock Exchange from the Alternative Investment Market (AIM), simultaneously raising £38.5million of new equity through a placing and open offer. These funds have supported the continued delivery of shareholder value through a number of new projects and acquisitions, effected during the period. National expansion has been a key theme. Our development team has successfully identified and delivered new schemes along the South Coast, as well as in our more familiar territories of the South West and London. Two strategically worthwhile portfolios were acquired in the North of England, located in Manchester and Liverpool and comprising seven properties and 928 beds. Full facilities management services are being provided for these properties, significantly increasing the Group's income stream from this important part of our integrated business. Finally, our nomination as the preferred accommodation provider for a Northern NHS Trust scheme is strategically advantageous, as it represents our first NHS project outside London. Development activity has gained further momentum, with a number of important schemes being completed in the period. In January our 168 bed Sydney Wharf scheme for Bath University was completed. In June we unveiled our modular constructed 392 bed Unite House project for Bristol University, which was fully let for the 2000/01 academic year within three weeks of opening. Also in June our 112 bed Northernhay House project for Plymouth University was completed and is already fully nominated for the forthcoming academic year. Our strategy of long term, consistent growth is based on developing a deep understanding of our customer base, at both the institutional and end-user levels, supported by leading research competence in our chosen sectors. Our research function, set up in late 1999, has recently issued two definitive research notes, on the student and the NHS key worker accommodation markets. Financial Highlights It is encouraging to report that the Group's net assets have increased further to £70.25million (158.6 pence per share) from £26.33million (104.0 pence per share) as at 31 December 1999. After adjusting for the impact of the placing and open offer, this represents net asset value growth, before dividends, of £7.85million for the six months, which is in line with our expectations and comfortably in excess of the net asset growth of £5.18million achieved in the same period last year. The majority of our schemes will be completed in the second half of the year. The maturing nature of the project portfolio is reflected in the increase in profitability in the period. Profit before tax for the six months was £850,000, actually exceeding the £842,000 reported for the whole of 1999. Earnings per share rose to 2.52 pence for the six months, from 2.20 pence for the six months to June 1999. Cash reserves as at 30 June totalled £19.4 million. As well as being invested in new schemes, approximately £8.5million of the placing proceeds have been applied to existing schemes, where the opportunity exists to release that capital prior to the end of the financial year through refinancing upon completion. As a result, debt as a percentage of property value has fallen to 59.4% from 70.9% at 31 December 1999. I am pleased to announce that the Board is proposing an interim dividend of 0.683 pence per share. We intend to pursue a progressive dividend policy, taking into account both the steady maturing of our earnings and the significant investment opportunities in our sectors. Employees The Board has focussed especial attention during the period on developing an integrated team approach across the Group, to ensure that we gain full advantage from our unique integrated strategy. We have stepped up activity and investment in training and development in support of this key approach, starting at the top. In addition, all of our teams will now operate under a single UNITE brand, rather than under separate banners. We have continued to build management and structures for future growth. We have made a number of important recruitments, including Hugh Sayer, as Head of our Development function, and Matthew Biddle, as Head of our Investment function, both bringing considerable expertise and enthusiasm to the Group. UNITE offers an exciting and challenging environment, which has enabled us to attract high quality staff. The Board continues to be impressed with the spontaneous enthusiasm and commitment throughout the Group. We have recently approved a range of incentive measures aimed at rewarding effective performance. Outlook 2000 was always going to be an important year. I am delighted that performance for the first six months has demonstrated our ability to deliver in line with plan. With leadership in our core market now established, we are seeing many new opportunities opening up to our unique approach, in this and related markets. I am confident that with a clear focus, a strategy based on progressive improvement and a continually strengthening management structure, we are capable of capitalising on the huge potential of our specialised market place. Geoffrey Maddrell 5 September 2000 Consolidated Balance Sheet Unaudited Unaudited Audited 30 June 2000 30 June 1999 31 Dec 1999 Note £'000 £'000 £'000 Fixed assets Intangible assets 53 59 65 Tangible assets - - - Investment and development properties 2 126,417 46,073 72,974 Other fixed assets 2,292 1,160 1,989 --------- --------- --------- 128,709 47,233 74,963 Joint venture undertaking 3 Share of gross assets 18,279 4,387 12,967 Share of gross liabilities (12,763) (2,237) (8,411) --------- --------- --------- 5,516 2,150 4,556 --------- --------- --------- 134,278 49,442 79,584 Current assets Stock and work in progress 936 2,404 1,658 Debtors 7,672 3,802 6,164 Cash at bank and in hand 19,429 9,047 1,864 --------- -------- --------- 28,037 15,253 9,686 Creditors: amounts falling due within one year 4 (42,347) (21,300) (35,205) --------- --------- --------- Net current liabilities (14,310) (6,047) (25,519) --------- --------- --------- Total assets less current liabilities 119,968 43,395 54,065 Creditors: amounts falling due after more than one year 5 (49,481) (24,898) (27,489) Provisions for liabilities and charges (241) (246) (244) --------- --------- --------- Net assets 70,246 18,251 26,332 ========= ========= ========= Capital and Reserves Called up share capital 11,075 6,027 6,329 Share premium account 34,722 1,920 3,101 Revaluation reserve 22,704 9,688 16,178 Profit and loss account 1,745 616 724 --------- --------- --------- Equity shareholders' funds 70,246 18,251 26,332 ========= ========= ========= Net assets per ordinary share (pence per share) 158.6 75.7 104.0 ========= ========= ========= Consolidated Profit and Loss Account Unaudited Unaudited Audited 6 months to 6 months to Year to 30 June 2000 30 June 1999 31 Dec 1999 Note £'000 £'000 £'000 Group turnover and share of joint venture 5,669 4,552 11,147 Less: share of turnover of joint venture (191) (17) (90) --------- --------- --------- Group turnover 6 5,478 4,535 11,057 Cost of Sales (3,380) (3,161) (7,906) --------- --------- --------- Gross Profit 2,098 1,374 3,151 Administrative expenses (789) (253) (1,009) --------- --------- --------- Group operating profit 1,309 1,121 2,142 Profit on disposal of investment properties 361 - - Share of results of joint venture 3 115 10 66 --------- --------- -------- Profit on ordinary activities before interest and taxation 1,785 1,131 2,208 Net interest payable (935) (675) (1,366) --------- --------- --------- Profit on ordinary activities before taxation 850 456 842 Taxation - 19 7 --------- -------- --------- Profit on ordinary activities after taxation 850 475 849 Dividends paid and proposed (303) - (266) --------- --------- --------- Retained profit for the financial period 547 475 583 ========= ========= ========= Basic earnings per share (pence per share) 2.5 2.2 3.7 ========= ========= ========= Fully diluted earnings per share (pence per share) 2.4 2.2 3.6 ========= ========= ========= Statement of Total Recognised Gains and Losses Unaudited Unaudited Audited 30 June 2000 30 June 1999 31 Dec 1999 £'000 £'000 £'000 Profit for the financial period 850 475 849 Unrealised surplus on revaluation of properties 6,272 2,525 6,645 Unrealised surplus on revaluation of joint venture 728 2,175 4,545 --------- --------- --------- Total recognised gains and losses relating to the period 7,850 5,175 12,039 ========= ========= ========= Consolidated Cash Flow Statement Unaudited Unaudited Audited 6 months to 6 months to Year to 30 June 2000 30 June 1999 31 Dec 1999 £'000 £'000 £'000 Net cash inflow from operating activities 1,053 2,461 6,549 Returns on investments and servicing of finance (820) (1,355) (2,937) Taxation - (115) (133) Capital expenditure and financial investment (43,162) (7,227) (29,713) Equity dividends paid (266) - - --------- --------- --------- Cash outflow before management of liquid resources and financing (43,195) (6,236) (26,234) Management of liquid resources - - 2,663 Financing Issue of shares (net of costs)36,367 2,809 4,292 Issue of loan stock (net of issue costs) - 5,411 5,406 Increase in debt and lease financing 24,393 3,815 15,354 --------- --------- --------- 60,760 12,035 25,052 --------- --------- --------- Increase in cash in the period 17,565 5,799 1,481 ====== ====== ====== Reconciliation of net cash flow to movement in net debt Unaudited Unaudited Audited 6 months to 6 months to Year to 30 June 2000 30 June 1999 31 Dec 1999 £'000 £'000 £'000 Increase in cash in the period 17,565 5,799 1,481 Cash flow resulting from movement in liquid resources - - (2,663) Cash inflows from increase in debt financing (24,279) (9,649) (20,760) New hire purchase contracts (42) (39) (216) Amortisation of loan stock issue costs (72) - (83) --------- --------- --------- Movement in net debt in the period (6,828) (3,889) (22,241) Net debt at beginning of the period (48,885) (26,644) (26,644) --------- --------- --------- Net debt at end of the period (55,713) (30,533) (48,885) ========= ========= ========= Note of consolidated historical cost profit and losses Unaudited Unaudited Audited 6 months to 6 months to Year to 30 June 2000 30 June 1999 31 Dec 1999 £'000 £'000 £'000 Reported profit on ordinary activities before taxation 850 456 842 Realisation of property revaluation gains of previous years 474 - - --------- --------- --------- Historical cost profit on ordinary activities before taxation 1,324 456 842 --------- --------- --------- Historical cost profit for the year retained after taxation and dividends 1,021 475 583 --------- --------- --------- Reconciliation of movement in shareholders' funds Unaudited Unaudited Audited 6 months to 6 months to Year to 30 June 2000 30 June 1999 31 Dec 1999 £'000 £'000 £'000 Profit attributable to ordinary shareholders 850 475 849 Dividends paid and proposed (303) - (266) --------- --------- --------- 547 475 583 Net surplus on revaluation of investment properties 7,000 4,700 11,190 New share capital subscribed (net of issue costs) 36,367 2,809 4,292 --------- --------- --------- Net addition to shareholders' funds 43,914 7,984 16,065 Opening equity shareholders' funds 26,332 10,267 10,267 --------- --------- --------- Closing equity shareholders' funds 70,246 18,251 26,332 ========= ========= ========= Notes to the Interim Report 1 Basis of preparation The Interim Results do not constitute statutory accounts within the meaning of s240 of the Companies Act 1985. The Interim Report is prepared on the basis of the accounting policies set out in the most recent set of annual Financial Statements. The Interim Report will be sent to all shareholders in early September 2000. Copies will be available to the public from the Company's registered office at Lawrence House, Lower Bristol Road, Bath. 2 Investment and development properties Completed Developments Properties developments in progress held for future development Total £'000 £'000 £'000 £'000 Cost or valuation At 1 January 2000 35,366 30,491 7,117 72,974 Additions 24,003 23,304 1,253 48,560 Completed developments 28,540 (28,540) - - Disposals - - (1,389) (1,389) Revaluations 4,841 931 500 6,272 ------- ------- ------- ------- At 30 June 2000 92,750 26,186 7,481 126,417 ======= ======= ======= ======= At 31 December 1999 35,366 30,491 7,117 72,974 ======= ======= ======= ======= At 30 June 1999 24,525 19,044 2,504 46,073 ======= ======= ======= ======= 3 Joint venture undertakings Interest in joint venture £'000 £'000 Group Cost or valuation and net book value At beginning of year 4,556 Share of operating profit for year 115 Share of interest payable for year (115) ------ ------ Share of retained profit for year - Transfer from amounts recoverable under contracts 232 Revaluation 728 ------ ------ At end of period 5,516 ====== ====== 4 Creditors: amounts falling due within one year Unaudited Unaudited Audited 30 June 2000 30 June 1999 31 Dec 1999 £'000 £'000 £'000 Build loans and other short term financing 25,662 13,771 24,246 Other creditors 16,685 7,529 10,959 --------- --------- --------- 42,347 21,300 35,205 ========= ========= ========= 5 Creditors: amounts falling due after more than one year Unaudited Unaudited Audited 30 June 2000 30 June 1999 31 Dec 1999 £'000 £'000 £'000 Long term borrowings 49,481 24,898 26,503 Other creditors - - 986 --------- --------- --------- 49,481 24,898 27,489 ===== ===== ===== 6 Turnover Comprises Unaudited Unaudited Audited 6 months to 6 months to Year to 30 June 2000 30 June 1999 31 Dec 1999 £'000 £'000 £'000 Investment activities 2,015 1,252 2,842 Development activities 2,788 120 4,319 Sales of trading and development properties 675 3,163 3,896 --------- --------- --------- 5,478 4,535 11,057 ===== ===== ===== 7 Taxation There is no corporation tax charge in the period due to the availability of substantial capital allowances and tax losses to offset against the taxable profits accrued. 8 Earnings per Share The calculation of the earnings per ordinary share is based on the profit available to ordinary shareholders of £850k (1999 interim - £475k; 1999 final - £849k) and on a weighted average number of ordinary shares in issue during the six months ended 30 June 2000 of 33,659,228 (1999 interim - 21,134,809; 1999 final - 22,983,112). On a fully diluted basis the weighted average number of ordinary shares was 35,234,886 (1999 interim - 21,334,809; 1999 final - 23,457,981).

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