Interim Results
Unite Group PLC
18 September 2002
Date: 18 September 2002
On behalf of: The UNITE Group plc ('UNITE')
Embargoed until: 0700hrs
The UNITE Group plc
INTERIM RESULTS 2002
The UNITE Group plc, the UK's leading specialist provider of student and NHS key
worker accommodation services, today announced its interim results for the six
months ended 30 June 2002. The highlights were:
• 7,613 organic beds secured for development bringing the total to 25,073
• Completion value of 25,073 organic beds estimated at £954m (31/12/01: £604m)
• Net assets grew to £217.3m (291p per share) from £202.1m (297p per
share) at year end 2001
• Gross profits increased to £11.2m (2001: £6.5m)
• Loss on ordinary activities before tax and exceptionals of £4.9m
(2001: £2.5m) representing the impact of the growing development pipeline
• £273.5m raised through securitisation in April 2002, releasing £39m
for investment
• £57.5m raised through placing and open offer in July 2002
• 95.3% occupancy levels during the period
• Peabody UNITE joint venture acquired and successfully integrated
• Development of a state-of-the-art modular manufacturing plant
• More selective approach on PPP projects adopted focusing on
maximising returns on investment
Commenting on the interim results, Geoffrey Maddrell, Chairman of UNITE, said:
'The last six months have been a period of intense activity for the Group. The
Group's infrastructure for growth is now fully in place, capital has been raised
and sustainable growth targets clearly set out. Due to the large number of
developments completing for the autumn term, second half performance is always
stronger than the first six months and we are confident of delivering strong net
asset value growth in the second half of the year.'
Enquiries to:
Nicholas Porter, Chief Executive Officer Tel: 020 7902 5055
Simon Bernstein, Chief Financial Officer
UNITE Group plc
Emma Kane, Chief Executive Tel: 020 7955 1410
Redleaf Communications Ltd Mob: 07876 338339
Interim Report 2002
Chairman's Statement
Introduction
During the six months to 30 June 2002, The UNITE Group plc has strengthened its
position as the UK's leading provider of student and key worker accommodation
services. We have secured a further 7,613 bed spaces for development and made
important strides in the establishment of a robust capital structure to fund
sustainable growth.
Net assets grew to £217.3 million (291 pence per share) from £202.1 million at
31 December 2001 (297 pence per share), whilst development profits from the
pipeline totalled £15.4 million for the six months (2001: £8.9 million), as our
roll out programme gathered pace. The continuing growth in our portfolio of
completed assets and the full consolidation of Peabody UNITE resulted in an
increase in gross profit for the six months to £11.2 million, compared to £6.5
million for the same period last year.
A crucial theme for the Group in 2002 has been the implementation of a
sustainable financing strategy. It is our intention to maximise shareholder
returns through using equity capital solely to fund the pipeline of
developments, where the returns are significant, rather than in holding assets
for the long term, where the returns are much lower.
It was, therefore, very encouraging that the Group was able to complete a
fundamental element of this strategy through the successful securitisation of
substantially all of its mature portfolio in April. In the process we raised
£273.5 million from the issue of bonds and released £39 million of capital for
reinvestment into the development pipeline. The Group achieved a 78 per cent
loan-to-value ratio on the bond issue; this implies a long term loan-to-cost
ratio of 100 per cent assuming the Group continues to achieve its targeted
levels of development profit. Over 50 per cent of the bonds, which were secured
on a portfolio of 47 properties (9,961 bed spaces), were rated AAA by Standard
and Poors. This was the first time this asset class has been securitised.
Of equal importance was the Group's successful £57.5 million equity raising in
August 2002. In order to capitalise on the depth and visibility of the Group's
pipeline, it was important to understand the extent to which further equity
capital would be available for commitment to new projects. Taking into account
the equity available within the Group the Board decided, as planned, to consult
its shareholders. The successful outcome of the placing and open offer, in
difficult market conditions, has given the Group a platform from which it can
continue to develop 8,500 beds per annum, without any further requirement for
equity capital envisaged.
In March 2002 UNITE acquired 100% control of the Peabody UNITE joint venture,
through which the Group's activities in London had previously been managed and
financed. The acquisition, which was financed through the issue of 6.8 million
new ordinary shares, fully-paid at 286.5 pence per share, has already been
successfully integrated into UNITE's regional network. Since the acquisition
was completed, the Group has secured 964 beds for development in London,
increasing the total number of completed and in development beds in the region
to 2,174.
Operationally, all areas have performed well during the period. Our pipeline of
organic schemes has increased the portfolio from 17,460 beds to 25,073 beds
whilst the anticipated development returns on these 7,613 new beds are well
ahead of expectations, with the average profit on cost expected to be 35 per
cent.
The Accommodation Services team is now fully prepared to bring a further 3,233
new beds on stream for our annual Autumn intake in the next few weeks and to
welcome over 14,000 customers during September and October. Reservations for
the forthcoming academic year stood at 93.6 per cent as at 16 September 2002.
The Group benefits from having a largely homogenous product and has capitalised
on the advantages of prefabricated bedroom and bathroom units over the past four
years. To capitalise further on this strategic advantage, and particularly in
addressing the market for affordable accommodation, we have recently relocated
our manufacturing facility to new and larger premises in Stroud. We are also
investing £4.9 million in new machinery to automate the fabrication process.
This new facility is scheduled to commence production in the fourth quarter of
2002, in line with plan.
Operations
The Portfolio
During the period to 30 June 2002, the Group secured 7,613 new organic beds for
development representing an increase in the portfolio of 44%. Furthermore, the
Group achieved financial close on two PPP projects, totalling 1,058 beds, where
it had been awarded preferred bidder status in 2001.
Following this activity the Group's secured portfolio was made up as follows:
Number of income generating beds: 10,880
Number secured or in development: 14,193
Total number of beds: 25,073
We are currently active in 30 prime locations across the UK. On completion of
the current build programme ten of these locations will comprise over 1,000 beds
and provide compelling opportunities for economies of scale.
Development Division
The completed value of the 25,073 organic beds currently completed or in
development is estimated to be approximately £954 million (31 December 2001:
£604 million). Of these, the development projects secured in the first half of
2002 are expected to deliver an average 35 per cent profit over total
development cost, a level well in excess of the Group's 25 per cent target.
Encouragingly, at 30 June 2002, the Group had secured, but not recorded, in
excess of £100 million of future development profits against its pipeline.
These uplifts are expected to be booked between now and the end of 2004.
The Group's substantial construction programme is running on schedule and to
budget, with a total of 3,233 new beds, across 12 properties, scheduled for
completion by 30 September 2002. These projects are expected to deliver net
asset value uplift in excess of £25 million in the second half. We have also
appointed seven partner contractors with whom we will work closely in the coming
years. At a run rate of 8,500 beds per annum, we expect to award approximately
£180 million of construction contracts to these partners over the next twelve
months.
On 13 September, UNITE announced that it had been unable to agree final terms
with the University of Sheffield, in respect of the proposed 30 year PPP
concession to which UNITE had been appointed preferred bidder in 2001. Following
detailed due diligence and extensive negotiation of a revised and reduced bid
we, in conjunction with the University, concluded that the level of risk
associated with maintaining and guaranteeing old, less economic bed stock would
be unacceptable against agreed returns and risk profiles.
In view of our experience with the University of Sheffield PPP project and the
considerable opportunities within our core business, the Board intends to adopt
a more selective approach to PPP contracts in the future. We shall restrict
involvement to those transactions where significant development activity is
required and, consequently, where most value can be added and best returns
achieved. UNITE will in future approach PPP opportunities through our regional
teams and has disbanded its centralised PPP bid team, resulting in annual
savings of £0.3 million.
Accommodation Services Division
For the period to 30 June 2002, 95.3 per cent of available rooms were occupied.
The Group expects to further improve upon this level in the forthcoming academic
year and at 16 September, 93.6 per cent of available beds had already been
reserved in advance (compared to 76.7 per cent at the same time in 2001). Prior
to the A Level clearing process, 73.8 per cent of direct let accommodation had
already been reserved, compared to 50.7 per cent in 2001. Importantly the rents
at which these reservations have been made are on average 4.3 per cent higher
than those charged in the previous year. Marketing for the 2003/04 academic year
begins in December 2002.
Financial Review
The first six months of 2002 saw substantial development of our balance sheet,
following the acquisition of the remaining 50 per cent stake in our London joint
venture Peabody UNITE, the equity issue which substantially funded that
acquisition and the securitisation of the Group's completed portfolio in April
2002. Furthermore, the development programme continued apace with ongoing
construction works on the 3,233 beds completing this autumn and the initial
stages of investment in the 7,613 new beds secured in the first half. As a
result, the value of investment and development properties increased by 46 per
cent to £545.5 million at 30 June (31 December 2001: £373.5 million) and gearing
increased to 160 per cent from 93 per cent at 31 December 2001.
The acquisition of Peabody UNITE has had a dual impact on Group turnover;
firstly the full inclusion of rental income from our London properties for half
of the period under review; and secondly revised accounting for development
activity undertaken on behalf of Peabody UNITE, which previously generated
profits for the Group. Overall, this contributed to a net increase in turnover
to £16.0 million, compared to £9.3 million for the first half of last year.
On 17 June 2002, the Group announced that it would be adopting UITF Abstract 34
in relation to pre-contract costs. As a result, costs relating to development
and PPP activity, which are incurred prior to the point of virtual certainty,
must now be charged to the profit and loss account and permanently written-off.
Consequently, some additional £7.5 million of development costs will be taken to
the profit and loss account this financial year, whilst development profits will
increase by a corresponding amount in the short term.
After absorbing the above changes, the Group incurred a loss on ordinary
activities before taxation, exceptional items and goodwill amortisation of £4.9
million in the six months to 30 June 2002 (six months to 30 June 2001: £2.3
million), reflecting the impact of the growing development pipeline on both our
development and investment activities.
The Group has adopted FRS 19 Deferred Tax in the period. However, the Group does
not expect to have any deferred tax liability in the medium term due to deferred
tax assets relating to internal development cost recharges exceeding the
deferred tax liabilities resulting from capitalised interest and capital
allowances.
As previously announced, the Group incurred certain exceptional costs and
goodwill amortisation relating to a number of specific transactions during the
period:
Firstly, following the decision not to proceed with the Sheffield PPP
concession, we have written off exceptional costs of £1.3 million.
Secondly, as announced at the time of securitisation, certain costs have been
incurred on the early termination of loans and related hedging instruments
repaid from the proceeds of the bond issue. These exceptional costs of £9.7
million are significantly outweighed by the benefits of the new financing which
is longer term, significantly lower cost (78 basis point saving) and has freed
up capacity with our bank lenders to fund future growth.
Finally, goodwill arising on the acquisition of both UniLodge last year and
Peabody UNITE in March 2002 has resulted in goodwill totalling £15.9 million.
The majority of this goodwill will be amortised over this and the next two
years, as net asset value uplift is achieved on the development pipelines taken
over by UNITE as part of these acquisitions. The total net asset value uplift
anticipated in relation to these acquisitions is currently £36.4 million,
significantly exceeding the amount of goodwill paid. Accounting standards
require us to expense the goodwill through the profit and loss account, although
the associated development profits will be taken to the revaluation reserve.
As a result of these matters, the Group has recorded an unusually large loss on
ordinary activities before taxation of £18.7 million resulting in a loss per
share of 25.9 pence. Excluding goodwill amortisation, exceptional items and
deferred tax, but including the impact of UITF Abstract 34, the Group recorded a
loss of 6.82 pence per share compared with a loss of 5.13 pence per share in the
first half of 2001.
The Group estimates that based on current assumptions, if it were to cease
acquiring new sites and simply build out those sites already contractually
secured, it would grow net asset value to 347 pence per share by the end of 2005
(assuming no growth in the underlying value of our portfolio of completed
assets). We now have the funding and infrastructure in place to continue our
development programme of 8,500 beds per annum, which will generate further
growth in net asset value.
Dividend
The Board recommends that the interim dividend is maintained at 0.83 pence per
share. As announced on 17 June 2002, the Board has decided to hold the current
total annual dividend payment at 2.5 pence per share until reported earnings
enable a progressive dividend policy to be resumed.
Key dates relating to the interim dividend are as follows:
Ex-Dividend Date - 16 October 2002
Record Date - 18 October 2002
Payment Date - 14 November 2002
UNITE team
In the first half of 2002, we continued to focus on developing our people,
processes and regional structures to meet the requirements of our growth
strategy. This included recruiting and training a team of high calibre
accommodation managers to run our newly completed properties for 2002 and
developing our Area Managers to deliver the required consistency and quality of
UNITE's products and services. UNITE has also established a comprehensive
induction and training programme specifically designed for new accommodation
managers, from which the first 17 have recently 'graduated' with success.
Outlook
University applications continue to rise year on year and the number of students
is at an all time high. The Group's infrastructure for growth is now fully in
place, capital has been raised and sustainable growth targets clearly set out.
Due to the large number of developments completing for the autumn term, second
half performance is always stronger than the first six months. Consequently, we
are confident of delivering strong net asset value growth in the latter half of
the year.
Following the successful issues of new capital, the Group has sufficient funding
in place to deliver its target of 8,500 beds each year and remains well placed
to realise its potential as a long term, non cyclical, growth business.
Geoffrey Maddrell
Chairman
18 September 2002
Consolidated balance sheet
at 30 June 2002
Unaudited Unaudited
Unaudited restated restated
30 June 2002 30 June 2001 31 Dec 2001
Note £'000 £'000 £'000
Fixed assets
Intangible assets 13,174 12,717 12,886
Tangible assets
Investment and development properties 4 545,541 251,486 373,532
Other fixed assets 17,680 5,208 7,921
Investments - 275 -
563,221 256,969 381,453
Joint venture undertaking 5
Share of gross assets - 41,912 51,159
Share of gross liabilities - (28,995) (37,950)
- 12,917 13,209
576,395 282,603 407,548
Current assets
Stock and work in progress 1,606 7,192 2,464
Debtors 22,923 26,113 33,371
Cash at bank and in hand 6,302 33,964 5,984
30,831 67,269 41,819
Creditors: amounts falling due within one year 6 (105,362) (54,211) (92,753)
Net current (liabilities)/assets (74,531) 13,058 (50,934)
Total assets less current liabilities 501,864 295,661 356,614
Creditors: amounts falling due after more than one year 7 (284,572) (118,735) (154,556)
Provisions for liabilities and charges - (644) -
Net assets 217,292 176,282 202,058
Capital and Reserves
Called up share capital 18,687 16,889 16,989
Share premium account 89,425 71,685 71,685
Merger reserve 40,177 40,177 40,177
Revaluation reserve 93,753 54,625 81,516
Profit and loss account (24,750) (7,094) (8,309)
Equity shareholders' funds 217,292 176,282 202,058
Net asset value per share 291p 261p 297p
Consolidated profit and loss account
for the six months to 30 June 2002
Unaudited Unaudited
Unaudited restated restated
6 months to 6 months to Year to
30 June 2002 30 June 2001 31 Dec 2001
£'000 £'000 £'000
Note
Group turnover and share of joint venture 16,377 10,109 26,312
Less: share of turnover of joint venture (414) (770) (1,813)
Group turnover - existing operations 14,698 9,339 24,499
- acquired operations 1,265 - -
8 15,963 9,339 24,499
Cost of sales (4,766) (2,868) (8,545)
Gross profit - existing operations 10,187 6,471 15,954
- acquired operations 1,010 - -
11,197 6,471 15,954
Administrative expenses - ordinary (8,526) (6,105) (12,471)
- exceptional 9 (1,303) - -
Goodwill amortisation (2,793) (3) (75)
Group operating (loss)/profit (1,425) 363 3,408
Share of results of joint venture 5 292 481 1,245
Profit/(loss) on disposal of investment properties 470 (50) 262
(Loss)/profit on ordinary activities before interest 8 (663) 794 4,915
and taxation
Net interest payable and similar charges - group - 10 (8,132) (2,585) (6,641)
ordinary
- exceptional 9 (9,705) - -
- joint venture 5 (249) (504) (1,167)
Loss on ordinary activities before taxation,
exceptional items and
goodwill amortisation (4,948) (2,292) (2,818)
Loss on ordinary activities before taxation (18,749) (2,295) (2,893)
Taxation 11 - 449 853
Loss on ordinary activities after taxation (18,749) (1,846) (2,040)
Dividends paid and proposed (897) (585) (1,825)
Retained loss for the financial period (19,646) (2,431) (3,865)
Earnings per share 12
Basic (25.85)p (4.13)p (3.63)p
Excluding goodwill amortisation and exceptional items (6.82)p (5.13)p (5.01)p
Diluted (25.70)p (4.04)p (3.58)p
Statement of total recognised gains and losses
for the six months to 30 June 2002
Unaudited Unaudited
Unaudited restated restated
6 months to 6 months to Year to
30 June 2002 30 June 2001 31 Dec 2001
£'000 £'000 £'000
Loss for the financial period (18,749) (1,846) (2,040)
Unrealised surplus on revaluation of properties 15,425 8,798 34,360
Unrealised surplus on revaluation of joint venture - 58 249
Unrealised profit on trading with joint venture 18 1,836 3,078
Total recognised gains and losses relating to the (3,306) 8,846 35,647
period
Prior year adjustment (as explained in note 3) (5,812) - -
Total gains and losses recognised (9,118) 8,846 35,647
Consolidated cash flow statement
for the six months to 30 June 2002
Unaudited Unaudited
Unaudited restated restated
6 months to 6 months to Year to
30 June 2002 30 June 2001 31 Dec 2001
£'000 £'000 £'000
Cash flow from operating activities 5,659 (5,768) (8,781)
Returns on investments and servicing of finance (15,113) (3,573) (8,325)
Taxation - (7) -
Capital expenditure and financial investment (92,135) (14,961) (83,075)
Acquisitions and disposals (1,518) (1,216) (3,620)
Equity dividends paid (1,231) (605) (1,190)
Cash outflow before management of liquid resources and
financing (104,338) (26,130) (104,991)
Financing
Issue of shares (net of costs) 2 38,088 38,188
Increase in debt 104,654 17,730 68,511
104,656 55,818 106,699
Increase in cash in the period 318 29,688 1,708
Reconciliation of net cash flow to movement in net debt
for the six months to 30 June 2002
Unaudited
Unaudited restated
Unaudited 6 months to Year to
6 months to 30 June 2001 31 Dec 2001
30 June 2002 £'000 £'000
£'000
Increase in cash in the period 318 29,688 1,708
Cash inflows from increase in debt financing (104,654) (17,731) (68,511)
Loan notes issued - (9,300) (9,300)
Loans acquired with subsidiaries (55,039) (31,864) (31,864)
New hire purchase contracts (27) (181) (528)
Amortisation of loan stock issue costs (60) (72) (143)
Movement in net debt in the period (159,462) (29,460) (108,638)
Net debt at beginning of the period (188,301) (79,663) (79,663)
Net debt at end of the period (347,763) (109,123) (188,301)
Note of consolidated historical cost profits and losses
for the six months to 30 June 2002
Unaudited Unaudited
Unaudited restated restated
6 months to 6 months to Year to
30 June 2002 30 June 2001 31 Dec 2001
£'000 £'000 £'000
Reported loss on ordinary activities before taxation (18,749) (2,295) (2,893)
Realisation of property revaluation gains of previous
years 487 38 256
Historical cost loss on ordinary activities before (18,262) (2,257) (2,637)
taxation
Historical cost loss for the year retained
after taxation and dividends (19,159) (2,393) (3,609)
Reconciliation of movement in shareholders' funds
for the six months to 30 June 2002
Unaudited Unaudited
Unaudited restated restated
6 months to 6 months to Year to
30 June 2002 30 June 2001 31 Dec 2001
£'000 £'000 £'000
Loss attributable to ordinary shareholders (18,749) (1,846) (2,040)
Dividends paid and proposed (897) (585) (1,825)
(19,646) (2,431) (3,865)
Net surplus on revaluations 15,442 10,760 37,870
New share capital subscribed (net of issue costs) 19,438 82,924 83,024
Net addition to shareholders' funds 15,234 91,253 117,029
Opening equity shareholders' funds (as restated) 202,058 85,029 85,029
Closing equity shareholders' funds 217,292 176,282 202,058
Notes to the Interim Report
1 Basis of preparation
The Interim Results do not constitute statutory accounts within the meaning of
S240 of the Companies Act 1985.
The Interim Report is prepared on the basis of the accounting policies set out
in the most recent set of annual Financial Statements. During the period, the
Group has adopted the requirements of Financial Reporting Standard 19 and UITF
Abstract 34, as detailed in note 3.
The Interim Report will be sent to all shareholders in September 2002. Copies
will be available to the public from the Company's registered office at Lawrence
House, Lower Bristol Road, Bath.
2 Goodwill
On 13 March 2002 the Group took full control of its London joint venture by
acquiring Peabody Trust's 50% interest in Peabody UNITE plc for a consideration
(including the cost of the acquisition) of £16.2m, satisfied by the issue of
shares with a value of £14.6m and £1.6m payable in cash. In addition, a further
£4.8m was paid to settle the joint venture's indebtedness to Peabody Trust by
the issue of further shares. The fair value of the net assets acquired has been
provisionally assessed at £13.1m giving rise to £3.1m of goodwill.
3 Prior year adjustment
During the period the Group has adopted UITF Abstract 34: Pre-contract costs.
As a result, in respect of development activity, costs incurred prior to
contracts being exchanged will be expensed through the profit and loss account
as incurred. Costs incurred following exchange of contracts will continue to be
attributed directly to the cost of the asset. Bidding costs relating to
PPP-type contracts which are incurred prior to Preferred Bidder status being
achieved will be expensed through the profit and loss account as incurred.
The results of the prior periods have been restated on the basis of this new
accounting policy, which causes more costs to be expensed in the profit and loss
account but greater revaluation gains to occur, as the cost of assets is
reduced.
There is a timing difference between the expensing of costs and recognition of
revaluation gains which amounts to £5.0m at 31 December 2001 and has been
treated as a prior year adjustment.
The Group has also adopted the requirements of Financial Reporting Standard 19:
Deferred Tax, which requires provision for deferred tax on all timing
differences. Timing differences existed at 31 December 2000 giving rise to a
deferred tax liability at this date of £853,000. These timing differences had
reversed by 31 December 2001 such that no provision for deferred tax is required
at that date or at 30 June 2002. The comparative figures have been restated
accordingly giving rise to both the appropriate balance sheet adjustments and a
tax credit in the profit and loss account in 2001.
4 Investment and development properties
Properties
Completed Developments in held for future
developments progress development Total
£'000 £'000 £'000 £'000
Cost or valuation
At 1 January 2001 288,620 69,539 18,407 376,566
Prior year adjustment - (2,379) (655) (3,034)
At 1 January 2002 - as restated 288,620 67,160 17,752 373,532
Additions - acquisitions 73,460 30,939 - 104,399
- other 5,658 34,862 13,885 54,405
Transfers 21,192 (11,519) (9,673) -
Disposals (2,220) - - (2,220)
Revaluations - 5,829 9,596 15,425
At 30 June 2002 386,710 127,271 31,560 545,541
At 30 June 2001 - restated 184,840 58,328 8,318 251,486
At 31 December 2001 - restated 288,620 67,160 17,752 373,532
5 Joint venture undertaking
Unaudited
30 June 2002
£'000 £'000
Group
At beginning of period - as previously reported 13,302
Prior year adjustment (see note 3) (93)
At beginning of period - as restated 13,209
Share of operating profit until acquisition 292
Share of interest payable until acquisition (249)
Share of retained profit until acquisition 43
Total 13,252
Acquisition during the period (13,252)
At end of period -
6 Creditors: amounts falling due within one year
Unaudited Unaudited Audited
30 June 2002 30 June 2001 31 Dec 2001
£'000 £'000 £'000
Build loans and other short term financing 71,398 27,035 42,354
Other creditors 33,964 27,176 50,399
105,362 54,211 92,753
7 Creditors: amounts falling due after more than one year
Unaudited Unaudited Audited
30 June 2002 30 June 2001 31 Dec 2001
£'000 £'000 £'000
Long term borrowings 282,036 116,051 151,931
Other creditors 2,536 2,684 2,625
284,572 118,735 154,556
8 Segmented analysis of operations
Unaudited Unaudited
Unaudited restated restated
6 months to 6 months to Year to
30 June 2002 30 June 2001 31 Dec 2001
£'000 £'000 £'000
Turnover
Investment activities
Existing operations 12,878 5,036 15,219
Acquired operations 1,265 - -
14,143 5,036 15,219
Development and corporate activities
Existing operations 1,820 4,303 9,280
Total
Existing operations 14,698 9,339 24,499
Acquired operations 1,265 - -
15,963 9,339 24,499
Profit before interest and tax
Investment activities 7,596 3,367 10,117
Development and corporate activities (8,259) (2,573) (5,202)
(663) 794 4,915
It is not possible to identify the operating profit attributable to acquired
operations as the administration function of the acquired entity has been merged
with those of the Group and cannot be separated.
9 Exceptional items
The exceptional cost of £1,303,000 comprises bid costs relating to the Sheffield
PPP project incurred since the Group's appointment as Preferred Bidder. As this
project is no longer going to proceed, these costs have been expensed to the
profit and loss account in accordance with the Group's accounting policy, but
were unusually large due to the size and complexity of the proposed project.
The exceptional costs of £9,705,000 comprise costs associated with the early
termination of loans and related hedging instruments as a result of the
securitised bond issue.
10 Interest
Unaudited Unaudited Audited
6 months to 6 months to Year to
30 June 2002 30 June 2001 31 Dec 2001
£'000 £'000 £'000
Bank loans and overdrafts 4,797 3,374 8,532
Interest on other loans 4,718 254 847
9,515 3,628 9,379
Transfer to cost of investment and development
properties (1,217) (931) (2,178)
8,298 2,697 7,201
Less: interest receivable (166) (112) (560)
Net interest payable 8,132 2,585 6,641
11 Taxation
There is no corporation tax charge in the period due to the availability of
capital allowances and tax losses to offset against the taxable profits accrued.
The tax credit in the prior period represents the release of the deferred tax
provision created at 31 December 2000 by restatement for FRS19.
12 Earnings per Share
Basic earnings per share has been calculated using a weighted average number of
shares of 72,531,971 (2001 interims - 44,699,277; 2001 final - 56,243,133) as
follows:
Earnings EPS
After goodwill Before goodwill After goodwill Before goodwill
amortisation and amortisation amortisation amortisation
deferred tax and deferred and deferred and deferred
tax tax tax
£'000 £'000 pence pence
Period ended 30 June 2002
Basic earnings (18,749) (15,956) (25) (22)
Bond issue - loan cancellation costs 9,705 9,705 13 13
PPP bid costs written off 1,303 1,303 1 1
Prior to exceptional costs (7,741) (4,948) (10) (6)
Period ended 30 June 2001
Basic earnings (1,846) (2,292) (4) (5)
Year end 31 December 2001
Basic earnings (2,040) (2,818) (3) (5)
On a diluted basis the weighted average number of ordinary shares was 72,954,269
(2001 interim - 45,726,249; 2001 final - 56,941,757).
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Friday, 17th May 2024
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