THE UNITE GROUP PLC(“UNITE” / “Group”) Interim results for the six months to 30 June 2008 Resilient NAV performance backed by strong sales and market growth The UNITE Group plc, the UK's largest manager of branded student accommodation, today announces its interim results for the six months to 30 June 2008. Financial Highlights: - Adjusted fully diluted net asset value fell by 2.3% to £498 million (31 December 2007: £510 million) or by 2.9% to 398 pence (31 December 2007: 410 pence). Basic net asset value was 335 pence per share (31 December 2007: 364 pence).
- Loss before tax of £12.8 million (30 June 2007: profit of £25.8 million); on an adjusted basis the loss for the six months was £12.2 million (2007: profit of £0.4 million), primarily due to revaluation movements on the Group’s investment property reflecting broader property market conditions and a provision against the value of land currently awaiting planning permission for the development of student accommodation.
- Strong performance by USAF, generating a total return of 5.6% in the six months to June 2008, making it the top performing fund in the IPD Pooled Property Fund Index and the only one to generate a positive return during that period.
- The USAF fund raising process remains open until 3 October. Applications for capital amounting to £85 million have been received of which £42 million is unconditionally committed. The unconditional commitments, together with proceeds from asset sales and maintaining gearing at June levels, provide a minimum of £180 million headroom within the Fund.
- Dividend maintained at 0.83 pence per share (2007: 0.83 pence).
Operational Highlights: - Reservations for the forthcoming academic year stand at 95% of available rooms as at 27 August, well in excess of the total 92% achieved for the 2007/08 academic year.
- Increasing national student numbers and ongoing undersupply of purpose-built accommodation provide strong market growth fundamentals.
- Room sales delivering like-for-like rental growth of 9.0% in the direct let portfolio, with 5.0% of core rental growth, which will be reflected in asset valuations; approximately 2.5% of rental growth booked in asset valuations in the six months to June 2008, largely offsetting the adverse movements in valuation yields.
- Successful programme of non-core asset disposals totalling £241.5 million on behalf of both UNITE and USAF and secured at prices 0.1% above December 2007 valuations. Proceeds to be used to reduce gearing and increase the Company’s financing capacity.
- Full review of secured development programme undertaken, with resulting scaling back of development commitments where appropriate.
- Full scale operational change programme initiated in January 2008 to improve the Group’s operating efficiency and margin, with an annualised savings target of £10 million to be realised through 2009.
- Seven planning consents obtained during the period on projects totalling 1,755 beds, with a further three consents won since 30 June for projects totalling 933 beds.
| Geoffrey Maddrell, Chairman of The UNITE Group, commented: “Against a challenging economic backdrop, UNITE has delivered a resilient performance, based primarily on its expertise and market-leading position in a specialist sector that is delivering consistent, strong rental growth at a level very few other property asset classes can currently match. “The fundamentals of the student accommodation sector and the UNITE business model remain sound and the Group has taken important steps to maximise its financial stability and strength during the current uncertain economic environment to ensure that it is well placed to take advantage of opportunities as they arise.”
Mark Allan, Chief Executive of The UNITE Group, commented: “The Group’s transition to a development and co-investing asset management model is designed to deliver enhanced returns on capital over the long term by allowing the Group to focus its capital investment into higher value-add activities such as development, whilst also retaining a significant minority stake in the long-term investment performance of the Group’s operational portfolio. “The current difficulties in the UK economy are likely to persist well into 2009 and, as a result, our priority will continue to be on managing the Group’s roll-out plan prudently, conserving cash and borrowing capacity appropriately and maintaining our focus on London and other high quality student locations in terms of development activity. “There are clear signs of increased activity in the development market place and clear evidence that land prices have fallen. We expect these values to fall further and believe that the dislocation between falling development site values and robust student accommodation investment values will present increasingly attractive opportunities for the Group later in 2008 and throughout 2009.”
RNS announcement |