Full year results for the year to 31 December 2013 – 06 March 2014
Continued strong performance built around high levels of service
- EPRA earnings per share (“EPS”) of 18.0 pence (2012: 9.9 pence);
- Adjusted EPS (pre UCC performance fee) of 13.6 pence (2012: 9.9 pence), representing a yield on opening adjusted NAV of 3.9% (2012: 3.1%). We continue to target a 4.5% yield by 2015;
- Adjusted NAV per share (fully diluted) up 9.1% to 382 pence (2012: 350 pence), equating to a total return on equity (NAV growth plus dividends) of 10.5% for the year;
- Net Portfolio Contribution up 34% to £25.6 million (2012: £19.1 million);
- Final dividend of 3.2 pence per share (2012: 3.0 pence), making 4.8 pence for the full year (2012: 4.0 pence), an increase of 20%;
- Service satisfaction levels again increased to highest ever levels.
Significant, fully funded, development programme secured, underpinning attractive growth prospects
- Three projects (comprising 1,555 beds) secured under contract in strong regional locations in line with target returns, accounting for approximately 70% of the proceeds of our June placing. In exclusive negotiations on a fourth project which will account for the remainder;
- LSAV pipeline 60% committed across three London projects comprising 2,350 beds;
- Secured development pipeline on track to add 39 pence per share to NAV and 13 pence to EPS by 2017 if expected returns achieved. A further project where the Group is in exclusive negotiations could add an additional 6 pence to NAV per share and 1 pence to EPS.
Positive market outlook supported by encouraging reservations performance
- Reservations for 2014/15 at 64% (2013: 62%) at pricing supportive of 3% rental growth for the full year;
- UCAS applications data shows an increase in University applications of 4% year on year;
- Government decision to remove the student number cap in 2015, and increase places by 30,000 (6%) in 2014, strengthens longer term prospects for the sector;
- Investor interest in sector broadening and deepening.
Capital structure strengthened
- Average cost of debt reduced to 4.7% (2012: 5.5%), weighted average loan maturity extended to 7.1 years (2012: 4.1 years). 75% of debt from non-bank sources (2012: 43%) and 27% unsecured (2012: 15%) following completion of £124 million loan in February 2014;
- Adjusted loan-to-value ratio reduced to 49% on a see-through basis (2012: 52%). We intend to reduce LTV towards 40% over time;
- Refinanced £565m of USAF debt in the public bond markets, decreasing its average cost of borrowing from 5.0% to 3.7%.
Mark Allan, Chief Executive of The UNITE Group said:
“Our full year results demonstrate the continued strong performance and growth of the business, with positive improvements in all key areas and our brand increasingly becoming a positive differentiator. Following an active year on the financing front we have established a strong capital base which has enabled us both to take advantage of the current low interest rate environment for the longer term and to secure capital to support exciting growth opportunities.
“Strong University applications and recent Government announcements intended to increase student enrolment in the coming years bode well for rental growth prospects and we have an excellent, fully funded development pipeline that is well positioned to provide further sustainable growth in the future.”