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Half year results: Maintaining strong performance momentum – 26 July 2016

11 November 2016

The Unite Group plc, the UK’s leading developer and manager of student accommodation, announces its half year results for the six months to 30 June 2016.


Robust financial performance: increased earnings, NAV and dividend

  • EPRA earnings up £6.5 million, 22% to £36.1 million (30 June 2015: £29.6 million)
  • EPRA earnings per share up 15% to 16.3 pence (30 June 2015: 14.2 pence)
  • EPRA NAV per share up 7% to 620 pence (31 December 2015: 579 pence) equating to a total accounting return of 8.7% 
  • Interim dividend increased 9% to 6.0 pence per share (2015 interim: 5.5 pence). Policy remains to distribute 65% of full-year recurring EPRA earnings by way of dividend each year
  • Average yield compression across the portfolio of 8 basis points in the first six months to 5.5% (31 December 2015: 5.55%) net initial yield
  • Leverage maintained at 35% LTV (31 December 2015: 35%)
  • IFRS profit after tax £106.7 million (30 June 2015: £208.3 million), due to lower level of yield compression than in 2015

Continued progress against strategic objectives

  • New scalable operating system, PRISM, fully implemented and delivering enhanced customer service and efficiency benefits. Remain on track to hit NOI margin target of 75% and overhead efficiency target of 25-30 basis points by the end of 2017
  • Further strengthening of University relationships; 71% of new openings and 57% of all rooms let through University agreements underpinning future income 
  • 2,100 beds added to the secured pipeline for delivery in 2018 and 2019 supporting further earnings growth

Well positioned for continued earnings growth

  • Student numbers expected to reach record levels again in 2016/17 
  • 89% of rooms reserved as at 25 July (2015: 88%) with rental growth levels in line with last year.  We expect rental growth for the next academic year to continue in the 3-4% range
  • Highly visible earnings growth trajectory. The delivery of our development pipeline together with rental growth could see our earnings grow by a further 14 to 19 pence over the next few years
  • We remain on track to convert to a REIT at the start of 2017

Richard Smith, Chief Executive of Unite Students, commented:

“Throughout the first half of 2016 we have continued to deliver a strong performance on all fronts, delivered through our market leading brand, best in class operating platform, high quality portfolio and our relationships with the strongest Universities. Despite the uncertainty caused by the result of the EU referendum, the fundamentals of our business and the student accommodation sector remain strong.

The demand:supply outlook for student accommodation remains favourable and our earnings growth trajectory is underpinned by our efficiencies of scale and a high quality development pipeline, focused on cluster flat accommodation with a lower price point, where the rental growth outlook is strongest.

“We continue to assess the broader impacts on the market and maintain a disciplined approach to investment and development activities. We remain confident of delivering meaningful year on year earnings and dividend growth over the next few years and are well placed to benefit from opportunities that may emerge from this period of uncertainty.”

Read the complete Interim Results Statment