Interim Results

Unite Group PLC 5 September 2001 UNITE ANNOUNCES INTERIM RESULTS For the six months ended 30 June 2001 The UNITE Group plc, the UK's leading specialist provider of student and NHS key worker accommodation services, today announced its interim results. HIGHLIGHTS * Increase in number of secured bedspaces to 19,609 from 10,450 at the end of 2000 * Successful acquisition of UniLodge Holding Ltd for a total consideration of £108.8m and raising of £85.8m of equity through a placing and open offer * Confirmation by University of Sheffield as sole Preferred Bidder in the UK's largest accommodation transfer scheme of 5,500 beds * Announcement today of a 438-bed scheme in Sheffield * Agreements signed on schemes for Swindon and Marlborough NHS Trust and the University of Northumbria * Net assets up 204% to £180.9m (31/12/00: £88.7m) * Net assets per share up 34% to 268p per share (31/12/00: 200p per share) * Profit Before Tax up 54% to £1.31m (June 2000: £0.85m) * Earnings per share up 14% to 2.93p (June 2000: 2.52p) * Interim dividend up 22% to 0.833p per share (June 2000: 0.683p) Commenting on the results, Geoffrey Maddrell, Chairman of UNITE, said: 'UNITE has created a new industry sector for accommodation services to students and NHS key workers. Today we own 70 properties in 17 cities across the UK and have made major progress in achieving our strategic target of 60,000 bedspaces by the end of 2003, in particular through our acquisition of UniLodge. The announcement by the University of Sheffield of our status as sole Preferred Bidder for the UK's largest accommodation transfer scheme, confirms the strength of UNITE's reputation and its market leading position.' Chairman's Statement In the first six months of 2001, UNITE has made a number of important moves reinforcing its position as the UK's leading provider of accommodation services to students and NHS key workers. Of particular importance has been the acquisition of UniLodge and the associated capital raising, as well as the confirmation as sole Preferred Bidder in The University of Sheffield's highly significant accommodation transfer scheme. As a result we now have 19,609 secured beds spaces and have raised funding to support our growth targets. UNITE is a service business with strong asset backing which has successfully created a new industry sector for accommodation services to students and NHS key workers. From a substantial leadership position, our priority during the reporting period has been to demonstrate major progress in implementing the strategy and in achieving our target of 60,000 secured bed spaces by the end of 2003. We currently own 70 properties in 17 cities across the UK, providing comprehensive development, accommodation and facilities management services to our customers via a regional office network in 5 cities - Bristol, London, Leeds, Salford and Edinburgh. We are building services around this regional structure and beginning to achieve critical mass with over 1,000 bed spaces in five of our key target cities across the UK. Key Strategic Moves On 1 June 2001 we announced the acquisition of UniLodge and the placing of 23,205,557 million shares to raise £85.8 million of new equity through a placing and open offer. This acquisition not only added 4,091 secured bed spaces, but more importantly enabled us to gain critical mass, key to our acquisition plans in Manchester, Liverpool and Newcastle. It has also supported our plans in Scotland, adding three new properties. The well planned integration of UniLodge was put into action immediately upon announcement and is progressing ahead of schedule, operational benefits and synergies are forecast to come through in the second half of the year. A further key success has been the progress achieved in securing arrangements with Universities and NHS Trusts under the Government's Public Private Partnership Initiative. In a highly significant development for our sector, we were delighted to be confirmed as Preferred Bidder in the accommodation transfer scheme of some 5,500 beds for the University of Sheffield. Significant management time was devoted to the UniLodge acquisition and the University of Sheffield transaction in the first half of the year. Financial Highlights In the first six months net assets grew to £180.9 million (267.7 pence per share) from 88.7 million or 200.0 pence per share at 31 December 2000. After adjusting for the impact of the placing and open offer and before dividends, net assets grew in the first six months by 9.89 million which is 26% ahead of the comparable period last year (£7.85 million). Profit before tax for the six months increased by 54% to £1.31 million from £0.85 million in the first half of 2000. Earnings per share grew to 2.93 pence per share from 2.52 pence in the comparable period. The new equity raised in conjunction with the acquisition of UniLodge will stand us in good stead to deliver the growth that we see in our expanding market place. We were very encouraged by the support we received from both existing and new shareholders. Cash at bank and in hand as at 30 June 2001 was £34.0 million as a result of the equity raising. We continue to fund ourselves on a flexible basis, so as to enable us to refinance our portfolio as the large planned construction programme is completed. Net debt as a percentage of property value was 43% at 30 June 2001 compared to 53% at 31 December 2000, although this ratio will increase as the cash raised from the equity issue is invested in new projects. Dividend The Board is proposing an interim dividend of 0.833 pence per share (2000: 0.683 pence per share). The interim dividend will be paid on 14 November 2001 for shareholders on the register at close of business on 19 October 2001. The shares become ex-dividend on 17 October 2001. We remain committed to providing shareholders with growth in income in line with increases in our profitability, whilst taking into account the considerable investment opportunities inherent in our strategy. Operations Alongside the UniLodge acquisition, we have continued to focus on our long term targets and, to this end, we acquired a number of new schemes, including two properties (the acquisition of which was announced in June 2001), representing a total of 1,117 beds in Manchester and Sheffield. We also acquired a 505 bed site at Market Gate in Bristol and have made progress in completing the construction of a number of existing schemes such as Margaret Rule Hall in Portsmouth and Hotwells Road in Bristol. These will be ready for the student in-take this Autumn. In addition to the University of Sheffield stock transfer opportunity, we have signed agreements on a 141 bed scheme for Swindon and Marlborough NHS Trust and a 345 bed scheme for the University of Northumbria. Within our Accommodation Services division, we have continued to deliver value added services and to roll out our on-line booking service, signing contracts with a number of Universities. For the coming academic year we have also initiated a test programme of added value services such as insurance. People The Group continues to grow in number in line with our plans. The Board is particularly pleased with the smooth integration of the UniLodge team who have brought with them valuable skills and experience. We warmly welcome all who have recently joined us. We are also very pleased to welcome to the Board Simon Bernstein who joined as Group Finance Director. At senior management level we welcome Andy Doyle, who joined us as Head of Accommodation Services, Paul Morland as Head of Strategy and Added Value Services, David Livingstone as Director of Project Services and John Tonkiss as head of our manufacturing operation. It was a great tribute to the whole UNITE team, that in July, the Company was awarded the title of South West Business of the Year 2001. This award recognises the significant achievements of the group in expanding nationally and developing new services, such as the NHS Hotel in London that offers accommodation on a nightly basis to key workers in the capital. All of these developments are being supported by training and development programmes, which have been stepped up on a well structured basis. Outlook The Group is making major progress in the achievement of its strategy. We have not only increased the number of secured bed spaces from 10,450 at the end of 2000 to 19,609 at the end of June 2001, but also significantly increased the number of schemes in our uncontracted pipeline, which we plan to convert into value for money accommodation over the coming months. At the same time major investment in people and processes is underway, to ensure that we implement our growth strategy in a controlled ad effective manner. In summary, I remain confident of our ability to achieve the strategic objectives inherent in our three year plan and in particular, our target of 60,000 secured bed spaces by 2003. Geoffrey Maddrell Chairman 5 September 2001 Enquiries to: Nicholas Porter, Chief Executive Tel: 0117 907 8112 Simon Bernstein, Finance Director The UNITE Group plc Emma Kane, Chief Executive Tel: 020 7955 1410 Redleaf Communications Ltd Mob: 07876 338339 Richard Thompson, Director Tel: 020 7426 9000 Martin Lampshire, Director Teather & Greenwood Limited Consolidated Balance Sheet Unaudited Unaudited Audited 6 months 6 months Year to to to 31 Dec 30June 30 June 2000 2001 2000 Note £'000 £'000 £'000 Fixed assets Intangible assets 12,717 53 524 Tangible assets Investment and development properties 3 253,686 126,417 151,438 Other fixed assets 5,208 2,292 4,474 Investments 275 - 273 259,169 128,709 156,185 Joint venture undertaking 4 Share of gross assets 41,985 18,279 41,390 Share of gross liabilities (28,995) (12,763) (28,448) 12,990 5,516 12,942 284,876 134,278 169,651 Current assets Stock and work in progress 9,112 936 5,689 Debtors 26,113 7,672 11,044 Cash at bank and in hand 33,964 19,429 4,276 69,189 28,037 21,009 Creditors: amounts falling due within 5 (56,895) (42,347) (31,512) one year Net current assets/(liabilities) 12,294 (14,310) (10,503) Total assets less current liabilities 297,170 119,968 159,148 Creditors: amounts falling due after 6 (116,051) (49,481) (70,252) more than one year Provisions for liabilities and charges (240) (241) (240) Net assets 180,879 70,246 88,656 Capital and Reserves Called up share capital 16,889 11,075 11,075 Share premium account 71,684 34,722 34,752 Merger reserve 40,178 - - Revaluation reserve 48,051 22,704 39,513 Profit and loss account 4,077 1,745 3,316 Equity shareholders' funds 180,879 70,246 88,656 Net assets per ordinary share (pence per 267.7 158.6 200.0 share) Consolidated Profit and Loss Account Unaudited Unaudited Audited 6 months 6 months Year to to to 31 Dec 30 June 30 June 2000 2001 2000 Note £'000 £'000 £'000 Group turnover and share of joint 10,109 5,669 30,444 venture Less: share of turnover of joint venture (770) (191) (492) Group turnover 7 9,339 5,478 29,952 Cost of sales (2,868) (3,380) (21,359) Gross profit 6,471 2,098 8,593 Administrative expenses (2,576) (789) (3,013) Group operating profit 3,895 1,309 5,580 Profit/(loss) on disposal of investment properties (50) 361 372 Share of results of joint venture 4 552 115 381 Profit on ordinary activities before 4,397 1,785 6,333 interest and taxation Net interest payable (3,089) (935) (3,307) Profit on ordinary activities before 1,308 850 3,026 taxation Taxation 8 - - - Profit on ordinary activities after 1,308 850 3,026 taxation Dividends paid and proposed (585) (303) (908) Retained profit for the financial period 723 547 2,118 Basic earnings per share (pence per 9 share) 2.93 2.52 7.71 Fully diluted earnings per share (pence 9 per share) 2.86 2.41 7.54 The results in both 2000 and 2001 arose from continuing operations. Statement of Total Recognised Gains and Losses Unaudited Unaudited Audited 6 months 6 months Year to to to 31 Dec 30 June 30 June 2000 2001 2000 £'000 £'000 £'000 Profit for the financial period 1,308 850 3,026 Unrealised surplus on revaluation of 6,669 6,272 15,082 properties Unrealised surplus on revaluation of joint - 728 8,336 venture Unrealised profit on trading with joint 1,907 - 391 venture Total recognised gains and losses relating 9,884 7,850 26,835 to the period Consolidated Cash Flow Statement Unaudited Unaudited Audited 6 months 6 months Year to to to 31 Dec 30 June 30 June 2000 2001 2000 £'000 £'000 £'000 Cash flow from operating activities (4,156) 1,167 2,836 Returns on investments and servicing of (3,573) (820) (5,045) finance Taxation (7) - (28) Capital expenditure and financial investment (16,573) (43,162)(63,749) Acquisitions and disposals (1,216) - - Equity dividends paid (605) (266) (569) Cash outflow before management of liquid resources and financing (26,130) (43,081)(66,555) Financing Issue of shares (net of costs) 38,088 36,367 36,397 Increase in debt and financing 17,730 24,279 32,570 55,818 60,646 68,967 Increase in cash in the period 29,688 17,565 2,412 Reconciliation of Net Cash Flow to Movement in Net Debt Unaudited Unaudited Audited 6 months 6 months Year to to to 31 Dec 30 June 30 June 2000 2001 2000 £'000 £'000 £'000 Increase in cash in the period 29,688 17,565 2,412 Cash inflows from increase in debt (17,730) (24,279) (32,570) financing Loan notes issued (9,300) - - Loans acquired with subsidiary (31,865) - - New hire purchase contracts (181) (42) (477) Amortisation of loan stock issue costs (72) (72) (143) Movement in net debt in the period (29,460) (6,828) (30,778) Net debt at beginning of the period (79,663) (48,885) (48,885) Net debt at end of the period (109,123) (55,713) (79,663) Note of Consolidated Historical Cost Profit and Losses Unaudited Unaudited Audited 6 months 6 months Year to to to 31 Dec 30 June 30 June 2000 2001 2000 £'000 £'000 £'000 Reported profit on ordinary activities before 1,308 850 3,026 taxation Realisation of property revaluation gains of 38 474 474 previous years Historical cost profit on ordinary activities 1,346 1,324 3,500 before taxation Historical cost profit for the year retained after taxation and dividends 761 1,021 2,592 Reconciliation of Movement in Shareholders' Funds Unaudited Unaudited Audited 6 months 6 months Year to to to 31 Dec 30 June 30 June 2000 2001 2000 £'000 £'000 £'000 Profit attributable to ordinary 1,308 850 3,026 shareholders Dividends paid and proposed (585) (303) (908) 723 547 2,118 Net surplus on revaluations 8,576 7,000 23,809 New share capital subscribed (net of 82,924 36,367 36,397 issue costs) Net addition to shareholders' funds 92,223 43,914 62,324 Opening equity shareholders' funds 88,656 26,332 26,332 Closing equity shareholders' funds 180,879 70,246 88,656 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 2001. Copies will be available to the public from the Company's registered office at Lawrence House, Lower Bristol Road, Bath. 2 Goodwill On 28 June 2001 the Group completed the acquisition of UniLodge for a consideration (including the costs of the acquisition) of £56 million, satisfied by the issue of shares, £45 million, loan stock, £9 million, and cash £2 million. The fair value of the net assets acquired, adjusted for the costs to complete properties, has been provisionally assessed at £44 million, net of £32 million of debt, resulting in £12 million of goodwill. 3 Investment and development properties Completed Developments in Properties developments progress held for future development Total £'000 £'000 £'000 £'000 Cost or valuation At 1 January 2001 119,450 22,396 9,592 151,438 Additions- acquisitions 57,055 20,122 853 78,030 - other 3,444 15,651 304 19,399 Transfers 3,646 (1,717) (1,929) - Disposals (1,850) - - (1,850) Revaluations 3,095 3,574 - 6,669 At 30 June 2001 184,840 60,026 8,820 253,686 At 31 December 119,450 22,396 9,592 151,438 2000 At 30 June 2000 92,750 26,186 7,481 126,417 4 Joint venture undertaking Unaudited 30 June 2001 £'000 £'000 Group Cost or valuation and net book value At beginning of period 12,942 Share of operating profit for period 552 Share of interest payable for period (504) Share of retained profit for period 48 Revaluation - At end of period 12,990 Notes to the Interim Report continued 5 Creditors: amounts falling due within one year Unaudited Unaudited Audited 30 June 30 June 31 Dec 2001 2000 2000 £'000 £'000 £'000 Build loans and other short term 27,035 25,662 16,387 financing Other creditors 29,860 16,685 15,125 56,895 42,347 31,512 6 Creditors: amounts falling due after more than one year Unaudited Unaudited Audited 30 June 2001 30 June 2000 31 Dec 2000 £'000 £'000 £'000 Long term borrowings 116,051 49,481 67,552 Other creditors - - 2,700 116,051 49,481 70,252 7 Segmented analysis of operations Unaudited Unaudited Audited 6 months to 6 months to Year to 30 June 2001 30 June 2000 31 Dec 2000 £'000 £'000 £'000 Turnover Investment activities 5,036 2,015 8,173 Development activities 4,303 3,463 21,779 9,339 5,478 29,952 Profit before interest and tax Investment activities 3,367 1,490 5,615 Development activities 1,030 295 718 4,397 1,785 6,333 8 Taxation There is no corporation tax charge in the period due to the availability of capital allowances and tax losses to offset against the taxable profits accrued. 9 Earnings per Share The calculation of the earnings per ordinary share is based on the profit available to ordinary shareholders of £1,308,000 (2000 interim - £850,000; 2000 final - £3,026,000) and on a weighted average number of ordinary shares in issue during the six months ended 30 June 2001 of 44,699,277 (2000 interim - 33,659,228; 2000 final - 39,225,847). On a fully diluted basis the weighted average number of ordinary shares was 45,726,249 (2000 interim - 35,234,886; 2000 final - 40,128,789). ENDS

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