1H22 - Strong results and positive outlook27 Jul '22
Great set of results for 1H22 from UTG - showing a very strong bounce back from Covid and a very positive outlook. Just what you want to see in these uncertain times. However.....
So, why on earth did CEO Richard Smith have to put a negative slant upfront on the RNS!! With Mr Market in a particularly skittish mood he didn't need to give him an invitation to focus on the negatives rather than the positives. He said:
"We have seen continued momentum in the first half, as earnings and dividends have grown strongly and reservations for the 2022/23 academic year are now ahead of pre-pandemic levels.
"Our business model offers inflationary protection but, like others, we are not immune from the impact of rising costs and interest rates. We are also very conscious of the current cost of living pressures facing students and parents. Our customer offer provides students with significant savings on their bills, as part of a simple, fixed price all-inclusive rental payment.
"Despite increased economic uncertainty, we remain confident in our ability to deliver significant growth over the medium to long term. Demand for Higher Education has proven to be resilient through economic cycles and we have significant opportunities for growth through our alignment to the strongest universities and by leveraging our best-in-class platform ."
The irony is that UTG have hedged their utility costs out to 2024! They have also managed their salary costs, have LTV at a very conservative 30% and debt profile that will minimise the impact of rising interest rates.
Looking beyond that the figs are great:
'Earnings and dividend ahead of their pre-pandemic peak'
>> Adjusted earnings up 32% to £96.0 million (H1 2021: £72.6 million)
>> Adjusted EPS up 32% to 24.0p (H1 2021: 18.2p)
>> IFRS profit before tax of £334.1 million (H1 2021: £ 130.4 million), driven by adjusted earnings and a valuation gain of £214.9 million in the period (H1 2021: £54.3 million)
>> EPRA NTA per share of 940p, up 7% (31 December 2021: 882p)
>> IFRS NAV per share up 8% to 948p (31 December 2020: 880p)
>> Total accounting return of 8.3% for H1 (H1 2021: 3.9%)
>> Interim dividend of 11.0p up 70% (H1 2021: 6.5p), targeting 80% pay-out of adjusted EPS for full year.