UNITE Group plc · LSE:UTG
UNITE — Investor Day (April 2014)
35 slides from UNITE's investor day presentation, Apr 30, 2014
Slide 1: Capital Markets Day
CAPITAL MARKETS DAY Delivering performance and growth for the long term Bristol, 30 April 2014
Slide 2: Introduction and Overview
INTRODUCTION AND OVERVIEW • Three pillars of long term success: − The most trusted student brand − The highest quality portfolio − The strongest capital structure • Primary financial objective is sustainable growth in recurring EPS and cashflow • More focus today on: − The value of our brand − Longe
Slide 3: Home for Success
HOME FOR SUCCESS 2
Slide 4: The Right Time to Invest in Our Brand
THE RIGHT TIME TO INVEST IN OUR BRAND • Universities seeking trusted The competitive landscape long term partner as Long standing but financially Smaller operators and entrants constrained lacking scale competitive pressures - Grew rapidly 2000-2007, - Typically less than 5,000 beds increase often w
Slide 5: New Visual Identity
UNITE NEW VISUAL IDENTITY STUDENTS ~\u 4 » uS =z STUDENTS is & | STUDENTS > U .
Slide 6: Operationalising Our Brand
OPERATIONALISING OUR BRAND Richard Smith, MD Operations
Slide 7: Continuing Our Success
CONTINUING OUR SUCCESS • Significant growth in NPC and earnings Growing recurring earnings over past five years NPC £m NPC EPS EPS pps 30 16 25.6 25 14 • Highest ever customer and employee 20 19.1 14 12 satisfaction 15 10 10 8 11 10 6 4.1 • Year on year improvements in HE ‘trust’ 5 0.6 3 4 2 metric
Slide 8: Signature Commitments
SIGNATURE COMMITMENTS Physical Digital Service People LEDs – latest lighting Information the way Services available A brilliant place to technology to help students want it when students work students sleep, relax need them and have fun Vibrant, multi- Digital community – All shared areas Tailored c
Slide 9: LED Lighting
LED LIGHTING • £21m installation over two years • Material reduction in maintenance costs • Carbon footprint reduction • Significant cost savings • Largest programme of its type in the UK education sector 8
Slide 10: Common Space
COMMON SPACE • New look and feel • Study, relax and socialise • Research and student feedback • Comfort and sense of home • Multi-functional areas, £7m • Space for Student Unions and investment universities 9
Slide 11: High Speed Wi-Fi
HIGH SPEED WI-FI • Increasing from 8Mb to 20Mb for new intake, £3m investment • Further increases each of next five years • Available throughout entire estate • Registration process simplified • Major contributor to student satisfaction • Creating digital communities 10
Slide 12: Systems and Technology Investment
SYSTEMS AND TECHNOLOGY INVESTMENT • £7m investment • Underpinning further efficiency savings • Driving service improvement • Refreshed website for new academic year, and flexible booking engine March 2015 • New HR, Customer Relationship Management and Maintenance platforms 11
Slide 13: Access to Services
ACCESS TO SERVICES • Maintenance, cleaning and reception services extended • Fortnightly kitchen/lounge cleaning • Further improving student wellbeing • Resource freed up through technology-driven efficiencies 12
Slide 14: Living Wage
LIVING WAGE • More than minimum wage • Proven impact on recruitment, retention and engagement • Reduces need for additional jobs, better family life • Modest investment to enhance pay for c. 100 employees • Intention to achieve accreditation 13
Slide 15: Longer Term Earnings Growth
LONGER TERM EARNINGS GROWTH Joe Lister, CFO
Slide 16: Growing EPS Over Next 5 Years
GROWING EPS OVER NEXT 5 YEARS • Continue to target 4.5% EPS yield for 2015 • Good visibility over future drivers of EPS growth − Investment in brand driving longer term sustainable rental growth − Delivering the development pipeline − Investment in technology for cost efficiency − Increased stakes i
Slide 17: Key Drivers of EPS Growth
KEY DRIVERS OF EPS GROWTH Development Increased USAF/UCC Rental growth pipeline stakes Favourable market outlook Secured £55m USAF (4.5% increase) - 39pps NAV and 11p EPS £15m UCC (9% increase) Supports longer term rental growth Funded OCB sale and re-investment - 20-25pps NAV and 5-8p EPS neutral I
Slide 18: Illustrative Earnings Progression
ILLUSTRATIVE EARNINGS PROGRESSION Rental USAF/UCC Secured Secured Funded growth / Illustrative 2013 Disposals stake pipeline sub-total pipeline investment 2018 in brand NOI 81 5 34 120 14-21 8-18 (10-12) 132-147 Overheads less (8) (1) (9) - (2-3) (11-12) fees Interest (47) (1) (10) (58) (4-5) - 4-5
Slide 19: Home for Success Investment
HOME FOR SUCCESS INVESTMENT • £40m invested into the estate over next 2 years − UTG share will be £20m − Funds/JVs will share costs proportionately Total UNITE P&L NAV cost Share impact impact £’m £’m Physical Cost savings will be reflected In valuations LED lighting 21 10 - to offset capital cost
Slide 20: Dividends and LTV
DIVIDENDS AND LTV • EPS growth will drive meaningful dividend per share enhancement • Dividend policy to be reviewed in line with development opportunities and progress with leverage targets • Operating cash is the key basis of dividend level − EPS ratio to be used going forward − 33% of NPC equates
Slide 21: Enhanced Total Returns
ENHANCED TOTAL RETURNS • Achieved an average of 10.4% over the last 4 years • Positive market outlook and visibility on development pipeline will drive enhanced total returns over the next 5 years − growing EPS yield − additional benefit from development pipeline • Maintain target of delivering doub
Slide 22: Students
STUDENTS
Slide 23: Introduction to Bristol
INTRODUCTION TO BRISTOL David Murtagh, Area Manager
Slide 24: Bristol: Strong Portfolio
BRISTOL: STRONG PORTFOLIO • Strong, city centre locations • Long-standing relationships with both universities • Range of ages of properties 1994-2007 • 11 of 12 properties on university agreements • Competition from new supply from 2016 – still large shortfall 23
Slide 25: Bristol: Supply/Demand
BRISTOL: SUPPLY/DEMAND • Two strong universities • 29,000 students seeking rooms • University of Bristol: − 5% YOY growth in last 2 years (ABB beneficiary) − 19% international (non-EU) students • University of West of England − 8% YOY growth in last 2 years − 8% international (non-EU) students • Str
Slide 26: Digital Update
DIGITAL UPDATE Christian Stanbury, Head of Operations Support
Slide 27: Mobile Working
MOBILE WORKING • Right tools for the job • Simply the way we work Full range of customer services: • Access and action customer account details – debt, rebookings • Room inspections – check-in/out • Monthly property audits – service and H&S compliance • Maintenance tool • General customer enquiries
Slide 28: Benefits
BENEFITS • Employees free from their PCs – no physical barriers • Customer-led interactions – where, when and how • Supports sales conversations and encourages cross / up selling • Greater operational efficiency and consistency 27
Slide 29: Student Facing Apps
STUDENT FACING APPS MY UNITE WORLD OF UNITE 28
Slide 30: Development Update
DEVELOPMENT UPDATE Richard Simpson, MD Property
Slide 31: London Development
LONDON DEVELOPMENT • Good, disciplined, progress • High barriers to entry – positive and negative • High quality, on track pipeline − Camden, Stratford and Angel Lane on site − Stapleton and Wembley secured planning • LSAV 60% committed • Land market competitive but working on a small number of off-
Slide 32: Regional Pipeline
REGIONAL PIPELINE Existing pipeline: • Huddersfield (2014) and Bristol (2015) 2013 capital raise pipeline • Good value opportunities • Three secured projects (2016): − Newcastle − Edinburgh − Aberdeen • Fourth project expected to be secured shortly • Pre-planning application and due diligence procee
Slide 33: Secured Regional Projects
SECURED REGIONAL PROJECTS Causewayend School, Aberdeen St Leonards, Edinburgh Newgate Centre, Newcastle Market overview Market overview Market overview • Existing Unite Students location • Existing Unite Students location • Existing Unite Students location • 22,000 full time students • 48,000 full t
Slide 34: Current Conditions – Regions
CURRENT CONDITIONS – REGIONS Competition for land beginning to increase: • Commercial, residential and hotels • Some active competition from other student developers • Sites too large for SME, too small for regen specialists and not yet targeted by residential Build cost inflation: • Low supply chai
Slide 35: 2017 Pipeline Approach
2017 PIPELINE APPROACH • Maintain highly disciplined, approach partnering with strong universities • Take advantage of ‘sweet spot’ opportunities • Consider existing and strong new locations • In advanced discussions on several sites • Good progress, expect to secure all sites in 2014 Sky Plaza, Lee