PRELIMINARY RESULTS FOR THE YEAR ENDED …...1 PRELIMINARY RESULTS FOR THE YEAR ENDED 29.02.16 FOR THE YEAR ENDED 29.02.16 FOR THE YEAR ENDED 29.02.16 FOR THE YEAR ENDED 4 OUR YEAR

1

PRELIMINARY RESULTS

FOR THE YEAR ENDED

29.02.16

FOR THE YEAR ENDED

29.02.16FOR THE YEAR ENDED

29.02.16

FOR THE YEAR ENDED

29.02.16

2

OVERVIEW AND HIGHLIGHTS

08/14 – FINANCIAL RESULTS 15/35 – OPERATING REVIEW 36/37 – SUMMARY 38/60 – APPENDICES02/07 – OVERVIEW AND HIGHLIGHTS

3

OUR VISION IS TO CREATE

LONG-LASTING SOCIAL AND

ECONOMIC CHANGE

FOR THE COMMUNITIES IN

WHICH WE BUILD AND

SUSTAINABLE VALUE FOR

OUR SHAREHOLDERS


4

OUR YEAR HAS DELIVERED A

NEW COMPANY, RECORD

GAINS AND CONTINUED NAV

GROWTH


5

FY2016 HIGHLIGHTS


6

RECORD GAINS AND

CONTINUED NAV

GROWTH

£51m of development and trading gains realised – 11.8% increase

+ 5.4% increase in EPRA NAV per share to 291p

SUPPLEMENTAL

DIVIDEND DECLARED

8.0 pence per share to be paid from strong cash flow

+ Interim and final dividend of 5.9 pence per share paid during the year

+ New dividend policy to provide greater visibility on shareholder returns

DELIVERING

STRATEGIC

INITIATIVES

To position business for long-term growth

+ Focus on larger regeneration projects

+ Repositioning investment portfolio to drive better value

+ Building specialist platforms

FY2016 HIGHLIGHTS


7

27

46

51

42

72

63

0

20

40

60

80

FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019

Realised gains (£'m) Expected gains (£'m)

53

61

Previous guidance (£’m)

54

RECORD GAINS AND GOOD VISIBILITY ON FUTURE YEARS

Aggregate expectations for development and trading gains unchanged for next 2 years

£114m

3 - 5 year target

+ £50m plus pa

+ 12% post-tax total return*

*Total returns: the growth in our basic net asset value including dividends.


8

FINANCIAL RESULTS


9

FY2016 PERFORMANCE

FY 2016 FY 2015

Development and trading gains £51.1m £45.7m

EPRA Net Asset Value (NAV) £363.5m* £345.6m

EPRA NAV per share 291p* 276p

Total declared dividends per share 13.9p 13.9p

EPRA Earnings per share 17.1p 23.9p

Profit before tax £25.8m £34.8m

Total return 7.2% 10.0%

Balance sheet gearing 44.4% 36.3%

*Before payment of £10.0m (8.0 pence per share) of supplemental dividend – to be paid on 17th June 2016


10

MOVEMENT IN EPRA NAV THROUGH THE PERIOD

291

17

12

2

6

10

41

1

276

270

280

290

300

310

320

330

EPRA NAVFeb 2015

Contributionfrom

invesmentproperty

Contributionfrom

developmentand trading

Operatingcosts

Net interestcosts

Taxation Ordinarydividend

Other EPRA NAVFeb 2016

NOTE: Development and trading assets not revalued, held at lower of book cost or net realisable value.


11

DEBT FINANCE

FY2016

£’m

FY2015£’m

Gross debt 213.3 205.0

Cash (51.8) (79.3)

Net debt 161.5 125.7

Gearing 44.4% 36.3%

Share of net debt in joint ventures 43.6 46.8

Net debt including joint ventures 205.1 172.5

Gearing including joint ventures 56.4% 49.8%

Analysis of gross debt (excluding JVs)

Fixed rate 35.1% 44.6%

Capped / SWAP 30.1% 31.0%

Floating rate 34.8% 24.4%

Weighted average interest rate 4.9% 5.4%

Weighted average maturity 4.5 years 5.4 years


12

DEBT MATURITY PROFILE

36.6

28.3

11.4 2.6

70.6

32.6

33.9

0

10

20

30

40

50

60

70

80

0

10

20

30

40

50

60

70

Feb-17 Feb-18 Feb-19 Feb-20 Feb-21 Feb-22 Feb-23 Feb-24 Feb-25 Feb-26

Corporate (£'m) Drawn - Investment (£'m) Drawn - Development (£'m)

NB: £7.6m of debt has been extended to 04/2017. £27.2m has been repaid following sales at Deptford.


13

NEW DIVIDEND POLICY TO CREATE GREATER VISIBILITY ON SHAREHOLDER

RETURNS

DEVELOPMENT +

TRADING GAINS

CASH PROFIT

NET FREE

CASH FLOW

NET

FINANCE

COST

ORDINARY

DIVIDENDS

OVERHEAD

SHORTFALL

CORPORATION

TAX

REINVESTREDUCE

DEBT

RETURN

CAPITAL

Ordinary dividend:

Fixed + recurring Supplemental dividend:

Paid from net free cash flow –

proportion intended to be

broadly similar to the

proportion paid in April 2015

(48%)/June 2016 (46%)

Announced alongside FY

results


14

FINANCIAL HIGHLIGHTS

Record gains delivered and clear visibility on 2-year pipeline

Target 12% post-tax return and over £50m of development and trading gains pa within 3 – 5 years

Strong balance sheet and focus on capital efficiency


15

OPERATING REVIEW


16

MIXED-USE

REGENERATION

Creating places where people can thrive

IN THREE CORE

MARKETS

London City Region, Manchester and Dublin

TO DRIVE

SUSTAINABLE

RETURNS

Our business model is designed to deliver a 12% post-tax total return on a consistent basis

OUR FOCUS


17

CREATING

PLACES

U+I: AN INTEGRATED PORTFOLIO

DEVELOPMENT AND

TRADING PORTFOLIO

63%

Of gross assets*

£359m

Capital Value

INVESTMENT

PORTFOLIO

37%

Of gross assets*

£212m

Capital Value

Objectives

Generate profit from

regeneration activities.

Key value drivers

Quality of place

Arbitrage/mispricing

Planning gain

Objectives

Drive recurring income streams.

Add value and contribute to NAV growth.

‘Warehouse’ longer-term development

opportunities.

Capture the value uplift of our completed

regeneration projects (‘Greenhouse’).

Key value drivers

Improve tenant mix and rental tone.

Asset management including development.

*Group share where appropriate


18

FEWER, LARGER

PROJECTS

To drive focus and better returns

+ 2 new PPP projects won with a GDV of over £450m

+ £335m of sales during the year – over 20 projects

+ Increasing profit per project over 3 year period

REPOSITIONING

INVESTMENT

PORTFOLIO

To drive better returns

+ £10.7m of assets ‘rationalised’ during the year plus a further c.£70m in the

short to medium-term

+ c.£130m of assets to be optimised

+ Early progress to build Greenhouse and Warehouse portfolios

SPECIALIST

PLATFORMS

To improve returns, efficiency and delivery options for our projects

+ Heads of terms signed with a major UK-based capital partner to create initial

off-balance sheet Build to Rent platform

FY2016 HIGHLIGHTS: ON TRACK WITH STRATEGIC INITIATIVES


19

DEVELOPMENT AND TRADING

PORTFOLIO


20

A BALANCED APPROACH TO DEVELOPMENT AND TRADING

MIXED-USE REGENERATION

−PPP PROJECTS AND LARGER MIXED-

USE PROJECTS (2-5 YEARS)

−MAX £15m EQUITY IN ANY ONE

PROJECT BUT HIGH UPSIDE

POTENTIAL IN ALL

−PLANNING GAIN IS KEY VALUE

DRIVER

−PROJECTS DE-RISKED VIA FORWARD

FUNDING OR PRE-SALES

−EQUITY MULTIPLE 2.0X – 5.0X

TRADING

−SHORT-TERM PROFIT FLOWS (1-3

YEARS)

−PLANNING GAIN IS OFTEN KEY

−ARBITRAGE/MISPRICING

OPPORTUNITIES

−IRR OF >30%

−EQUITY MULTIPLE 1.5X

PROJECT DELIVERY TIME

GAINS


21

FY2016 DEVELOPMENT AND TRADING GAINS

Anticipated FY16

gains

Gains realised in

FY16 Variance

399 Edgware Road £7m £8m

The Old Vinyl Factory £6m £6m

Dublin projects:

Percy Place

Charlemont Clinic

Robswall, Malahide

£10m £5m Profit from Percy Place deferred to

FY17 due to delay to commercial sale

Cross Quarter, Abbey Wood £4m £5m

Wick Lane Wharf £4m £4m

The Deptford Project £4m £4m

Brentwood £4m £4m

Becket House - £3m Disposal accelerated by off-market

approach from Freeholder

Hale Barns £2m £2m

Norwich £2m - Profit realisation deferred to FY17

Other (15 projects) £12m £10m

Total £55m £51m


22

OUTLOOK FOR FY17: DEVELOPMENT AND TRADING GAINS

Project name Anticipated

FY17 gains H1 H2 Profit trigger

12 Hammersmith Grove £10m £10m Letting 90% of office space

Dublin:

a) Percy Place

b) Robswall

c) Pembroke Road

£7m £5m £2m a) Sale of residential units and sale of

commercial component

b) Sale of remaining residential units

c) Sale of consented site

Maidstone

£4m £4m Sale of first consented residential phase.

Secure planning and sell second phase

of development (BTR).

Ashford £3m £3m Secure planning and sell consented site

The Old Vinyl Factory£3m £3m Secure planning and sell consented site.

Funding of record store.

Birmingham International Park

£2m £2m Secure planning and sell consented site

Norwich £2m £2m Sale of consented site

Woking£2m £2m Secure planning and sell consented site

(BTR)

Other (8 projects) £9m £3m £6m

Total £42m £8m £34m


23

+ 170,000 sq. ft. Grade A office building

+ Forward-funded by Aberdeen Asset Management

+ Lettings campaign underway - 10HG let within 12 months

+ Average Hammersmith rents - £56psf

+ Profit guidance of £10m based on rents of £52.50 and 5.5% yield

12 HAMMERSMITH GROVE


24

Maidstone

+ Consented site acquired in December 2015

– 192 residential units + 180,000 sq. ft. of

commercial space

+ Phase 1 – Under offer to sell existing

residential consent on part of the site

+ Phase 2 – Progressing new planning

applications for c. 240 residential units

MAIDSTONE AND ASHFORD

Ashford

+ 9-acre site acquired in October 2015

+ Planning process underway for c.660

homes – committee in Summer 2016


25

+ £380m PPP project with London Fire Brigade

+ Competitive bid process

+ £5m initial equity investment plus £5m post planning

+ Plans for major mixed-use regeneration

NEW PROJECT: 8 ALBERT EMBANKMENT


26

NEW PROJECT: COCKPIT YARD

+ £100m PPP project with Camden Council

+ Competitive bid process

+ £2m initial equity investment rising to £4m

+ Plans for major mixed-use regeneration –planning submission targeted Q1 2017


27

SPECIALIST PLATFORMS: BUILD TO RENT

CAPITAL

BUILD TO RENT

PLATFORM PLANNING DEVELOPMENT

BUILD TO

RENT UNITS

LAND +

MINORITY EQUITY

INVESTMENT +

PLANNING AND

DEVELOPMENT

EXPERTISE

LAND

IMPROVEMENT

PROFIT

DEVELOPMENT

MANAGEMENT FEE

PROMOTE PROFIT AND RUNNING INCOME

TARGET RETURN c.7.5%

PROFIT VIA

PROMOTE

STRUCTURE

(BASED ON OPERATING

PERFORMANCE OVER THE

MEDIUM TERM)

U+I

(LAND, PLANNING

AND DEVELOPMENT

EXPERTISE)

FUNDING

PARTNER


28

INVESTMENT PORTFOLIO


29

INVESTMENT PORTFOLIO OVERVIEW

NUMBER OF ASSETS VALUATION INCREASE (inc JVs) SIZE OF PORTFOLIO

20

Feb 2015: 21

£1.7m

Feb 2015: £11.2m

£203.3m

Feb 2015: £203.3m

INITIAL YIELD* CONTRACTED RENTAL INCOME

6.8%

Feb 2015: 6.8%

£14.3m

Feb 2015: £13.8m

ESTIMATED RENTAL VALUE* VOID RATE EQUIVALENT YIELD*

£14.4m

Feb 2015: £14.5m

4.5%

Feb 2015: 5.0%

7.20%

Feb 2015: 7.4%

*on a like-for like basis and core portfolio only


30

OPTIMISE Driving value through asset enhancement, planning gain or redevelopment

RATIONALISE Disposing of non-core assets where we see no further potential to add value

REINVEST Building a portfolio that better contributes to our overall returns target as a business

INVESTMENT PORTFOLIO: STRATEGY TO DRIVE VALUE


31

DYNAMIC

PORTFOLIO

+

HIGHER

RETURNS

TARGET BREAKDOWN OF INVESTMENT PORTFOLIO

GREENHOUSE

c.£35m (17.5%)

Target size

+ Retail, commercial or leisure elements of our completed developments

+ Emerging locations where ‘destination’ factor is key

+ High income and capital growth potential

WAREHOUSE

c.£45m (22.5%)

Target size

+ Income producing, longer-term development opportunities

+ Feeds regeneration pipeline

CORE

c.£120m (60%)

Target size

+ Assets with strong covenants and stable income streams (suited to Aviva debt facility)

+ Income and capital growth potential through asset management and enhancement

*analysis of core portfolio and assets considered within

investment portfolio repositioning process


Type Value % of portfolio

Greenhouse £3.6m 1.8%

Warehouse £16.9m 8.4%

Other (including core assets)

£181.0m 89.8%

£201.5m 100.0%

Current portfolio breakdown*

32

OPTIMISE: SWANLEY

+ Planning application to be submitted in Q2 2016

+ Surface car park - 343 residential units, retail and restaurant space, new public realm

+ c.£3m value add through planning. Further value if we develop out.


33

REINVEST: ‘CORE’ ASSETS

+ c.£120m of portfolio – held within Aviva facility

+ Focus on strong covenants and stable income streams

+ Location, catchment, experience and tenant demand are key

+ e.g. Killingworth (pictured) –dominant retail scheme in affluent town


34

REINVEST: WAREHOUSE ASSETS

ACQUISITION

OF ASSETSGROWTH INCOME

DEVELOP

MASTERPLAN

REGENERATION

OF PROPERTY

Target undervalued, income-producing land

or assets with a strategic planning case,

within our three core geographies.

Manage assets to drive short to medium-

term income streams.

Start process of community engagement

early in the process.

Create development proposals for new

mixed-use place and secure planning

consent.

Deliver new place.

EXAMPLE: CHARLTON RIVERSIDE


35

REINVEST: GREENHOUSE ASSETS

RETAIN GROW HARVEST

Ground floor retail, leisure or commercial space of

completed mixed-use regeneration project transferred to

investment portfolio.

Use detailed knowledge and experience of the location to

attract the best tenants, to mature the development, drive

footfall and add value.

Mature the investment asset, capturing rental and value uplift

ahead of ultimate sale.

EXAMPLE: THE DEPTFORD PROJECT


36

SUMMARY


37

U+I POSITIONED

FOR GROWTH

Business ‘getting into its stride’ and integrated into new home

GOOD VISIBILITY

ON GAINS

£50m+ of gains pa within 3-5 years

WELL-POSITIONED

TO DELIVER

SUSTAINABLE

SHAREHOLDER

RETURNS

Target post-tax returns of 12% plus new dividend policy

SUMMARY


38

APPENDICES


39

APPENDIX 1: BUSINESS MODEL


40

ON BALANCE

SHEET

U+I CREATING PLACES

DEVELOPMENT AND TRADING INVESTMENT

MIXED-USE

REGENERATIONTRADING

OFF BALANCE

SHEET

SIGNIFICANT LONGER TERM

PROFIT STREAMS FROM LARGER

REGENERATION PROJECTS

PLANNING

SECURED

DISPOSAL

(TO A FUND OR

SPECIALIST

PLATFORM)

PLANNING

SECURED

DEVELOPMENT

FINANCE SECURED

PROJECT DELIVERY

AND PRE-SALES

PROJECT

DELIVERY

COMPLETED

DEVELOPMENT

COMPLETED

DEVELOPMENT

DEVELOPMENT

PROFIT

DEVELOPMENT

PROFIT

LAND

IMPROVEMENT

PROFIT

DISPOSAL

ASSET MANAGEMENT

OR PLANNING

SHORTER-TERM PROFIT REALISATIONS

TO BALANCE LUMPIER PROFITS FROM

DEVELOPMENT ACTIVITY

TRADING PROFIT

GREENHOUSE WAREHOUSE OTHER

OPTIMISING THE VALUE OF

OUR RETAINED ASSETS

OPTIMISE

CAPITAL GROWTH

AND INCOME

RATIONALISE

RE

IN

VE

ST

EXAMPLE OF ROUTE:

399 EDGWARE ROAD

EXAMPLE OF ROUTE:

DEPTFORD PROJECT

EXAMPLE OF ROUTE: ROBSWALL,

BRENTWOOD


41

PRINCIPAL RISKS


42

APPENDIX 2: FINANCIALS


43

NET DEBT, NET ASSETS AND GEARING

304.5 306.7312.6

320.3

335.5

346.4342.9

363.3

147.1 146.8143.0

153.8 150.7

125.7

203.3

161.4

48.3 47.9

45.7

48

40

36.3

59.2

44.4

0

10

20

30

40

50

60

70

100

150

200

250

300

350

400

Aug 12 Feb 13 Aug 13 Feb 14 Aug 14 Feb-15 Aug-15 Feb-16

Net assets (LHS) Net debt (LHS) Gearing excl JVs (RHS)

£’m%


44

CONTRIBUTION TO NAV GROWTH

£’m

Cash-related in

the year

£’m

Non cash-related in

the year

£’m

Net assets attributable to shareholders at 28 Feb 2015 345.7

Contribution from investment property 12.1 12.1

Property revaluations 0.2 0.2

Contribution from development and trading portfolio 51.1 51.1

Operating costs (21.8) (21.8)

Net interest costs (11.8) (11.8)

Swap revaluations 0.3 0.3

Foreign currency movements (0.7) (0.7)

Other (1.2) (1.2)

Taxation (2.5) (2.5)

Dividends (7.4) (7.4)

Non controlling interest (0.7) (0.7)

Sub-total 17.6 17.1 0.5

Net assets attributable to shareholders at 29 Feb 2016 363.3


45

RECONCILIATION OF PROFIT BEFORE TAX

£’m

FY2015 profit before tax 34.7

Increase in development and trading gains 5.4

Increase in net rental income 1.9

Increase in operating costs:

One off - £2.4m

Recurring - £1.4m

(3.8)

Decrease in valuation gain on investment portfolio and investments held in JV (11.1)

Decrease in profit on sale of investment portfolio (4.1)

Change in FX movements in P&L* (7.8)

Exceptional items in 2015

Cathedral acquisition costs

Euro loan note refinance**

(2.7)

(7.9)

FY2016 profit before tax 25.8

*FX gains taken to reserves increased by £4.7 million

**Corresponding deficit of £6.0 million taken to reserve in 2015


46

OVERHEADS

FY2016

£m

FY2015

£m

Staff costs

LTIP

12.8

0.7

12.0

(0.1)

13.5 11.9

Establishment and other

Legal and professional

Depreciation

4.8

3.2

0.3

3.2

2.5

0.3

21.8 17.9

Non-recurring costs included above:

Rebrand and launch costs

Integration

Rationalisation of office space

HDD (unwinding of previous joint venture)

Audit fee

0.9

0.6

0.4

0.4

0.1

2.4

NB: Overheads include administration and professional fees relating to corporate structures for investing into

projects in a capital efficient manner totalling £0.4m


47

INVESTMENT PROPERTY PORTFOLIO CONTRIBUTION

(INCLUDES SHARE OF JVs)

FY2016

£m

FY2015

£m

Revenue 14.4 12.9

Direct costs (2.4) (2.7)

12.0 10.2

(Loss)/Gains on disposals (0.2) 3.8

Asset management fees and joint venture net income0.3

(0.1)

Contribution prior to revaluation 12.1 13.9

Revaluation gain

- Direct

- Share of JV

0.2

0.1

7.6

3.4

Contribution 12.4 24.9


48

APPENDIX 3: PORTFOLIO STATS


49

LEVEL OF PROFITS PER PROJECT

Aggregate expectations for development and trading gains unchanged for next 2 years

9

28 27

46

51

42

72

63

7

24

11

28 27

1821

14

0

1

2

3

4

5

6

7

8

9

0

10

20

30

40

50

60

70

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

£'m Profit (LHS) Number of projects (LHS) £'m profit per project (RHS)


67.1

25.2%

6.0% 1.7

Gross rental income - tenant profile

PLC/nationals/FTSE100

Local traders

Regional multiples

Government

INVESTMENT PROPERTY ANALYSIS

44.1%

37.2%

7.9%

10.8%

Gross rental income - lease term profile

0 - <5 years

5 - <10 years

10 - <20 years

20 years +

40.1%

24.5%

26.4%

9.0%

Capital value - location profile

London and SouthEast

South West

North and Midlands

Wales and NorthernIreland

1.8%8.4%

89.8%

Capital value - asset type

Greenhouse

Warehouse

Other


51

DEVELOPMENT AND TRADING PORTFOLIO: GEOGRAPHIC BREAKDOWN

60.0%22.9%

16.1%

1.0%

London City Region

Rest of UK

Dublin

Manchester


52

DEVELOPMENT AND TRADING PORTFOLIO: GDV PER SECTOR (% of portfolio)

66.0

18.8

8.3

2.22.0 2.7

GDV by sector

Residential

Office

Retail

Leisure

Student

Science


53

DEVELOPMENT PROJECTS IN LONDON CITY REGION

Key

Route of Crossrail 1

Route of Crossrail 2

M25

Zone One

(London

Underground)

1 h

ou

r

30

min

sOxford

Cambridge

Brighton

Reading

Ashford

Tunbridge Wells

Maidstone

SittingbourneWoking

Slough


54

APPENDIX 3: ECONOMIC CHARTS


55

-0.6-0.3

0.81

1.51.8

2.3

2.9

3.8 3.9

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

Cap

ita

l G

row

th %

CAPITAL GROWTH SEPTEMBER 2015 – MARCH 2016 BY SECTOR

Source: IPD monthly


56

AFFORDABILITY OF HOUSING IN LONDON

4

5

6

7

8

9

10

11

12

13

14

30

40

50

60

70

80

90

2000 2005 2010 2015

House Price-to-Earnings Ratio and Mortgage Affordability in London

Mortgage Affordability London HPE London(LHS (RHS

)

Source: Capital Economics


57

-400

-300

-200

-100

0

100

200

300

400

4.0

5.0

6.0

7.0

8.0

9.0

2000 2002 2004 2006 2008 2010 2012 2014 2016

Unemployment Rate (LHS, %) LFS Employment (3m change, 000s)

EMPLOYMENT CHANGE AND UNEMPLOYMENT RATE


58

0

20

40

60

80

100

120

140

160

180

0

20

40

60

80

100

120

140

160

180

2001 2003 2005 2007 2009 2011 2013 2015

INVESTMENT YIELDS: PRIME TO NON-PRIME SPREAD (bps)



59

-40

-30

-20

-10

0

10

20

-40

-30

-20

-10

0

10

20

Labour avail. Labour costs Materialsavail.

Material costs Land avail. Land prices Planningdelays

Dev. Finance

FACTORS THAT ARE MAJOR CONSTRAINTS ON PRODUCTION

(% balance, Difference from average, Q4 2015)



60

98

77

42

223 58

0

10

20

30

40

50

60

70

80

90

100

Number of enterprises Number of employees GVA

% o

f Tota

l

Irish Multinational

DUBLIN: BREAKDOWN OF FIRMS IN BUSINESS ECONOMY IN IRELAND

Source: CSO


61

DISCLAIMER

This presentation has been prepared by U and I Group PLC (the “Company”). No representation or warranty (express or implied) of any nature is

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In particular, no responsibility or liability is or will be accepted and no representation or warranty is or is authorised to be given as to the

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PRELIMINARY RESULTS FOR THE YEAR ENDED …...1 PRELIMINARY RESULTS FOR THE YEAR ENDED 29.02.16 FOR THE YEAR ENDED 29.02.16 FOR THE YEAR ENDED 29.02.16 FOR THE YEAR ENDED 4 OUR YEAR