Final Results
Unite Group PLC
14 March 2002
Date: 14 March 2002
On behalf of: The UNITE Group plc ('UNITE')
Embargoed until: 0700hrs
The UNITE Group plc - PRELIMINARY ANNOUNCEMENT OF RESULTS FOR THE YEAR ENDED 31
DECEMBER 2001
HIGHLIGHTS
The UNITE Group plc, the UK's leading specialist provider of student and NHS key
worker accommodation services, today releases the preliminary announcement of
its results for the year ended 31 December 2001. The key highlights are:
* Secured bed spaces up 122% to 23,192 (2000: 10,450)
* Net assets up 133% to £207.1m (2000: £88.7m)
* Net asset value per share up 53% to 305p (2000: 200p)
* Rental income up 130 % to £15.2m (2000: £6.6m)
* Profits before tax and internal costs relating to the UniLodge
acquisition up 33% at £4.0m (2000 £3.0m)
* Final dividend of 1.67p per share (2001 total: 2.50p)
* 60 properties in 23 towns and cities across UK, with 6 locations
exceeding 1,000 beds
* Successful £108.8m acquisition and integration of UniLodge
* Confirmation as Preferred Bidder for The University of Sheffield's
student accommodation PPP.
UNITE also announces today:
* Securitisation of 47 completed properties (9,961 completed bed
spaces) to raise between £265m and £285m
* Acquisition of the 50% stake in Peabody UNITE which is not already
owned by the Company from its joint venture partner, Peabody Trust
(see separate press releases)
Commenting on the announcement, Geoffrey Maddrell, Chairman of The UNITE Group
plc, said: 'We are delighted to announce a strong set of preliminary results
which demonstrate our accomplishments against our stated strategy. With the
achievement of 23,192 secured bed spaces at the end of 2001, UNITE is well
positioned to achieve our target of 60,000 beds by the end of 2003. Furthermore,
we are pleased to announce our intention to securitise a portfolio of 9,961
completed beds to raise between £265m and £285m, confirming our commitment to
recycle capital as an important means of financing growth. Finally, we will take
full control of our London joint venture with Peabody Trust with immediate
effect, enabling the Group to leverage strong new operational profits and
efficiencies.'
An analysts' meeting will be held today at 10.00 am at UNITE's London offices,
The Tower Building, 15th Floor, 11 York Road, London SE1 on 14th March 2001.
Press Enquiries to:
The UNITE Group plc
Nicholas Porter, Chief Executive Officer Tel: 020 7902 5055
Simon Bernstein, Chief Financial Officer
Redleaf Communications Ltd Tel: 020 7955 1410
Emma Kane, Chief Executive Mob: 07876 338339
Notes to Editors:
* UNITE was founded in 1991 by Nick Porter
* UNITE is currently capitalised at £197 million
* Further information on UNITE is available at the Company's website
at www.unite-group.co.uk
CHAIRMAN'S STATEMENT
In my report to you last year I set out our strategy for building a substantial
long-term business and forging a dynamic new market sector. In 2001 we
accomplished our major first year plan objectives and, in particular, achieved
critical mass in our sector. The secured pipeline of bed spaces, including
completed properties, more than doubled from 10,450 to 23,192 in the year.
With a proven business model we have been able to commence a groundbreaking
securitisation of 9,961 bed spaces which will be repeatable as we expand our
portfolio of student and key worker accommodation. Equally importantly, we have
put in place robust structures and processes to support our longer-term growth
plan. These included recruitment and development of management at all levels;
the establishment of teams on a regional basis; the development of processes for
an integrated structure; and initiating investment in new integrated systems.
Finally, we acquired a significant provider of student accommodation, UniLodge,
which brought with it major complementary benefits and operational synergies.
Financial Results
In line with the achievement of our secured pipeline, we have increased net
asset value by 133% to £207.1m from £88.7m at the end of 2000.
Net asset value added, excluding the impact of the new equity capital raised at
the time of the UniLodge acquisition, increased by 39% to £37.3m for the year
(2000: £26.8m).
Net asset value per share at 31 December 2001 stood at 305p, an increase of 53%
over the position at 31 December 2000 (200p).
Rental income increased by 130% to £15.2m (2000: £6.6m), reflecting the growth
of the Group's income generating portfolio (including Peabody UNITE) to 10,337
bed spaces by the year end (2000: 4,091 bed spaces). On an annualised basis,
properties which were income generating by the end of the year have a rent roll
of £29.7m. Profits from the completed portfolio rose to 110% to £10.1m (2000:
£4.8m).
Profits before tax, excluding the impact of £1.0m of internal costs written off
to the profit and loss account as a result of the UniLodge acquisition, rose by
33% to £4.0m (2000: £3.0m). Reported profits before and after tax for the year
stood at £2.9m.
Dividend
The Board is pleased to recommend a final dividend of 1.67p per share (2000:
1.367p per share) making a total dividend of 2.50p per share (2000: 2.05p per
share).
Strategy
UNITE pursues a highly focused strategy, to build our business for the long-term
and lead in the field of accommodation and related services for students and
nurses. Our large market continues to grow: we expect a 25% growth in our
underlying customer base by 2010. It is also a market where the need is for
affordable accommodation. Therefore, we adopt a unique integrated approach, with
control from planning through to supporting students and nurses in their
accommodation. This approach enables us to achieve consistent improvements in
quality and reductions in lifetime costs.
In reporting against this strategy, it is very encouraging that we are ahead of
plan in securing critical mass. This included the acquisition of UniLodge in
the early part of the year, which added 4,091 secured bed spaces and, more
importantly, enabled us to gain a stronger local presence in Manchester,
Liverpool and Newcastle, as well as to establish a firmer foothold in Scotland.
The full integration of Unilodge has been successfully achieved.
Finally, with the announcement of full control over our London joint venture,
the company is now afforded 100% of development and operating profits on the
existing 1,553 secured bed spaces together with a strong pipeline of future
growth.
We made very real progress in securing arrangements with Universities and NHS
Trusts under the Government's Public Private Partnership initiative, including
being confirmed as Preferred Bidder in the transfer of some 5,500 bed spaces
from the University of Sheffield. Negotiations continue and we hope that this
contract will be signed in time for the start of the next academic year.
As a key building block in funding long-term growth, we have commenced the
pre-marketing of a groundbreaking securitisation of 9,961 bed spaces,
representing substantially all of our income generating properties at 31
December 2001. We anticipate that this will be repeatable as we expand our
portfolio of student and key worker accommodation.
Furthermore, throughout the year a great deal of management's focus has been on
shifting the balance from a smaller, entrepreneurial business to a more
substantial and decentralised group with supporting processes. In addition we
have commenced investment in an integrated information system, initially for
customer relationship management, payroll and human resources.
People
As part of the process of creating a structure for long-term growth the Human
Resources department has introduced throughout the company a highly commendable
competency-based appraisal and development system to support every member of our
growing team. I reported on a number of key management appointments at the
interim stage, all of whom are now making important contributions.
With an exciting growth strategy in attractive markets and a publicly
responsible approach, we have made a point of attracting dedicated and committed
people, with the potential to grow with the company. We warmly appreciate the
efforts of everyone in the business, frequently beyond the call of duty.
Outlook
UNITE is uniquely placed, with a focused strategy, crafted to suit the changing
demands of our large and growing market and the careful development of long-term
partnerships which the sector demands. Therefore, with a strong pipeline of
opportunities and an infrastructure largely in place to achieve our three-year
plan of 60,000 beds, I am fully confident of our ability to deliver continued
growth in net asset value in the year ahead.
Geoffrey Maddrell
Consolidated balance sheet
at 31 December 2001
Note 2001 2000
£000 £000 £000 £000
Fixed assets
Intangible assets 12,886 475
Tangible assets
Investment and development properties 3 376,566 151,438
Other tangible fixed assets 7,921 4,474
Investments - 273
387,487 156,185
Joint venture undertakings 4
Share of gross assets 51,252 41,390
Share of gross liabilities (37,950) (28,448)
13,302 12,942
410,675 169,602
Current assets
Stocks 4,384 5,689
Debtors 33,371 11,093
Cash at bank and in hand 5,984 4,276
43,739 21,058
Creditors: amounts falling due within one
year
Build facilities and other short term
borrowings
(including convertible debt) (42,354) (16,387)
Other creditors (50,399) (15,125)
Net current liabilities (49,014) (10,454)
Total assets less current liabilities 361,661 159,148
Creditors: amounts falling due after more
than one year
Long term borrowings (151,931) (67,552)
Other creditors (2,625) (2,940)
Net assets 207,105 88,656
Capital and reserves
Called up share capital 6 16,989 11,075
Share premium account 71,685 34,752
Merger reserve 40,177 -
Revaluation reserve 73,588 39,513
Profit and loss account 4,666 3,316
Equity shareholders' funds 207,105 88,656
Net asset value per share 305p 200p
Consolidated profit and loss account
for the year ended 31 December 2001
Internal
Unilodge
Acquired Continuing acquisition Total Total
Note Operations Operations costs 2001 2000
£000 £000 £000 £000 £000
Group turnover and share of turnover
of joint venture 3,802 22,510 - 26,312 30,444
Less: share of turnover of joint - (1,813) - (1,813) (492)
venture
Group turnover 2 3,802 20,697 - 24,499 29,952
Cost of sales (779) (7,766) - (8,545) (21,359)
Gross profit 3,023 12,931 - 15,954 8,593
Administrative expenses (659) (5,217) (1,041) (6,917) (3,013)
Group operating profit 2,364 7,714 (1,041) 9,037 5,580
2,364
10,078
Share of operating profit of joint 4 1,428 - 1,428 381
venture
Profit on disposal of investment 262 - 262 372
properties
Profit on ordinary activities before
interest and taxation 11,768 (1,041) 10,727 6,333
Interest receivable 560 - 560 474
Interest payable and similar charges 7
Group (7,201) - (7,201) (3,450)
Joint venture (1,167) - (1,167) (331)
(8,368) - (8,368) (3,781)
Profit on ordinary activities before 3,960 (1,041) 2,919 3,026
taxation
Taxation 8 - - - -
Profit for the financial year 3,960 (1,041) 2,919 3,026
Dividends paid and proposed 9 (1,825) - (1,825) (908)
Retained profit for the financial year 2,135 (1,041) 1,094 2,118
Earnings per share
Basic 10 7.04p 5.19p 7.71p
Excluding goodwill amortisation 10 7.17p 5.32p 7.73p
Diluted 10 6.95p 5.13p 7.54p
The results in 2000 arose from continuing operations
Consolidated cash flow statement
for the year ended 31 December 2001
Note 2001 2000
£000 £000
Cash flow from operating activities 13 (5,072) 2,836
Returns on investments and servicing of finance 14 (8,325) (5,045)
Taxation - (28)
Acquisitions and disposals 14 (3,620) -
Capital expenditure and financial investment 14 (86,784) (63,749)
Equity dividends paid (1,190) (569)
Cash outflow before financing (104,991) (66,555)
Financing 14 106,699 68,967
Increase in cash in the year 1,708 2,412
Reconciliation of net cash flow to movement in net debt
for the year ended 31 December 2001
Note 2001 2000
£000 £000
Increase in cash in the year 1,708 2,412
Cash flow from increase in debt and lease financing (77,811) (32,570)
Change in net debt resulting from cash flows (76,103) (30,158)
Debt acquired in subsidiary undertaking 12 (31,864) -
New hire purchase agreements (528) (477)
Amortisation of loan stock issue costs (143) (143)
Movement in net debt in the year (108,638) (30,778)
Net debt at beginning of year 15 (79,663) (48,885)
Net debt at end of year 15 (188,301) (79,663)
Consolidated statement of total recognised gains and losses
for the year ended 31 December 2001
Note 2001 2000
£000 £000
Profit for the financial year
Group 2,658 2,976
Share of joint venture 4 261 50
2,919 3,026
Unrealised surplus on revaluation of properties 30,971 15,082
Unrealised surplus on revaluation of joint venture 99 8,336
Unrealised profit on trading with joint venture 3,261 391
Total gains and losses for the financial year 37,250 26,835
Net asset value added per share 11 66.2p 68.4p
Note of consolidated historical cost profits and losses
for the year ended 31 December 2001
2001 2000
£000 £000
Reported on ordinary activities before taxation 2,919 3,026
Realisation of property revaluation gains of previous 256 474
years
Historical cost profit on ordinary activities before 3,175 3,500
taxation
Historical cost profit for the year retained after
taxation and
Dividends 1,350 2,592
Reconciliation of movements in shareholders' funds
for the year ended 31 December 2001
2001 2000
£000 £000
Profit attributable to ordinary shareholders 2,919 3,026
Dividends paid and proposed (1,825) (908)
1,094 2,118
Net surplus on revaluations 34,331 23,809
New share capital subscribed 83,024 36,397
Net addition to shareholders' funds 118,449 62,324
Opening equity shareholders' funds 88,656 26,332
Closing equity shareholders' funds 207,105 88,656
Notes
1. Basis of Preparation
The group accounts include the accounts of the company and its subsidiary
undertakings, all of which are made up to 31 December 2001.
Internal costs arising on the acquisition of Unilodge Holding Limited have been
disclosed separately on the face of the consolidated profit and loss account.
The financial information set out in this document does not constitute the
company's statutory accounts for the years ended 31 December 2001 or 2000. The
financial information for 2000 is derived from the statutory accounts for 2000,
which have been delivered to the Registrar of Companies. The auditors have
reported on the 2000 accounts; their report was unqualified and did not contain
a statement under section 237 (2) or (3) of the Companies Act 1985.
The statutory accounts for 2001 will be finalised on the basis of the financial
information presented by the directors in this preliminary announcement and will
be delivered to the Registrar of Companies following the company's annual
general meeting; the financial information set out in this document in respect
of 2001 is therefore unaudited.
2. Segmental analysis of operations
2001 2000
Profit before Profit before
Turnover Interest and Tax Net Assets Turnover Interest and Tax Net Assets
£000 £000 £000 £000 £000 £000
Investment activities 15,219 10,117 145,410 6,623 4,842 64,654
Development and corporate
activities 9,280 610 61,695 23,329 1,491 24,002
24,499 10,727 207,105 29,952 6,333 88,656
3. Investment and development properties
Properties held
Investment Developments in for future
Properties progress development Total
£000 £000 £000 £000
Group
Cost or valuation and net book
value
At beginning of year 119,450 22,396 9,592 151,438
Additions 120,365 60,744 15,798 196,907
Disposals (1,850) (900) - (2,750)
Transfers 33,787 (22,537) (11,250) -
Revaluations 16,868 9,836 4,267 30,971
At 31 December 2001 288,620 69,539 18,407 376,566
At 31 December 2000 119,450 22,396 9,592 151,438
Included within investment and development properties are the following values
in respect of leasehold interests:
Properties held
Completed Developments in for future Total Total
developments progress development 2001 2000
£000 £000 £000 £000 £000
Cost or valuation and net
book value
Long leasehold 49,838 2,640 - 52,478 7,957
Short leasehold 6,630 1,671 1,087 9,388 545
56,468 4,311 1,087 61,866 8,502
The valuation of investment and development properties comprise:
2001 2000
£000 £000
Group
Historical cost 319,610 125,197
Revaluation 56,956 26,241
376,566 151,438
4. Joint venture undertaking
Interest in joint venture
2001 2000
£000 £000
Group
Cost or valuation and net book value
At beginning of year 12,942 4,556
Share of operating profit in year 1,428 381
Share of interest payable for year (1,167) (331)
Share of retained profit for year 261 50
Revaluation 99 8,336
At end of year 13,302 12,942
The Group's joint venture represents a 50% interest in the ordinary shares of
Peabody UNITE plc, a company incorporated in England & Wales, whose principal
activity is the development, holding and letting of investment properties in the
London area.
The value of the Group's interest in the joint venture is held at an amount
equivalent to its share of the underlying net asset value of the undertaking.
The amounts included in respect of the joint venture comprise the following:
2001 2000
£000 £000
Share of assets
Fixed assets 50,677 40,948
Current assets 575 442
51,252 41,390
Share of liabilities
Due within one year (13,166) (12,277)
Due after one year (24,784) (16,171)
Share of net assets 13,302 12,942
5. Analysis of debt
2001 2000
£000 £000
Bank loans, other loans and
overdrafts fall
due:
In one year or less, or on demand 42,353 16,158
Between one and two years 1,559 1,470
Between two and five years 87,158 12,763
In five years or more 63,215 52,940
194,285 83,331
The Group has various borrowing facilities available to it. The undrawn
committed facilities available at 31 December 2001 in respect of which all
conditions precedent had been met at that date were as follows:
2001 2000
£000 £000
Expiring in one year or less
Build facilities 7,428 17,761
Other facilities 5,300 5,000
12,728 22,761
6. Called up share capital
2001 2000
£000 £000
Authorised
120,000,000 (2000: 75,000,000) ordinary shares of 25p each 30,000 18,750
Allotted, called up and fully paid
67,957,895 (2000: 44,299,438) ordinary shares of 25p each 16,989 11,075
On 20 June 2001, the company increased its authorised share capital by
£11,250,000 to £30,000,000 divided into 120 million shares by the creation of 45
million ordinary shares of 25p each.
On 28 June 2001, the company allotted and issued 23,205,557 ordinary shares of
25p each by way of a placing and an open offer at 370p per share upon the
acquisition of Unilodge Holding Limited. The net proceeds of the issue were
£82,743,000.
7. Interest payable and similar charges
2001 2000
£000 £000
Amounts payable on bank loans and overdrafts
On loans not wholly repayable within five years 4,189 3,217
On loans wholly repayable within five years 4,284 1,300
On bank overdrafts 59 144
Amounts payable on other loans
On convertible unsecured loan stock 609 609
On unsecured loan notes 231 -
Finance charges payable in respect of hire purchase agreements 7 8
9,379 5,278
Transfer to cost of investment and development properties (2,178) (1,828)
7,201 3,450
Share of interest payable by joint venture 1,167 331
8,368 3,781
8. Taxation
There was no liability to taxation in respect of either year.
9. Dividends
2001 2000
£000 £000
Equity
Interim dividend paid of 0.83p (2000: 0.683p) per 25p ordinary share 585 303
Final dividend proposed of 1.67p (2000: 1.367p) per 25p ordinary share 1,240 605
1,825 908
10. Earnings per share
Basic earnings per share has been calculated using a weighted average number of
shares of 56,243,133 (2000: 39,225,847) as follows:
Earnings EPS
After goodwill Before goodwill After Before goodwill
goodwill
amortisation amortisation amortisation amortisation
£000 £000
Basic earnings per share 2,919 2,994 5.19p 5.32p
Internal Unilodge acquisition costs 1,041 1,041 1.85p 1.85p
Prior to internal UniLodge acquisition 3,960 4,035 7.04p 7.17p
costs
Year ended 31 December 2000
Basic earnings per share 3,026 3,033 7.71p 7.73p
Diluted earnings per share of 5.13p (2000: 7.54p) has been calculated on
earnings of £2,919,000 (2000: £3,026,000) and after including the effect of all
dilutive potential ordinary shares, which increases the average number of shares
to 56,941,757 (2000: 40,128,789).
11. Net asset value added per share
Net asset value added per share of 66.2p (2000: 68.4p) has been calculated on
total gains and losses recognised in the year of £37,250,000 (2000: £26,835,000)
divided by the average number of ordinary shares in issue during the year of
56,243,133 (2000: 39,225,847).
12. Purchase of subsidiary undertakings
On 28 June 2001, the group completed the acquisition of Unilodge for a
consideration (including the costs of acquisition) of £57 million satisfied by
the issue of shares, £45 million, loan stock, £9 million, and cash £3 million.
Book Fair value
Value Adjustments Fair value
£000 £000 £000
Tangible fixed assets 68,356 10,434 78,790
Stocks 198 198
Debtors 703 703
Cash 397 397
Creditors (3,678) (3,678)
Bank loans (31,864) (31,864)
34,112 10,434 44,546
Goodwill 12,906
57,452
Satisfied by:
Cash (including costs of acquisition; £2,526,000) 3,317
Shares allotted 44,835
Issue of loan notes 9,300
57,452
13. Reconciliation of operating profit to operating cash flows
2001 2000
£000 £000
Operating profit 9,037 5,580
Depreciation and amortisation charges 1,167 455
Decrease/(increase) in stocks 204 (4,031)
(Increase) in debtors (19,417) (4,880)
Increase in creditors and provisions 3,912 5,712
Loss on sale of fixed assets 25 -
Net cash (outflow) / inflow from operating activities (5,072) 2,836
14. Analysis of cash flows
2001 2000
£000 £000
Returns on investment and servicing of finance
Interest received 560 474
Interest paid (8,878) (5,511)
Interest element of hire purchase payments (7) (8)
Net cash flow from returns on investment and servicing of finance (8,325) (5,045)
Acquisitions and disposals
Purchase of subsidiary undertaking (4,017) -
Cash balances acquired with subsidiary 397 -
Net cash flow from acquisitions and disposals (3,620) -
Capital expenditure and financial investments
Purchase of tangible fixed assets (89,797) (69,910)
Purchase of intangible fixed assets - (466)
Disposal of tangible fixed assets 3,063 6,900
Purchase of own shares (50) (273)
Net cash flow from capital expenditure and financial investments (86,784) (63,749)
Financing
Issue of share capital 38,188 36,397
Movement of build facilities 11,419 (9,630)
Movement on bank loans 57,437 42,335
Capital element of hire purchase payments (345) (135)
Net cash flow from financing 106,699 68,967
15. Analysis of net debt
At 1 January Cash flow Acquired with Other changes At 31 December
2001 subsidiary 2001
£000 £000 £000 £000 £000
Cash at bank and in hand 4,276 1,708 - - 5,984
Bank overdraft - - - - -
4,276 1,708 - - 5,984
Financing
Debt due within one year (16,158) (25,608) - (143) (41,909)
Debt due after one year (67,173) (52,548) (31,864) - (151,585)
Hire purchase agreements (608) 345 - (528) (791)
(77,811) (31,864)
Net debt at end of year (79,663) (76,103) (31,864) (671) (188,301)
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