UNITE Group plc · LSE:UTG
UNITE — FY2005 Earnings Presentation
24 slides from UNITE's earnings presentation, 2006
Slide 1: Preliminary Results 2005
Preliminary Results 2005 Year ended 31 December 2005
Slide 2: Key themes
Key themes 11% adjusted NAV per share growth − 17% before SDLT impact − strong investment portfolio performance − growing development pipeline Improved portfolio performance − operating profits from portfolio up 15% to £47m − like-for-like revenue growth of 7.2% − operating margin up to 63.2%
Slide 3: Headline results
Headline results 2005 2004 Change Net asset value Basic NAV per share (IFRS) 314p 289p ↑ 9% Adjusted NAV per share 367p 335p ↑ 10% Adjusted NAV per share (fully diluted) 363p 328p ↑ 11% Earnings Profit before tax £28.1m £17.1m ↑ 64% Adjusted profit/(loss) before tax £3.4m £(3.8)m ↑ £7.2m Portfolio o
Slide 4: Operational update
Operational update Hospitality Services − beds under management up 17% − team restructured to increase customer-facing presence − systems investment commenced Development − margins maintained between 20% to 25% − 5,700 beds secured in year − 10 planning consents in year − planning and acquisitio
Slide 5: Student market update
Student market update Long term demand 390,000 − Overall demand - 1.4 million full time students 380,000 − 100,000 unsuccessful applicants in 2005/06 370,000 − Exceptional increase in applications for 2005/06 360,000 350,000 partially reversing in 2006/07 340,000 − Annualised growth of 2.6% over t
Slide 6: UNITE Top 10 Markets
UNITE Top 10 Markets Expected FT Student Projected 3 Yr Growth in 2006 2005 Completed City Completed Numbers Market Share FT Student Rank Rank Beds 2005 Beds 12/06 (04/05) 12/06 Numbers 1 (3) London 3,179 2,564 204,993 2% 12% 2 (4) Sheffield 3,132 2,365 39,993 8% 7% 3 (1) Bristol 3,082 3,082 32,677
Slide 7: Net asset value growth
Net asset value growth Key Indicators Dec 05 Dec 04 % NAVPS pps pps £m pps fd Investment portfolio NAV per share (IFRS) 314 289 − Rental growth 16.7 14.5 4.4% − Yield compression 35.5 30.7 9.4% Provision for deferred tax 38 46 − Specific write-downs (6.0) (5.2) -1.6% Development portfolio MTM of int
Slide 8: The investment portfolio
The investment portfolio Beds £m Capital growth % total Completed properties £m portfolio - wholly owned 25,438 1,029 Rental growth 16.7 1.8% - JVs 2,276 136 Yield compression 35.5 3.8% Specific write downs (6.0) -0.7% JV partner share (1,361) (86) Removal of stamp duty (20.3) -2.2% UNITE share 26,3
Slide 9: The development portfolio
The development portfolio Secured future developments Completed Average Beds Value £m stabilised yield 2006 – UNITE 2,468 107.5 6.75% – JV 1,808 114.9 6.40% 4,276 222.4 6.57% 2007 – UNITE 3,374 169.2 6.69% – JV 658 72.4 6.28% 4,032 241.6 6.57% 2008 + 2,173 162.8 6.48% 10,481 626.8 6.55% Built out NA
Slide 10: Joint ventures
Joint ventures Capital Cities Joint Venture Student Village Joint Venture Completed Completed Beds Value £m Beds Value £m Investment portfolio 1,114 86.9 The Forge, Sheffield - completed 1,162 48.9 Assets under development 844 70.7 The Plaza, Leeds – under 964 44.3 development Secured for transfer t
Slide 11: Debt finance
Debt finance New facilities in 2005 Purpose Principal Term Epic (UNITE) securitisation conduit Investment £250m 7 years Medium term syndicated facility Investment/ £225m revolving 4 years development Average cost of debt: 6.5% UNITE Finance One Securitisation (2002) Small asset substitution planne
Slide 12: Emerging investment activity
Emerging investment activity UNITE transactions in 2005 − second Lehmans joint venture (35 bps yield compression) − Capital Cities joint venture − sale and leaseback to Cordea Savills (55 bps yield compression) − competitive bidding on all transactions Other funds intended − c. £600 m of new fun
Slide 13: Portfolio performance
Portfolio performance 2005 performance 2005/06 Academic Year Dec 05 Dec 04 05/06 04/05 £m £m Gross rental income 81.1 66.8 Total beds in operation 30,729 26,319 Direct operating costs (26.0) (18.0) Occupancy 94.0% 94.8% Portfolio overhead (8.0) (7.8) Portfolio operating profit 47.1 41.0 Like-for-lik
Slide 14: Earnings performance
Earnings performance 2005 2004 £m £m Portfolio operating profit 48.0 41.0 Net interest charge (42.7) (37.0) 5.3 4.0 Non rental profits 3.3 1.2 8.6 5.2 Corporate and pre-contract costs (7.2) (6.5) Other items 2.0 (2.5) 3.4 (3.8) Major IFRS items: Revaluation of investment portfolio/JVs 29.0 20.9 Inef
Slide 15: UNITE Hospitality Services
UNITE Hospitality Services UNITE brand and reputation 35,000 beds under management for 2006/07, 121 properties 1,000+ beds in 13 cities Managed improvement in operating margins − 2003: 60.5% − 2004: 62.1% − 2005: 63.2% Student hospitality concept Strong management team 14
Slide 16: Expertise
Expertise Core strengths − marketing sales and lettings − facilities management − new building mobilisation − student hospitality Managing multiple stakeholders − students − parents − Universities − JV partners − third party asset owners Account management − relationships with 52 Universities − nomi
Slide 17: Scaleability
Scaleability Operating platform − local and regional operating model − more people on site at customer interface − capacity for new buildings Systems − underpinning local and regional management model − investment in IT systems − online student interaction Student hospitality − national consistency
Slide 18: Growth
Growth Research − market segmentation − sector research − customer research − recommendation 80%+ − customer expectations 79% Brand evolution − research led − differentiated student hospitality brand − driving rental growth of 7.2% Offering − 51 week tenancies for postgraduates, overseas students, a
Slide 19: Case Study: Plymouth
Case Study: Plymouth Students studying in Plymouth − 20,270 students − 11% growth over 4 years Plymouth University − Major investment to centralise campus in city centre: an extra 2,500 places − Ambition to be in top 15 for research within 15 years − 4.6 applications for every available place UNITE
Slide 20: Summary and outlook
Summary and outlook Continued demand and supply imbalance Delivering business performance − revenue growth − strong, visible roll-out programme Flexible capital base Investment activity demonstrating valuations − conservative yields Branded student hospitality experience Capability, capa
Slide 21: Appendices
Appendices Our property portfolio Portfolio operating margin NNNAV calc. 20
Slide 22: Our property portfolio
Our property portfolio Beds Properties Completed Average value stabilised Completed Portfolio: £m yield 2004 and prior 23,028 89 931 6.30% 2005 completions 2,410 6 98 6.49% Joint venture properties 2,276 7 136 6.16% 27,714 102 1,164 6.32% Beds under management 3,015 8 - - Development portfolio: 2006
Slide 23: Portfolio operating margin
Portfolio operating margin 2005 2004 £m £m £m £m Rental income - wholly owned 81.1 66.8 - operated in joint ventures 5.1 - 86.2 66.8 Property operating costs - wholly owned (26.0) (18.0) - operated in joint ventures (0.9) - Overheads attributable to property operations (8.0) (7.8) (34.9) (25.8) 51.3
Slide 24: NNNAV
NNNAV 2005 2004 £m £m Net assets 382.7 321.8 Fair value of swaps - (9.3) Fair value of fixed rate debt (22.1) (10.9) Deferred tax 6.6 6.1 NNNAssets 367.2 307.7 NNNAV per share 302p 276p 23