PRELIMINARY RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2017 1
AGENDA OVERVIEW AND HIGHLIGHTS FINANCIAL RESULTS STRATEGIC UPDATE + DEVELOPMENT AND TRADING PORTFOLIO + INVESTMENT PORTFOLIO + SPECIALIST PLATFORMS SUMMARY APPENDICES + APPENDIX 1: OVERVIEW + APPENDIX 2: FINANCIALS + APPENDIX 3: PORTFOLIO STATS + APPENDIX 4: ECONOMIC CHARTS 2
OVERVIEW AND HIGHLIGHTS 03/04 – OVERVIEW AND HIGHLIGHTS 05/14 – FINANCIAL RESULTS 14/31 – STRATEGIC UPDATE 32/33 – SUMMARY 34/61 – APPENDICES 3
FY2017 HIGHLIGHTS STRONG + £35m of development and trading gains (in line with guidance) with £23.5m secured in H2 PERFO RFORM RMAN ANCE CE + Basic NAV of 278p per share – after payment of FY2016 dividend IN H2 + Total dividends of 8.7p per share including a declared supplemental dividend of 2.8p per share, to be paid in June 2017 + Investment portfolio valuation decline of £6.8m – stable in H2 + Four major PPP projects won with a GDV of over £1.5bn – potential to realise PORTFOLIO profits in excess of £90m from FY2020 STRENGTHENED + Investment portfolio transition underway – £18m of non-core assets sold in TO DRIVE FY2017 FUTURE + Two specialist platforms created: JVs with Proprium Capital Partners and Colony NorthStar GROWTH + Good visibility on restated £65-70m development & trading gains in FY2018 Targeting a post-tax return of 12% and a minimum of £150m of development and trading gains over 3 years 03/04 – OVERVIEW AND HIGHLIGHTS 05/14 – FINANCIAL RESULTS 14/31 – STRATEGIC UPDATE 32/33 – SUMMARY 34/61 – APPENDICES 4
FINANCIAL RESULTS 03/04 – OVERVIEW AND HIGHLIGHTS 05/14 – FINANCIAL RESULTS 15/31 – STRATEGIC UPDATE 32/33 – SUMMARY 34/61 – APPENDICES 5
FY2017 PERFORMANCE FY2017 FY2017 FY2016 £35.0m Development and trading gains £51.1m £347.6m (1) Basic NAV £363.3m 278p (1) Basic NAV per share 291p £0.4m (2) Profit before tax £25.8m 5.9p Dividend per share (in respect of period reported) 5.9p 2.8p 2.8p Supplemental dividend per share declared (1) 8.0p £120.9m Net debt £161.4m 34.8% Gearing 44.4% (1) After payment of supplemental dividend (£10.0 million/8p per share) – declared for FY2016 and paid in June 2016 (2) Before exceptional item relating to serviced office business (£2.1m) 03/04 – OVERVIEW AND HIGHLIGHTS 05/14 – FINANCIAL RESULTS 15/31 – STRATEGIC UPDATE 32/33 – SUMMARY 34/61 – APPENDICES 6
FY2017: DEVELOPMENT AND TRADING GAINS Fore recast st (1 (1) ) Realise sed Projec roject t name me FY17 gains FY17 gains Value tr trigger Dublin: £4-5m £4m Trading: entire building let triggering a profit payment The Vertium Building entitlement £8m £5m Trading: sale of Percy Place and further commercial and Other residential units across two projects Birmingham International Park (UK) £8m £8m Trading: planning secured and site disposal completed Elizabeth House (LCR*) £2-6m £5m Trading: disposal of site completed pre planning Powergen site, Ashford (LCR*) £4m £4m Trading: disposal of site completed post planning Trading: disposal of Phase 1 of site completed post Springfield Park, Maidstone (LCR*) £2-4m £2m planning Other (8 projects) £8m £7m Trading: smaller projects (profit below £2m) Guidance £35-40m £35m * London City Region: an area within a one hour’s commute of Central London (1) Per guidance (October 2016) 03/04 – OVERVIEW AND HIGHLIGHTS 05/14 – FINANCIAL RESULTS 15/31 – STRATEGIC UPDATE 32/33 – SUMMARY 34/61 – APPENDICES 7
ANTICIPATED GAINS TO FY2020 3 - 5 year target £50m pa £m 12% post-tax total return* 80 £155 - £180m (from existing projects) 70 65-70 60 50-60 50 40-50 40 30 51 46 20 35 10 0 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 Realised gains Revised guidance (April 2017) *Total returns: the growth in our basic net asset value including dividends 03/04 – OVERVIEW AND HIGHLIGHTS 05/14 – FINANCIAL RESULTS 15/31 – STRATEGIC UPDATE 32/33 – SUMMARY 34/61 – APPENDICES 8
OUTLOOK FOR FY2018: DEVELOPMENT AND TRADING GAINS Forec recast (1) Projec roject t name me FY18 gains H1/1 H1 /18 H2 H2/1 /18 Value tr trigger Trading: let 90% of office space; 43% let or under offer; 12 Hammersmith Grove (LCR*) – £9-11m £9-11m negotiations on further 31% Scheme A, Brighton (LCR*) – £8-10m £8-10m PPP: completion of funding strategy PPP: surplus arising from either disposal of the site Residential Scheme A (LCR*) – £7-10m £7-10m (post planning) or from development Trading: surplus arising from either disposal of the site Residential Scheme B (LCR*) – £6-10m £6-10m (post planning) or from development Trading: surplus arising from disposal of 2-3 sites Wind Farm Portfolio (UK) £6-8m £3-4m £3-4m (planning secured on one project) PPP: entering into a funding agreement to develop the Mill Green, Cannock (UK) – £5-6m £5-6m scheme (planning consent secured) Trading: surplus arising from either disposal of the site Ashford (LCR*) £3-4m £1-2m £2m or from development (planning consent secured) Trading: surplus arising from disposal of the next The Old Vinyl Factory, Hayes (LCR*) – £2-3m £2-3m residential phase (post planning); BTR potential Trading: disposal of 16 town houses that were to be Telegraph Way, Greenwich (LCR*) – £2-4m £2-4m constructed for U+I as part of the original land transaction Trading: smaller projects with profit below £2m per Other (12 projects) £15m £6m £9m project Guidance range £65-70m £10-12m £55-58m * London City Region: an area within one hour’s commute of Central London (1) Per guidance (October 2016) 03/04 – OVERVIEW AND HIGHLIGHTS 05/14 – FINANCIAL RESULTS 15/31 – STRATEGIC UPDATE 32/33 – SUMMARY 34/61 – APPENDICES 9
FY2019 & FY2020: MAJOR DEVELOPMENT AND TRADING PROJECTS FY2019 Value tr trigger Charlton Riverside, Greenwich (LCR*) Investment asset: realisation of first phase of site PPP: refinancing to release value from early phases of commercial Harwell, Oxfordshire (LCR*) development Trading: practical completion of pre-sold residential units currently under Valentine House, Ilford (LCR*) construction Guidance: major projects contribute c40% of forecast development & trading gains of £40-50m (1) (from existing projects) FY2020 Value tr trigger Morden Wharf, Greenwich (LCR*) PPP: realisation of first phase of site (post planning) from within JV Scheme B, Brighton (LCR*) PPP: practical completion of pre-funded mixed-use development Trading: surplus arising from either disposal of the site (post planning) or from Pincent’s Hill, Reading (LCR*) development Guidance: major projects contribute c45% of forecast development & trading gains of £50-60m (1) (from existing projects) * London City Region (1) Per guidance (April 2017) 03/04 – OVERVIEW AND HIGHLIGHTS 05/14 – FINANCIAL RESULTS 15/31 – STRATEGIC UPDATE 32/33 – SUMMARY 34/61 – APPENDICES 10
EPRA NAV VALUATION + EPRA valuation exercise for development and trading assets undertaken U+I’s business model frequently involves either not owning land (e.g. PPP schemes) + or contractual profit shares (e.g. 12 Hammersmith Grove) + Only 30% of assets qualify to be valued with an uplift of £13.1 million and an EPRA NAV of 288p per share + 80% of development and trading guidance (FY2018-2020) result from assets which are not valued + Development and trading guidance most reliable measure of value within portfolio Prop roport rtion of f ass ssets ts Change in va valued Valuati tion 43% £15.5m Directly owned portfolio 20% (£2.4m) Assets held in JVs 30% £13.1m Total 03/04 – OVERVIEW AND HIGHLIGHTS 05/14 – FINANCIAL RESULTS 15/31 – STRATEGIC UPDATE 32/33 – SUMMARY 34/61 – APPENDICES 11
DEBT FINANCE FY2017 FY2016 £m £m 172.1 Gross debt 213.3 (51.3) Cash (51.8) 120.8 Net debt 161.5 34.8% Gearing 44.4% 44.0 Share of net debt in joint ventures 43.6 164.8 Net debt including joint ventures 205.1 47.4% Gearing including joint ventures 56.4% Analysis of gross debt (excluding JVs) 41.6% Fixed rate 35.1% 29.8% Capped / SWAP 30.1% 28.6% Floating rate 34.8% 4.6% Weighted average interest rate 4.9% 4.8 years Weighted average maturity 4.5 years 03/04 – OVERVIEW AND HIGHLIGHTS 05/14 – FINANCIAL RESULTS 15/31 – STRATEGIC UPDATE 32/33 – SUMMARY 34/61 – APPENDICES 12
DEBT MATURITY PROFILE £m 80 70 70 60 60.7 60 50 50 20.9 40 40 68.4 30 30 20 40.1 20 39.8 10 10 2.6 2.3 0 0 Feb-18 Feb-19 Feb-20 Feb-21 Feb-22 Feb-23 Feb-24 Feb-25 Feb-26 Corporate Drawn - Investment Drawn - Development *Terms of refinance agreed ** On Balance Sheet 03/04 – OVERVIEW AND HIGHLIGHTS 05/14 – FINANCIAL RESULTS 15/31 – STRATEGIC UPDATE 32/33 – SUMMARY 34/61 – APPENDICES 13
TARGETING BUSINESS EFFICIENCIES IN FY2018 Efficiency Gains Additional revenue (secured) FY2018 FY2018 £m £m Reduction in recurring overhead (1) 1.0 Office repositioning platform 0.6 Platform management fees 1.9 Income producing platform 0.2 Offsetting costs (0.9) Mayfield (Manchester) 0.2 Additional revenue (2) 1.0 Net management fees (2) 1.0 2.0 (1) Targeting a 5% reduction in FY2018 (2) Across specialist platforms + Reduction in recurring overhead (from FY2018) Additional revenue – net management fees from specialist platforms and major schemes + 03/04 – OVERVIEW AND HIGHLIGHTS 05/14 – FINANCIAL RESULTS 15/31 – STRATEGIC UPDATE 32/33 – SUMMARY 34/61 – APPENDICES 14
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