Finals/Placing&OpenOffer,etc

Unite Group PLC 15 March 2000 Not for release, publication or distribution in or into the United States of America, Canada, Australia or Japan. The Unite Group plc Announcement of audited results for the year ended 31 December 1999 Placing and Open Offer to raise £38.5 million Move to Official List The Unite Group plc is the UK's leading specialist provider of student residential accommodation and an independent provider of key worker accommodation to NHS Trusts. Highlights - Net assets up 155 per cent. to £26.3 million (1998: £10.3 million) - NAV per share up 108 per cent. to 104p (1998: 50p) - Dividend of 1.05p per share - Earnings per share up 65 per cent. to 3.69p (1998: 2.24p) - Expansion of geographic coverage - Placing and Open Offer at 203p to raise £38.5 million (before expenses) - Move to the Official List Geoffrey Maddrell, Chairman, said: 'This has been a momentous year for Unite. Our focused strategy continues to deliver results ahead of expectations and we have put in place a flexible structure for long-term growth. 'We have a series of exciting projects in the pipeline and a dynamic and determined management team. The Placing and Open Offer will provide funds for continued implementation of our strategy. I am fully confident of the Group's ability to deliver on its growth plans.' An analysts' meeting will be held at the offices of Robert Fleming & Co. Limited, 25 Copthall Avenue, London EC2 at 9.45 am (for 10.00 am) today, 15 March 2000. For further information, please contact: The Unite Group plc 15 March: 020 7253 2252 Nicholas Porter, Chief ExecutiveThereafter: 0117 907 8100 David Ransome, Finance Director Robert Fleming & Co. Limited 020 7638 5858 Simon Gorringe Teather & Greenwood Limited 020 7426 9073 Richard Thompson/Martin Lampshire Ludgate Communications 020 7253 2252 Tim Davis/Denise Peplow Robert Fleming & Co. Limited, which is regulated by The Securities and Futures Authority Limited, is acting for The Unite Group plc and no one else in connection with the Placing and Open Offer and will not be responsible to anyone other than The Unite Group plc for providing the protections afforded to customers of Robert Fleming & Co. Limited. This announcement has been approved by Robert Fleming & Co. Limited for the purposes of section 57 of the Financial Services Act 1986. Chairman's Statement Introduction I am pleased to announce that Unite has had a very successful year. We have implemented the strategy outlined when we floated on AIM in June 1999 and have achieved performance ahead of expectations. We have continued to drive the expansion and development of Unite's position as the UK's leading provider of student residential accommodation and as an independent provider of accommodation for key workers in the NHS sector. Unite's portfolio now comprises some 36 properties. 19 of these properties are completed schemes, providing a total of 1,592 beds; nine properties are in the course of development and eight are held for future development, which are expected to provide over 1,000 beds in aggregate when fully completed. The Group is in active negotiations in relation to a further 12 potential schemes, which the Directors estimate could add over 2,500 beds to the Group's portfolio. Unite is proposing to raise £38.5 million (before expenses) by way of a Placing and Open Offer to fund the continuing expansion of the Group and has applied for its ordinary shares to be admitted to the Official List. Financial performance The results for the year ended 31 December 1999 show an increase in net assets of 155 per cent. to £26.3 million (1998: £10.3 million), reflecting the growth of the business in the year. Net asset value per share increased by 108 per cent. to 104p (1998: 50p), that percentage increase reflecting the new shares issued during the year. Turnover increased by 102 per cent. to £11.1 million (1998 alternative basis: £5.5 million; 1998: £3.5 million). Profit before tax amounted to £842,000 (1998 alternative basis: £580,000; 1998: £227,000). Basic earnings per share are up 65 per cent. to 3.69p (1998 alternative basis: 2.24p; 1998: 2.21p). The Company ended the year with net cash of £1.8 million. (1998: £0.4 million). The Board is recommending a dividend of 1.05p per share, which will be covered 3.2 times. Subject to the approval of shareholders, the dividend will be paid on 16 May 2000 to shareholders on the register on 31 March 2000. National expansion The focus of the Board has been to develop a programme of national expansion. We are undertaking schemes in Portsmouth, Manchester and Exeter, as well as in Bath, Bristol and London. The recent opening of our Leeds office has enhanced our ability to develop awareness of our product and brand across the North of England. Our joint venture in London with Peabody Trust, Peabody Unite, performed strongly throughout the year. Its first scheme was opened in October 1999 and let to Barts and the London NHS Trust. Work also commenced during the year on two other substantial developments, which together are set to deliver a further 513 rooms for NHS key workers during 2000. Unite's integrated solutions The Group continues to develop the range of products and services which it offers institutions as solutions to their accommodation requirements. Unite adopts an integrated approach, which includes planning, design, development, investment, and subsequent leasing and facilities management. In addition to the traditional organic development undertaken by the Group, the Board expects that opportunities to acquire existing stock of accommodation from institutions, as well as from other property developers, will form an increasingly important element of the Group's activities in the future. The year has seen significant advances in the procurement and production facilities at our manufacturing and finishing division, with a notable highlight being the successful installation of the Group's innovative pre- fabricated 'pod' bedrooms in Unite House, our flagship scheme in Bristol. We have also grown our facilities management business, UNITEfm+, in line with the Group's expansion. Management and employees We have recruited experienced personnel to head-up the design & build, finishing and facilities management operations. Further key appointments have been made in the areas of finance, human resources, research and information technology. Across the Group, recruitment activity at all levels has been extensive and we have now established an infrastructure to service a much larger business. Placing and Open Offer The Company is proposing to raise £36.5 million (net of expenses) by way of a Placing and Open Offer of 18,985,473 new ordinary shares. The proceeds will be used to continue the expansion of Unite's property portfolio and the growth of its activities. The Group has a strong organic development pipeline, with some 17 properties either in the course of construction or refurbishment, or acquired for development. The Group is also shortlisted for stock transfers with three institutions and the Board expects further institutions to adopt this approach to their ongoing accommodation requirements. The Open Offer will be made on the basis of three new ordinary shares for every four existing ordinary shares held on the record date, which is 6 March 2000. The offer price is 203 pence per new ordinary share and the last date for application is 5 April 2000. Robert Fleming & Co. Limited is acting as the Company's sponsor. Each of the Directors has undertaken to take up shares in the Open Offer amounting in aggregate to 44,445 new ordinary shares. 14,541,305 new ordinary shares, representing 76.6 per cent. of the Open Offer have been placed firm by Teather & Greenwood Limited with institutions and other investors, which will significantly widen the shareholder base of the Company. 4,399,723 new ordinary shares have been placed subject to recall to satisfy valid applications under the Open Offer. Admission to the Official List Application has been made to the London Stock Exchange for the ordinary shares of the Company to be admitted to the Official List. This represents a significant step in the development of the Company and the Board believes that the new listing should enhance the Group's status and profile and help strengthen the capital base of the Company. The Company's loan stock will remain on AIM. Current trading and prospects Since the year end, we have continued to grow our portfolio with the acquisition of two properties in Manchester and a further two in Bristol. The Board expects to exchange contracts on a third property in Bristol in the near future. The Manchester acquisition was particularly significant as it represented Unite's first purchase of a completed development from a third party, its first scheme let directly to students and the first scheme implemented by the Group's Leeds office. The Group's rental income has also increased as a result of the Manchester acquisition and the Directors expect a further significant uplift following the completion of the Unite House development in Bristol. Unite has established a firm foothold for its integrated products and services in a long-term growth market which is resistant to major business cycles. We have a carefully constructed strategy, a series of projects in the pipeline and a dynamic and determined management. The Board believes that the prospects for the Group are excellent and looks forward to the coming year with great confidence. Geoffrey Maddrell Chairman 15 March 2000 The Annual Report and Accounts for the year ended 31 December 1999 will be posted to shareholders today, together with a prospectus in connection with the Placing and Open Offer. Further copies of both documents will be available from the Company up to and including 7 April 2000. The annual general meeting of the Company will be held at 10.00 am on 7 April 2000 at 10 Old Bailey, London EC4M 7NG. An extraordinary general meeting to approve matters in connection with the Placing and Open Offer will be held at the same venue at 10.05 am, or as soon thereafter as the annual general meeting concludes or is adjourned. Application forms are personal to shareholders and may not be transferred except to satisfy bona fide market claims. Shareholders should be aware that the Open Offer is not a rights issue and that entitlements to new ordinary shares which they do not take up under the Open Offer will not be sold in the market for their benefit. Notes to Editors Key data - In June 1999, Unite was admitted to trading on AIM at 85 pence per share. In October 1999, Unite raised a further £1.5 million through an institutional placing at 125 pence per share. - Assuming full subscription under the Open Offer at the Placing price of 203 pence per share, Unite will have a market cap. of £89.9 million, based on 44,299,438 shares in issue. This compares to a price of 225 pence per share at the close of business on 14 March 2000, and a market cap. at that date of £57.0 million. - It is expected that admission to the Official List will become effective, and dealings on the Official List will commence, on 11 April 2000. Peabody Trust Peabody Trust is London's longest-standing housing association and its primary aim is to provide social housing in London. It is London's largest charitable housing provider and currently owns or manages over 19,000 homes, housing approximately 40,000 people, and employs approximately 600 full time staff. Peabody Trust has an established reputation with London borough councils and planning authorities, having worked with most of them over many years. Consolidated balance sheet at 31 December 1999 Note 1999 1998 £000 £000 £000 £000 Fixed assets Intangible assets 65 63 Tangible assets Investment and development properties 2 72,974 36,452 Other tangible fixed assets 1,989 420 ------ ------ 74,963 36,872 Joint venture undertaking 3 Share of gross assets 12,967 76 Share of gross liabilities(8,411) (50) ------ ------ 4,556 26 ------ ------ 79,584 36,961 Current assets Stocks 1,658 3,372 Debtors 6,164 2,966 Liquid resources - 2,663 Cash at bank and in hand 1,864 401 ------ ------ 9,686 9,402 Creditors: amounts falling due within one year Build facilities and other short term borrowings (24,246) (10,982) Other creditors (10,959) (6,144) ------ ------ Net current liabilities (25,519) (7,724) ------ ------ Total assets less current liabilities 54,065 29,237 Creditors: amounts falling due after one year Long term borrowings (including convertible debt) (26,503) (18,722) Other creditors (986) - Provisions for liabilities and charges (244) (248) ------ ------ Net assets 26,332 10,267 ====== ====== Capital and reserves Called up share capital 5 6,329 5,136 Share premium account 3,101 2 Revaluation reserve 16,178 4,988 Profit and loss account 724 141 ------ ------ Equity shareholders' funds 26,332 10,267 ====== ====== Consolidated profit and loss account for the year ended 31 December 1999 Note 1999 1999 1998 1998 Alternative basis £000 £000 £000 £000 Group turnover and share of turnover of joint venture 11,147 5,505 3,480 Less: share of turnover of joint venture (90) - - ------ ------ ------ Group turnover 11,057 5,505 3,480 Cost of sales (7,906) (2,965) (2,225) ------ ------ ------ Gross profit 3,151 2,540 1,255 Administrative expenses (1,009) (851) (399) ------ ------ ------ Group operating profit 2,142 1,689 856 Share of operating profit/(loss) in joint venture 66 (24) (23) Profit on disposal of investment properties - 354 - ------ ------ ------ Profit on ordinary activities before interest and taxation 2,208 2,019 833 Interest receivable 341 113 121 Interest payable and similar charges 6 Group (1,626) Joint venture (81) ------ (1,707) (1,552) (727) ------ ------ ------ Profit on ordinary activities before taxation 842 580 227 Taxation 7 7 9 9 ------ ------ ------ Profit for the financial year 849 589 236 Dividends paid and proposed 8 (266) (100) (100) ------ ------ ------ Retained profit for the financial year 583 489 136 ====== ====== ====== Earnings per share 9 Basic 3.69p 2.24p 2.21p Diluted 3.62p 2.24p 2.20p ====== ====== ====== Consolidated cash flow statement for the year ended 31 December 1999 Note 1999 1998 1998 Alternative basis £000 £000 £000 Cash flow from operating activities 10 6,549 1,092 4,272 Returns on investment and servicing of finance 11 (2,937) (1,981) (846) Taxation (133) (183) (15) Capital expenditure and financial investment 11 (29,713) (4,448) (9,863) Acquisitions and disposals 11 - (1,431) (2,887) Equity dividends paid - (100) (100) ------ ------ ------ Cash outflow before management of liquid resources and financing (26,234) (7,051) (9,439) Management of liquid resources 2,663 (2,663) (2,663) Financing 11 25,052 9,732 12,371 ------ ------ ------ Increase in cash in the year 1,481 18 269 ====== ====== ====== Reconciliation of net cash flow to movement in net debt for the year ended 31 December 1999 1999 1998 1998 Alternative basis £000 £000 £000 Increase in cash in the year 1,481 18 269 Cash flow resulting from movement in liquid resources (2,663) 2,663 2,663 Cash flow from increase in debt and lease financing (20,760) (9,732)(12,371) ------ ------ ------ Change in net debt resulting from cash flows (21,942) (7,051) (9,439) Loans and finance leases acquired with subsidiary - -(15,580) New hire purchase contracts (216) (120) - Amortisation of loan stock issue costs (83) - - ------ ------ ------ Movement in net debt in the year (22,241) (7,171)(25,019) Net debt at beginning of year (26,644) (19,473) (1,625) ------ ------ ------ Net debt at end of year (48,885) (26,644)(26,644) ====== ====== ====== Consolidated statement of total recognised gains and losses for the year ended 31 December 1999 1999 1998 1998 Alternative basis £000 £000 £000 Profit for the financial year Group 864 613 259 Share of joint venture (15) (24) (23) ------ ------ ------ 849 589 236 Unrealised surplus on revaluation of properties 6,645 6,551 5,350 Unrealised surplus on revaluation of joint venture 4,545 - - Provision for deferred tax on revaluations - 188 188 ------ ------ ------ 12,039 7,328 5,774 ====== ====== ====== Note of consolidated historical cost profits and losses for the year ended 31 December 1999 1999 1998 1998 Alternative basis £000 £000 £000 Reported profit on ordinary activities before taxation 842 580 227 Realisation of property revaluation gains of previous years - 697 - ------ ------ ------ Historical cost profit on ordinary activities before taxation 842 1,277 227 ====== ====== ====== Historical cost profit for the year retained after taxation and dividends 583 1,186 136 ====== ====== ====== Reconciliation of movements in shareholders' funds for the year ended 31 December 1999 1999 1998 1998 Alternative basis £000 £000 £000 Profit attributable to ordinary shareholders 849 589 236 Dividends paid and proposed (266) (100) (100) ------ ------ ------ 583 489 136 Net surplus on revaluation 11,190 6,551 5,350 Provision for deferred tax on revaluations - 188 188 Net proceeds of new share capital subscribed 4,292 - 3,938 Capital distribution to shareholders - (2,975) - ------ ------ ------ Net addition to shareholders' funds 16,065 4,253 9,612 Opening equity shareholders' funds 10,267 6,014 655 ------ ------ ------ Closing equity shareholders' funds 26,332 10,267 10,267 ====== ====== ====== Notes to the accounts 1 Basis of preparation The Group accounts include the accounts of the Company and its subsidiary undertakings all of which are made up to 31 December 1999. The financial information set out in this announcement does not constitute the Company's statutory accounts for the years ended 31 December 1999 or 1998. Statutory accounts for 1998 have been delivered to the registrar of companies, and those for 1999 will be delivered following the company's Annual General Meeting. The auditors have reported on those accounts; their reports were unqualified and did not contain statements under section 237(2) or (3) of the Companies Act 1985. Prior to the formation of the present Group on 24 June 1998, its activities were not carried on by a single statutory group of companies. Accordingly, for comparative purposes, financial information prepared under two bases is shown in respect of profits for the year to 31 December 1998. The alternative basis financial information presented for the year to 31 December 1998 has been prepared under the principles of merger accounting and has been extracted from the accountants' report on the Group set out in the Company's AIM admission document dated 24 May 1999. The comparative information provided from the financial statements for the year ended 31 December 1998 has been prepared under the principles of acquisition accounting. 2 Investment and development properties Completed Developments Properties Total developments in progress held for future development £000 £000 £000 £000 Group Cost or valuation and net book value At beginning of year 23,870 10,114 2,468 36,452 Additions 7,728 19,557 2,667 29,952 Revaluations 3,768 820 1,982 6,570 ------ ------ ------ ------ At 31 December 1999 35,366 30,491 7,117 72,974 ====== ====== ====== ====== At 31 December 1998 23,870 10,114 2,468 36,452 ====== ====== ====== ====== 3 Joint venture undertaking At 31 December 1999, the Group's investment in joint venture represented a 50% shareholding of the ordinary shares of Peabody Unite plc. The amounts included in respect of the joint venture comprise the following: 1999 1998 £000 £000 Share of assets Fixed assets 12,447 63 Current assets 520 13 ------ ------ 12,967 76 Share of liabilities Due within one year (8,411) (13) Due after one year - (37) ------ ------ Share of net assets 4,556 26 ====== ====== 4 Analysis of net debt 1999 1999 1998 1998 £000 £000 £000 £000 Bank loans, other loans and overdrafts fall due: In one year or less, or on demand 24,130 10,923 Between one and two years 1,292 4,310 Between two and five years 10,354 3,078 In five years or more 14,707 11,255 ------ ------ 50,483 29,566 Obligations under hire purchase agreements In one year or less 116 62 Between two and five years 150 76 ------ ------ 266 138 Less: Liquid resources and cash at bank and in hand (1,864) (3,060) ------ ------ Net debt at end of year 48,885 26,644 ====== ====== The Group has various borrowing facilities available to it. The undrawn committed facilities available at 31 December 1999 in respect of which all conditions precedent had been met at that date were as follows: 1999 1998 £000 £000 Expiring in one year or less Build facilities 11,676 6,229 Other facilities 657 770 ------ ------ 12,333 6,999 ====== ====== 5 Called up share capital 1999 1998 £000 £000 Authorised 45,000,000 ordinary shares of 25p each 11,250 - 10,000,000 ordinary shares of £1 each - 10,000 ------ ------ 11,250 10,000 ====== ====== Allotted, called up and fully paid 25,313,965 ordinary shares of 25p each 6,329 - 5,136,000 ordinary shares of £1 each - 5,136 ------ ------ 6,329 5,136 ====== ====== On 5 March 1999, each of the issued and unissued ordinary shares of £1 each was divided into four ordinary shares of 25p each. On 20 May 1999, the Company increased its authorised share capital by £1,250,000 to £11,250,000 divided into 45 million shares by the creation of 5 million ordinary shares of 25p each. On 26 May 1999, the Company allotted and issued 3,564,549 ordinary shares of 25p each by way of a placing at 85p per share upon admission to trading on AIM. The net proceeds of the issue were £2,800,000. On 5 October 1999, the Company allotted and issued 1,205,416 ordinary shares of 25p each by way of a placing at £1.25 per share, the mid market price at the date of allotment. The net proceeds of the issue were £1,500,000. 6 Interest payable and similar charges 1999 1998 1998 Alternative basis £000 £000 £000 On loans not wholly repayable within 5 years 1,083 1,349 616 On loans wholly repayable within 5 years 1,908 701 329 On bank overdrafts - 41 21 On convertible unsecured loan stock 272 - - Finance charges payable in respect of hire purchase agreements 15 3 1 Amortisation of issue costs of loan stock 83 - - ------ ------ ----- 3,361 2,094 967 Transfer to cost of investment and development properties (1,735) (542) (240) ------ ------ ----- 1,626 1,552 727 Share of interest payable by joint venture 81 - - ------ ------ ----- 1,707 1,552 727 ====== ====== ===== 7 Taxation 1999 1998 1998 Alternative basis £000 £000 £000 UK corporation tax at 30% (1998: 31%) 373 263 263 Tax relief for capital allowances on non-depreciated property (179) (119) (119) Tax relief on capitalised interest(194) (87) (87) ------ ------ ----- - 57 57 Adjustment relating to an earlier year (7) - - Movement in deferred taxation - (66) (66) ------ ------ ----- (7) (9) (9) ====== ====== ===== 8 Dividends 1999 1998 1998 Alternative basis £000 £000 £000 Equity Interim dividend paid of 1.95p per £1 ordinary share - 100 100 Final dividend proposed of 1.05p per 25p ordinary share 266 - - ------ ------ ----- 266 100 100 ====== ====== ===== The proposed final dividend of 1.05 pence net per ordinary share will be paid on 16 May 2000 to holders of ordinary shares on the register at the close of business on 31 March 2000. 9 Earnings per share Basic earnings per share of 3.69p (1998 alternative basis: 2.24p; 1998: 2.21p) have been calculated on earnings of £849,000 (1998 alternative basis: £589,000; 1998: £236,000) divided by the average number of ordinary shares in issue during the year of 22,983,112 (1998 alternative basis: 26,315,661; 1998: 10,694,137). Diluted earnings per share of 3.62p (1998 alternative basis: 2.24p; 1998: 2.20p) have been calculated on earnings of £849,000 (1998 alternative basis: £589,000; 1998: £236,000) and after including the effect of all dilutive potential ordinary shares, which increase the average number of shares to 23,457,981 (1998 alternative basis: 26,335,387; 1998: 10,745,452). 10 Reconciliation of operating profit to operating cash flows 1999 1998 1998 Alternative basis £000 £000 £000 Operating profit 2,142 1,689 856 Depreciation and amortisation charges 209 196 22 Decrease/(increase) in stocks 1,714 (2,104) (383) (Increase)/decrease in debtors (3,198) (1,535) 1,069 Increase in creditors and provisions 5,675 2,846 2,708 Loss on sale of fixed assets 7 - - ------ ------ ----- Net cash inflow from operating activities 6,549 1,092 4,272 ====== ====== ===== 11 Analysis of cash flows 1999 1998 1998 Alternative basis £000 £000 £000 Returns on investment and servicing of finance Interest received 341 113 121 Interest paid (3,263) (2,094) (966) Interest element of finance lease rental payments (15) - (1) ------ ------ ----- Net cash flow from returns on investment and servicing of finance (2,937) (1,981) (846) ====== ====== ===== Capital expenditure and financial investment Purchase of tangible fixed assets (29,704) (12,248) (9,863) Purchase of intangible fixed assets (9) - - Disposal of tangible fixed assets - 7,850 - Purchase of investment in joint venture - (50) - ------- ------- ------ Net cash flow from capital expenditure and financial investment (29,713) (4,448) (9,863) ======= ======= ====== Acquisitions and disposals Purchase of subsidiary undertakings - (1,431) (3,045) Net cash acquired with subsidiaries - - 158 ------- ------- ------ Net cash flow from acquisitions and disposals - (1,431) (2,887) ======= ======= ====== Financing Issue of share capital 4,292 - - Issue of convertible loan stock 5,406 - - Movement on build facilities 12,919 8,053 7,511 Movement on bank loans 2,527 1,726 4,722 Capital element of hire purchase payments (92) (47) 138 ------ ------ ------ Net cash flow from financing 25,052 9,732 12,371 ====== ====== ======

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