(Alliance News) - Unite Group PLC on Wednesday reported a swing to an annual loss for 2019 due the impairment of goodwill and intangibles following its acquisition of Liberty Living, even though Unite's underlying performance was strong.
For the year, the student accommodation provider reported a pretax loss of GBP101.2 million, compared to a profit of GBP245.8 million the year before.
Unite said the swing was caused mainly by an impairment of GBP384.1 million, resulting from the share component of its GBP1.4 billion acquisition of Liberty Living Group, which was completed in November.
As part of the acquisition, London-based Unite issued 72.6 million consideration shares to Canada Pension Plan Investment Board, giving CPPIB a 20% stake in Unite.
Excluding exceptional items, pretax profit rose by 23% to GBP305.3 million. Rental income increased by 14% to GBP213.9 million from GBP188.3 million in 2018, driven by new openings and a one-month contribution from Liberty Living.
The group's net asset value as at December 31 increased by 8.0% to 853 pence per share from 790p the same date the prior year. Unite's property portfolio value at the end of 2019 rose by 76% year-on-year to GBP5.22 billion from GBP2.97 billion, driven by Liberty Living and increased valuations.
Unite declared a final dividend of 22.95 pence per share, bringing the total payout to 33.20p, a 14% rise from 29.00p the year before.
"2019 was a successful and transformational year for Unite. We made good progress against all of our key metrics and continued to deliver meaningful growth in our recurring earnings. We also leveraged our best-in-class operating platform to complete the acquisition of Liberty Living's 24,000-bed portfolio. Our strong results remain underpinned by the quality of our value-for-money product and the strength of our long-term relationships with Universities," said Chief Executive Richard Smith.
"The outlook for the business remains strong. Reservations for the 2020-21 academic year are in line with record levels, supporting our like-for-like rental growth guidance of 3.0% to 3.5% through a combination of further utilisation enhancements and value-driven price increases. Together with our development and University partnership pipeline of over 5,000 beds, this provides high visibility over sustainable earnings growth and we maintain our positive outlook," Smith added.
Shares in Unite were down 1.2% at 1,256.00 pence early Wednesday in London.
By Dayo Laniyan; dayolaniyan@alliancenews.com
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Unite (UTG)