Unite Group Plc · LSE:UTG
Unite — FY2004 Earnings Presentation
23 slides from Unite's earnings presentation, 2005
Slide 1: Preliminary Results 2004
Preliminary Results 2004 Year ending 31st December 2004 The UK’s largest provider of student accommodation
Slide 2: 2004 Key themes
2004 Key themes Strong operating performance NAV per share grew by 10% to 332p Operating profits from portfolio up 41% to £41m Increasing margins through scale Continuing to deliver new beds in line with managed growth plans Investment market maturing Asset class now firmly established S
Slide 3: Student market update
Student market update Demand driven by compelling demographics 1.4m full time students (100% increase from 1991) Government target of 50% of under 30s (currently 43%) HE funding policy encouraging overseas recruitment 12% increase in overseas applications Insufficient supply to satisfy deman
Slide 4: Headline results
Headline results Dec 04 Dec 03 Change NAV per share (NAV £m) 332p (£370m) 302p (£327m) + 10% Property portfolio £1.11bn £0.95bn + 17% Completed and managed beds 26,319 21,215 + 24% Gross rental income £66.8m £48.1m + 39% Net rental income £41.0m £29.1m + 41% Operating margin* 62.1% 60.5% + 2% Loss b
Slide 5: Balance sheet growth
Balance sheet growth FY04 FY03 £m £m Change Portfolio value – Investment portfolio 991 788 ↑ 26% – Development portfolio 119 161 – Share of joint venture 1 - Capital expenditure 183 216 NAV added in period 44 31 ↑ 42% Gearing 198% 182% Growth in NAV per share & portfolio value 340 1200 330 1100 m )
Slide 6: Profit & loss account
Profit & loss account FY 04 FY 03 £m £m Rental income 66.8 48.1 Operating profit from portfolio (margin) 41.0 (62.1%)* 29.1 (60.5%) Interest (37.0) (1.11x) (25.2) (1.15x) Portfolio profit 4.0 3.9 Other operating activities (JVs etc) 1.2 - Corporate & pre-contract costs (6.3) (7.2) Non-recurring cost
Slide 7: Our property portfolio
Our property portfolio Secured Completed Average beds properties value stabilised £m yield Completed Portfolio: 2002 and prior 14,317 67 539.1 6.44% 2003 5,652 14 229.2 6.65% 2004 5,104 15 223.2 6.78% 25,073 96 991.5 6.56% (2003: 6.61%) Beds under management 1,246 4 - - Development properties comple
Slide 8: Portfolio breakdown
Portfolio breakdown Investment portfolio Development portfolio Valuation £991m Built out value £475m Bed Numbers 10,436 Bed Numbers 25,073 Typical yield range 6.0% - 7.3% Typical yield range 5.4% - 7.5% Costs to complete £258m Capital Growth 2004: 2004 completions: - Stabilised student portfolio £20
Slide 9: Delivering our finance strategy
Delivering our finance strategy Debt finance Equity capital £250m facility with RBS Joint venture initiatives £173m assets − subsequently securitised − £53m of new equity − 7 year floating rate − Student Villages & Capital Cities Refinance horizon extends to Q4 2006 − Consistent with strategy
Slide 10: Capital Cities – The Joint Venture
Capital Cities – The Joint Venture Partners GIC RE 70%, UNITE 30% £350m student portfolio in London, Edinburgh, Plan Dublin and Belfast 4,000+ beds 1,114 beds in 6 properties Seed portfolio 69% direct let 5.9% initial yield (6.3% stabilised) 8 year fund life Term 15 year UNITE brand
Slide 11: Capital Cities – Benefits to UNITE
Capital Cities – Benefits to UNITE The disposal Further underpins valuations − particularly direct let properties Proceeds available to repay debt and fund new investment Demonstrates ability to control gearing, whilst growing NAV Station Court, London The Joint Venture Removes capital const
Slide 12: Development update
Development update Project acquisitions and delivery 5,104 beds delivered for 2004/05 academic year 11 planning consents achieved 10 new projects secured (4,530 beds) Modular construction 2,530 modules produced in year : on target Competitive with traditional alternatives Time and qualit
Slide 13: Development margins
Development margins Challenge Solution Build cost inflation Partner contracting Modular construction Supply chain/procurement Challenging planning environment Expertise Track record Working with planning authorities/government Landmark buildings Mealmarket Exchange, Aberdeen Site avail
Slide 14: Summary and outlook
Summary and outlook A year of strong performance against all objectives Operating margins continue to improve Rental growth prospects remain strong Asset class now firmly established in the broader Purbeck House, Bournemouth investment community Confident about outlook for 2005 Deliverin
Slide 15: Appendices
Appendices Growing the portfolio Growth in major markets Profit and loss account analysis Balance sheet Financing facilities Portfolio mix Portfolio analysis Morley disposal Mercury Point, Southampton 14
Slide 16: Growing the portfolio
Growing the portfolio Julian Markham House, The Heights, Birmingham London Cherry Court, Bristol Apollo Court, Liverpool Discovery Heights, Plymouth Alexandra Works, Plymouth New for 2004 15
Slide 17: Growth in major markets
Growth in major markets 3 Yr Projected Growth Rank City FT Student Market In FT 2005 (2004) Completed Completed Numbers Share Student Beds 12/05 Beds 12/04 (03/04) 12/05 Numbers Income generating properties 1 (1) Bristol 3,082 2,849 32,344 10% 11% 2 (2) Liverpool 2,832 2,832 36,360 8% 14% 3 (4) Lond
Slide 18: Profit and loss account analysis
Profit and loss account analysis Year to 31 Dec 04 Year to 31 Dec 03 £m £m Rental income 66.8 48.1 Property costs (18.0) (12.9) Overheads (7.8) (6.1) Interest (37.0) (25.2) Portfolio profit 4.0 3.9 Development pre-contract costs (2.4) (3.8) Development trading activity 1.2 - Corporate costs (3.9) (4
Slide 19: Balance sheet
Balance sheet Year to 31 Dec 04 Year to 31 Dec 03 £m £m Properties - Completed 991.5 788.3 - In development 119.0 160.5 Total 1110.5 948.8 Investment in JV 1.1 - Other fixed assets 18.1 19.7 Goodwill 2.5 5.1 Net indebtedness (731.5) (593.9) Other current assets 45.7 22.9 Other current liabilities (7
Slide 20: Financing facilities at December 2004
Financing facilities at December 2004 Facility Years to Committed maturity UFO securitisation 272 18.4 Conduit RBS 250 6.5 Revolving warehouse Barclays/Nationwide 100 1.9 Revolving department Fortis 50 1.5 HBOS 50 2.5 Bradford & Bingley 75 1.1 RBS 50 1.8 Property specific development Anglo Irish 64
Slide 21: Portfolio mix
Portfolio mix Direct Let: Beds Yield % Strong rental growth profile (historic 30,000 6.65% and potential) Emerging market yield evidence 25,000 6.60% Typical stabilised yields 6.75%-7.5% 20,000 6.55% Nominations agreements: Increasing demand from Universities 15,000 6.50% Strong counterp
Slide 22: Morley disposal
Morley disposal Date November 2004 Consideration Consideration for portfolio was £49.35m – 5.77% net initial yield Portfolio Bristol, Leeds, Newcastle - aggregate 1,246 beds − circa 4.7% of UNITE’s completed portfolio UNITE retains responsibility for site and share of net income UNITE’s role
Slide 23: New licensing legislation
New licensing legislation The Housing Act was passed in December 2004 Changes implemented from 2006 onwards Like other private halls and HMO’s UNITE will need to be licensed UNITE is already a founding member of the Code of Standards All University halls will need to sign up to this code